SEVERANCE PROTECTION AGREEMENT
THIS SEVERANCE PROTECTION AGREEMENT is entered into as
of the _______ day of_____________, 1995 by and between CBT
CORPORATION, a Kentucky corporation (the "Company"), and
______________________ ("Executive").
WHEREAS, the Board recognizes the possibility of a
Change in Control exists and that the threat or occurrence of a
Change in Control can result in significant distractions to its
key management personnel because of the uncertainties inherent in
that situation;
WHEREAS, the Board has determined that it is essential
and in the best interest of the Company and its stockholders to
retain the services of Executive in the event of a threat or
occurrence of a Change in Control and to ensure Executive's
continued dedication and efforts in such event without undue
concern for his personal financial and employment security; and
WHEREAS, to induce Executive to remain in the employ of
the Company, particularly in the event of a threat or the occur
rence of a Change in Control, the Company desires to enter into
this Agreement with Executive to provide Executive with certain
benefits in the event Executive's employment is terminated as a
result of, or in connection with, a Change in Control.
NOW, THEREFORE, in consideration of the respective
agreements of the parties contained herein, the Company and
Executive agrees as follows:
1. TERM OF AGREEMENT. This Agreement shall commence on
__________, 1995 and will continue in effect until the expiration
of two (2) years following a Change in Control.
2. DEFINITIONS. The following terms used in this
Agreement shall have the following meanings unless otherwise
expressly provided herein.
2.1 Agreement. The word "Agreement" means this
Severance Protection Agreement entered into between the Company
and Executive, as set forth herein.
2.2 Accrued Compensation. The term "Accrued Compensa
tion" means Executive's compensation earned or accrued through
27
the Termination Date but not paid as of the Termination Date,
including base salary in effect as of the Termination Date,
vacation pay, any incentive compensation which has been awarded
or allocated to Executive for a fiscal year or other measuring
period preceding the Termination Date but has not yet been paid,
and all other amounts to which Executive is entitled under any
compensation plan of Company or Successor at the time such
payments are due.
2.3 Base Amount. The term "Base Amount" means the
greater of Executive's annual base compensation, determined
without regard to any salary reduction elections made by
Executive, in effect on: (a) the date on which a Change in
Control occurs; or (b) January 1 of the year in which the
Termination Date occurs.
2.4 Beneficial Ownership. The term "Beneficial
Ownership" means beneficial ownership within the meaning of Rule
13d-3 promulgated under the Exchange Act.
2.5 Board. The word "Board" means the Company's Board
of Directors.
2.6 Cause. The word "Cause" means the termination of
Executive's employment with the Company or a Successor for the
following reasons: (a) Executive is convicted of a felony; or (b)
Executive engages in conduct in connection with his employment
which constitutes gross negligence or willful misconduct and
which results in economic harm to the Company or Successor.
Notwithstanding the foregoing, Executive shall not be deemed to
have been terminated for Cause unless and until there is
delivered to Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters (3/4) of the
entire membership of the Board at a meeting of the Board called
and held for the purpose (after reasonable notice to Executive
and an opportunity for Executive and his counsel to be heard
before the Board) of finding that, in the good faith opinion of
the Board, Executive is guilty of the conduct set forth above and
specifying the particulars thereof in detail.
2.7 Change in Control. The term "Change in Control"
means any of the following events:
(a) 20% Stock Acquisition. Acquisition (other than
directly from the Company) of Voting Securities by any
Person immediately after which such Person has Beneficial
Ownership of twenty percent (20%) or more of the combined
voting power of the Company's then outstanding Voting Securi
ties; provided, however, that in determining whether a
Change in Control has occurred, Voting Securities which are
acquired in a Non-Control Acquisition shall not constitute
an acquisition which would cause a Change in Control.
(b) Change in Board Membership. The members of the
Incumbent Board cease for any reason to constitute at least
a majority of the members of the Board; provided, however,
that if the election or nomination for election by the
Company's stockholders of any new director was approved by a
vote of at least two-thirds (2/3) of the Incumbent Board,
such new director shall be considered as a member of the
Incumbent Board; provided further that no individual shall
be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an
actual or threatened election contest (as described in Rule
14a-11 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, including by reason
of any agreement intended to avoid or settle any election
contest or proxy contest.
