EMPLOYMENT AGREEMENT
THIS
AGREEMENT (“Agreement”) is made on, and as of, the _1st _ day of May , 2008
(“Effective Date”), by and between PAB Bankshares, Inc.
(“Bankshares”) and The Park Avenue Bank (the
“Bank”) (the “Bank” and “Bankshares” are referred to in this Agreement,
collectively and/or separately, as the context shall require, as the “Company”)
and X. Xxxxx Xxxxx, Jr.
(the “Employee”).
INTRODUCTION
The Board
of Directors of each of Bankshares and the Bank (collectively and/or separately,
as the context shall require, the “Board”) has determined that it is in the best
interests of the Company to retain the Employee’s services and to reinforce and
encourage the continued attention and dedication of the Employee to his assigned
duties, without distraction in potentially disturbing circumstances arising from
the possibility of a change in control of the Company or the assertion of claims
and actions against employees.
AGREEMENT
NOW,
THEREFORE, in consideration of the premises and the mutual covenants herein
contained, the Company and the Employee hereby agree as follows:
1. Employment. Upon
the terms and subject to the conditions contained in this Agreement, the
Employee agrees to provide full-time services for the Company during the term of
this Agreement. The Employee agrees to devote his best efforts to the
business of the Company, and shall perform his duties in a diligent,
trustworthy, and business-like manner, all for the purpose of advancing the
business of the Company.
2. Duties. The
Employee shall hold the title of President and Chief Executive Officer, of each
of Bankshares and the Bank, and shall report directly to the
Board. The Employee shall render such administrative and management
services for the Company as are contemplated by the by-laws of the Company,
including those services currently rendered by him in such executive
capacity. The Employee shall also promote, by entertainment or
otherwise, as and to the extent permitted by law, the business of the
Company.
3. Employment
Term. Subject to the terms and conditions hereof, the Company
agrees to employ, and the Employee hereby accepts employment under this
Agreement, for three (3) years, commencing on the Effective Date, subject to the
terms of this Agreement. Additionally, subject to the terms of this
Agreement, and in the sole discretion of the Board, this Agreement may be
renewed annually, on or before the anniversary of the Effective Date, for
another one (1) year period, with Board approval. In the absence of a
renewal, this Agreement will expire at the end of any current three (3) year
term.
4. Compensation and
Benefits.
(a) Base
Salary. As of the Effective Date of this Agreement, the
Company agrees to pay the Employee, during the term of this Agreement, an annual
salary (“Base Salary”), initially at the rate of $309,800 per annum, payable in
accordance with Company’s normal payroll practices, with such payroll deductions
and withholdings as are required by law. The Employee’s Base
Salary shall be reviewed no less frequently than annually and may be increased
(but not reduced) at the discretion of the Board (or a committee thereof) and,
as so increased, shall, then, constitute the Employee’s Base Salary
hereunder.
(b) Annual Incentive
Payment. In addition to other compensation to be paid under this Section
4, each year, during the term of this Agreement, the Employee shall be eligible
to receive an annual incentive payment (the “Annual Incentive Payment”), which
shall be a percent of Base Salary. The amount actually awarded and
paid to the Employee each year will be determined by the Board and will be based
on specific performance criteria to be identified under a separate
communication. Any payments made under this section shall be paid as
soon as is practicable following the close of the Company’s financial statements
for the preceding year but no later than March 15 following the calendar year in
which the Annual Incentive Payment is earned. For terminations of
this Agreement prior to the end of the year, other than terminations pursuant to
subsections (b), (c), (d) and (e) of Section 5 below, the Annual Incentive
Payment shall be prorated and the Employee shall earn that portion of the Annual
Incentive Payment allocable to the portion of the year of his
employment.
(c) Vacation. The
Employee shall be entitled to the number of days of paid vacation, plus all
scheduled bank holidays, during each full year of his employment hereunder, in
accordance with the general terms of the vacation policy adopted by the
Company. In addition, upon any termination of employment, except a
termination pursuant to Section 5(b) below, the Employee will be paid any
remaining accrued vacation that has not been taken through the date of
termination.
(d) Reimbursement of
Expenses. The Company shall reimburse the Employee in
accordance with Company’s expense reimbursement policies for all reasonable,
ordinary and necessary business expenses incurred by the Employee in the course
of his duties conducted on behalf of the Company. The
Company shall also reimburse Employee’s reasonable expenses for attending
continuing education courses necessary to maintain any certifications or
licenses Employee may hold. Additionally, all such reimbursements
must satisfy each of the following requirements: (i) the reimbursement is
provided for an expense that is incurred during the term of this Agreement, (ii)
the amount of reimbursable expenses incurred in one of the Employee’s taxable
years cannot affect the amount of reimbursable expenses available in another
taxable year of the Employee, and (iii) the reimbursement payment is made no
later than the end of the Employee’s taxable year following the Employee’s
taxable year in which the expense is incurred.
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(e) Employee
Benefits. The Employee shall be entitled to participate in any
employee benefit plans, now existing or established hereafter, that are
generally available to employees of the Company or senior officers of the
Company, and to all normal perquisites provided to senior officers of the
Company, provided Employee is otherwise qualified to participate in such plans
or programs. As part of its normal course of business, the Company
may amend and/or terminate employee benefits in its absolute and sole
discretion.
