CHANGE IN CONTROL AGREEMENT
This Change in Control Agreement ("Agreement") is entered into by and
between FVNB Corp., a Texas corporation, (the "Company") and Xxxxx X. Xxxxxx
("you" or "your") on and effective this 24th day of January, 2001.
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WHEREAS, the Company considers the establishment and maintenance of a
sound and vital management to be essential to protecting and enhancing the
best interests of the Company and its shareholders. In this connection, the
Company recognizes that, as is the case with many corporations, the
possibility of a "Change in Control" (as hereinafter defined) may arise and
that such possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of management
personnel to the detriment of the Company and its shareholders;
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that appropriate steps should be taken to reinforce and encourage
the continued attention and dedication of members of the Company's management
to their assigned duties without distraction in circumstances arising from the
possibility of a Change in Control of the Company;
WHEREAS, in order to induce you to remain in the employ of the
Company, this letter agreement, which has been approved by the Board, sets
forth the severance benefits which the Company agrees will be provided to you
in the event your employment with the Company is terminated subsequent to a
Change in Control of the Company under the circumstances described below;
NOW, THEREFORE, the Company and you agree as follows:
1. AGREEMENT TO PROVIDE SERVICES; RIGHT TO TERMINATE. If an event occurs
or commences which upon completion would trigger a Change in Control
as defined in Section 3, you agree that you will not leave the
employment of the Company (other than as a result of Disability or
upon Retirement, as such terms are hereinafter defined) and will
render the services contemplated in the recitals to this Agreement
until such triggering event has been abandoned or terminated or a
Change in Control of the Company, as defined in Section 3 hereof, has
occurred, and the Company agrees that it will not terminate your
employment with the Company for any reason other than "Cause," as
hereinafter defined, during that period.
2. TERM OF AGREEMENT. This Agreement shall commence on the date hereof
and shall continue in effect until 5:00 p.m. Central time on January
1, 2002; provided, however, that commencing on January 1, 2002 and
each January thereafter, the term of this Agreement shall
automatically be extended for one additional year unless the Company
or you shall have given notice by 5:00 p.m. Central time on
the immediately preceding October 1 that this Agreement shall not be
extended; and provided further that this Agreement shall continue in
effect for a period of twenty-four (24) months beyond the term
provided herein if a Change in Control of the Company, as defined in
Section 3 hereof, shall have occurred during such term.
Notwithstanding anything in this Section 2 to the contrary, this
Agreement shall terminate if you or the Company terminates your
employment prior to a Change in Control of the Company, as defined in
Section 3 hereof.
3. CHANGE IN CONTROL. The term "Change of Control" shall mean the
occurrence of any of the following events:
(i) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act (other than the Company, any affiliate (as
defined in Rule 144 under the Securities Act) of the Company as
of the Effective Date, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or any
company owned, directly or indirectly, by the shareholders of
the Company in substantially the same proportions as their
ownership of the Stock of the Company)), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such person
any securities acquired directly from the Company) representing
more than 50% of the combined voting power of the Company's then
outstanding voting securities; provided, however, a Change in
Control shall not be deemed to occur solely because such person
acquired beneficial ownership of more than 50% of the combined
voting power of the Company's then outstanding voting securities
as a result of the acquisition of voting securities by the
Company, which by reducing the number of voting securities
outstanding, increases the proportional number of shares
beneficially owned by such person, provided that if a Change in
Control would occur (but for the operation of this sentence) as
a result of the acquisition of voting securities by the Company,
and after such share acquisition by the Company, such person
becomes the beneficial owner of any additional voting securities
which increases the percentage of the then outstanding voting
securities beneficially owned by such person, then a Change in
Control shall occur;
(ii) during any period of 24 consecutive months, individuals who at
the beginning of such period constitute the Board and any new
director (other than a director designated by a person who has
entered into an agreement with the Company to effect a
transaction described in subsection (i), (iii) or (iv) of this
Section 3) whose election by the Board or nomination for
election by the Company's shareholders was approved by a vote of
at least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or
whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority of the
Board;
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(iii) the shareholders of the Company approve a merger, consolidation
or reorganization of the Company with any other corporation,
other than a merger, consolidation or reorganization (i) with a
wholly-owned subsidiary of the Company which would result in all
or some of the shareholders of the Company immediately following
such merger, consolidation or reorganization owning, directly or
indirectly immediately following such merger, consolidation or
reorganization, 100% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding
immediately after such merger, consolidation or reorganization,
or (ii) which would result in the shareholders of the Company
immediately following such merger, consolidation or
reorganization owning, directly or indirectly immediately
following such merger, consolidation or reorganization, at least
50% of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after
such merger, consolidation or reorganization in substantially
the same proportion as their ownership of the voting securities
immediately before such merger, consolidation, or
reorganization; or
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets.
