EXHIBIT 10-u
Personal & Confidential
Executive Severance Agreement
For Executive
AmSouth Bancorporation
Contents
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Page
Article 1. Definitions 1
Article 2. Severance Benefits 6
Article 3. Form and Timing of Severance Benefits 9
Article 4. Excise Tax Gross-Up 10
Article 5. The Company's Payment Obligations 11
Article 6. Term of Agreement 11
Article 7. Legal Remedies 12
Article 8. Successors 12
Article 9. Miscellaneous 12
AmSouth Bancorporation
Executive Severance Agreement
THIS AGREEMENT is made and entered into as of the 18th day of December,
1997, by and between AmSouth Bancorporation, a Delaware corporation (hereinafter
referred to as the "Company"), and Executive (hereinafter referred to as the
"Executive").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company has approved the Company
entering into severance agreements with certain key executives of the Company
and its subsidiaries;
WHEREAS, the Executive is a key executive of the Company or of its
subsidiary;
WHEREAS, should the possibility of a Change in Control of the Company
arise, the Board believes it is imperative that the Company and the Board should
be able to rely upon the Executive to continue in his or her position, and that
the Company should be able to receive and rely upon the Executive's advice, if
requested, as to the best interests of the Company and its shareholders without
concern that the Executive might be distracted by the personal uncertainties and
risks created by the possibility of a Change in Control;
WHEREAS, should the possibility of a Change in Control arise, in addition
to his or her regular duties, the Executive may be called upon to assist in the
assessment of such possible Change in Control, advise management and the Board
as to whether such Change in Control would be in the best interests of the
Company and its shareholders, and to take such other actions as the Board might
determine to be appropriate; and
NOW THEREFORE, to assure the Company that it will have the continued
dedication of the Executive and the availability of his or her advice and
counsel notwithstanding the possibility, threat, or occurrence of a Change in
Control of the Company, and to induce the Executive to remain in the employ of
the Company, and for other good and valuable consideration, the Company and the
Executive agree as follows:
Article 1. Definitions
Whenever used in this Agreement, the following terms shall have the
meanings set forth below and, when the meaning is intended, the initial letter
of the word is capitalized:
(a) "Agreement" means this Executive Severance Agreement.
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(b) "Base Bonus Opportunity" means the base bonus opportunity as defined
in the Executive Incentive Plan and the Management Incentive Plan, or
a comparable opportunity under a specialized incentive plan, or their
successors, whichever of the foregoing is applicable to the Executive.
(c) "Base Salary" means the salary of record paid to the Executive as
annual salary, excluding amounts received under incentive or other
bonus plans, whether or not deferred.
(d) "Beneficial Owner" shall have the meaning ascribed to such term in
Rule 13d-3 of the General Rules and Regulations under the Exchange
Act.
(e) "Beneficiary" means the persons or entities designated or deemed
designated by the Executive pursuant to Section 9.2 herein.
(f) "Board" means the Board of Directors of the Company.
(g) "Cause" shall be determined by the Committee, in the exercise of good
faith and reasonable judgment, and shall mean the occurrence of any
one or more of the following:
(i) The willful and continued failure by the Executive to
substantially perform his or her duties (other than any such
failure resulting from the Executive's Disability), after a
written demand for substantial performance is delivered by the
Committee to the Executive that specifically identifies the
manner in which the Committee believes that the Executive has
not substantially performed his or her duties, and the Executive
has failed to remedy the situation within thirty (30) calendar
days of receiving such notice;
(ii) The Executive's conviction for committing an act of fraud,
embezzlement, theft, or other act constituting a felony under
the generally enforceable laws of the State of Alabama; or
(iii) The willful engaging by the Executive in gross misconduct
materially and demonstrably injurious to the Company, as
determined by the Committee. However, no act or failure to act,
on the Executive's part shall be considered "willful" unless
done, or omitted to be done, by the Executive not in good faith
and without reasonable belief that his or her action or omission
was in the best interest of the Company.
Notwithstanding the foregoing, Cause shall not be deemed to have
occurred with respect to any act or failure to act which is (a)
directed by the Board, or by the officer of the Company to whom the
Executive directly or indirectly reports, or (b) in accordance with
the advice of the Company's legal counsel.
