EXHIBIT 10.9
CHANGE IN CONTROL AGREEMENT
This CHANGE IN CONTROL AGREEMENT (Agreement), effective as of January
1, 2000 (the Effective Date), by and between Southwest Bancorporation of Texas,
Inc., a Texas corporation (the Company), and John Drew (the Employee);
W I T N E S S E T H:
WHEREAS, the Employee is an officer of the Company or its wholly-owned
subsidiary, Southwest Bank of Texas National Association (the Bank) and has made
and/or is expected to make or continue to make major contributions to the
profitability, growth and financial strength of the Company and the Bank;
WHEREAS, references herein to the Employee's employment by the Company
shall also mean his or her employment by the Bank, and references herein to
payments of any nature to be made by the Company to the Employee shall mean that
either the Company will make such payments or it will cause the Bank to make
such payments to the Employee;
WHEREAS, the Company desires to assure itself of both present and
future continuity of management in the event of a Change in Control (as defined
hereafter) and desires to establish certain minimum compensation rights of its
key officers, including the Employee, applicable in the event of a Change in
Control;
WHEREAS, the Company wishes to ensure that its key officers are not
practically disabled from discharging their duties upon a Change in Control;
WHEREAS, this Agreement is not intended to alter materially the
compensation and benefits which the Employee could reasonably expect to receive
from the Company or the Bank absent a Change in Control and, accordingly,
although effective and binding as of the date hereof, this Agreement shall
become operative only upon the occurrence of a Change of Control; and
WHEREAS, the Employee is willing to render services to the Company and
the Bank on the terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, the Company and the Employee agree as follows:
1. OPERATION OF AGREEMENT.
a) This Agreement shall be effective and binding as of
the Effective Date, but, anything in this Agreement to the contrary
notwithstanding, this Agreement shall not be operative unless and until
there shall have occurred a Change in Control.
For purposes of this Agreement, a Change in Control shall have
occurred if at any time during the Term (as that term is hereafter
defined) any of the following events shall occur:
i) The Company is merged, consolidated or
reorganized into or with or sells all or substantially all of
its assets to another corporation or other legal person, and
as a result of such merger, consolidation, reorganization or
sale (A) less than a majority of the combined voting power of
the then-outstanding securities of such corporation or person
immediately after such transaction are held in the aggregate
by the holders of Voting Stock (as that term is hereinafter
defined) of the Company immediately prior to such transaction
and (B) it is intended that persons serving as Directors of
the Company immediately prior to the transaction will
constitute none of or less than a majority of the Directors of
the other corporation or legal person after consummation of
the transaction; or
ii) If during any one (1) year period,
individuals who at the beginning of any such period constitute
the Directors of the Company cease for any reason to
constitute at least a majority thereof, unless the election,
or the nomination for election by the Company's shareholders,
of each Director of the Company first elected during such
period was approved by a vote of at least two-thirds of the
Directors of the Company then still in office who were
Directors of the Company at the beginning of any such period.
b) Upon occurrence of a Change in Control at any time
during the Term, this Agreement shall become immediately operative.
c) The period during which this Agreement shall be in
effect (the Term) shall commence as of the date hereof and shall expire
as of the later of (i) the close of business on December 31, 2002, and
(ii) the expiration of the Period of Employment (as that term is
hereinafter defined); provided, however, that (A) commencing on
December 31, 2002, and the last day of each of the Company's Fiscal
Years thereafter, the Term of this Agreement shall automatically be
extended for an additional year unless, not later than the last day of
the immediately preceding September, the Company or the Employee shall
have given notice that it or he, as the case may be, does not wish to
have the Term extended and (B) subject to Section 9 hereof, if, prior
to a Change in Control, the Employee ceases for any reason to be an
employee of the Company, thereupon the Term shall be deemed to have
expired and this Agreement shall immediately terminate and be of no
further effect.
2. EMPLOYMENT; PERIOD OF EMPLOYMENT.
a) Subject to the terms and conditions of this
Agreement, upon the occurrence of a Change in Control, the Company
shall continue the Employee in its employ and the Employee shall remain
in the employ of the Company for the period set forth in Section 2(b)
hereof (the Period of Employment). Throughout the Period of Employment,
the Employee shall devote substantially all of his time during normal
business hours (subject to vacations, sick leave and other absences in
accordance with the policies of the Company as in effect for
senior executives immediately prior to the Change in Control) to the
business and affairs of the Company, but nothing in this Agreement
shall preclude the Employee from devoting reasonable periods of time
during normal business hours to (i) serving as a director, trustee or
member of or participant in any organization or business so long as
such organization or business is not engaged, directly or indirectly,
in the business of commercial banking in competition with the business
of the Company, (ii) engaging in charitable and community activities,
or (iii) managing his personal investments.
b) The Period of Employment shall commence on the date
of an occurrence of a Change in Control and, subject only to the
provisions of Section 4 hereof, shall continue until the earlier of (i)
the expiration of the second anniversary of the occurrence of the
Change in Control or (ii) the Employee's death.
3. COMPENSATION DURING PERIOD OF EMPLOYMENT.
a) Upon the occurrence of a Change in Control, the
Employee shall receive during the Period of Employment (i) annual base
salary at a rate not less than the Employees annual fixed or base
compensation payable monthly or otherwise as in effect for senior
executives of the Company immediately prior to the occurrence of a
Change in Control or such higher rate as may be determined from time to
time by the Board of Directors of the Company (the Board) or the
Compensation Committee thereof (the Committee) (which base salary at
such rate is herein referred to as Base Pay) and (ii) an annual cash
bonus in an amount determined for the Employee in accordance with the
Company's incentive compensation plan or plans in effect at the time of
the Change in Control or in accordance with any bonus, incentive,
profit-sharing, performance, discretionary pay or similar policy, plan,
program or arrangement of the Company or any successor thereto
providing benefits at least as great as the benefits payable thereunder
prior to the Change in Control (Incentive Pay); provided, however, that
nothing herein shall preclude a change in the mix between Base Pay and
Incentive Pay so long as the aggregate cash compensation received by
the Employee in any one calendar year is not reduced in connection
therewith or as a result thereof and, provided further, however, that
in no event shall any increase in the Employee's aggregate cash
compensation or any portion thereof in any way diminish any other
obligation of the Company under this Agreement.
b) For his service pursuant to Section 2(a) hereof,
during the Period of Employment the Employee shall, if and on the same
basis as he participated therein immediately prior to the Change in
Control, be a full participant in, and shall be entitled to the
perquisites, benefits and service credit for benefits as provided under
any and all employee retirement income and welfare benefit policies,
plans, programs or arrangements in which senior executives of the
Company participate, including without limitation any stock option,
stock purchase, stock appreciation, savings, pension, supplemental
executive retirement or other retirement income or welfare benefit,
deferred compensation, incentive compensation, group and/or executive
life, accident, health, dental, medical/hospital or other insurance
(whether funded by actual insurance or self-insured by the Company),
disability, salary continuation, expense reimbursement and other
employee benefit policies, plans, programs or arrangements that may now
exist or any equivalent successor policies, plans,
programs or arrangements that may be adopted hereafter by the Company
providing perquisites, benefits and service credit for benefits at
least as great as are payable thereunder prior to a Change in
Control(collectively, Employee Benefits); provided, however, that the
Employee's rights thereunder shall be governed by the terms thereof and
shall not be enlarged hereunder or otherwise affected hereby. Subject
to the proviso in the immediately preceding sentence, if and to the
extent such perquisites, benefits or service credit for benefits are
not payable or provided under any such policy, plan, program or
arrangement as a result of the amendment or termination thereof, then
the Company shall itself pay or provide therefor. Nothing in this
Agreement shall preclude improvement or enhancement of any such
Employee Benefits, provided that no such improvement shall in any way
diminish any other obligation of the Company under this Agreement.
c) The Company has determined that the amounts payable
pursuant to this Section 3 constitute reasonable compensation.
Accordingly, notwithstanding any other provision hereof, unless such
action would be expressly prohibited by applicable law, if any amount
paid or payable pursuant to this Section 3 is subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the Code), the Company will pay to the Employee an additional
amount in cash equal to the amount necessary to cause the aggregate
remuneration received by the Employee under this Section 3, including
such additional cash payment (net of all federal, state and local
income taxes and all taxes payable as the result of the application of
Sections 280G and 4999 of the Code) to be equal to the aggregate
remuneration the Employee would have received under this Section 3,
excluding such additional payment (net of all federal, state and local
income taxes), as if Sections 280G and 4999 of the Code (and any
successor provisions thereto) had not been enacted into law.
4. TERMINATION FOLLOWING A CHANGE IN CONTROL.
a) In the event of the occurrence of a Change in
Control, this Agreement may be terminated by the Company during the
Period of Employment only upon the occurrence of one or more of the
following events:
i) If the Employee is unable to perform the
essential functions of his job (with or without reasonable
accommodation) because he has become permanently disabled
within the meaning of, and actually begins to receive
disability benefits pursuant to, the long-term disability plan
in effect for senior executives or, if applicable, employees
of the Company immediately prior to the Change in Control; or
ii) For Cause, which for purposes of this
Agreement shall mean that, prior to any termination pursuant
to Section 4(b) hereof, the Employee shall have committed:
A) Gross negligence or willful
misconduct in connection with his duties or in the
course of his employment with the Company;
B) an act of fraud, embezzlement or
theft in connection with his duties or in the course
of his employment with the Company;
C) intentional wrongful damage to
property of the Company;
D) intentional wrongful disclosure of
secret processes or confidential information of the
Company;
E) intentional wrongful engagement in
any Competitive Activity; or
F) an act leading to a conviction of a
felony or a misdemeanor involving moral turpitude.
For purposes of this Agreement, no act, or failure to act, on
the part of the Employee shall be deemed intentional if it was due
primarily to an error in judgment or negligence, but shall be deemed
intentional only if done, or omitted to be done, by the Employee not in
good faith and without reasonable belief that his action or omission
was in the best interest of the Company. Notwithstanding the foregoing,
the Employee shall not be deemed to have been terminated for Cause
hereunder unless and until there shall have been delivered to the
Employee a copy of a resolution duly adopted by the affirmative vote of
not less than three-quarters of the Board then in office at a meeting
of the Board called and held for such purpose (after reasonable notice
to the Employee and an opportunity for the Employee, together with his
counsel, to be heard before the Board), finding that, in the good faith
opinion of the Board, the Employee had committed an act set forth above
in this Section 4(a)(ii) and specifying the particulars thereof in
detail. Nothing herein shall limit the right of the Employee or his
beneficiaries to contest the validity or propriety of any such
determination.
b) in the event of the occurrence of a Change in
Control, this Agreement may be terminated by the Employee during the
Period of Employment with the right to benefits as provided in Section
5 hereof upon the occurrence of one or more of the following events:
i) Any termination by the Company of the
employment of the Employee for any reason other than for Cause
or as a result of the death of the Employee or by reason of
the Employee's disability and the actual receipt of disability
benefits in accordance with Section 4(a)(i) hereof; or
ii) Termination by the Employee of his
employment with the Company upon the occurrence of any of the
following events:
A) A reduction in the aggregate of the
Employee's Base Pay and Incentive Pay received from
the Company, or the termination of the Employee's
rights to any Employee Benefits to which he was
entitled immediately prior to the Change in Control
or a reduction in scope or value thereof without the
prior written consent of the Employee, any of which
is not
remedied within 10 calendar days after receipt by the
Company of written notice from the Employee of such
change, reduction or termination, as the case may be;
B) The liquidation, dissolution,
merger, consolidation or reorganization of the
Company or transfer of all or a significant portion
of its business and/or assets, unless the successor
or successors (by liquidation, merger, consolidation,
reorganization or otherwise) to which all or a
significant portion of its business and/or assets
have been transferred (directly or by operation of
law) shall have assumed all duties and obligations of
the Company under this Agreement pursuant to Section
11 hereof;
C) The Company requires the Employee
to have his principal location of work changed to any
location which is in excess of 50 miles from the
location thereof immediately prior to the Change of
Control or to travel away from his office in the
course of discharging his responsibilities or duties
hereunder significantly more (in terms of either
consecutive days or aggregate days in any calendar
year) than was required of him prior to the Change of
Control without, in either case, his prior consent;
or
D) Any material breach of this
Agreement by the Company or any successor thereto.
c) A termination by the Company pursuant to Section 4(a)
hereof or by the Employee pursuant to Section 4(b) hereof shall not
affect any rights which the Employee may have pursuant to any
agreement, policy, plan, program or arrangement of the Company
providing Employee Benefits, which rights shall be governed by the
terms thereof. If this Agreement or the employment of the Employee is
terminated under circumstances in which the Employee is not entitled to
any payments under Sections 3 or 5 hereof, the Employee shall have no
further obligation or liability to the Company hereunder with respect
to his prior or any future employment by the Company.
5. SEVERANCE COMPENSATION.
a) If, following the occurrence of a Change in Control,
the Company shall terminate the Employee's employment during the Period
of Employment other than pursuant to Section 4(a) hereof, or if the
Employee shall terminate his employment pursuant to Section 4(b)
hereof, the Company shall pay to the Employee the amount specified in
Section 5(a)(i) hereof within ten business days after the date (the
Termination Date) that the Employee's employment is terminated (the
effective date of which shall be the date of termination, or such other
date that may be specified by the Employee if the termination is
pursuant to Section 4(b) hereof):
i) In lieu of any further payments to the
Employee for periods subsequent to the Termination Date, but
without affecting the rights of the Employee referred to in
Section 5(b) hereof, a lump sum payment (the Severance
Payment) in
an amount equal to the present value (using a discount rate
required to be utilized for purposes of computations under
Section 280G of the Code or any successor provision thereto,
or if no such rate is so required to be used, a rate equal to
the then-applicable interest rate prescribed by the Pension
Benefit Guarantee Corporation for benefit valuations in
connection with non-multiemployer pension plan terminations
assuming the immediate commencement of benefit payments (the
Discount Rate) of the sum of (A) the Base Pay (at the highest
rate in effect during the Term prior to the Termination Date)
for one year, plus (B) the Incentive Pay for one year (based
upon the greatest amount of Incentive Pay paid or payable to
the Employee for any year during the three calendar years
preceding the year in which the Termination Date occurs);
provided, however, that in no event will the present value (as
determined under Section 280G of the Code or any successor
provision thereto) of the amount otherwise payable hereunder,
when added to the present value (as determined under Section
280G of the Code or any successor provision thereto) of any
other parachute payments (as that term is defined in Section
280G of the Code (without regard to Section 280G(b)(2)(A)(ii)
thereof) or any successor provision thereto) from the Company,
exceed an amount (the A299% Amount) equal to 299% of the
Employee's base amount (as that term is defined in Section
280G of the Code or any successor provision thereto) and if
the amount otherwise payable hereunder would exceed the 299%
Amount, the Severance Payment shall be reduced to the extent
necessary so that the aggregate present value determined in
the previous clause does not exceed the 299% Amount.
ii) The determination of whether any amount
otherwise payable under Section 5(a)(i) causes the 299% Amount
to be exceeded shall be made, if requested by the Employee or
the Company, by tax counsel selected by the Company and
reasonably acceptable to the Employee. The costs of obtaining
such determination shall be borne by the Company. The fact
that the Employee shall have his right to the Severance
Payment reduced as a result of the existence of the
limitations contained in this Section 5(a) shall not limit or
otherwise affect any rights of the Employee to any Employee
Benefit, or other right arising other than pursuant to this
Agreement. Without limiting the generality of the foregoing,
upon the Employee's termination of employment as provided in
this Section 5, the Company shall pay over to him all vested
benefits to which he is entitled under and in accordance with
the terms of the Company's employee savings, stock ownership,
supplemental executive retirement and similar Plans in the
event such payments are not otherwise made in accordance with
the terms of such plans.
