EX-10.2 3 dex102.htm CHANGE OF CONTROL EMPLOYMENT AGREEMENT CHANGE OF CONTROL EMPLOYMENT AGREEMENT
EXHIBIT 10.2
CHANGE OF CONTROL EMPLOYMENT AGREEMENT
THIS CHANGE OF CONTROL EMPLOYMENT AGREEMENT (the “Agreement”) by and between Crescent Bank & Trust Company (together with its successors and assigns, the “Bank”) and Xxxxxx X. Xxxxxxxxx, Xx. (the “Employee”), is dated as of August 19, 2004, and shall become effective as of the Effective Time of the Crescent Merger.
The Bank’s Board of Directors (the “Board”), has determined that it is in the best interests of the Bank and its shareholders to assure that the Bank obtain and preserve the continued service and dedication of the Employee, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined below) of Crescent Banking Company (the “Company”). The Employee, immediately prior to becoming a Bank employee had an agreement (the “Futurus Contract”) with Futurus Bank, N.A. (“Futurus Bank”) that provided benefits upon a change in control of Futurus Bank. Futurus Bank is being acquired by the Bank in the Crescent Merger which will result in a change of control of Futurus Bank for purposes of the Futurus Contract. The Company and the Bank are paying the Merger Consideration to the Futurus shareholders, including the Employee, granting the Employee options to purchase shares of Crescent Common Stock, and entering into this Agreement in consideration of the Employee entering into this Agreement, irrevocably waiving and releasing all rights under his existing Futurus Contract with respect to any benefits thereunder that could be receivable in light of the Crescent Merger, and irrevocably terminating the Futurus Contract upon the Effective Time of the Crescent Merger without the payment of any amounts thereunder to the Employee with respect to the Crescent Merger.
The Board believes it is important to diminish the inevitable distraction of the Employee by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control of the Company and to encourage Employee’s full attention and dedication to the Bank upon and following the Crescent Merger and in the event of any threatened or pending Change of Control of the Company, and to provide the Employee with compensation and benefits arrangements upon a Change of Control of the Company in lieu of those the Employee had under the Futurus Contract.
Capitalized terms used but not defined herein have the meanings provided in the Acquisition Agreement.
In consideration of the promises and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Employee and the Bank, intending to be legally bound, agree as follows:
(a) “Acquisition Agreement” means the Agreement and Plan of Reorganization by and among the Company, the Bank, Futurus and Futurus Bank, dated as of August 19, 2004.
(b) “Affiliated Company” shall mean any company or entity controlled by, controlling or under common control with the Company or the Bank.
(c) “Beneficially Own” and “Beneficial Owner” and correlative terms have the meanings provided in SEC Rule 13d-3 under the 1934 Act.
(d) “Change of Control Period” means the period commencing on the Effective Date and ending on the third anniversary of the Effective Date; provided that, the Change of Control Period automatically shall be extended for one year on each anniversary of the Effective Date unless the Company, not less than 60 days prior to an anniversary, shall give notice of non-extension to the Employee.
(e) “Crescent Merger” means the mergers contemplated in the Acquisition Agreement.
(f) “Effective Date” means the first date during the Employment Period on which a Change of Control occurs. Anything in this Agreement to the contrary notwithstanding, if a Change of Control occurs during the Employment Period and if Employee’s employment with the Bank has been terminated either (i) by the Bank without Cause or (ii) by the Employee for Good Reason (as such terms are defined in Section 5 below) within six (6) months prior to the date on which the Change of Control occurs, and unless it is reasonably demonstrated by the Bank that such termination of employment (i) was not at the request of a third party who has taken steps reasonably calculated to effect the Change of Control and (ii) did not otherwise arise in connection with or anticipation of the Change of Control, then for all purposes of this Agreement the Effective Date shall mean the date immediately prior to the date of such termination of employment.
(g) “Effective Time” means the effective time of the first Crescent Merger as provided by the Acquisition Agreement.
(h) “1933 Act” means the Securities Act of 1933, as amended.
(i) “1934 Act” means the Securities Exchange Act of 1934, as amended.
(j) “SEC” means the United States Securities and Exchange Commission and any successors thereto.
