NOTICE: THIS CONTRACT IS SUBJECT TO ARBITRATION PURSUANT
TO THE SOUTH CAROLINA UNIFORM ARBITRATION ACT
NONCOMPETITION,
SEVERANCE AND EMPLOYMENT AGREEMENT
Between
THE SOUTH FINANCIAL GROUP, INC. and X. X. XXXXX
This Noncompetition, Severance and Employment Agreement (this
"Agreement") is made and entered into as of this 14th day of May, 2003, by and
between X. X. Xxxxx, an individual (the "Executive"), and The South Financial
Group, Inc., a South Carolina corporation and financial institution holding
company headquartered in Greenville, South Carolina (the "Company"). As used
herein, the term "Company" shall include the Company and any and all of its
subsidiaries where the context so applies.
W I T N E S S E T H
WHEREAS the Company's Board of Directors (the "Board") believes that
the Executive has been instrumental in the success of MountainBank Financial
Corporation ("MBFC") and its wholly-owned subsidiary MountainBank.
WHEREAS MBFC and the Company have entered into an Agreement and Plan of
Merger dated May 14, 2003, which provides for the merger of MBFC into the
Company (the "Merger") and the Company's operation of MountainBank as a wholly
owned subsidiary of the Company;
WHEREAS the Company desires to employ the Executive as President of
MountainBank after the Merger;
WHEREAS the terms hereof are consistent with the executive compensation
objectives of the Company as established by the Board;
WHEREAS the Executive has entered into an Agreement (the "Gross Up
Agreement") with MountainBank dated May 13, 2003 with respect to the Executive's
currently-effective Executive Indexed Retirement Agreement (the "Indexed
Agreement");
WHEREAS the Executive is willing to accept the employment contemplated herein
under the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto
agree as follows:
1. Employment. Subject to completion of the acquisition of Merger and
the terms and conditions hereof, the Company hereby employs the Executive and
Executive hereby accepts such employment as the President of MountainBank having
such duties and responsibilities as are set forth in Section 3 below.
Notwithstanding anything to the contrary herein, the parties agree that in the
event that MountainBank is merged into another banking subsidiary of the
Company, that Executive shall be the executive directly responsible for the
Company's North Carolina and Virginia banking operations (although the Company
shall not be obligated to maintain Virginia operations) and such shall not be
considered a breach of this Agreement. Upon Closing (as defined below), the
Company agrees to pay to Executive all amounts properly payable under Section
2(g) of his existing employment contract dated June 26, 1997 with MountainBank
(the "Existing Agreement") as if Executive's employment were terminated without
cause (as defined in the Existing Agreement) immediately after the consummation
of the Merger. The parties agree that all obligations referenced in the
preceding sentence shall be satisfied upon payment of the amounts set forth in
Sections 6.2, 6.9 and 6.10. In the event the Merger is not completed, this
Agreement will be null and void.
2. Definitions. For purposes of this Agreement, the following terms
shall have the meanings specified below.
"Cause" shall mean:
(i) In the absence of a Change in Control: (a) fraud; (b)
embezzlement; (c) conviction of the Executive of any felony; (d) a
material breach of, or the willful failure by the Executive to perform
and discharge the Executive's duties, responsibilities and obligations
under this Agreement; (e) any act of moral turpitude or willful
misconduct by the Executive intended to result in personal enrichment
of the Executive at the expense of the Company, or any of its
affiliates or which has a material adverse impact on the business or
reputation of the Company or any of its affiliates (such determination
to be made by the Board in its reasonable judgment); (f) intentional
material damage to the property or business of the Company; (g) gross
negligence; or (h) the ineligibility of the Executive to perform
Executive's duties because of a ruling, directive or other action by
any agency of the United States or any state of the United States
having regulatory authority over the Company.
