Exhibit 10(b)
CHANGE OF CONTROL AGREEMENT
This AGREEMENT is entered into by and between CNB BANCSHARES, INC., an
Indiana corporation ("Company"), and XXXXX X. XXXXXXXX ("Executive").
Background
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A. Executive is an officer and key management employee of Company.
B. Company's Board of Directors ("Board") has determined that it is in
the best interests of Company and its shareholders to assure Executive's
continued dedication and undivided time, attention, and loyalty, notwithstanding
the possibility, threat, or occurrence of a Change of Control (as defined in
Section 2 below).
C. In furtherance of that goal, the Board wishes to provide Executive
with certain benefits, if his employment should terminate as a result of a
Change of Control.
D. In reliance on this Agreement, Executive is willing to continue his
employment with Company on the terms agreed to by Executive and Company from
time to time.
In consideration of the premises, Company and Executive agree as follows:
Agreement
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1. Duration Of Agreement. This Agreement shall be effective June 3,
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1997 ("Effective Date"), and shall continue until the end of the Term (as
defined in Section 2).
2. Definitions. The following words and phrases, when capitalized,
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shall have the following meanings for purposes of this Agreement:
(a) Affiliate. "Affiliate" means an employer required to be
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aggregated with Company pursuant to Section 414(b) or (c) of the Internal
Revenue Code.
(b) Anniversary Date. "Anniversary Date" means each anniversary of the
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Effective Date occurring during the Term.
(c) Cause. "Cause" means and shall be limited to the following:
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(1) Executive's willful and continued failure to perform (other
than a failure resulting from Executive's illness or disability) his
employment duties after a demand for substantial performance is
delivered to Executive on behalf of the Board that specifically
identifies the manner in which it alleges that Executive has failed to
perform his duties and Executive's failure to take appropriate actions
to correct such failure within thirty (30) days; or
(2) Executive's willful engaging in misconduct that has caused
demonstrable and material injury, monetary or otherwise, to Company or
an Affiliate.
For purposes of this Subsection (c), no act or failure to act on
Executive's part shall be considered "willful" unless done, or omitted to
be done, by Executive not in good faith and without reasonable belief that
his action or omission was in the best interests of Company.
Notwithstanding the foregoing, Executive shall not be deemed to have been
terminated for Cause unless and until the Board 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
Executive was guilty of conduct set forth above in clause (1) or (2) and
specifying the particulars thereof in detail.
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(d) Change of Control. "Change of Control" shall be deemed to have
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occurred upon the happening of any one or more of the following:
(1) any person, as that term is used in Section 13(d)(3) and
14(d)(2) of the Securities Exchange Act of 1934, as amended from time
to time, becomes a beneficial owner, directly or indirectly, of
securities of Company representing twenty percent (20%) or more of the
combined voting power of Company's then outstanding securities;
(2) less than fifty-one percent (51%) of the members of the Board
are Incumbent Directors;
(3) any corporation or group of associated persons acting in
concert, owns more than twenty-five percent (25%) of the outstanding
shares of voting stock of Company coupled with or followed by the
exercise of the voting power of such shares by the election of two (2)
or more directors of Company in any one election at the instance of
such corporation or group;
(4) Company becomes a party to an agreement of merger,
consolidation, or other reorganization pursuant to which Company will
be a constituent corporation, and either (A) Company is not the
surviving or resulting corporation, or (B) the transaction will result
in less than eighty percent (80%) of the outstanding voting securities
of the surviving or resulting entity being owned by the former
shareholders of Company;
(5) Company becomes a party to an agreement providing for
Company's sale or other disposition of all or substantially all of its
assets to any
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individual, partnership, joint venture, association, trust,
corporation, or other entity or person which is not an Affiliate; or
(6) the occurrence of another event that the Board designates a
Change of Control.
(e) Change of Control Date. "Change of Control Date" means the date as
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of which a Change of Control occurs.
(f) Change Period. "Change Period" means the period beginning six
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months before the Change of Control Date and continuing for the number of
months specified in Appendix A after the Change of Control Date.
Notwithstanding the preceding sentence, if a Change of Control described in
Paragraph (d)(4) or (d)(5) occurs, the Change Period shall begin when
Company becomes a party to a legally binding agreement described in
paragraph (d)(4) or (d)(5) but shall not end until the number of months
specified in Appendix A after the effective date of the Change of Control
transaction described in Paragraph (4) or (5).