(a) individuals who, at the Effective Time, constitute the board of directors (the “Incumbent Directors”) of the Company cease for any reason to constitute at least a majority of the Board of the Company, provided that any person becoming a Board member after the Effective Time and whose election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors serving on the Company’s Nominating Committee (the “Nominating Committee”) or if there is no Nominating Committee, by the Company’s Board or
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the shareholders, shall be an Incumbent Director. The immediately preceding sentence notwithstanding, no individual initially nominated or elected as a director of the Company as a result of an actual or threatened election contest (as described in SEC Rule 14a-11 under the 1934 Act (“Election Contest”) or other actual or threatened solicitation of proxies or consents by or on behalf of any “Person” (as such term is used in Sections 13(d)(3) and 14(d)(2) of the 1934 Act) other than the Company’s Board or Nominating Committee (“Proxy Contest”), including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest, shall be deemed an Incumbent Director;
(b) any Person becomes a Beneficial Owner, directly or indirectly, of securities of the Company representing 35% or more of the combined voting power of the Company’s then outstanding securities eligible to vote for the election of the Company’s Board (the “Company Voting Securities”). The immediately preceding sentence notwithstanding, an event described in this subsection 2(b) shall not be deemed to be a Change of Control of the Company by virtue of any of the following: (A) any acquisition by a Person who is at the Effective Time the Beneficial Owner of 15% or more of the outstanding Company Voting Securities, (B) an acquisition by the Company which reduces the number of Company Voting Securities outstanding and solely as a result thereof any Person has Beneficial Ownership of more than 35% of the outstanding Company Voting Securities; provided, that if after such acquisition, such Person becomes the Beneficial Owner of additional Company Voting Securities that increases the percentage of outstanding Company Voting Securities beneficially owned by such person by more than 1%, a Change of Control of the Company shall then occur, (C) an acquisition by any employee benefit plan (or related trust) (“Employee Plan”) sponsored or maintained by the Company or any parent or subsidiary of the Company, (D) an acquisition by an “underwriter” (as defined in Section 2(a)(11) of the 0000 Xxx) temporarily holding securities pursuant to an offering of such securities, or (E) an acquisition pursuant to a Non-Qualifying Transaction (as defined in subsection 2(c) below); or
(c) the consummation of a reorganization, merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company that requires the approval of the Company’s shareholders, whether for such transaction or the issuance of securities in the transaction, or the sale or other disposition of all or substantially all of the Company’s assets to an entity that is not an affiliate of the Company (a “Reorganization”), unless immediately following such Reorganization: (A) more than 50% of the total voting power of (x) the corporation resulting from such Reorganization (the “Surviving Company”), or (y) if applicable, the ultimate parent corporation that directly or indirectly Beneficial Owns 100% of the voting securities eligible to elect directors of the Surviving Company (the “Parent Company”), is represented by the Company Voting Securities that were outstanding immediately prior to such Reorganization (or, if applicable, is represented by shares into which such Company Voting Securities were converted pursuant to such Reorganization), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Reorganization, (B) no person (other than (x) the Company, (y) any Employee Plan sponsored or maintained by the Surviving Company, the Parent Company or any parent or subsidiary of either of them, or (z) a person who immediately prior to the Reorganization was the Beneficial Owner of 35% or more of the outstanding Company Voting Securities is the Beneficial Owner, directly
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or indirectly, of 35% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Company or the Surviving Company, and (C) at least a majority of the members of the board of directors of the Parent Company or the Surviving Company following the consummation of the Reorganization were Incumbent Directors at the time of the Company Board’s approval of the initial agreement providing for such Reorganization. Any Reorganization which satisfies all of the criteria specified in clauses (A), (B) and (C) of this subsection 2(c) shall be deemed to be a “Non-Qualifying Transaction”); or
(d) approval by the Company’s shareholders of a plan of liquidation or dissolution of the Company.
(i) During the Employment Period, (A) Employee’s position (including status, offices, titles and reporting requirements), authority, duties and responsibilities shall be at least commensurate in all material respects with the most significant of those held, exercised and assigned immediately following the Effective Time of the Crescent Merger, and (B) Employee’s services shall be performed at the location where Employee was employed immediately preceding the Effective Date or any office or location less than 50 miles from such location.
