EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT AGREEMENT (this “Agreement”) dated as of December 31, 2008, is made
among First National Bancshares, Inc., a South Carolina corporation (the
“Company”), its wholly owned subsidiary, First National Bank of the South, a
national bank (the “Bank”), and Xxxxx X. Xxxxxxx, an individual resident of
South Carolina (the “Executive”). The Company and the Bank are
referred to collectively as the “Employer.”
The
Employer recognizes the Executive's contribution to the growth and success of
the Employer and has previously entered into an Employment Agreement with
Executive as of September 10, 2004, which Employer and Employer now desire to
restate principally to reflect changes in tax laws. The Executive is
willing to continue to serve the Employer on the terms and conditions herein
provided. Certain terms used in this Agreement are defined in Section
17 hereof.
In
consideration of the foregoing, the mutual covenants contained herein, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. Employment. The
Employer shall employ the Executive, and the Executive shall serve the Employer,
as President and Chief Executive Officer of the Bank and the Company upon the
terms and conditions set forth herein. The Executive shall also serve
on the Board of Directors of the Company and the Bank. The Executive
shall have such authority and responsibilities consistent with his position as
are set forth in the Company's or the Bank's Bylaws or assigned by the Company's
or the Bank's Board of Directors (the “Board”) from time to time. The
Executive shall devote his full business time, attention, skill and efforts to
the performance of his duties hereunder, except during periods of illness or
periods of vacation and leaves of absence consistent with Bank
policy. The Executive may devote reasonable periods to service as a
director or advisor to other organizations, to charitable and community
activities, and to managing his personal investments, provided that such
activities do not materially interfere with the performance of his duties
hereunder and are not in conflict or competitive with, or adverse to, the
interests of the Company or the Bank.
2. Term. Unless
earlier terminated as provided herein, the Executive's employment under this
Agreement shall commence on the date hereof and be for a term (the “Term”) of
three years. At the end of each year of the Term, the Term shall be
extended for an additional year so that the remaining term shall continue to be
three years; provided that the
Executive or the Employer
may at any time, by written notice, fix the Term to a finite term of
three years commencing with the year of the notice. Notwithstanding
the foregoing, the Term of employment hereunder will end on the date that the
Executive attains the retirement age, if any, specified in the Bylaws of the
Bank for directors of the Bank.
3. Compensation and
Benefits.
(a) Executive's
base salary is $286,000, plus his medical insurance
premium. The Board (or an appropriate committee of the Board)
shall review the Executive's salary at least annually and may increase, but
cannot decrease, the Executive's salary if it determines in its sole discretion
that an increase is appropriate. The salary shall be payable in
accordance with the Employer’s normal payroll
practices, which shall mean no less frequently than monthly.
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(b) The
Executive will be eligible to receive an annual cash bonus of up to 50% of his
base salary based on the accomplishment of performance goals established in
advance each year by the Board of Directors. Any bonus payment made
pursuant to this Section 3(b) shall be made the earlier of (i) seventy days
after the previous year end or (ii) the first pay period following the
Employer's press release announcing its previous year's financial
performance.
(c) The
Executive shall participate in the Employer's long-term equity
incentive program and be eligible for the grant of stock options, restricted
stock, and other awards thereunder or under any similar plan adopted by the
Employer. Nothing
herein shall be deemed to preclude the granting to the Executive of warrants or
options under a director option plan in addition to the options granted
hereunder. Any options or similar awards shall be issued to Executive
(i) at an exercise price of not less than the stock's current fair market value
as of the date of grant and (ii) the number of shares subject to such grant
shall be fixed on the date of grant.
(d) The
Executive shall participate in all retirement, welfare and other benefit plans
or programs of the Employer
now or hereafter applicable generally to employees of the Employer or to
a class of employees that includes senior executives of the
Employer.
