EXHIBIT NO.10.(iv)
NON-COMPETITION AGREEMENT
THIS AGREEMENT is executed on the 24th day of November 2003,
("Effective Date"), by and between XXXXXX COUNTY BANCSHARES, INC. ("Company")
and R. XXXX XXXXXXX ("Employee").
INTRODUCTION
Whereas, the Board of Directors of Company (the "Board") has determined
that it is in the best interests of Company to retain Employee's services and to
reinforce and encourage the continued attention and dedication of Employee to
his assigned duties; and
Whereas, the Board has previously entered into an employment agreement
with Employee dated January 23, 1996 governing Employee's compensation and
salary (the "Employment Agreement"); and
Whereas, Employee is willing to provide Company with a covenant that he
will not engage in competition with Company in exchange for Company's willing to
provide him with certain deferred compensation benefits;
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, Company and Employee hereby agree as follows:
1. DEFINITIONS: The following definitions shall apply to this Agreement:
(a) TERMINATION FOR CAUSE. Termination for Cause shall be defined
to be termination of Employee's employment with Company for
commission of a felony or of a misdemeanor involving moral
turpitude:
(b) CHANGE IN CONTROL. The term Change in Control shall have the
following meaning:
(i) Any person or entity or group of affiliated persons
or entities (other than Company) becomes a beneficial owner,
directly or indirectly, of 20% or more of Company's voting
securities or all or substantially all of the assets of
Company;
(ii) Company enters into a definitive agreement which
contemplates the merger, consolidation or combination of
Company with an unaffiliated entity in which either or both of
the following is to occur: (i) the Board of Directors of
Company, as applicable, immediately prior to such merger,
consolidation or combination will constitute less than a
majority of the board of directors of the surviving, new or
combined entity; or (ii) less than 75% of the outstanding
voting securities of the surviving, new or combined entity
will be beneficially owned by the stock holders of Company
immediately prior to such merger, consolidation or
combination; provided, however, that if any definitive
agreement to merge, consolidate or combine is terminated
without consummation of the transaction, then no Change in
Control shall be deemed to have occurred pursuant to this
paragraph;
(iii) Company enters into a definitive agreement which
contemplates the transfer of all or substantially all of
Company's assets, other than to a wholly-owned Subsidiary of
Company; provided, however, that if any definitive agreement
to transfer assets is terminated without consummation of the
transfer, then no Change in Control shall be deemed to have
occurred pursuant to this paragraph; or
(iv) A majority of the members of the Board of Directors
of Company shall be persons who: (i) were not members of such
Board on the date this plan is approved by the stock holders
of Company ("current members"); and (ii) were not nominated by
a vote of such Board which included the affirmative vote of a
majority of the current members on such Board at the time of
their nomination ("future designees") and (iii) were not
nominated by a vote of such Board which included the
affirmative vote of a majority of the current members and
future designees, taken as a group, on such Board at the time
of their nomination.
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EXHIBIT NO.10.(iv)
2. NON-COMPETITION: For and in consideration of the deferred compensation
benefits granted by Company to Employee under the terms of this Agreement,
Employee agrees that he will not, during the term of Employee's employment with
Company and, if Employee's employment with Company terminates for any reason,
during the period from the termination of Employee's employment until his
sixtieth birthday, directly or indirectly engage in the business of banking, or
any other business in which Company directly or indirectly engages during the
term of Employee's employment with Company, in any county of any state in which
Company has an office or branch at the time of termination. For purposes of this
section, Employee shall be deemed to engage in a business if he directly or
indirectly, engages or invests in, owns, manages, operates, controls or
participates in the ownership, management, operation or control of, is employed
by, associated or in any manner connect with, or renders services or advice to,
any business engaged in banking or financial services; provided, however, that
Employee may invest in the securities of any enterprise (but without otherwise
participating in the activities of such enterprise) if two conditions are met:
(A) such securities are listed on any national or regional securities exchange
or have been registered under Section 12(g) of the Securities Exchange Act of
1934; and (B) Employee does not beneficially own as defined in Rule 1 3d-3
promulgated under the Securities Exchange Act of 1934 in excess of 1% of the
outstanding capital stock of such enterprise. The provisions of this section
shall remain binding after termination of Employee's employment regardless of
the reason for Employee's termination;
3. CONFIDENTIAL INFORMATION. Employee recognizes and acknowledges that he
will have access to certain information of Company and that such information is
confidential and constitutes valuable, special and unique property of Company.
