Exhibit 10.5
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS CHANGE IN CONTROL SEVERANCE AGREEMENT ("Agreement") entered into this 1/st/
day of January 2000 ("Effective Date"), by and between Guaranty Federal Savings
Bank (the "Bank") and Xxxxx X. Xxxxxxxxx (the "Executive"). WHEREAS, the
Executive is currently employed by the Bank as President and Chief Executive
Officer and is experienced in the business of the Bank; and WHEREAS, the parties
desire by this writing to set forth the rights and responsibilities of the Bank
and Executive if the Bank should undergo a change in control (as defined
hereinafter in the Agreement) after the Effective Date.
NOW, THEREFORE, it is AGREED as follows:
1. Employment. The Executive is employed in the capacity as the President and
Chief Executive Officer of the Bank. The Executive shall render such
administrative and management services to the Bank and Guaranty Federal
Bancshares, Inc. ("Parent") as are currently rendered and as are customarily
performed by persons situated in a similar executive capacity. The Executive's
other duties shall be such as the Board of Directors for the Bank (the "Board of
Directors" or "Board") may from time to time reasonably direct, including normal
duties as an officer of the Bank and the Parent.
2. Term of Agreement. The term of this Agreement shall be for the period
commencing on the Effective Date and ending thirty-six (36) months thereafter
("Term").
3. Termination of Employment in Connection with or Subsequent to a Change in
Control. (a) Notwithstanding any provision herein to the contrary, in the event
of the involuntary termination of Executive's employment under this Agreement,
absent Just Cause, in connection with, or within twenty-four (24) months after,
any Change in Control of the Bank or Parent, Executive shall be paid an amount
equal to two (2.0) times the Executives "base amount" as defined in
Section 280G(b)(3) of the Internal Revenue Code of 1986 ("Code"), and the costs
associated with maintaining coverage under the Bank's medical and dental
insurance reimbursement plans similar to that in effect on the date of
termination of employment for a period of two years thereafter. Said sum shall
be paid, at the option of Executive, either in one (1) lump sum not later than
the date of such termination of employment or in periodic payments over the
next24 months, as if Executive's employment had not been terminated.
Notwithstanding the forgoing, all sums payable hereunder shall be reduced in
such manner and to such extent so that no such payments made hereunder when
aggregated with all other payments to be made to the Executive by the Bank or
the Parent shall be deemed an "excess parachute payment" in accordance with
Section 280G of the Code and be subject to the excise tax provided at
Section 4999(a) of the Code. The term "change in control" shall refer to (i) the
sale of all,
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or a material portion, of the assets of the Bank or the Parent; (ii) the merger
or recapitalization of the Bank or the Parent whereby the Bank or the Parent is
not the surviving entity; (iii) a change in control of the Bank or the Parent,
as otherwise defined or determined by the Office of Thrift Supervision or
regulations promulgated by it; or (iv) the acquisition, directly or indirectly,
of the beneficial ownership (within the meaning of that term as it is used in
Section 13(d) of the Securities Exchange Act of 1934 and the rules and
regulations promulgated thereunder) of twenty-five percent (25%) or more of the
outstanding voting securities of the Bank or the Parent by any person, trust,
entity or group. This limitation shall not apply to the purchase of shares by
underwriters in connection with a public offering of Bank or Parent stock or the
purchase of shares of up to 25% of any class of securities of the Bank or Parent
by a tax-qualified employee stock benefit plan which is exempt from the approval
requirements, set forth under 12 C.F.R.(S)574.3(c)(1)(vi) as now in effect or as
may hereafter be amended. The term "person" refers to an individual or a
corporation, partnership, trust, association, joint venture, pool, syndicate,
sole proprietorship, unincorporated organization or any other form of entity not
specifically listed herein. (b) Notwithstanding any other provision of this
Agreement to the contrary, Executive may voluntarily terminate his employment
within 24 months following a change in control of the Bank or Parent, and
Executive shall thereupon be entitled to receive the payment described in
Section 3(a) of this Agreement, upon the occurrence, or within 120 days
thereafter, of any of the following events, which have not been consented to in
advance by the Executive in writing:(i) if Executive would be required to move
his personal residence or perform his principal executive functions more than
thirty-five (35) miles from the Executive's primary office as of the signing of
this Agreement; (ii) if in the organizational structure of the Bank, Executive
would be required to report to a person or persons other than the President or
Executive Vice President of the Bank; (iii) if the Bank should fail to maintain
Executive's base compensation in effect as of the date of the Change in Control
and the existing employee benefits plan, including material fringe benefit,
stock option and retirement plans; (iv) if Executive would be assigned duties
and responsibilities other than those normally associated with his position as
referenced at Section1,herein; or (v) if Executive's responsibilities or
authority have in any way been materially diminished or reduced.
