NOTICE: THIS CONTRACT IS SUBJECT TO ARBITRATION PURSUANT TO THE SOUTH CAROLINA UNIFORM ARBITRATION ACT NONCOMPETITION, SEVERANCE AND EMPLOYMENT AGREEMENT Between CAROLINA FIRST BANK and MAURICE J. SPAGNOLETTI
Exhibit 10.7
STRICTLY CONFIDENTIAL
NOTICE: THIS CONTRACT IS SUBJECT TO ARBITRATION PURSUANT
TO THE SOUTH CAROLINA UNIFORM ARBITRATION ACT
TO THE SOUTH CAROLINA UNIFORM ARBITRATION ACT
NONCOMPETITION,
SEVERANCE AND EMPLOYMENT AGREEMENT
Between
CAROLINA FIRST BANK and XXXXXXX X. XXXXXXXXXXX
SEVERANCE AND EMPLOYMENT AGREEMENT
Between
CAROLINA FIRST BANK and XXXXXXX X. XXXXXXXXXXX
This Amended and Restated Noncompetition, Severance and Employment Agreement (this
“Agreement”) is made and entered into as of this February 25, 2008, by and between Xxxxxxx X.
Xxxxxxxxxxx, an individual (the “Executive”), and Carolina First Bank, a South Carolina corporation
headquartered in Greenville, South Carolina (the “Company”) and wholly owned subsidiary of The
South Financial Group, Inc. (“TSFG”).
RECITALS
The Company’s Board of Directors (the “Board”) believes that the Executive has been
instrumental in the success of the Company.
The Company desires to continue to employ the Executive as Carolina First Bank — South
Carolina.
The terms hereof are consistent with the executive compensation objectives of the Company as
established by the Board.
The Executive is willing to accept the employment contemplated herein under the terms and
conditions set forth herein.
This Agreement amends and restates the original agreement between the Executive and the
Company dated May 8, 2006.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements
contained herein and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. Employment. Subject to the terms and conditions hereof, the Company hereby employs
the Executive and Executive hereby accepts such employment as the President Carolina First Bank —
South Carolina having such duties and responsibilities as are set forth in Section 3 below.
2. Definitions. For purposes of this Agreement, the following terms shall have the
meanings specified below.
“Agreement” shall have the meaning set forth in the preamble.
“Annual Base Salary” shall have the meaning set forth in Section 6.1.
“Annual Bonus Amount” shall mean the average of the annual cash bonuses earned by Executive
under any written short-term (i.e. one year) plan (regardless of whether a particular bonus has yet
been paid or whether any portion thereof was deferred) as a result of employment by the Company and
its affiliates over the three year period immediately preceding the date of termination. In
calculating the Annual Bonus Amount: (i) if one of the year’s bonuses in the calculation period was
based on a period of less than 12 full months, then such annual bonus amount shall be annualized;
(ii) if Executive was employed for less than three years and had not yet earned a bonus in year two
and/or year three (as applicable) because Executive was not employed at December 31 of that year,
then the Annual Bonus Amount shall be calculated based solely on the years in which Executive was
employed at the end of the year; (iii) if Executive shall not have
been employed long enough to earn a cash bonus, then the Annual Bonus Amount will be deemed to
be the Executive’s target bonus amount.
“Board” shall mean the Board of Directors of TSFG.
“Cause” shall mean:
(i) In the absence of a Change in Control: (a) fraud; (b) embezzlement; (c) conviction of the
Executive of any felony; (d) a material breach of, or the wilful failure or refusal by the
Executive to perform and discharge the Executive’s duties, responsibilities and obligations under
this Agreement; (e) any act of moral turpitude or wilful misconduct by the Executive intended to
result in personal enrichment of the Executive at the expense of the Company, or any of its
affiliates or which has a material adverse impact on the business or reputation of the Company or
any of its affiliates (such determination to be made by the Board in its reasonable judgment); (f)
intentional material damage to the property or business of the Company; (g) gross negligence; or
(h) the ineligibility of the Executive to perform Executive’s duties because of a ruling, directive
or other action by any agency of the United States or any state of the United States having
regulatory authority over the Company.
(ii) After a Change in Control: (a) material criminal fraud, (b) gross negligence, (c)
material dereliction of duties, (d) intentional material damage to the property or business of the
Company, or (e) the commission of a material felony, in each case, as determined in the reasonable
discretion of the Board, but only if (1) the Executive has been provided with written notice of any
assertion that there is a basis for termination for cause which notice shall specify in reasonable
detail specific facts regarding any such assertion, (2) such written notice is provided to the
Executive a reasonable time before the Board meets to consider any possible termination for cause,
(3) at or prior to the meeting of the Board to consider the matters described in the written
notice, an opportunity is provided to the Executive and Executive’s counsel to be heard before the
Board with respect to the matters described in the written notice, (4) any resolution or other
Board action held with respect to any deliberation regarding or decision to terminate the Executive
for cause is duly adopted by a vote of a majority of the entire Board of the Company at a meeting
of the Board called and held and (5) the Executive is promptly provided with a copy of the
resolution or other corporate action taken with respect to such termination. No act or failure to
act by the Executive shall be considered wilful unless done or omitted to be done by Executive not
in good faith and without reasonable belief that Executive’s action or omission was in the best
interests of the Company. The unwillingness of the Executive to accept any or all of a change in
the nature or scope of Executive’s position, authorities or duties, a reduction in Executive’s
total compensation or benefits, a relocation that he deems unreasonable in light of Executive’s
personal circumstances, or other action by or upon request of the Company in respect of Executive’s
position, authority, or responsibility that he reasonably deems to be contrary to this Agreement,
may not be considered by the Board to be a failure to perform or misconduct by the Executive.