iii) Except to the extent that the payments or
benefits pursuant to this Section 5(a)(iii) would result in a
reduction of the amount of the Severance Payment because they
would exceed the 299% Amount, (A) for the remainder of the
Period of Employment the Company shall arrange to provide the
Employee with Employee Benefits substantially similar to those
which the Employee was receiving or entitled to receive
immediately prior to the Termination Date (and if and to the
extent that such benefits shall not or cannot be paid or
provided under any policy, plan, program or arrangement of the
Company solely due to the fact that the Employee is no longer
an officer or employee of the Company, then the Company shall
itself pay or provide for the payment to the Employee, his
dependents and beneficiaries, such Employee Benefits) and (B)
without limiting the generality of the foregoing, the
remainder of the Period of Employment shall be considered
service with the Company for the purpose of service credits
under the Company's retirement income, supplemental executive
retirement and other benefit plans of the Company applicable
to the Employee or his beneficiaries immediately prior to the
Termination Date. Without otherwise limiting the purposes or
effect of Section 6 hereof, Employee Benefits payable to the
Employee pursuant to this Section 5(a)(iii) by reason of any
welfare benefit plan of the Company (as the term welfare
benefit plan is defined in Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended) shall be
reduced to the extent comparable welfare benefits are actually
received by the Employee from another employer during such
period following the Employee's Termination Date until the
expiration of the Period of Employment.
iv) Notwithstanding any provision of the Section
5(a) to the contrary, in the event the benefits intended to be
provided to the Employee pursuant to Section 5(a)(iii) hereof
are required to be reduced in whole or in part because the
value of such Employee Benefits, when added to the amount of
the Severance Payment under Section 5(a)(i), would exceed 299%
Amount, the Employee shall have the option to elect to
receive, in lieu of all or a portion of the Severance Payment
provided in Section 5(a)(i) hereof, one or more Employee
Benefits, provided that (A) prior to the receipt of any
payment under Section 5(a)(i) hereof, the Employee notifies
the Company of the Employee Benefit or Employee Benefits so
elected to be received, and (B) in no event shall the
aggregate present value of the payments in the nature of
compensation (as that phrase is used in Section 280G of the
Code) received by the Employee as a result of the receipt of
such Employee Benefits, when added to the remaining portion of
the Severance Payment, if any, to be received by the Employee,
exceed the 299% Amount.
v) In addition to all other compensation due to
the Employee, the following shall occur immediately following
the occurrence of a Change in Control:
A) all Company stock options held by
the Employee prior to a Change in Control shall
become fully exercisable, regardless of whether or
not the vesting conditions set forth in the relevant
stock option agreements have been satisfied in full;
and
B) all restrictions on any restricted
Company stock granted to the Employee prior to a
Change in Control shall be removed and the stock
shall be freely transferable, regardless of whether
the conditions set forth in the relevant restricted
stock agreements have been satisfied in full.
b) Upon written notice given by the Employee to the Company prior
to the receipt of any payment pursuant to Section 5(a) hereof, the Employee, at
his sole option, without reduction to reflect the present value of such amounts
as aforesaid, may elect to have all or any of the Severance
Payment payable pursuant to Section 5(a)(i) hereof paid to him on a quarterly or
monthly basis during the remainder of the Period of Employment.
c) There shall be no right of set-off or counterclaim in respect
of any claim, debt or obligation against any payment to or benefit for the
Employee provided for in this Agreement.
d) Without limiting the rights of the Employee at law or in
equity, if the Company fails to make any payment required to be made hereunder
on a timely basis, the Company shall pay interest on the amount thereof at an
annualized rate of interest equal to the then-applicable Discount Rate or, if
lesser, the highest rate allowed by applicable usury laws.
6. NO MITIGATION OBLIGATION. The Company hereby acknowledges that
it will be difficult, and may be impossible, for the Employee to find reasonably
comparable employment following the Termination Date. Accordingly, the parties
hereto expressly agree that the payment of the severance compensation by the
Company to the Employee in accordance with the terms of this Agreement will be
liquidated damages, and that the Employee shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise, nor shall any profits, income, earnings or other benefits from any
source whatsoever create any mitigation, offset, reduction or any other
obligation on the part of the Employee hereunder or otherwise, except as
expressly provided in Section 5(a)(iii) hereof.
7. [Reserved]
8. LEGAL FEES AND EXPENSES. In the event of a breach of this
Agreement by the Company, it is the intent of the Company that the Employee not
be required to incur the expenses associated with the enforcement of his rights
under this Agreement by litigation or other legal action because the cost and
expense thereof would substantially detract from the benefits intended to be
extended to the Employee hereunder. Accordingly, if the Company fails to comply
with any of its obligations under this Agreement or in the event that the
Company or any other person takes any action to declare this Agreement void or
unenforceable, or institutes any litigation designed to deny, or to recover
from, the Employee the benefits intended to be provided to the Employee
hereunder, the Company irrevocably authorizes the Employee from time to time to
retain counsel of his choice, at the expense of the Company as hereafter
provided, to represent the Employee in connection with the initiation or defense
of any litigation or other legal action, whether by or against the Company or
any Director, officer, shareholder or other person affiliated with the Company,
in any jurisdiction. Notwithstanding any existing or prior attorney-client
relationship between the Company and such counsel, the Company irrevocably
consents to the Employee's entering into an attorney-client relationship with
such counsel (other than Vinson & Elkins L.L.P.), and in that connection the
Company and the Employee agree that a confidential relationship shall exist
between the Employee and such counsel. The Company shall pay or cause to be paid
and shall be solely responsible for any and all attorneys and related fees and
expenses incurred by the Employee as a result of the Company's failure to
perform this Agreement or any provision thereof or as a result of the Company or
any person contesting the validity or enforceability of this Agreement or any
provision thereof as
aforesaid. If the Company should prevail in any litigation regarding this
Agreement, however, the Company shall not be responsible for any attorneys and
related fees and expenses incurred by Employee in connection with such
litigation.
9. EMPLOYMENT RIGHTS. Nothing expressed or implied in this
Agreement shall create any right or duty on the part of the Company or the
Employee to have the Employee remain in the employment of the Company prior to
any Change in Control; provided, however, that any termination of employment of
the Employee or removal of the Employee as an Officer of the Company following
the commencement of any discussion with a third person that ultimately results
in a Change in Control shall be deemed to be a termination or removal of the
Employee after a Change in Control for purposes of this Agreement.
10. WITHHOLDING OF TAXES. The Company may withhold from any
amounts payable under this Agreement all federal, state, city or other taxes as
shall be required pursuant to any law or government regulation or ruling.
11. SUCCESSORS AND BINDING AGREEMENT.
a) The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation, reorganization
or otherwise) to all or substantially all of the business and/or assets
of the Company to execute an agreement pursuant to which the successor
expressly assumes all of the liabilities and obligations of the Company
hereunder and agrees to perform this Agreement in the same manner and
to the same extent the Company would be required to perform if no such
succession had taken place. This Agreement shall be binding upon and
inure to the benefit of the Company and any successor to the Company,
including without limitation any persons acquiring directly or
indirectly all or substantially all of the business and/or assets of
the Company whether by purchase, merger, consolidation, reorganization
or otherwise (and such successor shall thereafter be deemed the Company
for the purposes of this Agreement), but shall not otherwise be
assignable, transferable or delegable by the Company.
b) This Agreement shall inure to the benefit of and be
enforceable by the Employee's personal or legal representatives,
executors, administrators, successors, heirs, distributees and/or
legatees.
c) This Agreement is personal in nature and neither of
the parties hereto shall, without the consent of the other, assign,
transfer or delegate this Agreement or any rights or obligations
hereunder except as expressly provided in Section 11(a) hereof. Without
limiting the generality of the foregoing, the Employee's right to
receive payments hereunder shall not be assignable, transferable or
delegable, whether by pledge, creation of a security interest or
otherwise, other than by a transfer by the Employee's will or by the
laws of descent and distribution and, in the event of any attempted
assignment or transfer contrary to this Section 11(c), the Company
shall have no liability to pay any amount so attempted to be assigned,
transferred or delegated.
d) The Company and the Employee recognize that each
Party will have no adequate remedy at law for breach by the other of
any of the agreements contained herein and, in the event of any such
breach, the Company and the Employee hereby agree and consent that the
other shall be entitled to a decree of specific performance, mandamus
or other appropriate remedy to enforce performance of this Agreement.
12. NOTICE. For all purposes of this Agreement, all communications
provided for herein shall be in writing and shall be deemed to have been duly
given when delivered or three business days after having been mailed by United
States registered or certified mail, return receipt requested, postage prepaid,
addressed to the Company (to the attention of the Secretary of the Company) at
its principal executive office and to the Employee at his principal residence,
or to such other address as any party may have furnished to the other in writing
and in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
13. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Texas, without giving effect to the principles of conflict of laws of such
State.
14. VALIDITY. If any provision of this Agreement or the
application of any provision hereof to any person or circumstances is held
invalid, unenforceable or otherwise illegal, the remainder of this Agreement and
the application of such provision to any other person or circumstances shall not
be affected, and the provision so held to be invalid, unenforceable or otherwise
illegal shall be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid and legal.
15. MISCELLANEOUS. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Employee and the Company. No waiver by either
party hereto at any time of any breach by the other party hereto or compliance
with any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, expressed or implied with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement.
16. PRIOR AGREEMENTS. This Agreement is voluntarily entered into
and supersedes and takes the place of any prior change in control, severance or
employment agreements between the parties hereto. The parties hereto expressly
agree and hereby declare that any and all prior change in control, severance or
employment agreements between the parties are terminated and of no force or
effect.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
SOUTHWEST BANCORPORATION OF TEXAS, INC.
By: /s/ Paul B. Murphy
---------------------------------------
EMPLOYEE:
/s/ John Drew
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CHANGE IN CONTROL AGREEMENT
This CHANGE IN CONTROL AGREEMENT (Agreement), effective as of January
1, 2000 (the Effective Date), by and between Southwest Bancorporation of Texas,
Inc., a Texas corporation (the Company), and Debra Innes (the Employee);
W I T N E S S E T H:
WHEREAS, the Employee is an officer of the Company or its wholly-owned
subsidiary, Southwest Bank of Texas National Association (the Bank) and has made
and/or is expected to make or continue to make major contributions to the
profitability, growth and financial strength of the Company and the Bank;
WHEREAS, references herein to the Employee's employment by the Company
shall also mean his or her employment by the Bank, and references herein to
payments of any nature to be made by the Company to the Employee shall mean that
either the Company will make such payments or it will cause the Bank to make
such payments to the Employee;
WHEREAS, the Company desires to assure itself of both present and
future continuity of management in the event of a Change in Control (as defined
hereafter) and desires to establish certain minimum compensation rights of its
key officers, including the Employee, applicable in the event of a Change in
Control;
WHEREAS, the Company wishes to ensure that its key officers are not
practically disabled from discharging their duties upon a Change in Control;
WHEREAS, this Agreement is not intended to alter materially the
compensation and benefits which the Employee could reasonably expect to receive
from the Company or the Bank absent a Change in Control and, accordingly,
although effective and binding as of the date hereof, this Agreement shall
become operative only upon the occurrence of a Change of Control; and
WHEREAS, the Employee is willing to render services to the Company and
the Bank on the terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, the Company and the Employee agree as follows:
1. OPERATION OF AGREEMENT.
a) This Agreement shall be effective and binding as of
the Effective Date, but, anything in this Agreement to the contrary
notwithstanding, this Agreement shall not be operative unless and until
there shall have occurred a Change in Control.
For purposes of this Agreement, a Change in Control shall have
occurred if at any time during the Term (as that term is hereafter
defined) any of the following events shall occur:
i) The Company is merged, consolidated or
reorganized into or with or sells all or substantially all of
its assets to another corporation or other legal person, and
as a result of such merger, consolidation, reorganization or
sale (A) less than a majority of the combined voting power of
the then-outstanding securities of such corporation or person
immediately after such transaction are held in the aggregate
by the holders of Voting Stock (as that term is hereinafter
defined) of the Company immediately prior to such transaction
and (B) it is intended that persons serving as Directors of
the Company immediately prior to the transaction will
constitute none of or less than a majority of the Directors of
the other corporation or legal person after consummation of
the transaction; or
ii) If during any one (1) year period,
individuals who at the beginning of any such period constitute
the Directors of the Company cease for any reason to
constitute at least a majority thereof, unless the election,
or the nomination for election by the Company's shareholders,
of each Director of the Company first elected during such
period was approved by a vote of at least two-thirds of the
Directors of the Company then still in office who were
Directors of the Company at the beginning of any such period.
b) Upon occurrence of a Change in Control at any time
during the Term, this Agreement shall become immediately operative.
c) The period during which this Agreement shall be in
effect (the Term) shall commence as of the date hereof and shall expire
as of the later of (i) the close of business on December 31, 2002, and
(ii) the expiration of the Period of Employment (as that term is
hereinafter defined); provided, however, that (A) commencing on
December 31, 2002, and the last day of each of the Company's Fiscal
Years thereafter, the Term of this Agreement shall automatically be
extended for an additional year unless, not later than the last day of
the immediately preceding September, the Company or the Employee shall
have given notice that it or he, as the case may be, does not wish to
have the Term extended and (B) subject to Section 9 hereof, if, prior
to a Change in Control, the Employee ceases for any reason to be an
employee of the Company, thereupon the Term shall be deemed to have
expired and this Agreement shall immediately terminate and be of no
further effect.
2. EMPLOYMENT; PERIOD OF EMPLOYMENT.
a) Subject to the terms and conditions of this
Agreement, upon the occurrence of a Change in Control, the Company
shall continue the Employee in its employ and the Employee shall remain
in the employ of the Company for the period set forth in Section 2(b)
hereof (the Period of Employment). Throughout the Period of Employment,
the Employee shall devote substantially all of his time during normal
business hours (subject to vacations, sick leave and other absences in
accordance with the policies of the Company as in effect for
senior executives immediately prior to the Change in Control) to the
business and affairs of the Company, but nothing in this Agreement
shall preclude the Employee from devoting reasonable periods of time
during normal business hours to (i) serving as a director, trustee or
member of or participant in any organization or business so long as
such organization or business is not engaged, directly or indirectly,
in the business of commercial banking in competition with the business
of the Company, (ii) engaging in charitable and community activities,
or (iii) managing his personal investments.
b) The Period of Employment shall commence on the date
of an occurrence of a Change in Control and, subject only to the
provisions of Section 4 hereof, shall continue until the earlier of (i)
the expiration of the second anniversary of the occurrence of the
Change in Control or (ii) the Employee's death.
3. COMPENSATION DURING PERIOD OF EMPLOYMENT.
a) Upon the occurrence of a Change in Control, the
Employee shall receive during the Period of Employment (i) annual base
salary at a rate not less than the Employees annual fixed or base
compensation payable monthly or otherwise as in effect for senior
executives of the Company immediately prior to the occurrence of a
Change in Control or such higher rate as may be determined from time to
time by the Board of Directors of the Company (the Board) or the
Compensation Committee thereof (the Committee) (which base salary at
such rate is herein referred to as Base Pay) and (ii) an annual cash
bonus in an amount determined for the Employee in accordance with the
Company's incentive compensation plan or plans in effect at the time of
the Change in Control or in accordance with any bonus, incentive,
profit-sharing, performance, discretionary pay or similar policy, plan,
program or arrangement of the Company or any successor thereto
providing benefits at least as great as the benefits payable thereunder
prior to the Change in Control (Incentive Pay); provided, however, that
nothing herein shall preclude a change in the mix between Base Pay and
Incentive Pay so long as the aggregate cash compensation received by
the Employee in any one calendar year is not reduced in connection
therewith or as a result thereof and, provided further, however, that
in no event shall any increase in the Employee's aggregate cash
compensation or any portion thereof in any way diminish any other
obligation of the Company under this Agreement.
b) For his service pursuant to Section 2(a) hereof,
during the Period of Employment the Employee shall, if and on the same
basis as he participated therein immediately prior to the Change in
Control, be a full participant in, and shall be entitled to the
perquisites, benefits and service credit for benefits as provided under
any and all employee retirement income and welfare benefit policies,
plans, programs or arrangements in which senior executives of the
Company participate, including without limitation any stock option,
stock purchase, stock appreciation, savings, pension, supplemental
executive retirement or other retirement income or welfare benefit,
deferred compensation, incentive compensation, group and/or executive
life, accident, health, dental, medical/hospital or other insurance
(whether funded by actual insurance or self-insured by the Company),
disability, salary continuation, expense reimbursement and other
employee benefit policies, plans, programs or arrangements that may now
exist or any equivalent successor policies, plans,
programs or arrangements that may be adopted hereafter by the Company
providing perquisites, benefits and service credit for benefits at
least as great as are payable thereunder prior to a Change in
Control(collectively, Employee Benefits); provided, however, that the
Employee's rights thereunder shall be governed by the terms thereof and
shall not be enlarged hereunder or otherwise affected hereby. Subject
to the proviso in the immediately preceding sentence, if and to the
extent such perquisites, benefits or service credit for benefits are
not payable or provided under any such policy, plan, program or
arrangement as a result of the amendment or termination thereof, then
the Company shall itself pay or provide therefor. Nothing in this
Agreement shall preclude improvement or enhancement of any such
Employee Benefits, provided that no such improvement shall in any way
diminish any other obligation of the Company under this Agreement.
c) The Company has determined that the amounts payable
pursuant to this Section 3 constitute reasonable compensation.
