EXHIBIT 10.4
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (the "AGREEMENT") is made as of March __
2004, by and among UNITED COMMUNITY BANKS, INC., a Georgia corporation (the
"COMPANY"; which shall include the Company's wholly-owned owned bank subsidiary,
United Community Bank, a Georgia bank) and XXXXXX X. XXXXXX, XX., a resident of
the State of Georgia ("COVENANTOR").
WHEREAS, Fairbanco Holding Company, Inc., a Georgia corporation
("FAIRBANCO") is the parent company of 1st Community Bank, a federal savings
bank ("BANK") engaging in a full range of banking services in Xxxxxx and Fayette
Counties, Georgia (the "BUSINESS") and Covenantor is an executive officer of the
Bank; and
WHEREAS, the Company and Fairbanco have entered into that certain
Agreement and Plan of Reorganization (the "ACQUISITION AGREEMENT") dated as of
March 11, 2004, as amended, whereby the Company has agreed to purchase Fairbanco
and Bank through the merger of Fairbanco with and into Company for cash and
stock of the Company; and
WHEREAS, as a condition of the Acquisition Agreement, Covenantor has
agreed to grant to the Company a covenant not to compete with, solicit employees
from, or disparage the Company in accordance with the terms of this Agreement;
NOW THEREFORE, in consideration of the premises and of the mutual
covenants, agreements, representations, warranties, benefits and obligations
contained in this Agreement, and of other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the parties hereto
agree as follows:
1. Covenantor hereby covenants with the Company that during the period
from the Closing Date (as defined in the Acquisition Agreement) to the
third (3rd) anniversary thereof, Covenantor shall not, upon the
termination of Covenantor's employment with the Company, for any reason
whatsoever, except as otherwise specifically permitted herein (the
"COVENANT"):
(a) directly or indirectly, for Covenantor's own account, or as a
partner, member, employee, advisor or agent of any partnership
or joint venture, or as a trustee, officer, director,
shareholder, employee, advisor or agent of any corporation,
bank, savings association, mutual thrift, credit union, trust,
or other business or financial services organization or
entity, within Fulton, Fayette or Coweta Counties, Georgia or
a fifty (50) mile radius of any office of the Business located
in Xxxxxx or Fayette Counties, Georgia: own, manage, join,
participate in, encourage, support, finance, be engaged in,
have an interest in, give financial assistance or advice to,
permit Covenantor's name to be used in connection with or be
concerned in any way in the ownership, management, operation
or control of, or be connected in any manner with any business
which is or may compete with the Company;
1
(b) solicit or assist anyone in soliciting in any way any employee
of the Company to resign or sever his or her employment or to
breach any employment agreement with the Company or affiliates
of the Company; or
(c) knowingly or intentionally damage or destroy the goodwill and
esteem of the Company, the Business or the Company's
suppliers, employees, patrons, customers, and others who may
at any time have or have had relations with the Company.
2. Notwithstanding any language to the contrary contained in this
Agreement, it shall be permissible for Covenantor to engage in the
conduct prohibited by Section 1(a) if Company terminates Covenantor's
employment with the Company without Cause (as described below) or if
Covenantor terminates his or her employment with the Company with
Adequate Justification (as described below).
