EXHIBIT 10.3
BancorpSouth, Inc.
Change in Control Agreement
This Agreement ("Agreement") is entered into this 1st day of February,
1999, by and between BancorpSouth, Inc. (the "Company") and Harry Baxter
("Employee").
W I T N E S S E T H:
Whereas, Employee is employed as the Vice Chairman of the Company; and
Whereas, the Company desires to provide certain severance payments to
Employee in the event that Employee's employment with the Company is
terminated in connection with a change in control of the Company;
Now, Therefore, based upon the premises set forth herein and for other
good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows
ARTICLE I. DEFINITIONS
Terms used in this Agreement that are defined are indicated by initial
capitalization of the term. References to an "Article" or a "Section" mean an
article or a section of this Agreement. In addition to those terms that are
specifically defined herein, the following terms are defined for purposes
hereof:
"Administrator" means a committee consisting of the Company's chief
executive officer, the secretary of the Company, the vice president of human
resources, and any other individuals appointed by the chief executive officer.
The Administrator may delegate any of its duties or authorities to any person
or entity. If a Change in Control occurs, as described in this Agreement, the
Administrator shall be the committee of individuals who were committee members
immediately prior to the Change in Control.
"Benefit" means the benefits described in Article II.
"Change in Control" means a transaction or circumstance in which any of
the following have occurred:
(a) any "person" as such term is used in sections 13(d) and 14(d) of the
Exchange Act, other than a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or a corporation
controlling the Company or owned directly or indirectly by the
shareholders of the Company in substantially the same proportions as
their ownership of stock of the Company, becomes the "beneficial owner"
(as defined in Rule 13d-3 under said Act), directly or indirectly, of
securities of the Company representing more than 25% of the total voting
power represented by the Company's then outstanding Voting Securities
(as defined below), or
(b) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board and any new director whose
election by the Board or nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority
thereof, or
(c) the shareholders of the Company approve a merger or consolidation of the
Company with any other corporation, other than a merger or consolidation
which would result in the Voting Securities (i.e., any securities of the
entity which vote generally in the election of its directors) of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into Voting
Securities of the surviving entity) more than 65% of the total voting
power represented by the Voting Securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation, or
(d) the shareholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of its assets.
"Code" means the Internal Revenue Code of 1986, as amended.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
ARTICLE II. CHANGE IN CONTROL TERMINATION PAYMENT
Section 2.1 Benefits on Termination.
(a) Amount. Subject to the conditions, limitations and adjustments
that are provided for herein, the Company will provide Benefits to Employee
the sum of the amounts described below if, within the 24 month period
following a Change in Control, Employee's employment with the Company
terminates pursuant to Section 2.3 of this Agreement:
(1) An amount equal to 200% of the Employee's annual base compensation
determined by reference to his base salary in effect at the time
of Change in Control.
(2) An amount equal to 200% of the highest annual bonus that Employee
would be eligible to receive during the fiscal year ending during
which the Change in Control occurs.
(3) For a period of 24 months, participation in medical, life,
disability and similar benefit plans that are offered to similarly
situated employees of the Company immediately prior to the
applicable Change in Control for the Eligible Employee and his
dependents. Such participation may be pursuant to the continuation
coverage rights of Eligible Employees pursuant to Part 6 of Title
I of ERISA ("COBRA") or the Company may provide such benefits
directly through the purchase of insurance or otherwise.
Notwithstanding the foregoing, the period of participation in a
self-funded medical plan pursuant to this paragraph 3 shall not
exceed the maximum period of continuation coverage provided under
COBRA. If benefits are provided pursuant to COBRA continuation
rights, the Company shall pay a cash amount to the Eligible
Employee at the time of severance that is sufficient to cover all
premiums required for such COBRA coverage under the appropriate
benefit plans.
(4) For a period of 24 months, participation in general and executive
fringe benefits offered to similarly situated executive employees
immediately prior to the applicable Change in Control, including,
but not limited to, auto allowance, financial planning, annual
physical examination, and civic and country club dues.
(b) Adjustments to the Amount of Benefit. Notwithstanding anything
herein to the contrary, the amounts due to Employee under Section 2.1
(a) shall be adjusted in accordance with Section 2.2 if any payment
provided to Employee is determined to be subject to the excise tax
described in section 4999 of the Code.
