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Exhibit 10.3
CHANGE OF CONTROL AGREEMENT
CHANGE OF CONTROL AGREEMENT (this " Agreement ")
dated as of October 31, 2006, by and between COAST
FINANCIAL HOLDINGS, INC. (the " Company "), a
Florida bank holding corporation, and JUSTIN D. LOCKE (the "
Executive "), an individual.
W I T N E S S E T H:
WHEREAS, the Executive is presently employed by the Company or
by one or more of its subsidiaries as a key employee (the Company
and all of its subsidiaries are hereinafter referred to
collectively as " Coast Bank ");
WHEREAS, in light of the competitive environment in the
local market areas served by Coast Bank, the Board of Directors of
the Company (hereinafter, the " Board of Directors ")
has undertaken a review of the commitments made to Coast Bank
management personnel in the event of a Change of Control (as
defined below), and based on such review, has concluded that such
commitments, if any, may not be sufficiently competitive in the
current market;
WHEREAS, the Board of Directors has determined that it is
in the best interests of the Company and its shareholders to assure
that they will have the continued dedication of the Executive,
notwithstanding the possibility of competing offers for the
Executive’s services or the possibility, threat, or
occurrence of a Change of Control of the Company; and
WHEREAS, the Board of Directors believes that it is
imperative to diminish the inevitable distraction of the Executive
by virtue of the personal uncertainties and risks created by
competitive inducements for the Executive’s services or by a
pending or threatened Change of Control and to encourage the
Executive’s full attention and dedication to Coast Bank
currently and in the event of any threatened or pending Change of
Control of the Company;
NOW, THEREFORE, in consideration of the Executive’s
continued employment, and the mutual covenants and agreements set
forth herein, the parties agree as follows:
1. Resignation or Termination without Cause during or
after a Change of Control; Company’s Obligation for Severance
Pay in Consideration of Executive’s Non-compete
Commitments . The Company, either by itself, or through its
Affiliated Companies, as defined below, or through its successors,
agrees to pay the Executive eighteen (18) months of the
Executive’s current Base Salary, as defined below, less all
payroll taxes required to be withheld by law, if the Executive
resigns employment with those Coast Bank entities by which the
Executive is employed, or if the Executive’s employment with
these Coast Bank entities is terminated without Cause, as defined
below, and where such resignation or termination occurs
(i) within one year of the Occurrence of a Change of Control,
as defined below, or (ii) during that period of time when
there is a Pending Change of Control, as defined below. This
compensation (" Severance Pay ") is offered to the
Executive in lieu of any other severance compensation provided by
the Company, or by the Affiliated Companies, or by their successors
and assigns, for which the Executive might be eligible, and shall
be paid in equal installments as salary continuation over the
eighteen (18) month period following the later of the Change
of Control, or
the Executive’s resignation or termination
(the " Severance Period "), at regular payroll
intervals; as consideration for the Severance Pay commitment
offered by this Agreement, the Executive agrees, in the event of
such resignation or termination, to comply with the protective
covenants set forth in Section 2 of this Agreement.
Provided , however, that in the event of the
Executive’s breach of any of the protective covenants in
Section 2 of the Agreement, the Company, or its Affiliated
Companies, or their successors, may reduce the consideration
provided for execution of the protective covenants by terminating
any Severance Pay otherwise due and owing after breach. Further
provided , that in no event shall the Executive be obligated to
seek other employment or take any other action by way of mitigation
of the Severance Pay provided pursuant to this Agreement; in other
words, the Severance Pay offered pursuant to this Agreement shall
not be reduced because the Executive fails to obtain mitigating
employment or fails to seek mitigating employment.
2. Protective Covenants . In the event of a
resignation or termination subject to Section 1 of this
Agreement, the Executive agrees, in consideration of the Severance
Pay commitments, to faithfully and fully adhere to the following
protective covenants:
(a) Covenant Not To Compete. The Executive agrees,
during the Severance Period, not to engage, either directly or
indirectly, in the business of banking, in the Company’s
Market Area. " Engaging " includes, but is not
limited to, being employed by, contracting with, working for,
owning (in whole or in part), providing services to or for, lending
assistance to or for, or consulting with or for the benefit of any
legal or natural person; provided, however, that the Executive may
own shares of stock in any banking corporation whose shares of
stock are registered under Section 12 of the Exchange Act, as
long as the Executive acquired the shares for investment purposes
only and further provided that the Executive does not own, directly
or indirectly, more than two percent (2%) of the issued and
outstanding shares of any class of stock of such corporation. The "
Company’s Market Area " is defined as
comprising all Florida counties where Coast Bank had an office as
of the day prior to the Occurrence of a Change of Control, and all
Florida Counties in which Coast Bank, as of the day prior to the
Occurrence of a Change of Control, had a definitive plan to locate
new offices prior to or within the Severance Period.
(b) Covenants Relating to Customers and Prospective
Customers. The Executive agrees, during the Severance
Period, and only as to the Company’s Market Area, not to do
any of the following: (i) solicit (directly or indirectly) any
Company customers, or the customers of any Affiliated Companies, or
their successors or assigns, to do business with a legal or natural
person other than the Company, or the Affiliated Companies, or
their successors or assigns; (ii) solicit (directly or
indirectly) any prospective customers of the Company or the
Affiliated Companies, or their successors or assigns, to do
business with a legal or natural person other than the Company or
the Affiliated Companies, or their successors or assigns; and
(iii) solicit (directly or indirectly) any customers to cease
doing business with the Company or the Affiliated Companies, or
their successors or assigns.
(c) Covenants Relating to Employees. The Executive
agrees, during the Severance Period, that the Executive will not
solicit or attempt to persuade Company or Affiliated Company
employees, or employees of the Company’s successors or
assigns, to terminate their employment, and accept other employment
within the Company’s Market Area.
2
This covenant specifically prohibits solicitation
of employees, in the event of resignation or termination of the
Executive’s employment, to work with or for the Executive in
a banking business in the Company’s Market Area during the
Severance Period.
(d) Related Provisions. The Executive agrees that
the rights of the Company, the Affiliated Companies, and their
successors and assigns provided in Section 2 of this Agreement
are special, unique and of extraordinary character and that they
would be without an adequate remedy at law if the Executive
violated any of the covenants set forth above. Accor
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