(f) Benefits Not in Lieu of
Compensation. No employee benefit or perquisite
provided to the Employee, under this Agreement or otherwise, shall be deemed to
be in lieu of Base Salary, bonus, or other compensation that is otherwise
payable under this Agreement, provided that the reporting of any benefits shall
be consistent with IRS regulations.
(g) Vesting of Options on
Retirement. Upon the termination of the Employee’s employment under this
Agreement, caused by the retirement of the Employee under the retirement
policies of the Company, the Employee will immediately vest in any stock
options, restricted stock, incentive plans, deferred compensation arrangements,
or other plans or programs in which the Employee is participating.
5. Termination of
Agreement. This Agreement, and the Employee’s employment
hereunder, may be terminated at any time, by any party, for the reasons, and as
provided, in this Section 5.
(a) For
purposes of this Agreement, “Good Reason” shall mean any action taken by the
Company, without the prior written consent of the Employee, that results in (i)
a diminution in the Employee’s Base Salary, (ii) a change in Employee’s title,
as President and Chief Executive Officer of the Company, or in his direct
reporting responsibilities to the Board, (iii) a material diminution in the
Employee’s authority, duties, or responsibilities with the Company, (iv) an
action or inaction by the Company that constitutes a material breach by the
Company of this Agreement; or (iv) any requirement of the Company that the
Employee relocate the office, from which he provides services to the Company,
more than fifty (50) miles from the offices of his present
employment.
If a
condition exists, as a result of actions taken by the Company without the prior
written consent of the Employee, that would create a Good Reason for the
Employee to terminate this Agreement, and the Employee desires to terminate this
Agreement for Good Reason, the Employee must first provide written notice to the
Company within ninety (90) days of the initial existence of the
condition. Once notice is provided, the Company has thirty (30) days
to cure the condition to the Employee’s satisfaction. If the
condition is not remedied by the Company within the thirty (30) day cure period,
then the Employee may terminate this Agreement for Good Reason, and the Company
shall pay to the Employee, as the Employee’s sole remedy hereunder, a severance
payment equal to two (2) times the Employee’s “Average Annual Compensation”, as
defined in Section 6(b). This severance payment shall be made by the
Company within thirty (30) days of the date of termination.
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(b) Cause. Notwithstanding
any provision of this Agreement to the contrary, the Company shall terminate
this Agreement, and shall not pay any benefit under this Agreement, if the
Company determines that the Employee committed one of the following acts while
in the employ of the Company, any of which acts shall constitute “Cause” for
such termination:
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(i)
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Gross
negligence in, or gross neglect with respect to, his
duties;
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(ii)
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A
material breach of this Agreement;
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(iii)
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Commission
of a felony or of a misdemeanor involving moral
turpitude;
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(iv)
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Fraud,
disloyalty, dishonesty or willful violation of any law, regulation policy,
practice, or code of conduct, of the Company, to which the Employee is
subject, committed in connection with the Employee's employment and
resulting in an adverse effect on the
Company;
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(v)
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Ineligibility
of the Employee to perform his 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;
or
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(vi)
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Willful
and knowing violation of any federal banking law, state banking law or any
regulation or rule promulgated thereunder, which violation is material to
the safety and soundness of the
Company.
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The
termination of this Agreement for Cause shall only occur after the Board, in its
sole and absolute discretion, has made a determination of “Cause”.
(c) Death. This
Agreement shall be terminated automatically upon the death of the
Employee. In addition, the Employee will immediately vest in any
stock options, restricted stock, incentive plans, deferred compensation
arrangements, or other plans or programs in which the Employee is participating
at the time of termination of his employment.
(i) The
Employee shall designate a beneficiary by filing a written designation with the
Company. The Employee may revoke or modify the designation at any
time by filing a new designation. However, designations will only be
effective if signed by the Employee and received by the Company during the
Employee's lifetime. The Employee's beneficiary designation shall be
deemed automatically revoked if the beneficiary predeceases the Employee, or if
the Employee names a spouse as beneficiary and the marriage is subsequently
dissolved. If the Employee dies without a valid beneficiary
designation, all payments shall be made to the Employee's estate.
(ii) If a benefit
is payable to a minor, to a person declared incompetent, or to a person
incapable of handling the disposition of his or her property, the Company may
pay such benefit to the guardian, legal representative or person having the care
or custody of such minor, incapacitated person or incapable
person. The Company may require proof of incompetence, minority or
guardianship as it may deem appropriate prior to distribution of the
benefit. Such distribution shall completely discharge the Company
from all liability with respect to such benefit.
