EXHIBIT 10 (v)
SEVERANCE AGREEMENT
This Agreement ("Agreement"), effective as of this 24th day of October,
2000, by and among Summit Bancshares, Inc. a Texas corporation (the "Company"),
Summit Community Bank (the "Bank"), and Philip E. Norwood, a key employee and
officer of the Company and the Bank (the "Executive"), provides as follows:
WHEREAS, the Company and the Bank wish to provide certain severance
benefits to Executive in the event Executive's employment is terminated; and
WHEREAS, in consideration for Executive's execution of this Agreement, the
Bank and/or the Company have agreed to amend the Restated Management Security
Plan of Summit Bancshares, Inc. (Philip Norwood and Jeffrey Harp) by adoption of
the First Amendment to Restated Management Security Plan of Summit Bancshares,
Inc. (Philip Norwood and Jeffrey Harp) Applicable to Philip Norwood; and
WHEREAS, the Executive, the Company and the Bank (collectively referred to
as the "Parties") understand and agree to the terms and provisions of this
Agreement and desire and intend to be bound by such terms and provisions.
NOW, THEREFORE, the Parties mutually covenant and agree as follows:
ARTICLE 1. DEFINITIONS
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1.1 "Beneficiary" shall mean the person(s) described in Article 5 of this
Agreement.
1.2 "Board" shall mean the Board of Directors of the Company.
1.3 "Cause" when used herein concerning the termination of Executive's
employment by the Company or the Bank, shall mean:
(a) any act or omission by Executive constituting fraud, embezzlement
or misappropriation of funds under the laws of the State of Texas or
the United States of America;
(b) conviction of, or a plea of nolo contendere by, Executive to a
felony;
(c) the willful or reckless failure by Executive to adhere to the
Bank's or the Company's written policies, or the willful or reckless
engaging by Executive in misconduct which causes, or is most likely to
cause, a material monetary injury or other material harm to the Bank
or the Company; or
(d) gross negligence in the performance by Executive of the duties in
his written position description with the Bank or the Company (but
only after
receiving written notice thereof and being given a reasonable period,
of not less than sixty (60) calendar days, to cure said performance by
taking such reasonable corrective action as shall be reasonably within
his power during the cure period);
provided, however, as a condition precedent to the termination of
Executive's employment under (c) or (d) of this Section 1.3, there shall
have been delivered to Executive a copy of a resolution duly adopted at a
meeting of the Board by the affirmative vote of not less than three-
quarters (:) of the Board (excluding Executive and Philip E. Norwood),
that, in the good faith opinion of the Board, there is factual evidence
that Executive committed such conduct as set forth in the referenced
subparagraphs above. Provided, however, that the Board shall deliver to
the Executive the factual evidence on which it based its opinion and that
not later than sixty (60) calendar days thereafter, the Board shall provide
Executive with counsel and an opportunity to reasonably defend himself
against such claims and the Board agrees to hear and consider in good faith
Executive's defense. As of the effective date of this Agreement, there is
no cause known to the Board, to issue a resolution as provided in this
Section 1.3.