“Change in Control” shall mean:
(i) when any Person or Persons acting as “group” (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act and within the meaning of Section 409A of the Code and applicable
regulations thereunder) acquires directly or indirectly, securities of TSFG representing an
aggregate of more than 50% of the combined voting power of TSFG’s then outstanding voting
securities other than an acquisition by:
| (A) | any employee plan established by TSFG; | ||
| (B) | TSFG or any of its affiliates (as defined in Rule 12b-2 promulgated under the Exchange Act); | ||
| (C) | an underwriter temporarily holding securities pursuant to an offering of such securities; | ||
| (D) | a corporation owned, directly or indirectly, by stockholders of TSFG in substantially the same proportions as their ownership of TSFG; or | ||
| (E) | except as provided in clause (iii) below, merger or consolidation of TSFG with any other corporation which is duly approved by the stockholders of TSFG; or |
(ii) when a majority of the board of directors of TSFG is replaced during any 12-month period
and such new appointments are not approved by a majority of the members of the current board prior
to the date of appointment or election; or
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(iii) The consummation of a merger, sale of substantially all assets, consolidation or similar
transaction between TSFG and any other corporation other than (A) such a transaction that would
result in the voting securities of TSFG outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting securities of the
surviving entity or any parent thereof), in combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan of any company, at least a majority of
the combined voting power of the voting securities of TSFG or such surviving entity or any parent
thereof outstanding immediately after such merger or consolidation; or (B) such a transaction
effected to implement a recapitalization of TSFG (or similar transaction) in which no Person is or
becomes the beneficial owner (as defined in clause (i) above), directly or indirectly, of
securities of TSFG (not including in the securities beneficially owned by such Person any
securities acquired directly from TSFG) representing a majority of the combined voting power of
TSFG’s then outstanding voting securities; or (C) a plan of complete liquidation of TSFG.
“Code” shall mean the Internal Revenue Code of 1986, as amended, or any successor statute,
rule or regulation of similar effect.
“Company” shall have the meaning set forth in the preamble.
“Compensation” shall mean the sum of (i) Executive’s Annual Base Salary (as defined in Section
6.1), and (ii) Executive’s Annual Bonus Amount.
“Competitor” shall have the meaning set forth in Section 9.
“Confidential Information” shall mean all business and other information relating to the
business of the Company and its affiliates, including without limitation, technical or nontechnical
data, programs, methods, techniques, processes, financial data, financial plans, product plans, and
lists of actual or potential customers, which (i) derives economic value, actual or potential, from
not being generally known to, and not being readily ascertainable by proper means by, other
Persons, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain
its secrecy or confidentiality. Such information and compilations of information shall be
contractually subject to protection under this Agreement whether or not such information
constitutes a trade secret and is separately protectable at law or in equity as a trade secret.
Confidential Information shall not include any of the foregoing that does not constitute a trade
secret under applicable law two years after any expiration or termination of this Agreement.
“Disability” or “Disabled” shall mean any medically determinable physical or mental impairment
that can be expected to result in death or can be expected to last for a continuous period of not
less than 12 months which results in (i) Executive being unable to engage in any substantial
gainful activity or (ii) Executive receiving income replacement benefits for a period of not less
than 3 months under an accident and health plan (including disability benefits) covering employees
of the Company. In addition, Executive will be deemed disabled if determined to be totally
disabled by the Social Security Administration, or if determined to be disabled in accordance with
a disability insurance program provided the definition of disability applied under such disability
insurance program complies with the requirements of the preceding sentence.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
“Executive” shall have the meaning set forth in the preamble.
“Noncompete Period” shall have the meaning set forth in Section 9.
“Involuntary Termination” shall mean the termination of Executive’s employment by the
Executive following a Change in Control which, in the sole judgment of the Executive, is due to (i)
a change of the Executive’s responsibilities, position (including status as President Carolina
First Bank — South Carolina, its
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successor or ultimate parent entity, office, title, reporting
relationships or working conditions), authority or duties (including changes resulting from the
assignment to the Executive of any duties inconsistent with Executive’s positions, duties or
responsibilities as in effect immediately prior to the Change in Control); or (ii) a change in the
terms or status (including the rolling three year termination date) of this Agreement; or (iii) a
reduction in the Executive’s compensation or benefits; or (iv) a forced relocation of the Executive
outside the Greenville metropolitan area; or (v) a significant increase in the Executive’s travel
requirements (collectively “Status Changes”); provided, however, Executive must elect to terminate
Executive’s employment within two (2) years of the Status Change on which Executive bases
Executive’s employment termination.
