EMPLOYMENT AGREEMENT
Exhibit 10.4
This employment agreement (“Agreement”) is made and entered into as of the 1
day of August, 2006, by and between FIRST MCMINNVILLE CORPORATION, a Tennessee corporation that
is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended,
its successors and assigns (“Company”), and XXXXXX XXX XXXXX (“Xxxxx”), an individual resident of
McMinnville, Tennessee.
WITNESSETH
WHEREAS, the Company desires to employ Xxxxx and Xxxxx desires to be employed by and to serve
the Company and the First National Bank of McMinnville (“Bank”) in the capacities and for the term
and compensation and upon the terms and conditions hereinafter set forth; and
WHEREAS, as an incentive to Xxxxx, and in order to promote continuity in management for the
Company, the Company desires to formalize the relationship with Xxxxx in order to assure itself of
the continuity of management for itself and the Bank, and also to obtain from him the agreements
contained herein;
NOW, THEREFORE, in consideration of the premises and the terms and agreements hereof, the
Company and Xxxxx agree that:
1. Employment of Xxxxx.
The Company hereby employs Xxxxx and Xxxxx hereby accepts employment with the Company and
agrees to serve the Company and the Bank in the capacities, for the term and compensation, and upon
and subject to the terms and conditions hereinafter set forth.
2. Office and Duties of Xxxxx: Place of Employment: Supervision.
X. Xxxxx shall serve the Company and the Bank as the President. The Company agrees that Xxxxx
shall not be required to serve in any other capacity without his prior consent and that he shall
not be required by the Company or the Bank to have or serve in a physical office location
(“Office”) of the Company or any Affiliate of the Company without his prior consent unless such
Office be within the City Limits of McMinnville, Tennessee. Xxxxx shall report and be responsible
to the Boards of Directors of the Company and the Bank.
X. Xxxxx shall be subject to the Company’s employment, personnel, and all other policies as in
effect on the date hereof and in effect from time to time; provided that no changes in such
policies shall be deemed to alter or diminish Xxxxx’x rights hereunder.
3. Compensation
A. Subject to the provisions of this Agreement for resignation and for termination by the
Company for default, material breach and/or cause, Xxxxx’x salary (“Salary”) and bonus (“Bonus”),
if a Bonus is to be paid, shall be as provided in this Paragraph.
B. If Xxxxx resigns for any reason, other than good reasons, such as poor health, disability,
retirement Xxxxx shall be entitled to be paid only for earned but unpaid Salary and un-reimbursed
expenses. If Xxxxx resigns after March 1, 2007 he will pay the company a settlement equal to his
current year’s salary.
C. The Company may terminate Xxxxx’x employment under this Agreement, subject to any
applicable notice and cure provisions set forth below, only for “Cause.” As used herein, “Cause”
means:
(i) Any one or more acts of theft, embezzlement, fraud or dishonesty;
(ii) Any material uncured breach or violation of this Agreement, including a Xxxxx
violation of Paragraph 6B hereof;
(iii) Any order issued by any federal banking agency requiring Xxxxx’x termination;
(iv) Any willful, uncured failure by Xxxxx to perform the duties described above in
Paragraph 2; and/or
(v) Any violation of the terms of Paragraph 6 hereof attributable to a deliberate and
knowing act by Xxxxx that was intended to harm, and did, harm the Company and/or the Bank
in a materially demonstrable financial manner.
(vi) The company fails to maintain at least a Return On Assets of 1%, Return of equity
of 8% and a CAMEL rating of 2.
Except for an occasion in which the Board, in its reasonable discretion believes that Xxxxx’x
immediate removal is necessary for the protection of the Bank or the Company, the Company shall
give Xxxxx written notice of the violation or reason that it desires to terminate him and at least
sixty (60) calendar days (exclusive of Federal and State holidays) to reasonably cure any violation
or to address any other ground stated by the Board of Directors in its written notice. The Company’s
written notice shall describe the facts and circumstances of the alleged breach or violation in
reasonable detail.
Any notice from the Company to Xxxxx concerning a “Cause” for removal shall be deemed a demand
for cure of the asserted breach or violation. The Company may terminate Xxxxx for the reasons
specified in Subparagraph 4C(i) and 4C(iii) immediately upon sending Xxxxx written notice
describing the facts and circumstances of the breach or violation in reasonable detail, but without
giving Xxxxx the opportunity to cure such violation(s) or breach(es).
