BANCTRUST FINANCIAL GROUP, INC. CHANGE IN CONTROL COMPENSATION AGREEMENT
Exhibit 10.4
BANCTRUST FINANCIAL GROUP, INC.
This Change in Control Compensation Agreement (this “Agreement”) is dated as of the
1st day of January, 2009 by and among BancTrust Financial Group, Inc., an Alabama
corporation having its principal place of business in Mobile, Alabama (“BancTrust”), BankTrust, an
Alabama banking corporation and wholly-owned subsidiary of BancTrust (“BankTrust” and together with
BancTrust the “Company”); and W. ▇▇▇▇ ▇▇▇▇▇, Jr. (the “Executive”).
RECITALS:
A. The Compensation Committee of the Board of Directors of BancTrust has recommended, and the
Board of Directors has approved, that BancTrust and its subsidiaries enter into agreements with key
executives of the Company designated from time to time by the Compensation Committee to provide for
compensation under certain circumstances after a change in control.
B. Executive is a key executive of the Company and has been selected by the Compensation
Committee to enter into this Agreement.
C. If the Company, or any subsidiary of the Company that employs Executive as a key executive
officer (an “Applicable Subsidiary”), should become subject to any proposed or threatened Change in
Control (as hereinafter defined), the Board of Directors of the Company believes it imperative that
the Company and the Board of Directors be able to rely upon Executive to continue in his position
and that the Company be able to receive and rely upon his advice, if requested, as to the best
interests of the Company and its shareholders, without concern that he might be distracted by the
personal uncertainties and risks created by such a proposal or threat.
D. If the Company should receive any such proposal, Executive may be called upon to assist in
the assessment thereof, advise management and the Board of Directors as to whether such proposal
would be in the best interests of the Company and its shareholders, and take such other actions
above and beyond his regular duties as the Board might determine to be appropriate.
NOW, THEREFORE, as assurance to the Company that it will have the continued dedication of
Executive and the availability of his advice and counsel notwithstanding the possibility, threat or
occurrence of an effort to take over control of BancTrust or any Applicable Subsidiary, as an
inducement to Executive to remain in the employ of the Company, in consideration of the mutual
covenants and agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and Executive agree as
follows:
1. Services During Certain Events. In the event any person, firm or corporation
unaffiliated with the Company begins a tender or exchange offer, circulates a proxy to
shareholders, or takes other steps to effect a Change in Control (as hereinafter defined),
Executive agrees that he will not voluntarily leave the employ of the Company on less than 4 months
written notice to the Chairman of the Board or Chairman of the Executive Committee of the Company,
will render the services expected of his position and will act in all things related to the
possible Change in Control in the manner he believes in good faith to be in the best interests of
the shareholders of the Company until such person, firm or corporation has abandoned or terminated
his or its efforts to effect a Change in Control or until a Change in Control has occurred.
2. Termination Following Change in Control. Except as provided in Section 4, the
Company will provide or cause to be provided to Executive the rights and benefits described in
Section 3 in the event that Executive’s employment is terminated at any time within two years
following a Change in Control (as such term is defined in this Section 2) under the circumstances
stated in (a) or (b) below:
2
(a) by the Company without Executive’s consent and where Executive is willing and able to
continue providing his services, i.e., for reasons other than for “cause” (as such term is defined
in Section 4) or other than as a consequence of Executive’s death, permanent disability or
attainment of the date he or she reaches “full retirement age” as provided under the statutes and
regulations governing Social Security benefits in the United States of America (“Normal Retirement
Date”); or
(b) by Executive within 120 days following the occurrence of any of the following events:
(i) a material reduction in Executive’s base salary from his or her base salary
immediately prior to the Change in Control;
(ii) a reduction in Executive’s total annual compensation paid by the Company as
reported by the Company on Form W-2 (“W-2 Compensation”) such that Executive’s W-2
Compensation is materially less than the average of Executive’s annual W-2
Compensation from the Company for the three most recently completed years prior to
the Change in Control (or the average of Executive’s annual W-2 Compensation from
the Company for his or her entire period of employment with the Company, if less
than three full years, with compensation annualized for periods of less than a full
year); or
(iii) a material change in the geographic location at which Executive must perform
his services without the Executive’s consent, meaning, the transfer of Executive,
without his consent, to a location requiring a change in his residence or a material
increase in the amount of travel normally required of Executive in connection with
his employment;
3
provided, however, that Executive must provide the Company notice of the occurrence of such event
within 90 days after the occurrence of such event and give the Company an opportunity to remedy the
condition within 30 days thereafter, and, if such condition has been timely remedied, the Company
will not be required to provide any of the rights and benefits described in Section 3.