“Other Benefits” means (i) any unpaid base salary through the date of termination and (ii)
amounts that are vested benefits or that Executive is otherwise entitled to receive under any plan,
policy, practice or program of or any other contract or agreement with the Company or its
affiliates (other than this Agreement) at or subsequent to the date of termination in accordance
with the terms of such plan, policy, practice or program or contract or agreement, except as
explicitly modified by this Agreement. Notwithstanding the foregoing, “Other Benefits” shall not
include any severance pay or benefits under any severance plan, program or policy of the Company
and its affiliates. Without limiting the generality of the foregoing, the Executive’s resignation
under this Agreement for any reason, shall in no way affect the Executive’s ability to terminate
employment by reason of the Executive’s “retirement” under any compensation and benefits plans,
programs or arrangements of the Company or its affiliates, including without limitation any
retirement or pension plans or arrangements or to be eligible to receive benefits under any
compensation or benefit plans, programs or arrangements of the Company or its affiliates, including
without limitation any retirement or pension plan or arrangement of the Company or its affiliates
or substitute plans adopted by the Company or its successors, and any termination which otherwise
qualifies as Involuntary Termination shall be treated as such even if it is also a “retirement” for
purposes of any such plan.
“Person” shall mean any individual, corporation, bank, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or other entity.
“Vesting Benefits” shall mean the following: (i) all rights of Executive pursuant to equity
compensation grants including stock options granted by the Company shall vest and shall be released
from all conditions and restrictions, except for restrictions on transfer pursuant to the
Securities Act of 1933, as amended; (ii) subject to applicable legal limits to the contrary,
including limits applicable to incentive stock options under the Code, Executive shall have the
lesser of (a) three years from the date of such termination or (b) until the end of the scheduled
term of any such stock option to exercise any outstanding stock options; (iii) Executive shall be
entitled to any benefits to which Executive is entitled under the Supplemental Executive Retirement
Agreement in accordance with the terms thereof; and (iv) for three years after Executive’s date of
termination, or such longer period as may be provided by the terms of the appropriate plan,
program, practice or policy, (the “Benefit Continuation Period”), the Company shall continue health
care and life insurance benefits to the Executive and/or the Executive’s family at least equal to
those that would have been provided to them in accordance with the plans, programs, practices and
policies providing health care and life insurance benefits and at the benefit level as if the
Executive’s employment had not been terminated or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of the Company and its
affiliates and their families; provided, however, that, the health care benefits provided during
the Benefit Continuation Period shall be provided in such a manner that such benefits (and the
costs and premiums thereof) are excluded from the Executive’s income for federal income tax
purposes and, if the Company reasonably determines that providing continued coverage under one or
more of its health care benefit plans contemplated herein could be taxable to the Executive, the
Company shall provide such benefits at the level required hereby through the purchase of individual
insurance coverage; provided, however, that if the Executive becomes re-employed with another
employer and is eligible to receive health care and life insurance benefits under another
employer-provided plan, the health care and life benefits
provided hereunder shall be secondary to those provided under such other plan during such
applicable period of eligibility.
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3. Duties. During the Term hereof, Executive shall have such duties and authority as
are commensurate with Executive’s position as set forth in Section 1, including, without
limitation, any such duties and authority as may be specified in the Company’s Bylaws. Executive
agrees that during the Term hereof, he will devote Executive’s full time, attention and energies to
the diligent performance of Executive’s duties. Executive shall not, without the prior written
consent of the Company, at any time during the Term hereof (i) accept employment with, or render
services of a business, professional or commercial nature to, any Person other than the Company,
(ii) engage in any venture or activity which the Company may in good faith consider to be
competitive with or adverse to the business of the Company or of any affiliate of the Company,
whether alone, as a partner, or as an officer, director, employee or shareholder or otherwise,
except that the ownership of not more than 5% of the stock or other equity interest of any publicly
traded corporation or other entity shall not be deemed a violation of this Section, or (iii) engage
in any venture or activity which the Board may in good faith consider to interfere with Executive’s
performance of Executive’s duties hereunder.
4. Term. Unless earlier terminated as provided herein, Executive’s employment
hereunder shall be for a rolling term of three years commencing on the date hereof (the “Term”).
This Agreement shall be deemed to extend each day for an additional day automatically without any
action on behalf of either party hereto; provided, however, that either party may, by written
notice to the other, cause this Agreement to cease to extend automatically and upon such notice,
the “Term” of this Agreement shall be the three years following the date of such notice, and this
Agreement shall terminate upon the expiration of such Term.
