UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C., 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
the
Securities Exchange Act of 1934
Date
of
Report (Date of Earliest Event Reported)
July
31, 2007
CITY
HOLDING COMPANY
(Exact
Name of Registrant as Specified in its Charter)
Commission
File Number: 0-17733
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West
Virginia
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55-0169957
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(State
or Other Jurisdiction of
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(I.R.S.
Employer
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|
Incorporation
or Organization)
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Identification
No.)
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25
Gatewater Road, Cross Lanes, WV 25313
(Address
of Principal Executive Offices, Including Zip Code)
304-769-1100
(Registrant’s
Telephone Number, Including Area Code)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
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¨
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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¨
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Soliciting
material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR
240.14a-12(b))
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¨
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
(17CFR240.13e-4(c))
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Section
1 – Registrant’s Business and Operations
Item
1.01 Entry
into a Material Definitive Agreement
On
July
31, 2007, City Holding Company (the “Company”)
and City
National Bank of West Virginia (“City National”) entered into the following
employment agreements:
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·
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An
Employment Agreement with Charles R. Hageboeck regarding his continued
employment as President and Chief Executive Officer of the Company
and
City National (the “Hageboeck Employment Agreement”);
and
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·
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An
Employment Agreement with Craig G. Stilwell regarding his continued
employment as Executive Vice President of the Company and City National
(the “Stilwell Employment
Agreement.
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The
Board
of Directors of the Company, at its regularly scheduled meeting on
July 25, 2007, approved the Hageboeck Employment Agreement and
Stilwell Employment Agreement (collectively, the “Employment Agreements”) upon
recommendation by the Company’s compensation committee. The material
terms and conditions of each of the Employment Agreements are set forth
below.
Hageboeck
Employment Agreement
The
material terms and conditions of the Hageboeck Employment Agreement are as
follows:
The
term
of the Hageboeck Employment Agreement begins on July 25, 2007 and terminates
on
July 31, 2009, unless extended. On each monthly anniversary date
following July 31, 2007, the term is automatically extended for an
additional month unless either the Company, City National or Mr. Hageboeck
serve notice to the other parties to fix the term to a definite two year period
from the date of such notice.
Cash
compensation under the Hageboeck
Employment Agreement consists of the following:
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·
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A
minimum annual salary at a rate not less than $360,000, which will
be
adjusted upward annually to reflect the Company’s performance,
compensation levels for peer institutions and changes in the scale
and
scope of business activities of the Company under Mr. Hageboeck’s
leadership;
|
|
·
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An
“incentive compensation” at the end of each of the Company’s fiscal years
based on the Company’s Return on Tangible Equity (“ROTE”) for such fiscal
year, such that if the Company’s ROTE is at least 14%, the incentive
compensation will be equal to 20% of Mr. Hageboeck’s annual salary
plus an additional 5% of annual salary for each 1% increase in ROTE
over
14%, but no incentive compensation will be payable if ROTE is less
than
14%; and
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|
·
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A
bonus to be awarded by the Company and City National’s Boards of Directors
in their discretion based upon Mr. Hageboeck’s accomplishments and
achievements and/or his leadership of the Company and City
National.
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In
the
event that Mr. Hageboeck’s employment with the Company terminates during any
fiscal year because of death, Total and Permanent Disability (defined as being
unable to engage in any substantial gainful activity by reason of a medically
determinable physical or mental impairment which can be expected to result
in
death or can be expected to last for a continuous period of not less than 12
months), termination by the Company without Just Cause (defined below) or
Mr. Hageboeck’s termination for Good Reason (defined below), the incentive
compensation will be prorated based on the number of days worked by Mr.
Hageboeck.
In
addition to the foregoing, Mr.
Hageboeck will have the right to participate in the incentive plans of the
Company and City National for which he may become eligible and designated a
participant. Also, Mr. Hageboeck will continue to participate in the
employee pension and welfare benefits and group employee benefits such as sick
leave, vacation, group disability and health, life, and accident insurance
and
similar indirect compensation which the Company and City National may from
time
to time extend to its officers; provided that Mr. Hageboeck will receive
term life insurance coverage in an amount not less than two times his base
salary.
If
Mr. Hageboeck suffers a Total and
Permanent Disability during the term of the agreement, he will continue to
earn
all compensation (including bonuses and incentive compensation) to which he
would have been entitled as if he had not been Totally and Permanently Disabled
for the first 12 months of the period, reduced by the amount of any compensation
received pursuant to any applicable disability insurance plan of the Company
or
City National. Thereafter, he will receive compensation to which he
is entitled under any applicable disability insurance plan. In
addition, after the first 12 months of any Total and Permanent Disability,
the
Board of Directors may terminate Mr. Hageboeck’s employment, in which case he
will be entitled to receive “Termination Compensation” multiplied by three paid
over 60 equal monthly installments and he will continue to receive health
insurance covered from the Company on the same terms as were in effect prior
to
his termination for all periods he receives Termination
Compensation. “Termination Compensation” means the highest amount of
cash compensation paid to the employee in respect of any of the three most
recent calendar years ending prior to the date of termination, determined by
reference to the annual cash compensation (salary, incentive compensation,
and
bonus). If Mr. Hageboeck dies during the term of the agreement, his
estate will receive an amount equal to his Termination Compensation multiplied
by three and paid over 36 equal monthly payments, in addition to any life
insurance benefits available to all employees of City National.
If
(i) Mr. Hageboeck voluntarily
terminates employment with the Company and City National for any reason (other
than Total and Permanent Disability or for Good Reason (defined below), (ii)
the
Company terminates Mr. Hageboeck for Just Cause (defined below); or (iii) the
Hageboeck Employment Agreement terminates after the Company elects not to extend
it and converts it to a fixed two-year period, Mr. Hageboeck will be entitled
to
receive $1,122,304, plus interest at the Treasury One-Year Constant
Maturity rate accruing from and after December 31, 2006, which will be paid
to him over 36 equal monthly payments beginning the first month following his
termination of employment. This termination benefit reflects benefits
originally provided under the Employment Agreement signed between the Company,
City National and Mr. Hageboeck on June 11, 2001, as amended on November 18,
2003 which benefits became fully vested on June 11, 2005. This
benefit is not subject to a risk of forfeiture under any circumstances except
where Mr. Hageboeck engages in a willful, fraudulent activity that materially
and adversely affects the Company or City National and Mr. Hageboeck personally
profits from such activity.
If
the Company and City National
terminate Mr. Hageboeck for reasons other than Just Cause or Mr. Hageboeck
terminates employment for Good Reason, he will receive his Termination
Compensation times three to be paid in 36 monthly installments.
The
Company and City National have the
right to terminate Mr. Hageboeck for “Just Cause” if he:
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·
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Commits
an act materially detrimental to the Company or City
National;
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·
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Is
convicted of a felony involving moral turpitude;
or
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·
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Materially
breaches any other provision of the
agreement.
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Mr.
Hageboeck may voluntarily terminate
employment for “Good Reason” if any of the following events occur without his
express written consent:
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·
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The
assignment to him of duties inconsistent with the position of President
and Chief Executive Officer;
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|
·
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A
reduction in his pay grade or base salary or his exclusion from
participation in benefit plans in which he previously
participated;
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·
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An
involuntary relocation more than 50 miles from where he is working
at such
time or breach of any other material provision of the agreement by
the
Company or City National;
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·
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Any
purported termination of his employment by the Company or City National
which is not in accordance with the agreement;
or
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·
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The
occurrence of a change of control.
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For
a period of 36 months following a
voluntary termination of employment or a termination of employment for Just
Cause or Total and Permanent Disability, Mr. Hageboeck cannot:
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·
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Engage
in the consumer, savings or commercial banking business, the savings
and
loan business or the mortgage banking business in any county of any
state
in which the Company or City National maintains offices as well as
certain
other counties in West Virginia, Kentucky or
Ohio.
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For
a
period of 36 months after a termination of employment for Good Reason or without
Just Cause, Mr. Hageboeck cannot:
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·
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Solicit
any depositors or customers of the Company, City National or their
affiliates; or
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·
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Induce
any then or former employee of the Company, City National or their
affiliates to terminate his or her employment with such
employer.
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For
a
period of 36 months after a termination of employment for any reason,
Mr. Hageboeck cannot disclose any confidential information obtained by him
while in the employ of the Company and City National.
Stilwell
Employment Agreement
The
material terms and conditions of the Stilwell Employment Agreement are as
follows:
The
term
of the Stilwell Employment Agreement begins on July 25, 2007 and terminates
on
July 31, 2009, unless extended. On each monthly anniversary date
following July 31, 2007, the term is automatically extended for an additional
month unless either the Company, City National or Mr. Stilwell serve notice
to the other parties to fix the term to a definite two year period from the
date
of such notice.
Cash
compensation under the Stilwell
Employment Agreement consists of the following:
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·
|
A
minimum annual salary at a rate not less than $212,000, which will
be
adjusted upward annually to reflect the Company’s performance,
compensation levels for peer institutions and changes in the scale
and
scope of business activities of the Company under Mr. Stilwell’s
leadership;
|
|
·
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An
“incentive compensation” at the end of each of the Company’s fiscal years
based on the Company’s Return on Tangible Equity (“ROTE”) for such fiscal
year, such that if the Company’s ROTE is at least 14%, the incentive
compensation will be equal to 20% of Mr. Stilwell’s annual salary
plus an additional 5% of annual salary for each 1% increase in ROTE
over
14%, but no incentive compensation will be payable if ROTE is less
than
14%; and
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|
·
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A
bonus to be awarded by the Company and City National’s Boards of Directors
in their discretion based upon Mr. Stilwell’s accomplishments and
achievements and/or his leadership of the Company and City
National.
|
In
the
event that Mr. Stilwell’s employment with the Company terminates during any
fiscal year because of death, Total and Permanent Disability (defined as being
unable to engage in any substantial gainful activity by reason of a medically
determinable physical or mental impairment which can be expected to result
in
death or can be expected to last for a continuous period of not less than 12
months), termination by the Company without Just Cause (defined below) or
Mr. Stilwell’s termination for Good Reason (defined below), the incentive
compensation will be prorated based on the number of days worked by Mr.
Stilwell.
In
addition to the foregoing, Mr.
Stilwell will have the right to participate in the incentive plans of the
Company and City National for which he may become eligible and designated a
participant. Also, Mr. Stilwell will continue to participate in the
employee pension and welfare benefits and group employee benefits such as sick
leave, vacation, group disability and health, life, and accident insurance
and
similar indirect compensation which the Company and City National may from
time
to time extend to its officers; provided that Mr. Stilwell will receive term
life insurance coverage in an amount not less than two times his base
salary.
