EXHIBIT 10.10
CHANGE OF CONTROL AGREEMENT
THIS AGREEMENT (this "Agreement") dated as of the 21st day of July, 2004
(the "Effective Date") is made by and between FIRST NATIONAL BANKSHARES OF
FLORIDA, INC., a Florida corporation (the "Company"), and Xxxxxx X. Xxxxxxxx
("Executive").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company (the "Board") believes that
it is in the best interest of the Company and its shareholders to assure that
the Company will have the continued dedication of Executive, notwithstanding the
possibility, threat or occurrence of a Change of Control (as defined below) of
the Company; that it is imperative to diminish the inevitable distraction of
Executive by virtue of the personal uncertainties and risks created by a pending
or threatened Change of Control and to encourage Executive's full attention and
dedication to the Company currently and in the event of any threatened or
pending Change of Control; and that it is appropriate to provide Executive with
compensation and benefits arrangements upon a Change of Control which ensure
that the compensation and benefits expectations of Executive will be satisfied
and which are competitive with those of other corporations in the financial
services industry;
WHEREAS, in order to accomplish the foregoing objectives, the Company and
Executive desire to enter into this Agreement which, among other things,
provides for the payment of compensation and benefits payable to Executive if
Executive's employment terminates in certain circumstances following a Change of
Control of the Company;
WHEREAS, the Company and Executive are also entering into an Employment
Agreement dated as of the Effective Date (the "Employment Agreement") pursuant
to which Executive agrees, among other things, that following the termination of
Executive's employment with the Company, Executive will be restricted from
competing with the Company or soliciting the Company's employees and customers;
WHEREAS, it is a condition of Executive's willingness to enter into the
Employment Agreement that the Company enter into this Agreement;
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein and in the Employment Agreement, and intending to be legally
bound hereby, the parties hereto agree as follows:
1. Definitions. As used herein, the following terms shall have the
meanings set forth below:
(a) "Change of Control" shall mean the occurrence of any of the following
events:
(i) An acquisition (other than directly from the Company) of any
voting securities of the Company (the "Voting Securities") by
any "Person" (as the term person is used for the purposes of
Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended as of Effective
Date (the "Exchange Act")) immediately after which such Person
has Beneficial Ownership (within the meaning of Rule l3d-3
promulgated under the Exchange Act) of greater than 15% of the
combined voting power of the Company's then-outstanding Voting
Securities; provided, however, in determining whether or not a
Change of Control has occurred, Voting Securities which are
acquired in a "Non-Control Acquisition" (as hereinafter
defined) shall not constitute a Change of Control. A
"Non-Control Acquisition" shall mean an acquisition by (A) the
Company, (B) any employee benefit plan (or related trust)
sponsored or maintained by the Company or any affiliate of the
Company or (C) any Person in connection with a Non-Control
Transaction (as hereinafter defined);
(ii) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with
respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or
on behalf of a Person other than the Board; or
(iii) The consummation of:
(A) a merger, consolidation, reorganization or similar
corporate transaction with or into the Company or in which
securities of the Company are issued, unless such transaction
is a "Non-Control Transaction." A "Non-Control Transaction" is
a merger, consolidation, reorganization or similar corporate
transaction with or into the Company or in which securities of
the Company are issued where:
I. the shareholders of the Company immediately before
such transaction own, directly or indirectly, a majority
of the combined voting power of the outstanding voting
securities of the corporation resulting from such
transaction (the "Surviving Corporation") in
substantially the same proportion as their ownership of
the Voting Securities immediately before such
transaction,
II. the individuals who were members of the Incumbent
Board immediately prior to the execution of the
agreement providing for such transaction constitute at
least a majority of the members of
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the board of directors of the Surviving Corporation or a
corporation owning directly or indirectly a majority of
the combined voting power of the outstanding securities
of the Surviving Corporation, and
III. no person other than (x) the Company, (y) any
subsidiary of the Company, or (z) any employee benefit
plan (or any trust forming a part thereof) maintained by
the Company immediately prior to such transaction owns a
majority of the combined voting power of the Surviving
Corporation's then-outstanding voting securities; or
(B) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company; or
(C) the sale or other disposition of all or substantially all
of the assets of the Company to any Person.
Notwithstanding the foregoing, a Change of Control shall not
be deemed to occur solely because any Person (the "Subject
Person") acquired Beneficial Ownership of more than the
permitted amount of the outstanding Voting Securities as a
result of the acquisition of Voting Securities by the Company
which, by reducing the number of Voting Securities
outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Person, provided that if a
Change of Control would occur (but for the operation of this
sentence) and after such acquisition of Voting Securities by
the Company, the Subject Person becomes the Beneficial Owner
of any additional Voting Securities, then a Change of Control
shall occur.
