EXHIBIT 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") by and between
Hometown Community Bancshares, Inc., a Georgia corporation (the "Company"),
and Xxxx Xxxxxxxx (the "Executive", and, together with the Company, collectively
referred to herein as the "Parties"), is entered into and effective as of
September 1, 2004 (the "Effective Date").
WHEREAS, the Company desires to employ the Executive as President and Chief
Executive Officer, and the Executive desire to accept said employment by the
Company;
WHEREAS, the Company is in the process of organizing a new Georgia banking
corporation (the "Bank");
WHEREAS, the Company and the Executive have entered into this Agreement in
contemplation of the organization of the Bank, the agreements and covenants
contained herein are intended to inure to the benefit of the Bank, following the
organization of the Bank this Agreement will be assigned by the Company to the
Bank pursuant to the terms hereof, and thereafter the Bank will possess all of
the rights and obligations originally inuring to the Company hereunder;
WHEREAS, the Executive's position is a position of trust and responsibility
with access to Confidential Information, Trade Secrets, and information
concerning employees and customers of the Company, all of which are valuable
assets of the Company and may not be used for any purpose other than the
Company's Business;
WHEREAS, the Company has agreed to employ the Executive upon the terms and
conditions of this Agreement in exchange for the Executive's compliance with the
terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, it is agreed:
1. EMPLOYMENT & DUTIES.
A. The Company shall employ the Executive as President and Chief Executive
Officer, in accordance with the terms and conditions set forth in this
Agreement. The Executive accepts employment on the terms set forth herein. The
Executive shall report to the Board.
B. The Executive shall have those duties ("Duties") assigned to, or
normally associated with, the Executive's position and such other duties as may
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otherwise be assigned to the Executive by the Board from time to time.
C. The Executive agrees that the Executive shall at all times faithfully
and to the best of the Executive's ability and experience perform all of the
duties that may be required of the Executive pursuant to the terms of this
Agreement. The Executive shall devote the Executive's full business time to the
performance of the Executive's obligations hereunder. The Executive shall not
render to others any service of any kind for compensation or engage in any
activity which conflicts or interferes with the performance of the Executive's
obligations under this Agreement without the express written consent of the
Board of the Company.
2. COMPENSATION.
A. BASE SALARY. During the term of this Agreement, the Company shall pay
to the Executive a base salary ("Base Salary"), subject to all applicable
withholdings. The initial base salary shall be $135,000. On each annual
anniversary of the Effective Date, the Executive's Base Salary shall be
increased by an amount equal to 5% of the Executive's Base Salary for the year
then ending, such that in the second year Executive's Base Salary shall be
$141,750, in the third year Executive's Base Salary shall be $148,838, in the
fourth year Executive's Base Salary shall be $156,279 and in the fifth year
Executive's Base Salary shall be $164,093. The Executive's Base Salary may be
increased further (but not decreased) annually at the discretion of the Board.
The Executive's Base Salary shall be paid to the Executive in accordance with
the Company's normal payroll practices.
B. PERFORMANCE RELATED BONUS. During the term of this Agreement, the
Executive shall be eligible to receive a Performance-Related Bonus determined
by the Board of Directors in its sole and absolute discretion. The Performance-
Related Bonus shall be subject to all applicable withholdings.
C. PENSION, WELFARE & FRINGE BENEFITS. The Executive shall be entitled to
participate in each "employee welfare benefit plan" (within the meaning of ERISA
Section 3(1)), each "employee pension benefit plan" (within the meaning of ERISA
Section 3(2)), and each "specified fringe benefit plan" (within the meaning of
Code Section 6039D) sponsored or maintained by the Company generally to any
employee of the Company from time to time, subject to the terms and conditions
of such plans and programs. Regardless of whether the Company sponsors or
maintains such a plan, the Company shall provide health insurance coverage to
the Executive or reimburse him for such coverage, and shall reimburse Executive
for the cost of COBRA coverage under his existing health insurance plan at his
previous employer until the earlier of the time that the Company's insurance
plan is in place or such COBRA coverage expires. The Executive shall also be
entitled to any "fringe benefit" (within the meaning of Code Section 132) which
is generally provided to any employee of the Company, subject to the rules in
effect regarding participation in such benefit arrangement. In addition, the
Executive shall be entitled to paid vacation in accordance with the Company's
vacation policies, as they may exist from time to time, which in the case of
Executive shall include four weeks of annual vacation during the term of this
Agreement.
