EXHIBIT 10.15.1
COMMUNITY FIRST BANKSHARES, INC.
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT ("Agreement") is entered into effective as of
December 1, 1998, by and between Community First Bankshares, Inc. a bank
holding company organized under the laws of the state of Delaware ("CFB") and
Xxxxxx Xxxxxxxxx, residing in Fargo, ND ("Executive").
WHEREAS, CFB considers the establishment and maintenance of a sound and
vital management to be essential to protecting and enhancing the best
interests of CFB and its shareholders; and
WHEREAS, the Executive has made and is expected to make, due to
Executive's intimate knowledge of the business and affairs of CFB, its
policies, methods, personnel, and problems, a significant contribution to the
profitability, growth, and financial strength of CFB; and
WHEREAS, CFB, as a publicly held corporation, recognizes that the
possibility of a Change in Control may exist, and that such possibility and
the uncertainty and questions which it may raise among management may result
in the departure or distraction of the Executive in the performance of the
Executive's duties, to the detriment of CFB and its shareholders; and
WHEREAS, it is in the best interests of CFB and its stockholders to
reinforce and encourage the continued attention and dedication of management
personnel, including Executive, to their assigned duties without distraction
and to ensure the continued availability to CFB of the Executive in the event
of a Change in Control; and
WHEREAS, CFB desires to assure Executive of certain benefits in the
event of Executive's severance from employment with CFB without Cause
following a Change in Control;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and promises stated below, and for other valuable
consideration, the receipt and adequacy of which are hereby acknowledged, CFB
and Executive agree as follows:
1. EMPLOYMENT. To be eligible to receive benefits under this Agreement,
(a) Executive must maintain employment with CFB until after a Change in
Control and (b) a Severance of Executive's employment shall have
occurred during the Term of this Agreement and after a Change in
Control. Prior to a Change in Control, Executive shall have no right to
benefits under this Agreement.
For purposes of this Agreement, Severance shall mean either the
involuntary termination of Executive's employment with CFB without
Cause or Executive's voluntary termination of employment with CFB
resignation for Good Reason; where Cause has the definition set forth in
Section 7(c)(ii) and Good Reason has the definition set forth in Section
7(a)(ii).
2. TERM OF AGREEMENT. Subject to the provisions for earlier termination
provided in this Agreement, the Term of this Agreement shall commence on
the effective date of this Agreement as stated above and shall continue
through December 31, 2001, and shall be extended for successive one-year
periods thereafter unless the Board of Directors of CFB ("Board") shall
have given written notice to Executive not later than September 30 of
the last year of the original or extended Term of this Agreement of
CFB's election to discontinue the Term of this Agreement; provided,
however, that if a Change in Control shall have occurred during the
original or extended Term of this Agreement, the Term of this Agreement
shall continue, irrespective of any action of the Board of CFB, for a
period of not less than 24 months beyond the month in which such Change
in Control occurred. In the event that more than one Change in Control
shall occur during the original or extended Term of this Agreement, the
24-month period shall follow the last Change in Control. The Term of
this Agreement shall expire and this Agreement shall neither impose nor
confer any further rights or obligations on CFB or Executive on the day
after the end of the Term of this Agreement. Expiration of the Term of
this Agreement of itself and without subsequent action by CFB or
Executive shall not end the employment relationship between CFB and
Executive.
On or before the expiration of the Term of this Agreement, this
Agreement shall terminate due to the resignation of Executive as set
forth in Section 7(a), death of Executive as set forth in Section 7(b),
discharge of Executive as set forth in Section 7(c) or disability of
Executive as set forth in Section 7(d); provided that any rights or
obligations which expressly or impliedly survive termination of this
Agreement shall continue to be binding and enforceable by CFB and
Executive.
3. EXECUTIVE'S DUTIES. During the Term of this Agreement, Executive
shall serve as Chairman and Chief Executive Officer or such successor
position as Executive voluntarily accepts, with such customary duties
and responsibilities as may be assigned from time to time to Executive
by CFB, provided that such duties and responsibilities are at all times
consistent with the duties and responsibilities of such position.
