CHANGE OF CONTROL AGREEMENT
EXHIBIT
10.1
THIS
AGREEMENT, made as of the 31st day of May, 2005, by and between SUMMIT
BANK CORPORATION, a
Georgia corporation (“Summit”), the SUMMIT
NATIONAL BANK, a
national banking association (“the Bank”) (Summit and the Bank being
collectively hereinafter referred to as the “Corporation”) and XXXXXX
X. XXXXXXXX, an
individual resident of Georgia (“the Executive”) for the purpose of establishing
a severance arrangement between the Corporation and the Executive in the event
of a Change in Control (as hereinafter defined) of the Corporation.
W I T
N E S S E T H:
WHEREAS,
the board of directors of the Corporation (the “Board”) recognizes that the
Executive’s contribution to the growth and success of the Corporation has been
substantial; and
WHEREAS,
the Executive has rendered valuable service to the Corporation in various
executive capacities; and
WHEREAS,
the Corporation desires to induce the Executive to remain in his current
employment by providing the Executive a measure of security; and
WHEREAS,
the Corporation desires to continue to have the benefits of the Executive’s full
time and attention to the affairs of the Corporation without diversion due to
concerns about a possible Change in Control (as hereinafter defined) of the
Corporation;
NOW,
THEREFORE, in consideration of the foregoing, the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows;
1. Definitions. All the
terms defined in this section shall have the meanings given below throughout
this Agreement.
(a) “Base
Annual Salary” shall mean the greater of the Executive’s annual base salary (i)
at the rate in effect on the Termination Date or (ii) at the highest rate in
effect at any time during the ninety day period prior to a Change in Control,
and shall include all amounts of his/her base salary that are deferred under any
qualified or non-qualified employee benefit plans of the corporation or any
other agreement or arrangement, but shall not include amounts paid or payable as
bonuses.
(b) “Board”
shall mean the Board of Directors of Summit.
(c) “Cause”
shall mean the termination of the Executive’s employment as a result of:
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(i) any act
that (A) constitutes, on the part of the Executive, fraud, dishonesty, gross
malfeasance of duty, or conduct grossly inappropriate to the Executive’s office,
and (B) is demonstrably likely to lead to a material injury to the Corporation
or resulted in or was intended to result in direct or indirect gain to or
personal enrichment of the Executive; or
(ii) the
conviction (from which no appeal may be or is timely taken) of the Executive of
a felony; or
(iii) the
suspension or removal of the Executive by federal or state banking regulatory
authorities acting under lawful authority pursuant to provisions of federal or
state law or regulation which may be in effect from time to time;
provided,
however, that in
the case of clause (i) above, such conduct shall not constitute
Cause;
(x)
unless (A) there shall have been delivered to the Executive a written notice
setting forth with specificity the reasons that the Board believes that the
Executive’s conduct constitutes the criteria set forth in clause (i), (B) the
Executive shall have been provided the opportunity to be heard in person by the
Board (with the assistance of the Executive’s counsel if the Executive so
desires) and (C) after such hearing, the termination is evidenced by a
resolution adopted in good faith by two-thirds of the members of the Board
(other than the Executive); or
(y)
if such conduct (A) was believed by the Executive in good faith to have been in
or not opposed to the interests of the Corporation, and (B) was not intended to
and did not result in the direct or indirect gain to or personal enrichment of
the Executive.
(d) “Change
in Control” shall mean the occurrence of any of the following
events:
(i) an
acquisition (other than directly from the Corporation) of any voting securities
of the Corporation ({“Voting Securities”) by any “Person” (as the term person is
used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of
1934 (the “1934 Act”)) immediately after which such Person has “Beneficial
Ownership” (within the meaning of Rule 13d-3 promulgated under the 0000 Xxx) of
25% or more of the combined voting power of the Corporation’s then outstanding
Voting Securities; provided,
however, that in
determining whether a Change in Control has occurred, Voting Securities which
are acquired in an acquisition by (1) an employee benefit plan (or a trust
forming a part thereof) maintained by (x) the Corporation or (y) any corporation
or other person of which a majority of its voting power or its equity securities
or equity interest is owned directly or indirectly by the Corporation (a
“Subsidiary”), (2) the Corporation or any subsidiary, or (3) any Person in
connection with a “Non-Control Transaction” (as hereinafter defined) shall not
constitute an acquisition for purposes for this clause (i).
