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EXHIBIT 10.3
EMPLOYMENT AGREEMENT
BETWEEN
FIRST MCMINNVILLE CORPORATION
AND
XXXXXXX X. XXXXXX
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EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
the 11th day of June, 1999, by and between FIRST MCMINNVILLE CORPORATION, a
Tennessee corporation that is registered as a bank holding company under the
Bank Holding Company Act of 1956, as amended, its successors and assigns
("Company"), and XXXXXXX X. XXXXXX ("Xxxxxx"), an individual resident of
McMinnville, Tennessee.
W I T N E S S E T H:
WHEREAS, the Company desires to employ Xxxxxx and Xxxxxx desires to be
employed by and to serve the Company and the First National Bank of McMinnville
("Bank") in the capacities and for the term and compensation and upon the terms
and conditions hereinafter set forth; and
WHEREAS, Xxxxxx has been an employee of the Company and/or its
subsidiary Bank for many years and currently serves as President and Chief
Executive Officer of the Company and the Bank; and
WHEREAS, as an incentive to Xxxxxx, and in order to promote continuity
in management for the Company, the Company desires to formalize the relationship
with Xxxxxx in order to assure itself of the continuity of management for itself
and the Bank, and also to obtain from him the agreements contained herein;
NOW, THEREFORE, in consideration of the premises and the terms and
agreements hereof, the Company and Xxxxxx agree that:
1. Employment of Xxxxxx. The Company hereby employs Xxxxxx and Xxxxxx
hereby accepts employment with the Company and agrees to serve the Company and
the Bank in the capacities, for the term and compensation, and upon and subject
to the terms and conditions hereinafter set forth.
2. Office and Duties of Xxxxxx; Place of Employment; Supervision.
X. Xxxxxx shall serve the Company and the Bank as the President and
Chief Executive Officer thereof; and, until a Change in Control (as defined
herein) occurs, he may serve also as a member of the Board of Directors. The
Company agrees that Xxxxxx shall not be required to serve in any other capacity
without his prior written consent and that he shall not be required by the
Company or the Bank to have or serve in a physical office location ("Office") of
the Company or any Affiliate of the Company without his prior written consent
unless such Office be within the City Limits of McMinnville, Tennessee. Xxxxxx
shall report and be responsible to the Boards of Directors of the Company and
the Bank.
X. Xxxxxx shall be subject to the Company's employment, personnel,
and all other policies as in effect on the date hereof and in effect from time
to time; provided that no changes in such policies shall be deemed to alter or
diminish Xxxxxx' rights hereunder.
3. Compensation
A. Subject to the provisions of this Agreement for resignation and
for termination by the Company for default, material breach and/or cause,
Xxxxxx'x salary ("Salary") and bonus ("Bonus"), if a Bonus is to be paid, shall
be as provided in this Paragraph.
(i) Salary. Xxxxxx' Salary shall be as determined by the Board of
Directors from time to time. However, prior to a Change in Control (as
herein defined), so long as the Bank's return on average assets is not
less than one percent, such Salary shall not be lowered, and, after the
commencement of a Change in Control, Xxxxxx' Salary shall not be lower
than his annual Salary for the year in which any Change of Control
Transaction commences. Xxxxxx' annual Salary shall be paid in equal
increments not less frequently than monthly. Xxxxxx shall receive the
Annual Salary
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Adjustment. The Annual Salary Adjustment shall occur on January 1 of each
year (or part of a year) during the term hereof (applicable to the
remainder of such year and until the expiration or termination of this
Agreement), commencing January 1st of the year in which any Change of
Control is deemed to occur pursuant to this Agreement.
(ii) Annual Salary Adjustment. Commencing with any Change in
Control, Xxxxxx'x Salary shall be increased annually by not less than an
amount equal to a percentage equal to 100% of the amount reasonably
determined by the Company to be the increase (if any) in the consumer
price index for the preceding year. (For example, the Salary would be
increased by 5% commencing on the first day of January next following a
Change of Control if the increase in the consumer price index for the
preceding year, as reasonably determined by the Company, were 5%; or 1%
where such increase were reasonably determined to be 1%, etc.). There
would be no increase (or decrease) in the event that such consumer price
index were determined by the Company not to have increased (or to have
declined).
(iii) Bonus. Xxxxxx shall have the right to receive a Bonus as
herein provided.
(a) Xxxxxx shall receive a Bonus for any year prior to a
Change in Control equal to an amount, if any, determined by the
Board of Directors.
