Exhibit 99-1
THIS AGREEMENT IS SUBJECT TO ARBITRATION PURSUANT TO THE SOUTH
CAROLINA UNIFORM ARBITRATION ACT
STATE OF SOUTH CAROLINA )
) AMENDED AND RESTATED
COUNTY OF CHARLESTON ) EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (as amended and
restated, hereinafter referred to as the "Agreement") made and entered into as
of this 14th day of August, 2008, by and among Southcoast Community Bank,
(hereinafter the "Bank"), Southcoast Financial Corporation (the "Company") and
L. Xxxxx Xxxxxxx (hereinafter referred to as the "Employee").
WHEREAS, the Bank, the Company and the Employee entered into an
Employment Agreement dated as of August 12, 2003 (the "Original Agreement"); and
WHEREAS, the Bank, the Company and the Employee desire to amend the
Original Agreement in compliance with the recently enacted Internal Revenue Code
Section 409A and associated federal regulations; and
WHEREAS, the Original Agreement contained the following Recitals, which
the parties hereby reaffirm:
RECITALS:
A. The Employee is presently employed as the President and Chief
Executive Officer of the Bank and serves as Chairman and Chief Executive Officer
of the Company.
B. The Employee has obtained substantial senior financial management
experience throughout his career, and can be expected to make substantial
contributions to the financial success of the Bank and the Company and to
contribute to the growth and development of the Bank and the Company through his
extensive knowledge and experience in the business, affairs, and management of
financial organizations such as the Bank and the Company.
C. The Bank and the Company consider the retention of the Employee in
their service to be in their best interests in order to insure and contribute to
the continuity of management of the Bank and the Company and to insure and
contribute to the future progress and financial success of the Bank and the
Company.
D. The Bank and the Company recognize that in order to retain the
Employee's services, they must offer him compensation, benefits and termination
rights which executives of comparable background, experience, ability and
expertise receive for such an executive position with a business organization of
similar size and complexity.
E. None of the conditions or events included in the definition of the
term "golden parachute payment" that is set forth in section 18(k)(4)(A)(ii) of
the Federal Deposit Insurance Act (12 U.S.C. 1828(k)(4)(A)(ii)) and in Federal
Deposit Insurance Corporation Rule 359.1 (f)(1)(ii) (12 CFR 359.1(f)(1)(ii))
exists or, to the best knowledge of the Company and the Bank, is contemplated;
and
WHEREAS, the parties desire to amend and restate this Agreement setting
forth the terms and conditionsof the employment relationship among the Bank, the
Company and the Employee.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein set forth, the parties hereto amend and restate the Original
Agreement, as follows:
1. Employment. The Bank and the Company each hereby employ the Employee
in a principal executive and managerial capacity as an officer having the titles
of President of the Bank and Chairman of the Company and Chief Executive Officer
of each, and the Employee hereby accepts such employment upon the terms and
conditions hereinafter set forth.
2. Term. The initial term of this Agreement shall be for three (3)
years beginning on the date of execution hereof. At the end of each day, the
term of this Agreement shall be automatically extended for one additional day,
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unless the Employee is terminated or unless any party gives written notice to
the other that the term of this Agreement will not be so extended. References in
this Agreement to the term of this Agreement refer to the initial term and any
extended term.
3. Compensation. The basic annual salary which the Bank shall pay to
the Employee for his services shall be not less than $333,505, payable in equal
installments not less than monthly during the term of this Agreement. The Board
of Directors of the Bank shall review the basic annual salary at least annually
and may provide for increases in its sole discretion. The Employee shall also be
eligible for additional performance based compensation as determined by the
Bank. To the extent not paid by the Bank, the compensation provided for in this
Agreement shall be paid by the Company.
4. Benefits. In addition to the basic compensation hereinabove set
forth, the Bank agrees to pay or supply the following benefits:
(a) Life Insurance. The Bank shall provide Employee with the life
insurance benefits provided on Schedule A hereto.
(b) Health Insurance. The Bank shall provide the Employee with such
health and dental insurance benefits as may hereafter be made available to other
executive officers of the Bank.
(c) Disability. The Bank shall provide the Employee with disability
insurance in an amount equal at all times to not less than one-half of his
annual base salary.