For purposes of this Agreement, a “Change in Control” is hereby defined to be: (1) a merger,
consolidation or other corporate reorganization of the Company or any Applicable Subsidiary in
which either the Company or the Applicable Subsidiary fails to survive, other than a merger of the
Applicable Subsidiary into the Company or another subsidiary of the Company; (2) disposition by the
Company of an Applicable Subsidiary; (3) the acquisition of the beneficial ownership by one person
or a closely related group of persons of as much as 40% of the outstanding voting stock of the
Company or an Applicable Subsidiary, unless the acquisition of stock resulting in such ownership by
such person or related group had been approved in advance by the Board of Directors of the Company;
or (4) as may otherwise be defined by the Board of Directors from time to time.
3. Rights and Benefits Upon Termination. In the event of the termination of
Executive’s employment under any of the circumstances set forth in Section 2 hereof
(“Termination”), the Company agrees to provide or cause to be provided to Executive the following
rights and benefits:
(a) Salary and Other Payments at Termination. Executive shall be entitled to receive
payment in cash equal to three times the sum of Executive’s annualized compensation, as such term
is defined in this Section 3(a), based upon the annual rate of pay for services provided to the
Company for the Executive’s taxable year preceding the Executive’s taxable year in which the
Termination occurs (adjusted for any increase during that year that was expected to continue
indefinitely if the Termination had not occurred). However, if such amount, when combined with
other payments or
4
benefits that are aggregated with such amount pursuant to the requirements of the Internal Revenue
Code of 1986, as amended (the “IRC”), exceeds the limit provided in Section 280G of the IRC or any
corresponding or similar provision of the IRC for the imposition of tax penalties on such payments
(but excluding IRC Section 162(m) or corresponding or similar provisions regarding deductibility of
such payments), the amount shall be reduced to the highest amount allowed to avoid such penalties.
Payment shall be made in one lump sum 15 days after the Termination to Executive or the personal
representative of Executive’s estate if Executive dies during such 15-day period.
For purposes of this Agreement, “annualized compensation” shall mean the amounts earned by
Executive for personal service rendered to the Company and its affiliates as reportable on Treasury
Department Form W-2, including bonuses, and excluding the following: (1) moving and educational
expenses, (2) income included under Section 79 of the IRC and (3) income imputed to Executive from
personal use of employer-owned automobiles and employer paid club dues. Earnings shall not include
any income attributable to grants of and dividends on shares awarded under any stock-based
incentive compensation plan.
(b) Medical Insurance. The Company shall reimburse Executive for COBRA premiums paid
by Executive, not reimbursed by any third party and allowable as a deduction under Section 213 of
the IRC (disregarding the requirement of Section 213(a) that the deduction is available only to the
extent that such expenses exceed 7.5 percent of adjusted gross income) during Executive’s
applicable COBRA continuation period as permitted by Section 409A of the IRC. Anything herein to
the contrary notwithstanding, if during such period Executive should enter into the employ of
another company or firm which provides medical insurance coverage, the Company’s reimbursement
shall cease.
5
(c) Other Benefit Plans. The specific arrangements referred to in this Section 3 are
not intended to exclude Executive’s participation in other benefit plans in which Executive
currently participates or which are or may become available to executive personnel generally in the
class or category of Executive or to preclude other compensation or benefits as may be authorized
by the Board of Directors from time to time.
(d) No Duty to Mitigate. Executive’s entitlement to benefits hereunder shall not be
governed by any duty to mitigate his damages by seeking further employment nor, except as
specifically provided above in Section 3(b), and subject to the covenants of Section 10, be offset
by any compensation or benefit which he may receive from future employment.
(e) Substantial Risk of Forfeiture. Executive understands that any rights and
benefits provided to him pursuant to this Agreement are subject to a substantial risk of forfeiture
and Executive is not entitled to any rights or benefits pursuant to this Agreement unless (1) a
Change in Control of the Company has occurred, (2) Executive’s employment has been terminated
pursuant to Section 2 of this Agreement and (3) the conditions in Section 4 of this Agreement have
not occurred.