(c) Merger, Consolidation, Reorganization. Approval
of any of the following events by the Company's stockhold
ers:
(1) A merger, consolidation, reorganization,
combination or share exchange involving the Company,
unless:
(i) the Company's stockholders immediately
before the merger, consolidation, reorganization,
combination or share exchange own, directly or
indirectly, immediately following the merger,
consolidation, reorganization, combination or
share exchange, at least fifty percent (50%) of
the combined voting power of the outstanding
voting securities of the Surviving Corporation, or
the ultimate parent of the Surviving Corporation,
in substantially the same proportion as their
ownership of the Voting Securities immediately
before the merger, consolidation, reorganization,
combination or share exchange; and
(ii) the individuals who were members of the
Incumbent Board immediately before the execution
of the agreement providing for the merger, consol
idation, reorganization, combination or share
exchange constitute at least a majority of the
members of the Board of Directors of the Surviving
Corporation or the ultimate parent of the
Surviving Corporation; and
(iii) no Person (other than the Company,
a Subsidiary, an employee benefit plan maintained
by the Company (or a trust forming a part there
of), the Surviving Corporation or a subsidiary of
the Surviving Corporation, or any Person who,
immediately before the merger, consolidation,
reorganization, combination or share exchange had
Beneficial Ownership of twenty percent (20%) or
more of the then outstanding Voting Securities)
has Beneficial Ownership of twenty (20%) or more
of the combined voting power of the Surviving
Corporation's then outstanding voting securities.
(2) An agreement for the sale or other
disposition of all or substantially all of the assets
of the Company to any Person (other than a transfer to
a Subsidiary).
Notwithstanding the foregoing:
[i] a Change in Control shall not be deemed to
occur solely because any Person acquired Beneficial
Ownership of more than the permitted amount of the
outstanding Voting Securities as a result of the
acquisition of Voting Securities by the Company which,
by reducing the number of Voting Securities
outstanding, increases the proportional number of
shares Beneficially Owned by such Person, provided that
if a Change in Control would occur (but for the
operation of this sentence) as a result of the
acquisition of Voting Securities by the Company, and
after such share acquisition by the Company, such
Person becomes the Beneficial Owner of any additional
Voting Securities which increases the percentage of the
then outstanding Voting Securities Beneficially Owned
by such Person, then a Change in Control shall occur;
and
[ii] no Change in Control shall be deemed to have
occurred for purposes of this Agreement by virtue of
any transaction which results in Executive, or a group
of persons which includes Executive (as the term
"group" is used and described in Rule 13d-5(b)
promulgated under the Exchange Act), acquiring directly
or indirectly more than twenty percent (20%) of the
Voting Securities.
2.8 Code. The word "Code" means the Internal Revenue
Code of 1986, as amended.
2.9 Company. The word "Company" means CBT
Corporation, a Kentucky corporation, with its principal place of
business at 333 Broadway, Paducah, Kentucky 42001.
2.10 Disability. The word "Disability" means a
physical or mental infirmity that results in Executive's absence
from his duties with the Company or Successor for a period of one
hundred eighty (180) consecutive days and Executive has not
returned to his full-time employment before the Termination Date.
2.11 Exchange Act. The term "Exchange Act" means the
Securities Exchange Act of 1934, as amended.
2.12 Excise Tax. The term "Excise Tax" means the
excise tax imposed by Code Section 4999 on excess parachute
payments.