(g) Confidential Information. "Confidential Information" means any
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information not in the public domain and not previously disclosed to the
public by the Board or management of the Company or an Affiliate with
respect to the products, facilities, and methods; trade secrets and other
intellectual property; systems, procedures, manuals, confidential reports,
customer lists, financial information, business plans, prospects, or
opportunities of the Company or an Affiliate; or any information which the
Company or an Affiliate has designated as Confidential Information.
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(h) Disability. "Disability" means Executive's inability to perform
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the material duties of his employment because of physical or mental
illness, which inability is likely to last for a period of one year or
longer.
(i) Effective Date. "Effective Date" means the effective date of this
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Agreement, as specified in Section 1.
(j) Full Incentive Compensation. "Full Incentive Compensation" means
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incentive compensation for a calendar year (including incentive
compensation in the amount of zero), provided that such compensation is not
reduced because Executive was employed by the Company for less than the
entire calendar year.
(k) Good Reason. "Good Reason" means, (i) with respect to a Change of
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Control described in Section 2(d)(4) in which Company is the surviving or
resulting corporation, and which results in less than eighty percent (80%)
but more than fifty percent (50%) of the outstanding voting securities of
the resulting or surviving corporation being owned by former shareholders
of the Company, a material change in position, title, compensation, status,
responsibilities, or working conditions in effect immediately before the
Change of Control or relocation of the Executive's place of employment to a
location more than fifty (50) miles from the Executive's place of
employment immediately before the Change of Control, and, (ii) with respect
to any Change of Control not described in Clause (i), Executive's
determination, in his sole judgment, that the duties of his employment,
compensation therefor, or the benefits or status associated therewith have
been reduced during the Change Period or that he is unable to continue to
perform the duties of his employment effectively because of
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circumstances that changed during the Change Period directly or indirectly
as a result of the Change of Control.
(l) Incumbent Director. "Incumbent Director" means a director serving
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on the Board who (i) was a director on the Effective Date or (ii) was later
elected as a director (except a director whose initial assumption of office
was in connection with an actual or threatened election contest, including
but not limited to a consent solicitation, relating to the election of
directors) and whose appointment, election, or nomination for election was
approved or recommended by a vote of at least two-thirds of the directors
then still in office who either were directors on the Effective Date hereof
or whose appointment, election, or nomination for election was previously
so approved or recommended.
(m) Payment Period. "Payment Period" means the period beginning on the
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later of the Change of Control Date or the date of Executive's termination
of employment during the Change Period and continuing for the number of
months specified in Appendix A; provided, however, if Executive's
employment terminates after a Change of Control (or, in the case of a
transaction described in Paragraph 2(d)(4) or 2(d)(5), the later effective
date of such transaction), the number of months in the Payment Period shall
be reduced by one for each full calendar month before the effective date of
Executive's termination of employment occurring after the most recent
Change of Control Date (or, in the case of a transaction described in
Paragraph 2(d)(3) or (4), the later effective date of such transaction)
before such termination date.
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(n) Term. "Term" means the period beginning on the Effective Date and
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ending on the second anniversary of the Effective Date, as extended
pursuant to the provisions of this Subsection. The period referred to in
the preceding sentence shall automatically be extended for one additional
year on each Anniversary Date, unless the Company has notified the
Executive not fewer than thirty (30) days before that Anniversary Date that
the Term will not automatically be extended further. Notwithstanding any
provision of this Agreement, if one or more Changes of Control occur during
the Term (as determined pursuant to the preceding provisions of this
Subsection or as extended pursuant to this sentence to reflect a prior
Change of Control), the Term shall not end before the end of the Payment
Period with respect to the latest Change of Control occurring during the
Term.
(o) Termination Compensation. "Termination Compensation" has the
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meaning specified in Paragraph 3(a)(1).
3. Termination of Executive's Employment During Change Period.
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(a) If Executive terminates his employment for Good Reason during the
Change Period, or if Company terminates Executive's employment during the
Change Period for a reason other than Cause or Executive's death or
Disability, Executive shall be entitled to the following benefits:
(1) An amount equal to Executive's Termination Compensation
multiplied by the number of months in the Payment Period. Executive's
Termination Compensation shall be equal to the sum of (i) his highest
rate of base monthly salary (unreduced by any elective salary
deferrals or redirections) during
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the twelve (12) month period immediately preceding his termination of
employment plus (ii) one-twelfth of his average annual incentive
compensation with respect to the shortest of (A) the three calendar
years immediately preceding the Payment Period, provided Executive
received Full Incentive Compensation for all such years, (B) the
calendar years immediately preceding the Payment Period with respect
to which Executive received Full Incentive Compensation, or (C) the
total period of Executive's employment by Company. This amount shall
be paid to Executive in a lump sum between sixty (60) and ninety (90)
days after the later of (A) his termination of employment or (B) the
Change of Control Date. Executive may, in his discretion, elect to
reduce the amount payable to him pursuant to this Paragraph 3 to the
extent necessary to avoid excise taxes in Code Section 4999 of the
Internal Revenue Code.
