STATE OF SOUTH CAROLINA )
) EMPLOYMENT AGREEMENT
COUNTY OF GREENVILLE )
THIS EMPLOYMENT AGREEMENT, made and entered into this 2ND day of
September, 1999, by and between XXXXX X. XXXXXXXX, a resident of the State and
County aforesaid, hereinafter referred to as "Employee" and Summit Financial
Corporation, a corporation duly chartered pursuant to the laws of the State of
South Carolina, hereinafter referred to as "Employer".
W I T N E S S E T H:
WHEREAS, the Employer is a corporation chartered under the laws of the
State of South Carolina and
WHEREAS, Employee is the Executive Vice President and Chief Operating
Officer of the banking operation which is a wholly-owned subsidiary of the
Employer; and
WHEREAS, the terms of this Agreement are subject to the approval by
the Board of Directors of the Employer;
NOW, THEREFORE, in consideration of the mutual promises of the parties
and the mutual benefits they will gain by the performance thereof, the parties
hereto agree as follows:
1. Employment. That the Employer, subject to the terms and
conditions hereof, does hereby agree to employ the Employee and the Employee
accepts such employment, from the date hereof and to continue therefrom until
terminated as hereinafter provided.
2. Duties. That the Employee is employed to act as Executive Vice
President/Chief Operating Officer of the banking entity, which is a wholly-owned
subsidiary of the Employer and to perform such other duties on behalf of the
Employer, as well as any subsidiary thereof, which will benefit the Employer.
3. Termination by Employee. That the Employee may terminate his
employment hereunder at any time after he has given ninety (90) days prior
written notice to the Employer, such notice to be accomplished by delivery of
such written termination to either the Chairman of the Board of Directors or
President (provided that the Employee is not serving in either capacity) of the
Employer.
4. Termination by Employer. That the Employer may terminate
immediately the Employee's employment hereunder at any time, with or without
cause, by giving written notice of such termination of employment to the
Employee.
5. Automatic Termination of Employee. That the employment of the
Employee shall be automatically terminated upon the earlier of any of the
following:
(a) The death of the Employee.
(b) The disability of the Employee so as to prevent the
Employee from adequately performing his duties contemplated hereunder (the
determination of any such disability shall be within the sole discretion of the
Board of Directors of the Employer). The Employee will be compensated at his
normal rate until the earlier of: (i) such time as he begins to receive benefits
from his disability insurance; or (ii) a period ending one hundred eighty (180)
days from such determination of disability.
6. Compensation. That for all of his duties hereunder, the Employee
shall receive compensation at the rate currently in place. However, anything to
the contrary notwithstanding, this compensation shall terminate immediately in
the event of termination of employment hereunder for any reason whatsoever
except for any payments which might be due the Employee under paragraph 5(b) or
by reason of the Employer enforcing its covenant not to compete set forth herein
below.
7. Covenant Not to Compete.
(a) That in the event the Employee voluntarily terminates his
employment with the Employer or any subsidiary of the Employer, that the
Employee agrees that he will not, directly or indirectly, own, manage, operate,
control, be employed by, participate in or be connected in any manner with the
ownership, management or operation of any business similar to that type of
business then conducted by the Employer or by any subsidiary for which the
Employee is then actively engaged for a period of twelve (12) months from the
date of such termination of employment and within the radius of twenty (20)
miles from where the Employee has his main office or five (5) miles from any
branch office, while he is performing his services hereunder. Further, that the
Employee acknowledges that this covenant not to compete with the Employer, or
such subsidiary, is NOT made under duress and that it is an essential part of
the Agreement, without which the Employer would not have engaged or continued
the services of the Employee. Further, the Employee acknowledges that this
covenant not to compete is for such good and valid consideration, the receipt of
which is hereby acknowledged and Employee agrees that in the event of a
threatened breach of his covenant under this Agreement, that any remedy at law
would be inadequate and Employer may seek injunctive relief, as well as damages.