(c) Time for Payment; Interest. The cash Benefits payable made under
this Section 2.1 shall be paid to Employee in a single lump sum within
ten days following the date of termination. The Company's obligation
to pay to Employee any amounts under this Section 2.1 will bear
interest at the lesser of (i) 10% or (ii) the maximum rate allowed by
law until paid by the Company, and all accrued and unpaid interest
will bear interest at the same rate, all of which interest will be
compounded annually.
(d) Troubled Institution Limitation. All Benefit payments hereunder
are subject to the limitations on golden parachute and
indemnification payments set forth in 12 USC 1823(k), the
regulations promulgated thereunder, and other law that prohibits
payment of any portion of Benefits by the Company to Employee by the
Company. To the extent possible, this limitation shall be applied by
reducing only the portion of Benefits that exceed such legal
limitation.
2.2 Benefit Adjustments.
(a) Gross Up Payment. Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment
or distribution by or on behalf of the Company to or for the benefit
of Employee as a result of a "change in control," as defined in
section 280G of the Code, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise,
but determined without regard to any additional payments required
under this Section, (a "Payment") would be subject to the excise tax
imposed by section 4999 of the Code or any interest or penalties are
incurred by Employee with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then Employee shall be
entitled to receive an additional payment (a "Gross-Up Payment") in
an amount such that after payment by Employee of all taxes (including
any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, Employee retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.
(b) Tax Opinion. Subject to the provisions of Section 2.2(c), all
determinations required to be made under this Section 2.2, including
whether and when a Gross-Up Payment is required and the amount of
such Gross-Up Payment and the assumptions to be utilized in arriving
at such determination, shall be made by a nationally recognized
accounting firm or law firm selected by the Company (the "Tax Firm");
provided, however, that the Tax Firm shall not determine that no
Excise Tax is payable by Employee unless it delivers to Employee a
written opinion (the "Tax Opinion") that failure to pay the Excise Tax
and to report the Excise Tax and the payments potentially subject
thereto on or with Employee's applicable federal income tax return
will not result in the imposition of an accuracy-related or other
penalty on Employee. All fees and expenses of the Tax Firm shall be
borne solely by the Company. Within 15 business days of the receipt
of notice from Employee that there has been a Payment, or such earlier
time as is requested by the Company, the Tax Firm shall make all
determinations required under this Section, shall provide to the
Company and Employee a written report setting forth such
determinations, together with detailed supporting calculations, and,
if the Tax Firm determines that no Excise Tax is payable, shall
deliver the Tax Opinion to Employee. Any Gross-Up Payment, as
determined pursuant to this Section, shall be paid by the Company to
Employee within fifteen days of the receipt of the Tax Firm's
determination. Subject to the remainder of this Section 2.2, any
determination by the Tax Firm shall be binding upon the Company and
Employee; provided, however, that Employee shall only be bound to the
extent that the determinations of the Tax Firm hereunder, including
the determinations made in the Tax Opinion, are reasonable and
reasonably supported by applicable law. As a result of the
uncertainty in the application of section 4999 of the Code at the
time of the initial determination by the Tax Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by the
Company should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that it is
ultimately determined in accordance with the procedures set forth in
Section 2.2(c) that Employee is required to make a payment of any
Excise Tax, the Tax Firm shall reasonably determine the amount of the
Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of Employee. In
determining the reasonableness of Tax Firm's determinations
hereunder, and the effect thereof, Employee shall be provided a
reasonable opportunity to review such determinations with Tax Firm
and Employee's tax counsel. Tax Firm's determinations hereunder,
and the Tax Opinion, shall not be deemed reasonable until Employee's
reasonable objections and comments thereto have been satisfactorily
accommodated by Tax Firm.
