KEY EXECUTIVE
CHANGE OF CONTROL AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into as of the 18th day of
December, 1998, by and between CENIT Bancorp, Inc. ("Bancorp") and Xxxxx X.
Xxxxxx ("Executive").
RECITALS:
Executive has rendered valuable service to Bancorp or its related
corporations in key executive capacities; and
Bancorp wants to induce Executive to remain in his current employment and
to retain his objectivity during circumstances relating to potential changes of
control by providing Executive a measure of security; and
Bancorp wants to continue to have the benefits of the Executive's full time
and attention directed to the affairs of Bancorp without diversion due to
concerns about a possible change of control; and
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Bancorp wants to position itself to attract and retain able executives by
adopting compensation practices competitive with peer companies by providing
severance benefits consistent with its policy of competitive employment and
compensation practices.
NOW, THEREFORE, in consideration of good and valuable considerations from
each to the other, receipt and adequacy whereof being hereby acknowledged,
Bancorp and Executive agree as follows:
1. Definitions. Certain terms are defined for purposes of this Agreement
in Exhibit A.
2. Severance Benefit.
(a) If within twelve (12) months after a Change of Control, either (1)
Executive's employment is terminated by Bancorp without Cause, or (2) for
any reason Executive resigns his employment, other than after the
occurrence of circumstances constituting Cause, Bancorp shall pay the
Severance Payment to Executive as soon as practicable and in no event more
than sixty (60) days after Executive's termination of employment.
(b) Notwithstanding Section 2(a), on or before the date of a Change of
Control, Bancorp may notify Executive of its desire to retain Executive's
services during a Transition Period and its commitment to continue
Executive during the Transition Period as an employee of Bancorp, a
Subsidiary or a successor thereto without reduction of his current Base
Salary and without requiring his relocation to an
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office outside the Hampton Roads metropolitan statistical area that
includes Bancorp's current headquarters at 000 X. Xxxxx Xxxx, Xxxxxxx, XX
00000. In the event of such a notice and commitment, the Severance Payment
shall be payable in accordance with the terms and conditions of Section
2(a) but only if Executive does not resign his employment prior to the
earlier of (1) the end of the Transition Period, or (2) any breach by
Bancorp of the commitment set forth in the preceding sentence.
(c) For purposes of this Agreement, if Executive's employment is
terminated by Bancorp (other than for Cause) after an event causing this
Agreement to become nonamendable and nonterminable under the first sentence
of Section 13, Executive's termination of employment shall be considered to
have occurred after a Change of Control if a Change of Control occurs with
respect to and within two (2) years after the event causing this Agreement
to become nonamendable and nonterminable.
3. Limitation.
(a) No payment shall be made to Executive under this Agreement that
would constitute an "excess parachute payment" within the meaning of
Section 280G of the Code and any regulations thereunder, thereby resulting
in a loss of an income tax deduction by Bancorp and/or a Subsidiary or the
imposition of an excise tax on Executive under Section 4999 of the Code. If
the independent accountants serving as auditors for Bancorp immediately
prior to the date of a Change of Control determine that some or all of the
Severance Payments or benefits under this Agreement, when
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combined with any other payments or benefits provided to Executive by
Bancorp upon a change in ownership or effective control of Bancorp or its
assets, would constitute nondeductible excess parachute payments by Bancorp
and/or a Subsidiary under Section 280G of the Code, then the Severance
Payment shall be reduced to one dollar ($1.00) less than the maximum amount
which may be paid or provided without causing any such payments or benefits
under this Agreement or otherwise provided upon a change in ownership or
effective control of Bancorp or its assets to be nondeductible. The
determination made as to the reduction of benefits or payments required
hereunder by the independent accountants shall be binding on the parties.
(b) Notwithstanding any other provision of this Agreement to the
contrary, any payments made by Bancorp or any Subsidiary to Executive
pursuant to this Agreement or otherwise are subject to and conditioned upon
their compliance with 12 U.S.C. Section 1828(b) and any regulations
promulgated thereunder.