4. TERMINATION FOLLOWING CHANGE IN CONTROL. If any of the events
described in Section 3 hereof constituting a Change in Control of the
Company shall have occurred, you shall be entitled to the benefits
provided in paragraphs (iii) and (iv) of Section 5 hereof upon the
termination of your employment within twenty-four (24) months after
such event, unless such termination is (a) because of your death or
Retirement, (b) by the Company for Cause or Permanent Disability or
(c) by you for Permanent Disability or other than for Good Reason (as
all such capitalized terms are hereinafter defined).
(i) Permanent Disability. Termination due to Permanent Disability
shall mean termination because of disability caused by accident,
illness, or insanity resulting in your inability, for a period
of three (3) substantially consecutive months, to fully perform
the duties which you were performing prior to such disability
and which will cause you to be "permanently and totally
disabled" as defined by Section 22(e)(3) of the Code and
corresponding provisions of successor statutes.
(ii) Retirement. Termination by you or by the Company of your
employment based on Retirement shall mean termination because of
retirement in accordance with the policy of the Company then in
effect governing the retirement of executive officers.
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(iii) Cause. Termination by the Company of your employment for Cause
shall mean termination by the Company upon (a) your failure to
satisfactorily perform your responsibilities and duties as
prescribed and amended from time to time, other than because of
incapacity due to physical or mental illness, or (b) your being
charged with an act punishable by imprisonment or your
committing an act of moral turpitude, or (c) your engaging in
conduct which is detrimental to the Company's reputation,
character, or standing or otherwise injurious to the Company,
monetarily or otherwise, including, but not limited to,
embezzlement, fraud, theft, dishonesty, misfeasance,
malfeasance, neglect of duties, incompetence and
insubordination, or (d) any violation by you of the policies and
procedures promulgated from time to time by the Company.
Notwithstanding the foregoing, you shall not be deemed to have
been terminated for Cause unless and until there shall have been
delivered to you a copy of a resolution duly adopted by the
affirmative vote of not less than seventy-five percent of the
entire membership of the Board at a meeting of the Board called
and held for that purpose (after reasonable notice to you and an
opportunity for you, together with your counsel, to be heard
before the Board), finding that in the good faith opinion of the
Board you were guilty of the conduct set forth above in (a),
(b), (c) or (d) of this paragraph (iii) and specifying the
particulars thereof in detail.
(iv) Good Reason. For purposes of this Agreement, termination by you
of your employment for "Good Reason" shall mean termination by
you based on:
(a) an adverse change in your status or position(s) as an
executive officer of the Company as in effect immediately
prior to the Change in Control, including, without
limitation, any adverse change in your status or position as
a result of a material diminution in your authority, duties
or responsibilities (other than, if applicable, any such
changes directly attributable to the fact that the Company
is no longer publicly owned) or the assignment to you of any
duty or responsibility which in your reasonable judgement is
inconsistent with such status or position, or any removal of
you from or any failure to reappoint or reelect you to such
position(s) (except in connection with the termination of
your employment for Cause, Disability or Retirement or as a
result of your death or by you other than for Good Reason);
(b) a reduction by the Company in your most recent annualized
salary as in effect immediately prior to the Change in
Control;
(c) the failure by the Company to continue in effect any Plan
(as hereinafter defined) in which you are participating at
the time immediately prior to the Change in Control of the
Company (or Plans providing you with at least substantially
similar benefits)
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other than as a result of the normal expiration of any such
Plan in accordance with its terms as in effect at the time
immediately prior to the Change in Control, or the taking of
any action, or the failure to act, by the Company which
would adversely affect your continued participation in any
of such Plans on at least as favorable a basis to you as is
the case immediately prior to the Change in Control or which
would materially reduce your benefits in the future under
any of such Plans or deprive you of any material benefit
enjoyed by you immediately prior to the Change in Control;
(d) the failure by the Company to provide and credit you with
the number of paid vacation days to which you are then
entitled in accordance with the Company's normal vacation
policy as in effect immediately prior to the Change in
Control;
(e) the Company's requiring you to be based anywhere other than
where your office is located immediately prior to the Change
in Control except for required travel on the Company's
business to an extent substantially consistent with the
business travel obligations which you undertook on behalf of
the Company prior to the Change in Control;
(f) the failure by the Company to obtain from any Successor (as
hereinafter defined) the assent to this Agreement
contemplated by Section 6 hereof; or
(g) any purported termination by the Company of your employment
which is not effected pursuant to a Notice of Termination
satisfying the requirements of paragraph (vi) below (and, if
applicable, paragraph (iii) above); and for purposes of this
Agreement, no such purported termination shall be effective.