2.13 Executive. The word "Executive" means
____________________,residing at________________________________.
2.14 Good Reason. The term "Good Reason" means the
occurrence after a Change in Control of any of the following
events or conditions:
(a) a significant adverse change in Executive's duties
or responsibilities from those in effect at any time within
ninety (90) days preceding the date of a Change in Control
or a change in Executive's reporting responsibilities or
offices as in effect immediately before a Change in Control
(it being understood that the failure of Executive to have
duties or responsibilities after the Change in Control
comparable to those in effect immediately before the Change
in Control shall constitute a significant adverse change in
duties or responsibilities);
(b) a material reduction in Executive's base salary or
the failure by the Company or Successor to increase Execu
tive's base salary each year after a Change in Control by an
amount which at least equals, on a percentage basis, the
mean average percentage increase in base salary for all
officers of the Company during the two (2) full calendar
years immediately preceding a Change in Control;
(c) the Company's or Successor's failure to provide
employee benefits to Executive which are comparable to those
provided to similarly situated employees of the Company or
Successor;
(d) the relocation of Executive's office at which he
is to perform his duties for the Company or Successor to a
location more than fifty (50) miles from the location at
which Executive performed his duties immediately before the
Change in Control, except for required travel on the Com
pany's or Successor's business to an extent substantially
consistent with Executive's business travel obligations
before the Change in Control, or, in the event Executive
consents to any such relocation, the failure by the Company
or Successor to pay (or reimburse Executive for) all
reasonable moving expenses incurred by Executive relating to
a change of his principal residence in connection with such
relocation;
(e) the taking of any action by the Company or Succes
sor not required by law which would:
(1) adversely affect Executive's participation in
or materially reduce Executive's benefits under any
benefit, compensation or bonus plan or arrangement in
which Executive is participating immediately preceding
the Change in Control; or
(2) deprive Executive of any material fringe
benefit enjoyed by Executive at the time of the Change
in Control;
(f) the failure by the Company or Successor to provide
Executive with the number of paid vacation days, holidays
and personal days to which Executive was entitled in accor
dance with the Company's normal leave policy in effect
immediately preceding a Change in Control;
(g) the failure of the Company to obtain the
assumption of and agreement to perform this Agreement by any
Successor as contemplated in Section 6; or
(h) any purported termination of Executive's
employment by the Company or Successor which is not effected
pursuant to a Notice of Termination satisfying the
requirements of Section 2.18 and Section 4.
2.15 Incumbent Board. The term "Incumbent Board" means
the individuals who are members of the Board as of the date of
this Agreement.
2.16 Non-Control Acquisition. The term "Non-Control
Acquisition" means an acquisition by: [i] an employee benefit
plan (or a trust forming a part thereof) maintained by the
Company or a Subsidiary; [ii] the Company or a Subsidiary, or [3]
any Person in connection with a Non-Control Transaction.
2.17 Non-Control Transaction. The term "Non-Control
Transaction" means a transaction described in clauses (i) through
(iii) of Section 2.7(c)(1).
2.18 Notice of Termination. The term "Notice of
Termination" means, following a Change in Control, a written
notice of termination of Executive's employment which indicates
the specific termination provision in this Agreement, if any,
relied upon and which sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of
Executive's employment under the provision so indicated.
2.19 Person. The word "Person" means a person as such
term is used for purposes of Section 13(d) or 14(d) of the
Exchange Act.
2.20 Subsidiary. The word "Subsidiary" means any
corporation or other Person of which a majority of its voting
power or its equity securities or equity interest is owned
directly or indirectly by the Company.
2.21 Successor. The word "Successor" means a Surviving
Corporation, or a corporation or other entity acquiring all or
substantially all the assets and business of the Company whether
by operation of law or otherwise.
2.22 Surviving Corporation. The term "Surviving
Corporation" means the corporation resulting from a merger,
consolidation, reorganization, combination or exchange of shares
involving the Company.
2.23 Termination Date. The term "Termination Date"
means: (a) in the case of Executive's death, his date of death;
(b) in the case of Executive's termination of employment for Good
Reason, the last day of Executive's employment as specified in
the Notice of Termination; and (c) in all other cases, thirty
(30) days after: [i] the date Notice of Termination is delivered
to Executive, or [ii] Executive's resignation for reasons other
than Good Reason.
2.24 Voting Securities. The term "Voting Securities"
means the Company's voting securities.