Employee shall not at any time, either during or subsequent to the term of this
Agreement, disclose to others, use, copy or permit to be copied, except as
directed by law or in pursuance of Employee's duties for or on behalf of
Company, its successors, assigns or nominees, any Confidential Information of
Company (regardless of whether developed by Employee), without the prior written
consent of Company.
The term "Confidential Information" means any Company secret or
confidential information or know-how and shall include, but shall not be limited
to, the plans; customers; customer specific information; customer specific loan
pricing, loan needs, and maturity dates; costs, prices, rates, uses, and
applications of products and services; customer specific deposit information;
results of investigations; studies owned or used by such person; and all
products, processes, compositions, computer programs, and servicing, marketing
or operational methods and techniques at any time used, developed, investigated,
made or sold by such person, before or during the term of this Agreement, that
are not readily available in the banking industry.
Employee shall also maintain in confidence any confidential information
of third parties received as a result of Employee's employment with Company in
accordance with Company's obligations to such third parties and the and the
policies established by Company.
4. DELIVERY OF DOCUMENTS UPON TERMINATION. Employee shall deliver to
Company or its designee at the termination of Employee's employment all
correspondence, memoranda, notes, records, drawings, sketches, plans, customer
lists, product compositions, and other documents and all copies thereof, made,
composed or received by Employee, solely or jointly with others, that are in
Employee's possession, custody, or control at termination and that are related
in any manner to the past, present, or anticipated business of Company. The
foregoing notwithstanding, Employee may retain the original of any document,
which is primarily of a personal nature or relates to his personal business or
employment; provided that a copy of the same is given to Company and Company is
advised that Employee is retaining the original. Further, Employee may retain a
copy of any document that a similarly situated prudent person would keep, but
shall advise Company of each such copy so retained. In keeping with the
provisions of Section 3, Employee shall keep confidential any Confidential
Information contain in the retained documents except to the extent disclosure of
the same is necessary to defend Employee against a claim made by Company or
others.
5. NO SOLICITATION. For and in consideration of the deferred compensation
benefits granted by Company to Employee under the terms of this Agreement,
Employee agrees that he will not, during the term of Employee's employment with
Company and, if Employee's employment with Company terminates for any reason,
during the period from the termination of Employee's employment until his
sixtieth birthday, solicit the employment or services of, hire, or assist in the
hiring of any person eligible for Company's compensation or benefit plans for
senior officers or executives, directly or indirectly for the benefit of any
bank or financial institution or any
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EXHIBIT NO.10.(iv)
company or other entity affiliated, directly or indirectly, with another bank or
financial institution other than Company.
6. NO TAMPERING. For and in consideration of the deferred compensation
benefits granted by Company to Employee under the terms of this Agreement,
Employee agrees that he will not, during the term of Employee's employment with
Company and, if Employee's employment with Company terminates for any reason,
during the period from the termination of Employee's employment until his
sixtieth birthday, directly or indirectly (a) request, induce or attempt to
influence any existing or prospective customers, vendors or licensors of Company
to curtail or cancel any business they may transact with Company; or (b)
request, induce or attempt to influence any senior or executive employee of
Company to terminate that employee's employment with Company. For purposes of
this Section 6, "prospective customers" shall mean individuals or entities whom
Company or its affiliates have contacted regarding specific business within the
twelve (12) months immediately preceding the termination of this Agreement.
7. REMEDIES. Employee acknowledges that a remedy at law for any breach or
attempted breach of Employee's obligations under SECTIONS 2 THROUGH 6 may be
inadequate, agrees that Company may be entitled to specific performance and
injunctive and other equitable remedies in case of any such breach or attempted
breach and further agrees to waive any requirement for the securing or posting
of any bond in connection with the obtaining of any such injunctive or other
equitable relief. Employee agrees and stipulates that if Company can prove a
violation of any one covenant, that it shall be entitled to injunctive relief on
all such covenants and that proof of one such violation is satisfactory to show
that Company will suffer immediate and irreparable harm if injunctive relief is
not granted. Company shall have the right to offset against amounts to be paid
to Employee pursuant to the terms hereof any amounts from time to time owing by
Employee to Company. The termination of Employee's employment shall not be
deemed to be a waiver by Company of any breach by Employee of this Agreement or
any other obligation owed Company, and notwithstanding such a termination,
Employee shall be liable for all damages attributable to such a breach. Upon
breach of this Agreement by Company of any of its obligations arising hereunder
to Employee, Employee shall be entitled to pursue a claim for benefits due under
Section 8 in addition to, and without any reduction for, the release of
Employee's obligations under Section 9.
