CHANGE OF CONTROL AGREEMENT
This AGREEMENT is entered into by and between CNB BANCSHARES, INC., an
Indiana corporation ("Company"), and XXXXXXX X. XXXXX ("Executive").
Background
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A. Executive is an officer and key management employee of Company.
B. Company's Board of Directors ("Board") has determined that it is in
the best interests of Company and its shareholders to assure Executive's
continued dedication and undivided time, attention, and loyalty, notwithstanding
the possibility, threat, or occurrence of a Change of Control (as defined in
Section 2 below).
C. In furtherance of that goal, the Board wishes to provide Executive
with certain benefits, if his employment should terminate as a result of a
Change of Control.
D. In reliance on this Agreement, Executive is willing to continue his
employment with Company on the terms agreed to by Executive and Company from
time to time.
In consideration of the premises, Company and Executive agree as
follows:
Agreement
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1. Duration Of Agreement. This Agreement shall be effective May
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23, 1997 ("Effective Date"), and shall continue until the end of the Term (as
defined in Section 2).
2. Definitions. The following words and phrases, when capitalized,
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shall have the following meanings for purposes of this Agreement:
(a) Affiliate. "Affiliate" means an employer required to be
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aggregated with Company pursuant to Section 414 (b) or (c) of the
Internal Revenue Code.
(b) Anniversary Date. "Anniversary Date" means each anniversary
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of the Effective Date occurring during the Term.
(c) Cause. "Cause" means and shall be limited to the
following:
(1) Executive's willful and continued failure to perform
(other than a failure resulting from Executive's illness or
disability) his employment duties after a demand for substantial
performance is delivered to Executive on behalf of the Board that
specifically identifies the manner in which it alleges that
Executive has failed to perform his duties and Executive's failure
to take appropriate actions to correct such failure within thirty
(30) days; or
(2) Executive's willful engaging in misconduct that has caused
demonstrable and material injury, monetary or otherwise, to
Company or an Affiliate.
For purposes of this Subsection (c), no act or failure to act on
Executive's part shall be considered "willful" unless done, or omitted
to be done, by Executive not in good faith and without reasonable
belief that his action or omission was in the best interests of
Company. Notwithstanding the foregoing, Executive shall not be deemed
to have been terminated for Cause unless and until the Board has
delivered to him a copy of a notice of termination, and after
reasonable notice to him and an opportunity for him, together with
counsel, to be heard before the Board, at least two-thirds of the Board
finds, in its reasonable opinion, that Executive was guilty of conduct
set forth above in clause (1) or (2) and specifying the particulars
thereof in detail.
(d) Change of Control. "Change of Control" shall be deemed to
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have occurred upon the happening of any one or more of the following:
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(1) any person, as that term is used in Section 13(d)(3) and
14(d)(2) of the Securities Exchange Act of 1934, as amended from time
to time, becomes a beneficial owner, directly or indirectly, of
securities of Company representing twenty percent (20%) or more of the
combined voting power of Company's then outstanding securities;
(2) less than fifty-one percent (51%) of the members of the
Board are Incumbent Directors;
(3) any corporation or group of associated persons acting in
concert, owns more than twenty-five percent (25%) of the outstanding
shares of voting stock of Company coupled with or followed by the
exercise of the voting power of such shares by the election of two (2)
or more directors of Company in any one election at the instance of
such corporation or group;
(4) Company becomes a party to an agreement of merger,
consolidation, or other reorganization pursuant to which Company will
be a constituent corporation, and either (A) Company is not the
surviving or resulting corporation, or (B) the transaction will result
in less than eighty percent (80%) of the outstanding voting securities
of the surviving or resulting entity being owned by the former
shareholders of Company;
(5) Company becomes a party to an agreement providing for
Company's sale or other disposition of all or substantially all of its
assets to any individual, partnership, joint venture, association,
trust, corporation, or other entity or person which is not an
Affiliate; or
(6) the occurrence of another event that the Board designates
a Change of Control.
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(e) Change of Control Date. "Change of Control Date" means the
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date as of which a Change of Control occurs.
(f) Change Period. "Change Period" means the period beginning
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six months before the Change of Control Date and continuing for the
number of months specified in Appendix A after the Change of Control
Date. Notwithstanding the preceding sentence, if a Change of Control
described in Paragraph (d)(4) or (d)(5) occurs, the Change Period shall
begin when Company becomes a party to a legally binding agreement
described in paragraph (d)(4) or (d)(5) but shall not end until the
number of months specified in Appendix A after the effective date of
the Change of Control transaction described in Paragraph (4) or (5).
