**EXHIBIT 10.5**

 

**GREAT WESTERN BANK**

**CLIVE, IOWA**

** **

April 30, 2003

 

TO:  Daniel A. Hamann, Chairman

 

RE:  Phantom StockLong-Term Incentive Plan (the “Plan”)

 

Dear****Dan:

 

Thisletter shall constitute an agreement between you and Great Western Bank, Clive,Iowa (the “Bank”), and shall supersede the Plan dated June 30, 2000between you and Citizens Bank, Mt. Ayr, Iowa, which has been merged into thisBank effective February 24, 2003.

 

I.                                         Office.  You have been appointed Chairman of the Bank and have agreed to so serve.Your base compensation will be determined and agreed from time to time.

 

2.                                       Stock Outstanding. There are 35,438 shares of common stock of Bank outstanding. There are1,153 “deemed” shares allocated hereunder and other “deemed” shares may begranted in the future.

 

3.                                       Phantom Stock.   As of June 30, 2000 you were “deemed”to have been issued ninety-six (96) shares of common stock of Citizens Bank,Mt. Ayr, or 1.2% of the outstanding shares. In lieu thereof, upon adoption ofthis Plan, you will be deemed to have been issued three hundred fifty-four(354) shares of common stock of Bank, or approximately 1.0% of the sharesoutstanding. The Bank will maintain a record of such “deemed” shares, but noactual acquisition of such shares shall be made nor shall any shares be issuedto you or on your account. You shall pay nothing for the deemed shares norshall the Bank pay you or your beneficiaries anything therefor. Such deemedshares are solely for the purpose of calculating accruals to your accountpursuant to this Plan.

 

4.                                       Earnings Accrual.  For purposes of this Plan, the merger ofCitizens Bank, Mt. Ayr and Citizens Bank of Princeton into Citizens Bank,Clive, now known as Great Western Bank, Clive, shall be deemed to have takenplace on July l, 2002. Subject to paragraphs 5 and 6 hereof, starting asof July l, 2002, and ending as of the end of the month preceding the monthin which occurs the date of termination of your employment by Bank, the Bankshall accrue an amount payable to you which shall be equal to the totalearnings per share of the Bank common shares which are deemed owned by you fora full fiscal year as if you had in fact purchased such common shares from theBank; provided, in no event shall an amount be so accrued in excess of50% of the base salary paid to you in such fiscal year. In calculating suchearnings per share, the “deemed” common shares shall be divided into the netafter tax earnings of the Bank allocable to common stock (including all“deemed” shares). Payment of cash dividends on common stock outstanding shall notaffect the amount allocated to the common shares “deemed” purchased by you.Amounts so accrued shall not bear interest. Any partial year accruals shall becomputed on an annualized basis.

 

5.                                       Minimum Goals.  The full accrual of earnings per deemedshare in any year will be made only if both the following minimum goals areachieved: First, the net after-tax earnings of the Bank must

 

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exceed 1.3% of average daily assets of the Bank.Second, the net after-tax earnings of the Bank must exceed the prior year’s netafter-tax earnings by 10%; however, if this second goal is not achieved,and the current year’s earnings exceed 1% of average assets for the year, andcumulative earnings of the Bank over the 5-year period ending with the mostrecent year exceed the cumulative earnings which would have resulted from 10%compound annual earnings growth over such 5-year period, then the 10% earningsgrowth goal will be deemed to have been met. If only one of the two goals ismet, then one-half the earnings per deemed share calculated under paragraph 4hereof shall be accrued. If neither goal is met, nothing shall be accrued. TheBank retains full discretionary right to adjust earnings for any year fromthose otherwise shown on the Bank’s financial statements to, in its judgment,make the year’s income reasonably comparable to prior years and amortize oradjust for extraordinary items. Without limitation, such adjustments mayinclude elimination of tax benefits due to carryover deductions or credits;change in or correction of accounting methods, etc. Any such decision shall bemade within 45 days after the Bank’s financial statements are furnished to itby outside-auditors. If no change be so made in such time, the figures on theBank’s financial statement prepared by outside auditors, audited or unaudited,shall be used for all purposes of this Agreement, prepared under generallyaccepted accounting practices, including amortization of intangible assets.Should the Bank elect “S” status for federal income tax purposes, allcalculations shall be made for the purposes hereof as if the Bank continued tobe a “C” corporation. In determining whether minimum goals have been metpursuant to this paragraph, the earnings of the predecessor Citizens Banks; Mt.Ayr, Princeton and Clive shall be combined for historical comparison purposes.

 

6.                                       No MinimumEmployment Period to Vest.  In theevent your employment by Bank is terminated, all amounts accrued to youraccount shall be fully vested and shall not be forfeited, except for violationsof the Plan as hereinafter provided at paragraphs 13, 14 and 15.

