CHANGE IN CONTROL
EMPLOYMENT AGREEMENT
BETWEEN
IOWA FIRST BANCSHARES CORP.
AND
D. SCOTT INGSTAD
January 1, 1996
TABLE OF CONTENTS
CAPTIONS PAGE
1. Purpose
2. Operation of Agreement
3. Change in Control
4. Employment
5. Compensation
6. Termination
7. Company Obligations on Termination
8. Confidentiality
9. No Obligation to Mitigate Damages
10. Non-Exclusivity of Rights
11. Full Settlement
12. Notices
13. Non-Alienation
14. Governing Law
15. Amendment
16. Successor to the Company
17. Miscellaneous
CHANGE IN CONTROL EMPLOYMENT AGREEMENT
This Agreement is made on January 1, 1996, between Iowa First Bancshares Corp.,
an Iowa corporation (the "Company"), and D. Scott Ingstad (the "Executive").
1. Purpose. The Company wishes to attract and retain well-qualified executive
and key personnel. The Company and the Executive wish to assure continuity of
management in the event of any actual or threatened Change in Control (as
defined in Section 3) of the Company. This Agreement is made to accomplish these
purposes and in consideration for the mutual covenants contained in this
Agreement.
2. Operation of Agreement. The "effective date of this Agreement" shall be the
date on which a Change in Control occurs, and its terms and conditions shall
have no effect on the existing terms of the Executive's employment until the
effective date. This Agreement shall terminate if the Board of Directors of the
Company (the "Board") determines that the Executive is no longer a key executive
who should be covered by this Agreement and so notifies the Executive; provided,
however, that such a determination shall not be made, and if made shall have no
effect, (a) within three years after the Change of Control, or (b) during any
period of time when the Company has knowledge that any third person has taken
steps reasonably calculated to effect a Change of Control until, in the opinion
of the Board, the third person has abandoned or terminated such efforts to
effect a Change of Control. Any good faith decision by the Board that the third
person has abandoned or terminated efforts to effect a Change of Control shall
be conclusive and binding on the Executive.
3. Change in Control. For purposes of this Agreement, a "Change in Control"
means a change of control of a nature that would be required to be reported in
response to Item 1(a) of the Current Report on Form 8-K pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"); provided,
however, without limitation, that such a "Change of Control" shall be deemed to
have occurred if either:
a. A third person or entity, including a group as defined in Section
13(d)(3) of the Exchange Act, becomes the beneficial owner, directly or
indirectly, of shares of the Company having 35 percent or more of the total
number of votes that may be cast for the election of Directors of the Company;
or
b. The individuals who constitute the Board as of the date of this
Agreement (the "Incumbent Board") cease for any reason to constitute at least
two-thirds thereof, provided that any person who becomes a Director subsequent
to the date of this Agreement whose election or nomination for election by the
Company's shareholders was approved by a vote of at least 75 percent of the
Directors comprising the Incumbent Board (other than an election or nomination
in connection with an actual or threatened election contest relating to the
election of Directors of the Company, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) shall be, for purposes of
this clause, considered as though such person were a member of the Incumbent
Board.
4. Employment. The Company agrees to continue the Executive in its employ, and
the Executive agrees to remain in the employ of the Company for the period
commencing on the effective date of this Agreement and ending on the earlier to
occur of (1) the third anniversary of such date or (2) the Executive's assumed
retirement date, herein defined as attainment of age 65 or under such other
agreement as the Company may have made with the Executive. The period commencing
on the effective date of this Agreement and ending on the earlier to occur of
dates specified in clauses (1) and (2) is the "Employment Period". During the
Employment Period:
a. Position. The Executive's position (including titles), authority,
and responsibilities shall be at least commensurate with those held, exercised,
and assigned during the 90-day period immediately preceding the effective date
of this Agreement. Such services shall be performed at the location where the
Executive was employed immediately prior to the effective date of this
Agreement.
b. Performance. The Executive shall devote such business time during
normal business hours exclusively to the business and affairs of the Company and
use his or her best efforts to perform faithfully and efficiently the
responsibilities assigned, in each case, to the extent necessary to discharge
the responsibilities assigned, except for services on corporate, civic, or
charitable boards or committees not significantly interfering with the
performance of such responsibilities and periods of vacation and sick leave to
which he or she is entitled. The Executive's continuing to serve on any boards
and committees with which he or she shall be connected, as a member or
otherwise, at the date of this Agreement shall not be deemed to interfere with
the performance of the Executive's services to the Company.