1.4 "Change of Control" shall mean:
(a) a change in the ownership of the capital stock of the Bank or the
Company where a corporation, person, or group acting in concert,
(other than the Bank or the Company, or any savings, pension, or other
benefit plan for the benefit of employees of the Company, the Bank or
subsidiaries thereof) (a "Person") as described in Section 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
holds or acquires, directly or indirectly, beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act)
a number of shares of capital stock of the Bank or the Company which
constitutes fifty-one percent (51%) or more of the combined voting
power of the Bank's or the Company's then outstanding capital stock
then entitled to vote generally in the election of directors;
(b) the persons who were members of the Board or the Board of
Directors of the Bank immediately prior to a tender offer, exchange
offer, contested election, or any combination of the foregoing, cease
to constitute a majority of the Board or the Board of Directors of the
Bank;
(c) the effective date of a merger, consolidation, or reorganization
plan that is adopted by the Board or the Board of Directors of the
Bank involving the Bank or the Company in which the Bank or the
Company is not the surviving entity, or a sale of all or substantially
all of the assets of the Bank or the Company. For purposes of this
Agreement, a sale of all or substantially all of the assets of the
Bank or the Company shall be deemed to occur if any Person acquires
(or during the consecutive three hundred sixty-five (365) calendar day
period ending on the date of the most recent acquisition by such
Person, has acquired) gross assets of the Bank or the Company that
have an aggregate fair market value equal to fifty-
one percent (51%) of the fair market value of all of the gross assets
of the Bank or the Company immediately prior to such acquisition or
acquisitions;
(d) a tender offer or exchange offer is made by any Person which is
successfully completed and which results in such Person beneficially
owning (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) either fifty-one percent (51%) or more of the Bank's or
the Company's outstanding shares of capital stock or shares of capital
stock having fifty-one percent (51%) or more of the combined voting
power of the Bank's or the Company's then outstanding capital stock
(other than an offer made by the Bank or the Company), and sufficient
shares are acquired under the offer to cause such Person to own fifty-
one percent (51%) or more of the voting power; or
(e) any other transactions or series of related transactions occurring
which have substantially the same effect as the transactions specified
in any of the preceding clauses of this Section 1.4;
provided, however, that a shareholder may make the following transfers and
such transfers shall be deemed not to be a Change of Control:
(i) to any trust described section 1361(c)(2) of the Internal Revenue
Code of 1986, as amended ("Code") that is created solely for the
benefit of any shareholder or any spouse of or any lineal descendant
of any shareholder;
(ii) to any individual by bona fide gift;
(iii) to any spouse or former spouse pursuant to the terms of a
decree of divorce;
(iv) to any officer or employee of the Bank or the Company pursuant
to any incentive stock option plan established by the shareholders; or
(v) to any family member.
1.5 "Compensation" means the Executive's base salary or base rate of pay
excluding any extraordinary or premium pay such as bonuses, commissions,
incentive payments, benefits or car allowances.
1.6 "Constructive Termination" shall mean:
(a) termination of employment for any reason other than death or
disability, on or after ninety (90) calendar days following a Change
in Control, but prior to one hundred and eighty (180) calendar days
following such Change in Control;
(b) termination of employment for any reason other than death or
disability, at anytime after two hundred (200) calendar days following
the execution of this
Agreement, but only if a definitive agreement which would result in a
Change in Control has not yet been signed;
(c) the demotion or reduction in title or rank of Executive, or the
assignment to Executive duties that are materially inconsistent with
his current positions, duties, responsibilities and status with the
Bank or any removal of Executive from, or any failures to re-elect
Executive to, any of such positions, except for such demotions,
reductions, assignments, removals, or failures that occur in
connection with the Executive's termination of employment for Cause,
as a result of the Executive's disability or death, or with the
Executive's prior consent;
(d) the reduction of Executive's Compensation without the prior
written consent of the Executive, which is not remedied within thirty
(30) calendar days after receipt by the Bank of written notice from
Executive of such reduction;
(e) the Bank or the Company shall relocate its principal offices or
require Executive to have as his principal location of work any
location which is in excess of thirty (30) miles from the current
location of the Bank or the Company or to travel away from his office
in the course of discharging his responsibilities or duties hereunder
more than ten (10) consecutive calendar days or an aggregate of more
than thirty (30) calendar days in any consecutive three hundred sixty-
five (365) calendar day period without the Executive's prior written
consent; or
(f) the failure by the Company or the Bank to require any Person
effecting a Change of Control, by agreement in form and substance
satisfactory to Executive, expressly to assume and agree to cause its
Successors to perform this Agreement in the same manner and to the
same extent that the Bank or the Company would be required to perform
it if no such succession had taken place;
1.7 "Triggering Termination" shall mean the termination of Executive's
employment by the Bank or the Company, including Executive's Constructive
Termination of employment with the Bank or the Company, for any reason
other than a termination for Cause.
