Exhibit 10.1
Form Of Change in Control Agreement for Named
Executive Officers
(and description of benefits for each Named Executive Officer)
AGREEMENT
between
APPALACHIAN BANCSHARES, INC.
a Georgia corporation, and its
wholly-owned subsidiary
APPALACHIAN COMMUNITY BANK
a Georgia banking company,
and
[Name of Executive]
As of
November 12, 2004
TABLE OF CONTENTS
1. Defined Terms............................................................................................2
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2. Term of Agreement........................................................................................2
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3. Employer's Covenants Summarized..........................................................................2
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4. Compensation Other Than Severance Payments...............................................................3
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5. Severance Payments.......................................................................................4
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6. Termination Procedures and Compensation During Dispute..................................................11
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7. No Mitigation...........................................................................................13
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8. Successors; Binding Agreement...........................................................................13
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9. Notices.................................................................................................14
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10. Miscellaneous...........................................................................................15
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11. Counterparts............................................................................................15
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12. Settlement of Disputes; Arbitration.....................................................................15
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13. Definitions.............................................................................................16
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AGREEMENT
THIS AGREEMENT (the "Agreement"), dated as of November 12, 2004, is made by
and among APPALACHIAN COMMUNITY BANCSHARES, INC., a Georgia corporation
("Holding Company"), and its wholly-owned subsidiary, APPALACHIAN COMMUNITY
BANK, a Georgia banking company ("Bank") (Holding Company and Bank hereinafter
collectively referred to as "Employer"), and
_________________________("Executive").
WHEREAS Employer considers it essential to the best interests of its
shareholders to ▇▇▇▇▇▇ the continuous employment of key management personnel;
and
WHEREAS the Board of Directors of each of Holding Company and Bank
(collectively and/or individually, as the context shall require, the "Board")
recognizes that, as is the case with many publicly-held corporations, the
possibility of a Change in Control (as defined in Section 13 hereof) exists 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 Holding Company, Bank and their respective
shareholders; and
WHEREAS the Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of
Employer's management, including Executive, to their assigned duties, without
distraction in the face of potentially disturbing circumstances arising from the
possibility of a Change in Control;
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained, Employer and Executive hereby agree as follows:
1. Defined Terms. The definitions of capitalized terms used in this
Agreement, unless provided elsewhere in
2. Term of Agreement. This Agreement shall be for a term commencing on the
date set forth above (the "Effective Date") and ending thirty-six (36) months
thereafter, unless sooner terminated in accordance with this Agreement.
Additionally, on each anniversary date of Effective Date, this Agreement shall
be extended for an additional one-year period beyond the then effective
expiration date, provided that the Board determines, in a duly adopted
resolution, that the performance of Executive has met with the Board's
requirements and standards, and that this Agreement shall be extended.
3. Employer's Covenants Summarized. In order to induce Executive to remain
in the employ of Employer, Employer agrees, subject to the conditions described
herein, to pay to Executive the Severance Payments (as defined in Section 5.01
hereof) and the other payments and benefits described herein, in the event
Executive's employment with Employer is terminated following a Change in Control
and during the term of this Agreement. Except as provided by the second sentence
of Section 5.01 hereof or the last sentence of Section 8.01 hereof, no amount or
benefit shall be payable under this Agreement, unless there shall have been a
termination of Executive's employment with Employer following a Change in
Control. This Agreement shall not be construed as creating an express or implied
contract of employment and, except as required by applicable law or as otherwise
agreed in writing between Executive and Employer, Executive shall have no rights
hereunder to be retained in the employ of Employer.
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4. Compensation Other Than Severance Payments.
4.01 Following a Change in Control and during the term of this Agreement,
during any period prior to the establishment of Executive's Disability (as
defined herein), in which Executive is unable to perform Executive's full-time
duties with Employer, due to Executive's mental or physical infirmity, Employer
shall pay Executive's full salary to Executive, at the rate in effect at the
time Executive is first unable to perform his or her duties due to such
infirmity. If Executive's Disability is subsequently established through a
good-faith determination of the Board (as provided herein), Employer shall
continue to pay Executive's full salary at such rate, until Executive's
employment is terminated by Employer for Disability in accordance with the terms
of this Agreement. Alternatively, if Executive's Disability is subsequently
established by Executive's becoming eligible for disability benefits provided
pursuant to a disability benefit plan of the Employer, Employer shall not be
required to pay Executive any salary from such time through the termination of
Executive's employment for Disability, except as provided under the terms of
Employer's long-term disability plan.