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(d) Disability. Both
Employee and the Company acknowledge and agree that, pursuant to this Agreement,
Employee will assume a significant position with the Company, which will require
his consistent attention and presence. Therefore, if (i) Employee has
a medically-qualified condition, and, as a result of such condition, is unable
to perform his duties and responsibilities as President and Chief Executive
Officer of the Company and/or is unable to be present at work for more than
ninety (90) consecutive days; or (ii) Employee otherwise qualifies for long-term
disability by (a) a determination of total disability by the Social Security
Administration, or (b) a determination of disability as defined under the
Company’s long-term disability policy (provided the disability definition is
compliant with the requirements provided under Section 409A of the Internal
Revenue Code of 1986 (“Section 409A”)), then Employee acknowledges and agrees
that such circumstances indicate that Employee is unable to perform the
essential functions of his duties and responsibilities, and the Company may
terminate this Agreement and Employee’s employment. Unless otherwise determined
by Section 5(g), after the termination for disability, the Company shall
continue to pay the Employee his Base Salary, at the then-effective rate, for a
period of six (6) months, and during such period of time the Employee may
continue to participate in all of the Company’s employee benefit
plans. In addition, the Employee will immediately vest in any stock
options, restricted stock, incentive plans, deferred compensation arrangements,
or other plans or programs in which the Employee is participating at the time of
termination of his employment.
(e) Voluntary
Resignation. If the Employee shall voluntarily terminate his
employment for other than Good Reason, as defined in Section 5(a), this
Agreement shall terminate immediately, and the Company shall have no further
obligation to make any payment under this Agreement which has not already become
payable; provided, however, that, with
respect to any stock options, restricted stock, incentive plans, deferred
compensation arrangements, or other plans or programs in which the Employee is
participating at the time of termination of his employment, the Employee’s
rights and benefits under each such plan shall be determined in accordance with
the terms, conditions, and limitations of the plan and any separate agreement
executed by the Employee which may then be in effect.
(f) Involuntary Termination
Without Cause. If during the term of this Agreement, the
Employee’s employment is involuntarily terminated by the Company without Cause,
then the Company shall pay to the Employee, as the Employee’s sole remedy
hereunder, a severance payment equal to two (2) times the Employee’s Average
Annual Compensation. This severance payment shall be made by the
Company within thirty (30) days of the date of termination. A
termination of the Employee’s employment for disability, as contemplated under
Section 5(d) of the Agreement, shall not constitute an involuntary termination
of the Employee’s employment without Cause, as contemplated by this Section
5(f).
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(g) Payment of
Benefits. The Employee and the Company agree that the
provisions of this Agreement will be interpreted in a manner to comply with
Section 409A. For purposes of the application of Section 409A, the
amounts payable to the Employee pursuant to this Agreement are intended to be
excepted from the definition of nonqualified deferred compensation, pursuant to
Treas. Reg. Section 1.409A-1(a). Notwithstanding the foregoing, if
the Employee is a “specified employee” within the meaning of Treas. Reg.
1.409A-1(i), to the extent that any portion of the severance payments under
Section 5 cannot be paid at the time(s) contemplated without violating Section
409A(a)(2)(B)(i), payment shall be delayed until the later of six (6) months
after termination of employment (or any earlier date permitted under Treasury
Reg. Section 1.409A-1(i) (or any successor guidance)) or the date the payment
would otherwise be made. Any payments that are so delayed shall be
paid in one lump sum, in cash, upon the date the delayed payments can first be
made.
6. Change in Control
Benefit. If a Change in Control, as defined in Section 6(a),
occurs, and the employment of Employee is terminated by the Company without
Cause, or by the Employee for Good Reason, within six (6) months before, or
twelve (12) months following a Change in Control, the Company (subject to the
provisions of Section 6(c) and Section 6(e) hereof) shall pay to the Employee
the benefits provided in this Section 6 (the “Change in Control Benefit”),
within thirty (30) days of such termination or, if later, within thirty (30)
days of the occurrence of the Change in Control.
(a) “Change in
Control”. A “Change in Control” shall mean (i) the
acquisition, directly or indirectly, by any person (other than the Employee)
acting individually or in concert with others or as a “group” (within the
meaning of Section 13(d) of the Securities Exchange Act of 1934) of securities
of representing an aggregate of 25% or more of the combined voting power of
Bankshares’ or the Bank’s then outstanding voting securities, other than an
acquisition thereof by: (A) any employee plan established by Bankshares or the
Bank; (B) Bankshares or any of its “affiliates” (as defined in Rule 12b-2
promulgated under the Securities Exchange Act of 1934), including the Bank; (C)
an underwriter temporarily holding securities pursuant to an offering of such
securities; (D) a current director of Bankshares who was a director
of Bankshares on the Effective Date of this Agreement (the “Current Director”);
and (E) the immediate family members of a Current Director, including the
parents, spouse, children (and their respective spouses) and grandchildren of
said Current Director, and any trusts or other legal entities, which are
controlled by the Current Director and/or the immediate family members of the
Current Director (collectively, “Director Related Parties”); (ii) during any
period of up to two consecutive years, individuals who, at the beginning of such
period, constitute the Board of Directors (of Bankshares or the Bank) 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 Bankshares, as such terms are used in Rule 14a-11 of Regulation 14A under the
Securities Exchange Act of 1934, or (B) who was designated by a person who has
entered into an agreement with Bankshares or the Bank to effect a transaction
described in clause (i) or (iii) of this Section 6 (a)) shall be deemed a
director as of the beginning of such period; or (iii) the stockholders of
Bankshares or the Bank approve a merger or consolidation of Bankshares or the
Bank with any other corporation other than (A) a merger or consolidation that
would result in the voting securities of Bankshares 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 bank, at
least 51% of the combined voting power of the voting securities
of Bankshares, or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation and provided that no
person (other than a Current Director or Directed Related Parties), acting
individually or in concert with others or as a “group,” acquires, directly or
indirectly, the voting control of 25% or more of said voting securities, or (B)
a merger or consolidation effected to implement a recapitalization of Bankshares
(or similar transaction) in which no person (other than the Employee or a
Current Director or Director Related Parties), acting individually or in concert
with others or as a “group,” acquires, directly or indirectly, the voting
control of securities of Bankshares representing 25% or more of the combined
voting power of Bankshares’ then outstanding voting securities.