(ii) After a Change in Control: (a) material criminal fraud,
(b) gross negligence, (c) material dereliction of duties, (d)
intentional material damage to the property or business of the Company,
or (e) the commission of a material felony, in each case, as determined
in the reasonable discretion of the Board, but only if (1) the
Executive has been provided with written notice of any assertion that
there is a basis for termination for cause which notice shall specify
in reasonable detail specific facts regarding any such assertion, (2)
such written notice is provided to the Executive a reasonable time
before the Board meets to consider any possible termination for cause,
(3) at or prior to the meeting of the Board to consider the matters
described in the written notice, an opportunity is provided to the
Executive and Executive's counsel to be heard before the Board with
respect to the matters described in the written notice, (4) any
resolution or other Board action held with respect to any deliberation
regarding or decision to terminate the Executive for cause is duly
adopted by a vote of a majority of the entire Board of the Company at a
meeting of the Board called and held and (5) the Executive is promptly
provided with a copy of the resolution or other corporate action taken
with respect to such termination. No act or failure to act by the
Executive shall be considered willful unless done or omitted to be done
by Executive not in good faith and without reasonable belief that
Executive's action or omission was in the best interests of the
Company. The unwillingness of the Executive to accept any or all of a
change in the nature or scope of Executive's position, authorities or
duties, a reduction in Executive's total compensation or benefits, a
relocation that he deems unreasonable in light of Executive's personal
circumstances, or other action by or upon request of the Company in
respect of Executive's position, authority, or responsibility that he
reasonably deems to be contrary to this Agreement, may not be
considered by the Board to be a failure to perform or misconduct by the
Executive.
"Change in Control" shall mean:
(i) The acquisition, directly or indirectly, by any Person of
securities of the Company (not including in the securities beneficially
owned by such Person any securities acquired directly from the Company)
representing an aggregate of 20% or more of the combined voting power
of the Company's then outstanding voting securities other than an
acquisition by:
(A) any employee plan established by the Company;
(B) the Company or any of its affiliates (as
defined in Rule 12b-2 promulgated under the
Exchange Act);
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(C) an underwriter temporarily holding
securities pursuant to an offering of such
securities;
(D) a corporation owned, directly or indirectly,
by stockholders of the Company in
substantially the same proportions as their
ownership of the Company; or
(E) merger, consolidation, or similar
transaction of the Company with any other
corporation which is duly approved by the
stockholders of the Company;
(ii) During any period of up to two consecutive years,
individuals who, at the beginning of such period, constitute the Board
cease for any reason to constitute at least a majority thereof,
provided that any person who becomes a director subsequent to the
beginning of such period and whose nomination for election is approved
by at least two-thirds of the directors then still in office who either
were directors at the beginning of such period or whose election or
nomination for election was previously so approved (other than a
director (A) whose initial assumption of office is in connection with
an actual or threatened election contest relating to the election of
the directors of the Company, as such terms are used in Rule 14a-11 of
Regulation 14A under the Exchange Act, or (B) who was designated by a
Person who has entered into an agreement with the Company to effect a
transaction described in clause (i), (iii) or (iv) hereof) shall be
deemed a director as of the beginning of such period;
(iii) The stockholders of the Company approve a merger or
consolidation of the Company with any other corporation other than (A)
a merger or consolidation that would result in the voting securities of
the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof), in
combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of any Company, at
least a majority of the combined voting power of the voting securities
of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (B) a
merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no Person is or becomes the
beneficial owner (as defined in clause (i) above), directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired
directly from the Company) representing 25% or more of the combined
voting power of the Company's then outstanding voting securities; or
(C) a plan of complete liquidation of the Company or an agreement for
the sale or disposition of the Company of all or substantially all of
the Company's assets; or
(iv) The occurrence of any other event or circumstance which
is not covered by (i) through (iii) above which the Board determines
affects control of the Company and, in order to implement the purposes
of this Agreement as set forth above, adopts a resolution that such
event or circumstance constitutes a Change in Control for the purposes
of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
successor statute, rule or regulation of similar effect.
"Compensation" shall mean the amounts payable under Section 6.1, 6.3
and 6.7. For purposes of determining bonus compensation under Section 6.3 which
is not fixed, the annual amount of such unfixed compensation shall be deemed to
be equal to the average of such compensation paid under Section 6.3 over the
three year period immediately prior to the termination. If the Executive has not
been employed by the Company for at least three years, the annual amount of such
unfixed bonus compensation under Section 6.3 shall be deemed to be equal to the
average of such compensation over the period of time the Executive was employed
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by the Company immediately prior to the termination. In the event the Executive
has been employed by the Company less than one year, the annual amount of such
unfixed bonus compensation shall be deemed to be equal to the target bonus
amount under Section 6.3, if any, for the year in which such termination occurs.
