EXHIBIT 10(6)(E)
EMPLOYMENT AND NON-COMPETE AGREEMENT
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THIS EMPLOYMENT AND NON-COMPETE AGREEMENT (this "Agreement") is made
January 1, 1998, by and between XXXXXXX X. XXXXXXXXX, a Missouri resident (the
"Officer"), and WEDGEWOOD PARTNERS, INC., a Missouri corporation ("Wedgewood"),
and acknowledged and joined in by CNB BANCSHARES, INC., an Indiana corporation
("CNB").
RECITALS
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A. The Officer has been and is presently employed as President and
Chief Executive Officer of Wedgewood.
B. CNB has indirectly acquired all of the capital stock of Wedgewood
(the "Acquisition") pursuant to a certain Agreement and Plan of Reorganization
(the "Acquisition Agreement"), dated as of December 23, 1997, by and among CNB,
The Citizens National Bank of Evansville, Wedgewood and the shareholders of
Wedgewood. The Acquisition was subject to, among other things, the execution of
this Agreement contemporaneous with the consummation of the Acquisition.
C. The Officer has derived and in the future will derive direct
financial and other direct and indirect benefits from consummation of the
Acquisition.
D. Wedgewood and CNB desire to assure the continuing services of the
Officer after the consummation of the Acquisition. The Officer desires to be
employed by Wedgewood on a full-time basis pursuant to the terms and conditions
hereinafter more fully set forth.
E. The parties hereto desire to set forth their mutual understandings
and agreements with respect to the foregoing.
AGREEMENT
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In consideration of the foregoing, the mutual covenants herein
contained and other good and valuable consideration (the receipt, adequacy and
sufficiency of which are hereby acknowledged by the parties by their execution
hereof), the parties hereby agree as follows:
SECTION 1. EMPLOYMENT. Wedgewood shall employ the Officer as
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President and Chief Executive Officer of Wedgewood, and the Officer agrees to be
so employed during the Term (as defined in Section 2 hereof) of this Agreement,
upon the terms and conditions hereinafter set forth. The Officer shall also be
Chairman of the Board of Directors of Wedgewood during the Term hereof.
SECTION 2. TERM OF AGREEMENT. The term of this Agreement (the
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"Term") shall commence on the date hereof and shall continue in full force and
effect until December 31, 2002; provided, however, that the obligations and
limited rights of the Officer under Sections 7 and 8 hereof shall survive the
expiration of the Term as provided therein.
SECTION 3. DUTIES. During the Term of this Agreement, the Officer
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shall devote his full time and best efforts in carrying out his duties as
contemplated in Section 1 hereof. The Officer covenants and agrees to
diligently, exclusively and faithfully serve Wedgewood or its successors in the
capacity set forth above (or such other assigned duties) and to devote his full-
time professional
energies, attention, care, undivided loyalty and best efforts to the performance
of such services and the fulfillment of duties attendant thereto.
SECTION 4. COMPENSATION. As full consideration for all services the
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Officer shall render to Wedgewood hereunder, Wedgewood shall compensate the
Officer in the following manner:
(A) BASE SALARY. Wedgewood shall pay the Officer an annual
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salary of $275,000 (the "Base Salary"), payable in the manner and in accordance
with the customary payroll practices of Wedgewood. The amount of the Officer's
Base Salary shall be reviewed by the Board of Directors of Wedgewood annually
and may be increased from time to time (but not decreased) in accordance with
Wedgewood's normal business practices. The Officer shall not receive additional
compensation or fees for service on the Board of Directors of Wedgewood or any
committees thereof.
(B) INCENTIVE COMPENSATION.