(e) Retirement and Employee Benefit Plans. The Employee shall be
entitled to participate in any plan adopted by the Bank or the Company relating
to stock options, stock appreciation rights, stock purchases, pension, thrift,
profit sharing, bonus, performance award and incentive compensation, group life
insurance, medical insurance, education and other retirement or employee
benefits that the Bank or the Company may have already established, or may
hereafter adopt, for the benefit of the executive employees of the Employee's
class or all employees of the Bank or the Company, including executive employees
of the Employee's class.
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(f) Disability/Salary Continuation. The Bank shall continue to pay the
Employee his full salary then in effect and continue all benefits then in effect
for a period of one year after the Date of Termination (as hereafter defined) in
the event of the Employee's Disability. "Disability" shall mean, that because of
a medically determinable physical or mental impairment that can be expected to
result in death or that can be expected to last for a continuous period of at
least 12 months, (x) the Employee is unable to engage in any substantial gainful
activity, or (y) the Employee is receiving income replacement benefits for a
period of at least three months under an accident and health plan of the Bank.
Determination of disability may be made either by the Social Security
Administration or by the provider of an accident or health plan covering
employees of the Bank, provided that the definition of disability applied under
such plan complies with the requirements of subsections 4(f)(i) or (ii) above.
Upon request of the Company or the Bank, the Executive must submit proof to the
Company or the Bank of the Social Security Administration's or provider's
determination. For purposes of this Agreement, "accident and health plan" shall
be interpreted as such phrase is used in Treas. Reg. ss. 1.409A-3(i)(4).
(g) Other Benefits. The Bank shall provide the Employee all other
remunerations and fringe benefits as are available to executive officers of the
Bank, and any other benefits commensurate with the responsibility of and
functions performed by the Employee under this Agreement.
(h) Payment of Shortfall by Company. To the extent not provided by the
Bank, the compensation and benefits set forth in this Section 4 will be provided
by the Company.
5. Duties. The Bank and the Company recognize the managerial and
executive ability of the Employee, and in recognition of those abilities, the
Bank has designated the Employee as its President and Chief Executive Officer
and the Company has designated the Employee as its Chairman and Chief Executive
Officer, which titles carry with them the duties as specified in the bylaws of
the Bank and the Company. In this capacity, the Employee is granted such
authority and is responsible for such executive duties as are commensurate with
the authority being exercised and duties being performed by the Employee
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immediately prior to the date of the execution hereof and as may hereafter be
designated by the Boards of Directors of the Bank or the Company. The Employee
shall perform his duties in accordance with such reasonable standards
established from time to time by the Boards of Directors of the Bank and the
Company. In the performance of his duties, the Bank and/or the Company will
continue to make available to the Employee offices, secretarial and other
assistance, facilities and amenities commensurate with his position and duties,
but in no event less than those furnished at the time this Agreement is
executed.
6. Termination of Employment.
(a) Termination by the Company and the Bank.
(i) Termination for Cause. The Employee shall be subject to
Termination for Cause. As used in this Agreement, "Termination
for Cause" shall mean termination on account of the following
acts:
(A) the breach by Employee of any material provision of
this Agreement, provided that the Bank or the Company gives
the Employee written notice of such breach and such breach
is not cured within thirty (30) days thereafter;
(B) the willful and continued failure by the Employee
to substantially perform his duties under this Agreement
(other than the Employee's inability to perform, with or
without reasonable accommodation, resulting from his
incapacity due to physical or mental illness or impairment),
after a demand for substantial performance is delivered to
him by the Bank or the Company, which demand specifically
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identifies the manner in which the Employee is alleged to
have not substantially performed his duties;
(C) the willful engaging by the Employee in misconduct
(criminal, immoral or otherwise) which is materially
injurious to the Bank or the Company;
(D) the Employee's conviction of a felony;
(E) the commission by the Employee in the course of his
employment of an act of fraud, embezzlement, theft or proven
dishonesty, or any other illegal act or practice, which
would constitute a felony, (whether or not resulting in
criminal prosecution or conviction), or any act or practice
which has resulted in the Employee's becoming unbondable
under the Bank's "banker's blanket bond;"
(F) failure by the Employee to comply with clear
provisions of law and regulations applicable to the Bank or
the Company which is materially injurious to the Bank or the
Company; or
(G) removal or permanent prohibition from participating
in the affairs of the Bank by an order or consent issued
under Section 8(e)(4) or (g)(1) of the Federal Deposit
Insurance Act.
