EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement"), effective as of April 1,
1997, is by and among First National Bank of Coffee County ("Bank"), its holding
company FNC Bancorp, Inc. ("Holding Company"; Bank and Holding Company being
collectively referred to as "Employer"), and Xxxxxxx X. Xxxxxxx ("Executive").
Background Statement
Executive has been retained as President and Chief Executive Officer of
the Bank and its Holding Company. The parties desire to enter into this
Agreement to memorialize the terms of Executive's employment.
Agreement
In consideration of the mutual promises set forth below, and other good
and valuable consideration, the receipt and sufficiency of which are
acknowledged, the parties agree as follows:
1. Employment Duties.
(a) General. Employer employs Executive as President and Chief
Executive Officer of the Bank and its Holding Company. In this capacity,
Executive agrees to use his best efforts to carry out the responsibilities
associated with the positions of President and Chief Executive Officer.
Executive further agrees to perform such other duties as are and may be assigned
to him from time to time by the Boards of Directors of the Bank and its Holding
Company ("the Boards").
(b) Exclusive Services. Throughout his employment, except as may from
time to time be otherwise agreed in writing by Employer, and unless prevented by
ill health, Executive will devote his full-time working hours to his duties as
President and Chief Executive Officer, will exclusively and faithfully serve
Employer, will conform to and comply with the lawful and reasonable directions
and instructions given to him by the Boards, and will use his best efforts to
promote and serve the interests of Employer. Executive will not render services,
directly or indirectly, to any other person or organization for which he
receives compensation without the written consent of Employer, or otherwise
engage in activities that would interfere significantly with the faithful or
competent performance of his duties under this Agreement.
2. Term of Employment.
The initial term of employment under this Agreement will be
three (3) years from the date of employment and will continue for successive
one-year periods thereafter, unless sooner terminated as provided by Section 6
of this Agreement.
3. Compensation.
(a) Base Salary. The Bank will pay Executive a monthly base salary of
$8,000.00, in accordance with the Bank's standard payroll procedures.
Executive's base salary may be increased at the Board's discretion.
(b) Annual Incentive Bonus.
(i) Eligibility; Maximum. Executive will be eligible to earn an
annual incentive bonus based upon the achievement of the Holding Company goals
set forth below. Executive's annual incentive bonus with respect to each fiscal
year of Holding Company will equal fifty (50%) percent of the amount, if any, by
which the Holding Company's consolidated net income (with respect to such year
and as reported in the Holding Company's audited financial statements for such
year) exceeds the Net Income Target (as defined below) for such year. The
maximum bonus shall not exceed $35,000.00 with respect to the 1997 fiscal year,
$45,000.00 with respect to the 1998 fiscal year, and $50,000.00 with respect to
each succeeding fiscal year.
(ii) Net Income Target. With respect to each fiscal year for
which Executive is eligible to receive an annual incentive bonus under this
Section 3(b), the "Net Income Target" for such year shall be equal to the total
stockholders' equity for the prior fiscal year of the Holding Company, as set
forth in the Holding Company's audited financial statements for such prior
fiscal year, multiplied by the XXX Benchmark applicable to the fiscal year for
which Executive is eligible to receive such annual incentive bonus, as set forth
in Section 3(b)(iii) below.
(iii) XXX Benchmarks. The XXX benchmarks to be applied in
calculating Executive's annual incentive bonus are as follows:
1997 = 9.50%
Following the 1997 fiscal year, XXX benchmarks will be as
determined by the Board of Directors of Holding Company, or the Compensation
Committee thereof. XXX will be computed by net after-tax income divided by the
equity as of the last day of the previous year.
(iv) Time of Payment. Unless otherwise specified, each incentive
bonus earned will be paid in the fiscal year next succeeding the fiscal year
with respect to which Executive was eligible to earn the incentive bonus, within
thirty (30) days after receipt by Holding Company of final audit results for
such prior year's performance of the Holding Company.