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(I) Additional compensation (the "Incentive
Compensation") shall be payable to the Officer based upon the achievement by
Wedgewood of certain financial measures during the five (5) calendar years
(each, a "Calculation Period") commencing January 1, 1998, in an amount equal to
ten percent (10%) of the amount, if any, by which by which the Pre-Tax Income
(as defined below in Section 4(b)(ii) hereof) for a particular Calculation
Period exceeds the Target Pre-Tax Income (as defined below in Section 4(b)(ii)
hereof) for such Calculation Period. Within thirty (30) days after the end of
each Calculation Period, CNB shall deliver, or cause to be delivered, to the
Officer a certificate setting forth, in reasonable detail, CNB's calculation of
the Pre-Tax Income and the amount of Incentive Compensation, if any, due
pursuant to this Section 4(b)(i). The amount of the Incentive Compensation, if
any, for an applicable Calculation Period shall be paid in cash or immediately
available funds by Wedgewood to the Officer on the sixtieth (60th) day after the
last day of the applicable Calculation Period.
(II) As used herein, the following terms shall have the
following meanings:
(1) "Pre-Tax Income" shall mean the amount of
Wedgewood's net income before taxes during the applicable Calculation Period, as
shown on the books of Wedgewood, but excluding, for purposes of such
calculation, (i) the amortization of the goodwill on the books of Wedgewood
resulting from the Acquisition for the applicable Calculation Period, (ii) the
aggregate Incentive Compensation paid or payable by Wedgewood for the applicable
Calculation Period under this Agreement, and (iii) certain extraordinary
expenditures which are approved in advance by the Board of Directors of
Wedgewood and which CNB shall have agreed in writing, prior to the incurrence
thereof by Wedgewood, shall not be included in the determination of Pre-Tax
Income for purposes of the Incentive Compensation.
(2) "Target Pre-Tax Income" shall mean, for a
particular Calculation Period, the amount set forth in the table below opposite
such Calculation Period:
CALCULATION PERIOD TARGET PRE-TAX INCOME
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(Year Ended December 31,)
1998................................................. $400,000
1999................................................. $440,000
2000................................................. $484,000
2001................................................. $532,400
2002................................................. $585,640
(C) OTHER BENEFITS. The Officer shall, during the Term of this
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Agreement, be entitled to participate in (i) any and all employee welfare plans,
employee benefit plans, stock purchase plans and similar plans of Wedgewood or
CNB now or hereafter in effect and open to participation by qualifying employees
of Wedgewood and CNB generally, in accordance with the eligibility and other
requirements established for such corporate benefits, and (ii) the CNB
Bancshares, Inc. Short-Term Incentive Plan, at a Level II, commencing in 1998.
(D) STOCK OPTIONS. The Officer shall be granted, on the Closing
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Date (as defined in the Acquisition Agreement), non-qualified employee stock
options under the CNB Bancshares, Inc. 1995 Stock Incentive Plan to purchase
20,000 shares of CNB common stock for an option exercise price per share equal
to the closing price of a share of CNB common stock as reported in The Wall
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Street Journal (Midwest Edition) on the date upon which the Closing Date shall
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have occurred.
SECTION 5. TERMINATION. Except as provided below in this Section 5, the
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Officer shall receive from Wedgewood, upon the termination of the Officer's
employment during the Term of this Agreement, the benefits provided in Section 6
hereof, unless such termination was (a) because of the Officer's death or
Retirement, (b) by Wedgewood for Grave Cause or Disability, or (c) by the
Officer other than for Good Reason. Notwithstanding the foregoing, in the event
that the Officer's employment is terminated during the Term of this Agreement
under circumstances (e.g., a change of control of CNB) which would entitle the
Officer to severance payments and benefits under any Change of Control Agreement
between CNB and the Officer, then the Officer shall not be entitled to receive
any payments hereunder as a result of such termination. As used herein, the
terms "Disability," "Retirement," "Grave Cause" and "Good Reason" shall have the
meanings set forth below.
(I) DISABILITY. "Disability" shall mean termination because
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of the Officer's absence from duties with Wedgewood on a full time basis for 100
business days during any period of 150 consecutive business days, as a result of
incapacity due to physical or mental illness.