Accordingly, notwithstanding any other provision hereof, unless such
action would be expressly prohibited by applicable law, if any amount
paid or payable pursuant to this Section 3 is subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the Code), the Company will pay to the Employee an additional
amount in cash equal to the amount necessary to cause the aggregate
remuneration received by the Employee under this Section 3, including
such additional cash payment (net of all federal, state and local
income taxes and all taxes payable as the result of the application of
Sections 280G and 4999 of the Code) to be equal to the aggregate
remuneration the Employee would have received under this Section 3,
excluding such additional payment (net of all federal, state and local
income taxes), as if Sections 280G and 4999 of the Code (and any
successor provisions thereto) had not been enacted into law.
4. TERMINATION FOLLOWING A CHANGE IN CONTROL.
a) In the event of the occurrence of a Change in
Control, this Agreement may be terminated by the Company during the
Period of Employment only upon the occurrence of one or more of the
following events:
i) If the Employee is unable to perform the
essential functions of his job (with or without reasonable
accommodation) because he has become permanently disabled
within the meaning of, and actually begins to receive
disability benefits pursuant to, the long-term disability plan
in effect for senior executives or, if applicable, employees
of the Company immediately prior to the Change in Control; or
ii) For Cause, which for purposes of this
Agreement shall mean that, prior to any termination pursuant
to Section 4(b) hereof, the Employee shall have committed:
A) Gross negligence or willful
misconduct in connection with his duties or in the
course of his employment with the Company;
B) an act of fraud, embezzlement or
theft in connection with his duties or in the course
of his employment with the Company;
C) intentional wrongful damage to
property of the Company;
D) intentional wrongful disclosure of
secret processes or confidential information of the
Company;
E) intentional wrongful engagement in
any Competitive Activity; or
F) an act leading to a conviction of a
felony or a misdemeanor involving moral turpitude.
For purposes of this Agreement, no act, or failure to act, on
the part of the Employee shall be deemed intentional if it was due
primarily to an error in judgment or negligence, but shall be deemed
intentional only if done, or omitted to be done, by the Employee not in
good faith and without reasonable belief that his action or omission
was in the best interest of the Company. Notwithstanding the foregoing,
the Employee shall not be deemed to have been terminated for Cause
hereunder unless and until there shall have been delivered to the
Employee a copy of a resolution duly adopted by the affirmative vote of
not less than three-quarters of the Board then in office at a meeting
of the Board called and held for such purpose (after reasonable notice
to the Employee and an opportunity for the Employee, together with his
counsel, to be heard before the Board), finding that, in the good faith
opinion of the Board, the Employee had committed an act set forth above
in this Section 4(a)(ii) and specifying the particulars thereof in
detail. Nothing herein shall limit the right of the Employee or his
beneficiaries to contest the validity or propriety of any such
determination.
b) in the event of the occurrence of a Change in
Control, this Agreement may be terminated by the Employee during the
Period of Employment with the right to benefits as provided in Section
5 hereof upon the occurrence of one or more of the following events:
i) Any termination by the Company of the
employment of the Employee for any reason other than for Cause
or as a result of the death of the Employee or by reason of
the Employee's disability and the actual receipt of disability
benefits in accordance with Section 4(a)(i) hereof; or
ii) Termination by the Employee of his
employment with the Company upon the occurrence of any of the
following events:
A) A reduction in the aggregate of the
Employee's Base Pay and Incentive Pay received from
the Company, or the termination of the Employee's
rights to any Employee Benefits to which he was
entitled immediately prior to the Change in Control
or a reduction in scope or value thereof without the
prior written consent of the Employee, any of which
is not
remedied within 10 calendar days after receipt by the
Company of written notice from the Employee of such
change, reduction or termination, as the case may be;
B) The liquidation, dissolution,
merger, consolidation or reorganization of the
Company or transfer of all or a significant portion
of its business and/or assets, unless the successor
or successors (by liquidation, merger, consolidation,
reorganization or otherwise) to which all or a
significant portion of its business and/or assets
have been transferred (directly or by operation of
law) shall have assumed all duties and obligations of
the Company under this Agreement pursuant to Section
11 hereof;
C) The Company requires the Employee
to have his principal location of work changed to any
location which is in excess of 50 miles from the
location thereof immediately prior to the Change of
Control or to travel away from his office in the
course of discharging his responsibilities or duties
hereunder significantly more (in terms of either
consecutive days or aggregate days in any calendar
year) than was required of him prior to the Change of
Control without, in either case, his prior consent;
or
D) Any material breach of this
Agreement by the Company or any successor thereto.
c) A termination by the Company pursuant to Section 4(a)
hereof or by the Employee pursuant to Section 4(b) hereof shall not
affect any rights which the Employee may have pursuant to any
agreement, policy, plan, program or arrangement of the Company
providing Employee Benefits, which rights shall be governed by the
terms thereof. If this Agreement or the employment of the Employee is
terminated under circumstances in which the Employee is not entitled to
any payments under Sections 3 or 5 hereof, the Employee shall have no
further obligation or liability to the Company hereunder with respect
to his prior or any future employment by the Company.
5. SEVERANCE COMPENSATION.
a) If, following the occurrence of a Change in Control,
the Company shall terminate the Employee's employment during the Period
of Employment other than pursuant to Section 4(a) hereof, or if the
Employee shall terminate his employment pursuant to Section 4(b)
hereof, the Company shall pay to the Employee the amount specified in
Section 5(a)(i) hereof within ten business days after the date (the
Termination Date) that the Employee's employment is terminated (the
effective date of which shall be the date of termination, or such other
date that may be specified by the Employee if the termination is
pursuant to Section 4(b) hereof):
i) In lieu of any further payments to the
Employee for periods subsequent to the Termination Date, but
without affecting the rights of the Employee referred to in
Section 5(b) hereof, a lump sum payment (the Severance
Payment) in
an amount equal to the present value (using a discount rate
required to be utilized for purposes of computations under
Section 280G of the Code or any successor provision thereto,
or if no such rate is so required to be used, a rate equal to
the then-applicable interest rate prescribed by the Pension
Benefit Guarantee Corporation for benefit valuations in
connection with non-multiemployer pension plan terminations
assuming the immediate commencement of benefit payments (the
Discount Rate) of the sum of (A) the Base Pay (at the highest
rate in effect during the Term prior to the Termination Date)
for one year, plus (B) the Incentive Pay for one year (based
upon the greatest amount of Incentive Pay paid or payable to
the Employee for any year during the three calendar years
preceding the year in which the Termination Date occurs);
provided, however, that in no event will the present value (as
determined under Section 280G of the Code or any successor
provision thereto) of the amount otherwise payable hereunder,
when added to the present value (as determined under Section
280G of the Code or any successor provision thereto) of any
other parachute payments (as that term is defined in Section
280G of the Code (without regard to Section 280G(b)(2)(A)(ii)
thereof) or any successor provision thereto) from the Company,
exceed an amount (the A299% Amount) equal to 299% of the
Employee's base amount (as that term is defined in Section
280G of the Code or any successor provision thereto) and if
the amount otherwise payable hereunder would exceed the 299%
Amount, the Severance Payment shall be reduced to the extent
necessary so that the aggregate present value determined in
the previous clause does not exceed the 299% Amount.
ii) The determination of whether any amount
otherwise payable under Section 5(a)(i) causes the 299% Amount
to be exceeded shall be made, if requested by the Employee or
the Company, by tax counsel selected by the Company and
reasonably acceptable to the Employee. The costs of obtaining
such determination shall be borne by the Company. The fact
that the Employee shall have his right to the Severance
Payment reduced as a result of the existence of the
limitations contained in this Section 5(a) shall not limit or
otherwise affect any rights of the Employee to any Employee
Benefit, or other right arising other than pursuant to this
Agreement. Without limiting the generality of the foregoing,
upon the Employee's termination of employment as provided in
this Section 5, the Company shall pay over to him all vested
benefits to which he is entitled under and in accordance with
the terms of the Company's employee savings, stock ownership,
supplemental executive retirement and similar Plans in the
event such payments are not otherwise made in accordance with
the terms of such plans.
iii) Except to the extent that the payments or
benefits pursuant to this Section 5(a)(iii) would result in a
reduction of the amount of the Severance Payment because they
would exceed the 299% Amount, (A) for the remainder of the
Period of Employment the Company shall arrange to provide the
Employee with Employee Benefits substantially similar to those
which the Employee was receiving or entitled to receive
immediately prior to the Termination Date (and if and to the
extent that such benefits shall not or cannot be paid or
provided under any policy, plan, program or arrangement of the
Company solely due to the fact that the Employee is no longer
an officer or employee of the Company, then the Company shall
itself pay or provide for the payment to the Employee, his
dependents and beneficiaries, such Employee Benefits) and (B)
without limiting the generality of the foregoing, the
remainder of the Period of Employment shall be considered
service with the Company for the purpose of service credits
under the Company's retirement income, supplemental executive
retirement and other benefit plans of the Company applicable
to the Employee or his beneficiaries immediately prior to the
Termination Date. Without otherwise limiting the purposes or
effect of Section 6 hereof, Employee Benefits payable to the
Employee pursuant to this Section 5(a)(iii) by reason of any
welfare benefit plan of the Company (as the term welfare
benefit plan is defined in Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended) shall be
reduced to the extent comparable welfare benefits are actually
received by the Employee from another employer during such
period following the Employee's Termination Date until the
expiration of the Period of Employment.
iv) Notwithstanding any provision of the Section
5(a) to the contrary, in the event the benefits intended to be
provided to the Employee pursuant to Section 5(a)(iii) hereof
are required to be reduced in whole or in part because the
value of such Employee Benefits, when added to the amount of
the Severance Payment under Section 5(a)(i), would exceed 299%
Amount, the Employee shall have the option to elect to
receive, in lieu of all or a portion of the Severance Payment
provided in Section 5(a)(i) hereof, one or more Employee
Benefits, provided that (A) prior to the receipt of any
payment under Section 5(a)(i) hereof, the Employee notifies
the Company of the Employee Benefit or Employee Benefits so
elected to be received, and (B) in no event shall the
aggregate present value of the payments in the nature of
compensation (as that phrase is used in Section 280G of the
Code) received by the Employee as a result of the receipt of
such Employee Benefits, when added to the remaining portion of
the Severance Payment, if any, to be received by the Employee,
exceed the 299% Amount.
v) In addition to all other compensation due to
the Employee, the following shall occur immediately following
the occurrence of a Change in Control:
A) all Company stock options held by
the Employee prior to a Change in Control shall
become fully exercisable, regardless of whether or
not the vesting conditions set forth in the relevant
stock option agreements have been satisfied in full;
and
B) all restrictions on any restricted
Company stock granted to the Employee prior to a
Change in Control shall be removed and the stock
shall be freely transferable, regardless of whether
the conditions set forth in the relevant restricted
stock agreements have been satisfied in full.
b) Upon written notice given by the Employee to the Company prior
to the receipt of any payment pursuant to Section 5(a) hereof, the Employee, at
his sole option, without reduction to reflect the present value of such amounts
as aforesaid, may elect to have all or any of the Severance
Payment payable pursuant to Section 5(a)(i) hereof paid to him on a quarterly or
monthly basis during the remainder of the Period of Employment.
c) There shall be no right of set-off or counterclaim in respect
of any claim, debt or obligation against any payment to or benefit for the
Employee provided for in this Agreement.
d) Without limiting the rights of the Employee at law or in
equity, if the Company fails to make any payment required to be made hereunder
on a timely basis, the Company shall pay interest on the amount thereof at an
annualized rate of interest equal to the then-applicable Discount Rate or, if
lesser, the highest rate allowed by applicable usury laws.
6. NO MITIGATION OBLIGATION. The Company hereby acknowledges that
it will be difficult, and may be impossible, for the Employee to find reasonably
comparable employment following the Termination Date. Accordingly, the parties
hereto expressly agree that the payment of the severance compensation by the
Company to the Employee in accordance with the terms of this Agreement will be
liquidated damages, and that the Employee shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise, nor shall any profits, income, earnings or other benefits from any
source whatsoever create any mitigation, offset, reduction or any other
obligation on the part of the Employee hereunder or otherwise, except as
expressly provided in Section 5(a)(iii) hereof.
7. [Reserved]
8. LEGAL FEES AND EXPENSES. In the event of a breach of this
Agreement by the Company, it is the intent of the Company that the Employee not
be required to incur the expenses associated with the enforcement of his rights
under this Agreement by litigation or other legal action because the cost and
expense thereof would substantially detract from the benefits intended to be
extended to the Employee hereunder. Accordingly, if the Company fails to comply
with any of its obligations under this Agreement or in the event that the
Company or any other person takes any action to declare this Agreement void or
unenforceable, or institutes any litigation designed to deny, or to recover
from, the Employee the benefits intended to be provided to the Employee
hereunder, the Company irrevocably authorizes the Employee from time to time to
retain counsel of his choice, at the expense of the Company as hereafter
provided, to represent the Employee in connection with the initiation or defense
of any litigation or other legal action, whether by or against the Company or
any Director, officer, shareholder or other person affiliated with the Company,
in any jurisdiction. Notwithstanding any existing or prior attorney-client
relationship between the Company and such counsel, the Company irrevocably
consents to the Employee's entering into an attorney-client relationship with
such counsel (other than Vinson & Elkins L.L.P.), and in that connection the
Company and the Employee agree that a confidential relationship shall exist
between the Employee and such counsel. The Company shall pay or cause to be paid
and shall be solely responsible for any and all attorneys and related fees and
expenses incurred by the Employee as a result of the Company's failure to
perform this Agreement or any provision thereof or as a result of the Company or
any person contesting the validity or enforceability of this Agreement or any
provision thereof as
aforesaid. If the Company should prevail in any litigation regarding this
Agreement, however, the Company shall not be responsible for any attorneys and
related fees and expenses incurred by Employee in connection with such
litigation.
9. EMPLOYMENT RIGHTS. Nothing expressed or implied in this
Agreement shall create any right or duty on the part of the Company or the
Employee to have the Employee remain in the employment of the Company prior to
any Change in Control; provided, however, that any termination of employment of
the Employee or removal of the Employee as an Officer of the Company following
the commencement of any discussion with a third person that ultimately results
in a Change in Control shall be deemed to be a termination or removal of the
Employee after a Change in Control for purposes of this Agreement.
10. WITHHOLDING OF TAXES. The Company may withhold from any
amounts payable under this Agreement all federal, state, city or other taxes as
shall be required pursuant to any law or government regulation or ruling.