(v) Plan. For purposes of this Agreement, Plan shall mean any
compensation plan such as an incentive stock option or
restricted stock plan or any employee welfare or pension benefit
plan such as a thrift, pension, profit sharing, medical,
disability, accident, life insurance plan or a relocation plan
or policy or any other plan, program or policy of the Company
intended to benefit employees.
(vi) Notice of Termination. Any purported termination by the Company
or by you following a Change in Control shall be communicated by
written Notice of Termination to the other party hereto. For
purposes of this Agreement, a Notice of Termination shall mean a
notice which shall indicate the specific termination provision
in this Agreement relied upon.
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(vii) Date of Termination. Date of Termination following a Change in
Control shall mean (a) if your employment is to be terminated
for Disability, thirty (30) days after Notice of Termination is
given (provided that you shall not have returned to the
performance of your duties on a full-time basis during such
thirty (30) day period), (b) if your employment is to be
terminated by the Company for Cause or by you pursuant to
Sections 4(iv)(f) and 6 hereof or for any other Good Reason, the
date specified in the Notice of Termination, which in no event
shall be a date earlier than the date on which a Notice of
Termination is given, or (c) if your employment is to be
terminated by the Company for any reason other than Cause, the
date specified in the Notice of Termination, which in no event
shall be a date earlier than ninety (90) days after the date on
which a Notice of Termination is given, unless an earlier date
has been expressly agreed to by you in writing either in advance
of, or after, receiving such Notice of Termination. In the case
of termination by the Company of your employment for Cause, if
you have not previously expressly agreed in writing to the
termination, then within thirty (30) days after receipt by you
of the Notice of Termination with respect thereto, you may
notify the Company that a dispute exists concerning the
termination, in which event the Date of Termination shall be the
date set either by mutual written agreement of the parties or by
the arbitrators in a proceeding as provided in Section 13
hereof. During the pendency of any such dispute, the Company
will continue to pay you your full compensation in effect just
prior to the time the Notice of Termination is given and until
the dispute is resolved in accordance with Section 13.
5. COMPENSATION UPON TERMINATION OR DURING DISABILITY; OTHER AGREEMENTS.
(i) During any period following a Change in Control that you fail to
perform your duties as a result of incapacity due to physical or
mental illness, you shall continue to receive your salary at the
rate then in effect and any benefits or awards under any Plans
shall continue to accrue during such period, to the extent not
inconsistent with such Plans, until your employment is
terminated pursuant to and in accordance with paragraphs 4(i)
and 4(vi) hereof. Thereafter, your benefits shall be determined
in accordance with the Plans then in effect.
(ii) If your employment shall be terminated for Cause following a
Change in Control of the Company, the Company shall pay you your
salary through the Date of Termination at the rate in effect
just prior to the time a Notice of Termination is given plus any
benefits or awards (including both the cash and stock
components) which pursuant to the terms of any Plans have been
paid to you. Thereupon the Company shall have no further
obligations to you under this Agreement.
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(iii) Subject to Section 8 hereof, if, within twenty-four (24) months
after a Change in Control of the Company shall have occurred, as
defined in Section 3 above, your employment by the Company shall
be terminated by the Company other than for Cause, Disability or
Retirement or by you for Good Reason then, by no later than the
fifth day following the Date of Termination (except as otherwise
provided), you shall be entitled, without regard to any contrary
provisions of any Plan, to the benefits as provided below:
(a) the Company shall pay your salary through the Date of
Termination at the rate in effect just prior to the time a
Notice of Termination is given plus any benefits or awards
(including both the cash and stock components) which
pursuant to the terms of any Plans have been earned or
become payable, but which have not yet been paid to you
(including amounts which previously had been deferred at
your request); and
(b) as severance pay and in lieu of any further salary for
periods subsequent to the Date of Termination, the Company
shall pay to you an amount in cash equal to two and 99/100
(2.99) times your annualized includible compensation for the
base period (as defined in Section 280G(d)(1) of the
Internal Revenue Code of 1986 (the Code) and any regulations
issued thereunder).