(II) RETIREMENT. "Retirement" shall mean termination by
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Wedgewood based on the Officer's having reached age 65 or such other age as
shall have been fixed in any arrangement established with the Officer's consent.
(III) GRAVE CAUSE. "Grave Cause" shall mean and shall be
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limited to the following (1) Officer's willful and continued failure to perform
(other than a failure resulting from Officer's illness or Disability) his
employment duties after a demand for substantial performance is delivered to
Officer on behalf of the Board of Directors of Wedgewood or CNB that
specifically identifies the manner in which such Board of Directors alleges that
Officer has failed to perform his duties and Officer's failure to take
appropriate actions to correct such failure within thirty (30) days; or (2)
Officer's willful engaging in misconduct that has caused demonstrable and
material injury, monetary or otherwise, to CNB or Wedgewood or their respective
affiliates. For purposes of this definition of "Grave Cause," no act or failure
to act on Officer's part shall be considered "willful" unless done, or omitted
to be done, by Officer not in good faith and without reasonable belief that his
action or omission was in the best interests of Wedgewood and/or CNB.
Notwithstanding the foregoing, Officer shall not be deemed to have been
terminated for Grave Cause unless and until the Board of Directors of Wedgewood
or CNB has delivered to him a copy of a notice of termination, and
after reasonable notice to him and an opportunity for him, together with
counsel, to be heard before the Board, at least two-thirds of the Board finds,
in its reasonable opinion, that Officer was guilty of conduct set forth above in
clause (1) or (2) and specifying the particulars thereof in detail.
(IV) GOOD REASON. "Good Reason" shall mean termination by the
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Officer of his employment based on the occurrence of a material breach by
Wedgewood of any provision of this Agreement; provided, however, that any such
occurrence shall not be deemed a "Good Reason" if the Officer consents thereto.
(V) NOTICE OF TERMINATION. Any termination by Wedgewood
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pursuant to Sections 5(i), (ii) or (iii) above or by the Officer pursuant to
Section 5(iv) above shall be communicated by written Notice of Termination
delivered to the other party hereto. As used herein, a "Notice of Termination"
shall mean a 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 Officer's
employment under the provision so indicated.
(VI) DATE OF TERMINATION. "Date of Termination" shall mean (A)
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if the Officer's employment is terminated on account of Disability or pursuant
to Section 5(iii) above, the date specified in the Notice of Termination, (B) if
the Officer's employment is terminated on account of the Officer's death, the
date of the Officer's death, and (C) if the Officer's employment is terminated
for any other reason, the date on which a Notice of Termination is given.
SECTION 6. CERTAIN BENEFITS UPON TERMINATION. Subject to the exception
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set forth in the second sentence of Section 5 hereof, if, during the Term of
this Agreement, the Officer's employment by Wedgewood shall be terminated (A) by
Wedgewood other than for Grave Cause, Disability, Retirement or death, or (B) by
the Officer for Good Reason, then the Officer shall receive from Wedgewood, for
a period of time equal to the unexpired Term of this Agreement, on a semi-
monthly basis, an amount equal to the Officer's semi-monthly Base Salary payable
at the Date of Termination (the "Termination Payments"). Such Termination
Payments shall be the only amounts, payments and damages payable by Wedgewood or
CNB in the event of the termination of the Officer as provided in this Section
6. Such Termination Payments shall be payable in the manner and in accordance
with the customary payroll practices of Wedgewood. The provisions of this
Agreement, and any Termination Payment provided for hereunder, shall not,
however, reduce any amounts otherwise payable, or in any way diminish the
Officer's rights, under any benefit plan, incentive plan, stock option plan, or
other plan or arrangement pursuant to which the Officer receives benefits from
Wedgewood. If, during the Term of this Agreement, the Officer's employment by
Wedgewood shall be terminated (A) by Wedgewood for Grave Cause, Disability,
Retirement or death, or (B) by the Officer for other than Good Reason, the
Officer shall not be entitled to receive any amounts or payments from Wedgewood
on account of such termination (other than any compensation payable by Wedgewood
to the Officer up to and including the Date of Termination).