11. SUCCESSORS AND BINDING AGREEMENT.
a) The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation, reorganization
or otherwise) to all or substantially all of the business and/or assets
of the Company to execute an agreement pursuant to which the successor
expressly assumes all of the liabilities and obligations of the Company
hereunder and agrees to perform this Agreement in the same manner and
to the same extent the Company would be required to perform if no such
succession had taken place. This Agreement shall be binding upon and
inure to the benefit of the Company and any successor to the Company,
including without limitation any persons acquiring directly or
indirectly all or substantially all of the business and/or assets of
the Company whether by purchase, merger, consolidation, reorganization
or otherwise (and such successor shall thereafter be deemed the Company
for the purposes of this Agreement), but shall not otherwise be
assignable, transferable or delegable by the Company.
b) This Agreement shall inure to the benefit of and be
enforceable by the Employee's personal or legal representatives,
executors, administrators, successors, heirs, distributees and/or
legatees.
c) This Agreement is personal in nature and neither of
the parties hereto shall, without the consent of the other, assign,
transfer or delegate this Agreement or any rights or obligations
hereunder except as expressly provided in Section 11(a) hereof. Without
limiting the generality of the foregoing, the Employee's right to
receive payments hereunder shall not be assignable, transferable or
delegable, whether by pledge, creation of a security interest or
otherwise, other than by a transfer by the Employee's will or by the
laws of descent and distribution and, in the event of any attempted
assignment or transfer contrary to this Section 11(c), the Company
shall have no liability to pay any amount so attempted to be assigned,
transferred or delegated.
d) The Company and the Employee recognize that each
Party will have no adequate remedy at law for breach by the other of
any of the agreements contained herein and, in the event of any such
breach, the Company and the Employee hereby agree and consent that the
other shall be entitled to a decree of specific performance, mandamus
or other appropriate remedy to enforce performance of this Agreement.
12. NOTICE. For all purposes of this Agreement, all communications
provided for herein shall be in writing and shall be deemed to have been duly
given when delivered or three business days after having been mailed by United
States registered or certified mail, return receipt requested, postage prepaid,
addressed to the Company (to the attention of the Secretary of the Company) at
its principal executive office and to the Employee at his principal residence,
or to such other address as any party may have furnished to the other in writing
and in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
13. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Texas, without giving effect to the principles of conflict of laws of such
State.
14. VALIDITY. If any provision of this Agreement or the
application of any provision hereof to any person or circumstances is held
invalid, unenforceable or otherwise illegal, the remainder of this Agreement and
the application of such provision to any other person or circumstances shall not
be affected, and the provision so held to be invalid, unenforceable or otherwise
illegal shall be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid and legal.
15. MISCELLANEOUS. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Employee and the Company. No waiver by either
party hereto at any time of any breach by the other party hereto or compliance
with any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, expressed or implied with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement.
16. PRIOR AGREEMENTS. This Agreement is voluntarily entered into
and supersedes and takes the place of any prior change in control, severance or
employment agreements between the parties hereto. The parties hereto expressly
agree and hereby declare that any and all prior change in control, severance or
employment agreements between the parties are terminated and of no force or
effect.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
SOUTHWEST BANCORPORATION OF TEXAS, INC.
By: /s/ Paul B. Murphy
---------------------------------------
EMPLOYEE:
/s/ Debra J. Innes
---------------------------------------
CHANGE IN CONTROL AGREEMENT
This CHANGE IN CONTROL AGREEMENT (Agreement), effective as of January
1, 2000 (the Effective Date), by and between Southwest Bancorporation of Texas,
Inc., a Texas corporation (the Company), and Marylyn Manis (the Executive);
W I T N E S S E T H:
WHEREAS, the Employee is an officer of the Company or its wholly-owned
subsidiary, Southwest Bank of Texas National Association (the Bank) and has made
and/or is expected to make or continue to make major contributions to the
profitability, growth and financial strength of the Company and the Bank;
WHEREAS, references herein to the Employee's employment by the Company
shall also mean his or her employment by the Bank, and references herein to
payments of any nature to be made by the Company to the Employee shall mean that
either the Company will make such payments or it will cause the Bank to make
such payments to the Employee;
WHEREAS, the Company desires to assure itself of both present and
future continuity of management in the event of a Change in Control (as defined
hereafter) and desires to establish certain minimum compensation rights of its
key officers, including the Employee, applicable in the event of a Change in
Control;
WHEREAS, the Company wishes to ensure that its key officers are not
practically disabled from discharging their duties upon a Change in Control;
WHEREAS, this Agreement is not intended to alter materially the
compensation and benefits which the Employee could reasonably expect to receive
from the Company or the Bank absent a Change in Control and, accordingly,
although effective and binding as of the date hereof, this Agreement shall
become operative only upon the occurrence of a Change of Control; and
WHEREAS, the Employee is willing to render services to the Company and
the Bank on the terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, the Company and the Employee agree as follows:
1. OPERATION OF AGREEMENT.
a) This Agreement shall be effective and binding as of
the Effective Date, but, anything in this Agreement to the contrary
notwithstanding, this Agreement shall not be operative unless and until
there shall have occurred a Change in Control.
For purposes of this Agreement, a Change in Control shall have
occurred if at any time during the Term (as that term is hereafter
defined) any of the following events shall occur:
i) The Company is merged, consolidated or
reorganized into or with or sells all or substantially all of
its assets to another corporation or other legal person, and
as a result of such merger, consolidation, reorganization or
sale (A) less than a majority of the combined voting power of
the then-outstanding securities of such corporation or person
immediately after such transaction are held in the aggregate
by the holders of Voting Stock (as that term is hereinafter
defined) of the Company immediately prior to such transaction
and (B) it is intended that persons serving as Directors of
the Company immediately prior to the transaction will
constitute none of or less than a majority of the Directors of
the other corporation or legal person after consummation of
the transaction; or
ii) If during any one (1) year period,
individuals who at the beginning of any such period constitute
the Directors of the Company cease for any reason to
constitute at least a majority thereof, unless the election,
or the nomination for election by the Company's shareholders,
of each Director of the Company first elected during such
period was approved by a vote of at least two-thirds of the
Directors of the Company then still in office who were
Directors of the Company at the beginning of any such period.
b) Upon occurrence of a Change in Control at any time
during the Term, this Agreement shall become immediately operative.
c) The period during which this Agreement shall be in
effect (the Term) shall commence as of the date hereof and shall expire
as of the later of (i) the close of business on December 31, 2002, and
(ii) the expiration of the Period of Employment (as that term is
hereinafter defined); provided, however, that (A) commencing on
December 31, 2002, and the last day of each of the Company's Fiscal
Years thereafter, the Term of this Agreement shall automatically be
extended for an additional year unless, not later than the last day of
the immediately preceding September, the Company or the Employee shall
have given notice that it or he, as the case may be, does not wish to
have the Term extended and (B) subject to Section 9 hereof, if, prior
to a Change in Control, the Employee ceases for any reason to be an
employee of the Company, thereupon the Term shall be deemed to have
expired and this Agreement shall immediately terminate and be of no
further effect.
2. EMPLOYMENT; PERIOD OF EMPLOYMENT.
a) Subject to the terms and conditions of this
Agreement, upon the occurrence of a Change in Control, the Company
shall continue the Employee in its employ and the Employee shall remain
in the employ of the Company for the period set forth in Section 2(b)
hereof (the Period of Employment). Throughout the Period of Employment,
the Employee shall devote substantially all of his time during normal
business hours (subject to vacations, sick leave and other absences in
accordance with the policies of the Company as in effect for
senior executives immediately prior to the Change in Control) to the
business and affairs of the Company, but nothing in this Agreement
shall preclude the Employee from devoting reasonable periods of time
during normal business hours to (i) serving as a director, trustee or
member of or participant in any organization or business so long as
such organization or business is not engaged, directly or indirectly,
in the business of commercial banking in competition with the business
of the Company, (ii) engaging in charitable and community activities,
or (iii) managing his personal investments.
b) The Period of Employment shall commence on the date
of an occurrence of a Change in Control and, subject only to the
provisions of Section 4 hereof, shall continue until the earlier of (i)
the expiration of the second anniversary of the occurrence of the
Change in Control or (ii) the Employee's death.
3. COMPENSATION DURING PERIOD OF EMPLOYMENT.
a) Upon the occurrence of a Change in Control, the
Employee shall receive during the Period of Employment (i) annual base
salary at a rate not less than the Employees annual fixed or base
compensation payable monthly or otherwise as in effect for senior
executives of the Company immediately prior to the occurrence of a
Change in Control or such higher rate as may be determined from time to
time by the Board of Directors of the Company (the Board) or the
Compensation Committee thereof (the Committee) (which base salary at
such rate is herein referred to as Base Pay) and (ii) an annual cash
bonus in an amount determined for the Employee in accordance with the
Company's incentive compensation plan or plans in effect at the time of
the Change in Control or in accordance with any bonus, incentive,
profit-sharing, performance, discretionary pay or similar policy, plan,
program or arrangement of the Company or any successor thereto
providing benefits at least as great as the benefits payable thereunder
prior to the Change in Control (Incentive Pay); provided, however, that
nothing herein shall preclude a change in the mix between Base Pay and
Incentive Pay so long as the aggregate cash compensation received by
the Employee in any one calendar year is not reduced in connection
therewith or as a result thereof and, provided further, however, that
in no event shall any increase in the Employee's aggregate cash
compensation or any portion thereof in any way diminish any other
obligation of the Company under this Agreement.
b) For his service pursuant to Section 2(a) hereof,
during the Period of Employment the Employee shall, if and on the same
basis as he participated therein immediately prior to the Change in
Control, be a full participant in, and shall be entitled to the
perquisites, benefits and service credit for benefits as provided under
any and all employee retirement income and welfare benefit policies,
plans, programs or arrangements in which senior executives of the
Company participate, including without limitation any stock option,
stock purchase, stock appreciation, savings, pension, supplemental
executive retirement or other retirement income or welfare benefit,
deferred compensation, incentive compensation, group and/or executive
life, accident, health, dental, medical/hospital or other insurance
(whether funded by actual insurance or self-insured by the Company),
disability, salary continuation, expense reimbursement and other
employee benefit policies, plans, programs or arrangements that may now
exist or any equivalent successor policies, plans,
programs or arrangements that may be adopted hereafter by the Company
providing perquisites, benefits and service credit for benefits at
least as great as are payable thereunder prior to a Change in
Control(collectively, Employee Benefits); provided, however, that the
Employee's rights thereunder shall be governed by the terms thereof and
shall not be enlarged hereunder or otherwise affected hereby. Subject
to the proviso in the immediately preceding sentence, if and to the
extent such perquisites, benefits or service credit for benefits are
not payable or provided under any such policy, plan, program or
arrangement as a result of the amendment or termination thereof, then
the Company shall itself pay or provide therefor. Nothing in this
Agreement shall preclude improvement or enhancement of any such
Employee Benefits, provided that no such improvement shall in any way
diminish any other obligation of the Company under this Agreement.
c) The Company has determined that the amounts payable
pursuant to this Section 3 constitute reasonable compensation.
Accordingly, notwithstanding any other provision hereof, unless such
action would be expressly prohibited by applicable law, if any amount
paid or payable pursuant to this Section 3 is subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the Code), the Company will pay to the Employee an additional
amount in cash equal to the amount necessary to cause the aggregate
remuneration received by the Employee under this Section 3, including
such additional cash payment (net of all federal, state and local
income taxes and all taxes payable as the result of the application of
Sections 280G and 4999 of the Code) to be equal to the aggregate
remuneration the Employee would have received under this Section 3,
excluding such additional payment (net of all federal, state and local
income taxes), as if Sections 280G and 4999 of the Code (and any
successor provisions thereto) had not been enacted into law.
4. TERMINATION FOLLOWING A CHANGE IN CONTROL.
a) In the event of the occurrence of a Change in
Control, this Agreement may be terminated by the Company during the
Period of Employment only upon the occurrence of one or more of the
following events:
i) If the Employee is unable to perform the
essential functions of his job (with or without reasonable
accommodation) because he has become permanently disabled
within the meaning of, and actually begins to receive
disability benefits pursuant to, the long-term disability plan
in effect for senior executives or, if applicable, employees
of the Company immediately prior to the Change in Control; or
ii) For Cause, which for purposes of this
Agreement shall mean that, prior to any termination pursuant
to Section 4(b) hereof, the Employee shall have committed:
A) Gross negligence or willful
misconduct in connection with his duties or in the
course of his employment with the Company;
B) an act of fraud, embezzlement or
theft in connection with his duties or in the course
of his employment with the Company;
C) intentional wrongful damage to
property of the Company;
D) intentional wrongful disclosure of
secret processes or confidential information of the
Company;
E) intentional wrongful engagement in
any Competitive Activity; or
F) an act leading to a conviction of a
felony or a misdemeanor involving moral turpitude.
For purposes of this Agreement, no act, or failure to act, on
the part of the Employee shall be deemed intentional if it was due
primarily to an error in judgment or negligence, but shall be deemed
intentional only if done, or omitted to be done, by the Employee not in
good faith and without reasonable belief that his action or omission
was in the best interest of the Company. Notwithstanding the foregoing,
the Employee shall not be deemed to have been terminated for Cause
hereunder unless and until there shall have been delivered to the
Employee a copy of a resolution duly adopted by the affirmative vote of
not less than three-quarters of the Board then in office at a meeting
of the Board called and held for such purpose (after reasonable notice
to the Employee and an opportunity for the Employee, together with his
counsel, to be heard before the Board), finding that, in the good faith
opinion of the Board, the Employee had committed an act set forth above
in this Section 4(a)(ii) and specifying the particulars thereof in
detail. Nothing herein shall limit the right of the Employee or his
beneficiaries to contest the validity or propriety of any such
determination.
b) in the event of the occurrence of a Change in
Control, this Agreement may be terminated by the Employee during the
Period of Employment with the right to benefits as provided in Section
5 hereof upon the occurrence of one or more of the following events:
i) Any termination by the Company of the
employment of the Employee for any reason other than for Cause
or as a result of the death of the Employee or by reason of
the Employee's disability and the actual receipt of disability
benefits in accordance with Section 4(a)(i) hereof; or
ii) Termination by the Employee of his
employment with the Company upon the occurrence of any of the
following events:
A) A reduction in the aggregate of the
Employee's Base Pay and Incentive Pay received from
the Company, or the termination of the Employee's
rights to any Employee Benefits to which he was
entitled immediately prior to the Change in Control
or a reduction in scope or value thereof without the
prior written consent of the Employee, any of which
is not
remedied within 10 calendar days after receipt by the
Company of written notice from the Employee of such
change, reduction or termination, as the case may be;
B) The liquidation, dissolution,
merger, consolidation or reorganization of the
Company or transfer of all or a significant portion
of its business and/or assets, unless the successor
or successors (by liquidation, merger, consolidation,
reorganization or otherwise) to which all or a
significant portion of its business and/or assets
have been transferred (directly or by operation of
law) shall have assumed all duties and obligations of
the Company under this Agreement pursuant to Section
11 hereof;
C) The Company requires the Employee
to have his principal location of work changed to any
location which is in excess of 50 miles from the
location thereof immediately prior to the Change of
Control or to travel away from his office in the
course of discharging his responsibilities or duties
hereunder significantly more (in terms of either
consecutive days or aggregate days in any calendar
year) than was required of him prior to the Change of
Control without, in either case, his prior consent;
or
D) Any material breach of this
Agreement by the Company or any successor thereto.
c) A termination by the Company pursuant to Section 4(a)
hereof or by the Employee pursuant to Section 4(b) hereof shall not
affect any rights which the Employee may have pursuant to any
agreement, policy, plan, program or arrangement of the Company
providing Employee Benefits, which rights shall be governed by the
terms thereof. If this Agreement or the employment of the Employee is
terminated under circumstances in which the Employee is not entitled to
any payments under Sections 3 or 5 hereof, the Employee shall have no
further obligation or liability to the Company hereunder with respect
to his prior or any future employment by the Company.