4. Conditions to the Obligations of the Company. The Company shall have no obligation
to provide or cause to be provided to Executive the rights and benefits described in Section 3
hereof if any of the following events shall occur:
(a) Termination for Cause. The Company shall terminate Executive’s employment for
“cause.” For purposes of this Agreement, termination of employment for “cause” shall mean:
(i) Executive’s willful and continued failure to perform the duties and
responsibilities of his position that is not corrected within a thirty day
correction
6
period that begins upon delivery to Executive of a written demand for
performance from the Board of Directors of the Company that describes the
basis for the Board’s belief that Executive has not substantially performed
his duties;
(ii) Any act of personal dishonesty taken by Executive in connection with
his responsibilities as an employee of the Company or an Applicable
Subsidiary with the intention or reasonable expectation that such act may
result in substantial and personal enrichment of Executive; or
(iii) Executive’s conviction of, or plea of nolo contendre to, a felony that
the Board reasonably believes has had or will have a material detrimental
effect on the Company’s reputation or business.
(b) Other Terminations. The Company shall terminate Executive because of Executive’s
death, permanent disability or attainment of the Normal Retirement Date.
(c) Resignation as Director or Officer. Executive shall fail, promptly after
Termination and upon receiving a written request to do so, to resign as a director and/or officer
of the Company and each affiliate of the Company of which he is then serving as a director and/or
officer.
5. Confidentiality; Cooperation; Remedies.
(a) Confidentiality. Executive agrees that following Termination he will not without
the prior written consent of the Company disclose to any person, firm or corporation any
confidential information of the Company or its affiliates which is now known to him or which
hereafter (whether before or after his Termination) may become known to him as a result of his
employment or
7
association with the
Company and which could be helpful to a competitor; provided, however, that the foregoing
shall not apply to confidential information which becomes publicly disseminated by means other than
a breach of this Agreement.
(b) Cooperation. Executive agrees that following Termination he will furnish such
information and render such assistance and cooperation as may reasonably be requested in connection
with any litigation or legal proceedings concerning the Company or any of its affiliates (other
than any legal proceedings concerning Executive’s employment). In connection with such
cooperation, the Company will pay or reimburse Executive for all reasonable expenses incurred in
cooperating with such requests.
(c) Remedies for Breach. It is recognized that damages in the event of breach of this
Section 5 by Executive would be difficult, if not impossible, to ascertain, and it is therefore
agreed that the Company, in addition to and without limiting any other remedy or right it may have,
shall have the right to an injunction or other equitable relief in any court of competent
jurisdiction enjoining any such breach, and Executive hereby waives any and all defenses he may
have on the ground of lack of jurisdiction or competence of the court to grant such an injunction
or other equitable relief. The existence of this right shall not preclude the Company from
pursuing any other rights and remedies at law or in equity which the Company may have.
6. Term of Agreement. This Agreement shall terminate on December 31, 2009; provided,
however, that this Agreement shall automatically renew for successive one-year terms unless the
Company notifies Executive in writing at least 90 days prior to a December 31 expiration date that
it does not desire to renew this Agreement for an additional term; and provided further, however,
that such notice shall not be given and if given shall have no effect (i) within two years after a
Change in Control or (ii) during any period of time when the Company has reason to believe that any
third person has begun a
8
tender or exchange offer, circulated a proxy to shareholders, or taken
other steps or formulated plans to effect a
Change in Control, with such period of time to end when, in the opinion of the Compensation
Committee, the third person has abandoned or terminated such person’s efforts or plans to effect a
Change in Control.
7. Expenses. The Company shall pay or reimburse Executive for all costs and expenses,
including, without limitation, court costs and attorney’s fees, incurred by Executive as a result
of any successful claim, action or proceeding by Executive against the Company to enforce the
provisions of this Agreement following the refusal without justification by the Company after
written demand by Executive to fulfill its obligations hereunder.
8. Miscellaneous.
(a) Assignment. No right, benefit or interest hereunder shall be subject to
assignment, anticipation, alienation, sale, encumbrance, charge, pledge, hypothecation or set-off
in respect of any claim, debt or obligation, or to execution, attachment, levy or similar process;
provided, however, that Executive may assign any right, benefit or interest hereunder if such
assignment is permitted under the terms of any plan or policy of insurance or annuity contract
governing such right, benefit or interest.