4. Withholding; No Set-off. The Severance Payment shall be subject to
withholding of such amounts related to taxes as Bancorp or a Subsidiary may be
legally obligated to withhold. Any right of Executive to receive the Severance
Payment, however, shall be absolute and shall not be subject to any set-off,
counterclaim, recoupment, defense, duty to mitigate or other rights Bancorp or a
Subsidiary may have against him or anyone else.
5. Subsequent Employment. The Severance Payment under this Agreement shall
not be reduced by reason of Executive's employment with any other employer
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after terminating employment with Bancorp, and any other compensation for
services rendered or consulting fees earned after the date of termination shall
not diminish Executive's right to receive the full amount of the Severance
Payment.
6. Executive's Indemnity. On and after a Change of Control, Executive shall
be entitled to the benefits of the indemnity provided by Bancorp's articles of
incorporation, bylaws or otherwise immediately prior to the Change of Control,
and any subsequent changes to the articles of incorporation, bylaws or otherwise
reducing the indemnity granted to officers shall not affect the rights granted
hereunder. Bancorp may not reduce these indemnity benefits confirmed to
Executive hereunder without the written consent of Executive.
7. Notices. Notices, which must be in writing, will be considered effective
upon receipt and shall be sent to the party at the following address or at such
other address as the applicable party may hereafter specify by the giving of a
proper notice hereunder.
Addresses for Notice Purposes
If to Bancorp:
CENIT Bancorp, Inc.
Attn: Chief Executive Officer
000 Xxxx Xxxxx Xxxx
Xxxxxxx, XX 00000
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If to Executive:
Xxxxx X. Xxxxxx
0000 Xxxx Xxxxx Xxxx #000
Xxxxxxx, XX 00000
8. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia applicable to
agreements made and entirely to be performed therein.
9. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the successors (including any successor to Bancorp by reason
of any dissolution, merger, consolidation, sale of assets or other
reorganization of Bancorp), heirs, personal representatives and permitted
assigns of the parties hereto. Neither this Agreement nor any right or interest
hereunder shall be assignable by Executive, his beneficiaries or his legal
representatives without Bancorp's prior written consent; provided, however, that
nothing in this Section 9 shall preclude the executors, administrators or other
legal representatives of Executive or his estate from assigning any rights
hereunder to any person or persons entitled thereto.
10. Employment with Related Parties. References in this Agreement to
employment services with and rendered for Bancorp shall include employment with
and services rendered for any present or future parent, Subsidiary or other
affiliated entity of Bancorp, and correspondingly, references in this Agreement
to "Bancorp" shall
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mean and refer to each parent or future parent, Subsidiary or other affiliated
entity of Bancorp for which Executive performs services, as the context may
require.
11. Not Contract for Employment. Nothing in this Agreement shall be deemed
to give Executive the right to be retained in the service of Bancorp or to deny
Bancorp any right it may have to discharge or demote Executive at any time.
12. Severability. The invalidity and unenforceability of any particular
provision of this Agreement shall not affect any other provision of the
Agreement, and this Agreement shall be construed in all respects as if any
invalid or unenforceable provision were omitted.
13. Amendment or Termination. This Agreement may be amended or terminated
by Bancorp at any time prior to the occurrence of a Change of Control, except
that after (a) the public announcement of a proposal for a transaction that, if
consummated, would constitute a Change of Control, or (b) the Chief Executive
Officer or Board of Directors of Bancorp learns of a specific proposal
containing the essential terms of a transaction that, if consummated, would
constitute a Change of Control, this Agreement shall not be amended or
terminated at the direction, recommendation or other instance of any "person or
group" (as defined in or pursuant to Sections 13(d) and 14(d) of the Exchange
Act) other than the Chief Executive Officer or the Board of Directors of Bancorp
without Executive's written consent thereto, unless and until the proposal is
finally withdrawn or terminated. After the occurrence of a Change of
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Control, this Agreement may not be amended or terminated without Executive's
written consent.