8. DEFERRED COMPENSATION BENEFITS: In consideration of the covenants
contained herein, Company agrees to provide deferred compensation benefits to
Employee, in addition to all other such benefits provided to Employee by
Company, in the amounts set forth in Schedule A under the column Annual Benefit
Upon Termination for the age specified in said schedule (the "Benefit Amount"),
upon the termination of his employment. The Benefit amount shall be paid for
seven (7) consecutive years. .If Employee dies after age fifty four (54) while
still employed by Company, then benefits shall be paid to his named beneficiary
the same as they would have been paid to him if he had retired on the date of
his death. If Employee die before age fifty four (54) while still employed by
Company, then benefits shall be paid to his named beneficiary the same as they
would have been paid to him if he had retired on his fifty fourth birthday. If
Employee dies after he has commenced drawing the benefits contemplated herein,
then said benefits shall continue to be paid for the balance of the seven (7)
year period to his named beneficiary. If Employee is still employed by Company
on his sixtieth (60) birthday, then Company shall commence paying said deferred
compensation benefits on his sixtieth birthday. Provided, however, if Employee's
employment is Terminated for Cause as defined in Section 1, then Company shall
be released from its duty to pay the benefits contemplated in this section.
9. REALEASE OF COVENANTS: Employee shall be released from the covenants
contained in Sections 2, 5, and 6 upon the occurrence of any of the following
events: (i) the Termination for Cause of Employee's employment by the Company as
defined in Section 1; (ii) a Change in Control as defined in Section 1; or (iii)
any material breach by Company of its obligations to Employee arising under this
Agreement, if said breach remains uncured for more than thirty (30) days after
Employee gives Company written notice of breach specifying the nature of the
breach.
10. MISCELLANEOUS PROVISIONS.
(a) EMPLOYEE'S HEIRS, ETC. Employee may not assign Employee's
rights or delegate Employee's duties or obligations hereunder without
the written consent of Company, which consent shall not be unreasonably
withheld. This Agreement shall inure to the benefit of and be
enforceable by Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributes, devisees and legatees.
If Employee should die prior to his receipt of all benefits due him
hereunder, said unpaid benefits shall be paid to Employee's designee
or, if there be no such designee, to Employee's estate.
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EXHIBIT NO.10.(iv)
(b) NOTICES. Any notice or communication required or permitted
under the terms of this Agreement shall be in writing and shall be
delivered personally, or sent by registered or certified mail, return
receipt requested, postage prepaid, or sent by nationally recognized
overnight carrier, postage prepaid, or sent by facsimile transmission
to Company at Company's principal office and facsimile number in
Greeneville, Tennessee listed below or to Employee at the address and
facsimile number listed below with a copy to his attorney. Such notice
or communication shall be deemed given (a) when delivered if personally
delivered; (b) five mailing days after having been placed in the mail,
if delivered by registered or certified mail; (c) the business day
after having been placed with a nationally recognized overnight
carrier, if delivered by nationally recognized overnight carrier, and
(d) the business day after transmittal when transmitted with electronic
confirmation of receipt, if transmitted by facsimile. Any party may
change the address or facsimile number to which notices or
communications are to be sent to it by giving notice of such change in
the manner herein provided for giving notice. Until changed by notice,
the following shall be the address and facsimile number to which
notices shall be sent:
If to Company, to: Xxxxxx County Bancshares
000 X. Xxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
If to Employee, to: R. Xxxx Xxxxxxx
000 Xxxxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
(c) AMENDMENT OR WAIVER. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by Employee and an authorized
officer of Company (other than Employee). No waiver by either party
hereto at any time of any breach by the other party hereto of or
compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been
made by either party that are not set forth expressly in this
Agreement.
(d) INVALID PROVISIONS. Should any portion of this Agreement be
adjudged or held to be invalid, unenforceable or void, such holding
shall not have the effect of invalidating or voiding the remainder of
this Agreement and the parties hereby agree that the portion so held
invalid, unenforceable or void shall if possible, be deemed amended or
reduced in scope, or otherwise be stricken from this Agreement to the
extent required for the purposes of validity and enforcement thereof.
(e) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all
of which together will constitute one and the same instrument.
(f) SURVIVAL OF EMPLOYEE'S OBLIGATIONS. Except as otherwise
provided herein, Employee's obligations under this Agreement shall
survive regardless of whether Employee's employment by Company is
terminated, voluntarily or involuntarily, by Company or Employee, with
or without Cause.
(f) GOVERNING LAW. This Agreement and any action or proceeding
related to it shall be governed by and construed under the laws of the
State of Tennessee. The parties agree that venue in any litigation
shall be in Xxxxxx County, TN, the parties having agreed and stipulated
that Xxxxxx County, TN is a neutral and fair venue to both sides. The
parties also hereby agree to waive any objection to or defense against
Xxxxxx County, TN as the place of venue.