(c) Stock Options in Lieu of Cash Bonus. Employer recognizes
Executive's preference to receive certain non-qualified stock options as
described below in lieu of the cash bonus under Section (b) hereof if such
arrangements can be made. The Holding Company intends to establish a program to
provide for the availability of non-qualified stock options ("Non-Qualified
Stock Options") with respect to the $1.00 par value common stock of the Holding
Company ("Common Stock"). If such a program is established, Executive will be
eligible to participate in this program in accordance with the program's
requirements, and, at his sole discretion, may receive the value of the annual
incentive bonus in the form of Non-Qualified Stock Options or in cash (or in a
combination thereof); provided, however, that to the extent Executive receives
Non-Qualified Stock Options, he will not also be entitled to the cash bonus
described in Section 3(b) above. The number of stock options to be received by
Executive shall be determined by the Board of Directors of the Holding Company
(or Compensation Committee thereof), based on the difference between $10.00 per
share and 150% of the book value of the Common Stock (as determined by such
Board or Compensation Committee). In no event shall Executive be entitled to
receive options to acquire more than 25,000 shares of Common Stock in lieu of
bonus pursuant to this Section 3(c). The form of the Non-Qualified Stock Option
agreement will be determined by the Board of Directors of the Holding Company
(or the Compensation Committee thereof), subject to the requirements of the
applicable stock option plan.
(d) Special Incentive. Executive will be eligible to receive a one-time
incentive for returning the Bank to "satisfactory" status with the Office of the
Comptroller of the Currency, currently defined as an overall "2" rating, during
the term of Executive's employment hereunder. The amount of this incentive
payment will be $10,000 and will be paid to Executive within thirty (30) days
after receipt of the final report from the regulators notifying Employer of the
requisite change of status.
(e) Withholding. All compensation paid to Executive will be subject to
state and federal income and employment tax withholding and any other
withholding requirements imposed by applicable law.
(f) Annual Review. Employer will review Executive's job performance,
base salary, and other compensation annually following the end of each fiscal
year, with the first review occurring in April 1998, or when 1997 final audit
results are available; provided, however, that Executive will receive no change
in the amount of Executive's base salary and eligibility for annual incentive
compensation under Section 3(b) hereof before May 2000.
4. Stock Options.
(a) Additional Non-Qualified Options. Holding Company will enter into
an agreement with Executive under which Holding Company will issue to Executive
Non-Qualified Stock Options to acquire 25,000 shares of Common Stock at an
option price of $10.00 per share. These Non-Qualified Stock Options will vest
over three (3) years (8,333 on December 31, 1997; 8,333 on December 31, 1998;
and 8,334 on December 31, 1999), shall be exercisable only if Executive is at
the time of exercise an Employee of the Holding Company (or within three months
thereafter), and shall be subject to such additional terms as are required
pursuant to the applicable option plan and option agreement under which such
options are granted. Each such Non-Qualified Stock Option shall expire seven (7)
years from its date of vesting.
(b) Time Period for Adopting Stock Option Plan. Subject to compliance
with applicable legal requirements, the Board of Directors of the Holding
Company shall adopt a stock option plan that will facilitate the issuance of the
Non-Qualified Stock Options described in Sections 3(c) and 4(a). If the Holding
Company is not able to issue Non-Qualified Stock Options to Executive as
contemplated by Section 4(a) of this Agreement, then Employer agrees to pay
Executive $160,000.00 in cash in lieu of such Non-Qualified Stock Options (such
amount to be prorated to the extent that a portion of such 25,000 Non-Qualified
Stock Options are issued to Executive). This sum will be payable over three
years, $55,000.00 on December 31, 1997; $55,000.00 on December 31, 1998; and
$50,000.00 on December 31, 1999, subject to proration as set forth above.
(c) Notwithstanding any other provision of this Agreement, Executive's
right to receive Non-Qualified Stock Options will cease upon his termination of
employment.
(d) The total number of shares of Common Stock with respect to which
Non- Qualified Stock Options are issued to Executive under Sections 3(c) and
4(a) of this Agreement shall not exceed 50,000.
