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Exhibit 10.5
RESTATED CHANGE OF CONTROL AGREEMENT
THIS AGREEMENT, made as of the 21st day of August, 1995, by and
between FIRST NATIONAL BANCORP (hereinafter referred to as "Company") and XXXXX
X. XXXXXX (hereinafter referred to as "Employee"), establishes a severance
arrangement between the parties in the event of a change of control of Company.
WITNESSETH:
WHEREAS, Employee is currently serving as President and Chief
Administrative and Financial Officer of Company; and
WHEREAS, Company desires that Employee continue to serve in such
capacities for Company by providing Employee a measure of security; and
WHEREAS, Company wants to continue to have the benefits of Employee's
full time and attention to the affairs of Company without diversion due to
concerns about a possible change of control;
NOW, THEREFORE, in consideration of ONE DOLLAR and other good and
valuable consideration, receipt of which is hereby acknowledged, Company and
Employee agree as follows:
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
an Involuntary Termination within the Covered Period, then the Company shall
pay to the Employee an amount equal to the Severance Amount, payable within 15
days after the Termination Date. In addition, Employee will immediately be
entitled to payment of the Severance Amount and the other benefits hereunder
if, following a Change of Control, any successor to Company refuses to
acknowledge and accept the obligations of Company hereunder either directly or
by operation of law. If for any reason or no reason, the Company takes the
position that some or all of the benefits provided hereunder are not due and
owing to Employee or that it will not pay Employee any or all of the benefits
provided hereunder, Employee may, at his discretion, submit the resolution of
such dispute to arbitration as provided in Paragraph 5 below by notifying
Company in writing of his intent to do so.
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, as determined on the Termination
Date, be equal to the greater of:
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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 Termination Date.
(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 him 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 him immediately prior to the date on which a Change of
Control occurs;
iii. any diminution in the Employee's eligibility to participate or
level of participation in bonus, stock option, incentive award and
other compensation plans which provide opportunities to receive
compensation, from the greater of:
-the opportunities provided by the Company (including its
subsidiaries) for executives with comparable duties; or
-the opportunities under any such plans under which he was
participating immediately prior to the date on which a Change
of Control occurs;
iv. a diminution in employee benefits (including but not limited
to medical, dental, life insurance and long-term disability plans) and
perquisites applicable to Employee, from the greater of:
-the employee benefits and perquisites provided by the Company
(including its subsidiaries) to executives with comparable
duties; or
-the employee benefits and perquisites to which he was
entitled immediately prior to the date on which a Change in
Control occurs;
v. a change in the location of the Employee's principal place of
employment by the Company (including its subsidiaries) by more than 50
miles from the location where he was principally employed immediately
prior to the date on which a Change of Control occurs to which
Employee has not agreed;
vi. any reduction in the Employee's title with Company;
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vii. if Employee, because of any change in circumstances resulting
from a Change of Control, is adversely affected with respect to his
ability to exercise the authorities, powers, functions or duties
attached to his 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")(other than the Company, any subsidiary of the Company,
or any employee benefit plan, as defined in ERISA, of any of the
foregoing) is or becomes the beneficial owner, directly or indirectly,
of securities of the Company representing 25% 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 75% of the
outstanding voting securities of the surviving or resulting
corporation shall then be owned in the aggregate by the former
shareholders 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 50% 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
Company.
(e) "COVERED PERIOD" for the Employee shall mean two years
following the occurrence of any Change of Control, including a Change of
Control following another/other Change(s) of Control.
(f) "INVOLUNTARY TERMINATION" shall mean any termination which:
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i. does not result from a resignation by the Employee (other than
a resignation pursuant to clause ii of this subparagraph (f)); or
ii. results from a resignation following any Change in Duties;
provided, however, the term "Involuntary Termination" shall not
include:
x. a Termination for Cause, or
y. any termination as a result of death, disability, or
normal retirement pursuant to a retirement plan to which the
Employee was subject prior to any Change in Control.
(g) "SEVERANCE AMOUNT" is equal to two hundred percent (200%) of
the Employee's Base Annual Salary.