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(ii) The
individuals who, as of the date of this Agreement, are members of the Board (the
“Incumbent Board”) cease for any reason to constitute at least 80% of the Board;
provided,
however, that if
the election, or nomination for election by the Corporation’s shareholders, of
any new director was approved by a vote of at least 80% of the Incumbent Board,
such new director shall for purposes of this Agreement, be considered as a
member of the Incumbent Board; provided,
further,
however, that no
individual shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an actual or
threatened “Election Contest” (as described in Rule 14a-11 promulgated under the
0000 Xxx) or other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board (a “Proxy Contest”) including by
reason of any agreement intending to avoid or settle any Election Contest of
Proxy Contest; or
(iii) Approval
by the shareholders of the Corporation of:
(a) a merger,
consolidation or reorganization involving the Corporation, unless:
(1) the
shareholders of the Corporation, immediately before such merger, consolidation
or reorganization own, directly or indirectly, immediately following such a
merger, consolidation or reorganization, at least two-thirds of the combined
voting power of the outstanding voting securities of the corporation resulting
from such merger, consolidation or reorganization (the “Surviving Corporation”)
in substantially the same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation or reorganization, and
(2) the
individuals who were members of the Incumbent Board immediately prior to the
execution of the Agreement providing for such merger, consolidation or
reorganization constitute at least 80% members of the board of directors of the
Surviving Corporation.
(A
transaction described in clauses (1) and (2) above shall hereinafter be referred
to as “Non-Control Transaction.”)
(b) A
complete liquidation or dissolution of the Corporation; or
(c) An
agreement for the sale or other disposition of all or substantially all of the
assets of the Corporation to any Person (other than a transfer to a
Subsidiary).
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(iv) Notwithstanding
anything contained in this Agreement to the contrary, if the Executive’s
employment is terminated prior to a Change in Control and the Executive
reasonably demonstrates that such termination (A) was at the request of a third
party who has indicated an intention or taken steps reasonably calculated to
effect a change in Control (a “Third Party”) r (B) otherwise occurred in
connection with, or in anticipation of, a Change in Control, then for all
purposes of this Agreement, the date of a Change in Control with respect to the
Executive shall mean the date immediately prior to the date of such termination
of the Executive’s employment.
(d) “Good
Reason” shall mean the occurrence after a Change in Control of any of the events
or provisions as described in subsections (i) through (viii)
hereof:
(i) a change
in the Executive’s status, title, position or responsibilities (including
reporting responsibilities) which, in the Executive’s reasonable judgment,
represents an adverse change from his/her status, title, position or
responsibilities as in effect at any time within ninety days preceding the date
of a Change in Control or at any time thereafter; the assignment to the
Executive of any duties or responsibilities which, in the Executive’s reasonable
judgment, are inconsistent with his/her status, title, position or
responsibilities as in effect at any time within ninety days preceding the date
of a Change in Control or at any time thereafter; any removal of the Executive
from or failure to reappoint or reelect him/her to any of such offices or
positions, except in connection with the termination of his/her employment for
Cause, as a result of his/her death or by the Executive other than for Good
Reason, or any other change in condition or circumstances that in the
Executive’s reasonable judgment makes it materially more difficult for the
Executive to carry out the duties and responsibilities of his/her office that
existed at any time within ninety days preceding the date of the Change in
Control or at any time thereafter;
(ii) a
reduction in the Executive’s base salary or any failure to pay the Executive any
compensation or benefits to which he/she is entitled within five days of the
date due;
(iii) the
Corporation’s requiring the Executive to be based at any place outside a 50-mile
radius from the offices occupied by the Executive immediately prior to the
Change in Control, except for reasonably required travel on the Corporation’s
business which is not materially greater than such travel requirements prior to
the Change in Control;
(iv) the
failure by the Corporation to (A) continue in effect (without reduction in
benefit level and/or reward opportunities) any material compensation or employee
benefit plan in which the Executive was participating at any time within ninety
days preceding the date of a Change in Control or at any time thereafter, unless
such plan is replaced with a plan that provides substantially equivalent
compensation or benefits to the Executive or (B) provide the Executive with
compensation and benefits , in the aggregate, at least equal (in terms of
benefits levels and/or reward opportunities) to those provided for under each
other employee benefit plan, program or practice in which the Executive was
participating at any time within ninety days preceding the date of a Change of
Control or at any time thereafter;
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(v) the
insolvency or the filing (by any party, including the Corporation) of a petition
for bankruptcy of the Corporation which petition is not dismissed within sixty
days;
(vi) any
material breach by the Corporation of any provision of this
Agreement;
(vii)
any
purported termination of the Executive’s employment for Cause by the Corporation
which does not comply with the terms of this Agreement;
(viii)
the
failure of the Corporation to obtain an agreement, satisfactory to the
Executive, from any Successors and Assigns to assume and agree to perform this
Agreement.