(b) "Cause" shall have the meaning given such term in the Employment
Agreement.
(c) "Good Reason" shall mean:
(i) removal of Executive from the position he held immediately
prior to the Change of Control (by reason other than death,
disability or Cause);
(ii) a substantial alteration in the nature or status of
Executive's responsibilities following the Change in Control
which renders Executive's position to be of less dignity,
responsibility or scope;
(iii) a reduction by the Company in Executive's target annual bonus
under the Company's Executive Incentive Compensation Plan, or
any successor plan, or the establishment of performance goals
under such plan that are unreasonable in comparison to the
Company's historical practice under such plan prior to the
Change of Control;
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(iv) the Company requiring Executive to be based anywhere other
than the Company's principal executive offices in the city in
which Executive is principally located immediately prior to
the Change of Control, except for required travel on the
Company's business to an extent substantially consistent with
Executive's business travel obligations prior to the Change of
Control;
(v) any material reduction by the Company of the benefits enjoyed
by Executive prior to the Change in Control under any of the
Company's pension, retirement, profit sharing, savings, life
insurance, medical, health and accident, disability or other
employee benefit plans, programs or arrangements, or the
taking of any action by the Company which would directly or
indirectly materially reduce any of such benefits or deprive
Executive of any material fringe benefits made available to
Executive prior to the Change in Control; or
(vi) any material breach by the Company of its obligations
contained in this Agreement or the Employment Agreement.
(d) "Salary and Benefits Continuation" shall mean:
(i) payment of an amount of cash equal to the one-twelfth of the
Severance Period multiplied by Executive's base salary at the
rate of base salary per annum in effect immediately prior to
the Change of Control or on the date of the termination of
Executive's employment, whichever is higher (such amount shall
be payable in equal installments, on a basis consistent with
the Company's payroll practices, over a number of months equal
to the Severance Period, unless Executive has notified the
Company in writing not less than six months prior to the
Triggering Event of Executive's election to receive such
amount in one lump sum payment, in which event the Company
shall make such lump sum payment within 30 days following the
Triggering Event);
(ii) payment of an amount of cash equal to the one-twelfth of the
Severance Period multiplied by the greater of (x) the average
annual incentive bonus payment earned by Executive under the
Company's Executive Incentive Compensation Plan (or any
successor plan) in respect of the three most recent complete
fiscal years of the Company preceding the date of the
termination of Executive's employment or (y) the target
incentive bonus award under the Company's Executive Incentive
Compensation Plan (or any successor plan) for the year in
which the Change of Control occurs or the year in which the
termination of Executive's employment occurs, whichever is
higher (such amount shall be payable in equal installments, on
a basis consistent with the Company's payroll practices, over
a number of months equal to the Severance Period, unless
Executive has notified the
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Company in writing not less than six months prior to the
Triggering Event of Executive's election to receive such
amount in one lump sum payment, in which event the Company
shall make such lump sum payment within 30 days following the
Triggering Event);
(iii) provision to Executive and his eligible dependents of medical,
long-term disability, dental and life insurance coverage, to
the extent such coverage was in effect immediately prior to
the Change of Control, for a period of months equal to the
Severance Period;
(iv) contribution or crediting by the Company to Executive's
account under the Company's defined contribution retirement
plans (currently, the Company's Salary Savings Plan and ERISA
Excess Profit Sharing and Lost Match Plan) an amount of cash
equal to the amount that the Company would have contributed or
credited to such plans (including both profit-sharing
contributions and Company matching contributions in respect of
Executive's contributions to the plan) had Executive continued
to be employed by the Company for an additional period of
months equal to Severance Period at an annual compensation
equal to the sum of (x) Executive's base salary immediately
prior to the Change of Control or at the time of the
termination of Executive's employment, whichever is higher and
(y) the greater of (A) the average annual incentive bonus
payment earned by Executive under the Company's Executive
Incentive Compensation Plan (or any successor plan) in respect
of the three most recent complete fiscal years of the Company
preceding the date of the termination of Executive's
employment or the date of the Change of Control, whichever is
higher or (B) the target incentive bonus award under the
Company's Executive Incentive Compensation Plan (or any
successor plan) for the year in which the Change of Control
occurs or the year in which the termination of Executive's
employment occurs, whichever is higher; (and assuming for this
purpose that Executive made the maximum permissible
contributions to such plans during such period), such
contributions being deemed to be made immediately prior to the
termination of Executive's employment; and
(v) reimbursement to Executive of costs incurred by Executive for
outplacement services in the 24-month period following
termination of Executive's employment, not to exceed 15% of
Executive's base salary immediately prior to the Change of
Control or at the time of the termination of Executive's
employment, whichever is higher.