(h) "Change in Control" of the Company shall be deemed to have occurred as
of the first day that any one or more of the following conditions have
been satisfied:
(i) Any person (other than those Persons in control of the Company
as of the Effective
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Date, or other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or a
corporation owned directly or indirectly by the stockholders of
the Company in substantially the same proportions as their
ownership of stock of the Company), becomes the Beneficial
Owner, directly or indirectly, of securities of the Company
representing twenty percent (20%) or more of the combined voting
power of the Company's then outstanding securities; or
(ii) During any period of two (2) consecutive years (not including
any period prior to the Effective Date of this Agreement),
individuals who at the beginning of such period constitute the
Board (and any new Director, whose election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3)
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 so approved, 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) cease for any reason to
constitute at least sixty percent (60%) thereof; or
(iii) The stockholders of the Company approve: (A) a plan of complete
liquidation of the Company; or (B) an agreement for the sale or
disposition of all or substantially all the Company's assets; or
(C) a merger, consolidation, or reorganization of the Company
with or involving any other corporation, other than a merger,
consolidation, or reorganization that would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity),
at least sixty percent (60%) of the combined voting power of the
securities of the Company (or the surviving entity, or an entity
which as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or
through one or more subsidiaries) outstanding immediately after
such merger, consolidation or reorganization.
However, in no event shall a Change in Control be deemed to have occurred,
with respect to the Executive, if the Executive is part of a purchasing
group which consummates the Change-in-Control transaction. The Executive
shall be deemed "part of a purchasing group" for purposes of the preceding
sentence if the Executive is an equity participant in the purchasing
company or group (except for: (i) passive ownership of less than three
percent (3%) of the stock of the purchasing company; or (ii) ownership of
equity participation in the purchasing company or group which is otherwise
not significant, as determined prior to the Change in Control by a majority
of the nonemployee Directors who were Directors prior to the transaction,
and who continue as Directors following the transaction).
(i) "Code" means the United States Internal Revenue Code of 1986, as
amended.
(j) "Committee" means the Executive Compensation Committee of the Board,
or any other committee appointed by the Board to perform the functions
of the Executive Compensation Committee.
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(k) "Company" means AmSouth Bancorporation, a Delaware corporation
(including any and all subsidiaries), or any successor thereto as
provided in Article 8 herein.
(l) "Disability" means permanent and total disability, within the meaning
of Code Section 22(e)(3), as determined by the Committee in the
exercise of good faith and reasonable judgment, upon receipt of and in
reliance on sufficient competent medical advice from one or more
individuals, selected by the Committee, who are qualified to give
professional medical advice.
(m) "Effective Date" is December 18, 1997.
(n) "Effective Date of Termination" means the date on which a Qualifying
Termination occurs which triggers the payment of Severance Benefits
hereunder.
(o) "Exchange Act" means the United States Securities Exchange Act of
1934, as amended.
(p) "Executive" means Executive.