5. SEVERANCE COMPENSATION.
a) If, following the occurrence of a Change in Control,
the Company shall terminate the Employee's employment during the Period
of Employment other than pursuant to Section 4(a) hereof, or if the
Employee shall terminate his employment pursuant to Section 4(b)
hereof, the Company shall pay to the Employee the amount specified in
Section 5(a)(i) hereof within ten business days after the date (the
Termination Date) that the Employee's employment is terminated (the
effective date of which shall be the date of termination, or such other
date that may be specified by the Employee if the termination is
pursuant to Section 4(b) hereof):
i) In lieu of any further payments to the
Employee for periods subsequent to the Termination Date, but
without affecting the rights of the Employee referred to in
Section 5(b) hereof, a lump sum payment (the Severance
Payment) in
an amount equal to the present value (using a discount rate
required to be utilized for purposes of computations under
Section 280G of the Code or any successor provision thereto,
or if no such rate is so required to be used, a rate equal to
the then-applicable interest rate prescribed by the Pension
Benefit Guarantee Corporation for benefit valuations in
connection with non-multiemployer pension plan terminations
assuming the immediate commencement of benefit payments (the
Discount Rate) of the sum of (A) the Base Pay (at the highest
rate in effect during the Term prior to the Termination Date)
for one year, plus (B) the Incentive Pay for one year (based
upon the greatest amount of Incentive Pay paid or payable to
the Employee for any year during the three calendar years
preceding the year in which the Termination Date occurs);
provided, however, that in no event will the present value (as
determined under Section 280G of the Code or any successor
provision thereto) of the amount otherwise payable hereunder,
when added to the present value (as determined under Section
280G of the Code or any successor provision thereto) of any
other parachute payments (as that term is defined in Section
280G of the Code (without regard to Section 280G(b)(2)(A)(ii)
thereof) or any successor provision thereto) from the Company,
exceed an amount (the A299% Amount) equal to 299% of the
Employee's base amount (as that term is defined in Section
280G of the Code or any successor provision thereto) and if
the amount otherwise payable hereunder would exceed the 299%
Amount, the Severance Payment shall be reduced to the extent
necessary so that the aggregate present value determined in
the previous clause does not exceed the 299% Amount.
ii) The determination of whether any amount
otherwise payable under Section 5(a)(i) causes the 299% Amount
to be exceeded shall be made, if requested by the Employee or
the Company, by tax counsel selected by the Company and
reasonably acceptable to the Employee. The costs of obtaining
such determination shall be borne by the Company. The fact
that the Employee shall have his right to the Severance
Payment reduced as a result of the existence of the
limitations contained in this Section 5(a) shall not limit or
otherwise affect any rights of the Employee to any Employee
Benefit, or other right arising other than pursuant to this
Agreement. Without limiting the generality of the foregoing,
upon the Employee's termination of employment as provided in
this Section 5, the Company shall pay over to him all vested
benefits to which he is entitled under and in accordance with
the terms of the Company's employee savings, stock ownership,
supplemental executive retirement and similar Plans in the
event such payments are not otherwise made in accordance with
the terms of such plans.
iii) Except to the extent that the payments or
benefits pursuant to this Section 5(a)(iii) would result in a
reduction of the amount of the Severance Payment because they
would exceed the 299% Amount, (A) for the remainder of the
Period of Employment the Company shall arrange to provide the
Employee with Employee Benefits substantially similar to those
which the Employee was receiving or entitled to receive
immediately prior to the Termination Date (and if and to the
extent that such benefits shall not or cannot be paid or
provided under any policy, plan, program or arrangement of the
Company solely due to the fact that the Employee is no longer
an officer or employee of the Company, then the Company shall
itself pay or provide for the payment to the Employee, his
dependents and beneficiaries, such Employee Benefits) and (B)
without limiting the generality of the foregoing, the
remainder of the Period of Employment shall be considered
service with the Company for the purpose of service credits
under the Company's retirement income, supplemental executive
retirement and other benefit plans of the Company applicable
to the Employee or his beneficiaries immediately prior to the
Termination Date. Without otherwise limiting the purposes or
effect of Section 6 hereof, Employee Benefits payable to the
Employee pursuant to this Section 5(a)(iii) by reason of any
welfare benefit plan of the Company (as the term welfare
benefit plan is defined in Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended) shall be
reduced to the extent comparable welfare benefits are actually
received by the Employee from another employer during such
period following the Employee's Termination Date until the
expiration of the Period of Employment.
iv) Notwithstanding any provision of the Section
5(a) to the contrary, in the event the benefits intended to be
provided to the Employee pursuant to Section 5(a)(iii) hereof
are required to be reduced in whole or in part because the
value of such Employee Benefits, when added to the amount of
the Severance Payment under Section 5(a)(i), would exceed 299%
Amount, the Employee shall have the option to elect to
receive, in lieu of all or a portion of the Severance Payment
provided in Section 5(a)(i) hereof, one or more Employee
Benefits, provided that (A) prior to the receipt of any
payment under Section 5(a)(i) hereof, the Employee notifies
the Company of the Employee Benefit or Employee Benefits so
elected to be received, and (B) in no event shall the
aggregate present value of the payments in the nature of
compensation (as that phrase is used in Section 280G of the
Code) received by the Employee as a result of the receipt of
such Employee Benefits, when added to the remaining portion of
the Severance Payment, if any, to be received by the Employee,
exceed the 299% Amount.
v) In addition to all other compensation due to
the Employee, the following shall occur immediately following
the occurrence of a Change in Control:
A) all Company stock options held by
the Employee prior to a Change in Control shall
become fully exercisable, regardless of whether or
not the vesting conditions set forth in the relevant
stock option agreements have been satisfied in full;
and
B) all restrictions on any restricted
Company stock granted to the Employee prior to a
Change in Control shall be removed and the stock
shall be freely transferable, regardless of whether
the conditions set forth in the relevant restricted
stock agreements have been satisfied in full.
b) Upon written notice given by the Employee to the
Company prior to the receipt of any payment pursuant to Section 5(a)
hereof, the Employee, at his sole option, without reduction to reflect
the present value of such amounts as aforesaid, may elect to have all
or any of the Severance
Payment payable pursuant to Section 5(a)(i) hereof paid to him on a quarterly or
monthly basis during the remainder of the Period of Employment.
c) There shall be no right of set-off or counterclaim
in respect of any claim, debt or obligation against any payment to or
benefit for the Employee provided for in this Agreement.
d) Without limiting the rights of the Employee at law
or in equity, if the Company fails to make any payment required to be
made hereunder on a timely basis, the Company shall pay interest on the
amount thereof at an annualized rate of interest equal to the
then-applicable Discount Rate or, if lesser, the highest rate allowed
by applicable usury laws.
6. NO MITIGATION OBLIGATION. The Company hereby acknowledges that
it will be difficult, and may be impossible, for the Employee to find reasonably
comparable employment following the Termination Date. Accordingly, the parties
hereto expressly agree that the payment of the severance compensation by the
Company to the Employee in accordance with the terms of this Agreement will be
liquidated damages, and that the Employee shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise, nor shall any profits, income, earnings or other benefits from any
source whatsoever create any mitigation, offset, reduction or any other
obligation on the part of the Employee hereunder or otherwise, except as
expressly provided in Section 5(a)(iii) hereof.
7. COMPETITIVE ACTIVITY. During a period ending six months
following the Termination Date, if the Executive shall have received or shall be
receiving benefits under Section 5(a) hereof, the Executive shall not, without
the prior written consent by the Company, directly or indirectly engage in the
business of commercial banking in competition with the business of the Company
within Harris County, Fort Bend County and Montgomery County, Texas and any
other geographical area served by the Company during the twelve (12) month
period immediately preceding termination of employment nor will the Executive
engage, within this geographical area, in the design, development, distribution,
or sale of a product or service in competition with any product or service being
marketed or planned by the Company at such time, the plans, designs or
specifications of which have been revealed to the Executive. The Executive
acknowledges that these limited prohibitions are reasonable as to time,
geographical area and scope of activities to be restrained and that the limited
prohibitions do not impose a greater restraint than is necessary to protect the
Company's goodwill, proprietary information and other business interests.
Competitive Activity shall mean the prohibitions set forth above in this Section
7, but shall not include (i) the mere ownership of securities in any such
enterprise and exercise of rights appurtenant thereto or (ii) participation in
management of any such enterprise or business operation thereof other than in
connection with the competitive operation of such enterprise.
8. LEGAL FEES AND EXPENSES. In the event of a breach of this
Agreement by the Company, it is the intent of the Company that the Employee not
be required to incur the expenses associated with the enforcement of his rights
under this Agreement by litigation or other legal action because the cost and
expense thereof would substantially detract from the benefits intended to be
extended to the Employee hereunder. Accordingly, if the Company fails to comply
with any of its obligations under this Agreement or in the event that the
Company or any other person takes any action to declare this Agreement void or
unenforceable, or institutes any litigation designed to deny,
or to recover from, the Employee the benefits intended to be provided to the
Employee hereunder, the Company irrevocably authorizes the Employee from time to
time to retain counsel of his choice, at the expense of the Company as hereafter
provided, to represent the Employee in connection with the initiation or defense
of any litigation or other legal action, whether by or against the Company or
any Director, officer, shareholder or other person affiliated with the Company,
in any jurisdiction. Notwithstanding any existing or prior attorney-client
relationship between the Company and such counsel, the Company irrevocably
consents to the Employee's entering into an attorney-client relationship with
such counsel (other than Vinson & Elkins L.L.P.), and in that connection the
Company and the Employee agree that a confidential relationship shall exist
between the Employee and such counsel. The Company shall pay or cause to be paid
and shall be solely responsible for any and all attorneys and related fees and
expenses incurred by the Employee as a result of the Company's failure to
perform this Agreement or any provision thereof or as a result of the Company or
any person contesting the validity or enforceability of this Agreement or any
provision thereof as aforesaid. If the Company should prevail in any litigation
regarding this Agreement, however, the Company shall not be responsible for any
attorneys and related fees and expenses incurred by Employee in connection with
such litigation.
9. EMPLOYMENT RIGHTS. Nothing expressed or implied in this
Agreement shall create any right or duty on the part of the Company or the
Employee to have the Employee remain in the employment of the Company prior to
any Change in Control; provided, however, that any termination of employment of
the Employee or removal of the Employee as an Officer of the Company following
the commencement of any discussion with a third person that ultimately results
in a Change in Control shall be deemed to be a termination or removal of the
Employee after a Change in Control for purposes of this Agreement.
10. WITHHOLDING OF TAXES. The Company may withhold from any
amounts payable under this Agreement all federal, state, city or other taxes as
shall be required pursuant to any law or government regulation or ruling.
11. SUCCESSORS AND BINDING AGREEMENT.
a) The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation, reorganization
or otherwise) to all or substantially all of the business and/or assets
of the Company to execute an agreement pursuant to which the successor
expressly assumes all of the liabilities and obligations of the Company
hereunder and agrees to perform this Agreement in the same manner and
to the same extent the Company would be required to perform if no such
succession had taken place. This Agreement shall be binding upon and
inure to the benefit of the Company and any successor to the Company,
including without limitation any persons acquiring directly or
indirectly all or substantially all of the business and/or assets of
the Company whether by purchase, merger, consolidation, reorganization
or otherwise (and such successor shall thereafter be deemed the Company
for the purposes of this Agreement), but shall not otherwise be
assignable, transferable or delegable by the Company.
b) This Agreement shall inure to the benefit of and be
enforceable by the Employee's personal or legal representatives,
executors, administrators, successors, heirs, distributees and/or
legatees.
c) This Agreement is personal in nature and neither of
the parties hereto shall, without the consent of the other, assign,
transfer or delegate this Agreement or any rights or obligations
hereunder except as expressly provided in Section 11(a) hereof. Without
limiting the generality of the foregoing, the Employee's right to
receive payments hereunder shall not be assignable, transferable or
delegable, whether by pledge, creation of a security interest or
otherwise, other than by a transfer by the Employee's will or by the
laws of descent and distribution and, in the event of any attempted
assignment or transfer contrary to this Section 11(c), the Company
shall have no liability to pay any amount so attempted to be assigned,
transferred or delegated.
d) The Company and the Employee recognize that each
Party will have no adequate remedy at law for breach by the other of
any of the agreements contained herein and, in the event of any such
breach, the Company and the Employee hereby agree and consent that the
other shall be entitled to a decree of specific performance, mandamus
or other appropriate remedy to enforce performance of this Agreement.
12. NOTICE. For all purposes of this Agreement, all communications
provided for herein shall be in writing and shall be deemed to have been duly
given when delivered or three business days after having been mailed by United
States registered or certified mail, return receipt requested, postage prepaid,
addressed to the Company (to the attention of the Secretary of the Company) at
its principal executive office and to the Employee at his principal residence,
or to such other address as any party may have furnished to the other in writing
and in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
13. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Texas, without giving effect to the principles of conflict of laws of such
State.
14. VALIDITY. If any provision of this Agreement or the
application of any provision hereof to any person or circumstances is held
invalid, unenforceable or otherwise illegal, the remainder of this Agreement and
the application of such provision to any other person or circumstances shall not
be affected, and the provision so held to be invalid, unenforceable or otherwise
illegal shall be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid and legal.
15. MISCELLANEOUS. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Employee and the Company. No waiver by either
party hereto at any time of any breach by the other party hereto or compliance
with any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise,
expressed or implied with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement.
16. PRIOR AGREEMENTS. This Agreement is voluntarily entered into
and supersedes and takes the place of any prior change in control, severance or
employment agreements between the parties hereto. The parties hereto expressly
agree and hereby declare that any and all prior change in control, severance or
employment agreements between the parties are terminated and of no force or
effect.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
SOUTHWEST BANCORPORATION OF TEXAS, INC.
By: /s/ Paul B. Murphy
---------------------------------------
EXECUTIVE:
/s/ Marylyn Manis
---------------------------------------
CHANGE IN CONTROL AGREEMENT
This CHANGE IN CONTROL AGREEMENT (Agreement), effective as of January
1, 2000 (the Effective Date), by and between Southwest Bancorporation of Texas,
Inc., a Texas corporation (the Company), and George Marshall (the Employee);
W I T N E S S E T H:
WHEREAS, the Employee is an officer of the Company or its wholly-owned
subsidiary, Southwest Bank of Texas National Association (the Bank) and has made
and/or is expected to make or continue to make major contributions to the
profitability, growth and financial strength of the Company and the Bank;
WHEREAS, references herein to the Employee's employment by the Company
shall also mean his or her employment by the Bank, and references herein to
payments of any nature to be made by the Company to the Employee shall mean that
either the Company will make such payments or it will cause the Bank to make
such payments to the Employee;
WHEREAS, the Company desires to assure itself of both present and
future continuity of management in the event of a Change in Control (as defined
hereafter) and desires to establish certain minimum compensation rights of its
key officers, including the Employee, applicable in the event of a Change in
Control;
WHEREAS, the Company wishes to ensure that its key officers are not
practically disabled from discharging their duties upon a Change in Control;
WHEREAS, this Agreement is not intended to alter materially the
compensation and benefits which the Employee could reasonably expect to receive
from the Company or the Bank absent a Change in Control and, accordingly,
although effective and binding as of the date hereof, this Agreement shall
become operative only upon the occurrence of a Change of Control; and
WHEREAS, the Employee is willing to render services to the Company and
the Bank on the terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, the Company and the Employee agree as follows:
1. OPERATION OF AGREEMENT.
a) This Agreement shall be effective and binding as of
the Effective Date, but, anything in this Agreement to the contrary
notwithstanding, this Agreement shall not be operative unless and until
there shall have occurred a Change in Control.