Xxxxx shall be entitled to the Termination Payment, together with interest thereon at the
judgment rate of interest, if the Company terminates Xxxxx’x employment for any reason other than
those set forth in this Paragraph 4C.
D. If an external change of control occurs and Xxxxx’x services are not retained by the
acquiring party, Xxxxx will be entitled to receive four (4) times his current base salary as
settlement paid in cash in a lump sum.
(i) Salary. Xxxxx’x beginning salary will be $125,000. On October 1, 2006 if Xxxxx has moved to McMinnville and made satisfactory progress his salary will be increased to $135,000. On March 1, 2007 if Xxxxx is promoted to Chief Executive Officer his salary will be increased to $150,000. Thereafter, Xxxxx’x salary shall be as determined by the Board of Directors from time to time but shall not be less than $150,000. Xxxxx’x annual salary shall be paid in equal increments not less frequently than monthly. |
(ii) Bonus. Xxxxx shall receive a bonus any year the Board of
Directors determine to grant a bonus to the staff.
(iii) Stock. Xxxxx shall receive an option on three thousand shares (3,000) of First
McMinnville Corporation stock. One thousand shares (1,000) will be vested immediately, one thousand
shares (1,000) in one year and the remaining one thousand shares (1,000) at the end of two years.
The option price will be the book value of the stock at the time the option is issued. The stock
option will be subject to the Company’s stock option plan approved by shareholders on April 1997.
B. Expense Reimbursement. In addition to Salary and any Bonus, Xxxxx shall be reimbursed for
all actual, normal out-of-pocket expenses that he reasonably incurs in connection with his duties
hereunder during the term hereof. The company will employ McMinnville Moving and Storage to move
Xxxxx to McMinnville.
C. Other Benefits. The Company shall provide to Xxxxx, during his employment under this
Agreement, such non-salary benefits as are provided from time to time to the senior management of
the Company or the Bank, or any Affiliate thereof, such as medical and hospitalization insurance,
disability insurance, retirement benefits, profit-sharing, membership in one civic club, and
comparable non-salary items. The Company shall make available for Xxxxx’x use an appropriate
automobile.
D. Board of Directors. Etc., Xxxxx shall serve on the Board. As the case with other directors
he will be subject to being reelected by shareholders.. Xxxxx shall receive the same compensation
as other Board members for serving on the Board, except he will not be compensated for attending
committee meetings.
E. Professional Matters. Etc. The Company agrees to assist and support Xxxxx in maintaining
and extending his professional education and activities. The Company shall reimburse Xxxxx for all
reasonable travel, accommodations, and out-of-pocket expenses incurred in attending banking
conventions and educational programs to the extent permitted by the Board of Directors.
4. Terms, Expiration and Termination.
A. The term of this Agreement shall be the period beginning August 1, 2006 (the “Commencement
Date”) and expiring on July 31, 2009 (“Expiration Date”) unless extended by the parties, except as
provided below in this Paragraph 4.
5. Salary Continuation Agreement.
There is not any salary continuation provision in this contract.
6. Noncompetition and Non-Disclosure Agreement.
Xxxxx acknowledges that the Company has advised him that a principal reason for its entry into
this Agreement is to obtain non-competition and related agreements from him and that it would not
enter into this Agreement without the provisions of this Paragraph and that the
agreements herein contained are extremely material to the Company in entering into this Agreement.
The provisions of this Paragraph shall survive the expiration or termination of this
Agreement.
A. Non-competition Agreement. During the term of this Agreement, or for three (3) years
following the good faith termination of Xxxxx for valid Cause or Xxxxx’x voluntary resignation
pursuant to this Agreement, Xxxxx shall be subject to the non-competition agreement set forth
below.
Xxxxx’x non-competition agreement is set forth in this paragraph: Xxxxx agrees that he will
not engage or be involved in, directly or indirectly, any Competitor Business in any capacity
whatsoever including, without limitation, as owner, lender, employee, officer, director, advisor,
consultant, principal agent, trustee, member or any other capacity, or through the agency of any
corporation, partnership, association, agent or agency. Further, Xxxxx shall not, directly or
indirectly, own nor lend money or guarantee borrowings for the purpose of owning more than One
Percent (1%) of the outstanding capital stock or other investment in, or loan to, any Competitor
Business. However, in the event Xxxxx’x employment is terminated before March 1, 2007 this
non-compete agreement will not be enforced.
