CHANGE IN CONTROL AGREEMENT
Exhibit
10.23
THIS CHANGE IN CONTROL AGREEMENT (the
“Agreement”) entered into this 17th day of July, 2008, between XxXXXXXX
BANCSHARES, INC., a Georgia corporation (the “Corporation”), and XXXXX X. XXXXX
(the “Employee”).
W I T N E S S E T
H:
WHEREAS, the Corporation wishes to
assure both itself and its key employees of continuity of management and
objective judgment in the event of any actual or contemplated Change in Control
(as defined hereinafter) of the Corporation or XxXxxxxx State Bank, the
Corporation’s wholly-owned subsidiary (the “Bank”), and Employee is a key
employee of the Corporation and Bank and an integral part of their management;
and
WHEREAS, this Agreement is not intended
to materially alter the compensation and benefits that Employee could reasonably
expect to receive in the absence of a Change in Control of the Corporation or
the Bank, and this Agreement accordingly will be offered solely upon
circumstances relating to an actual or anticipated Change in Control of the
Corporation or Bank.
NOW, THEREFORE, for and in
consideration of the premises and the mutual covenants herein contained, and
other good and valuable consideration, the receipt, adequacy and sufficiency of
which is hereby acknowledged, the parties hereto, intending to be legally bound,
agree as follows:
1. DEFINITIONS
As used in this Agreement of the
following terms shall have the definitions as set forth
hereinafter:
1.1 “Board
of Directors” shall mean the Board of Directors of the Corporation or the Bank,
as the case may be.
1.2 “Cause”
shall mean either:
1.2.1 any
act that constitutes on Employee’s part, fraud, dishonesty, a felony or gross
malfeasance of duty, and that directly results in material injury to the
Corporation or to the Bank; or
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1.2.2 conduct
by Employee in his office with the Corporation or the Bank that is grossly
inappropriate and demonstrably likely to lead to material injury to the
Corporation or the Bank, as determined by the Board of Directors acting
reasonably and in good faith; provided, however, such conduct shall not
constitute Cause unless the Board of Directors shall deliver to Employee notice
setting forth with specificity that conduct to qualify as Cause, reasonable
action that would remedy such objection, and a reasonable time (not less than
thirty (30) days) within which Employee may take such remedial action, and
Employee shall not have taken such specified remedial action within the
specified time.
1.3 “Change
in Control” occurs when (a) any one person or more than one person acting as a
group acquires ownership of the stock of the Corporation that, together with
stock held by such person or group, constitutes more than fifty percent (50%) of
the total fair market value or total voting power of the stock of the
Corporation; (b) a change in the effective control of the Corporation occurs on
either of the following dates: The date any one person or more than
person acting as a group acquires ownership of the stock possessing thirty
percent (30%) of the total voting power of the stock of the Corporation or the
date a majority of the members of the Corporation’s Board of Directors is
replaced during any twelve (12) months period by directors whose appointment or
election is not endorsed by a majority of the members of the Corporation’s Board
of Directors before the date of appointment or election, provided that for
purposes of this paragraph the term Corporation refers solely to the
Corporation; or (c) a change in the ownership of a substantial portion of the
Corporation’s assets occurs on the date that any one person, or more than one
person acting as a group, acquires assets of the Corporation that has a total
gross fair market value equal to or more than forty percent (40%) of the total
gross fair market value of all assets of the Corporation immediately before such
acquisition or acquisitions over a twelve (12) month period.
1.4 “Current
Salary” shall mean that salary at the highest rate in effect during the six (6)
month period prior to Employee’s termination.
1.5 “Disability”
means if an employee 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.
1.6 “Involuntary
Termination” shall mean termination of his employment by Employee following a
Change in Control, which in the reasonable judgment of Employee is due to
either:
1.6.1 a
change in Employee’s responsibilities, position (including status, office,
title, reporting relationships or working conditions), authority or duties
(including changes resulting from the assignment to Employee of any duties
inconsistent with his positions, duties or responsibilities as in effect
immediately prior to the Change in Control); or
1.6.2 a
reduction in Employee’s compensation or benefits; or
1.6.3 a
forced relocation of Employee outside of Butts County or significant increase in
Employee’s travel requirements. Involuntary Termination does not
include Employee’s Disability, Retirement (as defined hereinafter) or
death.
