TWO-YEAR CHANGE IN CONTROL AGREEMENT (BANKLIBERTY)
Exhibit
10.4
TWO-YEAR
(BANKLIBERTY)
This
AGREEMENT
(“Agreement”) is hereby entered into as of July
21,
2006, by
and
between BankLiberty
(the
“Bank”), a federally chartered financial institution, with its principal offices
at 00 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, Xxxx
X. Xxxxxxxx (“Executive”)
and
Liberty Bancorp, Inc. (the
“Company”), a Missouri-chartered corporation and the holding company of the
Bank, as guarantor.
WHEREAS,
the Bank recognizes the importance of Executive to the Bank’s operations and
wishes to protect his position with the Bank in the event of a change in control
of the Bank or the Company for the period provided for in this Agreement;
and
WHEREAS,
Executive and the Board of Directors of the Bank desire to enter into an
agreement setting forth the terms and conditions of payments due to Executive
in
the event of a change in control and the related rights and obligations of
each
of the parties.
NOW,
THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is hereby agreed as follows:
1. Term
of Agreement.
(a) The
term
of this Agreement shall be (i) the initial term, consisting of the period
commencing on the date of this Agreement (the “Effective Date”) and ending on
the second anniversary of the Effective Date, plus (ii) any and all extensions
of the initial term made pursuant to this Section 1.
(b) Commencing
on the first anniversary of the Effective Date and continuing each anniversary
date thereafter, the Board of Directors of the Bank (the “Board of Directors”)
may extend the term of this Agreement for an additional one (1) year period
beyond the then effective expiration date, provided that Executive shall not
have given at least sixty (60) days’ written notice of his desire that the term
not be extended.
(c) Notwithstanding
anything in this Section to the contrary, this Agreement shall terminate if
Executive or the Bank terminates Executive’s employment prior to a Change in
Control.
2. Change
in Control.
(a) Upon
the
occurrence of a Change in Control of the Company followed at any time during
the
term of this Agreement by the termination of Executive’s employment in
accordance with the terms of this Agreement, other than for Cause, as defined
in
Section 2(c) of this Agreement, the provisions of Section 3 of this Agreement
shall apply. Upon the occurrence of a Change in Control, Executive shall have
the right to elect to voluntarily terminate his employment at any time during
the term of this Agreement following an event constituting “Good Reason.”
For
purposes of this Section 2, “Good Reason” means, unless Executive has consented
in writing thereto, the occurrence following a Change in Control, of any of
the
following:
| (i) |
the
assignment to Executive of any duties materially inconsistent with
Executive’s
position, including any material change in status, title, authority,
duties or responsibilities or any other action that results in a
material
diminution in such status, title, authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial and inadvertent
action not taken in bad faith and that is remedied by the Bank or
Executive’s employer reasonably promptly after receipt of notice thereof
given by the Executive;
|
| (ii) |
a
reduction by the Bank or Executive’s employer of the Executive’s base
salary in effect immediately prior to the Change in
Control;
|
| (iii) |
the
relocation of the Executive’s office to a location more than fifty (50)
miles from its location as of the date of this
Agreement;
|
| (iv) |
the
taking of any action by the Bank or any of its affiliates or successors
that would materially adversely affect the Executive’s overall
compensation and benefits package, unless such changes to the compensation
and benefits package are made on a non-discriminatory basis to all
employees; or
|
| (v) |
the
failure of the Bank or the affiliate of the Bank by which Executive
is
employed, or any affiliate that directly or indirectly owns or
controls
any affiliate by which Executive is employed, to obtain the assumption
in
writing of the Bank’s obligation to perform this Agreement by any
successor to all or substantially all of the assets of the Bank
or such
affiliate within thirty (30) days after a reorganization, merger,
consolidation, sale or other disposition of assets of the Bank
or such
affiliate.
|
(b) For
purposes of this Agreement, a “Change in Control” shall be deemed to occur on
the earliest of:
|
(i)
|
Merger:
The Company or the Bank merges into or consolidates with another
corporation, or merges another corporation into the Company or the
Bank,
and as a result less than a majority of the combined voting power
of the
resulting corporation immediately after the merger or consolidation
is
held by persons who were stockholders of the Company immediately
before
the merger or consolidation.
