NONCOMPETE AGREEMENT
THIS NONCOMPETE AGREEMENT
(this "Agreement") dated as of September 18, 2009, is by and among First
National Bank of the South, N.A., a national bank (the "Bank), its bank holding
company First National Bancshares, Inc, a South Carolina corporation (the
"Company"), and J. Xxxxx Xxxxx, an individual and resident of the state of South
Carolina (the "Executive").
WHEREAS, Executive is
presently employed as the Chief Executive Officer and President of the Bank and
the Company, having been hired to such positions on or about the date hereof
pursuant to the terms of that certain employment agreement between the
Executive, the Bank, and the Company (the "Employment Agreement") entered into
on or about the date hereof.
WHEREAS, during the course of
his employment, Executive will develop relationships with employees and
customers of the Bank and the Company, which the Bank and the Company desire to
protect following the termination of the Executive's employment with the Bank
and the Company.
WHEREAS, the Executive is
willing to forego his rights to compete with the Bank for a period of one year
following the termination of the Executive's employment with the Bank and the
Company for that certain consideration stated below.
NOW, THEREFORE, in
consideration of the premises, the mutual covenants and agreements set forth in
this Agreement, and other good and valuable consideration the receipt, mutuality
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Restrictive
Covenants.
(a) No
Solicitation of Customers. For a period of one year following
termination of Executive's employment with the Bank, the Executive shall not
(except on behalf of or with the prior written consent of the Bank), either
directly or indirectly, on the Executive's own behalf or in the service or on
behalf of others, (A) solicit, divert, or appropriate to or for a Competing
Business, or (B) attempt to solicit, divert, or appropriate to or for a
Competing Business, any person or entity that is or was a customer of the Bank
or any of its Affiliates on the date of termination and is located in the
Territory and with whom the Executive has had material contact.
(b) No
Recruitment of Personnel. For a period of one year following
termination of Executive's employment with the Bank, the Executive shall not,
either directly or indirectly, on the Executive's own behalf or in the service
or on behalf of others, (A) solicit, divert, or hire away, or (B) attempt to
solicit, divert, or hire away, to any Competing Business located in the
Territory, any employee of or consultant to the Bank or any of its Affiliates
engaged or experienced in the Business, regardless of whether the employee or
consultant is full-time or temporary, the employment or engagement is pursuant
to written agreement, or the employment is for a determined period or is at
will.
(c) Non-Competition
Agreement. During the Executive's employment with the Bank, the Executive
shall not (without the prior written consent of the Bank) compete with the Bank
or any of its Affiliates by, directly or indirectly, forming, serving as an
organizer, director or officer of, or consultant to, or acquiring or maintaining
more than a 1% passive investment in, a depository financial institution or
holding company therefor if such depository institution or holding company has
one or more offices or branches located in the
Territory. Notwithstanding the foregoing, the Executive may serve as
an officer of or consultant to a depository institution or holding company
therefore even though such institution operates one or more offices or branches
in the Territory, if the Executive's employment does not directly involve, in
whole or in part, the depository financial institution's or holding company's
operations in the Territory.
(d) Geographic
Scope. The restrictions
on competition set forth in Section 1 shall apply to the Executive's activities
within the Territory. However, the restrictions are intended to apply
only with respect to personal activities of Executive within the Territory and
shall not deemed to apply if Executive is employed by an entity that has branch
offices within the Territory but Executive does not personally work in or have
any business contacts with persons in the Territory.
(e) Enforceability
of Covenants. Executive acknowledges
that the term, geographic area, and scope of the covenants set forth in this
Agreement are reasonable, and agrees that he will not, in any action, suit or
other proceeding, deny the reasonableness of, or assert the unreasonableness of,
the premises, consideration or scope of the covenants set forth
herein. Executive agrees that his position as employee of the Bank,
involves duties and authority relating to all aspects of the Business and all of
the Territory. Executive further acknowledges that complying with the
provisions contained in this Agreement will not preclude him from engaging in a
lawful profession, trade or business, or from becoming gainfully
employed. Executive and Bank agree that Executive’s obligations under
the above covenants are separate and distinct under this Agreement, and the
failure or alleged failure of the Bank to perform its obligations under any
other provisions of this Agreement shall not constitute a defense to the
enforceability of this covenant. Executive and Bank agree that if any
portion of the foregoing covenants is deemed to be unenforceable because the
geography, time or scope of activities restricted is deemed to be too broad, the
court shall be authorized to substitute for the overbroad term an enforceable
term that will enable the enforcement of the covenants to the maximum extent
possible under applicable law. Executive acknowledges and agrees that
any breach or threatened breach of this covenant will result in irreparable
damage and injury to the Bank and its Affiliates and that Bank will be entitled
to exercise all rights including, without limitation, obtaining one or more
temporary restraining orders, injunctive relief and other equitable relief,
including specific performance in the event of any breach or threatened breach
of this Agreement, in any federal or state court of competent jurisdiction in
South Carolina without the necessity of posting any bond or security (all of
which are waived by the Executive), and to exercise all other rights or
remedies, at law or in equity, including, without limitation, the rights to
damages.