14. Miscellaneous. No provisions of this Agreement may be waived or
discharged unless the waiver or discharge is agreed to in writing signed by
Executive and Bancorp. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with any condition or
provision of this Agreement to be performed by the other party shall be deemed a
waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
expressed or implied, with respect to the subject matter hereof have been made
by either party which are not set forth expressly in this Agreement.
15. Headings. The heading of the Sections herein are for convenience only
and shall have no significance in the interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
under their respective seals as of the date written above.
CENIT BANCORP, INC. (SEAL)
By:-------------------------------
Its:-------------------------
----------------------------------(SEAL)
Xxxxx X. Xxxxxx, Executive
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EXHIBIT A
Definitions
For purposes of this Key Executive Change of Control Agreement, the
following terms shall have the meanings set forth in this Exhibit A unless a
different meaning is required by the context or unless the term is defined by
reference to another document or a plan, program or arrangement maintained by
Bancorp or a Subsidiary.
Base Salary means Executive's monthly rate of basic compensation
immediately prior to the Change of Control or at the time of his termination of
employment, whichever is greater.
Cause means any of the following: (1) continued and willful neglect by
Executive of Executive's duties for or on behalf of Bancorp or any of its
Subsidiaries; (2) continued and willful devotion by Executive of less than full
time and attention during normal business hours to the business of Bancorp or
any of its Subsidiaries; (3) willful misconduct of Executive in connection with
the performance of any of Executive's duties, including, by way of example, but
not limitation, misappropriation of funds or property of Bancorp or its
Subsidiaries or a Subsidiary's depositors or borrowers, securing or attempting
to secure personally any profit in connection with any transaction entered into
on behalf of Bancorp or its Subsidiaries, or willful violation of any code of
conduct or standards of ethics applicable to employees of Bancorp; (4) conduct
by Executive which results in Executive's suspension and/or temporary
prohibition or removal and/or permanent prohibition from participation in the
conduct of the affairs of a Subsidiary pursuant to the rules and regulations of
the primary federal or state banking agency for such Subsidiary or any other
federal or state banking agency having regulatory jurisdiction over such
Subsidiary; (5) conviction of Executive of a felony or any misdemeanor involving
moral turpitude; (6) willful disloyalty to Bancorp, such as aiding a competitor;
(7) continued and willful breach of any of Executive's obligations under this
Agreement; (8) the issuance of a permanent injunction or similar remedy against
Executive preventing Executive from executing or performing all or part of this
Agreement; or (9) executive's personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule or
regulation (other than traffic violations or similar offenses) or final
cease-and-desist order, or material breach of any provisions of this Agreement,
within the meaning of the rules and regulations of the primary federal or state
banking agency for such Subsidiary or any other federal or state banking agency
having regulatory jurisdiction over such Subsidiary. Notwithstanding anything
herein to the contrary, (a) except as "incompetence" may be otherwise defined by
the rules and regulations of the primary
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federal or state banking agency for each bank Subsidiary for which Executive
provides services or any other federal or state banking agency having regulatory
jurisdiction over each such Subsidiary, no actions or inactions taken by
Executive shall be considered "incompetence" unless such actions or inactions
evidence willful or reckless disregard of the written policies of Bancorp or
each bank Subsidiary for which Executive performs services or the safety and
soundness standards customarily observed in the banking industry; and (b) except
as "willful" may be otherwise defined by the rules and regulations of the
primary federal or state banking agency for each such Subsidiary or any other
federal or state banking agency having regulatory jurisdiction over each such
Subsidiary, (i) no act or failure to act on Executive's part shall be considered
"willful" unless done, or omitted to be done, by Executive in bad faith and
without reasonable belief that Executive's action or omission was in the best
interest of Bancorp and/or each bank Subsidiary for which Executive performs
services, and (ii) no failure to act on Executive's part shall be considered
"willful" if such failure is a result of a Disability; and (c) (i) Executive
shall not be deemed to have been terminated for Cause unless and until there
shall have been delivered to Executive a notice of termination from Bancorp
(after reasonable notice to Executive and an opportunity for Executive, together
with Executive's counsel, to be heard before Bancorp's Board of Directors)
accompanied by a resolution duly adopted by a majority of the directors (other
than Executive) of Bancorp then in office, finding that, in the good faith
opinion of such directors, Cause exists and specifying the particulars thereof
in detail, and (ii) nothing in such notice or such resolution or specifications
shall be used by Executive as grounds for any claim (A) against any director who
acts in good faith in connection therewith or (B) against Bancorp unless one or
more of the directors voting for such resolution has acted in bad faith in
connection therewith (but nothing herein shall preclude Executive from
contesting any allegation or finding that Cause existed or from pursuing any
available remedy against Bancorp for breach of this Agreement).
