Exhibit 10.4
CAROLINA FIRST CORPORATION
CHANGE IN CONTROL AGREEMENT
This Change in Control Agreement ("Agreement") is entered into this 2
day of November, 1998, by and between Michael W. Sperry (the "Executive") and
Carolina First Corporation, a South Carolina corporation and financial
institution holding company headquartered in Greenville, South Carolina (the
"Company"). As used herein, the term Company shall include the Company and any
and all of its subsidiaries where the context so applies.
RECITALS
The Company considers it the best interest of its stockholders to
foster the continuous employment of key management personnel. In this
connection, the Board of Directors of the Company (the "Board") recognizes that,
as is the case with many publicly held corporations, the possibility of a change
in control may exist and that such possibility, and the uncertainty and
questions which it may raise among management, may result in the departure or
distraction of management personnel to the detriment of the Company and it
stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of the
Company's management, including the Executive, to assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of a change in control of the Company.
To induce the Executive to remain in the employ of the Company, and in
consideration of the Executive's agreement set forth below, the Company agrees
that the Executive shall receive the severance benefits set forth in this
Agreement in the event that the Executive's employment with the Company is
terminated subsequent to a "change in control of the Company" (as defined in
Section 2 below) under the circumstances described below.
NOW, THEREFORE, in consideration of the Executive's continued
employment and the parties' agreement to be bound by the terms contained in this
Agreement, the parties agree as follows:
1. Term of the Agreement. This Agreement shall commence on
November 2, 1998, and shall continue in effect through
November 2, 2000; provided, however, that commencing on
November 2, 1999 and each year thereafter, the term of this
Agreement shall automatically be extended for one additional
year unless, not later than ninety (90) days prior to the end
of the preceding term, the Company shall have given notice
that it does not wish to extend this Agreement. Further, if a
change in control of the Company shall have occurred during
the original term or extended term of this Agreement, this
Agreement shall continue in effect for a period not less than
twelve (12)
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months beyond the month in which such a change in
control occurred. Unless otherwise stated, the term of this
Agreement shall not extend beyond the month in which the
Executive attains the age of sixty-five (65) years.
2. Change in Control.
No benefit shall be payable under this Agreement unless there
has been a change in control of the Company, as set forth
below. For purposes of this Agreement, a "change in control of
the Company" shall be deemed to have occurred if:
(a) Any "Person" (as the term "Person" is used for purposes of
Section 13(d) or 14(d) of the Securities Exchange Act of 1934
(the "1934 Act")) acquires (other than directly from the
Company) any voting securities of the Company (the "Voting
Securities") immediately after which such person has
"beneficial ownership" (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of 20% or more of the combined
voting power of the Company's then outstanding Voting
Securities; PROVIDED, HOWEVER, that in determining whether a
"change in control of the Company" has occurred, Voting
Securities which are acquired in a "Non-Control Acquisition"
(as hereinafter defined) shall not constitute an acquisition
which would cause a change in control. A "Non-Control
Acquisition" shall mean an acquisition by (a) an employee
benefit plan (or a trust forming a part thereof) maintained by
(x) the Company or (y) 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 (a "Subsidiary"), (b) the Company or any Subsidiary,
or (c) any Person in connection with a "Non-Control
Transaction" (as hereinafter defined); or
(b) During any period of three (3) consecutive years (not
including any period prior to the execution of this
Agreement), the individuals who, as of the date of this
Agreement, are members of the Board (the "Incumbent Board")
cease for any reason to constitute at least two-thirds 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 of the
Incumbent Board, such new director shall, for purposes of this
Agreement, be considered as a member of the Incumbent Board;
PROVIDED, FURTHER, HOWEVER, 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 1934 Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a
Person other than the Board (a "Proxy Contest"), including by
reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; or
(c) Approval by the stockholders of the Company of:
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(1) A merger, consolidation or reorganization involving the
Company, unless
(i) the stockholders of the Company, immediately
before such merger, consolidation or
reorganization, own, directly or indirectly,
immediately following such merger, consolidation
or reorganization, at least two-thirds of the
combined voting power of the outstanding voting
securities of the corporation resulting from such
merger or consolidation or reorganization (the
"Surviving Corporation") in substantially the same
proportion as their ownership of the Voting
Securities immediately before such merger,
consolidation or reorganization, and
(ii) the individuals who were members of the Incumbent
Board immediately prior to the execution of the
agreement providing for such merger, consolidation
or reorganization constitute at least two-thirds
of the members of the board of directors of the
Surviving Corporation.