Required Procedures for Termination for Cause. The decision of the Bank
or the Company to terminate the Employee's employment for Cause shall be made in
the following manner. The Board of Directors of the terminating entity,
excluding the Employee, or a committee thereof, shall review the acts
constituting Cause. The Employee shall be given notice of the acts constituting
Cause. The full Board of Directors of the terminating entity, excluding the
Employee, shall review completely the evidence and justification for such
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termination. The Employee shall be given an opportunity to be heard in order to
rebut the existence of such acts. Thereafter, termination shall be voted upon by
the full Board of Directors of the terminating entity, excluding the Employee,
by roll call vote. The Employee shall be so terminated upon a vote of not less
than two-thirds (2/3) of all members of the Board of Directors of the
terminating entity, excluding the Employee. The Board of Directors of the
terminating entity shall give the Employee written Notice of Termination and
specify an effective date of termination in such Notice of Termination. The
Employee may be suspended, with pay, by the Board of Directors of the
terminating entity prior to or subsequent to the notice to the Employee. Any
termination not meeting these requirements shall not be a Termination for Cause
under this Section 6(a)(i).
Effect of Termination for Cause. The Employee shall have no right to
receive from the Bank or the Company, and shall not receive from the Bank or the
Company, any compensation or other benefits provided for herein or otherwise
provided by the Bank or the Company for any period after the Date of Termination
for Cause. Notwithstanding the foregoing provisions of this paragraph, no
Termination for Cause shall affect vested rights of the parties hereto.
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(ii) Termination Other Than For Cause.
(A) The Employee's employment may be terminated at any
time for any reason or for no reason in the sole discretion
of the Company or the Bank.
Compensation and Benefits to be provided. Except as
otherwise limited herein or as otherwise limited by the
regulations of the Federal Deposit Insurance Corporation,
the Bank or the Company agrees that, in the event of its
termination of the Employee's employment other than for
Cause prior to the expiration of the term of this Agreement,
pursuant to this Subsection 6(a)(ii)(A), the Employee shall
be entitled to (1) Employee's Full Annual Compensation (as
hereinafter defined), and (2) the Benefits provided for in
Subsection 6(a)(ii)(D) of this Agreement, as such Full
Annual Compensation and Benefits are in effect immediately
prior to termination, for the remaining term of this
Agreement, unless the Employee shall become disabled as
described in Subsection 4(f) hereof, in which case the
provisions of Subsection 4(f) shall apply. Compensation to
be paid pursuant to this Subsection 6(a)(ii)(A) and Benefits
required to be paid in cash pursuant to Subsection
6(a)(ii)(D) shall be paid in equal monthly installments over
the remaining term of this Agreement.
(B) Any resignation by the Employee with a Date of
Termination (as defined in Subsection 6(d)) at any time
within 24 months following a Change in Control of the Bank
or the Company (as hereinafter defined) shall constitute an
involuntary termination of employment by the Bank and the
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Company other than Termination for Cause and shall entitle
Employee to the compensation and benefits provided for in
this Subsection 6(a)(ii)(B), but only if such resignation is
preceded by one or more of the following events that occurs
after the Change in Control: (1) a material decrease in
Employee's base compensation provided for under this
Agreement; (2) any material decrease, or series of decreases
which taken as a whole are material, in the nature or scope
of the Employee's duties, responsibilities and authorities,
without the written consent of the Employee as to each and
every such decrease, from the greater of those duties,
responsibilities or authorities being exercised and
performed by the Employee immediately prior to the date of
the Change in Control; (3) any attempt by the Bank or the
Company to relocate the Employee to a location outside of
Mount Pleasant, South Carolina without his written consent
thereto given not more than one (1) year prior thereto; or
(4) any other action or inaction that constitutes a material
breach of this Agreement by the Company or the Bank.
Employee's termination of his employment for any of the
foregoing reasons shall constitute termination of employment
for "Good Reason."
Notice and Cure period. In order for the Employee's
resignation for Good Reason to constitute an involuntary
termination of employment by the Bank or the Company, the
Employee must give a Notice of Termination to the Company or
the Bank setting forth the existence of one or more of the
conditions described above in this Subsection 6(a)(ii)(B)
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within 90 days after the initial existence of the condition,
and the Company and the Bank shall have 30 days thereafter
to remedy the condition.