ARTICLE 2. SPECIAL TERMINATION BENEFITS
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2.1 In the event of a Triggering Termination, the Bank or the Company shall
continue to pay Executive, for a consecutive seven hundred thirty (730)
calendar day period, his regularly scheduled Compensation, pursuant to the
Bank's and/or the Company's regular payroll practice, less withholding
required to be paid or withheld in accordance with Federal, State or local
law or regulation.
2.2 In the event of a Triggering Termination, the Executive, his spouse (on the
date of the Executive's Triggering Termination) and the Executive's
dependent children shall, continue to participate, for the Restricted
Period as defined in Section 8.1, in all health plans or arrangements of
the Bank or the Company in which he, his spouse or his dependent children
were participating in immediately prior to the date of his Triggering
Termination and on the same terms thereunder, as if he continued to be an
employee of the Bank or the Company, to the extent that participation in
any one or more of such plans or arrangements is possible without
jeopardizing the respective plan's qualified status under the applicable
rules of the Code; provided, however, that if the Executive obtains
employment with another employer during the Restricted Period, coverage
shall be provided under this paragraph only to the extent that this
coverage exceeds the coverage of any substantially similar plans provided
by his new employer and that the Executive, his spouse, and his dependent
children shall receive continued health, dental and other coverage, at his
own expense, beginning at the end of the Restricted Period, as required by
section 4980B of the Code (or any successor provisions), but on the basis
that the last date for which coverage is provided under this paragraph
shall be the first day of his period of continuation coverage under section
4980B of the Code.
2.3 In the event of a Triggering Termination, the Bank or the Company will
transfer title of the Bank or the Company provided automobile to Executive
on the date of such Triggering Termination.
2.4 In the event of a Triggering Termination, the Company or the Bank shall
continue to pay, for the Restricted Period, all of Executive's club dues,
for such of the Executive's clubs paid for by the Company and/or the Bank
and participated in by the Executive, immediately prior to his Triggering
Termination.
2.5 If Executive voluntarily resigns or severs his employment with the Bank or
the Company for any reason, including death or disability, other than due
to a Constructive Termination, or is terminated by the Bank or the Company
for Cause, then the Executive will not be entitled to any benefits under
this Agreement.
ARTICLE 3. CONFIDENTIALITY
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3.1 The Bank and the Company have provided and/or will provide the Executive
with access to confidential, proprietary, and highly sensitive information
relating to the business of the Company and the Bank which is a competitive
asset of the Company and/or the Bank, which may include, without
limitation, information pertaining to: (a) the identities of customers with
which or whom the Company and/or the Bank do or seek to do business, as
well as the point of contact persons and decision-makers at these
customers; (b) the identities of the vendors and suppliers with which or
whom the Company and/or the Bank do or seek to do business, as well as the
point of contact persons and decision-makers at these vendors and
suppliers; (c) the volume of business and the nature of the business
relationship between the Company and/or the Bank and their customers,
vendors and suppliers; (d) the particular product, service, and pricing
preferences of existing and potential customers; (e) the financing methods
employed by and arrangements between the Company and/or the Bank and their
existing or potential customers, vendors, or suppliers; (f) the pricing of
the Company's and/or the Bank's products and services, including any
deviations from its standard pricing for particular customers, vendors, or
suppliers; (g) the Company's and/or the Bank's costs, expenses, and
overhead associated with the creation, production, delivery and maintenance
of its products and services; (h)
the Company's and/or the Bank's business plans and strategy, including
territory assignments and rearrangements, sales and administrative staff
expansions, marketing and sales plans and strategy, proposed adjustments in
compensation of sales personnel, revenue, expense and profit projections,
and industry analyses; (i) information regarding the Company's and/or the
Bank's employees, including their identities, skills, talents, knowledge,
experience, compensation, and preferences; (j) financial information about
the Company and/or the Bank; (k) the Company's and/or the Bank's financial
results and business conditions; and (l) computer programs and software
developed by the Company and/or the Bank or their consultants.
3.2 The confidential, proprietary, and highly sensitive information described
in Section 3.1 above is hereinafter referred to as "Proprietary
Information." The Bank, the Company and the Executive agree that the term
Proprietary Information shall only include such information of which
Executive has specific knowledge.
