EXHIBIT 10.6
SEPARATION AGREEMENT BETWEEN
J. XXXXXXX XXXXXX AND FLAG FINANCIAL CORPORATION
SEPARATION AGREEMENT
THIS SEPARATION AGREEMENT is made and effective this 13th day of May,
1998 (the "Effective Date") by and between FLAG FINANCIAL CORPORATION ("FLAG"),
a Georgia corporation (the "Employer"), and J. Xxxxxxx Xxxxxx, an employee of
the Employer (the "Executive").
STATEMENT OF BACKGROUND INFORMATION
A. The Executive currently serves as an officer of the Employer or of
one of its wholly owned subsidiaries.
B. The Employer and the Executive desire to enter into this agreement
to document certain terms and conditions of the Executive's employment
relationship with the Employer.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and promises herein contained, and other good and valuable consideration, the
sufficiency and receipt of which are hereby acknowledged, the parties agree as
follows:
ARTICLE I. TERM OF AGREEMENT
This Agreement shall remain in effect for an initial term of twelve
(12) months; provided that, at the end of the initial twelve-month period, and
at the end of each twelve-month period thereafter during which this Agreement is
in effect, this Agreement shall automatically be extended for an additional
twelve-month period commencing at the end of the initial twelve-month period or
any subsequent extension thereof, unless either party gives written notice to
the other of its intent not to extend this Agreement. Such written notice shall
be given not less than ninety (90) days prior to the end of the initial
twelve-month period or any subsequent twelve-month period to which this
Agreement has been extended. In the event that notice of non-extension is
properly given, this Agreement shall terminate at the end of the remaining term
then in effect.
ARTICLE II. SEVERANCE BENEFIT
In the event of the Executive's Involuntary Termination of employment
with the Employer during the term of this Agreement for the reasons specified in
Article III below, the Employer shall pay to the Executive an amount equal to
the Executive's base salary and bonus paid over the last three full fiscal years
(or the compensation paid to the Executive for such shorter period as Executive
has been employed) of the Employer or its subsidiary bank immediately preceding
such involuntary termination (the "Severance Benefit"). The Severance Benefit
shall be paid in cash in a lump sum within thirty (30) days following the
Involuntary Termination.
The Employer shall be entitled to withhold appropriate employment and
income taxes, if required by applicable law, should the Severance Benefit become
payable.
In addition, the insurance policy on The Executive being transferred to
FLAG Financial Corporation will be maintained by the Bank and will totally vest
to The Executive following seven (7) years from the date of this Agreement;
however, provided that in the event of the Executive's Involuntary Termination
of employment with the Employer during the term of this Agreement for the
reasons specified in Article III below, the policy will become fully vested to
the Executive.
ARTICLE III. PAYMENT EVENTS
The Severance Benefit described in Article II above shall become
payable if (a) the Executive's employment is Involuntarily Terminated and either
(i) such Involuntary Termination occurred within six (6) months prior to one (1)
year following a Change in Control as defined in Section 5.1(2) below, or (ii)
such Involuntary Termination occurred within one (1) year following the date of
this Agreement.
ARTICLE IV. PROTECTIVE COVENANTS
4.1 Confidential Information. As a senior management employee of the
Employer, the Executive has access to Confidential Information (as defined
herein). The Executive agrees to maintain the confidentiality of all
Confidential Information throughout the Term and for a period of one (1) year
after the termination of this Agreement. For purposes of this Section, the term
"Confidential Information" means data and information relating to the business
of the Employer which is or has been disclosed to the Executive or of which the
Executive has become aware as a consequence of or through his employment
relationship with the Employer and which has value to the Executive and is not
generally known to its competitors. Confidential Information shall not include
any data or information that has been voluntarily disclosed to the public by the
Employer (except where such public disclosure was effected by the Executive
without authorization) or that has been independently developed and disclosed by
others or that otherwise enters the public domain through law means.
4.2 Covenant Not to Compete. The Executive agrees, acknowledges and
understands that the nature, kind and character of the business conducted by the
Employer is highly competitive. Incident to the Executive engagement hereunder
and for the considerations contained herein, the Executive agrees that:
(1) during the term of this Agreement and for a period of
twelve (12) months following the later of the
termination of this Agreement or the resignation or
Involuntary Termination of Executive, the Executive
will not, in the Georgia counties of Telfair, Dooly,
Crisp, Macon, Xxxxx or Dodge:
(a) enter into any employment relationship with
any bank, thrift institution, other entity
providing financial services or an affiliate
of any of the foregoing in a capacity
identical with or substantially similar to
the capacity in which he was employed by the
Employer at the time of his termination of
employment;
(b) directly or indirectly, on his own behalf or
in the service or on behalf of others,
solicit, divert, appropriate or attempt to
solicit, divert or appropriate, any business
from any of the Employer's customers with
whom the Executive has had material contact
during the past two (2) years of the
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Executive's employment, for purposes of
providing products or services that are
competitive with those provided by the
Employer; or
(c) on his own behalf or in the service or on
behalf of others, solicit, recruit or hire
away, or attempt to solicit, recruit or hire
away, directly or by assisting others, any
employee of the Employer, whether or not
such employee is a full-time employee,
part-time or temporary employee of the
Employer, and whether or not such employment
is pursuant to a written agreement or is for
a determined period or at will.