B. Non-Disclosure Agreement. Xxxxx shall never disclose, except pursuant to lawful order of a
court of competent jurisdiction, or by an administrative agency having jurisdiction, material
non-public information about the Company or the Bank. In the event that Xxxxx is served with any
notice, subpoena, or other court or administrative order (all of the above referred to herein as a
“Court Order”), he shall immediately, if reasonably practicable, before making any disclosure
covered by this Paragraph, provide a copy thereof to the Company in order to permit the Company
and/or the Bank to object to such Court Order or to resist the enforcement thereof by lawful means
(at the Bank’s and/or the Company’s expense). This provision shall be enforceable by the Company or
the Bank. However, nothing in this Subparagraph shall be understood to limit Xxxxx’x ability to
comply with any subpoena, or any court or administrative order, believed by him to be genuine.
7. Other Material Terms.
A. Governing Law. This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Tennessee.
B. Successors and Assigns: Assignment: Material Breach, Etc. All covenants and agreements set
forth in this Agreement by or on behalf of the Company shall bind its successors and
assigns, and all covenants and agreements set forth in this Agreement by or on behalf of Xxxxx
shall inure to the benefit of and be enforceable by the Company and its successors and assigns.
Neither party may assign any rights or delegate any duties under this Agreement without the prior
written consent of the other party, and such consent shall not be unreasonably withheld. Any
assignment of rights or delegation of duties without an express, prior written consent will be of
no force or effect.
C. Injunctive Relief: Standing. Xxxxx agrees and acknowledges that the Company’s and the
Bank’s remedy of monetary damages will be insufficient to compensate and protect the interests of
the Company and/or the Bank in the event of his violation of the non-competition and/or
nondisclosure provisions of this Agreement. Accordingly, Xxxxx agrees that the Company and/or the
Bank which may have been injured or adversely affected (or threatened with injury or adverse
effect) by his conduct shall be entitled to obtain injunctive relief to prevent violations of this
Agreement. The Bank, if affected by Xxxxx’x alleged breach of this Agreement, shall have standing
to seek injunctive, damages, and other appropriate relief. These provisions of this Subparagraph
shall survive the expiration or termination of this Agreement.
D. Judicial Elision. Revision. The provisions of this Agreement, including Paragraph 6, shall
not be held invalid or unenforceable because of the scope of the territory or actions subject
thereto or restricted thereby, or the period of time within which such agreement is operative; but
any judgment of a court of competent jurisdiction may define the maximum territory and actions
subject to any conduct or activity restricted by this and other Paragraphs and the period of time
during which such agreement is enforceable.
E. Integrated Agreement: Amendment: Etc. This Agreement expresses the entire agreement between
Xxxxx and the Company with reference to the subject mater hereof. No waiver or modification of this
Agreement or of any covenant, condition, or limitation herein contained shall be valid, unless in
writing and duly executed by the party to be charged therewith, and the parties further agree that
the provisions of this Paragraph 7E may not be waived except by express terms in a written
instrument signed by both parties hereto.
F. Notices. Etc. Any notice or communication hereunder must, in order to be effective, be in
writing and may be given by registered or certified mail, and if given by registered or certified
mail, shall be deemed to have been given when delivered to and received by the party to whom it is
addressed. Such notice of communication shall be given to the parties hereto at their following
addresses:
If to the Company, to:
|
First McMinnville Corporation | |
c/o The First National Bank of McMinnville | ||
000 Xxxx Xxxx Xxxxxx | ||
XxXxxxxxxxx, Xxxxxxxxx 00000 | ||
Attention: Chairman | ||
If to XXXXX, to:
|
Xx. XXXXXX XXX.XXXXX | |
XxXxxxxxxxx, Xxxxxxxxx 00000 |
Any party hereto may at any time, by giving ten (10) days written notice to the other party
hereto, designate any other address in substitution of his or its respective address to which such
notice or communication shall be given.
In order for a notice described in Paragraph 4C to be effective, it must be sent in accordance
with this Paragraph 7F and contain sufficient detail of the matter being described to allow a
reasonable businessperson to understand such matter.
G. Indemnification. Each of the Company and Xxxxx hereby agree to indemnify and hold the other
harmless from and against any and all losses, claims, damages, or expenses including, but not
limited to, attorney’s fees and litigation expenses at all trial and appellate levels, arising from
or growing out of the other party’s breach or threatened breach of this Agreement. This provision
shall survive the expiration or termination of this Agreement.