3.3 The Executive acknowledges and understands that the term Proprietary
Information does not include information or know-how which: (a) was in the
Executive's possession prior to its disclosure to him by the Company and/or
the Bank (as shown by competent written evidence in the Executive's files
and records immediately prior to the time of disclosure); or (b) is
approved for release by written authorization of the Company and the Bank.
3.4 The Executive acknowledges that from time to time the Company and/or the
Bank will disclose Proprietary Information to him in order to enable him to
perform his duties for the Company and or the Bank. The Executive
recognizes and agrees that the unauthorized disclosure of Proprietary
Information could place the Company and/or the Bank at a competitive
disadvantage. Consequently, the Executive agrees not: (a) to use, at any
time, any Proprietary Information for his own benefit and for the benefit
of any person, entity, or corporation other than the Company and/or the
Bank; or (b) to disclose, directly or indirectly, any Proprietary
Information to any person who is not a current employee of the Company
and/or the Bank, except in the performance of the duties assigned to him by
the Company and/or the Bank, at any time prior or subsequent to the
termination of his employment with the Bank, without the express, written
consent of the Company and the Bank. The Executive further acknowledges and
agrees not to make copies of any Proprietary Information, except as
authorized in writing by the Company and the Bank.
3.5 The Executive understands and agrees that his obligations under this
Article shall survive the termination of his employment with the Bank
and/or the Company but shall terminate (other than Executive's obligations
under Section 3.4 which shall be non-terminable) at the end of the
Restricted Period as defined in Section 8.1. The Executive further
understands and agrees that his obligations under this Article are in
addition to, and not in limitation or preemption of, all other obligations
of confidentiality which he may have to the Company and/or the Bank under
general legal or equitable principles, or other policies implemented by the
Company and/or the Bank.
ARTICLE 4. RESTRICTIONS UPON FUNDING
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4.1 Neither the Company nor the Bank shall have any obligation to set aside,
earmark or entrust any fund or money with which to pay its obligations
under this Agreement. The Executive, his Beneficiary or any successor-in-
interest to him shall be and remain simply a general creditor of the
Company and the Bank in the same manner as any other creditor having a
general unsecured claim.
4.2 For purposes of the Code, the Company and the Bank intend this Agreement to
be an unfunded, unsecured promise to pay on the part of the Company and/or
the Bank. For purposes of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") the Company and the Bank intend that this
Agreement not be subject to ERISA. If this Agreement is deemed subject to
ERISA, it is intended to be an unfunded arrangement for the benefit of a
select member of management who is a highly compensated employee of the
Company and/or the Bank, for the purpose of qualifying this Agreement for
the "top hat" plan exception under sections 201(2), 301(a)(3) and 401(a)(1)
of ERISA.
4.3 If the Company or the Bank elects to invest in a life insurance, disability
or annuity policy upon the life of the Executive, the Executive shall
assist the Company and/or the Bank by freely submitting to a physical
examination and supplying such additional information necessary to obtain
such insurance or annuities.
4.4 Notwithstanding any provision of this Agreement to the contrary, neither
the Company nor the Bank shall be required to pay any benefit under this
Agreement if, upon the advice of counsel, the Company or the Bank
determines in good faith that the payment of such benefit would be
prohibited by 12 C.F.R. Part 359 or any successor regulations regarding
employee compensation promulgated by any regulatory agency having
jurisdiction over the Company, the Bank or their affiliates. To the extent
possible, such benefit payment shall be proportionately reduced to allow
payment within the fullest extent permissible under applicable law.
Executive shall have the right to have any determination made pursuant to
this Section 4.5 reviewed by independent counsel for the Executive, prior
to the reduction of any amount payable pursuant to the terms of this
Agreement. Any review by independent counsel pursuant to this Section 4.5,
must be completed within five (5) business days of the Company and/or the
Bank's determination made pursuant hereto, and all amounts payable pursuant
to this Agreement shall be suspended for such period.