(b) Construction of Agreement. Nothing in this Agreement shall be construed to amend
any provision of any plan or policy of the Company other than as specifically stated herein. This
Agreement is not, and nothing herein shall be deemed to create an employment contract between
Executive and the Company or any of its subsidiaries. Executive acknowledges that he is an
“at-will” employee.
9
(c) Inurement. This Agreement shall be binding upon and inure to the benefit of the
Company and its affiliates and the Executive and their respective heirs, executors, administrators,
successors and assigns.
(d) Nature of Obligation. The Company intends that its obligations hereunder be
construed in the nature of severance pay. Except as set forth in Section 4, the Company’s
obligations under
Section 3 are absolute and unconditional and shall not be affected by any circumstance,
including, without limitation, any right of offset, counterclaim, recoupment, defense, or other
right which the Company may have against the Executive or others. All amounts payable by the
Company hereunder shall be paid without notice or demand.
(e) Choice of Law. This Agreement shall be governed and construed in accordance with
the laws of the State of Alabama.
(f) Invalidity. In the event that any one or more provisions of this Agreement shall,
for any reason, be held invalid, illegal or unenforceable in any manner, such invalidity,
illegality or unenforceability shall not affect any other provision of this Agreement.
(g) Entire Agreement. This Agreement contains the entire agreement of the parties
hereto and supersedes all prior understandings and agreements, oral or written, between the parties
with respect to the subject matter hereof, including, but not limited to, any prior Change in
Control Compensation Agreement entered into by Executive and the Company, any prior Change of
Control Employment Agreement entered into by Executive, The Peoples BancTrust Company, Inc., and
The Peoples Bank and Trust Company, or any similar agreement between the Executive and any
predecessor employer or company acquired by the Company or an Applicable Subsidiary.
10
9. Section 409A. This Agreement is intended to comply with the requirements of
Section 409A of the IRC and the regulations and guidance thereunder (“Section 409A”) and shall be
construed accordingly. No acceleration or deceleration of any payments or benefits provided herein
shall be permitted unless allowed under the requirements of Section 409A. If any compensation or
benefits provided by this Agreement may result in the application of Section 409A, the Executive
hereby consents to the modification of this Agreement by the Company in the least restrictive
manner (as determined by the
Company) and without any diminution in the value of the payments to the Executive as may be
necessary in order to exclude such compensation from the definition of “deferred compensation”
within the meaning of Section 409A or in order to comply with the provisions of Section 409A, other
applicable provision(s) of the IRC and/or any rules, regulations, and/or regulatory guidance issued
under such statutory provisions.
10. Nonsolicitation Covenants.
(a) Prohibited conduct:
(i) Covenant Not to Solicit Customers. Executive covenants, acknowledges
and agrees that for a period of 12 months following the termination of his/her
employment which results in the Executive being granted the rights and benefits set
forth in Section 3 of this Agreement (a “Covered Termination”), Executive will not,
directly or indirectly, on his/her own behalf or in the service or on behalf of
others, whether as a consultant, independent contractor, employee, owner, partner,
joint venturer or otherwise, solicit, contact, attempt to divert or appropriate any
person or entity who was a Customer or Account of the Company or a subsidiary of the
Company, for the purposes of providing the same or similar services and products as
provided by the Company or its subsidiaries. The term “Customer or Account” for
purposes of this Section 10 is defined as those individuals or entities for whom the
Executive performed work on the Company’s, or a
11
subsidiary’s, behalf at the time of
the Covered Termination or at any time during the two year period prior to such
termination.
(ii) Covenant Not to Solicit Prospects. Executive covenants, acknowledges
and agrees that for a period of 12 months following a Covered Termination, Executive
will not, directly or indirectly, on his/her own behalf or in the service or on
behalf of others, whether as a consultant, independent contractor, employee, owner,
partner, joint venturer
or otherwise, solicit, contact, attempt to divert, or appropriate, for the purpose
of providing the same or similar services as provided by the Company or its
Subsidiaries, any person or entity whom Executive was soliciting, or helping someone
else from the Company or its subsidiaries to solicit, as a potential Customer or
Account of the Company or its subsidiaries, at any time during the six month period
prior to the Covered Termination.
