EXHIBIT 10.9
SEPARATION, SETTLEMENT AND NON-COMPETITION AGREEMENT
This SEPARATION, SETTLEMENT AND NON-COMPETITION AGREEMENT ("Non-Compete
Agreement") is entered into between XXXX X. XXXXXXX (hereinafter "Employee") and
APPALACHIAN COMMUNITY BANK and APPALACHIAN BANCSHARES, INC. (Appalachian
Community Bank and Appalachian Bancshares, Inc. are hereinafter collectively
referred to as the "Company"), as follows:
WITNESSETH:
WHEREAS, Employee has been employed by Appalachian Community Bank as
its Executive Vice President and is a member of the Board of Directors of
Appalachian Community Bank;
WHEREAS, Employee has been employed by Appalachian Bancshares, Inc. as
its Executive Vice President and is a member of the Board of Directors of
Appalachian Bancshares, Inc.;
WHEREAS, the parties hereto wish to enter into this Non-Compete
Agreement for the purposes of providing for certain limited restraints on
possible competition by the Employee with the Company, to provide for an orderly
termination of their employment relationship and of the Employee's positions on
the respective Boards of Directors of Appalachian Community Bank and Appalachian
Bancshares, Inc., and to provide for a full and final settlement of any and all
claims arising out of or pertaining to those relationships, including their
termination, whether past, present or future, including claims for attorney's
fees and expenses;
NOW, THEREFORE, in consideration of the mutual promises and
undertakings contained herein, and for such other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties do agree as follows:
1. Separation From Employment. The Employee's employment with the
Company terminated effective January 11, 2002 (hereinafter, the "Separation
Date"). On and after the Separation Date, the employment relationship that
existed between Employee and the Company terminated in all respects.
2. Resignation from Board of Directors. Employee hereby resigns
from the Boards of Directors of Appalachian Community Bank and Appalachian
Bancshares, Inc., and from all committees thereof, effective January 11, 2002.
3. Post-Separation Non-Compete Payments.
(a) Employee, upon his continuing compliance with the terms and
conditions of this Non-Compete Agreement, shall receive
payments from the Company in the
amount of $165,000 payable as follows: (1) $23,000 payable
upon execution of this Non-Compete Agreement; (2) twenty-three
(23) payments of $4,000, payable on the 15th of each month,
beginning on February 15, 2002; and (3) a payment of $50,000,
payable on January 15, 2004. In addition, Company shall pay
Employee $21,363.52 upon execution of this Non-Compete
Agreement, which payment represents payment for all accrued
leave and vacation days owed by Company to Employee. The
Company will withhold all applicable taxes and statutory
deductions from said payments.
(b) Company will issue Employee a COBRA notice, and Company agrees
to reimburse Employee for the monthly COBRA payments in order
to continue Employee's present level of medical insurance
coverage until July 15, 2003 or until Employee becomes covered
under a different health insurance plan, whichever occurs
sooner. Employee agrees to immediately provide the Company
with notice should he become covered under a health insurance
plan on or before July 15, 2003.
(c) Appalachian Bancshares, Inc. agrees to fully vest all of
Employee's unexercised stock options in Appalachian
Bancshares, Inc. and Employee and Appalachian Bancshares, Inc.
hereby agree that stock options for 86,000 shares of
Appalachian Bancshares, Inc. common stock remain unexercised
as of the date Employee executes this Non-Compete Agreement.
Company further agrees that, in the event Employee chooses to
exercise his stock options and Employee requires a loan to
exercise such stock options, Company will lend sufficient
funds for Employee to exercise his stock options at its prime
lending rate (as determined and announced from time to time by
the Company), minus .25%, such loan rate to float, and be
determined, as of each anniversary date of the loan; provided,
however, that Employee shall execute all necessary loan
documentation and provide adequate security (all as determined
in the discretion of the Company) for such loan. Company and
Employee further agree that, if the loan is secured by
Appalachian Bancshares, Inc. stock, the applicable
loan-to-value ratio will be determined by the book value of
the stock, not the market value thereof, subject to compliance
with applicable regulatory guidelines, and, further, that the
terms and provisions of the loan will be subject to all
applicable laws and regulations.
4. Additional Consideration. The Company agrees to transfer all
title and interest to the 2000 Chrysler Town & Country van now being used by
Employee ("Van") to Employee, in an "as is" condition, by January 15, 2002 (the
"Transfer Date"). Employee will be solely responsible for all insurance
coverage, tag, taxes, maintenance and any other expenses related to the Van on
and after the Transfer Date.