(e) "Severance Period" shall mean the lesser of (x) 24 and (y) the number
of full months between the date of termination of Executive's employment
and the date on which Executive would attain the age of 65.
(f) "Triggering Event" shall mean the occurrence of one of the following
events:
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(i) the termination of Executive's employment with the Company by
the Company other than for Cause prior to a Change of Control,
and the reasonable demonstration by Executive that such
termination of employment (x) was at the request of a third
party who had taken steps reasonably calculated to effect a
Change of Control, or (y) otherwise arose in connection with
or in anticipation of a Change of Control; or
(ii) at any time during the 24-month period commencing on the date
of a Change of Control, either (x) the Company terminates
Executive's employment other than for Cause or (y) Executive
terminates his employment for Good Reason.
2. Term. The term of this Agreement shall commence on the Effective Date
and shall expire on the earlier of (i) the date of the termination of
Executive's employment by the Company for any reason prior to a Change of
Control, unless such termination is a Triggering Event under Section 1(f)(i)
hereof; or (ii) the third anniversary of the date on which the Company gives
written notice to Executive of the Company's decision to terminate both this
Agreement and any and all employment agreements in effect between the Company
Executive.
3. Change in Control Payments and Benefits.
(a) Upon the occurrence of a Triggering Event:
(i) the Company shall provide Salary and Benefits Continuation to
the Executive; provided, however, that in the event medical,
long-term disability, dental and life insurance benefits cannot be
provided under appropriate Company group insurance policies pursuant
to clause (iii) of the definition of "Salary and Benefits
Continuation," an amount equal to the premium necessary for
Executive to purchase directly the same level of coverage in effect
immediately prior to the termination of employment shall be added to
the Company's payments to Executive pursuant to this Section 3. If
Executive is required to pay income or other taxes on any medical,
long-term disability, dental or life insurance benefits provided or
paid to Executive pursuant to this Section 3, then the Company shall
pay to Executive an amount of cash sufficient to "gross-up" such
benefits or payments so that Executive's "net" benefits received
under this Section 3 are not diminished by any such taxes that are
imposed with respect to the same or the Company's gross-up hereunder
with respect to such taxes;
(ii) all equity compensation awards granted to Executive by the
Company (e.g., all stock options and shares of restricted stock),
will immediately become fully vested and fully exercisable;
(iii) notwithstanding anything to the contrary contained in the
Company's Basic Retirement Plan (the "BRP"), Executive's "Credited
Service" under the BRP shall be deemed for all purposes to be
increased by an amount equal to the
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one-twelfth of the Severance Period, and Executive's "Compensation"
under the BRP for each such additional year of Credited Service for
purposes of the BRP shall be deemed to be an amount equal to the sum
of (x) Executive's base salary at the rate of base salary per annum
in effect immediately prior to the Change of Control or on the date
of the termination of Executive's employment, whichever is higher,
and (y) the greater of (A) the average annual incentive bonus
payment earned by Executive under the Company's Executive Incentive
Compensation Plan (or any successor plan) in respect of the three
most recent complete fiscal years of the Company preceding the date
of the termination of Executive's employment or the date of the
Change of Control, whichever is higher or (B) the target incentive
bonus award under the Company's Executive Incentive Compensation
Plan (or any successor plan) for the year in which the Change of
Control occurs or the year in which the termination of Executive's
employment occurs, whichever is higher;
(iv) payments to Executive pursuant to the BRP shall begin in
accordance with BRP election procedures; provided, however that
payments shall begin no earlier than the later to occur of (x) the
first month following Executive's attainment of age 55 or (y) a
number of months following the termination of the employment of
Executive equal to the Severance Period;
(vi) as to Executive, Section A-1 of Appendix A of the BRP shall be
amended to read as follows:
"A-1. Participant's early retirement benefit factor ("Commencement
Factor") shall be determined as follows:
1. Participant's waiver factor ("Waiver Factor") shall be determined
according to the following table, with the Waiver Factor for ages
between those shown to be derived by linear interpolation between
the two closest ages, with age calculated to the nearest month.
