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Exhibit 10.4
CANCELLATION AGREEMENT
THIS AGREEMENT is made on February 19, 2002 (the "Effective Date"), by
and among FLAG Financial Corporation, a Georgia corporation (the "Employer"),
and J. XXXXXXX XXXXXX, a resident of the State of Georgia (the "Employee").
R E C I T A L S:
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The Employer and the Employee entered into that certain change in
control agreement dated as of April 1, 2001 (the "Change in Control Agreement").
The parties wish to cancel the provisions of the Change in Control
Agreement.
In consideration of the above premises and the mutual agreements
hereinafter set forth, good and valuable consideration, the receipt and the
parties hereto agree as follows:
1. Cancellation of the Change in Control Agreement. The Employer and
the Employee agree to cancel all provisions of the Change in Control Agreement.
In addition, the Employee will tender his resignation as a member of the Board
of Directors of the Employer, with such resignation to be effective no later
than the Effective Date.
2. Consideration. In full and complete consideration of the cancellation
of the Change in Control Agreement, and in full and complete settlement of any
and all obligations of the Employer to the Employee under the Change in Control
Agreement, the Employer shall provide Employee with the following:
(a) Purchase Price for the Change in Control Agreement. For
the settlement of its obligations to the Employee under the Change in
Control Agreement, the Employer shall pay to the Employee a lump-sum
cash payment equal to $400,000, payable on the Effective Date or as
soon as practicable thereafter;
(b) Transfer of Automobile. The title to the automobile
currently made available by the Employer to the Employee for his use
shall be transferred to the Employee on the Effective Date or as soon
as practicable thereafter. The Employee acknowledges that the value of
the automobile at the time of transfer will constitute imputed income
to the Employee; and
(c) Transfer of Insurance Policy. As of or as soon as
practicable after the Effective Date, the Employer shall transfer to
the Employee ownership of that certain life insurance policy on the
life of the Employee with a policy number of 4761757, issued by Woodmen
of the World Insurance Society.
3. Protective Covenants.
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(a) Confidential Information. As a management employee of the
Employer, the Employee has access to Confidential Information (as
defined herein). The Employee agrees to maintain the confidentiality of
all Confidential Information throughout his employment with the
Employer and its affiliates and for a period of twelve (12) months
thereafter. For purposes of this Section, the term "Confidential
Information" means data and information relating to the business of the
Employer which is or has been disclosed to the Employee or of which the
Employee has become aware as a consequence of or through his employment
relationship with the Employer and which has value to the Employer and
is not generally known to its competitors. Confidential Information
shall not include any data or information that has been voluntarily
disclosed to the public by the Employer (except where such public
disclosure was effected by the Employee without authorization) or that
has been independently developed and disclosed by others or that
otherwise enters the public domain through lawful means.
(b) Covenant Not to Compete or Solicit Employees or Customers.
The Employee agrees, acknowledges and understands that the nature, kind
and character of the business conducted by the Employer is highly
competitive. For the considerations contained herein, the Employee
agrees that:
(1) during his employment with the Employer and its
affiliates and for a period of twenty-four (24) months
thereafter, the Employee will not:
(i) within the Area, enter into any
employment relationship with any bank, thrift
institution, other entity providing financial
services or an affiliate of any of the foregoing in a
capacity identical with or substantially similar to
the capacity in which he was employed by the Employer
at the time of his termination of employment;
(ii) directly or indirectly, on his own
behalf or in the service or on behalf of others,
solicit, divert, appropriate or attempt to solicit,
divert or appropriate, any business from any of the
Employer's customers with whom the Employee has had
material contact during the two (2) years immediately
preceding the Employee's termination of employment,
for purposes of providing products or services that
are competitive with those provided by the Employer;
or
(iii) on his own behalf or in the service or
on behalf of others, solicit, recruit or hire away,
or attempt to solicit, recruit or hire away, directly
or by assisting others, any employee of the Employer,
whether or not such employee is a full-time employee,
part-time or temporary employee of the Employer, and
whether or not such employment is pursuant to a
written agreement or is for a determined period or at
will.