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D. BUSINESS EXPENSES. The Company will reimburse the Executive for all
reasonable ordinary and necessary business-related expenses incurred by the
Executive in the performance of his duties under this Agreement, provided that
the Executive presents invoices or vouchers for such expenses or other evidence
thereof to the Company in accordance with the Company's general reimbursement
policy in effect for executives.
E. AUTOMOBILE. During the period of the Executive's employment with the
Company, the Company shall provide an automobile for the use of the Executive in
the conduct of the Company's business as a condition of his employment. In lieu
of the Company providing an automobile, the Executive may lease an automobile
and the Company will reimburse the Executive for the cost of such lease up to
$500.00 per month and $3,000 in initial down payments and other lease initiation
or acquisition costs, provided that such automobile is appropriate in style and
appearance and consistent with the Company's and the Bank's marketing image.
The Executive will maintain appropriate automobile insurance at all times on the
automobile and provide proof of insurance to the Company. The Employee may also
use the Company provided automobile for reasonable personal use.
F. CLUB INITIATION FEE & MEMBERSHIP DUES. During the period of the
Executive's employment with the Company, the Company shall pay up to $5,000.00
for the Executive to join the club of his choice and will reimburse the
Executive for dues to such club not to exceed $250.00 per month. The Executive
agrees to use club as entertainment for selective Bank clients.
G. OPTIONS. The Company shall grant the Executive options to purchase
25,000 shares of the Company's common stock. The options shall vest in five
equal annual installments beginning on the first anniversary of the Effective
Date, and shall have a term of 10 years. The options shall have an exercise
price equal to the price at which the Company sells shares of its common stock
in its initial public offering. The options shall immediately vest in full upon
a Change in Control.
3. TERM & TERMINATION.
The term of this Agreement shall be five years. Ninety days prior to the
fifth anniversary of the Effective Date, the Executive shall notify Board in
writing whether he desires to extend this Agreement. Following such
notification, the Board in its sole discretion may agree to extend this
Agreement on mutually agreeable terms. This Agreement may be terminated prior
to the end of its scheduled term upon the occurrence of any of the following
events:
A. By the Company, upon the Executive's death;
B. By the Company, upon the Executive's Disability which renders the
Executive unable to perform the essential functions of the Executive's job even
with reasonable accommodation and which has continued for a period of 6 months;
C. By mutual written agreement between the Executive and the Company;
D. By the Company for Cause.
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E. By the Company without Cause. For this purpose, the phrase "without
Cause" shall mean a termination by the Company at any time and for any reason
not permitted pursuant to subsections A-D above;
4. POST TERMINATION PAYMENT OBLIGATIONS.
A. TERMINATION BY THE COMPANY FOR CAUSE. If this Agreement is terminated
pursuant to Section 3.D. of this Agreement, then the Executive shall be entitled
to receive no further compensation and thereafter the Company shall have no
further obligations under this Agreement, but the Executive shall continue to
be bound by Section 7 hereof, and all other post-termination obligations to
which the Executive is subject, including, but not limited to, the obligations
contained in this Agreement.
B. MUTUALLY AGREED TERMINATION. If this Agreement is terminated pursuant
to Section 3.C. of this Agreement, the Executive shall be entitled to any
parting compensation package mutually agreed to by the Parties.
C. TERMINATION BY DEATH OR DISABILITY OF THE EXECUTIVE. If this Agreement
is terminated pursuant to Section 3.A. or 3.B. of this Agreement, then the
Executive (or his estate) shall be entitled to receive the Executive's Base
Salary for six months, and thereafter the Company shall have no further
obligations under this Agreement but the Executive shall, in the case of a
termination pursuant to Section 3.B., continue to be bound by Section 7 and all
other post-termination obligations to which the Executive is subject, including,
but not limited to, the obligations contained in this Agreement.
D. TERMINATION BY THE COMPANY WITHOUT CAUSE. If this Agreement is
terminated pursuant to Section 3.E. of this Agreement, then the Company shall
pay to or provide to the Executive the following:
1. A single lump sum cash separation payment equal to 6 months Base Salary
as in effect as of the date of termination; and
2. Reimbursement of any premiums for COBRA continuation coverage for the
Executive paid by the Executive during the 6 month period beginning on the
date of termination.
These separation payments and benefits set forth in the preceding sentence
shall constitute full satisfaction of the Company's obligations under this
Agreement. The Company's obligation to make the separation payments and
benefits in this subsection D shall be conditioned upon the Executive's:
1. Execution of a Separation and Release Agreement in a form approved by
the Company whereby the Executive releases the Company from any and all
liability and claims of any kind; and
2. Compliance with the provisions of Section 7 hereof and all post-
termination obligations, including, but not limited to, the obligations
contained in this Agreement. However, the "Restricted Period" of Section
7.(D.) (Non-Compete) shall be reduced to the date of termination if
Executive is terminated by the Company without cause.