(e) The
Employer shall provide the
Executive with a term life insurance policy providing for death benefits
totaling $500,000 payable to the Executive's spouse and heirs (and may provide
for additional death benefits of up to $500,000 payable to the Employer), and
the Executive shall cooperate with the Employer in the securing and maintenance
of such policy. The Employer shall also pay for an accident liability
policy on the Executive totaling $1,000,000 to protect the Employer from damages
or lawsuits resulting from injuries to third parties caused by the Executive. In
addition, the Employer
shall provide a separate disability policy for the Executive with terms
acceptable to the Board and the Executive. The Employer shall require
and pay the cost of an annual physical for the Executive.
(f) The
Employer shall provide Executive with either an automobile owned or leased by
the Employer of a make and model appropriate to the Executive's status, or a
monthly automobile allowance, which shall be paid no less frequently than
monthly. The Employer
shall provide for reasonable expenses associated with the automobile,
including, but not limited to insurance, taxes, etc. The Employer
shall reimburse Executive for such expenses no later than the last day of the
calendar year following the calendar year in which the expense was
incurred.
(g) The
Employer shall pay on a
monthly basis Executive’s membership dues pertaining to an area country club and
The Piedmont Club for so long as the Executive remains the President and Chief
Executive Officer of the Company or the Bank and this Agreement remains in
force.
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(h) The
Employer shall reimburse
the Executive for reasonable travel and other business development expenses
related to the Executive's duties which are incurred and accounted for in
accordance with the normal practices of the Employer. The expenses
described in this Section 3(h) must be incurred by the Executive during the term
of this Agreement to be eligible for reimbursement. All
reimbursements shall be paid as soon as administratively practicable, but in no
event shall any reimbursement be paid after the last day of the calendar year
following the calendar year in which the expense was incurred, nor shall the
amount of reimbursable expenses incurred in one taxable year affect the expenses
eligible for reimbursement in any other taxable year.
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4.
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Termination.
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(a) The
Executive's employment under this Agreement may be terminated prior to the end
of the Term only as provided in this Section 4.
(b) The
Agreement will be terminated upon the death of the Executive. In this
event, the Employer shall pay the Executive's estate any sums due him as base
salary and/or reimbursement of expenses through the end of the month during
which death occurred in accordance with the Employer’s normal payroll
practices, which shall mean no less frequently than monthly. The Employer shall
also pay the Executive's estate any bonus earned or accrued through the date of
death (including any amounts awarded for previous years but which were not yet
vested). Any bonus for previous years which was not yet paid will be
paid pursuant to the terms as set forth in Section 3(b). Any bonus
that is earned in the year of death will be paid on the earlier of (i) seventy
days after the year end in which the Executive died or (ii) the first pay period
following the Employer's press release announcing its financial performance for
the year in which the Executive died. To the extent that the bonus is
performance-based, the amount of the bonus will be calculated by taking into
account the performance of the Company for the entire year and prorated through
the date of Executive's death.
(c) The
Employer may terminate the Executive's employment upon the Disability of the
Executive for a period of 180 days. During the period of any
Disability leading up to the Executive’s Termination of Employment under this
provision, the Employer shall continue to pay the Executive his full base salary
at the rate then in effect and all perquisites and other benefits (other than
any bonus) in accordance with the Employer's normal payroll schedule (and in no
event less frequently than monthly) until the Executive becomes eligible for
benefits under any long-term disability plan or insurance program maintained by
the Employer, provided that the amount of any such payments to the Executive
shall be reduced by the sum of the amounts, if any, payable to the Executive for
the same period under any other disability benefit or pension plan covering the
Executive. Furthermore, the Employer shall pay the Executive any
bonus earned or accrued through the date of Disability (including any amounts
awarded for previous years but which were not yet vested). Any bonus
for previous years which was not yet paid will be paid pursuant to the terms as
set forth in Section 3(b). Any bonus that is earned in the year of
Disability will be paid on the earlier of (i) seventy days after the year end in
which Executive became Disabled or (ii) the first pay period following the
Employer's press release announcing its financial performance for the year in
which the Executive became Disabled. Nothing herein shall prohibit
the Employer from hiring an acting president or chief executive officer prior to
the expiration of this 180-day period.