5. Termination. This Agreement may be terminated as follows:
5.1 The Company. The Company may terminate Executive’s employment hereunder at any
time during the Term hereof, whether prior to or after a Change in Control (i) for Cause, (ii) if
Executive becomes Disabled, (iii) upon Executive’s death, (iv) without Cause, or (v) if the
Company, in its sole discretion, elects not to create the position of Chief Banking Officer before
May 22, 2008, or if Executive is not selected to be the Chief Banking Officer when that position is
created and first filled, provided the Company terminates Executive’s employment within ninety (90)
days of May 22, 2008, or of another person’s appointment to that position.
5.1.1 If the Company terminates Executive’s employment under this Agreement pursuant to clause
(i) of Section 5.1, the Company’s obligations hereunder shall cease as of the date of termination.
5.1.2 If the Company terminates Executive’s employment under this Agreement pursuant to
clauses (ii) or (iii) of Section 5.1, the Company’s obligations hereunder shall cease as of the
date of termination except that Executive or Executive’s estate will be entitled to receive (1) the
Other Benefits and (2) an amount equal to the product of (x) Executive’s target annual cash bonus
for the year in which the date of termination or death occurs and (y) a fraction, the numerator of
which is the number of days in the current fiscal year through the date of termination or death and
the denominator of which is 365.
5.1.3 (a) If the Company terminates Executive’s employment pursuant to clause (iv) of Section
5.1 prior to a Change in Control, Executive shall be entitled to receive (1) the Other Benefits and
(2) immediately in a lump sum in cash as severance upon such termination, a multiple of Executive’s
Compensation equal to the number of years (including any partial years) remaining under the Term of
this Agreement.
(b) If the Company terminates Executive’s employment pursuant to clause (iv) of Section 5.1
after a Change in Control, Executive shall be entitled to receive (1) the Other Benefits, (2) the
Vesting Benefits and (3) immediately in a lump sum in cash as severance upon such termination, a
multiple of Executive’s Compensation equal to the number of years (including any partial years)
remaining under the Term of this Agreement.
5.1.4 If the Company terminates Executive’s employment under this Agreement pursuant to clause
(v) of Section 5.1, Executive shall be entitled to receive immediately in a lump sum in cash
as severance an amount equal to one times the Executive’s Compensation. Provided, however,
Executive will be paid his reasonable moving expenses to a destination within the Continental
United States.
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5.2 By Executive. Executive shall have the right to terminate Executive’s employment
during the Term (i) if the Company materially breaches this Agreement and such breach is not cured
within 30 days after written notice of such breach is given by Executive to the Company, (ii) if
there is an Involuntary Termination, (iii) for any other reason than clauses (i), (ii) or (iv), or
(iv) if the Company, in its sole discretion, elects not to create the position of Chief Banking
Officer before May 22, 2008, or if Executive is not selected to be the Chief Banking Officer when
that position is created and first filled, provided the Executive terminates his employment within
ninety (90) days of May 22, 2008, or of another person’s appointment to that position.
5.2.1 (a) If Executive terminates Executive’s employment pursuant to clause (iii) of Section
5.2 prior to a Change in Control, the Company’s obligations under this Agreement shall cease as of
the date of such termination.
(b) If Executive terminates Executive’s employment pursuant to clause (iii) of Section 5.2,
after a Change in Control, the Executive shall be entitled to receive (i) the Other Benefits and
(ii) immediately in a lump sum in cash as severance upon such termination, one times Executive’s
Compensation.
5.2.2 (a) If Executive terminates Executive’s employment hereunder pursuant to clause (i) of
Section 5.2 during the two (2) year period following a Change in Control, or pursuant to clause
(ii) of Section 5.2, Executive shall be entitled to receive (1) the Other Benefits, (2) the Vesting
Benefits and (3) immediately in a lump sum in cash as severance upon such termination, the greater
of two times Executive’s Compensation or a multiple of Executive’s Compensation equal to the number
of years (including any partial years) remaining under the Term of this Agreement.
(b) If Executive terminates Executive’s employment pursuant to clause (i) of Section 5.2 other
than under the circumstances described in the immediately preceding clause (a), Executive shall be
entitled to receive (1) the Other Benefits, (2) the Vesting Benefits, and (3) immediately in a lump
sum as severance upon such termination, a multiple of Executive’s Compensation equal to the number
of years (including any partial years) remaining under the Term of this Agreement.
5.2.3 If Executive terminates Executive’s employment under this Agreement pursuant to clause
(iv) of Section 5.2, Executive shall be entitled to receive immediately in a lump sum in cash as
severance an amount equal to one times the Executive’s Compensation. Provided, however, Executive
will be paid his reasonable moving expenses to a destination within the Continental United States.
