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EXHIBIT 10.4(b)
CHANGE-IN-CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT entered into this ___ day of __________, 1997, by and
between HCB Bancshares, Inc. (the "Company") and William Lyon (the "Employee"),
effective on the date (the "Effective Date") this agreement is executed.
WHEREAS, the Employee has heretofore been employed by Heartland
Community Bank (the "Bank") as an executive officer, and the Company deems it
to be in its best interest to enter into this Agreement as additional incentive
to the Employee to continue as an executive employee of the Bank; and
WHEREAS, the parties desire by this writing to set forth their
understanding as to their respective rights and obligations in the event a
change of control occurs with respect to the Bank or the Company.
NOW, THEREFORE, the undersigned parties AGREE as follows:
1. Defined Terms
When used anywhere in the Agreement, the following terms shall
have the meaning set forth herein.
(a) "Affiliate" shall mean any "parent corporation" or "subsidiary
corporation" of the Bank, as the terms are defined in Section 424(e) and (f),
respectively, of the Code.
(b) A "Change in Control" shall be deemed to have occurred if:
(i) as a result of, or in connection with, any initial public
offering, tender offer or exchange offer, merger or other business
combination, sale of assets or contested election, any combination of
the foregoing transactions, or any similar transaction, the persons
who were non-employee directors of the Company or the Bank before such
transaction cease to constitute a majority of the Board of Directors
of the Company or the Bank or any successor to the Company or the
Bank;
(ii) the Company or the Bank transfers substantially all of
its assets to another corporation which is not an Affiliate of the
Company;
(iii) the Company sells substantially all of the assets an
Affiliate which accounted for 50% or more of the controlled group's
assets immediately prior to such sale;
(iv) any "person" including a "group" is or becomes the
"beneficial owner", directly or indirectly, of securities of the
Company or the Bank representing twenty-five percent (25%) or more of
the combined voting power of the Company or the Bank's
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outstanding securities (with the terms in quotation marks having the
meaning set forth under the federal securities laws); or
(v) the Company or the Bank is merged or consolidated with
another corporation and, as a result of the merger or consolidation,
less than seventy percent (70%) of the outstanding voting securities
of the surviving or resulting corporation is owned in the aggregate by
the former stockholders of the Company or the Bank.
Notwithstanding the foregoing, a "Change in Control" shall not be
deemed to occur solely by reason of a transaction in which the Bank converts to
the stock form of organization, or creates an independent holding company in
connection therewith.
(c) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and as interpreted through applicable rulings and
regulations in effect from time to time.
(d) "Code Section 280G Maximum" shall mean product of 2.99 and
his "base amount" as defined in Code Section 280G(b)(3).
(e) "Good Reason" shall mean any of the following events, which
has not been consented to in advance by the Employee in writing: (i) the
requirement that the Employee move his personal residence, or perform his
principal executive functions, more than thirty (30) miles from his primary
office as of the date of the Change in Control; (ii) a material reduction in
the Employee's base compensation on the date of the Change in Control or as the
same may be increased from time to time; (iii) the failure by the Bank or the
Company to continue to provide the Employee with compensation and benefits
provided for on the date of the Change in Control, as the same may be increased
from time to time, or with benefits substantially similar to those provided to
him under any of the employee benefit plans in which the Employee now or
hereafter becomes a participant, or the taking of any action by the Bank or the
Company which would directly or indirectly reduce any of such benefits or
deprive the Employee of any material fringe benefit enjoyed by him at the time
of the Change in Control; (iv) the assignment to the Employee of duties and
responsibilities materially different from those normally associated with his
position; (v) a failure to elect or reelect the Employee to the Board of
Directors of the Bank or the Company, if the Employee is serving on such Board
on the date of the Change in Control; (vi) a material diminution or reduction
in the Employee's responsibilities or authority (including reporting
responsibilities) in connection with his employment with the Bank or the
Company; or (vii) a material reduction in the secretarial or other
administrative support of the Employee.
(f) "Just Cause" shall mean, in the good faith determination of
the Bank's Board of Directors, the Employee's personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful violation of any
law, rule or regulation (other than traffic violations or similar offenses) or
final cease-and-desist order, or material breach of any provision of this
Agreement. The Employee shall have no right to receive compensation or other
benefits for any period after termination for Just Cause. No act, or failure
to act, on the Employee's part shall be considered "willful" unless
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he has acted, or failed to act, with an absence of good faith and without a
reasonable belief that his action or failure to act was in the best interest of
the Bank and the Company.