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(d) The
Employer may terminate the Executive's employment for Cause upon delivery of a
Notice of Termination to the Executive. If the Executive's employment
is terminated for Cause under this provision, the Executive shall receive only
any sums due him as base salary and/or reimbursement of expenses through the
date of termination, which shall be paid in accordance with the Employer’s normal payroll
practices, which shall mean no less frequently than monthly.
(e) The
Employer may terminate the Executive's employment without Cause upon delivery of
a Notice of Termination to the Executive. If the Executive's
employment is terminated without Cause under this provision, subject to the
possibility of a six-month delay described below in this Section 4(e), beginning
on the first day of the month following the date of the Executive's termination,
and continuing on the first day of the month for the next 23 months, the
Employer shall pay to the Executive severance compensation in an amount equal to
100% of his then current monthly base salary. Employer shall also pay
the Executive any bonus earned or accrued through the date of termination
(including any amounts awarded for previous years but which were not yet
vested). Any bonus for previous years which was not yet paid will be
paid pursuant to the terms as set forth in Section 3(b). Any bonus that is
earned in the year of the Executive's termination will be paid on the earlier of
(i) seventy days after the date of Executive's termination or (ii) the first pay
period following the Employer's press release announcing its financial
performance for the year of the Executive's termination. In addition,
for a period of 24 months following termination, the Employer shall at its
expense continue on behalf of the Executive and his dependents and beneficiaries
the life insurance, disability, medical, dental, and hospitalization benefits
provided (x) to the Executive at any time during the 90-day period prior to
the termination hereunder or (y) to other similarly situated executives who
continue in the employ of the Employer. Such coverage and benefits (including
deductibles and costs) shall be no less favorable to the Executive and his
dependents and beneficiaries than the most favorable of such coverages and
benefits referred to above. The Employer's obligation hereunder with
respect to the foregoing benefits shall be limited to the extent that the
Executive obtains any such benefits pursuant to a subsequent employer's benefit
plans, in which case the Employer may reduce the coverage of any benefits it is
required to provide the Executive hereunder as long as the aggregate coverages
and benefits of the combined benefit plans is no less favorable to the Executive
than the coverages and benefits required to be provided hereunder. If
when the Executive's employment terminates he is a specified employee within the
meaning of Section 409A of the Code, and if the benefits under this Section 4(e)
would be considered deferred compensation under Section 409A, and finally if an
exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) is
not available, the following benefits under this Section 4(e) shall be paid to
the Executive as follows: severance compensation in an amount equal to 7 times
his then current monthly base salary, any bonus for previous years which was not
yet paid will be paid in a single lump sum on the date that is six months and
one day following date of Executive's termination; thereafter on the first day
of the month for the next 17 months, the Employer shall pay to the Executive
severance compensation in an amount equal to 100% of his then current monthly
base salary. Any bonus that is earned in the year of the Executive's
termination will be paid pursuant to the terms as set forth
above. This provision shall not be interpreted so as to limit any
benefits to which the Executive or his dependents or beneficiaries may be
entitled under any of the Employer's employee benefit plans, programs, or
practices following the Executive's Termination of Employment, including,
without limitation, retiree medical and life insurance benefits.
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(f) The
Executive may terminate his employment at any time by delivering a Notice of
Termination at least 30 days prior to the Executive’s date of
termination. If the Executive terminates his employment under this
provision, the Executive shall receive any sums due him as base salary and/or
reimbursement of expenses through the date of such termination, which shall be
paid in accordance with the Employer’s normal payroll
practices, which shall mean no less frequently than monthly.