Any event
or condition described in clause (i) through (viii) above which occurs prior to
a Change in Control but which the Executive reasonably demonstrates (A) was at
the request of a Third-Party, or (B) otherwise arose in connection with, or in
anticipation of, a Change in Control which actually occurs, shall constitute
Good Reason for purposes of this Agreement, notwithstanding that it occurred
prior to the Change in Control. The Executive’s right to terminate his/her
employment for Good Reason shall not be affected by his/her incapacity due to
physical or mental illness.
(e) “Involuntary
Termination” shall mean any termination of the Executive’s employment with the
Corporation or any Subsidiary, Successor or Assign of the Corporation following
a change in Control, provided,
however, that
the term Involuntary Termination shall not include a termination resulting from
a resignation by the Executive or a termination by the Corporation for Cause.
(f) “Notice
of Termination” shall mean a written notice of termination from the Corporation
or the Executive which specifies an effective date of termination, indicates the
Corporation or the Executive which specifies an effective date of termination,
indicates the specific termination provision in this Agreement relied upon and
sets forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive’s employment under the provision so
indicated.
(h) “Severance
Amount” shall mean an amount equal to 100% of the Executive’s Base Annual
Salary.
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(i) “Successors
and Assigns” shall mean a corporation or other entity acquiring all or
substantially all of the assets and business of the Corporation (including this
Agreement), whether by operation of law or otherwise.
(j) “Termination
Date” shall mean the date specified in the Notice of Termination.
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(2) |
Payment
of Severance Amount. |
(a) If the
Executive’s employment by the Corporation or any Subsidiary, or Successor or
Assign of the Corporation shall be subject to an Involuntary Termination, then
the Corporation shall pay the Executive an amount equal to the Severance Amount,
payable within fifteen days after the Termination Date. If the Executive
terminates his/her employment for Good Reason, then the Corporation shall pay to
the Executive an amount equal to the Severance Amount, payable within fifteen
days after the Termination Date.
(b) In the
event of either an Involuntary Termination or the Executive’s resignation for
Good Reason, any stock options previously granted to the Executive shall
immediately become fully vested, and all such options shall be exercisable by
the Executive at any time within six months from the Termination
Date.
3.
Indemnification
of Executive. In the
event of either an Involuntary Termination or the Executive’s resignation for
Good Reason, the Executive shall be entitled to the indemnity provided to
officers and directors of the Corporation immediately prior to the Change in
Control. Any changes to the Corporation’s bylaws or Articles of Incorporation or
otherwise which reduce any indemnity granted to the offices or directors of the
Corporation shall not affect the rights granted hereunder. The Corporation shall
not reduce any of the Executive’s indemnity benefits without the prior written
consent of the Executive. Any references to Georgia law in the Corporation’s
bylaws or other documents granting indemnity to the Executive shall be deemed to
be references as of the date of this Agreement, and any amendments to Georgia
laws, including a revocation thereof, shall not reduce the indemnification
benefits granted hereunder.