(A transaction described in clauses (i) and (ii) of this
Section 2(c) shall be referred to as a "Non-Control
Transaction").
(2) A complete liquidation or dissolution of the Company; or
(3) 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).
3. Termination Following Change in Control.
(a) General. If any of the events described in Section 2
above constituting a change in control of the Company
shall have occurred, the Executive shall be entitled to
the benefits provided in Section 4(c), upon the
subsequent termination of the Executive's employment
during the twelve (12) month period following the change
in control of the Company, unless such termination is:
(1) because of the Executive's death, Disability, or
Retirement; or
(2) by the Company for Cause; or
(3) by the Executive other than for Good Reason.
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In the event the Executive's employment with the Company
is terminated for any reason and subsequently a change
in control of the Company occurs, the Executive shall
not be entitled to any benefits hereunder.
(b) Disability. If, as a result of the Executive's
incapacity due to physical or mental illness as
determined by an independent physician selected with the
approval of both the Executive and the Board, the
Executive shall have been absent from the full-time
performance of his duties with the Company for six (6)
consecutive months, and, within thirty (30) days after
written notice of termination is given, the Executive
shall not have returned to full-time performance of his
duties, the Executive's employment may be terminated for
"Disability."
(c) Retirement. Termination by the Company or the Executive
of the Executive's employment based on "Retirement"
shall mean termination in accordance with the Company's
retirement policy, including early retirement, generally
applicable to its employees or in accordance with any
retirement arrangement with respect to the Executive.
(d) Cause. Termination by the Company of the Executive's
employment for "Cause" shall mean:
(1) termination for any act that (i) constitutes, on
the part of the Executive, fraud, dishonesty,
gross malfeasance of duty, or conduct grossly
inappropriate to the Executive's office, and (ii)
is demonstrably likely to lead to material injury
to the Company or resulted or was intended to
result in direct or indirect gain to or personal
enrichment of the Executive; or
(2) the conviction (from which no appeal may be or is
timely taken) of the Executive of a felony; or
(3) the suspension or removal of the Executive by
federal or state banking regulatory authorities
acting under lawful authority pursuant to
provisions of federal or state law or regulation
which may be in effect from time to time;
PROVIDED, HOWEVER, that in the case of clause (1)
above, such conduct shall not constitute Cause
unless (i) there shall have been delivered to the
Executive a written Notice of Termination setting
forth with specificity the reasons that the Board
believes
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the Executive's conduct constitutes the criteria set
forth in clause (1), (ii) the Executive shall have been
provided the opportunity to be heard in person by the
Board (with the assistance of the Executive's counsel if
the Executive so desires), and (iii) after such hearing,
the termination is evidenced by a resolution adopted in
good faith by two-thirds of the members of the Board
(other than the Executive).
(e) Good Reason. The Executive shall be entitled to
terminate his employment for Good Reason. For purposes
of this Agreement, "Good Reason" shall mean, without the
Executive's express written consent, the occurrence
after a change in control of the Company of any of the
following circumstances:
(1) a material change in the Executive's
responsibilities, position (including status as an
executive of the Company, its successor or
ultimate parent entity), office, title, reporting
relationship or working conditions, authority, or
duties (including changes resulting from the
assignment to the Executive of any duties
inconsistent with his positions, duties or
responsibilities as in effect immediately prior to
the change in control of the Company); or
(2) a change in the terms or status of this Agreement;
or
(3) a reduction in the Executive's compensation or
benefits; or
(4) a forced relocation of the Executive outside of
the Greeenville metropolitan area; or
(5) a significant increase in the Executive's travel
requirements; or
(6) any attempted termination for Cause that does not
comply with the substantive and procedural
provisions set forth in the definition of Cause
above for purposes of this Agreement; or
(7) the Company's insolvency.