Compensation and Benefits to be provided. The
compensation and benefits which shall be paid and provided,
respectively, to the Employee pursuant to this Subsection
6(a)(ii)(B) shall be (1) three (3) times the Employee's Full
Annual Compensation, plus (2) the Benefits provided for in
Subsection 6(a)(ii)(D) of this Agreement for a period of
three (3) years after the Date of Termination. Compensation
and benefits required to be paid or furnished pursuant to
this Subsection 6(a)(ii)(B) shall be reduced by compensation
paid and benefits furnished to the Employee between the
effective date of the Change in Control and the Date of
Termination. Compensation to be paid pursuant to this
Subsection 6(a)(ii)(B) shall be paid in a lump sum within
five (5) business days after the Date of Termination and
shall not be reduced to account for the time value of money
or discounted to present value. Benefits to be paid or
provided pursuant to this Subsection 6(a)(ii)(B) shall be
paid or provided as set forth in Subsection 6(a)(ii)(D).
The payments to be made and the benefits to
be provided pursuant to this Subsection 6(a)(ii)(B)
shall be made and provided notwithstanding any other
employment obtained by Employee.
(C) "Full Annual Compensation" as used in
this Subsection 6(a)(ii) shall mean (1) Employee's
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basic annual salary on the Date of Termination or, if
greater and following a Change in Control, Employee's
basic annual salary immediately prior to the Change
in Control, plus (2) the average of any bonuses and
other non-equity compensation paid for the three
calendar years immediately preceding the Date of
Termination.
(D) In every case where the Employee is
entitled to receive benefits in accordance with this
Subsection 6(a)(ii), "Benefits" shall mean and be
limited to life insurance, health and dental
insurance, and disability insurance as in effect
immediately preceding the Date of Termination or, if
greater, immediately preceding the effective date of
a Change in Control, and shall also mean the pre-tax
cash value of all retirement plan contributions made
by the Company or the Bank for the benefit of the
Employee for the calendar year immediately preceding
the Date of Termination. Such Benefits may, at the
option of the Bank, the Company or any successor
thereto, be provided by (1) a continuation of the
Benefits without diminution, (2) substitution of
other policies, plans, goods or services affording
substantially identical coverage or value, or (3)
cash payment in the amount it would cost to provide
the policies, plans, goods or services affording
substantially identical coverage or value to the
Employee.
(E) "Change in Control" of the Bank or the
Company means: (x) a "change in ownership:" a change
in ownership of the Company or the Bank occurs on the
date any one person or group acquires ownership of
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the Company's or the Bank's stock constituting more
than 50% of the total fair market value or total
voting power of the Company's or the Bank's stock;
(y) a "change in effective control:" a change in
effective control occurs on the date either (1) any
one person, or more than one person acting as a
group, acquires within a 12-month period ownership of
the Company's or the Bank's stock possessing more
than 50% of the total voting power of the Company's
or the Bank's stock, or (2) a majority of the
Company's board of directors is replaced during any
12 month period by directors whose appointment or
election is not endorsed in advance by a majority of
the Company's board of directors; or (z) a "change in
ownership of a substantial portion of assets:" a
change in ownership of a substantial portion of the
Company's or the Bank's assets occurs if in a
12-month period any one person or more than one
person acting as a group acquires from the Company or
the Bank assets having a total gross fair market
value equal to or exceeding 50% of the total gross
fair market value of all of the Company's or the
Bank's assets immediately before the acquisition or
acquisitions. For this purpose, "gross fair market
value" means the value of the Company's or the Bank's
respective assets, or the value of the assets being
disposed of, determined without regard to any
liabilities associated with the assets.
(b) Termination by Employee. The Employee's employment may be terminated by
Employee at any time by Employee's giving written Notice of Termination to the
Bank and the Company not less than ninety (90) days prior to the Date of
Termination. In the event of such termination by the Employee, other than under
circumstances constituting Good Reason under Subsection 6(a)(ii)(B), the Bank
and the Company shall be obligated only to continue to compensate and provide
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the benefits hereunder to Employee up to the Date of Termination. This provision
shall not be interpreted as in any manner whatsoever limiting the vested rights
of the Employee under any other agreement between the Employee and the Bank or
the Company, including, without limitation, any retirement, deferred
compensation, or fringe benefit agreement, whether or not such agreements are in
existence at the time of the execution hereof.
(c) Required Suspension and Termination Provisions. Notwithstanding any
other provision of this Agreement, the following provisions are included in this
Agreement concerning its suspension and termination.