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E. TERMINATION BY THE COMPANY DUE TO LACK OF MINIMUM CAPITAL RAISE. If
the Board of Directors votes to terminate the effort to organize the Bank due
to the organizers inability to raise the minimum capital as required by the DBF,
then the Company shall pay to or provide to the Executive the following:
1. A single lump sum cash separation payment equal to 4 months Base Salary
as in effect as of the date of termination; and
2. Reimbursement of any premiums for COBRA continuation coverage for the
Executive paid by the Executive during the 4 month period beginning on the
date of termination.
These separation payments and benefits set forth in the preceding sentence
shall constitute full satisfaction of the Company's obligations under this
Agreement. The Company's obligation to make the separation payments and
benefits in this subsection D shall be conditioned upon the Executive's:
1. Execution of a Separation and Release Agreement in a form approved by
the Company whereby the Executive releases the Company from any and all
liability and claims of any kind; and
2. Compliance with the provisions of Section 7 hereof and all post-
termination obligations, including, but not limited to, the obligations
contained in this Agreement. However, the "Restricted Period" of Section 7.
(D.) (Non-Compete) shall be reduced to the date of termination if
Executive is terminated by the Company without cause.
The Company's obligation to make the separation payments set forth in
subsections D & E shall terminate immediately upon any breach by the Executive
of any post-termination obligations to which the Executive is subject.
5. SET OFF.
If the Executive has any outstanding obligations to the Company at the time
this Agreement terminates for any reason, the Executive acknowledges that the
Company is authorized to deduct any amounts owed to the Company from the
Executive's final paycheck and/or from any amounts that would otherwise be due
to the Executive under Section 4 above. However, notwithstanding the foregoing,
this Section 5 shall not apply with respect to loans made in the normal course
of business by the Company or any subsidiary of the Company which are made in
accordance with Regulation O.
6. ASSETS, BOOKS & RECORDS.
The Executive agrees that all files, documents, records, customer lists,
books and other materials or company assets which come into the Executive's use
or possession during the term of this Agreement and which are in any way related
to the Company's business shall at all times remain the property of the Company,
and that upon request by the Company or upon the termination of this Agreement
for any reason, the Executive shall immediately surrender to the Company all
such property and copies thereof.
7. RESTRICTIVE COVENANTS.
The Executive acknowledges that the restrictions contained in this Section
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7 are reasonable and necessary to protect the legitimate business interests of
the Company, and will not impair or infringe upon the Executive's right to work
or earn a living after the Executive's employment with the Company ends.
A. TRADE SECRETS AND CONFIDENTIAL INFORMATION. The Executive represents
and warrants that: (i) the Executive is not subject to any legal or contractual
duty or agreement that would prevent or prohibit the Executive from performing
the Executive's duties for the Company or otherwise complying with this
Agreement, and (ii) the Executive is not in breach of any legal or contractual
duty or agreement, including any agreement concerning trade secrets or
confidential information owned by any other party.
The Executive agrees that the Executive will not: (i) use, disclose, or
reverse engineer the Trade Secrets or the Confidential Information for any
purpose other than the Company's Business, except as authorized in writing by
the Company; (ii) during the Executive's employment with the Company, use,
disclose, or reverse engineer (a) any confidential information or trade secrets
of any former employer or third party, or (b) any works of authorship developed
in whole or in part by the Executive during any former employment or for any
other party, unless authorized in writing by the former employer or third party;
or (iii) upon the Executive's resignation or termination (a) retain Trade
Secrets or Confidential Information, including any copies existing in any form
(including electronic form), which are in the Executive's possession or control,
or (b) destroy, delete, or alter the Trade Secrets or Confidential Information
without the Company's written consent.
The obligations under this subsection A shall: (i) with regard to the Trade
Secrets, remain in effect as long as the information constitutes a trade secret
under applicable law, and (ii) with regard to the Confidential Information,
remain in effect during the Restricted Period.
The confidentiality, property, and proprietary rights protections available
in this Agreement are in addition to, and not exclusive of, any and all other
rights to which the Company is entitled under federal and state law, including,
but not limited to, rights provided under copyright laws, trade secret and
confidential information laws, and laws concerning fiduciary duties.
B. NON-SOLICITATION OF CUSTOMERS. During the Restricted Period, the
Executive will not directly or indirectly solicit any Customer of the Company
for the purpose of providing any goods or services competitive with the
Business. The restrictions set forth in this subsection B apply only to the
Customers with whom the Executive had Contact.
