NON-COMPETE AND NON-SOLICITATION AGREEMENT
This
NON-COMPETE AND NON-SOLICITATION AGREEMENT (the “Agreement”) is dated as of
December 11, 2009, by and between Xxxxxx X. Xxxxxxx, Xx. (“Executive”) and
Atlantic Coast Bank (the “Bank”), a wholly-owned subsidiary of Atlantic Coast
Federal Corporation (the “Company”).
WHEREAS, Executive is
President and Chief Executive Officer of the Bank and the Company;
and
WHEREAS, the Executive, the
Bank and the Company are parties to an employment agreement dated December 11,
2009 (the “Employment Agreement”); and
WHEREAS, separate from the
Employment Agreement, in order to protect the business, trade secrets and other
confidential and proprietary information of the Bank and Company known to
Executive following Executive’s termination of employment for any reason (other
than “Cause,” as defined in the Employment Agreement), including, but not
limited to, (i) voluntary resignation; (ii) Retirement (as defined in the
Employment Agreement); (iii) involuntary termination of employment without
Cause; and (iv) voluntary termination for “Good Reason” (as defined in the
Employment Agreement) (all of which shall constitute a “Termination of
Employment” under this Agreement), Executive has agreed to restrict his
activities in accordance with the terms and conditions of this Agreement;
and
NOW, THEREFORE, in
consideration of the premises, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereby
agree as follows:
1. Covenants.
(a) Executive
hereby covenants and agrees that for a period of two (2) years following his
Termination of Employment he shall not, without the written consent of the Bank,
either directly or indirectly:
(1) solicit,
offer employment to, or take any other action intended (or that a reasonable
person acting in like circumstances would expect) to have the effect of causing
any officer or employee of the Bank or the Company, or any of their respective
subsidiaries or affiliates, to terminate his or her employment and accept
employment or become affiliated with, or provide services for compensation in
any capacity whatsoever to, any business whatsoever that competes with the
business of the Bank or the Company, or any of their direct or indirect
subsidiaries or affiliates or has headquarters or offices within 50 miles of the
locations in which the Bank or the Company has business operations or has filed
an application for regulatory approval to establish an office;
(2) become
an officer, employee, consultant, director, independent contractor, agent, sole
proprietor, joint venturer, greater than 5% equity owner or stockholder, partner
or trustee of
any savings bank, savings and loan association, savings and loan holding
company, credit union, bank or bank holding company, insurance company or
agency, any mortgage or loan broker or any other entity competing with the Bank
or its affiliates in the same geographic locations where the Bank or its
affiliates has material business interests; or
(3) solicit,
provide any information, advice or recommendation or take any other action
intended (or that a reasonable person acting in like circumstances would expect)
to have the effect of causing any customer of the Bank to terminate an existing
business or commercial relationship with the Bank.
(b) Executive
shall, upon reasonable notice, furnish such information and assistance to the
Bank and/or the Company as may reasonably be required by the Bank and/or the
Company, in connection with any litigation in which it or any of its
subsidiaries or affiliates is, or may become, a party; provided, however, that
Executive shall not be required to provide information or assistance with
respect to any litigation between the Executive and the Bank and/or the Company
and/or any of its subsidiaries or affiliates.
(c) All
payments to Executive under this Agreement shall be subject to Executive’s
compliance with this Section 1. The parties hereto, recognizing that
irreparable injury will result to the Bank and/or the Company, its business and
property in the event of Executive’s breach of this Section 1, agree that, in
the event of any such breach by Executive, the Bank and/or the Company will be
entitled, in addition to any other remedies and damages available, to an
injunction to restrain the violation hereof by Executive and all persons acting
for or with Executive. Executive represents and admits that Executive’s
experience and capabilities are such that Executive can obtain employment in a
business engaged in other lines and/or of a different nature than the Bank, and
that the enforcement of a remedy by way of injunction will not prevent Executive
from earning a livelihood. Nothing herein will be construed as
prohibiting the Bank or the Company from pursuing any other remedies available
to them for such breach or threatened breach, including the recovery of damages
from Executive.