(i) If the Employee is suspended or temporarily prohibited from
participating in the Bank's affairs by a notice served under 12 U. S. C.
Section 1818(e)(3) or (g)(1), the Bank's obligations under this Agreement
shall be suspended as of the date of service unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the Bank or the
Company may in its discretion (i) pay the Employee all or part of the
compensation withheld while the obligations under this Agreement were
suspended and (ii) reinstate (in whole or in part) any of such obligations
which were suspended.
(ii) If Employee is removed and/or permanently prohibited from
participating in the affairs of the Bank by an order issued under 12 U.S.C.
ss. 1818(e)(4) or (g)(1), all obligations of the Bank and the Company under
this Agreement shall terminate as of the effective date of the order.
(iii) If the Bank is in default (as defined in 12 U. S. C. Section
1813(x)(1)), all obligations of the Bank and the Company under this
Agreement shall terminate as of the date of default.
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(iv) Any payments made to the Employee pursuant to this Agreement, or
otherwise, are subject to and conditioned upon their compliance with 12
U.S.C. Section 1828(k) or any successor provision thereof and any
regulations promulgated thereunder.
Notwithstanding the provisions of this Subsection 6(c), no suspension
or termination pursuant to this Subsection 6(c) shall affect vested rights of
the parties hereto.
(d) Date of Termination. "Date of Termination" shall mean:
(i) if the Employee's employment is terminated by reason of his
death, his date of death;
(ii) if the Employee's employment is terminated for Disability,
thirty (30) days after Notice of Termination is given (provided that
the Employee shall not have returned to the performance of his duties
as provided under Section 4(f) hereof);
(iii) if the Employee's employment is terminated for Cause, the
date specified in the Notice of Termination;
(iv) if the Employee's employment is terminated for Good Reason
pursuant to Subsection 6(a)(ii)(B), the 31st day following the date of
Employee's notice to the Bank of the existence of a condition
constituting a reason for termination under that subsection, if the
Bank shall have failed to remedy the condition by the end of the 30th
day following the date of Employee's notice; or
(v) if the Employee's employment is terminated by action of
either party for any other reason, the date specified in the Notice of
Termination; provided, however, that if within thirty (30) days after
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any such Notice of Termination is given under this Subsection 6(d)(v),
the party receiving such Notice of Termination notifies the other
party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally
resolved, either by mutual written agreement of the parties, or by a
final judgment, order or decree of an arbitrator, a panel of
arbitrators or a court of competent jurisdiction (the time for appeal
therefrom having expired and no appeal having been perfected).
(e) Notice of Termination. "Notice of Termination" shall mean a
written notice which shall include the specific termination provision
under this Agreement relied upon, and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termination of the Employee's employment. Any purported termination of
the Employee's employment hereunder by action of either party shall be
communicated by delivery of a Notice of Termination to the other
party, except in the event of Employee's death.
7. Relocation. The Bank and the Company hereby agree that the Employee
shall not be required to relocate his residence at any time during the term of
this Agreement without the Employee's written consent thereto given not less
than one (1) year prior thereto. Furthermore, Employee shall continue to make
his primary business headquarters in Mount Pleasant, South Carolina.
8. Confidentiality.
(a) The Employee recognizes that his activities on behalf of the
Bank and the Company require considerable responsibility and trust. Relying on
the ethical responsibilities and undivided loyalty of the Employee, the Bank,
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the Company and their subsidiaries have and will entrust the Employee with
highly sensitive confidential, restricted and proprietary information involving
Confidential Information (as defined below).
(b) For the purposes of this Agreement, "Confidential Information"
means any data or information, that is material to the Bank, the Company or the
subsidiaries of the Bank or the Company, and not generally known by the public.
To the extent consistent with the foregoing definition, Confidential Information
includes (without limitation): (i) the profit and performance reports, pricing
policies, training manuals, marketing and pricing procedures, financing methods
of the Bank, the Company or the subsidiaries of the Bank or the Company, and all
other business records of the Bank, the Company or the subsidiaries of the Bank
or the Company; (ii) the identities of the customers of the Bank, the Company or
the subsidiaries of the Bank or the Company, their specific demands, and their
current and anticipated requirements for the products and services of the Bank,
the Company or the subsidiaries of the Bank or the Company; (iii) the business
plans and internal financial statements and projections of the Bank, the Company
or the subsidiaries of the Bank or the Company; and (iv) the specifics of any
specialized products or services the Bank, the Company or the subsidiaries of
the Bank or the Company may offer or provide to its customers.
