EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of the 1st
day of November, 1997, by and between CENIT Bancorp, Inc., a Delaware
corporation (hereinafter referred to as "Bancorp") and Michael S. Ives (the
"Executive").
RECITALS
Bancorp desires to employ Executive on the terms and conditions set forth
herein, and Executive desires to be employed under the terms and conditions of
this Agreement.
NOW, THEREFORE, in consideration of the mutual promises of the parties
hereto and for other good and valuable consideration, the receipt and adequacy
whereof each party hereby acknowledges, Bancorp and Executive hereby agree as
follows:
1. DEFINITIONS: Except as otherwise expressly provided in this Agreement,
the following terms shall have the following meanings for all purposes of this
Agreement:
(a) Base Salary means the annual compensation specified in Section 4 below.
(b) Cause means any of the reasons listed in Section 7(d) below for which
this Agreement may be terminated or Executive may be discharged prior to the end
of the Term hereof.
(c) 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
events described in Section 8(a) below.
(d) Code means the Internal Revenue Code of 1986, as amended.
(e) Exchange Act means the Securities Exchange Act of 1934, as amended.
- 1 -
(f) Good reason means the occurrence of any of the conditions listed in
Section 7(f) below which is followed by the resignation of Executive within 12
months after such occurrence.
(g) Resignation for good reason means resignation by Executive in
accordance with the provisions of Section 7(f) below.
(h) Severance pay means an amount paid to Executive in the event he is
terminated without cause following a Change of Control or resigns for good
reason following a Change of Control.
(i) 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.
(j) Term means the term of this Agreement specified in Section 3 below, and
all renewals and extensions thereof.
(k) Termination for cause means discharge of Executive prior to the end of
the Term in accordance with the provisions of Section 7(d) below for any of the
reasons listed therein.
(l) Termination without cause means discharge of Executive prior to the end
of the Term for any reason other than cause (as described in Section 7(d) below)
or disability.
2. EMPLOYMENT:
(a) During the Term, Executive shall be employed to perform such services
for Bancorp and/or one or more Subsidiaries as may be assigned to Executive by
Bancorp from time to time upon the terms and conditions hereinafter set forth.
Executive's services shall be rendered in a senior management or executive
capacity and shall be of the type for which Executive is suited by background
and training. Executive agrees that, during the Term of Executive's employment
under this Agreement, he will devote Executive's full business time and energy
to the business, affairs and interests of Bancorp and serve diligently and to
the best of Executive's ability. Notwithstanding the preceding sentence,
Executive may serve as a director of other corporations and entities, including
without limitation charitable organizations,
- 2 -
and be employed in other activities to the extent those activities and services
do not inhibit the performance of Executive's duties hereunder or conflict with
the business of Bancorp or any Subsidiary or any other affiliate of Bancorp or a
Subsidiary.
(b) References in this Agreement to services rendered for Bancorp and
compensation, benefits, indemnification and liability insurance payable or
provided by Bancorp shall include services rendered for and compensation,
benefits, indemnification and liability insurance payable or provided by any
Subsidiary, and references in this Agreement to "Bancorp" shall mean and refer
to each Subsidiary" for which Executive performs services, as the context may
require.
(c) The provisions of this Agreement amend and supersede the provisions of
any previously existing employment agreement between Executive and Bancorp
and/or any Subsidiary.
3. TERM: The initial term of this Agreement begins as of the date hereof
and ends on December 31, 2000. The Board of Directors may renew this Agreement
for successive one-year periods and will review Executive's performance annually
for the purpose of determining whether to renew this Agreement.
4. BASE SALARY: Executive shall receive a Base Salary of not less than
$173,000 per year, payable in substantially equal installments no less
frequently than monthly (less any amounts withheld as required by law or
pursuant to any benefits plan). The Base Salary may be increased in the sole and
absolute discretion of Bancorp.
