Exhibit 10.3
EXECUTION COPY
WESTERN LIBERTY BANCORP
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this “Agreement”), dated as of November 6, 2009 between
Western Liberty Bancorp, a Delaware corporation, its successors or assigns (the
“Company”), and John Gaynor (the “Employee”).
W I T N E S S E T H
WHEREAS, the Company has entered into an agreement (the “Merger Agreement”)
pursuant to which it has agreed to acquire Service1st Bank of Nevada, a
Nevada-chartered non-member bank, on the terms and subject to the conditions set
forth therein (the “Transaction”);
WHEREAS, the Company desires to employ the Employee as the President and Chief
Operating Officer of the Company’s and the Company’s Nevada commercial banking
operations (the “Business”) following the occurrence of the Transaction;
WHEREAS, the Company and the Employee desire to enter into this Agreement as to
the terms of the Employee’s employment as President and Chief Operating Officer
of the Company and the Business;
WHEREAS, the Employee’s agreement to be employed by the Company as of the
Effective Date (as defined in Section 2 hereof) is a material inducement to the
Company to enter into this Agreement as of the date hereof and the Merger
Agreement;
NOW, THEREFORE, in consideration of the foregoing, of the mutual promises
contained herein and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. POSITION AND DUTIES.
(a) During the Employment Term (as defined in Section 2 hereof), the Employee
shall serve as the President and Chief Operating Officer of the Company and the
Business. In this capacity, the Employee shall have all duties, authorities and
responsibilities commensurate with the duties, authorities and responsibilities
of persons in similar capacities in similarly sized companies, and such other
duties, authorities and responsibilities as the Chairman (the “Chairman”) of the
Board of Directors of the Company (the “Board”) shall designate from time to
time that are not inconsistent with the Employee’s position as President and
Chief Operating Officer of the Business. As the President and Chief Operating
Officer of the Company, the Employee shall report to (1) the Chairman, (2) if,
as and when requested by the Chairman, the Chief Executive Officer of the
Company, and (3) the board of directors of any subsidiary he may serve
hereunder. As the President and Chief Executive Officer of the Business, the
Employee shall report to the Chief Executive Officer of the Business.

 

 

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(b) During the Employment Term, the Employee shall devote all of the Employee’s
business time, energy and skill and the Employee’s best efforts to the
performance of the Employee’s duties with the Company; provided, that the
foregoing shall not prevent the Employee from (i) serving on the boards of
directors of non-profit organizations and, with the prior written approval of
the Board in each instance, other for-profit companies, (ii) participating in
charitable, civic, educational, professional, community or industry affairs, and
(iii) managing the Employee’s passive personal investments; so long as such
activities do not, individually or in the aggregate, interfere or conflict with
the Employee’s duties hereunder or create a potential conflict of interest;
provided further, that the foregoing shall not prevent the Employee from
participating in other non-passive activities if, as and when approved by the
Board, in each instance. If the Board determines, in its sole discretion, that
any outside activity or activities pose or will pose a conflict of interest, or
that the time commitments required interfere with the performance of the
Employee’s duties hereunder, even if previously approved, the Employee shall, at
the request of the Board, cease such activities at the earliest available
opportunity.
(c) The Employee shall serve hereunder as an officer or director of any
subsidiary or division of the Company that includes any portion of the Business
as requested by the Company from time to time without any additional
compensation therefor. The Company may, without limiting its liability
hereunder, cause any subsidiary to assume the Company’s obligations hereunder.
2. EMPLOYMENT TERM. The Company agrees to employ the Employee pursuant to the
terms of this Agreement, and the Employee agrees to be so employed, for a term
of three years (the “Initial Term”) commencing as of the Effective Date.
Notwithstanding anything herein to the contrary, the Employee agrees that he
shall not terminate this Agreement prior to the Effective Date; provided, that
the Effective Date occurs no later than September 30, 2010; provided further,
that, prior to the Effective Date, the Employee shall agree to cooperate and
permit the Company to use his name in regulatory filings that he has approved,
which approval shall not unreasonably be withheld or delayed. On each
anniversary of the Effective Date following the Initial Term, the term of this
Agreement shall be automatically extended for successive 1-year periods (each a
“Renewal Term”), provided, however, that either party hereto may elect not to
extend the term of this Agreement by giving written notice to the other party at
least 30 days prior to any such anniversary date. Notwithstanding the foregoing,
the Employee’s employment hereunder may be earlier terminated at any time during
the Initial Term or any Renewal Term in accordance with Section 7 hereof,
subject to Section 8 hereof. The period of time between the Effective Date and
the termination of the Employee’s employment hereunder for any reason shall be
referred to herein as the “Employment Term.” For purposes of this Agreement,
“Effective Date” means the closing of the Transaction.
3. BASE SALARY. During the Employment Term, the Company agrees to pay the
Employee an annual base salary which initially shall be not less than $300,000.
The Employee’s Base Salary shall be payable in accordance with the regular
payroll practices of the Company. The Employee’s Base Salary shall be subject to
annual review by the Board (or a committee thereof), and may be increased, but
not decreased below its then current level, from time to time by the Board. For
purposes of this Agreement, the base salary as determined herein from time to
time shall constitute “Base Salary”.