6 Compensation. In consideration of Executive’s services and covenants hereunder,
Company shall pay to Executive the compensation and benefits described below (which compensation
shall be paid in accordance with the normal compensation practices of the Company, provided
that Executive’s salary pursuant to Section 6.1 shall be payable not less frequently than monthly):
6.1 Annual Base Salary. During the Term hereof, the Company shall pay to Executive a
base salary established by the Company which for the first year of the Term shall be $350,000.00
(the “Annual Base Salary”). Executive’s salary will be reviewed at the beginning of each of its
fiscal years and, in the sole discretion of the Company, may be increased for such year (but not
decreased). All references herein to Annual Base Salary shall refer to Executive’s base salary as
so increased.
6.2 Annual Incentive Bonus. During Executive’s employment, the Executive shall
participate in the Management Performance Incentive Plan or any successor thereto on terms equal to
similarly situated officers. For Plan Year 2006, the Company guarantees that Executive will
receive a minimum payout equal to the 50% target of $175,000, plus an additional $25,000, for a
total of no less than $200,000.
6.3 Long Term Incentive Plan. During Executive’s employment, the Executive shall
participate in the Long Term Incentive Plan or any successor thereto on terms equal to similarly
situated officers.
6.4 Supplemental Executive Benefit Plan. During Executive’s employment, Executive
shall be entitled to participate in a Supplemental Executive Retirement Agreement.
6.5 Equity Compensation Awards. During Executive’s employment, the Company may grant
Executive equity compensation awards based on the Company’s common stock as determined by the
Company.
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6.6 Miscellaneous Benefits. During Executive’s employment, Executive shall be
entitled to participate in any other employee benefit plan, programs, policies or other
arrangements generally provided by the Company to its comparable ranking executives for so long as
the Company provides such benefits. The Company agrees to provide Executive, during the Term
hereof, with a $1.0 million term life insurance policy. The Company agrees to provide Executive a
taxable car allowance of no less than $1,600 per month. The Company agrees to reimburse Executive
for monthly dues, including initiation fees to both an appropriate club membership and a social
club membership. During the Term, Executive shall also be entitled to participate in all other
benefits accorded general Company employees.
6.7 Signing Bonus. On or before Friday, June 30, 2006, Executive shall receive a
one-time signing bonus in the gross amount of seventy-five thousand dollars ($75,000), less
applicable federal and state tax withholding and any other applicable deductions.
6.8 Relocation. The Company will pay for the movement of household goods from
Executive’s primary residence to the Greenville, South Carolina area, provided the move is through
Xxxxx Xxxx Line Moving & Storage and coordinated through OneSource Relocation Company, and provided
further that the relocation benefits available are those set forth in the Company’s offer letter to
Executive dated April 17, 2006.
7. Excess Parachute Payments.
7.1 Anything in this Agreement to the contrary notwithstanding and except as set forth below,
in the event it shall be determined that any Payment would be subject to the Excise Tax, then
Executive shall be entitled to receive an additional payment (the “Gross-Up Payment”) in an amount
such that, after payment by Executive of all taxes (and any interest or penalties imposed with
respect to such taxes), including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, but
excluding any income taxes and penalties imposed pursuant to Section 409A of the Code, Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
Notwithstanding the foregoing provisions of this Section 7.1, if it shall be determined that
Executive is entitled to the Gross-Up Payment, but that the Parachute Value of all Payments does
not exceed 110% of the Safe Harbor Amount, then no Gross-Up Payment shall be made to Executive and
the amounts payable under this Agreement shall be reduced so that the Parachute Value of all
Payments, in the aggregate, equals the Safe Harbor Amount. The reduction of the amounts payable
hereunder, if applicable, shall be made by reducing the cash severance payments. For purposes of
reducing the Payments to the Safe Harbor Amount, only the cash severance payments payable under
this Agreement (and no other Payments) shall be reduced. If the reduction of the amount of cash
severance payments payable under this Agreement would not result in a reduction of the Parachute
Value of all Payments to the Safe Harbor Amount, no amounts payable under the Agreement shall be
reduced pursuant to this Section 7.1. The Company’s obligation to make Gross-Up Payments under
this Section 7 shall not be conditioned upon Executive’s termination of employment.
7.2 Subject to the provisions of Section 7.3, all determinations required to be made under
this Section 7, including whether and when a Gross-Up Payment is required, the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be
made by Pricewaterhouse Coopers, or such other nationally recognized certified public accounting
firm as may be designated by Executive (the “Accounting Firm”). The Accounting Firm shall provide
detailed supporting calculations both to the Company and Executive within 15 business days of the
receipt of notice from Executive that there has been a Payment or such earlier time as is requested
by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the
individual, entity or group effecting the Change in Control, Executive may appoint another
nationally recognized accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses
of the Accounting Firm shall be borne solely by the Company. Any determination by the Accounting
Firm shall be binding upon the Company and Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments that will not have been made by
the Company should have been made (the “Underpayment”), consistent with the calculations required
to be made hereunder. In the event the Company exhausts its remedies pursuant to Section 7.3 and
Executive
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thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of Executive.