(c) The Employee recognizes the proprietary and sensitive nature of the
Bank's, the Company's and their subsidiaries' Confidential Information. The
Employee agrees to abide by all of the Bank's, the Company's and their
subsidiaries' rules and procedures designed to protect their Confidential
Information and to preserve and maintain all such information in strict
confidence during the Employee's employment by the Bank or the Company and as
long thereafter as the Confidential Information remains, in the sole opinion of
the Bank, the Company and their subsidiaries, proprietary and confidential to
the Bank, the Company and their subsidiaries. The Employee agrees not to use,
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disclose or in any other way use or disseminate any Confidential Information to
any person not properly authorized by the Bank, the Company or their
subsidiaries.
9. Return of Materials. Upon the request of the Bank or the Company,
and in any event, upon the termination of the Employee's employment, the
Employee must return to the Bank, the Company and their subsidiaries and leave
at the disposal of the Bank, the Company and their subsidiaries, all memoranda,
notes, records, and other documents or electronic files pertaining to the
business of the Bank, the Company and their subsidiaries, or the Employee's
specific duties for such entities (including all copies of such materials). The
Employee must also return to the Bank, the Company and their subsidiaries, and
leave at the disposal of the Bank, the Company and their subsidiaries, all
materials involving any Confidential Information of the respective entities.
10. Implementation. The covenants contained herein shall be construed
as covenants independent of one another, and as obligations distinct from any
other contract between the Employee and the Company or the Bank. Any claim the
Employee may have against the Company or the Bank shall not constitute a defense
to enforcement by the Company or the Bank of this Agreement. The covenants made
by the Employee herein shall survive termination of the Employee's employment,
regardless of who causes the termination and under what circumstances.
11. Restrictive Covenants. In consideration of the Bank's and the
Company's employment of the Employee and the compensation and benefits provided
hereby, which compensation and benefits the Employee acknowledges are greater
than those to which he was entitled prior to the effective date of this
Agreement, the Employee agrees that in addition to any other limitation: (i) for
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a period of twelve (12) months after the termination of his employment by the
Employee, other than for Good Reason pursuant to Subsection 6(a)(ii)(B), or (ii)
during the continuation of compensation payments pursuant to Subsection
6(a)(ii)(A) above, whichever is later, he will not, within a twenty-five (25)
mile radius of any operating office of the Company, the Bank or any of their
subsidiaries, manage, operate or be employed by, participate in, or be connected
in any manner with the management, operation, or control of any banking business
whether or not carried on by a bank. The Employee further agrees, that for a
period of twelve (12) months after the termination of his employment hereunder
by the Employee, other than for Good Reason pursuant to Subsection 6(a)(ii)(B),
or the completion of compensation payments pursuant to Subsection 6(a)(ii)(A)
above, whichever is later, he will not solicit the business or patronage,
directly or indirectly, from any customers of the Bank or its subsidiaries (or
any other office of the Company or of a subsidiary of the Company if Employee
shall have been employed and located at such office), and the Employee will not
seek to or assist others to persuade any employee of the Bank, the Company or
any of their subsidiaries engaged in similar work or related to the Bank's, the
Company's or any of their subsidiaries' work to discontinue employment with the
Bank, the Company or any of their subsidiaries or seek employment or engage in
any business of the Bank, the Company or any of their subsidiaries. Furthermore,
the Employee will not communicate to any person, firm or corporation any
information related to customer lists, prices, secrets or other Confidential
Information which he might from time to time acquire with respect to the
business of the Bank, the Company, or their subsidiaries, or any of their
affiliates. The Employee agrees to disclose the contents of this Agreement to
any subsequent employer for a period of twelve (12) months following termination
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of his employment hereunder, the termination of this Agreement or completion of
compensation payments pursuant to Subsection 6(a)(ii)(A) above, whichever is
later.
