EXHIBIT 10.6
COMMERCE NATIONAL CORPORATION
STOCK APPRECIATION RIGHTS AGREEMENT
THIS AGREEMENT is made this _________ day of __________________, 1999, by
and between Commerce National Corporation, a Florida corporation having offices
at Winter Park, Florida (the "Company"), and XXX X. XXXXXX (the "Director).
INTRODUCTION
To encourage the Director to remain a director of the Company, the Company
is willing to provide to the Director an opportunity to share in the
appreciation of the Company's Common Stock. The Company will provide a deferred
benefit equal to the Stock Appreciation Account value at the termination of the
plan. The Company's Board of Directors will award at inception and annually
thereafter, in its sole discretion, phantom stock to the Director. The phantom
shares will be valued at the Company's Equity Per Share determined by dividing
the Company's Equity by the number of shares of common stock outstanding. The
appreciation in value of the Director's phantom shares will be credited to the
Director's Stock Appreciation Account each year. The Stock Appreciation Account
shall be an accounting device to record phantom stock appreciation. At various
triggering events, the Company will pay the value of the Stock Appreciation
Account in cash from its general assets.
AGREEMENT
The Director, the Company and the Company agree as follows:
Article 1
Definitions
1.1 Definitions. Whenever used in this Agreement, the following words and
phrases shall have the meanings specified:
1.1.1 "Agreement" means this instrument, including all amendments
thereto.
1.1.2 "Anniversary Date" means December 31 of each Plan Year.
1.1.3 "Applicable Percentage" means the number of Plan Years from
the Effective Date divided by ten, but in no event greater than 100%.
1.1.4 "Change of Control" means: any merger of the Company with,
or acquisition of the Company by, another entity, whether or not the Company is
the surviving entity; or any Board composition change such that individuals who
constitute the Board of Directors of the Company on the effective date hereof
(the "Incumbent Board") cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent to the date
hereof whose election was approved by a vote of at least three-quarters
of the directors comprising the Incumbent Board shall be considered as though he
or she were a member of the Incumbent Board.
1.1.5 "Company" means Commerce National Corporation.
1.1.6 "Discount Rate" means the annual rate of 7.5%.
1.1.7 "Effective Date" means January 1, 1999.
1.1.8 "Equity" means the Company's equity as reported under
generally accepted accounting principles.
1.1.9 "Equity Per Share" means the Company's Equity divided by the
number of shares of common stock outstanding. Notwithstanding the foregoing, at
such time that the Company's common stock becomes actively traded on a
recognized securities exchange, from that date forward the market value per
share will become the measure of Equity Per Share for purposes of this
Agreement.
1.1.10 "Initial Value" means the Equity Per Share as of the
beginning of the Plan Year in which a phantom stock award is made to the
Director times the number of phantom shares awarded in that Plan Year. If the
basis for the measure of Equity Per Share changes from Equity value to market
value during the Plan Year, Initial Value for phantom stock awards during the
Plan Year should be calculated on the Equity value basis.
1.1.11 "Normal Termination Date" means the earlier of Plan
Termination or Termination of Service as a director.
1.1.12 "Plan Year" means the calendar year. The first Plan Year
shall commence on the Effective Date.
1.1.13 "Plan Termination" means the last day of the tenth Plan
Year.
1.1.14 "Sales Multiple" means a fraction in which the numerator is
the sales price paid for any of the Company's common stock or, in the case of a
sale of substantially all of the Company's assets, the sales price paid for the
Company's assets, and the denominator shall be the book value of such common
stock or assets. If there is a merger or consolidation in which stock is used to
purchase the common stock or assets of the Company, then a qualified appraiser
chosen by the Company shall be hired to determine the fair market value of the
acquirer's stock exchanged for the Company's stock or assets. The appraised
value shall then be the sales price. Notwithstanding the foregoing, if the stock
used to purchase the common stock or assets of the Company is actively traded on
a recognized securities exchange, the trade price on the last trading day prior
to the merger will be used to determine sales price in lieu of an appraised
value.
1.1.15 "Termination of Service" means the Director ceasing to serve
as a director of the Company for any reason whatsoever, voluntary or
involuntary, other than by reason of an approved leave of absence.