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(b) Amount of
Benefit. Subject to the provisions of Section 9, if this
Agreement is terminated by the Company, within six (6) months before, or twelve
(12) months following, a Change in Control, as defined in Section 6(a), without
Cause, or if, during said period of time, terminated by the Employee for Good
Reason, pursuant to Section 5(a) or Section 14(a) of this Agreement, the
Employee will receive a Change in Control Benefit equal to two and 99/100 (2.99)
times the Employee’s Average Annual Compensation, as defined in this Section
6(b). The term “Average Annual Compensation” means the average annual
taxable earnings of the Employee for the five (5) full calendar years preceding
the date of the Change in Control as reflected in Box 1 of the Employee’s W-2
for such years. If the Employee has not been employed by the Company
for the entire five-year period, the Average Annual Compensation will be the
average of the Employee’s annual compensation for the full term of the
Employee’s employment with the Company. In addition, the Employee
will immediately vest in any stock options, restricted stock, or other equity
plans or programs in which the Employee is participating at the time of
termination of his employment.
(c) Consideration of
Benefit. As consideration for the benefit paid in this Section
6, the Employee (provided that the Employee is employed by the Company on the
date of a Change in Control), at the discretion of the successor organization
(as contemplated in Section 14(a)), expressed in writing, hereby agrees that,
notwithstanding the Employee’s election to terminate this Agreement for Good
Reason pursuant to Section 14(a) hereof, the Employee will continue in the
employ of the successor organization for a period of no less than six (6) months
after the date of the Change in Control, at the same Base Salary and level of
benefits being provided to the Employee, as of such date, pursuant to Section 4
hereof, exclusive of any compensation that might otherwise be provided to
Employee under Section 4(b) hereof. Further, the Employee shall
receive payment of the amount of the Employee’s Change in Control Benefit,
pursuant to the Employee’s previous election to terminate this Agreement for
Good Reason under Section 14(a), within thirty (30) days from date of expiration
of said six-month period or, if earlier than the expiration of said six-month
period, within thirty (30) days from the date of a subsequent termination of
employment by the Employee for Good Reason (as contemplated below in this
Section 6(c)) or from the date of a subsequent termination of the employment of
the Employee by the Company without Cause.
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However,
if the Employee fails to remain employed for at least six (6) months with the
successor organization (for any reason other than a subsequent termination of
employment by the Employee for Good Reason, as provided in item (1) below, or a
subsequent termination of the employment of the Employee by the Company without
Cause), or if the Company terminates the Employee’s employment for Cause (as
provided in item (2) below), then no benefits will be payable to the Employee
pursuant to this Section 6; provided, that, if the Employee has previously
elected to terminate this Agreement for Good Reason, pursuant to Section
14(a):
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(1)
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the
Employee, prior to the end of said six-month period, may
subsequently terminate his employment with the Company for Good Reason,
pursuant to:
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(a) the
provisions of items (i) and (iv) of Section 5(a) of this Agreement,
and
(b) any
subsequent failure by the Company to pay the full amount of the Employee’s Base
Salary and benefits, as contemplated and provided under this Section
6(c);
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(2)
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the
Company, prior to the end of said six-month period, may subsequently
terminate the Employee’s employment with the Company for Cause, but only
upon the acts and provisions set forth in items (iii), (iv), (v) and (vi)
of Section 5(b); and
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(3)
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the
effective date of the termination of the Agreement shall be the date of
the termination of the employment of the Employee, as contemplated and
provided under this Section 6(c).
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(d) Tax
Gross-up. If due to a Change in Control, any benefit payable
under this Agreement results in an excise tax, pursuant to Section 4999 of the
Internal Revenue Code or similar state law, the Company shall pay to, or for the
benefit of, the Employee an amount sufficient to pay (i) the excise tax owed and
payable by the Employee, including, subject to the Employee’s good-faith efforts
to comply with applicable law and regulations relating to the timely filing
(including extensions for filing) of the Employee’s relevant tax returns and the
payment of the taxes when due, any interest and penalties thereon, (ii) any
federal, state, local, and Medicare taxes owed and payable by the Employee, as a
result of the Company’s payment to Employee of the amount of such excise tax,
including any interest and penalties thereon, and (iii) any additional taxes,
interest and penalties that are related to the payments provided under (i) and
(ii) of this sentence, as is necessary to ensure that the Employee retains an
amount, after payment of the excise tax and all such other taxes,
interest and penalties, that is equal to the amount of the Employee’s Change in
Control Benefit.