|
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| (ii) |
Acquisition
of Significant Share Ownership:
There is filed or required to be filed a report on Schedule 13D or
another
form or schedule (other than Schedule 13G) required under Sections
13(d)
or 14(d) of the Securities Exchange Act of 1934, if the schedule
discloses
that the filing person or persons acting in concert has or have become
the
beneficial owner of 25% or more of a class of the Company’s voting
securities, but this clause (ii) shall not apply to beneficial ownership
of Company voting shares held in a fiduciary capacity by an entity
of
which the Company directly or indirectly beneficially owns 50% or
more of
its outstanding voting securities.
|
| (iii) |
Change
in Board Composition:
During any period of two consecutive years, individuals who constitute
the
Bank’s or the Company’s Board of Directors at the beginning of the
two-year period cease for any reason to constitute at least a majority
of
the Company’s or the Bank’s Board of Directors; provided, however, that
for purposes of this clause (iii), each director who is first elected
by
the board (or first nominated by the board for election by the
stockholders) by a vote of at least two-thirds (2/3) of the directors
who
were directors at the beginning of the two-year period shall be deemed
to
have also been a director at the beginning of such period;
or
|
| (iv) |
Sale
of Assets:
The Company or the Bank sells to a third party all or substantially
all of
its assets.
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(c) Executive
shall not have the right to receive termination benefits pursuant to Section
3
hereof upon termination for Cause. The term “Cause” shall mean termination
because of Executive’s personal dishonesty, incompetence, willful misconduct,
any breach of fiduciary duty involving personal profit, intentional failure
to
perform stated duties, willful violation of any law, rule, regulation (other
than traffic violations or similar offenses), final cease and desist order,
or
any material breach of any provision of this Agreement. Executive shall not
have
the right to receive compensation or other benefits for any period after
termination for Cause. During the period beginning on the date of the Notice
of
Termination for Cause pursuant to Section 4 hereof through the Date of
Termination, stock options granted to Executive under any stock option plan
shall not be exercisable nor shall any unvested stock awards
granted to Executive under any stock benefit plan of the Bank, the Company
or
any subsidiary or affiliate thereof, vest. At the Date of Termination, such
stock options and any such unvested stock awards shall become null and void
and
shall not be exercisable by or delivered to Executive at any time subsequent
to
such termination for Cause.
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3. Termination
Benefits.
(a) If
Executive’s employment is voluntarily (in accordance with Section 2(a) of
this Agreement) or involuntarily terminated within two (2) years of a Change
in
Control, Executive shall receive:
| (i) |
a
lump sum cash payment equal to two (2) times the Executive’s “base
amount,” within the meaning of Section 280G(b)(3) of the Internal Revenue
Code of 1986, as amended (the “Code”). Such payment shall be made not
later than five (5) days following Executive’s termination of employment
and shall be reduced, if necessary, to avoid an excess parachute
payment
as noted in paragraph (b) under this
Section 3.
|
| (ii) |
Continued
benefit coverage under all Association health and welfare plans which
Executive participated in as of the date of the Change in Control
(collectively, the “Employee Benefit Plans”) for a period of 24 months
following Executive’s termination of employment. Said coverage shall be
provided under the same terms and conditions in effect on the date
of
Executive’s termination of employment. Solely for purposes of benefits
continuation under the Employee Benefit Plans, Executive shall be
deemed
to be an active employee. To the extent that benefits required under
this
Section 3(a) cannot be provided under the terms of any Employee Benefit
Plan, the Bank shall enter into alternative arrangements that will
provide
Executive with comparable benefits.
|
(b) Notwithstanding
the preceding provisions of this Section 3, in no event shall the aggregate
payments or benefits to be made or afforded to Executive under said paragraphs
or otherwise (the “Termination Benefits”) constitute an “excess parachute
payment” under Section 280G of the Code or any successor thereto, and to avoid
such a result, Termination Benefits will be reduced, if necessary, to an amount
(the “Non-Triggering Amount”), the value of which is one dollar ($1.00) less
than an amount equal to three (3) times Executive’s “base amount,” as determined
in accordance with said Section 280G. The allocation of the reduction required
hereby among the Termination Benefits provided by this Section 3 shall be
determined by Executive.
4. Notice
of Termination.
(a) Any
purported termination by the Bank or by Executive shall be communicated by
Notice of Termination to the other party hereto. For purposes of this Agreement,
a “Notice of Termination” shall mean a written notice which shall indicate the
specific termination provision in this Agreement relied upon and shall set
forth
in detail the facts and circumstances claimed to provide a basis for termination
of Executive’s employment under the provision so indicated.