(g) Confidential Information. "Confidential Information" means
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any information not in the public domain and not previously disclosed
to the public by the Board or management of the Company or an Affiliate
with respect to the products, facilities, and methods; trade secrets
and other intellectual property; systems, procedures, manuals,
confidential reports, customer lists, financial information, business
plans, prospects, or opportunities of the Company or an Affiliate; or
any information which the Company or an Affiliate has designated as
Confidential Information.
(h) Disability. "Disability" means Executive's inability to
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perform the material duties of his employment because of physical or
mental illness, which inability is likely to last for a period of one
year or longer.
(i) Effective Date. "Effective Date" means the effective date
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of this Agreement, as specified in Section 1.
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(j) Full Incentive Compensation. "Full Incentive Compensation"
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means incentive compensation for a calendar year (including incentive
compensation in the amount of zero), provided that such compensation is
not reduced because Executive was employed by the Company for less than
the entire calendar year.
(k) Good Reason. "Good Reason" means, (i) with respect to a
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Change of Control described in Section 2(d)(4) in which Company is the
surviving or resulting corporation, and which results in less than
eighty percent (80%) but more than fifty percent (50%) of the
outstanding voting securities of the resulting or surviving corporation
being owned by former shareholders of the Company, a material change in
position, title, compensation, status, responsibilities, or working
conditions in effect immediately before the Change of Control or
relocation of the Executive's place of employment to a location more
than fifty (50) miles from the Executive's place of employment
immediately before the Change of Control, and, (ii) with respect to any
Change of Control not described in Clause (i), Executive's
determination, in his sole judgment, that the duties of his employment,
compensation therefor, or the benefits or status associated therewith
have been reduced during the Change Period or that he is unable to
continue to perform the duties of his employment effectively because of
circumstances that changed during the Change Period directly or
indirectly as a result of the Change of Control.
(l) Incumbent Director. "Incumbent Director" means a director
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serving on the Board who (i) was a director on the Effective Date or
(ii) was later elected as a director (except a director whose initial
assumption of office was in connection with an actual or threatened
election contest, including but not limited to a consent solicitation,
relating to the election of directors) and whose appointment, election,
or
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nomination for election was approved or recommended by a vote of at
least two-thirds of the directors then still in office who either were
directors on the Effective Date hereof or whose appointment, election,
or nomination for election was previously so approved or recommended.
(m) Payment Period. "Payment Period" means the period
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beginning on the later of the Change of Control Date or the date of
Executive's termination of employment during the Change Period and
continuing for the number of months specified in Appendix A; provided,
however, if Executive's employment terminates after a Change of Control
(or, in the case of a transaction described in Paragraph 2(d)(4) or
2(d)(5), the later effective date of such transaction), the number of
months in the Payment Period shall be reduced by one for each full
calendar month before the effective date of Executive's termination of
employment occurring after the most recent Change of Control Date (or,
in the case of a transaction described in Paragraph 2(d)(3) or (4), the
later effective date of such transaction) before such termination date.
(n) Term. "Term" means the period beginning on the Effective
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Date and ending on the second anniversary of the Effective Date, as
extended pursuant to the provisions of this Subsection. The period
referred to in the preceding sentence shall automatically be extended
for one additional year on each Anniversary Date, unless the Company
has notified the Executive not fewer than thirty (30) days before that
Anniversary Date that the Term will not automatically be extended
further. Notwithstanding any provision of this Agreement, if one or
more Changes of Control occur during the Term (as determined pursuant
to the preceding provisions of this Subsection or as extended pursuant
to this sentence to reflect a prior Change of Control),
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the Term shall not end before the end of the Payment Period with
respect to the latest Change of Control occurring during the Term.
(o) Termination Compensation. "Termination Compensation" has
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the meaning specified in Paragraph 3(a)(1).
3. Termination of Executive's Employment During Change Period.
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(a) If Executive terminates his employment for Good Reason
during the Change Period, or if Company terminates Executive's
employment during the Change Period for a reason other than Cause or
Executive's death or Disability, Executive shall be entitled to the
following benefits:
(1) An amount equal to Executive's Termination
Compensation multiplied by the number of months in the Payment
Period. Executive's Termination Compensation shall be equal to
the sum of (i) his highest rate of base monthly salary
(unreduced by any elective salary deferrals or redirections)
during the twelve (12) month period immediately preceding his
termination of employment plus (ii) one-twelfth of his average
annual incentive compensation with respect to the shortest of
(A) the three calendar years immediately preceding the Payment
Period, provided Executive received Full Incentive
Compensation for all such years, (B) the calendar years
immediately preceding the Payment Period with respect to which
Executive received Full Incentive Compensation, or (C) the
total period of Executive's employment by Company. This amount
shall be paid to Executive in a lump sum between sixty (60)
and ninety (90) days after the later of (A) his termination of
employment or (B) the Change of Control Date. Executive may,
in his discretion, elect to reduce the amount payable to
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him pursuant to this Paragraph 3 to the extent necessary to
avoid excise taxes in Code Section 4999 of the Internal
Revenue Code.
