SEVERANCE AGREEMENT FOR CHIEF EXECUTIVE OFFICER
-----------------------------------------------
This SEVERANCE AGREEMENT FOR CHIEF EXECUTIVE OFFICER ("Agreement") is made
and entered into as of this 12th day of November, 1997, by C B & T, INC.
(together with its successors, the "Company") and XXXX XXXXXX (the "Executive").
WHEREAS, the Executive currently serves as Chief Executive Officer of the
Company; and
WHEREAS, the Company is currently contemplating the sale of the Company;
and
WHEREAS, the Company desires and intends to continue to employ the
Executive as Chief Executive Officer of the Company and wishes to encourage the
Executive to remain in such position during the negotiations for the sale of the
Company; and
WHEREAS, both the Company and the Executive have read and understood the
terms and provisions set forth in this Agreement, and have been afforded a
reasonable opportunity to review this Agreement with their respective legal
counsel.
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth in this Employment Agreement, the Executive and the Company agree as
follows:
1. DURATION: This Agreement will remain in effect until (1) the termination of
the Executive by the Company before a Change of Control of the Company (as
hereafter defined); (2) the voluntary resignation of the Executive before a
Change of Control of the Company; (3) the death or disability of the Executive
before a Change of Control; or (4) October 31, 1999, if there has been no Change
of Control of the Company before such date, whichever of the preceding four
conditions occurs first.
2. CHANGE IN CONTROL: If the Company should undergo a "Change of Control," whose
Effective Date is on or before October 31, 1999, and if the Executive remains in
continuous service as Chief Executive Officer of the Company until the Effective
Date of a Change of Control, and if the Executive is Terminated Without Good
Cause on or after thirty-six (36) months of the Effective Date of a Change of
Control, the parties agree as follows:
a. Compensation: Within thirty (30) days of the Termination Date, the
Company will pay the Executive the following:
(1) A lump sum cash payment equal to the Severance Factor times the
Monthly Rate of Pay of the Executive as of the Effective Date of a Change
of Control; where
(2) The Severance Factor is the number 36 less the number of complete
months elapsing from the Effective Date of the Change of Control until the
Termination Date.
1
b. Definitions: For purposes of this Agreement, the terms "Change of
Control," "Effective Date of Change of Control," "Monthly Rate of Pay," and
"Termination Date," shall be defined the same as those definitions found in the
C B &T, Inc. Employee Severance Pay Plan, As Effective October 31, 1997 (the
"Plan"). The term "Termination without Good Cause" shall mean (a) the
termination of the Executive's employment or a substantial reduction in his
duties, salary or benefits, or the location at which he performs services, as in
effect the day prior to the Effective Date of a Change of Control (b) which is
for a reason other than those listed in the definition of a Termination for
Cause under the Plan.
c. Tax Liability: In the event that any compensation payable under this
Paragraph (the "Payment") is determined to be a "parachute payment" under
section 280G of the Internal Revenue Code of 1986, as amended (the "Code") or
any successor provision, subject to the excise tax imposed by section 4999 of
the Code or any successor provision (the "Excise Tax"), the Company agrees to
pay to the Executive an additional amount (the "Gross Up") such that the net
amount retained by the Executive, after receiving both the Payment and the Gross
Up after reduction by the sum of (i) any Excise Tax on the Payment and (ii) any
Federal, state and local income taxes on the Payment, is equal to the amount of
the Payment determined as if it were not a parachute payment under the Code.
For purposes of determining the Gross Up, the Executive shall be deemed to
pay Federal, state and local income taxes at the highest marginal rate of
taxation in his filing status for the calendar year in which the Payment is to
be made. State and local taxes shall be determined using the same rate
assumption, but based upon the Executive's domicile on the date of the Change of
Control. The determination of whether such Excise Tax is payable and the amount
of such Excise Tax shall be based upon the opinion of tax counsel selected by
the Company subject to the approval of the Executive. If such opinion is not
finally accepted by the Internal Revenue Service, then appropriate adjustments
shall be calculated (with Gross Up, if applicable) by such tax counsel based
upon the final amount of Excise Tax so determined. The final amount shall be
paid, if applicable, within thirty (30) days after such calculations are
completed.