 

7                                          Payment onRetirement or Disability.  The totalamount accrued to your account pursuant to paragraph 4 hereof shall be paid toyou in 120 equal monthly installments, beginning on the 31st day ofJanuary following the year in which you shall have terminated youremployment with Bank, due to retirement after having attained an age of notless than 65 years or due to total and permanent disability as solelydetermined by the Bank (“disability”). In the event of termination ofemployment prior to age 65 for reasons other than disability or death, themonthly payments shall begin in January of the year following the year inwhich you attain age 65 unless the Bank in its sole discretion elects tocommence the payments at an earlier date, based on the then present value ofthe accrued amounts.

 

8.                                       Payment on Death.  In the event of your death prior to age 65,the monthly payments under this Agreement shall commence in the second monthfollowing the month during which death occurred and payment shall be made tothe beneficiaries designated by you in writing or, in the absence of suchdesignation, to your spouse if such spouse survives you, otherwise to yourestate. In the event of your death when installments from the accrual accountshave become payable because of retirement at or after age 65, or due todisability, or due to attainment of age 65 when no longer in the employment ofthe Bank, unpaid monthly installments shall continue to be paid to your livingdesignated beneficiaries or, if none are so designated, to your estate. TheBank may discharge its obligations by delivery of an annuity or prepaying thepresent value at the current rate for ten year U.S. Government Bonds.

 

9.                                       No Trust.  The amount credited to your account shallnot be held by Bank in trust, escrow or similar fiduciary capacity and neitheryou nor any legal representative shall have any right against the Bank withrespect to any portion of the account, except as a general unsecured creditorof the Bank.

 

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10.                                 SpendthriftClause.  Neither you nor any beneficiaryentitled to payment hereunder shall have any right to anticipate, alienate,sell, transfer, assign or encumber any benefit or payment hereunder nor shallsuch rights thereto be subject to attachment or other legal process for your ora beneficiary’s debts.

 

11.                                 Anti Dilution andDilution.  In the event of any commonstock split or common stock dividend by which shares of common stock are issuedfor no new consideration, the number of shares “deemed” owned by you hereundershall be adjusted accordingly. If new common shares are sold at more or lessthan the then book value (as determined under generally accepted accountingprinciples), or if capital is contributed to the bank without the issuance ofshares, an appropriate adjustment (upward or downward) will be made to adjustthe number of outstanding shares for the purpose of these calculations, as ifthe issued shares had been sold at book value as of the end of the calendarquarter preceding the sale, or as if shares had been issued at book value inconsideration of such contributions of capital.

 

12.                                 Termination ofPlan.  The Bank reserves the right atits sole option to terminate the Plan at the end of any fiscal year of the Bankby written notice to you . prior to the end of such fiscal year, and, in suchevent, the deemed shares shall be cancelled and no further accruals shall bemade with respect thereto. In the event of such termination, subject toparagraphs 13, 14 and 15, hereof all amounts accrued to your account shall bevested in you.

 

13.                                 Covenant Not toSolicit Customers**.**

 

a.                                       During Employment.  During the period of your employment withthe Bank, you shall not, directly or indirectly, solicit or work for existingBank customers, or prospective customers with whom Bank is discussing abusiness relationship, for your own account, or for the account of one or moreof Bank’s competitors, with a view to providing, then or at a future date,goods or services of a nature similar to those provided by Bank.

 

b.                                      After Employment.  For a period of twenty-four (24) monthsfollowing your separation from employment with Bank, voluntarily or****involuntarily**,**with or without cause, you shall not solicit or work for,directly or indirectly, existing Bank customers with whom you actually didbusiness and had personal contact, or prospective Bank customers with whom youactually discussed a business relationship and had personal contact, for yourown account or for the account of one or more of the Bank’s competitors, with aview to providing, then or at a future date, goods or services of a nature similarto those provided by the Bank to those customers, or offered or presented bythe Bank to those prospective customers. Termination or other separation ofyour employment with the Bank shall not affect the validity or enforceabilityof the provisions of this Covenant.

 

c.                                       Scope of Covenant.  This Covenant shall apply only to thefollowing: (1) Existing Bank customers with whom you actually did business andhad personal contact; and (2) Prospective Bank customers with whom you actuallydiscussed a business relationship and had personal contact.  A prospective Bank customer is defined asany person or entity you have actively solicited during the 12-month periodimmediately prior to the termination of your employment with the Bank. ThisCovenant shall apply only to goods or services similar in nature to thoseoffered by the Bank.

 

d.                                      Violations.  Should you violate this Covenant not tocompete, any amounts otherwise due you pursuant to this Agreement shall beforfeited, and any amounts previously paid hereunder shall be refunded by youto the Bank. Bank may further exercise its rights against you

 

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orany third party, in law or in equity, in the event you solicit Bank customersin violation of this Agreement or applicable statutory provisions.