If
Mr. Stilwell suffers a Total and
Permanent Disability during the term of the agreement, he will continue to
earn
all compensation (including bonuses and incentive compensation) to which he
would have been entitled as if he had not been Totally and Permanently Disabled
for the first 12 months of the period, reduced by the amount of any compensation
received pursuant to any applicable disability insurance plan of the Company
or
City National. Thereafter, he will receive compensation to which he
is entitled under any applicable disability insurance plan. In
addition, after the first 12 months of any Total and Permanent Disability,
the
Board of Directors may terminate Mr. Stilwell’s employment, in which case he
will be entitled to receive “Termination Compensation” multiplied by three paid
over 60 equal monthly installments and he will continue to receive health
insurance covered from the Company on the same terms as were in effect prior
to
his termination for all periods he receives Termination
Compensation. “Termination Compensation” means the highest amount of
cash compensation paid to the employee in respect of any of the three most
recent calendar years ending prior to the date of termination, determined by
reference to the annual cash compensation (salary, incentive compensation,
and
bonus). If Mr. Stilwell dies during the term of the agreement, his
estate will receive an amount equal to his Termination Compensation multiplied
by three and paid over 36 equal monthly payments, in addition to any life
insurance benefits available to all employees of City National.
If
(i) Mr. Stilwell voluntarily
terminates employment with the Company and City National for any reason (other
than Total and Permanent Disability or for Good Reason (defined below), (ii)
the
Company terminates Mr. Stilwell for Just Cause (defined below); or (iii) the
Stilwell Employment Agreement terminates after the Company elects not to extend
it and converts it to a fixed two-year period, Mr. Stilwell will be entitled
to
receive $693,082, plus interest at the Treasury One-Year Constant Maturity
rate accruing from and after December 31, 2006, which will be paid to him
over 36 equal monthly payments beginning the first month following his
termination of employment. This termination benefit reflects benefits
originally provided under the Employment Agreement signed between the Company,
City National and Mr. Stilwell on May 15, 2001, as amended on November 18,
2003
which benefits became fully vested on May 15, 2005. This benefit is
not subject to a risk of forfeiture under any circumstances except where Mr.
Stilwell engages in a willful, fraudulent activity that materially and adversely
affects the Company or City National and Mr. Stilwell personally profits from
such activity.
If
the Company and City National
terminate Mr. Stilwell for reasons other than Just Cause, or Mr. Stilwell
terminates employment for Good Reason, he will receive his Termination
Compensation times three to be paid in 36 monthly installments.
The
Company and City National have the
right to terminate Mr. Stilwell for “Just Cause” if he:
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·
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Commits
an act materially detrimental to the Company or City
National;
|
|
·
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Is
convicted of a felony involving moral turpitude;
or
|
|
·
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Materially
breaches any other provision of the
agreement.
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Mr.
Stilwell may voluntarily terminate
employment for “Good Reason” if any of the following events occur without his
express written consent:
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·
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The
assignment to him of duties inconsistent with the position of Executive
Vice President;
|
|
·
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A
reduction in his pay grade or base salary or his exclusion from
participation in benefit plans in which he previously
participated;
|
|
·
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An
involuntary relocation more than 50 miles from where he is working
at such
time or breach of any other material provision of the agreement by
the
Company or City National;
|
|
·
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Any
purported termination of his employment by the Company or City National
which is not in accordance with the agreement;
or
|
|
·
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The
occurrence of a change of control.
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For
a period of 36 months following a
voluntary termination of employment or a termination of employment for Just
Cause or Total and Permanent Disability, Mr. Stilwell cannot:
|
·
|
Engage
in the consumer, savings or commercial banking business, the savings
and
loan business or the mortgage banking business in any county of any
state
in which the Company or City National maintains offices as well as
certain
other counties in West Virginia, Kentucky or
Ohio.
|
For
a
period of 36 months following a termination for Good Reason or without Just
Cause, Mr. Stilwell cannot:
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·
|
Solicit
any depositors or customers of the Company, City National or their
affiliates; or
|
|
·
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Induce
any then or former employee of the Company, City National or their
affiliates to terminate his or her employment with such
employer.
|
For
a
period of 36 months after termination for any reason, Mr. Stilwell cannot
disclose any confidential information obtained by him while in the employ of
the
Company and City National.
The
foregoing is a summary of the material terms of the Hageboeck Employment
Agreement and Stilwell Employment and is qualified in its entirety by each
such
agreement, copies of which are attached as Exhibits 10.1 and 10.2, respectively,
to this Current Report on Form 8-K and is hereby incorporated by reference
into
this Item 1.01.
Section
9 - Financial Statements and Exhibits
Item
9.01 Financial Statements and Exhibits.
(c) Exhibits
Signatures
Pursuant
to the requirements of the Securities and Exchange Act of 1934, the Registrant
has duly caused this Report to be signed on its behalf by the Undersigned
hereunto duly authorized.
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Dated:
July 31, 2007
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City
Holding Company
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By:
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/s/
David L. Bumgarner
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David
L. Bumgarner
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Chief
Financial Officer
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-9-
EXHIBIT
10.1
EMPLOYMENT
AGREEMENT
THIS
EMPLOYMENT AGREEMENT (“Agreement”) is effective as of July 25, 2007, and is
among CITY HOLDING COMPANY, a West Virginia corporation (the “Company”), CITY
NATIONAL BANK OF WEST VIRGINIA, a national banking association
(“City National”), and Charles R. Hageboeck (“Employee”). The Company and
City National are referred to collectively herein as the
“Employer.”
Recitals:
The
Company desires to employ Employee as its President & Chief Executive
Officer and City National desires to employ Employee as its President and Chief
Executive Officer.
This
employment agreement replaces and supersedes the Amended and Restated Employment
Agreement entered into between the Employer and Employee on June 11, 2001 as
amended on November 18, 2003, as well as the Amendment to the Employment
Agreement signed on February 1, 2005, pursuant to which the Employee became
the
President and Chief Executive Officer of the Company and City National. That
Employment Agreement currently has a term which ends February 11,
2008.
Employee
is willing to make his services available to Employer on the terms and subject
to the conditions set forth herein.
NOW,
THEREFORE, in consideration of the mutual covenants and promises contained
herein and other good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, the parties agree as follows:
Agreement:
1.
Employment.
Employee is employed as President and Chief Executive Officer of the Company
and
President and Chief Executive Officer of City National. Employee shall have
such
duties and responsibilities as are commensurate with such positions. Employee
accepts and agrees to such employment, subject to the general supervision and
pursuant to the orders, advice and direction of Employer’s Boards of Directors.
Employee shall perform such duties as are customarily performed by one holding
such positions in other same or similar businesses or enterprises as that
engaged in by Employer.
2.
Term
of
Employment. The term of this Agreement shall commence on July 25, 2007
and shall terminate on July 31, 2009, unless extended. On each monthly
anniversary date following July 31, 2007, this Agreement will be automatically
extended for an additional month; provided, however, that on any one month
anniversary date following July 31, 2007 either Employer or Employee
may serve notice to the other party to fix the term to a definite two year
period from the date of such notice and, in such event, no further automatic
extensions will occur. The term of this Agreement as it may be extended pursuant
to this Section 2, or as it may be shortened in accordance with Section 5 or
Section 6, is referred to as the “Term.”
3.
Compensation.
(a)
For
all
services rendered by Employee to Employer under this Agreement, Employer shall
pay to Employee a minimum annual salary at a rate not less than $360,000 or
as
it has been periodically adjusted, payable in accordance with the payroll
practices of Employer applicable to its officers. The Company and/or City
National may make such payments as well as any other payments provided for
in
this Agreement but, regardless of who is the payor, both the Company and City
National shall be jointly and severally liable for such payments. Employee’s
annual salary shall be adjusted upward annually reflecting the Company’s
performance, compensation levels for peer institutions, and changes in the
scale
and scope of business activities of the Company under Employee’s
leadership.
(b)
Employee
shall be paid “incentive compensation” at the end of each of Employer’s fiscal
years which occurs in whole or in part during the Term based on Employer’s
Return on Tangible Equity (“ROTE”) for such fiscal year. For purposes of this
Agreement, “Return on Tangible Equity” shall mean Net Income divided by Tangible
Equity. For purposes of this Agreement, Tangible Equity shall mean Stockholder’s
Equity less Goodwill and Other Intangibles. If ROTE is at least 14%, such
incentive compensation shall be payable as follows: If Employer’s
ROTE is 14%, Employee shall receive “incentive compensation” of 20% of
Employee’s annual salary. If ROTE is greater than 14%, Employee shall receive
“incentive compensation” of 20% of his annual salary, plus an additional 5% of
annual salary for each 1% increase in ROTE over 14%. If ROTE results in a
fraction of 1%, then the “incentive compensation” shall be calculated based on
the formula set forth above through the whole number of the percentage, plus
the
fractional portion of ROTE times 5%. As a result, the following table provides
some examples of the “incentive compensation” earned for various levels of
ROTE:
|
|
Incentive
Compensation as a
|
|
Return
on Tangible Equity
|
Percentage
of Annual Salary
|
|
|
|
|
14%
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20%
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15%
|
25%
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16%
|
30%
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17%
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35%
|
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18%
|
40%
|
|
19%
|
45%
|
|
20%
|
50%
|
|
21%
|
55%
|
|
22%
|
60%
|
|
23%
|
65%
|
|
24%
|
70%
|
|
25%
|
75%
|
|
26%
|
80%
|
|
27%
|
85%
|
|
28%
|
90%
|
|
29%
|
95%
|
|
30%
|
100%
|
(c)
Any
“incentive compensation” for a fiscal year shall be deemed to have been fully
earned and payable at December 31st of each fiscal year, and shall be paid
to
Employee within 30 days of the issuance of Employer’s audited financial
statements for a specified fiscal year. “Return on Tangible Equity” shall be
determined on a consolidated basis in accordance with Generally Accepted
Accounting Principles before extraordinary items. Unless otherwise approved
in
the discretion of the Board of Directors or its Compensation Committee, no
“incentive compensation” shall be payable if Return on Tangible Equity is less
than 14%. In the event that, during any fiscal year, Employee dies, is deemed
to
have voluntarily terminated his employment by reason of Total and Permanent
Disability, is terminated without Just Cause, or terminates employment for
Good
Reason, or if this Agreement terminates because it is not extended under Section
2 of this Agreement, the “incentive compensation” provided for herein shall be
prorated based on the number of days worked by Employee pursuant to this
Agreement in the fiscal year of his termination of employment (including
vacation and sick days) or in the fiscal year in which the Agreement is not
extended to the number of business days in such fiscal year.
