Exhibit 10.40
MATRIX BANCORP, INC.
CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement (the "Agreement") is made and entered
into effective as of the 28th day of October, 2003 by and between MATRIX
BANCORP, INC. (the "Company"), a Colorado corporation with its principal offices
in Denver, Colorado, and T. Xxxxx XxXxxxxxx (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company wishes to provide certain protections upon a
Change of Control (as defined in Section 1.4) to the Executive under the terms
and conditions provided in this Agreement; and
WHEREAS, the Executive and the Company (collectively referred to as
"both parties") understand and agree to the terms and provisions of this
Agreement and desire and intend to be bound by such terms and provisions.
NOW, THEREFORE, both parties mutually covenant and agree as follows:
ARTICLE 1. DEFINITIONS
1.1. "Average Annual Compensation" shall mean the average annual
compensation reported in Box 1 on Internal Revenue Service Form W-2 (or
its equivalent) for the two preceding calendar years, but excluding
amounts realized from the transfer or exercise of non-qualified stock
options and amounts realized from any disqualifying dispositions of
incentive stock options.
1.2. "Board" shall mean the Board of Directors of the Company.
1.3. "Cause" when used herein concerning the termination of Executive's
employment by the Company, shall mean:
(a) conviction of, or a plea of nolo contendere by, Executive
to a felony or to fraud, embezzlement or misappropriation of
funds;
(b) the commission of a fraudulent act or omission, breach of
trust or fiduciary duty, or insider abuse with regard to the
Company or the Company's subsidiary bank, Matrix Capital Bank
("Bank"), that has had a material adverse effect on the Bank
or the Company;
(c) substantial and direct responsibility for the insolvency
of, the appointment of a conservator or receiver for, or the
troubled condition, as defined by applicable regulations of
the appropriate federal banking agency, of the Company, the
Bank, or any insured depository institution subsidiary of the
Company;
(d) material violation by Executive of any applicable federal
banking law or regulation that has had a material adverse
effect on the Bank or the Company;
(e) violation or conspiracy to violate section 215, 656, 657,
1005, 1006, 1007, 1014, 1032, or 1344 of title 18 of the
United States Code, or section 1341 or 1343 of such title
affecting a federally insured financial institution as defined
in title 18 of the United States Code;
(f) the willful failure by Executive to adhere to the
Company's written policies, which causes a material monetary
injury or other material harm to the Company (but only after
receiving written notice thereof and being given a reasonable
period, not less than thirty (30) days, to cure said
performance by taking such reasonable corrective action as
shall be reasonably within his power at the time of
reference);
(g) the willful failure by Executive to substantially perform
material stated duties of his position with the Company (but
only after receiving written notice thereof and being given a
reasonable period, not less than thirty (30) days, to cure
said performance by taking such reasonable corrective action
as shall be reasonably within his power at the time of
reference);
(h) the removal or suspension of Executive from the
performance of his duties by any bank regulatory authority;
(i) appointment of a conservator or receiver for the Company's
subsidiary bank, Matrix Capital Bank (the "Bank") by
applicable bank regulatory authorities as a result of fraud
committed by the Executive; or
(j) the declaration by federal bank regulators that the Bank
is in a "troubled condition" as a result of fraud committed by
the Executive, and while the Bank is in such a "troubled
condition" as a result of fraud committed by Executive, the
Bank or the Company engages in a Change in Control
transaction;
provided, however, as a condition precedent to the termination of
Executive's employment under subparagraph (b) - (d) of this Section,
there shall have been delivered to Executive a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters
(3/4) of the entire membership of the Board at a meeting of the Board
called and held for such purpose (after reasonable notice to Executive
and an opportunity for Executive to be heard before the Board), finding
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that, in the good faith opinion of the Board, Executive committed such
conduct as set forth in the referenced subparagraphs above.
1.4. "Change of Control" shall mean:
(a) a change in the ownership of the capital stock of the
Company where a corporation, person, or group acting in
concert (a "Person"), as described in Section 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), holds or acquires, directly or indirectly, beneficial
ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of a number of shares of capital stock of
the Company which constitutes fifty percent (50%) or more of
the combined voting power of the Company's then outstanding
capital stock then entitled to vote generally in the election
of directors;
(b) the persons who were members of the Board of Directors of
the Company immediately prior to a tender offer, exchange
offer, contested election, or any combination of the
foregoing, cease to constitute a majority of the Board of
Directors of the Company;
(c) the adoption by the Board of Directors of the Company of a
merger, consolidation, or reorganization plan involving the
Company in which the Company is not the surviving entity, or a
sale of all or substantially all of the assets of the Company.