(b) Xxxxxx shall receive a Bonus for any year in which a
Change in Control occurs, and for each year thereafter, equal to the
highest amount awarded by any Affiliate of the Company and/or the
Bank to any officer of any Financial Institution owned or otherwise
controlled, directly or indirectly, by such Affiliate or, if the
company then controlling the Bank or the Company does not at any
time own another Financial Institution other than the Bank, then the
Bonus shall be equal to the highest bonus paid to any officer,
director, or employee of such company or any Affiliate thereof, who
acts in the capacity of a regional and/or multi-bank administrator.
For purposes of this Agreement, "Salary" and "Bonus" include all amounts paid by
the Company and all (or any) of its subsidiaries (including the Bank) to Xxxxxx
as salary and bonus during the term hereof.
B. Expense Reimbursement. In addition to Salary and any Bonus,
Xxxxxx shall be reimbursed for all actual, normal out-of-pocket expenses that
he reasonably incurs in connection with his duties hereunder during the term
hereof.
C. Other Benefits. The Company shall provide to Xxxxxx, during his
employment under this Agreement, such non-salary benefits as are provided from
time to time to the senior management of the Company or the Bank, or any
Affiliate thereof, such as medical and hospitalization insurance, disability
insurance, retirement benefits, profit-sharing, life insurance, and comparable
non-salary items. The Company shall make available for Xxxxxx'x use an
appropriate automobile.
D. Board of Directors, Etc. Prior to any Change in Control, Xxxxxx
shall serve on the Board. After a transaction that is calculated or designed to
result in a Change in Control commences, Xxxxxx shall serve on any such Board or
committee as to which he shall consent. Xxxxxx shall receive the same
compensation as other Board members for serving on the Board.
E. Professional Matters, Etc. The Company agrees to assist and
support Xxxxxx in maintaining and extending his professional education and
activities. In this regard, prior to the commencement of any Change in Control
Transaction, the Company shall reimburse Xxxxxx for all reasonable travel,
accommodations, and out-of-pocket expenses incurred in attending banking
conventions and educational programs to the extent permitted by the Board of
Directors. After a Change in Control commences, Xxxxxx shall be entitled to be
reimbursed for attending (in his discretion) at least such conventions and
educational programs (1) as was customary prior to the year in which a Change in
Control is deemed to have commenced and (2) as the Board of Directors or its
Chairman shall have approved in advance.
4. Term, Expiration and Termination.
A. The term of this Agreement shall be the period beginning on the
date first above written (the "Commencement Date") and expiring on December 31,
2003 ("Expiration Date") unless extended by the parties, except as provided
below in this Paragraph 4.
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X. Xxxxxx shall have the right to resign and to receive the
Termination Payment (as herein defined) based on any of the following:
(i) The Company commits a material breach or violation of this
Agreement, including a Company violation of Paragraph 4B(ii) hereof, which
is not cured before the expiration of thirty (30) calendar days after
written notice from Xxxxxx describing the facts and circumstances of the
breach or violation in reasonable detail. Such notice shall be deemed a
demand for cure of the breach or violation; and/or
(ii) The Company persists, for a period of thirty (30) calendar days
after written notice from Xxxxxx describing in reasonable detail the
matter as to which he is complaining, in any attempt to require Xxxxxx to
perform (or omit to perform) any act or engage (or omit to engage) in any
conduct that would constitute unethical or illegal conduct or omission.
Such notice shall be deemed a demand for the Company to cease any such
attempt; and/or
(iii) A Change in Control of the Company or the Bank occurs.
If Xxxxxx resigns for any reason other those specified in this Paragraph
4B, Xxxxxx shall be entitled to be paid only for earned but unpaid Salary and
unreimbursed expenses.
C. The Company may terminate Xxxxxx'x employment under this
Agreement, subject to any applicable notice and cure provisions set forth below,
only for "Cause." As used herein, "Cause" means:
(i) Any one or more acts of theft, embezzlement, fraud or
dishonesty;
(ii) Any material uncured breach or violation of this Agreement,
including a Xxxxxx violation of Paragraph 6B hereof;
(iii) Any order issued by any federal banking agency requiring
Xxxxxx' termination;
(iv) Any willful, uncured failure by Xxxxxx to perform the duties
described above in Paragraph 2; and/or
(v) Any violation of the terms of Paragraph 6 hereof attributable to
a deliberate and knowing act by Xxxxxx that was intended to harm, and did,
harm the Company and/or the Bank in a materially demonstrable financial
manner.
