NON-COMPETITION AND NON-DISCLOSURE AGREEMENT
THIS NON-COMPETITION AND NON-DISCLOSURE AGREEMENT (the "Agreement") is made
this 14th day of April, 1998, by and between J. XXXXXX XXXXX (the "Consultant");
and CENIT BANCORP, INC., a Delaware corporation (the "Company"), CENIT BANK,
FSB, a federal savings bank (the "Savings Bank"), and CENIT BANK, a Virginia
state chartered commercial bank (the "Bank").
W I T N E S S E T H:
WHEREAS, the Consultant has heretofore served as a Director of and as
President and Chief Executive Officer of the Bank, and as a Director of the
Company, which is the sole stockholder of the Bank; and
WHEREAS, in such capacities the Consultant has become familiar with all
aspects of and information about (i) the business strategy and business plans of
the Bank, the Company, and the Savings Bank, the other wholly owned subsidiary
of the Company (the Bank, the Company, and the Savings Bank being sometimes
hereinafter referred to together as "CENIT"), (ii) the borrowers, depositors,
and other customers of CENIT, (iii) the marketing, loan pricing, and deposit
rate strategies of CENIT, and (iv) other similar confidential and proprietary
information concerning the business and affairs of CENIT (all such confidential
and proprietary information about the business and affairs of CENIT being
referred to herein as the "CENIT Confidential Information"); and
WHEREAS, by mutual agreement among the Consultant, the Bank, and the
Company, the Consultant has decided to resign as a director and officer of the
Bank and the Company and any subsidiaries of the Bank and the Company, and CENIT
has decided to retain the services of the Consultant as a consultant to CENIT on
and subject to terms and conditions set forth in a Consulting Agreement (the
"Consulting Agreement"), of even date herewith; and
WHEREAS, in consideration of the agreement of the Consultant not to compete
with CENIT and not to disclose the CENIT Confidential Information as set forth
herein, CENIT has agreed to pay the Consultant the amount described below.
NOW, THEREFORE, in consideration of the mutual promises set forth herein,
the amount to be paid to the Consultant hereunder, and other good and valuable
consideration, the adequacy and receipt of which is hereby acknowledged, the
Consultant and CENIT hereby agree as follows:
1. Resignation as Director and Officer. Effective as of the date of this
Agreement, the Consultant has resigned as a director and officer of the
Bank, as a director of the Company, and as a director and officer of any
subsidiaries of either the Bank or the Company, and any ventures in which
either the Bank or the Company or any of their respective subsidiaries are
involved.
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2. Termination of Employment Agreement. The Consultant and the Bank are
parties to that certain Employment Agreement (the "Employment Agreement")
dated as of January 30, 1995. The Consultant and the Bank mutually agree
that the Employment Agreement is hereby terminated in all respects,
effective as of the date hereof, and that the respective rights, duties,
and obligations of the Consultant and CENIT shall be as set forth in this
Agreement, the Consulting Agreement, the exhibits thereto, and the Release.
3. Term. Unless earlier terminated pursuant to the provisions set forth in
this Agreement, the term of this Agreement shall be twenty-five (25) months
commencing as of the date of this Agreement and ending May 1, 2000;
provided, however, that the obligation of the Consultant under Paragraph
6.B. shall continue through May 1, 2001.
4. Duties of the Consultant. The Consultant shall have the duties and
obligations set forth in the Consulting Agreement and shall be subject to
the agreements, limitations and restrictions set forth herein.
5. Compensation.
A. The Consultant shall continue to receive compensation and benefits as
an employee of the Company through May 1, 1998, pursuant to the
provisions of the Consulting Agreement.
B. In consideration of the agreements of the Consultant set forth in this
Agreement, the Bank shall pay to the Consultant during the term of
this Agreement, effective May 2, 1998, if the Consultant is not then
in default under this Agreement, an amount equal to $13,000 per month.