SECTION 7. COVENANT NOT TO COMPETE.
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(A) DEFINITION OF CARRY ON OR PARTICIPATE IN THE INVESTMENT
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ADVISORY, BROKERAGE AND ANNUITY BUSINESS. As used in this Agreement, the term
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"Carry on or Participate in the Investment Advisory, Brokerage and Annuity
Business" means having an interest in, or engaging in business with or rendering
services to, or consulting or advising with, or providing assistance or guidance
to (as a director, officer, employee, agent, partner, joint venturer, advisor,
consultant,
stockholder, individual proprietor, member, lender or in any other capacity
whatsoever), any business or other company or entity (however organized or
structured) which directly, or indirectly through its subsidiaries or
affiliates, is engaged in (i) investment advisory services, advice or asset
management, or any related business which would require registration under the
Investment Advisors Act of 1940, as amended and/or under comparable state laws
and regulations (the "Investment Advisory Services"), (ii) full and discount
brokerage services (the "Brokerage Services"), (iii) insurance sales and related
activities, including the sale of fixed and variable annuities (the "Annuity
Services"), and (iv) otherwise in any business of a type now or hereafter
conducted by Wedgewood or its subsidiaries or any type of business that is
directly or indirectly competitive with any business now or hereafter conducted
by Wedgewood or its subsidiaries (the "Other Wedgewood Activities"), and, in the
case of each of the clauses (i) through (iv) above, which has an office or which
otherwise solicits customers, clients or business within any county in which CNB
or any of its subsidiaries or affiliates may now or hereafter have an office or
branch location.
(B) PROHIBITED ACTIVITIES.
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(I) For a period of time equal to the Term of this Agreement
plus two (2) years (the "Non-Compete Term"), the Officer shall not, directly or
indirectly, and the Officer shall not participate or take part (as a director,
officer, employee, agent, partner, joint venturer, advisor, consultant,
stockholder, individual proprietor, member, lender or in any other capacity
whatsoever) in any entity(ies) which, directly or indirectly (A) Carry on or
Participate in the Investment Advisory, Brokerage and Annuity Business, or (B)
solicit or attempt to solicit or otherwise accept for the Officer's own benefit
or for the benefit of others (1) the employment or services of any then-present
employee of Wedgewood or CNB (and their respective subsidiaries, affiliates,
successors and assigns), or (2) any client or customer of Wedgewood or CNB (and
their respective subsidiaries, affiliates, successors and assigns), or (C) use
or otherwise disseminate or attempt to use or disseminate any information
relating to Wedgewood or CNB (and their respective subsidiaries, affiliates,
successors and assigns) or their respective clients and customers. As used in
this Section 7, the term "stockholder" shall not include any investment in any
entity, public or private, where the Officer owns less than one percent (1%) of
the stock or other ownership interest issued and outstanding.
(II) Anything to the contrary in Sections 7(b)(i) and 8 hereof
notwithstanding, if, at any time hereafter, the Officer's employment by
Wedgewood shall be terminated (A) by Wedgewood other than for Grave Cause, or
(B) by the Officer for Good Reason hereunder or for "good reason" as defined
under the Change of Control Agreement referred to in Section 5 hereof, then the
Officer shall be entitled to participate in the activities described below in
this Section 7(b)(ii) (any termination for the reasons set forth in the
preceding sentence is referred to herein as a "Covered Termination"). Upon the
occurrence of a Covered Termination, the Officer may (1) provide Investment
Advisory Services to any person or entity without restriction (including clients
to whom he previously provided Brokerage Services and Investment Advisory
Services) and related Brokerage Services to any such Investment Advisory client
to the extent necessary to fully service the investment advisory account of such
client, (2) provide Investment Advisory, Brokerage and Annuity Services to First
Community Credit Union ("FCCU"), and its successors, and to any of FCCU's
members, (3) subject to compliance with applicable laws and regulations, make
and retain copies of all records and files (paper and electronic media) with
respect to Wedgewood's Investment Advisory clients and with respect to FCCU and
its members, (4) to advise (verbally and in writing) FCCU and any of the
Wedgewood Investment Advisory clients that he has left his employment with
Wedgewood and inform them of the name and location of his new place of
employment and the business he conducts, and (v) employ any person without
geographic, time or other restriction; provided that
neither the Officer nor any one working on his behalf shall solicit the
employment of any person employed by CNB or Wedgewood at any time within the six
(6) months preceding the termination of the Officer's employment with Wedgewood.