5. OTHER BENEFITS: During the Term of employment under this Agreement,
Executive shall participate or be entitled to participate in any pension, group
insurance, hospitalization, incentive or deferred compensation and other benefit
or compensation plans of Bancorp presently in effect or hereafter adopted and
generally available to all employees of senior executive status. Executive shall
also be entitled to any additional compensation, benefits or perquisites, if
any, that may be provided specifically to or for Executive by Bancorp from time
to time. During the Term of this Agreement, to the extent that such expenditures
meet the requirements of Bancorp and are substantiated by Executive as required
by corporate policies, Executive shall be reimbursed promptly for all
expenditures (including travel, entertainment, parking and business meetings)
made in accordance with rules and policies established from time to time by
Bancorp in pursuance and furtherance of the business and good will of Bancorp.
- 3 -
6. INDEMNIFICATION:
(a) Bancorp and each bank Subsidiary for which Executive provides services
shall indemnify and hold Executive harmless from and against all liability and
expense resulting from (i) all acts or omissions of Executive while acting in
the capacity of a director, officer, and/or employee of Bancorp and its
Subsidiaries during Executive's employment as such director, officer, and/or
employee and (ii) acts or omissions of Bancorp and its Subsidiaries occurring or
alleged to have occurred during or prior to Executive's employment, on terms and
conditions no less favorable to Executive than the terms and conditions
providing for indemnification of officers and directors under the Articles or
Certificate of Incorporation and the Bylaws of Bancorp and each such Subsidiary
as in effect on the date of this Agreement. If the Articles or Certificate of
Incorporation or the Bylaws of Bancorp and/or each such Subsidiary are hereafter
amended to provide officers and directors with broader or greater rights of
indemnification, Bancorp and each such Subsidiary acknowledge and agree that
Executive shall be indemnified and held harmless under such broader or greater
rights of indemnification and, further, that in no event shall Executive be
entitled to any lesser rights of indemnification than are presently available to
Executive under such Articles or Certificate of Incorporation and/or Bylaws on
the date of this Agreement.
(b) To the maximum extent permitted by applicable law as in effect on the
date of this Agreement and without abridging or limiting the right of
indemnification provided under Section 6(a) above, Bancorp and each bank
Subsidiary for which Executive provides services shall indemnify and hold
Executive harmless from and against all liability and expense resulting from (i)
all acts or omissions of Executive while acting in the capacity of a director,
officer, and/or employee of Bancorp and its Subsidiaries during Executive's
employment as such officer and director and (ii) acts or omissions of Bancorp
and its Subsidiaries occurring or alleged to have occurred during or prior to
Executive's employment. If applicable laws relating to the indemnification of
officers and directors (including, without limitation, the rules and regulations
of the appropriate primary federal or state banking agency for Bancorp and each
bank Subsidiary for which Executive provides services) are hereafter amended to
provide officers and directors with broader or greater rights of indemnification
than is provided under Section 6(a) above or this Section 6(b), Bancorp and each
such Subsidiary acknowledge and agree that Executive shall be indemnified and
held harmless under such broader or greater rights of indemnification and,
further, that in no event shall Executive be entitled to any lesser rights of
indemnification than are presently available to Executive under Section 6(a)
above or this Section 6(b) on the date of this Agreement. Bancorp and Executive
further acknowledge and agree that it
- 4 -
is the intention of the parties that Executive shall be entitled to
indemnification as set forth under Section 6(a) above and this Section 6(b) to
the greatest extent possible under either the Articles or Certificate of
Incorporation and the Bylaws of Bancorp and each bank Subsidiary for which
Executive performs services or applicable law as in effect on the date of this
Agreement or as hereafter amended from time to time to provide broader or
greater rights of indemnification.
