AMENDED NONCOMPETITION, SEVERANCE AND EMPLOYMENT AGREEMENTEmployee Alternative Dispute Resolution Agreement |
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GRANDSOUTH BANCORPORATION | GrandSouth Bank | Ronald K. Earnest. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here. |
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Search Employee Alternative Dispute Resolution Agreement by:
Exhibit 10.4
NOTICE: THIS AGREEMENT IS SUBJECT TO ARBITRATION PURSUANT
TO THE SOUTH CAROLINA UNIFORM ARBITRATION ACT
AMENDED NONCOMPETITION, SEVERANCE AND EMPLOYMENT AGREEMENT
THIS AMENDED NONCOMPETITION, SEVERANCE AND EMPLOYMENT AGREEMENT (the
"Agreement") is made and entered into as of this 17th day of October, 2007, by
and among Ronald K. Earnest, an individual (the "Executive"), GrandSouth
Bancorporation, a South Carolina corporation (the "Company"), and the Company's
wholly-owned subsidiary, GrandSouth Bank, a South Carolina corporation (the
"Bank").
WHEREAS, the Company, the Bank and the Executive entered into a
Noncompetition, Severance and Employment Agreement dated as of January 18, 2006
(the "Original Agreement"); and
WHEREAS, the Company, the Bank and the Executive desire to amend the
Original Agreement in compliance with the recently enacted Internal Revenue Code
Section 409A and associated federal regulations; and
WHEREAS, the Boards of Directors of the Company and the Bank continue
to believe that the Executive has been instrumental in the success of the
Company and the Bank since his employment in 1998; and
WHEREAS, the Company desires to continue to employ the Executive as
President and Chief Operating Officer of the Company, and the Bank desires to
continue to employ the Executive as President and Chief Executive Officer of the
Bank; and
WHEREAS, the Executive is willing to continue to accept the employment
contemplated herein under the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto
agree to amend and restate the Original Agreement as follows:
1. Employment. Subject to the terms and conditions hereof, the Company
hereby employs the Executive and the Executive hereby accepts such employment as
the President and Chief Operating Officer of the Company, and the Bank hereby
employs the Executive and the Executive hereby accepts such employment as the
President and Chief Executive Officer of the Bank, having such duties and
responsibilities as are set forth in Section 3 below.
2. Definitions. For purposes of this Agreement, the following terms
shall have the meanings specified below.
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2.1 "Change of Control" shall mean the occurrence during the
Term of any of the following events:
(a) An acquisition (other than directly from the Company) of
any voting securities of the Company (the "Voting Securities") by any
one Person, or more than one Person acting as a group, immediately
after which such Person or group has ownership of more than 50% of the
combined voting power of the Company's then outstanding Voting
Securities; provided, however, that in determining whether a Change of
Control has occurred, Voting Securities which are acquired in a
"Non-Control Acquisition" (as hereinafter defined) shall not constitute
an acquisition which would cause a Change of Control. A "Non-Control
Acquisition" shall mean an acquisition by (i) an employee benefit plan
(or a trust forming a part thereof) maintained by (x) the Company or
(y) any corporation or other Person or group of which a majority of its
voting power or its equity securities or equity interest is owned
directly or indirectly by the Company (a "Subsidiary"), (ii) the
Company or any Subsidiary, or (iii) any Person or group in connection
with a "Non-Control Transaction" (as hereinafter defined); or
(b) The date a majority of the individuals who, as of the date
of this Agreement, are members of the Board of Directors of the Company
(the "Incumbent Board") are replaced for any reason during any twelve
month period; provided, however, that if the election, or nomination
for election by the Company's stockholders, of any new director was
approved by a vote of at least a majority of the Incumbent Board, such
new director shall, for purposes of this Agreement, be considered as a
member of the Incumbent Board; or
(c) A merger, consolidation or reorganization involving the
Company, unless
(i) the stockholders of the Company, immediately before such
merger, consolidation or reorganization, own, directly or
indirectly, immediately following such merger, consolidation
or reorganization, at least a majority of the combined voting
power of the outstanding voting securities of the corporation
resulting from such merger or consolidation or reorganization
(the "Surviving Corporation"), and
(ii) the individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement providing
for such merger, consolidation or reorganization constitute at
least a majority of the members of the board of directors of
the Surviving Corporation.
(A transaction described in clauses (c)(i) and (ii) shall
herein be referred to as a "Non-Control Transaction"); or
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(d) The sale or other disposition of all or substantially all
of the assets of the Company to any Person (other than a transfer to a
related person as set forth in 26 C.F.R. 1.409A-3(i)(5)(vii)(B)) over a
consecutive 12-month period.
2.2 "Cause" shall mean:
(a) any act that (i) constitutes, on the part of the
Executive, fraud, dishonesty, willful failure to follow the directives
or implement the policies of the Board of Directors of the Company or
the Bank, willful violation of any state or federal law or regulation
applicable to the Company or the Bank, gross malfeasance of duty,
conduct grossly inappropriate to the Executive's office, or a material
willful violation of this Agreement, and (ii) is demonstrably likely to
lead to material injury to the Company or the Bank or resulted or was
intended to result in direct or indirect gain to or personal enrichment
of the Executive at the expense, direct or indirect, of the Company or
the Bank; or
(b) the conviction (from which no appeal may be or is timely
taken) of the Executive of a felony; or
(c) the suspension or removal of the Executive by federal or
state banking regulatory authorities acting under lawful authority
pursuant to provisions of federal or state law or regulation which may
be in effect from time to time;
provided, however, that in the case of clause (a) above, such conduct
shall not constitute Cause:
(i) unless (x) there shall have been delivered to the
Executive a written notice setting forth with specificity the
reasons that the Board of the Company or the Bank believes the
Executive's conduct meets the criteria set forth in clause
(a); (y) the Executive shall have been provided the
opportunity to be heard in person by the Board of the Company
or the Bank, as applicable (with assistance of the Executive's
counsel if the Executive so desires); and (z) after such
opportunity to be heard, the termination is evidenced by a
resolution adopted in good faith by two-thirds of the members
of the Board of the Company or the Bank, as applicable (other
than the Executive); or
(ii) if such conduct (x) was believed by the Executive in good
faith to have been in, or not opposed to, the interests of the
Company and the Bank, and (y) was not intended to, and did
not, result in the direct or indirect gain to or personal
enrichment of the Executive.