C. NON-RECRUIT OF THE EXECUTIVES. During the Restricted Period, the
Executive will not directly or indirectly solicit, recruit or induce any Company
Executive to (a) terminate his or her employment relationship with the Company
or (b) work for any other person or entity engaged in the Business.
D. NON-COMPETE. During the Restricted Period, the Executive shall not
compete with the Company by serving as a senior or executive officer of any
insured financial institution which competes with the Company anywhere within a
twenty-five mile radius of the Bank headquarters.
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8. WORK PRODUCT.
The Executive's employment duties may include inventing in areas directly
or indirectly related to the business of the Company or to a line of business
that the Company may reasonably be interested in pursuing. All Work Product
arising during the period of the Executive's employment with the Company or
during the Restricted Period shall constitute work made for hire. If (i) any of
the Work Product may not be considered work made for hire, or (ii) ownership of
all right, title, and interest to the legal rights in and to the Work Product
will not vest exclusively in the Company, then, without further consideration,
the Executive assigns all presently-existing Work Product to the Company, and
agrees to assign, and automatically assign, all future Work Product arising
during the period of the Executive's employment with the Company or during the
Restricted Period to the Company.
The Company will have the right to obtain and hold in its own name
copyrights, patents, design registrations, proprietary database rights,
trademarks, rights of publicity, and any other protection available in the Work
Product. At the Company's request, the Executive agrees to perform, during or
after the Executive's employment with the Company, any acts to transfer, perfect
and defend the Company's ownership of the Work Product, including, but not
limited to: (i) executing all documents (including a formal assignment to the
Company) necessary for filing an application or registration for protection of
the Work Product (an "Application"), (ii) explaining the nature of the Work
Product to persons designated by the Company, (iii) reviewing Applications and
other related papers, or (iv) providing any other assistance reasonably required
for the orderly prosecution of Applications.
The Executive agrees to provide the Company with a written description of
any Work Product in which the Executive is involved (solely or jointly with
others) and the circumstances surrounding the creation of such Work Product.
9. LICENSE.
During the Executive's employment and after the Executive's employment with
the Company ends, the Executive grants to the Company an irrevocable,
nonexclusive, worldwide, royalty-free license to: (i) make, use, sell, copy,
perform, display, distribute, or otherwise utilize copies of the Licensed
Materials, (ii) prepare, use and distribute derivative works based upon the
Licensed Materials, and (iii) authorize others to do the same. The Executive
shall notify the Company in writing of any Licensed Materials the Executive
delivers to the Company.
10. RELEASE.
During the Executive's employment and during the Restricted Period, the
Executive consents to the Company's use of the Executive's image, likeness,
voice, or other characteristics in the Company's products or services. The
Executive releases the Company from any cause of action which the Executive has
or may have arising out of the use, distribution, adaptation, reproduction,
broadcast, or exhibition of such characteristics. The Executive represents that
the Executive has obtained, for the benefit of the Company, the same release in
writing from all third parties whose characteristics are included in the
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services, materials, computer programs and other deliverables that the Executive
provides to the Company.
11. INJUNCTIVE RELIEF.
The Executive agrees that if the Executive breaches any provision of
Sections 7, 8 or 9 of this Agreement: (i) the Company would suffer irreparable
harm; (ii) it would be difficult to determine damages, and money damages alone
would be an inadequate remedy for the injuries suffered by the Company, and
(iii) if the Company seeks injunctive relief to enforce this Agreement, the
Executive will waive and will not (a) assert any defense that the Company has
an adequate remedy at law with respect to the breach, (b) require that the
Company submit proof of the economic value of any Trade Secret or Confidential
Information, or (c) require the Company to post a bond or any other security.
Nothing contained in this Agreement shall limit the Company's right to any other
remedies at law or in equity.
12. SEVERABILITY.
The provisions of this Agreement are severable. If any provision is
determined to be invalid, illegal, or unenforceable, in whole or in part, the
remaining provisions and any partially enforceable provisions shall remain in
full force and effect.
13. ATTORNEYS' FEES.
In the event of litigation relating to this Agreement, the prevailing Party
shall be entitled to recover attorneys' fees and costs of litigation in addition
to all other remedies available at law or in equity.
14. WAIVER.
The Company's failure to enforce any provision of this Agreement shall not
act as a waiver of that or any other provision. The Company's waiver of any
breach of this Agreement shall not act as a waiver of any other breach.