7.3 The Executive shall notify the Company in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable, but no later than 10 business days after
Executive is informed in writing of such claim. The Executive shall apprise the Company of the
nature of such claim and the date on which such claim is requested to be paid. The Executive shall
not pay such claim prior to the expiration of the 30-day period following the date on which
Executive gives such notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that the Company desires to contest such claim,
Executive shall:
| 1. | give the Company any information reasonably requested by the Company relating to such claim, | ||
| 2. | take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, | ||
| 3. | cooperate with the Company in good faith in order effectively to contest such claim; and | ||
| 4. | permit the Company to participate in any proceedings relating to such claim; |
provided, however, that the Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest, and shall indemnify
and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties) imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this Section 7.3, the Company shall
control all proceedings taken in connection with such contest, and, at its sole discretion, may
pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the
applicable taxing authority in respect of such claim and may, at its sole discretion, either pay
the tax claimed to the appropriate taxing authority on behalf of Executive and direct Executive to
xxx for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute
such contest to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall determine; provided,
however, that, if the Company pays such claim and directs Executive to xxx for a refund, the
Company shall indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties) imposed with respect to such payment or with respect
to any imputed income in connection with such payment; and provided, further, that any extension of
the statute of limitations relating to payment of taxes for the taxable year of Executive with
respect to which such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect
to which the Gross-Up Payment would be payable hereunder, and Executive shall be entitled to settle
or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
7.4 If, after the receipt by Executive of a Gross-Up Payment or payment by the Company of an
amount on Executive’s behalf pursuant to Section 7.3, Executive becomes entitled to receive any
refund with respect to the Excise Tax to which such Gross-Up Payment relates or with respect to
such claim, Executive shall (subject to the Company’s complying with the requirements of Section
7.3, if applicable) promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after payment by the
Company of an amount on Executive’s behalf pursuant to Section 7.3, a determination is made that
Executive shall not be entitled to any refund with respect to such claim and the Company does not
notify Executive in writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then the amount of such payment shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.
7.5 Any Gross-Up Payment, as determined pursuant to this Section 7, shall be paid by the
Company to Executive within five days of the receipt of the Accounting Firm’s determination;
provided that, the Gross-Up Payment shall in all events be paid no later than the end of
Executive’s taxable year next
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following Executive’s taxable year in which the Excise Tax (and any
income or other related taxes or interest or penalties thereon) on a Payment are remitted to the
Internal Revenue Service or any other applicable taxing authority or, in the case of amounts
relating to a claim described in Section 7.3 that does not result in the remittance of any federal,
state, local and foreign income, excise, social security and other taxes, the calendar year in
which the claim is finally settled or otherwise resolved. Notwithstanding any other provision of
this Section 7, the Company may, in its sole discretion, withhold and pay over to the Internal
Revenue Service or any other applicable taxing authority, for the benefit of Executive, all or any
portion of any Gross-Up Payment, and Executive hereby consents to such withholding.
7.6 Definitions. The following terms shall have the following meanings for purposes of this
Section 7.
“Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, together with any
interest or penalties imposed with respect to such excise tax.
“Parachute Value” of a Payment shall mean the present value as of the date of the change of
control for purposes of Section 280G of the Code of the portion of such Payment that constitutes a
“parachute payment” under Section 280G(b)(2), as determined by the Accounting Firm for purposes of
determining whether and to what extent the Excise Tax will apply to such Payment.
A “Payment” shall mean any payment or distribution in the nature of compensation (within the
meaning of Section 280G(b)(2) of the Code) to or for the benefit of Executive, whether paid or
payable pursuant to this Agreement or otherwise.
The “Safe Harbor Amount” means 2.99 times Executive’s “base amount,” within the meaning of
Section 280G(b)(3) of the Code.
8. Confidentiality. Executive shall hold in a fiduciary capacity for the benefit of
the Company all Confidential Information relating to the Company or any of its affiliates, and
their respective businesses, which shall have been obtained by Executive during Executive’s
employment by the Company or any of its affiliates. After termination of Executive’s employment
with the Company for any reason, Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those designated by it. Upon
the termination or expiration of Executive’s employment hereunder, Executive agrees to deliver
promptly to the Company all Company files, customer lists, management reports, memoranda, research,
Company forms, financial data and reports and other documents supplied to or created by Executive
in connection with Executive’s employment hereunder (including all copies of the foregoing) in
Executive’s possession or control and all of the Company’s equipment and other materials in
Executive’s possession or control.
9. Noncompetition and Nonsolicitation Agreement.
9.1 During the term hereof and for the two year period following the date of termination of
employment for any reason (the “Noncompete Period”), Executive shall not directly or indirectly
enter into an employment relationship or a consulting arrangement (or other economically beneficial
arrangement) with any other bank, thrift or lending institution, including such entities “in
organization” (a “Competitor”) which would involve Executive working in, consulting with respect
to, overseeing or otherwise servicing any market area or customers over which Executive had
responsibility at the time of his termination or during the two years immediately prior to such
termination. The obligations contained in this Section 9 shall not prohibit Executive from being an
owner of not more than 5% of the outstanding stock of any class of a corporation which is publicly
traded, so long as Executive has no active participation in the business of such corporation.