For purposes of this Agreement, a Change in Control shall have
occurred if at any time during the Term (as that term is hereafter
defined) any of the following events shall occur:
i) The Company is merged, consolidated or
reorganized into or with or sells all or substantially all of
its assets to another corporation or other legal person, and
as a result of such merger, consolidation, reorganization or
sale (A) less than a majority of the combined voting power of
the then-outstanding securities of such corporation or person
immediately after such transaction are held in the aggregate
by the holders of Voting Stock (as that term is hereinafter
defined) of the Company immediately prior to such transaction
and (B) it is intended that persons serving as Directors of
the Company immediately prior to the transaction will
constitute none of or less than a majority of the Directors of
the other corporation or legal person after consummation of
the transaction; or
ii) If during any one (1) year period,
individuals who at the beginning of any such period constitute
the Directors of the Company cease for any reason to
constitute at least a majority thereof, unless the election,
or the nomination for election by the Company's shareholders,
of each Director of the Company first elected during such
period was approved by a vote of at least two-thirds of the
Directors of the Company then still in office who were
Directors of the Company at the beginning of any such period.
b) Upon occurrence of a Change in Control at any time
during the Term, this Agreement shall become immediately operative.
c) The period during which this Agreement shall be in
effect (the Term) shall commence as of the date hereof and shall expire
as of the later of (i) the close of business on December 31, 2002, and
(ii) the expiration of the Period of Employment (as that term is
hereinafter defined); provided, however, that (A) commencing on
December 31, 2002, and the last day of each of the Company's Fiscal
Years thereafter, the Term of this Agreement shall automatically be
extended for an additional year unless, not later than the last day of
the immediately preceding September, the Company or the Employee shall
have given notice that it or he, as the case may be, does not wish to
have the Term extended and (B) subject to Section 9 hereof, if, prior
to a Change in Control, the Employee ceases for any reason to be an
employee of the Company, thereupon the Term shall be deemed to have
expired and this Agreement shall immediately terminate and be of no
further effect.
2. EMPLOYMENT; PERIOD OF EMPLOYMENT.
a) Subject to the terms and conditions of this
Agreement, upon the occurrence of a Change in Control, the Company
shall continue the Employee in its employ and the Employee shall remain
in the employ of the Company for the period set forth in Section 2(b)
hereof (the Period of Employment). Throughout the Period of Employment,
the Employee shall devote substantially all of his time during normal
business hours (subject to vacations, sick leave and other absences in
accordance with the policies of the Company as in effect for
senior executives immediately prior to the Change in Control) to the
business and affairs of the Company, but nothing in this Agreement
shall preclude the Employee from devoting reasonable periods of time
during normal business hours to (i) serving as a director, trustee or
member of or participant in any organization or business so long as
such organization or business is not engaged, directly or indirectly,
in the business of commercial banking in competition with the business
of the Company, (ii) engaging in charitable and community activities,
or (iii) managing his personal investments.
b) The Period of Employment shall commence on the date
of an occurrence of a Change in Control and, subject only to the
provisions of Section 4 hereof, shall continue until the earlier of (i)
the expiration of the second anniversary of the occurrence of the
Change in Control or (ii) the Employee's death.
3. COMPENSATION DURING PERIOD OF EMPLOYMENT.
a) Upon the occurrence of a Change in Control, the
Employee shall receive during the Period of Employment (i) annual base
salary at a rate not less than the Employees annual fixed or base
compensation payable monthly or otherwise as in effect for senior
executives of the Company immediately prior to the occurrence of a
Change in Control or such higher rate as may be determined from time to
time by the Board of Directors of the Company (the Board) or the
Compensation Committee thereof (the Committee) (which base salary at
such rate is herein referred to as Base Pay) and (ii) an annual cash
bonus in an amount determined for the Employee in accordance with the
Company's incentive compensation plan or plans in effect at the time of
the Change in Control or in accordance with any bonus, incentive,
profit-sharing, performance, discretionary pay or similar policy, plan,
program or arrangement of the Company or any successor thereto
providing benefits at least as great as the benefits payable thereunder
prior to the Change in Control (Incentive Pay); provided, however, that
nothing herein shall preclude a change in the mix between Base Pay and
Incentive Pay so long as the aggregate cash compensation received by
the Employee in any one calendar year is not reduced in connection
therewith or as a result thereof and, provided further, however, that
in no event shall any increase in the Employee's aggregate cash
compensation or any portion thereof in any way diminish any other
obligation of the Company under this Agreement.
b) For his service pursuant to Section 2(a) hereof,
during the Period of Employment the Employee shall, if and on the same
basis as he participated therein immediately prior to the Change in
Control, be a full participant in, and shall be entitled to the
perquisites, benefits and service credit for benefits as provided under
any and all employee retirement income and welfare benefit policies,
plans, programs or arrangements in which senior executives of the
Company participate, including without limitation any stock option,
stock purchase, stock appreciation, savings, pension, supplemental
executive retirement or other retirement income or welfare benefit,
deferred compensation, incentive compensation, group and/or executive
life, accident, health, dental, medical/hospital or other insurance
(whether funded by actual insurance or self-insured by the Company),
disability, salary continuation, expense reimbursement and other
employee benefit policies, plans, programs or arrangements that may now
exist or any equivalent successor policies, plans,
programs or arrangements that may be adopted hereafter by the Company
providing perquisites, benefits and service credit for benefits at
least as great as are payable thereunder prior to a Change in
Control(collectively, Employee Benefits); provided, however, that the
Employee's rights thereunder shall be governed by the terms thereof and
shall not be enlarged hereunder or otherwise affected hereby. Subject
to the proviso in the immediately preceding sentence, if and to the
extent such perquisites, benefits or service credit for benefits are
not payable or provided under any such policy, plan, program or
arrangement as a result of the amendment or termination thereof, then
the Company shall itself pay or provide therefor. Nothing in this
Agreement shall preclude improvement or enhancement of any such
Employee Benefits, provided that no such improvement shall in any way
diminish any other obligation of the Company under this Agreement.
c) The Company has determined that the amounts payable
pursuant to this Section 3 constitute reasonable compensation.
Accordingly, notwithstanding any other provision hereof, unless such
action would be expressly prohibited by applicable law, if any amount
paid or payable pursuant to this Section 3 is subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the Code), the Company will pay to the Employee an additional
amount in cash equal to the amount necessary to cause the aggregate
remuneration received by the Employee under this Section 3, including
such additional cash payment (net of all federal, state and local
income taxes and all taxes payable as the result of the application of
Sections 280G and 4999 of the Code) to be equal to the aggregate
remuneration the Employee would have received under this Section 3,
excluding such additional payment (net of all federal, state and local
income taxes), as if Sections 280G and 4999 of the Code (and any
successor provisions thereto) had not been enacted into law.
4. TERMINATION FOLLOWING A CHANGE IN CONTROL.
a) In the event of the occurrence of a Change in
Control, this Agreement may be terminated by the Company during the
Period of Employment only upon the occurrence of one or more of the
following events:
i) If the Employee is unable to perform the
essential functions of his job (with or without reasonable
accommodation) because he has become permanently disabled
within the meaning of, and actually begins to receive
disability benefits pursuant to, the long-term disability plan
in effect for senior executives or, if applicable, employees
of the Company immediately prior to the Change in Control; or
ii) For Cause, which for purposes of this
Agreement shall mean that, prior to any termination pursuant
to Section 4(b) hereof, the Employee shall have committed:
A) Gross negligence or willful
misconduct in connection with his duties or in the
course of his employment with the Company;
B) an act of fraud, embezzlement or
theft in connection with his duties or in the course
of his employment with the Company;
C) intentional wrongful damage to
property of the Company;
D) intentional wrongful disclosure of
secret processes or confidential information of the
Company;
E) intentional wrongful engagement in
any Competitive Activity; or
F) an act leading to a conviction of a
felony or a misdemeanor involving moral turpitude.
For purposes of this Agreement, no act, or failure to act, on
the part of the Employee shall be deemed intentional if it was due
primarily to an error in judgment or negligence, but shall be deemed
intentional only if done, or omitted to be done, by the Employee not in
good faith and without reasonable belief that his action or omission
was in the best interest of the Company. Notwithstanding the foregoing,
the Employee shall not be deemed to have been terminated for Cause
hereunder unless and until there shall have been delivered to the
Employee a copy of a resolution duly adopted by the affirmative vote of
not less than three-quarters of the Board then in office at a meeting
of the Board called and held for such purpose (after reasonable notice
to the Employee and an opportunity for the Employee, together with his
counsel, to be heard before the Board), finding that, in the good faith
opinion of the Board, the Employee had committed an act set forth above
in this Section 4(a)(ii) and specifying the particulars thereof in
detail. Nothing herein shall limit the right of the Employee or his
beneficiaries to contest the validity or propriety of any such
determination.
b) in the event of the occurrence of a Change in
Control, this Agreement may be terminated by the Employee during the
Period of Employment with the right to benefits as provided in Section
5 hereof upon the occurrence of one or more of the following events:
i) Any termination by the Company of the
employment of the Employee for any reason other than for Cause
or as a result of the death of the Employee or by reason of
the Employee's disability and the actual receipt of disability
benefits in accordance with Section 4(a)(i) hereof; or
ii) Termination by the Employee of his
employment with the Company upon the occurrence of any of the
following events:
A) A reduction in the aggregate of the
Employee's Base Pay and Incentive Pay received from
the Company, or the termination of the Employee's
rights to any Employee Benefits to which he was
entitled immediately prior to the Change in Control
or a reduction in scope or value thereof without the
prior written consent of the Employee, any of which
is not
remedied within 10 calendar days after receipt by the
Company of written notice from the Employee of such
change, reduction or termination, as the case may be;
B) The liquidation, dissolution,
merger, consolidation or reorganization of the
Company or transfer of all or a significant portion
of its business and/or assets, unless the successor
or successors (by liquidation, merger, consolidation,
reorganization or otherwise) to which all or a
significant portion of its business and/or assets
have been transferred (directly or by operation of
law) shall have assumed all duties and obligations of
the Company under this Agreement pursuant to Section
11 hereof;
C) The Company requires the Employee
to have his principal location of work changed to any
location which is in excess of 50 miles from the
location thereof immediately prior to the Change of
Control or to travel away from his office in the
course of discharging his responsibilities or duties
hereunder significantly more (in terms of either
consecutive days or aggregate days in any calendar
year) than was required of him prior to the Change of
Control without, in either case, his prior consent;
or
D) Any material breach of this
Agreement by the Company or any successor thereto.
c) A termination by the Company pursuant to Section 4(a)
hereof or by the Employee pursuant to Section 4(b) hereof shall not
affect any rights which the Employee may have pursuant to any
agreement, policy, plan, program or arrangement of the Company
providing Employee Benefits, which rights shall be governed by the
terms thereof. If this Agreement or the employment of the Employee is
terminated under circumstances in which the Employee is not entitled to
any payments under Sections 3 or 5 hereof, the Employee shall have no
further obligation or liability to the Company hereunder with respect
to his prior or any future employment by the Company.
5. SEVERANCE COMPENSATION.
a) If, following the occurrence of a Change in Control,
the Company shall terminate the Employee's employment during the Period
of Employment other than pursuant to Section 4(a) hereof, or if the
Employee shall terminate his employment pursuant to Section 4(b)
hereof, the Company shall pay to the Employee the amount specified in
Section 5(a)(i) hereof within ten business days after the date (the
Termination Date) that the Employee's employment is terminated (the
effective date of which shall be the date of termination, or such other
date that may be specified by the Employee if the termination is
pursuant to Section 4(b) hereof):
i) In lieu of any further payments to the
Employee for periods subsequent to the Termination Date, but
without affecting the rights of the Employee referred to in
Section 5(b) hereof, a lump sum payment (the Severance
Payment) in
an amount equal to the present value (using a discount rate
required to be utilized for purposes of computations under
Section 280G of the Code or any successor provision thereto,
or if no such rate is so required to be used, a rate equal to
the then-applicable interest rate prescribed by the Pension
Benefit Guarantee Corporation for benefit valuations in
connection with non-multiemployer pension plan terminations
assuming the immediate commencement of benefit payments (the
Discount Rate) of the sum of (A) the Base Pay (at the highest
rate in effect during the Term prior to the Termination Date)
for one year, plus (B) the Incentive Pay for one year (based
upon the greatest amount of Incentive Pay paid or payable to
the Employee for any year during the three calendar years
preceding the year in which the Termination Date occurs);
provided, however, that in no event will the present value (as
determined under Section 280G of the Code or any successor
provision thereto) of the amount otherwise payable hereunder,
when added to the present value (as determined under Section
280G of the Code or any successor provision thereto) of any
other parachute payments (as that term is defined in Section
280G of the Code (without regard to Section 280G(b)(2)(A)(ii)
thereof) or any successor provision thereto) from the Company,
exceed an amount (the A299% Amount) equal to 299% of the
Employee's base amount (as that term is defined in Section
280G of the Code or any successor provision thereto) and if
the amount otherwise payable hereunder would exceed the 299%
Amount, the Severance Payment shall be reduced to the extent
necessary so that the aggregate present value determined in
the previous clause does not exceed the 299% Amount.
ii) The determination of whether any amount
otherwise payable under Section 5(a)(i) causes the 299% Amount
to be exceeded shall be made, if requested by the Employee or
the Company, by tax counsel selected by the Company and
reasonably acceptable to the Employee. The costs of obtaining
such determination shall be borne by the Company. The fact
that the Employee shall have his right to the Severance
Payment reduced as a result of the existence of the
limitations contained in this Section 5(a) shall not limit or
otherwise affect any rights of the Employee to any Employee
Benefit, or other right arising other than pursuant to this
Agreement. Without limiting the generality of the foregoing,
upon the Employee's termination of employment as provided in
this Section 5, the Company shall pay over to him all vested
benefits to which he is entitled under and in accordance with
the terms of the Company's employee savings, stock ownership,
supplemental executive retirement and similar Plans in the
event such payments are not otherwise made in accordance with
the terms of such plans.
iii) Except to the extent that the payments or
benefits pursuant to this Section 5(a)(iii) would result in a
reduction of the amount of the Severance Payment because they
would exceed the 299% Amount, (A) for the remainder of the
Period of Employment the Company shall arrange to provide the
Employee with Employee Benefits substantially similar to those
which the Employee was receiving or entitled to receive
immediately prior to the Termination Date (and if and to the
extent that such benefits shall not or cannot be paid or
provided under any policy, plan, program or arrangement of the
Company solely due to the fact that the Employee is no longer
an officer or employee of the Company, then the Company shall
itself pay or provide for the payment to the Employee, his
dependents and beneficiaries, such Employee Benefits) and (B)
without limiting the generality of the foregoing, the
remainder of the Period of Employment shall be considered
service with the Company for the purpose of service credits
under the Company's retirement income, supplemental executive
retirement and other benefit plans of the Company applicable
to the Employee or his beneficiaries immediately prior to the
Termination Date. Without otherwise limiting the purposes or
effect of Section 6 hereof, Employee Benefits payable to the
Employee pursuant to this Section 5(a)(iii) by reason of any
welfare benefit plan of the Company (as the term welfare
benefit plan is defined in Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended) shall be
reduced to the extent comparable welfare benefits are actually
received by the Employee from another employer during such
period following the Employee's Termination Date until the
expiration of the Period of Employment.
iv) Notwithstanding any provision of the Section
5(a) to the contrary, in the event the benefits intended to be
provided to the Employee pursuant to Section 5(a)(iii) hereof
are required to be reduced in whole or in part because the
value of such Employee Benefits, when added to the amount of
the Severance Payment under Section 5(a)(i), would exceed 299%
Amount, the Employee shall have the option to elect to
receive, in lieu of all or a portion of the Severance Payment
provided in Section 5(a)(i) hereof, one or more Employee
Benefits, provided that (A) prior to the receipt of any
payment under Section 5(a)(i) hereof, the Employee notifies
the Company of the Employee Benefit or Employee Benefits so
elected to be received, and (B) in no event shall the
aggregate present value of the payments in the nature of
compensation (as that phrase is used in Section 280G of the
Code) received by the Employee as a result of the receipt of
such Employee Benefits, when added to the remaining portion of
the Severance Payment, if any, to be received by the Employee,
exceed the 299% Amount.
v) In addition to all other compensation due to
the Employee, the following shall occur immediately following
the occurrence of a Change in Control:
A) all Company stock options held by
the Employee prior to a Change in Control shall
become fully exercisable, regardless of whether or
not the vesting conditions set forth in the relevant
stock option agreements have been satisfied in full;
and
B) all restrictions on any restricted
Company stock granted to the Employee prior to a
Change in Control shall be removed and the stock
shall be freely transferable, regardless of whether
the conditions set forth in the relevant restricted
stock agreements have been satisfied in full.
b) Upon written notice given by the Employee to the Company prior
to the receipt of any payment pursuant to Section 5(a) hereof, the Employee, at
his sole option, without reduction to reflect the present value of such amounts
as aforesaid, may elect to have all or any of the Severance
Payment payable pursuant to Section 5(a)(i) hereof paid to him on a quarterly or
monthly basis during the remainder of the Period of Employment.
c) There shall be no right of set-off or counterclaim in respect
of any claim, debt or obligation against any payment to or benefit for the
Employee provided for in this Agreement.
d) Without limiting the rights of the Employee at law or in
equity, if the Company fails to make any payment required to be made hereunder
on a timely basis, the Company shall pay interest on the amount thereof at an
annualized rate of interest equal to the then-applicable Discount Rate or, if
lesser, the highest rate allowed by applicable usury laws.