5. Compensation. During the Employment Period:
A. Base Salary. The Executive shall receive a base salary ("Base
Salary") at a monthly rate at least equal to the highest monthly salary paid to
the Executive by the Company or any of its affiliated companies within one year
prior to the effective date of this Agreement. The Base Salary shall be reviewed
at least once each year and shall be increased at any time and from time to time
by action of the Board of the Company or any committee thereof or any individual
having authority to take such action in accordance with the Company's regular
practices. No increase in the Base Salary shall serve to limit or reduce any
other obligation of the Company hereunder, and, after any such increase, the
Base Salary shall not be reduced. As used in this Agreement, the term
"affiliated companies" means any company controlling, controlled by, or under
common control with the Company.
b. Annual Bonus. In addition to the Base Salary, the Executive shall be
awarded for each fiscal year an annual bonus pursuant to any bonus or incentive
plan or program of the Company or otherwise, in cash at least equal to the
highest bonus paid or payable to the Executive in respect of any of the fiscal
years during the three fiscal years immediately prior to the effective date of
this Agreement.
c. Incentive and Savings Plans. In addition to the Base Salary and any
annual bonus payable as provided in this Agreement, the Executive shall be
entitled to participate in all applicable incentive and savings plans and
programs (including, when applicable, the Incentive Stock Option and
Nonstatutory Stock Option Plan) and in all applicable retirement and pension
plans on a basis providing him or her with the opportunity to receive
compensation (without duplication of any annual bonus) and benefits equal to
those provided by the Company and its affiliated companies for the Executive
under such plans and programs as in effect any time during the 90-day period
immediately preceding the effective date of this Agreement or, if more favorable
to the Executive, as in effect at any time thereafter with respect to executives
with comparable responsibilities.
d. Benefit Plans. The Executive or his or her spouse, as the case may
be, shall be entitled to receive employee benefits (including, without
limitation, all amounts which the Executive or his or her spouse and family is
or would have been entitled to receive as benefits under all medical, dental,
disability, group life, accidental death and travel accident insurance plans and
programs of the Company and its affiliated companies) as in effect at any time
during the 90-day period immediately preceding the effective date of this
Agreement or, if more favorable to the Executive, as in effect at any time
thereafter with respect to executives with comparable responsibilities.
e. Expenses. The Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Executive in
accordance with the policies and procedures of the Company as in effect during
the 90-day period immediately preceding the effective date of this Agreement or,
if more favorable to the Executive, as in effect at any time thereafter with
respect to executives with comparable responsibilities.
f. Vacation and Fringe Benefits. The Executive shall be entitled to
paid vacation and fringe benefits in accordance with the policies of the Company
as in effect during the 90-day period immediately preceding the effective date
of this Agreement or, if more favorable to the Executive, as in effect at any
time thereafter with respect to executives with comparable responsibilities.
6. Termination.
a. Death or Disability. This Agreement shall terminate automatically on
the Executive's death. The Company may terminate this Agreement, after having
established the Executive's Disability, by giving to the Executive written
notice of its intention to terminate his or her employment, and the Executive's
employment with the Company shall terminate effective on the 90th day after
receipt of such notice (the "Disability Effective Date") if within 90 days after
such receipt the Executive shall fail to return to full-time performance of
duties (and if the Executive's Disability has been established pursuant to the
definition of "Disability" set forth below). For purposes of this Agreement,
"Disability" means disability which, after the expiration of more than 26 weeks
after its commencement, is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the Executive or his
or her legal representative (such agreement to acceptability shall not be
withheld unreasonably).
b. Cause. The Company may terminate the Executive's employment during
the Employment Period for Cause. For purposes of this Agreement, 'Cause' shall
mean (1) a material breach by the Executive of the Executive's obligations under
Section 4 (other than as a result of incapacity due to physical or mental
illness) which is: (A) demonstratively willful and deliberate on the Executive's
part, (B) committed in bad faith or without reasonable belief that such breach
is in the best interest of the Company, and (C) not remedied in a reasonable
period of time after receipt of written notice from the Company specifying such
breach, or (2) the conviction of the Executive of a felony involving moral
turpitude.