(a) For purposes of this Agreement "Cause" shall consist of any of
(i) the commission by Covenantor 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 Covenantor, which is intended to cause,
causes, or is reasonably likely to cause material harm to the
Company (including harm to its business reputation), (ii) the
indictment of Covenantor for the commission or perpetration by
Covenantor of any felony or any crime involving dishonesty,
moral turpitude or fraud, (iii) the receipt of any form of
notice, written or otherwise, that any regulatory agency
having jurisdiction over the Company intends to institute any
form of formal or informal (e.g., a memorandum of
understanding which relates to Covenantor's performance)
regulatory action against Covenantor or the Company (provided,
that the Board of Directors determines in good faith, such
action involves acts or omissions by or under the supervision
of Covenantor or that termination of Covenantor would
materially advance the Company's compliance with the purpose
of the action or would materially assist the Company in
avoiding or reducing the restrictions or adverse effects to
the Company related to the regulatory action), (iv) Covenantor
exhibits a standard of behavior within the scope of his
employment that is materially disruptive to the orderly
conduct of the Company'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, is materially detrimental to the
Company's best interest, that, if susceptible of cure remains
uncured ten (10) days following written notice to Covenantor
of such specific inappropriate behavior, or (v) the continued
failure by Covenantor to subsequently perform the duties
reasonably assigned to Covenantor (given his or her training
and experience), as judged in good faith by the Board of
Directors of the Company, unless such failure is the result of
incapacity due to mental or physical illness, disability or
death, after ten (10) days' written demand for substantial
performance is delivered by the Company that specifically
identifies
2
the manner in which the Company believes that Covenantor has
not substantially performed his or her duties.
(b) "Adequate Justification" means the occurrence of any of the
following events or conditions: (i) any relocation more than
thirty (30) miles of Covenantor's principal office that is not
approved by Covenantor; or (ii) substantial reduction in
Covenantor's compensation on the date hereof that is not
approved by Covenantor. Adequate Justification shall only be
deemed to have occurred if not cured by the Company within ten
(10) days following receipt of written notice from Covenantor
which specifies with particularity the events which constitute
such Adequate Justification.
3. Notwithstanding any language to the contrary contained in this
Agreement, it shall be permissible for Covenantor to own stock or
securities of any company which may be deemed competitive with the
Company providing such shares or securities held by Covenantor are
issued by a company listed on a national securities exchange or the
NASDAQ National Market System and Covenantor owns less than a one
percent (1%) interest thereof.
4. The parties agree that the remedies of the Company at law for any
actual or threatened breach of this Agreement by Covenantor would be
inadequate and that, in the event of such actual or threatened breach,
in addition to any other remedy available to it, the Company shall be
entitled to specific performance hereof, injunctive relief, or both, by
temporary or permanent injunction or other appropriate judicial remedy,
writ or order.
5. The remedies provided for in this Agreement are non-exclusive and are
in addition to each other and to any other remedy available generally
at law or in equity.
6. Covenantor acknowledges that the Company is entering into this
Agreement and the related Acquisition Agreement in reliance upon the
Covenant. Covenantor further acknowledges and agrees that the Covenant
is necessary and fundamental to the business of the Company, is not
contrary to the public interest, and may be assigned by the Company in
the event that Company sells or otherwise disposes of the Business.
7. If any portion of this Covenant is held to be unreasonable, arbitrary
or against public policy, provisions of this Agreement shall be
considered divisible both as to time and as to geographical areas; and
each month of each year of the specified period shall be deemed to be a
separate period of time. In the event any court determines the
specified time period or geographical area to be unreasonable,
arbitrary or against public policy, the lesser time period or
geographical area which is determined to be reasonable, non-arbitrary
and not against the public policy may be enforced. Notwithstanding the
foregoing, Covenantor agrees to honor the terms of this Covenant for
the time periods and areas specified herein and not to contest the
enforceability of such periods or areas.
3
8. If any of the covenants, capacities, activities, periods or areas
specified in this Covenant are considered unreasonable by a court of
competent jurisdiction, the parties agree that the Court will have
authority to limit such covenants, capacities, activities, periods or
areas to that which the court deems proper in the circumstances.
9. This Agreement will be deemed to be a contract made under the laws of
the State of Georgia, and for all purposes will be governed by and
interpreted in accordance with the laws prevailing in the State of
Georgia, without regard to principles of conflict of laws.
10. This Agreement shall inure to the benefit of and shall be binding upon
the parties hereto and their respective heirs, successors and assigns.
11. Nothing in this Agreement, express or implied, is intended to confer
upon any third person any rights or remedies under or by reason of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
UNITED COMMUNITY BANKS, INC.
By:
--------------------------------
--------------------------------
--------------------------------
COVENANTOR
-----------------------------------
Xxxxxx X. Xxxxxx, Xx.
4