(c) Bancorp shall carry Directors and Officers Liability Insurance in such
amounts as the Board of Directors in its discretion deems appropriate, and any
payments made under such policy to Executive or on Executive's behalf shall be
offset against the indemnification obligation set forth in Section 6(a) and
Section 6(b) above. Notwithstanding the foregoing, the indemnification provided
by Section 6(a) and Section 6(b) above shall not apply, and Executive shall not
be indemnified, with respect to any acts or omissions which constitute wanton or
willful misconduct or gross negligence or in the event that the disinterested
directors of Bancorp determine that Executive was not acting in good faith
within the scope of Executive's employment or authority as he could reasonably
have perceived it under the circumstances and for a purpose he could reasonably
have believed under the circumstances was in the best interests of Bancorp and
its Subsidiaries.
(d) The provisions of this Section 6 shall survive termination of this
Agreement.
7. TERMINATION: Executives employment under this Agreement may be
terminated under any of the following conditions.
(a) Disability: If Executive is unable to perform the essential functions
of Executive's job (as described in this Agreement) on a full-time basis for a
period of six (6) consecutive months by reason of illness or other physical or
mental disability, Bancorp shall have the right to terminate Executive's
employment under this Agreement by giving Executive thirty (30) days written
notice thereof. If Executive's employment is so terminated, Executive shall be
paid any salary and benefits to which Executive may be entitled until the end of
the payroll period on which the date of termination occurs and not thereafter,
except that Executive shall be entitled to any benefits provided under employee
benefit plans in which Executive is a participant, such as long-term disability
and other insurance benefits regularly provided to disabled employees. A
condition of disability shall be determined by the Board of Directors of Bancorp
on the basis of competent evidence. A written opinion of a licensed physician
certified in Executive's field of specialization and acceptable to the Board, or
- 5 -
Executive's receipt of or entitlement to disability benefits under any insurance
policy or employee benefit plan provided or made available to Executive or under
Federal Social Security law, shall be conclusive evidence of disability.
(b) Death: In the event of Executive's death during the Term of this
Agreement, Executive's estate, legal representatives or named beneficiaries (as
directed by Executive in writing) shall be paid compensation at the rate in
effect at the time of Executive's death for a period of one month after the date
of Executive's death.
(c) Resignation By Executive: If Executive resigns or voluntarily leaves
the employ of Bancorp, other than under circumstances treated as resignation for
good reason, then the obligations of Bancorp to Executive shall terminate,
except for the obligation to pay any accrued and unpaid salary as of the date of
such resignation. Executive shall be liable to Bancorp and its Subsidiaries for
any damages suffered by them as a result of Executive's resignation.
(d) Termination For Cause: The Board of Directors of Bancorp may, in its
sole discretion, terminate Executive's employment upon the occurrence of 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
- 6 -
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.
If Executive's employment is terminated for cause or Bancorp has cause
for termination and Executive voluntarily resigns, Executive shall not be
entitled to any further compensation or benefits under this Agreement;
except that nothing in this Section 7 is intended to have any effect on any
rights that are vested.
Notwithstanding anything herein to the contrary, (i) except as
"incompetence" may be otherwise defined by the rules and regulations of the
primary 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 (ii) 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
- 7 -
Subsidiary, (x) 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 (y) no failure to act on Executive's part shall be considered
"willful" if such failure is a result of a condition of disability within the
meaning of Section 7(a) of this Agreement; and (iii) (x) 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 (as set forth in Section 7(d) above) exists and specifying the
particulars thereof in detail, and (y) 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).
(e) Termination Without Cause: The Board of Directors of Bancorp may, in
its sole discretion, terminate Executive's employment under this Agreement
without cause at any time in any lawful manner by not less than thirty (30) days
written notice to Executive. In the event of such termination, Executive shall
continue to be paid, during the twelve (12) months that follow such termination,
the base salary and benefits (excluding, however, future participation in any
bonus or other incentive plans) that Executive is entitled to receive as of the
date Executive is terminated without cause; except that nothing in this Section
shall affect Executive's rights to receive any benefit which has been earned but
not paid with respect to Executive's performance prior to the date of such
termination. The salary and benefits described in this Section 7(e) will be due
Executive regardless of any subsequent employment attained by Executive which is
not in violation of this Agreement.