Executive shall devote exclusive attention and time during normal
business hours to the business and affairs of CFB and, to the extent
necessary to discharge the duties and responsibilities of Executive's
position, shall perform faithfully and efficiently to the best of
Executive's abilities such duties and responsibilities.
4. BASE COMPENSATION. For services rendered by Executive, CFB shall pay
to Executive Base Compensation of $450,000 per annum payable in
accordance with CFB's customary payroll practice for its management
personnel. Base Compensation shall be reviewed at least annually as of
the close of each fiscal year of CFB and may be increased to reflect
inflation or such other adjustments as CFB may deem appropriate, but
original Base Compensation or Base Compensation as subsequently
increased shall not be decreased thereafter, except for across-the-board
percentage salary reductions similarly affecting all management
personnel of CFB.
5. ADDITIONAL BENEFITS. In addition to Base Compensation, Executive shall
be entitled to receive all fringe benefits customarily offered by CFB to
its executives including, without
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limitation, participation in CFB's Annual Incentive Compensation Plan at
the participation level established by CFB for Executive as of the date
of this Agreement, other incentive plans and perquisites offered
generally to key employees, the various employee benefit plans or
programs provided to the employees of CFB in general subject to the
eligibility requirements with respect to each of such benefit plans or
programs, and such other benefits or perquisites as may be approved by
the Board during the Term of this Agreement. Nothing in this Section 5
shall prohibit CFB from making any changes in any of the plans, programs
or benefits described in this Section 5, provided the change similarly
affects all management personnel of CFB.
6. CHANGE IN CONTROL.
(a) For purposes of this Agreement, "Change in Control" shall mean
the occurrence of one of the following events:
(i) any "person" [as such term is used in Section 13(d) and 4(d) of
the Securities Exchange Act of 1934, as amended ("Exchange
Act")], other than a trustee or other fiduciary holding
securities under an employee benefit plan of CFB is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly of securities
representing 25% or more of the combined voting power of CFB's
then outstanding securities;
(ii) during any period of two consecutive years (not including any
period ending prior to the effective date of this Agreement),
individuals who at the beginning of such period constitute the
Board of Directors of CFB, and any new director [other than a
director designated by a person who has entered into agreement
with CFB to effect a transaction permitted by Section 6(a)(I),
(iii) or (iv)] whose election by the Board of Directors of CFB
or nomination for election by CFB's stockholders was approved
by vote of at least two-thirds of the directors then still in
office who either were directors at the beginning of the period
or whose election or nomination for election was previously so
approved ("Continuing Directors"), cease for any reason to
constitute at least a majority of the Board of Directors of
CFB;
(iii) the stockholders of CFB approve a merger or consolidation of
CFB with any other corporation, other than (A) a merger or
consolidation which would result in the voting securities of
CFB outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the merged or
consolidated entity) 50% or more of the combined voting power
of the voting securities of CFB or such merged or
consolidated entity outstanding immediately after such merger
or consolidation, or (B) a merger or consolidation effected
to implement a recapitalization of CFB or similar transaction
in which no "person" acquires
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more than 25% of the combined voting power of CFB's then
outstanding securities;
(iv) the stockholders of CFB approve a plan of complete
liquidation or a sale or disposition by CFB of all or
substantially all of CFB's assets. "The sale or disposition
by CFB of all or substantially all of CFB's assets" shall
mean a sale or other disposition transaction or series of
related transactions involving assets of CFB or of any direct
or indirect subsidiary of CFB (including the stock of any
direct or indirect subsidiary of CFB) in which the value of
the assets or stock being sold or otherwise disposed of (as
measured by the purchase price being paid therefor or by such
other method as the Board of Directors of CFB determines is
appropriate in a case where there is no readily ascertainable
purchase price) constitutes more than 50% of the fair market
value of CFB. For purposes of the preceding sentence, the
"fair market value of CFB" shall be the aggregate market
value of CFB's outstanding common stock (on a fully diluted
basis) plus the aggregate market value of CFB's other
outstanding equity securities. The aggregate market value of
CFB's common stock shall be determined by multiplying the
number of shares of CFB common stock (on a fully diluted
basis) outstanding on the date of the execution and delivery
of a definitive agreement ("Transaction Date") with respect
to the sale or disposition by CFB of all or substantially all
of CFB's assets by the average closing price for CFB's common
stock for the ten trading days immediately preceding the
Transaction Date. The aggregate market value of any other
equity securities of CFB shall be determined in a manner
similar to that prescribed in the immediately preceding
sentence for determining the aggregate market value of CFB's
common stock or by such other method as the Board of
Directors of CFB shall determine is appropriate; and
(v) the Board of Directors of CFB determines, by a vote of a
majority of its entire membership, that a tender offer
statement by any person (as defined above) indicates an
intention on the part of such person to acquire control of
CFB.