4.02 If Executive's employment shall be terminated for any reason other
than the Executive's Retirement, death or Disability, following a Change in
Control and during the term of this Agreement, Employer shall pay Executive's
full salary to Executive through the Date of Termination, at the rate in effect
at the time that the Notice of Termination is given, together with all
compensation and benefits payable to Executive through the Date of Termination
under the terms of any compensation or benefit plan, program or arrangement
maintained by Employer during such period.
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5. Severance Payments.
5.01 Subject to Sections 5.02 and 5.05 hereof, following a Change in
Control and during the term of this Agreement, upon the termination of
Executive's employment (i) by Employer Without Cause, or (ii) voluntarily by
Executive following the occurrence of an event constituting Good Reason, as
defined herein, in lieu of any further salary payments to Executive for periods
subsequent to the Date of Termination and in lieu of any severance benefit
otherwise payable to Executive (other than retirement plan payments and
benefits), Employer shall pay Executive the payments described below in this
Section 5.01 (the "Severance Payments"). For purposes of the immediately
preceding sentence, if a termination of Executive's employment, either by
Employer Without Cause or by Executive for Good Reason, occurs within six (6)
months prior to a Change in Control, such termination shall be deemed to have
occurred following a Change in Control, and the Date of Termination (as defined
herein) shall be deemed to have occurred, on and as of, the date of the
occurrence of the Change in Control; thus entitling Executive to the payments
contemplated in Section 4.02 hereof and the Severance Payments described below
in this Section 5.01.
The Severance Payments are as follows:
(A) Employer shall pay to Executive a lump sum severance payment, in cash,
in an amount which is equal to the higher of (x) ___ times Executive's
annual base salary in effect immediately prior to the occurrence of
the event or circumstance upon which the Notice of Termination is
based, or (y) ___ times the average of Executive's annual base salary
for the three (3) years immediately prior to the occurrence of the
event or circumstance upon which the Notice of Termination is based.
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(B) Employer shall pay to Executive a lump-sum amount, in cash, equal to
the sum of (i) any annual discretionary bonus which has been allocated
or awarded to Executive for a completed fiscal year preceding the Date
of Termination, but has not yet been paid (pursuant to Section 4.02
hereof or otherwise), and (ii) a pro rata portion of an annual
discretionary bonus for the fiscal year in which the Date of
Termination occurs, determined by multiplying Executive's annual
discretionary bonus, awarded or paid for the most-recently-completed
fiscal year, by a fraction, the numerator of which shall be the number
of full days Executive was employed by Employer during the fiscal year
in which Executive's Date of Termination occurred and the denominator
of which shall be three hundred sixty-five (365).
(C) At the election of Executive, exercised by written notice to the Board
no later than thirty (30) days following the Date of Termination,
Employer shall repurchase all Options for shares in Holding Company or
Bank held by Executive ("Options") that Executive elects to sell to
Employer (which Options shall be cancelled upon the making of the
payment referred to below) by the payment of a lump-sum amount, in
cash, equal to the product of:
(i) that amount which is equal to the excess of (x) the higher of (1)
the Current Market Value of Holding Company or Bank Shares
("Shares") or (2) the highest per-share price for Shares actually
paid within six (6) months preceding the Executive's written
notice of election to sell the Option, over (y) the per-share
exercise price of each such Option held by Executive, times
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(ii) the number of Shares covered by each such Option.
As used in this subparagraph, the term "Current Market Value"
shall mean the Closing Price of such shares on the Date of
Termination, or if no shares were traded or bid or ask quotations were
published on such date, then on the next preceding date on which such
sales transactions or quotations were actually made. The term "Closing
Price" shall mean:
(1) if the Shares are listed on a national securities exchange,
the NASDAQ National Market, or authorized for trading in any
other market or quotation system in which last sale
transactions are reported on a contemporary basis, the last
reported sales price, regular way, of such security on such
exchange or in such quotation system for such day; or
(2) if the Shares are not listed, or authorized for trading in
the markets described in (1) above, the last bid quotation
in the over-the-counter market on such trading day as
reported by the National Association of Securities Dealers,
Inc. through NASDAQ, its automated system for reporting
quotations, or its successor or such other generally
accepted source of publicly reported bid quotations as the
Board may reasonably designate; or
(3) if the Shares are not traded in the organized securities
markets, the fair market value of the Shares as determined
by the Board in good faith.