12. Non-Disparagement. Neither the Employee nor the Company or the Bank
will disparage, portray in a negative light, or make any statement which would
be harmful to, or lead to unfavorable publicity for, any of the Employee, the
Company or the Bank, or any of its or their current or former directors,
officers or employees, including without limitation, in any and all interviews,
oral statements, written materials, electronically displayed materials and
materials or information displayed on internet- or intranet-related sites;
provided however, that this paragraph will not apply to the extent the Employee
or any agent of the Company or the Bank is making truthful statements when
required by law or by order of a court or other legal body having jurisdiction
or when responding to any inquiry from any governmental or regulatory agency or
from any person to whom the Employee has given the Company or the Bank as a
reference.
13. Remedies for Breach of Employment Contract. Irreparable harm shall
be presumed if the Employee breaches any covenant of this Agreement. The
faithful observance of all covenants in this Agreement is an essential condition
to the Employee's employment, and the Bank, the Company and their subsidiaries
are depending upon absolute compliance. Damages would probably be very difficult
to ascertain if the Employee breached any covenant in this Agreement. This
Agreement is intended to protect the proprietary rights of the Bank, the Company
and their subsidiaries in many important ways. In light of these facts, the
Employee agrees that any court of competent jurisdiction should immediately
enjoin any breach of this Agreement, upon the request of the Bank, the Company,
or any of their subsidiaries, and the Employee specifically releases the Bank,
the Company, and their subsidiaries, from the requirement to post any bond in
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connection with a temporary or interlocutory injunctive relief, to the extent
permitted by law.
14. Assignment. This Agreement shall be construed as an agreement for
personal services and shall not be subject to assignment by any party without
the written consent of all parties.
15. Stock Options and Rights. In the event of any termination of
employment pursuant to Subsection 6(a)(ii), outstanding stock options and stock
appreciation rights, and any and all rights under performance stock award plans,
restricted stock plans and any other stock option, or incentive stock plans
shall become immediately and fully exercisable for a period of sixty (60) days
following the last payment required by this Agreement to be made by the Bank or
the Company to Employee; provided, however, that no such option or right shall
be exercisable after the termination date of such option or right. The
provisions of this Section shall be in addition to the Employee's rights granted
in connection with such stock options or other rights, and such rights and
options shall continue to be exercisable pursuant to their terms and their
governing plans.
16. Governing Law. The law of South Carolina shall govern this
Agreement, subject only to any conflicting federal statutes and regulations, as
they exist or may be adopted or promulgated from time to time, affecting
financial institutions whose accounts are insured by the Federal Deposit
Insurance Corporation and their operations; in the event of such conflict, the
appropriate federal statutes and regulations shall govern this Agreement.
17. Arbitration. Unless otherwise provided by the regulations of the
Federal Deposit Insurance Corporation or otherwise provided in this Agreement,
any dispute or controversy, arising under or in connection with this Agreement
shall be settled exclusively by arbitration in Mount Pleasant, South Carolina,
by three arbitrators pursuant to the Federal Arbitration Act or the South
20
Carolina Uniform Arbitration Act, as applicable, in accordance with the rules of
the American Arbitration Association then in effect. Judgment may be entered on
the arbitrators' award in any court having jurisdiction. Notwithstanding the
foregoing, the Employee, the Bank, the Company or any of the Company's or the
Bank's subsidiaries shall be entitled to seek injunctive relief in any court of
competent jurisdiction without initiating an arbitration proceeding. In
particular, Employee shall be entitled to seek specific performance of any right
to be paid until the Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement. Any civil action
seeking injunctive relief, challenging an arbitration proceeding or award or
otherwise related to this Agreement will be instituted and maintained in the
federal or state courts for Charleston County, South Carolina, and the parties
hereby consent to the personal jurisdiction of such courts. Each party to any
such arbitration or judicial proceeding shall bear its own attorneys' fees,
provided, however, that the Bank or the Company shall bear all costs and
expenses of the American Arbitration Association and the arbitrators in
connection with any arbitration proceeding pursuant to this Section.
18. Binding Effect. This Agreement and the rights, powers and duties
set forth herein shall bind and inure to the benefit of the successors and
assigns of the parties hereto.
19. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the specific matters addressed
herein, and supercedes all prior inconsistent agreements, written or oral, with
respect to such specific matters.
20. Waiver. The failure of either party to insist in any one or more
instances upon performance of any terms or conditions of this Agreement shall
not be construed a waiver of future performance of any such term, covenant or
condition, but the obligations of either party with respect thereto shall
continue in full force and effect.
