COMMUNITY TRUST BANCORP, INC. SEVERANCE AGREEMENT
Exhibit
10.6
COMMUNITY
TRUST BANCORP, INC.
THIS
SEVERANCE AGREEMENT (“Agreement”), applicable only in the event of a change in
control, is made effective as of the day of ______________________, 2008, by and
between Community Trust Bancorp, Inc., a Kentucky corporation having its
principal place of business in Pikeville, Kentucky (the “Company”), and
_____________________________ (the “Employee”).
1. Payment of Severance
Amount. If the Employee’s employment by the Company or any
subsidiary or successor of the Company shall be subject to a Voluntary
Termination or an Involuntary Termination within the Covered Period, then the
Company shall pay the Employee an amount equal to the applicable Severance
Amount. Except as otherwise provided by paragraph 3, the applicable
Severance Amount shall be payable within 15 days after the Termination
Date.
2. Definitions. All
the terms defined in this paragraph 2 shall have the meanings given below
throughout this Agreement.
(a) An “Affiliate” shall mean any
entity which owns or controls, is owned by or is under common ownership or
control with, the Company.
(b) “Base Annual Salary” shall be
equal to the greater of:
(i) the
employee’s annual salary excluding bonuses and special incentive payments on the
date of the earliest Change of Control to occur during the Covered Period,
or
(ii) the
employee’s annual salary excluding bonuses and special incentive payments on the
date of the Employee’s termination of employment from the Company or an
Affiliate.
(c) “Change in Duties” shall mean
any one or more of the following:
(i) a
significant change in the nature or scope of the Employee’s authorities or
duties from those applicable to the Employee immediately prior to the date on
which a Change of Control occurs;
(ii) a
reduction in the Employee’s Base Annual Salary from that provided to the
Employee immediately prior to the date on which a Change of Control
occurs;
(iii) a
diminution in the Employee’s eligibility to participate in bonus, stock option,
incentive award and other compensation plans which provide opportunities to
receive compensation, from the greater of:
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the
opportunities provided by the Company (including its subsidiaries) for
executives with comparable duties;
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or
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the
opportunities under any such plans under which the Employee was
participating immediately prior to the date on which a Change of Control
occurs;
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(iv) a change
in the location of the Employee’s principal place of employment by the Company
(including its Affiliates) by more than twenty-five miles from the location
where the Employee was principally employed immediately prior to the date on
which a Change of Control occurs; or
(v) a
reasonable determination by the Board of Directors of the Company that, as a
result of a Change in Control and a change in circumstances thereafter
significantly affecting the Employee’s position, the Employee is unable to
exercise the authorities, powers, function or duties attached to the Employee’s
position immediately prior to the date on which a Change of Control
occurs.
(d) “A Change of Control” shall be
deemed to have occurred if:
(i) any
“person”, including a “group” as determined in accordance with section 13(d)(3)
of the Securities Exchange Act of 1934 (the “Exchange Act”), is or becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing 30 percent or more of the combined voting power of the Company’s
then outstanding securities;
(ii) as a
result of, or in connection with, any tender offer or exchange offer, merger or
other business combination, sale of assets or contested election, or any
combination of the foregoing transactions (a “Transaction”), the persons who
were directors of the Company before the Transaction shall cease to constitute a
majority of the Board of Directors of the Company or any successor to the
Company;
(iii) the
Company is merged or consolidated with another corporation and as a result of
the merger or consolidation less than 70 percent of the outstanding voting
securities of the surviving or resulting corporation shall then be owned in the
aggregate by the former stockholders of the Company, other than (x) affiliates
within the meaning of the Exchange Act or (y) any party to the merger or
consolidation;
(iv) a tender
offer or exchange offer is made and consummated for the ownership of securities
of the Company representing 30 percent or more of the combined voting power of
the Company’s then outstanding voting securities; or
(v) the
Company transfers substantially all of its assets to another corporation which
is not a wholly-owned subsidiary of the Company.
(e) “Code” shall mean the Internal
Revenue Code of 1986, as amended.
(f) “Covered Period” for the
Employee shall mean a period of time following the occurrence of a Change of
Control equal to (i) two years following the occurrence of the Change of Control
in the event of an Involuntary Termination or a Voluntary Termination if the
Employee has realized a Change in Duties or (ii) the thirteenth month following
the occurrence of the Change of Control in the event of a Voluntary Termination
except as provided above.
(g) “Involuntary Termination”
shall mean any termination of employment (within the meaning of section 409A of
the Code and the regulations promulgated thereunder) which does not result from
a Voluntary Termination by the Employee, however, the term “Involuntary
Termination” shall not include a Termination for Cause by the Company, or any
termination as a result of death, disability, or retirement pursuant to a
retirement plan in which the Employee participated prior to the Change of
Control.
(h) “Severance Amount” is equal
to:
(i) in the
case of an Involuntary Termination, 2.99 times the Employee’s Base Annual
Salary, and
(ii) in the
case of a Voluntary Termination, 2.99 times the Employee’s Base Annual Salary if
the Employee has realized a Change in Duties subsequent to a Change of Control,
or 2.00 times the Employee’s Base Salary in the case of a Voluntary Termination
which is not preceded by a Change in Duties.