3. TERMINATION OF EMPLOYMENT.
3.1 Severance Benefits. If, during the term of this
Agreement, Executive's employment with the Company and/or its
Subsidiaries or a Successor is terminated within twenty-four (24)
months following a Change in Control, Executive shall be entitled
to the following compensation and benefits:
(a) If Executive's employment is terminated by the
Company or a Successor for Cause or Disability, or by reason
of Executive's death or, if Executive's employment is termi
nated by Executive other than for Good Reason, the Company
or Successor shall pay to Executive his Accrued Compensa
tion.
(b) If Executive's employment is terminated for any
reason (including, without limitation, by Executive for Good
Reason) other than as specified in Section 3.1(a), Executive
shall be entitled to the following:
(1) the Company or Successor shall pay to Execu
tive all Accrued Compensation;
(2) the Company or Successor shall pay to Execu
tive a severance payment equal to two (2) times Execu
tive's Base Amount;
(3) immediate vesting of all outstanding options
under any stock option plan of the Company, its Subsid
iaries or a Successor;
(4) the Company or Successor shall maintain in
full force and effect for the benefit of Executive and
Executive's dependents and beneficiaries, at the Comp-
any's or Successor's expense (less the amount Executive
or his dependent or beneficiary would have paid for
such coverage had Executive's employment not terminat
ed) all medical, hospitalization, vision and/or dental
plans in which Executive and/or Executive's dependents
and beneficiaries participated immediately before the
Termination Date (provided that continued participation
is possible under the general terms and provisions of
such plans), until the earlier of [i] the expiration of
two (2) years following the Termination Date, or [ii]
the effective date of Executive's coverage under a
group medical, vision and dental benefit plan of a new
employer (which is comparable to coverage under the
Company's or Successor's medical, vision or dental
plan). If participation in any such plan is barred,
the Company or Successor shall arrange at its own ex
pense (less the amount Executive or Executive's
dependent or beneficiary would have paid for such
coverage had Executive's employment not terminated) to
provide Executive and his dependents and beneficiaries
with medical, vision and dental benefits substantially
similar to the benefits which he or she was entitled to
receive under such plans. Said coverage shall count
against any period of continuation coverage to which
Executive and his dependents and beneficiaries may be
entitled under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended;
(5) the Company or Successor shall pay to Execu
tive an award under the Company's or Successor's annual
cash incentive compensation plan equal to the amount
Executive would have received under such plan in the
calendar year in which the Termination Date falls
prorated to the Termination Date;
(6) the Company or Successor shall reimburse
Executive for reasonable moving expenses, except to the
extent such expenses are paid by Executive's new
employer;
(7) the Company or Successor shall pay to Execu
tive reasonable attorney fees and other expenses in
curred by Executive to enforce the provisions of this
Agreement or in connection with any tax audit or
proceeding to the extent attributable to the
application of Excise Tax applicable to any payment or
transfer under this Agreement; and
(8) the Company or Successor shall pay to Execu
tive all benefits payable to Executive under the Com
pany's or Successor's money purchase pension plan and
401(k) plan and any other plan or agreement relating to
retirement benefits.
3.2 Time and Form of Payment.
(a) The amounts provided for in Sections 3.1(a) and
3.1(b)(1) and (2) shall be paid: [i] in a single sum cash
payment no later than fifteen (15) days after Executive's
Termination Date; or [ii] at Executive's option made
pursuant to a written election delivered to the Company
before the Change in Control, in three (3) substantially
equal annual payments commencing no later than fifteen (15)
days after Executive's Termination Date. Should Executive
elect to receive payments hereunder in installments, the
amount of the Company's outstanding obligation to Executive
shall be credited with interest on a monthly basis at a rate
equal to the then current rate for one-year insured
certificates of deposit at Citizens Bank and Trust Company,
Paducah, Kentucky.
(b) Reimbursement of moving expenses as provided in
Section 3.1(b)(6) and reimbursement of legal fees and
expenses as provided in Section 3.1(b)(7) shall be made on a
regular and periodic basis by the Company or Successor upon
Execu-tive's presentation to the Company or Successor of a
statement of such fees and expenses.
(c) The amounts provided for in Sections 3.1(b)(5) and
(8) shall be paid as soon as reasonably practicable
following the calculation thereof.
