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EXHIBIT 10(p)
TERMINATION BENEFITS AGREEMENT
This Termination Benefits Agreement ("Agreement") is made and entered into as of
December 15, 1999, by and between National City Bancshares, Inc., an Indiana
corporation (hereinafter referred to as the "Corporation") and Xxxxx X. Xxxxx
(hereinafter referred to as "Employee").
W I T N E S S E T H
WHEREAS, Employee is an at-will employee of the Corporation and has been
appointed an executive officer of the Corporation; and
WHEREAS, the Corporation believes that Employee will make valuable contributions
to the productivity and profitability of the Corporation; and
WHEREAS, the Corporation desires to encourage Employee to continue to make such
contributions and not to seek or accept employment elsewhere; and
WHEREAS, the Corporation, therefore, desires to assure Employee of certain
benefits in case of any termination or significant redefinition of the terms of
his employment with the Corporation in connection with to any Change in Control
of the Corporation;
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
herein contained and the mutual benefits herein provided, the Corporation and
Employee hereby agree as follows:
1. The term of this Agreement shall be from the date hereof through December 31,
2001; provided, however, that such term shall be automatically extended for an
additional year on December 31, 1999, and on December 31 of each year thereafter
unless either party hereto gives written notice to the other party not to so
extend prior to November 30 of the year for which notice is given, in which case
no further automatic extension shall occur and the term of this Agreement shall
end on December 31 two (2) years subsequent to the date of the latest preceding
automatic extension. Notwithstanding the foregoing, if a Change in Control of
the Corporation (as defined in Section 2 below) shall occur prior to the
expiration of the original term or any extensions of the term of this Agreement,
then the term of this Agreement shall automatically become a term of two (2)
years commencing on the date of any such Change in Control.
2. As used in this Agreement, "Change in Control" of the Corporation means:
(A) The acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") (a "Person") of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act as in effect from time to time) of
twenty-five percent (25%) or more of either (i) the then outstanding shares of
common stock of the Corporation or (ii) the combined voting power of the then
outstanding voting securities of the Corporation entitled to vote generally in
the election of directors; provided, however, that the following acquisitions
shall not constitute an acquisition of control: (i) any acquisition directly
from the Corporation (excluding an acquisition by virtue of the exercise of a
conversion privilege), (ii) any acquisition by the Corporation, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Corporation or any corporation controlled by the Corporation,
or (iv) any acquisition by any corporation pursuant to a reorganization, merger
or consolidation, if, following such reorganization, merger or consolidation,
the conditions described in clauses (i), (ii) and (iii) of subsection (C) of
this Section 2 are satisfied;
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(B) Individuals who, as of the date hereof, constitute the Board of Directors of
the Corporation (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board of Directors of the Corporation (the "Board");
provided, however, that any individual becoming a director subsequent to the
date hereof whose election, or nomination for election by the Corporation's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board; or
(C) Approval by the shareholders of the Corporation of a reorganization, merger
or consolidation, in each case, unless, following such reorganization, merger or
consolidation, (i) more than sixty percent (60%) of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
reorganization, merger or consolidation and the combined voting power of the
then outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the outstanding Corporation common stock
and outstanding Corporation voting securities immediately prior to such
reorganization, merger or consolidation in substantially the same proportions as
their ownership, immediately prior to such reorganization, merger or
consolidation, of the outstanding Corporation stock and outstanding Corporation
voting securities, as the case may be, (ii) no Person (excluding the
Corporation, any employee benefit plan or related trust of the Corporation or
such corporation resulting from such reorganization, merger or consolidation and
any Person beneficially owning, immediately prior to such reorganization, merger
or consolidation, directly or indirectly, twenty-five percent (25%) or more of
the outstanding Corporation common stock or outstanding voting securities, as
the case may be) beneficially owns, directly or indirectly, twenty-five percent
(25%) or more of, respectively, the then outstanding shares of common stock of
the corporation resulting from such reorganization, merger or consolidation or
the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors and (iii) at
least a majority of the members of the board of directors of the corporation
resulting from such reorganization, merger or consolidation were members of the
Incumbent Board at the time of the execution of the initial agreement providing
for such reorganization, merger or consolidation; or
(D) Approval by the shareholders of the Corporation of (i) a complete
liquidation or dissolution of the Corporation or (ii) the sale or other
disposition of all or substantially all of the assets of the Corporation, other
than to a corporation with respect to which following such sale or other
disposition (a) more than sixty percent (60%) of, respectively, the then
outstanding shares of common stock of such corporation and the combined voting
power of the then outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the outstanding Corporation common
stock and outstanding Corporation voting securities immediately prior to such
sale or other disposition in substantially the same proportion as their
ownership, immediately prior to such sale or other disposition, of the
outstanding Corporation common stock and outstanding Corporation voting
securities, as the case may be, (b) no Person (excluding the Corporation and any
employee benefit plan or related trust of the Corporation or such corporation
and any Person beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, twenty-five percent (25%) or more of the
outstanding Corporation common stock or outstanding Corporation voting
securities, as the case may be) beneficially owns, directly or indirectly,
twenty-five percent (25%) or more of, respectively, the then outstanding shares
of common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors and (c) at least a majority of the members of the
board of directors of such corporation were members of the Incumbent Board at
the time of the execution of the initial agreement or action of the Board
providing for such sale or other disposition of assets of the Corporation.