21. Severability. All agreements, provisions and covenants contained
herein are severable, and in the event that any one or more of them shall be
held to be invalid, illegal or unenforceable in any respect by any court of
competent jurisdiction, the validity, legality and enforceability of the
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remaining provisions contained herein shall not in any way be affected thereby
and this Agreement shall be interpreted as if such invalid, illegal or
unenforceable agreements, provisions or covenants were not contained herein.
22. Indemnification. The Bank and the Company shall indemnify the
Employee to the extent of the indemnification provided for in any agreement,
bylaw or articles of incorporation provision of the Bank or the Company, or any
provision of law, rule or regulation, any of which may be applicable to the
Employee or generally applicable to other executive officers of the Employee's
class or any lesser class.
23. Payment Obligation. The Bank and the Company recognize that the
provisions of this Agreement, including the termination provisions, protecting
the Employee's rights to compensation and benefits in the event of a termination
hereof, other than Termination for Cause, leave of absence or Disability, are an
essential element of the basis of the bargain with the Employee. Accordingly,
all amounts payable by the Bank or the Company hereunder shall be paid without
notice or demand. The Employee shall not be obligated to seek other employment
in mitigation of the amounts payable or arrangements made under any provision of
this Agreement; provided, however, that, except in the case of termination for
Good Reason covered by Subsection 6(a)(ii)(B), the obtaining of any such other
employment shall reduce the Bank's and the Company's obligations to make the
payments and provide at its expense the benefits required to be paid and
provided under this Agreement by an amount equal to the payments or benefits
received from such other employment.
24. Internal Revenue Code Section 409A. Notwithstanding any other
provision of this Agreement, if when the Employee's employment terminates, the
Employee is a "specified employee," as defined in section 409A of the IRC, and
if any payments or benefits under this Agreement will result in additional tax
or interest to the Employee because of section 409A, then despite any provision
of this Agreement to the contrary the Employee shall not be entitled to the
payments or benefits until the earliest of (x) the date that is at least six
months after termination of the Employee's employment for reasons other than the
Employee's death, (y) the date of the Employee's death, or (z) any earlier date
that does not result in additional tax or interest to the Employee under section
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409A. As promptly as possible after the end of the period during which payments
or benefits are delayed under this provision, the entire amount of the delayed
payments shall be paid to the Employee in a single lump sum. References in this
Agreement to section 409A of the Internal Revenue Code of 1986 include rules,
regulations, and guidance of general application issued by the Department of the
Treasury under IRC section 409A.
25. Notices. Any notices to be given hereunder by either party to the
other may be effected either by personal delivery in writing or by mail,
registered or certified postage prepaid, with return receipt requested. Mailed
notices shall be addressed to the parties at the addresses appearing herein, but
each party may change its address by written notice in accordance with this
Section. Notices delivered personally shall be deemed communicated as of actual
receipt; mailed notices shall be deemed communicated as of five (5) days after
mailing.
TO THE BANK: Vice Chairman of the Board of Directors
Southcoast Community Bank
000 Xxxxxxx Xxxxx Xxxxxxxxx
Xx. Xxxxxxxx, X.X. 00000
TO THE COMPANY: Vice Chairman of the Board of Directors
Southcoast Financial Corporation
000 Xxxxxxx Xxxxx Xxxxxxxxx
Xx. Xxxxxxxx, X.X. 00000
TO THE EMPLOYEE: L. Xxxxx Xxxxxxx
Southcoast Community Bank
000 Xxxxxxx Xxxxx Xxxxxxxxx
Xx. Xxxxxxxx, X.X. 00000
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the Bank and the Company have duly executed this
Agreement by their duly authorized corporate officers set forth below and the
Employee has duly signed and sealed this Agreement as of the day and year first
above written.
WITNESSES: SOUTHCOAST COMMUNITY BANK
------------------------------ By:------------------------------------------
Its: Vice Chairman of the Board of Directors
------------------------------
As to the Bank
SOUTHCOAST FINANCIAL CORPORATION
------------------------------ By:------------------------------------------
Its: Vice Chairman of the Board of Directors
------------------------------
As to the Company
(SEAL)
------------------------------ ---------------------------------------------
L. Xxxxx Xxxxxxx
------------------------------
As to the Employee
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SCHEDULE A
(1) Life Insurance Benefits: The benefits provided by the Endorsement Split
Dollar Agreement by and between Southcoast Financial Corporation and L.
Xxxxx Xxxxxxx dated as of August 14, 2008.