3.3 Mitigation Not Required. Executive is not
required to mitigate the amount of any payment provided for in
this Agreement by seeking other employment or otherwise and no
payment shall be reduced by compensation or benefits provided to
Executive in any subsequent employment except as provided in
Section 3.1(b)(4).
3.4 Payments in Lieu of Other Compensation. The
payments and benefits provided for in this Section 3 shall be in
lieu of any other severance or termination pay to which Executive
may be entitled.
4. NOTICE OF TERMINATION. Following a Change in Control,
(a) any termination of Executive's employment by the Company or
Successor hereof shall be communicated by Notice of Termination
to Executive and (b) any termination of Executive's employment by
Executive for Good Reason shall be communicated by Notice of
Termination to the Company or Successor, which Notice of Termina
tion shall specify a Termination Date which shall not be more
than thirty (30) days after the delivery of Notice of
Termination.
5. TERMINATION FOR GOOD REASON. Executive's continued
employment shall not constitute consent to, or a waiver of rights
with respect to, any circumstance constituting Good Reason.
Executive's termination of employment for Good Reason under this
Agreement shall not be considered termination for "cause" under
the Company's or Successor's stock option plans or agreements.
6. SUCCESSORS. This Agreement is binding upon and shall
inure to the benefit of the Company and its Successors. The
Company shall require any Successors to expressly assume and
agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if
no such succession or assignment had taken place.
7. NONTRANSFERABILITY. This Agreement, and the rights or
interests hereunder, are not assignable or transferable by Execu
tive, or Executive's dependents, beneficiaries or legal repre
sentatives, except by will or by the laws of descent and distribu
tion. This Agreement shall inure to the benefit of and be
enforceable by Executive and Executive's duly appointed legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If Executive dies while
amounts are still payable to Executive under this Agreement if
Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to Executive's devisee, legatee, or other
designee, or, if there be no such designee, to Executive's
estate.
8. NOTICES. Notices and all other communications provided
for in the Agreement (including the Notice of Termination) shall
be in writing and shall be deemed to have been duly given when
personally delivered or sent by certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses
last given by each party to the other, provided that all notices
to the Company or Successor shall be directed to the attention of
the Board of Directors with a copy to the Secretary of the
Company or Successor. All notices and communications shall be
deemed to have been received on the date hand-delivered or on the
third business day after depositing in the United States mail,
except that notice of change of address shall be effective only
upon receipt.
9. MODIFICATION; WAIVER; TERMINATION. No provision of
this Agreement may be modified, waived or discharged unless the
waiver, modification or discharge is agreed to in writing and
signed by Executive and the Company or Successor. No waiver by
Executive or the Company or Successor at any time of any breach
by the other party, or compliance with any condition or provision
of this Agreement to be performed by the other party, shall be
deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. Neither the
termination of this Agreement nor the expiration of the term of
this Agreement shall affect the obligations of the Company or
Successor under Section 3 of this Agreement, which shall survive
any such termination.
10. SEVERABILITY. The provisions of this Agreement shall
be deemed severable and the invalidity or unenforceability of any
provision shall not affect the validity or enforceability of
other provisions, which shall remain in full force and effect.
11. ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement between the Company and Executive and supersedes
all prior agreements, if any, understandings and arrangements,
oral or written, between the parties with respect to the subject
matter of this Agreement; provided, however, that if Executive
terminates his employment with the Company or Successor following
a Change in Control for other than Good Reason, this Agreement
shall not be deemed to modify or supersede in any manner any
rights which Executive may have under any existing severance or
other employee benefit plan or program of the Company or
Successor.
12. GOVERNING LAW. This Agreement shall be governed by and
be construed and enforced in accordance with the laws of the
Commonwealth of Kentucky without giving effect to Kentucky's
conflict of laws principles.
IN WITNESS WHEREOF, the Company has caused this
Agreement to be executed by its duly authorized officer and
Executive has executed this Agreement as of the date and year
first above written.
CBT CORPORATION
By: __________________________
Title: __________________________
ATTEST:
___________________________
Secretary
"EXECUTIVE"
_________________________