15. ENTIRE AGREEMENT.
This Agreement, including EXHIBIT A which is incorporated by reference,
constitutes the entire agreement between the Parties concerning the subject
matter of this Agreement. This Agreement supersedes any prior communications,
agreements or understandings, whether oral or written, between the Parties
relating to the subject matter of this Agreement. Other than terms of this
Agreement, no other representation, promise or agreement has been made with the
Executive to cause the Executive to sign this Agreement.
16. AMENDMENTS.
This Agreement may not be amended or modified except in writing signed by
both Parties.
17. SUCCESSORS & ASSIGNS.
This Agreement shall be assignable to, and shall inure to the benefit of,
the Company's successors and assigns, including, without limitation, the Bank
and successors through merger, name change, consolidation, or sale of a majority
of the Company's stock or assets, and shall be binding upon the Executive. The
Executive shall not have the right to assign the Executive's rights or
obligations under this Agreement. The covenants contained in Section 7 of this
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Agreement shall survive cessation of the Executive's employment with the
Company, regardless of the reason for cessation of the Executive's employment
and regardless of who causes the cessation.
18. GOVERNING LAW.
The laws of the State of Georgia shall govern this Agreement. If Georgia's
conflict of law rules would apply another state's laws, the Parties agree that
Georgia law shall still govern.
19. NO STRICT CONSTRUCTION.
If there is a dispute about the language of this Agreement, the fact that
one Party drafted the Agreement shall not be used in its interpretation.
20. NOTICE.
Whenever any notice is required, it shall be given in writing addressed as
follows:
To the Company:
XX Xxx 000
Xxxxxxxxx, Xxxxxxx 00000
To the Executive:
0000 Xxxxxx Xxxxx Xxxx
Xxxxxxx Xxxxxx, XX 00000
Notice shall be deemed given and effective three days after the deposit in
the U.S. mail of a writing addressed as above and sent first class mail,
certified, return receipt requested, or when actually received. Either Party
may change the address for notice by notifying the other party of such change
in accordance with this Section.
21. CONSENT TO JURISDICTION & VENUE.
Any claim other than claims that are required to be arbitrated under
section 26 arising out of or relating to this Agreement shall be (i) brought in
the Superior Court of Xxxxxxx County, Georgia, or (ii) brought in or removed to
the United States District Court for the Northern District of Georgia. The
Executive consents to the personal jurisdiction of the courts identified above.
The Executive waives (i) any objection to jurisdiction or venue, and (ii) any
defense claiming lack of jurisdiction or improper venue, in any action brought
in such courts.
22. AFFIRMATION.
EXECUTIVE ACKNOWLEDGES THAT EXECUTIVE HAS CAREFULLY READ THIS AGREEMENT,
THAT EXECUTIVE KNOWS AND UNDERSTANDS ITS TERMS AND CONDITIONS, AND THAT
EXECUTIVE HAS HAD THE OPPORTUNITY TO ASK THE COMPANY ANY QUESTIONS EXECUTIVE
MAY HAVE HAD PRIOR TO SIGNING THIS AGREEMENT.
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23. DEFINITIONS.
Unless otherwise indicated, all capitalized terms used in this Agreement
are defined in the "Definitions" section attached as EXHIBIT A. EXHIBIT A is
hereby incorporated by reference and is included in the definition of
"Agreement."
24. BINDING ARBITRATION.
Except as provided in this section, any dispute, controversy or claim
arising out of or in connection with, or relating to, this Agreement or any
breach or alleged breach hereof, shall be submitted to and settled by binding
arbitration administered by the American Arbitration Association ("AAA") under
its Commercial Arbitration Rules (the "Rules"). Judgment upon the award
rendered by the arbitrator may be entered in any court of competent
jurisdiction. Notwithstanding the then-current Rules, the following shall apply
with respect to arbitration proceedings, unless expressly agreed to otherwise by
the parties:
A. The arbitration proceeding shall be held in Xxxxxxx County, Georgia.
The arbitration shall be conducted by a single arbitrator selected in
accordance with the Rules.
B. The arbitrator shall be and remain at all times wholly independent and
impartial.
C. The administrative costs of the arbitration proceeding and the
arbitrator's compensation shall be allocated equally between the parties by
the AAA. The arbitrator shall award to the prevailing party, if any, as
determined by the arbitrator, all fees, expenses, and costs. "Fees,
expenses, and costs" mean all reasonable pre-award expenses of the
arbitration, including without limitation the arbitrator's fees,
administrative fees, travel expenses, out-of-pocket expenses such as
copying and telephone, witness fees, and attorneys' fees and expenses.
D. The decision of the arbitrator shall be in writing, and shall be final
and binding upon the parties.
