EMPLOYMENT AGREEMENT
EXHIBIT
10.18
THIS
AGREEMENT
is
entered into as of April 16, 2007, by and between SOUTHERN
COMMUNITY BANK AND TRUST,
a North
Carolina banking corporation (hereinafter referred to as the “Bank”) and
XXXXX
X. XXXXXX
of North
Carolina (hereinafter referred to as the “Officer”).
For
and
in consideration of their mutual promises, covenants and conditions hereinafter
set forth, and other good and valuable consideration, the receipt and
sufficiency of which hereby is acknowledged, the parties agree as
follows:
1. Employment.
The
Bank agrees to employ the Officer and the Officer agrees to accept employment
upon the terms and conditions stated herein as a Senior Vice President of the
Bank. The Officer shall render such administrative and management services
to
the Bank as are customarily performed by persons situated in a similar capacity.
The Officer shall promote the business of the Bank, including being active
in at
least two civic or community organizations in Forsyth County, and perform such
other duties as shall, from time to time, be reasonably assigned by the Chief
Executive Officer of the Bank. Upon the request of the Chief Executive Officer,
the Officer shall disclose all business activities or commercial pursuits in
which Officer is engaged, other than Bank duties.
2. Compensation.
The
Bank shall pay the Officer during the term of this Agreement, as compensation
for all services rendered by him to the Bank, a base salary at the rate of
$175,000 per annum, payable in cash not less frequently than monthly. The rate
of such salary shall be reviewed by the Bank not less often than annually and
if
increased, shall not be decreased during the term of this Agreement. Such rate
of salary, or increased rate of salary, as the case may be, may be further
increased from time to time in such amounts as the Bank, in its discretion,
may
decide. In determining salary increases, the Bank shall compensate the Officer
for increases in the cost of living and may also provide for performance or
merit increases. Participation in the Bank’s incentive compensation, deferred
compensation, discretionary bonus, profit-sharing, retirement and other employee
benefit plans and participation in any fringe benefits shall not reduce the
salary payable to the Officer under this Paragraph. In the event of a Change
in
Control (as defined in Paragraph 10), the Officer’s rate of salary shall be
increased not less than five percent annually during the term of this Agreement.
Any payments made under this Agreement shall be subject to such deductions
as
are required by law or regulation or as may be agreed to by the Bank and the
Officer.
3. Discretionary
Bonuses.
During
the term of this Agreement, the Officer shall be entitled, in an equitable
manner with all other key management personnel of the Bank, to such
discretionary bonuses as may be authorized, declared and paid by the Bank to
key
management employees. No other compensation provided for in this Agreement
shall
be deemed a substitute for the Officer’s right to such discretionary bonuses
when and as declared by the Bank.
4. Participation
in Retirement and Employee Benefit Plans; Fringe
Benefits.
The
Officer shall be entitled to participate in any plan relating to deferred
compensation, stock options, stock purchases, pension, thrift, profit sharing,
group life insurance, medical coverage, disability coverage, education, or
other
retirement or employee benefits that the Bank has adopted, or may, from time
to
time adopt, for the benefit of its senior officers and for employees generally,
subject to the eligibility rules of such plans.
The
Officer shall also be entitled to participate in any other fringe benefits
which
are now or may be or become applicable to the Bank’s senior officers, including
the payment of reasonable expenses for continuing education to maintain
professional designations, and any other benefits which are commensurate with
the duties and responsibilities to be performed by the Officer under this
Agreement. Additionally, the Officer shall be entitled to such vacation and
sick
leave as shall be established under uniform employee policies promulgated by
the
Bank. The Bank shall reimburse the Officer for all out-of-pocket reasonable
and
necessary business expenses that the Officer may incur in connection with his
services on behalf of the Bank.
5. Term.
The
initial term of employment under this Agreement shall be for the period
commencing upon the effective date of this Agreement and ending two calendar
years from the effective date of this Agreement. On each anniversary of the
effective date of this Agreement, the term of this Agreement shall automatically
be extended for an additional one year period beyond the then effective
expiration date unless written notice from the Bank or the Officer is received
90 days prior to an anniversary date advising the other that this Agreement
shall not be further extended; provided that the Chief Executive Officer shall
review the Officer’s performance annually and make a specific determination
pursuant to such review to renew this Agreement prior to the 90 days’
notice.
6. Loyalty;
Noncompetition.
(a) The
Officer shall devote his full efforts and entire business time to the
performance of his duties and responsibilities under this
Agreement.