Except for an occasion in which the Board, in its reasonable discretion
believes that Xxxxxx' immediate removal is necessary for the protection of the
Bank or the Company, the Company shall give Xxxxxx written notice of the
violation or reason that it desires to terminate him and at least sixty (60)
calendar days (exclusive of Federal and State holidays) to reasonably cure any
violation or to address any other ground stated by the Board of Directors in its
written notice. The Company's written notice shall describe the facts and
circumstances of the alleged breach or violation in reasonable detail.
Any notice from the Company to Xxxxxx concerning a "Cause" for removal
shall be deemed a demand for cure of the asserted breach or violation. The
Company may terminate Xxxxxx for the reasons specified in Subparagraph 4C(i) and
4C(iii) immediately upon sending Xxxxxx written notice describing the facts and
circumstances of the breach or violation in reasonable detail, but without
giving Xxxxxx the opportunity to cure such violation(s) or breach(es). If Xxxxxx
is acquitted, not convicted, or otherwise prevails in respect of the charges
described in Subparagraph 4C(i) or (iii), he shall be entitled to either (x)
back pay and reinstatement or (y) back pay plus the Termination Payment, at his
election.
Xxxxxx shall be entitled to the Termination Payment, together with
interest thereon at the judgment rate of interest, if the Company terminates
Xxxxxx'x employment for any reason other than those set forth in this Paragraph
4C. For the purposes of this Agreement, a Change in Control shall be deemed to
have commenced not less than twelve (12) months prior to its actual
consummation.
D. In the event that Xxxxxx shall die or become substantially
mentally disabled and/or otherwise unable to perform his then assigned duties
before the Expiration Date, then the provisions of Paragraph 5 shall apply. As
to the disability
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referred to in this Subparagraph 4D, the Company agrees that if, at the
inception of the disability, it reasonably appears that the disability will
persist for less than six (6) months, then such disability shall be disregarded
for the purposes of this Subparagraph 4D unless, in fact, the disability
persists for more than six (6) months.
5. Salary Continuation Agreement. [RESERVED.]
6. Noncompetition and Non-Disclosure Agreement.
Xxxxxx acknowledges that the Company has advised him that a principal
reason for its entry into this Agreement is to obtain non-competition and
related agreements from him and that it would not enter into this Agreement
without the provisions of this Paragraph and that the agreements herein
contained are extremely material to the Company in entering into this Agreement.
The provisions of this Paragraph shall survive the expiration or termination of
this Agreement.
A. Noncompetition Agreement. During the term of this Agreement, or for
one (1) year following the good faith termination of Xxxxxx for valid Cause (or
Xxxxxx'x voluntary resignation other than for the reasons specified in Paragraph
4B hereof) pursuant to this Agreement, Xxxxxx shall be subject to the
non-competition agreement set forth below.
Xxxxxx' non-competition agreement is set forth in this paragraph:
Xxxxxx agrees that he will not engage or be involved in, directly or indirectly,
any Competitor Business in any capacity whatsoever including, without
limitation, as owner, lender, employee, officer, director, advisor, consultant,
principal agent, trustee, member or any other capacity, or through the agency of
any corporation, partnership, association, agent or agency. Further, Xxxxxx
shall not, directly or indirectly, own nor lend money or guarantee borrowings
for the purpose of owning more than One Percent (1%) of the outstanding capital
stock or other investment in, or loan to, any Competitor Business. This
non-competition agreement applies to all of the Primary Service Area but not
elsewhere.
This non-competition agreement shall be of no further force and effect
if Xxxxxx resigns for any of the reasons described in Paragraph 4B or is
Xxxxxx'x employment is terminated by the Company other than for Cause and, if
the basis is Subparagraph 4C(i) and/or 4C(iii), the dismissal is supported by a
final judgment substantially adverse to Xxxxxx, by a final order of conviction,
or by a debarment.
B. Non-Disclosure Agreement. Xxxxxx shall never disclose, except
pursuant to lawful order of a court of competent jurisdiction, or by an
administrative agency having jurisdiction, material non-public information about
the Company or the Bank. In the event that Xxxxxx is served with any notice,
subpoena, or other court or administrative order (all of the above referred to
herein as a "Court Order"), he shall immediately, if reasonably practicable,
before making any disclosure covered by this Paragraph, provide a copy thereof
to the Company in order to permit the Company and/or the Bank to object to such
Court Order or to resist the enforcement thereof by lawful means (at the Bank's
and/or the Company's expense). This provision shall be enforceable by the
Company or the Bank. However, nothing in this Subparagraph shall be understood
to limit Xxxxxx' ability to comply with any subpoena, or any court or
administrative order, believed by him to be genuine.