5. Benefits and Expenses.
(a) Benefit Plans. Subject to the eligibility requirements of the
various arrangements, Executive will participate in sick leave, life, health,
and disability insurance programs, and the 401(k) plan available through the
Bank to its employees. If there are "waiting periods" under the Bank's health
insurance plan on account of pre-existing conditions or other requirements, the
Bank will pay the cost of maintaining Executive's current health insurance
coverage pursuant to COBRA continuation coverage until the Bank is able to
provide Executive with coverage under its health insurance plan.
(b) Vacation. Executive will receive four (4) weeks of paid vacation
annually with the amount available in 1997 to be determined on a pro rata basis,
based on the date Executive's employment begins. Vacation will be administered
in accordance with the policies and procedures applicable to other officers of
the Bank.
(c) Holidays. Executive will be entitled to the following paid
holidays: New Year's Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, Christmas Day, and any other Bank holidays.
(d) Automobile. The Bank will provide Executive with an automobile, of
a type to be determined by the Board of Directors of the Bank, suitable for
Executive's business use. During Executive's employment, the Bank will pay the
expenses associated with operating and maintaining this vehicle, including
without limitation lease (if any), maintenance, insurance, and fuel costs. Not
less frequently than once annually, Executive will make a good faith allocation
between business and personal use of such vehicle as required by Internal
Revenue Service guidelines, and neither Executive nor the Bank will take any
position on any income tax return, before any governmental agency, or in any
judicial or quasi-judicial proceeding that is inconsistent with such good faith
allocation.
(e) Club Membership. The Bank will provide Executive with a full family
golf and social membership at the Xxxxxxx Country Club. This includes payment by
the Bank of the required initiation fee and recurring monthly dues. Expenses
incurred by Executive at the Xxxxxxx Country Club for business entertainment and
verified by an appropriate receipt will be reimbursed.
(f) Professional Associations. The Bank holds memberships in several
bank professional associations, among them the Community Bankers Association
(Georgia) and Georgia Bankers Association. Executive's recommendations regarding
his participation at conferences and on committee assignments for these and
other professional associations will be reviewed in terms of cost and benefit to
the Bank.
(g) Professional Licensing and Education. Employer recognizes the value
of Executive's continuing professional education and commits to his
participation in such education. Executive's recommendations regarding his
participation in courses and seminars to increase or stay current with technical
and management issues will be reviewed in terms of cost and benefit to the
Employer.
(h) Relocation.
(i) Moving. It is agreed that Executive will move his residence
to Coffee County, Georgia as soon as possible. Employer will pay $3,000.00 for
the cost of relocating Executive's household goods.
(ii) Temporary Housing. While Executive is in transition,
Employer will provide him with up to $3,600.00 to cover the cost of duplicate
housing in Xxxxxxx while Executive's home is for sale. This is separate from the
relocation allowance described in the preceding Section.
(iii) Other Expenses. During Executive's employment, Employer
will reimburse him for other reasonable and necessary business expenses incurred
by Executive at the request of, or on behalf of, Employer in the performance of
his duties pursuant to this Agreement, including without limitation expenses
associated with entertainment, a car phone, and a pager. These expenses will be
reimbursed upon approval by either of the Boards following submission of
appropriate receipts related to such expenses.
6. Termination of Employment.
(a) Resignation by Executive. Executive may terminate his employment
under this Agreement, with or without cause, at any time upon thirty (30) days'
prior written notice to the Boards.
(b) Termination by Employer Without Cause. Subject to the provisions of
Section 7(a) below, Employer may terminate Executive's employment under this
Agreement without cause, at any time upon thirty (30) days' prior written notice
to Executive.
(c) Termination by Mutual Consent. This Agreement, and Executive's
employment, may be terminated at any time, without prior notice, upon the
mutual, written consent of all parties.
(d) Death or Disability. Executive's employment will terminate
immediately upon Executive's death or Executive's becoming unable, due to a
disability as defined under the Americans With Disabilities Act, to perform the
essential functions of his position with or without reasonable accommodation.