Article 2
Phantom Stock Award
2.1 Initial Phantom Stock Award. The Board of Directors hereby awards two
hundred sixty (260) phantom shares to the Director as of the Effective Date of
this Agreement.
2.2 Future Annual Phantom Stock Awards. As long as the Director is serving
as a member of the Board of Directors on the first day of future Plan Years an
additional two hundred sixty (260) phantom shares will be awarded to the
Director as of the first day of such Plan Year. No future annual phantom stock
awards will be awarded beyond the Normal Termination Date.
2.3 Meeting Attendance Phantom Stock Awards. An additional twenty-four
(24) phantom shares will be awarded to the Director for each Board of Directors
meeting attended by the Director as a member of the Board. A maximum of two
hundred forty (240) meeting-attendance phantom shares may be awarded to the
Director in a Plan Year under this Section 2.3. The phantom shares will be
awarded as of the first day of the Plan Year in which the Board of Directors
meeting occurred. No meeting-attendance phantom stock awards will be awarded for
meetings occurring later than the Normal Termination Date.
2.4 Adjustment to Number of Phantom Shares. If the outstanding shares of
the Company's stock as a whole are increased, decreased, or changed into, or
exchanged for, a different number or kind of shares or securities of the
Company, whether through merger, consolidation, acquisition, reorganization, re-
capitalization, reclassification, stock dividend, stock split, combination of
shares, exchange of shares, change in corporate structure or the like, an
appropriate and proportionate adjustment shall be made in the number of phantom
shares outstanding and future phantom shares to be awarded under this Agreement
so that the total value of the Director's phantom shares is not effected by
reason of the transaction other than as provided in Section 2.5.
2.5 Additional Phantom Shares for Common Stock Dividends. Additional
phantom shares will be awarded to compensate for cash dividends paid holders of
the Company's common stock. The number of additional phantom shares to be
awarded under this Section 2.4 will be determined by multiplying the cash
dividend per common share by the Director's total number of phantom shares and
then dividing that resulting number by the Equity Per Share at the beginning of
the Plan Year.
2.6 Adjustment of Phantom Shares following a Change of Control. In the
event of a Change of Control where the Corporation's stock is valued at a
premium, an increase in the number phantom shares in Director's Stock
Appreciation Account shall be made to reflect such transaction premium by
multiplying the number of shares outstanding by the Sales Multiple.
2.7 Adjustment of Phantom Shares following a contribution of capital. In
the event additional capital is contributed to the Company by the existing
shareholders without the issuance of additional common shares, a reduction in
the number of phantom shares in the Director's Stock Appreciation Account shall
be made to reflect such capital contribution.
Article 3
Stock Appreciation Account
3.1 Establishing and Crediting. The Company shall establish a Stock
Appreciation Account on its books for the Director, and shall credit to the
Stock Appreciation Account the following amounts:
3.1.1 Initial Appreciation. On the first Anniversary Date after a
phantom stock award the phantom shares then awarded shall be valued at the
Equity Per Share on the Anniversary Date. Any increase in value from the
Initial Value of such shares shall be credited to the Stock Appreciation
Account.
3.1.2 Future Appreciation. On each Anniversary Date the Director's
total number of phantom shares, other than phantom shares awarded in the
Plan Year, shall be valued at the Equity Per Share on the Anniversary Date.
The change in value from the prior Anniversary Date shall be added to or
subtracted from the Stock Appreciation Account. In no event will the value
of the Stock Appreciation Account in regard to any phantom share be reduced
below zero.
3.2 Statement of Accounts. The Company shall provide to the Director,
within 120 days of the end of each Plan Year that this Agreement is in effect, a
statement setting forth the number of phantom shares to the Director's credit
and the cash value of the Stock Appreciation Account balance.
3.3 Accounting Device Only. The Stock Appreciation Account is solely a
device for measuring amounts to be paid under this Agreement. The Stock
Appreciation Account is not a trust fund of any kind. The Director is a general
unsecured creditor of the Company for the payment of benefits. The benefits
represent the mere Company promise to pay such benefits. The Director's rights
are not subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by the Director's
creditors.
Article 4
Lifetime Benefits
4.1 Full Term Benefit. If the Director still serves as a director on the
Normal Termination Date, the Company shall pay to the Director the benefit
described in this Section 4.1 in lieu of any other benefit under this Agreement.