(D) For a ______ (__) month period after the Date of Termination, Employer
shall arrange to provide Executive with life, disability, accident and
health insurance benefits substantially similar to those which
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Executive is receiving immediately prior to the Notice of Termination
(without giving effect to any reduction in such benefits subsequent to
a Change in Control which reduction constitutes Good Reason). Benefits
otherwise receivable by Executive pursuant to this Section 5.01(D)
shall be reduced to the extent comparable benefits are actually
received by, or made available to, Executive without cost during the
twelve (12) month period following the Date of Termination (any such
benefits actually received by Executive shall be reported to Employer
by Executive). If the benefits provided to Executive under this
Section 5.01(D) shall result in a decrease, pursuant to Section 5.02,
in the Severance Payments and these Section 5.01(D) benefits are
thereafter reduced pursuant to the immediately preceding sentence
because of the receipt of comparable benefits, Employer shall, at the
time of such reduction, pay to Executive the lesser of (a) the amount
of the decrease made in the Severance Payments pursuant to Section
5.02, or (b) the maximum amount which can be paid to Executive without
being, or causing any other payment to be, nondeductible by reason of
section 280G of the Code.
5.02 Notwithstanding any other provisions of this Agreement, in the event that
any payment or benefit received, or to be received, by Executive in
connection with, and contingent on, a Change in Control or the termination
of Executive's employment (whether pursuant to the terms of this Agreement
or any other plan, arrangement or agreement with Employer, or any Person
whose actions result in a Change in Control, or any Person affiliated with
Employer or such Person) (all such payments and benefits, including the
Severance Payments, being hereinafter called "Total Payments") would not be
deductible (in whole or part), by Employer, an affiliate or Person making
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such payment or providing such benefit, as a result of section 280G of the
Code, then, to the extent necessary to make the remaining portion of the
Total Payments deductible (and after taking into account any reduction in
the Total Payments provided by reason of Section 280G of the Code in such
other plan, arrangement or agreement), (A) the cash Severance Payments
and/or other cash payments provided for hereunder, in each case, to the
extent still unpaid, shall first be reduced (if necessary, to zero), and
(B) all other non-cash Severance Payments and/or other non-cash benefits
provided for hereunder, in each case, to the extent still unfurnished,
shall next be reduced (if necessary, to zero), and (C) Executive shall have
no right to receive hereunder, and neither Employer, or any Person whose
actions result in a Change in Control, or any Person affiliated with
Employer or such Person, shall be obligated to make, pay or furnish to
Executive hereunder any payment or benefit in excess of those payments or
benefits provided hereunder as reduced, if applicable, pursuant to clause
(A) or clause (B) above. For purposes of this limitation (i) no portion of
the Total Payments, the receipt or enjoyment of which Executive shall have
effectively waived in writing prior to the Date of Termination, shall be
taken into account, (ii) no portion of the Total Payments shall be taken
into account which, in the opinion of tax counsel selected by Employer's
independent auditors and reasonably acceptable to Executive, does not
constitute a "parachute payment" within the meaning of section 280G(b)(2)
of the Code, including by reason of section 280G(b)(4)(A) of the Code,
(iii) the Severance Payments shall be reduced only to the extent necessary
so that the Total Payments (other than those referred to in clauses (i) or
(ii)) in their entirety constitute reasonable compensation for services
actually rendered within the meaning of section 280G(b)(4)(B) of the Code
or are otherwise not subject to disallowance as deductions, in the opinion
of the tax counsel referred to in clause (ii); and (iv) the value of any
non-cash benefit or any deferred payment or benefit included in the Total
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Payments shall be determined by Employer's independent auditors in
accordance with the principles of sections 280G(d)(3) and (4) of the Code.