Notwithstanding the foregoing provisions of this Section 7(e), Bancorp
shall not terminate Executive's employment without cause (nor shall any decision
previously made to terminate Executive's employment without cause be effective)
nor shall Bancorp, without cause, fail to renew this Agreement pursuant to
Section 3 during any period of time when Bancorp has knowledge that any person,
- 8 -
entity or concern, whether acting independently, as part of a group or in
concert with any other person, entity or concern, has taken steps reasonably
calculated to effect a Change of Control of Bancorp until, in the opinion of the
Board of Directors of Bancorp, such person, entity or concern has abandoned or
terminated such efforts to effect a Change of Control. Any good faith
determination by the Board of Directors of Bancorp that any such person, concern
or entity has abandoned or terminated such efforts to effect a Change of Control
shall be conclusive and binding on Executive. Such determination shall be
promptly communicated to Executive in writing by the Secretary of Bancorp.
(f) Resignation For Good Reason:
(1) Executive may resign for good reason upon the occurrence of any of
the following conditions:
a. Without Executive's express written consent, Bancorp requires
Executive to render services other than in a senior management or
executive capacity or to render services other than the type for which
Executive is suited by background and training;
b. A material reduction by Bancorp of Executive's Base Salary, as
the same may be increased from time to time, except in line with
decreases in compensation applicable to all senior management or
executive officers of Bancorp;
c. Failure of Bancorp to renew this Agreement as provided in
Section 3 hereof; or
d. A Change of Control.
(2) Resignation for good reason shall be effected by delivering to
Bancorp, within twelve (12) months after the occurrence of one of the
conditions described above, a written notice specifying a date for
termination of employment which is not less than 30 days after the date of
the notice or more than 90 days after the date of the notice. The notice
shall also state that Executive is resigning for good reason as
contemplated by this Section 7(f) and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for resignation for
good reason hereunder.
- 9 -
(3) If Executive resigns for good reason at any time after the date of
this Agreement (other than a resignation for good reason within 12 months
after a Change of Control), then Executive shall continue to be paid,
during the twelve (12) months that follow such resignation, the base salary
and benefits (excluding, however, future participation in any bonus or
other incentive plans) that Executive is entitled to receive as of the date
of the notice announcing Executive's resignation; except that nothing in
this Section 7(f) shall affect Executive's rights to receive any benefit
which has been earned but not paid with respect to Executive's performance
prior to the date of termination. The salary and benefits described in this
Section 7(f) will be due Executive regardless of any subsequent employment
attained by Executive which is not in violation of this Agreement.
8. CHANGE OF CONTROL: Notwithstanding the provisions of Section 7 of this
Agreement, if during the Term of this Agreement Executive's employment is
terminated without cause or Executive resigns for good reason within 12 months
after a Change of Control of Bancorp, Bancorp shall pay to Executive, in lieu of
the compensation specified in Sections 7(e) and 7(f), severance pay (subject to
any applicable payroll or other taxes required to be withheld) equal to 2.99
times Executive's average annual compensation from Bancorp and its Subsidiaries
includable in Executive's gross income for federal income tax purposes for
Executive's most recent five taxable years ending before the date on which the
Change of Control occurs. Notwithstanding the preceding sentence, however, if a
Change of Control for purposes of this Agreement occurs in a taxable year of the
Executive but does not constitute and is followed by a change in ownership or
effective control of Bancorp or its assets for purposes of Section 280G of the
Code that occurs in a subsequent taxable year of the Executive, severance pay
shall be based upon Executive's most recent five taxable years ending before the
date on which the change in ownership or effective control occurs for purposes
of Section 280G of the Code. Severance pay shall be paid in cash (except to the
extent that Executive and Bancorp agree that it shall be paid in other property)
and shall be paid in one lump sum on or before Executive's last day of
employment; except that, at the option of Executive, any cash amount required to
be paid hereby shall be paid by Bancorp in consecutive equal monthly
installments over the six (6) months following the month in which termination
occurs, payable on the first day of each such month. As provided in Section 10
of this Agreement, the severance pay described in this Section 8 is subject to
the limitations set forth in Section 280G of the Code and the regulations
thereunder, and such severance pay is intended to be the maximum amount payable
that will not give rise to an "excess parachute payment" under that statute.