5. Non-Competition. Employee expressly covenants and agrees that,
for a period of two (2) years following the execution of this Non-Compete
Agreement, he will not, directly or indirectly, seek, obtain or accept a
"Competitive Position" in the "Restricted Territory" with a
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"Competitor" of the Company (as such terms are defined below), if the Company or
its successors or assigns are also then still engaged in the "Company's
Business." For purposes of this Non-Compete Agreement, a "Competitor" of the
Company means any business, individual, partnership, joint venture, association,
firm, corporation or other entity engaged, wholly or partly, in the Company's
Business; the "Company's Business" means the business of banking, as such
business is contemplated and permitted for "financial institutions" (as such
term is defined in Section 7-1-4(21) of the Official Code of Georgia Annotated)
under Title 7 (Banking and Finance) of the Official Code of Georgia Annotated
(the "Georgia Banking Code"), including (but not limited to) commercial lending
or residential lending activities, commercial or residential loan brokerage
activities, and the other financial activities and financial services permitted
to financial institutions and their subsidiaries and affiliates under applicable
provisions of the Georgia Banking Code; a "Competitive Position" means any
employment with any Competitor of the Company whereby Employee will use or is
likely to use any Trade Secrets or Confidential Information (as those terms are
defined in Sections 9 and 10 of this Non-Compete Agreement), or whereby Employee
has duties for such Competitor that are the same as, or substantially similar
to, those actually performed by him as an employee for the Company; the
"Restricted Territory" means and includes the geographic area comprising Gilmer,
Fannin, and Union counties in Georgia. Employee acknowledges and agrees that he
has been working within and throughout the Restricted Territory as defined above
and has had material contact with customers or actively sought prospective
customers of the Company located within such areas.
6. Non-Solicitation: Customers. For two years following the
execution of this Non-Compete Agreement, Employee shall not, directly or
indirectly, or in any manner, on Employee's own behalf or on behalf of any
person, firm, partnership, association, corporation or business organization,
entity or enterprise, solicit any customer of the Company, or any representative
of any customer, with a view to selling or providing any product or service
competitive or potentially competitive with any product or service sold or
provided by the Company during the two-year period immediately preceding
cessation of Employee's employment with the Company, provided that the
restrictions set forth in this section shall apply only to customers of the
Company, or representatives of customers of the Company with whom Employee had
material contact during such two-year period. "Material contact" exists between
Employee and each of the Company's existing customers: (i) with whom Employee
actually dealt; or (ii) whose dealings with the Company were handled,
coordinated or supervised by Employee.
7. Non-Solicitation: Employees. For two years following the
execution of this Non-Compete Agreement, Employee will not, directly or
indirectly, or in any manner, solicit or encourage employees of the Company to
leave the employ of the Company. The foregoing prohibition applies only to
employees with whom Employee had material contact pursuant to Employee's duties
during the period of two years immediately preceding cessation of Employee's
employment with the Company. "Material contact" means interaction between the
Employee and another employee of the Company: (i) with whom Employee actually
dealt; or (ii) whose employment or dealings with the Company or services for the
Company were handled, coordinated or supervised by the Employee.
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8. Company Property. Employee shall immediately return to the
Company all property, equipment, records, correspondence, documents, files,
keys, computer disks, computer programs, data, and any other information,
including trade secrets (as defined herein) and confidential information (as
defined herein) whether originals, copies or extracts, belonging to the Company,
whether maintained by Employee at the Company, at Employee's home, or at any
other location, and Employee will not retain any copies or reproductions of any
property of the Company.
9. Trade Secrets. Employee agrees that he will not use, disclose
or exploit any Trade Secret of the Company at any time. "Trade secret(s)" means
information, without regard to form, including, but not limited to, technical or
non-technical data, a formula, a pattern, a compilation, a program, a device, a
method, a technique, a drawing, a process, financial data, financial plans,
product plans, or a list of actual or potential customers or suppliers which is
not commonly known by or available to the public and which information: (a)
derives economic value, actual or potential, from not being generally known to,
and not being readily ascertainable by proper means by, other persons who can
obtain economic value from its disclosure or use; and (b) is the subject of
efforts that are reasonable under the circumstances to maintain its secrecy.
10. Confidential Information. Employee agrees that for two years
following the execution of this Non-Compete Agreement, Employee will not,
directly or indirectly, use, disclose or exploit, for any reason, any
Confidential Information of the Company. "Confidential information" means data
and information relating to the business of the Company (which may not rise to
the level of a trade secret under applicable law) which is or has been disclosed
to Employee or of which Employee became aware as a consequence of or through his
relationship with the Company and which has value to the Company and is not
generally known to the public or to the Company's competitors. Confidential
information shall not include any data or information that has been voluntarily
disclosed to the public by the Company (except where public disclosure has been
made by Employee without authorization) or that has been independently developed
and disclosed by others, or that otherwise enters the public domain through
lawful means.
11. Non-Disparagement. Employee agrees that he will not at any
time, directly or indirectly, denigrate, degrade, ridicule, intentionally
criticize or make negative remarks about the Company or any of its respective
employees, officers, directors, agents, affiliates, parents or subsidiaries.
12. Future Employment. Employee agrees not to apply for any
position of employment with the Company and their affiliates, parents or
subsidiaries.