 

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4. EQUITY AWARDS.
(a) Subject to the approval of the awards by (i) the Board and (ii) the
Company’s stockholders in connection with the solicitation of proxies for
approval of the Transaction, the Employee shall receive on the Effective Date, a
one-time grant of a number of restricted shares of the Company’s common stock
equal to $1,000,000 divided by the closing price of the Company’s common stock
on the Effective Date (all such shares being, the “Restricted Stock”).
(b) The Restricted Stock will vest 20% on each of the first, second, third,
fourth and fifth anniversaries of the Effective Date, subject to the Employee’s
continuous employment through each vesting date, except that the Restricted
Stock shall immediately vest in full upon a Change in Control (as defined
below).
(c) The Employee agrees that, for a period of one year following each vesting
date (each such period, a “Lock-up Period”), the Employee will not offer, sell,
contract to sell, pledge, grant any option to purchase, make any short sale or
otherwise dispose of, directly or indirectly, the shares of the Company’s common
stock that became or is deemed to have become vested on such vesting date;
provided, however, that on each such vesting date (or, in the case of Restricted
Stock issued after a vesting date, on the date of its issuance), the Employee
shall be able to sell certain of his Restricted Stock to the extent the proceeds
of each such sale will be applied exclusively towards the satisfaction of the
portion of any tax liabilities that become due and payable that is directly
attributable to the vesting of such shares of common stock; provided further,
however, that the Employee shall not transfer the shares of common stock subject
to forfeiture, as provided in Section 8(c), without first delivering prior
notice to the Company, then receiving written approval from the Company, which
approval shall not unreasonably be withheld or delayed. For the avoidance of
doubt, the shares of common stock subject to a Lock-up Period shall not be
Restricted Stock and are not subject to forfeiture, except as otherwise provided
in Section 8(c). Each Lock-up Period shall survive the termination of the
Employee’s employment hereunder. The Restricted Stock will be subject to the
terms of a restricted stock agreement to be entered into between the Employee
and contain such other provisions as determined necessary by the Board, which
provisions shall not be inconsistent with the terms set forth in this Agreement.
(d) For purposes of this Agreement, a “Change in Control” means, (1) with
respect to the Restricted Stock, the acquisition, directly or indirectly, in one
or more transactions, by any person or group of persons acting in concert, of
50% of more of the then outstanding voting securities of the Company or the
power to cause the election of a majority of the members of the Board, and
(2) with respect to the Change in Control Payment (as defined below), the
acquisition, directly or indirectly, in one or more transactions, by any person
or group of persons acting in concert, of 50% of more of the then outstanding
voting securities of the Business.
(e) During the Employment Term, the Employee shall be eligible to receive other
equity and other long-term incentive awards under the equity-based incentive
compensation plans adopted by the Company during the Employment Term for which
the Company’s senior executives are generally eligible. The level of the
Employee’s participation in any such plan, if any, shall be determined in the
sole discretion of the Board from time to time.

 

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5. ANNUAL BONUS. During the Employment Term, the Employee shall be eligible to
receive an annual discretionary incentive payment under the Company’s annual
bonus plan as in effect from time to time (the “Annual Bonus”), upon the
attainment of one or more pre-established performance goals established by the
Board of the Company’s Compensation Committee, which shall include, but not be
limited to, operating the Business and/or the Company in a safe and sound manner
and complying with all federal or state laws, rules and regulations.
6. EMPLOYEE BENEFITS; CHANGE IN CONTROL BENEFITS.
(a) BENEFIT PLANS. During the Employment Term, the Employee shall be entitled to
participate in any employee benefit plan that the Company has adopted or may
adopt, maintain or contribute to for the benefit of its employees generally from
time to time in accordance with, and subject to, the terms and conditions
thereof, including satisfying the applicable eligibility requirements.
Notwithstanding the foregoing, the Company may in its sole discretion modify or
terminate any employee benefit plan at any time.
(b) VACATIONS. During the Employment Term, the Employee shall be entitled to
four (4) weeks of paid vacation per calendar year (as prorated for partial
years) in accordance with the Company’s policy on accrual and use applicable to
employees as in effect from time to time. The Employee agrees that any vacation
taken by the Employee during the Employment Term shall be taken at times which
are mutually determined by the Chairman and the Employee not to interfere, in
any material respect, with the Employee’s performance of his duties hereunder.
(c) BUSINESS AND ENTERTAINMENT EXPENSES. Upon presentation of appropriate
documentation, the Employee shall be reimbursed in accordance with the Company’s
expense reimbursement policy, for all reasonable business and entertainment
expenses incurred in connection with the performance of the Employee’s duties
hereunder and the Company’s policies with regard thereto.
(d) CHANGE IN CONTROL PAYMENT. If the Employee remains the President and Chief
Operating Officer of the Business through the closing of a Change in Control,
then, upon such closing, the Employee shall receive a single cash payment in an
amount equal to one (1) times the Employee’s Base Salary for the year prior to
the date of such closing (the “Change in Control Payment”).
7. TERMINATION. The Employee’s employment and/or the Employment Term shall
terminate on the first of the following to occur:
(a) DISABILITY. Upon written notice by the Company to the Employee of
termination due to Disability. For purposes of this Agreement, “Disability”
shall be defined as the inability of the Employee to have performed the
Employee’s material duties hereunder due to a physical or mental injury,
infirmity or incapacity for 180 days (including weekends and holidays) in any
365-day period.
(b) DEATH. Automatically on the date of death of the Employee.