The Executive acknowledges that the foregoing covenants are reasonable
and necessary to protect the interests of the Employer.
(2) by virtue of the duties and special knowledge of the
affairs and operations of the Employer that the
Executive has and will obtain as a result of his
employment relationship with the Employer, a breach
or threatened breach by him of the provisions of this
covenant not to compete shall cause irreparable
injury to the Employer and shall entitle the
Employer, in addition to any other remedy, to
injunctive relief against such breach or threatened
breach.
ARTICLE V. MISCELLANEOUS
5.1 Definitions. For purposes of this Agreement the terms set forth
below shall have the following meanings ascribed to them:
(1) "Cause" means conduct (a) constituting fraud or
dishonesty resulting in financial harm to the
Employer or any of its affiliates; (b) constituting a
gross dereliction of the Executive's duties in the
capacity in which he is employed by the Employer; or
(c) which results in the successful criminal
prosecution by federal, state or local authorities
for anything other than a misdemeanor relating to
public safety laws.
(2) "Change in Control" means any one of the following
events which occurs during the term of this Agreement
or any extension:
(a) the acquisition by any person or persons
acting in concert of the then-outstanding
voting shares of FLAG Financial Corporation,
after the transaction, the acquiring person
or persons own, control or hold with power
to vote twenty-five percent (25%) or more of
any class of voting securities of FLAG
Financial Corporation or such other
transactions as may be described under 12
C.F.R. ss. 225.41(b)(1) or any successor
thereto; or,
(b) the approval by the stockholders of FLAG
Financial Corporation of a reorganization,
merger, share exchange or consolidation,with
respect to which persons who were the share-
holders of FLAG Financial Corporation
immediately prior to such reorganization,
merger, share exchange or consolidation, do
not, immediately thereafter, own more than
fifty percent (50%) of the combined voting
power entitled to vote at the election of
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directors of the reorganized, merged,
exchanged or consolidated company's then
outstanding voting securities; or
(c) the sale, transfer or assignment of all or
substantially all of the assets of FLAG
Financial Corporation to any third party.
(3) "Involuntary Termination" means termination of
Executive by the Employer for any reason other than
for Cause, and shall include for purposes of this
Agreement a material diminution in the compensation,
duties and responsibilities of Executive or a
transfer of the Executive to another location more
than thirty (30) miles from the location of the
office where Executive employed at the time of the
Change in Control.
5.2 Amendment. This Agreement may not be amended (in whole or in part)
orally or by course of performance, but only by a written instrument signed by
both parties.
5.3 Notice. Except as otherwise required under this Agreement, any
notice required or permitted to be given pursuant to this Agreement shall be
sufficiently given:
(1) to the Executive if in writing and personally
delivered, or mailed (and if mailed shall be deemed
given three (3) business days after mailing)
registered or certified mail addressed to the
Executive at the Executive's residence as shown in
the records of the Employer or at such address as the
Executive shall designate in a written notice to the
Employer; and
(2) to the Employer if in writing and personally
delivered to the Chairman or President and CEO of the
Employer or mailed (and if mailed, shall be deemed
given three (3) business days after mailing)
registered or certified mail addressed to FLAG
Financial Corp., X.X. Xxx 0000, XxXxxxxx, Xxxxxxx,
00000, Attn: Chairman or President.
5.4 Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the Executive and upon the Employer and its successors and assigns.
The Executive may not assign his rights and obligations hereunder without the
written consent of the Employer.
5.5 Applicable Law. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Georgia.
5.6 No Defense. The existence of any claim or cause of action of the
Executive against the Employer, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Employer of
any covenant contained in this Agreement.
5.7 Survival. The provisions of Article IV shall survive any
termination of this Agreement.
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IN WITNESS WHEREOF, the Employer has executed and delivered by its duly
authorized officer, and the Executive has signed, this Agreement all as of the
day and year first above written.
FLAG FINANCIAL CORPORATION
By: /s/ Xxxx X. Xxxxx
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Title: President, Chairman of the Board
EXECUTIVE:
/s/ Xxxxxxx X. Xxxxxx (SEAL)
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Print Name: Xxxxxxx X. Xxxxxx
Senior Vice President and C.O.O.
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