(h) "TERMINATION FOR CAUSE" shall mean only a termination as a
result of fraud, gross negligence, gross dereliction of duties,
misappropriation of or intentional material damage to the property or business
of the Company (including its subsidiaries), or a commission of a felony by the
Employee. In the event that the Company takes the position that there is a
Termination for Cause, the Company shall so notify the Employee in writing at
the Termination Date and Employee may, at his discretion, submit the
determination of such matter to arbitration by notification to Company that he
elects his rights pursuant to Paragraph 5 below within thirty (30) days after
the receipt of such notification.
(i) "VOTING SECURITIES" shall mean any securities which ordinarily
possess the power to vote in the election of directors without the happening of
any pre-condition or contingency.
3. OTHER EMPLOYEE BENEFITS. If the Employee's employment by the
Company or any subsidiary or successor of the Company shall be subject to an
Involuntary Termination within the Covered Period, then the following
provisions shall also apply:
(a) MEDICAL, DENTAL, LIFE INSURANCE AND LONG-TERM DISABILITY
BENEFITS. To the extent that the Employee or any of the Employee's dependents
may be covered under the terms of any medical, dental, life insurance or
long-term disability plans of the Company (or any subsidiary) for active
employees immediately prior to the termination, the Company will provide the
Employee and those dependents with equivalent coverages for twenty-four (24)
months from the termination. The coverages may be procured directly by the
Company (or any subsidiary, if appropriate) apart from, and outside of the
terms of the plans themselves; provided that the Employee and the Employee's
dependents comply with all of the conditions of the medical, dental, life
insurance or long-term disability plans. In consideration for these benefits,
the Employee must make contributions equal to those required from time
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to time from active employees of Company (or its subsidiaries) for equivalent
coverages under the medical, dental, life insurance, or long-term disability
plans. Company shall not be entitled to amend or modify the benefits for
Employee or any of his dependents or any of the terms or conditions thereof
without the prior written consent of Employee. The foregoing health benefits
are not intended to be a substitute for any benefits required under COBRA.
Notwithstanding the foregoing, Employee's rights to the foregoing benefits
shall terminate as to any benefit for which he becomes entitled to
substantially similar benefits on substantially similar terms, without
limitations or exclusions for pre-existing conditions or similar limitations,
through a program of a subsequent employer.
(b) PROFIT-SHARING PLANS. An amount equal to the amount of the
Employee's account balance which is not vested under any profit-sharing plans
(including, without limitation, plans with 401k arrangements) maintained by
Company immediately prior to the termination of Employee shall be paid by
Company to Employee within 15 days after the Termination Date. Such amount
shall be repaid by Employee to Company, without interest, in the event that the
profit- sharing plan(s) is/are terminated and Employee receives distribution of
his fully vested account from a terminated plan. In addition, at each of the
two consecutive plan year ends the first of which coincides with or next
follows the Termination Date, Company shall pay to Employee (within 15 days
after the end of the plan year) the amounts which Employee would have been
allocated under the profit-sharing plans from contributions (including, without
limitation, matching contributions under any 401(k) plan or arrangement) made
by the Company for such plan years had Employee not been terminated, had he
continued to earn the Base Annual Salary, and had he elected to make employee
deferrals to any 401(k) plan at the level such deferrals were made by Employee
immediately prior to his termination. In addition, if the Employee has, or
should have, an Excess Benefit Account under the First National Bancorp Excess
Benefits Plan (the "Excess Plan") or similar account under any other deferred
compensation plan which is designed to supplement the Company's 401(k) plan,
the entire account, including any nonvested portion, shall be paid by Company
to Employee within 15 days after the Termination Date. If, at the two
consecutive plan year ends of the Excess Plan (or other deferred compensation
plan, as applicable) the first of which coincides with or next follows the
Termination Date, Employee's Excess Benefit Account, or similar account under
any other deferred compensation plan, would have been credited with amounts
(based on Employee's Base Salary Amount and employee deferrals to any 401(k)
and other deferred compensation plans at the level such deferrals were made by
Employee immediately prior to his termination) if Employee had not been
terminated, then Company shall pay to Employee said amounts within 15 days
after the end of each respective plan year. The Excess Plan shall be deemed
amended to reflect the above provisions as applicable to Employee and the
provisions shall also apply to
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any deferred compensation plan which is subsequently adopted by Company under
which Employee participates.
(c) STOCK PLANS. Employee shall receive full vesting and all
restrictions against Employee shall lapse with respect to and under any stock
plans maintained by Company immediately prior to the Termination Date.