(ii) During the Employment Period, and excluding any periods of vacation and sick leave to which Employee is entitled, Employee shall devote his full business attention and time during normal business hours to the business and affairs of the Bank and shall use his reasonable best efforts to perform faithfully and efficiently all responsibilities assigned to him and consistent with applicable laws, regulations and requirements of applicable governmental authorities, and the Company’s and the Bank’s policies, codes of conduct, practices and progress. During the Employment Period it shall not be a violation of this Agreement for Employee to (A) serve on a reasonable number of corporate, civic or charitable boards or committees that promote the Bank’s interests in serving its communities, (B) engage in other business activities that do not represent a conflict of interest with the Company, the Bank or the Affiliated Companies or the full execution of his duties to the Bank, and (C) manage personal investments, so long as such activities do not materially interfere with the performance of Employee’s responsibilities as an employee of the Bank in accordance with this Agreement.
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(i) the willful and continued failure of Employee to perform substantially all of Employee’s duties with the Bank (other than any such failure resulting from incapacity due to physical or mental illness, and specifically excluding any failure by Employee, after reasonable efforts, to meet performance expectations), after a written demand for substantial performance is delivered to Employee by the Bank’s Board or Chief Executive Officer; or
(ii) any conduct inconsistent with applicable law or regulation, or any violation of this Agreement, or any gross negligence or willful misconduct by the Employee which is materially injurious to the Bank; or
(iii) any refusal or failure by Employee to comply with a lawful directive from the Bank’s Board or Chief Executive Officer.
For purposes of this provision, no act or failure to act, on the part of Employee, shall be considered “willful” unless it is done, or omitted to be done, by Employee in bad faith or without reasonable belief that Employee’s action or omission was in the best interests of the Bank. Any act, or failure to act, based upon direction given pursuant to a resolution duly adopted by the Board or based upon and consistent with the prior advice of counsel for the Bank after being informed adequately of the action or failure to act, shall be conclusively presumed to be done, or omitted to be done, by Employee in good faith and in the best interests of the Bank. The cessation of employment of Employee shall not be deemed to be for Cause, unless and until there shall have been delivered to Employee a copy of a resolution duly adopted by the affirmative vote of the Board at a meeting of such Board called and held for such purpose (after reasonable notice is provided to Employee and Employee is given an opportunity, together with counsel, to be heard before such Board), finding that, in the business judgment of such Board, Employee may be terminated consistent with subparagraphs (i) or (ii) above.
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(i) without the written consent of Employee, the assignment to Employee of any duties inconsistent in any material respect with Employee’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as in effect on the Effective Date, or any other action by the Bank which results in a diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Bank promptly (which shall in no event be deemed to require action in less than thirty (30) days) after receipt of notice thereof given by Employee;
(ii) the Bank’s requiring Employee, without his consent, to be based at any office or location that is more than 50 miles from the location where Employee was employed immediately prior to the Effective Date;
(iii) a material reduction in Employee’s Annual Base Salary or exclusion from any benefits or plans to which Employee is entitled pursuant to subsections 4(b)(iii) through (vi), or as the same may be increased from time to time except where such change is necessitated by law, regulation or action by applicable governmental authorities, which is not remedied by the Bank promptly (which shall in no event be deemed to require action in less than thirty (30) days) after receipt of notice thereof given by Employee; and provided further, a change in any compensation, plan or benefits generally or those provided to Peer Employees shall not constitute “Good Reason”.
(iv) any failure by the Bank to comply with and satisfy Section 13(c) of this Agreement which is not remedied by the Bank promptly (which shall in no event be deemed to require action in less than thirty (30) days) after receipt of notice thereof given by Employee; or
(v) the material breach of this Agreement by the Bank which is not remedied by the Bank promptly (which shall in no event be deemed to require action in less than thirty (30) days) after receipt of notice thereof given by Employee.
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Employee’s termination of employment, the parties shall pursue the resolution of such dispute with reasonable diligence. Within five (5) days of such a resolution, any party owing any payments pursuant to the provisions of this Agreement shall make all such payments together with interest accrued thereon at the rate provided in Section 1274(b)(2)(B) of the Internal Revenue Code of 1986, as amended (the “Code”). The failure by either party to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of such party hereunder or preclude such party from asserting such fact or circumstance in enforcing such party’s rights hereunder.