(g) The
Executive may terminate this Agreement for Good Reason upon delivery of a Notice
of Termination to the Employer within a 90-day period beginning on the 30th day
after the occurrence of a Change in Control or within a 90-day period beginning
on the one year anniversary of the occurrence of a Change in
Control. If the Executive's employment is terminated by the Executive
pursuant to this provision, in addition to other rights and remedies available
in law or equity, the Executive shall be entitled to the following:
(i) the
Employer shall pay the Executive in cash within 15 days of the date of
termination severance compensation in cash in an amount equal to his then
current monthly base salary multiplied by 36. The Employer shall also pay the
Executive any bonus earned or accrued through the date of termination (including
any amounts awarded for previous years but which were not yet
vested). Any bonus for previous years which was not yet paid will be
paid pursuant to the terms as set forth in Section 3(b). Any bonus
that is earned in the year of the Executive's termination will be paid on the
earlier of (i) the date that is six months and one day following date of the
Executive's termination or (ii) the first pay period following the Employer's
press release announcing its financial performance for the year of the
Executive's termination;
(ii) for
a period of 36 months, the Employer shall at its expense continue on behalf of
the Executive and his dependents and beneficiaries the life insurance,
disability, medical, dental, and hospitalization benefits provided (x) to
the Executive at any time during the 90-day period prior to the Change in
Control or at any time thereafter or (y) to other similarly situated
executives who continue in the employ of the Employer. Such coverage
and benefits (including deductibles and costs) shall be no less favorable to the
Executive and his dependents and beneficiaries than the most favorable of such
coverages and benefits referred to above. The Employer's obligation
hereunder with respect to the foregoing benefits shall be limited to the extent
that the Executive obtains any such benefits pursuant to a subsequent employer's
benefit plans, in which case the Employer may reduce the coverage of any
benefits it is required to provide the Executive hereunder as long as the
aggregate coverages and benefits of the combined benefit plans is no less
favorable to the Executive than the coverages and benefits required to be
provided hereunder. This subsection (ii) shall not be interpreted so
as to limit any benefits to which the Executive or his dependents or
beneficiaries may be entitled under any of the Employer's employee benefit
plans, programs, or practices following the Executive's Termination of
Employment, including, without limitation, retiree medical and life insurance
benefits; and
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(iii) the
restrictions on any outstanding incentive awards (including restricted stock)
granted to the Executive under the Company's or the Bank’s long-term equity
incentive program or any other incentive plan or arrangement shall lapse and
such awards shall become 100% vested, all stock options and stock appreciation
rights granted to the Executive shall become immediately exercisable and shall
become 100% vested, all performance units granted to the Executive shall become
100% vested, and the restrictive covenants contained in Section 9 shall not
apply to the Executive.
(h) With
the exceptions of the provisions of this Section 4, and the express terms of any
benefit plan under which the Executive is a participant, it is agreed that, upon
Executive's Termination of Employment, the Employer shall have no obligation to
the Executive for, and the Executive waives and relinquishes, any further
compensation or benefits (exclusive of COBRA benefits). Unless
otherwise stated in this Section 4, the effect of termination on any outstanding
incentive awards, stock options, stock appreciation rights, performance units,
or other incentives shall be governed by the terms of the applicable benefit or
incentive plan and/or the agreements governing such incentives. At
the time of termination of employment, the Employer and the Executive shall
enter into a mutually satisfactory form of release acknowledging such remaining
obligations and discharging both parties, as well as the Employer's officers,
directors and employees with respect to their actions for or on behalf of the
Employer, from any other claims or obligations arising out of or in connection
with the Executive's employment by the Employer, including the circumstances of
such termination.
(i) In
the event that the Executive's employment is terminated for any reason, the
Executive shall tender his resignation as a director of the Company and the Bank
and effective as of the date of termination.
(j) In
the event that the Executive's employment is terminated for any reason prior to
a Change in Control, the Employer shall have the right of first refusal during
the twelve-month period following the date of termination to repurchase any or
all shares of common stock then held by the Executive. The Employer may assign
this right to one or more other persons. Executive agrees not to sell
or convey his shares or any portion thereof without notice to Employer of
Executive's intention to do so. To that end, Executive shall not sell or convey
said shares except by binding written agreement, which agreement shall be
expressly subject to Employer's rights under this option of first refusal.
