EXHIBIT 10.28

 

CHANGE IN CONTROL AGREEMENT

BETWEEN COMMUNITY BANCSHARES, INC.

AND STACEY W. MANN

 

THIS CHANGE IN CONTROL AGREEMENT (this “Agreement”), dated this 4th day of
December, 1999, by and between Community Bancshares, Inc. a Delaware corporation
(the “Company”), and Stacey W. Mann (the “Executive”).

 

WITNESSETH:

 

WHEREAS, the Company wishes to assure itself and its key employees of continuity
of management and objective judgment in the event of any actual or contemplated
Change in Control of the Company, and the Executive is a key employee of the
Company or one of its subsidiaries and is an integral part of management of the
Company (for purposes hereof employment with any present or future parent or
subsidiary corporation of the Company shall be considered employment by the
Company); and

 

WHEREAS, this Agreement is not intended to materially alter the compensation and
benefits that the Executive could reasonably expect to receive in the absence of
a Change in Control of the Company, and this Agreement accordingly will be
operative only upon circumstances relating to an actual or anticipated change in
control of the Company.

 

NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants herein contained, the parties hereby agree as follows:

 

I. OPERATION OF AGREEMENT

 

This Agreement shall be effective immediately upon its execution by the parties
hereto, but anything in this Agreement to the contrary notwithstanding, neither
the Agreement nor any provision hereof shall be operative unless, during the
term of this Agreement, there has been a Change in Control of the Company during
the term of this Agreement, all of the provisions hereof shall become operative
immediately.

 

II. TERM OF AGREEMENT

 

The term of this Agreement shall be for an initial three (3) year period
commencing on the date hereof; provided however that this Agreement shall be
extended automatically for one (1) additional year at the end of this initial
term and at the end of each additional year thereafter, unless the Compensation
Committee delivers written notice twelve (12) months prior to the end of such
term, or extended term, to the Executive, that the Agreement will not be
extended. In such case, the Agreement will terminate at the end of the term, or
extended term, then in progress.

 

However, in the event a Change in Control occurs during the original or any
extended term, this Agreement will remain in effect until all obligations of the
Company hereunder have been fulfilled, and until all benefits required hereunder
have been paid to the Executive.

 

III. DEFINITIONS

 

1. “Board” or “Board of Directors” - the Board of Directors of the Company.

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2. “Cause” - either

 

(I) any act that constitutes, on the part of the Executive, (A) fraud,
dishonesty, a felony or gross malfeasance of duty, and (B) that directly results
in material injury to the Company; or

 

(ii) conduct by the Executive in his office with the Company that is grossly
inappropriate and demonstrably likely to lead to material injury to the Company,
as determined by the Board acting reasonably and in good faith;

 

provided, however, that in the case of (ii) above, such conduct shall not
constitute Cause unless the Board shall have delivered to the Executive notice
setting forth with specificity (A) the conduct deemed to qualify as Cause, (B)
reasonable action that would remedy such objection, and (c) a reasonable time
(not less than thirty (30) days) within which the Executive may take such
remedial action, and the Executive shall not have taken such specified remedial
action within such specified reasonable time.

 

3. “Change in Control” - Either

 

(i) the acquisition, directly or indirectly, by any “person” (as such term is
used in Section 13(d) and 14(d) of the Securities Exchange Act of 1937, as
amended), other than those persons in control of the Company as of the effective
date of this Agreement, within any twelve (12) month period of securities of the
Company representing an aggregate of twenty percent (20%) or more of the
combined voting power of the Company’s then outstanding securities; or

 

(ii) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board, cease for any reason to
constitute at least a majority thereof, unless the election of each new director
was approved in advance by a vote of at least a majority of the directors then
still in office who were directors at the beginning of the period; or

 

(iii) consummation of (a) a merger, consolidation or other business combination
of the Company with any other “person” (as such term is used in Section 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended) or affiliate
thereof, other than a merger, consolidation or business combination which would
result in the outstanding common stock of the Company immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into common stock of the surviving entity or a parent or affiliate thereof) at
least sixty (60)% of the outstanding common stock of the Company or such
surviving entity or parent or affiliate thereof outstanding immediately after
such merger, consolidation or business combination, or (b) a plan of complete
liquidation of the Company or an agreement for the sale of disposition by the
Company of all or substantially all of the Company’s assets; or

 

(iv) the occurrence of any other event or circumstance which is not covered by
(i) through (iii) above which the Board determines affects control of the
Company and, in order to implement the purposes of this Agreement as set forth
above, adopts a resolution that such event or circumstance constitutes a Change
in Control of the purposes of this Agreement.