3. The Corporation shall provide Employee with the benefits set forth in
Section 6 of this Agreement upon any termination of Employee's employment by the
Corporation following a Change in Control during the term of this Agreement for
any reason except the following:
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(A) Termination by reason of Employee's death.
(B) Termination by reason of Employee's "disability." For purposes hereof,
"disability" shall be defined as Employee's inability by reason of illness or
other physical or mental disability to perform the duties required by his
employment for any consecutive One Hundred Eighty (180) day period, provided
that notice of any termination by the Corporation because of Employee's
"disability" shall have been given to Employee prior to the resumption by him of
the performance of such duties.
(C) Termination upon Employee reaching his normal retirement date, which for
purposes of this Agreement shall be deemed to be the end of the month during
which employee reaches sixty-five (65) years of age.
(D) Termination for "cause." As used in this Agreement, the term "cause" means
fraud, dishonesty, theft of corporate assets, or other gross misconduct by
Employee. Notwithstanding the foregoing, Employee shall not be deemed to have
been terminated for cause unless and until there shall have been delivered to
him a copy of a resolution duly adopted by the affirmative vote of not less than
a majority of the entire membership of the Corporation's Board at a meeting
called and held for the purpose (after reasonable notice to him and an
opportunity for him, together with his counsel, to be heard before such Board),
finding that, in the good faith opinion of such Board, Employee was guilty of
conduct constituting "cause" and specifying the particulars thereof in detail.
4. The Corporation shall also provide Employee with the benefits set forth in
Section 6 of this Agreement upon any termination of Employee's employment with
the Corporation at Employee's option if any one of the following events occurs
within six (6) months prior to or within two (2) years following a Change in
Control:
(A) Without Employee's express written consent, the assignment of Employee to
any duties which, in Employee's reasonable judgment, are materially inconsistent
with his positions, duties, responsibilities or status with the Corporation
immediately prior to the earlier of termination of employment or the Change in
Control or a substantial reduction of his duties or responsibilities which, in
Employee's reasonable opinion, does not represent a promotion from his position,
duties or responsibilities immediately prior to the earlier of termination of
employment or the Change in Control.
(B) A reduction by the Corporation in Employee's salary from the level of such
salary immediately prior to the earlier of termination of employment or the
Change in Control or the Corporation's failure to increase (within twelve (12)
months of Employee's last increase in base salary) Employee's base salary after
a Change in Control in an amount which at least equals, on a percentage basis,
the average percentage increase in base salary for all executive and senior
officers of the Corporation effected in the preceding twelve (12) months.
(C) The failure by the Corporation to continue in effect any incentive, bonus or
other compensation plan in which Employee participates, including but not
limited to the Corporation's stock option plans, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan), with which Employee has
consented, has been made with respect to such plan in connection with the Change
in Control, or the failure by the Corporation to continue Employee's
participation therein, or any action by the Corporation which would directly or
indirectly materially reduce Employee's participation therein.
(D) The failure by the Corporation to continue to provide Employee with benefits
substantially similar to those enjoyed by Employee or to which Employee was
entitled under any of the Corporation's principal pension, profit sharing, life
insurance, medical, dental, health and accident, or disability plans in which
Employee was participating immediately prior to the earlier of the termination
of employment or the Change in Control, the taking of any action by the
Corporation which would directly or indirectly materially reduce any of such
benefits or deprive Employee of any material fringe benefit enjoyed by Employee
or to which Employee was entitled immediately prior to the earlier of the
termination of employment or the Change in Control, or the failure by the
Corporation to provide Employee with the number of paid vacation and sick leave
days to which Employee is entitled on the basis of years of service or position
with the Corporation in accordance with the Corporation's normal vacation policy
in effect on the date hereof.