(e) Termination by Employer for Cause. Employer may terminate
Executive's employment under this Agreement for cause shown, immediately upon
written notice. For purposes of this Agreement, "cause" is limited to conduct by
Executive amounting to fraud, breach of fiduciary duty, dishonesty,
embezzlement, conviction of a felony or of any crime involving moral turpitude,
gross negligence, willful misconduct, violation of any applicable state or
federal banking statutes, rules or regulations, or persistent unsatisfactory
performance of assigned duties (without curing said unsatisfactory performance
twenty (20) days after receipt of written notice of such deficiency) that are
within the scope of those performed by a bank president and chief executive
officer in carrying out responsibility for the safety and soundness of the
Employer in the current regulatory environment.
7. Payment upon Termination of Employment.
(a) Termination By Employer Without Cause. In the event that
Executive's employment is terminated pursuant to Section 6(b) above, Executive
will be entitled to a severance payment equal to twelve (12) months of
Executive's then-current base compensation, to be paid, in the Employer's
discretion, (i) as a lump sum payment within thirty (30) days of the date of
termination, or (ii) in equal monthly installments over a period not to exceed
twelve (12) months.
(b) Termination By Employer for Cause. Termination of Executive's
employment for "cause" pursuant to Section 6(e) above will result in the
termination of all salary, incentive payments, stock options not already earned
or issued as of the date of termination. Unused, accrued vacation will not be
paid in the event of termination for cause.
(c) Termination by Resignation, Mutual Consent, Death, Disability. In
the event that Executive's employment is terminated pursuant to Sections 6(a),
(c) or (d), Executive will not be entitled to any compensation other than base
salary earned but not yet paid through the date of termination, pro-rata bonuses
and incentives (if applicable under and as calculated in Section 7(d) below),
and any unused vacation benefits (accrued on a pro-rata basis). In the event of
Executive's death, these amounts will be paid to Executive's estate.
(d) Pro Rata Payment of Bonuses/Incentives. For purposes of Section
7(a) and 7(c) above, bonuses and incentive payments will be calculated and paid
on a pro rata basis based on the number of days during which the Executive
served as President and Chief Executive Officer during the particular calendar
year, provided Executive is employed by Employer through June 30 of the calendar
year in question. Notwithstanding the foregoing, no bonuses and incentive
payments shall be payable in the event of termination for cause under Section
6(e).
(e) Benefit Eligibility in the Event of Disability or Death. In the
event that Executive's employment is terminated as a result of disability,
Executive will be entitled to long- term disability benefits as provided
pursuant to any group disability insurance policy maintained by Employer in
which Executive is a participant and which is in effect at the time of
termination. Normal base salary will be paid during any "waiting period" called
for by the policy before long-term disability benefits begin to be paid. In the
event that Executive's employment is terminated as a result of his death
pursuant to Section 6(d) above, Executive's eligible dependents will be entitled
to continue health insurance coverage in accordance with any applicable plan
documents and/or by operation of law.
(f) Change in Control. In the event of a "change in control" (as
defined below) in which Executive is not retained by the acquiring party in a
position of materially similar or greater authority, duties or responsibilities
for at least six (6) months following the change of control, Executive, at his
election, may (i) negotiate a new employment agreement with the acquiring party,
or (ii) terminate his employment and receive a lump sum payment equal to two (2)
times his annual base salary in full and final settlement of all amounts due
under this Agreement; provided, however, that any action taken with the consent
of Executive and any action which is promptly remedied after notice given by
Executive shall not give rise to Executive's rights under clauses (i) or (ii) of
this Section. For purposes of this Section, "change in control" shall mean: the
acquisition by any person, entity or "group," within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") of (a) beneficial ownership (within the meaning of Rule 13d-3
under the Exchange Act) of 50% or more of the then outstanding voting securities
of the Holding Company or the Bank (including an acquisition by merger), or (b)
all or substantially all of the assets of the Holding Company or the Bank, in
each case other than an acquisition of voting securities or assets of the Bank
by an entity controlled by or under common control with the Holding Company (as
"control" is defined for purposes of the Exchange Act).