(q) "Good Reason" means, without the Executive's express written consent,
the occurrence after a Change in Control of the Company of any one or
more of the following:
(i) The assignment of the Executive to duties materially
inconsistent with the Executive's authorities, duties,
responsibilities, and status (including titles and reporting
requirements) as an officer of the Company, or a material
reduction or alteration in the nature or status of the
Executive's authorities, duties, or responsibilities from those
in effect as of ninety (90) days prior to the Change in Control,
other than an insubstantial and inadvertent act that is remedied
by the Company promptly after receipt of notice thereof given by
the Executive in accordance with Section 2.8 hereof;
(ii) The Company's requiring the Executive to be based at a location
in excess of thirty-five (35) miles from the location of the
Executive's principal job location or office immediately prior
to the Change in Control;
(iii) A reduction by the Company of the Executive's Base Salary as in
effect on the Effective Date, or as the same shall be increased
from time to time;
(iv) A reduction by the Company of the Executive's aggregate
incentive opportunity under the Short-Term Incentive Plan, as
such opportunity exists on the Effective Date, or as such
opportunity may be increased after the Effective Date. For this
purpose, a reduction in the Executive's incentive opportunity
shall be deemed to have occurred in the event his or her Base
Bonus Opportunity and/or the degree of probability of attainment
of such opportunity would result in a bonus of less than the
greatest of (i) the Executive's greatest annual bonus earned
(whether paid or deferred) in the three (3) consecutive fiscal
years most recently completed prior to the commencement of the
Window Period; (ii) the Executive's Base Bonus Opportunity for
the bonus plan year
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most recently completed; or (iii) the Executive's bonus which
was earned (whether paid or deferred) for the fiscal year most
recently completed based on the actual performance compared to
pre-established criteria under the Short Term Incentive Plan;
(v) A reduction by the Company of the Executive's aggregate
annualized incentive opportunity under the Company's long-term
incentive program, as such opportunity exists on the Effective
Date, or as such opportunity may be increased after the
Effective Date. For this purpose, a reduction in the Executive's
incentive opportunity shall be deemed to have occurred if the
Executive's annualized long-term incentive opportunity is less
than the value as determined by a compensation consulting firm
with a national reputation to be a competitive annual long term
incentive grant (defined as a size-adjusted, 50th percentile
grant as of the date of determination as compared to the
Company's peer group).
(vi) The failure of the Company to maintain the Executive's relative
level of coverage under the Company's employee benefit or
retirement plans, policies, practices, or arrangements in which
the Executive participates as of the Effective Date, both in
terms of the amount of benefits provided and the relative level
of the Executive's participation or as such coverage may be
increased from time to time. For this purpose, the Company may
eliminate and/or modify existing programs and coverage levels;
provided, however, that the Executive's levels of coverage under
all such programs must be at least as great as such coverage
provided to executives who have the same or lesser levels of
reporting responsibilities within the Company's organization;
(vii) The failure of the Company to obtain a satisfactory agreement
from any successor to the Company to assume and agree to perform
the Company's obligations under this Agreement, as contemplated
in Article 8 herein;
(viii)Any purported termination by the Company of the Executive's
employment that is not effected pursuant to a notice of
termination satisfying the requirements of Section 2.8 herein,
and for purposes of this Agreement, no such purported
termination shall be effective;
(ix) Any failure to maintain reasonable and adequate indemnification
and director and officer liability insurance in respect of the
Executive's services as an officer; and
(x) Any material increase, either as to frequency or time expended,
in the travel of the Executive relative to the discharge or his
or her responsibilities to the Company.
The Executive's right to terminate employment for Good Reason
shall not be affected by the Executive's incapacity due to physical or
mental illness. The Executive's continued employment shall not
constitute a consent to, or a waiver of rights with respect to, any
circumstance constituting Good Reason herein.
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(r) "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d).
(s) "Pro-Rata" means that a calculation will take into consideration the
number of days elapsed prior to the Executive's Effective Date of
Termination as a percentage of the number of days in the fiscal or
other applicable year.
(t) "Qualifying Termination" means any of the events described in Section
2.3 herein, the occurrence of which triggers the payment of Severance
Benefits hereunder.
(u) "Severance Benefits" means the payment of severance compensation as
provided in Section 2.4 herein.
(v) "Severance Multiplier" means the lesser of: (i) numbertimes
(numericx); or (ii) a fraction, the numerator of which is the number
of full months between the Effective Date of the Executive's
Qualifying Termination and the Executive's sixty-fifth (65th)
birthday, and the denominator of which is twelve (12). For this
purpose, the Severance Multiplier following the attainment of age
sixty-five (65) shall be zero (0) in all cases.
(w) "Short Term Incentive Plan" means the annual incentive plan applicable
to the Executive which may include the Company's Executive Incentive
Plan, Management Incentive Plan, or other specialized plans or their
successors.
(x) "Total Payments" means the sum of the Executive's Severance Benefits
and all other payments and benefits provided to the Executive by the
Company and its affiliates which constitute "excess parachute
payments" within the meaning of Code Section 280G(b)(1). Without
limiting the generality of the foregoing, Total Payments shall include
any and all excess parachute payments associated with outstanding
long-term incentive grants (to include, but not be limited to, early
vesting of stock options or restricted stock).
