Exhibit 10.1
CHANGE OF CONTROL AGREEMENT
THIS AGREEMENT is made and entered into this 22nd day of May, 2003 by and
between Cape Cod Bank and Trust Company, N.A., a national banking association
(the "Bank"), CCBT Financial Companies, Inc., a Massachusetts corporation (the
"Company") (the Bank and the Company, collectively, the "Employers") and Nancy
S. Hardaway, a resident of Yarmouth, Massachusetts ("Employee").
WITNESSETH, the Company is the holding company for the Bank;
WHEREAS the Employers have determined that it is in the best interests of
the Employers to allow the Employee to consider the prospect of a Change in
Control (as herein defined) in an objective manner and in consideration of the
services to be rendered by the Employee to the Employers and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the Employers, the Employers are willing to provide, subject to
the terms of this Agreement, certain benefits upon the occurrence of a
Terminating Event (as herein defined) subsequent to a Change in Control.
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, the Employers and the Employee hereby agree as follows:
1. Definitions.
1.1 "Affiliate" means:
1.1.1 A member of a controlled group of corporations of which
either of the Employers is a member; or
1.1.2 An unincorporated trade or business which is under
common control with either of the Employers as
determined in accordance with Section 414(c) of the
Internal Revenue Code of 1986, as amended (henceforth
the "Code") and regulations issued thereunder.
For purposes hereof, a "controlled group of
corporations" shall mean a controlled group of
corporations as defined in Section 1563(a) of the Code
determined without regard to Section 1563(a)(4) and
(e)(3)(C) of the Code.
1.2 "Base Annual Salary" means the annualized value of the Employee's
salary, based on the most recent pay period, prior to a Change of
Control.
1.3 "Change in Duties" means:
1.3.1 A significant reduction in the nature or scope of the
Employee's authority or duties from those immediately
prior to the date on which a Change of Control occurs;
1.3.2 A reduction in the Employee's Base Annual Salary;
1.3.3 Exclusion from any incentive program from which the
Employee was previously eligible, or which other
executives with comparable duties participate in;
1.3.4 A change in location of the Employee's principal place
of employment by more than fifty (50) miles;
1.4 "Change in Control" shall be deemed to have occurred in any one of
the following events:
1.4.1 if there has occurred a change in control of either the
Company or the Bank which the Company or the Bank would
be required to report in response to Item 1 of Form 8-K
promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), or, if such form and
the related regulations are no longer in effect, any
forms or regulations promulgated by the Securities and
Exchange Commission, pursuant to the Exchange Act, which
are intended to serve similar purposes; or
1.4.2 A Change in Control of the Company or the Bank has
occurred within the meaning of the Change in Bank
Control Act, as amended and the rules and regulations
promulgated thereunder; or
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1.4.3 Without limitation such a Change in Control shall be
deemed to have occurred at such time as:
1.4.3.1. Any "person" (as the term is used in
Section 13(d) and 14(d) of the Exchange
Act), or group of persons acting in
concert, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under
the Exchange Act) directly or
indirectly, of any class of equity
securities of the Bank representing 50%
or more of a class of equity securities
except for any securities purchased by
the Bank's employee stock ownership plan
and trust; or
1.4.3.2. Individuals who constitute the Board of
the Company on the date hereof (the
"Incumbent Board") cease for any reason
to constitute at least a majority
thereof, provided that any person
becoming a director subsequent to the
date hereof whose election was approved
by a vote of at least three-quarters of
the directors comprising the Incumbent
Board, or whose nomination for election
by the Company's shareholders was
approved by the same Committee serving
under an Incumbent Board, shall be, for
purposes of this clause (b) considered
as though he were a member of the
Incumbent Board; or
1.4.3.3. A plan of reorganization, merger,
consolidation, sale of all or
substantially all the assets of the
Company or similar transaction occurs in
which the Company is not the resulting
entity; or
1.4.3.4. A proxy statement shall be distributed
soliciting proxies from stockholders of
the Company, by someone other than the
current management of the Company,
seeking stockholder approval of a plan
or similar transaction with one or more
corporations as a result of which the
outstanding shares of the class of
securities then subject to such plan or
transaction are exchanged for or
converted into cash or property or
securities not issued by the Company.
1.4.4 Notwithstanding the foregoing, no Change in Control
shall be deemed to occur by virtue of the Bank becoming
a subsidiary of the Company.
1.5 "Code" means the Internal Revenue Code of 1986, as from time to time
amended.
1.6 "Constructive Termination" means the voluntary termination of
employment by the Employee following a Change in Duties following a
Change of Control.
1.7 "Employment Compensation" means any salary, bonus or commissions
paid to the Employee as an employee (as defined in the Code) by any
entity other than the Employers or their successors. If the Employee
is a partner in a partnership, this definition shall include the
Employee's share of partnership income.
1.8 "Exchange Act" means the Securities Exchange Act of 1934, as from
time to time amended.