The Executive will be required (i) to inform the Company
by written Notice of Termination of his intent to
terminate employment with Good Reason, setting forth the
specific grounds described in this
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Agreement constituting the termination and stating in
reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's
employment under the grounds so indicated, and (ii) to
provide the Company ten (10) days to cure said grounds
for termination. If the grounds for termination are
corrected within ten (10) days, the Executive's notice
of intent to terminate employment with Good Reason shall
be deemed withdrawn and of no further force or effect.
4. Compensation Upon Termination or During Disability. Following
a change in control of the Company, the Executive shall be
entitled to the following benefits during a period of
disability or upon termination of the Executive's employment,
as the case may be, provided that such period or termination
occurs during the term of this Agreement.
(a) During any period the Executive fails to perform his
full time duties with the Company as a result of
incapacity due to physical or mental illness, the
Executive shall continue to receive his base salary at
the rate in effect at the commencement of any such
period, together with all compensation payable to the
Executive under the Company's disability plan or program
or other similar plan during such period, until this
Agreement is terminated pursuant to Section 3(b) hereof.
Thereafter, or in the event the Executive's employment
shall be terminated by the Company or by the Executive
for Retirement, or by reason of the Executive's death,
the Executive's benefits shall be determined under the
Company's retirement, insurance, other compensation
programs or any employment contract then in effect in
accordance with the terms of such programs or contract.
(b) If the Executive's employment shall be terminated by the
Company for Cause or by the Executive other than for
Good Reason, Disability, death, or Retirement, the
Company shall pay the Executive's full base salary
through the date of termination as determined by the
Company at the rate in effect at the time the Notice of
Termination is given, plus all other amounts to which
the Executive is entitled under any compensation plan of
the Company at the time such payments are due, and the
Company shall have no further obligations to the
Executive under this Agreement.
(c) If the Executive's employment shall be terminated by the
Company for reasons other than Cause, Retirement,
Disability, or death, or if the Executive should
terminate employment for Good Reason, then the Executive
shall be entitled to the benefits provided below.
(1) The Company shall pay the Executive's full base
salary through the date of termination as
determined by the Company at the rate in effect at
the time the Notice of Termination is given, plus
all other amounts to which the Executive is
entitled
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under any compensation plan of the Company at the
time such payments are due, except as otherwise
provided below.
(2) In lieu of any further salary payments for periods
subsequent to the date of termination, the Company
shall pay to the Executive a lump sum severance
payment equal to the compensation, defined as
current base salary plus annual bonus, that would
have otherwise been payable over the two (2) years
subsequent to such termination. The annual bonus
amount shall be deemed equal to the average of
such compensation over the three (3) year period
immediately prior to the occurrence giving rise to
the Notice of Termination. The severance payment
provided for in this Section 4(iii)(b) shall be
made no later than the sixty (60) days following
the date of termination.
(3) The Executive shall be entitled to the
continuation of basic benefits coverage and
continuing perquisites for two (2) years
subsequent to the date of termination. Such
benefits consist of those benefits generally
provided to executives and may include health
insurance, disability insurance, and retirement
benefits, but shall not include life insurance or
club dues.
5. Vesting of Executive's Stock Options and Restricted Stock.
Executive stock options, restricted stock, or other components
of compensation subject to vesting requirements shall fully
vest upon the occurrence of a change in control of the Company
or upon the triggering of the provisions of the Company's
Shareholder Rights Agreement, even if the Executive is
terminated by the Company for Cause, terminates voluntarily,
or terminates with Good Reason or for Retirement or
Disability. Additionally, to the extent that this Agreement is
inconsistent with the Company's existing Restricted Stock Plan
(the "RSP"), the terms of the RSP shall control. The Executive
will have a minimum of one (1) year subsequent to the change
in control or triggering within which to exercise such options
which have received accelerated vesting.