E. It is the parties' intent that the arbitration process proceed as
quickly as possible. Accordingly, the party filing the demand for
arbitration (the claimant) shall submit a statement of its position along
with all supporting documents and all other documents that it intends to
introduce into evidence at the hearing within 10 business days after the
AAA notifies the parties of the appointment of the arbitrator. The
respondent shall submit a statement of its position along with all
supporting documents and all other documents that it intends to introduce
into evidence at the hearing within 10 business days after receiving the
claimant's statement of position and documents. If the respondent includes
a counterclaim against the claimant, the claimant shall submit a statement
of its position on that counterclaim, along with all supporting documents
and all other documents that it intends to introduce into evidence at the
hearing within 10 business days after receiving the claimant's statement
of position and documents. Each party shall have the right to take one
deposition of the other. No further discovery shall be allowed. A party
will not be allowed to introduce documents into evidence at the hearing
unless they were provided to the other party with its statement of
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position, as described above. In order to be considered timely submitted,
the submission must be delivered by hand delivery on the date it is due, or
dispatched via a recognized overnight delivery service the day before the
submission is due, in such manner that it is reasonable to expect that
delivery will be made on the due date. All such submissions shall
simultaneously be filed with the arbitrator.
F. The arbitration hearing shall be held within 20 business days after
the date the last statement of position is submitted or was due to be
submitted. The arbitrator shall render his or her award within 10 business
days after conclusion of the hearing. The arbitrator shall agree to comply
with this schedule before accepting appointment. However, the time limits
set forth in paragraphs E and G of this section 26 may be extended by
agreement of the parties or by the arbitrator if the arbitrator deems such
extension to be necessary.
G. The arbitrator shall not have the authority to award punitive damages.
H. Any claim or action must be brought within one year after the cause of
action accrues.
Notwithstanding the foregoing provisions of this Section, the parties
hereto acknowledge and agree that the Company shall have the right to pursue any
claim for specific performance, injunction, or other equitable relief in a court
of competent jurisdiction (before or during the pendency of any arbitration, or
otherwise) in the event of any alleged breach of any provision in Sections 7, 8
or 9 of this Agreement.
25. FDIC COMPLIANCE LIMITATION.
If the amounts to be paid to the Executive under this Agreement would cause
the Executive to receive a payment in violation of 12 CFR Section 359 (or the
corresponding provisions of any future regulations promulgated under Section
18(k) of the Federal Deposit Insurance Act (12 U.S.C. Section 1828(k))), then,
after seeking the approval of the FDIC to nonetheless make payment of such
amounts, if such approval is not forthcoming, such amounts shall be limited so
that no violation of such regulations will occur.
26. GOLDEN PARACHUTE LIMITATION.
If amounts to be paid to the Executive under this Agreement would somehow
cause the Executive to be subject to the excise tax imposed by Code Section 4999
on golden parachute payments, then, to the extent that the total "parachute
payments" (as defined in Code Section 280G(b)(2)) which would be made to the
Executive are greater than three times the Executive's "base amount" (as defined
in Code Section 280G(b)(3)), but are less than the Golden Parachute Upper
Limitation, then amounts to be paid under this Agreement which would constitute
"parachute payments" shall be reduced to the extent necessary so that the total
"parachute payments" which would be paid to the Executive shall not exceed three
times the Executive's "base amount." It is the intent of the foregoing
provision that if the Executive would be economically better off, on an after-
tax (federal and state income and federal excise) basis, by receiving less under
this Agreement because of the application of the golden parachute excise tax
under Code Section 4999 to amounts that the Executive receives, then the
Executive's payments hereunder shall be reduced so that the Code Section 4999
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excise tax shall not apply. The Executive shall have complete discretion to
appoint competent tax experts to make the calculations required by this Section,
and the calculations made by such experts shall be final and binding upon both
the Company and the Executive. Any reductions required under this Section shall
come first from cash payments required hereunder.
27. PARTICIPATION AS AN ORGANIZER.
Executive shall serve as an organizer of the Bank on the same terms as the
other organizers thereof, including participating in the filing of all of the
applications submitted by the organizers, contributing $10,000 to the capital of
the Company in return for 1,000 shares of the Company's common stock,
guaranteeing the repayment of up to $100,000 of the Company's organizational
line of credit, purchasing a minimum of 10,000 shares of the Company's common
stock in its initial public offering (net of the 1,000 shares referred to
above), and, on a best efforts basis, identifying and recruiting purchasers of,
or otherwise be primarily responsible for the sale of, at least 100,000
additional shares of the Company's common stock in its initial public offering.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the Effective Date.