(2) Throughout the Payment Period, Company shall provide to
Executive and his family medical, life insurance, and other welfare
benefits substantially similar to those provided to active executive
employees of the Company, provided Executive pays any premiums charged
by Company to active executive employees receiving similar coverage.
Beginning at the end of the Payment Period, Company shall provide
medical coverage to Executive and his family that is substantially
similar to the coverage provided to active employees of the Company,
provided that Executive pays Company the same premium as he would have
been required to pay if such coverage had been provided pursuant to
the Consolidated Omnibus Budget Reconciliation Act of 1985. Executive
may
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elect to purchase single coverage or family coverage pursuant to the
preceding sentence. Subject to Executive's payment of the required
premiums, post-Payment Period medical coverage for Executive and his
spouse shall continue until the earliest of the following events: (i)
the Executive's (or in the case of coverage for the Executive's
spouse, his spouse's) Medicare eligibility, (ii) the Executive's (or
in the case of coverage for the Executive's spouse, his spouse's)
death, or (iii) medical coverage for the Executive (or in the case of
coverage for the Executive's spouse, his spouse) through another
employer.
(b) The payment or provision of benefits to Executive pursuant to
this Agreement shall not affect the obligations of Company or its successor
under any plan, agreement, or arrangement generally applicable to Company's
retired management employees pursuant to which Executive is entitled to any
retirement benefits, welfare benefits, stock, or other fringe benefits.
4. Non-Competition. Executive shall not, while employed or during the
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Payment Period, become an officer, director, or employee of, consultant to, or
majority shareholder in any bank or bank holding company that substantially
competes with Company, its subsidiaries, or Affiliates, or its successor or
successors within one hundred (100) miles from Evansville, Indiana, or fifty
(50) miles from the nearest banking office of Company or a subsidiary thereof.
5. Non-Disclosure of Confidential Information. Executive acknowledges
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that, by virtue of his employment, he has obtained or will obtain Confidential
Information, the use or disclosure of which could cause Company immeasurable and
substantial loss and damages for which no remedy at law would be adequate.
Accordingly, Executive covenants and agrees with
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Company that, except as necessary to perform his obligations to Company or with
the prior written consent of Company's Board, he will not at any time directly
or indirectly disclose any Confidential Information that he may acquire or has
acquired by reason of his association with Company. Without limiting the rights
or remedies, both legal and equitable, available to Company in the event of an
actual or threatened breach of Executive's obligations under this Section,
Company shall be entitled to seek and obtain a temporary restraining order
and/or a preliminary or permanent injunction against Executive, which shall
prevent Executive from engaging in any activities prohibited by this Section, or
to seek and obtain such other relief against Executive as may be required to
enforce Executive's obligations hereunder. Executive's obligations set forth in
this Section and Company's rights and remedies, whether legal or equitable, with
respect thereto, shall extend indefinitely.
6. Expenses. If Executive determines, in his absolute judgment, that it
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is necessary or advisable for him to incur reasonable legal and/or accounting
expenses, including but not limited to reasonable attorneys' and/or accountants'
fees, to obtain full and effective enforcement of his rights under this
Agreement or to determine the appropriate tax treatment of amounts paid pursuant
to this Agreement, Company shall reimburse Executive for all such reasonable
expenses and costs on a periodic basis. Company's obligation to reimburse
Executive for these reasonable expenses or costs pursuant to this Section shall
survive expiration of the Term and shall survive the termination of any later
employment agreements between Executive and Company. Any reimbursement required
by this Section shall be paid promptly to Executive after he submits a copy of
the service provider's invoice for the covered expense.
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7. Company's Obligation to Provide Information. After termination of
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Executive's employment, Company shall promptly provide Executive with reasonably
requested information relating to his retirement, benefits and payments under
this Agreement, and other post-employment benefits.