(y) "Window Period" means the time period commencing upon a Change in
Control, as defined in Section (h) of this Article 1, and ending
twenty-four months after the latter to occur of: (i) any of the events
defined as a Change in Control in Section 1(h); or (ii) final
consummation of the liquidation, sale or disposition of assets, or the
merger, consolidation or reorganization of the Company as described in
Section 1(h)(iii).
Article 2. Severance Benefits
2.1. Right to Severance Benefits. The Executive shall be entitled to
receive from the Company Severance Benefits as described in Section 2.4 herein,
if there has been a Change in Control of the Company and if, within the Window
Period, the Executive's employment with the Company shall end for any reason
specified in Section 2.3 herein.
The Executive shall not be entitled to receive Severance Benefits, if he or
she is terminated for Cause, or if his or her employment with the Company ends
due to death, Disability, retirement on or
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after early retirement age (as defined under the then established rules of the
Company's tax-qualified retirement plan applicable to the Executive), or due to
a voluntary termination of employment by the Executive without Good Reason.
2.2. Services During Certain Events. In the event a Person begins a tender
or exchange offer, circulates a proxy to shareholders of the Company, or takes
other steps seeking to effect a Change in Control, the Executive agrees that he
or she will not voluntarily leave the employ of the Company and will render
services until such Person has abandoned or terminated his or her, or its
efforts to effect a Change in Control, or until six (6) months after a Change in
Control has occurred; provided, however, that the Company may terminate the
Executive for Cause at any time, and the Executive may terminate his or her
employment any time after the Change in Control for Good Reason.
2.3. Qualifying Termination. The occurrence of any one or more of the
following events within the Window Period shall trigger the payment of Severance
Benefits to the Executive under this Agreement:
(a) An involuntary termination of the Executive's employment by the
Company for reasons other than Cause;
(b) A voluntary termination of employment by the Executive for Good
Reason;
(c) A successor company fails or refuses to assume the Company's
obligations under this Agreement, as required by Article 8 herein; or
(d) The Company or any successor company breaches any of the provisions of
this Agreement.
2.4. Description of Severance Benefits. In the event that the Executive
becomes entitled to receive Severance Benefits, as provided in Sections 2.1 and
2.3 herein, the Company shall pay to the Executive a lump sum cash payment equal
to the sum of the amounts described in the following paragraphs (a) through (h)
and provide the benefits and/or distributions as described in paragraphs (i)
through (k):
(a) An amount equal to the Severance Multiplier times the highest rate of
the Executive's annual Base Salary in effect at any time up to and
including the Effective Date of Termination.
(b) An amount equal to the Severance Multiplier times the greatest of: (i)
the Executive's greatest annual bonus earned (whether paid or
deferred) in the three (3) full consecutive fiscal years most recently
completed prior to the Effective Date of Termination; (ii) the
Executive's Base Bonus Opportunity for the bonus plan year in which
the Executive's Effective Date of Termination occurs, or (iii) the
Executive's bonus for the fiscal year in which occurs the Effective
Date of Termination based on the actual performance compared to
pre-established criteria under the Short Term Incentive Plan through
the Effective Date of Termination, multiplied by a fraction, the
numerator of which is 12 and the denominator of which is the number of
calendar months to have elapsed preceding the Effective Date of
Termination in the fiscal year of the Effective Date of Termination.
(c) An amount equal to the Severance Multiplier times the sum of: (i) the
Executive's annual club dues bonus (if applicable); plus (ii) the
Executive's annual automobile allowance (if
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applicable), for the year in which the Executive's Effective Date of
Termination occurs.
(d) An amount equal to the product of (i) the value determined by a
consulting firm with a national reputation to be a competitive annual
long term incentive grant (defined as a size-adjusted, 50th percentile
grant as of the date of determination as compared to the Company's
peer group), and (ii) the Severance Multiplier, provided, however,
that if the Executive's then currently outstanding grant under the
Company's long term incentive compensation plan has a performance
measurement period of more than one year, the number of years in
clause (ii) shall be reduced by multiplying such number of years by
the quotient of the number of full calendar months remaining until the
conclusion of the performance measurement period for the Executive's
grant divided by the total number of months in the performance
measurement period.