The Officer shall continue, during the Non-Compete Term, to be subject to and
bound by each and every other term, provision, restriction and prohibition set
forth in Section 7(b)(i) not expressly permitted in this Section 7(b)(ii).
(III) The Officer hereby agrees that the restrictions set
forth in this Section 7 are an integral aspect of this Agreement and are
reasonable and necessary and, accordingly, that Wedgewood and CNB (and their
respective subsidiaries, affiliates, successors and assigns) shall, anything to
the contrary in Section 20 hereof notwithstanding, be entitled to injunctive
relief, from a court having jurisdiction with respect to the matter, for the
purpose of restraining the Officer and any entity in which the Officer has an
interest (as described in Section 7(b)(i) hereof) from any actual or threatened
breach of the restrictions set forth in this Section 7 and to any other
appropriate relief. If any action is maintained to enforce any term of the
restrictions set forth in this Section 7, the prevailing party shall be entitled
to receive its reasonable attorneys' fees and expenses from the other party. If
any court of competent jurisdiction or arbitrator determines that the time
period, activities covered or the geographical scope referenced in this Section
7 is unreasonable or otherwise in contravention of the law, said restrictions
shall not be determined to be null and void and of no effect, but shall be
reformed by said court or arbitrator to impose a reasonable time period,
activities covered or geographical scope, as the case may be.
(C) SURVIVAL. The provisions of this Section 7 shall survive any
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termination of this Agreement.
SECTION 8. CONFIDENTIAL INFORMATION. Subject to Section 7(b)(ii)(3)
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hereof, the Officer agrees that he shall not, to the detriment of Wedgewood or
CNB (and their subsidiaries, affiliates, successors and assigns), impart any
confidential information or knowledge relative to Wedgewood or CNB (and their
subsidiaries, affiliates, successors and assigns), to any person or entity,
corporate or otherwise, without specific prior written permission from Wedgewood
or CNB to do so, and the Officer agrees that all such information or knowledge
shall be kept strictly confidential. The Officer confirms and agrees that such
information constitutes the exclusive property of Wedgewood and CNB. The
provisions of this Section 8 shall survive any termination of this Agreement.
SECTION 9. NOTICES. All notices or other communications hereunder shall
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be in writing and shall be deemed to have been given when personally delivered
or deposited in the United States mail, certified or registered, return receipt
requested, postage prepaid, or sent by Federal Express or other recognized
overnight courier service that provides proof of delivery, and addressed as
follows:
(a) if to CNB or Wedgewood:
CNB Bancshares, Inc.
00 X.X. Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxxx, Chief Executive Officer
Facsimile: 812/464-3496
(b) if to the Officer:
Xxxxxxx X. Xxxxxxxxx
00 X. Xxxxxxxx
Xxxxxxxx, Xxxxxxxx 00000
or to such other address as any party may from time to time designate by notice
to the others.
SECTION 10. AMENDMENT AND MODIFICATION. This Agreement may not be
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amended, modified, supplemented, or terminated unless the same is in writing and
is signed by all the parties hereto. Any waiver of any provision of this
Agreement and any consent to any departure from the terms of any provision of
this Agreement is to be effective only in the specific instance and for the
specific purpose for which given.