 

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(c) CAUSE. Immediately upon written notice by the Company to the Employee of a
termination for Cause. “Cause” shall mean:
(i) the Employee’s willful misconduct or gross negligence in the performance of
the Employee’s duties to the Company that has or could reasonably be expected to
have an adverse effect on the Company or the Business that, if curable, is not
cured within 30 days of the giving of written notice thereof to the Employee;
(ii) the Employee’s repeated refusal or failure to perform the Employee’s duties
to the Company or the Business or to follow the lawful directives of the Board
(other than as a result of death or a physical or mental incapacity), which
refusal or failure continued for at least 30 days following the giving of
written notice of demand for substantial performance to the Employee;
(iii) indictment for, conviction of, or pleading of guilty or nolo contendere
to, a felony or any crime involving moral turpitude;
(iv) the Employee’s embezzlement or misappropriation of corporate funds or other
acts of theft, fraud, malfeasance, self-dealing, dishonesty or breach of
fiduciary duty in connection with the performance of the Employee’s duties to
the Company or the Business;
(v) the Employee either not receiving approval from the Bank Regulators to serve
as either the President or the Chief Operating Officer of either the Company or
the Business or later being determined by the Bank Regulators to be unsuitable
to serve in such capacity. “Bank Regulators” shall mean the Federal Deposit
Insurance Corporation or any successor thereto, the Federal Reserve Board, the
State of Nevada Financial Institutions Division, or any other federal or state
regulatory agency with authority over the Company, the Business or Service1st
Bank of Nevada;
(vi) breach of Section 10 of this Agreement; or
(vii) material breach of any other Section of this Agreement or any other
agreement with the Company, the Business or a violation of the Company’s code of
conduct or other written policy that, if curable, is not cured within 30 days of
the giving of written notice thereof to the Employee.
(d) WITHOUT CAUSE. Immediately upon written notice by the Company to the
Employee of an involuntary termination without Cause (other than for death or
Disability).
(e) GOOD REASON. Upon written notice by the Employee to the Company of a
termination for Good Reason. “Good Reason” shall mean the occurrence of any of
the following events without the written consent of the Employee, unless such
events are fully corrected in all material respects by the Company within
30 days following its receipt of the written notification by the Employee to the
Company described below:
(i) diminution in the Employee’s Base Salary;

 

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(ii) relocation of the Employee’s primary work location beyond 50 miles outside
of Las Vegas, Nevada;
(iii) a material diminution of the Employee’s authority, duties and
responsibilities; or
(iv) any other action or inaction that constitutes a material breach by the
Company of this Agreement.
Any claim of any such event as “Good Reason” shall be deemed irrevocably waived
by the Employee unless: (x) the Employee delivers written notice to the Board of
his intent to resign from his employment hereunder for Good Reason within
60 days following the date on which the event the Employee claims constitutes
Good Reason occurs, which notice shall specifically identify the facts and
circumstances the Employee claims constitutes Good Reason, and (y) the Employee
resigns from his employment hereunder for Good Reason within 150 days following
the date on which the event the Employee claims constitutes Good Reason occurs.
Notwithstanding anything herein to the contrary, the Employee agrees that this
Agreement may be terminated by the Company prior to the Effective Date upon the
occurrence of any of the events set forth in Section 7(a), Section 7(b),
Section 7(c)(iii), Section 7(c)(v), Section 7(c)(vi) (with respect to a breach
of Section 10(a), Section (c) and Section 10(d)) or Section 7(c)(vii).
(f) WITHOUT GOOD REASON. Upon 30 days’ prior written notice by the Employee to
the Company of the Employee’s voluntary termination of employment without Good
Reason; provided, that upon receipt of such notice the Company may, in its sole
discretion, make such termination effective at an earlier date and the
termination shall still be treated as a voluntary termination by the Employee
without Good Reason.
(g) EXPIRATION OF EMPLOYMENT TERM; NON-EXTENSION OF AGREEMENT. Upon the
expiration of the Employment Term due to a non-extension of the Agreement by the
Company or the Employee pursuant to the provisions of Section 2 hereof.
8. CONSEQUENCES OF TERMINATION.
(a) DEATH. In the event that the Employee’s employment and the Employment Term
ends on account of the Employee’s death, the Employee’s estate shall be entitled
to the following:
(i) any unpaid Base Salary through the date of termination, paid in accordance
with the regular payroll practices of the Company;
(ii) reimbursement for any unreimbursed business expenses incurred through the
date of termination pursuant to, and paid in accordance with, Sections 6(c) and
23(b)(iii) of this Agreement;
(iii) any accrued but unused vacation time paid in accordance with Company
policy; and

 