4. Other Changes in Employment Status. Except as provided for at Section 3,
herein, the Board of Directors may terminate the Executive's employment at any
time with our without Just Cause within its sole discretion. This Agreement
shall not be deemed to give Executive any right to be retained in the employment
or service of the Bank, or to interfere with the right of the Bank to terminate
the employment of the Executive at any time. The Executive shall have no right
to receive compensation or other benefits for any period after termination for
Just Cause. Termination for "Just Cause" shall include termination because of
the Executive's personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule or
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regulation (other than traffic violations or similar offenses) or final
cease-and-desist order, or material breach of any provision of the Agreement.
5. Regulatory Exclusions. (a) If the Executive is removed and/or permanently
prohibited from participating in the conduct of the Bank's affairs by an order
issued under Sections 8(e)(4) and 8(g)(1) of the Federal Deposit Insurance Act
("FDIA") (12U.S.C. 1818(e)(4) and (g)(1)), all obligations of the Bank under
this Agreement shall terminate, as of the effective date of the order, but the
vested rights of the contracting parties shall not be affected. (b) If the Bank
is in default (as defined in Section 3(x)(1) of FDIA) all obligations under this
Agreement shall terminate as of the date of default, but this paragraph shall
not affect any vested rights of the contracting parties. (c) All obligations
under this Agreement shall be terminated, except to the extent determined that
continuation of this Agreement is necessary for the continued operation of the
Bank: (i) by the Director of the Office of Thrift Supervision ("Director of
OTS"), or his or her designee, at the time that the Federal Deposit Insurance
Corporation ("FDIC") enters into an agreement to provide assistance to or on
behalf of the Bank under the authority contained in Section 13(c) of FDIA; or
(ii) by the Director of the OTS, or his or her designee, at the time that the
Director of the OTS, or his or her designee approves a supervisory merger to
resolve problems related to operation of the Bank or when the Bank is determined
by the Director of the OTS 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. (d) If the Executive is suspended and/or temporarily prohibited from
participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) or (g)(1) of the FDIA (12U.S.C. 1818(e)(3) and (g)(1)), the
Bank's obligations under the Agreement 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 within its discretion (i) pay the Executive all or
part of the compensation withheld while its contract obligations were suspended
and (ii) reinstate (in whole or in part) any of its obligations which were
suspended. (e) Notwithstanding anything herein to the contrary, any payments
made to the Executive pursuant to the Agreement, or otherwise, shall be subject
to and conditioned upon compliance with 12 U.S.C. (S)1828(k) and any regulations
promulgated thereunder.
6. Successors and Assigns. (a) This Agreement shall inure to the benefit of and
be binding upon any corporate or other successor of the Bank which shall
acquire, directly or indirectly, by merger, consolidation, purchase or
otherwise, all or substantially all of the assets or stock of the Bank or
Parent.
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(b) the Executive shall be precluded from assigning or delegating his rights or
duties hereunder without first obtaining the written consent of the Bank.
7. Amendments. No amendments or additions to this Agreement shall be binding
upon the parties hereto unless made in writing and signed by both parties,
except as herein otherwise specifically provided.