(e) An amount equal to the Executive's unpaid Base Salary, a Pro Rata
portion of the Executive's bonus for the fiscal year in which
termination occurs determined as the greatest of (i) the Executive's
greatest annual bonus earned (whether paid or deferred) in the three
(3) full consecutive fiscal years most recently completed prior to the
Effective Date of Termination; (ii) the Executive's Base Bonus
Opportunity for the bonus plan year in which the Executive's Effective
Date of Termination occurs; (iii) the Executive's bonus for the fiscal
year in which occurs the Effective Date of Termination based on the
actual performance compared to pre-established criteria under the
Short Term Incentive Plan through the Effective Date of Termination,
multiplied by a fraction, the numerator of which is 12 and the
denominator of which is the number of calendar months to have elapsed
preceding the Effective Date of Termination of the fiscal year in
which occurs the Effective Date of Termination, and accrued vacation
pay through the Effective Date of Termination.
(f) An amount equal to the actuarial present value equivalent of the
aggregate benefits accrued by the Executive as of the Effective Date
of Termination under the terms of the AmSouth Bancorporation
Supplemental Retirement Plan (if applicable). For this purpose, the
Executive's interest under the Supplemental Retirement Plan shall be
fully vested as of the effective date of the Change in Control and
such benefits shall be calculated under the assumption that the
Executive's employment continued following the Effective Date of
Termination for the number of years equal to the Severance Multiplier
(i.e., additional years of service credits shall be added); provided,
however, that for the purposes of determining "final average pay"
under the benefit calculation, the Executive's actual pay history as
of the Effective Date of Termination shall be used. Further, the
payment provided under this Subsection 2.4(f) shall be made in lieu
of, and shall completely supersede and replace the Executive's
benefits payable under the Supplemental Retirement Plan or its
successor.
(g) An amount equal to the aggregate benefits accrued by the Executive as
of the Effective Date of Termination under the terms of the AmSouth
Bancorporation Supplemental Thrift Plan (if applicable). The payment
provided under this Subsection 2.4(g) shall be made in lieu of, and
shall completely supersede and replace the Executive's benefits
payable under the Supplemental Thrift Plan or its successor.
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(h) An amount equal to any relocation benefits accrued by the Executive
under the relocation policy of the Company or its successor as are
available to employees in the same class or category as the Executive
immediately prior to the Change in Control.
(i) Distribution of the entire balance of the Executive's account, if any,
established under the AmSouth Bancorporation Deferred Compensation
Plan or its successor.
(j) A continuation of all benefits pursuant to any and all welfare benefit
plans under which the Executive and/or the Executive's family is
eligible to receive benefits and/or coverage as of the effective date
of the Change in Control or as the same may be increased from time to
time, including but not limited to, group life insurance,
hospitalization, disability, medical and dental plans. Such benefits
shall be provided to the Executive at the same premium cost, and at
the same coverage level, as in effect as of the Executive's Effective
Date of Termination.
The welfare benefits described in this Subsection 2.4(j) shall
continue following the Effective Date of Termination for the number of
years equal to the Severance Multiplier; provided, however, that such
benefits shall be discontinued prior to the end of such period in the
event the Executive receives substantially similar benefits from a
subsequent employer, as determined by the Committee.
(k) A provision of outplacement services at the expense of the company for
the number of years equal to the Severance Multiplier following the
Effective Date of Termination or until the Executive shall have
obtained employment comparable to his or her position with the Company
on the Effective Date of Termination, whichever is earlier, the scope
and provider of which shall be commensurate with the Executive's
position in the Company.
2.5. Termination for Total and Permanent Disability. Following a Change in
Control of the Company, if the Executive's employment is terminated due to
Disability, the Executive shall receive his or her Base Salary through the
Effective Date of Termination, at which point in time the Executive's benefits
shall be determined in accordance with the Company's retirement, insurance, and
other applicable plans and programs then in effect.