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Further,
if the amount paid to the Employee under this Section 6(d) is later determined
to have resulted in, either, an overpayment to the Employee (“Overpayment”) or
in an underpayment to Employee (“Underpayment”), the Company and the Employee,
as applicable, shall take the following actions:
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(1)
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in
the case of an Underpayment, the amount of such Underpayment shall be
promptly paid by the Company to, or for the benefit of, the
Employee;
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(2)
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in
the case of an Overpayment, the Employee shall, at the direction and
expense of the Company, take such steps as reasonably necessary (including
the filing of tax returns and claims for refund), follow reasonable
instructions from, and procedures established by, the Company, and
otherwise reasonably cooperate with the Company to correct such
Overpayment; provided, however,
that:
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(a) Employee
shall be obligated to return to the Company an amount no greater than the net
after-tax portion of the Overpayment that the Employee has retained or has
recovered as a refund from the applicable taxing authority, and
(b) this
provision shall be interpreted in a manner consistent with the intent of this
Section 6(d), which intent is to make the Employee whole, on an after-tax basis,
from the application of the excise tax, it being understood that the correction
of an Overpayment may result in the Employee’s repayment to the Company of an
amount which is less than the Overpayment.
(e) Application of Section
409A. The Employee and the Company agree that the provisions
of this Agreement, including, but not limited to this Section 6, will be
interpreted in a manner to comply with Section 409A. For purposes of
the application of Section 409A, the amounts payable to the Employee pursuant to
this Agreement are intended excepted from the definition of nonqualified
deferred compensation pursuant to Treas. Reg. Section
1.409A-1(a). Notwithstanding the foregoing, if the Employee is a
“specified employee” within the meaning of Treas. Reg. 1.409A-1(i), to the
extent that any portion of the severance payments under this Section 6 cannot be
paid at the time(s) contemplated without violating Section 409A(a)(2)(B)(i),
payment shall be delayed until the later of six (6) months after termination of
employment (or any earlier date permitted under Treasury Reg. Section
1.409A-1(i) (or any successor guidance)) or the date the payment would otherwise
be made. Any payments that are so delayed shall be paid in one lump
sum in cash upon the date the delayed payments can first be
made.
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7. Confidential
Information. The Employee recognizes and acknowledges that he
will have access to certain information of the Company and that such information
is confidential and constitutes valuable, special and unique property of the
Company. The Employee shall not at any time, either during or
subsequent to the term of this Agreement, disclose to others, use, copy or
permit to be copied, except as directed by law or in pursuance of the Employee’s
duties for or on behalf of the Company, its successors, assigns or nominees, any
Confidential Information of the Company (regardless of whether developed by the
Employee), without the prior written consent of the Company.
The term
“Confidential Information” means any secret or confidential information or
know-how and shall include, but shall not be limited to, the plans, strategic
plans, budgets, customers, costs, prices, uses, and applications of products and
services, results of investigations, studies owned or used by the Company, and
all products, processes, compositions, computer programs, and servicing,
marketing or operational methods and techniques at any time used, developed,
investigated, made or sold by the Company, before or during the term of this
Agreement, that are not readily available to the public or that are maintained
as confidential by such person. The Employee shall maintain in
confidence, not disclose to any person, or use to the benefit of the Employee
any Confidential Information of any person received as a result of the
Employee’s employment with the Company.
8. Delivery of Documents upon
Termination. The Employee shall deliver to the Company or its
designee at the termination of the Employee’s employment all Confidential
Information and all correspondence, memoranda, notes, records, drawings,
sketches, plans, customer lists, product compositions, and other documents and
all copies thereof, made, composed or received by the Employee, solely or
jointly with others, that are in the Employee’s possession, custody, or control
that are related in any manner to the past, present, or anticipated business of
the Company.
9. Protective
Covenants: Employee Acknowledgements; Non-Competition;
Non-Solicitation.
(a) Employee
acknowledges that, (i) by reason of the character and nature of the Company’s
business activities and operations, and, further, by reason of the scope of the
territory in which the Employee will perform services for the Company, it is
necessary, in order to protect the Company’s legitimate business interests, for
the Employee to agree not to engage in certain specified activities at any time
during the term of this Agreement and for a period of time thereafter; (ii)
Employee's duties will include responsibility for, and extensive involvement
with, the Company’s business of banking and the provision of the financial
products and services, as conducted and provided by the Company
during the term of this Agreement (the “Business of the Company”); and (iii) his
duties and responsibilities will not be limited to any geographic region, but,
instead, will require that his services be rendered in connection with the
Business of the Company, as conducted through all of the offices and locations
of the Company within the State of Georgia and the State of Florida, as the
Company’s President and Chief Executive Officer and, thereby, the executive of
the Company responsible for the overall business of the
Company.