(c) Notice of IRS Claim. Employee shall notify the Company in writing
of any claims by the Internal Revenue Service that, if successful,
would require the payment of the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but no later
than 30 calendar days after Employee actually receives notice in
writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid;
provided, however, that the failure of Employee to notify the Company
of such claim (or to provide any required information with respect
thereto) shall not affect any rights granted to Employee under this
Section 2.2 except to the extent that the Company is materially
prejudiced in the defense of such claim as a direct result of such
failure. Employee shall not pay such claim prior to the expiration
of the 30-day period following the date on which he gives such notice
to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company
notifies Employee in writing prior to the expiration of such period
that it desires to contest such claim, Employee shall do all of
the following:
(1) give the Company any information reasonably requested by the
Company relating to such claim;
(2) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney selected by the Company and
reasonably acceptable to Employee;
(3) cooperate with the Company in good faith in order effectively to
contest such claim;
(4) if the Company elects not to assume and control the defense of
such claim, permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Employee harmless, on an after-
tax basis, for any Excise Tax or income tax (including interest and penalties
with respect thereto) imposed as a result of such representation and payment
of costs and expenses. Without limiting the foregoing provisions of this
Section 2.2, the Company shall have the right, at its sole option, to assume
the defense of and control all proceedings in connection with such contest, in
which case it may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may either direct Employee to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and Employee agrees to
prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine, provided, however, that if the Company directs
Employee to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to Employee, on an interest-free basis and shall
indemnify and hold Employee harmless, on an after-tax basis, from any Excise
Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income
with respect to such advance; and further provided that any extension of the
statute of limitations relating to payment of taxes for the taxable year of
Employee with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company's right to
assume the defense of and control the contest shall be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder and Employee
shall be entitled to settle or contest, as the case may be, any other issue
raised by the Internal Revenue Service or any other taxing authority.
(d) Right to Tax Refund. If, after the receipt by Employee of an
amount advanced by the Company pursuant to Section 2.2 Employee becomes
entitled to receive any refund with respect to such claim, Employee shall
(subject to the Company's complying with the requirements of Section 2.2(c))
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after
the receipt by Employee of an amount advanced by the Company pursuant to
Section 2.2(c), a determination is made that Employee is not entitled to a
refund with respect to such claim and the Company does not notify Employee in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall, to the extent of
such denial, be forgiven and shall not be required to be repaid and the amount
of forgiven advance shall offset, to the extent thereof, the amount of Gross-
Up Payment required to be paid.
2.3 Termination of Employment. Employee shall only be entitled to the
Benefits described in Section 2.1, as adjusted by Section 2.2, if Employee's
termination of employment is on account of termination by Company without
cause or termination by Employee with cause, which are described as follows:
(a) By Company Without Cause. Termination of employment by the
Company without cause shall occur if the Company provides oral or written
notice to Employee of involuntary termination that is not on account of just
cause. For this purpose, termination for "just cause" will only occur upon
written notice to Employee that employment is involuntarily terminated due to
any of the following:
(1) conviction of Employee for a crime involving fraud, dishonesty or
theft, or of any felony which, in the reasonable judgment of the
Board, materially affects Employee's ability to perform his duties
pursuant to this Agreement;
(2) commission by Employee of an act of fraud, embezzlement, or
material dishonesty against the Company or its affiliates; or
(3) intentional neglect of or material inattention to Employee's
duties, which neglect or inattention remains uncorrected for more
than 30 days following written notice from the Board detailing the
Board's concern.
(b) By Employee With Cause. Termination of employment by Employee with
cause shall occur if Employee terminates employment for any of the following
reasons:
(1) A material adverse alteration in Employee's position,
responsibilities or status from that which was in effect
immediately prior to a Change in Control.
(2) A reduction in Employee's compensation as in effect immediately
prior to the Change in Control, or a substantial reduction in the
benefits provided to Employee prior to the Change in Control.
(3) Relocation of Employee by the Company to a location that is more
than 35 miles from the Employee's current workplace.
(4) The material breach of the Company of any portion of its
employment policies and/or any employment agreement with Employee.
Provided, however, that 180 days after Employee begins performing duties
pursuant to a position that was offered by the Company (or its successor)
following a Change in Control and that would have otherwise resulted in the
occurrence of the events described in this Section 2.3(b), the occurrence of
the events described in this Section 2.3(b) shall be determined by reference
to the position as it was accepted by Employee following the Change in
Control.
ARTICLE III. ADMINISTRATION
Section 3.1. The provisions of this Agreement are intended to provide
severance benefits and protection to Employee. The Administrator has absolute
discretion to interpret the terms of this Agreement and to make all
determinations required in the administration hereof, including making
determinations about eligibility for and the amounts of Benefits. All
decisions of the Administrator are final, binding and conclusive on all
parties.