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(iv) such vested accrued benefits, if any, as to which the Employee may be
entitled under the Company’s employee benefit plans and programs applicable to
the Employee as of the date of termination (other than any severance pay plan),
which shall be paid or provided in accordance with the terms of the applicable
plan or program (collectively, Sections 8(a)(i) through 8(a)(iv) hereof shall be
hereafter referred to as the “Accrued Benefits”).
For the avoidance of doubt, in the event that the Employee’s employment and the
Employment Term ends on account of the Employee’s death, any unvested shares of
Restricted Stock shall be forfeited.
(b) DISABILITY. In the event that the Employee’s employment and/or Employment
Term ends on account of the Employee’s Disability, the Company shall pay or
provide the Employee with the Accrued Benefits. For the avoidance of doubt, in
the event that the Employee’s employment and/or Employment Term ends on account
of the Employee’s Disability, any unvested shares of Restricted Stock shall be
forfeited.
(c) TERMINATION FOR CAUSE OR WITHOUT GOOD REASON OR AS A RESULT OF EMPLOYEE
NON-EXTENSION OF THIS AGREEMENT. If the Employee’s employment is terminated
(i) by the Company for Cause, (ii) by the Employee without Good Reason, or
(iii) as a result of the Employee’s non-extension of the Employment Term as
provided in Section 2 hereof, the Company shall pay to the Employee the Accrued
Benefits, and, if the Employee’s employment is terminated on account of
Section 8(c)(i) during the Employment Term or Section 8(c)(ii) through the fifth
anniversary of the Effective Date, the Employee shall forfeit and transfer to
the Company at no cost (other than any amounts the Employee paid to acquire such
shares) 50% of the shares of Restricted Stock vested (subject to reduction for
any amount of tax liability incurred by the Employee with respect to that 50% of
the shares); provided, that the Employee has not made an election with respect
to the shares of Restricted Stock under Section 83(b) of the Code (as defined in
Section 23(b)), as of the date of termination (including any shares subject to a
Lock-up Period), and, for the avoidance of doubt, any unvested shares of
Restricted Stock shall be forfeited.
(d) TERMINATION WITHOUT CAUSE OR FOR GOOD REASON OR AS A RESULT OF COMPANY
NON-EXTENSION OF THIS AGREEMENT. If the Employee’s employment by the Company is
terminated (x) by the Company other than for Cause, (y) by the Employee for Good
Reason, or (z) as a result of the Company’s non-extension of the Employment Term
as provided in Section 2 hereof, the Company shall pay or provide the Employee
with the Accrued Benefits and, subject to the Employee’s compliance with the
obligations in Sections 9, 10 and 11 hereof, the following, subject to the
provisions of Section 23 hereof: subject to (A) the Employee’s timely election
of continuation coverage under the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended (“COBRA”), and (B) the Employee’s continued co-payment
of premiums at the same level and cost to the Employee as if the Employee were
an employee of the Company (excluding, for purposes of calculating cost, an
employee’s ability to pay premiums with pre-tax dollars) (the “active employee
rate”), continued participation in the Company’s group health plan (to the
extent permitted under applicable law and the terms of such plan) which covers
the Employee for a period of up to 18 months at the Company’s expense (other
than as set forth in sub-section (B)), provided, that the Employee is

 

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eligible and remains eligible for COBRA coverage; and provided, further, that in
the event that the Employee obtains other employment that offers group health
benefits, such continuation of coverage by the Company under this
Section 8(d)(ii) shall immediately cease. Notwithstanding the foregoing, if he
benefits under the Company’s group health plan will be taxable to the Employee,
then in lieu of the Company’s payments for such continued participation, the
Company shall reimburse the Employee for his premiums for continued coverage
under such plan in the amount that the cost of such coverage exceeds the active
employee rate (as determined based on the Executive’s premium rate in effect on
the date of termination).
; provided, however, that Company shall have no contractual or other obligation
to make any payment to which the Employee shall be entitled pursuant to this
Section 7(d) to the Employee unless (i) such payment receives the prior approval
of the appropriate federal banking agency, if required at that time by 12 U.S.C.
Section 1828(k),12 C.F.R. Part 359, or other federal or state laws, rules or
regulations, and (ii) such obligation and such payment comply in all other
respects with 12 U.S.C. Section 1828(k),12 C.F.R. Part 359, and other federal
and state laws, rules or regulations, to the extent that such provisions are
applicable at that time; provided further, however, that this Agreement shall
comply with 12 U.S.C. Section 1828(k), 12 C.F.R. Part 359, and other applicable
federal and state laws, rules or regulations.
For the avoidance of doubt, in the event that the Employee’s employment and/or
Employment Term ends in accordance with this Section 8(d) any unvested shares of
Restricted Stock shall be forfeited, but no vested shares of Restricted Stock
shall be forfeited. Payments and benefits provided in this Section 8(d) shall be
in lieu of any termination or severance payments or benefits for which the
Employee may be eligible under any of the plans, policies or programs of the
Company.
(e) OTHER OBLIGATIONS. Upon any termination of the Employee’s employment with
the Company, the Employee shall promptly resign from any other position as an
officer, director or fiduciary of any Company-related entity.
9. RELEASE; NO MITIGATION. Any and all amounts payable and benefits or
additional rights provided to the Employee upon a termination of his employment
pursuant to Section 8 (other than the Accrued Benefits) shall only be payable or
provided if the Employee delivers to the Company and does not revoke a general
release of claims in favor of the Company and certain related parties in a form
reasonably satisfactory to the Company, which the Company shall provide to the
Employee within seven days following the date of termination. Such release shall
be executed and delivered (and no longer subject to revocation, if applicable)
within 60 days following termination. In no event shall the Employee be
obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to the Employee under any of the provisions of this
Agreement, nor shall the amount of any payment hereunder be reduced by any
compensation earned by the Employee as a result of employment by a subsequent
employer, except as provided in Section 8(d)(ii) hereof. The Employee shall not
be entitled to any release of claims from the Company in favor of the Employee.
10. RESTRICTIVE COVENANTS.