c. Good Reason. The Executive may terminate his or her employment for
Good Reason. For purposes of this Agreement, "Good Reason" means:
(1) Without the express written consent of the Executive, (a)
the assignment to the Executive of any duties inconsistent in any
substantial respect with the Executive's position, authority, or
responsibilities as contemplated by Section 3 of this Agreement, or (b)
any other substantial change in such position (including titles),
authority, or responsibilities;
(2) Any failure by the Company to comply with any of the
provisions of Section 5 of this Agreement, other than an insubstantial
and inadvertent failure remedied by the Company promptly after receipt
of notice thereof given by the Executive;
(3) The Company's requiring the Executive to be based at any
office or location other than that at which the Executive is based at
the effective date of this Agreement, except for travel reasonably
required in the performance of the Executive's responsibilities;
(4) Any purported termination by the Company of the
Executive's employment other than as permitted by this Agreement, it
being understood that any such purported termination shall not be
effective for any purpose of this Agreement; or
(5) Any failure by the Company to obtain the assumption and
agreement to perform this Agreement by a successor as contemplated by
Section 16.
d. Notice of Termination. Any termination by the Company for Cause or
by the Executive for Good Reason shall be communicated by Notice of Termination
to the other party given in accordance with Section 12. For purposes of this
Agreement, a "Notice of Termination" means a written notice which (1) indicates
the specific termination provision in this Agreement which is applicable, (2)
sets forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated, and (3) if the termination date is other than the date of receipt of
such notice, specifies the termination date of this Agreement (which date shall
be not more than 15 days after the giving of such notice).
e. Date of Termination. "Date of Termination" means the date of receipt
of the Notice of Termination or the date specified therein, as the case may be.
7. Company Obligations on Termination. During the Employment Period, if the
Executive's employment is terminated:
a. Death. By reason of the Executive's death, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement other than those obligations accrued or vested hereunder at
the date of the Executive's death.
b. Disability. By reason of the Executive's disability, the Executive
shall be entitled to receive disability and other benefits after the Disability
Effective Date at least equal to those provided in accordance with Section 5(d).
c. Cause. For Cause, the Company shall pay to the Executive his or her
full Base Salary through the Date of Termination at the rate in effect at the
time Notice of Termination is given, and the Company shall have no further
obligations to the Executive under this Agreement, except that such termination
shall not modify or affect in any way any accrued right of the Executive to any
other compensation payable pursuant to Section 5 or to any vested or accrued
benefits payable in accordance with such Section.
d. Good Reason: Other Than for Cause or Disability. During the
Employment Period:
(1) Termination Payments. Subject to clause (2) hereof, if the
Company terminates the Executive's employment other than for Cause or
disability, or if the Executive terminates his or her employment for
Good Reason, the Company shall pay to the Executive the following
amounts and provide the Executive with the following benefits:
(a) If not previously paid, the Executive shall be
paid his or her Base Salary through the Date of Termination at
the rate in effect (or, if greater, the rate required by
Section 5(a) at the time the Notice of Termination was given.
(b) During the remainder of the Employment Period,
the Company shall continue to pay to the Executive his or her
salary on a monthly basis at a rate in effect (or, if greater,
the rate required by section 5(a)) immediately prior to the
Date of Termination.
(c) During the remainder of the Employment Period,
the Executive shall continue to receive benefits under the
Company's employee benefit plans described in Sections 5(d)
and 5(f) hereof as if he or she remained employed by the
Company.
(d) The Executive shall be considered fully vested in
any compensation or benefit amounts accrued, accruable, or
payable by the Company to the Executive under any
Company-sponsored compensation or benefit plan, whether
qualified or unqualified, and such other plans as may have
been in effect for the Executive immediately prior to the
Effective Date of this Agreement or the Date of Termination.
(e) If, despite the provisions of Sections 7(d)(1)(c)
and (d) above, benefits or service credits under any such
employee benefit plan shall not be payable or provided under
any such plan to the Executive or the Executive's dependents,
beneficiaries, and estate, because he or she is no longer an
employee of the Company, the Company shall, to the extent
necessary, pay or provide for payment of such benefits and
service credits for such benefits to the Executive, his or her
dependents, beneficiaries, and estate.