Employee shall have six months following the Termination Date in which to
exercise the rights granted below. The six-month exercise period shall apply
notwithstanding any shorter exercise period which may be provided for under the
stock option agreement in the case of Employee's termination of employment. To
the extent that the provision set forth in the previous sentence conflicts with
Employee's stock option agreement, the stock option agreement is deemed amended
and the provision in the previous sentence shall control. Provided, however,
the exercise period shall in no event be extended beyond the date on which the
option would expire under the stock option agreement if Employee had not been
terminated. During the six-month period (or shorter period if the options
would expire within such shorter period under the stock option agreement if
Employee had not been terminated) following the Termination Date, the Employee
shall be entitled to elect one (but not more than one) of the following
alternatives:
(1) To exercise any stock options not exercised prior to the
Termination Date;
(2) To make a written demand for payment by Company of an amount
equal to the difference between the value of the stock which
is subject to the options and the exercise price for the stock
subject to said options. For this purpose, the "value" of the
stock subject to the options shall be the greatest of (i) the
fair market value of the stock on the date Employee demands
payment hereunder, or (ii) the highest fair market value of
the stock on the date any Change of Control occurred, or (iii)
the highest consideration (whether in cash or in kind) paid in
connection with any Change of Control event to any shareholder
of Company for such shareholder's shares of stock in Company
by the "person" or "group," as determined in accordance with
Section 13(d)(3) of the Exchange Act, which attained control
pursuant to said Change of Control event. Company shall make
payment of the appropriate amount, as determined above, within
15 days after Employee makes the written demand.
(e) MISCELLANEOUS BENEFITS. Employee may continue using any
Company-owned automobile and any Company-provided country club privileges
through the end of the month in which the Termination Date occurs.
(f) OTHER EMPLOYEE BENEFITS. The benefits hereunder shall not be
affected by or reduced because of any other benefits
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(including, but not limited to, a severance pay plan which is independent of a
Change of Control) to which Employee may be entitled by reason of his
continuing employment with Company or the termination of his employment with
Company, and no other such benefit by reason of such employment shall be
affected or reduced because of the benefits bestowed by this Agreement;
provided, however, that the foregoing will not be interpreted to require
duplicative medical benefits.
4. GOLDEN PARACHUTE PAYMENT. It is the intention of the parties
that the Severance Amount payments and other payments under this Agreement are
reasonable compensation for Employee's service to Company and its subsidiaries
and shall not constitute "excess parachute payments" within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended, 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 or other
payments under this Agreement constitute "excess parachute payments" (without
taking into account any amounts in excess of 299 percent (299%) of the "base
amount," as defined in Section 280G(b)(3) which might otherwise be "reasonable
compensation" within the meaning of Section 280G(b)(4)), then the payments
under this Agreement shall, in lieu of the payments otherwise due, be increased
to the sum of (a) the base amount, as defined in Section 280G(b)(3), plus (b)
an amount equal to the quotient of (i) the "excess parachute payment," as
defined in Section 280G(b), divided by (ii) one (1) minus the rate of tax
(expressed as a decimal) imposed under Code Section 4999. The purpose of the
preceding sentence is that payments hereunder are "grossed up" so that Employee
will receive all amounts due under this Agreement without diminution by reason
of taxes imposed under Section 4999.
5. ARBITRATION AND LITIGATION.
(a) Arbitration is not required of Employee to resolve any dispute
with Company hereunder, but is merely an alternative to resolve the dispute
available to Employee if he elects to use it. Company shall have no right to
avail itself of arbitration unless Employee agrees to arbitration. All
arbitrations pursuant to this Agreement shall be determined in accordance with
the rules of the American Arbitration Association then in effect, by a single
arbitrator if the parties shall agree upon one, or by three arbitrators, one
appointed by each party, and a third arbitrator appointed by the two
arbitrators selected by the parties, all arbitrators from a panel proposed by
the American Arbitration Association. If any party shall fail to appoint an
arbitrator within thirty (30) days after it is notified to do so, then the
arbitration shall be accomplished by a single arbitrator. Unless otherwise
agreed by the parties hereto, all arbitration proceedings shall be held in
Gainesville, Georgia. Each party agrees to comply
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with any award rendered in such proceeding. The decision of the arbitrator(s)
shall be tendered within sixty (60) days after final submission of the parties
in writing or any hearing before the arbitrators and shall include their
individual votes. If Employee is entitled to any award pursuant to the
determination reached in the arbitration proceeding, he shall be entitled to
payment by Company of all attorney's fees, costs and other out-of-pocket
expenses incurred in connection with the arbitration.
