FIDELITY FEDERAL BANK & TRUST
CHANGE IN CONTROL AGREEMENT
FOR
CHRISTOPHER H. COOK
This CHANGE IN CONTROL AGREEMENT ("Agreement") is made effective as of
December __, 2005 by and between a Fidelity Federal Bank & Trust, a federally
chartered stock savings bank (the "Bank"), and Christopher H. Cook (the
"Executive"). Any reference to "Company" herein shall mean Fidelity Bankshares,
Inc., or any successor thereto.
WHEREAS, the Bank and the Executive had previously entered into a Change in
Control Agreement, effective as of January 1, 2004; and
WHEREAS, the Bank recognizes the substantial contribution the Executive has
made to the Bank and wishes to protect his position therewith for the period
provided in this Agreement; and
WHEREAS, the Executive has been elected to, and has agreed to serve in the
position of Executive Vice President and Corporate Counsel for the Bank, a
position of substantial responsibility; and
WHEREAS, the Executive is deemed a "Specified Employee" for purposes of new
Section 409A of the Internal Revenue Code ("Code") and the payments under this
Change in Control Agreement are deemed to be "deferred compensation," such that
the Agreement is required to be modified to conform to the requirements of Code
Section 409A.
NOW, THEREFORE, in consideration of the contribution of the Executive, and
upon the other terms and conditions hereinafter provided, the parties hereto
agree as follows:
1. TERM OF AGREEMENT
The term of this Agreement shall be deemed to have commenced as of the date
first above written and shall continue for a period of thirty-six (36) full
calendar months thereafter. Commencing on the first anniversary date of this
Agreement ("Anniversary Date") and continuing at each Anniversary Date
thereafter, the Board of Directors of the Bank (the "Board") may extend the
Agreement for an additional year. The Board will conduct a performance
evaluation of the Executive for purposes of determining whether to extend the
Agreement, and the results thereof shall be included in the minutes of the
Board's meeting.
2. PAYMENTS TO EXECUTIVE UPON CHANGE IN CONTROL
(a) Upon the occurrence of a Change in Control of the Bank or the Company
(as herein defined) the provisions of Section 3 shall apply.
(b) A "Change in Control" of the Bank or the Company shall mean (i) a
change in ownership of the Bank or the Company under paragraph (a) below, or
(ii) a change in effective control of the Bank or the Company under paragraph
(b) below, or (iii) a change in the ownership of a substantial portion of the
assets of the Bank or the Company under paragraph (c) below:
(a) Change in the ownership of the Bank or the Company. A
change in the ownership of the Bank or the Company
shall occur on the date that any one person, or more
than one person acting as a group (as defined in
Proposed Treasury Regulation Section
1.409A-3(g)(5)(v)(B)), acquires ownership of stock of
the corporation that, together with stock held by
such person or group, constitutes more than 50
percent of the total fair market value or total
voting power of the stock of such corporation.
(b) Change in the effective control of the Bank or the
Company. A change in the effective control of the
Bank or the Company shall occur on the date that
either (i) any one person, or more than one person
acting as a group (as defined in Proposed Treasury
Regulation Section 1.409A-3(g)(5)(v)(B)), acquires
(or has acquired during the 12-month period ending
on the date of the most recent acquisition by such
person or persons) ownership of stock of the
corporation possessing 35 percent or more of the
total voting power of the stock of such corporation;
or (ii) a majority of members of the corporation's
Board of Directors is replaced during any 12-month
period by directors whose appointment or election is
not endorsed by a majority of the members of the
corporation's Board of directors prior to the date
of the appointment or election, provided that this
sub-section (ii) is inapplicable where a majority
shareholder of the Bank or the Company is
another corporation.
(c) Change in the ownership of a substantial portion
of the Bank or the Company's assets. A change in the
ownership of a substantial portion of the Bank or
the Company's assets shall occur on the date that
any one person, or more than one person acting as
a group (as defined in Proposed Treasury Regulation
Section 1.409A-3(g)(5)(v)(B)), acquires (or has
acquired during the 12-month period ending on the
date of the most recent acquisition by such person
or persons) assets from the corporation that have
a total gross fair market value equal to or more than
40% of the total gross fair market value of (i) all
of the assets of the Bank or the Company, or (ii)
the value of the assets being disposed of, either
of which is determined without regard to any
liabilities associated with such assets.