8. Binding Effect And Assignment. This Agreement shall inure to the
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benefit of and shall be binding upon the parties to this Agreement and their
respective executors, administrators, heirs, personal representatives,
successors, and assigns, but neither this Agreement nor any right created by
this Agreement may be assigned or transferred by either party. Notwithstanding
the foregoing, the Company shall assign this Agreement to any person or entity
succeeding to substantially all of the business and assets of the Company upon a
Change in Control, and upon such a Change in Control, the Company shall obtain
the assumption of this Agreement by its successor.
9. Notices. Any notice to a party required or permitted to be given by
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this Agreement shall be in writing and shall be deemed given when mailed by
registered or certified mail to the party at the party's address as specified in
this Section:
If to the Company, to: CNB Bancshares, Inc.
Attention: Corporate Secretary
00 X.X. Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
or such other address designated by Company in writing to Executive as provided
in this Section.
If to Executive, to: 0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
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or such other address designated by the Executive in writing to the Company as
provided in this Section.
10. Severability. If any term, provision, covenant, or restriction of
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this Agreement is held by a court of competent jurisdiction to be invalid, void,
or unenforceable, the remainder of the terms, provisions, covenants, and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired, or invalidated.
11. Amendments. This Agreement may not be modified, amended, altered, or
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supplemented except upon the execution and delivery of a written agreement
executed by Company and Executive.
12. Governing Law. This Agreement shall be construed in accordance with
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the laws of the State of Indiana.
13. Arbitration. Any dispute, claim, or controversy concerning the terms,
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meaning, application, or enforcement of any provision of this Agreement that
cannot be resolved through direct discussion or mediation shall be submitted to
final and binding arbitration before a neutral arbitrator pursuant to the
arbitration procedures set out in this Section ("Procedures") under the auspices
of the American Arbitration Association (AAA) at Evansville, Indiana. The AAA
Employment Dispute Resolution Rules in effect at the time of the arbitration
shall govern arbitration proceedings, except insofar as these Procedures, as
they may be amended from time to time, specifically provide otherwise.
Executive may initiate a claim or case only by a written notice to Company as
provided in this Agreement. Company may likewise initiate a claim or case by a
written notice delivered to Executive, as provided in this Agreement. The
written notice must set forth the matter in dispute in sufficient detail to
advise the non-initiating party
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of the nature and amount of the dispute or claim, the date(s) of the underlying
occurrence(s), and the relief requested. It shall also be the initiating party's
responsibility to submit the claim and other required documents and fees to AAA
in a timely manner; provided, however, if Executive is fully or partially
successful, Company shall reimburse Executive for arbitration fees reasonably
incurred. In conducting arbitration proceedings, the AAA-appointed arbitrator
shall be authorized to award any relief available under the laws of the United
States or the State of Indiana applicable to the claim, dispute, or controversy
submitted, where such relief is warranted based on the evidence and the law. Any
arbitration award shall be final and binding, and enforceable by an action in
any court of competent jurisdiction. No award shall be set aside, or denied
enforcement, by any court in any action unless the court finds that the
arbitrator purported to resolve claims, disputes, or controversies not within
the scope of these Procedures. Adherence to these Procedures, and the agreement
of the parties to this Agreement to follow them, shall be enforceable in an
action to compel or stay arbitration pursuant to the Federal Arbitration Act or
the Indiana Uniform Arbitration Act in a court of competent jurisdiction.
14. Integration. This Agreement supersedes all prior agreements between
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the parties with respect to the matters covered herein.
15. Counterparts. This Agreement may be signed in two counterparts, each
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of which shall be deemed to be an original but which together shall constitute
one and the same instrument.
16. Effect Of Headings. The section headings in this Agreement are for
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convenience only and shall not affect the construction of this Agreement.
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IN WITNESS WHEREOF, CNB Bancshares, Inc. has caused this Agreement to be
executed on this 3rd day of June , 1997, and Executive has
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executed this Agreement on the date specified below.
ATTEST: CNB BANCSHARES, INC.
By /s/ H. Xxx Xxxxxx
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(Signature)
6-3-97
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(Date)
EXECUTIVE
/s/ Xxxxx X. Xxxxxxxx
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(Signature)
6-3-97
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(Date)
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APPENDIX A
The Payment Period shall consist of 36 months.
ATTEST: CNB BANCSHARES, INC.
By /s/ H. Xxx Xxxxxx
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(Signature)
6-3-97
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(Date)
EXECUTIVE
/s/ Xxxxx X. Xxxxxxxx
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(Signature)
6-3-97
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(Date)
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