Section 3.2. Benefits can only be denied or forfeited if Employee does
not satisfy the conditions for receiving payment that are described herein or
if the Company validly amends the Agreement as described in Section 4.4.
Section 3.3. If Employee's claim for Benefits is denied, the
Administrator will furnish written notice of denial to Employee within 90 days
of the date the claim is received, unless special circumstances require an
extension of time for processing the claim. This extension will not exceed 90
days, and Employee must receive written notice stating the grounds for the
extension and the length of the extension within the initial 90-day review
period. If the Administrator does not provide written notice, Employee may
deem the claim denied and seek review according to the appeals procedures set
forth below.
(a) Notice of Denial. The notice of denial to the Claimant shall state:
(1) The specific reasons for the denial.
(2) Specific references to pertinent provisions of the Agreement on
which the denial was based.
(3) A description of any additional material or information needed for
Employee to perfect his claim and an explanation of why the
material or information is needed.
(4) A statement that Employee may request a review upon written
application to the Administrator, review pertinent documents, and
submit issues and comments in writing and that any appeal that
Employee wishes to make of the adverse determination must be in
writing to the Administrator within 60 days after Employee
receives notice of denial of benefits.
(5) The name and address of the Administrator to which Employee may
forward an appeal. The notice may state that failure to appeal the
action to the Administrator in writing within the 60-day period
will render the determination final, binding and conclusive.
(b) Appeals Procedure. If Employee appeals to the Administrator,
Employee or his authorized representative may submit in writing whatever
issues and comments he believes to be pertinent. The Administrator shall
reexamine all facts related to the appeal and make a final determination of
whether the denial of benefits is justified under the circumstances. The
Administrator shall advise Employee in writing of:
(1) The Administrator's decision on appeal.
(2) The specific reasons for the decision.
(3) The specific provisions of the Agreement on which the decision is
based.
Notice of the Administrator's decision shall be given within 60 days of the
Claimant's written request for review, unless additional time is required due
to special circumstances. In no event shall the Administrator render a
decision on an appeal later than 120 days after receiving a request for a
review.
ARTICLE IV. GENERAL TERMS
Section 4.1 Notices. All notices and other communications hereunder
will be in writing or by written telecommunication, and will be deemed to have
been duly given if delivered personally or if sent by overnight courier or by
written telecommunication, to the relevant address set forth below, or to such
other address as the recipient of such notice or communication will have
specified to the other party hereto in accordance with this Section:
If to the Company to:
BancorpSouth, Inc.
Personnel Director
P. O. Box 789
Tupelo, MS 38802
If to Employee, to:
Harry Baxter
BancorpSouth, Inc.
P. O. Box 789
Tupelo, MS 38802
Section 4.2 Withholding; No Offset. All payments required to be made by
the Company under this Agreement to Employee will be subject to the
withholding of such amounts, if any, relating to federal, state and local
taxes as may be required by law. No payment under this Agreement will be
subject to offset or reduction attributable to any amount Employee may owe to
the Company or any other person, except as required by law.
Section 4.3 Entire Agreement; Modification. This Agreement and its
Attachments constitute the complete and entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior agreements
between the parties. The parties have executed this Agreement based upon the
express terms and provisions set forth herein and have not relied on any
communications or representations, oral or written, which are not set forth in
this Agreement.
Section 4.4 Amendment. This Agreement may not be modified by an
subsequent agreement unless the modifying agreement: (i) is in writing; (ii)
contains an express provision referencing this Agreement; (iii) is signed and
executed on behalf of the Company by an officer of the Company other than
Employee; and (iv) is signed by Employee.
Section 4.5 Choice of Law. This Agreement and the performance hereof
will be construed and governed in accordance with the laws of the State of
Mississippi, without regard to its choice of law principles, except to the
extent that federal law controls or preempts state law.
Section 4.6 Successors and Assigns. The obligations, duties and
responsibilities of Employee under this Agreement are personal and shall not
be assignable. In the event of Employee's death or disability, this Agreement
shall be enforceable by Employee's estate, executors or legal representatives.
The obligations, duties and responsibilities of Company hereunder shall be
binding upon any successor of the Company (whether through a transaction
described as a Change in Control or otherwise).
Section 4.7 Waiver of Provisions. Any waiver of any terms and
conditions hereof must be in writing and signed by the parties hereto. The
waiver of any of the terms and conditions of this Agreement shall not be
construed as a waiver of any subsequent breach of the same or any other terms
and conditions hereof.