(d) For all purposes hereunder, the definition of Change
in Control shall be construed to be consistent with
the requirements of Proposed Treasury Regulation
Section 1.409A-3(g), except to the extent that such
proposed regulations are superseded by subsequent
guidance.
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(c) The Executive shall not have the right to receive benefits pursuant to
Section 3 hereof in the event of Termination for Cause prior to the Change in
Control. The term "Termination for Cause" shall mean termination because of the
Executive's intentional failure to perform stated duties, personal dishonesty,
incompetence, willful misconduct, any breach of fiduciary duty involving
personal profit, willful violation of any law, rule, regulation (other than
traffic violations or similar offenses) or final cease and desist order, or any
material breach of any material provision of this Agreement. In determining
incompetence, the acts or omissions shall be measured against standards
generally prevailing in the savings institution industry. For purposes of this
paragraph, no act or failure to act on the part of the Executive shall be
considered "willful" unless done, or omitted to be done, by the Executive not in
good faith and without reasonable belief that the Executive's action or omission
was in the best interest of the Bank. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Cause unless and until
there shall have been delivered to him a copy of a resolution duly adopted by
the affirmative vote of not less than three-fourths of the members of the Board
at a meeting of the Board called and held for that purpose (after reasonable
notice to the Executive and an opportunity for him, together with counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
the Executive was guilty of conduct justifying Termination for Cause and
specifying the particulars thereof in detail. The Executive shall not have the
right to receive compensation or other benefits for any period after Termination
for Cause. Any stock options granted to Executive under any stock option plan of
the Bank, the Company or any subsidiary or affiliate thereof, shall become null
and void effective upon Executive's Termination for Cause, and shall not be
exercisable by Executive at any time subsequent to such Termination for Cause.
3. CHANGE IN CONTROL BENEFITS
Upon the occurrence of a Change in Control, the Bank shall be obligated to
pay the Executive, or in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be, the following:
(a) a payment equal to three times the sum of (i) the highest rate of base
salary, and (ii) highest rate of bonus awarded to the Executive during the prior
three years, subject to applicable withholding taxes. The payment shall be made
in a lump sum on the effective date of the Change in Control. Such payments
shall not be reduced in the event Executive obtains other employment following
the Change in Control;
(b) for so long as Executive is employed by the Bank and/or Company, and
continuing for a period of thirty-six (36) months following termination of
employment, continued life insurance coverage for Executive and health care
coverage (including dental) for Executive and Executive's dependents at the
Bank's own expense (at the end of which, Executive shall be entitled to elect
the maximum continued health care coverage available in accordance with the
COBRA provisions of Section 4980B of the Code) and such coverage shall be
substantially identical to the coverage maintained by the Bank or the Company
for the Executive prior to the Change in Control;
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(c) any outstanding unvested stock options or shares of restricted stock of
the Company that have been awarded to Executive shall become fully vested as of
the Change in Control;
(d) at the time of or within sixty (60) days (or within such shorter period
to the extent that information can be reasonably obtained) following the Change
in Control, a lump sum payment in an amount equal to the present value of the
Bank's contributions that would be made on Executive's behalf under the Bank's
401(k) Plan and employee stock ownership plan (and any other defined
contribution plan maintained by the Bank) if he continued working for the Bank
for a thirty-six (36) month period following the Change in Control, earning the
base salary that would be achieved during the remaining unexpired term of this
Agreement (assuming, if a Change in Control has occurred, that the annual base
salary increases at the rate of six percent (6%) per year on each Anniversary
Date over the remaining unexpired term of the Agreement) and making the maximum
amount of employee contributions permitted, if any, under such plan or plans,
where such present values are to be determined using a discount rate of six
percent (6%) per year;
(e) at the time of or within sixty (60) days (or within such shorter period
to the extent that information can reasonably be obtained) following the Change
in Control, a lump sum payment in an amount equal to the excess, if any, of (A)
the present value of the benefits to which he would be entitled under the
Fidelity Federal Savings Bank of Florida Supplemental Executive Retirement Plan
(and any other deferred compensation plan for management or highly compensated
employees that are maintained by the Bank) if he continued working for the Bank
for the thirty-six (36) month period following the Change in Control at the base