If it is established pursuant to a final determination of an arbitral
tribunal, court or an Internal Revenue Service proceeding that,
notwithstanding the good faith of Executive and Employer in applying the
terms of this Section 5.02, the aggregate "parachute payments" paid to or
for Executive's benefit are in an amount that would result in any portion
of such "parachute payments" not being deductible by reason of section 280G
of the Code, then Executive shall have an obligation to pay Employer, upon
demand, an amount equal to the sum of (i) the excess of the aggregate
"parachute payments" paid to Executive, or for Executive's benefit, over
the aggregate "parachute payments" that could have been paid to Executive,
or for Executive's benefit, without any portion of such "parachute
payments" being non-deductible by reason of section 280G of the Code; and
(ii) interest on the amount set forth in clause (i) of this sentence at the
rate provided in section 1274(b)(2)(B) of the Code from the date of
Executive's receipt of such excess until the date of such payment.
5.03 The payments and other items provided for in Section 5.01 (other than
Section 5.01(D)) hereof shall be made not later than the tenth (10th) day
following the Date of Termination or the date of exercise by Executive of
any of Executive's rights hereunder; provided, however, that if the amounts
of such payments, and the limitation on such payments set forth in Section
5.02 hereof, cannot be finally determined on or before such day, Employer
shall pay to Executive on such day an estimate, as determined in good faith
by Employer, of the minimum amount of such payments to which Executive is
clearly entitled and shall pay the remainder of such payments (together
with interest at the rate provided in section 1274(b)(2)(B) of the Code) as
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soon as the amount thereof can be determined but in no event later than the
thirtieth (30th) day after the Date of Termination. In the event that the
amount of the estimated payments exceeds the amount subsequently determined
to have been due, such excess shall constitute a loan by Employer to
Executive, payable on the fifth (5th) business day after demand by Employer
(together with interest at the rate provided in section 1274(b)(2)(B) of
the Code). At the time that payments are made under this Section, Employer
shall provide Executive with a written statement setting forth the manner
in which such payments were calculated and the basis for such calculations
including, without limitation, any opinions or other advice Employer has
received from outside counsel, auditors or consultants (and any such
opinions or advice which are in writing shall be attached to the
statement).
5.04 Employer also shall pay to Executive all legal and accounting fees and
expenses incurred by Executive as a result of a termination which entitles
Executive to the Severance Payments (including all such fees and expenses,
if any, incurred in disputing any such termination or in seeking in good
faith to obtain or enforce any benefit or right provided by this Agreement
or in connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Code to any payment
or benefit provided hereunder). Such payments shall be made within fifteen
(15) business days after delivery of Executive's written requests for
payment accompanied with such evidence of fees and expenses incurred as
Employer reasonably may require.
5.05 Following a Change in Control and during the term of this Agreement, upon
the termination of Executive's employment (i) by Employer Without Cause, or
(ii) voluntarily by Executive following the occurrence of an event
constituting Good Reason, as defined herein, Executive shall be entitled to
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the Severance Payments as described in Section 5.01, only upon the
condition that Executive positively and publicly supports any event which
constitutes a Change in Control, as defined in Section 13(C) hereof, from
the date which is the earlier of the date of such termination of employment
or the occurrence of the Change in Control, until the later of such dates.
6. Termination Procedures and Compensation During Dispute.
6.01 Notice of Termination. After a Change in Control and during the term
of this Agreement, any termination of Executive's employment (other
than by reason of death or Retirement) shall be communicated and
effected by a Notice of Termination (defined below) from one party
hereto to the other party hereto, in accordance with Section 9 hereof.
For purposes of this Agreement, a "Notice of Termination" shall mean a
written notice which shall indicate the specific termination provision
in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination
of Executive's employment under the provision so indicated. Further, a
Notice of Termination, regarding the termination of Executive's
employment For Cause, is required to include a copy of a resolution
duly adopted by the affirmative vote of a majority of the entire
membership of the Board (excluding Executive, if a member of the
Board), at a meeting of the Board which was called and held for the
purpose of considering such termination (after reasonable notice to
Executive and an opportunity for Executive, together with Executive's
legal counsel, to be heard before the Board) finding that, in the good
faith opinion of the Board, Executive was guilty of conduct set forth
in the definition of "For Cause" herein, and specifying the
particulars thereof in detail.
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6.02 Date of Termination. "Date of Termination", with respect to any purported
termination of Executive's employment (other than by reason of death or
Retirement) following a Change in Control and during the term of this
Agreement, shall mean (i) if Executive's employment is terminated for
Disability, thirty (30) days after Notice of Termination is given (provided
that Executive shall not have returned to the full-time performance of
Executive's duties during such thirty (30) day period), and (ii) if
Executive's employment is terminated for any other reason, the date
specified in the Notice of Termination, which, in the case of a termination
by Employer, shall not be less than thirty (30) days (except in the case of
a termination For Cause) and, in the case of a termination by Executive,
shall not be less than fifteen (15) days nor more than sixty (60) days,
respectively, from the date such Notice of Termination is given.