 

4. “Code” - the Internal Revenue Code of 1986, as amended.

 

5. “Compensation Committee” - the Executive Compensation Committee of the Board
of Directors of the Company, or any successor committee.

 

6. “Disability” - total and permanent disability under the Corporation’s
long-term disability plan.

 

7. “Excess Severance Payment” - the term “Excess Severance Payment” shall have
the same meaning as the term “excess parachute payment” defined in Section
280G(b)(1) of the Code.

 

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8. “Involuntary Termination” - termination of the Executive’s employment by the
Executive following a Change in Control which, in the reasonable judgment of the
Executive, is due to (i) a change of the Executive’s responsibilities, position
(including status, office, title, reporting relationships or working
conditions), authority or duties (including changes resulting from the
assignment to the Executive of any duties inconsistent with his positions,
duties or responsibilities as in effect immediately prior to the Change in
Control); or (ii) a reduction in the Executive’s compensation or benefits as in
effect immediately prior to the Change in Control, or (iii) a forced relocation
of the Executive’s primary place of employment to a place more than fifty (50)
miles from the Executive’s primary place of employment immediately prior to the
Change in Control. Involuntary Termination does not include Retirement, death or
Disability of the Executive.

 

9. “Present Value” - The term “Present Value” shall have the same meaning as
provided in Section 280G(d)(4) of the Code.

 

10. “Severance Payment” - The term “Severance Payment” shall have the same
meaning as the term “parachute payment” defined in Section 280G(b)(2) of the
Code.

 

11. “Reasonable Compensation” - The term “Reasonable Compensation” shall have
the same meaning as provided in Section 280G(b)(4) of the Code.

 

10 “Retirement” - termination of employment at or after the Executive’s 65th
birthday.

 

IV. BENEFITS UPON TERMINATION FOLLOWING A CHANGE IN CONTROL

 

1. Termination - The Executive shall be entitled to, and the Company shall pay
or provide to the Executive, the benefits described in Section 2 below if (a) a
Change in Control occurs during the term of this Agreement, and (b) the
Executive’s employment is terminated within thirty (30) months following the
Change in Control either (i) by the Company (other than for Cause or by reason
of the Executive’s Retirement, death or Disability) or (ii) by the Executive
pursuant to Involuntary Termination; provided, however, that if:

 

(a) during the term of this Agreement there is a public announcement of a
proposal for a transaction that, if consummated, would constitute a Change in
Control or the Board receives and decides to explore an expression of interest
with respect to a transaction which, if consummated, would lead to a Change in
Control (either transaction being referred to herein as the “Proposed
Transaction”); and

 

(b) the Executive’s employment is thereafter terminated by the Company other
than for Cause or by reason of the Executive’s Retirement, death or Disability;
and

 

(c) the Proposed Transaction is consummated within one (1) year after the date
of termination of the Executive’s employment.

 

then, for the purposes of this Agreement, a Change in Control shall be deemed to
have occurred during the term of this Agreement and the termination of the
Executive’s employment shall be deemed to have occurred within thirty (30)
months following a Change in Control.

 

An executive shall also be entitled to receive the benefits described in Section
2 below if he terminates employment for any reason during a 30-day period
beginning twelve months after the occurrence of a Change in Control.

 

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2. Benefits to be Provided - If the Executive becomes eligible for benefits
under Section 1 above, the Company shall pay or provide to the Executive the
benefits set forth in this Section 2.

 

(a) Salary - The Executive will continue to receive his current salary (subject
to withholding of all applicable taxes and any amounts referred to in Section
2(c) below) for a period of thirty (30) months from his date of termination in
the same manner as it was being paid as of the date of termination; provided,
however, that the salary payments provided for hereunder shall be paid in a
single lump sum payment, to be paid not later than thirty (30) days after his
termination of employment; provided further, that the amount of such lump sum
payment shall be determined by taking the salary payments to be made and
discounting them to their Present Value. For purposes hereof, the Executive’s
“current salary” shall be the highest rate in effect during the six-month period
prior to the Executive’s termination.