b) That in the event that the Employer shall terminate the employment
of the Employee, without cause ("cause" is defined herein below), the Employer
agrees to pay the Employee one hundred (100%) percent of his regular monthly
salary (regular monthly salary shall be computed by dividing by twelve (12) the
Employee s W-2 cash salary and cash bonus income from the Employer for the
calendar year immediately preceding such termination of employment). Such
payment to begin on the last day of the first month following the termination of
employment and to continue for one (1) year from the date of termination of
employment. At Employer's sole option, and for the same monthly payment
amounts, this non-competition agreement may be continued up to a maximum of two
(2) years from the date of termination of employment; PROVIDED, HOWEVER, that
after one (1) year from the date of termination, Employer shall have the
absolute right, in its sole discretion, to terminate, at any time, this said
non-competition agreement by giving thirty (30) days prior written notice to the
Employee, mailed to the Employee s address designated in Item 8 hereof and this
covenant not to compete shall terminate thirty (30) days after the mailing of
such notice and the payments referred to herein above shall likewise
automatically terminate on said date, after which termination by the Employer,
no payments shall be payable as it is expressly acknowledged by both the
Employee and the Employer that Employer shall have no obligation whatsoever to
continue this covenant not to compete for any period of time beyond one (1) year
from the date of termination. Naturally, such notice of termination of such
payments by the Employer shall, at that time, release the Employee from his
obligation not to compete. Such non-compete shall prevent the Employee from,
directly or indirectly, owning, managing, operating, or being employed by,
participating in or being connected in any manner with the ownership, management
and operation of any business similar to that type of business then conducted by
the Employer or by any subsidiary for which the Employee is then actively
engaged for a period of twelve (12) months (24 months at Employer's sole
options) from the date of such termination of employment and within the radius
of twenty (20) miles from the office of the Employer, or five (5) miles from any
branch office, as the case may be, within which Employee has his main office
while he is performing his services hereunder. Further, that the Employee
acknowledges that this covenant not to compete with the Employer or such
subsidiary is NOT made under duress and that it is an essential part of this
Agreement, without which the Employer would not have engaged or continued the
services of the Employee. Further, the Employee acknowledges that this covenant
not to compete is for such good and valid consideration, the receipt of which is
hereby acknowledged and Employee agrees that in the event of a threatened breach
of his covenant under this Agreement, that any remedy at law would be inadequate
and Employer may seek injunctive relief, as well as damages.
(c) That in the event that the Employer shall terminate the employment
of the Employee for cause (with cause" being defined under this Agreement to
mean either: (i) willful failure of the Employee to substantially perform
prescribed duties other than a result of disability (the Employee shall be given
written notice of an alleged willful failure to substantially perform such
prescribed duties and shall have a period of thirty (30) days to correct such
willful failure to substantially perform such prescribed duties); or (ii) the
willful engaging in misconduct significantly detrimental to the Employer), the
Employer agrees to pay the Employee one hundred (100%) percent of his regular
monthly salary (regular monthly salary shall be computed by dividing by twelve
(12) the Employee's W-2 cash salary and cash bonus income from the Employer for
the calendar year immediately preceding such termination of employment) for a
period of one (1) month. Further, that in the event of such termination for
cause, the Employee agrees that he will not, directly or indirectly, own,
manage, operate, control, be employed by, participate in, or be connected in any
manner with the ownership, management or operation of any business similar to
that type of business then conducted by the Employer or by any subsidiary for
which the Employee is then actively engaged for a period of six (6) months from
the date of termination of employment and within a radius of twenty (20) miles
from where the employee has his main office, or five (5) miles from any branch
office, while he is performing the services hereunder. Further, that the
Employee acknowledges that this covenant not to compete with the Employer, or
such subsidiary, is NOT made under duress and that it is an essential part of
this Agreement, without which the Employer would not have engaged or continued
the services of the Employee. Further, the Employee acknowledges that this
covenant not to compete is for such good and valid consideration and Employee
agrees that in the event of a threatened breach of his covenant under this
Agreement, that any remedy at law would be inadequate and Employer may seek
injunctive relief, as well as damages.
(d) That in the event the Employee is terminated by the Employer after
a change in control (as hereinafter defined) or by the Employer during the
pendency of a potential change in control (other than for cause in either case)
or by the Employee for good reason (as hereinafter defined) after a change in
control, then the Employee is entitled to EITHER:
OPTION 1: a non-competition amount equal to three (3) times his annual base pay
amount, calculated as the average of the Employee s W-2 annual cash salary and
cash bonus income from the Employer over the five (5) most recent taxable years,
payable in three (3) equal annual installments without any interest due thereon,
the first installment being due within thirty (30) days from the date of such
termination and annually thereafter until paid in full; OR:
OPTION 2: a non-competition amount equal to one-and-one-half (1-1/2) times his
annual base pay amount, calculated as the average of the Employee s W-2 annual
cash salary and cash bonus income from the Employer over the five (5) most
recent taxable years, payable in two (2) equal annual installments without any
interest due thereon, the first installment being due within thirty (30) days
from the date of such termination and annually thereafter until paid in full.
Employee must select in writing to receive non-competition payments under
either OPTION 1 or OPTION 2 as defined above within 48 hours of such
termination. In addition, the Employee is entitled to continued life,
disability and medical insurance coverage for a period of twelve (12) months,
paid for by the Employer.
Said non-compete payments shall prevent the Employee from, directly or
indirectly, owning, managing, operating, or being employed by, participating in
or being connected in any manner with the ownership, management and operation of
any business similar to that type of business then conducted by the Employer or
by any subsidiary for which the Employer is then actively engaged for a period
of EITHER:
Assuming the Employee selects OPTION 1: 36 months from the date of such
termination of employment, OR:
Assuming the Employee selects OPTION 2: 18 months from the date of such
termination of employment.