"Confidential Information" shall mean all business and other
information relating to the business of the Company, including without
limitation, technical or nontechnical data, programs, methods, techniques,
processes, financial data, financial plans, product plans, and lists of actual
or potential customers, which (i) derives economic value, actual or potential,
from not being generally known to, and not being readily ascertainable by proper
means by, other Persons, and (ii) is the subject of efforts that are reasonable
under the circumstances to maintain its secrecy or confidentiality. Such
information and compilations of information shall be contractually subject to
protection under this Agreement whether or not such information constitutes a
trade secret and is separately protectable at law or in equity as a trade
secret. Confidential Information does not include confidential business
information which does not constitute a trade secret under applicable law two
years after any expiration or termination of this Agreement.
"Disability" or "Disabled" shall mean the Executive's inability as a
result of physical or mental incapacity to substantially perform Executive's
duties for the Company on a full-time basis, with or without accommodation, for
a period of six (6) months.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Involuntary Termination" shall mean the termination of Executive's
employment by the Executive following a Change in Control which, in the sole
judgment of the Executive, is due to (i) a change of the Executive's
responsibilities, position (including status as President of MountainBank (or
head of the Company's North Carolina operations, if MountainBank is merged into
a Company banking subsidiary), reporting relationships or working conditions),
authority or duties (including changes resulting from the assignment to the
Executive of any duties inconsistent with Executive's positions, duties or
responsibilities as in effect immediately prior to the Change in Control); or
(ii) a change in the terms or status (including the rolling three year
termination date) of this Agreement; or (iii) a reduction in the Executive's
compensation or benefits; or (iv) a forced relocation of the Executive outside
the Hendersonville, North Carolina metropolitan area; or (v) a significant
increase in the Executive's travel requirements (collectively "Status Changes");
provided, however, Executive must elect to terminate Executive's employment
within 90 days of the Status Change on which Executive bases Executive's
employment termination.
"Person" shall mean any individual, corporation, bank, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or other entity.
"Voluntary Termination" shall mean the termination by Executive of
Executive's employment following a Change in Control which is not the result of
any of clauses (i) through (v) set forth in the definition of Involuntary
Termination above.
3. Duties. During the Term hereof, the Executive shall have such duties
and authority as are typical of the President of MountainBank, or the head of
the Company's North Carolina operations. Executive shall report directly to the
Company's CEO and shall be a member of the Company's Executive Committee. The
Company shall nominate and recommend Executive for service on the Company's
Board of Directors for at least three years subsequent to Closing (although
Executive will not receive director fees for such service so long as other
"inside" directors are not so compensated). Executive agrees that during the
Term hereof, he will devote Executive's full time, attention and energies to the
diligent performance of Executive's duties. Executive shall not, without the
prior written consent of the Company, at any time during the Term hereof (i)
accept employment with, or render services of a business, professional or
commercial nature to, any Person other than the Company, (ii) engage in any
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venture or activity which the Company may in good faith consider to be
competitive with or adverse to the business of the Company or of any affiliate
of the Company, whether alone, as a partner, or as an officer, director,
employee or shareholder or otherwise, except that the ownership of not more than
5% of the stock or other equity interest of any publicly traded corporation or
other entity shall not be deemed a violation of this Section, or (iii) engage in
any venture or activity which the Board may in good faith consider to interfere
with Executive's performance of Executive's duties hereunder.
4 Term. Unless earlier terminated as provided herein, the Executive's
employment hereunder shall be for a rolling term of three years (the "Term")
commencing on the closing date of the Merger ("Closing"). This Agreement shall
be deemed to extend each month for an additional month automatically without any
action on behalf of either party hereto; provided, however, that either party
may, by written notice to the other, cause this Agreement to cease to extend
automatically and upon such notice, the "Term" of this Agreement shall be the
three years following the date of such notice, and this Agreement shall
terminate upon the expiration of such Term.
5. Termination. This Agreement may be terminated as follows:
5.1 The Company. The Company shall have the right to terminate
Executive's employment hereunder at any time during the Term hereof (i)
for Cause, (ii) if the Executive becomes Disabled, (iii) upon the
Executive's death, or (iv) without Cause.
5.1.1 If the Company terminates Executive's
employment under this Agreement pursuant to clauses (i) of
Section 5.1, the Company's obligations hereunder shall cease
as of the date of termination and forfeitable share awards and
unexercised stock options granted on or after the date hereof
(regardless of their vested status) shall be deemed
immediately terminated.