4.
Term. Unless
terminated as provided below, this Agreement shall be effective as of the date
first above written and shall remain in effect for a continuing term of three
(3) years which shall be extended automatically (without further action by the
Executive, Summit or the Bank) each day for an additional day so that the
remaining term is always three years; provided, that the Executive, Summit or
the Bank may, by the giving of written notice to all the other parties to this
Agreement, fix the term to a finite term of three years, without further
automatic extension, commencing with the date of such notice.
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5. Notices. Notices
and all communications under this Agreement shall be in writing and shall be
deemed given when personally delivered or mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the
Corporation, to:
Summit
Bank Corporation
0000
Xxxxxxxx Xxxxxxxx Xxxx
Xxxxxxx,
Xxxxxxx 00000
Attn:
Secretary of Summit Bank Corporation, or its Successor or Assign, with copies to
the President of Summit Bank Corporation or its Successor or Assign and the
President of the Summit National Bank or its Successor or Assign.
If to the
Executive, to:
Summit
Bank Corporation
0000
Xxxxxxxx Xxxxxxxx Xxxx
Xxxxxxx,
Xxxxxxx 00000
Attn:
Xxxxxx X. Xxxxxxx
or to
such other address as either party may furnish to the other in writing, except
that any notice of changes of address shall be effective only upon
receipt.
6. Applicable
Law. This
contract is entered into under, and shall be governed by the laws of the State
of Georgia.
7. Severability. If a
court of competent jurisdiction determines that any provision of this Agreement
is invalid or unenforceable, then the invalidity or unenforceability of that
provision shall not affect the validity or enforceability of any other provision
of this Agreement and all other provisions shall remain in full force and
effect.
8. Not
an Employment Agreement; Mitigation. Nothing
in this Agreement shall give the Executive any rights (or impose any
obligations) to continue employment by the Corporation or any Subsidiary or
Successor or Assign of the Corporation, nor shall it give the Corporation any
rights (or impose any obligations) for the continued performance of duties by
the Executive for the Corporation or any Subsidiary, Successor or Assign of the
Corporation. The Executive’s right to receive benefits under this Agreement
shall not be reduced by the Executive’s employment with any other employer after
terminating employment with the Corporation in accordance with this Agreement.
Any compensation for services rendered or consulting fees earned after the
Termination Date shall not diminish the Executive’s right to receive all amounts
due hereunder.
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9. No
Assignment. The
Executive’s right to receive payment or benefits under this Agreement shall not
be assignable or transferable, whether by pledge, creation of a security
interest or otherwise, other than the transfer by will or by the laws of descent
and distribution. In the event of an attempted assignment or transfer contrary
to this paragraph, the Corporation shall have no liability to pay any amount so
attempted to be assigned or transferred. This Agreement shall inure to the
benefit of and be enforceable by the Executive’s personal or legal
representatives, executors, administrators, successors, heirs, distributes,
devisees and legatees.
10.
Cost
of Enforcement; Interest. If the
Executive collects any part of the Severance Amount or other benefits hereunder
or otherwise enforces the terms of this Agreement through a lawyer or lawyers,
the Corporation shall pay all cost of such collection or enforcement, including
reasonable legal fees incurred by the Executive. In addition the Corporation
shall pay the Executive interest on all or any part of the Severance Amount or
other benefits hereunder that is not paid when due at a rate equal to the Prime
Rate as announced by the Wall
Street Journal in its
Money Rates column from time to time.
IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed and
delivered as of the date and year first above written.
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SUMMIT
BANK CORPORATION | ||
|
By: |
/s/
Pin Pin Xxxx | |
|
Its: |
Chief
Executive Officer | |
|
THE
SUMMIT NATIONAL BANK | ||
|
By: |
/s/
Pin Pin Xxxx | |
|
Its: |
Chief
Executive Officer | |
|
EXECUTIVE | ||
|
/s/
Xxxxxx X. Xxxxxxxx | ||
|
Xxxxxx
X. Xxxxxxxx | ||
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