Section 4.8 Severability. The provisions of this Agreement and the
amount of Benefits payable hereunder shall be deemed severable, and if any
portion shall be held invalid, illegal or enforceable for any reason, the
remainder of this Agreement and/or Benefit payment shall be effective and
binding upon the parties.
Section 4.9 Counterparts. This Agreement may be executed in multiple
counterparts, each of which will be deemed an original, and all of which
together will constitute one and the same instrument.
ARTICLE V. ERISA RIGHTS AND INFORMATION
The parties acknowledge that the following information is provided to Employee
hereunder in connection with Employee's rights as a welfare plan participant
under ERISA. The terms "you" and "yours" refer to Employee.
As a participant in a welfare plan maintained by the Company, you are entitled
to certain rights and protections under ERISA. ERISA provides that all plan
participants shall be entitled to:
Examine, without charge, at the Administrator's office and at other
specified locations, all plan documents, including insurance contracts, and
copies of all documents filed by the plan with the U.S. Department of
Labor, such as detailed annual reports and plan descriptions.
Obtain copies of all plan documents and other plan information upon written
request to the Administrator. The Administrator may make a reasonable
charge for the copies.
Receive a summary of the plan's annual financial report. The Administrator
is required by law to furnish each participant with a copy of this summary
annual report.
In addition to creating rights for plan participants, ERISA imposes duties
upon the people who are responsible for the operation of the employee benefit
plan. The people who operate your plan, called "fiduciaries" of the plan, have
a duty to do so prudently and in the interest of you and other plan
participants and beneficiaries. No one, including the Company or any other
person, may fire you or otherwise discriminate against you in any way to
prevent you from obtaining a benefit under this plan or from exercising your
rights under ERISA.
If a claim for a Benefit is denied in whole or in part, you must receive a
written explanation of the reason for the denial. You have the right to have
the Administrator review and reconsider your claim.
Under ERISA, there are steps you can take to enforce the above rights. For
instance, if you request materials from the plan and do not receive them
within 30 days, you may file suit in a federal court. In such a case, the
court may require the Administrator to provide the materials and pay you up to
$100 a day until you receive the materials, unless the materials were not sent
because of reasons beyond the control of the Administrator.
If you have a claim for benefits that is denied or ignored, in whole or in
part, you may file suit in a state or federal court. If it should happen that
plan fiduciaries misuse the plan's money or if you are discriminated against
for asserting your rights, you may seek assistance from the U.S. Department of
Labor or you may file suit in a federal court. The court will decide who
should pay court costs and fees. If you lose, the court may order you to pay
these costs and fees, for example, if it finds your claim is frivolous.
If you have any questions about your plan, you should contact the
Administrator. If you have any questions about this statement or about your
rights under ERISA, you should contact the nearest Area Office of the U.S.
Labor-Management Services Administration, Department of Labor.
Summary of ERISA Information
Name of Plan: BancorpSouth, Inc. Change in Control Plan
Name and Address of the Company:
BancorpSouth, Inc.
One Mississippi Plaza
Tupelo, MS 38801
Who Pays for the Plan: The cost of the plan is paid entirely by the Company.
The Company's Employer Identification No.: 64-0659571
Plan Number: 520
Plan Year: January 1 to December 31
Plan Administrator, Name, Address and Telephone No.
Administrator of the BancorpSouth, Inc. Change in Control plan
c/o Cathy Freeman
BancorpSouth, Inc.
One Mississippi Plaza
Tupelo, MS 38801
(601) 680-2084
Agent for Service of Legal Process on the Plan: Chief executive officer or
Administrator.
Benefits are paid out of the general assets of the Company. The Company may,
in its discretion establish a "grantor trust" to fund the payment of Benefits.
Otherwise, this plan does not give you any rights to any particular assets of
the Company. Cash amounts paid under a severance plan are generally considered
taxable income to the recipient.
IN WITNESS WHEREOF, Company and Employee have caused this Agreement to
be executed on the day and year indicated below to be effective on the day and
year first written above.
Employee
- ---------------------------------- ------------------------------------
Harry Baxter Date
COMPANY:
BancorpSouth, Inc.
By: ------------------------------ ------------------------------------
(Date)
Its: _____________________________