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CHANGE IN CONTROL AGREEMENT
THIS AGREEMENT, made as of the 25th day of August, 1995, 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 XXXXX XX, 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/her 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 an 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) main 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-
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Control Transaction" (as hereinafter defined) shall not constitute an
acquisition for purposes for this clause (i).
(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, 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 or 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") or (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.
(e) "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
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was participating at any time withinninety days preceding the date of a
Change of Control or at any time thereafter;
(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 effected by his/her incapacity due to physical
or mental illness.
(f) "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.
(g) "Long-Term Stock Option Incentive Plan" shall mean that certain pool
of 20,000 options to purchase Summit common stock at ten dollars ($10.00) per
share established at the August 22, 1994, meeting of the Board for grant to Pin
Pin Xxxx, Xxxxx Xx, Xxxx XxXxxxx or Xxxx Xxxxxx as a reward for truly
outstanding performance during fiscal years 1994, 1995 and 1996 and shall
include any additions, modifications, and supplements thereto.
(h) "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 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.
(i) "Severance Amount" shall mean an amount equal to 100% of the
Executive's Base Annual Salary.
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(j) "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.
(k) "Termination Date" shall mean the date specified in the
Notice of Termination.
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. In addition, 40% of any options under the Long Term Stock Option
Incentive Plan not granted as of the Termination Date shall immediately be
deemed granted to the Executive and shall be fully vested, and all such options
shall be exercisable by the Executive at any time within six months of 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 officers or directors of the Corporation shall not
effect 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.
5. NOTICES. Notices and all other 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:
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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: Xxxxx Xx
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.
9. NO ASSIGNMENT. The Executive's right to receive payment or benefits
under this Agreement shall not be assignable or transferrable, 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, distributees, devisees and legatees.
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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.
SUMMIT BANK CORPORATION
By: /S/ W. Xxxxxxx Xxxxxxx, Xx.
--------------------------------
Its: Chairman
SUMMIT NATIONAL BANK
By: /S/ P. Xxxx Xxxxx
--------------------------------
Its: Vice Chairman
EXECUTIVE
/S/ Xxxxx Xx
--------------------------------
Xxxxx Xx
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