(d)
Employee
shall be eligible for a “bonus” in addition to the previously described
“incentive compensation”, such bonus to be awarded by the Employer’s Board of
Directors following recommendation by the Compensation Committee of such Board.
Any bonus awarded is at the discretion of the Board and would incorporate and
recognize accomplishments and achievements attributable to Employee and/or
his
leadership which the Compensation Committee and/or the Board determined to
be in
the best long-term interests of the Employer and which contributions are not
deemed to be adequately reflected in “incentive compensation” based on
Employer’s Return on Tangible Equity provided for in Section 3(b) of this
Agreement.
(e)
Employee
shall have the right to participate in the incentive plans of Employer for
which
he may become eligible and designated a participant, including but not limited
to any equity based compensation plans and future incentive plans adopted by
the
Employer during the Term.
(f)
Except
as otherwise specifically provided herein, for so long as Employee is employed
by Employer, Employee also shall be paid, on the same basis as other officers
of
Employer, employee pension and welfare benefits and group employee benefits
such
as sick leave, vacation, group disability and health, life, and accident
insurance and similar indirect compensation which Employer may from time to
time
extend to its officers; provided that Employee shall receive term life insurance
coverage in an amount not less than two (2) times his base salary as then in
effect. For purposes of clarification, under Employer’s existing policies
Employee shall be entitled to up to eight weeks of vacation each year. Unused
vacation pay shall not carry over to succeeding years.
(g)
If
during
the Term of the Agreement Employee becomes eligible for retirement under
Employer's retirement plans and he retires, Employee may elect to continue
receiving the health insurance coverage provided to Employee prior to retirement
at a comparable rate and benefit available to other retired employees (or,
if no
such benefit is then made available to other retired employees, at the rate
and
benefit available to Employee at the time of retirement).
(h)
For
so
long as Employee is employed by Employer, Employer shall pay Employee's
reasonable civic club dues.
(i)
Employer
shall reimburse Employee for the reasonable fees and charges of Employee's
legal
counsel and tax advisor incurred in connection with the negotiation,
implementation and exercise of his rights under his employment agreements and
benefits from time to time.
(j)
In
the
event that the Company effects a distribution of purchase rights or warrants
or
other equity securities to holders of its Common Stock generally, including,
without limitation, a rights offering for the purpose of raising capital, and
the terms of any options or other equity compensation arrangements then held
by
Employee do not provide for an equitable adjustment for Employee's benefit
to
protect Employee from dilution of Employee's equity interest resulting
therefrom, then the Company shall cause such amount of warrants, rights or
securities to be issued or made available for purchase or exercise by Employee
in the same amount and on the same terms and conditions as would be available
to
a shareholder holding the number of shares covered by the options or other
equity compensation benefits then held by Employee. Without limiting the
foregoing, if the provisions of Employee's Stock Option Agreements relating
to
equitable adjustment of stock options are not permitted or are limited by the
Company’s Stock Incentive Plans, or if there are insufficient shares available
for issuance under such plan to provide for such adjustment, the Employer shall
pay to Employee such amount as may be necessary to hold Employee harmless in
respect of its inability to provide Employee the full benefit of such
provision.
(k)
For
so
long as Employee is employed by Employer, Employer shall pay one country club
membership, including dues and fees, for Employee and shall reimburse Employee
for expenses incurred with respect to business conducted at said country club,
but not for personal costs and expenses.
4.
Covenants
of Employee.
(a)
Subject
to the limitations provided in Subsections 4(b), 4(c), 4(d), and 4(e) (whichever
may be applicable), upon termination of Employee's employment, Employee will
not, directly or indirectly, either as a principal, executive officer, employer,
stockholder, co-partner or in any other individual or representative capacity
whatsoever, engage in the consumer, savings or commercial banking business,
the
savings and loan business, or the mortgage banking business in any county of
any
state in which the Company or City National Bank maintains offices immediately
prior to the termination of employment, as well as the counties of Kanawha,
Putnam, Jackson, Cabell, Wayne, Mason, Lincoln, Doddridge, Marion, Raleigh,
Summers, Fayette, Greenbrier, Nicholas, Braxton, Lewis, Monroe, Pocahontas,
Mercer, Wood, Harrison, Jefferson, Berkeley, Morgan, Hampshire in West Virginia
or the counties of Boyd, Carter, Greenup or Johnson in Kentucky, or the counties
of Lawrence or Scioto in Ohio, nor will Employee solicit, or assist any other
person in so soliciting, any depositors or customers of Employer or its
Affiliates or induce any then or former employee of Employer or its Affiliates
to terminate his or her employment with Employer or its Affiliates; provided,
however, that nothing herein contained shall be deemed to prevent or limit
the
right of Employee to invest in a business similar to Employer's business if
such
investment is limited to less than one percent of the capital stock or other
securities of any corporation or similar organization whose stock or securities
are publicly owned or are regularly traded on any public exchange. The term
“Affiliate” as used in this Agreement means a Person that directly or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, another Person. The term “Person” as used in this Agreement
means any person, partnership, corporation, group or other entity.
(b)
Except
as
provided in Section 4(e) hereof, if Employee voluntarily terminates his
employment with Employer, Employee will be subject to the provisions of
Subsection 4(a) for a period of 36 months following the date of termination
of
employment of Employee.
(c)
If
Employee's employment is terminated by Employer for Just Cause (as defined
in
Subsection 6(c)), Employee will be subject to the provisions of Subsection
4(a)
for a period of 36 months following the date of termination of Employee’s
employment.
(d)
If
Employee's employment is terminated by Employer for reasons other than Just
Cause (as defined In Subsection 6(c)) at any time, Employee will not be subject
to the provisions of Subsection 4(a), provided, however, that for 36 months
after termination, Employee shall not solicit or assist another person in
soliciting, any depositor or customer of Employer or its Affiliates or induce
any then or former employee to terminate his or her employment with Employer
or
its Affiliates.
(e)
Notwithstanding
any other provision of this Agreement to the contrary, if Employee voluntarily
terminates his employment with Employer in accordance with Subsection 6(f),
Employee will not be subject to Subsection 4(a), provided, however, that for
36
months after termination, Employee shall not solicit or assist another person
in
soliciting, any depositor or customer of Employer or its Affiliates or induce
any then or former employee to terminate his or her employment with Employer
or
its Affiliates.
(f)
During
the Term of Employee's employment hereunder and thereafterfor a period of 36
months, and except as required by any court, supervisory authority or
administrative agency or as may be otherwise required by applicable law,
Employee shall not, without the written consent of the Board of Directors of
Employer or a person authorized thereby, disclose to any person, other than
an
employee of Employer or an Affiliate thereof or a person to whom disclosure
is
reasonably necessary or appropriate in connection with the performance by
Employee of his duties as an employee of Employer or an Affiliate, any
confidential information obtained by him while in the employ of Employer, unless
such information has become a matter of public knowledge at the time of such
disclosure.
(g)
The
covenants contained in this Section 4 shall be construed and interpreted in
any
judicial proceeding to permit their enforcement to the maximum extent permitted
by law. Employee agrees that the restraints imposed herein are necessary for
the
reasonable and proper protection of Employer and its Affiliates and that each
and every one of the restraints is reasonable in respect to such matter, length
of time and the area proscribed. Employee further acknowledges that damages
at
law would not be a measurable or adequate remedy for breach of the covenants
contained in this Section 4 and, accordingly, Employee agrees to submit to
the
equitable jurisdiction of any court of competent jurisdiction in Charleston,
West Virginia in connection with any action to enjoin Employee from violating
any such covenants.
5.
Disability.
If,
by
reason of Total and Permanent Disability (as defined below) during the Term,
Employee is unable to carry out the essential functions of his employment for
12
consecutive months, his services may be terminated by the Board of Directors
determining so to do upon one month's notice to be given to Employee at any
time
after the period of 12 continuous months of Total and Permanent Disability
and
while such Total and Permanent Disability continues. If, prior to the expiration
of the one month period after the giving of such notice, Employee shall recover
from such Total and Permanent Disability and return to the full-time active
discharge of his duties, then such notice shall be of no further force and
effect and Employee's employment shall continue as if the same had been
uninterrupted. If Employee shall not so recover from his Total and Permanent
Disability and return to his duties, then his services shall terminate at the
expiration date of such one month's notice with the same force and effect as
if
that date had been the date of termination originally provided for hereunder.
During the first 12 months of the period of Employee's Total and Permanent
Disability, Employee shall continue to earn all compensation (including bonuses
and incentive compensation) to which Employee would have been entitled as if
he
had not been Totally and Permanently Disabled, such compensation to be paid
at
the time, in the amounts, and in the manner provided in Subsection 3(a), and
to
be reduced by the amount of any compensation received pursuant to any applicable
disability insurance plan of Employer. Thereafter, Employee shall receive
compensation to which he is entitled under any applicable disability insurance
plan. At the time of Employee’s termination of employment under this Section 5
as a result of his Total and Permanent Disability, Employee shall be entitled
to
receive “Termination Compensation” as defined in Subsection 6(b) multiplied by
three (3) paid over 60 equal monthly installments beginning with the first
day
of the month following Employee’s termination of employment as a result of Total
and Permanent Disability under this Section 5. Such payments shall be reduced
by
the amount of any compensation received pursuant to any applicable disability
insurance plan of Employer. Employee shall continue to receive health insurance
coverage from Employer on the same terms as were in effect prior to Employee’s
termination, either under the Employer’s plans or comparable coverage, for all
periods Employee receives Termination Compensation so long as Employee complies
with Subsection 4(a). If a dispute arises between Employee and Employer
concerning Employee's physical or mental ability to continue or return to the
performance of his duties as aforesaid, Employee shall submit to examination
by
a competent physician mutually agreeable to the parties, and his opinion as
to
Employee's capability to so perform will be final and binding. Upon termination
of Employee's services by reason of Total and Permanent Disability, the Term
shall end. For purposes of this Agreement, “Total and Permanent Disability”
means the Employee: (i) is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a
continuous period of not less than twelve (12) months; or (ii) is, by reason
of
any medically determinable physical or mental impairment which can be expected
to result in death or can be expected to last for a continuous period of not
less than twelve (12) months, receiving income replacement benefits for a period
of not less than three (3) months under an accident and health plan covering
employees of the Company.
6.
Termination.