 

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(a) CONFIDENTIALITY. The Employee agrees that the Employee shall not, directly
or indirectly, use, make available, sell, disclose or otherwise communicate to
any person, other than in the course of the Employee’s assigned duties and for
the benefit of the Company, following the date of this Agreement, any business
and technical information or trade secrets, nonpublic, proprietary or
confidential information, knowledge or data relating to the Company, any of its
subsidiaries, affiliated companies or businesses, which shall have been obtained
by the Employee following the date of this Agreement. The foregoing shall not
apply to information that (A) was known to the public prior to its disclosure to
the Employee; (B) becomes generally known to the public subsequent to disclosure
to the Employee through no wrongful act of the Employee or any representative of
the Employee; or (C) the Employee is required to disclose by applicable law,
regulation or legal process (provided, that the Employee provides the Company
with prior notice of the contemplated disclosure and cooperates with the Company
at its expense in seeking a protective order or other appropriate protection of
such information).
(b) NONCOMPETITION. The Employee acknowledges that the Employee performs
services of a unique nature for the Company that are irreplaceable, and that the
Employee’s performance of such services to a competing business within the State
of Nevada will result in irreparable harm to the Company. Accordingly, during
the Employee’s employment hereunder and for a period of 1 year thereafter, the
Employee agrees that the Employee will not, directly or indirectly, own, manage,
operate, control, be employed by (whether as an employee, consultant,
independent contractor or otherwise, and whether or not for compensation) or
render services to any person, firm, corporation or other entity, in whatever
form, engaged in competition with the Company or any of its subsidiaries or
affiliates or in any other material business in which the Company or any of its
subsidiaries or affiliates is engaged on the date of termination or in which
they have planned, on or prior to such date, to be engaged in on or after such
date, within the State of Nevada. Notwithstanding the foregoing, nothing herein
shall prohibit the Employee from being a passive owner of not more than one
percent of the equity securities of a publicly traded corporation engaged in a
business that is in competition with the Company or any of its subsidiaries or
affiliates, so long as the Employee has no active participation in the business
of such corporation.
(c) NONSOLICITATION; NONINTERFERENCE. (i) Following the date of this Agreement
and for a period of 1 year following the Employee’s employment with the Company,
the Employee agrees that the Employee shall not, except in the furtherance of
the Employee’s duties hereunder, directly or indirectly, individually or on
behalf of any other person, firm, corporation or other entity, solicit, aid or
induce any customer of the Company or any of its subsidiaries or affiliates to
purchase goods or services then sold by the Company or any of its subsidiaries
or affiliates from another person, firm, corporation or other entity or assist
or aid any other persons or entity in identifying or soliciting any such
customer.
(ii) Following the date of this Agreement and for a period of 1 year following
the Employee’s employment with the Company, the Employee agrees that the
Employee shall not, except in the furtherance of the Employee’s duties
hereunder, directly or indirectly, individually or on behalf of any other
person, firm, corporation or other entity, (A) solicit, aid or induce any
employee, representative or agent of the Company or any of its subsidiaries or
affiliates to leave such employment or retention or to accept employment with or
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other entity unaffiliated with the Company or hire or retain any such employee,
representative or agent, or take any action to materially assist or aid any
other person, firm, corporation or other entity in identifying, hiring or
soliciting any such employee, representative or agent, or (B) interfere, or aid
or induce any other person or entity in interfering, with the relationship
between the Company or any of its subsidiaries or affiliates and any of their
respective vendors, joint venturers or licensors. An employee, representative or
agent shall be deemed covered by this Section 10(c)(ii) while so employed or
retained and for a period of six (6) months thereafter.
(d) NONDISPARAGMENT. The Employee agrees not to make negative comments or
otherwise disparage the Company or its officers, directors, employees,
shareholders, agents or products, in any manner likely to be harmful to them or
their business, business reputation or personal reputation other than while
employed by the Company, in the good faith performance of the Employee’s duties
to the Company. The foregoing shall not be violated by truthful statements in
response to legal process, required governmental testimony or filings, or
administrative or arbitral proceedings (including, without limitation,
depositions in connection with such proceedings); provided, that prior to making
any such statement the Employee shall provide the Company with prior notice and
shall reasonably cooperate with the Company in seeking a protective order or
other appropriate protection against making such statement.
(e) INVENTIONS. (i) The Employee acknowledges and agrees that all ideas,
methods, inventions, discoveries, improvements, work products or developments
(“Inventions”), whether patentable or unpatentable, (A) that relate to the
Employee’s work with the Company, made or conceived by the Employee, solely or
jointly with others, during the Employment Term, or (B) suggested by any work
that the Employee performs in connection with the Company, either while
performing the Employee’s duties to the Company or on the Employee’s own time,
but only insofar as the Inventions are related to the Employee’s work as an
employee or other service provider to the Company, shall belong exclusively to
the Company (or its designee), whether or not patent applications are filed
thereon. The Employee will keep full and complete written records (the
“Records”), in the manner prescribed by the Company, of all Inventions, and will
promptly disclose all Inventions completely and in writing to the Company. The
Records shall be the sole and exclusive property of the Company, and the
Employee will surrender them upon the termination of the Employment Term, or
upon the Company’s request. The Employee will assign to the Company the
Inventions and all patents that may issue thereon in any and all countries,
whether during or subsequent to the Employment Term, together with the right to
file, in the Employee’s name or in the name of the Company (or its designee),
applications for patents and equivalent rights (the “Applications”). The
Employee will, at any time during and subsequent to the Employment Term, make
such applications, sign such papers, take all rightful oaths, and perform all
acts as may be requested from time to time by the Company with respect to the
Inventions. The Employee will also execute assignments to the Company (or its
designee) of the Applications, and give the Company and its attorneys all
reasonable assistance (including the giving of testimony) to obtain the
Inventions for its benefit, all without additional compensation to the Employee
from the Company, but entirely at the Company’s expense.
(ii) In addition, the Inventions will be deemed Work for Hire, as such term is
defined under the copyright laws of the United States, on behalf of the Company
and the Employee agrees that the Company will be the sole owner of the
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underlying rights therein, in all media now known or hereinafter devised,
throughout the universe and in perpetuity without any further obligations to the
Employee. If the Inventions, or any portion thereof, are deemed not to be Work
for Hire, the Employee hereby irrevocably conveys, transfers and assigns to the
Company, all rights, in all media now known or hereinafter devised, throughout
the universe and in perpetuity, in and to the Inventions, including, without
limitation, all of the Employee’s right, title and interest in the copyrights
(and all renewals, revivals and extensions thereof) to the Inventions,
including, without limitation, all rights of any kind or any nature now or
hereafter recognized, including without limitation, the unrestricted right to
make modifications, adaptations and revisions to the Inventions, to exploit and
allow others to exploit the Inventions and all rights to sue at law or in equity
for any infringement, or other unauthorized use or conduct in derogation of the
Inventions, known or unknown, prior to the date hereof, including, without
limitation, the right to receive all proceeds and damages therefrom. In
addition, the Employee hereby waives any so-called “moral rights” with respect
to the Inventions. The Employee hereby waives any and all currently existing and
future monetary rights in and to the Inventions and all patents that may issue
thereon, including, without limitation, any rights that would otherwise accrue
to the Employee’s benefit by virtue of the Employee being an employee of or
other service provider to the Company.
(f) RETURN OF COMPANY PROPERTY. On the date of the Employee’s termination of
employment with the Company for any reason (or at any time prior thereto at the
Company’s request), the Employee shall return all property belonging to the
Company or its affiliates (including, but not limited to, any Company-provided
laptops, computers, cell phones, wireless electronic mail devices or other
equipment, or documents and property belonging to the Company).
(g) REFORMATION. If it is determined by a court of competent jurisdiction in any
state that any restriction in this Section 10 is excessive in duration or scope
or is unreasonable or unenforceable under the laws of that state, it is the
intention of the parties that such restriction may be modified or amended by the
court to render it enforceable to the maximum extent permitted by the laws of
that state.
(h) TOLLING. In the event of any violation of the provisions of this Section 10,
the Employee acknowledges and agrees that the post-termination restrictions
contained in this Section 10 shall be extended by a period of time equal to the
period of such violation, it being the intention of the parties hereto that the
running of the applicable post-termination restriction period shall be tolled
during any period of such violation.
(i) SURVIVAL OF PROVISIONS. The obligations contained in Sections 10 and 11
hereof shall survive the termination or expiration of this Agreement, the
Employment Term and/or the Employee’s employment with the Company and shall be
fully enforceable thereafter.
11. COOPERATION. Upon the receipt of reasonable notice from the Company
(including its outside counsel), the Employee agrees that while employed by the
Company and thereafter, the Employee will respond and provide information with
regard to matters in which the Employee has knowledge as a result of the
Employee’s employment with the Company, and

