Exhibit 10.4
MANAGEMENT CONTINUITY AGREEMENT
This
Management Continuity Agreement (this “Agreement”) is
entered into this 10th day of August 2009, by and between O.A.K.
FINANCIAL CORPORATION , a Michigan corporation (together with
its subsidiaries, the “Corporation”), whose address is
2445 84th Street, S.W., Byron Center, Michigan 49315, and
James A. Luyk (“Executive”), whose address is
___________________________________________________.
WHEREAS,
Executive is an officer and employee of the Corporation and/or one
or more of the Corporation’s subsidiaries, including Byron
Bank (the “Bank”);
WHEREAS,
the parties have entered into an Employment Agreement dated as of
the same date as this Agreement to set forth the terms and
conditions of the employment relationship between the Corporation
(together with its subsidiaries) and Executive (the
“Employment Agreement”);
WHEREAS,
the Board of Directors of the Corporation has approved this
Agreement and authorized Bank to enter into this Agreement with
Executive;
WHEREAS,
Executive has many years of experience in the financial services
industry and is familiar with the Corporation’s business,
employees and customers, and any competition by the Executive would
have an adverse effect on the Corporation; and
WHEREAS,
the services of the Executive, his or her experience and knowledge
of the affairs of the Corporation and his or her reputation and
contacts in the industry are extremely valuable to the Corporation.
The Corporation wishes to attract and retain such well-qualified
executives, and it is in the best interests of the Corporation and
of the Executive to secure the continued services of the Executive.
The Corporation considers the establishment and maintenance of a
sound and vital management to be part of its overall corporate
strategy and to be essential to protecting and enhancing the best
interests of this Corporation and its shareholders. Accordingly,
the Board has approved this Agreement with the Executive and
authorized its execution and delivery on behalf of the
Corporation.
NOW,
THEREFORE, IT IS AGREED AS FOLLOWS:
1.
Term of Agreement . The initial term of this
Agreement (the “Initial Term”) shall be from the date
entered above (the “Effective Date”) until December 31,
2011, subject to earlier terminations provided in this Agreement.
Beginning on December 31, 2009, and on each December 31 thereafter,
the term of this Agreement shall be extended for a period of one
year in addition to the then-remaining term, unless the Corporation
has given notice to the Executive in writing at least 90 days prior
to such December 31 that the term of this Agreement shall not be
extended further; if such notice is given, this Agreement will
expire at the end of the then-remaining term; provided, however,
that such notice may not be given and will not be effective if the
Corporation is at the time in negotiations to effect a Change of
Control. References in this Agreement to the “Term” of
this Agreement shall refer to the Initial Term and any extensions
thereof. If a Change of Control occurs during the Term of this
Agreement, this Agreement will continue in effect for at least
thirty-six (36) months beyond the end of the month in which any
Change of Control occurs.
2.
Definitions . The following defined terms shall have
the meanings set forth below, for purposes of this
Agreement:
(a)
Cause . “Cause” means (i) the willful commission
by the Executive of a criminal or other act that causes or will
probably cause substantial economic damage to the Corporation or a
Subsidiary or substantial injury to the business reputation of the
Corporation or a Subsidiary; (ii) the commission by the Executive
of an act of fraud or material dishonesty in the performance of
such Executive’s duties on behalf of the Corporation or a
Subsidiary; (iii) the continuing willful failure of the Executive
to perform the duties of such Executive to the Corporation or a
Subsidiary (other than any such failure resulting from the
Executive’s Disability or occurring after issuance by
Executive of a Notice of Termination for Good Reason) after written
notice thereof (specifying the particulars thereof in reasonable
detail) and a reasonable opportunity to be heard and cure such
failure are given to the Executive by the Executive Compensation
Committee of the Board, or (iv) the order of a federal or state
bank regulatory agency or a court of competent jurisdiction
requiring the termination of Executive’s employment. For
purposes of this Section, no act, or failure to act, on the
Executive’s part shall be deemed “willful” unless
done, or omitted to be done, by the Executive not in good faith and
without reasonable belief that the action or omission was in the
best interest of the Corporation or a Subsidiary.
(b)
Change of Control . A “Change of Control” of the
Corporation shall be deemed to have occurred only if:
(i)
Any “person” (as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934 (the
“Exchange Act”)) is or becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Corporation
representing fifty-one percent (51%) or more of the combined voting
power of the Corporation’s then outstanding securities;
or
(ii)
At any time a majority of the Board of Directors of the Corporation
is comprised of other than Continuing Directors (for purposes of
this and the following sections, the term Continuing Director means
a director who was either (A) first elected or appointed as a
Director prior to the date of this Agreement; or (B) subsequently
elected or appointed as a director if such director was nominated
or appointed by at least a majority of the then Continuing
Directors); or
(iii)
Any of the following occur:
(A)
Any merger or consolidation of the Corporation, other than a merger
or consolidation in which the voting securities of the Corporation
immediately prior to the merger or consolidation continue to
represent (either by remaining outstanding or being converted into
securities of the surviving entity) fifty-one percent (51%) or more
of the combined voting power of the Corporation or surviving entity
immediately after the merger or consolidation with another
entity;
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(B)
Any sale, exchange, transfer, or other disposition (in a single
transaction or a series of related transactions) of all or
substantially all of the assets of the Corporation, which shall not
include any asset sales approved by the Continuing Directors for
the specific purpose of downsizing of the Corporation’s
continuing business operations;
(C)
Any reorganization, reverse stock split, or recapitalization of the
Corporation which would result in a Change of Control;
or
(D)
Any transaction or series of related transactions having, directly
or indirectly, the same effect as any of the foregoing; or any
agreement, contract, or other arrangement providing for any of the
foregoing.