(i) “Termination for Cause” shall
mean only a termination as a result of fraud, misappropriation of or intentional
material damage to the property or business of the Company (including its
subsidiaries), or commission of a felony by the Employee.
(j) “Voluntary Termination” shall
mean any termination of employment (within the meaning of section 409A of the
Code and the regulations promulgated thereunder) which is elected by the
Employee. However, the term “Voluntary Termination” does not include
a termination as a result of death, disability, or retirement pursuant to a
retirement plan in which the Employee participated prior to the Change of
Control.
3. Six Month Delay. So
long as section 409A of Code is in effect, and notwithstanding any provision of
this Agreement to the contrary, if, at the time of the Employee’s termination of
employment with the Company (within the meaning of section 409A of the Code and
the regulations promulgated thereunder), the Employee is a “specified employee”
as defined in section 409A(a)(2)(B)(i) of the Code and the regulations
promulgated thereunder, no such payment or benefit will be provided under this
Agreement until the earlier of (a) the date that is six months following the
Employee’s termination of employment with the Company, or (b) the Employee’s
death.
4. Golden Parachute Payment
Reduction. It is the intention of the parties that the
Severance Amount payments under this Agreement shall not constitute “excess
parachute payments” within the meaning of section 280G of the Code and any
regulations thereunder. If the independent accountants acting as
auditors for the Company on the date of a Change of Control (or another
accounting firm designated by them) determine that the Severance Amount payments
under this Agreement may constitute “excess parachute payments,” the payments
may be reduced to the maximum amount which may be paid without the payments
being “excess parachute payments.” The determination shall take into
account (i) whether the payments are “parachute payments” under section 280G of
the Code and, if so, (ii) the amount of payments under this Agreement that
constitutes reasonable compensation under section 280G of the
Code. Nothing contained in this Agreement shall prevent the Company
after a Change of Control from agreeing to pay the Employee compensation or
benefits in excess of those provided in this Agreement.
5. Notices. Notices
and all other communications under this Agreement shall be in writing and shall
be deemed given when personally delivered or when mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the
Company, to:
Community
Trust Bancorp, Inc.
000 Xxxxx
Xxxx Xxxxx
X.X. Xxx
0000
Xxxxxxxxx,
XX 00000-0000
Attention: Chairman,
President & CEO
If to the
Employee, to:
or to
such other address as either party may furnish to the other in writing, except
that notices of changes of address shall be effective only upon
receipt.
6. Applicable
Law. This contract is entered into under, and shall be
governed for all purposes by, the laws of the Commonwealth of
Kentucky.
7. Severability. If a
court of competent jurisdiction determines that any provision of this Agreement
is invalid or unenforceable, then the invalidity or unenforceability of that
provision shall not affect the validity or enforceability of any other provision
of this Agreement and all other provisions shall remain in full force and
effect.
8. Withholding of
Taxes. Company may withhold from any benefits payable under
this Agreement all Federal, state, city or other taxes as may be required
pursuant to any law, governmental regulation or ruling.
9. Not An Employment
Agreement. Nothing in this Agreement shall give the Employee
any rights (or impose any obligations) to continued employment by the Company or
any subsidiary or successor of the company, nor shall it give the Company any
rights (or impose any obligations) for the continued performance of duties by
the Employee for the Company or any subsidiary or successor of the
Company.
10. No Assignment. The
Employee’s right to receive payments or benefits under this Agreement shall not
be assignable or transferable, whether by pledge, creation of a security
interest or otherwise, other than a transfer by will or by the laws of descent
or distribution. In the event of any attempted assignment or transfer
contrary to this paragraph the Company shall have no liability to pay any amount
so attempted to be assigned or transferred. This Agreement shall
insure to the benefit of and be enforceable by the Employee’s personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
11. Successors. This Agreement
shall be binding upon and inure to the benefit of the Company, its successors
and assigns (including, without limitation, any company into or with which the
Company may merge or consolidate). The Company agrees that it will not
effect the sale or other disposition of all or substantially all of its assets
unless either (i) the person on entity acquiring the assets or a substantial
portion of the assets shall expressly assume by an instrument in writing all
duties and obligations of the Company under this Agreement or (ii) the Company
shall provide, through the establishment of a separate reserve for the payment
in full of all amounts which are or may reasonably be expected to become payable
to the Employee under this Agreement.
12. Term. This Agreement shall be
effective as of the date first above written and shall remain in effect for an
initial period of three years. In the event of a Change of Control
during the term of this Agreement, this Agreement shall remain in effect for the
Covered Period.
13. Extension. This
Agreement shall automatically extend at the end of the initial term or any
renewal term for successive one-year periods, unless the Company gives the
Employee written notice of its intention not to renew at least sixty (60) days,
but not more than one hundred twenty (120) days, prior to the last date of such
term or renewal term, as applicable.
IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed and
delivered as of the day and year first written.
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COMMUNITY
TRUST BANCORP, INC.
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By:
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| President & CEO | ||||
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| Employee | ||||
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