CHANGE OF CONTROL AGREEMENT
This AGREEMENT is entered into by and between CNB BANCSHARES, INC., an
Indiana corporation ("Company"), and XXXX X. XXXXXX XX. ("Executive").
Background
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
1. Duration Of Agreement. This Agreement shall be effective May 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,
shall have the following meanings for purposes of this Agreement:
(a) Affiliate. "Affiliate" means an employer required to be
aggregated with Company pursuant to Section 414 (b) or (c) of the
Internal Revenue Code.
(b) Anniversary Date. "Anniversary Date" means each anniversary 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 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
date as of which a Change of Control occurs.
(f) Change Period. "Change Period" means the period beginning
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
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
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
of this Agreement, as specified in Section 1.
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(j) Full Incentive Compensation. "Full Incentive Compensation"
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
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
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
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
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 the
meaning specified in Paragraph 3(a)(1).
3. Termination of Executive's Employment During Change Period.
(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
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
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 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
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 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 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: 0000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
or such other address designated by the Executive in writing to the Company as
provided in this Section.
10. Severability. If any term, provision, covenant, or
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, 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
accordance with the laws of the State of Indiana.
13. Arbitration. Any dispute, claim, or controversy concerning
the terms, meaning, application, or enforcement of any provision of this
Agreement that cannot be resolved through direct discussion or mediation shall
be submitted to final and binding
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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 agreements
between the parties with respect to the matters covered herein.
15. Counterparts. This Agreement may be signed in two
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
----------------------------- -------------------------------------
(Signature)
5/23/97
----------------------------------------
(Date)
EXECUTIVE
/s/ Xxxx X. Xxxxxx Xx.
----------------------------------------
(Signature)
5/23/97
----------------------------------------
(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
----------------------------- -------------------------------------
(Signature)
5/23/97
----------------------------------------
(Date)
EXECUTIVE
/s/ Xxxx X. Xxxxxx Xx.
----------------------------------------
(Signature)
5/23/97
----------------------------------------
(Date)
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