(b) For
and in consideration
of the agreement by the parent corporation of the Bank, Southern Community
Financial Corporation, to grant the Officer 10,000 options to purchase shares
of
its common stock
during the term of this Agreement, or any renewals thereof, and for a period
of
two years after termination, the Officer agrees he will not, within the
“Restricted Area,” directly or indirectly, engage in any business that competes
with the Bank or any of its subsidiaries without the prior written consent
of
the Bank; provided, however, that the provisions of this Paragraph shall not
apply in the event the Officer’s employment is unilaterally terminated by the
Bank for Cause, (as such term is defined in Paragraph 8(c) hereof) or in the
event the Officer terminates his employment with the Bank after the occurrence
of a “Termination Event” (as such term is defined in Paragraph 10(b) hereof)
following a “Change of Control” (as such term is defined in Paragraph 10(d)
hereof). The Restricted Area covers the following divisible list of territories:
Forsyth, Guilford, Iredell, Rockingham, Xxxxxx, Surry and Yadkin Counties,
North
Carolina, and within 15 miles of any Bank office operated during the term of
this Agreement. The two-year restricted period, however, does not include any
period of violation or period of time required for litigation to enforce the
Officer’s agreement not to compete against the Bank. Notwithstanding the
foregoing, the Officer shall be free, without such consent, to purchase or
hold
as an investment or otherwise, up to five percent of the outstanding stock
or
other security of any corporation that has its securities publicly traded on
any
recognized securities exchange or in any over-the counter
market.
(c) The
Officer agrees he will hold in confidence all knowledge or information of a
confidential nature with respect to the business of the Bank or any subsidiary
received by him during the term of this Agreement and will not disclose or
make
use of such information without the prior written consent of the Bank. The
Officer agrees that he will be liable to the Bank for any damages caused by
unauthorized disclosure of such information. Upon termination of his employment,
the Officer agrees to return all records or copies thereof of the Bank or any
subsidiary in his possession or under his control, which relate to the
activities of the Bank or any subsidiary.
(d) The
Officer acknowledges that it would not be possible to ascertain the amount
of
monetary damages in the event of a breach by the Officer under the provisions
of
this Paragraph 6. The Officer agrees that, in the event of a breach of this
Paragraph 6, injunctive relief enforcing the terms of this Paragraph 6 is an
appropriate remedy. If the scope of any restriction contained in this Paragraph
6 is determined to be too broad by any court of competent jurisdiction, then
such restriction shall be enforced to the maximum extent permitted by law and
the Officer consents that the scope of this restriction may be modified
judicially.
7. Standards.
The
Officer shall perform his duties and responsibilities under this Agreement
in
accordance with such reasonable standards expected of employees with comparable
positions in comparable organizations and as may be established from time to
time by the Chief Executive Officer. The Bank will provide the Officer with
the
working facilities and staff customary for similar executives and necessary
for
him to perform his duties.
8. Termination
and Termination Pay.
(a) The
Officer’s employment under this Agreement shall be terminated upon the death of
the Officer during the term of this Agreement, in which event, the Officer’s
estate shall be entitled to receive the compensation due the Officer through
the
last day of the calendar month in which his death shall have occurred and for
a
period of one month thereafter.
(b) The
Officer’s employment under this Agreement may be terminated at any time by the
Officer upon 60 days’ written notice to the Bank. Upon such termination, the
Officer shall be entitled to receive compensation through the effective date
of
such termination.
(c) The
Bank
may terminate the Officer’s employment at any time, but any termination by the
Bank, other than termination for Cause, shall not prejudice the Officer’s right
to compensation or
other
benefits under this Agreement. The Bank shall provide written notice specifying
the grounds for termination for Cause. The Officer shall have no right to
receive compensation or other benefits for any period after termination for
Cause. Termination for Cause shall include termination because of the Officer’s
personal dishonesty, incompetence, willful misconduct, breach of fiduciary
duty
involving personal profit, failure to perform stated duties, willful violation
of any law, rule, or regulation (other than traffic violations or similar
offenses) or final cease-and-desist order, or material breach of any provision
of this Agreement. Notwithstanding such termination, the obligations under
Paragraph 6(c) shall survive any termination of employment.