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For purposes of this Subsection (1), "Area" shall
mean the geographic area within the boundaries of Dooly, Xxxxx
and Xxxxx Counties, Georgia. It is the express intent of the
parties that the Area as defined herein is the area where the
Employee performs services on behalf of the Employer as of the
Effective Date.
(2) by virtue of the duties and special knowledge of
the affairs and operations of the Employer that the Employee
has and will obtain as a result of his employment relationship
with the Employer, a breach or threatened breach by him of the
provisions of this covenant not to compete and not to solicit
employees or customers shall cause irreparable injury to the
Employer and shall entitle the Employer, in addition to any
other remedy, to injunctive relief against such breach or
threatened breach.
The Employee acknowledges that the foregoing covenants are reasonable
and necessary to protect the interests of the Employer.
4. Litigation. Each party agrees that no party, nor any person or
organization on the party's behalf, has filed, or assigned others the right to
file, nor are there pending, any complaints, charges, or lawsuits against any
other party, with any federal, state or local governmental agency or court.
5. Assignment. This Agreement shall inure to the benefit of and be
binding upon the Employee and upon the Employer and its successors and assigns.
The Employee may not assign his rights and obligations hereunder without the
written consent of the Employer.
6. Entire Agreement. This Agreement, embodies the entire agreement of
the parties hereto relating to the subject matter hereof and supersede any and
all prior agreements, including, but not limited to, the Change in Control
Agreement. No amendment or modification of this Agreement shall be valid or
binding upon the parties unless made in writing and signed by the parties
hereto.
7. Governing Law. This Agreement shall be governed by and construed in
accordance with any applicable federal law and the substantive laws of the State
of Georgia, without reference to its conflict of laws provisions.
8. No Defense. The existence of any claim or cause of action of the
Employee against the Employer, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Employer of
any covenant contained in this Agreement.
9. No Contract of Employment. Nothing in this Agreement shall be
construed to constitute or be evidence of an agreement or understanding, express
or implied, on the part of the Employer to continue the Employee's employment
for any specific period of time. The Employee's employment with the Employer
shall be terminable at the will of the Employer, with or without "Cause." For
purposes of this Section, "Cause" means (a) conduct constituting fraud or
dishonesty resulting in financial harm to the Employer or any of its affiliates;
(b) conviction of a crime involving breach of trust, moral turpitude, theft or
fraud; (c) performance in job duties which results in Employee not attaining
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pre-determined goals and objectives; (d) failure to follow reasonable
instructions from the Employee's supervisor; or (e) the failure to perform the
duties assigned to the Employee.
10. Survival. The obligations of the parties as expressly set forth in
Section 2 and 3 hereof shall survive the Executive's termination of employment
as an at-will employee.
11. Notice. Except as otherwise required under this Agreement, any
notice required or permitted to be given pursuant to this Agreement shall be
sufficiently given:
(a) to the Employee if in writing and personally delivered, or
mailed (and if mailed shall be deemed given three (3) business days
after mailing) registered or certified mail addressed to the Employee
at the Employee's residence as shown in the records of the Employer or
at such address as the Employee shall designate in a written notice to
the Employer; and
(b) to the Employer if in writing and personally delivered to
the Chief Executive Officer of the Employer or mailed (and if mailed,
shall be deemed given three (3) business days after mailing) registered
or certified mail addressed to FLAG Financial Corp., 000 Xxxxxxxxx
Xxxxxx, Xxxxxxxxxxx, Xxxxxxx 00000, Attn: Chief Executive Officer.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year set forth below.
FLAG FINANCIAL CORPORATION
By: /s/ Xxxxxx X. Xxxxx
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Title: Chairman and CEO
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/s/ J. Xxxxxxx Xxxxxx
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J. XXXXXXX XXXXXX