(b) “Date
of
Termination” shall mean the date specified in the Notice of Termination (which,
in the case of a termination for Cause, shall not be less than thirty (30)
days
from the date such Notice of Termination is given).
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5. Source
of Payments.
All
payments provided in this Agreement shall be timely paid in cash or check from
the general funds of the Bank. The Company, however, unconditionally guarantees
payment and provision of all amounts and benefits due hereunder to Executive
and, if such amounts and benefits due from the Bank are not timely paid or
provided by the Bank, such amounts and benefits shall be paid or provided by
the
Company.
6. Effect
on Prior Agreements and Existing Benefit Plans.
This
Agreement contains the entire understanding between the parties hereto and
supersedes any prior agreement between the Bank and Executive, except that
this
Agreement shall not affect or operate to reduce any benefit or compensation
inuring to Executive of a kind elsewhere provided. No provision of this
Agreement shall be interpreted to mean that Executive is subject to receiving
fewer benefits than those available to him without reference to this Agreement.
Nothing in this Agreement shall confer upon Executive the right to continue
in
the employ of the Bank or shall impose on the Bank any obligation to employ
or
retain Executive in its employ for any period.
7. No
Attachment.
(a) Except
as
required by law, no right to receive payments under this Agreement shall be
subject to anticipation, commutation, alienation, sale, assignment, encumbrance,
charge, pledge, or hypothecation or to execution, attachment, levy or similar
process or assignment by operation of law, and any attempt, voluntary or
involuntary, to affect any such action shall be null, void and of no
effect.
(b) This
Agreement shall be binding upon, and inure to the benefit of, Executive, the
Bank and their respective successors and assigns.
8. Modification
and Waiver.
(a) This
Agreement may not be modified or amended except by an instrument in writing
signed by the parties hereto.
(b) No
term
or condition of this Agreement shall be deemed to have been waived, nor shall
there be any estoppel against the enforcement of any provision of this
Agreement, except by written instrument of the party charged with such waiver
or
estoppel. No such written waiver shall be deemed a continuing waiver unless
specifically stated therein, and each such waiver shall operate only as to
the
specific term or condition waived and shall not constitute a waiver of such
term
or condition for the future or as to any act other than that specifically
waived.
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9. Severability.
If,
for
any reason, any provision of this Agreement, or any part of any provision,
is
held invalid, such invalidity shall not affect any other provision of this
Agreement or any part of such provision not held so invalid, and each such
other
provision and part thereof shall to the full extent consistent with law continue
in full force and effect.
10. Headings
for Reference Only.
The
headings of sections and paragraphs herein are included solely for convenience
of reference and shall not control the meaning or interpretation of any of
the
provisions of this Agreement. In addition, references herein to the masculine
shall apply to both the masculine and the feminine.
11. Governing
Law.
Except
to
the extent preempted by federal law, the validity, interpretation, performance,
and enforcement of this Agreement shall be governed by the laws of the State
of
Missouri, without regard to principles of conflicts of law of that State.
12. Arbitration.
Any
dispute or controversy arising under or in connection with this Agreement shall
be settled exclusively by arbitration, conducted before a panel of three
arbitrators sitting in a location selected by Executive within fifty (50) miles
from the location of the Bank, in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator’s award in any court having jurisdiction; provided, however, that
Executive shall be entitled to seek specific performance of his right to be
paid
until the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.
13. Payment
of Legal Fees.
All
reasonable legal fees paid or incurred by Executive pursuant to any dispute
or
question of interpretation relating to this Agreement shall be paid or
reimbursed by the Bank, only if Executive is successful pursuant to a legal
judgment, arbitration or settlement.
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14. Indemnification.
The
Company or the Bank shall provide Executive (including his heirs, executors
and
administrators) with coverage under a standard directors’ and officers’
liability insurance policy at its expense and shall indemnify Executive (and
his
heirs, executors and administrators) to the fullest extent permitted under
applicable law against all expenses and liabilities reasonably incurred by
him
in connection with or arising out of any action, suit or proceeding in which
he
may be involved by reason of his having been a director or officer of the
Company or the Bank (whether or not he continues to be a director or officer
at
the time of incurring such expenses or liabilities), such expenses and
liabilities to include, but not be limited to, judgments, court costs,
attorneys’ fees and the cost of reasonable settlements.
15. Successors
to the Bank and the Company.