Change of Control means a change in the ownership or effective control of
Bancorp or in the ownership of a substantial portion of the assets of Bancorp
and shall be deemed to have occurred upon the occurrence of any one of the
following events: (1) the acquisition by any "person" or "group" (as defined in
or pursuant to Sections 13(d) and 14(d) of the Exchange Act) (other than
Bancorp, any Subsidiary or any Bancorp or Subsidiary's employee benefit plan),
directly or indirectly, as "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act) of securities of Bancorp representing twenty percent (20%) or
more of either the then outstanding shares or the combined voting power of the
then outstanding securities of Bancorp; (2) either a majority of the directors
of Bancorp elected at Bancorp's annual stockholders meeting shall have been
nominated for election other than by or at the direction of the "incumbent
directors" of Bancorp, or the "incumbent directors" shall cease to constitute a
majority of the directors of Bancorp. The term "incumbent director" shall mean
any
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director who was a director of Bancorp on December 1, 1998 and any individual
who becomes a director of Bancorp subsequent to December 1, 1998 and who is
elected or nominated by or at the direction of at least two-thirds of the then
incumbent directors; (3) the shareholders of Bancorp approve (a) a merger,
consolidation or other business combination of Bancorp with any other "person"
or "group" (as defined in or pursuant to Sections 13(d) and 14(d) of the 0000
Xxx) or affiliate thereof, other than a merger or consolidation that would
result in the outstanding common stock of Bancorp 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) more
than fifty percent (50%) of the outstanding common stock of Bancorp or such
surviving entity or a parent or affiliate thereof outstanding immediately after
such merger, consolidation or other business combination, or (b) a plan of
complete liquidation of Bancorp or an agreement for the sale or disposition by
Bancorp of all or substantially all of Bancorp's assets; or (4) any other event
or circumstance which is not covered by the foregoing subsections of this
definition but which the Board of Directors of Bancorp determines to affect
control of Bancorp and with respect to which the Board of Directors adopts a
resolution that the event or circumstance constitutes a Change of Control for
purposes of this Agreement.
Code means the Internal Revenue Code of 1986, as amended.
Disability means Executive's inability to perform the essential functions
of his position with Bancorp immediately prior to a Change of Control.
Exchange Act means the Securities Exchange Act of 1934, as amended.
Severance Payment means an amount equal to the sum of (1) the product of
the amount of Executive's Base Salary multiplied by twelve (12); and (2) the
product of the amount of Executive's Base Salary multiplied by the number of
Executive's Years of Service not in excess of twelve (12).
Subsidiary means any corporation at least a majority of the stock of which
is owned by Bancorp, either directly or through one or more other Subsidiaries,
and any other entity controlled, directly or indirectly, by Bancorp or any other
Subsidiary.
Transition Period means a specified period not in excess of six (6) months
after a Change of Control during which Executive's services are to be retained
under Section 2(b).
Year of Service means each twelve (12) complete months of employment by
Executive with Bancorp.
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