For purposes of this Agreement, a sale of all or substantially
all of the assets of the Company shall be deemed to occur if
any Person acquires (or during the 12-month period ending on
the date of the most recent acquisition by such Person, has
acquired) gross assets of the Company that have an aggregate
fair market value equal to fifty percent (50%) of the fair
market value of all of the gross assets of the Company
immediately prior to such acquisition or acquisitions. The
sale of the Bank shall be deemed to be a sale of substantially
all the assets of the Company;
(d) a tender offer or exchange offer is made by any Person
which is successfully completed and which results in such
Person beneficially owning (within the meaning of Rule 13d-3
promulgated under the Exchange Act) either fifty percent (50%)
or more of the Company's outstanding shares of capital stock
or shares of capital stock having fifty percent (50%) or more
of the combined voting power of the Company's then outstanding
capital stock (other than an offer made by the Company), and
sufficient shares are acquired under the offer to cause such
person to own fifty percent (50%) or more of the voting power;
or
(e) a Distribution Date, as defined in Section 3(a) of the
Rights Agreement dated as of November 4, 2002, between Matrix
Bancorp, Inc. and Computershare Trust Company ("Rights
Agreement"), and/or any other transaction or series of related
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transactions occurring which have or would have substantially
the same effect as a transaction that would cause a
Distribution Date pursuant to Section 3(a) of the Rights
Agreement as in effect on the effective date of this
Agreement, regardless of whether any provision of the Rights
Agreement is subsequently waived or amended to prevent the
issuance of Right Certificates (as defined in Section 3 of the
Rights Agreement) or whether the Right Certificates are
redeemed in connection with the transaction or series; or
(f) any other transactions or series of related transactions
occurring which have substantially the same effect as the
transactions specified in any of the preceding clauses of this
Section 1.04;
provided, however, that a shareholder may make any of the following
transfers and such transfer shall be deemed not to be a Change of
Control unless such transfer causes a Distribution Date as described in
Section 1.04(e) above:
(i) to any trust described section 1361(c)(2) of the Code that
is created solely for the benefit of any shareholder or any
spouse of or any lineal descendant of any shareholder;
(ii) to any individual by bona fide gift;
(iii) to any spouse or former spouse pursuant to the terms of
a decree of divorce;
(iv) to any officer or employee of the Company pursuant to any
incentive stock option plan established by the shareholders;
or
(v) to any family member.
ARTICLE 2. CHANGE OF CONTROL BENEFITS
2.1. Immediately prior to the effective time of a Change of Control, the
Company shall pay Executive, in cash, a lump sum payment equal to one
hundred and fifty percent (150%) of his Average Annual Compensation,
less withholding required to be paid or withheld in accordance with
federal, state, or local law or regulation.
2.2. If Executive, prior to a Change of Control, voluntarily resigns or
voluntarily xxxxxx his employment with the Company for any reason,
including death or permanent disability, or is discharged or terminated
by the Company for Cause, then the Executive will not be entitled to
any benefits under this Agreement.
2.3 Notwithstanding any provision of this Agreement to the contrary,
amounts payable under this Agreement shall be made without regard to
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whether such payment would cause the aggregate of all compensation paid
to Executive by the Company to be a parachute payment under Section
280G of the Code.
ARTICLE 3. CONFIDENTIALITY
The Executive and the Company agree that the terms of this Agreement as
well as the discussions preliminary to, or relating to, this Agreement will be
kept strictly confidential, except as disclosure is required by law or deemed
appropriate by the Company's securities counsel.
ARTICLE 4. COMPLETE AND VOLUNTARY AGREEMENT
4.1. The promises of the Company contained in this Agreement are the whole
consideration for this Agreement.
4.2. Executive intends to be legally bound by this Agreement and has signed
and delivered it voluntarily, without coercion, and with knowledge as
to the nature and consequences thereof.
4.3. The Company intends to be legally bound by this Agreement and has
signed and delivered it voluntarily, without coercion, and with
knowledge as to the nature and consequences thereof.
4.4. It is understood and agreed that this Agreement contains the entire
agreement between the parties and supersedes any and all prior
agreements, arrangements, or undertakings between the parties relating
to the subject matter. No oral understandings, statements, promises or
inducements contrary to the terms of this Agreement exist. This
Agreement cannot be changed orally and any changes or amendments to
this Agreement must be signed by all parties affected by the changes or
amendment.
ARTICLE 5. TERMINATION OF AGREEMENT
This Agreement will terminate upon the earlier of the following: (i)
the occurrence of a Change of Control and the payment of the special termination
benefit described in Section 2.1, or (ii) the Executive's voluntary resignation
or voluntary severance of employment with the Company for any reason, including
death or permanent disability, or discharge or termination by the Company for
Cause.
ARTICLE 6. GENERAL
6.1. Severability. The Executive and the Company agree that each provision
of this Agreement shall be enforceable independent of every other
provision and in the event any provision of this Agreement is
determined to be unenforceable for any reason, the remaining provisions
will remain effective, binding, and enforceable.
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6.2. Successors And Assigns of Company. The Executive and the Company agree
that this Agreement shall be fully assignable by the Company to any
successor-in-interest resulting from a transaction described in Section
1.4(c), without the consent of the Executive, and this Agreement shall
be fully enforceable by any successor or assignee.
6.3. Not Assignable by the Executive. The Executive and the Company agree
that this Agreement is personal to the Executive and shall not be
assignable, in whole or in part, by the Executive for any reason. The
Company covenants and agrees that, in the event of the Executive's
death after a Change of Control, the Company will continue to make all
payments required by this Agreement to the Executive's estate. In the
event of the Executive's death, this Agreement shall be enforceable by
the Executive's estate, executors, or legal representatives only to the
extent provided in this Agreement.
6.4. Choice of Law. The Executive and the Company agree that the law of the
State of Colorado will govern the validity and interpretation of this
Agreement.
6.5. Article and Section Headings. The titles or headings of the respective
Article or Sections in this Agreement are inserted merely for
convenience and shall be given no legal effect.
IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement this ________day of _______________, 2003.
EXECUTIVE:
___________________________________
T. Xxxxx XxXxxxxxx
THE COMPANY:
MATRIX BANCORP, INC.
By:_________________________________
Name: ______________________________
Title: _____________________________
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