13. Continuing Cooperation. From the Separation Date through
January 11, 2003, Employee acknowledges and agrees that he shall provide certain
consulting, administrative and advisory services to the Company (the "Transition
Period"). During the Transition Period,
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Employee agrees to provide reasonable cooperation and assistance to the Company
with respect to the transitioning of matters previously handled by him and to
make himself available on reasonable terms on a when-needed, as-needed basis
during the Transition Period. The parties acknowledge that such services may
require telephone consultations or Employee's physical presence at the Company's
facilities from time-to-time. Employee further agrees and warrants that during
this Transition Period, he shall provide such time and best efforts as are
reasonably needed to accomplish the transitioning of his duties and
responsibilities. Employee agrees that he will only be entitled to receive the
amounts set forth in this Non-Compete Agreement, and he shall not be entitled to
any further or additional compensation during the Transition Period.
14. General Release.
(a) Employee accepts the terms of this Separation and Settlement
Agreement in full, final and complete settlement and
satisfaction of any and all claims which in any way relate to,
pertain to or arise out of his employment with the Company,
the termination of that employment, or Employee's dealings or
affiliation with the Company. Accordingly, Employee does
hereby release the Company, and any and all parent, subsidiary
or affiliated corporations or business entities, and any and
all respective past or present employees, officers, agents,
directors, shareholders and representatives of the foregoing,
and others acting for or on behalf of the foregoing
(hereinafter "Releasees") from all past, present or future
claims, actions, rights or benefits of whatever nature or
description, including any claims for attorney's fees and
expenses, from the beginning of time, through and including
the date of execution of this Non-Compete Agreement, including
any and all claims arising out of or relating to Employee's
employment with the Company or the termination of that
employment, including claims for wages, salary, bonuses,
commissions, or other forms of compensation or benefits.
(b) It is further understood and agreed that this document is
intended to be a total accord, settlement and satisfaction of
any and all claims which Employee has or may have had against
Releasees, including but not limited to, any and all claims
arising under the Fair Labor Standards Act, Civil Rights Acts
of 1866, 1964 and 1991, Rehabilitation Act of 1973, Equal Pay
Act of 0000, Xxxxx Xxxx Xxxxxxxxxx Xxxxxxxx Xxxx, Xxxxxxx Era
Veteran's Readjustment Assistance Act of 1974, Occupational
Safety and Health Act, Immigration Reform and Control Act of
1986, Americans with Disabilities Act, Older Workers Benefit
Protection Act, Age Discrimination in Employment Act (which
Act and laws prohibits discrimination based upon race, sex,
color, national origin, religion, age, handicap, citizenship
status, veteran status, other) and any other federal, state or
local laws, regulations, ordinances or common law theories of
recovery.
15. Confidentiality. Employee agrees that he will keep the terms
of this Non-Compete Agreement and the amount of the payments specified in
Section 3 and Section 4 above confidential, and he will not disclose the terms
of this Non-Compete Agreement or the amount of
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said payments to anyone unless required by law; provided however, that Employee
may disclose to his accountants, attorneys, tax advisors, business or financial
consultants or advisors such information as may be necessary and required for
legal advice, business, financial or tax advice, tax planning, business or
financial planning or the preparation of tax returns. This provision is subject
to and shall be construed in accordance with all applicable federal, state and
local laws, statutes and regulations.
16. Acknowledgement. Employee acknowledges and warrants that he is
less than forty years old. Employee further acknowledges that nothing contained
in this Non-Compete Agreement shall be construed as an admission of liability or
responsibility on the part of the Company and further acknowledges that all such
liability or responsibility is expressly denied.
17. Interpretations. The headings to the various paragraphs herein
are for convenience only and have no legal effect.
18. Whole Agreement. This Non-Compete Agreement constitutes the
entire agreement and understanding between the parties and all previous
discussions, undertakings, representations, promises, negotiations and
agreements with respect to the matters included in this Non-Compete Agreement
are merged into this Non-Compete Agreement. It is further agreed and understood
that this Non-Compete Agreement cannot be changed, altered or amended except in
a subsequent writing signed by each of the parties hereto.
19. Choice of Law. It is further understood and agreed that this
Non-Compete Agreement shall be subject to and construed in accordance with the
laws of the State of Georgia and not of any other state.
20. Severability. Should any provision of this Non-Compete
Agreement be declared or determined by any court of competent jurisdiction to be
unenforceable or invalid for any reason, the validity of the remaining parts,
terms or provisions of this Non-Compete Agreement shall not be affected thereby,
and that the Non-Compete Agreement will be amended to delete or modify, as
necessary, any invalid or unenforceable parts, terms or provisions to the extent
necessary to allow for enforcement.
21. Miscellaneous. Employee and the Company acknowledge and
represent that they each have read or caused to be read this Non-Compete
Agreement and that each understands it fully and signs it voluntarily.
[THE SIGNATURE PAGE FOLLOWS.]
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IN WITNESS WHEREOF, the undersigned hereunto set their hands and seals
on the date shown below.
XXXX X. XXXXXXX
/s/ Xxxx X. Xxxxxxx
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Date: January 11, 2002
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APPALACHIAN COMMUNITY BANK
By: /s/ Xxxxx X. Xxxxxx
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Title: President and CEO
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Date: January 11, 2002
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APPALACHIAN BANCSHARES, INC.
By: /s/ Xxxxx X. Xxxxx
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Title: Chairman
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Date: January 11, 2002
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