(E) The Corporation's requiring Employee to be based anywhere other than the
metropolitan area where the Corporation office at which he was based immediately
prior to the earlier of the termination of employment or the
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Change in Control was located, except for required travel on the Corporation's
business in accordance with the Corporation's past management practices.
(F) Any failure of the Corporation to obtain the assumption of the obligation to
perform this Agreement by any successor as contemplated in Section 10 hereof.
(G) Any failure by the Corporation or its shareholders, as the case may be, to
reappoint or reelect Employee to a corporate office held by him immediately
prior to the earlier of the termination of employment or the Change in Control
or his removal from any such office including any seat held at such time on the
Corporation's Board of Directors.
(H) The effectiveness of a resignation, tendered at any time, either before or
after a Change in Control and regardless of whether formally characterized as
voluntary or otherwise, by Employee of any corporate office held by him
immediately prior to the Change in Control or of any seat held at such time on
the Corporation's Board of Directors, at the request of the Corporation or at
the request of the person obtaining control of the Corporation in such Change in
Control.
(I) Any purported termination of the Employee's employment which is not effected
pursuant to a Notice of Termination satisfying the requirements of Section 5
hereof (and, if applicable, Section 3(D) hereof); and for purposes of this
Agreement, no such purported termination shall be effective.
(J) Any request by the Corporation that Employee participate in an unlawful act
or take any action constituting a breach of Employee's professional standard of
conduct.
(K) Any breach by the Corporation of any of the provisions of this Agreement or
any failure by the Corporation to carry out any of its obligations hereunder.
Notwithstanding anything in this Section 4 to the contrary, Employee's right to
terminate Employee's employment pursuant to this Section 4 shall not be affected
by Employee's incapacity due to physical or mental illness.
5. Any termination of Employee's employment with the Corporation as contemplated
by Section 3 hereof (except subsection 3(A) and 3(C)) or by Employee as
contemplated by Section 4 hereof shall be communicated by written "Notice of
Termination" to the other party hereto. Any "Notice of Termination" given by
Employee pursuant to Section 4 or given by the Corporation in connection with a
termination as to which the Corporation believes it is not obligated to provide
Employee with benefits set forth in Section 6 hereof shall indicate the specific
provisions of this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for such
termination.
6. Subject to the conditions and exceptions set forth in Section 3 and Section 4
hereof, the following benefits, less any amounts required to be withheld
therefrom under any applicable federal, state or local income tax, other tax, or
social security laws or similar statutes, shall be paid to Employee upon any
termination of his employment within six (6) months before or within two (2)
years after any Change in Control:
(A) Within thirty (30) days following such a termination or, if later, such a
Change in Control, Employee shall be paid, at his then-effective salary, for
services performed through the date of his termination. In addition, any earned
but unpaid amount of any bonus or incentive payment (which, for purposes of this
Agreement, shall mean that amount computed in a fashion consistent with the
manner in which Employee's bonus or incentive plan for the year preceding the
year of termination was computed, if Employee received a bonus or incentive
payment during such preceding year in accordance with a plan or program of the
Corporation, or, if not, then the total bonus or incentive payment received by
the Employee during such preceding year, in either case prorated through the
date of termination) shall be paid to Employee within thirty (30) days following
the termination of his employment or, if later, such a Change in Control.
(B) Within thirty (30) days following such a termination, Employee shall be paid
a lump sum payment of an amount equal to two and nine-tenths (2.9) times
Employee's "Base Amount." For purposes hereof, Base Amount is defined as
Employee's average includable salary, bonus, incentive payments and similar
compensation paid by the
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Corporation for the five (5) most recent taxable years ending before the date on
which the Change in Control occurs (or such shorter period of time that the
Employee has been employed by the Corporation). The definition, interpretation
and calculation of the dollar amount of Base Amount shall be in a manner
consistent with and as required by the provisions of Section 280G of the
Internal Revenue Code of 1986, as amended ("Code"), and the regulations and
rulings of the Internal Revenue Service promulgated thereunder. The payments to
the Employee under this Section 6(B) shall be reduced by the full amount that
such payment, when added to all other payments or benefits of any kind to the
Employee by reason of the Change in Control, constitutes an "excess parachute
payment" within the meaning of Section 280G of the Code.