2.3 "Confidential Information" shall mean all business and
other information relating to the business of the Company or the Bank, including
without limitation, technical or non-technical data, programs, methods,
techniques, processes, financial data, financial plans, product plans, and lists
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of actual or potential customers, which (a) derives economic value, actual or
potential, from not being generally known to, and not being readily
ascertainable by proper means by, other Persons, and (b) is the subject of
efforts that are reasonable under the circumstances to maintain its secrecy or
confidentiality. Such information and compilations of information shall be
contractually subject to protection under this Agreement whether or not such
information constitutes a trade secret and is separately protectable at law or
in equity as a trade secret.
2.4 "Disability" or "Disabled" shall mean (a) the Executive is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months; or (b) the Executive is, by reason of any medically determinable
physical or mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, receiving
income replacement benefits for a period of not less than three months under an
accident and health plan covering employees of the Company or the Bank; or (c)
the Executive has been determined to be totally disabled by the Social Security
Administration or Railroad Retirement Board; or (d) the Executive has been
determined to be disabled in accordance with a disability insurance program
provided by the Company or the Bank and in which Executive participates,
provided that the definition of disability applied under such disability
insurance program complies with the requirements of (a) or (b) listed above.
2.5 A voluntary termination by the Executive shall be
considered an involuntary termination with "Good Reason" if any of the following
occurs, following a Change of Control, without the Executive's advance written
consent, and the term "Good Reason" shall mean the occurrence, following a
Change of Control, of any of the following without the Executive's advance
written consent: (a) a material diminution of the Executive's base compensation;
(b) a material diminution of the Executive's authority, duties, or
responsibilities; (c) a material diminution in the authority, duties, or
responsibilities of the supervisor to whom the Executive is required to report;
(d) a material diminution in the budget over which the Executive retains
authority; (e) a material change in the geographic location at which the
Executive must perform services for the Company or the Bank; or (f) any other
action or inaction that constitutes a material breach by the Company or the Bank
of this Agreement. In order to qualify as a voluntary termination for Good
Reason, (x) the Executive must give notice to the Company or the Bank, as
applicable, of the existence of one or more of the conditions described in (a) -
(f) above within 90 days after the initial existence of the condition, and the
Company or the Bank, as applicable, shall have 30 days thereafter to remedy the
condition, and (y) the termination of employment must occur within 24 months
following a Change of Control.
2.6 "Person" shall mean any individual, corporation, bank,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or other entity.
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3. Duties. During the Term hereof, the Executive shall have such duties
and authority as are typical of a President and Chief Operating Officer of
companies such as the Company and the Bank, including, without limitation, those
specified in the Company's and the Bank's Bylaws. Executive agrees that during
the Term hereof, he will devote his full time, attention and energies to the
diligent performance of his duties. Executive shall not, without prior written
consent of the Company and the Bank, at any time during the Term hereof (a)
accept employment with, or render services of a business, professional or
commercial nature to, any Person other than the Company and the Bank, (b) engage
in any venture or activity which the Company or the Bank may in good faith
consider to be competitive with or adverse to the business of the Company, the
Bank or of any other affiliate of the Company, whether alone, as a partner, or
as an officer, director, employee or shareholder or otherwise, except that the
ownership of not more than 5% of the stock or other equity interest of any
publicly traded corporation or other entity shall not be deemed a violation of
this Section, or (c) engage in any venture or activity which the Board of
Directors of the Company or the Bank may in good faith consider to interfere
with Executive's performance of his duties hereunder.
4. Term. Unless earlier terminated as provided herein, the Executive's
employment hereunder shall be for a rolling term of three years (the "Term"),
which commenced on the date of the Original Agreement, with compensation to be
effective as of the date of this Agreement. This Agreement shall be deemed to
extend each day for an additional day automatically and without any action on
behalf of any party hereto; provided, however, that any party may, by notice to
the others, cause this Agreement to cease to extend automatically and, upon such
notice, the "Term" of this Agreement shall be the three years following the date
of such notice, and this Agreement shall terminate upon the expiration of such
Term. If no such notice is given and this Agreement is terminated pursuant to
Section 5 hereof, for the purposes of calculating any amounts payable to the
Executive as a result of such termination, the remaining Term of this Agreement
shall be deemed to be three years from the date of such termination.
5. Termination. This Agreement may be terminated as follows:
5.1 By the Company or the Bank. The Company or the Bank shall have
the right to terminate the Executive's employment hereunder at any time during
the Term hereof for any reason or for no reason, including, without limitation,
(a) for Cause, (b) if the Executive becomes Disabled, or (c) upon the
Executive's death.
5.1.1 If the Company or the Bank terminates Executive's
employment under this Agreement for Cause or as a result of Executive's
Disability or death, the Company's and the