The
Bank
and the Company shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all of the business or assets of the Bank or the Company,
expressly and unconditionally to assume and agree to perform the Bank’s and the
Company’s obligations under this Agreement, in the same manner and to the same
extent that the Bank and the Company would be required to perform if no such
succession or assignment had taken place.
16. Required
Provisions.
In the
event any of the foregoing provisions of this Section 16 are in conflict with
the terms of this Agreement, this Section 16 shall prevail.
(a) The
Bank’s board of directors may terminate Executive’s employment at any time, but
any termination by the Bank, other than Termination for Cause, shall not
prejudice Executive’s right to compensation or other benefits under this
Agreement. Executive shall not have the right to receive compensation or
other
benefits for any period after Termination for Cause as defined in Section
4(b)
hereinabove.
(b) If
Executive is suspended from office and/or temporarily prohibited from
participating in the conduct of the Bank’s affairs by a notice served under
Section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C.
§1818(e)(3) or (g)(1); the Bank’s obligations under this contract shall be
suspended as of the date of service, unless stayed by appropriate proceedings.
If the charges in the notice are dismissed, the Bank may in its discretion:
(i)
pay Executive all or part of the compensation withheld while their contract
obligations were suspended; and (ii) reinstate (in whole or in part) any
of the
obligations which were suspended.
(c) If
Executive is removed and/or permanently prohibited from participating in
the
conduct of the Bank’s affairs by an order issued under Section 8(e)(4) or
8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. §1818(e)(4) or (g)(1),
all obligations of the Bank under this contract shall terminate as of the
effective date of the order, but vested rights of the contracting parties
shall
not be affected.
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(d) If
the
Bank is in default as defined in Section 3(x)(1) of the Federal Deposit
Insurance Act, 12 U.S.C. §1813(x)(1) all obligations of the Bank under this
contract shall terminate as of the date of default, but this paragraph shall
not
affect any vested rights of the contracting parties.
(e) All
obligations under this contract shall be terminated, except to the extent
determined that continuation of the contract is necessary for the continued
operation of the Bank: (i) by the Director of the OTS (or his designee),
at the
time the FDIC enters into an agreement to provide assistance to or on behalf
of
the Bank under the authority contained in Section 13(c) of the Federal Deposit
Insurance Act, 12 U.S.C. §1823(c); or (ii) by the Director of the OTS (or his
designee) at the time the Director (or his designee) approves a supervisory
merger to resolve problems related to the operations of the Bank or when
the
Bank is determined by the Director to be in an unsafe or unsound condition.
Any
rights of the parties that have already vested, however, shall not be affected
by such action.
(f) Any
payments made to employees pursuant to this Agreement, or otherwise, are
subject
to and conditioned upon their compliance with 12 U.S.C. §1828(k) and FDIC
regulation 12 C.F.R. Part 359, Golden Parachute and Indemnification Payments.
(g) Notwithstanding
anything in this Agreement to the contrary, if the Company or the Bank in
good
faith determines that amounts that, as of the effective date of the Executive’s
termination of employment are or may become payable to the Executive upon
termination of his employment hereunder are required to be suspended or delayed
for six (6) months in order to satisfy the requirements of Section 409A of
the
Internal Revenue Code, then the Company or the Bank will so advise the
Executive, and any such payments shall be suspended and accrued for six months,
whereupon they shall be paid to the Executive in a lump sum (together with
interest thereon at the then-prevailing prime rate).
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SIGNATURES
IN
WITNESS WHEREOF, BankLiberty and Liberty Bancorp, Inc. have caused this
Agreement to be executed and their seals to be affixed hereunto by their duly
authorized officers, and Executive has signed this Agreement, on the 16 day
of
August, 2006.
| ATTEST: | BANKLIBERTY | ||
| /s/ Xxxxxx X. Xxxxxx | By: | /s/ Xxxxxx X. O’Dell | |
|
Corporate Secretary |
For the Entire Board of Directors |
||
| ATTEST: |
LIBERTY
BANCORP, INC.
(Guarantor)
|
||
| /s/ Xxxxxx X. Xxxxxx | By: | /s/ Xxxxxx X. O’Dell | |
|
Corporate Secretary |
For the Entire Board of Directors |
||
[SEAL]
| WITNESS: | EXECUTIVE | ||
| /s/ Xxxxxx X. Xxxxxx | /s/ Xxxx X. Xxxxxxxx | ||
|
Corporate Secretary |
Xxxx X. Xxxxxxxx |
||
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