Accordingly, the provisions of this Section 8 are to be interpreted in the
broadest possible way in order to pay to Executive the maximum
- 10 -
amount that, at the time concerned, will not constitute an excess parachute
payment under Section 280G.
(a) For purposes of this Agreement, a Change of Control shall be
deemed to have occurred upon the occurrence of any of the following:
(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 director who was a director of Bancorp on
November 1, 1997 and any individual who becomes a director of Bancorp
subsequent to November 1, 1997 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 (x) 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 1934 Act) 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 (y) 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 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
- 11 -
that the event or circumstance constitutes a Change of Control for purposes of
this Agreement.
(b) The date of a Change of Control under Section 8(a) above is the
date on which an event described in Section 8 (a) (1), (2), (3) or (4)
above occurs.
(c) If Executive collects any part or all of the severance pay
provided under this Section 8 by or through a lawyer or lawyers, following
a Change of Control and a dispute with Bancorp regarding the terms of this
Section 8 and any related provision of this Agreement, Bancorp will pay all
costs of any such collection or enforcement, including reasonable legal
fees and other out of pocket expenses incurred by the Executive, up to that
point when Bancorp offered to settle the dispute for an amount equal to the
amount that Executive is entitled to recover.
(d) The payments described in this Section 8 will be due Executive
regardless of any subsequent employment obtained by Executive.
9. NONCOMPETITION: NONDISCLOSURE:
(a) Except as otherwise provided in Section 9(c) below, Executive
shall not, for a period of twelve (12) months after Executive's employment
under this Agreement has terminated, 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 Bancorp and competes with Bancorp or any Subsidiary. In
addition, Executive will not, for a period of twelve (12) months after
Executive's employment under this Agreement has terminated, (i) in any way
induce or attempt to induce any employee of Bancorp or any Subsidiary to
leave such employee's position with Bancorp or any Subsidiary to become
associated with a business competing in any way with Bancorp or any
Subsidiary; or (ii) induce or attempt to induce any customer of Bancorp or
any Subsidiary of either to cease transacting business with Bancorp or any
Subsidiary or transfer any part of such customer's business to any other
depository institution.
(b) During the Term of this Agreement and for a period of two (2)
years following the termination of Executive's employment hereunder,
Executive shall hold in a fiduciary capacity for the benefit of Bancorp and
its Subsidiaries all secret or
- 12 -
confidential information, knowledge or data relating to Bancorp and its
Subsidiaries and their respective businesses, which shall have been
obtained by Executive during Executive's employment by Bancorp and any
Subsidiary and which shall not be or become public knowledge (other than by
acts by Executive or representatives of Executive in violation of this
Agreement). For a period of two (2) years after termination of Executive's
employment with Bancorp or any Subsidiary, Executive shall not, without the
prior written consent of Bancorp and such Subsidiary or as may otherwise be
required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than Bancorp and any such
Subsidiary and those designated by them.
(c) The provisions contained in Sections 9(a) and 9(b) above shall not
apply and shall have no force and effect at any time following a Change of
Control. During any period in which the provisions of Section 9(a) are
effective, those provisions shall not preclude Executive from (i) holding
any publicly traded stock provided Executive does not acquire any stock
interest in any one company in excess of ten percent (10%) of the
outstanding voting stock of that company or (ii) practicing law and
representing clients who compete with Bancorp or any Subsidiary.