4.1.1 Amount of Benefit. The benefit under this Section 4.1 is the
Stock Appreciation Account balance on the Normal Termination Date.
4.1.2 Payment of Benefit. The Company shall pay the benefit to the
Director in a lump sum within sixty (60) days following the Normal
Termination Date; provided, however, that the Director may elect to receive
the benefit payable hereunder in annual installments, not to exceed ten
(10) years, by filing with the Company a written election form. Such
election must be received by the Company at least 12 months prior to the
Director's Normal Termination Date. In the event the Director elects to
receive such annual
installments, the Company shall credit interest at 7.5% on the remaining
account balance during any applicable installment period.
4.2 Early Termination Benefit. If the Director terminates service before
the Plan Termination Date, and for reasons other than death or following a
Change of Control, the Company shall pay to the Director the benefit described
in this Section 4.2 in lieu of any other benefit under this Agreement.
4.2.1 Amount of Benefit. The benefit amount under this Section 4.2 is
the Stock Appreciation Account Director's Normal Termination Date.
4.2.2 Payment of Benefit. The Company shall pay the benefit to the
Director in a lump sum within sixty (60) days following the Normal
Termination Date.
4.3 Change of Control Benefit. If the Director terminates service
following a Change of Control before the Plan Termination Date, the Company
shall pay to the Director the benefit described in this Section 4.3 in lieu of
any other benefit under this Agreement.
4.3.1 Amount of Benefit. The benefit amount under this Section 4.3 is
the Stock Appreciation Account balance at the Director's Normal Termination
Date after the adjustment described in Section 2.5.
4.3.2 Payment of Benefit. The Company shall pay the benefit to the
Director in a lump sum within sixty (60) days following the Normal
Termination Date; provided, however, that the Director may elect to receive
the benefit payable hereunder in annual installments, not to exceed ten
(10) years, by filing with the Company a written election form. Such
election must be received by the Company at least 12 months prior to the
Director's Normal Termination Date. In the event the Director elects to
receive such annual installments, the Company shall credit interest at 7.5%
on the remaining account balance during any applicable installment period.
4.4 Hardship Distribution. Upon the Company's determination (following
petition by the Director) that the Director has suffered an unforeseeable
financial emergency, the Company may distribute to the Director all or a portion
of the Stock Appreciation Account balance as determined by the Company, but in
no event shall the distribution be greater than the lessor of the amount
necessary to relieve the financial hardship or the vested balance of the Stock
Appreciation Account calculated as described in Section 4.2.1. An unforeseeable
financial emergency means that an event arising from the death of a family
member, divorce, sickness, injury, catastrophe or similar event outside the
control of the Director occurs and the Company's Board of Directors, in its sole
discretion, approves of, in writing, of the hardship distribution.
Article 5
Death Benefits
5.1 Death During Active Service. If the Director dies before the Plan
Termination Date while in the active service of the Company, the Company shall
pay to the Director's beneficiary the benefit described in this Section 5.1 in
lieu of any other benefit under this Agreement.
5.1.1 Amount of Benefit. The benefit under this Section 5.1 is the
balance in the Stock Appreciation Account as of the Director's Normal
Termination Date.
5.1.2 Payment of Benefit. The Company shall pay the benefit to the
Directors beneficiary in a lump sum within sixty (60) days following the
Director's Normal Termination Date.
Article 6
Beneficiaries
6.1 Beneficiary Designations. The Director shall designate a beneficiary
by filing a written designation with the Company. The Director may revoke or
modify the designation at any time by filing a new designation. However,
designations will only be effective if signed by the Director and accepted by
the Company during the Director's lifetime. The Director's beneficiary
designation shall be deemed automatically revoked if the beneficiary predeceases
the Director, or if the Director names a spouse as beneficiary and the marriage
is subsequently dissolved. If the Director dies without a valid beneficiary
designation, all payments shall be made to the Director's estate.
6.2 Facility of Payment. If a benefit is payable to a minor, to a person
declared incompetent, or to a person incapable of handling the disposition of
his or her property, the Company may pay such benefit to the guardian, legal
representative or person having the care or custody of such minor, incompetent
person or incapable person. The Company may require proof of incompetence,
minority or guardianship as it may deem appropriate prior to distribution of the
benefit. Such distribution shall completely discharge the Company from all
liability with respect to such benefit.