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Employee
further agrees and acknowledges that, because of his association with the
Company and his knowledge of the trade secrets and confidential, proprietary
information of the Company that relate to the Business of the Company,
Employee's competition with the Company, as (or with) a direct competitor in the
same business would irreparably damage and impair the Business of the
Company. Therefore, at all times during the term of this Agreement
and, if applicable, during any period of time following a termination of this
Agreement for Good Reason by the Employee, pursuant to Section 14(a) of this
Agreement, that the Employee remains in the employ of the Company or its
successor, and for a period of twelve months thereafter (the “Restricted
Period”), Employee will not, directly or indirectly, anywhere within the State
of Georgia or the State of Florida, either: (a) for himself; (b) as a
consultant, independent contractor, manager, supervisor, employee, officer,
director, or stockholder, partner, member or trustee, of any bank, bank holding
company, thrift, thrift holding company, or other Competing Business (as defined
below); or (c) through the investment of capital, lending of money or
property, or rendering of services, engage in any Competitive Activity within
the county, or, if a greater distance, within a fifteen (15) mile radius of the
county, in which an office of the Company is located, from which the Company
provided services, or solicited customers, and, otherwise, performed the
Business of the Company, during the term of this Agreement (the
“Territory”).
“Competitive
Activity” is defined as work, services, products, solicitation of customers, and
other Business of the Company, performed, provided, or supervised, by Employee
or those under his control, which is the same as, or substantially the same as,
the work, services, products, solicitations, and other Business of
the Company, performed, provided, or supervised, by Employee or those under his
control, at any time during the term of this Agreement.
"Competing
Business" shall mean any
person, business, or entity, who, (or which), engages in the business of
banking, or who (or which) sells, markets, distributes, or provides products
and/or services that are the same, or substantially the same, as those sold,
marketed, distributed, or provided, by the Company during the term of this
Agreement.
(b) During
the Restricted Period, the Employee shall not, and shall not permit any of his
respective affiliates, employees, agents or others under his control who are
engaged in the Business of the Company to, directly or indirectly, on their own
behalf or on behalf of any other person or entity, (i) call on any customer of
the Company located in the Territory for the purpose of soliciting the banking
deposits or loans of, or other financial services and products provided by the
Company during the term of this Agreement for, such customer of the Company,
(ii) otherwise divert or attempt to divert any business from the Company within
the Territory, (iii) interfere with the business relationships within the
Territory, between the Company, on the one hand, and any of its respective
customers or others with whom it has business relationships, on the other hand,
(iv) recruit or otherwise solicit or induce, or enter into or participate in any
plan or arrangement, to cause any person who is an employee of, or otherwise
performing services for, the Company to terminate his or her employment or other
relationship with the Company, or (v) hire any person who has left the employ of
the Company during the preceding twelve (12) months.
11
(c) The
Employee shall not at any time, directly or indirectly, use, or purport to
authorize any person to use, any name, xxxx, logo, or other identifying words or
images, which are the same as, or similar to, those used currently or in the
past by the Company, in connection with any product or service, whether or not
such use would be in a business competitive with that of the
Company.
(d) The
ownership or control of up to five percent (5%) of the outstanding securities of
any class of a bank or bank holding company doing business in the Territory,
which has a class of securities registered under the Securities Exchange Act of
1934, as amended, shall not be deemed to be a violation of the provisions of
this Section 9.
10. Publicity and
Advertising. The Employee agrees that the Company may use the
Employee’s name, picture, or likeness for any advertising, publicity, or other
business purpose at any time, during the term of the Agreement by the Company
and may continue to use materials generated during the term of the Agreement for
a period of twenty four (24) months thereafter. The Employee shall
receive no additional consideration if the Employee’s name, picture or likeness
is so used. The Employee further agrees that any negatives, prints or
other material for printing or reproduction purposes prepared in connection with
the use of the Employee’s name, picture or likeness by the Company shall be and
are the sole property of the Company.
11. Remedies. The
Employee acknowledges that the Company would be irreparably harmed and that
monetary damages would not provide an adequate remedy to it, in the event the
covenants contained in either Section 7 or Section 9 were not complied with, in
accordance with their terms. Accordingly, the Employee agrees that
any willful or intentional breach, or threatened breach, by him of any provision
of either Section 7 or Section 9 shall entitle the Company to injunctive and
other equitable relief to secure the enforcement of these provisions, in
addition to any other remedies which may be available to it, and it shall be
entitled to receive from the Employee reimbursement for all reasonable
attorneys’ fees and expenses incurred by it in enforcing these provisions
(unless the Company is not the substantially prevailing party in any legal
action brought for such purposes). In addition to its other rights
and remedies, the Company shall have the right to require the Employee to
account for, and pay over to it, all compensation, profits, money, accruals and
other benefits derived or received, directly or indirectly, by the Employee from
any action constituting a willful or intentional breach of either Section 7 or
Section 9. It is the desire and intent of the parties that the provisions of
either Section 7 or Section 9 be enforced in full; however, if any provisions of
Section 9 relating to the time period, scope of activities or geographic area of
restrictions is declared by a court of competent jurisdiction to exceed the
maximum permissible time period, scope of activities or geographic area, the
maximum time period, scope of activities or geographic area, as the case may be,
shall be reduced to the maximum which such court deems
enforceable. If any provisions of either Section 7, Section 9 or this
Section 11, other than those described in the preceding sentence, are
adjudicated to be invalid or unenforceable, the invalid or unenforceable
provisions shall be deemed amended (with respect only to the jurisdiction in
which such adjudication is made) in such manner as to render them enforceable
and to effectuate as nearly as possible the original intentions and agreement of
the parties.