(b) In the event of a Change in Control, any options granted to
Executive that are not vested on the date of a Change in Control
shall be immediately fully (100%) vested and shall be exercisable
in accordance with their respective terms and conditions.
7. TERMINATION. This Agreement may be terminated prior to the end of
the Term of this Agreement subject to the provisions of this Section 7.
(a) RESIGNATION.
(i) Executive may resign, including by reason of retirement, at
any time and thereby terminate this Agreement. In the event
of such resignation, except
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in the case of resignation for Good Reason following a Change
in Control, all rights and obligations of CFB and Executive
under this Agreement shall cease on the date of resignation.
(ii) If Executive resigns for Good Reason following a Change in
Control, Executive shall be entitled to the compensation and
benefits provided in Section 7(c)(I). "Good Reason" shall
mean (A) the material breach of any of CFB's obligations
under this Agreement without Executive's written consent or
(B) the occurrence of any of the following circumstances
without Executive's express written consent unless such
circumstances are fully corrected prior to the Date of
Termination specified in Executive's Notice of Termination:
(1) the assignment to Executive of any duties and
responsibilities inconsistent with the position that
Executive held immediately prior to the Change in
Control, relocation of the Executive to an office or
site more than 50 miles from the Executive's job
location prior to the Change in Control, or a
significant adverse alteration in the nature or status
of Executive's duties and responsibilities or the
conditions of Executive's employment from those in
effect immediately prior to the Change in Control;
(2) a reduction by CFB in Executive's Base Compensation;
(3) the failure by CFB to pay to Executive any portion of
Executive's current compensation or any portion of an
installment of deferred compensation under any deferred
compensation program of CFB within seven days of the
date such compensation is due;
(4) the failure by CFB to continue in effect any
compensation plan in which Executive participated
immediately prior to a Change in Control if that
compensation plan is material to Executive's total
compensation unless an equitable arrangement (embodied
in an ongoing substitute or alternative plan) has been
made with respect to such plan, or the failure by CFB
to continue Executive's participation in such
compensation plan (or in such substitute or alternative
plan) on a basis at least as favorable, both in terms
of the amount of benefits provided and the level of
Executive's participation relative to other
participants, as existed prior to the Change in Control;
(5) the failure by CFB to continue to provide Executive
with benefits substantially similar to those enjoyed by
Executive under any of CFB's pension, savings, life
insurance, medical, health, accident, or disability
plans in which Executive was participating at the time
of
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the Change in Control, the taking of any action by CFB
which would materially reduce, directly or indirectly,
any of such benefits or deprive Executive of any
material fringe benefit or policy or program for the
benefit of the management personnel of CFB enjoyed by
Executive at the time of the Change in Control;
(6) the failure by CFB to provide Executive with the number
of paid vacation days to which Executive is entitled in
accordance with CFB's normal vacation policy in effect
at the time of the Change in Control;
(7) the failure of CFB to obtain a satisfactory agreement
from any successor to assume and agree to perform this
Agreement, as contemplated in Section 12; or
(8) any purported termination of Executive's employment
that is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 7(e).