(d) Subject
to the Bank’s obligations and the Officer’s rights under (i) Title I of the
Americans with Xxxxxxxxxxxx Xxx, §000 of the Rehabilitation Act, and the Family
and Medical Leave Act, and to (ii) the vacation leave, disability leave, sick
leave and any other leave policies of the Bank, the Officer’s employment under
this Agreement automatically shall be terminated in the event the Officer
becomes disabled during the term of this Agreement and it is determined by
the
Bank that the Officer is unable to perform the essential functions of his job
under this Agreement for sixty (60) business days or more during any 12-month
period. Upon any such termination, the Officer shall be entitled to receive
any
compensation the Officer shall have earned prior to the date of termination
but
which remains unpaid, and shall be entitled to any payments provided under
any
disability income plan of the Bank which is applicable to the
Officer.
In
the
event of any disagreement between the Officer and the Bank as to whether the
Officer is physically or mentally incapacitated such as will result in the
termination of the Officer’s employment pursuant to this Paragraph 8(d), the
question of such incapacity shall be submitted to an impartial physician
licensed to practice medicine in North Carolina for determination and who will
be selected by mutual agreement of the Officer and the Bank, or failing such
agreement, by two (2) physicians (one (1) of whom shall be selected by the
Bank
and the other by the Officer), and such determination of the question of such
incapacity by such physician or physicians shall be final and binding on the
Officer and the Bank. The Bank shall pay the reasonable fees and expenses of
such physician or physicians in making any determination required under this
Paragraph 8(d).
9. Additional
Regulatory Requirements.
Notwithstanding anything contained in this Agreement to the contrary, it is
understood and agreed that the Bank (or any of its successors in interest)
shall
not be required to make any payment or take any action under this Agreement
if:
(a) the
Bank
is declared by any governmental agency having jurisdiction over the Bank
(hereinafter referred to as “Regulatory Authority”) to be insolvent, in default
or operating in an unsafe or unsound manner; or,
(b) in
the
opinion of counsel to the Bank, such payment or action (i) would be prohibited
by or would violate any provision of state or federal law applicable to the
Bank, including, without limitation, the Federal Deposit Insurance Act as now
in
effect or hereafter amended, (ii) would be prohibited by or would violate any
applicable rules, regulations, orders or statements of policy, whether now
existing or hereafter promulgated, of any Regulatory Authority, or (iii)
otherwise would be prohibited by any Regulatory Authority.
10. Change
in Control.
(a) In
the
event of a termination of the Officer’s employment in connection with, or within
twenty-four (24) months after, a “Change in Control” (as defined in Subparagraph
(d) below) of the Bank other than for Cause (as defined in Paragraph 8), the
Officer shall be entitled to receive the payment set forth in Subparagraph
(c)
below. Said sum shall be payable as provided in Subparagraph (e)
below.
(b) In
addition to any rights the Officer might have to terminate this Agreement
contained in Paragraph 8, the Officer shall have the right to terminate this
Agreement upon the occurrence of any of the following events (the “Termination
Events”) within twenty-four months following a Change in Control of the
Bank:
(i) Officer
is assigned any duties and/or responsibilities that are inconsistent with or
constitute a demotion or reduction in his position, duties, responsibilities
or
status at the time of the Change in Control or with his reporting
responsibilities or titles with the Bank in effect at such time, regardless
of
Officer's resulting position; or
(ii) Officer’s
annual base salary rate is reduced below the annual amount in effect as of
the
effective date of a Change in Control or as the same shall have been increased
from time to time following such effective date; or
(iii) Officer’s
life insurance, medical or hospitalization insurance, disability insurance,
stock options plans, stock purchase plans, deferred compensation plans,
management retention plans, retirement plans or similar plans or benefits being
provided by the Bank to the Officer as of the effective date of the Change
in
Control are reduced in their level, scope or coverage, or any such insurance,
plans or benefits are eliminated, unless such reduction or elimination applies
proportionately to all salaried employees of the Bank who participated in such
benefits prior to such Change in Control; or
(iv) Officer
is transferred to a location, which is more than 35 miles from his current
principal work location without the Officer’s express written
consent.
A
Termination Event shall be deemed to have occurred on the date such action
or
event is implemented or takes effect.
(c) In
the
event that the Officer terminates this Agreement pursuant to this Paragraph
10,
the Bank will be obligated to pay or cause to be paid to Officer liquidated
damages in an amount equal to two (2) times the Officer’s “base amount” as
defined in Section 280G(b)(3) of the Internal Revenue Code of 1986, as amended
(the “Code”).