Age at
Termination
of Employment Waiver Factor
------------- -------------
50 or younger 0.0
51 0.2
52 0.4
53 0.6
54 0.8
55 or older 1.0
2. Participant's base factor ("Base Factor") shall be determined
according to the following table, with the Base Factor for ages
between those shown to be
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derived by linear interpolation between the two closest ages, with
age calculated to the nearest month.
Age at First
BRP Payment Base Factor
------------ -----------
62 or older 1.000
61 0.899
60 0.809
59 0.730
58 0.660
57 0.597
56 0.541
55 or younger 0.492
3. Participant's Commencement Factor shall be determined as follows:
Commencement Factor = Base Factor + (Waiver Factor x (1.0 - Base
Factor))"
(b) Executive's subsequent employment, death or disability following
Executive's termination of employment in connection with a Change of
Control shall not affect the Company's obligation to provide to Executive
the payments and benefits pursuant to this Section 3. Executive shall not
be required to mitigate the amount of any payment provided for in this
Section 3 by seeking employment or otherwise. The rights to the payments
and benefits pursuant to this Section 3 shall be in addition to any other
benefits to which Executive may be entitled under any other agreement or
compensation plan, program or arrangement of the Company; provided, that
Executive shall not be entitled to any separate or additional severance
payments pursuant to any severance plan of the Company then in effect and
generally applicable to similarly situated Executives.
4. Employment at Will. Subject to the provisions of any other agreement
between Executive and the Company (including the Employment Agreement),
Executive shall remain an employee at will and nothing herein shall confer upon
Executive any right to continued employment and shall not affect the right of
the Company to terminate Executive for any reason not prohibited by law;
provided, however, that any such removal shall be without prejudice to any
rights Executive may have to receive payments and benefits pursuant to Section 3
hereof.
5. Effect of Certain Payments. Notwithstanding anything herein to the
contrary, if any payment or right accruing to Executive hereunder (without the
application of this Section 5), either alone or together with other payments or
rights accruing to Executive from the Company would constitute a "parachute
payment" (as defined in Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"), and regulations thereunder), such payment or right shall
be reduced to the largest amount that will result in no portion of the amount
payable or right accruing hereunder being subject to an excise tax under Section
4999 of the Code, unless Executive would be in a better after-tax economic
position if no such reduction were to occur.
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The determination of the amount of any potential reduction in the rights or
payments shall be made in good faith by the Company. Executive shall cooperate
in good faith with the Company in making such determination and providing the
necessary information for this purpose.
6. Resolution of Differences Over Breaches of Agreement. Except as
otherwise provided herein, in the event of any controversy, dispute or claim
arising out of, or relating to this Agreement, or the breach thereof, or arising
out of any other matter relating to Executive's employment with the Company or
the termination of such employment, the parties may seek recourse only for
temporary or preliminary injunctive relief to the courts having jurisdiction
thereof and if any relief other than injunctive relief is sought, the Company
and Executive agree that such underlying controversy, dispute or claim shall be
settled by arbitration conducted in Naples, Florida in accordance with this
Section 6 of this Agreement and the Commercial Arbitration Rules of the American
Arbitration Association ("AAA"). The matter shall be heard and decided, and
awards rendered by a panel of three arbitrators (the "Arbitration Panel"). The
Company and Executive shall each select one arbitrator from the AAA National
Panel of Commercial Arbitrators (the "Commercial Panel") and those two
arbitrators shall select a third arbitrator; provided, however, that in the
event the two arbitrators cannot agree on a third arbitrator, the AAA shall
select a third arbitrator from the Commercial Panel. The award rendered by the
Arbitration Panel shall be final and binding as between the parties hereto and
their heirs, executors, administrators, successors and assigns, and judgment on
the award may be entered by any court having jurisdiction thereof. The Company
and Executive will each bear their own costs for legal representation in any
arbitration, except that the Arbitration Panel will have the authority to award
all remedies provided by applicable law, including recovery of attorney fees
when so provided by applicable law. The Company will pay all arbitrators' fees
and other administrative fees in connection with any arbitration hereunder;
provided, however, that the Arbitration Panel may require all or a portion of
such fees and expenses to be paid by Executive in the event the Arbitration
Panel determines that Executive's position in the arbitration proceeding was
without merit.
7. Release. Executive hereby acknowledges and agrees that prior to
Executive's or his dependents' right to receive from the Company any
compensation or benefit to be paid or provided to him or his dependents pursuant
to Section 3 of this Agreement, Executive may be required by the Company, in its
sole discretion, to execute a release in the form of Exhibit A hereto.
8. Waiver. The waiver by a party hereto of any breach by the other party
hereto of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach by a party hereto.