H. Certain Definitions and Intentions, Etc. As used herein the following terms shall be
understood to have the meanings set forth below:
(i) “Affiliate” means any “affiliate” or “associate” of any person or entity as those
terms are defined by the Securities Act of 1933 and/or the Securities Exchange Act of 1934,
both as amended.
(ii) “Affiliated Person” means a person (or entity) who (or which) is, at the time of a
solicitation (direct or indirect) by Xxxxx or any Competitor Business, an employee, agent,
officer, or director of, or other person or entity (such as a vendor, realtor, real estate
developer, or mortgage loan investor), affiliated with the Company and/or any Company
Affiliate(s).
(iii) “Bank” means and includes The First National Bank of McMinnville and its
successors and assigns.
(iv) “Change in Control” means (1) any “change in control” of the Company or the Bank as
such term is defined on the date hereof in the Federal Change in Bank Control Act and any
comparable laws, rules, and regulations currently in effect, and/or (2) any merger,
reorganization, consolidation, substantial disposition of assets, liquidation or comparable
transaction affecting the Bank, the Company, or any material Affiliate of either the Bank or
the Company. The intent of the Change in Control provisions in this Agreement is to provide
protection for Xxxxx against changes in control and ownership, Xxxxx having contracted
herein to be employed principally by local Shareholders and Directors and having stated his
desire to be protected against changes in control.
(v) “Company” means and includes First McMinnville Corporation and its successors and
assigns and all and each of the Company’s present and future subsidiaries (both direct and
indirect), and its present and future affiliates, and the successors and assigns of each and
all of these, so long as they are owned or in existence prior to any Change in Control.
(vi) “Competitor Business” means any person or entity, which engages, or competes with
the Company or any Company Affiliate, in any part of the Primary Service Area, in any
aspect of the commercial banking business.
(vii) “Financial Institution” means any commercial bank or thrift institution the
deposits of which are insured by the Bank or Savings Association Insurance Fund of the
Federal Deposit Insurance Corporation (or any successor thereto), and any company
controlling or controlled by any such commercial bank or thrift institution.
(viii) “Termination Payment” means a payment of $450,000 if termination occurs between
March 1, 2007 and December 31, 2007. After January 1, 2008 payment will be three times
Xxxxx’x base salary. The Termination Payment shall be paid to Xxxxx in cash, in a lump sum.
I. Captions. The captions set forth in this Agreement are for the convenience of the parties
only and shall not affect the substantive meaning or interpretation of this Agreement.
J. Company Actions. The actions of the Company under this Agreement shall be as determined
reasonably in the exercise of good faith by the Board of Directors.
K. Automatic Renewals. The expiration date of this Agreement, currently set as, July 31, 2009 shall
automatically extend for one-year periods on each annual anniversary date
hereof (i) unless the Board of Directors shall promptly deliver Xxxxx a copy of its resolution revoking such automatic renewal on or before any such anniversary date or (ii) unless Xxxxx shall notify the Board of Directors in writing on or before any such anniversary date that he is revoking such automatic renewal.
hereof (i) unless the Board of Directors shall promptly deliver Xxxxx a copy of its resolution revoking such automatic renewal on or before any such anniversary date or (ii) unless Xxxxx shall notify the Board of Directors in writing on or before any such anniversary date that he is revoking such automatic renewal.
L. Mandatory Binding Arbitration. Any disputes under this Agreement shall not be litigated
but, rather, shall be subject to mandatory binding arbitration in McMinnville, Tennessee before a
panel of three neutral arbitrators chosen by the American Arbitration Association (“AAA”). At least
one of the arbitrators shall be a licensed attorney in the State of Tennessee who has specialized
in banking law for at least five years. The arbitrators shall be chosen, and the arbitration
proceeding shall be held in accordance with, the commercial arbitration rules of the AAA in effect
at the time of the dispute. The arbitrators are specifically authorized to award attorneys fees,
costs, and expenses to the parties measured by their relative success (or failure) in respect of
the disputes arbitrated. The arbitrators shall award only compensatory damages, plus any applicable
interest at the judgment rate, and they are not authorized to award punitive damages.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement in McMinnville,
Tennessee this the 23rd day of June, 2006.
FIRST MCMINNVILLE CORPORATION
By: |
/s/ Xxxxxxx X. Xxxxxx
|
/s/ Xxxxxx Xxx Xxxxx
|