THE COMPANY: THE EXECUTIVE:
HOMETOWN COMMUNITY BANCSHARES, INC. XXXX XXXXXXXX
By: /s/Xxxxxx X. Xxxxxx /s/C. Xxxx Xxxxxxxx
------------------------------ ---------------------------------
Xxxxxx X. Xxxxxx C. Xxxx Xxxxxxxx
Its: Director, Secretary
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EXHIBIT A
DEFINITIONS
A. "BOARD" shall mean the Board of Directors of Hometown Community Bancshares,
Inc.
B. "BUSINESS" shall mean the business of commercial banking.
C. "CAUSE" shall exist if the Executive (1) materially breaches any provision
of this Agreement and such breach is not cured by the Executive within 30 days
after receipt by the Executive of written notice from the Company of such
breach, (2) engages in gross negligence or willful misconduct, fraud,
dishonesty, or malfeasance that results in material injury to the Company and
has not been cured by the Executive within 30 days after receipt by the
Executive of written notice from the Company of such conduct, (3) engages in
willful, intentional, or grossly negligent failure to (A) perform the
Executive's duties under this Agreement, (B) follow the direction (consistent
with the Executive's duties) of the Board, or (C) to follow the policies,
procedures, and rules of the Company; provided, however, that the Company shall
first give the Executive written notice setting forth with specificity the
reasons that the Company believes the Executive is engaging in a failure under
this clause (3), and shall give the Executive 30 days to cure such failure, (4)
is convicted of, or enters into a plea of guilty or no contest to, (A) a felony
or (B) a crime involving moral turpitude that adversely affects the Company's
reputation in a material way, or (5) is not approved by the DBF, the FDIC, the
Federal Reserve or any other regulatory agency having jurisdiction over the
Company to serve as in the capacities required under this Agreement, or any such
agency subsequently requests the removal of Executive from serving in any of
such capacities.
D. "CHANGE OF CONTROL" means any of the following: (a) any transaction or
series of transactions pursuant to which the Company sells, transfers, leases,
exchanges or disposes of substantially all (i.e., at least 85%) of its assets
for cash or property, or for a combination of cash and property, or for other
consideration; (b) any transaction pursuant to which persons who are not
current shareholders of the Company acquire by merger, consolidation,
reorganization, division or other business combination or transaction, or by a
purchase of an interest in the Company so that after such transaction, the
shareholders of the Company immediately prior to such transaction no longer have
a controlling (i.e., 50% or more) voting interest in the Company; (c) the
individuals who, as of the date of this Agreement, were members of the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that if either the election of any new director
or the nomination for election of any new director by the Company's stockholders
was approved by a vote of at least a majority of the Incumbent Board, such new
director shall be considered as a member of the Incumbent Board; or (d) any
transaction if the Executive and the Company agree in writing prior to such
transaction that such transaction shall constitute a Change of Control for
purposes of this Agreement. However, notwithstanding the foregoing, the
Executive and the Company may agree in writing prior to the occurrence of any
of the foregoing events that such event shall not constitute a Change of Control
for purposes of this Agreement.
E. "COMPANY" means Hometown Community Bancshares, Inc., its parents,
subsidiaries, affiliates and all related companies, as well as their respective
officers, directors, shareholders, employees, agents and any other
representatives.
F. "COMPANY EXECUTIVE" means any person who (i) is employed by the Company at
the time the Executive's employment with the Company ends, (ii) was employed by
Executive Employment Agreement
13
the Company during the last year of the Executive's employment with the Company
(or during the Executive's employment if employed less than a year), or (iii) is
employed by the Company during the Restricted Period.
G. "CONFIDENTIAL INFORMATION" means (a) information of the Company, to the
extent not considered a Trade Secret under applicable law, that (i) relates to
the business of the Company, (ii) possesses an element of value to the Company,
(iii) is not generally known to the Company's competitors, and (iv) would damage
the Company if disclosed, and (b) information of any third party provided to the
Company which the Company is obligated to treat as confidential. Confidential
Information includes, but is not limited to, (i) future business plans, (ii) the
composition, description, schematic or design of products, future products or
equipment of the Company, (iii) communication systems, audio systems, system
designs and related documentation, (iv) advertising or marketing plans, (v)
information regarding independent contractors, employees, clients and customers
of the Company, and (vi) information concerning the Company's financial
structure and methods and procedures of operation. Confidential Information
shall not include any information that (i) is or becomes generally available
to the public other than as a result of an unauthorized disclosure, (ii) has
been independently developed and disclosed by others without violating this
Agreement or the legal rights of any party, or (iii) otherwise enters the public
domain through lawful means.