(2) Throughout the Payment Period, Company shall
provide to Executive and his family medical, life insurance,
and other welfare benefits substantially similar to those
provided to active executive employees of the Company,
provided Executive pays any premiums charged by Company to
active executive employees receiving similar coverage.
Beginning at the end of the Payment Period, Company shall
provide medical coverage to Executive and his family that is
substantially similar to the coverage provided to active
employees of the Company, provided that Executive pays Company
the same premium as he would have been required to pay if such
coverage had been provided pursuant to the Consolidated
Omnibus Budget Reconciliation Act of 1985. Executive may elect
to purchase single coverage or family coverage pursuant to the
preceding sentence. Subject to Executive's payment of the
required premiums, post-Payment Period medical coverage for
Executive and his spouse shall continue until the earliest of
the following events: (i) the Executive's (or in the case of
coverage for the Executive's spouse, his spouse's) Medicare
eligibility, (ii) the Executive's (or in the case of coverage
for the Executive's spouse, his spouse's) death, or (iii)
medical coverage for the Executive (or in the case of coverage
for the Executive's spouse, his spouse) through another
employer.
(b) The payment or provision of benefits to Executive pursuant
to this Agreement shall not affect the obligations of Company or its
successor under any plan, agreement, or arrangement generally applicable to
Company's retired
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management employees pursuant to which Executive is entitled to any
retirement benefits, welfare benefits, stock, or other fringe benefits.
4. Non-Competition. Executive shall not, while employed or
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during the Payment Period, become an officer, director, or employee of,
consultant to, or majority shareholder in any bank or bank holding company
that substantially competes with Company, its subsidiaries, or Affiliates,
or its successor or successors within one hundred (100) miles from
Evansville, Indiana, or fifty (50) miles from the nearest banking office of
Company or a subsidiary thereof.
5. Non-Disclosure of Confidential Information. Executive
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acknowledges that, by virtue of his employment, he has obtained or will
obtain Confidential Information, the use or disclosure of which could cause
Company immeasurable and substantial loss and damages for which no remedy
at law would be adequate. Accordingly, Executive covenants and agrees with
Company that, except as necessary to perform his obligations to Company or
with the prior written consent of Company's Board, he will not at any time
directly or indirectly disclose any Confidential Information that he may
acquire or has acquired by reason of his association with Company. Without
limiting the rights or remedies, both legal and equitable, available to
Company in the event of an actual or threatened breach of Executive's
obligations under this Section, Company shall be entitled to seek and
obtain a temporary restraining order and/or a preliminary or permanent
injunction against Executive, which shall prevent Executive from engaging
in any activities prohibited by this Section, or to seek and obtain such
other relief against Executive as may be required to enforce Executive's
obligations hereunder. Executive's obligations set forth in this Section
and Company's rights and remedies, whether legal or equitable, with respect
thereto, shall extend indefinitely.
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6. Expenses. If Executive determines, in his absolute
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judgment, that it is necessary or advisable for him to incur reasonable
legal and/or accounting expenses, including but not limited to reasonable
attorneys' and/or accountants' fees, to obtain full and effective
enforcement of his rights under this Agreement or to determine the
appropriate tax treatment of amounts paid pursuant to this Agreement,
Company shall reimburse Executive for all such reasonable expenses and
costs on a periodic basis. Company's obligation to reimburse Executive for
these reasonable expenses or costs pursuant to this Section shall survive
expiration of the Term and shall survive the termination of any later
employment agreements between Executive and Company. Any reimbursement
required by this Section shall be paid promptly to Executive after he
submits a copy of the service provider's invoice for the covered expense.
7. Company's Obligation to Provide Information. After
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termination of Executive's employment, Company shall promptly provide
Executive with reasonably requested information relating to his retirement,
benefits and payments under this Agreement, and other post-employment
benefits.