1.9 "Termination for Cause" means the termination of the Employee's
employment with the Bank or the Company, as applicable, as a result
of:
1.9.1 The Employee's failure or refusal to perform the
Employee's duties occasioned by reason other than
sickness or other disability of the Employee, which is
not cured within ten (10) business days after written
notice from the Bank or the Company, as applicable,
specifying such failure or refusal has been delivered;
1.9.2 Commission by the Employee of any materially fraudulent,
dishonest or other act of misconduct in the performance
of the Employee's duties hereunder, other than at the
specific direction of the Board of the Bank or the
Company, as applicable; or
1.9.3 Conviction for any felony or crime involving moral
turpitude.
1.10 "Voting Securities" means any securities which ordinarily possess
the power to vote in the election of directors without the happening
of any precondition or contingency.
2. Term. Subject to the provisions for earlier termination hereinafter set
forth in Section 4 of this Agreement, the term of this Agreement shall
commence on the date hereof and end on the day preceding the second
anniversary hereof.
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3. Automatic Extension. Unless the Employee receives written notification
from either of the Employers of their intention not to renew this
Agreement at least twelve (12) months prior to the expiration date, plus
any extensions, the term of this Agreement shall automatically be extended
by twelve (12) months.
4. Termination of Employment.
4.1 Termination Prior to a Change in Control:
4.1.1 Prior to a Change in Control, the Employers may
terminate the Employee's employment under this Section
of the Agreement for any reason.
4.1.2 If the Employee's employment is terminated pursuant to
this Section 4.1, any severance policies maintained by
the Bank or the Company, as applicable, shall apply and
no amounts shall be payable pursuant to this Agreement.
4.2 Termination following a Change in Control:
4.2.1 If, during a period of two years following a Change in
Control, the employment of the Employee is terminated by
the Bank or the Company, as applicable, for any reason,
other than Cause, or if the Employee is subject to
Constructive Termination, benefits shall be payable
under Section 5.
4.2.2 If the Employee voluntarily terminates his or her
employment following a Change in Control for any reason
other than Constructive Termination, no amount shall be
paid pursuant to this agreement.
5. Benefit following a Change in Control. If a benefit is payable, pursuant
to Section 4.2.1, the Employee shall receive, in monthly installments,
payable on the first of each month, an amount equal to:
5.1 One-twelfth (1/12th) of the Employee's Base Annual Salary, less any
withholding required pursuant to the Code; reduced by
5.2 Any Employment Compensation payable to the Employee for that month,
whether received currently or deferred.
5.3 This benefit shall be payable for 24 months following the
termination of the Employee's employment with the Bank or the
Company, as applicable.
5.4 No other amounts shall be payable under this Agreement in lieu of
bonuses, perquisites or other benefits maintained by the Employers,
nor shall the Employee be considered to continue in the employ of
the Bank or the Company, as applicable, while payments are being
made pursuant to this Section 5.
5.5 Limitation on Benefits.
5.5.1 It is the intention of the Employee and of the Employers
that no payments by the Employers to or for the benefit
of the Employee under this Agreement or any other
agreement or plan pursuant to which he is entitled to
receive payments or benefits shall be non-deductible to
the Employers by reason of the operation of Section 280G
of the Code relating to parachute payments. Accordingly,
and notwithstanding any other provision of this
Agreement or any such agreement or plan, if by reason of
the operation of said Section 280G, any such payments
exceed the amount which can be deducted by the
Employers, such payments shall be reduced to the maximum
amount which can be deducted by the Employers. To the
extent that payments exceeding such maximum deductible
amount have been made to or for the benefit of the
Employee, such excess payments shall be refunded to the
Employers with interest thereon at the applicable
Federal Rate determined under Section 1274(d) of the
Code, compounded annually, or at such other rate as may
be required in order than no such payments shall be
non-deductible to the Employers by reason of the
operation of said Section 280G. To the extent that there
is more than one method of reducing the payments to
bring them within the limitations of said Section 280G,
the Employee shall determine which method shall be
followed, provided that if the Employee fails to make
such determination within forty-five days after the
Employers have sent him written notice of the need for
such reduction, the Employers may determine the method
of such reduction in their sole discretion.
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5.5.2 If any dispute between the Employers and the Employee as
to any of the amounts to be determined under this
Section 5.5.2, or the method of calculating such
amounts, cannot be resolved by the Employers and the
Employee, either the Employers or the Employee after
giving three days' written notice to the other, may
refer the dispute to a partner in the Boston office of a
firm of independent certified public accountants
selected jointly by the Employers and the Employee. The
determination of such partner as to the amount to be
determined under Section 5(a) and the method of
calculating such amounts shall be final and binding on
both the Employers and the Employee. The Employers shall
bear the costs of any such determination.
6. Miscellaneous.
6.1 Agreement Supersedes. This Agreement supersedes all prior agreements
and understandings by and between the Employee and the Employers and
of any Affiliates of their respective directors, officers,
shareholders, employees, attorneys, agents, or representatives,
including any Severance Agreement, Employment Letter, Employment
Terms, Non-Disclosure Agreement and /or Employment Agreement, and
constitutes the entire agreement between the parties, respecting the
subject matter hereof; there are no representations, warranties or
other commitments other than those expressed herein.