(d) The
terms and provisions of the covenants contained in this Section 1 are intended
to be separate and divisible provisions and if, for any reason, any one or more
of them is held to be invalid or unenforceable, the validity or the
enforceability of any other provision of this Agreement shall not thereby be
affected. If, in any judicial proceeding, a court shall refuse to
enforce any of the separate covenants (or any part thereof) contained in the
preceding paragraphs of this Section 1, then such unenforceable covenants (or
any such part) shall be deemed eliminated from this Agreement for the purpose of
those proceedings to the extent necessary to permit the remaining separate
covenants (or portions thereof) to be enforced.
(e) Each
party hereto acknowledges that the potential restrictions on Executive’s future
activities imposed by the covenants in this Section 1 are reasonable in both
duration and geographic scope and in all other respects. In the event
that the provisions of this Section 1 should ever be deemed to exceed the
duration or geographic limitations or scope permitted by applicable law, then
such provisions shall be reformed to the maximum time or geographic limitations
or scope, as the case may be, permitted by applicable law, and each party agrees
that the restrictions and prohibitions contained herein shall be effective to
the fullest extent allowed under applicable law in such jurisdiction. If the
two-year duration is deemed unenforceable, and a court will not permit
reformation as provided for in this subparagraph, then the two-year duration
provided for above, shall be deemed to be one year.
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2. Payment.
(a) No
later than thirty (30) days after the Executive’s Termination of Employment, the
Bank or the Company agree to pay Executive a cash lump sum equal to two times
(i) the highest annual rate of “Base Salary” (as defined in the Employment
Agreement) paid to Executive at any time under the Employment Agreement and (ii)
the highest annual bonus and non-equity incentive compensation (as defined in
the Employment Agreement) paid to the Executive over the most recent two
calendar years prior to the Termination of Employment; provided, however, that
any payment owed to Executive under this Agreement shall be reduced by an amount
equal to the amount of any severance pay that the Executive receives under the
Employment Agreement upon an “Event of Termination” (as defined in the
Employment Agreement).
(b) No
payment shall be made under this Agreement unless the Termination of Employment
qualifies as a “Separation from Service” (as defined in the Internal Revenue
Code (the “Code”) Section 409A and the regulations thereunder).
(c) Notwithstanding
the foregoing, in the event Executive is a “Specified Employee” (as defined in
the Code Section 409A and the regulations thereunder) to the extent required
under Code Section 409A, no payment shall be made to Executive prior to the
first day of the seventh month following the Termination of
Employment.
3. Source
of Payment. The payment
provided in this Agreement shall be timely paid in cash or check from the
general funds of the Bank. The Company, however, guarantees payment
of the amount due hereunder to Executive, and if such amount due from the Bank
is not timely paid or provided by the Bank, such amount shall be paid by the
Company.
4. No
Attachment; Binding on Successors.
(a) Except
as required by law, no right to receive a payment under this Agreement shall be
subject to anticipation, commutation, alienation, sale, assignment, encumbrance,
charge, pledge, or hypothecation, or to execution, attachment, levy, or similar
process or assignment by operation of law, and any attempt, voluntary or
involuntary, to effect any such action shall be null, void, and of no
effect.
(b) This
Agreement shall be binding upon, and inure to the benefit of, Executive and the
Bank and their respective successors and assigns.
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5. Modification
and Waiver.
(a) This
Agreement may not be modified or amended except by an instrument in writing
signed by the parties hereto.
(b) No
term or condition of this Agreement shall be deemed to have been waived, nor
shall there be any estoppel against the enforcement of any provision of this
Agreement, except by written instrument of the party charged with such waiver or
estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.
6. Required
Provisions.