5.1.2 If the Company terminates Executive's
employment under this Agreement pursuant to clauses (ii) or
(iii) of Section 5.1, the Company's obligations hereunder
shall cease as of the date of termination except that
Executive or Executive's estate will be entitled to receive a
pro-rata portion of the targeted Annual Incentive Bonus under
Section 6.2 for the portion of the year actually worked by
Executive prior to Executive's Disability or death.
5.1.3 If the Company terminates Executive pursuant to
clause (iv) of Section 5.1 and there has been a Change in
Control, Executive shall be entitled to receive immediately in
a lump sum as severance upon such termination, aggregate
compensation and benefits provided in Section 6 equal to three
times Executive's annual Compensation being paid at the time
of termination. If the Company terminates Executive pursuant
to clause (iv) of Section 5.1 and in the absence of a Change
in Control, Executive shall be entitled to receive immediately
in a lump sum as severance upon such termination, an amount
equal to the Compensation that would otherwise be provided to
Executive under the applicable provisions in Section 6 hereof
for the remaining Term of this Agreement.
5.1.4 In the event of such termination pursuant to
clause (iv) of Section 5.1, (A) all rights of Executive
pursuant to awards of share grants or options granted by the
Company shall be deemed to have vested and shall be released
from all conditions and restrictions, except for restrictions
on transfer pursuant to the Securities Act of 1933, as
amended, and (B) the Executive shall be deemed to be credited
with service with the Company for such remaining Term for the
purposes of the Company's benefit plans; (C) the Executive
shall be deemed to have retired from the Company and shall be
entitled as of the termination date, or at such later time as
he may elect to commence receiving the total combined
qualified and non-qualified retirement benefit to which he is
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entitled hereunder, or Executive's total non-qualified
retirement benefit hereunder if under the terms of the
Company's qualified retirement plan for salaried employees he
is not entitled to a qualified benefit, and (D) if any
provision of this Section 5.1.4 cannot, in whole or in part,
be implemented and carried out under the terms of the
applicable compensation, benefit, or other plan or arrangement
of the Company because the Executive has ceased to be an
actual employee of the Company, because the Executive has
insufficient or reduced credited service based upon
Executive's actual employment by the Company, because the plan
or arrangement has been terminated or amended after the
effective date of this Agreement, or because of any other
reason, the Company itself shall pay or otherwise provide the
equivalent of such rights, benefits and credits for such
benefits to Executive, Executive's dependents, beneficiaries
and estate. Subject to applicable legal limits to the
contrary, including, without limitation, limits applicable to
incentive stock options under the Code, in the event of
termination pursuant to clause (iv) of Section 5.1, Executive
shall have three (3) years from the date of such termination
to exercise any outstanding stock options.
5.2 By Executive. Executive shall have the right to terminate
Executive's employment hereunder if (i) the Company materially breaches
this Agreement and such breach is not cured within 30 days after
written notice of such breach is given by Executive to the Company;
(ii) there is a Voluntary Termination; or (iii) there is an Involuntary
Termination.
5.2.1 If Executive terminates Executive's employment
other than pursuant to clauses (i), (ii) or (iii) of Section
5.2, the Company's obligations under this Agreement shall
cease as of the date of such termination.
5.2.2 If Executive terminates Executive's employment
hereunder pursuant to clause (i) of Section 5.2 and there has
been a Change in Control, or pursuant to clause (iii) of
Section 5.2, Executive shall be entitled to receive
Executive's base salary and other benefits due Executive
through the termination date, less applicable taxes and other
deductions, and receive immediately in a lump sum as
severance, aggregate compensation and benefits equal to three
times Executive's annual Compensation being paid at the time
of termination. If the Executive terminates Executive's
employment pursuant to clause (i) of Section 5.2 and in the
absence of a Change in Control, Executive shall be entitled to
receive immediately in a lump sum as severance upon such
termination, an amount equal to one times Executive's annual
Compensation being paid at the time of termination.
5.2.3 If Executive terminates Executive's employment
pursuant to clause (ii) of Section 5.2, Executive shall be
entitled to receive Executive's base salary and other benefits
due Executive through the termination date less applicable
taxes and other deductions and receive immediately in a lump
sum as severance aggregate compensation and benefits equal to
one times Executive's annual Compensation being paid at the
time of Voluntary Termination.