2.
Extension
of Term of Restrictions. If the Executive
violates any of the restrictions set forth in Section 1 of this Agreement, the
duration of such restriction shall be extended by a number of days equal to the
number of days in which the Executive shall have been determined to be or shall
have admitted to being in violation of such restriction.
3.
Remedies. The Executive
acknowledges and agrees that great loss and irreparable damage would be suffered
by the Bank if the Executive should breach or violate any of the terms or
provisions of the covenants and agreements set forth in Section 1 of this
Agreement. The Executive further acknowledges and agrees that each of
these covenants and agreements is reasonably necessary to protect and preserve
the interests of the Bank and agrees that money damages for any breach of such
provisions by the Executive are impossible to measure and that the Executive or
any of the Executive's affiliates, as the case may be, will, to the extent
permitted by law, waive in any proceeding initiated to enforce such sections any
claim or defense that an adequate remedy at law exists. The existence
of any claim, demand, action or cause of action against the Bank, whether
predicated upon this Agreement or otherwise, shall not constitute a defense to
the enforcement by the Bank of any of the covenants or agreements in this
Agreement; provided, however, that nothing
in this Agreement shall be deemed to deny the Executive the right to defend
against this enforcement on the basis that the Bank has no right to its
enforcement under the terms of this Agreement. The remedies of a
party provided in this Agreement are cumulative and shall not exclude any other
remedies to which any party may be lawfully entitled under this Agreement or
applicable law, and the exercise of a remedy shall not be deemed an election
excluding any other remedy (any such claim by the other party being hereby
waived).
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4. Consideration. In consideration
of the foregoing covenants and agreements of the Executive herein contained, the
Bank hereby agrees to pay the Executive an amount equal to his then current
monthly base salary on the last business day of each month for the remainder of
the Term specified in the Employment Agreement; provided however, if
at any time the Bank is deemed to be in "troubled condition" (as such term is
defined by applicable regulations of the appropriate federal banking agency),
the Bank's obligations to make such payments shall be limited to a period of
twelve months following the termination of the Executive's employment with the
Bank; provided
further that the Bank's obligations to make such payments are also
contingent upon the Executive not being terminated for Cause and shall terminate
immediately upon the Executive's violation of the restrictive covenants of
Section 1(a-c) of this Agreement.
5. Certain
Definitions.
(a) “Affiliate”
shall mean any business entity controlled by, controlling or under common
control with the Bank.
(b) “Business”
shall mean the operation of a depository financial institution, including,
without limitation, the solicitation and acceptance of deposits of money and
commercial paper, the solicitation and funding of loans and the provision of
other banking services, and any other related business engaged in by the Bank or
any of its Affiliates as of the date of termination.
(c) “Cause”
shall consist of any of (A) the commission by the Executive of a willful act
(including, without limitation, a dishonest or fraudulent act) or a grossly
negligent act, or the willful or grossly negligent omission to act by the
Executive, which is intended to cause, causes or is reasonably likely to cause
material harm to the Company or the Bank (including harm to its business
reputation), (B) the indictment of the Executive for the commission or
perpetration by the Executive of any felony or any crime involving dishonesty,
moral turpitude or fraud, (C) the material breach by the Executive of this
Agreement that, if susceptible of cure, remains uncured ten days following
written notice to the Executive of such breach, (D) the receipt of any form of
notice, written or otherwise, that any regulatory agency having jurisdiction
over the Company or the Bank intends to (i) institute any new formal or informal
(e.g., a memorandum of understanding) regulatory action or (ii) refuses to
terminate any existing formal or informal (e.g., a memorandum of understanding)
regulatory action against the Executive or the Company or the Bank provided that
the Board of Directors determines in good faith, with the Executive abstaining
from participating in the consideration of and vote on the matter, that the
subject matter of such action involves acts or omissions by or under the
supervision of the Executive or that termination of the Executive would
materially advance the Company's or the Bank's compliance with the purpose of
the action or would materially assist the Company or the Bank in avoiding or
reducing the restrictions or adverse effects to the Company or the Bank related
to the regulatory action; (E) the exhibition by the Executive of a standard of
behavior within the scope of his employment that is materially disruptive to the
orderly conduct of the Company's or the Bank's business operations (including,
without limitation, substance abuse or sexual misconduct) to a level which, in
the Board of Directors good faith and reasonable judgment, with the Executive
abstaining from participating in the consideration of and vote on the matter, is
materially detrimental to the Company or the Bank's best interest, that, if
susceptible of cure remains uncured ten days following written notice to the
Executive of such specific inappropriate behavior; or (F) the failure of the
Executive to devote his full business time and attention to his employment as
provided under this Agreement that, if susceptible of cure, remains uncured 30
days following written notice to the Executive of such failure.