8. Compliance with Applicable Law.
Executive will comply with all federal, state, and local laws,
statutes, regulations, rules, and ordinances applicable to his employment under
this Agreement, including but not limited to applicable federal and state
banking laws.
9. Non-Competition, Non-Solicitation, and Non-Disclosure Agreement.
(a) Non-Competition. Executive covenants and agrees that, during his
employment by the Employer and for a period of one (1) year after termination of
such employment for any reason, Executive will not, without prior written
consent of the Boards, directly or indirectly within the Territory, (i) for
himself, (ii) as a consultant, manager, supervisor, employee or owner of a
competing bank or financial institution, or (iii) as an independent contractor
for a competing bank or financial institution, perform any duties which are the
same or substantially similar to his duties for the Employer as are assigned to
him from time to time by the Boards. "Territory" is defined as the geographical
area consisting of the city of Douglas, Georgia and the area within a 00-xxxx
xxxxxx xx Xxxxxxx, Xxxxxxx, which all parties acknowledge comprise the service
area of the Employer.
(b) Non-Solicitation of Customers. Executive covenants and agrees that,
during his employment by the Employer and for a period of one (1) year after
termination of such employment for any reason, Executive will not, without prior
written consent of the Boards, directly or indirectly within the Territory, (i)
for himself, (ii) as a consultant, manager, supervisor, employee or owner of a
competing bank or financial institution, or (iii) as an independent contractor
for a competing bank or financial institution, solicit or attempt to divert or
appropriate to a competing business, any customer of the Bank to whom the Bank
provided any commercial banking services within the twelve (12) month period
prior to Executive's termination of employment.
(c) Non-Solicitation of Employees and Others. Executive covenants and
agrees that, during his employment by the Employer and for a period of one (1)
year after termination of such employment for any reason, Executive will not,
without prior written consent of the Boards, directly or indirectly, (i) for
himself, (ii) as a consultant, manager, supervisor, employee or owner of a
competing bank or financial institution, or (iii) as an independent contractor
for a competing bank or financial institution, solicit or attempt to divert or
appropriate to a competing business, any person who is employed by or associated
with the Employer as of the date of termination of Executive's employment or
within sixty days prior to such termination (including, but not limited to, any
organizations with whom the Employer has a contractual, agency, employment or
independent contractor relationship).
(d) Non-Disclosure. For a period of one (1) year from Executive's
termination for any reason, Executive will not directly or indirectly disclose
or give to others any confidential or proprietary fact or information not
generally available to the public concerning the Employer's financial operations
and businesses. Such trade secret or confidential or proprietary fact or
information includes but is not limited to business plans, financial
information, financial systems, financing arrangements, customer lists and any
other secret or confidential information relating to customer accounts, customer
needs, organization, strategy, research and development, design, drawings,
specifications, techniques, processes, procedures, "know-how," marketing
techniques and materials, marketing and development plans, fee lists, fee
policies or any other confidential information relating to customers.
(e) Modification of "Territory". Executive acknowledges that from time
to time Executive and Employer may agree to change the definition of "Territory"
as defined above. Any such changes will be binding upon Executive.
10. Contingency.
This Agreement is subject to and contingent upon Executive's
securing all required approvals by bank regulatory agencies and Employer's
obtaining satisfactory reports on checks of Executive's background.
11. Damages and Injunctive Relief.
(a) Acknowledgment. Executive acknowledges that compliance with the
obligations under the non-competition, non-solicitation and non-disclosure
provisions of this Agreement is necessary to protect the business and goodwill
of Employer and that a breach of these provisions may cause irreparable and
continual injury to Employer, entitling Employer to seek and obtain (i)
compensation and damages; and (ii) injunctive relief against the breach or
threatened breach of those provisions, in addition to other remedies at law or
in equity which may be available. Executive further acknowledges that the
non-competition, non-solicitation and non-disclosure provisions of this
Agreement are reasonable in scope and restriction, in light of his duties for
the Employer, the information and customers to which Executive will have access,
and the territory in which the Bank serves its customers. Executive further
acknowledges that the non- competition, non-solicitation and non-disclosure
provisions of this Agreement are intended to be separate covenants, and the
enforcement or validity of one is not in any way dependent upon the enforcement
of validity of the others. Finally, Executive acknowledges that the employment,
compensation and severance payments contemplated by this Agreement are
consideration for the non-competition, non-solicitation and non-disclosure
agreements, and that his failure to comply strictly with any of these covenants
shall be a basis for immediate termination of any further payments following the
date of noncompliance.