6. Obligations of the Bank upon Termination.
(i) the Bank shall pay to Employee the following:
A. an amount equal the sum of (1) Employee’s Annual Base Salary through the Date of Termination to the extent not theretofore paid, and (2) any compensation previously deferred by Employee (together with any accrued interest or earnings thereon if any, then owed to Employee) to the extent not theretofore paid (the sum of the amounts described in clauses (1) and (2) shall be hereinafter referred to as the “Accrued Obligations”); and
B. an amount equal to one (1) times Employee’s Annual Base Salary at the rate in effect on the Date of Termination payable over the one year following the Date of Termination in accordance with Bank’s normal payroll;
(ii) for a period of one (1) year from the Date of Termination, the Bank shall continue benefits to Employee and/or Employee’s family that are at least equal, on an after-tax basis, to those which would have been provided to them in accordance with the medical and other welfare plans described in Section 4(b)(iv) of this Agreement if Employee’s employment had not been terminated; provided, however, that if Employee becomes re-employed with another employer and is eligible to receive medical or other welfare benefits under another employer-provided plan, the medical and other welfare benefits described herein shall be secondary to those provided under such other plan during such applicable period of eligibility;
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(iii) all unvested stock options to acquire capital stock of the Company and all awards of restricted Company capital stock held by Employee as of the Date of Termination shall be immediately and fully vested as of the Date of Termination and, in the case of stock options, shall be fully exercisable as of the Date of Termination; and
(iv) to the extent not theretofore paid or provided, the Bank shall timely pay or provide to Employee any other amounts or benefits required to be paid or provided or which Employee is eligible to receive under any plan, program, policy, contract or agreement of the Bank (collectively, the “Other Benefits”).
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by the Bank or any of its Affiliated Companies and for which Employee may qualify, nor, subject to Section 14(h), shall anything herein limit or otherwise affect such rights as Employee may have under any contract or agreement with the Bank or any of its Affiliated Companies. Amounts which are vested benefits or which Employee is otherwise entitled to receive under any plan, policy, program of or any contract or agreement with the Bank at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, program, contract or agreement, except as explicitly modified by this Agreement.
10. Nondisclosure of Trade Secrets and Confidential Information.
(a) Trade Secrets Defined. “Trade Secrets” means all secret, proprietary or confidential information regarding Futurus, Futurus Bank, the Bank, the Company, and their Affiliated Companies or any of their respective activities, that fits within the definition of “trade secrets” under the Georgia Trade Secrets Act. Without limiting the foregoing or any definition of Trade Secrets, Trade Secrets protected hereunder shall include all source codes and object codes for software and all website design information to the extent that such information fits within the Georgia Trade Secrets Act. Nothing in this Agreement is intended, or shall be construed, to limit the protections or remedies available to Futurus, Futurus Bank, the Company, the Bank or their Affiliated Companies under the Georgia Trade Secrets Act or any other applicable law protecting trade secrets or other confidential information. “Trade Secrets” shall not include information that has become generally available to the public by the act of one who has the right to disclose such information without violating any right or privilege of Futurus, Futurus Bank, the Company, the Bank or their Affiliated Companies, including their rights under the Confidentiality Agreement with Futurus and/or its representatives. This definition shall not limit any definition of “trade secrets” or any equivalent term under the Georgia Trade Secrets Act or any other state, local or federal law.