(iv) Following a Change in Control of the Company, unless you are
terminated for Cause, Disability or Retirement or you terminate
your employment other than for Good Reason, the Company shall
maintain in full force and effect, for the continued benefit of
you, your spouse, and your dependents for a period terminating
on the earliest of (a) the commencement date of equivalent
benefits from a new employer or (b) your normal retirement date
under the terms of the Retirement Plan, all insured and
self-insured employee welfare benefit Plans in which you were
entitled to participate immediately prior to the Date of
Termination, provided that your continued participation is
possible under the general terms and provisions of such Plans
(and any applicable funding media) and you continue to pay an
amount equal to your regular contribution under such Plans for
such participation as adjusted for any increases in
contributions or premiums in the same manner as other
participants in the Plans. If you reach your normal retirement
date as defined in the Retirement Plan and you have not
previously received or are not then receiving equivalent
benefits from a new employer, the Company shall arrange, at its
sole cost and expense, to enable you to convert your, your
spouse's, and your dependents' coverage under such Plans to
individual policies or programs upon the same terms as employees
of the Company may apply for such conversions. In the event that
your participation in any such Plan is barred, the Company, at
its sole cost and expense, shall arrange to have issued for the
benefit of
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you, your spouse, and your dependents individual policies of
insurance providing benefits substantially similar (on an
after-tax basis) to those which you otherwise would have been
entitled to receive under such Plans pursuant to this paragraph
(iv) or, if such insurance is not available at a reasonable cost
to the Company, the Company shall otherwise provide you and your
dependents equivalent benefits (on an after-tax basis). You
shall not be required to pay any premiums or other charges in an
amount greater than that which you would have paid in order to
participate in such Plans as adjusted to reflect increased
charges in the same manner as adjusted for other participants in
the Plans.
(v) Except as specifically provided in paragraph (iv) above, the
amount of any payment provided for in this Section 5 shall not
be reduced, offset or subject to recovery by the Company by
reason of any compensation earned by you as the result of
employment by another employer after the Date of Termination, or
otherwise.
6. SUCCESSORS; BINDING AGREEMENT.
(i) Upon your written request, the Company will seek to have any
Successor (as hereinafter defined), by agreement in form and
substance satisfactory to you, assent to the fulfillment by the
Company of its obligations under this Agreement. Failure of such
Person to furnish such assent by the later of (A) three business
days prior to the time such Person becomes a Successor or (B)
two business days after such Person receives a written request
to so assent shall constitute Good Reason for termination by you
of your employment and, if a Change in Control of the Company
occurs or has occurred, shall entitle you immediately to the
benefits provided in paragraphs (iii) and (iv) of Section 5
hereof upon delivery by you of a Notice of Termination. For
purposes of this Agreement, Successor shall mean any Person that
succeeds to, or has the practical ability to control (either
immediately or with the passage of time), the Company's business
directly, by merger or consolidation, or indirectly, by purchase
of the Company's Voting Securities, all or substantially all of
its assets, or otherwise.
(ii) This Agreement shall inure to the benefit of and be enforceable
by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If you should die while any amount would still be
payable to you hereunder if you had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to your devisee,
legatee or other designee or, if there be no such designee, to
your estate.
(iii) For purposes of this Agreement, the Company shall include any
corporation or other entity which is the surviving or continuing
entity in
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respect of any merger, consolidation or form of business
combination in which the Company ceases to exist.
7. FEES AND EXPENSES; MITIGATION.
(i) The Company shall pay all reasonable legal fees and related
expenses incurred by you in connection with the Agreement
following a Change in Control of the Company, including, without
limitation, (a) all such fees and expenses, if any, incurred in
contesting or disputing any such termination or incurred by you
in seeking advice with respect to the matters set forth in
Section 8 hereof or (b) your seeking to obtain or enforce any
right or benefit provided by this Agreement; provided, however,
you shall be required to repay any such amounts to the Company
to the extent that a court issues a final and non-appealable
order setting forth the determination that the position taken by
you was frivolous or advanced by you in bad faith.