9.2 During the Noncompete Period, Executive shall not directly or indirectly, either as an
independent contractor, employee, consultant, agent, partner, joint venturer or otherwise through
another person or entity, including but not limited to a Competitor, (i) solicit, induce or
attempt to induce (or aid any person or entity in doing so) any employee of Company to leave the
employ of Company or in any way
interfere with the relationship between Company and any employee thereof or (ii) hire or engage any
person who was an employee of Company or any subsidiary at any time during the six month period
preceding Executive’s hiring or engagement of such employee.
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9.3 If, at the time of enforcement of this Section 9, a court shall hold that the duration,
scope or area restrictions stated herein are unreasonable under circumstances then existing, the
parties agree that the maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall be allowed to revise
the restrictions contained herein to cover the maximum period, scope and area permitted by law and
that such revised restrictions may be enforced against Executive.
9.4 In the event of the breach or a threatened breach by Executive of any of the provisions of
this Section 9, Company, in addition and supplementary to other rights and remedies existing in its
favor, may apply to any court of law or equity of competent jurisdiction for specific performance
and/or injunctive or other relief in order to enforce or prevent any violations of the provisions
hereof (without posting a bond or other security). In addition, in the event of an alleged breach
or violation by Executive of this Section 9, the Noncompete Period shall be tolled until such
breach or violation has been duly cured.
9.5 The Noncompete Period shall be extended commensurately for any period of time during which
the covenants set forth in this Section 9 are contested. Executive agrees that the restrictions
contained in this Section 9 are reasonable.
10. Assignment.
10.1 This Agreement is personal to Executive, and, without the prior written consent of the
Company, shall not be assignable by Executive other than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by Executive’s legal
representatives.
10.2 This Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns. Except as provided in Section 10.3, without the prior written consent of
Executive this Agreement shall not be assignable by the Company.
10.3 The Company will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the
Company to assume expressly 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 succession had taken place.
“Company” means the Company as hereinbefore defined and any successor to its business and/or assets
as aforesaid that assumes and agrees to perform this Agreement by operation of law or otherwise.
11. Notices. All notices, requests, demands, and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly given if delivered or
seven days after mailing if mailed, first class, certified mail postage prepaid:
| To the Company: | Carolina First Bank, c/o TSFG 000 Xxxxx Xxxx Xxxxxx Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000 Attn: Xxxx X. Xxxxxxx |
| To Executive: | At the most recent address for Executive on file at the Company. |
Any party may change the address to which notices, requests, demands, and other communications
shall be delivered or mailed by giving notice thereof to the other party in the same manner
provided herein.
12. Provisions Severable/Savings Clause. If any provision or covenant, or any part
thereof, of this Agreement should be held by any court to be invalid, illegal or unenforceable,
either in whole or in part, such invalidity, illegality or unenforceability shall not affect the
validity, legality or enforceability of the remaining provisions or covenants, or any part thereof,
of this Agreement, all of which shall remain in full force and effect. With respect to any
provision or covenant of Section 8 or 9 finally determined by a court of competent jurisdiction to
be unenforceable, Executive, the Company and its affiliates hereby agree that
such court shall have jurisdiction to reform such provision or covenant so that it is
enforceable to the maximum extent permitted by law, and the parties agree to abide by such court’s
determination. If any of the provisions or covenants of Section 8 or 9 are determined to be wholly
or partially unenforceable in any
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jurisdiction, such determination shall not be a bar to or in any
way diminish the rights of the Company or its affiliates, as applicable, to enforce any such
provision or covenant in any other jurisdiction.
13. Remedies.
13.1 Executive acknowledges that if he breaches or threatens to breach Executive’s covenants
and agreements in this Agreement, such actions may cause irreparable harm and damage to the Company
which could not be compensated in damages. Accordingly, if Executive breaches or threatens to
breach this Agreement, the Company shall be entitled to injunctive relief, in addition to any other
rights or remedies of the Company.
13.2 All claims, disputes and other matters in question between Executive and the Company
arising out of or related to the interpretation of this Agreement or the breach of this Agreement,
except as specifically governed by the foregoing provisions where there may be irreparable harm and
damage to the Company which could not be compensated in damages, shall be decided by arbitration in
accordance with the rules of the American Arbitration Association. This agreement to arbitrate
shall be specifically enforceable under applicable law in any court having jurisdiction. The award
rendered by the arbitrator shall be final and judgment may be entered upon it in accordance with
the applicable law of any court having jurisdiction thereof.
14. No Mitigation. In no event shall Executive be obligated to seek other employment
or take any other action by way of mitigation of the amounts payable to Executive under any of the
provisions of this Agreement, and such amounts shall not be reduced whether or not Executive
obtains other employment.
15. Waiver. Failure of either party to insist, in one or more instances, on
performance by the other in strict accordance with the terms and conditions of this Agreement shall
not be deemed a waiver or relinquishment of any right granted in this Agreement or of the future
performance of any such term or condition or of any other term or condition of this Agreement,
unless such waiver is contained in a writing signed by the party making the waiver.