 

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will provide reasonable assistance to the Company, its affiliates and their
respective representatives in defense of any claims that may be made against the
Company or its affiliates, and will assist the Company and its affiliates in the
prosecution of any claims that may be made by the Company or its affiliates, to
the extent that such claims may relate to the period of the Employee’s
employment with the Company. The Employee agrees to promptly inform the Company
if the Employee becomes aware of any lawsuits involving such claims that may be
filed or threatened against the Company or its affiliates. The Employee also
agrees to promptly inform the Company (to the extent that the Employee is
legally permitted to do so) if the Employee is asked to assist in any
investigation of the Company or its affiliates (or their actions), regardless of
whether a lawsuit or other proceeding has then been filed against the Company or
its affiliates with respect to such investigation, and shall not do so unless
legally required. If the Employee is required to provide services pursuant to
this Section 11 following the Employment Term for more than five hours per month
for more than three months, then (a) the Employee shall receive a fee for his
time at a rate of $1,000 per day and (b) in accordance with its reimbursement
policies and procedures as in effect, including the timely submission of proper
documentation supporting such expenses, the Company will pay (or reimburse the
Employee for) reasonable out-of-pocket travel, lodging, communication and
duplication expenses incurred in connection with the performance of such
services 
12. EQUITABLE RELIEF AND OTHER REMEDIES. The Employee acknowledges and agrees
that the Company’s remedies at law for a breach or threatened breach of any of
the provisions of Section 10 or Section 11 hereof would be inadequate and, in
recognition of this fact, the Employee agrees that, in the event of such a
breach or threatened breach, in addition to any remedies at law, the Company,
without posting any bond, shall be entitled to obtain equitable relief in the
form of specific performance, a temporary restraining order, a temporary or
permanent injunction or any other equitable remedy which may then be available.
In the event of a violation by the Employee of Section 10 or Section 11 hereof,
any severance being paid or provided to the Employee pursuant to this Agreement
or otherwise shall immediately cease, and any severance previously paid to the
Employee shall be immediately repaid to the Company.
13. NO ASSIGNMENTS. This Agreement is personal to each of the parties hereto.
Except as provided in this Section 13 hereof, no party may assign or delegate
any rights or obligations hereunder without first obtaining the written consent
of the other party hereto. The Employee hereby acknowledges and agree that the
Company may assign this Agreement (including the provisions of Section 10 and
Section 11) to any successor to all or substantially all of the business and/or
assets of the Company. As used in this Agreement, “Company” shall mean the
Company and any successor to its business and/or assets.
14. NOTICE. For purposes of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing. Each notice and all other
communications shall be delivered either by hand, by confirmed facsimile or
electronic mail (but only if followed by transmittal by national overnight
courier or hand delivered in person on the next business day), by guaranteed
overnight delivery service, or by United States registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
If to the Employee:

 

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At the address (or to the facsimile number) shown
on the records of the Company
If to the Company:
Western Liberty Bancorp
1370 Avenue of the Americas
28th Floor
New York, New York 10019
Attention: Jason N. Ader, Chairman
Facsimile: 212.445.7800
with a copy to:
Proskauer Rose LLP
1585 Broadway
New York, New York 10036-8299
Attention: Jeffrey A. Horwitz
Facsimile: 212.969.2900
or to such other address as either party may have furnished to the other in
writing in accordance herewith. Each notice and all other communications shall
be deemed duly given and effective upon actual receipt (or refusal of receipt).
15. SECTION HEADINGS; INCONSISTENCY. The section headings used in this Agreement
are included solely for convenience and shall not affect, or be used in
connection with, the interpretation of this Agreement. In the event of any
inconsistency between the terms of this Agreement and any form, award, plan or
policy of the Company, the terms of this Agreement shall govern and control.
16. 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.
17. COUNTERPARTS. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
18. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL. This Agreement
shall be governed by and construed in accordance with the internal laws of the
State of New York, without regard to its principles of conflicts of laws. Each
of the Parties irrevocably submits to the exclusive jurisdiction of the courts
of the State of New York located in New York City or the United States District
Court for the Southern District of New York for the purpose of any suit, action,
proceeding or judgment relating to or arising out of this Agreement and the
transactions contemplated hereby. Service of process in connection with any such
suit, action or proceeding may be served on each party hereto anywhere in the
world by the

 

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same methods as are specified for the giving of notices under this Agreement.
Each of the parties hereto irrevocably consents to the jurisdiction of any such
court in any such suit, action or proceeding and to the laying of venue in such
court. Each party hereto irrevocably waives any objection to the laying of venue
of any such suit, action or proceeding brought in such courts and irrevocably
waives any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO
WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO
THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO
THIS WAIVER.
19. INDEMNIFICATION. The Company hereby agrees to indemnify the Employee and
hold the Employee harmless to the extent provided under the By-Laws of the
Company and the Indemnification Agreement, dated as of November 3, 2009, between
Service1st Bank of Nevada and the Employee against and in respect of any and all
actions, suits, proceedings, claims, demands, judgments, costs, expenses
(including reasonable attorney’s fees), losses, and damages resulting from the
Employee’s good faith performance of the Employee’s duties and obligations with
the Company. This obligation shall survive the termination of the Employee’s
employment with the Company. Notwithstanding the foregoing, the Employee’s right
to indemnification pursuant to this Section 19 shall be made ineffective as
necessary to ensure with compliance with 12 C.F.R. Part 359.
20. LIABILITY INSURANCE. From and after the Effective Date, the Company shall
cover the Employee under directors’ and officers’ liability insurance both
during and, while potential liability exists, after the term of this Agreement
in the same amount and to the same extent as the Company covers its other
officers and directors.
21. MISCELLANEOUS. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by the Employee and such officer or director as may be designated by
the Board. No waiver by either party hereto at any time of any breach by the
other party hereto of, 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. This Agreement together with all exhibits hereto sets forth the
entire agreement of the parties hereto in respect of the subject matter
contained herein and supersedes any and all prior agreements or understandings,
written or oral, between the Employee and either the Company or Service1st Bank
of Nevada with respect to the subject matter hereof, including, without
limitation, any draft employment agreement previously provided by or on behalf
of Service1st Bank of Nevada to the Employee (it being agreed and acknowledged
that, for the avoidance of doubt, no such agreement was ever executed and
delivered by either Service1st Bank of Nevada or the Employee and, accordingly,
does not constitute a binding obligation of either Services1st Bank of Nevada or
the Employee). No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement.
22. REPRESENTATIONS. The Employee represents and warrants to the Company that
(a) the Employee has the legal right to enter into this Agreement and to perform
all of the obligations on the Employee’s part to be performed hereunder in
accordance with its terms, and

 