6.03 Dispute Concerning Termination. If, following any Notice of Termination and
prior to the Date of Termination (as determined without regard to this
Section 6.03), the party receiving such Notice of Termination notifies the
other party that a dispute exists concerning the termination, the Date of
Termination shall be the date determined in the resolution of the dispute,
either by mutual written agreement of the parties or by the arbitral
process outlined in Section 12 hereof; provided further that the Date of
Termination shall be extended by a notice of dispute, only if such notice
is given in good faith and the party giving such notice pursues the
resolution in such dispute with reasonable diligence.
6.04 Compensation During Dispute. If a purported termination of Executive's
employment occurs after a Change of Control and during the term of this
Agreement, and such termination is disputed in accordance with Section 6.03
hereof, Employer shall continue to pay Executive the full compensation in
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effect when the Notice of Termination giving rise to the dispute was given
(including, but not limited to, salary) and continue Executive as a
participant in all compensation, benefit and insurance plans in which
Executive was participating when the notice giving rise to the dispute was
given, until the dispute is finally resolved in accordance with Section
6.03 hereof.
7. No Mitigation. Employer agrees that, if Executive's employment by Employer
is terminated during the term of this Agreement, Executive is not required
to seek other employment or to attempt in any way to reduce any amounts
payable to Executive by Employer pursuant to Section 5 or Section 6.04.
Further, the amount of any payment or benefit provided for in Section 5
(other than Section 5.01(D)) or Section 6.04 shall not be reduced by any
compensation earned by Executive as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to
be owed by Executive to Employer, or otherwise.
8. Successors; Binding Agreement.
8.01 In addition to any obligations imposed by law upon any successor to
Employer, Employer will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Employer to
expressly assume and agree to perform this Agreement in the same
manner and to the same extent that Employer would be required to
perform it if no such succession had taken place. Failure of Employer
to obtain such assumption and agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall
entitle Executive to compensation from Employer in the same amount and
on the same terms as Executive would be entitled to hereunder, if
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Executive were to terminate voluntarily Executive's employment for
Good Reason following a Change in Control; except that, for purposes
of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination.
8.02 This Agreement shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If Executive shall die while any amount would still be
payable to Executive hereunder (other than amounts which, by their
terms, terminate upon the death of Executive) 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 the
executors, personal representatives or administrators of Executive's
estate.
9. Notices. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to
the respective addresses set forth below, or to such other address as
either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only
upon actual receipt:
To Employer: Appalachian Community Bancshares, Inc.
Appalachian Community Bank
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
To Executive: [Name of Executive]
Appalachian Community Bank
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
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10. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing and signed by Executive and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition
or provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not expressly set forth in
this Agreement. The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the State of Georgia.
All references to sections of the Exchange Act or the Code shall be deemed
also to refer to any successor provisions to such sections. Any payments
provided for hereunder shall be paid net of any applicable withholding
required under federal, state or local law and any additional withholding
to which Executive has agreed. The obligations of Employer and Executive
under Sections 5 and 6 shall survive the expiration of the term of this
Agreement. 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. Counterparts. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
12. Settlement of Disputes; Arbitration. All claims by Executive for benefits
under this Agreement shall be directed to, and determined by, the Board and
shall be in writing. Any denial by the Board of a claim for benefits under
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this Agreement shall be delivered to Executive in writing and shall set
forth the specific reasons for the denial and the specific provisions of
this Agreement relied upon. Any dispute or controversy arising under, or in
connection with, this Agreement shall be settled exclusively by arbitration
in Ellijay, Georgia, in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however,
that Executive shall be entitled to seek specific performance of
Executive's right to be paid until the Date of Termination during the
pendency of any dispute or controversy arising under or in connection with
this Agreement.
13. Definitions. For purposes of this Agreement, the following terms shall have
the meanings indicated below:
(A) "Beneficial Owner" shall have the meaning defined in Rule 13d-3 under
the Exchange Act.
(B) "Board" shall mean the Board of Directors of each of Holding Company
and Bank, collectively and/or individually as the context shall
require.