12
12. Dispute
Resolution. Other than the Company’s right to seek the
remedies described in Section 11 of this Agreement, any dispute, controversy or
claim arising out of or in relation to or connection to this Agreement,
including without limitation any dispute as to the construction, validity,
interpretation, enforceability or breach of this Agreement, including a claim
for indemnification under this Section 12, shall be resolved either as provided
by applicable law, or, at the option of either party, by impartial binding
arbitration. In the event that either the Company or the Employee
demands arbitration, the Employee and the Company agree that such arbitration
shall be the exclusive, final and binding forum for the ultimate resolution of
such claims, subject to any rights of appeal that either party may have under
the Federal Arbitration Act and/or under applicable state law dealing with the
review of arbitration decisions.
(a) Arbitration. Arbitration
shall be heard and determined by one arbitrator, who shall be impartial and who
shall be selected by mutual agreement of the parties; provided, however, that if
the dispute involves more than $1,000,000, then the arbitration shall be heard
and determined by three (3) arbitrators. If three (3) arbitrators are
necessary as provided above, then (i) each side shall appoint an arbitrator of
its choice within thirty (30) days of the submission of a notice of arbitration
and (ii) the party-appointed arbitrators shall in turn appoint a presiding
arbitrator of the tribunal within thirty (30) days following the appointment of
the last party-appointed arbitrator. If any party fails or refuses to
appoint an arbitrator, the arbitration shall proceed with one (1)
arbitrator.
(b) Demand for
Arbitration. In the event that the Employee or the Company
initially elects to file suit in any court, the other party will have sixty (60)
days from the date that it is formally served with a summons and a copy of the
suit to notify the party filing the suit of the non-filing party’s demand for
arbitration. In that case, the suit must be dismissed by consent of
the parties or by the court on motion, and arbitration commenced with the
arbitrators. In situations where suit has not been filed, either the
Employee or the Company may initiate arbitration by serving a written demand for
arbitration upon the other party. Such a demand must be served within
twelve (12) months of the events giving rise to the dispute. Any
claim that is not timely made will be deemed waived.
(c) Proceedings. Unless
otherwise expressly agreed in writing by the parties to the arbitration
proceedings:
(i) The
arbitration proceedings shall be held in the Valdosta, Georgia or at a site
chosen by mutual agreement of the parties;
13
(ii) The
arbitrators shall be and remain at all times wholly independent and
impartial;
(iii) The
arbitration proceedings shall be conducted in accordance with the Employment
Arbitration Rules of the American Arbitration Association, as amended from time
to time;
(iv) Any
procedural issues not determined under the arbitral rules selected pursuant to
item (iii) above shall be determined by the law of the place of arbitration,
other than those laws which would refer the matter to another
jurisdiction;
(v) The
costs of the arbitration proceedings (including attorneys’ fees and costs) shall
be borne in the manner determined by the arbitrators;
(vi) The
arbitrators may grant any remedy or relief that would have been available to the
parties had the matter been heard in court;
(vii) The
decision of the arbitrators shall be reduced to writing; final and binding
without the right of appeal; the sole and exclusive remedy regarding any claims,
counterclaims, issues or accounting presented to the arbitrators; made and
promptly paid in United States dollars free of any deduction or offset; and any
costs or fees incident to enforcing the award shall to the maximum extent
permitted by law, be charged against the party resisting such
enforcement;
(viii) The
award shall include interest from the date of any breach or violation of this
Agreement, as determined by the arbitral award, and from the date of the award
until paid in full, at six percent (6%) per annum; and
(ix) Judgment
upon the award may be entered in any court having jurisdiction over the person
or the assets of the party owing the judgment or application may be made to such
court for a judicial acceptance of the award and an order of enforcement, as the
case may be.
(d) Acknowledgement of
Parties. The Company and Employee understand and acknowledge
that this Agreement means that neither can pursue an action against the other in
a court of law regarding any employment dispute, except for claims involving
workers’ compensation benefits or unemployment benefits, and except as set forth
elsewhere in this Agreement, in the event that either party notifies the other
of its demand for arbitration under this Agreement. The Company and
Employee understand and agree that this Section 12, concerning arbitration,
shall not include any controversies or claims related to any agreements or
provisions (including provisions in this Agreement) respecting confidentiality,
proprietary information, non-competition, non-solicitation, trade secrets, or
breaches of fiduciary obligations by the Employee, which shall not be subject to
arbitration.
14
(e) Consultation. Employee
has been advised of the Employee’s right to consult with an attorney prior to
entering into this Agreement.
13. Indemnification. To
the fullest extent provided in the Company’s by-laws and by Georgia law, the
Company shall indemnify and defend the Employee against any and all claims and
civil actions arising out of his employment with the Company.
14. Miscellaneous
Provisions.