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(b) the Employee is not a party to any agreement or understanding, written or
oral, and is not subject to any restriction, which, in either case, could
prevent the Employee from entering into this Agreement or performing all of the
Employee’s duties and obligations hereunder. In addition, the Employee
acknowledges that the Employee is aware of Section 304 (Forfeiture of Certain
Bonuses and Profits) of the Sarbanes-Oxley Act of 2002 and the right of the
Company to be reimbursed for certain payments to the Employee in compliance
therewith. In addition, the Employee hereby represents, warrants and agrees with
the Company that: (i) a portion of the compensation payable to the Employee
pursuant to this Agreement constitutes good and valuable consideration, the
receipt and sufficiency of which are hereby expressly acknowledged, for the
covenants and agreements contained in Section 10 and Section 11; (ii) the
covenants and agreements contained in Section 10 and Section 11 are reasonable,
appropriate and suitable in their geographic scope, duration and content; the
Employee shall not, directly or indirectly, raise any issue of the
reasonableness, appropriateness and suitability of the geographic scope,
duration or content of such covenants and agreements in any proceeding to
enforce such covenants and agreements; and such covenants and agreements shall
survive the termination of the Employees employment for the durations set forth
therein; (iii) the enforcement of any remedy under this Agreement will not
prevent the Employee from earning a livelihood because the Employee’s past work
history and abilities are such that the Employee reasonably can expect to find
work, if he so chooses, in other areas and lines of business; (iv) the covenants
and agreements stated in Section 10 and Section 11 are essential for the
Employer’s reasonable protection; and (v) the Company has reasonably relied on
these covenants and agreements by the Employee.
23. TAX MATTERS.
(a) WITHHOLDING. The Employee shall pay, or make arrangements satisfactory to
the Company to pay, in a manner satisfactory to the Company, an amount equal to
the amount of all applicable federal, state and local taxes (but not the
Company’ share of Social Security taxes) that the Company is required to
withhold at any time. In the absence of such arrangements, the Company may
withhold from any and all amounts payable under this Agreement such federal,
state and local taxes as may be required to be withheld pursuant to any
applicable law or regulation, including the right to retain, and not deliver to
the Employee, vested shares of the Company’s Restricted Stock otherwise
deliverable to the Employee hereunder.
(b) SECTION 409A COMPLIANCE.
(i) The parties agree that this Agreement shall be interpreted to comply with
Code Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”)
and the regulations and guidance promulgated thereunder to the extent applicable
(collectively “Code Section 409A”) and all provisions of this Agreement shall be
construed in a manner consistent with the requirements for avoiding taxes or
penalties under Code Section 409A. In no event will the Company be liable for
any additional tax, interest or penalties that may be imposed on the Employee by
Code Section 409A or any damages for failing to comply with Code Section 409A or
the provisions of this Section 23.
(ii) Notwithstanding any provision to the contrary in this Agreement, a
termination of the Employee’s employment shall not be deemed to have occurred
for

 

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purposes of any provision of this Agreement providing for the payment of any
amounts or benefits upon or following a termination of employment unless such
termination is also a “separation from service” (within the meaning of Code
Section 409A) and, for purposes of any such provision of this Agreement,
references to a “termination” or “termination of employment” will mean
separation from service. If the Employee is deemed on the date of termination of
his employment to be a “specified employee”, within the meaning of that term
under Section 409A(a)(2)(B) of the Code and using the identification methodology
selected by the Company from time to time, or if none, the default methodology
set forth in Code Section 409A, then with regard to any payment or the providing
of any benefit that constitutes “non-qualified deferred compensation” pursuant
to Code Section 409A, such payment or benefit will not be made or provided prior
to the earlier of (i) the expiration of the six-month period measured from the
date of the Employees separation from service or (ii) the date of the Employee’s
death. On the first day of the seventh month following the date of the
Employee’s separation from service or, if earlier, on the date of the Employee’s
death, all payments delayed pursuant to this Section (whether they would have
otherwise been payable in a single sum or in installments in the absence of such
delay) will be paid or reimbursed to the Employee in a lump sum, and any
remaining payments and benefits due under this Agreement will be paid or
provided in accordance with the normal payment dates specified for them herein.
(iii) Any reimbursement of costs and expenses provided for under this Agreement
shall be made no later than December 31 of the calendar year next following the
calendar year in which the expenses to be reimbursed are incurred.
(iv) With regard to any provision herein that provides for reimbursement of
expenses or in-kind benefits, except as permitted by Code Section 409A, (i) the
right to reimbursement or in-kind benefits is not subject to liquidation or
exchange for another benefit, and (ii) the amount of expenses eligible for
reimbursement, or in-kind benefits, provided during any taxable year shall not
affect the expenses eligible for reimbursement, or in-kind benefits to be
provided, in any other taxable year, provided, that the foregoing clause (ii)
shall not be violated with regard to expenses reimbursed under any arrangement
covered by Code Section 105(b) solely because such expenses are subject to a
limit related to the period the arrangement is in effect.
(v) With regard to any installment payments provided for herein, each
installment thereof shall be deemed a separate payment for purposes of Code
Section 409A.
(vi) Whenever a payment under this Agreement specifies a payment period with
reference to a number of days, the actual date of payment within the specified
period shall be within the sole discretion of the Company.
(vii) To the extent that this Agreement provides for the Employee’s
indemnification by the Company and/or the payment or advancement of costs and
expenses associated with indemnification, any such amounts shall be paid or
advanced to the Employee only in a manner and to the extent that such amounts
are exempt from the

 

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application of Code Section 409A in accordance with the provisions of Treasury
Regulation 1.409A-1(b)(10).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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EXECUTION COPY
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

            WESTERN LIBERTY BANCORP
      By:   /s/ Jason N. Ader       Name:   Jason N. Ader       Title:   Chief
Executive Officer        /s/ John Gaynor           JOHN GAYNOR