7. Other Material Terms.
A. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Tennessee.
B. Successors and Assigns; Assignment; Material Breach, Etc. All
covenants and agreements set forth in this Agreement by or on behalf of the
Company shall bind its successors and assigns, and all covenants and agreements
set forth in this Agreement by or on behalf of Xxxxxx shall inure to the benefit
of and be enforceable by the Company and its successors and assigns. Neither
party may assign any rights or delegate any duties under this Agreement without
the prior written consent of the other party, and such consent shall not be
unreasonably withheld. Any assignment of rights or delegation of duties without
an express, prior written consent will be of no force or effect.
C. Injunctive Relief; Standing. Xxxxxx agrees and acknowledges that the
Company's and the Bank's remedy of monetary damages will be insufficient to
compensate and protect the interests of the Company and/or the Bank in the event
of his
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violation of the noncompetition and/or non-disclosure provisions of this
Agreement. Accordingly, Xxxxxx agrees that the Company and/or the Bank which may
have been injured or adversely affected (or threatened with injury or adverse
effect) by his conduct shall be entitled to obtain injunctive relief to prevent
violations of this Agreement. The Bank, if affected by Jacobs's alleged breach
of this Agreement, shall have standing to seek injunctive, damages, and other
appropriate relief. This provisions of this Subparagraph shall survive the
expiration or termination of this Agreement.
D. Judicial Elision, Revision. The provisions of this Agreement,
including Paragraph 6, shall not be held invalid or unenforceable because of the
scope of the territory or actions subject thereto or restricted thereby, or the
period of time within which such agreement is operative; but any judgment of a
court of competent jurisdiction may define the maximum territory and actions
subject to any conduct or activity restricted by this and other Paragraphs and
the period of time during which such agreement is enforceable.
E. Integrated Agreement; Amendment; Etc. This Agreement expresses the
entire agreement between Xxxxxx and the Company with reference to the subject
mater hereof. No waiver or modification of this Agreement or of any covenant,
condition, or limitation herein contained shall be valid, unless in writing and
duly executed by the party to be charged therewith, and the parties further
agree that the provisions of this Paragraph 7E may not be waived except by
express terms in a written instrument signed by both parties hereto.
F. Notices, Etc. Any notice or communication hereunder must, in order
to be effective, be in writing and may be given by registered or certified mail,
and if given by registered or certified mail, shall be deemed to have been given
when delivered to and received by the party to whom it is addressed. Such notice
of communication shall be given to the parties hereto at their following
addresses:
If to the Company, to: First McMinnville Corporation
c/o The First National Bank of McMinnville
000 Xxxx Xxxx Xxxxxx
XxXxxxxxxxx, Xxxxxxxxx 00000
Attention: Chairman
If to Xxxxxx, to: Xx. Xxxxxxx X. Xxxxxx
0000 Xxxxxxxx Xxxx
XxXxxxxxxxx, Xxxxxxxxx 00000
Any party hereto may at any time, by giving ten (10) days written
notice to the other party hereto, designate any other address in substitution of
his or its respective address to which such notice or communication shall be
given.
In order for a notice described in Paragraph 4B or 4C to be effective,
it must be sent in accordance with this Paragraph 7F and contain sufficient
detail of the matter being described to allow a reasonable business person to
understand such matter.
G. Indemnification. Each of the Company and Xxxxxx hereby
agree to indemnify and hold the other harmless from and against any and all
losses, claims, damages, or expenses including, but not limited to, attorneys
fees and litigation expenses at all trial and appellate levels, arising from or
growing out of the other party's breach or threatened breach of this Agreement.
This provision shall survive the expiration or termination of this Agreement.
H. Certain Definitions and Intentions, Etc. As used herein the
following terms shall be understood to have the meanings set forth below:
(i) "Affiliate" means any "affiliate" or "associate" of any
person or entity as those terms are defined by the Securities Act of
1933 and/or the Securities Exchange Act of 1934, both as amended.
(ii) "Affiliated Person" means a person (or entity) who (or
which) is, at the time of a solicitation (direct or indirect) by Xxxxxx
or any Competitor Business, an employee, agent, officer, or director
of, or other person or entity (such as a vendor, realtor, real estate
developer, or mortgage loan investor), affiliated with the Company
and/or any Company Affiliate(s).
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(iii) "Bank" means and includes The First National Bank of
McMinnville and its successors and assigns.