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(c) “Competing
Business” shall mean any business that, in whole or in part, is the same or
substantially the same as the Business.
(d) “Territory”
shall mean a radius of 40 miles from (i) the main office of the Bank or (ii) any
branch or loan production office of the Bank.
6. Miscellaneous.
(a) This
Agreement constitutes the entire agreement between the parties hereto and
supersedes all prior agreements, if any, understandings and arrangements, oral
or written, between the parties hereto with respect to the subject matter
hereof.
(b) The
rights and obligations of this Agreement shall bind and inure to the benefit of
the surviving corporation in any merger or consolidation in which the Bank is a
party, or any assignee of all or substantially all of the Bank's business and
properties. The Executive's rights and obligations under this
Agreement may not be assigned by him, except that his right to receive payments,
if any, provided under this Agreement shall pass after death to the personal
representatives of his estate.
(c) Failure
of the Bank to enforce any of the provisions of this Agreement or any rights
with respect thereto shall in no way be considered to be a waiver of such
provisions or rights, or in any way affect the validity of this
Agreement.
(d) This
Agreement may be executed in several counterparts, each of which shall be deemed
an original instrument, but all of which together shall constitute one and the
same instrument.
(e) This
Agreement shall be governed by and construed and enforced in accordance with the
laws of the State of South Carolina without giving effect to the conflict of
laws principles thereof. Any action brought by any party to this
Agreement shall be brought and maintained in a court of competent jurisdiction
in State of South Carolina.
(f) Notices
or other communications required or permitted hereunder shall be in writing and
sufficient if delivered personally, by facsimile transmission, or by registered
or certified mail, postage pre-paid, if to the Bank, at the addresses set forth
below (or at such other address as may be provided hereunder), and if to the
Executive, to the address set forth underneath the Executive's signature below,
and shall be deemed to have been delivered as of the date so
delivered.
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The
Bank:
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First
National Bank of the South, N.A.
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000
X. Xxxx Xxxxxx
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Xxxxxxxxxxx,
XX 00000
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Attention: Chairman
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Copy
to Counsel:
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Xxxxxx
Xxxxxxx Xxxxx & Scarborough LLP
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Poinsett
Plaza, Suite 9000
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000
Xxxxx Xxxx Xxxxxx
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Xxxxxxxxxx,
XX 00000
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Attention: Xxxx
X. Xxxxxxx
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[signatures
appear on following page]
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IN WITNESS WHEREOF, this
Agreement has been duly executed and delivered by the parties, under seal, as of
the date first above written.
| FIRST NATIONAL BANK OF THE SOUTH, N.A. | ||||||
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Attest:
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/s/ Xxxxx X. Xxxxx
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By:
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/s/ C. Xxx Xxxxx
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Secretary
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Name:
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C. Xxx Xxxxx
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Title:
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Chairman of the Board of
Directors
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[SEAL]
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| FIRST NATIONAL BANCSHARES, INC. | ||||||
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Attest:
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/s/ Xxxxx X. Xxxxx
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By:
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/s/ C. Xxx Xxxxx
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Secretary
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Name:
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C. Xxx Xxxxx
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Title:
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Chairman of the Board of
Directors
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[SEAL]
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As
to the Executive, signed and sealed in the presence of:
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| /s/ J. Xxxxx Xxxxx | ||||||
| J. Xxxxx Xxxxx [SEAL] | ||||||
| Address for Notices: | ||||||
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