(f) The Executive may elect, within 60 days after the
Date of Termination, to be paid a lump sum severance
allowance, in lieu of the payments payable pursuant to Section
7(d)(1)(b), (d), and (e) hereof, and in addition to the
benefits payable or provided pursuant to Sections 7(d)(1)(a)
and (c) hereof, in an amount which is equal to the sum of (i)
the total payments remaining pursuant to Section 7(d)(1)(b) of
this Agreement, and (ii) any other amounts payable to the
Executive under Sections 7(d)(1)(d) and (e) of this Agreement.
(2) Limitation. Notwithstanding anything in this Agreement to
the contrary, if it is determined that any payment or distribution by
the Company to or for the benefit of the Executive (whether paid or
payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise) (a "Payment") would not be deductible by the
Company for federal income tax purposes because of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), the aggregate
present value of amounts payable or distributable to or for the benefit
of the Executive pursuant to this Agreement (such payments or
distributions pursuant to this Agreement are hereinafter referred to as
"Agreement Payments") shall be reduced (but not below zero) to the
Reduced Amount, as defined below.
(a) The "Reduced Amount" shall be an amount expressed
in present value which maximizes the aggregate present value
of Agreement Payments without causing any Payment to be
nondeductible by the Company because of Section 280G of the
Code. Present value shall be determined in accordance with
Section 280G(d)(4) of the Code. The determination of the
Reduced Amount and the components thereof required to be made
hereunder shall be made by McGladrey & Pullen, LLP
("Accounting Firm"), which shall provide detailed supporting
calculations both to the Company and the Executive within ten
business days of the termination of employment of the
Executive or such earlier time as is requested by the Company.
Such determination by Accounting Firm shall be binding on the
Company and the Executive.
(b) The Executive shall determine which and how much
of the Agreement Payments (or, at the election of the
Executive, other Payments) shall be eliminated or reduced
consistent with the determination of Reduced Amount by
Accounting Firm; provided that, if the Executive does not make
such determination within five business days of the receipt of
the calculations made by Accounting Firm, the Company shall
elect which and how much of the Agreement Payments shall be
eliminated or reduced consistent with the calculation of the
Reduced Amount and shall notify the Executive promptly of such
election.
(c) As promptly as practicable thereafter, the
Company shall pay to or distribute to or for the benefit of
the Executive such amounts as are then due to the Executive
under this Agreement and shall promptly pay to or distribute
for the benefit of the Executive in the future such amounts as
become due to the Executive under this Agreement.
(d) As a result of the uncertainty in the application
of Section 280G of the Code at the time of the initial
determination by Accounting Firm hereunder, it is possible
that Agreement Payments will have been made by the Company
which should not have been made ("Overpayment") or that
additional Agreement Payments which will have not been made by
the Company could have been made ("Underpayments"), in each
case, consistent with the calculation of the Reduced Amount
hereunder.
(e) If Accounting Firm determines that an Overpayment
has been made, any such Overpayment shall be treated for all
purposes as a loan to the Executive which the Executive shall
repay to the Company together with interest at the applicable
Federal rate provided for in Section 7872(f)(2) of the Code;
provided, however, that no amount shall be payable by the
Executive to the Company (or if paid by the Executive to the
Company shall be returned to the Executive) if and to the
extent such payment would not reduce the amount which is
subject to taxation under Section 4999 of the Code. If
Accounting Firm determines that an Underpayment has occurred,
any such Underpayment shall be promptly paid by the Company to
or for the benefit of the Executive, together with interest at
the applicable Federal rate provided for in Section 7872(f)(2)
of the Code.
8. Confidentiality. The Executive shall hold in a fiduciary capacity for the
Company's benefit all secret or confidential information, knowledge, or data
relating to the Company or any of its affiliated companies and their respective
businesses which shall have been obtained by the Executive during his or her
employment by the Company or any of its affiliated companies and which shall not
be public knowledge. After termination of the Executive's employment with the
Company, the Executive shall not, without the prior written consent of the
Company, communicate or divulge any such information, knowledge, or data to
anyone other than the Company and those designated by it. In no event shall an
asserted violation of the provisions of this Section 8 constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.