9. Assignment. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Company. The Company shall be
obligated to require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the Company's
business or assets, by a written agreement in form and substance satisfactory to
Executive, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform if
no succession had taken place. This Agreement shall inure to the extent provided
hereunder to the benefit of and be enforceable by Executive or his legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. Executive may not delegate any of his
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duties, responsibilities, obligations or positions hereunder to any person and
any such purported delegation by him shall be void and of no force and effect
with respect to matters relating to his employment and termination of
employment. Without limiting the foregoing, Executive's rights to receive
payments and benefits hereunder shall not be assignable or transferable, other
than a transfer by Executive's will or by the laws of descent and distribution.
10. Notices. Any notices required or permitted to be given under this
Agreement shall be sufficient if in writing, and if personally delivered or when
sent by first class certified or registered mail, postage prepaid, return
receipt requested -- in the case of Executive, to his residence address as set
forth in the books and records of the Company, and in the case of the Company,
to the address of its principal place of business, in care of the Chairman of
the Compensation Committee of the Board -- or to such other person or at such
other address with respect to each party as such party shall notify the other in
writing.
11. Entire Agreement. This Agreement, along with the Employment Agreement,
contains the entire agreement of the parties concerning the matters set forth
herein and therein all promises, representations, understandings, arrangements
and prior agreements regarding the subject matter hereof, other than those set
forth in the Employment Agreement, are merged herein and superseded hereby. The
provisions of this Agreement may not be amended, modified, repealed, waived,
extended or discharged except by an agreement in writing signed by the party
against whom enforcement of any amendment, modification, repeal, waiver,
extension or discharge is sought. No person acting other than pursuant to a
resolution of the Board of Directors shall have authority on behalf of the
Company to agree to amend, modify, repeal, waive, extend or discharge any
provision of this Agreement or anything in reference thereto or to exercise any
of the Company's rights to terminate this Agreement.
12. Construction of Agreement.
(a) Governing Law. This Agreement shall be governed by and construed under
the laws of the State of Florida without regard to its conflict of law
provisions.
(b) Severability. In the event that any one or more of the provisions of
this Agreement shall be held to be invalid, illegal or unenforceable, the
validity, legality or enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
(c) Headings. The descriptive headings of the several paragraphs of this
Agreement are inserted for convenience of reference only and shall not
constitute a part of this Agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
"COMPANY"
FIRST NATIONAL BANKSHARES OF FLORIDA, INC.
By: /s/ Xxxx X. Xxxx
-----------------------------------------
Xxxx X. Xxxx, Chairman and Chief
Executive Officer
"EXECUTIVE"
/s/ Xxxxxx X. Xxxxxxxx
--------------------------------------------
Xxxxxx X. Xxxxxxxx
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EXHIBIT A
FORM OF RELEASE
THIS RELEASE is made by the undersigned ("Executive") in favor of First
National Bankshares of Florida, Inc. [OR SUCCESSOR ENTITY] (the "Company") this
____ day of _____, _____.
WHEREAS, Executive and the Company are parties to that certain Change of
Control Agreement, dated as of _________, 2004 (the "Change of Control
Agreement"); and
WHEREAS, pursuant to Section 7 of the Change of Control Agreement, it is a
condition to the Company's obligation to make certain payments and provide
certain benefits to Executive pursuant to the Change of Control Agreement
following the termination of Executive's employment that Executive execute and
deliver to the Company a release in the form hereof.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Executive hereby releases the Company and any affiliated entities
and their respective officers, directors, shareholders, executives and agents,
from any and all claims, demands, suits, causes of action, damages or expenses
which Executive has had or may have in the future, arising out of Executive's
employment as an executive of the Company and Executive's separation from the
Company, including, without limitation:
(a) claims under any and all federal, state or local laws or
regulations, including, but not limited to any labor, employment or
benefit laws prohibiting any form of discrimination such as the Fair
Labor Standards Act, the Age Discrimination in Employment Act, as
amended by the Older Workers Benefit Protection Act, Title VII of
the Civil Rights Act of 1964, as amended, the Americans with
Disabilities Act, and the Civil Rights Act of 1991;
(b) any right to recover under any claim that may be filed by the Equal
Employment Opportunity Commission, or state or local human relations
commission, or any other federal, state or local governmental
agency; and
(c) any claim that Executive is entitled to any payments or benefits
other than as expressly set forth in the Change of Control
Agreement.
IN WITNESS WHEREOF, intending to be legally bound, Executive has executed
this Release on the date first set forth above.
_______________________________________
Print Name: ___________________________