(iii) Notwithstanding anything herein to the contrary, during the
period commencing on the 90th day following a Change in
Control and ending on the 180th day following a Change in
Control, Executive may voluntarily terminate his employment
for any reason, and such termination shall be deemed "Good
Reason" for all purposes of this Agreement.
(iv) Executive's rights to resign pursuant to this Section 7(a)
shall not be affected by incapacity due to physical or mental
illness. Executive's continued employment shall not
constitute consent to, or a waiver of rights with respect to,
any circumstances constituting Good Reason.
(b) DEATH. Upon Executive's death, this Agreement shall terminate and
CFB shall have no obligations to Executive or Executive's legal
representatives with respect to this Agreement. Executive's death
prior to the Date of Termination stated in any Notice of
Termination given by CFB or Executive shall invalidate and
supersede the Notice of Termination. Termination of this Agreement
shall not affect any of the death benefits payable to Executive's
dependents, survivors or beneficiaries under any plan or program
under which Executive was covered at the time of death.
(c) DISCHARGE.
(i) CFB may terminate, without any liability to Executive under
this Agreement, this Agreement and Executive's employment by
discharging Executive for any reason deemed sufficient by CFB
if the Date of Termination associated with such discharge
occurs prior to a Change in Control. In the event that
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this Agreement and Executive's employment are terminated by
discharge during the Term of this Agreement following a
Change in Control by CFB for any reason other than Cause
[as defined in Section 7(c)(ii)] or Disability
[as defined in Section 7(d)(I)], then, subject to Sections
7(c)(iii), 7(g) and 7(h):
(A) CFB shall pay to Executive, within 15 days of the Date
of Termination, an amount in cash equal to the greater
of four million and no/100 dollars ($4,000,000.00) or
three (3) times the sum of:
(1) the higher of (a) the Executive's annual Base
Compensation as in effect immediately prior to
the Notice of Termination, or (b) Executive's
highest annual Base Compensation over the
24-month period preceding the Notice of
Termination; and
(2) the maximum annual incentive award payable
Executive (without giving any effect to any
reduction that would constitute Good Reason under
Section 7(a)(ii)(4) of this Agreement) under
CFB's Annual Incentive Compensation Plan (or any
substitute or alternative plan) for such year in
lieu of any other payment thereunder; and
(3) the average percentage of employer matching
contributions to the CFB Retirement Savings Plan
and Trust (as a percent of Compensation as
defined in the Plan) and employer contributions
to the CFB Employee Stock Ownership Plan and
Trust on behalf of Executive for the three most
recent Plan Years ending immediately prior to the
Date of Termination.
(B) for the 36-month period after Date of Termination, CFB,
at its cost, shall provide or arrange to provide
Executive and Executive's dependents with life,
disability, accident and group health insurance
benefits substantially similar to those which Executive
and Executive's dependents were receiving immediately
prior to the Notice of Termination; benefits otherwise
receivable by Executive pursuant to this Section
7(c)(I)(B) shall be reduced to the extent comparable
benefits are actually received by Executive and
Executive's dependents during the 36-month period
following Executive's Date of Termination from another
employer or employer's plan or program, and any such
benefits actually received by Executive and Executive's
dependents shall be reported to CFB;
(C) in lieu of shares of restricted stock granted to
Executive by CFB upon which the restricted period does
not lapse upon Date of Termination,
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CFB shall pay to Executive within 30 days of the Date
of Termination a lump-sum cash payment equal to the
greater of (1) the highest quoted per share sales price
for common shares on the New York Stock Exchange during
the ten-day period commencing on the Date of
Termination (or, if not listed on such exchange, on a
nationally recognized exchange or quotation system on
which trading volume of the common shares is highest),
or (2) the fixed or formula price for the acquisition
of common shares specified in an agreement in
connection with any Change in Control;
(D) in lieu of shares of common stock of CFB ("Common
Shares") issuable upon exercise of outstanding options
("Options"), if any, granted to Executive under a CFB