(ii) You shall not be required to mitigate the amount of any payment
the Company becomes obligated to make to you in connection with
this Agreement, by seeking other employment or otherwise.
8. TAXES.
(i) All payments to be made to you under this Agreement will be
subject to required withholding of federal, state and local
income and employment taxes.
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(ii) Notwithstanding anything in the foregoing to the contrary, if
any of the payments provided for in this Agreement, together
with any other payments which you have the right to receive from
the Company or any corporation which is a member of an
affiliated group (as defined in Section 1504(a) of the Code
without regard to Section 1504(b) of the Code) of which the
Company is a member, would constitute a parachute payment (as
defined in Section 280G(b)(2) of the Code), the payments
pursuant to this agreement shall be an amount sufficient to
cover the excise tax on any excess parachute payments. The
payments should be calculated as follows: the gross-up amount
will equal 20% of the amount of the parachute less 20% of the
base amount divided by 80% less the aggregate applicable income
tax rate.
9. SURVIVAL. The respective obligations of, and benefits afforded to, the
Company and you as provided in Sections 5, 6(ii), 7, 8, 13 and 14 of
this Agreement shall survive any termination of this Agreement
following a Change in Control.
10. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by
United States registered mail, return receipt requested, postage
prepaid and addressed, in the case of the Company, to the
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address set forth below or, in the case of the undersigned employee,
to the address set forth below his signature, provided that all
notices to the Company shall be directed to the attention of the Board
of Directors of the Company, with a copy to the Secretary of the
Company, or to such other address as either party may have furnished
to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon receipt.
11. MISCELLANEOUS. No provision of this Agreement may be modified, waived
or discharged unless such modification, waiver or discharge is agreed
to in writing signed by you and the Chairman of the Board or President
of the Company. No waiver by either party hereto at any time of any
breach by the other party hereto of, or of compliance with, any
condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement.
Notwithstanding any provisions to the contrary, the Board reserves the
right to provide you with additional benefits, including, but not
limited to, providing benefits hereunder in excess of the limitations
described in Section 8, which the Board determines are appropriate in
its sole discretion.
12. GOVERNING LAW; VALIDITY. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Texas.
The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Texas. The
invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
13. ARBITRATION. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in the
nearest local office of the American Arbitration Association (AAA) in
accordance with the rules of the AAA then in effect or by three
arbitrators who have been selected by mutual agreement of the parties
who proceed in accordance with the rules of the AAA then in effect.
Judgment may be entered on the arbitrators' award in any court having
jurisdiction; provided, however, that you shall be entitled to seek
specific performance of your right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising
under or in connection with this Agreement. The Company shall bear all
costs and expenses arising in connection with any arbitration
proceeding pursuant to this Section 13.
14. EMPLOYEE'S COMMITMENT. You agree that subsequent to your period of
employment with the Company, you will not at any time communicate or
disclose to any unauthorized person without the written consent of the
Company, any proprietary processes of the Company or any subsidiary or
other confidential information concerning their business, affairs,
products, suppliers or customers which, if disclosed, would have a
material adverse effect upon the business or
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operations of the Company and its subsidiaries, taken as a whole; it
being understood, however, that the obligations of this Section 14
shall not apply to the extent that the aforesaid matters (a) are
disclosed in circumstances where you are legally required to do so or
(b) become generally known to and available for use by the public
otherwise than by your wrongful act or omission. The intent of this
Section 14 is not to create a non-competition agreement but to protect
the rights of the Company as provided above.
15. RELATED AGREEMENTS. To the extent that any provision of any other
agreement between the Company or any of its subsidiaries and you shall
limit, qualify or be inconsistent with any provision of this
Agreement, then for purposes of this Agreement, while the same shall
remain in force, the provision of this Agreement shall control and
such provision of such other agreement shall be deemed to have been
superseded, and to be of no force or effect, as if such other
agreement had been formally amended to the extent necessary to
accomplish such purpose.
16. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
FVNB CORP.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------------
Xxxxxxx X. Xxxxxxxx, Chairman of the Board
000 Xxxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000
/s/ Xxxxx X. Xxxxxx
------------------------------------------
Xxxxx X. Xxxxxx, President & C.E.O.
000 Xxxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000
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