(a)
Notwithstanding
any other provision of this Agreement to the contrary, in the event that
Employee voluntarily terminates employment with Employer (other than as a result
of the application of Section 5 or 6(f) hereof) or in the event this Agreement
terminates after Employer elects not to extend it and to convert it to a fixed
two-year period, Employee will be entitled to receive $1,122,304, plus interest
accruing from and after December 31, 2006, on all unpaid amounts until paid,
at
the Treasury One-Year Constant Maturity rate which shall be determined as of
December 31
st
of the prior year for the succeeding calendar year and shall adjust each
December 31
st
for the succeeding year until the amount is fully paid. This amount shall be
paid to Employee over 36 equal monthly payments, beginning with the first day
of
the month following Employee’s voluntary termination of employment. In addition,
Employee shall continue to receive health insurance coverage from Employer
on
the same terms as were in effect prior to Employee's termination, either under
the Employer's plans or comparable coverage for 60 months or until Employee
becomes eligible for health benefits provided by another employer, which
benefits are substantially equivalent to those offered by Employer to Employee
immediately prior to termination, whichever is shorter, so long as Employee
complies with Subsection 4(a). The benefits provided for under this Section
6(a)
reflect benefits originally provided under the Employment Agreement signed
between the Employer and the Employee on June 11, 2001 as amended on November
18, 2003 which benefits became fully vested on June 11, 2005. The benefits
provided under this Section 6(a) shall not be subject to risk of forfeiture
under any circumstances, including any of the reasons that qualify for “Just
Cause” as provided under Section 6(c) except where Employee personally profits
from his willful fraudulent activity and that activity materially and adversely
affects Employer. If, at the time of such termination, circumstances exist
which
would permit Employee to terminate his employment and be entitled to the
benefits provided for under paragraph 6(f), Employee may elect to terminate
employment either pursuant to paragraph 6(f) or this paragraph 6(a); provided,
however, that such election shall be permitted only if the timing and form
of
payment under paragraph 6(f) and this paragraph 6(a) are the same. No voluntary
termination of employment by Employee under this paragraph 6(a) shall be deemed
to be made in connection with a Change of Control for any reason.
By
way of
example, to illustrate the foregoing, Employee may voluntarily resign at any
time during the term of this Agreement and receive $1,122,304 plus interest
on
any unpaid amounts during 2007 at the Treasury One-Year Constant Maturity Rate
on December 31, 2006, (which was 4.94%), plus interest on unpaid amounts during
subsequent years at the Treasury One-Year Constant Maturity Rate as of December
31 of each prior year. Interest would continue to adjust on this same
basis until the amount is paid in full, etc. For example, the Employee may
resign effective December 31, 2007 and receive $1,177,746.
(b)
“Termination
Compensation” means the highest amount of cash compensation paid (or earned and
payable whether or not deferred) to or for the benefit of Employee in respect
of
any of the three most recent calendar years ending prior to the date of
termination, determined by reference to the annual cash compensation (salary,
incentive compensation, and bonus) reflected in the summary
compensation table set forth in the Company’s proxy statement for such year, or,
in the absence of such previously reported table, by reference to the amount
of
such compensation as would be reflected for such year in such a summary
compensation table prepared in accordance with Item 402(b) of Regulation S-K
of
the Securities and Exchange Commission.
By
way of
example, to illustrate the foregoing: Cash compensation for 2004 was
$412,375. Cash compensation for 2005 was $518,568, and cash compensation for
2006 was $561,172. As a result, Termination Compensation would be at least
$561,172 if termination occurs during 2007, 2008, or 2009. As a result, if
Employee’s employment was terminated 1) by Employer for reasons other than “Just
Cause” as provided for in Subsection 6(c), 2) by death as provided for in
Subsection 6(d), 3) by disability as provided for in Section 5, or 4) as
provided for in Subsection 6(f) at any time through December 31, 2009, Employee
would receive at least $1,683,516 paid over 36 months (three times “Termination
Compensation” of $561,172). The amount that would be paid could increase above
this amount if total cash compensation of Employee in 2007 or any subsequent
year preceding termination, is higher than $561,172. For instance, if the
Employee’s employment was terminated for reasons other than “Just Cause” in
2008, and cash compensation for 2007 was $570,000, then the employee would
receive $1,710,000 paid over 36 months.
(c)
Employer
shall have the right to terminate Employee's employment under this Agreement
at
any time for Just Cause, which termination shall be Effective immediately.
Termination for “Just Cause” shall include termination for (a) Employee's
commission of an act materially and demonstrably detrimental to the Employer,
which act constitutes willful misconduct by the Employee in the performance
of
his material duties to the Employer not authorized, directed or ratified by
City
National’s or the Company’s Board of Directors; (b) Employee's conviction of a
felony involving moral turpitude; or (c) Employee’s material breach of any other
provision of this Agreement, provided that Employee has received written notice
from Employer of such material breach and such breach remains uncured 30 days
after the delivery of such notice. No act or failure to act will be considered
“willful” under this Agreement unless it is done, or omitted to be done, by the
Employee in bad faith or without reasonable belief that his action or omission
was in the best interests of the Employer. In the event Employee's employment
under this Agreement is terminated for Just Cause, Employee’s right to receive
compensation or other benefits under this Agreement for any period after such
termination shall be limited to those provided for under Subsection
6(a).
(d)
If
Employee shall die during the Term, this Agreement and the employment
relationship hereunder will automatically terminate on the date of death, which
date shall be the last date of the Term. Notwithstanding this Subsection 6(d),
if Employee dies while employed by Employer, Employee's estate shall receive
an
amount equal to the Employee's Termination Compensation (as defined above)
multiplied by (3) three, paid over 36 equal monthly payments commencing with
the
first day of the month following the date of death, in addition to any life
insurance benefits available to all employees of City National.
(e)
Employer
may terminate Employee’s employment other than for “Just Cause,” as described in
Subsection 6(c), at any time upon written notice to Employee, which termination
shall be effective immediately. In the event Employer terminates Employee
pursuant to this Subsection 6(e), Employee will nevertheless receive his
Termination Compensation times (3) three to be paid in 36 monthly installments
commencing with the first day of the month following Employee’s termination of
employment under this Section 6(e). In addition, Employee shall continue to
receive health insurance coverage from Employer on the same terms as were in
effect prior to Employee’s termination, either under Employer’s plans or
comparable coverage, for 60 months, or until Employee becomes eligible for
health benefits offered by another employer, which benefits are substantially
equivalent to those provided by Employer to Employee immediately prior to
termination, whichever is shorter. Notwithstanding anything in this Agreement
to
the contrary, if Employee breaches Subsection 4(d), Employee will not be
entitled to receive any further compensation or benefits pursuant to this
Subsection 6(e).
(f)
Employee
may voluntarily terminate employment with Employer (i) pursuant to
paragraph 8(g) hereof, or (ii) for “Good Reason.” In either such
event, Employee shall be entitled to receive (i) any compensation due but not
yet paid through the date of termination, and (ii) in lieu of any further salary
payments from the date of termination to the end of the Term, an amount equal
to
the Termination Compensation multiplied by 3.00 paid in 36 monthly installments
commencing with the first day of the month following the date of such
termination of employment. In addition, Employee shall continue to receive
health insurance coverage from Employer on the same terms as were in effect
prior to Employee’s termination, either under Employer’s plans or comparable
coverage for either 60 months or until Employee becomes eligible for health
benefits provided by another employer, which benefits are substantially
equivalent to those offered by Employer to Employee immediately prior to
termination, whichever is shorter. Under these circumstances, Employee shall
not
be subject to the restrictions in Section 4(a), as set forth in Section
4(e).
“Good
Reason” shall mean the occurrence of any of the following events without
Employee's express written consent:
(i)
the
assignment to Employee of duties inconsistent with the position of President
and
Chief Executive Officer of companies similar to the Employer;
(ii)
a
reduction by Employer in Employee's pay grade or base salary as then in effect
or the exclusion of Employee from participation in Employer's benefit plans
in
which he previously participated as in effect at the date hereof or as the
same
may be increased from time to time during the term of this
Agreement.
(iii)
an
involuntary relocation of Employee more than 50 miles from the location where
Employee worked immediately following his most recent voluntary relocation
or
the breach by Employer of any other material provision of this
Agreement;
(iv)
any
purported termination of the employment of Employee by Employer which is not
effected in accordance with this Agreement; or
(v)
the
occurrence of a Change of Control within the period of 24 months preceding
such
termination.
A
“Change
of Control” shall be deemed to have occurred if (i) any person or group of
persons (as defined in Section 13(d) and 14(d) of the Securities Exchange Act
of
1934) together with its affiliates, excluding employee benefit plans of
Employer, is or becomes, directly or indirectly, the “beneficial owner” (as
defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934)
of
securities of the Company or of City National representing 20% or more of the
combined voting power of its then outstanding securities; or (ii) during the
term of this Agreement as a result of a tender offer or exchange offer for
the
purchase of securities of the Company or of City National (other than such
an
offer by the Company or City National for its own securities), or as a result
of
a proxy contest, merger, consolidation or sale of assets, or as a result of
any
combination of the foregoing, individuals who at the beginning of any two-year
period during the Term of this Agreement constitute the Company’s or City
National’s Board of Directors, plus new directors whose election or nomination
for election by the Company’s or City National’s shareholders, as applicable, is
approved by a vote of at least two-thirds of the directors still in office
who
were directors at the beginning of such two-year period, cease for any reason
during such two-year period to constitute at least two-thirds of the members
of
such Board of Directors; or (iii) the shareholders of the Company or of City
National approve a merger or consolidation of the Company and/or City National
with any other corporation or entity regardless of which entity is the survivor,
other than a merger or consolidation which would result in the voting securities
of the Company or City National outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or being converted into voting
securities of the surviving entity) at least 80% of the combined voting power
of
the voting securities of the Company or City National or such surviving entity
outstanding immediately after such merger or consolidation; or (iv) the
shareholders of the Company or City National, as applicable, approve a plan
of
complete liquidation or winding-up of the Company or City National or an
agreement for the sale or disposition by the Company or City National of all
or
substantially all of the Company’s or City National’s assets; or (v) any event
which Employer's Board of Directors determines should constitute a Change of
Control.
(g)
In
receiving any payments pursuant to this Section 6, Employee shall not be
obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to Employee hereunder, and such amounts shall not be
reduced or terminated whether or not Employee obtains other
employment.