(h) CAPTIONS AND GENDER. The use of Captions and Section headings
herein is for purposes of convenience only and shall not effect the
interpretation or substance of any provisions contained herein.
Similarly, the use of the masculine gender with respect to pronouns in
this Agreement is for purposes of convenience and includes either sex
who may be a signatory.
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EXHIBIT NO.10.(iv)
(i) ENTIRE AGREEMENT. This Agreement along with the Employment
Agreement, and any attachments, represents the entire agreement between
Company and Employee concerning the subject matter of Employee's
employment and supersedes any prior agreements.
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EXHIBIT NO.10.(iv)
IN WITNESS WHEREOF, Employee and a duly authorized Company officer have
signed this Agreement.
THE EMPLOYEE: THE COMPANY:
XXXXXX COUNTY BANCSHARES, INC.
/s/ Xxxx Xxxxxxx By: /s/ Xxxxx Xxxxxx
----------------------------- --------------------------------
R. Xxxx Xxxxxxx Xxxxx Xxxxxx
Chairman & CEO Title: Secretary
Xxxxxx County Bank
By: /s/ Xxxxx Xxxxxxx
--------------------------------
Xxxxx Xxxxxxx
Title: Chairman of Compensation Committee
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EXHIBIT NO.10.(iv)
Schedule A - Summary of Benefits for Non Compete Agreement
CHANGE
% ANNUAL IN PRERETIREMENT
VESTED BENEFIT DISABILITY CONTROL ANNUAL
PERIOD IN VALUE OF UPON ANNUAL ANNUAL DEATH
ENDING ACCRUED ACCRUED VESTED TERMINATION BENEFIT BENEFIT BENEFIT
OCT OF AGE LIABILITY LIABILITY BENEFIT (1) (1) (1) (2)
2003 47 $ 0 100.00% $ 0 $ 0 $ 0 $100,000 $100,000
2004 48 $ 73,257 100.00% $ 73,257 $ 18,346 $ 18,346 $100,000 $100,000
2005 49 $151,420 100.00% $151,420 $ 35,540 $ 35,540 $100,000 $100,000
2006 50 $234,817 100.00% $234,817 $ 51,656 $ 51,656 $100,000 $100,000
2007 51 $323,800 100.00% $323,800 $ 66,759 $ 66,759 $100,000 $100,000
2008 52 $418,742 100.00% $418,742 $ 80,915 $ 80,915 $100,000 $100,000
2009 53 $520,043 100.00% $520,043 $ 94,182 $ 94,182 $100,000 $100,000
3/2010 54 $564,228 100.00% $564,228 $100,000 $100,000 $100,000 $100,000
2011 55 $587,926 100.00% $587,926 $104,200 $104,200 $104,200 $104,200
2012 56 $612,619 100.00% $612,619 $108,576 $108,576 $108,576 $108,576
2013 57 $638,349 100.00% $638,349 $113,137 $113,137 $113,137 $113,137
2014 58 $665,159 100.00% $665,159 $117,888 $117,888 $117,888 $117,888
2015 59 $693,096 100.00% $693,096 $122,840 $122,840 $122,840 $122,840
2016 60 $722,206 100.00% $722,206 $127,999 $127,999 $127,999 $127,999
2017 61 $752,539 100.00% $752,539 $133,375 $133,375 $133,375 $133,375
2018 62 $784,145 100.00% $784,145 $138,977 $138,977 $138,977 $138,977
2019 63 $817,080 100.00% $817,080 $144,814 $144,814 $144,814 $144,814
2020 64 $851,397 100.00% $851,397 $150,896 $150,896 $150,896 $150,896
2021 65 $887,156 100.00% $887,156 $157,233 $157,233 $157,233 $157,233
(1) If termination occurs at or before age 54, payments commence at age 54
and are payable to the officer or his beneficiary in equal annual
installments for 7 years. If termination occurs after age 54, payments
commence the month following termination and are payable in equal
annual installments for 7 years. After age 54, the benefit payments
grow at 4.20% per year, which is the Bank's pretax opportunity cost as
specified by the Bank's CFO.
(2) Payments commence within 90 days of the date of receipt of the death
certificate and are payable to the named beneficiary in equal annual
installments for 7 years.
Note: The Accrued Liability balance is based on the accruals required under
Generally Accepted Accounting Principles (GAAP). It is based on a plan
commencement date of November 1, 2003, the interest method of accounting,
and a 6.50% discount rate, compounded monthly.
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