6. NO MITIGATION OBLIGATION. The Company hereby acknowledges that
it will be difficult, and may be impossible, for the Employee to find reasonably
comparable employment following the Termination Date. Accordingly, the parties
hereto expressly agree that the payment of the severance compensation by the
Company to the Employee in accordance with the terms of this Agreement will be
liquidated damages, and that the Employee shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise, nor shall any profits, income, earnings or other benefits from any
source whatsoever create any mitigation, offset, reduction or any other
obligation on the part of the Employee hereunder or otherwise, except as
expressly provided in Section 5(a)(iii) hereof.
7. [Reserved]
8. LEGAL FEES AND EXPENSES. In the event of a breach of this
Agreement by the Company, it is the intent of the Company that the Employee not
be required to incur the expenses associated with the enforcement of his rights
under this Agreement by litigation or other legal action because the cost and
expense thereof would substantially detract from the benefits intended to be
extended to the Employee hereunder. Accordingly, if the Company fails to comply
with any of its obligations under this Agreement or in the event that the
Company or any other person takes any action to declare this Agreement void or
unenforceable, or institutes any litigation designed to deny, or to recover
from, the Employee the benefits intended to be provided to the Employee
hereunder, the Company irrevocably authorizes the Employee from time to time to
retain counsel of his choice, at the expense of the Company as hereafter
provided, to represent the Employee in connection with the initiation or defense
of any litigation or other legal action, whether by or against the Company or
any Director, officer, shareholder or other person affiliated with the Company,
in any jurisdiction. Notwithstanding any existing or prior attorney-client
relationship between the Company and such counsel, the Company irrevocably
consents to the Employee's entering into an attorney-client relationship with
such counsel (other than Vinson & Elkins L.L.P.), and in that connection the
Company and the Employee agree that a confidential relationship shall exist
between the Employee and such counsel. The Company shall pay or cause to be paid
and shall be solely responsible for any and all attorneys and related fees and
expenses incurred by the Employee as a result of the Company's failure to
perform this Agreement or any provision thereof or as a result of the Company or
any person contesting the validity or enforceability of this Agreement or any
provision thereof as
aforesaid. If the Company should prevail in any litigation regarding this
Agreement, however, the Company shall not be responsible for any attorneys and
related fees and expenses incurred by Employee in connection with such
litigation.
9. EMPLOYMENT RIGHTS. Nothing expressed or implied in this
Agreement shall create any right or duty on the part of the Company or the
Employee to have the Employee remain in the employment of the Company prior to
any Change in Control; provided, however, that any termination of employment of
the Employee or removal of the Employee as an Officer of the Company following
the commencement of any discussion with a third person that ultimately results
in a Change in Control shall be deemed to be a termination or removal of the
Employee after a Change in Control for purposes of this Agreement.
10. WITHHOLDING OF TAXES. The Company may withhold from any
amounts payable under this Agreement all federal, state, city or other taxes as
shall be required pursuant to any law or government regulation or ruling.
11. SUCCESSORS AND BINDING AGREEMENT.
a) The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation, reorganization
or otherwise) to all or substantially all of the business and/or assets
of the Company to execute an agreement pursuant to which the successor
expressly assumes all of the liabilities and obligations of the Company
hereunder and agrees to perform this Agreement in the same manner and
to the same extent the Company would be required to perform if no such
succession had taken place. This Agreement shall be binding upon and
inure to the benefit of the Company and any successor to the Company,
including without limitation any persons acquiring directly or
indirectly all or substantially all of the business and/or assets of
the Company whether by purchase, merger, consolidation, reorganization
or otherwise (and such successor shall thereafter be deemed the Company
for the purposes of this Agreement), but shall not otherwise be
assignable, transferable or delegable by the Company.
b) This Agreement shall inure to the benefit of and be
enforceable by the Employee's personal or legal representatives,
executors, administrators, successors, heirs, distributees and/or
legatees.
c) This Agreement is personal in nature and neither of
the parties hereto shall, without the consent of the other, assign,
transfer or delegate this Agreement or any rights or obligations
hereunder except as expressly provided in Section 11(a) hereof. Without
limiting the generality of the foregoing, the Employee's right to
receive payments hereunder shall not be assignable, transferable or
delegable, whether by pledge, creation of a security interest or
otherwise, other than by a transfer by the Employee's will or by the
laws of descent and distribution and, in the event of any attempted
assignment or transfer contrary to this Section 11(c), the Company
shall have no liability to pay any amount so attempted to be assigned,
transferred or delegated.
d) The Company and the Employee recognize that each
Party will have no adequate remedy at law for breach by the other of
any of the agreements contained herein and, in the event of any such
breach, the Company and the Employee hereby agree and consent that the
other shall be entitled to a decree of specific performance, mandamus
or other appropriate remedy to enforce performance of this Agreement.
12. NOTICE. For all purposes of this Agreement, all communications
provided for herein shall be in writing and shall be deemed to have been duly
given when delivered or three business days after having been mailed by United
States registered or certified mail, return receipt requested, postage prepaid,
addressed to the Company (to the attention of the Secretary of the Company) at
its principal executive office and to the Employee at his principal residence,
or to such other address as any party may have furnished to the other in writing
and in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
13. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Texas, without giving effect to the principles of conflict of laws of such
State.
14. VALIDITY. If any provision of this Agreement or the
application of any provision hereof to any person or circumstances is held
invalid, unenforceable or otherwise illegal, the remainder of this Agreement and
the application of such provision to any other person or circumstances shall not
be affected, and the provision so held to be invalid, unenforceable or otherwise
illegal shall be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid and legal.
15. MISCELLANEOUS. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Employee and the Company. No waiver by either
party hereto at any time of any breach by the other party hereto or compliance
with any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, expressed or implied with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement.
16. PRIOR AGREEMENTS. This Agreement is voluntarily entered into
and supersedes and takes the place of any prior change in control, severance or
employment agreements between the parties hereto. The parties hereto expressly
agree and hereby declare that any and all prior change in control, severance or
employment agreements between the parties are terminated and of no force or
effect.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
SOUTHWEST BANCORPORATION OF TEXAS, INC.
By: /s/ Paul B. Murphy
---------------------------------------
EMPLOYEE:
/s/ George Marshall
---------------------------------------
CHANGE IN CONTROL AGREEMENT
This CHANGE IN CONTROL AGREEMENT (Agreement), effective as of January
1, 2000 (the Effective Date), by and between Southwest Bancorporation of Texas,
Inc., a Texas corporation (the Company), and John McWhorter (the Employee);
W I T N E S S E T H:
WHEREAS, the Employee is an officer of the Company or its wholly-owned
subsidiary, Southwest Bank of Texas National Association (the Bank) and has made
and/or is expected to make or continue to make major contributions to the
profitability, growth and financial strength of the Company and the Bank;
WHEREAS, references herein to the Employee's employment by the Company
shall also mean his or her employment by the Bank, and references herein to
payments of any nature to be made by the Company to the Employee shall mean that
either the Company will make such payments or it will cause the Bank to make
such payments to the Employee;
WHEREAS, the Company desires to assure itself of both present and
future continuity of management in the event of a Change in Control (as defined
hereafter) and desires to establish certain minimum compensation rights of its
key officers, including the Employee, applicable in the event of a Change in
Control;
WHEREAS, the Company wishes to ensure that its key officers are not
practically disabled from discharging their duties upon a Change in Control;
WHEREAS, this Agreement is not intended to alter materially the
compensation and benefits which the Employee could reasonably expect to receive
from the Company or the Bank absent a Change in Control and, accordingly,
although effective and binding as of the date hereof, this Agreement shall
become operative only upon the occurrence of a Change of Control; and
WHEREAS, the Employee is willing to render services to the Company and
the Bank on the terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, the Company and the Employee agree as follows:
1. OPERATION OF AGREEMENT.
a) This Agreement shall be effective and binding as of
the Effective Date, but, anything in this Agreement to the contrary
notwithstanding, this Agreement shall not be operative unless and until
there shall have occurred a Change in Control.
For purposes of this Agreement, a Change in Control shall have
occurred if at any time during the Term (as that term is hereafter
defined) any of the following events shall occur:
i) The Company is merged, consolidated or
reorganized into or with or sells all or substantially all of
its assets to another corporation or other legal person, and
as a result of such merger, consolidation, reorganization or
sale (A) less than a majority of the combined voting power of
the then-outstanding securities of such corporation or person
immediately after such transaction are held in the aggregate
by the holders of Voting Stock (as that term is hereinafter
defined) of the Company immediately prior to such transaction
and (B) it is intended that persons serving as Directors of
the Company immediately prior to the transaction will
constitute none of or less than a majority of the Directors of
the other corporation or legal person after consummation of
the transaction; or
ii) If during any one (1) year period,
individuals who at the beginning of any such period constitute
the Directors of the Company cease for any reason to
constitute at least a majority thereof, unless the election,
or the nomination for election by the Company's shareholders,
of each Director of the Company first elected during such
period was approved by a vote of at least two-thirds of the
Directors of the Company then still in office who were
Directors of the Company at the beginning of any such period.
b) Upon occurrence of a Change in Control at any time
during the Term, this Agreement shall become immediately operative.
c) The period during which this Agreement shall be in
effect (the Term) shall commence as of the date hereof and shall expire
as of the later of (i) the close of business on December 31, 2002, and
(ii) the expiration of the Period of Employment (as that term is
hereinafter defined); provided, however, that (A) commencing on
December 31, 2002, and the last day of each of the Company's Fiscal
Years thereafter, the Term of this Agreement shall automatically be
extended for an additional year unless, not later than the last day of
the immediately preceding September, the Company or the Employee shall
have given notice that it or he, as the case may be, does not wish to
have the Term extended and (B) subject to Section 9 hereof, if, prior
to a Change in Control, the Employee ceases for any reason to be an
employee of the Company, thereupon the Term shall be deemed to have
expired and this Agreement shall immediately terminate and be of no
further effect.
2. EMPLOYMENT; PERIOD OF EMPLOYMENT.
a) Subject to the terms and conditions of this
Agreement, upon the occurrence of a Change in Control, the Company
shall continue the Employee in its employ and the Employee shall remain
in the employ of the Company for the period set forth in Section 2(b)
hereof (the Period of Employment). Throughout the Period of Employment,
the Employee shall devote substantially all of his time during normal
business hours (subject to vacations, sick leave and other absences in
accordance with the policies of the Company as in effect for
senior executives immediately prior to the Change in Control) to the
business and affairs of the Company, but nothing in this Agreement
shall preclude the Employee from devoting reasonable periods of time
during normal business hours to (i) serving as a director, trustee or
member of or participant in any organization or business so long as
such organization or business is not engaged, directly or indirectly,
in the business of commercial banking in competition with the business
of the Company, (ii) engaging in charitable and community activities,
or (iii) managing his personal investments.
b) The Period of Employment shall commence on the date
of an occurrence of a Change in Control and, subject only to the
provisions of Section 4 hereof, shall continue until the earlier of (i)
the expiration of the second anniversary of the occurrence of the
Change in Control or (ii) the Employee's death.
3. COMPENSATION DURING PERIOD OF EMPLOYMENT.
a) Upon the occurrence of a Change in Control, the
Employee shall receive during the Period of Employment (i) annual base
salary at a rate not less than the Employees annual fixed or base
compensation payable monthly or otherwise as in effect for senior
executives of the Company immediately prior to the occurrence of a
Change in Control or such higher rate as may be determined from time to
time by the Board of Directors of the Company (the Board) or the
Compensation Committee thereof (the Committee) (which base salary at
such rate is herein referred to as Base Pay) and (ii) an annual cash
bonus in an amount determined for the Employee in accordance with the
Company's incentive compensation plan or plans in effect at the time of
the Change in Control or in accordance with any bonus, incentive,
profit-sharing, performance, discretionary pay or similar policy, plan,
program or arrangement of the Company or any successor thereto
providing benefits at least as great as the benefits payable thereunder
prior to the Change in Control (Incentive Pay); provided, however, that
nothing herein shall preclude a change in the mix between Base Pay and
Incentive Pay so long as the aggregate cash compensation received by
the Employee in any one calendar year is not reduced in connection
therewith or as a result thereof and, provided further, however, that
in no event shall any increase in the Employee's aggregate cash
compensation or any portion thereof in any way diminish any other
obligation of the Company under this Agreement.
b) For his service pursuant to Section 2(a) hereof,
during the Period of Employment the Employee shall, if and on the same
basis as he participated therein immediately prior to the Change in
Control, be a full participant in, and shall be entitled to the
perquisites, benefits and service credit for benefits as provided under
any and all employee retirement income and welfare benefit policies,
plans, programs or arrangements in which senior executives of the
Company participate, including without limitation any stock option,
stock purchase, stock appreciation, savings, pension, supplemental
executive retirement or other retirement income or welfare benefit,
deferred compensation, incentive compensation, group and/or executive
life, accident, health, dental, medical/hospital or other insurance
(whether funded by actual insurance or self-insured by the Company),
disability, salary continuation, expense reimbursement and other
employee benefit policies, plans, programs or arrangements that may now
exist or any equivalent successor policies, plans,
programs or arrangements that may be adopted hereafter by the Company
providing perquisites, benefits and service credit for benefits at
least as great as are payable thereunder prior to a Change in
Control(collectively, Employee Benefits); provided, however, that the
Employee's rights thereunder shall be governed by the terms thereof and
shall not be enlarged hereunder or otherwise affected hereby. Subject
to the proviso in the immediately preceding sentence, if and to the
extent such perquisites, benefits or service credit for benefits are
not payable or provided under any such policy, plan, program or
arrangement as a result of the amendment or termination thereof, then
the Company shall itself pay or provide therefor. Nothing in this
Agreement shall preclude improvement or enhancement of any such
Employee Benefits, provided that no such improvement shall in any way
diminish any other obligation of the Company under this Agreement.
c) The Company has determined that the amounts payable
pursuant to this Section 3 constitute reasonable compensation.
Accordingly, notwithstanding any other provision hereof, unless such
action would be expressly prohibited by applicable law, if any amount
paid or payable pursuant to this Section 3 is subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the Code), the Company will pay to the Employee an additional
amount in cash equal to the amount necessary to cause the aggregate
remuneration received by the Employee under this Section 3, including
such additional cash payment (net of all federal, state and local
income taxes and all taxes payable as the result of the application of
Sections 280G and 4999 of the Code) to be equal to the aggregate
remuneration the Employee would have received under this Section 3,
excluding such additional payment (net of all federal, state and local
income taxes), as if Sections 280G and 4999 of the Code (and any
successor provisions thereto) had not been enacted into law.
4. TERMINATION FOLLOWING A CHANGE IN CONTROL.
a) In the event of the occurrence of a Change in
Control, this Agreement may be terminated by the Company during the
Period of Employment only upon the occurrence of one or more of the
following events:
i) If the Employee is unable to perform the
essential functions of his job (with or without reasonable
accommodation) because he has become permanently disabled
within the meaning of, and actually begins to receive
disability benefits pursuant to, the long-term disability plan
in effect for senior executives or, if applicable, employees
of the Company immediately prior to the Change in Control; or
ii) For Cause, which for purposes of this
Agreement shall mean that, prior to any termination pursuant
to Section 4(b) hereof, the Employee shall have committed:
A) Gross negligence or willful
misconduct in connection with his duties or in the
course of his employment with the Company;
B) an act of fraud, embezzlement or
theft in connection with his duties or in the course
of his employment with the Company;
C) intentional wrongful damage to
property of the Company;
D) intentional wrongful disclosure of
secret processes or confidential information of the
Company;
E) intentional wrongful engagement in
any Competitive Activity; or
F) an act leading to a conviction of a
felony or a misdemeanor involving moral turpitude.