(C) A "Change in Control" shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs shall have
been satisfied:
(I) any Person is or becomes, directly or indirectly, the Beneficial
Owner of securities of Holding Company or Bank representing 25%
or more of the voting power of the then outstanding securities of
Holding Company or Bank; or
(II) any Person acquires, directly or indirectly, the ability to
control the election of a majority of the directors of either
Holding Company or Bank; or
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(III)any Person acquires, directly or indirectly, the ability to
exercise a controlling influence over the management of policies
of either Holding Company or Bank; or
(IV) during any period of two consecutive years, the Continuing
Directors (as defined herein) cease for any reason to constitute
at least two-thirds of the Board of Directors of either Holding
Company or Bank; or
(V) the consummation of a merger or statutory share exchange of
Holding Company or Bank with any other corporation, other than
(i) a merger or statutory share exchange which would result in
the voting securities of Holding Company or Bank outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity), in combination with the
ownership of any trustee or other fiduciary holding securities
under an employee benefit plan of Holding Company or Bank, at
least 75% of the combined voting power of the voting securities
of Holding Company, Bank or such surviving entity outstanding
immediately after such merger or statutory share exchange in
substantially the same proportions as their ownership immediately
prior to such merger or statutory share exchange, or (ii) a
merger or statutory share exchange effected to implement a
recapitalization of Holding Company or Bank (or similar
transaction) in which no Person acquires more than 50% of the
combined voting power of the then outstanding securities of
Holding Company or Bank; or
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(VI) the shareholders of Holding Company or Bank approve a plan of
complete liquidation of Holding Company or Bank, or an agreement
for the sale or disposition by Employer of all or substantially
all Employer's assets.
(D) "Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
(E) "Continuing Directors" for any period of two consecutive years shall mean
(i) any individuals who, at the beginning of such period, constitute the
Board of Directors of either Holding Company or Bank, and
(ii) any individuals whose election or nomination for election as directors
of the Board were approved by a vote of at least two-thirds of the
individuals described in clause (i) above then in office, provided
that such an individual designated as a director by a Person who has
entered into an agreement with Holding Company or Bank to effect a
transaction described in subsections (I), (II), (III), (V) or (VI) of
section (D) of this Article shall not be a Continuing Director.
(F) "Date of Termination" shall have the meaning stated in Section 6.02 hereof.
(G) "Disability" shall mean a physical or mental infirmity which impairs
Executive's ability to substantially perform his or her duties of
employment, or established by the Employer from time to time, in a written
agreement or otherwise. Executive's Disability shall be conclusively
established (i) by Executive's becoming eligible for long-term disability
benefits under the terms of any long-term disability plan sponsored by
Employer, or (ii) if Employer has no such plan in effect, by a good faith
determination by the Board that Executive's infirmity will impair
Executive's ability to substantially perform his or her duties under this
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Agreement for a period of one hundred eighty (180) consecutive days.
Following the establishment of Executive's Disability, Employer may
terminate Executive's employment for Disability if, after Employer has
given Executive a Notice of Termination for Disability, Executive has not
returned to the full-time performance of Executive's duties within thirty
(30) days after such Notice of Termination has been given.
(H) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time.
(I) "Executive" shall mean the individual named in the first paragraph of this
Agreement.
(J) Termination "For Cause" shall mean termination by Employer of Executive's
employment because of, in the good faith determination by the Board:
Executive's personal dishonesty, incompetence, willful misconduct, breach
of fiduciary duty involving personal profit, intentional failure to perform
stated duties (other than any such failure resulting from Executive's
incapacity due to physical or mental illness or any such actual or
anticipated failure after the issuance of a Notice of Termination for Good
Reason by Executive pursuant to Section 6.01), willful violation of any
law, rule, regulation (other than traffic violations or similar offenses)
or final cease-and-desist order, or material breach of any provision of
Executive's employment agreement with Employer. For purposes of this
definition, no act, or failure to act, on Executive's part shall be deemed
"willful" unless done, or omitted to be done, by Executive not in good
faith and without reasonable belief that Executive's act, or failure to
act, was in the best interest of Employer.