1.7 “Person”
shall mean a natural person, corporation, partnership, association, joint-stock
company, trust, unincorporated organization, or government or political
subdivision thereof.
1.8 “Present
Value” shall have the same meaning as provided in Section 280G(d)(4) of the
Internal Revenue Code of 1986, as amended.
1.9 “Proposed
Transaction” shall mean either a public announcement of a proposal for a
transaction that, if consummated, would constitute a Change in Control or the
Board of Directors of the Corporation or the Bank receives and decides to
explore an expression of interest with respect to a transaction in which, if
consummated, would lead to a Change in Control.
1.10 “Retirement”
shall mean Employee’s termination by “retirement” as that term is defined in any
of the Corporation’s or Bank’s retirement plans.
1.11 “Specified
Employee” means a key employee (as defined in Section 416(i) of the Internal
Revenue Code without regard to paragraph 5 thereof) of the Corporation if any
stock of the Corporation is publicly traded on an established securities market
or otherwise.
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2.
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OPERATION OF
AGREEMENT
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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 Corporation or of the
Bank. Upon such a Change in Control of the Corporation or of the Bank
during the term of this Agreement, all of the provisions hereof shall become
operative immediately.
3. TERM
OF AGREEMENT
The term of this Agreement shall be for
an initial three (3) year period commencing on the date hereof, and shall be
renewable at the end of the first year of such initial three (3) year period and
annually thereafter, for an additional one (1) year period following the initial
three (3) year period and prior extensions thereof in the sole discretion of the
Board of Directors of the Corporation and upon such terms and conditions as it
may authorize at such time.
4. BENEFITS
FOLLOWING A CHANGE IN CONTROL
4.1 Provided
Employee is providing services to the Corporation or an Employer, the majority
of which is owned by the Corporation, at the time of the Change in Control,
Employee shall be entitled to and the Corporation shall pay to Employee, the
salary, bonus and benefits set forth in paragraph 4.3 below if a Change in
Control occurs during the term of this Agreement and Employee’s employment is
terminated within two (2) years following the Change in Control
either:
4.1.1 by
the Corporation or the Bank other than for Cause or by reason of Employee’s
Disability, Retirement or death, or
4.1.2 by
Employee pursuant to Involuntary Termination.
4.2 Employee
shall be entitled to and the Corporation shall pay to Employee the salary, bonus
and benefits set forth in paragraph 4.3 below if during the term of this
Agreement there is a Proposed Transaction and Employee’s employment
is thereafter terminated by the Corporation or the Bank other than for Cause or
by reason of Employee’s Disability, Retirement or death, and the Proposed
Transaction is consummated within one (1) year after the date of termination of
Employee’s employment, then a Change in Control shall be deemed to have occurred
during the term of this Agreement and the termination of Employee’s employment
shall be deemed to have occurred within one (1) year following a Change in
Control.
4.3.1 The
Corporation or the Bank shall pay and Employee shall receive his Current Salary
(subject to withholding all applicable taxes) for a period of two (2) years 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, said lump sum payment to
be determined by taking the salary payments to be made and discounting them to
their Present Value.
4.3.2 The
Corporation or the Bank shall pay and Employees shall receive a bonus (subject
to withholding all applicable taxes) greater than or equal to a pro rata
percentage of the previous years’ bonus based upon the number of months worked
during the current fiscal year prior to termination.
4.3.3 The
Corporation or the Bank shall pay and Employees shall receive the §401(k)
contributions based upon employee’s Current Salary (subject to withholding all
applicable taxes) for a period of two (2) year from the date of his termination
in the same manner as it was being paid as of the date of termination; provided,
however, that the §401(k) contributions 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, said lump sum payment to
be determined by taking the §401(k) contributions to be made and discounting
them to their Present Value.
4.3.4 Employees
shall be entitled to any life, health or disability insurance in effect at the
time of employee’s termination for a period of two (2) years from his date of
termination in the same manner as it was provided as of the date of
termination.