Article 7
General Limitations
Notwithstanding any provision of this Agreement to the contrary, the
Company shall not pay any benefit under this Agreement:
7.1 Excess Parachute Payment. To the extent the benefit would create an
excise tax under the parachute rules of Section 280G of the Internal Revenue
Code.
7.2 Termination for Cause. If the Company terminates the Director's
service as a director for:
7.2.1 Personal dishonesty,
7.2.2 Incompetence,
7.2.3 Willful misconduct,
7.2.4 Breach of fiduciary duty involving personal profit,
7.2.5 Intentional failure to perform stated duties,
7.2.6 Willful violation of any law, rule or regulation (other than
traffic violation or similar offenses or final cease-and-desist order; or
7.2.7 Acts which the Board reasonably finds in good faith to be
inimical to the best interests of the Company.
Article 8
Claims and Review Procedures
8.1 Claims Procedure. The Company shall notify the Director, the
Director's beneficiary or any other person which makes a claim under this
Agreement (the "Claimant") in writing, within ninety (90) days of his or her
written application for benefits, of his or her eligibility or ineligibility for
benefits under the Agreement. If the Company determines that the Claimant is not
eligible for benefits or full benefits, the notice shall set forth (1) the
specific reasons for such denial, (2) a specific reference to the provisions of
the Agreement on which the denial is based, (3) a description of any additional
information or material necessary for the Claimant to perfect his or her claim,
and a description of why it is needed, and (4) an explanation of the Agreement's
claims review procedure and other appropriate information as to the steps to be
taken if the Claimant wishes to have the claim reviewed. If the Company
determines that there are special circumstances requiring additional time to
make a decision, the Company shall notify the Claimant of the special
circumstances and the date by which a decision is expected to be made, and may
extend the time for up to an additional ninety-day period.
8.2 Review Procedure. If the Claimant is determined by the Company not to
be eligible for benefits, or if the Claimant believes that he or she is entitled
to greater or different benefits, the Claimant shall have the opportunity to
have such claim reviewed by the Company by filing a petition for review with the
Company within sixty (60) days after receipt of the notice issued by the
Company. Said petition shall state the specific reasons which the Claimant
believes entitle him or her to benefits or to greater or different benefits.
Within sixty (60) days after receipt by the Company of the petition, the Company
shall afford the Claimant (and counsel, if any) an opportunity to present his or
her position to the Company verbally or in writing, and the Claimant (or
counsel) shall have the right to review the pertinent documents. The Company
shall notify the Claimant of its decision in writing within the sixty-day
period, stating specifically the basis of its decision, written in a manner
calculated to be understood by the Claimant and the specific provisions of the
Agreement on which the decision is based. If, because of the need for a hearing,
the sixty-day period is not sufficient, the decision may be deferred for up to
another sixty-day period at the election of the Company, but notice of this
deferral shall be given to the Claimant.
Article 9
Amendments and Termination
This Agreement may be amended or terminated only by a written agreement
signed by the Company and the Director.
Article 10
Miscellaneous
10.1 Binding Effect. This Agreement shall bind the Director and the
Company, and their beneficiaries, survivors, executors, administrators and
transferees.
10.2 No Guarantee of Service. This Agreement is not an employment policy
or contract. It does not give the Director the right to remain a director of the
Company, nor does it interfere with the Company's right to discharge the
Director. It also does not require the Director to remain a director nor
interfere with the Director's right to terminate service at any time.
10.3 Non-Transferability. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
10.4 Tax Withholding. The Company shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.
10.5 Applicable Law. The Agreement and all rights hereunder shall be
governed by the laws of the State of Florida, except to the extent preempted by
the laws of the United States of America. Nothing contained herein shall be
deemed to obligate the Company to make a payment hereunder in violation of any
statute, regulation, or regulatory order or directive applicable to the Company.
10.6 Named Fiduciary. For purposes of the Employee Retirement Income
Security Act of 1974, the Company shall be the fiduciary of this Agreement.