All such payments shall be payable in monthly, semimonthly or
bi-weekly installments in conformity with the Bank's personnel policy
relating to salaried employees. In the event of the death of the
Consultant during the term of this Agreement, and if the Consultant is
not then in default under this Agreement, the Bank shall continue to
pay such amount to the executor, administrator or legal representative
of the Consultant for the benefit of the Consultant's estate for a
period of one (1) month following the date of death. The Consultant
acknowledges and agrees that the payment by the Bank of the amount of
$13,000 per month to the Consultant shall be the total compensation
payable by the Bank for the agreements of the Consultant set forth in
this Agreement and that the Bank shall have no duty or obligation to
provide any other compensation or benefits of any kind to the
Consultant under this Agreement.
C. The compensation to be paid to the Consultant under this Agreement is
expressly conditioned upon the full and faithful performance by the
Consultant of each of the agreements of the Consultant set forth in
this Agreement.
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D. Notwithstanding the other provisions of this Paragraph 5, at any time
after April 1, 1999, the Consultant shall be entitled to terminate the
right to receive compensation under this Paragraph 5 and in
consideration thereof shall be released from the obligation not to
compete with CENIT under Paragraph 6.A. of this Agreement but not from
the obligation not to disclose CENIT Confidential Information under
Paragraph 6.B. of this Agreement. The Consultant may exercise this
right by delivering written notice to CENIT at least thirty (30) days
in advance of the date on which the Consultant desires to terminate
such right to receive compensation.
6. Noncompetition; Nondisclosure:
A. For a period of two (2) years from the date of this Agreement, the
Consultant shall not, directly or indirectly, whether or not receiving
compensation therefor, either as principal, agent, manager, employee,
partner, shareholder, director, officer, consultant or otherwise,
become employed by, or manage or perform services for any business
operation, whether financially or in any other capacity, if such
business operation has a location within a fifty (50) mile radius of
the headquarters of the Company and competes with CENIT. For a period
of two (2) years from the date of this Agreement, the Consultant shall
not, directly or indirectly, whether or not receiving compensation
therefor, either as principal, agent, manager, employee, partner,
shareholder, director, officer, consultant or otherwise, (i) in any
way induce or attempt to induce any employee of CENIT to leave such
employee's position with CENIT to become associated with a business
competing in any way with CENIT or (ii) induce or attempt to induce
any customer of CENIT of either to cease transacting business with
CENIT or transfer any part of such customer's business to any other
depository institution.
B. For a period of three (3) years from the date of this Agreement, the
Consultant shall hold in a fiduciary capacity for the benefit of CENIT
all CENIT Confidential Information, which shall have been obtained by
the Consultant during the Consultant's previous employment by the
Bank, service as a director of the Company or during the term of this
Agreement and which shall not be or become public knowledge (other
than by acts by the Consultant or representatives of the Consultant in
violation of this Agreement). For a period of three (3) years from the
date of this Agreement, the Consultant shall not, without the prior
written consent of CENIT or as may otherwise be required by law or
legal process, communicate or divulge any such CENIT Confidential
Information to anyone other than CENIT and those persons designated by
CENIT.
C. During any period in which the provisions of Paragraph 6.A. are
effective, those provisions shall not preclude the Consultant from
holding any publicly traded stock provided the Consultant does not
acquire any stock interest in any one company in excess of ten percent
(10%) of the outstanding voting stock of that company.
D. Except as provided in Paragraph 6.C. above, the Consultant shall be
deemed to be in violation of the provisions of Paragraph 6.A. if he
(i) is employed by, manages, or performs services for a bank or
company that engages in business or performs services similar to the
business
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conducted or services performed by CENIT at the time this Agreement is
terminated; (ii) otherwise performs work in the financial services
industry of a similar nature to that performed by the Consultant for
the Bank previously or during the term of this Agreement; or (iii)
solicits or accepts, other than on behalf of CENIT, any competitive
business from any customers of CENIT or requests or advises any
customer of CENIT to withdraw, curtail, or cancel the customer's
business with CENIT or to refrain from conducting additional business
with or procuring additional services from CENIT.