(iv) "Change in Control" means (1) any "change in control" of
the Company or the Bank as such term is defined on the date hereof in
the Federal Change in Bank Control Act and any comparable laws, rules,
and regulations currently in effect, and/or (2) any merger,
reorganization, consolidation, substantial disposition of assets,
liquidation or comparable transaction affecting the Bank, the Company,
or any material Affiliate of either the Bank or the Company. The intent
of the Change in Control provisions in this Agreement is to provide
protection for Xxxxxx against changes in control and ownership, Xxxxxx
having contracted herein to be employed principally by local
Shareholders and Directors and having stated his desire to be protected
against changes in control. For the purposes of this Agreement, a
"Change in Control" shall be deemed to have occurred (1) on the first
day of the calendar year in which either the Company's (and/or the
Bank's) Board of Directors or the Company's (and/or the Bank's)
Shareholder(s) approve the transaction resulting in or constituting a
Change in Control (whichever is first to occur) and (2) as otherwise
provided herein. In addition, a "Change in Control" shall be deemed to
have occurred in the event that a Distribution Date occurs under the
Shareholders Rights Agreement of the Company dated June 10, 1997, as
the term "Distribution Date" is defined in such Shareholders Rights
Agreement, or would have been deemed to have occurred but for an
amendment or termination of such Shareholders Rights Agreement at some
future time.
(v) "Company" means and includes First McMinnville Corporation
and its successors and assigns and all and each of the Company's
present and future subsidiaries (both direct and indirect), and its
present and future affiliates, and the successors and assigns of each
and all of these, so long as they are owned or in existence prior to
any Change in Control.
(vi) "Competitor Business" means any person or entity which
engages, or competes with the Company or any Company Affiliate, in any
part of the Primary Service Area, in any aspect of the commercial
banking business.
(vii) "Financial Institution" means any commercial bank or
thrift institution the deposits of which are insured by the Bank or
Savings Association Insurance Fund of the Federal Deposit Insurance
Corporation (or any successor thereto), and any company controlling or
controlled by any such commercial bank or thrift institution.
(viii) "Primary Service Area" means Xxxxxx County, Tennessee,
and any other city or township in which the Bank (prior to the
commencement of any Change in Control) has a material branch.
(ix) "Termination Payment" means an amount equal to five times
Xxxxxx' Compensation. As used in this subparagraph, "Compensation"
means the sum of Xxxxxx' Salary and Bonus for the immediately preceding
calendar year (or, if greater, the sum of Xxxxxx' Salary and Bonus for
the then current calendar year). The Termination Payment shall be paid
to Xxxxxx in cash, in a lump sum, within five calendar days of his
written request therefor.
I. Captions. The captions set forth in this Agreement are for
the convenience of the parties only and shall not affect the substantive meaning
or interpretation of this Agreement.
J. Company Actions. The actions of the Company under this
Agreement shall be as determined reasonably in the exercise of good faith by the
Board of Directors.
K. Automatic Renewals. The expiration date of this Agreement,
currently set as December 31, 2003, shall automatically extend for one year
periods on each annual anniversary date hereof (i) unless the Board of Directors
shall promptly deliver Xxxxxx a copy of its resolution revoking such automatic
renewal on or before any such anniversary date or (ii) unless Xxxxxx shall
notify the Board of Directors in writing on or before any such anniversary date
that he is revoking such automatic renewal.
L. Mandatory Binding Arbitration. Any disputes under this
Agreement shall not be litigated but, rather, shall be subject to mandatory
binding arbitration in McMinnville, Tennessee before a panel of three neutral
arbitrators chosen by the American Arbitration Association ("AAA"). At least one
of the arbitrators shall be a licensed attorney in the State of Tennessee who
has specialized in banking law for at least five years. The arbitrators shall be
chosen, and the arbitration proceeding shall be held in accordance with, the
commercial arbitration rules of the AAA in effect at the time of the dispute.
The arbitrators are specifically authorized to award attorneys fees, costs, and
expenses to the parties measured by their relative success
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(or failure) in respect of the disputes arbitrated. The arbitrators shall award
only compensatory damages, plus any applicable interest at the judgment rate,
and they are not authorized to award punitive damages.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement in McMinnville, Tennessee as of the day and year first above written.
EMPLOYER:
FIRST MCMINNVILLE CORPORATION
By: /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx, Chairman
EMPLOYEE:
/s/ Xxxxxxx X. Xxxxxx
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XXXXXXX X. XXXXXX
XXXXX X. XXXXX
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WITNESS
XXXXX X. XXXXXXXX
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WITNESS