8. Applicable Law. This Agreement shall be governed by all respects whether as
to validity, construction, capacity, performance or otherwise, by the laws of
the State of Missouri, except to the extent that Federal law shall be deemed to
apply.
9. Severability. The provisions of this Agreement shall be deemed severable and
the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof.
10. Arbitration. Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be settled by arbitration in accordance
with the rules then in effect of the district office of the American Arbitration
Association ("AAA") nearest to the home office of the Bank, and judgment upon
the award rendered may be entered in any court having jurisdiction thereof,
except to the extent that the parties may otherwise reach a mutual settlement of
such issue. Further, the settlement of the dispute to be approved by the Board
of the Bank may include a provision for the reimbursement by the Bank to the
Executive for all reasonable costs and expenses, including reasonable attorneys'
fees, arising from such dispute, proceedings or actions, or the Board of the
Bank or the Parent may authorize such reimbursement of such reasonable costs and
expenses by separate action upon a written action and determination of the Board
following settlement of the dispute. Such reimbursement shall be paid within ten
(10) days of Executive furnishing to the Bank or Parent evidence, which may be
in the form, among other things, of a canceled check or receipt, of any costs or
expenses incurred by Executive.
11. Confidential Information. The Executive acknowledges that during his or her
employment he or she will learn and have access to confidential information
regarding the Bank and the Parent and its customers and businesses
("Confidential Information"). The Executive agrees and covenants not to disclose
or use for his or her own benefit, or the benefit of any other person or entity,
any such Confidential Information, unless or until the Bank or the Parent
consents to such disclosure or use or such information becomes common knowledge
in the industry or is otherwise legally in the public domain. The Executive
shall not knowingly disclose or reveal to any unauthorized person any
Confidential Information relating to the Bank, the Parent, or any subsidiaries
or affiliates, or to any of the businesses operated by them, and the Executive
confirms that such information constitutes the exclusive property of the Bank
and the Parent. The Executive shall not otherwise knowingly act or conduct
himself (a) to the material detriment of the Bank or the Parent, or its
subsidiaries, or affiliates, or (b) in a manner which is inimical or contrary to
the interests of the Bank or the Parent. Executive acknowledges and agrees thatt
he existence of this Agreement and its terms and conditions constitutes
Confidential Information of the Bank, and the Executive agrees not to disclose
the Agreement or its
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contents without the prior written consent of the Bank. Notwithstanding the
foregoing, the Bank reserves the right in its sole discretion to make disclosure
of this Agreement as it deems necessary or appropriate in compliance with its
regulatory reporting requirements. Notwithstanding anything herein to the
contrary, failure by the Executive to comply with the provisions of this Section
may result in the immediate termination of the Agreement within the sole
discretion of the Bank, disciplinary action against the Executive taken by the
Bank, including but not limited to the termination of employment of the
Executive for breach of the Agreement and the provisions of this Section, and
other remedies that may be available in law or in equity.
12. Entire Agreement. This Agreement together with any understanding or
modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement between the parties hereto. This Agreement supercedes any
prior written Employment Agreement or Severance Agreements between the Executive
and the Bank or the Parent.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
first hereinabove written.
Guaranty Federal Savings Bank
By /s/ Xxxx X. Xxxxxx
ATTEST:
/s/ E. Xxxxxx Xxxxxx
Secretary
WITNESS:
/s/ Xxxxx Xxxxxxx
/s/ Xxxxx X. Xxxxxxxxx
Executive
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[remainder of exhibit]
In addition to the accompanying change in control severance agreement with Xx.
Xxxxxxxxx, Guaranty Federal Savings Bank (a subsidiary of the registrant)
entered into virtually identical agreements as of the same date with eight
employees of the bank. These additional contracts provide for the payment of two
times the employee's "base amount" (as defined in 26 U.S.C. Section
280G(b)(3))in the event of a change in control. Between October 2000 and
February 2001, three additional officers entered into employment agreements with
the bank. These three agreements provide for a payment of 2.99 times the
employee's base amount in the event of a change in control.
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