H. "CONTACT" means any interaction between the Executive and a Customer which
(i) takes place in an effort to establish, maintain, and/or further a business
relationship on behalf of the Company and (ii) occurs during the last year of
the Executive's employment with the Company (or during the Executive's
employment if employed less than a year).
I. "CUSTOMER" means any person or entity to whom the Company has sold its
products or services, or solicited to sell its products or services.
J. "DBF" means the Georgia Department of Banking and Finance.
K. "DISABILITY" means a physical or mental impairment (a physiological
disorder or condition, cosmetic disfigurement, anatomical loss affecting a major
body system and any mental or psychological disorder) that substantially limits
one or more major life activities.
L. "FDIC" means the Federal Deposit Insurance Corporation.
M. "FEDERAL RESERVE" means the Board of Governors of the Federal Reserve
System or any delegate thereof, including without limitation the Federal Reserve
Bank of Atlanta.
N. "GOLDEN PARACHUTE UPPER LIMITATION" means , with respect to the Executive,
that dollar amount of "parachute payments" of the Executive exceeding three
times the Executive's "base amount" (as defined in Code Section 280G(b)(3)),
given the Executive's tax situation, which would, after the application of all
such taxes, yield to the Executive the same after-tax amount as if the
Executive's "parachute payments" were exactly $0.01 less than three times the
Executive's "base amount" (as defined in Code Section 280G(b)(3)), or, in other
words, that dollar amount of "parachute payments" of the Executive exceeding
three times the Executive's "base amount" (as defined in Code Section
280G(b)(3)) at which the negative impact of the additional golden parachute
excise tax is exactly offset by the additional compensation paid to the
Executive. Mathematically, the Golden Parachute Upper Limitation should equal
the "base amount" (as defined in Code Section 280G(b)(3)) of the Executive
multiplied by the following fraction, if the marginal rates of the Executive are
constant:
Executive Employment Agreement
14
3 - 3F - 3S - E
-----------------
1 - F - S - E
where:
"F" is the highest marginal rate of federal income taxation applicable to the
Executive's "parachute payments" under this Agreement;
"S" is the highest marginal rate of state income taxation applicable to the
Executive's "parachute payments" under this Agreement; and
"E" is the golden parachute excise tax rate applicable to the Executive's
"parachute payments" under this Agreement.
O. "LICENSED MATERIALS" means any materials that the Executive utilizes for
the benefit of the Company, or deliver to the Company or the Company's
customers, which (i) do not constitute Work Product, (ii) are created by the
Executive or of which the Executive is otherwise in lawful possession, and (iii)
the Executive may lawfully utilize for the benefit of, or distribute to, the
Company or the Company's customers.
P. "RESTRICTED PERIOD" means the time period during the Executive's employment
with the Company, and for one year after the Executive's employment with the
Company ends.
Q. "TRADE SECRETS" means information of the Company, and its licensors,
suppliers, clients and customers, without regard to form, including, but not
limited to, technical or non-technical data, a formula, a pattern, a
compilation, a program, a device, a method, a technique, a drawing, a process,
financial data, financial plans, product plans, or a list of actual or potential
customers or suppliers which is not commonly known by or available to the public
and which information (i) derives economic value, actual or potential, from not
being generally known to, and not being readily ascertainable by proper means
by, other persons who can obtain economic value from its disclosure or use, and
(ii) is the subject of efforts that are reasonable under the circumstances to
maintain its secrecy.
R. "WORK PRODUCT" means (a) any data, databases, materials, documentation,
computer programs, inventions (whether or not patentable), designs, and/or works
of authorship, including but not limited to, discoveries, ideas, concepts,
properties, formulas, compositions, methods, programs, procedures, systems,
techniques, products, improvements, innovations, writings, pictures, audio,
video, images of the Executive, and artistic works, and (b) any subject matter
protected under patent, copyright, proprietary database, trademark, trade
secret, rights of publicity, confidential information, or other property rights,
including all worldwide rights therein, that is or was conceived, created or
developed in whole or in part by the Executive while employed by the Company and
that either (i) is created within the scope of the Executive's employment, (ii)
is based on, results from, or is suggested by any work performed within the
scope of the Executive's employment and is directly or indirectly related to the
business of the Company or a line of business that the Company may reasonably be
interested in pursuing, (iii) has been or will be paid for by the Company, or
(iv) was created or improved in whole or in part by using the Company's time,
resources, data, facilities, or equipment.
Executive Employment Agreement
15