(h)
In
the
event that Employer's independent public accountants or the Internal Revenue
Service determine, at any time during or after expiration of this Agreement,
that Employee has collected an amount arising from any and all sources of
compensation from Employer (including, without limitation, by virtue of the
immediately following sentence) exceeding the product of 2.99 and Employee's
“base amount” as defined in Section 280G(b)(3) of the Internal Revenue Code (the
“Code § 280G Maximum”), notwithstanding any provision of this agreement or any
plan or arrangement of Employer to the contrary, Employer shall pay Employee
147.5% of the federal excise taxes payable by Employee under Code § 4999. Such
tax gross up payment shall be made to Employee no later than the due date of
the
Employee’s tax return reporting the amount of such tax. If, by virtue of any
plan or arrangement of Employer, benefits to which Employee would otherwise
be
entitled would be curtailed or reduced because Employee may collect an amount
exceeding the Code § 280G Maximum, Employer shall nevertheless pay to Employee
an amount equal to 100% of the value by which such benefits are curtailed or
reduced, and any such payments shall be subject to the excise tax reimbursement
prescribed by the preceding section.
(i)
To
the
extent that Employee is a "key employee" (as defined under Section 416(i) of
the
Internal Revenue Code, disregarding Section 416(i)(5) of the Internal Revenue
Code) of the Company, no payment of Termination Compensation may be made under
this Section 6 prior to the earlier of (i) the expiration of the six (6)-month
period measured from the date of Employee's separation from service, or (ii)
the
date of Employee's death; provided, however, that the six (6) month delay
required under this Section 6(i) shall not apply to the portion of any payment
resulting from the Employee’s “involuntary separation from service” (as defined
in Treas. Reg. § 1.409A 1(n) and including a “separation from service for good
reason,” as defined in Treas. Reg. § 1.409A 1(n)(2)) that (a) is payable no
later than the last day of the second year following the year in which the
separation from service occurs, and (b) does not exceed two times the lesser
of
(i) the Employee’s annualized compensation for the year prior to the year in
which the separation from services occurs, or (ii) the dollar limit described
in
Section 401(a)(17) of the Code. To the extent Termination Compensation payable
in monthly installments under this Section 6 is required to be deferred under
the preceding sentence, the first six months of monthly installments shall
be
payable in month seven following Employee's separation from service and the
remaining monthly payments shall be made when otherwise scheduled.
(j)
Any
reference in this Agreement to a termination of employment, severance from
employment or separation from employment shall be deemed to mean a “Termination
of Employment.” A “Termination of Employment” means the termination
of the Employee’s employment with the Company and its Affiliates for reasons
other than death or Total and Permanent Disability. Whether a
Termination of Employment takes place is determined based on the facts and
circumstances surrounding the termination of the Employee’s
employment. A Termination of Employment will be considered to have
occurred if it is reasonably anticipated that:
(i)
the
Employee will not perform any services for the Company or its Affiliates after
Termination of Employment, or
(ii)
the
Employee will continue to provide services as the Company or its Affiliates
at
an annual rate that is less than fifty percent (50%) of the bona fide services
rendered during the immediately preceding twelve (12) months of
employment.
7.
Other
Employment.
Employee
shall devote all of his business time, attention, knowledge and skills solely
to
the business and interest of Employer and its Affiliates, and Employer and
its
Affiliates shall be entitled to all of the benefits, profits and other
emoluments arising from or incident to all work, services and advice of
Employee, and Employee shall not, during the Term hereof, become interested
directly or indirectly, in any manner, as partner, officer, director,
stockholder, advisor, employee or in any other capacity in any other business
similar to Employer's business; provided, however, that nothing herein contained
shall be deemed to prevent or limit the right of Employee to invest in a
business similar to Employer's business if such investment is limited to less
than one percent of the capital stock or other securities of any corporation
or
similar organization whose stock or securities are publicly owned or are
regularly traded on any public exchange.
8.
Miscellaneous.
(a)
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of West Virginia without regard to conflicts of law principles
thereof.
(b)
This
Agreement constitutes the entire Agreement between Employee and Employer, with
respect to the subject matter hereof, and supersedes the Amended and Restated
Employment Agreement entered into between the Employer and Employee on June
11,
2001, as amended on November 18, 2003, as well as the Amendment to the
Employment Agreement signed on February 1, 2005, pursuant to which the Employee
became the President and Chief Executive Officer of the Company and City
National. Without limiting the foregoing, Employee agrees that this
Agreement satisfies any rights he may have had under the prior employment
agreements.
(c)
This
Agreement may be executed in one or more counterparts, all of which, taken
together, shall constitute one and the same instrument.
(d)
Any
notice or other communication required or permitted under this Agreement shall
be effective only if it is in writing and delivered in person or by reliable
overnight courier service or deposited in the mails, postage prepaid, return
receipt requested, addressed as follows:
To
Employer:
City
Holding Company
25
Gatewater Road
Charleston,
West Virginia 25313
(304)
769-1100
Attention:
Corporate Secretary
To
Employee:
Charles
R. Hageboeck
[Address
and Telephone Number]
Notices
given in person or by overnight courier service shall be deemed given when
delivered to the address required by this Subsection 8(d), and notices given
by
mail shall be deemed given three days after deposit in the mails. Any party
hereto may designate by written notice to the other party in accordance herewith
any other address to which notices addressed to him shall be sent.
(e)
The
provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof. It is understood and agreed
that
no failure or delay by Employer or Employee in exercising any right, power
or
privilege under this Agreement shall operate as a waiver thereof, nor shall
any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege
hereunder.
(f)
In
the
event any dispute shall arise between Employee and Employer as to the terms
or
interpretations of this Agreement, whether instituted by formal legal
proceedings or otherwise, including any action taken by Employee to enforce
the
terms of this Agreement or in defending against any action taken by Employer,
Employer shall reimburse Employee for all reasonable costs and expenses,
including reasonable attorneys' fees, arising from such dispute, proceeding
or
action, if Employee shall prevail in any action initiated by Employee or shall
have acted reasonably and in good faith in defending against any action
initiated by Employer. Such reimbursement shall be paid within 10 days of
Employee furnishing to Employer written evidence, which may be in the form,
among other things, of a canceled check or receipt, of any costs or expenses
incurred by Employee. Any such request for reimbursement by Employee shall
be
made no more frequently than at 60 day intervals.
(g)
Should
Employee die after termination of his employment with Employer while any amounts
are payable to him hereunder, this Agreement shall inure to the benefit of
and
be enforceable by Employee's executors, administrators, heirs, distributees,
devisees and legatees and all amounts payable hereunder shall be paid in
accordance with the terms of this Agreement to Employee's devisee, legatee
or
other designee or, if there is no such designee, to his estate. Employer shall
require any successor (whether direct or indirect, by purchase, merger,
consolidation or other-wise) to all or substantially all of the business or
assets of Employer, by agreement in form and substance reasonably satisfactory
to Employee to expressly assume and agree to perform this Agreement in the
same
manner and same extent that Employer would be required to perform it if no
such
succession had taken place. Failure of Employer to obtain such agreement prior
to the effectiveness of any such succession shall be deemed “Good Reason”,
permitting termination by Employee pursuant to Section 6(f). As used in this
Agreement, “Employer” shall mean Employer as hereinbefore defined and any
successor to its business or assets as aforesaid.
(h)
To
the
extent necessary to effectuate the terms of this Agreement, the terms of this
Agreement, and the respective rights and obligations of the parties, which
must
survive the termination of Employee's employment or the termination or
expiration of this Agreement shall so survive. Without limiting the foregoing,
Sections 4, 5, 6, and 8(g) shall expressly survive the termination of this
Agreement.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
and year first above written.
|
CITY
HOLDING COMPANY
|
|
|
|
|
|
By:
/s/
Philip L McLaughlin
|
|
Philip
L. McLaughlin,
Chairman
|
|
of
the
Board
|
|
CITY
NATIONAL BANK OF
|
|
WEST
VIRGINIA
|
|
|
|
|
|
By:
/s/
Philip L. McLaughlin
|
|
Philip
L. McLaughlin,
Chairman
|
|
of
the
Board
|
|
EMPLOYEE
|
|
|
|
|
|
/s/
Charles R. Hageboeck
|
|
Charles
R.
Hageboeck
|
-24-
EXHIBIT
10.2
EMPLOYMENT
AGREEMENT
THIS
EMPLOYMENT AGREEMENT (“Agreement”) is effective as of July 25, 2007, and is
among CITY HOLDING COMPANY, a West Virginia corporation (the “Company”), CITY
NATIONAL BANK OF WEST VIRGINIA, a national banking association
(“City National”), and Craig G. Stilwell (“Employee”). The Company and City
National are referred to collectively herein as the “Employer.”
Recitals:
The
Company desires to employ Employee as its Executive Vice-President and City
National desires to employ Employee as its Executive
Vice-President.
This
employment agreement replaces and supersedes the Amended and Restated Employment
Agreement entered into between the Employer and Employee on May 15, 2001 as
amended on November 18, 2003, as well as the Amendment to the Employment
Agreement signed on February 25, 2005, pursuant to which the Employee became
the
Executive Vice-President of the Company and City National. That Employment
Agreement currently has a term which ends February 15, 2008.
Employee
is willing to make his services available to Employer on the terms and subject
to the conditions set forth herein.
NOW,
THEREFORE, in consideration of the mutual covenants and promises contained
herein and other good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, the parties agree as follows:
Agreement:
1.
Employment.
Employee is employed as Executive Vice-President of the Company and City
National. Employee shall have such duties and responsibilities as are
commensurate with such positions. Employee accepts and agrees to such
employment, subject to the general supervision and pursuant to the orders,
advice and direction of Employer’s President and Chief Executive Officer.
Employee shall perform such duties as are customarily performed by one holding
such positions in other same or similar businesses or enterprises as that
engaged in by Employer.
2.
Term
of
Employment. The term of this Agreement shall commence on July 25, 2007
and shall terminate on July 31, 2009, unless extended. On each monthly
anniversary date following July 31, 2007, this Agreement will be automatically
extended for an additional month; provided, however, that on any one month
anniversary date following July 31, 2007 either Employer or Employee
may serve notice to the other party to fix the term to a definite two year
period from the date of such notice and, in such event, no further automatic
extensions will occur. The term of this Agreement as it may be extended pursuant
to this Section 2, or as it may be shortened in accordance with Section 5 or
Section 6, is referred to as the “Term.”
3.
Compensation.
(a)
For
all
services rendered by Employee to Employer under this Agreement, Employer shall
pay to Employee a minimum annual salary at a rate not less than $212,000 or
as
it has been periodically adjusted, payable in accordance with the payroll
practices of Employer applicable to its officers. The Company and/or City
National may make such payments as well as any other payments provided for
in
this Agreement but, regardless of who is the payor, both the Company and City
National shall be jointly and severally liable for such payments. Employee’s
annual salary shall be adjusted upward annually reflecting the Company’s
performance, compensation levels for peer institutions, and changes in the
scale
and scope of business activities of the Company under Employee’s
leadership.