9. No Obligation to Mitigate Damages. If the Executive's employment is
terminated, the Executive shall be under no obligation to mitigate damages by
seeking other employment. However, to the extent that the Executive receives
compensation from other employment, the payments to be made under the provisions
of Section 7(d)(1) of this Agreement (other than 7(d)(1)(f), if used), shall be
correspondingly reduced.
10. Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or limit
the Executive's continuing or future participation in any benefit, bonus,
incentive, or other plan or program provided by the Company or any of its
affiliated companies for which the Executive may qualify. Nothing in this
Agreement shall limit or otherwise affect such rights as the Executive may have
under other agreements with the Company or any of its affiliated companies.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any plan or program of the Company or any of its affiliated
companies at or subsequent to the Date of Termination shall be payable according
to such plan or program.
11. Full Settlement. The Company's obligation to make the payments described in
this Agreement and otherwise to perform its obligations hereunder shall not be
affected by any circumstances, including without limitation any set-off,
counterclaim, recoupment, defense, or other right which the Company may have
against the Executive or others. The Company agrees to pay, to the full extent
permitted by law, all legal fees and expenses which the Executive may reasonably
incur as a result of any contest (regardless of the outcome thereof) by the
Company or others of the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance thereof or as a
result of any contest by the Executive against the amount of any deduction
pursuant to Section 7(d)(2) hereof, plus, in each case, interest compounded
quarterly on the total unpaid amount determined to be payable under this
Agreement. Such interest shall be calculated on the basis of the prime
commercial lending rate as reported in the Wall Street Journal, in effect from
time to time during the period of such nonpayment.
If the Executive shall in good faith give a Notice of Termination for
Good Reason and it shall thereafter be determined that Good Reason did not
exist, unless the Company and the Executive shall otherwise mutually agree, the
employment of the Executive shall be deemed to have terminated at the date of
giving such purported Notice of Termination by mutual consent of the Company and
the Executive. Except as provided in the preceding sentence and except that such
termination shall not modify or in any way any accrued right of the Executive to
any compensation payable pursuant to Section 5 or to any vested or accrued
benefits payable in accordance with such Section, the Executive shall be
entitled to receive only those payments and benefits which he or she would have
been entitled to receive at such date otherwise than under this Agreement.
12. Notices. Any notices, requests, demands, and other communications provided
for by this Agreement shall be sufficient if in writing and if sent by
registered or certified mail to the Executive at the last address he or she has
filed in writing with the Company or, in the case of the Company, at its
principal executive offices. Notice and communications shall be effective when
actually received by the addressee.
13. Non-Alienation. The Executive shall not have any right to pledge,
hypothecate, anticipate, or in any way create a lien on any amounts provided
under this Agreement; and no benefits payable hereunder shall be assignable in
anticipation of payment either by voluntary or involuntary acts or by operation
of law, except by will or the laws of descent and distribution.
14. Governing Law. The provisions of this Agreement shall be construed in
accordance with Iowa law, without reference to principles of conflicts of laws.
15. Amendment. This Agreement may be amended or canceled by mutual agreement of
the parties in writing without the consent of any other person, and, so long as
the Executive lives, no person, other than parties hereto, shall have any rights
under or interest in this Agreement or the subject matter hereof.
16. Successor to the Company. This Agreement shall inure to the benefit of and
be binding on the Company and its successors. The Company shall require any
successor to all or substantially all the business or assets of the Company,
whether direct or indirect, by purchase, merger, consolidation, acquisition of
stock, or otherwise, by an agreement in form and substance satisfactory to the
Executive, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent as the Company would be required to perform if no
such succession had taken place.
17. Miscellaneous.
a. If any provision or portion of this Agreement shall be determined to
be invalid or unenforceable for any reason, the remaining provisions of this
Agreement shall be unaffected thereby and shall remain in full force and effect.
b. The Company may withhold from any amounts payable under this
Agreement such federal, state, or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
c. This Agreement contains the entire understanding with the Executive
with respect to the subject matter hereof.
The Executive has signed this Agreement and, pursuant to authorization by its
Board of Directors, the Company has caused this Agreement to be executed in its
name and attested by its Secretary, all as of the date stated in the
introductory paragraph.
/s/ D. Scott Ingstad
--------------------
D. Scott Ingstad
IOWA FIRST BANCSHARES CORP.
By: /s/ George A. Shepley
-------------------------
George A. Shepley
Chairman, President & CEO
ATTEST:
/s/
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Secretary