2.6. Termination for Retirement or Death. Following a Change in Control of
the Company, if the Executive's employment is terminated by reason of his or her
retirement (as defined under the then-established rules of the Company's
tax-qualified retirement plan), or death, the Executive's benefits shall be
determined in accordance with the Company's retirement, survivor's benefits,
insurance, and other applicable programs of the Company then in effect.
2.7. Termination for Cause or by the Executive Other Than for Good Reason.
Following a Change in Control of the Company, if the Executive's employment is
terminated either: (i) by the Company for Cause; or (ii) by the Executive other
than for Good Reason, the Company shall pay the Executive his or her full Base
Salary and accrued vacation through the Effective Date of Termination, at the
rate then in effect, plus all other amounts to which the Executive is entitled
under any compensation plans of the Company, at the time such payments are due,
and the Company shall have no further obligations to the Executive under this
Agreement.
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2.8. Notice of Termination. Any termination by the Company for Cause or by
the Executive for Good Reason shall be communicated by Notice of Termination (as
herein defined) to the other party. For purposes of this Agreement, a "Notice of
Termination" shall mean a written notice which shall indicate the specific
termination provision in this Agreement relied upon, and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated. A
termination for Cause shall be permitted hereunder only if the Company provides
the Notice of Termination not later than six (6) months after the date the
Company first knew or should have reasonably known of the act or omission to act
or conviction giving rise to the termination for Cause. A termination for Good
Reason shall be permitted hereunder only if the Employee provides the Notice of
Termination not later than six (6) months after the date the Employee first knew
or should have known of the act or omission to act giving rise to the
termination for Good Reason. In either case, the six (6)-month period shall be
tolled during any permitted period of correction or administrative procedure.
Article 3. Form and Timing of Severance Benefits
3.1. Form and Timing of Severance Benefits. The Severance Benefits
described in Sections 2.4(a) through (h) herein shall be paid in cash to the
Executive in a single lump sum, and the distribution under 2.4 (i) herein shall
be made, as soon as practicable following the Effective Date of Termination, but
in no event beyond thirty (30) days from such date.
3.2. Withholding of Taxes. The Company shall be entitled to withhold from
any amounts payable under this Agreement all taxes as legally shall be required
(including, without limitation, any United States Federal taxes, and any other
state, city, or local taxes).
3.3. Annual Bonus Pay. Notwithstanding any provision to the contrary in
this Agreement or the Company's annual Base Bonus Opportunity arrangement for
the Executive in the event of a Change in Control, if the Executive remains
employed by the Company through the end of the fiscal year of the Change in
Control, the bonus for the fiscal year in which occurs the Change in Control
shall be the greatest of: (i) the Executive's greatest annual bonus earned
(whether paid or deferred) in the three (3) full consecutive fiscal years most
recently completed prior to the fiscal year in which occurs the Change in
Control; (ii) the Executive's Base Bonus Opportunity for the fiscal year in
which occurs the Change in Control; or (iii) the Executive's bonus for the
fiscal year in which the Change in Control occurs based on the actual
performance compared to pre-established criteria under the Short Term Incentive
Plan through the date of the consummation of the Change in Control multiplied by
a fraction, the numerator of which is 12 and the denominator of which is the
number of calendar months to have elapsed in the fiscal year prior to the
calendar month in which the Change in Control occurs in the fiscal year of the
Change in Control. Payment of this annual bonus will be made in accordance with
the Short Term Incentive Plan.
Article 4. Excise Tax Gross-Up
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4.1 Equalization Payment. In the event that the Executive becomes entitled
to Severance Benefits, if any of the Executive's Total Payments will be subject
to the tax (the "Excise Tax") imposed by Section 4999 of the Code (or any
similar tax that may hereafter be imposed), the Company shall pay to the
Executive in cash an additional amount (the "Gross-up Payment") such that the
net amount retained by the Executive after deduction of any Excise Tax on the
Total Payments and any federal, state, and local income and employment taxes and
Excise Tax upon the Gross-up Payment provided for by this Section 4.1, shall be
equal to the Total Payments. Such payment shall be made by the Company to the
Executive as soon as practicable following the Effective Date of Termination,
but in no event beyond thirty (30) days from such date.