SECTION 11. CAPTIONS. Captions contained in this Agreement have been
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inserted herein only as a matter of convenience and in no way define, limit,
extend or describe the scope of this Agreement or the intent of any provision
hereof.
SECTION 12. COMPLIANCE WITH LAW. None of the terms or provisions of this
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Agreement require any of the parties to take any action prohibited by, or
contrary to, applicable law.
SECTION 13. COUNTERPARTS. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original and all of which shall
be deemed one and the same instrument. For purposes of executing this
Agreement, a document (or signature page thereto) signed and transmitted by
facsimile machine or telecopier shall be treated as an original document. The
signature of any party thereon, for purposes hereof, shall be considered as an
original signature, and the document transmitted shall to be considered to have
the same binding effect as an original signature on an original document. At
the request of any party, any facsimile or telecopy document shall be re-
executed in original form by the parties who executed the facsimile or telecopy
document. No party may raise the use of a facsimile machine or telecopier or
the fact that any signature was transmitted through the use of a facsimile or
telecopier machine as a defense to the enforcement of this Agreement or any
amendment or other document executed in compliance with this Section 13.
SECTION 14. ENTIRE AGREEMENT. This Agreement and the Change of Control
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Agreement referred to in Section 5 hereof constitute the entire agreement among
the parties pertaining to the subject matter hereof and supersedes all prior
agreements, letters of intent, understandings, negotiations and discussions of
the parties, whether oral or written.
SECTION 15. FAILURE OR DELAY. No failure on the part of any party to
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exercise, and no delay in exercising, any right, power or privilege hereunder
operates as a waiver thereof; nor does any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof, or the exercise of any other right, power or privilege. No notice to
or demand on any party in any case entitles such party to any other or further
notice or demand in similar or other circumstances.
SECTION 16. GOVERNING LAW. This Agreement and the rights and obligations
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of the parties hereunder are to be governed by and construed and interpreted in
accordance with the laws of the State of Indiana applicable to contracts made
and to be performed wholly within Indiana, without regard to choice or conflict
of laws rules.
SECTION 17. SUCCESSORS AND ASSIGNS. All provisions of this Agreement are
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binding upon, inure to the benefit of, and are enforceable by or against, the
parties and their respective heirs, executors, administrators or other legal
representatives and permitted successors and assigns.
SECTION 18. THIRD-PARTY BENEFICIARY. This Agreement is solely for the
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benefit of the parties hereto and their respective successors and permitted
assigns, and no other person has any right, benefit, priority or interest under,
or because of the existence of, this Agreement.
SECTION 19. TERMINATION OF PRIOR EMPLOYMENT ARRANGEMENTS. Any employment
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arrangements between Wedgewood and the Officer that existed at any time prior to
the Closing (as defined in the Acquisition Agreement) are terminated by the
Officer and, from and after the Closing, the Officer shall not be entitled to
any compensation from Wedgewood on account of any such arrangement or agreement.
SECTION 20. ARBITRATION. Any dispute or disagreement between the Officer
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and Wedgewood or CNB arising from or related to the employment arrangement
created hereunder shall be settled by arbitration. The arbitration shall be
conducted by one arbitrator under the commercial arbitration rules of the
American Arbitration Association ("AAA") then in effect. The arbitrator shall
be chosen from a panel of persons with knowledge of employment practices and
contracts. The decision and award of the arbitrator shall be final and binding
and the award may be entered in any court of competent jurisdiction. The
arbitration shall be held in the AAA region in which Evansville, Indiana is
located.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES HERETO.
/s/ Xxxxxxx X. Xxxxxxxxx
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Xxxxxxx X. Xxxxxxxxx
WEDGEWOOD PARTNERS, INC.
By: ______________________________
_____________
_____________
CNB BANCSHARES, INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx
Chief Executive Officer