 

14.                                 Trade Secrets.  The parties agree that the followinginformation, without limitation, shall constitute “trade secrets” for thepurposes of Iowa’s Trade Secrets Act and that the Bank makes reasonable effortsto maintain the secrecy of its information:

 

a.Names, addresses, telephone and fax numbers, account balances, loan balances,trust relationships, financial statements and credit reports concerning Bankcustomers.

 

b. The Bank’spricing models for loans, deposits and other financial****services.

 

c. The Bank’s expansionplans, whether through new geographic locations, proposed products andservices, or through new means of distribution such as the internet.

 

d. The Bank’sstrategic and marketing plans.

 

By accepting thisAgreement, you agree not to disclose the Bank’s trade secrets to anyone exceptother Bank personnel (or personnel of affiliates or vendors in ordinary courseof business) in the course of your employment with Bank during or for a periodof two years following termination of your employment by the Bank.

 

In****theevent you disclose the Bank’s trade secrets in violation of this Agreement, allamounts otherwise due you hereunder shall be forfeited, and any amountspreviously paid hereunder shall be refunded by you to the Bank. Bank mayfurther exercise its rights against you or any third party, in law or inequity, in the event you reveal the Bank’s trade secrets in violation of thisAgreement or applicable statutory provisions.

 

15.                                 Non-Hire Agreement.  Inthe event of termination of your employment, voluntarily or involuntarily, withor without cause, you shall not, for a period of twelve (12) months followingsuch termination, hire, seek to hire, or encourage your employer or any otherperson to hire any person who was an employee of the Bank on the date ofannouncement to the Bank or to any such employee of termination or the decisionto terminate your employment. Further, you shall not attempt to induce any suchemployee to leave the employ of the Bank to work for you or any other person,firm or corporation during such period. Should you violate this non-hireagreement, any amounts otherwise due you pursuant to this Agreement shall beforfeited and any amounts previously paid hereunder shall be refunded by you tothe Bank. Bank may further exercise its rights against you or any third party,in law or in equity, in the event you violate this non-hire agreement inviolation of this Agreement or applicable statutory provisions.

 

16.                                 Reasonableness andEnforcement of Covenants.  You agreethat the restrictions in paragraph 13 (Covenant not to solicit customers), 14(Trade Secrets), and 15 (Non-Hire Agreement) are necessary, reasonable and fairmeasures to protect the Bank’s secrets and goodwill which are entrusted to youunder this Agreement; that a violation thereof will be presumed to cause theBank irreparable harm which cannot be fully remedied by monetary damages; andthat in the event of a violation, the Bank shall be entitled to a temporaryrestraining order, preliminary and permanent injunctive relief, and all damagesand other relief which any court or jury may award at law or in equity. Youagree that you will not be unduly burdened by the enforcement of paragraphs 13,14 and 15 by injunctive relief.

 

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17.                                 Sale/Severance.  In the event of the sale of Bank, then thereshall thereafter be no forfeiture under paragraph 13 of amounts otherwise dueyou because of your engaging in any act set forth herein if your employment byBank was terminated: (a) involuntarily, or (b) voluntarily in the event youshall have been demoted from the position of President of the Bank or if yourbase salary shall have been reduced below the level at which it stood at thebeginning of the year in which such sale was concluded. For these purposes, a“sale” shall be deemed to have occurred in the event that both of the followingoccur:

 

(i)Deryl F. Hamann, his family and trusts, corporations or other entitiescontrolled by him or his family (including descendants and spouses ofdescendants of Deryl F. Hamann) collectively fail to own directly, orindirectly whether through a holding company, outright or in trust, in theaggregate, at least 51% of the Voting stock of the Bank, and

 

(ii) There is at least 25% ownership of Bank vested in some other personor entity.

 

18.                                 Captions.  The captions of the paragraphs are foridentification only and do not affect the meaning of the text.

 

19.                                 Binding onParties.  This Agreement shall be bindingon and inure to the benefit of the parties hereto, their heirs, personalrepresentatives and successors in interest.

 

20.                                 Governing Law.  This agreement shall be governed by the lawsof the State of Iowa.

 

21.                                 Prior Plan.  The Chairman’s Phantom Stock Long-TermIncentive Plan dated June 30, 2000 with Citizens Bank, Mt. Ayr, governedall benefits accrued thereunder through June 30, 2002. The Bank willassume obligations to you of Citizens Bank, Mt. Ayr. The Provisions of thisPlan shall determine all matters concerning the Plan, and accrued benefits.

 

Please indicate youracceptance of the terms of this Agreement by signing below.

 

 
|             | GREAT WESTERN BANK, Clive, Iowa |
|------------------|---------------------------------|
|             |                            |
|             | By:                             |   |   |
|             | President                       |
|             |                            |
|             |                            |
| Accepted:        |                            |
|             |                            |
|             |                            |   |
| Daniel A. Hamann |                            |
|                  |                                 |  |  |  |

 

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