4.2 Tax Computation. For purposes of determining whether any of the Total
Payments will be subject to the Excise Tax and the amounts of such Excise Tax:
(a) Any other payments or benefits received or to be received by the
Executive in connection with a Change in Control of the Company or the
Executive's termination of employment (whether pursuant to the terms
of this Plan or any other plan, arrangement, or agreement with the
Company, or with any Person whose actions result in a Change in
Control of the Company or any Person affiliated with the Company or
such Persons) shall be treated as "parachute payments" within the
meaning of Section 280G(b)(2) of the Code, and all "excess parachute
payments" within the meaning of Section 280G(b)(1) of the Code shall
be treated as subject to the Excise Tax, unless in the opinion of tax
counsel selected by the Company's independent auditors and acceptable
to the Executive, such other payments or benefits (in whole or in
part) do not constitute parachute payments, or unless such excess
parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning of
Section 280G(b)(4) of the Code in excess of the base amount within the
meaning of Section 280G(b)(3) of the Code, or are otherwise not
subject to the excise tax;
(b) The amount of the Total Payments which shall be treated as subject to
the Excise Tax shall be equal to the lesser of: (i) the total amount
of the Total Payments; or (ii) the amount of excess parachute payments
within the meaning of Section 280G(b)(1) (after applying clause (a)
above); and
(c) The value of any noncash benefits or any deferred payment or benefit
shall be determined by the Company's independent auditors in
accordance with the principles of Sections 280G(d)(3) and (4) of the
Code.
For purposes of determining the amount of the Gross-Up Payment, the
Executive shall be deemed to pay Federal income taxes at the highest marginal
rate of Federal income taxation in the calendar year in which the Gross-Up
Payment is to be made, and state and local income taxes at the highest marginal
rate of taxation in the state and locality of the Executive's residence on the
Effective Date of Termination, net of the maximum reduction in Federal income
taxes which could be obtained from deduction of such state and local taxes.
4.3 Subsequent Recalculation. In the event the Internal Revenue Service
adjusts the computation of the Company under Section 4.2 herein, which
adjustment becomes binding on the Service, the Company and the Executive, so
that the Executive did not receive the greatest net benefit, the
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Company shall reimburse the Executive for the full amount necessary to make the
Executive whole, plus an appropriate market rate of interest, as determined by
the Company's Board of Directors.
Article 5. The Company's Payment Obligation
5.1 Payment Obligations Absolute. The Company's obligation to make the
payments and the arrangements provided for herein shall be absolute and
unconditional, and shall not be affected by any circumstances, including,
without limitation, any offset, counterclaim, recoupment, defense, or other
right which the Company may have against the Executive or anyone else. All
amounts payable by the Company hereunder shall be paid without notice or demand.
Each and every payment made hereunder by the Company shall be final, and the
Company shall not seek to recover all or any part of such payment from the
Executive or from whomsoever may be entitled thereto, for any reasons
whatsoever.
The Executive shall not be obligated to seek other employment in mitigation
of the amounts payable or arrangements made under any provision of this
Agreement, and the obtaining of any such other employment shall in no event
effect any reduction of the Company's obligations to make the payments and
arrangements required to be made under this Agreement, except to the extent
provided in Section 2.4(j) herein.
5.2 Contractual Rights to Benefits. This Agreement establishes and vests in
the Executive a contractual right to the benefits to which he or she is entitled
hereunder. However, nothing herein contained shall require or be deemed to
require, or prohibit or be deemed to prohibit, the Company to segregate,
earmark, or otherwise set aside any funds or other assets, in trust or
otherwise, to provide for any payments to be made or required hereunder.
Article 6. Term of Agreement
This Agreement will commence on the Effective Date and shall terminate on
December 17, 2000; provided however that this Agreement shall be extended
automatically for one (1) additional year at the end of this initial term and at
the end of each additional year thereafter, unless the Committee delivers
written notice twelve (12) months prior to the end of such term, or extended
term, to the Executive, that the Agreement will not be extended. In such case,
the Agreement will terminate at the end of the term, or extended term, then in
progress.