 

(b) Bonuses - The Executive shall receive payments from the Company for the
thirty (30) months following the month in which this employment is terminated in
an amount for each such month equal to one-twelfth of the average of the bonuses
earned by him for the two calendar years immediately preceding the year in which
such termination occurs. Any bonus amounts that the Executive had previously
earned from the Company but which may not yet have been paid as of the date of
termination shall not be affected by this provision, other than to serve as a
measurement for this portion of the severance benefit. The bonus amounts
determined herein shall be paid in a single lump sum payment, to be paid not
later than 30 days after termination of employment; provided, further, that the
amount of such lump sum payment shall be determined by taking the bonus payments
(as of the payment date) to be made and discounting them to their Present Value.

 

(c) Health and Life Insurance Coverage - The health and life insurance benefits
coverage provided to the Executive at his date of termination shall be continued
at the same level and in the same manner as if his employment had not terminated
(subject to the customary changes in such coverages if the Executive retires or
reaches age 65 or similar events), beginning on the date of such termination and
ending on the date thirty (30) months from the date of such termination. Any
additional coverages the Executive had at termination, including dependent
coverage, will also be continued for such period at the same level and on the
same terms as provided to the Executive immediately prior to his termination, to
the extent permitted by the applicable policies or contract. Any costs Executive
was paying for such coverages at the time of termination shall be paid by the
Executive by separate check payable to the Company each month in advance. If the
terms of any benefit plan referred to in this Section do not permit continued
participation by the Executive, then the Company will arrange for other coverage
at its expense providing substantially similar benefits as it can find for other
officers in similar positions.

 

(d) Employee Retirement Plans - To the extent permitted by the applicable plan,
the Executive will be fully vested in and will be entitled to continue to
participate, consistent with past practices, in all employee retirement plans
maintained by the Company in effect as of his date of termination. The
Executive’s participation in such retirement plans shall continue for a period
of thirty (30) months from the date of termination of his employment (at which
point he will be considered to have terminated employment within the meaning of
the plans) and the compensation payable to the executive under (a) and (b) above
shall be treated (unless otherwise excluded) as compensation under the plan. If
full vesting and continued participation in any plan is not permitted, the
Company shall pay to the executive and, if applicable, his beneficiary, a
supplemental benefit equal to the Present Value on the date of termination of
employment of the excess of (i) the benefit the Executive would have been paid
under such plan if he had been fully vested and had continued to be covered for
the 30-month period as if the Executive had earned compensation described under
(a) and (b) above and had made contributions sufficient to earn the maximum
matching contribution, if any, under such plan (less any amounts he would have
been required to contribute), over (ii) the benefit actually payable to or on
behalf of the Executive under such plan. For purposes of determining the benefit
under (i) in the preceding sentence, contributions deemed to be made under a
defined contribution plan will be deemed to be invested in the same manner as
the Executive’s account under such plan at the time of termination of
employment. The Company shall pay such supplemental benefits (if any) in a lump
sum.

 

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(e) Career Counseling - The Company will provide career counseling and out
placement services on an individual basis to the Executive as the Company deems
appropriate and for a reasonable period following the Executive’s termination of
employment; provided, however, that the Company’s obligation to provide such
services shall terminate at such time, if any, as the cost of such services
exceeds $5,000.

 

(f) Effect of Lump Sum Payment - The lump sum payment under (a) or (b) above
shall not alter the amounts the Executive is entitled to receive under the
benefit plans described in (c) and (d) above. Benefits under such plans shall be
determined as if the Executive had remained employed and received such payments
over a period of thirty (30) months.

 

(g) Effect of Death or Retirement - The benefits payable or to be provided under
this Agreement shall continue in the event of the Executive’s death and shall be
payable to his estate or named beneficiary. The benefits payable or to be
provided under this Agreement shall cease in the event of the Executive’s
election to commence Retirement benefits under the Company’s retirement plan.

 

(h) Total Benefit - Notwithstanding anything in this Agreement to the contrary,
the Total Benefit payable or to be provided to the Executive by the Company or
an affiliate, whether pursuant to this Agreement or otherwise, shall be
calculated so as to provide the greatest total benefit after taxes. The Company
shall calculate, or authorize an independent third party to calculate, the
Executive’s Total Benefit under three different methods and make payment to the
Executive according to the method that provides the Executive with the greatest
total benefit after taxes.