(d) Except as provided in Section 9(c) above, Executive shall be
deemed to be in violation of the provisions of Section 9(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 conducted
or services performed by Bancorp or any Subsidiary at the time Executive's
employment ceases; (ii) otherwise performs work of a similar nature to that
performed by Executive during Executive's employment with Bancorp or any
Subsidiary; (iii) solicits or accepts, other than on behalf of Bancorp or a
Subsidiary, any competitive business from any customers of Bancorp or a
Subsidiary or requests or advises any customer of Bancorp or a Subsidiary
to withdraw, curtail, or cancel Executive's business with Bancorp or a
Subsidiary.
(e) The parties agree that the restrictions contained in this Section
9 are reasonable and fair. If Executive competes in violation of the terms
of this Section 9, the parties agree that Bancorp will be irreparably
harmed without an adequate remedy at law. Accordingly, Executive
acknowledges that if he breaches or threatens to breach any provision of
this Section 9, Bancorp shall be entitled to an injunction, both
preliminary and permanent, restraining Executive from such breach or
threatened breach, but such injunctive relief shall not preclude Bancorp
from pursuing all other legal or equitable remedies arising out of such a
breach.
- 13 -
(f) The parties have attempted to limit Executive's right to compete
only to the extent necessary to protect Bancorp and its Subsidiaries 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 Section 9 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 Bancorp and its Subsidiaries.
10. LIMITATION OF BENEFITS:
(a) It is the intention of the parties that no payment be made or
benefit provided to Executive 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 payments or benefits scheduled under this
Agreement, when 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 payments or benefits scheduled under this Agreement will be
reduced to one dollar less than the maximum amount which may be paid or
provided without causing any such payments or benefits scheduled 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. Executive shall
have the right to designate within a reasonable period which payments or
benefits scheduled under this Agreement will be reduced; except that if no
direction is received from Executive, Bancorp shall implement the
reductions under this Agreement in its discretion.
(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.
11. NOTICES: For the purposes of this Agreement, notices or other
communications provided for in this Agreement shall be in writing and shall be
deemed
- 14 -
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 may, from time to time, and shall, upon request
of another party, designate an address to which notices should be sent. Notices
of change of address shall be effective only upon receipt.
12. 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 Executive and on behalf of
Bancorp by such officers as may be specifically designated by the Board of
Directors of Bancorp. 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.
13. 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.
14. SUCCESSOR RIGHTS: This Agreement shall inure to the benefit of and be
enforceable by Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees, and
shall be binding upon Bancorp and any successor to Bancorp. If Executive should
die while any amounts would still be payable to Executive hereunder all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to Executive's devisee, legatee or other designee or, if
there is no such designee, to Executive's estate.
- 15 -
15. COMPLIANCE WITH FEDERAL STATUTES AND REGULATIONS:
(a) If Executive is suspended and/or temporarily prohibited from
participating in the conduct of the affairs of Bancorp or any Subsidiary 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)), Bancorp's
obligations to Executive under this Agreement pertaining to the applicable
bank Subsidiary 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, Bancorp may in its discretion (i) pay Executive 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.
(b) If Executive is removed and/or permanently prohibited from
participating in the conduct of a bank Subsidiary'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 Bancorp under
this Agreement pertaining to the applicable bank Subsidiary shall terminate
as of the effective date of the order, but vested rights of the parties
hereto shall not be affected.
(c) If a bank Subsidiary 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.
(d) All obligations under this Agreement pertaining to a bank
Subsidiary shall be terminated, except to the extent that it is determined
that continuation of the contract is necessary to the continued operation
of the applicable Subsidiary (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 the applicable
Subsidiary under the authority contained in Section 13(c) of the Federal
Deposit 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 the applicable Subsidiary or when the applicable
Subsidiary is determined by such agency to be in an unsafe or unsound
condition; but vested rights of the parties hereto shall not be affected.
- 16 -
16. 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.
17. 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.
EXECUTIVE:
--------------------------
Michael S. Ives
CENIT BANCORP, INC.
By:-----------------------
Chairman of the Board
- 17 -