ARTICLE 5. DESIGNATION OF BENEFICIARIES
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5.1 Should the Executive die prior to full payment of amounts due under Article
2, payment shall be made to his Beneficiary. The Executive's written
designation of one or more persons or entities as his Beneficiary shall
operate to designate the Executive's Beneficiary under this Agreement. The
Executive shall file with the Company a copy of his Beneficiary designation
on the form supplied to the Executive by the Company. The last such
designation form received by the Company shall be controlling, and no
designation, or change or revocation of a designation shall be effective
unless received by the Company prior to the Executive's death.
5.2 If no Beneficiary designation is in effect at the time of the Executive's
death, if no designated Beneficiary survives the Executive or if the
otherwise applicable Beneficiary designation conflicts with applicable law,
the Executive's estate shall be the Beneficiary.
ARTICLE 6. INTERPRETATION AND ENFORCEMENT
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6.1 The Parties shall have the exclusive power and authority to interpret and
construe this Agreement. The Parties may engage agents to assist them,
including their legal counsel.
6.2 The Parties consent to the resolution by final and binding arbitration of
any claim, controversy, or dispute arising under this Agreement, in
accordance with the Employment Arbitration Rules of the American
Arbitration Association in effect on the date the claim or controversy
arises.
6.3 Notwithstanding Section 6.2, the Parties hereto recognize that the
covenants hereunder are special, unique and of extraordinary character, and
therefore any claim for injunctive or other equitable relief including
violation of the Covenants of Noncompetition and Nonsolicitation of this
Agreement or the use, misuse, misappropriation, or unauthorized disclosure
of the Bank's or the Company's Proprietary Information, shall not be
covered by Section 6.2. The Parties agree to waive the requirement of
posting of bond or other security as a condition precedent to obtaining any
injunctive or other equitable relief, including emergency or temporary
injunctive relief.
ARTICLE 7. COMPLETE AND VOLUNTARY AGREEMENT
--------------------------------
7.1 The promises of the Company and the Bank contained in this Agreement and
the First Amendment to Restated Management Security Plan of Summit
Bancshares, Inc. (Philip Norwood and Jeffrey Harp) Applicable to Philip
Norwood are the whole consideration for this Agreement.
7.2 Executive intends to be legally bound by this Agreement and has signed and
delivered it voluntarily, without coercion, and with knowledge as to the
nature and consequences thereof.
7.3 The Company and the Bank intend to be legally bound by this Agreement and
have signed and delivered it voluntarily, without coercion, and with
knowledge as to the nature and consequences thereof.
7.4 It is understood and agreed that this Agreement contains the entire
agreement between the Parties and supersedes any and all prior agreements,
arrangements, or undertakings between the Parties relating to the subject
matter. No oral understandings, statements, promises or inducements
contrary to the terms of this Agreement exist. This Agreement cannot be
changed orally and any changes or amendments to this Agreement must be
signed by all Parties.
ARTICLE 8. COVENANTS OF NONCOMPETITION AND NONSOLICITATION
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8.1 Executive acknowledges that Executive has received and/or will receive
specialized knowledge and training and Proprietary Information (as outlined
in Article 3) from the Company and/or the Bank during the term of this
Agreement, and that such knowledge, training, and/or Proprietary
Information would provide an unfair advantage if used to compete with the
Company and/or the Bank. In order to avoid such unfair advantage, and in
consideration for the promises and covenants set forth in this Agreement
and other good and valuable consideration, Executive agrees that while
Executive is employed with the Bank and/or the Company and for a
consecutive seven hundred thirty (730) calendar day period after the date
of a Triggering Termination (the "Restricted Period"), Executive shall not,
directly or indirectly, individually or as an owner, lender, consultant,
adviser, independent contractor, employee, partner, officer, director or in
any other capacity, alone or in association with other persons or entities,
own, assist, finance, participate in or be employed in Tarrant County by:
(i) any National or State chartered banking institution or bank holding
company; or (ii) any business or other endeavor that is in direct
competition with the Company or the Bank in any business that the Company
or the Bank was engaged in during Executive's employment or at the date of
a Triggering Termination. Because Executive has developed and/or may
develop considerable personal contacts with the clients served by the
Company or the Bank during his employment with the Bank and the Company,
Executive also agrees that, while Executive is employed with the Bank
and/or the Company and for the Restricted Period, Executive will not,
either directly or indirectly, solicit individuals or other entities that
are customers or potential customers (as defined below) of the Bank or the
Company for banking services or any other services which are in competition
with the services provided by the Bank or the Company during Executive's
employment or at the date of a Triggering Termination. Executive also
agrees that while Executive is employed with the Bank and/or the Company
and for the Restricted Period, Executive will not, either directly or
indirectly, solicit any employee or other independent contractor of the
Company or the Bank to terminate his employment or contract with the
Company or the Bank.