However, in the event a Change in Control occurs during the original or any
extended term, this Agreement will remain in effect for the longer of: (i) the
duration of the Window Period; or (ii) until all obligations of the Company
hereunder have been fulfilled, and until all benefits required hereunder have
been paid to the Executive.
Article 7. Legal Remedies
7.1 Payment of Legal Fees. To the extent permitted by law, the Company
shall pay all legal fees, costs of litigation, prejudgment interest, and other
expenses incurred in good faith by the Executive as a result of the Company's
refusal to provide the Severance Benefits to which the Executive becomes
entitled under this Agreement, or as a result of the Company's contesting
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the validity, enforceability, or interpretation of this Agreement, or as a
result of any conflict between the parties pertaining to this Agreement.
7.2 Arbitration. The Executive shall have the right and option to elect (in
lieu of litigation) to have any dispute or controversy arising under or in
connection with this Agreement settled by arbitration, conducted before a panel
of three (3) arbitrators sitting in a location selected by the Executive within
fifty (50) miles from the location of his or her job with the Company, in
accordance with the rules of the American Arbitration Association then in
effect.
Judgment may be entered on the award of the arbitrator in any court having
proper jurisdiction. All expenses of such arbitration, including the fees and
expenses of the counsel for the Executive, shall be borne by the Company.
Article 8. Successors
The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation, or otherwise) of all or substantially all of
the business and/or assets of the Company to expressly assume and agree to
perform the Company's obligations under this Agreement in the same manner and to
the same extent that the Company would be required to perform them if no such
succession had taken place. Failure of the Company to obtain such assumption and
agreement prior to the effective date of any such succession shall be a breach
of this Agreement and shall entitle the Executive to compensation from the
Company in the same amount and on the same terms as he or she would be entitled
to hereunder if he or she had terminated his or her employment with the Company
voluntarily for Good Reason. The date on which any such succession becomes
effective shall be deemed the Effective Date of Termination.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees, and legatees. If the Executive should
die while any amount would still be payable to him or her hereunder had he or
she continued to live, all such amounts, unless otherwise provided herein, shall
be paid in accordance with the terms of this Agreement, to the Executive's
Beneficiary. If the Executive has not named a Beneficiary, then such amounts
shall be paid to the Executive's devisee, legatee, or other designee, or if
there is no such designee, to the Executive's estate.
Article 9. Miscellaneous
9.1 Employment Status. The Executive and the Company acknowledge that,
except as may be provided under any other agreement between the Executive and
the Company, the employment of the Executive by the Company is "at will," and,
prior to the effective date of a Change in Control, may be terminated by either
the Executive or the Company at any time, subject to applicable law. Upon a
termination of the Executive's employment prior to the effective date of a
Change in Control, there shall be no further rights under this Agreement;
provided, however, that if such an employment termination shall arise in
connection with, or in anticipation of, a Change in Control, then the
Executive's rights shall be the same as if the termination had occurred within
two (2) years following a Change in Control.
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9.2 Beneficiaries. The Executive may designate one or more persons or
entities as the primary and/or contingent Beneficiaries of any Severance
Benefits owing to the Executive under this Agreement. Such designation must be
in the form of a signed writing acceptable to the Committee. The Executive may
make or change such designation at any time.
9.3 Entire Agreement. This Agreement contains the entire understanding of
the Company and the Executive with respect to the subject matter hereof.
9.4 Gender and Number. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall
include the singular, and the singular shall include the plural.
9.5 Severability. In the event any provision of this Agreement shall be
held illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Agreement, and the Agreement shall be
construed and enforced as if the illegal or invalid provision had not been
included. Further, the captions of this Agreement are not part of the provisions
hereof and shall have no force and effect.
9.6 Modification. No provision of this Agreement may be modified, waived,
or discharged unless such modification, waiver, or discharge is agreed to in
writing and signed by the Executive and by an authorized member of the
Committee, or by the respective parties' legal representatives and successors.
9.7 Applicable Law. To the extent not preempted by the laws of the United
States, the laws of the state of Alabama shall be the controlling law in all
matters relating to this Agreement.