4.3.5 Employees
shall be entitled to purchase the automobile provided by the Bank at the Bank’s
depreciated value.
4.4 Restriction
on Timing of Distribution. Notwithstanding any provision of this
Agreement to the contrary, if the Employee is considered a Specified Employee at
Termination of Employment under such procedures as established by the
Corporation in accordance with Section 409A of the Code, benefit distributions
that are made upon Termination of Employment may not commence earlier than six
(6) months after the date of such Termination of Employment. In the
event this Section 4.4 is applicable to the Employee, any distribution which
would otherwise be paid to the Employee within the first six (6) months
following the Termination of Employment shall be accumulated and paid to the
Employee in a lump sum on the first day of the seventh (7th) month
following the Termination of Employment. All subsequent distributions
shall be paid in the manner specified.
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5. MISCELLANEOUS
5.1 Assignment. The
parties acknowledge that this Agreement has been entered into due to, among
other things, the special skills of Employee, and agree that this Agreement may
not be assigned or transferred by Employee, in whole or in part, without the
prior written consent of the Corporation. Any business entity
succeeding to all or substantially all of the business of the Corporation or the
Bank by purchase, merger, consolidation, sale of assets or otherwise shall be
bound by this Agreement.
5.2 Other
Agents. Nothing in this Agreement is to be interpreted as limiting
the Corporation from employing other personnel on such terms and conditions as
may be satisfactory to the Corporation.
5.3 Notices. All
notices, requests, demands and other communication required or permitted
hereunder shall be in writing and shall be deemed to have been duly given if
delivered or three days after mailing, if mailed first class, certified mail,
postage prepaid:
To the
Corporation: XxXxxxxx
Bancshares, Inc.
000 Xxxxx Xxx Xxxxxx
P. O. Xxx 0000
Xxxxxxx, XX 00000
To
Employee: Xxxxx
X. Xxxxx
c/x XxXxxxxx State Bank
000 Xxxxx Xxx Xxxxxx
P. O. Xxx 0000
Xxxxxxx, XX 00000
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 part in the same manner provided herein.
5.4 Severability. 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.
5.5 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.
5.6 Amendments. This
Agreement may be amended or modified only by a writing signed by both parties
hereto making specific reference to this Agreement. This Agreement
shall supersede and replace all prior Change in Control Agreements between the
Corporation and Employee.
5.7 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
Georgia.
5.8 Arbitration. The
parties agree that all disputes that may arise between them relating to the
interpretation or performance of 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 Employee incurs legal fees and
other expense in seeking to obtain or to enforce any rights or benefits provided
by this Agreement and is successful, in whole or in part, in obtaining or
enforcing any such rights or benefits through settlement, arbitration or
otherwise, the Corporation shall promptly pay the Employee’s reasonable legal
fees and expense 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, with the fee for the
arbitrator to be shared equally.
5.9 Compliance
with Section 409A. This Agreement shall at all times be administered
and the provisions of this Agreement shall be interpreted consistent with the
requirements of Section 409A of the Code and any and all regulations thereunder,
including such regulations as may be promulgated after the Effective Date of
this First Amendment.
5.10 Rescission. Any
modification to the terms of this Agreement that would inadvertently result in
(i) treatment as a material modification under Section 409A of the Code; or (ii)
an additional tax liability on the part of the Employee, shall have no effect
provided the change in the terms of the plan is rescinded by the earlier of a
date before the right is exercised (if the change grants a discretionary right)
and the last day of the calendar year during which such change
occurred.
IN WITNESS WHEREOF, the Corporation has
caused this Agreement to be executed on its behalf by its duly authorized
officers and Employee has hereunto set his hand, as of the date and year first
above written.
“CORPORATION”
XxXXXXXX BANCSHARES, INC.
By:/s/ Xxxxxxx X.
Xxxxxx
Chairman
Attest: /s/ Xxxxx X.
Xxxxx
Secretary
(SEAL)
“EMPLOYEE”
/s/ Xxxxx X.
Xxxxx
XXXXX X.
XXXXX