8.2 For the purposes of this Agreement, the term "potential customer" shall
mean any person or entity contacted by the Company or the Bank or any of
its affiliates, officers, directors, employees, shareholders, agents or
representatives during the period that Executive was
an employee of the Company or the Bank for the purpose of soliciting
business in connection with the business of the Company or the Bank. The
Parties acknowledge that the prohibitions contained in this Article 8 do
not apply to purely social contacts and shall only apply to those persons
or entities which Executive knows, or reasonably should know, are potential
customers, pursuant to this Section 8.2.
ARTICLE 9. TERM, AMENDMENT AND TERMINATION OF AGREEMENT
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9.1 The term of this Agreement shall commence on the effective date hereof and
shall end upon the discharge of all of the Bank's or the Company's
obligations to Executive or his beneficiary.
9.2. This Agreement may be amended only by a written instrument executed by the
Chairman of the Executive Committee of the Company, the Chairman of the
Board of the Bank and by the Executive.
ARTICLE 10. GENERAL
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10.1 The Executive, the Company and the Bank agree that each provision of this
Agreement shall be enforceable independent of every other provision and in
the event any provision of this Agreement is determined to be
unenforceable for any reason, the remaining provisions will remain
effective, binding, and enforceable.
10.2 The Executive, the Company and the Bank agree that this Agreement shall be
binding on the Company and the Bank, their successors, and assigns and
that this Agreement shall be fully enforceable by the Executive against
any successor or assignee of the Company or the Bank.
10.3 The Executive, the Company and the Bank agree that this Agreement is
personal to the Executive and shall not be assignable, in whole or in
part, by the Executive for any reason. The Company and the Bank covenant
and agree that, in the event of the Executive's death, the Company and/or
the Bank will continue to make all payments required by this Agreement to
the Executive's Beneficiary or estate. In the event of the Executive's
death, this Agreement shall be enforceable by the Executive's Beneficiary,
estate, executors, or legal representatives only to the extent provided in
this Agreement.
10.4 THE EXECUTIVE, THE COMPANY AND THE BANK AGREE THAT THE LAW OF THE STATE OF
TEXAS WILL GOVERN THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT. VENUE
IN ANY SUCH DISPUTE, WHETHER IN FEDERAL OR STATE COURT, WILL BE LAID IN
TARRANT COUNTY, TEXAS. EACH PARTY HEREBY WAIVES, AND AGREES NOT TO ASSERT
IN ANY SUCH DISPUTE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY CLAIM THAT (a) SUCH PARTY IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF SUCH COURTS, (b) SUCH PARTY AND SUCH PARTY'S PROPERTY IS
IMMUNE FROM ANY LEGAL PROCESS ISSUED BY SUCH
COURTS OR (c) ANY LITIGATION COMMENCED IN SUCH COURTS IS BROUGHT IN AN
INCONVENIENT FORUM.
10.5 The titles or headings of the respective Articles in this Agreement are
inserted merely for convenience and shall be given no legal effect.
IN WITNESS WHEREOF, the Company, the Bank and the Executive have executed
this Agreement to be effective as of the date first written above.
PHILIP E. NORWOOD
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/s/ Philip E. Norwood
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SUMMIT BANCSHARES, INC.
By: /s/ Bob G. Scott.
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Title: Executive Vice President
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SUMMIT COMMUNITY BANK
By: /s/ Sheri Stewart
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Title: Secretary
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