8. Binding Effect And Assignment. This Agreement shall
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inure to the benefit of and shall be binding upon the parties to this
Agreement and their respective executors, administrators, heirs, personal
representatives, successors, and assigns, but neither this Agreement nor
any right created by this Agreement may be assigned or transferred by
either party. Notwithstanding the foregoing, the Company shall assign this
Agreement to any person or entity succeeding to substantially all of the
business and assets of the Company upon a Change in Control, and upon such
a Change in Control, the Company shall obtain the assumption of this
Agreement by its successor.
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9. Notices. Any notice to a party required or permitted to
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be given by this Agreement shall be in writing and shall be deemed given
when mailed by registered or certified mail to the party at the party's
address as specified in this Section:
If to the Company, to: CNB Bancshares, Inc.
Attention: Corporate Secretary
00 X.X. Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
or such other address designated by Company in writing to Executive as
provided in this Section.
If to Executive, to: Xxxxxxx X. Xxxxx
0000 X. Xxxxxxxxx-Xxx Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
or such other address designated by Company in writing to Executive as
provided in this Section.
10. Severability. If any term, provision, covenant, or
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restriction of this Agreement is held by a court of competent jurisdiction
to be invalid, void, or unenforceable, the remainder of the terms,
provisions, covenants, and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired, or
invalidated.
11. Amendments. This Agreement may not be modified,
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amended, altered, or supplemented except upon the execution and delivery of
a written agreement executed by Company and Executive.
12. Governing Law. This Agreement shall be construed in
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accordance with the laws of the State of Indiana.
13. Arbitration. Any dispute, claim, or controversy
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concerning the terms, meaning, application, or enforcement of any provision
of this Agreement that cannot be
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resolved through direct discussion or mediation shall be submitted to final
and binding arbitration before a neutral arbitrator pursuant to the
arbitration procedures set out in this Section ("Procedures") under the
auspices of the American Arbitration Association (AAA) at Evansville,
Indiana. The AAA Employment Dispute Resolution Rules in effect at the time
of the arbitration shall govern arbitration proceedings, except insofar as
these Procedures, as they may be amended from time to time, specifically
provide otherwise. Executive may initiate a claim or case only by a written
notice to Company as provided in this Agreement. Company may likewise
initiate a claim or case by a written notice delivered to Executive, as
provided in this Agreement. The written notice must set forth the matter in
dispute in sufficient detail to advise the non-initiating party of the
nature and amount of the dispute or claim, the date(s) of the underlying
occurrence(s), and the relief requested. It shall also be the initiating
party's responsibility to submit the claim and other required documents and
fees to AAA in a timely manner; provided, however, if Executive is fully or
partially successful, Company shall reimburse Executive for arbitration
fees reasonably incurred. In conducting arbitration proceedings, the AAA-
appointed arbitrator shall be authorized to award any relief available
under the laws of the United States or the State of Indiana applicable to
the claim, dispute, or controversy submitted, where such relief is
warranted based on the evidence and the law. Any arbitration award shall be
final and binding, and enforceable by an action in any court of competent
jurisdiction. No award shall be set aside, or denied enforcement, by any
court in any action unless the court finds that the arbitrator purported to
resolve claims, disputes, or controversies not within the scope of these
Procedures. Adherence to these Procedures, and the agreement of the parties
to this Agreement to follow them, shall be enforceable in an action to
compel or stay arbitration pursuant to the Federal Arbitration Act or the
Indiana Uniform Arbitration Act in a court of competent jurisdiction.
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14. Integration. This Agreement supersedes all prior
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agreements between the parties with respect to the matters covered herein.
15. Counterparts. This Agreement may be signed in two
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counterparts, each of which shall be deemed to be an original but which
together shall constitute one and the same instrument. Effect Of Headings.
The section headings in this Agreement are for convenience only and shall
not affect the construction of this Agreement.
IN WITNESS WHEREOF, CNB Bancshares, Inc. has caused this
Agreement to be executed on this 23rd day of May, 1997, and Executive has
executed this Agreement on the date specified below.
ATTEST: CNB BANCSHARES, INC.
/s/ Xxxxxx X. Xxxx By /s/ Xxxxx X. Xxxxxxxx
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(Signature)
5/23/97
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(Date)
EXECUTIVE
/s/ Xxxxxxx X. Xxxxx
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(Signature)
May 23, 1997
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(Date)
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APPENDIX A
The Payment Period shall consist of 18 months.
ATTEST: CNB BANCSHARES, INC.
/s/ Xxxxxx X. Xxxx By /s/ Xxxxx X. Xxxxxxxx
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(Signature)
5/23/97
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(Date)
EXECUTIVE
/s/ Xxxxxxx X. Xxxxx
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(Signature)
May 23, 1997
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(Date)
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