(C) Employee acknowledges and agrees that payment in accordance with subsections
6(A), 6(B) and 6(C) shall be deemed to constitute a full settlement and
discharge of any and all obligations of the Corporation to Employee arising out
of his employment with the Corporation and the termination thereof, except for
any vested rights Employee may then have under any insurance, pension,
supplemental pension, thrift, employee stock ownership, or stock option plans
sponsored or made available by the Corporation.
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7. The Corporation is aware that upon the occurrence of a Change in Control the
Board of Directors or a shareholder of the Corporation may then cause or attempt
to cause the Corporation to refuse to comply with its obligations under this
Agreement, or may cause or attempt to cause the Corporation to institute, or may
institute, litigation seeking to have this Agreement declared unenforceable, or
may take or attempt to take other action to deny Employee the benefits intended
under this Agreement. In these circumstances, the purpose of this Agreement
could be frustrated. It is the intent of the Corporation that Employee not be
required to incur the expenses associated with the enforcement of his rights
under this Agreement by litigation or other legal action, nor be bound to
negotiate any settlement of his rights hereunder, because the cost and expense
of such legal action or settlement would substantially detract from the benefits
intended to be extended to Employee hereunder. Accordingly, if following a
Change in Control it should appear to Employee that the Corporation has failed
to comply with any of its obligations under this Agreement or in the event that
the Corporation or any other person takes any action to declare this Agreement
void or unenforceable, or institutes any litigation or other legal action
designed to deny, diminish or to recover from Employee the benefits entitled to
be provided to the Employee hereunder, and that Employee has complied with all
of his obligations under this Agreement, the Corporation irrevocably authorizes
Employee from time to time to retain counsel of his choice, at the expense of
the Corporation as provided in this Section 7, to represent Employee in
connection with the initiation or defense of any litigation or other legal
action, whether such action is by or against the Corporation or any director,
officer, shareholder, or other person affiliated with the Corporation, in any
jurisdiction. Notwithstanding any existing or prior attorney-client relationship
between the Corporation and such counsel, the Corporation irrevocably consents
to Employee entering into an attorney-client relationship with such counsel, and
in that connection the Corporation and Employee agree that a confidential
relationship shall exist between Employee and such counsel. The reasonable fees
and expenses of counsel selected from time to time by Employee as hereinabove
provided shall be paid or reimbursed to Employee by the Corporation on a
regular, periodic basis upon presentation by Employee of a statement or
statements prepared by such counsel in accordance with its customary practices,
up to a maximum aggregate amount of One Hundred Thousand Dollars ($100,000). Any
legal expenses incurred by the Corporation by reason of any dispute between the
parties as to enforceability of or the terms contained in this Agreement as
provided by this Section 7, notwithstanding the outcome of any such dispute,
shall be the sole responsibility of the Corporation, and the Corporation shall
not take any action to seek reimbursement from Employee for such expenses.
Notwithstanding any limitation contained in this Section 7 to the contrary,
Employee shall be entitled to payment or reimbursement of legal expenses in
excess of One Hundred Thousand Dollars ($100,000) if the expenses were incurred
as a result of a dispute under this Agreement in which Employee obtains a final
judgment in his favor from a court of competent jurisdiction or his claim is
settled by the Corporation prior to the rendering of a judgment by such a court.
8. Employee is not required to mitigate the amount of benefit payments to be
made by the Corporation pursuant to this Agreement by seeking other employment
or otherwise, nor shall the amount of any benefit payments provided for in this
Agreement be reduced by any compensation earned by Employee as a result of
employment by another employer or which might have been earned by Employee had
Employee sought such employment, after the date of termination of his employment
with the Corporation or otherwise.
9. In order to induce the Corporation to enter into this Agreement, Employee
hereby agrees as follows:
(A) He agrees that his employment with the Corporation is terminable at will by
the Corporation and that this Agreement does not alter that relationship in any
way.
(B) He will keep confidential and not improperly divulge for the benefit of any
other party any of the Corporation's confidential information and business
secrets including, but not limited to, confidential information and business
secrets relating to such matters as the Corporation's finances and operations.