(b) In the event that any dispute hereunder is resolved through
litigation, and Employee's position in such litigation is sustained to any
extent by the court, then Company agrees that it shall pay all of Employee's
attorney's fees, court costs and other out-of-pocket expenses relating to the
litigation.
6. NOTICES. Notices and all other communications under this
Agreement shall be in writing and shall be deemed given when personally
delivered or mailed by United States registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Company to:
First National Bancorp
X.X. Xxxxxx 000
Xxxxxxxxxxx, Xxxxxxx 00000
Attention: Secretary of First National Bancorp, or its
successor, with copies to the President of First
National Bancorp, or its successor and the President
of the Bank, or its successor.
If to the Employee to:
Xx. Xxxxx X. Xxxxxx
First National Bancorp
P. O. Drawer 937
Gainesville, Georgia 30503
or to such other address as either party may furnish to the other in writing,
except that notice of changes of address shall be effective only upon receipt.
7. APPLICABLE LAW. This contract is entered into under, and
shall be governed for all purposes by, the laws of the State of Georgia.
8. 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.
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9. WITHHOLDING OF TAXES; SET-OFF. 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. The
right of Employee to receive benefits under this Agreement, however, shall be
absolute and shall not be subject to any set-off, counterclaim, recoupment,
defense, duty to mitigate, or other rights Company may have against him or
anyone else.
10. NOT AN EMPLOYMENT AGREEMENT; SUBSEQUENT EMPLOYMENT. 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. Employee's right to
receive benefits under this Agreement shall not be reduced by Employee's
employment with any other employer after terminating employment with the
Company. Any compensation for services rendered or consulting fees earned
after the date of termination shall not diminish Employee's right to receive
all amounts due hereunder.
11. 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 and 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 will inure to the benefit of and be enforceable by the
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
12. 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 or 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.
13. EMPLOYEE'S INDEMNITY. Employee shall be entitled to the
indemnity provided to officers of Company immediately prior to the Change of
Control. Any changes to Company's bylaws or otherwise which reduce any
indemnity granted to officers shall not affect the
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rights granted hereunder. Company shall not reduce any of Employee's indemnity
benefits without the prior written consent of Employee. Any references to
Georgia law in the bylaws of Company or other documents granting indemnity to
Employee shall be deemed to be references as of the date of this Agreement, and
any amendments to Georgia law, including a revocation thereof, shall not reduce
the indemnity benefits granted hereunder.
14. COSTS OF ENFORCEMENT; INTEREST. Subject to the provisions of
Paragraph 5 above, in the event the Employee collects any part of the Severance
Amount or other benefits hereunder or otherwise enforces the terms of this
Agreement through a lawyer or lawyers, Company will pay all costs of such
collection or enforcement, including reasonable legal fees incurred by the
Employee. In addition, Company shall pay to Employee interest on all or any
part of the Severance Amount or other benefits hereunder that is not paid when
due at a rate equal to the Prime Rate as announced by The First National Bank
of Gainesville or its successors from time to time.
15. TERM. This Agreement shall be effective as of the date first
above written and shall remain in effect for a period of three years.
Notwithstanding anything herein to the contrary, in the event of a Change of
Control during the initial, or any subsequent, term of this Agreement, this
Agreement shall remain in effect until the later of (a) the end of the term of
the Agreement or (b) the day after the last day in the Covered Period. This
Agreement, unless terminated as provided below, shall be automatically renewed
to add an additional year after each year expires, so that the term is always
three years, without further action by the Employee or the Company. This
Agreement can be terminated only by either party giving the other notice on or
before June 30 of the year of termination. If the agreement is terminated
under the preceding sentence, the term shall continue for two years after the
end of the year in which the notice of termination was given. If notice of
termination is given after June 30 of a year, then the term of the Agreement
shall continue for three years after the end of the year in which the notice of
termination was given.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the day and year first above written.
FIRST NATIONAL BANCORP
By: /s/ C. Xxxxxxxx Xxxxxxxx
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Its: Senior Vice President,
Secretary and Treasurer
EMPLOYEE:
/s/ Xxxxx X. Xxxxxx
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XXXXX X. XXXXXX
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