(a) The
Bank may terminate Executive’s employment at any time, but any termination by
the Board other than termination for Cause shall not prejudice Executive’s right
to compensation under this Agreement. Executive shall have no right
to receive compensation for any period after termination for Cause.
(b) If
Executive is suspended from office and/or temporarily prohibited from
participating in the conduct of the Bank’s affairs by a notice served under
Section 8(e)(3) [12 U.S.C. §1818(e)(3)] or 8(g)(1) [12 U.S.C. §1818(g)(1)]
of the Federal Deposit Insurance Act, the Bank’s obligations under this contract
shall be suspended as of the date of service, unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the Bank may
in its discretion (i) pay Executive all or part of the compensation withheld
while its contract obligations were suspended and (ii) reinstate (in whole or in
part) any of its obligations which were suspended.
(c) If
Executive is removed and/or permanently prohibited from participating in the
conduct of the Bank’s affairs by an order issued under Section 8(e)(4) [12
U.S.C. §1818(e)(4)] or 8(g)(1) [12 U.S.C. §1818(g)(1)] of the Federal Deposit
Insurance Act, all obligations of the Bank under this Agreement shall terminate
as of the effective date of the order, but vested rights of the contracting
parties shall not be affected.
(d) If
the Bank is in default as defined in Section 3(x)(1) [12 U.S.C. §1813(x)(1)] of
the Federal Deposit Insurance Act, all obligations of the Bank under this
Agreement shall terminate as of the date of default, but this paragraph shall
not affect any vested rights of the contracting parties.
(e) All
obligations under this Agreement shall be terminated, except to the extent
determined that continuation of the contract is necessary for the continued
operation of the Bank, (i) by the Director of the Office of Thrift Supervision
(“OTS”) or his or her designee, at the time the FDIC enters into an agreement to
provide assistance to or on behalf of the Bank under the authority contained in
Section 13(c) [12 U.S.C. §1823(c)] of the Federal Deposit Insurance Act; or
(ii) by the Director or his or her designee at the time the Director or his
or her designee approves a supervisory merger to resolve problems related to
operation of the Bank or when the Bank is determined by the Director to be in an
unsafe or unsound condition. Any rights of the parties that have
already vested, however, shall not be affected by such action.
(f) Notwithstanding
anything herein contained to the contrary, any payments to Executive by the Bank
or the Company, whether pursuant to this Agreement or otherwise, are subject to
and conditioned upon their compliance with Section 18(k) of the Federal Deposit
Insurance Act, 12 U.S.C. § 1828(k), and the regulations promulgated
thereunder in 12 C.F.R. Part 359.
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6. Severability. If,
for any reason, any provision of this Agreement, or any part of any provision,
is held invalid, such invalidity shall not affect any other provision of this
Agreement or any part of such provision not held so invalid, and each such other
provision and part thereof shall to the full extent consistent with law continue
in full force and effect.
7. Headings
for Reference Only. The
headings of sections and paragraphs herein are included solely for convenience
of reference and shall not control the meaning or interpretation of any of the
provisions of this Agreement.
8. Governing
Law. This
Agreement shall be governed by the laws of the State of Georgia but only to the
extent not superseded by federal law.
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IN WITNESS WHEREOF, the Bank
and the Company have caused this Agreement to be executed by its duly authorized
representatives, and Executive has signed this Agreement, on the date first
above written.
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ATLANTIC
COAST BANK
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December 11, 2009
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By:
/s/ Xxxxxxx X. Xxxxxx, Xx.
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| Date |
Chairman
of the Board
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ATLANTIC
COAST FEDERAL
CORPORATION
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December 11, 2009
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By:
/s/ Xxxxxxx X. Xxxxxx, Xx.
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| Date |
Chairman
of the Board
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EXECUTIVE:
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December 11, 2009
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By: /s/ Xxxxxx X. Xxxxxxx,
Xx.
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| Date |
Xxxxxx
X. Xxxxxxx, Xx.
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