 

(i) Total Benefit Calculation - The three methods of benefit calculation shall
include the Limited Benefit Method, the Unlimited Benefit Method and the Grossed
Up Unlimited Benefit Method, as each is defined herein. Under the Limited
Benefit Method, the Executive’s Total Benefit shall be determined as defined in
this Section IV and then modified or reduced to the extent necessary so that the
benefits payable or to be provided to the Executive under this Agreement that
are treated as Severance Payments, as well as any payments or benefits provided
outside of this Agreement that are so treated, shall not cause the Company to
have paid an Excess Severance Payment. In computing such amount, the parties
shall take into account all provisions of Internal Revenue Code Section 280G,
including making appropriate adjustments to such calculation for amounts
established to be Reasonable Compensation. In the event that the amount of any
Severance Payments that would be payable to or for the benefit of the Executive
under this Agreement must be modified or reduced, the Executive shall direct
which Severance Payments are to be modified or reduced; provided, however, that
no increase in the amount of any payment or change in the timing of the payment
shall be made without the consent of the Company. The Limited Benefit Method
shall be interpreted so as to avoid the imposition of excise taxes on the
Executive under Section 4999 of the Code or the disallowance of a deduction to
the Company pursuant to Section 280G(a) of the Code with respect to amounts
payable under this Agreement or otherwise. The Executive shall be responsible
for any and all federal and state income taxes associated with the Limited
Benefit Method. Under the Unlimited Benefit Method, the Total Benefit payable to
the Executive shall be determined as defined in this Section IV and shall not be
reduced or modified in any manner. The Executive shall be responsible for any
and all income, excise and/or other taxes associated with the Unlimited Benefit
Method. Under the Grossed Up Unlimited Benefit Method, the Executive’s Total
Benefit shall be determined as defined in this Section IV with no reduction, and
an additional payment shall be made to the Executive by the Company with such
additional payment equal to the amount of any excise tax on the Total Benefit
plus the estimated federal and state income taxes and any excise tax associated
with the additional payment.

 

(j) No Obligation to Fund - The agreement of the Company (or its successor) to
make payments to the Executive hereunder shall represent solely the unsecured
obligation of the Company (and its successor), except to the extent the Company
(or its successors) in its sole discretion elects in whole or in part to fund
its obligations under this Agreement pursuant to a trust arrangement or
otherwise.

 

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V. MISCELLANEOUS

 

1. Contract Non-Assignable - The parties acknowledge that this Agreement has
been entered into due to, among other things, the special skills of the
Executive, and agree that this Agreement may not be assigned or transferred by
the Executive, in whole or in part, without the prior written consent of the
Company. Any business entity succeeding to all or substantially all of the
business of the Company by purchase, merger, consolidation, sale of assets or
otherwise, shall be bound by this Agreement.

 

2. Other Agents - Nothing in this Agreement is to be interpreted as limiting the
Company from employing other personnel on such terms and conditions as may be
satisfactory to the Company.

 

3. Notices - All notices, requests, demands and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if delivered or seven days after mailing if mailed, first class, certified
mail, postage prepaid:

 

To the Company:

   Community Bancshares, Inc.     

P. O. Box 1000

    

Blountsville, Alabama 35031

To the Executive:        

   Stacey W. Mann     

770 Grandview Road

    

Oneonta, Alabama 35121

 

Any party may change the address to which notices, requests, demands and other
communications shall be delivered or mailed by giving notice thereof to the
other party in the same manner provided herein.

 

4. Provisions Severable - If any provision or covenant, or any part thereof, of
this Agreement should be held by any court to be invalid, illegal or
unenforceable, either in whole or in part, such invalidity, illegality or
unenforceability shall not affect the validity, legality or enforceability of
the remaining provisions or covenants, or any part thereof, of this Agreement,
all of which shall remain in full force and effect.

 

5. Waiver - Failure of either party to insist, in one or more instances, on
performance by the other in strict accordance with the terms and conditions of
this Agreement shall not be deemed a waiver or relinquishment of any right
granted in this Agreement or of the future performance of any such term or
condition or of any other term or condition of this Agreement, unless such
waiver is contained in a writing signed by the party making the waiver.

 

6. Amendments and Modifications - This Agreement may be amended or modified only
by a writing signed by both parties hereto, which makes specific reference to
this Agreement.