16. Amendments and Modifications. This Agreement may be amended or modified only by a
writing signed by other parties hereto.
17. Governing Law. The validity and effect of this agreement shall be governed by and
construed and enforced in accordance with the laws of the State of South Carolina without regard to
principles of conflicts of laws.
18. Withholding. The Company may withhold from any amounts payable under this
Agreement such United States federal, state or local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
19. Compliance With Section 409A. Within the time period permitted by the applicable
Treasury Regulations, the Company may, in consultation with the Executive, modify the Agreement, in
the least restrictive manner necessary and without any diminution in the value of the payments to
the Executive, in order to cause the provisions of the Agreement to comply with the requirements of
Section 409A of the Code, so as to avoid the imposition of taxes and penalties on the Executive
pursuant to Section 409A of the Code. Notwithstanding any provision of this Agreement to the
contrary, in the event that the Executive is a “specified employee” within the meaning of Section
409A of the Code (as determined in accordance with the methodology established by the Company as in
effect on the date of termination), amounts that would otherwise be payable under Section 5 during
the six-month period immediately following the date of termination shall instead be paid, with
interest on any delayed payment at the applicable federal rate provided for in Section
7872(f)(2)(A) of the Code, or provided on the first business day after the date that is six
months following the Executive’s “separation from service” within the meaning of Section 409A
of the Code. The Company and the Executive shall take all steps necessary (including with regard
to any post-termination services by the Executive) to ensure that any termination described in this
Agreement constitutes a
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“separation from service” within the meaning of Section 409A of the Code,
and notwithstanding anything contained herein to the contrary, the date on which such separation
from service takes place shall be the “date of termination”.
20. Enforceability of Confidentiality, Noncompetition and Nonsolicitation Provisions.
The provisions of Sections 8 and 9, including all subparts thereof, shall be enforceable regardless
of the reason for termination of Executive’s employment and without regard to whether the
employment is terminated by Executive or the Company. Executive expressly agrees that should
Executive terminate the employment relationship on the grounds of a breach by the Company, as
provided at Section 5.2(i) or an Involuntary Termination, as provided at Section 5.2(ii), such
breach or Involuntary Termination shall not have any affect upon the enforceability of the
provisions of Sections 8 and 9, including all subparts thereof, and Executive may not assert any
such breach or Involuntary Termination as a defense to an action to enforce the provisions of
Sections 8 and 9, including all subparts thereof. The existence of any claim or cause of action of
Executive against the Company, whether predicated in this Agreement or otherwise, shall not
constitute a defense to the enforcement of Sections 8 or 9 by the Company.
21. Remedies after a Change in Control. The terms of this Section 14 will apply in the absence
of a Change in Control.
21.1 The Executive acknowledges that if he breaches or threatens to breach Executive’s
covenants and agreements in this Agreement, such actions may cause irreparable harm and damage to
the Company which could not be compensated in damages. Accordingly, if Executive breaches or
threatens to breach this Agreement, the Company shall be entitled to injunctive relief, in addition
to any other rights or remedies of the Company.
21.2 All claims, disputes and other matters in question between the Executive and the Company
arising out of or related to the interpretation of this Agreement or the breach of this Agreement,
except as specifically governed by the foregoing provisions where there may be irreparable harm and
damage to the Company which could not be compensated in damages, shall be decided by arbitration in
accordance with the rules of the American Arbitration Association. This agreement to arbitrate
shall be specifically enforceable under applicable law in any court having jurisdiction. The award
rendered by the arbitrator shall be final and judgment may be entered upon it in accordance with
the applicable law of any court having jurisdiction thereof.
21.3 In the event that the Executive is reasonably required to engage legal counsel to enforce
Executive’s rights hereunder against the Company, Executive shall be entitled to receive from the
Company Executive’s reasonable attorneys’ fees and costs. In order to comply with Section 409A of
the Code, in no event shall the payments by the Company under this Section 21.3 be made (i) with
respect to expenses incurred following the 20th anniversary of the date on which the
dispute arose and (ii) later than the end of the calendar year next following the calendar year in
which such fees and expenses were incurred, provided, that the Executive shall have submitted an
invoice for such fees and expenses at least 10 days before the end of the calendar year next
following the calendar year in which such fees and expenses were incurred. The amount of such legal
fees and expenses that the Company is obligated to pay in any given calendar year shall not affect
the legal fees and expenses that the Company is obligated to pay in any other calendar year, and
the Executive’s right to have the Company pay such legal fees and expenses may not be liquidated or
exchanged for any other benefit.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first
above written.
| EXECUTIVE |
||||
| /s/ Xxxxxxx X. Xxxxxxxxxxx | ||||
| Xxxxxxx X. Xxxxxxxxxxx | ||||
| CAROLINA FIRST BANK |
||||
| By: | /s/ Xxxx X. Xxxxxxx | |||
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