19
(K) "Good Reason" for voluntary termination by Executive of Executive's
employment shall mean the occurrence (without Executive's express written
consent) following any Change in Control, of any one of the following acts,
or failures to act, by Employer:
(I) the assignment to Executive of any duties materially different from
those normally associated with his or her position, or a substantial
adverse alteration in the nature or status of Executive's
responsibilities from those in effect immediately prior to the Change
in Control;
(II) a material reduction by Employer without reasonable cause of
Executive's annual base salary, as in effect on the date of the Change
in Control;
(III)the relocation of Employer's principal executive offices to a
location outside a thirty-five (35) mile radius from the location at
which such offices are located immediately prior to the Change in
Control, or Employer's requiring Executive to be based anywhere other
than the metropolitan area in which Executive is based immediately
prior to the Change in Control, except for required travel on
Employer's business to an extent substantially consistent with
Executive's present business travel obligations;
(IV) the failure by Employer to continue to provide Executive with
compensation and benefits provided for under this Agreement, as the
same may be increased from time to time, or with benefits
20
substantially similar to those provided to him under any of the
employee benefit plans in which Executive now or hereafter becomes a
participant, or the taking of any action by Employer which would,
directly or indirectly, reduce any of such benefits or deprive
Executive of any material fringe benefit enjoyed by him at the time of
the Change in Control;
(V) the failure to elect or re-elect Executive to the Board, if Executive
is serving as a member of the Board on the date of the Change in
Control; or
(VI) any purported termination of Executive's employment which is not
effected pursuant to a Notice of Termination satisfying the
requirements of Section 6.01; for purposes of this Agreement, no such
purported termination shall be effective. Executive's right to
terminate voluntarily Executive's employment for Good Reason shall not
be affected by Executive's incapacity due to physical or mental
illness. Executive's continued employment shall not constitute consent
to, or a waiver of rights with respect to, any act or failure to act
constituting Good Reason hereunder.
(L) "Notice of Termination" shall have the meaning stated in Section 6.01
hereof.
(M) "Options" shall mean options for Holding Company or Bank Shares granted to
Executive under the stock option plans of Holding Company or Bank.
(N) "Person" shall mean an individual (other than the Executive), individuals
acting in concert or as a "group" (as defined in Section 13(d) of the
Exchange Act), or a corporation, partnership, trust, association, joint
venture, pool, syndicate, sole proprietorship, unincorporated organization
or any other form of entity not specifically listed herein. A Person shall
21
not include (i) Holding Company or Bank, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of Holding Company or
Bank, (iii) an underwriter temporarily holding securities pursuant to an
offering of such securities, or (iv) a corporation owned, directly or
indirectly, by the stockholders of Holding Company in substantially the
same proportions as their ownership of stock of Holding Company.
(O) "Retirement" shall be deemed the reason for the termination by Employer or
Executive of Executive's employment. if such employment is terminated in
accordance with Employer's retirement policy, not including early
retirement, generally applicable to its salaried employees, as in effect
immediately prior to the Change in Control, or in accordance with the
bylaws of the Employer or any retirement arrangement established with
Executive's consent with respect to Executive.
(P) "Severance Payments" shall mean those payments described in Section 5.01
hereof.
(Q) "Shares" shall mean shares of common stock of Holding Company, Bank or any
equity securities into which such shares have been converted.
(R) "Total Payments" shall mean those payments described in Section 5.02
hereof.
(S) Termination "Without Cause" shall mean termination by Employer of
Executive's employment for any reason other than Retirement, Disability or
For Cause.
[signatures appear on the following page]
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IN WITNESS WHEREOF, the parties hereto have set their hands and seals all as
of the day and year first above written.
APPALACHIAN BANCSHARES, INC.
By:
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Name:
----------------------------------------------
Title:
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APPALACHIAN COMMUNITY BANK
By:
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Name:
------------------------------------------------
Title:
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EXECUTIVE
----------------------------------
[Name of Executive]
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Description of Benefits of each of the Named Executive Officers
Under the Change of Control Agreement
Name Severance Multiple of Multiple of Repurchase Insurance Other
---- --------- ----------- ----------- ----------- --------- -----
Payments Salary Bonus Stock Benefits Benefits
-------- ------ ----- ----- -------- --------
Options
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 90 days 2.99 2 Yes 18 mos. 18 mos.
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 90 days 2 1 Yes 12 mos. 12 mos.
▇▇▇▇ ▇. May 90 days 2 1 Yes 12 mos. 12 mos.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 90 days 2 1 Yes 12 mos. 12 mos.