Executive shall notify Employer in writing of such proposed conveyance or sale
and shall furnish Employer with a true and correct copy of the aforesaid written
agreement. Thereafter, Employer shall have the option for a period of fifteen
(15) days from the date of receipt of such notice and copy, during which
Employer may determine and notify Executive whether Employer desires to purchase
the shares for the same price and on the same terms as set forth in said written
agreement. If Employer exercises the option granted herein, Executive shall
transfer to Employer said shares in accordance with the terms of said written
agreement and upon such delivery, Employer shall pay to Executive the purchase
money called for in the written agreement. If Employer fails to exercise the
option to purchase, Executive shall be at liberty to conclude the sale or
conveyance of said shares only at the exact price and terms submitted to
Employer. Any failure to consummate the sale on the exact terms and conditions
within a reasonable time after Employer's notification of its intent not to
exercise its rights hereunder shall cause the provisions of this option of first
refusal to remain in full force and effect and fully applicable to any
subsequent conveyances or sales.
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(k) The
parties intend that the severance payments and other compensation provided for
herein are reasonable compensation for the Executive's services to the Employer
and shall not constitute “excess parachute payments” within the meaning of
Section 280G of the Internal Revenue Code of 1986 and any regulations
thereunder. In the event that the Employer's independent accountants
acting as auditors for the Employer on the date of a Change in Control determine
that the payments provided for herein constitute “excess parachute payments,”
then the compensation payable hereunder shall be reduced to an amount the value
of which is $1.00 less than the maximum amount that could be paid to the
Executive without the compensation being treated as “excess parachute payments”
under Section 280G. The allocations of the reduction required hereby
among the termination benefits payable to the Executive shall be determined by
the Executive.
5. Ownership of Work
Product. The Employer shall own all Work Product arising
during the course of the Executive's employment (prior, present or
future). For purposes hereof, “Work Product” shall mean all
intellectual property rights, including all Trade Secrets, U.S. and
international copyrights, patentable inventions, and other intellectual property
rights in any programming, documentation, technology or other work product that
relates to the Employer, its business or its customers and that Executive
conceives, develops, or delivers to the Employer at any time during his
employment, during or outside normal working hours, in or away from the
facilities of the Employer, and whether or not requested by the
Employer. If the Work Product contains any materials, programming or
intellectual property rights that the Executive conceived or developed prior to,
and independent of, the Executive's work for the Employer, the Executive agrees
to point out the pre-existing items to the Employer and the Executive grants the
Employer a worldwide, unrestricted, royalty-free right, including the right to
sublicense such items. The Executive agrees to take such actions and
execute such further acknowledgments and assignments as the Employer may
reasonably request to give effect to this provision.
6. Protection of Trade
Secrets. The Executive agrees to maintain in strict confidence
and, except as necessary to perform his duties for the Employer, the Executive
agrees not to use or disclose any Trade Secrets of the Employer during or after
his employment. “Trade Secret” means information, including a
formula, pattern, compilation, program, device, method, technique, process,
drawing, cost data or customer list, that: (i) derives economic value, actual or
potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value
from its disclosure or use; and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.
7. Protection of Other
Confidential Information. In addition, the Executive agrees to maintain
in strict confidence and, except as necessary to perform his duties for the
Employer, not to use or disclose any Confidential Business Information of the
Employer during his employment and for a period of 36 months following
termination of the Executive's employment. “Confidential Business
Information” shall mean any internal, non-public information (other than Trade
Secrets already addressed above) concerning the Employer's financial position
and results of operations (including revenues, assets, net income, etc.); annual
and long-range business plans; product or service plans; marketing plans and
methods; training, educational and administrative manuals; customer and supplier
information and purchase histories; and employee lists. The
provisions of Sections 6 and 7 above shall also apply to protect Trade Secrets
and Confidential Business Information of third parties provided to the Employer
under an obligation of secrecy.