5.2.4 In addition, in the event of such termination
pursuant to any of clauses (i) through (iii) of this Section
5.2, (A) all rights of Executive pursuant to awards of share
grants or options granted by the Company shall be deemed to
have vested and shall be released from all conditions and
restrictions, except for restrictions on transfer pursuant to
the Securities Act of 1933, as amended, and (B) the Executive
shall be deemed to be credited with service with the Company
for such remaining Term for the purposes of the Company's
benefit plans, and (C) the Executive shall be deemed to have
retired from the Company and shall be entitled as of the
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termination date, or at such later time as he may elect to
commence receiving the total combined qualified and
non-qualified retirement benefit to which he is entitled
hereunder, or Executive's total non-qualified retirement
benefit hereunder if under the terms of the Company's
qualified retirement plan for salaried employees he is not
entitled to a qualified benefit, and (D) if any provision of
this Section 5.2.4 cannot, in whole or in part, be implemented
and carried out under the terms of the applicable
compensation, benefit, or other plan or arrangement of the
Company because the Executive has ceased to be an actual
employee of the Company, because the Executive has
insufficient or reduced credited service based upon
Executive's actual employment by the Company, because the plan
or arrangement has been terminated or amended after the
effective date of this Agreement, or because of any other
reason, the Company itself shall pay or otherwise provide the
equivalent of such rights, benefits and credits for such
benefits to Executive, Executive's dependents, beneficiaries
and estate. Subject to applicable legal limits to the contrary
including, without limitation, limits applicable to incentive
stock options under the Code, in the event of termination
pursuant to clauses (i) through (iii) of Section 5.2,
Executive shall have three (3) years from the date of such
termination to exercise any outstanding stock options.
6. Compensation. In consideration of Executive's services and covenants
hereunder, Company shall pay to Executive the compensation and benefits
described below (which compensation shall be paid in accordance with the normal
compensation practices of the Company and shall be subject to such deductions
and withholdings as are required by law or policies of the Company in effect
from time to time, provided that Executive's salary pursuant to Section 6.1
shall be payable not less frequently than monthly):
6.1 Annual Salary. During the Term hereof, the Company shall
pay to Executive a base established by the Board which for the first
year of the Term shall be Two Hundred Fifty Thousand and 00/100 Dollars
($250,000). Executive's salary will be reviewed by the Board at the
beginning of each of its fiscal years and, in the sole discretion of
the Board, may be increased for such year; provided, however, that
following a Change in Control, the base salary shall be increased by an
amount at least equal to the average annual increase in that particular
year of all the Company's Executive Committee members except for the
CEO.
6.2 Sign On Bonus. As soon as reasonably possible after the
acquisition of MountainBank (but not later than six business days after
the Closing), Company shall pay a bonus (the "Sign On Bonus") to
Executive in the amount of Two Hundred Thousand and 00/100 Dollars
($200,000). It is the intention of the parties hereto that these
Section 6.2 payments and other compensation provided for herein are
reasonable compensation for Executive's services to the Company and
shall not constitute "excess parachute payments" within the meaning of
Section 280G of the Code and any regulations thereunder, and the
parties agree to cooperate in an effort to achieve this treatment
(although if such treatment cannot reasonably be achieved, the Sign On
Bonus shall be paid nevertheless).
6.3 Annual Incentive Bonus. During the Term hereof, the Board
may pay to Executive an annual incentive cash bonus in accordance with
the terms of the Short Term Incentive Compensation Plan, with a target
bonus of 50% of his Annual Salary.
6.4 Long Term Incentive Compensation Plan. During the Term
hereof, the Board may pay to Executive long term incentive cash bonuses
in accordance with the Company's 2004 Long Term Incentive Compensation
Plan and any successor plan.
6.5 Supplemental Executive Benefit Plan. During the Term
hereof, Executive shall be entitled to participate in The South
Financial Group Supplemental Executive Benefit Plan (the "SERP");
provided, however, that the Company shall not be required to offer the
SERP to the Executive unless and until the benefits associated with the
SERP exceed the benefits paid to Executive under the Indexed Agreement.