(b)
Employee
shall be paid “incentive compensation” at the end of each of Employer’s fiscal
years which occurs in whole or in part during the Term based on Employer’s
Return on Tangible Equity (“ROTE”) for such fiscal year. For purposes of this
Agreement, “Return on Tangible Equity” shall mean Net Income divided by Tangible
Equity. For purposes of this Agreement, Tangible Equity shall mean Stockholder’s
Equity less Goodwill and Other Intangibles. If ROTE is at least 14%, such
incentive compensation shall be payable as follows: If Employer’s
ROTE is 14%, Employee shall receive “incentive compensation” of 20% of
Employee’s annual salary. If ROTE is greater than 14%, Employee shall receive
“incentive compensation” of 20% of his annual salary, plus an additional 5% of
annual salary for each 1% increase in ROTE over 14%. If ROTE results in a
fraction of 1%, then the “incentive compensation” shall be calculated based on
the formula set forth above through the whole number of the percentage, plus
the
fractional portion of ROTE times 5%. As a result, the following table provides
some examples of the “incentive compensation” earned for various levels of
ROTE:
|
|
Incentive
Compensation as a
|
|
Return
on Tangible Equity
|
Percentage
of Annual Salary
|
|
|
|
|
14%
|
20%
|
|
15%
|
25%
|
|
16%
|
30%
|
|
17%
|
35%
|
|
18%
|
40%
|
|
19%
|
45%
|
|
20%
|
50%
|
|
21%
|
55%
|
|
22%
|
60%
|
|
23%
|
65%
|
|
24%
|
70%
|
|
25%
|
75%
|
|
26%
|
80%
|
|
27%
|
85%
|
|
28%
|
90%
|
|
29%
|
95%
|
|
30%
|
100%
|
(c)
Any
“incentive compensation” for a fiscal year shall be deemed to have been fully
earned and payable at December 31st of each fiscal year, and shall be paid
to
Employee within 30 days of the issuance of Employer’s audited financial
statements for a specified fiscal year. “Return on Tangible Equity” shall be
determined on a consolidated basis in accordance with Generally Accepted
Accounting Principles before extraordinary items. Unless otherwise approved
in
the discretion of the Board of Directors or its Compensation Committee, no
“incentive compensation” shall be payable if Return on Tangible Equity is less
than 14%. In the event that, during any fiscal year, Employee dies, is deemed
to
have voluntarily terminated his employment by reason of Total and Permanent
Disability, is terminated without Just Cause, or terminates employment for
Good
Reason, or if this Agreement terminates because it is not extended under Section
2 of this Agreement, the “incentive compensation” provided for herein shall be
prorated based on the number of days worked by Employee pursuant to this
Agreement in the fiscal year of his termination of employment (including
vacation and sick days) or in the fiscal year in which the Agreement is not
extended to the number of business days in such fiscal year.
(d)
Employee
shall be eligible for a “bonus” in addition to the previously described
“incentive compensation”, such bonus to be awarded by the Employer’s Board of
Directors following recommendation by the Compensation Committee of such Board.
Any bonus awarded is at the discretion of the Board and would incorporate and
recognize accomplishments and achievements attributable to Employee and/or
his
leadership which the Compensation Committee and/or the Board determined to
be in
the best long-term interests of the Employer and which contributions are not
deemed to be adequately reflected in “incentive compensation” based on
Employer’s Return on Tangible Equity provided for in Section 3(b) of this
Agreement.
(e)
Employee
shall have the right to participate in the incentive plans of Employer for
which
he may become eligible and designated a participant, including but not limited
to any equity based compensation plans and future incentive plans adopted by
the
Employer during the Term.
(f)
Except
as otherwise specifically provided herein, for so long as Employee is employed
by Employer, Employee also shall be paid, on the same basis as other officers
of
Employer, employee pension and welfare benefits and group employee benefits
such
as sick leave, vacation, group disability and health, life, and accident
insurance and similar indirect compensation which Employer may from time to
time
extend to its officers; provided that Employee shall receive term life insurance
coverage in an amount not less than two (2) times his base salary as then in
effect. For purposes of clarification, under Employer’s existing policies
Employee shall be entitled to up to eight weeks of vacation each year. Unused
vacation pay shall not carry over to succeeding years.
(g)
If
during
the Term of the Agreement Employee becomes eligible for retirement under
Employer's retirement plans and he retires, Employee may elect to continue
receiving the health insurance coverage provided to Employee prior to retirement
at a comparable rate and benefit available to other retired employees (or,
if no
such benefit is then made available to other retired employees, at the rate
and
benefit available to Employee at the time of retirement).
(h)
For
so
long as Employee is employed by Employer, Employer shall pay Employee's
reasonable civic club dues.
(i)
Employer
shall reimburse Employee for the reasonable fees and charges of Employee's
legal
counsel and tax advisor incurred in connection with the negotiation,
implementation and exercise of his rights under his employment agreements and
benefits from time to time.
(j)
In
the
event that the Company effects a distribution of purchase rights or warrants
or
other equity securities to holders of its Common Stock generally, including,
without limitation, a rights offering for the purpose of raising capital, and
the terms of any options or other equity compensation arrangements then held
by
Employee do not provide for an equitable adjustment for Employee's benefit
to
protect Employee from dilution of Employee's equity interest resulting
therefrom, then the Company shall cause such amount of warrants, rights or
securities to be issued or made available for purchase or exercise by Employee
in the same amount and on the same terms and conditions as would be available
to
a shareholder holding the number of shares covered by the options or other
equity compensation benefits then held by Employee. Without limiting the
foregoing, if the provisions of Employee's Stock Option Agreements relating
to
equitable adjustment of stock options are not permitted or are limited by the
Company’s Stock Incentive Plans, or if there are insufficient shares available
for issuance under such plan to provide for such adjustment, the Employer shall
pay to Employee such amount as may be necessary to hold Employee harmless in
respect of its inability to provide Employee the full benefit of such
provision.
4.
Covenants
of Employee.
(a)
Subject
to the limitations provided in Subsections 4(b), 4(c), 4(d), and 4(e) (whichever
may be applicable), upon termination of Employee's employment, Employee will
not, directly or indirectly, either as a principal, executive officer, employer,
stockholder, co-partner or in any other individual or representative capacity
whatsoever, engage in the consumer, savings or commercial banking business,
the
savings and loan business, or the mortgage banking business in any county of
any
state in which the Company or City National Bank maintains offices immediately
prior to the termination of employment, as well as the counties of Kanawha,
Putnam, Jackson, Cabell, Wayne, Mason, Lincoln, Doddridge, Marion, Raleigh,
Summers, Fayette, Greenbrier, Nicholas, Braxton, Lewis, Monroe, Pocahontas,
Mercer, Wood, Harrison, Jefferson, Berkeley, Morgan, Hampshire in West Virginia
or the counties of Boyd, Carter, Greenup or Johnson in Kentucky, or the counties
of Lawrence or Scioto in Ohio, nor will Employee solicit, or assist any other
person in so soliciting, any depositors or customers of Employer or its
Affiliates or induce any then or former employee of Employer or its Affiliates
to terminate his or her employment with Employer or its Affiliates; provided,
however, that nothing herein contained shall be deemed to prevent or limit
the
right of Employee to invest in a business similar to Employer's business if
such
investment is limited to less than one percent of the capital stock or other
securities of any corporation or similar organization whose stock or securities
are publicly owned or are regularly traded on any public exchange. The term
“Affiliate” as used in this Agreement means a Person that directly or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, another Person. The term “Person” as used in this Agreement
means any person, partnership, corporation, group or other entity.
(b)
Except
as
provided in Section 4(e) hereof, if Employee voluntarily terminates his
employment with Employer, Employee will be subject to the provisions of
Subsection 4(a) for a period of 36 months following the date of termination
of
employment of Employee.
(c)
If
Employee's employment is terminated by Employer for Just Cause (as defined
in
Subsection 6(c)), Employee will be subject to the provisions of Subsection
4(a)
for a period of 36 months following the date of termination of Employee’s
employment.
(d)
If
Employee's employment is terminated by Employer for reasons other than Just
Cause (as defined In Subsection 6(c)) at any time, Employee will not be subject
to the provisions of Subsection 4(a), provided, however, that for 36 months
after termination, Employee shall not solicit or assist another person in
soliciting, any depositor or customer of Employer or its Affiliates or induce
any then or former employee to terminate his or her employment with Employer
or
its Affiliates.
(e)
Notwithstanding
any other provision of this Agreement to the contrary, if Employee voluntarily
terminates his employment with Employer in accordance with Subsection 6(f),
Employee will not be subject to Subsection 4(a), provided, however, that for
36
months after termination, Employee shall not solicit or assist another person
in
soliciting, any depositor or customer of Employer or its Affiliates or induce
any then or former employee to terminate his or her employment with Employer
or
its Affiliates.
(f)
During
the Term of Employee's employment hereunder and thereafterfor a period of 36
months, and except as required by any court, supervisory authority or
administrative agency or as may be otherwise required by applicable law,
Employee shall not, without the written consent of the Board of Directors of
Employer or a person authorized thereby, disclose to any person, other than
an
employee of Employer or an Affiliate thereof or a person to whom disclosure
is
reasonably necessary or appropriate in connection with the performance by
Employee of his duties as an employee of Employer or an Affiliate, any
confidential information obtained by him while in the employ of Employer, unless
such information has become a matter of public knowledge at the time of such
disclosure.
(g)
The
covenants contained in this Section 4 shall be construed and interpreted in
any
judicial proceeding to permit their enforcement to the maximum extent permitted
by law. Employee agrees that the restraints imposed herein are necessary for
the
reasonable and proper protection of Employer and its Affiliates and that each
and every one of the restraints is reasonable in respect to such matter, length
of time and the area proscribed. Employee further acknowledges that damages
at
law would not be a measurable or adequate remedy for breach of the covenants
contained in this Section 4 and, accordingly, Employee agrees to submit to
the
equitable jurisdiction of any court of competent jurisdiction in Charleston,
West Virginia in connection with any action to enjoin Employee from violating
any such covenants.
5.
Disability.