Option Plan (which Options shall be canceled upon the
making of the payment referred to below), within 15
days of the Date of Termination CFB shall pay to
Executive a lump-sum amount in cash equal to the
product of:
(1) the excess of, in the case of an "incentive stock
option" [as defined in Section 422A of the
Internal Revenue Code of 1986, as amended (the
"Code")] , the closing price of common shares as
reported on the New York Stock Exchange on or
nearest the Date of Termination (or, if not listed
on such exchange, on a nationally recognized or
quotation system on which trading volume in the
common shares is highest) and, in the case of all
other Options, the greater of (a) the highest
quoted per share sales price for common shares on
the New York Stock Exchange during the ten-day
period commencing on the Date of Termination (or,
if not listed on such exchange, on a nationally
recognized exchange or quotation system on which
trading volume of the common shares is highest),
or (b) the fixed or formula price for the
acquisition of common shares specified in an
agreement in connection with any Change in Control,
over the per share option price of each Option held
by Executive (whether or not then fully
exercisable); and
(2) the number of common shares of CFB covered by each
such Option;
(E) for a period of 12 months following Date of
Termination, CFB shall pay the expenses for such
outplacement services as Executive may require, with
such services to be performed by an agency CFB shall
designate;
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(F) CFB shall pay to Executive all legal fees and expenses
incurred by Executive as a result of termination of
employment (including, but not limited to, all such
fees and expenses, if any, incurred in contesting or
disputing any such termination or in seeking to obtain
or enforce any right or benefit provided by this
Agreement or in connection with any tax audit or
proceeding to the extent attributable to the
application of Section 4999 of the Code to any payment
or benefit provided hereunder); and
(G) in the event any additional or new incentive
compensation, deferred compensation or other type of
bonus program is instituted by CFB ("New Incentive
Program"), the maximum award payable to Executive under
the New Incentive Program for such year in lieu of any
other payment thereunder, assuming for purposes hereof
that Executive had been employed for all of such year,
that all performance objectives for such year had been
met at the maximum levels and that Executive had been
entitled to a full award thereunder.
(ii) None of the obligations imposed on CFB by Sections 7(c)
(I) (A) through (G) shall apply in the event Executive
is discharged for Cause, in which event this Agreement
shall terminate on the Date of Termination without
further rights or obligations on the part of Executive
or CFB under this Agreement. "Cause" shall mean: (A)
the willful and continued failure by Executive (other
than any such failure resulting from (1) Executive's
incapacity due to physical or mental illness, (2) any
such actual or anticipated failure after the issuance
of a Notice of Termination by Executive for Good Reason
or (3) CFB's active or passive obstruction of the
performance of Executive's duties and responsibilities)
to perform substantially the duties and
responsibilities of Executive's position with CFB after
a written demand for substantial performance is
delivered to Executive by the Board, which demand
specifically identifies the manner in which the Board
believes that Executive has not substantially performed
the duties or responsibilities; (B) the conviction of
Executive by a court of competent jurisdiction for
felony criminal conduct; (C) the willful engaging by
Executive in fraud or dishonesty which is demonstrably
and materially injurious to CFB, monetarily or
otherwise; No act, or failure to act, on Executive's
part shall be deemed "willful" unless committed, or
omitted by Executive in bad faith and without
reasonable belief that Executive's act or failure to
act was in the best interest of CFB. Executive shall
not be terminated for Cause unless and until CFB shall
have delivered to Executive a copy of a resolution duly
adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Board at
a
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meeting of the Board called and held for such purpose
(after reasonable notice to Executive and an
opportunity for Executive, together with Executive's
counsel, to be heard before the Board), finding that,
in the good faith opinion of the Board, Executive's
conduct was Cause and specifying the particulars
thereof in detail.