E. The parties agree that the restrictions contained in this Paragraph 6
are reasonable and fair. If the Consultant competes in violation of
the terms of this Paragraph 6, the parties agree that CENIT will be
irreparably harmed without an adequate remedy at law. Accordingly, the
Consultant acknowledges that if he breaches or threatens to breach any
provision of this Paragraph 6, CENIT shall be entitled to an
injunction, both preliminary and permanent, restraining the Consultant
from such breach or threatened breach, but such injunctive relief
shall not preclude CENIT from pursuing all other legal or equitable
remedies arising out of such a breach.
F. The parties have attempted to limit the Consultant's right to compete
only to the extent necessary to protect CENIT from unfair competition.
The parties recognize, however, that reasonable people may differ in
making such a determination. Consequently, the parties hereby agree
that, if the scope or enforceability of a restrictive covenant set
forth in this Paragraph 6 is in any way disputed at any time, a court
or other trier of fact may modify and reform such provision to
substitute such other terms as are reasonable to protect the
legitimate business interests of CENIT.
G. References in this Paragraph 6 to CENIT shall mean and refer to the
Bank, Savings Bank and/or the Company and their respective present and
future affiliates and subsidiaries as the context may require.
H. The provisions of Paragraph 6.A. and Paragraph 6.B. shall survive any
termination of this Agreement or the Consulting Agreement by CENIT as
a consequence of the breach of any of the provision of this Agreement
or the Consulting Agreement by the Consultant, and the provisions of
Paragraph 6.B. shall survive any termination by the Consultant under
Paragraph 5.D. of the right to receive compensation under this
Agreement.
I. The Consultant shall have the right at any time to seek a
determination from CENIT that conduct in which the Consultant proposes
to engage does not violate the provisions of this Paragraph 6. The
Consultant must seek such a determination before engaging in such
conduct and CENIT will use its best efforts to respond to the
Consultant's request for such a determination within fifteen (15) days
of receipt.
7. Publicity. The Consultant and CENIT shall maintain in confidence the
provisions of this Agreement and shall not disclose the terms of this
Agreement to any other person except as provided in this paragraph. The
Consultant agrees that CENIT may disclose the terms of this
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Agreement and/or the termination of the Employment Agreement to the
extent that disclosure is required by or deemed to be appropriate
under applicable federal or state banking or securities laws and
regulations or in any litigation to which CENIT may become a party and
in which disclosure of the terms of this Agreement is compelled. The
Consultant and CENIT shall mutually agree upon a statement to be
released to the public concerning the Consultant's resignation of his
positions as a director and an officer of the Bank and the Company and
shall otherwise withhold comment on the circumstances surrounding such
resignation. The Consultant agrees that the limitations imposed on
CENIT by this paragraph shall become null and void in the event of the
termination of this Agreement following a breach of the terms hereof
by the Consultant.
8. Termination. CENIT shall be entitled to terminate this Agreement,
immediately and without prior notice to the Consultant, in the event of any
breach or violation by the Consultant of either the terms of this Agreement
or the terms of the Consulting Agreement or in the event of any act or
omission prior to or during the term of this Agreement that would have
permitted the Bank to terminate the Employment Agreement for cause as
provided therein. In the event of such termination, the obligation of CENIT
to pay compensation and other benefits to the Consultant under this
Agreement shall terminate, and CENIT thereupon shall be entitled to pursue
all legal and equitable remedies available to it under this Agreement, or
at law or in equity, and any limitations imposed hereby upon CENIT's rights
and remedies shall be immediately terminated. The Consultant's duties and
obligations under Paragraph 6 of this Agreement shall survive any such
termination.
9. Notices. For the purposes of this Agreement, notices or other
communications provided for in this Agreement shall be in writing and shall
be deemed to have been duly given when hand delivered to the party to whom
directed or mailed by United States certified mail, return receipt
requested, postage prepaid, addressed to such party at such party's address
last known by the party giving such notice. Each party shall advise the
other parties of the appropriate address to which notices should be sent.