Further, for either of the Options, said non-competition payments will
prevent the Employee's activities described above within the radius of twenty
(20) miles from the office of the Employer, or five (5) miles from any branch
office, as the case may be, within which Employer has his main office while he
is performing his services hereunder. The Employee acknowledges that this
covenant not to compete with the Employer or such subsidiary is NOT made under
duress and that it is an essential part of this Agreement. Further, the
Employee acknowledges that this covenant not to compete is for such good and
valid consideration, the receipt of which is hereby acknowledged. The Employer
and Employee acknowledge that any breach of this contract would cause damages to
the Employer, the value of which would be difficult to determine. For that
reason, the Employer and Employee hereby agree upon liquidated damages
specifying that the damages that the Employer would incur as a result of a
breach by the Employee would be determined based on the present value of the
stream of unpaid non-competition payments specified above. In addition, in the
event of a breach of the Employee s covenant under this Agreement, the Employer
may seek injunctive relief, as well as the liquidated damages set forth above.
A change in control occurs if: (i) any person or entity acting directly or
indirectly or through or in concert (other than persons who are presently on the
Board of Directors for the Employer) with one or more persons, acquires the
power, directly or indirectly, to vote twenty-five (25%) percent or more of any
class of voting securities of the Employer; or (ii) the Employer becomes a
subsidiary of another corporation or is merged or consolidated into another
corporation. A potential change in control occurs if: (i) the Employer has
entered into an agreement, the consummation of which would result in a change in
control; (ii) any person publicly announces his intention to take or to consider
taking actions which, if consummated, would constitute a change in control; or
(iii) any person becomes the beneficial owner, as defined under Securities and
Exchange Commission rules, directly or indirectly of the Employer s securities
which represent nine and one-half (9.5%) percent or more of the combined voting
power of the Employer's then outstanding securities entitled to elect directors;
or (iv) the Board of Directors adopts a resolution to the effect that a
potential change in control for purposes of the agreement has occurred. A
potential change in control remains pending for purposes of receiving payments
under the agreement until the earlier of the occurrence of a change in control
or a determination by the Board of Directors or a committee thereof (at any
time) that a change of control is not or was no longer reasonably expected to
occur.
Termination of employment because of disability, retirement or death,
or by the Employer for cause or by the Employee for any reason other than for
good reason, will not result in the full payment of benefits under the
provisions of paragraph 7(d) above. Cause" is defined under the agreement to
mean: (i) willful failure substantially to perform prescribed duties other than
as a result of disability; or (ii) the willful engaging in misconduct
significantly detrimental to the Employer. Good reason" for Employee to
terminate employment with the Employer occurs if: (i) duties are assigned that
are materially inconsistent with previous duties; (ii) duties and
responsibilities are substantially reduced; (iii) base compensation is reduced
not as part of an across-the-board reduction for such executives; (iv)
participation under compensation plans or arrangements generally made available
to persons at the Employee s level of responsibility at the Employer is denied
except as otherwise provided; (v) a successor fails to assume the agreement; or
(vi) termination is made without compliance with prescribed procedures.
8. Addresses. That, unless mutually amended in writing, any notices
required or permitted to be given under this Agreement shall be sufficient if in
writing and sent by registered mail to the following addresses:
FOR THE EMPLOYER:
Summit Financial Corporation
X/X X. Xxxxxxxx Xxxxxx
X X Xxx 0000
Xxxxxxxxxx, XX 00000
FOR THE EMPLOYEE:
Xxxxx X. Xxxxxxxx
000 X. Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
9. Vacation. That during the term of active employment hereunder,
the Employee shall be entitled to an annual paid vacation of three (3) weeks to
be taken at such reasonable time or times as allowed by the Board of Directors
of the Employer.
10. Employee Benefits. That the Employee shall be entitled, during the
term of active employment hereunder, to those employee benefits currently in
place for the Employee.
11. State Law. That this Agreement is made pursuant to the laws of
the State of South Carolina and shall be construed thereby.
12. Entire Agreement. That this Agreement constitutes the sole and
complete agreement between the Employer and the Employee and it is agreed that
no verbal or other statement, inducements or representations have been made to
or relied upon by the Employee and that no modification to this Agreement shall
be binding upon either party hereto unless in writing and signed by each party.
13. Binding Effect. That this Agreement is binding upon the parties
hereto, their successors, personal representatives, legal representatives, heirs
and assigns (however this Agreement shall not be assigned by the Employee unless
the Employer shall agree thereto in writing).
IN WITNESS WHEREOF, the parties hereto have signed and sealed this
Agreement on the date above first written.
IN THE PRESENCE OF: EMPLOYER:
SUMMIT FINANCIAL CORPORATION
/s/ Xxxxxx X. Xxxxxxxxxx By: /s/ J. Xxxxxxxx Xxxxxx
Its: President
/s/ Xxxxx Xxx And: /s/ C. Xxxxxxx Xxxxx
Its: Chairman
EMPLOYEE:
/s/ Xxxxxx X. Xxxxxxxxxx /s/ X. X. Xxxxxxxx
/s/ Xxxxx Xxx