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8. Return of
Materials. The Executive shall surrender to the Employer,
promptly upon its request and in any event upon termination of the Executive's
employment, all media, documents, notebooks, computer programs, handbooks, data
files, models, samples, price lists, drawings, customer lists, prospect data, or
other material of any nature whatsoever (in tangible or electronic form) in the
Executive's possession or control, including all copies thereof, relating to the
Employer, its business, or its customers. Upon the request of the
Employer, Executive shall certify in writing compliance with the foregoing
requirement.
9. Restrictive
Covenants.
(a) No Solicitation of
Customers. During the Executive's employment with the
Employer, and for a period of 12 months thereafter, or during any period the
Employer is paying Executive severance under Section 4 if longer than 12 months,
the Executive shall not (except on behalf of or with the prior written consent
of the Employer), either directly or indirectly, on the Executive's own behalf
or in the service or on behalf of others, (A) solicit, divert, or appropriate to
or for a Competing Business, or (B) attempt to solicit, divert, or appropriate
to or for a Competing Business, any person or entity that is or was a customer
of the Employer or any of its Affiliates on the date of termination and is
located in the Territory and with whom the Executive has had material
contact.
(b) No Recruitment of
Personnel. During the Executive's employment with the
Employer, and for a period of 12 months thereafter, or during any period the
Employer is paying Executive severance under Section 4 if longer than 12 months,
the Executive shall not, either directly or indirectly, on the Executive's own
behalf or in the service or on behalf of others, (A) solicit, divert, or hire
away, or (B) attempt to solicit, divert, or hire away, to any Competing Business
located in the Territory, any employee of or consultant to the Employer or any
of its Affiliates engaged or experienced in the Business, regardless of whether
the employee or consultant is full-time or temporary, the employment or
engagement is pursuant to written agreement, or the employment is for a
determined period or is at will.
(c) Non-Competition
Agreement. During the Executive's employment with the Employer, and for a
period of 12 months thereafter, or during any period the Employer is paying
Executive severance under section 4 if longer than 12 months, the Executive
shall not (without the prior written consent of the Employer) compete with the
Employer or any of its Affiliates by, directly or indirectly, forming, serving
as an organizer, director or officer of, or consultant to, or acquiring or
maintaining more than a 1% passive investment in, a depository financial
institution or holding company therefor if such depository institution or
holding company has one or more offices or branches located in the
Territory. Notwithstanding the foregoing, the Executive may serve as
an officer of or consultant to a depository institution or holding company
therefor even though such institution operates one or more offices or branches
in the Territory, if the Executive's employment does not directly involve, in
whole or in part, the depository financial institution's or holding company's
operations in the Territory.
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10. Independent
Provisions. The provisions in each of the above Sections 9(a),
9(b), and 9(c) are independent, and the unenforceability of any one provision
shall not affect the enforceability of any other provision.
11. Successors; Binding
Agreement. The rights and obligations of this Agreement shall bind and
inure to the benefit of the surviving corporation in any merger or consolidation
in which the Employer is a party, or any assignee of all or substantially all of
the Employer's business and properties. The Executive's rights and
obligations under this Agreement may not be assigned by him, except that his
right to receive accrued but unpaid compensation, unreimbursed expenses and
other rights, if any, provided under this Agreement which survive termination of
this Agreement shall pass after death to the personal representatives of his
estate.
12. Notice. For
the purposes of this Agreement, notices and all other communications provided
for in the Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered or sent by certified mail, return receipt
requested, postage prepaid, addressed to the respective addresses last given by
each party to the other; provided, however, that all
notices to the Employer shall be directed to the attention of the Employer with
a copy to the Secretary of the Employer. All notices and
communications shall be deemed to have been received on the date of delivery
thereof.
13. Governing
Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of South Carolina without
giving effect to the conflict of laws principles thereof. Any action
brought by any party to this Agreement shall be brought and maintained in a
court of competent jurisdiction in State of South Carolina.