3. SUCCESSORS AND ASSIGNS: The parties acknowledge and agree that this Agreement
may not be assigned by either party without the written consent of the other
party. In the event of the Executive's death, this Agreement shall be
enforceable by the Executive's estate, executors or legal representatives, but
only to the extent that such persons may collect any compensation due to the
Executive under this Agreement.
4. RULES OF CONSTRUCTION: The following provisions shall govern the
interpretation and enforcement of this Agreement:
2
a. Severability: The parties acknowledge and agree that each provision of
this Agreement shall be enforceable independently of every other provision.
Furthermore, the parties acknowledge and agree that, in the event any provision
of this Agreement is determined to be unenforceable for any reason, the
remaining covenants and/or provisions will remain effective, binding and
enforceable.
b. Waiver: The parties acknowledge and agree that the failure of either to
enforce any provision of this Agreement shall not constitute a waiver of that
particular provision, or of any other provisions, of this Agreement.
c. Choice of Law: The parties acknowledge and agree that except as
specifically provided otherwise in this Agreement, the law of Tennessee will
govern the validity, interpretation and effect of this Agreement.
d. Modification: The parties acknowledge and agree that this Agreement
constitutes the complete and entire agreement between the parties with respect
to its subject matter (i.e, Severance Benefits arising out of the termination of
the Executive following a Change of Control); that the parties have executed
this Agreement based upon the express terms and provisions set forth herein;
that the parties have not relied on any representations, oral or written, which
are not set forth in this Agreement; that no previous agreement, either oral or
written, shall have any effect on the terms or provisions of this Agreement; and
that all previous agreements, either oral or written, are expressly superseded
and revoked by this Agreement. In addition, the parties acknowledge and agree
that the provisions of this Agreement may not be modified by any subsequent
agreement unless the modifying agreement (i) is in writing (ii) contains an
express provision referencing this Agreement (iii) is signed by the Executive
and (iv) is approved by the Board of Directors. This Agreement may not be
modified by the Company so as to diminish the Severance Benefits to the
Executive prior to a Change of Control of the Company that occurs on or before
October 31, 1999. Likewise, this Agreement may not be modified by the Purchaser
or the Company so as to diminish the Executive's benefits hereunder for three
years following the Effective Date of a Change of Control.
e. Execution: The parties agree that this Agreement may be executed in
multiple counterparts, each of which shall be deemed an Original for all
purposes.
f. Headings: The parties agree that the subject headings set forth at the
beginning of each paragraph in this Agreement are provided for ease of reference
only, and shall not be utilized for any purpose in connection with the
construction, interpretation or enforcement of this Agreement.
5. LEGAL CONSULTATION: The parties acknowledge and agree that both parties have
been accorded a reasonable opportunity to review this Agreement with legal
counsel prior to executing the agreement. The Executive acknowledges that the
firm of Jenkens & Xxxxxxxxx, a Professional Corporation, represents only the
Company with respect to this Agreement.
3
6. NOTICES: The parties acknowledge and agree that any and all Notices required
to be delivered under the terms of this Agreement shall be forwarded by personal
delivery or certified U.S. mail. Notices shall be effective on the day of
receipt. Such Notices shall be addressed to each party as follows:
PROVIDE ADDRESSES FOR NOTICES
7. EMPLOYMENT STATUS. This Agreement will not be construed as giving to the
Executive, or other person, any legal or equitable right against the Company or
any person acting on behalf of the Company, except as expressly provided herein.
Likewise, nothing appearing in or done pursuant to the Agreement shall be held
or construed to create a contract of employment with the Executive or to
obligate the Company to continue the service of the Executive or to affect or
modify his or her terms of employment in any way, except to provide the
severance benefits stated herein.
EXECUTED on this 8 day of December, 1997, at McMinnville,
Tennessee.
/s/ Xxxx Xxxxxx
---------------------------------------------
XXXX XXXXXX
C B & T, Inc.
By: /s/ M.T. Xxxxxxxx
-----------------------------------
Title: Vice Chairman
4