(d) DISABILITY. If, following a Change in Control, Executive shall have
been absent from the substantial performance of Executive's duties
and responsibilities with CFB for six consecutive months as a
result of Executive's incapacity due to physical or mental illness,
as determined by Executive's physician and within 30 days after
written notice to return is given by CFB, Executive shall not have
returned to the substantial performance of the duties and
responsibilities, of Executive's position, CFB may terminate this
Agreement as of the end of the 30-day period, after which
termination neither CFB nor the Executive shall have rights or
obligations under this Agreement and Executive shall not be
entitled to any compensation or benefits pursuant to this
Agreement. The termination of this Agreement shall not terminate
Executive's employment of itself and without further express action
by CFB or affect in any way Executive's rights or benefits under
CFB Long Term Disability Plan.
(e) NOTICE OF TERMINATION. Any purported termination of this Agreement
by CFB or by Executive shall be communicated by written Notice of
Termination to the other party in accordance with Section 10.
Notice of Termination shall mean a notice given not less than 30
days prior to the Date of Termination stated in the notice which
shall set forth in reasonable detail the basis for termination of
this Agreement by CFB, or, in the case of resignation by Executive
for Good Reason, the basis for such resignation. No purported
termination which is not affected pursuant to this Section 7(e)
shall be valid or effective.
(f) DATE OF TERMINATION. Date of Termination shall mean the date
specified in the Notice of Termination. Following a Change in
Control, either party may, within 15 days after any Notice of
Termination is given, provide notice to the other party pursuant to
Section 10 that a dispute exists concerning the termination of this
Agreement. Notwithstanding the pendency of any such dispute, CFB
shall continue to perform CFB's obligations to Executive under this
Agreement, pay Executive full compensation in effect when the
Notice of Termination giving rise to the dispute was given
(including, but not limited to, Base Compensation) and continue
Executive as a participant in all compensation, benefit and
insurance plans in which Executive was participating when the
Notice of Termination giving rise to the dispute was given, and
Executive shall continue to perform Executive's duties and
responsibilities with CFB unless prevented or relieved by CFB from
so performing, until the dispute is finally resolved in accordance
with Section 16, but in no event after the expiration of the Term
of this Agreement.
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(g) MITIGATION. Executive shall not be required to mitigate the amount
of any payment provided for in this Section 7 by seeking other
employment or otherwise, nor shall the amount of any payment
provided for in this Agreement be reduced by any compensation
earned by Executive as a result of employment by another employer,
by retirement benefits, by offset against any amount claimed to be
owing by Executive to CFB, or otherwise. In the event that,
following a Notice of Termination given to Executive by CFB,
Executive elects to receive all payments and benefits provided by
CFB's severance plan or policy for employees in general in lieu of
any payments and benefits under this Agreement, Executive shall
receive no payments or benefits under this Agreement as a result of
Severance of the Executive by CFB.
(h) POTENTIAL EXCISE TAX. Should any payments hereunder or
contemplated hereby be subject to excise tax pursuant to Section
4999 of the Internal Revenue Code of 1986, as may be amended, or
any successor or similar provision thereto, or comparable state or
local tax laws, CFB shall pay to Executive such additional
compensation as is necessary (after taking into account all
federal, state and local income taxes payable by Executive as a
result of the receipt of such compensation) to place Executive in
the same after-tax position he would have been in had no such
excise tax (or any interest or penalties thereon) been paid or
incurred. CFB shall pay such additional compensation upon the
earlier of
(i) the time at which CFB withholds such excise tax from any
payments to Executive; or
(ii) 30 days after Executive notifies CFB that Executive has paid
such excise tax pursuant to a tax return filed by Executive
which takes the position that such excise tax is due and
payable in reliance on a written opinion of Executive's tax
counsel that it is more likely than not that such excise tax
is due and payable, or, if later, the date the IRS notifies
Executive that such amount is due and payable.
Without limiting the obligation of CFB hereunder, Executive agrees,
in the event Executive makes any payment pursuant to the preceding
sentence, to negotiate with CFB in good faith with respect to
procedures reasonably requested by CFB which would afford CFB the
ability to contest the imposition of such excise tax; provided,
however, that Executive will not be required to afford CFB any
right to contest the applicability of any such excise tax to the
extent that Executive reasonably determines that such contest is
inconsistent with the overall tax interests of Executive.