If,
by
reason of Total and Permanent Disability (as defined below) during the Term,
Employee is unable to carry out the essential functions of his employment for
12
consecutive months, his services may be terminated by the Board of Directors
determining so to do upon one month's notice to be given to Employee at any
time
after the period of 12 continuous months of Total and Permanent Disability
and
while such Total and Permanent Disability continues. If, prior to the expiration
of the one month period after the giving of such notice, Employee shall recover
from such Total and Permanent Disability and return to the full-time active
discharge of his duties, then such notice shall be of no further force and
effect and Employee's employment shall continue as if the same had been
uninterrupted. If Employee shall not so recover from his Total and Permanent
Disability and return to his duties, then his services shall terminate at the
expiration date of such one month's notice with the same force and effect as
if
that date had been the date of termination originally provided for hereunder.
During the first 12 months of the period of Employee's Total and Permanent
Disability, Employee shall continue to earn all compensation (including bonuses
and incentive compensation) to which Employee would have been entitled as if
he
had not been Totally and Permanently Disabled, such compensation to be paid
at
the time, in the amounts, and in the manner provided in Subsection 3(a), and
to
be reduced by the amount of any compensation received pursuant to any applicable
disability insurance plan of Employer. Thereafter, Employee shall receive
compensation to which he is entitled under any applicable disability insurance
plan. At the time of Employee’s termination of employment under this Section 5
as a result of his Total and Permanent Disability, Employee shall be entitled
to
receive “Termination Compensation” as defined in Subsection 6(b) multiplied by
three (3) paid over 60 equal monthly installments beginning with the first
day
of the month following Employee’s termination of employment as a result of Total
and Permanent Disability under this Section 5. Such payments shall be reduced
by
the amount of any compensation received pursuant to any applicable disability
insurance plan of Employer. Employee shall continue to receive health insurance
coverage from Employer on the same terms as were in effect prior to Employee’s
termination, either under the Employer’s plans or comparable coverage, for all
periods Employee receives Termination Compensation so long as Employee complies
with Subsection 4(a). If a dispute arises between Employee and Employer
concerning Employee's physical or mental ability to continue or return to the
performance of his duties as aforesaid, Employee shall submit to examination
by
a competent physician mutually agreeable to the parties, and his opinion as
to
Employee's capability to so perform will be final and binding. Upon termination
of Employee's services by reason of Total and Permanent Disability, the Term
shall end. For purposes of this Agreement, “Total and Permanent Disability”
means the Employee: (i) is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a
continuous period of not less than twelve (12) months; or (ii) is, by reason
of
any medically determinable physical or mental impairment which can be expected
to result in death or can be expected to last for a continuous period of not
less than twelve (12) months, receiving income replacement benefits for a period
of not less than three (3) months under an accident and health plan covering
employees of the Company.
6.
Termination.
(a)
Notwithstanding
any other provision of this Agreement to the contrary, in the event that
Employee voluntarily terminates employment with Employer (other than as a result
of the application of Section 5 or 6(f) hereof) or in the event this Agreement
terminates after Employer elects not to extend it and to convert it to a fixed
two-year period, Employee will be entitled to receive $693,082, plus interest
accruing from and after December 31, 2006, on all unpaid amounts until paid,
at
the Treasury One-Year Constant Maturity rate which shall be determined as of
December 31
st
of the prior year for the succeeding calendar year and shall adjust each
December 31
st
for the succeeding year until the amount is fully paid. This amount shall be
paid to Employee over 36 equal monthly payments, beginning with the first day
of
the month following Employee’s voluntary termination of employment. In addition,
Employee shall continue to receive health insurance coverage from Employer
on
the same terms as were in effect prior to Employee's termination, either under
the Employer's plans or comparable coverage for 60 months or until Employee
becomes eligible for health benefits provided by another employer, which
benefits are substantially equivalent to those offered by Employer to Employee
immediately prior to termination, whichever is shorter, so long as Employee
complies with Subsection 4(a). The benefits provided for under this Section
6(a)
reflect benefits originally provided under the Employment Agreement signed
between the Employer and the Employee on May 15, 2001 as amended on November
18,
2003 which benefits became fully vested on May 15, 2005. The benefits
provided under this Section 6(a) shall not be subject to risk of forfeiture
under any circumstances, including any of the reasons that qualify for “Just
Cause” as provided under Section 6(c) except where Employee personally profits
from his willful fraudulent activity and that activity materially and adversely
affects Employer. If, at the time of such termination, circumstances exist
which
would permit Employee to terminate his employment and be entitled to the
benefits provided for under paragraph 6(f), Employee may elect to terminate
employment either pursuant to paragraph 6(f) or this paragraph 6(a); provided,
however, that such election shall be permitted only if the timing and form
of
payment under paragraph 6(f) and this paragraph 6(a) are the same. No voluntary
termination of employment by Employee under this paragraph 6(a) shall be deemed
to be made in connection with a Change of Control for any reason.
By
way of
example, to illustrate the foregoing, Employee may voluntarily resign at any
time during the term of this Agreement and receive $693,082 plus interest on
any
unpaid amounts during 2007 at the Treasury One-Year Constant Maturity Rate
on
December 31, 2006, (which was 4.94%), plus interest on unpaid amounts during
subsequent years at the Treasury One-Year Constant Maturity Rate as of December
31 of each prior year. Interest would continue to adjust on this same
basis until the amount is paid in full, etc. For example, the Employee may
resign effective December 31, 2007 and receive $727,320.25.
(b)
“Termination
Compensation” means the highest amount of cash compensation paid (or earned and
payable whether or not deferred) to or for the benefit of Employee in respect
of
any of the three most recent calendar years ending prior to the date of
termination, determined by reference to the annual cash compensation (salary,
incentive compensation, and bonus) reflected in the summary
compensation table set forth in the Company’s proxy statement for such year, or,
in the absence of such previously reported table, by reference to the amount
of
such compensation as would be reflected for such year in such a summary
compensation table prepared in accordance with Item 402(b) of Regulation S-K
of
the Securities and Exchange Commission.
By
way of
example, to illustrate the foregoing: Cash compensation for 2004 was
$328,000. Cash compensation for 2005 was $328,440, and cash compensation for
2006 was $346,541. As a result, Termination Compensation would be at least
$346,541 if termination occurs during 2007, 2008, or 2009. As a result, if
Employee’s employment was terminated 1) by Employer for reasons other than “Just
Cause” as provided for in Subsection 6(c), 2) by death as provided for in
Subsection 6(d), 3) by disability as provided for in Section 5, or 4) as
provided for in Subsection 6(f) at any time through December 31, 2009, Employee
would receive at least $1,039,623 paid over 36 months (three times “Termination
Compensation” of $346,541). The amount that would be paid could increase above
this amount if total cash compensation of Employee in 2007 or any subsequent
year preceding termination, is higher than $346,541. For instance, if the
Employee’s employment was terminated for reasons other than “Just Cause” in
2008, and cash compensation for 2007 was $360,000, then the employee would
receive $1,080,000 paid over 36 months.
(c)
Employer
shall have the right to terminate Employee's employment under this Agreement
at
any time for Just Cause, which termination shall be Effective immediately.
Termination for “Just Cause” shall include termination for (a) Employee's
commission of an act materially and demonstrably detrimental to the Employer,
which act constitutes willful misconduct by the Employee in the performance
of
his material duties to the Employer not authorized, directed or ratified by
City
National’s or the Company’s Board of Directors; (b) Employee's conviction of a
felony involving moral turpitude; or (c) Employee’s material breach of any other
provision of this Agreement, provided that Employee has received written notice
from Employer of such material breach and such breach remains uncured 30 days
after the delivery of such notice. No act or failure to act will be considered
“willful” under this Agreement unless it is done, or omitted to be done, by the
Employee in bad faith or without reasonable belief that his action or omission
was in the best interests of the Employer. In the event Employee's employment
under this Agreement is terminated for Just Cause, Employee’s right to receive
compensation or other benefits under this Agreement for any period after such
termination shall be limited to those provided for under Subsection
6(a).
(d)
If
Employee shall die during the Term, this Agreement and the employment
relationship hereunder will automatically terminate on the date of death, which
date shall be the last date of the Term. Notwithstanding this Subsection 6(d),
if Employee dies while employed by Employer, Employee's estate shall receive
an
amount equal to the Employee's Termination Compensation (as defined above)
multiplied by (3) three, paid over 36 equal monthly payments commencing with
the
first day of the month following the date of death, in addition to any life
insurance benefits available to all employees of City National.
(e)
Employer
may terminate Employee’s employment other than for “Just Cause,” as described in
Subsection 6(c), at any time upon written notice to Employee, which termination
shall be effective immediately. In the event Employer terminates Employee
pursuant to this Subsection 6(e), Employee will nevertheless receive his
Termination Compensation times (3) three to be paid in 36 monthly installments
commencing with the first day of the month following Employee’s termination of
employment under this Section 6(e). In addition, Employee shall continue to
receive health insurance coverage from Employer on the same terms as were in
effect prior to Employee’s termination, either under Employer’s plans or
comparable coverage, for 60 months, or until Employee becomes eligible for
health benefits offered by another employer, which benefits are substantially
equivalent to those provided by Employer to Employee immediately prior to
termination, whichever is shorter. Notwithstanding anything in this Agreement
to
the contrary, if Employee breaches Subsection 4(d), Employee will not be
entitled to receive any further compensation or benefits pursuant to this
Subsection 6(e).
(f)
Employee
may voluntarily terminate employment with Employer (i) pursuant to
paragraph 8(g) hereof, or (ii) for “Good Reason.” In either such
event, Employee shall be entitled to receive (i) any compensation due but not
yet paid through the date of termination, and (ii) in lieu of any further salary
payments from the date of termination to the end of the Term, an amount equal
to
the Termination Compensation multiplied by 3.00 paid in 36 monthly installments
commencing with the first day of the month following the date of such
termination of employment. In addition, Employee shall continue to receive
health insurance coverage from Employer on the same terms as were in effect
prior to Employee’s termination, either under Employer’s plans or comparable
coverage for either 60 months or until Employee becomes eligible for health
benefits provided by another employer, which benefits are substantially
equivalent to those offered by Employer to Employee immediately prior to
termination, whichever is shorter. Under these circumstances, Employee shall
not
be subject to the restrictions in Section 4(a), as set forth in Section
4(e).
“Good
Reason” shall mean the occurrence of any of the following events without
Employee's express written consent:
(i)
the
assignment to Employee of duties inconsistent with the position of Executive
Vice-President of companies similar to the Employer;
(ii)
a
reduction by Employer in Employee's pay grade or base salary as then in effect
or the exclusion of Employee from participation in Employer's benefit plans
in
which he previously participated as in effect at the date hereof or as the
same
may be increased from time to time during the term of this
Agreement.