All of the Corporation's confidential information and business secrets shall be
the sole and exclusive property of the Corporation.
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(C) For a period of two years after Employee's employment with the Corporation
ceases, Employee shall not either on his own account or for any other person,
firm or company solicit or endeavor to cause any employee of the Corporation to
leave his employment or to induce or attempt to induce any such employee to
breach any employment agreement with the Corporation.
In the event of a breach or threatened breach by Employee of the provisions of
this Section 9, the Corporation shall be entitled to an injunction restraining
Employee from committing or continuing such breach. Nothing herein contained
shall be construed as prohibiting the Corporation from pursuing any other
remedies available to it for such breach or threatened breach including the
recovery of damages from Employee. The covenants of this Section 9 shall run not
only in favor of the Corporation and its successors and assigns, but also in
favor of its subsidiaries and their respective successors and assigns and shall
survive the termination of this Agreement.
10. The Corporation shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Corporation, by agreement in form and substance
satisfactory to Employee, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Corporation would
be required to perform it if no such succession had taken place. Failure of the
Corporation to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle Employee to
compensation from the Corporation in the same amount and on the same terms as
Employee would be entitled hereunder if he were to terminate his employment
pursuant to Section 4 hereof, except that for purposes of implementing the
foregoing, the date on which succession becomes effective shall be deemed the
date of termination of Employee's employment with the Corporation. As used in
this Agreement, "Corporation" shall mean the Corporation as hereinbefore defined
and any successor to the business or assets of it as aforesaid which executes
and delivers the agreement provided for in this Section 10 or which otherwise
becomes bound by all of the terms and provisions of this Agreement by operation
of law.
11. Should Employee die while any amounts are payable to him hereunder, this
Agreement shall inure to the benefit of and be enforceable by Employee's
executors, administrators, heirs, distributees, devisees and legatees and all
amounts payable hereunder shall be paid in accordance with the terms of this
Agreement to Employee's devisee, legatee or other designee or if there be no
such designee, to his estate.
12. For purposes of this Agreement, notices and all other communications
provided for herein shall be in writing and shall be deemed to have been given
when delivered or mailed by United States registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to Employee:
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If to the Corporation:
National City Bancshares, Inc.
000 Xxxx Xxxxxx
P. O. Xxx 000
Xxxxxxxxxx, Xxxxxxx 00000-0000
Attention: Chief Executive Officer
or to such other address as any party may have furnished to the other party in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
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13. The validity, interpretation, and performance of this Agreement shall be
governed by the laws of the State of Indiana. The parties agree that all legal
disputes regarding this Agreement will be resolved in Evansville, Indiana, and
irrevocably consent to service of process in such City for such purpose.
14. No provision of this Agreement may be modified, waived or discharged unless
such waiver, modification or discharge is agreed to in writing signed by
Employee and the Corporation. No waiver by any party hereto at any time of any
breach by any other party hereto of, or 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 any
prior or subsequent time. No agreements or representation, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
any party which are not set forth expressly in this Agreement.
15. The invalidity or unenforceability of any provisions 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.
16. This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original but all of which together will constitute one and
the same Agreement.
17. This Agreement is personal in nature and neither of the parties hereto
shall, without the consent of the other, assign or transfer this Agreement or
any rights or obligations hereunder, except as provided in Section 10 and
Section 11 above. Without limiting the foregoing, Employee's right to receive
payments hereunder shall not be assignable or transferable, whether by pledge,
creation of a security interest or otherwise, other than a transfer by his will
or by the laws of descent and distribution as set forth in Section 11 hereof,
and in the event of any attempted assignment or transfer contrary to this
Section 17, the Corporation shall have no liability to pay any amount so
attempted to be assigned or transferred.
Any benefits payable under this Agreement shall be paid solely from the general
assets of the Corporation. Neither Employee nor Employee's beneficiary shall
have interest in any specific assets of the Corporation under the terms of this
Agreement. This Agreement shall not be considered to create an escrow account,
trust fund or other funding arrangement of any kind or a fiduciary relationship
between Employee and the Corporation.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and
delivered as of the day and year first above set forth.
NATIONAL CITY BANCSHARES, INC.
("Corporation")
By: /s/ Xxxxxxx X. Xxx
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Xxxxxxx X. Xxx
Chairman of the Board and Chief
Executive Officer
/s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
"Employee"