CFB agrees to hold in confidence and not to disclose, without
Executive's prior written consent, any information with regard to
Executive's tax position which CFB obtains pursuant to this
subsection.
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8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or
limit Executive's continuing or future participation in any benefit,
bonus, incentive or other plan or program provided by CFB or any of its
affiliated companies except as provided in Section 7 (g) with respect to
CFB's severance plan or policy and for which Executive may qualify.
Nothing in this Agreement shall limit or otherwise adversely affect such
rights as Executive may have under any stock option or other agreements
with CFB or any of its affiliated corporations.
9. ASSIGNMENT AND DELEGATION. The obligations of Executive under this
Agreement are personal and may not be delegated by Executive or
transferred in any manner whatsoever, nor are such obligations subject
to involuntary alienation, assignment, delegation or transfer. CFB may
assign CFB's rights under this Agreement and delegate all obligations
under this Agreement, either in whole or in part, to any parent,
affiliate, or subsidiary organization or company of CFB, provided that
the obligations of CFB under this Agreement shall remain the obligations
of CFB for which CFB shall be primarily liable notwithstanding the
assignment and delegation.
10. NOTICES. Notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly
given when delivered by hand or when mailed by United States registered
mail, return receipt requested, postage prepaid, addressed to CFB as its
principal office address, directed to the attention of the Board, and to
Executive at Executive's residence address on the records of CFB or to
such other address as either party may have furnished to the other in
writing in accordance herewith except that notice of change of address
shall be effective only upon receipt.
11. VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of the other
provisions of this Agreement, which other provisions shall remain in
full force and effect.
12. SUCCESSORS: BINDING AGREEMENT.
(a) CFB shall require any successor (whether direct or indirect, by
purchase, merger, consolidation, contract or otherwise) to all or
substantially all of the business or assets of CFB expressly to
assume and agree to perform this Agreement in the same manner and
to the same extent that CFB would be required to perform it if no
such succession had taken place. Failure of CFB to obtain such
agreement prior to the effective date of any such succession shall
be a breach of this Agreement and shall also entitle Executive to
resign for Good Reason. CFB shall include any successor to its
business or assets which executes and delivers the Agreement
required by this Section 12 or which otherwise becomes bound by all
terms and provisions of this Agreement by operation of law.
(b) This Agreement and all rights of Executive hereunder shall inure to
the benefit of, and be enforceable by, Executive's personal or
legal representatives, executors, administrators, successors,
heirs, distributes, devises and legatees. If Executive
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should die while any amounts would be payable to Executive if
Executive had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this
Agreement to Executive's devisee, legatee, or other designee or, if
none of the foregoing, to Executive's estate.
13. INDEMNIFICATION.
(a) CFB shall pay, on behalf of Executive and Executive's executors,
administrators or assigns, any amount which Executive is or becomes
legally obligated to pay as a result of any claim or claims made
against Executive by reason of Executive's service as an employee,
Director or Officer of CFB. The payments that CFB will be
obligated to make shall include (without limitation) damages,
judgments, settlements, costs and expenses of investigation, costs
and expenses of defense of legal actions, claims and proceedings
and appeals therefrom, and costs of attachment and similar bonds;
provided, however, that CFB shall not be obligated to pay fines or
other obligations or fees imposed by law or otherwise that CFB is
prohibited by applicable law from paying as indemnity or for any
other reason.
(b) Costs and expenses (including, without limitation, attorney fees)
incurred by Executive in defending or investigating any action,
suit, proceeding or claim shall be paid by CFB in advance of the
disposition of such matter upon receipt of a written undertaking by
or on behalf of Executive to repay any such amounts if it is
ultimately determined that Executive is not entitled to
indemnification under this Agreement.
(c) If a claim under this Agreement is not paid by or on behalf of CFB
within ninety days after a written claim has been received by CFB,
Executive may at any time thereafter bring suit or proceed under
Section 16 against CFB to recover the unpaid amount of the claim
and, if successful in whole or in part, Executive shall also be
entitled to be paid the expenses, including attorneys' fees, of
prosecuting such claim.