(c)
Disability . “Disability” means that, as a
result of Executive’s incapacity due to physical or mental
illness, the Executive shall have been found to be eligible for the
receipt of benefits under the Corporation’s long term
disability plan.
(d)
Good Reason . For purposes of this Agreement, “Good
Reason” means the occurrence of any one or more of the
following without the Executive’s express written
consent:
(i)
The assignment to Executive of duties which are materially
different from or inconsistent with the duties, responsibilities,
and status of Executive’s position at any time during the six
(6) month period prior to a Change of Control of the Corporation,
or which result in a significant reduction in Executive’s
authority and responsibility as a senior executive of the
Corporation;
(ii)
A reduction by the Corporation in Executive’s base salary or
salary grade as of the day prior to the Change of Control, or the
failure to grant salary increases and bonus payments on a basis
comparable to those granted to other executives of the Corporation,
or reduction of Executive’s most recent incentive bonus
potential prior to the Change of Control under the
Corporation’s executive officer bonus plan, or any successor
plan;
(iii)
The Corporation requiring Executive to be based at a location in
excess of thirty (30) miles from the location where Executive is
currently based, or in the event of any relocation of the Executive
with the Executive’s express written consent, the failure of
the Corporation or a Subsidiary to pay (or reimburse the Executive
for) all reasonable moving expenses by the Executive relating to a
change of principal residence in connection with such relocation
and to indemnify the Executive against any loss realized in the
sale of the Executive’s principal residence in connection
with any such change of residence, all to the effect that the
Executive shall incur no loss on an after tax basis;
(iv)
The failure of the Corporation to obtain a satisfactory agreement
from any successor to the Corporation to assume and agree to
perform this Agreement, as contemplated in Section 13 of this
Agreement;
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(v)
Any termination by the Corporation of Executive’s employment
that is other than for Cause;
(vi)
Any termination of Executive’s employment, reduction in
Executive’s compensation or benefits, or adverse change in
Executive’s location or duties, if such termination,
reduction or adverse change (aa) occurs within six (6) months
before a Change of Control, (bb) is in contemplation of such Change
in Control, and (cc) is taken to avoid the effect of this Agreement
had such action occurred after such Change in Control;
(vii)
The failure of the Corporation to provide the Executive with
substantially the same fringe benefits (including, without
limitation, retirement plan, health care, insurance, stock options
and paid vacations) that were provided to him immediately prior to
the Change in Control, or with a package of fringe benefits that,
though one or more of such benefits may vary from those in effect
immediately prior to such Change in Control, is substantially
comparable in all material respects to such fringe benefits taken
as a whole.
The
existence of Good Reason shall not be affected by Executive’s
Disability. Executive’s continued employment shall not
constitute a waiver of Executive’s rights with respect to any
circumstance constituting Good Reason under this
Agreement.
(e)
Notice of Termination . “Notice of Termination”
means a written notice indicating the specific termination
provision in this Agreement relied upon and setting forth in
reasonable detail the facts and circumstances claimed to provide a
basis for termination of the employment under the provision so
indicated. The Executive shall not be entitled to give a Notice of
Termination that the Executive is terminating employment for Good
Reason more than six (6) months following the occurrence of the
event alleged to constitute Good Reason, except with respect to an
event which occurred before the Change of Control, in which case
the Notice of Termination must be given within six (6) months
following the Change of Control.
(f)
Subsidiary . “Subsidiary” means a corporation
with at least eighty percent (80%) of its outstanding capital stock
owned by the Corporation.
3.
Eligibility for Severance Benefits . Subject to
Section 5, the Executive shall receive the Severance Benefits
described in Section 4 if the Executive’s employment is
terminated during the term of this Agreement, and
(a)
The termination occurs within thirty-six (36) months after a Change
of Control, unless the termination is (A) because of
Executive’s death or Disability, (B) by the Corporation for
Cause, or (C) by the Executive other than for Good Reason;
or
(b)
The Corporation terminates the employment within six (6) months
before a Change of Control, in contemplation of such Change of
Control, and with the purpose of avoiding the effect of this
Agreement had such termination of employment occurred after such
Change of Control.
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(c)
Notwithstanding and in addition to the foregoing, during the period
beginning on the date that is one hundred eighty (180) days after
the effective date of a Change of Control and ending on the date
that is two hundred ten (210) days after a Change of Control, the
Executive shall have the right to terminate the Executive’s
employment for any reason or no reason, with or without “Good
Reason,” and shall receive the Severance Benefits described
in Section 4.
(d)
For purposes of this Agreement, the Executive’s employment
shall be deemed terminated when the Executive incurs a
“separation from service” (as such term is defined in
Code Section 409A and the regulations promulgated thereunder) with
the Corporation because of death, retirement or termination of
employment for any other reason, including any reason specified in
this Section 3; provided, however, that no termination shall be
deemed to occur for purposes of this Agreement while the Executive
continues to perform services for the Corporation in