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(b) Confidential Information Defined. “Confidential Information” means all information regarding Futurus, Futurus Bank, the Company, and their Affiliated Companies and any of their respective activities, businesses or customers that is not generally known to persons not employed (as employees or independent agents) by Futurus, Futurus Bank, the Bank, the Company or their Affiliated Companies, that is not generally disclosed publicly by regular practice or authority to persons not employed by Futurus, Futurus Bank, the Company, the Bank or their Affiliated Companies, except to their regulatory authorities and pursuant to confidential or other relationships where there is no expectation of public disclosure) and is the subject of reasonable efforts to keep it confidential. Confidential Information shall include all customer information, product code, product concepts, production techniques, technical information regarding products or services, production processes and product/service development, operations techniques, product/service formulas, information concerning techniques for use and integration of websites and other products/services, product pricing, current and future development and expansion or contraction plans of Futurus, Futurus Bank, the Company, the Bank or their Affiliated Companies, sale/acquisition plans and contacts, marketing plans and contacts, information concerning the legal affairs of Futurus, Futurus Bank, the Company, the Bank and their Affiliated Companies and certain information concerning the strategy, tactics and financial affairs of Futurus, Futurus Bank, the Company or the Bank and their Affiliated Companies. “Confidential Information” shall not include information that has become generally available to the public by the act of one who has the right to disclose such information without violating any right or privilege of Futurus, Futurus Bank, the Company, the Bank and their Affiliated Companies or any duty owed to any of them. This definition shall not limit any definition of “confidential information” or any equivalent term under the Georgia Trade Secrets Act or any other federal, state or local law.
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11. Nonrecruitment and Nonsolicitation Covenants.
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credit, letters of credit, commercial and consumer deposits and deposit accounts, securities repurchase agreements and sweep accounts, money transfer and xxxx payment services, internet or electronic banking, automated teller machines, XXX and retirement accounts, mortgage loans, and home equity lines of credit. For purposes of this Section 11(c), the “Restricted Area” shall be Xxxx and Xxxxxxx Counties, Georgia and that area of Xxxxxx County, Georgia north and west of Interstate 000 xxxxxxx Xxxxxxxxxx 00 Xxxx xx Xxxxxxx and Interstate 85 North of Atlanta, together all of which are within the area over which Employee had authority for Futurus and Futurus Bank, and within which Employee will provide services to the Bank upon and following the Effective Time of the Crescent Merger. Nothing in this Section 11(c) shall prohibit Employee from acquiring or holding, for investment purposes only, less than one percent (1%) of the outstanding securities of any corporation which may compete directly or indirectly with the Bank or its Affiliated Companies. Furthermore, if during the Employment Period the Bank terminates Employee without Cause or if Employee terminates for Good Reason, this Section 11(c) shall terminate and have no further force or effect.
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(a) This Agreement is personal to Employee and without the prior written consent of the Bank shall not be assignable by Employee. This Agreement shall inure to the benefit of and be enforceable by Employee’s personal and legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the Bank and its successors and assigns.
(c) The Bank will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Bank to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Bank would be required to perform it if no such succession had taken place. As used in this Agreement, the term “Bank” shall mean Crescent Bank & Trust Company including any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.
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Employee’s employment may be terminated by either Employee or the Bank at any time, in which case Employee shall have no further rights under this Agreement, except as expressly set forth herein. However, absent a voluntary termination of employment by Employee, this Agreement may not be terminated by the Bank during the Change of Control Period except for Cause or Disability. From and after the Effective Time of the Crescent Merger, this Agreement shall supersede any other agreement between the parties (or their predecessors) with respect to the subject matter hereof, including without limitation the Futurus Contract or any other then-current employment agreement between the Employee and Futurus Bank.
(e) Governing Law. Except to the extent preempted by federal law, and without regard to conflict of laws principles, the laws of the State of Georgia shall govern this Agreement in all respects, whether as to its validity, construction, capacity, performance or otherwise.
| To the Bank: | Crescent Bank & Trust Company | |
| 000 Xxxxxxx 000 | ||
| Xxxxxx, Xxxxxxx 00000 | ||
| Attention: Chief Executive Officer | ||
| To Employee: | Xxxxxx X. Xxxxxxxxx, Xx. | |
| 0000 Xxxxxxxx Xxxxxxx | ||
| Xxxxxxxxxx, XX 00000 |
Any party may change the address to which notices, requests, demands and other communications shall be delivered or mailed by giving notice thereof to the other party in the same manner provided herein.
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Change of Control Employment Agreement as of the date first above written.
| CRESCENT BANK & TRUST COMPANY | ||
| By: | /s/ J. Xxxxxx Xxxxxx, Xx. | |
| J. Xxxxxx Xxxxxx, Xx. | ||
| President and Chief Executive Officer |
| EMPLOYEE: |
| /s/ Xxxxxx X. Xxxxxxxxx, Xx. |
| Xxxxxx X. Xxxxxxxxx, Xx. |
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