(a) Successors of the
Company. The Company, prior to the occurrence of a Change in
Control, will use its best efforts to require any successor organization, by
written agreement, in form and substance satisfactory to the Employee in his
reasonable discretion, to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required to
perform it, if no such Change in Control had taken place. Failure of
the Company to obtain such written agreement prior to the effectiveness of any
such Change in Control shall entitle the Employee, subject to the performance by
the Employee of any obligations under Section 6(c) of this Agreement (to the
extent required thereby), to terminate his employment with the Company for Good
Reason as of the effective date of such Change in Control, and to receive the
Change in Control Benefit from the Company, in accordance with, and as
determined under, Section 6 of this Agreement. As used in this
Agreement, “Company”, as hereinbefore defined, shall also include any such
successor organization, as aforesaid, which executes and delivers the written
agreement provided for in this Section 14(a), or which, otherwise, becomes bound
by all the terms and provisions of this Agreement, by operation of
law.
(b) Employee’s Heirs,
etc. The Employee may not assign the Employee’s rights or
delegate the Employee’s duties or obligations hereunder without the written
consent of the Company. This Agreement shall inure to the benefit of
and be enforceable by the Employee’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Employee should die while any amounts would still be
payable to the Employee hereunder as if he had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Employee’s designee or, if there be no such
designee, to the Employee’s estate.
(c) Notices. Any
notice or communication required or permitted under the terms of this Agreement
shall be in writing and shall be delivered personally, or sent by registered or
certified mail, return receipt requested, postage prepaid, or sent by nationally
recognized overnight carrier, or postage prepaid. Such notice or communication
shall be deemed given (i) when delivered if personally delivered; (ii) five (5)
mailing days after having been placed in the mail, if delivered by registered or
certified mail; (iii) the business day after having been placed with a
nationally recognized overnight carrier, if delivered by nationally recognized
overnight carrier, and (iv) the business day after transmittal when transmitted
with electronic confirmation of receipt, if transmitted by
facsimile. Any party may change the address or facsimile number to
which notices or communications are to be sent to it by giving notice of such
change in the manner herein provided for giving notice. Until changed
by notice, the following shall be the address and facsimile number to which
notices shall be sent:
15
|
|
If
to the Company, to:
|
PAB
Bankshares, Inc.
|
0000
Xxxxx Xxxxxxxx Xxxx
Xxxxxxxx,
Xxxxxxx 00000
Attention: Chairman,
Compensation
Committee
of the Board of Directors
If to
the Employee, to:
X. Xxxxx
Xxxxx, Jr.
000
Xxxxxxx Xxxxx
XxXxxxxxx,
Xxxxxxx 00000
(d) Amendment or
Waiver. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Employee and the Chairman or Vice Chairman of the Board
(which shall not include the Employee). No waiver by either party
hereto at any time of any breach by the other party hereto of or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreement or
representation, oral or otherwise, express or implied, with respect to the
subject matter hereof has been made by either party that is not set forth
expressly in this Agreement.
(e) Invalid
Provisions. Should any portion of this Agreement be adjudged
or held to be invalid, unenforceable or void, such holding shall not have the
effect of invalidating or voiding the remainder of this Agreement and the
parties hereby agree that the portion so held invalid, unenforceable or void
shall if possible, be deemed amended or reduced in scope, or otherwise be
stricken from this Agreement to the extent required for the purposes of validity
and enforcement thereof.
(f) Unreasonable
Compensation. If any portion of the Compensation and Benefits
provided by this Agreement should be deemed to be unreasonable or
disproportionate to the services the Employee provides (under 12 C.F.R. 364 or
other applicable law), the Company shall reduce such Compensation and Benefits
to the maximum amount that would be reasonable or proportionate, and such
circumstance shall not constitute Good Reason for Employee’s termination of the
Agreement.
(g) Survival of the Employee’s
Obligations. The Employee’s obligations under this Agreement
shall survive regardless of whether the Employee’s employment by the Company is
terminated, voluntarily or involuntarily, by the Company or the Employee, with
or without Cause.
16
(h) Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original but all of which together will constitute one and the
same instrument.
(i) Governing
Law. This Agreement and any action or proceeding related to it
shall be governed by and construed under the laws of the State of
Georgia.
(j) Captions and
Gender. The use of Captions and Section headings herein is for
purposes of convenience only and shall not effect the interpretation or
substance of any provisions contained herein. Similarly, the use of
the masculine gender with respect to pronouns in this Agreement is for purposes
of convenience and includes either sex who may be a signatory.
(k) Effect on Prior
Agreements. This Agreement, and any attachments, represent the
entire understanding between the parties hereto and supersedes in all respects
any other prior Agreement or understanding between the Company and the Employee
regarding the Employee’s employment.
IN
WITNESS WHEREOF, the Employee and a duly authorized Company officer have signed
this Agreement.
|
THE
EMPLOYEE:
|
THE
COMPANY:
|
||
|
PAB
Bankshares, Inc.
|
|||
|
/s/ X. Xxxxx Welsh, Jr.
|
By:
|
/s/ Xxxxxxx X. XxXxxxx
|
|
|
X.
Xxxxx Xxxxx, Jr.
|
Title:
|
Vice-Chairman
|
|
|
The
Park Avenue Bank
|
|||
|
By:
|
/s/ Xxxxxxx X. XxXxxxx
|
||
|
Title:
|
Vice-Chairman
|
||
17