 

7. Governing Law - The validity and effect of this Agreement shall be governed
by and construed and enforced in accordance with the laws of the State of
Alabama.

 

8. Arbitration of Disputes; Expenses - The parties agree that all disputes that
may arise between them relating to the interpretation or performance of this
Agreement, including matters relating to any funding arrangements for the
benefits provided under this Agreement, shall be determined by binding
arbitration through an arbitrator approved by the American Arbitration
Association or other arbitrator mutually acceptable to the parties. The award of
the arbitrator shall be final and binding upon the parties and judgment upon the
award rendered may be entered in any court having jurisdiction. In the event the
Executive incurs legal fees and other expenses in seeking to obtain or to
enforce any such rights or benefits through settlement, arbitration or
otherwise, the Company shall promptly pay the Executive’s reasonable legal fees
and expenses incurred in enforcing this Agreement. Except to the extent provided
in the preceding sentence, each party shall pay its own legal fees and other
expenses associated with the arbitration, provided that the fee for the
arbitrator shall be shared equally.

 

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9. Indemnity - The Executive shall be entitled to the benefits of the indemnity
currently applicable to the Executive, if any, as provided by the Company’s
articles of incorporation or bylaws. Any changes to the articles of
incorporation or bylaws reducing the indemnity granted to officers shall not
affect the rights granted hereunder. The Company may not reduce these indemnity
benefits confirmed to the Executive hereunder without the written consent of the
Executive.

 

10. Termination of Prior Agreements - The Executive hereby agrees to a mutual
termination, effective as of the effective date of this Agreement, of any prior
existing change in control agreements (by whatever name), providing benefits to
the Executive upon a termination of employment following a Change in Control of
the Company, to which he and the Company are parties, and as to such prior
agreements, if any, the Executive releases all claims, rights and entitlements.

 

11. Regulatory Approvals - The Agreement, and the rights and obligations of the
parties hereto, shall be subject to approval of the same by any and all
regulatory authorities having jurisdiction over the Company, to the extent such
approval is required by law, regulation, or order.

 

12. Regulator Intervention - Notwithstanding any term of this Agreement to the
contrary, this Agreement is subject to the following terms and conditions:

 

(a) The Company’s obligations to provide compensation or other benefits to
Executive under this Agreement may be suspended if the Company has been served
with a notice of charges by the appropriate federal banking agency under
provisions of Section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818)
directing the Company to cease making payments required hereunder; provided,
however, that

 

(i) The Company shall seek in good faith with its best efforts to oppose such
notice of charges as to which there are reasonable defenses;

 

(ii) In the event the notice of charges is dismissed or otherwise resolved in a
manner that will permit the Company to resume its obligations to provide
compensation or other benefits hereunder, the Company shall immediately resume
such payments and shall also pay Executive the compensation withheld while the
contract obligations were suspended, except to the extent precluded by such
notice; and

 

(iii) During the period of suspension, the vested rights of the contracting
parties shall not be affected, except to the extent precluded by such notice.

 

(b) The Company’s obligations to provide compensation or other benefits to
Executive under this Agreement shall be terminated to the extent a final order
has been entered by the appropriate federal banking agency under provisions of
Section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818) directing the
Company not to make the payments required hereunder; provided, however, that the
vested rights of the contracting parties shall not be affected by such order,
except to the extent precluded by such order.

 

(c) The Company’s obligations to provide compensation or other benefits to
Executive under this Agreement shall be terminated or limited to the extent
required by the provisions of any final regulation or order of the Federal
Deposit Insurance Company promulgated under Section 18(k) of the Federal Deposit
Insurance Act (12 U.S.C. 1828(k)) limiting or prohibiting any “golden parachute
payment” as defined therein, but only to the extent that the compensation or
payments to be provided under this Agreement are so prohibited or limited.

 

(d) Notwithstanding the foregoing, the Company shall not be required to make any
payments under this Agreement prohibited by law.

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its
behalf by its duly authorized officers and the Executive has hereunto set his
hand, as of the date and year first above written.

 

COMMUNITY BANCSHARES, INC.

By:

 

/s/ Kennon R. Patterson, Sr.

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Chairman, President and

   

Chief Executive Officer

 

Attest:

/s/ Denny Kelly

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Executive Vice President

(CORPORATE SEAL)

 

EXECUTIVE

   

/s/ Stacey W. Mann

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(SEAL)

Stacey W. Mann

   

 

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