6.2 Noncontravention. The Employee represents and warrants to the
Employers that the Employee is not a party to or bound by, and the
employment of the Employee by the Employers or the Employee's
disclosure of any information to the Employers or their use of such
information will not violate or breach any employment, retainer,
consulting, license, non-competition, non-disclosure, trade secrets
or other agreement between the Employee and any other person,
partnership, corporation, joint venture, association or other
entity.
6.3 Modification; Waiver. No modification or amendment of, or waiver
under, this Agreement shall be valid unless signed in writing and
signed by the Employee and the Chairman of the Board of Directors of
the Bank and the Company, pursuant to expressed authority of the
Board of each entity.
6.4 Indemnification. The Employee and the Employers and their Affiliates
each agree to indemnify and hold the other harmless from, any and
all claims, lawsuits, losses, damages, expenses, costs and
liabilities, including, without limitation, court costs and
attorney's fees which a party to this Agreement may sustain as a
result of, or in connection with, either directly or indirectly, a
breach or violation of any of the provisions of this Agreement by
the other party.
6.5 Remedies. The Employee hereby agrees that if the Employee violates
any provision of this Agreement, the Employers shall be entitled, if
they, or either of them, so elect, to institute and prosecute
proceedings at law or in equity to obtain damages with respect to
such violation or to enforce the specific performance of this
Agreement by the Employee or to enjoin the Employee from engaging in
any activity in violation hereof.
6.6 Waiver. The waiver by either party to this Agreement of a breach of
any provision of this Agreement by the other shall not operate or be
construed as a waiver of any subsequent breach.
6.7 Notices. Any communication which may be required under this
Agreement shall be in writing and shall be deemed to have been
properly given when delivered personally at the address set forth
below for the intended party during normal business hours, or when
sent by U.S. registered or certified mail, return receipt requested,
postage prepaid as follows:
If to the Bank or Cape Cod Bank and Trust Company
the Company: 307 Main Street
Hyannis, MA 02601
If to the Employee: Ms. Nancy S. Hardaway
83 Nautical Lane
Yarmouth, MA 02664
Notices shall be given to such other addressee or address, or both,
as a particular party may from time to time request by written
notice to the other party to the Agreement. Each notice, request,
demand, approval or other communication which is sent in accordance
with this Section shall be deemed to be delivered, given and
received for all purposes of this Agreement as of two business days
after the date of deposit thereof for mailing in a duly constituted
U.S. post office or
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branch thereof, one business day after deposit with a recognized
overnight courier service or upon written confirmation of receipt of
any facsimile transmission. Notice given to a party hereto by any
other method shall only be deemed to be delivered, given and
received when actually received in writing by such party.
6.8 Binding Nature; Employment Status. This Agreement shall inure to the
benefit of and be binding upon the Employers, jointly and severally,
and the Employee. This is not an agreement for the employment of the
Employee and shall confer no rights on the Employee except as herein
expressly provided.
6.9 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of The Commonwealth of Massachusetts.
6.10 Allocation of Obligations. The Bank and the Company shall allocate
among themselves which party shall be responsible for paying the
severance payments and other benefits directed by this Agreement.
The payment by either party of such severance payments and other
benefits shall satisfy the obligations of the non-paying party under
this Agreement. Both the Bank and the Company shall be jointly
liable in the event of a failure by both parties to pay such
severance payments and other benefits.
6.11 Assignment; Prior Agreements. Neither the Employers nor the Employee
may make any assignment of this Agreement or any interest herein, by
operation of law or otherwise, without the prior written consent of
the other party, and without such consent any attempted transfer
shall be null and void and of no effect. This Agreement shall inure
to the benefit of and be binding upon the Employers and the
Employee, their respective successors, executors, administrators,
heirs and permitted assigns. In the event of the Employee's death
prior to the completion by the Employers of all payments due him
under this Agreement, the Employers shall continue such payments to
the Employee's beneficiary designated in writing to the Employers
prior to his death (or to his estate, if he fails to make such
designation). This Agreement supersedes any prior agreement covering
the subject matter hereof.
6.12 Enforceability. If any portion or provision of this Agreement shall
to any extent be declared illegal or unenforceable by a court of
competent jurisdiction, then the remainder of this Agreement, or the
application of such portion or provision in circumstances other than
those as to which it is so declared illegal or unenforceable, shall
not be affected thereby, and each portion and provision of this
Agreement shall be valid and enforceable to the fullest extent
permitted by law.
6.13 Waiver. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of any
party to require the performance of any term or obligation of this
Agreement, or the waiver by any party of any breach of this
Agreement, shall not prevent any subsequent enforcement of such term
or obligation or be deemed a waiver of any subsequent breach.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
a sealed instrument as of the day and year first above written.
CAPE COD BANK AND TRUST EMPLOYEE
COMPANY, N.A.
A national banking association
By: /s/ John Otis Drew /s/ Nancy S. Hardaway
------------------- ---------------------
Name: John Otis Drew Name: Nancy S. Hardaway
Title: Chairman of the
Board of Directors
CCBT FINANCIAL COMPANIES, INC.
By: /s/ Stephen B. Lawson
---------------------
Name: Stephen B. Lawson
Title: President and Chief Executive Officer
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