salary and bonus that would be achieved during the remaining unexpired term of
this Agreement (assuming, if a Change in Control has occurred, that annual base
salary and bonus each increase at the rate of six percent (6%) per year on each
Anniversary Date for the remaining unexpired term of the Agreement) over (B) the
present value of the benefits to which he is actually entitled under any such
plan, as of the date of the Change in Control, where the present values are to
be determined using a discount rate of six percent (6%) and the mortality tables
prescribed under Section 72 of the Code;
(f) Payments under Section 3(d) and Section 3(e) above shall be made
irrespective of whether termination of employment has occurred. Notwithstanding
anything herein to the contrary, if termination of employment occurs
simultaneously with the effective date of the Change in Control, and such
termination is deemed a "Separation from Service" within the meaning of Code
Section 409A, then the payments required under this Section 3 shall be delayed
until the first day of the seventh month following such Separation from Service,
but only if required by Code Section 409A;
(g) Notwithstanding the preceding paragraphs of this Section 3, in no event
shall the aggregate payments or benefits to be made or afforded to the Executive
under said paragraphs (the "Change in Control Benefits") constitute an "excess
parachute payment" under Section 280G of the Code or any successor thereto, and
in order to avoid such a result, the Change in Control Benefits will be reduced,
if necessary, to an amount (the "Non-Triggering Amount"), the value of which is
one dollar ($1.00) less than an amount equal to three (3) times the Executive's
"base amount," as determined in accordance with said Section 280G. The
allocation of the reduction required hereby among Change in Control Benefits
provided by the preceding paragraphs of this Section 3 shall be determined by
the Executive.
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4. SOURCE OF PAYMENTS
(a) All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Bank. Executive and the Bank, however,
acknowledge that pursuant to that certain Change in Control Agreement between
Executive and the Company dated as of the date of this Agreement (the "Company
Change in Control Agreement"), the Company has guaranteed payment and provision
of all amounts and benefits due hereunder to Executive and, if such amounts and
benefits due from the Bank are not timely paid or provided by the Bank, such
amounts and benefits shall be paid or provided by the Company.
(b) Notwithstanding any provision herein to the contrary, to the extent
that payments and benefits, as provided in this Agreement, are paid to or
received by Executive under the Company Change in Control Agreement, such
compensation payments and benefits will be subtracted from any amounts due
simultaneously to Executive under similar provisions of this Agreement.
(c) For financial statement purposes, Change in Control payments made
pursuant to the provisions of Section 3 of each of the Agreements shall be
charged and paid in accordance with the terms of Section 3(g) of this Agreement
and Section 4 of the Company Change in Control Agreement.
5. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFIT PLANS
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior agreement between the Bank and the Executive, except
that this Agreement shall not affect or operate to reduce any benefit or
compensation inuring to the Executive of a kind elsewhere provided. No provision
of this Agreement shall be interpreted to mean that the Executive is subject to
receiving fewer benefits than those available to him without reference to this
Agreement.
6. NO ATTACHMENT
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of, the
Executive, the Bank and their respective successors and assigns.
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7. MODIFICATION AND WAIVER
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future or as to any act other than that
specifically waived.
8. REQUIRED PROVISIONS
(a) The Bank may terminate the Executive's employment at any time. The
Executive shall not have the right to receive compensation or other benefits for
any period after Termination for Cause as defined in Section 2(c) hereinabove.
(b) If Executive is suspended from office and/or temporarily prohibited
from participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act (12 USC
ss.1818(e)(3) and ss.1818(g)(1)), the Bank's obligations under this contract
shall be suspended as of the date of service unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the Bank may in its
discretion (i) pay Executive all or part of the compensation withheld while its
contract obligations were suspended and (ii) reinstate (in whole or in part) any
of the obligations which were suspended.
(c) If Executive is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued under
Section 8(e)(4) or 8g(1) of the Federal Deposit Insurance Act (12 USC
ss.1818(e)(4) and ss.1818(g)(1)), all obligations of the Bank under this
contract shall terminate as of the effective date of the order, but vested
rights of the contracting parties shall not be affected.
(d) If the Bank is in default as defined in Section 3(x)(1) of the Federal
Deposit Insurance Act (12 USC ss.1813(x)(1)), all obligations of the Bank under
this contract shall terminate as of the date of default, but this paragraph
shall not affect any vested rights of the contracting parties.