For purposes of this Agreement, no act, or failure to act, on
the part of the Employee shall be deemed intentional if it was due
primarily to an error in judgment or negligence, but shall be deemed
intentional only if done, or omitted to be done, by the Employee not in
good faith and without reasonable belief that his action or omission
was in the best interest of the Company. Notwithstanding the foregoing,
the Employee shall not be deemed to have been terminated for Cause
hereunder unless and until there shall have been delivered to the
Employee a copy of a resolution duly adopted by the affirmative vote of
not less than three-quarters of the Board then in office at a meeting
of the Board called and held for such purpose (after reasonable notice
to the Employee and an opportunity for the Employee, together with his
counsel, to be heard before the Board), finding that, in the good faith
opinion of the Board, the Employee had committed an act set forth above
in this Section 4(a)(ii) and specifying the particulars thereof in
detail. Nothing herein shall limit the right of the Employee or his
beneficiaries to contest the validity or propriety of any such
determination.
b) in the event of the occurrence of a Change in
Control, this Agreement may be terminated by the Employee during the
Period of Employment with the right to benefits as provided in Section
5 hereof upon the occurrence of one or more of the following events:
i) Any termination by the Company of the
employment of the Employee for any reason other than for Cause
or as a result of the death of the Employee or by reason of
the Employee's disability and the actual receipt of disability
benefits in accordance with Section 4(a)(i) hereof; or
ii) Termination by the Employee of his
employment with the Company upon the occurrence of any of the
following events:
A) A reduction in the aggregate of the
Employee's Base Pay and Incentive Pay received from
the Company, or the termination of the Employee's
rights to any Employee Benefits to which he was
entitled immediately prior to the Change in Control
or a reduction in scope or value thereof without the
prior written consent of the Employee, any of which
is not
remedied within 10 calendar days after receipt by the
Company of written notice from the Employee of such
change, reduction or termination, as the case may be;
B) The liquidation, dissolution,
merger, consolidation or reorganization of the
Company or transfer of all or a significant portion
of its business and/or assets, unless the successor
or successors (by liquidation, merger, consolidation,
reorganization or otherwise) to which all or a
significant portion of its business and/or assets
have been transferred (directly or by operation of
law) shall have assumed all duties and obligations of
the Company under this Agreement pursuant to Section
11 hereof;
C) The Company requires the Employee
to have his principal location of work changed to any
location which is in excess of 50 miles from the
location thereof immediately prior to the Change of
Control or to travel away from his office in the
course of discharging his responsibilities or duties
hereunder significantly more (in terms of either
consecutive days or aggregate days in any calendar
year) than was required of him prior to the Change of
Control without, in either case, his prior consent;
or
D) Any material breach of this
Agreement by the Company or any successor thereto.
c) A termination by the Company pursuant to Section 4(a)
hereof or by the Employee pursuant to Section 4(b) hereof shall not
affect any rights which the Employee may have pursuant to any
agreement, policy, plan, program or arrangement of the Company
providing Employee Benefits, which rights shall be governed by the
terms thereof. If this Agreement or the employment of the Employee is
terminated under circumstances in which the Employee is not entitled to
any payments under Sections 3 or 5 hereof, the Employee shall have no
further obligation or liability to the Company hereunder with respect
to his prior or any future employment by the Company.
5. SEVERANCE COMPENSATION.
a) If, following the occurrence of a Change in Control,
the Company shall terminate the Employee's employment during the Period
of Employment other than pursuant to Section 4(a) hereof, or if the
Employee shall terminate his employment pursuant to Section 4(b)
hereof, the Company shall pay to the Employee the amount specified in
Section 5(a)(i) hereof within ten business days after the date (the
Termination Date) that the Employee's employment is terminated (the
effective date of which shall be the date of termination, or such other
date that may be specified by the Employee if the termination is
pursuant to Section 4(b) hereof):
i) In lieu of any further payments to the
Employee for periods subsequent to the Termination Date, but
without affecting the rights of the Employee referred to in
Section 5(b) hereof, a lump sum payment (the Severance
Payment) in
an amount equal to the present value (using a discount rate
required to be utilized for purposes of computations under
Section 280G of the Code or any successor provision thereto,
or if no such rate is so required to be used, a rate equal to
the then-applicable interest rate prescribed by the Pension
Benefit Guarantee Corporation for benefit valuations in
connection with non-multiemployer pension plan terminations
assuming the immediate commencement of benefit payments (the
Discount Rate) of the sum of (A) the Base Pay (at the highest
rate in effect during the Term prior to the Termination Date)
for one year, plus (B) the Incentive Pay for one year (based
upon the greatest amount of Incentive Pay paid or payable to
the Employee for any year during the three calendar years
preceding the year in which the Termination Date occurs);
provided, however, that in no event will the present value (as
determined under Section 280G of the Code or any successor
provision thereto) of the amount otherwise payable hereunder,
when added to the present value (as determined under Section
280G of the Code or any successor provision thereto) of any
other parachute payments (as that term is defined in Section
280G of the Code (without regard to Section 280G(b)(2)(A)(ii)
thereof) or any successor provision thereto) from the Company,
exceed an amount (the A299% Amount) equal to 299% of the
Employee's base amount (as that term is defined in Section
280G of the Code or any successor provision thereto) and if
the amount otherwise payable hereunder would exceed the 299%
Amount, the Severance Payment shall be reduced to the extent
necessary so that the aggregate present value determined in
the previous clause does not exceed the 299% Amount.
ii) The determination of whether any amount
otherwise payable under Section 5(a)(i) causes the 299% Amount
to be exceeded shall be made, if requested by the Employee or
the Company, by tax counsel selected by the Company and
reasonably acceptable to the Employee. The costs of obtaining
such determination shall be borne by the Company. The fact
that the Employee shall have his right to the Severance
Payment reduced as a result of the existence of the
limitations contained in this Section 5(a) shall not limit or
otherwise affect any rights of the Employee to any Employee
Benefit, or other right arising other than pursuant to this
Agreement. Without limiting the generality of the foregoing,
upon the Employee's termination of employment as provided in
this Section 5, the Company shall pay over to him all vested
benefits to which he is entitled under and in accordance with
the terms of the Company's employee savings, stock ownership,
supplemental executive retirement and similar Plans in the
event such payments are not otherwise made in accordance with
the terms of such plans.
iii) Except to the extent that the payments or
benefits pursuant to this Section 5(a)(iii) would result in a
reduction of the amount of the Severance Payment because they
would exceed the 299% Amount, (A) for the remainder of the
Period of Employment the Company shall arrange to provide the
Employee with Employee Benefits substantially similar to those
which the Employee was receiving or entitled to receive
immediately prior to the Termination Date (and if and to the
extent that such benefits shall not or cannot be paid or
provided under any policy, plan, program or arrangement of the
Company solely due to the fact that the Employee is no longer
an officer or employee of the Company, then the Company shall
itself pay or provide for the payment to the Employee, his
dependents and beneficiaries, such Employee Benefits) and (B)
without limiting the generality of the foregoing, the
remainder of the Period of Employment shall be considered
service with the Company for the purpose of service credits
under the Company's retirement income, supplemental executive
retirement and other benefit plans of the Company applicable
to the Employee or his beneficiaries immediately prior to the
Termination Date. Without otherwise limiting the purposes or
effect of Section 6 hereof, Employee Benefits payable to the
Employee pursuant to this Section 5(a)(iii) by reason of any
welfare benefit plan of the Company (as the term welfare
benefit plan is defined in Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended) shall be
reduced to the extent comparable welfare benefits are actually
received by the Employee from another employer during such
period following the Employee's Termination Date until the
expiration of the Period of Employment.
iv) Notwithstanding any provision of the Section
5(a) to the contrary, in the event the benefits intended to be
provided to the Employee pursuant to Section 5(a)(iii) hereof
are required to be reduced in whole or in part because the
value of such Employee Benefits, when added to the amount of
the Severance Payment under Section 5(a)(i), would exceed 299%
Amount, the Employee shall have the option to elect to
receive, in lieu of all or a portion of the Severance Payment
provided in Section 5(a)(i) hereof, one or more Employee
Benefits, provided that (A) prior to the receipt of any
payment under Section 5(a)(i) hereof, the Employee notifies
the Company of the Employee Benefit or Employee Benefits so
elected to be received, and (B) in no event shall the
aggregate present value of the payments in the nature of
compensation (as that phrase is used in Section 280G of the
Code) received by the Employee as a result of the receipt of
such Employee Benefits, when added to the remaining portion of
the Severance Payment, if any, to be received by the Employee,
exceed the 299% Amount.
v) In addition to all other compensation due to
the Employee, the following shall occur immediately following
the occurrence of a Change in Control:
A) all Company stock options held by
the Employee prior to a Change in Control shall
become fully exercisable, regardless of whether or
not the vesting conditions set forth in the relevant
stock option agreements have been satisfied in full;
and
B) all restrictions on any restricted
Company stock granted to the Employee prior to a
Change in Control shall be removed and the stock
shall be freely transferable, regardless of whether
the conditions set forth in the relevant restricted
stock agreements have been satisfied in full.
b) Upon written notice given by the Employee to the
Company prior to the receipt of any payment pursuant to Section 5(a)
hereof, the Employee, at his sole option, without reduction to reflect
the present value of such amounts as aforesaid, may elect to have all
or any of the Severance
Payment payable pursuant to Section 5(a)(i) hereof paid to him on a
quarterly or monthly basis during the remainder of the Period of
Employment.
c) There shall be no right of set-off or counterclaim in
respect of any claim, debt or obligation against any payment to or
benefit for the Employee provided for in this Agreement.
d) Without limiting the rights of the Employee at law or
in equity, if the Company fails to make any payment required to be made
hereunder on a timely basis, the Company shall pay interest on the
amount thereof at an annualized rate of interest equal to the
then-applicable Discount Rate or, if lesser, the highest rate allowed
by applicable usury laws.
6. NO MITIGATION OBLIGATION. The Company hereby acknowledges that
it will be difficult, and may be impossible, for the Employee to find reasonably
comparable employment following the Termination Date. Accordingly, the parties
hereto expressly agree that the payment of the severance compensation by the
Company to the Employee in accordance with the terms of this Agreement will be
liquidated damages, and that the Employee shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise, nor shall any profits, income, earnings or other benefits from any
source whatsoever create any mitigation, offset, reduction or any other
obligation on the part of the Employee hereunder or otherwise, except as
expressly provided in Section 5(a)(iii) hereof.
7. [Reserved]
8. LEGAL FEES AND EXPENSES. In the event of a breach of this
Agreement by the Company, it is the intent of the Company that the Employee not
be required to incur the expenses associated with the enforcement of his rights
under this Agreement by litigation or other legal action because the cost and
expense thereof would substantially detract from the benefits intended to be
extended to the Employee hereunder. Accordingly, if the Company fails to comply
with any of its obligations under this Agreement or in the event that the
Company or any other person takes any action to declare this Agreement void or
unenforceable, or institutes any litigation designed to deny, or to recover
from, the Employee the benefits intended to be provided to the Employee
hereunder, the Company irrevocably authorizes the Employee from time to time to
retain counsel of his choice, at the expense of the Company as hereafter
provided, to represent the Employee in connection with the initiation or defense
of any litigation or other legal action, whether by or against the Company or
any Director, officer, shareholder or other person affiliated with the Company,
in any jurisdiction. Notwithstanding any existing or prior attorney-client
relationship between the Company and such counsel, the Company irrevocably
consents to the Employee's entering into an attorney-client relationship with
such counsel (other than Vinson & Elkins L.L.P.), and in that connection the
Company and the Employee agree that a confidential relationship shall exist
between the Employee and such counsel. The Company shall pay or cause to be paid
and shall be solely responsible for any and all attorneys and related fees and
expenses incurred by the Employee as a result of the Company's failure to
perform this Agreement or any provision thereof or as a result of the Company or
any person contesting the validity or enforceability of this Agreement or any
provision thereof as
aforesaid. If the Company should prevail in any litigation regarding this
Agreement, however, the Company shall not be responsible for any attorneys and
related fees and expenses incurred by Employee in connection with such
litigation.
9. EMPLOYMENT RIGHTS. Nothing expressed or implied in this
Agreement shall create any right or duty on the part of the Company or the
Employee to have the Employee remain in the employment of the Company prior to
any Change in Control; provided, however, that any termination of employment of
the Employee or removal of the Employee as an Officer of the Company following
the commencement of any discussion with a third person that ultimately results
in a Change in Control shall be deemed to be a termination or removal of the
Employee after a Change in Control for purposes of this Agreement.
10. WITHHOLDING OF TAXES. The Company may withhold from any
amounts payable under this Agreement all federal, state, city or other taxes as
shall be required pursuant to any law or government regulation or ruling.
11. SUCCESSORS AND BINDING AGREEMENT.
a) The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation, reorganization
or otherwise) to all or substantially all of the business and/or assets
of the Company to execute an agreement pursuant to which the successor
expressly assumes all of the liabilities and obligations of the Company
hereunder and agrees to perform this Agreement in the same manner and
to the same extent the Company would be required to perform if no such
succession had taken place. This Agreement shall be binding upon and
inure to the benefit of the Company and any successor to the Company,
including without limitation any persons acquiring directly or
indirectly all or substantially all of the business and/or assets of
the Company whether by purchase, merger, consolidation, reorganization
or otherwise (and such successor shall thereafter be deemed the Company
for the purposes of this Agreement), but shall not otherwise be
assignable, transferable or delegable by the Company.
b) This Agreement shall inure to the benefit of and be
enforceable by the Employee's personal or legal representatives,
executors, administrators, successors, heirs, distributees and/or
legatees.
c) This Agreement is personal in nature and neither of
the parties hereto shall, without the consent of the other, assign,
transfer or delegate this Agreement or any rights or obligations
hereunder except as expressly provided in Section 11(a) hereof. Without
limiting the generality of the foregoing, the Employee's right to
receive payments hereunder shall not be assignable, transferable or
delegable, whether by pledge, creation of a security interest or
otherwise, other than by a transfer by the Employee's will or by the
laws of descent and distribution and, in the event of any attempted
assignment or transfer contrary to this Section 11(c), the Company
shall have no liability to pay any amount so attempted to be assigned,
transferred or delegated.
d) The Company and the Employee recognize that each
Party will have no adequate remedy at law for breach by the other of
any of the agreements contained herein and, in the event of any such
breach, the Company and the Employee hereby agree and consent that the
other shall be entitled to a decree of specific performance, mandamus
or other appropriate remedy to enforce performance of this Agreement.
12. NOTICE. For all purposes of this Agreement, all communications
provided for herein shall be in writing and shall be deemed to have been duly
given when delivered or three business days after having been mailed by United
States registered or certified mail, return receipt requested, postage prepaid,
addressed to the Company (to the attention of the Secretary of the Company) at
its principal executive office and to the Employee at his principal residence,
or to such other address as any party may have furnished to the other in writing
and in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
13. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Texas, without giving effect to the principles of conflict of laws of such
State.
14. VALIDITY. If any provision of this Agreement or the
application of any provision hereof to any person or circumstances is held
invalid, unenforceable or otherwise illegal, the remainder of this Agreement and
the application of such provision to any other person or circumstances shall not
be affected, and the provision so held to be invalid, unenforceable or otherwise
illegal shall be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid and legal.
15. MISCELLANEOUS. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Employee and the Company. No waiver by either
party hereto at any time of any breach by the other party hereto or compliance
with any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, expressed or implied with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement.
16. PRIOR AGREEMENTS. This Agreement is voluntarily entered into
and supersedes and takes the place of any prior change in control, severance or
employment agreements between the parties hereto. The parties hereto expressly
agree and hereby declare that any and all prior change in control, severance or
employment agreements between the parties are terminated and of no force or
effect.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
SOUTHWEST BANCORPORATION OF TEXAS, INC.
By: /s/ Paul B. Murphy
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EMPLOYEE:
/s/ John McWhorter
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