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6.6 Stock Options and Restricted Stock. During the Term
hereof, the Board shall grant Executive options to purchase Company
Common Stock and restricted stock in accordance with the Company's 2004
Long Term Incentive Compensation Plan and any successor plan.
6.7 Other Benefits. Executive shall be entitled to share in
any other employee benefits generally provided by the Company to its
most highly ranking executives for so long as the Company provides such
benefits. The Company also agrees to provide Executive on a grossed-up
basis with an automobile allowance equal to similarly situated
executives, reasonable club dues for two country clubs and the regimen
fee for the Wild Dunes Club, personal tax advisory services, and a
$1,000,000.00 life insurance policy and such disability insurance as
may be purchased by $15,000 per year in premiums. Executive shall also
be entitled to participate in all other benefits accorded general
Company employees.
6.8 Stock Option. At Closing, the Company shall grant to
Executive under its Second Amended and Restated Option Plan an option
to purchase 10,000 shares of Company common stock at an exercise price
equal to the closing price on the date of grant and otherwise on such
terms as are typical of option grants to senior executives of the
Company.
6.9 Noncompete Payments. The Company shall pay to Executive
$1.2 million at Closing for the covenants set forth in Section 9.
6.10 Indexed Agreement. The Company shall pay to Executive
$1.661 million at Closing in full satisfaction of the "Secondary Normal
Retirement Benefit" as such term is defined in the Indexed Agreement.
7. Excess Parachute Payments. It is the intention of the parties hereto
that the severance payments and other compensation provided for herein are
reasonable compensation for Executive's services to the Company and shall not
constitute "excess parachute payments" within the meaning of Section 280G of the
Code and any regulations thereunder. In the event that the Company's independent
accountants acting as auditors for the Company on the date of a Change in
Control determine that the payments provided for herein, other than the payments
described in Section 1 or Section 6.2 or otherwise payable pursuant to
obligations in force prior to the date hereof and which have been disclosed to
the Company (but subject in all cases to the Gross Up Agreement), constitute
"excess parachute payments," then the compensation payable hereunder shall be
reduced to the point that such compensation shall not qualify as "excess
parachute payments."
8. Confidentiality. Executive shall hold in a fiduciary capacity for
the benefit of the Company all Confidential Information relating to the Company
or any of its affiliated companies, and their respective businesses, which shall
have been obtained by the Executive during the Executive's employment by the
Company or any of its affiliated companies. After termination of Executive's
employment with the Company for any reason, the Executive shall not, without the
prior written consent of the Company or as may otherwise be required by law or
legal process, communicate or divulge any such information, knowledge or data to
anyone other than the Company and those designated by it. Upon the termination
or expiration of Executive's employment hereunder, Executive agrees to deliver
promptly to the Company all Company files, customer lists, management reports,
memoranda, research, Company forms, financial data and reports and other
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documents supplied to or created by Executive in connection with Executive's
employment hereunder (including all copies of the foregoing) in Executive's
possession or control and all of the Company's equipment and other materials in
Executive's possession or control. In no event shall an asserted violation of
the provisions of this Section 8 constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this Agreement.
9. Noncompetition and Nonsolicitation Agreement. If this Agreement is
terminated by the Company pursuant to Section 5.1(i) or 5.1(iv), or by Executive
pursuant to Section 5.2(i) or Section 5.2.1, Executive shall not provide
banking-related services (whether via an employment relationship or a consulting
arrangement) to any other bank, thrift, lending or financial institution of any
type (1) in any county in the State of North Carolina or Virginia in which the
Company conducts a banking business at the time of Executive's termination, or
(2) in Greenville, Spartanburg, Xxxxxxxx, Oconee, Pickens, Greenwood, Laurens,
Newberry, Cherokee, York, Union, Lexington or Richland counties in South
Carolina (hereinafter a "competitor") within three years of the date of the
termination of employment (the "Noncompete Period"). The obligations contained
in this Section 9 shall not prohibit Executive from being an owner of not more
than 5% of the outstanding stock of any class of a corporation which is publicly
traded, so long as Executive has no active participation in the business of such
corporation. In the event that Executive's employment is terminated for any
reason following a Change in Control (whether by the Company or Executive), it
is expressly acknowledged that there shall be no limitation on any activity of
Executive, including direct competition with the Company or its successor, and
Company shall not be entitled to injunctive relief with respect to any such
activities of Executive.