(d) In the event of payment under this Agreement, CFB shall be
subrogated to the extent of such payment to all of the rights of
recovery of Executive, who shall execute all documents required and
shall do everything that may be necessary to secure such rights,
including the execution of such documents necessary to enable CFB
effectively to bring suit to enforce such rights.
(e) CFB shall not be liable under this Agreement to make any payment in
connection with any claim made against Executive:
(i) for which payment is actually made to Executive under an
insurance policy maintained by CFB, except in respect of any
excess beyond the amount of payment under such insurance;
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(ii) for which Executive is indemnified by CFB otherwise than
pursuant to this Agreement;
(iii) based upon or attributable to Executive's gaining in fact any
personal profit or advantage to which Executive was not
legally entitled;
(iv) for an accounting of profits made from the purchase or sale
by Executive of securities of CFB within the meaning of
Section 16(b) of the Exchange Act; or
(v) brought about or contributed to by the dishonesty of
Executive; provided, however, that notwithstanding the
foregoing, Executive shall be protected under this Agreement
as to any claims upon which suit may be brought alleging
dishonesty on the part of Executive, unless a judgment or
other final adjudication thereof adverse to Executive shall
establish that Executive committed acts of active and
deliberate dishonesty with actual dishonest purpose and
intent, which acts were material to the cause of action so
adjudicated.
(f) Executive, as a condition precedent to his right to be indemnified
under this Agreement, shall give to CFB notice in accordance with
Section 10 as soon as practicable of any claim made against
Executive for which indemnity will or could be sought under this
Agreement. Executive shall give CFB such information and
cooperation as it may reasonably require and as shall be within
Executive's power.
(g) Nothing herein shall be deemed to diminish or otherwise restrict
Executive's right to indemnification under any provision of the
Certificate of Incorporation or Bylaws of CFB or under State of
Delaware law.
14. MISCELLANEOUS. No provision of this Agreement may be modified or waived
unless such waiver or modification is agreed to in writing and signed by
Executive and such officer of CFB as may be specifically authorized by
the Board. No waiver by either party at any time of any breach by the
other party of 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 is an integration of the parties'
agreement; no agreement or representation, oral or otherwise, express or
implied, with respect to the subject matter of this Agreement have been
made by either party which are not set forth expressly in this
Agreement. The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the State of North
Dakota.
15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be an original document but all of
which together will constitute one instrument.
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16. DISPUTE RESOLUTION. Executive shall be permitted (but not required) to
elect that any dispute or controversy arising under or in connection
with this Agreement be resolved in Fargo, North Dakota, by any
recognized method of alternative dispute resolution or by arbitration in
accordance with the rules of the American Arbitration Association then
in effect. The parties shall select a mutually acceptable single
arbitrator to resolve the dispute or if they fail or are unable to do
so, each side shall within the following ten business days select a
single arbitrator and the two so selected shall select a third
arbitrator within the following ten business days. The arbitrator shall
have no power to award any punitive or exemplary damages. The
arbitrator may construe or interpret, but shall not ignore or vary the
terms of this Agreement, and shall be bound by controlling law. The
arbitration award or other resolution may be entered as a judgment at
the request of the prevailing party bay any court of competent
jurisdiction in North Dakota or elsewhere. All legal fees and costs
incurred by Executive in connection with the resolution of any dispute
or controversy under or in connection with this Agreement shall be
reimbursed by CFB as bills for such services are presented by Executive
to CFB.
17. AUTHORITY. The authority of CFB to execute and perform this Agreement
is contained in a resolution of the Board of Directors of CFB dated
December 1, 1998.
IN WITNESS WHEREOF, Community First Bankshares, Inc. and Executive have
executed this Agreement on December 1,1998, to be effective for all purposes.
COMMUNITY FIRST BANKSHARES, INC.
By /s/ Xxxx X. Xxxxxxxx
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Its Vice Chairman and CFO
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EXECUTIVE:
/s/ Xxxxxx Xxxxxxxxx
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Xxxxxx Xxxxxxxxx
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