(d) For
the
purposes of this Agreement, the term Change in Control shall mean any of the
following events:
(i) After
the
effective date of this Agreement, any “person” (as such term is defined in
Section 7(j)(8)(A) of the Change in Bank Control Act of 1978), directly or
indirectly, acquires beneficial ownership of voting stock, or acquires
beneficial ownership of voting stock, or acquires irrevocable proxies or any
combination of voting stock and irrevocable proxies, representing twenty-five
percent (25%) or more of any class of voting securities of the Bank, or acquires
control of, in any manner, the election of a majority of the Board of Directors
of the Bank; or
(ii) The
Bank
consolidates or merges with or into another corporation, association or entity,
or is otherwise reorganized, where the Bank is not the surviving corporation
in
such transaction; or
(iii) All,
or
substantially all, of the assets of the Bank are sold or otherwise transferred
to or are acquired by any other corporation, association or other person, entity
or group.
Notwithstanding
the other provisions of this Paragraph 10, a transaction or event shall not
be
considered a Change in Control if, prior to the consummation or occurrence
of
such transaction or event, Officer and Bank agree in writing that the same
shall
not be treated as a Change in Control for purposes of this
Agreement.
(e) Such
amounts payable pursuant to this Paragraph 10 shall be paid, at the option
of
the Officer, either in one lump sum or in equal monthly payments following
termination of this Agreement.
(f) Following
a Termination Event, which gives rise to Officer’s rights hereunder, the Officer
shall have twelve (12) months from the date of occurrence of the Termination
Event to terminate this Agreement pursuant to this Paragraph 10. Any such
termination shall be deemed to have occurred only upon delivery to the Bank
(or
to any successor corporation) of written notice of termination that describes
the Change in Control and the Termination Event. If Officer does not so
terminate this Agreement within such twelve-month period, he shall thereafter
have no further rights hereunder with respect to that Termination Event, but
shall retain rights, if any, hereunder with respect to any other Termination
Event as to which such period has not expired.
(g) It
is the
intent of the parties hereto that all payments made pursuant to this Agreement
be deductible by the Bank for federal income tax purposes and not result in
the
imposition of an excise tax on the Officer. Notwithstanding anything contained
in this Agreement to the contrary, any payments to be made to or for the benefit
of the Officer which are deemed to be “parachute payments” as that term is
defined in Section 280G of the Code, shall be modified or reduced to the extent
deemed to be necessary by the Bank to avoid the imposition of excise taxes
on
the Officer under Section 4999 of the Code or the disallowance of a deduction
to
the Bank under Section 280(a) of the Code.
(h) In
the
event any dispute shall arise between the Officer and the Bank as to the terms
or interpretation of this Agreement, including this Paragraph 10, whether
instituted by formal legal proceedings or otherwise, including any action taken
by the Officer to enforce the terms of this Paragraph 10 or in defending against
any action taken by the Bank, the Bank shall reimburse the Officer for all
costs
and expenses, proceedings or actions, in the event the Officer prevails in
any
such action.
11. Successors
and Assigns.
(a) This
Agreement shall inure to the benefit of and be binding upon any corporate or
other successor of the Bank which shall acquire, directly or indirectly, by
conversion, merger, purchase or otherwise, all or substantially all of the
assets of the Bank.
(b) Since
the
Bank is contracting for the unique and personal skills of the Officer, the
Officer shall be precluded from assigning or delegating his rights or duties
hereunder without first obtaining the written consent of the Bank.
12. Modification;
Waiver; Amendments.
No
provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing, signed by the Officer
and on behalf of the Bank by such officer as may be specifically designated
by
the Chief Executive Officer. 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 amendment or addition to this Agreement shall
be
binding unless in writing and signed by both parties, except as herein otherwise
provided.
13. Applicable
Law.
This
Agreement shall be governed in all respects whether as to validity,
construction, capacity, performance or otherwise, by the laws of North Carolina,
except to the extent that federal law shall be deemed to apply.
14. Severability.
The
provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.
IN
WITNESS WHEREOF,
the
parties have executed this Agreement as of the day and year first hereinabove
written.
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SOUTHERN
COMMUNITY BANK AND TRUST
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| By: | /s/ F. Xxxxx Xxxxx | |
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F. Xxxxx Xxxxx |
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| Chief Executive Officer | ||
| OFFICER | ||
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| /s/ Xxxxx X. Xxxxxx, Xx. | ||
|
Xxxxx X. Xxxxxx |
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