14. Non-Waiver. Failure
of the Employer to enforce any of the provisions of this Agreement or any rights
with respect thereto shall in no way be considered to be a waiver of such
provisions or rights, or in any way affect the validity of this
Agreement.
15. Enforcement. The
Executive agrees that in the event of any breach or threatened breach by the
Executive of any covenant contained in Section 9(a), 9(b), or 9(c) hereof, the
resulting injuries to the Employer would be difficult or impossible to estimate
accurately, even though irreparable injury or damages would certainly
result. Accordingly, an award of legal damages, if without other
relief, would be inadequate to protect the Employer. The Executive,
therefore, agrees that in the event of any such breach, the Employer shall be
entitled to obtain from a court of competent jurisdiction an injunction to
restrain the breach or anticipated breach of any such covenant, and to obtain
any other available legal, equitable, statutory, or contractual
relief. Should the Employer have cause to seek such relief, no bond
shall be required from the Employer, and the Executive shall pay all attorney's
fees and court costs which the Employer may incur to the extent the Employer
prevails in its enforcement action.
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16. Saving
Clause. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions
hereof. If any provision or clause of this Agreement, or portion
thereof, shall be held by any court or other tribunal of competent jurisdiction
to be illegal, void, or unenforceable in such jurisdiction, the remainder of
such provision shall not be thereby affected and shall be given full effect,
without regard to the invalid portion. It is the intention of the
parties that, if any court construes any provision or clause of this Agreement,
or any portion thereof, to be illegal, void, or unenforceable because of the
duration of such provision or the area or matter covered thereby, such court
shall reduce the duration, area, or matter of such provision, and, in its
reduced form, such provision shall then be enforceable and shall be enforced.
The Executive and the Employer hereby agree that they will negotiate in good
faith to amend this Agreement from time to time to modify the terms of Sections
9(a), 9(b), and 9(c), the definition of the term “Territory,” and the definition
of the term “Business,” to reflect changes in the Employer's business and
affairs so that the scope of the limitations placed on the Executive's
activities by Section 9 accomplishes the parties' intent in relation to the then
current facts and circumstances. Any such amendment shall be
effective only when completed in writing and signed by the Executive and the
Employer.
17. Certain
Definitions.
(a) “Affiliate” shall mean
any business entity controlled by, controlling or under common control with the
Employer.
(b) “Business” shall mean
the operation of a depository financial institution, including,
without limitation, the solicitation and acceptance of deposits of money and
commercial paper, the solicitation and funding of loans and the provision of
other banking services, and any other related business engaged in by the
Employer or any of its Affiliates as of the date of
termination.
(c) “Cause” shall consist
of any of (A) the commission by the Executive of a willful act (including,
without limitation, a dishonest or fraudulent act) or a grossly negligent act,
or the willful or grossly negligent omission to act by the Executive, which is
intended to cause, causes or is reasonably likely to cause material harm to the
Employer (including harm to its business reputation), (B) the indictment of the
Executive for the commission or perpetration by the Executive of any felony or
any crime involving dishonesty, moral turpitude or fraud, (C) the material
breach by the Executive of this Agreement that, if susceptible of cure, remains
uncured ten days following written notice to the Executive of such breach,
(D) the receipt of any form of notice, written or otherwise, that any
regulatory agency having jurisdiction over the Employer intends to institute any
form of formal or informal (e.g., a memorandum of
understanding which relates to the Executive's performance) regulatory action
against the Executive or the Employer or the Employer (provided that the
Board of Directors determines in good faith, with the Executive abstaining from
participating in the consideration of and vote on the matter, that the subject
matter of such action involves acts or omissions by or under the supervision of
the Executive or that termination of the Executive would materially advance the
Employer's compliance with the purpose of the action or would materially assist
the Employer in avoiding or reducing the restrictions or adverse effects to the
Employer related to the regulatory action, and provided further
that, if the matters relating to the Executive’s performance are susceptible of
cure, such matters remain uncured to the satisfaction of the regulatory agency
30 days following receipt of the notice from the regulatory agency); (E) the
exhibition by the Executive of a standard of behavior within the scope of his
employment that is materially disruptive to the orderly conduct of the
Employer's business operations (including, without limitation, substance abuse
or sexual misconduct) to a level which, in the Board of Directors good faith and
reasonable judgment, with the Executive abstaining from participating in the
consideration of and vote on the matter, is materially detrimental to the
Employer's best interest, that, if susceptible of cure remains uncured ten days
following written notice to the Executive of such specific inappropriate
behavior; or (F) the failure of the Executive to devote his full business time
and attention to his employment as provided under this Agreement that, if
susceptible of cure, remains uncured 30 days following written notice to the
Executive of such failure.
