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Item
5.02.
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Departure of Directors
or Certain Officers; Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain
Officers.
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On
January 28, 2010, the Board of Directors of TierOne Corporation (the “Company”), the
holding company for TierOne Bank (the “Bank”), announced
that it has named Michael J. Falbo as Chairman and Chief Executive Officer,
effective immediately. Mr. Falbo was also named as Chief Executive
Officer of the Bank and as a director of both the Company and the
Bank.
The
appointment of Mr. Falbo reflects the Company’s long-term succession planning to
replace current Chairman and Chief Executive Officer, Gilbert G. Lundstrom, who
announced his retirement. Mr. Lundstrom will assume the
position of Vice Chairman of the Company and the Bank to assist in ensuring the
effective execution of strategic initiatives and in the leadership
transition. He will also continue as a director of the Company and
the Bank.
Mr.
Falbo, age 60, served as the Chairman and Chief Executive Officer of State
Financial Services Corporation from 1984 to 2005 when State Financial Services
Corporation was acquired by Associated Banc-Corp. State Financial was
a $1.5 billion bank with 29 full-service offices located in Wisconsin and
Illinois. Associated Banc-Corp is a $23.0 billion financial
institution with 291 offices across Wisconsin, Illinois and
Minnesota. Falbo most recently served as Chairman of Associated Bank
Community Development, LLC, a subsidiary of Associated Banc-Corp focused on
affordable housing and neighborhood development in Associated Bank’s three state
market area.
A
copy of the press release announcing the appointment of Mr. Falbo is attached
hereto as Exhibit
99.1 and is incorporated herein by reference.
Employment
Agreement and Incentive Stock Option
In
connection with Mr. Falbo’s appointment as Chairman and Chief Executive Officer,
the Company and the Bank (collectively, the “Companies”) have
entered into an employment agreement with Mr. Falbo dated January 28,
2010. Pursuant to the employment agreement, the Companies will employ
Mr. Falbo as their Chief Executive Officer. For his services as Chief
Executive Officer, Mr. Falbo will receive a base salary of $500,000 per
year. The Board of Directors may increase Mr. Falbo’s base salary in
its sole discretion, but Mr. Falbo’s base salary cannot be decreased without his
written consent. The agreement has an initial term of one year, and
may then be renewed, at the discretion of the Board and subject to applicable
regulatory limitations, for successive one year terms on the anniversary of the
effective date of the employment agreement.
In the
event that, during the term of his employment agreement, Mr. Falbo’s employment
is terminated by the Company with cause or due to his death or disability, or if
Mr. Falbo resigns, he will be entitled to receive (1) all earned but unpaid base
salary to which he is entitled through the date of the termination of his
employment, (2) payment of the benefits to which he is entitled under all
applicable employee benefit plans, and (3) the provision of such other benefits,
if any, to which he is entitled as a former employee under the Companies’
employee benefit plans. If a change in control of the Companies (as
defined in the employment agreement) occurs prior to the end of the term of Mr.
Falbo’s employment agreement and his employment is terminated by the Companies
within one year thereafter (and during the term of the employment agreement),
then Mr. Falbo will be entitled to receive a lump sum payment equal to his base
salary for the period of twelve months.
Mr.
Falbo’s employment agreement also contains a covenant not to compete, under
which he agrees that if his employment terminates before the expiration of the
term of his employment agreement (other than a termination of employment in
connection with or within 12 months following a change in control), he will not
compete with the Companies in any county in which the Companies maintain an
office until the expiration of the earlier of two years from the date on which
his employment terminates or the date on which the term of his employment
agreement would otherwise expire. In addition, for two years after his
employment terminates (other than a termination of employment in connection with
or within 12 months following a change in control), he agrees to not solicit
customers or employees of the Companies to accept other employment in the
counties where the Companies maintain offices.
Mr. Falbo
was also granted an incentive stock option to purchase 300,000 shares of the
Company’s common stock at an exercise price of $0.8701 per share. The
option vests over a five-year period, with 20% of the award vesting on each
anniversary of the grant date, and is subject to accelerated vesting in the
event of Mr. Falbo’s death or disability unless such acceleration is prohibited
by applicable regulatory limitations. The option has a ten-year term,
and was granted pursuant to the Company’s Amended and Restated 2003 Stock Option
Plan.
The above
summary is qualified in its entirety by reference to the employment agreement
and the incentive stock option agreement attached hereto as Exhibit 10.1 and
Exhibit 10.2,
respectively, and incorporated herein by reference.
Retirement
and Transition Agreement
In
connection with Mr. Lundstrom’s retirement as Chairman and Chief Executive
Officer, the Companies have entered into a retirement and transition agreement
with Mr. Lundstrom dated January 28, 2010. Pursuant to the agreement,
Mr. Lundstrom’s existing employment agreements were terminated, and Mr.
Lundstrom was appointed as the Vice Chairman of the Board of Directors for a
period of one year, for which Mr. Lundstrom will receive a Vice Chairman fee of
$12,500 per month. As Vice Chairman of the Board, Mr. Lundstrom will
provide the following services: (1) assistance to Mr. Falbo in order to ensure a
smooth transition; (2) assistance with the pending branch sale by the Bank; (3)
assistance with the raising of additional capital; and (4) such other duties as
shall be mutually agreed to by Mr. Falbo and Mr. Lundstrom. The
Companies or Mr. Lundstrom may terminate the agreement upon thirty days’ prior
written notice.
The above
summary is qualified in its entirety by reference to the retirement and
transition agreement attached hereto as Exhibit 10.3 and
incorporated herein by reference.
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Item
5.03.
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Amendments to Articles
of Incorporation or Bylaws; Change in Fiscal
Year.
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On
January 28, 2010, the Board of Directors of the Company amended Section
3.01 of Article III of the Company’s Bylaws to increase the size of the Board
from eight directors to nine directors, and Section 4.01 and 4.06 of Article IV
of the Company’s Bylaws to permit the Board to elect a Vice Chairman of the
Board and to specify the duties of such Vice Chairman of the
Board. The text of the amendment to the Bylaws is attached to this
Current Report on Form 8-K as Exhibit 3.1 and is
incorporated into this Current Report on Form 8-K by reference
thereto.
Item
9.01. Financial Statements and
Exhibits.
The
following exhibits are attached to this Current Report on Form 8-K:
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3.1
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Text
of Amendment to Bylaws.
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10.1
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TierOne
Corporation and TierOne Bank Employment Agreement, dated January 28, 2010,
between TierOne Corporation, TierOne Bank, and Michael J.
Falbo.
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10.2
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TierOne
Corporation Incentive Stock Option Agreement, dated January 28, 2010,
between TierOne Corporation and Michael J.
Falbo.
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10.3
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Retirement
and Transition Agreement, dated January 28, 2010, among Gilbert Lundstrom,
TierOne Corporation and its wholly owned subsidiary, TierOne
Bank.
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99.1
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Press
Release of TierOne Corporation, dated January 28,
2010.
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