10.7 Reorganization. The Company shall not merge or consolidate into or
with another company, or reorganize, or sell substantially all of its assets to
another company, firm, or person unless such succeeding or continuing company,
firm, or person agrees to assume and discharge the obligations of the Company
under this Agreement. Upon the occurrence of such event, the term "Company" as
used in this Agreement shall be deemed to refer to the successor or survivor
company.
10.8 Unfunded Arrangement. The Director and beneficiary are general
unsecured creditors of the Company for the payment of benefits under this
Agreement. The benefits represent the mere promise by the Company to pay such
benefits. The rights to benefits are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or
garnishment by creditors. Any insurance on the Director's life is a general
asset of the Company to which the Director and beneficiary have no preferred or
secured claim.
10.9 Entire Agreement. This Agreement constitutes the entire agreement
between the Company and the Director as to the subject matter hereof. No rights
are granted to the Director by virtue of this Agreement other than those
specifically set forth herein.
10.10 Administration. The Company shall have powers which are necessary to
administer this Agreement, including but not limited to:
10.10.1 Interpreting the provisions of the Agreement;
10.10.2 Establishing and revising the method of accounting for the
Agreement;
10.10.3 Maintaining a record of benefit payments; and
10.10.4 Establishing rules and prescribing any forms necessary or
desirable to administer the Agreement.
10.11 Designated Fiduciary. For purposes of the Employee Retirement Income
Security Act of 1974, if applicable, the Company shall be the named fiduciary
and plan administrator under the Agreement. The named fiduciary may delegate to
others certain aspects of the management and operation responsibilities of the
plan including the employment of advisors and the delegation of ministerial
duties to qualified individuals.
IN WITNESS WHEREOF, the Director and a duly authorized Company officer have
signed this Agreement.
DIRECTOR: COMPANY:
COMMERCE NATIONAL CORPORATION
_____________________________ By_____________________________
XXX X. XXXXXX Title__________________________
NATIONAL COMPANY OF COMMERCE
STOCK APPRECIATION RIGHTS AGREEMENT
XXX X. XXXXXX
BENEFICIARY DESIGNATION FORM
I designate the following as beneficiary of any death benefits under the
National Company of Commerce Phantom Stock Appreciation Agreement:
Primary: _______________________________________________________________________
________________________________________________________________________________
Contingent: ____________________________________________________________________
________________________________________________________________________________
Note: To name a trust as beneficiary, please provide the name of the trustee(s)
and the exact name and date of the trust agreement.
-----
I understand that I may change these beneficiary designations by filing a new
written designation with the Company. I further understand that the designations
will be automatically revoked if the beneficiary predeceases me, or, if I have
named my spouse as beneficiary, in the event of the dissolution of our marriage.
Signature _________________________________
Date ____________________________
Accepted by the Company this _______ day of ________________, 199__.
By _______________________________________
Title _____________________________
NATIONAL COMPANY OF COMMERCE
STOCK APPRECIATION RIGHTS AGREEMENT
XXX X. XXXXXX
OPTIONAL ELECTIONS
The following elections must be received by the Company twelve (12) or more
months prior to the Director's Normal Termination Date. If the Normal
Termination Date occurs within twelve (12) months of the date the election is
received by the Company, the installment elections will not be effective and the
relevant payments under this Agreement will be paid in a lump sum as otherwise
provided in the Agreement.
Full Term Benefit - Installment Payment Election:
-------------------------------------------------
I hereby elect to receive installment payments under Section 4.1.2 in lieu of
the lump sum payment otherwise called for. The installment payments will be made
annually on the first business day of the month following the Normal Termination
Date in equal annual amounts, including interest at 7.5% per year, for the
duration entered below.
Number of annual installments elected: ________ (not greater than 10)
Signature of Director: ______________________ Date: ________________
Accepted by the Company this _______ day of ________________, ______.
By _______________________________________
Title _____________________________
Change of Control Benefit - Installment Payment Election:
---------------------------------------------------------
I hereby elect to receive installment payments under Section 4.3.2 in lieu of
the lump sum payment otherwise called for. The installment payments will be made
annually on the first business day of the month following the Normal Termination
Date in equal annual amounts, including interest at 7.5% per year, for the
duration entered below.
Number of annual installments elected: _________ (not greater than 10)
Signature of Director: ______________________ Date: _________________
Accepted by the Company this _______ day of ________________, ______.
By _______________________________________
Title _____________________________