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(d) “Change in Control”
shall mean as defined by Treasury Regulation § 1.409A-3(i)(5).
(e) “Competing Business”
shall mean any business that, in whole or in part, is the same or substantially
the same as the Business.
(f) "Disability" or "Disabled" shall mean
as defined by Treasury Regulation § 1.409A-3(i)(4).
(g) “Good Reason” shall
mean as defined by Treasury Regulation § 1.409A-1(n)(2).
(h) “Territory” shall mean
a radius of 40 miles from (i) the main office of the Employer or (ii) any branch
or loan production office of the Employer.
(i) “Notice of
Termination” shall mean a written notice of termination from the Employer
or the Executive which specifies an effective date of termination, indicates the
specific termination provision in this Agreement relied upon, and sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision so
indicated.
(j) "Terminate," "terminated," "termination," or
"Termination” of
Employment" shall mean separation from service as defined by Regulation
1.409A-1(h).
18. Entire
Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof.
19. Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.
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20. Compliance with Internal
Revenue Code Section 409A. The Employer and the Executive
intend that their exercise of authority or discretion under this Agreement shall
comply with section 409A of the Internal Revenue Code of 1986. If any
provision of this Agreement does not satisfy the requirements of section 409A,
such provision shall nevertheless be applied in a manner consistent with those
requirements. If any provision of this Agreement would subject the Executive to
additional tax or interest under section 409A, the Employer shall reform the
provision. However, the Employer shall maintain to the maximum extent
practicable the original intent of the applicable provision without subjecting
the Executive to additional tax or interest, and the Employer shall not be
required to incur any additional compensation expense as a result of the
reformed provision. Notwithstanding any other provision in this
Agreement, if the Executive is determined by the Board, as of the date of
termination of employment with the Bank, to be a "specified employee," as such
term is defined in Treasury Regulation §1.409A-1(i), and if any benefits paid to
the Executive hereunder would be considered deferred compensation under Section
409A, and finally if an exemption from the six month delay requirement of
Section 409A(a)(2)(B)(i) is not available, then all severance payments and other
payment, except for other payments of base salary at the normal payroll
schedule, reimbursement of expenses, and other than as a result of death, that
would normally be paid within six months and one day from the date of
termination of employment shall be paid on the first day of the seventh month
following termination of employment.
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IN
WITNESS WHEREOF, the Employer has caused this Agreement to be executed and its
seal to be affixed hereunto by its officers thereunto duly authorized, and the
Executive has signed and sealed this Agreement, effective as of the date first
above written.
|
FIRST
NATIONAL BANCSHARES, INC.
|
||||
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ATTEST:
|
||||
|
|
By:
/s/
C. Xxx Xxxxx
|
|||
|
Witness
|
Title:
Chairman
|
|||
|
FIRST
NATIONAL BANK OF THE SOUTH
|
||||
|
ATTEST:
|
||||
|
|
By:
/s/
C. Xxx Xxxxx
|
|||
|
Witness
|
Title:
Chairman
|
|||
|
EXECUTIVE
|
||||
|
|
/s/ Xxxxx X. Xxxxxxx | |||
|
Witness
|
Xxxxx
X. Xxxxxxx
|
|||
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