(g) "Protected Period" shall mean the period that begins on the
date one year before a Change in Control and ends on the closing date of the
Change in Control.
2. Trigger Events
The Employee shall be entitled to collect the severance benefits set
forth in Section 3 of this Agreement in the event that (i) a Change in Control
occurs, or, (ii) the Bank, the Company, or their successor(s) in interest
terminate the Employee's employment for any reason other than Just Cause during
the Protected Period.
3. Amount of Severance Benefit
If the Employee becomes entitled to collect severance benefits
pursuant to Section 2 hereof, the Company shall, if not paid by the Bank
pursuant to the severance agreement between the Employee and the Bank, pay the
Employee a severance benefit equal to the difference between the Code Section
280G Maximum and the sum of any other "parachute payments" as defined under
Code Section 280G(b)(2) that the Employee receives on account of the Change in
Control. Said sum shall be paid in one lump sum within ten (10) days of the
later of the date of the Change in Control and the Employee's last day of
employment with the Bank or the Company, provided that the Employee may elect
at any time or before becoming entitled to collect benefits hereunder, to have
such benefits be paid in substantially equal installments over a period of up
to 10 years.
In the event that the Employee and the Company agree that the Employee
has collected an amount exceeding the Code Section 280G Maximum, the parties
may jointly agree in writing that such excess shall be treated as a loan ab
initio which the Employee shall repay to the Company, on terms and conditions
mutually agreeable to the parties, together with interest at the applicable
federal rate provided for in Section 7872(f)(2)(B) of the Code.
4. Term of the Agreement. This Agreement shall remain in effect
for the period commencing on the Effective Date and ending on the earlier of
(i) the date 36 months after the Effective Date, and (ii) the date on which the
Employee terminates employment with the Company; provided that the Employee's
rights hereunder shall continue following the termination of this employment
with the Company under any of the circumstances described in Section 2 hereof.
Additionally, on each annual anniversary date from the Effective Date, the term
of this Agreement shall be extended for an additional one-year period beyond
the then effective expiration date provided the Board of Directors of the
Company determines in a duly adopted resolution that the performance of the
Employee has met the requirements and standards of the respective Boards, and
that this Agreement shall be extended.
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5. Termination or Suspension Under Federal Law. Any payments
made to the Employee pursuant to this Agreement, or otherwise, are subject to
and conditioned upon their compliance with 12 U.S.C. Section 1828(k) and any
regulations promulgated thereunder.
6. Expense Reimbursement.
In the event that any dispute arises between the Employee and
the Company as to the terms or interpretation of this Agreement, whether
instituted by formal legal proceedings or otherwise, including any action that
the Employee takes to enforce the terms of this Agreement or to defend against
any action taken by the Company, the Employee shall be reimbursed for all costs
and expenses, including reasonable attorneys' fees, arising from such dispute,
proceedings or actions, provided that the Employee shall obtain a final
judgement in favor of the Employee in a court of competent jurisdiction or in
binding arbitration under the rules of the American Arbitration Association.
Such reimbursement shall be paid within ten (10) days of Employee's furnishing
to the Company written evidence, which may be in the form, among other things,
of a cancelled check or receipt, of any costs or expenses incurred by the
Employee.
7. Successors and Assigns.
(a) This Agreement shall inure to the benefit of and be
binding upon any corporate or other successor of the Company which shall
acquire, directly or indirectly, by merger, consolidation, purchase or
otherwise, all or substantially all of the assets or stock of the Bank or
Company.
(b) Since the Company is contracting for the unique and
personal skills of the Employee, the Employee shall be precluded from assigning
or delegating his rights or duties hereunder without first obtaining the
written consent of the Company.
8. Amendments. No amendments or additions to this Agreement
shall be binding unless made in writing and signed by all of the parties,
except as herein otherwise specifically provided.
9. Applicable Law. Except to the extent preempted by Federal
law, the laws of the State of Arkansas shall govern this Agreement in all
respects, whether as to its validity, construction, capacity, performance or
otherwise.
10. Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof.
11. Entire Agreement. This Agreement, together with any
understanding or modifications thereof as agreed to in writing by the parties,
shall constitute the entire agreement between the parties hereto.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first hereinabove written.
ATTEST: HCB BANCSHARES, INC.
By:
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Secretary Its Chairman of the Board
WITNESS:
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William Lyon
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