Notices of change of address shall be effective only upon receipt. CENIT
hereby advises the Consultant that all notices to CENIT should be addressed
to CENIT Bancorp, Inc., 000 Xxxx Xxxxx Xxxx, Xxxxxxx, Xxxxxxxx 00000,
attention: President.
10. Modification - Waivers - Applicable Law. No provisions of this Agreement
may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing, signed by the Consultant and on behalf
of CENIT by such officers as may be specifically designated by the Board of
Directors of the Company. No waiver of any breach, condition or provision
of this Agreement by any party hereto at any time 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, express or implied, with respect to the subject matter hereof
have been made by any party which are not set forth expressly in this
Agreement. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the Commonwealth of
Virginia.
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11. Invalidity-Enforceability. The invalidity or enforceability of any
provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force
and effect. Any provision in this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective only to the extent of such prohibition or unenforceability
without invalidating or affecting the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
12. Successor Rights. This Agreement shall inure to the benefit of and be
enforceable by the Consultant's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees, and shall be binding upon and inure to the benefit of the
Company, the Savings Bank, and the Bank and any successors thereto and any
present and future affiliates and subsidiaries thereof. If the Consultant
should die while any amounts would still be payable to the Consultant
hereunder, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the Consultant's
legatee or other designee or, if there is no such designee, to the
Consultant's estate.
13. Compliance with Federal Statutes and Regulations. If the Consultant is
suspended and/or temporarily prohibited from participating in the conduct
of the affairs of CENIT by a notice served under Section 8(e)(3) or (g)(1)
of the Federal Deposit Insurance Act (12 U.S.C. Section 1818(e)(3) and
(g)(1)), CENIT's obligations to the Consultant under this Agreement shall
be suspended as of the date of service of any such notice unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, CENIT
may in its discretion (i) pay the Consultant all or part of the
compensation withheld while its obligations under this Agreement were
suspended, and (ii) reinstate (in whole or in part) any of its obligations
which were suspended.
A. If the Consultant is removed and/or permanently prohibited from
participating in the conduct of CENIT's affairs by an order issued
under Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act
(12 U.S.C. Section 1818(e)(4) or (g)(1)), all obligations of CENIT
under this Agreement pertaining to CENIT shall terminate as of the
effective date of the order, but vested rights of the parties hereto
shall not be affected.
B. If either the Bank or the Savings Bank is in default (as defined in
Section 3(x)(1) of the Federal Deposit Insurance Act 12 U.S.C. Section
1813(x)(1)), all obligations under this Agreement shall terminate as
of the date of default, but this paragraph shall not affect any vested
rights of the parties hereto shall not be affected.
C. All obligations of CENIT under this Agreement shall be terminated,
except to the extent that it is determined that continuation of the
contract is necessary to the continued operation of the Bank (i) by
the appropriate federal banking agency, at the time the Federal
Deposit Insurance Corporation enters into an agreement to provide
assistance to or on behalf of either the Bank or the Savings Bank
under the authority contained in Section 13(c) of the Federal Deposit
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Insurance Act; or (ii) by the appropriate federal banking agency, at
the time such agency approves a supervisory merger to resolve problems
related to operation of either the Bank or the Savings Bank or when
either the Bank or the Savings Bank is determined by such agency to be
in an unsafe or unsound condition; but vested rights of the parties
hereto shall not be affected.
14. Headings. Descriptive headings contained in this Agreement are for
convenience only and shall not control or affect the meaning or
construction of any provision hereof.
15. Legal Conflict. In the event of any conflict between any of the provisions
of this Agreement and the provisions of any applicable statutes or
regulations, as such statutes or regulations are in effect as of the date
of this Agreement, the provisions of such statutes or regulations in effect
as of the date of this Agreement shall control.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the date first above written.
CONSULTANT:
_____________________________(SEAL)
J. Xxxxxx Xxxxx
COMPANY:
CENIT BANCORP, INC.
By______________________________
Title:
SAVINGS BANK:
CENIT BANK, FSB
By______________________________
Title:
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BANK:
CENIT BANK
By______________________________
Title:
8