9.1 During the Noncompete Period, Executive shall not directly
or indirectly through another entity, including but not limited to a
competitor, (i) induce or attempt to induce any employee of Company to
leave the employ of Company or in any way interfere with the
relationship between Company and any employee thereof, (ii) hire any
person who was an employee of Company or any subsidiary at any time
during the time that Executive was employed by Company, or (iii) induce
or attempt to induce any customer, supplier, or other entity in a
business relation with Company to cease doing business with Company, or
in any way interfere with the relationship between any such customer,
supplier, or business relation and Company or do business with a
competitor.
9.2 If, at the time of enforcement of this Section 9, a court
shall hold that the duration, scope or area restrictions stated herein
are unreasonable under circumstances then existing, the parties agree
that the maximum duration, scope or area reasonable under such
circumstances shall be substituted for the stated duration, scope or
area and that the court shall be allowed to revise the restrictions
contained herein to cover the maximum period, scope and area permitted
by law. Executive agrees that the restrictions contained in this
Section 9 are reasonable.
9.3 In the event of the breach or a threatened breach by
Executive of any of the provisions of this Section 9, Company, in
addition and supplementary to other rights and remedies existing in its
favor, may apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive or other relief
in order to enforce or prevent any violations of the provisions hereof
(without posting a bond or other security). In addition, in the event
of an alleged breach or violation by Executive of this Section 9, the
Noncompete Period shall be tolled until such breach or violation has
been duly cured.
10. Trust. Notwithstanding anything to the contrary in this agreement,
in lieu of direct payments to the Executive under Section 5 of this Agreement,
the Company shall establish an irrevocable trust to fund and pay Executive the
maximum amount of obligations which could reasonably be expected to become
payable hereunder under any circumstances (which may be a "rabbi trust" if so
requested by Executive), which trust (i) shall have as trustee an individual
acceptable to Executive, (ii) shall be fully funded upon the earlier of a Change
in Control or the approval of any regulatory application filed by a potential
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acquiror of the Company seeking to acquire control of the Company, and (iii)
shall contain such other terms and conditions as are reasonably necessary in
Executive's determination to ensure the Company's compliance with its
obligations hereunder.
11. Assignment. The parties acknowledge that this Agreement has been
entered into due to, among other things, the special skills of Executive, and
agree that this Agreement may not be assigned or transferred by Executive, in
whole or in part, without the prior written consent of Company.
12. Notices. All notices, requests, demands, and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered or seven days after mailing if mailed, first class,
certified mail postage prepaid:
To the Company: The South Financial Group, Inc.
Poinsett Plaza
000 Xxxxx Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxxxxx Xxxxxx
To Executive: X. X. Xxxxx
[Address]
Any party may change the address to which notices, requests, demands, and other
communications shall be delivered or mailed by giving notice thereof to the
other party in the same manner provided herein.
13. Provisions Severable. If any provision or covenant, or any part
thereof, of this Agreement should be held by any court to be invalid, illegal or
unenforceable, either in whole or in part, such invalidity, illegality or
unenforceability shall not affect the validity, legality or enforceability of
the remaining provisions or covenants, or any part thereof, of this Agreement,
all of which shall remain in full force and effect.
14. Remedies in the Absence of a Change in Control. The terms of this
Section 14 will apply in the absence of a Change in Control.
14.1 The Executive acknowledges that if he breaches or
threatens to breach Executive's covenants and agreements in this
Agreement, such actions may cause irreparable harm and damage to the
Company which could not be compensated in damages. Accordingly, if
Executive breaches or threatens to breach this Agreement, the Company
shall be entitled to injunctive relief, in addition to any other rights
or remedies of the Company.
14.2 All claims, disputes and other matters in question
between the Executive and the Company arising out of or related to the
interpretation of this Agreement or the breach of this Agreement,
except as specifically governed by the foregoing provisions where there
may be irreparable harm and damage to the Company which could not be
compensated in damages, shall be decided by arbitration in accordance
with the rules of the American Arbitration Association. This agreement
to arbitrate shall be specifically enforceable under applicable law in
any court having jurisdiction. The award rendered by the arbitrator
shall be final and judgment may be entered upon it in accordance with
the applicable law of any court having jurisdiction thereof.