(e) All obligations of the Bank under this contract shall be terminated,
except to the extent determined that continuation of the contract is necessary
for the continued operation of the Bank by the Director of the Office of Thrift
Supervision ("OTS") or his designee at the time (i) the Federal Deposit
Insurance Corporation ("FDIC") enters into an agreement to provide assistance to
or on behalf of the Bank under the authority contained in Section 13(c) of the
Federal Deposit Insurance Act (12 USC ss.1823(c)); or (ii) the Director of the
OTS or his designee approves a supervisory merger to resolve problems related to
the operation of the Bank or when the Bank is determined by the Director of the
OTS to be in an unsafe or unsound condition. Any rights of the parties that have
already vested, however, shall not be affected by such action.
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(f) Notwithstanding anything herein contained to the contrary, any payments
to Executive by the Bank pursuant to this Agreement are subject to and
conditioned upon their compliance with Section 18(k) of the Federal Deposit
Insurance Act, 12 U.S.C. Section 1828(k), and the regulations promulgated
thereunder in 12 C.F.R. Part 359.
9. SEVERABILITY
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
10. HEADINGS FOR REFERENCE ONLY
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
11. GOVERNING LAW
The validity, interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of Florida, unless
preempted by Federal law as now or hereafter in effect.
Except as otherwise expressly provided elsewhere in this Agreement, in the
event that any dispute should arise between the parties as to the meaning,
effect, performance, enforcement, or other issue in connection with this
Agreement, which dispute cannot be resolved by the parties, the dispute shall be
decided by final and binding arbitration of a panel of three arbitrators.
Proceedings in arbitration and its conduct shall be governed by the rules of the
American Arbitration Association ("AAA") applicable to commercial arbitrations
(the "Rules") except as modified by this Section. The Executive shall appoint
one arbitrator, the Bank shall appoint one arbitrator, and the third shall be
appointed by the two arbitrators appointed by the parties. The third arbitrator
shall be impartial and shall serve as chairman of the panel. The parties shall
appoint their arbitrators within thirty (30) days after the demand for
arbitration is served, failing which the AAA promptly shall appoint a defaulting
party's arbitrator, and the two arbitrators shall select the third arbitrator
within fifteen (15) days after their appointment, or if they cannot agree or
fail to so appoint, then the AAA promptly shall appoint the third arbitrator.
The arbitrators shall render their decision in writing within thirty (30) days
after the close of evidence or other termination of the proceedings by the
panel, and the decision of a majority of the arbitrators shall be final and
binding upon the parties, nonappealable, except in accordance with the Rules and
enforceable in accordance with the Florida Arbitration Code or any applicable
successor legislation. Any hearings in the arbitration shall be held in Palm
Beach County, Florida unless the parties shall agree upon a different venue, and
shall be private and not open to the public. Each party shall bear the fees and
expenses of its arbitrator, counsel, and witnesses, and the fees and expenses of
the third arbitrator shall be shared equally by the parties. The costs of the
arbitration, including the fees of AAA, shall be borne as directed in the
decision of the panel.
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12. PAYMENT OF LEGAL FEES
All reasonable legal fees paid or incurred by the Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Bank if the Executive is successful on the merits pursuant
to a legal judgment, arbitration or settlement.
13. INDEMNIFICATION
The Bank shall provide the Executive (including his heirs, executors and
administrators) with coverage under a standard directors' and officers'
liability insurance policy at its expense, or in lieu thereof, shall indemnify
the Executive (and his heirs, executors and administrators) to the fullest
extent permitted under federal law and as provided in the Bank's Charter and
Bylaws against all expenses and liabilities reasonably incurred by him in
connection with or arising out of any action, suit or proceeding in which he may
be involved by reason of his having been a director or officer of the Bank
(whether or not he continues to be a director or officer at the time of
incurring such expenses or liabilities), such expenses and liabilities to
include, but not be limited to, judgments, court costs and attorneys' fees and
the cost of reasonable settlements.
14. SUCCESSOR TO THE BANK
The Bank shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Bank, expressly and
unconditionally to assume and agree to perform the Bank's obligations under this
Agreement, in the same manner and to the same extent that the Bank would be
required to perform if no such succession or assignment had taken place.
15. SIGNATURES
IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed by
its duly authorized officer, and the Executive has signed this Agreement, on the
day and date first above written.
ATTEST: FIDELITY FEDERAL BANK & TRUST
__________________ By:
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President
WITNESS: EXECUTIVE
__________________ By:
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Christopher H. Cook
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