(iii) Covenant not to Perform Services for Customer or Account. Executive
covenants, acknowledges and agrees that for a period of 12 months following a
Covered Termination, Executive will not, directly or indirectly, on his/her own
behalf or in the service or on behalf of others, whether as a consultant,
independent contractor, employee, owner, partner, joint venturer or otherwise,
perform services the same or similar to those which Executive performed for the
Company or any subsidiary of the Company for any Customer or Account of the Company
or its subsidiaries.
(iv) Covenant Not to Solicit Employees. Executive covenants, acknowledges
and agrees that for a period of 12 months following a Covered Termination, Executive
will not, either directly or indirectly, on his/her own behalf or in the service or
on behalf of
12
others, whether as a consultant, independent contractor, employee,
owner, partner, joint venturer or otherwise, solicit, recruit or entice any employee
of the Company or its subsidiaries to leave employment with the Company or its
subsidiaries.
(b) Executive hereby acknowledges and agrees that the covenants contained above are supported
by independent valuable consideration; contain reasonable limitations as to time, geographic scope
and scope of activity prohibited; and do not impose a greater restraint than is necessary to
protect the
goodwill, customer relationships, employee relationships and other legitimate protectable
business interests of the Company and its subsidiaries.
(c) Executive recognizes that damages in the event of breach of this Section 10 by Executive would
be difficult, if not impossible, to ascertain, and, therefore, the Company, in addition to and
without limiting any other remedy or right it may have, shall have the right to an injunction or
other equitable relief in any court of competent jurisdiction enjoining any such breach, and
Executive hereby waives any and all defenses he/she may have on the ground of lack of jurisdiction
or competence of the court to grant such an injunction or other equitable relief. The existence of
this right shall not preclude the Company from pursuing any other rights and remedies at law or in
equity which the Company may have, and the Company may pursue equitable relief without the
necessity of posting a bond or other security. In the event of a breach or threatened breach by
the Executive of the covenants contained in this Section 10 the Executive consents and agrees that
the period of any injunction will correspond to the time restrictions set forth in Section 10 and
that the restriction period will start to commence from the date of entry of an order granting such
injunction by a court of competent jurisdiction. Executive agrees to reimburse the Company
for all fees and expenses it incurs (including reasonable attorneys fees and related expenses) as a
result of Executive’s breach or threatened breach of this Section 10 or related to or arising out
of the
13
Company’s enforcement of such Sections. If Executive violates any of the covenants
contained in Section 10(a) hereinabove, then the Company shall be entitled to retain and not pay or
furnish, and Executive shall forfeit, any amounts and benefits due under Section 3 of this
Agreement not already paid to Executive; and Executive shall, within thirty days after demand,
repay to the Company all amounts previously paid to or expended for the benefit of Executive under
Section 3 of this Agreement. If a court of competent jurisdiction declares any provisions (or
sub-provisions) of this Agreement unenforceable, the parties acknowledge and agree that the court
may revise or reconstruct such unenforceable provisions (or sub-provisions) to better effectuate
the parties’ intent to reasonably restrict the activity of the Executive to the
greatest extent allowed by law and needed to protect the business interests of the Company and its
subsidiaries.
IN WITNESS WHEREOF, Executive has hereunto set his hand and seal and the Company and BankTrust
have caused this Agreement to be executed by their respective officers thereunto duly authorized as
of the date first written above.
| /s/ W. ▇▇▇▇ ▇▇▇▇▇, Jr. | (SEAL) | |||||||
| W. ▇▇▇▇ ▇▇▇▇▇, JR. | ||||||||
| Dated: December 18, 2008 | ||||||||
| ATTEST: | BANCTRUST FINANCIAL GROUP, INC. | |||||||
/s/ J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ |
||||||||
| BY: | /s/ F. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ | |||||||
Its: Senior Vice President
|
Its: Chief Financial Officer | |||||||
| Dated: December 18, 2008 | ||||||||
| ATTEST: | BANKTRUST | |||||||
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ |
||||||||
| BY: | /s/ F. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ | |||||||
Its: Senior Vice President
|
Its: Senior Vice President | |||||||
| Dated: December 18, 2008 | ||||||||
14