6. Excess Parachute Payments. It is the intention of the parties
hereto that the severance payments and other compensation
provided for herein are reasonable compensation for the
Executive's services to the Company and shall not constitute
"excess parachute payments" within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended, and any
regulations thereunder. In the event that the Company's
independent accountants acting as auditors for the Company on
the date of a change in control determine that the payments
provided for herein constitute "excess parachute payments,"
then the compensation payable hereunder shall be increased, on
a tax gross-up basis, so as to reimburse the Executive for the
tax payable by the Executive, pursuant to Section 4999 of the
Internal
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Revenue Code, on such "excess parachute payments," taking into
account all taxes payable by the Executive with respect to
such tax gross-up payments hereunder, so that the Executive
shall be, after payment of all taxes, in the same financial
position as if no taxes under Section 4999 had been imposed
upon him.
7. Notice. For the purposes of this Agreement, notices and all
other communications provided shall be in writing and will be
deemed to have been duly given when delivered or seven days
after mailed by the U.S. mail, certified, first class, postage
paid, and addressed to the respective party. All Notices to
the Company shall be directed to the attention of the Board.
8. Confidentiality. The Executive acknowledges that, prior to and
during the term of this Agreement, the Company has furnished
and will furnish to Executive Confidential Information which
could be used by the Executive on behalf of a competitor of
the Company to the Company's substantial detriment.
"Confidential Information" shall mean all business and other
information relating to the business of the Company, including
without limitation, technical or nontechnical data, programs,
methods, techniques, processes, financial data, financial
plans, product plans, and lists of actual or potential
customers, which (i) derives economic value, actual or
potential, from not being generally known to, and not being
readily ascertainable by proper means by, other Persons, and
(ii) is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy or confidentiality. Such
information and compilations of information shall be
contractually subject to protection under this Agreement
whether or not such information constitutes a trade secret and
is separately protectable at law or in equity as a trade
secret. Confidential Information does not include confidential
business information which does not constitute a trade secret
under applicable law two years after any expiration or
termination of this Agreement. Executive agrees that he shall
protect the Company's Confidential Information and shall not
disclose to any Person, or otherwise use, except in connection
with his duties performed in accordance with this Agreement,
any Confidential Information; provided, however, that
Executive may make disclosures required by a valid order or
subpoena issued by a court or administrative agency of
competent jurisdiction, in which event the Executive will
promptly notify the Company of such order or subpoena to
provide the Company an opportunity to protect its interests.
Upon the termination or expiration of his employment
hereunder, the Executive agrees to deliver promptly to the
Company all Company files, customer lists, management reports,
memoranda, research, Company forms, financial data and reports
and other documents supplied to or created by him in
connection with his employment hereunder (including all copies
of the foregoing) in his possession or control and all of the
Company's equipment and other materials in his possession or
control.
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9. Remedies. The Executive acknowledges that if he breaches or
threatens to breach his covenants and agreements in this
Agreement, such actions may cause irreparable harm and damage
to the Company which could not be compensated by monetary
damages alone. Accordingly, if Executive breaches or threatens
to breach this Agreement, the Company shall be entitled to
injunctive relief, in addition to any other rights or remedies
of the Company.
10. Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
11. Entire Agreement. This Agreement sets forth the entire
understanding of the parties with respect to its subject
matter and supercedes all prior written or oral agreements
regarding severance benefits provided following a change in
control of the Company.
12. Governing Law. This Agreement shall be governed by and
construed according to the laws of the State of South
Carolina.
13. Amendments and Modification. This Agreement may be amended or
modified only in writing if duly approved and signed by all
parties.
IN WITNESS WHEREOF, the Company and the Executive have executed this
Change in Control Agreement as of the date set forth above.
Date:______________________ ___________________________________
Michael W. Sperry
CAROLINA FIRST CORPORATION
Date:______________________ By:________________________________
Its: Executive Vice President
Carolina First Corporation
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