(b) Waiver. The obligations or requirements of this Section may be
waived by Employer in writing.
(c) Survival. The obligations contained in this Section shall survive
the termination of this Agreement or the employment relationship.
12. Arbitration.
Any dispute, controversy, or claim arising out of or in
connection with, or relating to, this Agreement or any breach or alleged breach
of this Agreement will, upon the request of any party involved, be submitted to,
and settled by, arbitration in the State of Georgia, pursuant to the commercial
arbitration rules then in effect of the American Arbitration Association (or at
any time or at any other place or under any other form of arbitration mutually
acceptable to the parties involved). Any award rendered will be final and
conclusive upon the parties and a judgment on such award may be entered in the
highest court of the forum, state or federal, having jurisdiction. The expenses
of the arbitration will be borne equally by the parties to the arbitration,
provided that each party will pay for and bear the cost of its own experts,
evidence, and counsel's fees, except that in the discretion of the arbitrator,
any award may include the cost of a party's counsel if the arbitrator expressly
determines that the party against whom such award is entered has caused the
dispute, controversy, or claim to be submitted to arbitration in bad faith or as
a delaying tactic.
13. Miscellaneous.
(a) Modification. Should any portion, provision, or clause of this
Agreement be deemed too broad to permit enforcement to its full extent, then it
will be enforced to the maximum extent permitted by law, and Executive agrees
that such scope may be modified in any proceeding brought to enforce such
restriction.
(b) Nonassignability; Binding Agreement. Neither this Agreement nor any
right, duty, obligation, or interest in it is assignable or delegable by
Executive without Employer's prior written consent; provided, however, that any
obligations of the parties will terminate upon Executive's death (except as to
vested benefits or amounts due under any insurance policies upon death).
(c) Binding Effect. This Agreement is binding upon, and inures to the
benefit of, the parties, any successors to or assigns of Employer, and
Executive's heirs and the personal representatives of Executive's estate.
(d) Severability. It is expressly agreed that each section, covenant,
or provision of this Agreement is separate, distinct, and severable from the
other sections, covenants, or provisions of this Agreement and that the
unenforceability of any section, covenant, or provision will not affect the
validity or enforceability of the remainder of this Agreement.
(e) Complete Understanding. This Agreement reflects the complete
understanding between Executive and Employer, and supersedes all previous
agreements, if any, between the parties concerning the matters addressed in this
Agreement.
(f) Amendment; Waiver. No alteration or modification to any of the
provisions contained in this Agreement will be valid unless made in writing and
signed by the parties to the Agreement.
(g) Applicable Law. It is agreed that all aspects of the employment
relationship, including the terms outlined in this Agreement will be governed by
and construed and enforced in accordance with the laws of the State of Georgia.
(h) Headings. The section headings in this Agreement are inserted for
convenience only and are not a part of the Agreement.
(i) Notices. Any notice required or permitted by this Agreement will be
given in writing, by personal delivery, certified mail (return receipt
requested), or overnight or special courier, to the address specified below the
parties' respective signatures to this Agreement, or to such other address as
may be specified by notice from time to time by Executive or Employer. A notice
is deemed given, if by personal delivery or overnight or special courier, on the
date of such delivery or, if by certified mail, on the date shown on the
applicable return receipt.
(j) Counterparts. This Agreement may be executed by the parties in
counterpart, each of which shall be deemed to be an original, but all such
counterparts will together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
_______ day of ______________, 1997, effective as set forth above.
FIRST NATIONAL BANK OF COFFEE COUNTY and FNC
BANCORP, INC.
Signature:
Xxxxxx X. Cation, Chairman
Address: 000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
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Xxxxxxx X. Xxxxxxx
Address:
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