(iii)
an
involuntary relocation of Employee more than 50 miles from the location where
Employee worked immediately following his most recent voluntary relocation
or
the breach by Employer of any other material provision of this
Agreement;
(iv)
any
purported termination of the employment of Employee by Employer which is not
effected in accordance with this Agreement; or
(v)
the
occurrence of a Change of Control within the period of 24 months preceding
such
termination.
A
“Change
of Control” shall be deemed to have occurred if (i) any person or group of
persons (as defined in Section 13(d) and 14(d) of the Securities Exchange Act
of
1934) together with its affiliates, excluding employee benefit plans of
Employer, is or becomes, directly or indirectly, the “beneficial owner” (as
defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934)
of
securities of the Company or of City National representing 20% or more of the
combined voting power of its then outstanding securities; or (ii) during the
term of this Agreement as a result of a tender offer or exchange offer for
the
purchase of securities of the Company or of City National (other than such
an
offer by the Company or City National for its own securities), or as a result
of
a proxy contest, merger, consolidation or sale of assets, or as a result of
any
combination of the foregoing, individuals who at the beginning of any two-year
period during the Term of this Agreement constitute the Company’s or City
National’s Board of Directors, plus new directors whose election or nomination
for election by the Company’s or City National’s shareholders, as applicable, is
approved by a vote of at least two-thirds of the directors still in office
who
were directors at the beginning of such two-year period, cease for any reason
during such two-year period to constitute at least two-thirds of the members
of
such Board of Directors; or (iii) the shareholders of the Company or of City
National approve a merger or consolidation of the Company and/or City National
with any other corporation or entity regardless of which entity is the survivor,
other than a merger or consolidation which would result in the voting securities
of the Company or City National outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or being converted into voting
securities of the surviving entity) at least 80% of the combined voting power
of
the voting securities of the Company or City National or such surviving entity
outstanding immediately after such merger or consolidation; or (iv) the
shareholders of the Company or City National, as applicable, approve a plan
of
complete liquidation or winding-up of the Company or City National or an
agreement for the sale or disposition by the Company or City National of all
or
substantially all of the Company’s or City National’s assets; or (v) any event
which Employer's Board of Directors determines should constitute a Change of
Control.
(g)
In
receiving any payments pursuant to this Section 6, Employee shall not be
obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to Employee hereunder, and such amounts shall not be
reduced or terminated whether or not Employee obtains other
employment.
(h)
In
the
event that Employer's independent public accountants or the Internal Revenue
Service determine, at any time during or after expiration of this Agreement,
that Employee has collected an amount arising from any and all sources of
compensation from Employer (including, without limitation, by virtue of the
immediately following sentence) exceeding the product of 2.99 and Employee's
“base amount” as defined in Section 280G(b)(3) of the Internal Revenue Code (the
“Code § 280G Maximum”), notwithstanding any provision of this agreement or any
plan or arrangement of Employer to the contrary, Employer shall pay Employee
147.5% of the federal excise taxes payable by Employee under Code § 4999. Such
tax gross up payment shall be made to Employee no later than the due date of
the
Employee’s tax return reporting the amount of such tax. If, by virtue of any
plan or arrangement of Employer, benefits to which Employee would otherwise
be
entitled would be curtailed or reduced because Employee may collect an amount
exceeding the Code § 280G Maximum, Employer shall nevertheless pay to Employee
an amount equal to 100% of the value by which such benefits are curtailed or
reduced, and any such payments shall be subject to the excise tax reimbursement
prescribed by the preceding section.
(i)
To
the
extent that Employee is a "key employee" (as defined under Section 416(i) of
the
Internal Revenue Code, disregarding Section 416(i)(5) of the Internal Revenue
Code) of the Company, no payment of Termination Compensation may be made under
this Section 6 prior to the earlier of (i) the expiration of the six (6)-month
period measured from the date of Employee's separation from service, or (ii)
the
date of Employee's death; provided, however, that the six (6) month delay
required under this Section 6(i) shall not apply to the portion of any payment
resulting from the Employee’s “involuntary separation from service” (as defined
in Treas. Reg. § 1.409A 1(n) and including a “separation from service for good
reason,” as defined in Treas. Reg. § 1.409A 1(n)(2)) that (a) is payable no
later than the last day of the second year following the year in which the
separation from service occurs, and (b) does not exceed two times the lesser
of
(i) the Employee’s annualized compensation for the year prior to the year in
which the separation from services occurs, or (ii) the dollar limit described
in
Section 401(a)(17) of the Code. To the extent Termination Compensation payable
in monthly installments under this Section 6 is required to be deferred under
the preceding sentence, the first six months of monthly installments shall
be
payable in month seven following Employee's separation from service and the
remaining monthly payments shall be made when otherwise scheduled.
(j)
Any
reference in this Agreement to a termination of employment, severance from
employment or separation from employment shall be deemed to mean a “Termination
of Employment.” A “Termination of Employment” means the termination
of the Employee’s employment with the Company and its Affiliates for reasons
other than death or Total and Permanent Disability. Whether a
Termination of Employment takes place is determined based on the facts and
circumstances surrounding the termination of the Employee’s
employment. A Termination of Employment will be considered to have
occurred if it is reasonably anticipated that:
(i)
the
Employee will not perform any services for the Company or its Affiliates after
Termination of Employment, or
(ii)
the
Employee will continue to provide services as the Company or its Affiliates
at
an annual rate that is less than fifty percent (50%) of the bona fide services
rendered during the immediately preceding twelve (12) months of
employment.
7.
Other
Employment.
Employee
shall devote all of his business time, attention, knowledge and skills solely
to
the business and interest of Employer and its Affiliates, and Employer and
its
Affiliates shall be entitled to all of the benefits, profits and other
emoluments arising from or incident to all work, services and advice of
Employee, and Employee shall not, during the Term hereof, become interested
directly or indirectly, in any manner, as partner, officer, director,
stockholder, advisor, employee or in any other capacity in any other business
similar to Employer's business; provided, however, that nothing herein contained
shall be deemed to prevent or limit the right of Employee to invest in a
business similar to Employer's business if such investment is limited to less
than one percent of the capital stock or other securities of any corporation
or
similar organization whose stock or securities are publicly owned or are
regularly traded on any public exchange.
8.
Miscellaneous.
(a)
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of West Virginia without regard to conflicts of law principles
thereof.
(b)
This
Agreement constitutes the entire Agreement between Employee and Employer, with
respect to the subject matter hereof, and supersedes the Amended and Restated
Employment Agreement entered into between the Employer and Employee on May
15,
2001, as amended on November 18, 2003, as well as the Amendment to the
Employment Agreement signed on February 25, 2005, pursuant to which the Employee
became the Executive Vice President of the Company and City
National. Without limiting the foregoing, Employee agrees that this
Agreement satisfies any rights he may have had under the prior employment
agreements.
(c)
This
Agreement may be executed in one or more counterparts, all of which, taken
together, shall constitute one and the same instrument.
(d)
Any
notice or other communication required or permitted under this Agreement shall
be effective only if it is in writing and delivered in person or by reliable
overnight courier service or deposited in the mails, postage prepaid, return
receipt requested, addressed as follows:
To
Employer:
City
Holding Company
25
Gatewater Road
Charleston,
West Virginia 25313
(304)
769-1100
Attention: Corporate
Secretary
To
Employee:
Craig
G.
Stilwell
[Address
and Telephone Number]
Notices
given in person or by overnight courier service shall be deemed given when
delivered to the address required by this Subsection 8(d), and notices given
by
mail shall be deemed given three days after deposit in the mails. Any party
hereto may designate by written notice to the other party in accordance herewith
any other address to which notices addressed to him shall be sent.
(e)
The
provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof. It is understood and agreed
that
no failure or delay by Employer or Employee in exercising any right, power
or
privilege under this Agreement shall operate as a waiver thereof, nor shall
any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege
hereunder.
(f)
In
the
event any dispute shall arise between Employee and Employer as to the terms
or
interpretations of this Agreement, whether instituted by formal legal
proceedings or otherwise, including any action taken by Employee to enforce
the
terms of this Agreement or in defending against any action taken by Employer,
Employer shall reimburse Employee for all reasonable costs and expenses,
including reasonable attorneys' fees, arising from such dispute, proceeding
or
action, if Employee shall prevail in any action initiated by Employee or shall
have acted reasonably and in good faith in defending against any action
initiated by Employer. Such reimbursement shall be paid within 10 days of
Employee furnishing to Employer written evidence, which may be in the form,
among other things, of a canceled check or receipt, of any costs or expenses
incurred by Employee. Any such request for reimbursement by Employee shall
be
made no more frequently than at 60 day intervals.
(g)
Should
Employee die after termination of his employment with Employer while any amounts
are payable to him hereunder, this Agreement shall inure to the benefit of
and
be enforceable by Employee's executors, administrators, heirs, distributees,
devisees and legatees and all amounts payable hereunder shall be paid in
accordance with the terms of this Agreement to Employee's devisee, legatee
or
other designee or, if there is no such designee, to his estate. Employer shall
require any successor (whether direct or indirect, by purchase, merger,
consolidation or other-wise) to all or substantially all of the business or
assets of Employer, by agreement in form and substance reasonably satisfactory
to Employee to expressly assume and agree to perform this Agreement in the
same
manner and same extent that Employer would be required to perform it if no
such
succession had taken place. Failure of Employer to obtain such agreement prior
to the effectiveness of any such succession shall be deemed “Good Reason”,
permitting termination by Employee pursuant to Section 6(f). As used in this
Agreement, “Employer” shall mean Employer as hereinbefore defined and any
successor to its business or assets as aforesaid.
(h)
To
the
extent necessary to effectuate the terms of this Agreement, the terms of this
Agreement, and the respective rights and obligations of the parties, which
must
survive the termination of Employee's employment or the termination or
expiration of this Agreement shall so survive. Without limiting the foregoing,
Sections 4, 5, 6, and 8(g) shall expressly survive the termination of this
Agreement.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
and year first above written.
|
CITY
HOLDING COMPANY
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By:
/s/
Charles R. Hageboeck
|
|
Charles
R. Hageboeck, President
&
|
|
CEO
|
|
CITY
NATIONAL BANK OF
|
|
WEST
VIRGINIA
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|
|
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|
By:
/s/
Charles R. Hageboeck
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|
Charles
R. Hageboeck, President
&
|
|
CEO
|
|
EMPLOYEE
|
|
|
|
|
|
/s/
Craig G. Stilwell
|
|
Craig
G.
Stilwell
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