14.3 In the event that the Executive is reasonably required to
engage legal counsel to enforce Executive's rights hereunder against
the Company, Executive shall be entitled to receive from the Company
Executive's reasonable attorneys' fees and costs; provided that
Executive shall not be entitled to receive those fees and costs related
to matters, if any, which were the subject of litigation and with
respect to which a judgment is rendered against Executive.
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15. Remedies in the Event of a Change in Control. The terms of this
Section 15 shall apply in the event of a Change in Control.
15.1 The Executive acknowledges that if he breaches or
threatens to breach Executive's covenants and agreements in this
Agreement, such actions may cause irreparable harm and damage to the
Company which could not be compensated in damages. Accordingly, if
Executive breaches or threatens to breach this Agreement, the Company
shall be entitled to injunctive relief, in addition to any other rights
or remedies of the Company. All claims, disputes and other matters in
question between the Executive and the Company arising out of or
related to the interpretation of this Agreement or the breach of this
Agreement shall be decided under and governed by the laws of the State
of South Carolina.
15.2 The Company is aware that upon the occurrence of a Change
in Control, the Board or a stockholder of the Company may then cause or
attempt to cause the Company to refuse to comply with its obligations
under this Agreement, or may cause or attempt to cause the Company to
institute, or may institute, litigation seeking to have this Agreement
declared unenforceable, or may take, or attempt to take, other action
to deny the Executive the benefits intended under this Agreement. In
these circumstances, the purpose of this Agreement could be frustrated.
It is the intent of the parties that the Executive not be required to
incur the legal fees and expenses associated with the protection or
enforcement of Executive's rights under this Agreement by litigation or
other legal action because such costs would substantially detract from
the benefits intended to be extended to the Executive hereunder, nor be
bound to negotiate any settlement of Executive's rights hereunder under
threat of incurring such costs. Accordingly, if at any time after a
Change in Control, it should appear to the Executive that the Company
is or has acted contrary to or is failing or has failed to comply with
any of its obligations under this Agreement for the reason that it
regards this Agreement to be void or unenforceable or for any other
reason, or that the Company has purported to terminate Executive's
employment for cause or is in the course of doing so in either case
contrary to this Agreement, or in the event that the Company or any
other person takes any action to declare this Agreement void or
unenforceable, or institutes any litigation or other legal action
designed to deny, diminish or to recover from the Executive the
benefits provided or intended to be provided to Executive hereunder,
and the Executive has acted in good faith to perform Executive's
obligations under this Agreement, the Company irrevocably authorizes
the Executive from time to time to retain counsel of Executive's choice
at the expense of the Company to represent Executive in connection with
the protection and enforcement of Executive's rights hereunder,
including without limitation representation in connection with
termination of Executive's employment contrary to this Agreement or
with the initiation or defense of any litigation or other legal action,
whether by or against the Executive or the Company or any director,
officer, stockholder or other person affiliated with the Company, in
any jurisdiction. The reasonable fees and expenses of counsel selected
from time to time by the Executive as hereinabove provided shall be
paid or reimbursed to the Executive by the Company on a regular,
periodic basis upon presentation by the Executive of a statement or
statements prepared by such counsel representing other officers or key
executives of the Company in connection with the protection and
enforcement of their rights under similar agreements between them and
the Company, and, unless in Executive's sole judgment use of common
counsel could be prejudicial to Executive or would not be likely to
reduce the fees and expenses chargeable hereunder to the Company, the
Executive agrees to use Executive's best efforts to agree with such
other officers or executives to retain common counsel.
16. Waiver. Failure of either party to insist, in one or more
instances, on performance by the other in strict accordance with the terms and
conditions of this Agreement shall not be deemed a waiver or relinquishment of
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any right granted in this Agreement or of the future performance of any such
term or condition or of any other term or condition of this Agreement, unless
such waiver is contained in a writing signed by the party making the waiver.
17. Amendments and Modifications. This Agreement may be amended or
modified only by a writing signed by other parties hereto.
18. Governing Law. The validity and effect of this agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of South Carolina.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
EXECUTIVE
/s/ X. X. Xxxxx
---------------------------------------
X. X. Xxxxx
THE SOUTH FINANCIAL GROUP, INC.
By: /s/ Xxxx Xxxxxxx
---------------------------------------
Title: V. P.
---------------------------------------
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