Exhibit 10.3
EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT AGREEMENT (this “Agreement”) dated as of
June 17, 2008, is made by and between First Community
Corporation, a South Carolina corporation (the
“Company”), First Community Bank, N.A., (the
“Bank”), which is a wholly owned subsidiary of the
Company (the Company and the Bank collectively referred to
herein as the “Employer”), and David K. Proctor, an
individual resident of South Carolina (the
“Executive”).
The
Employer presently employs the Executive as its Senior Credit
Officer and Senior Vice President. The Employer recognizes that
the Executive's contribution to the growth and success of the
Employer is substantial. The Employer desires to provide for the
continued employment of the Executive and to make certain
changes in the Executive's employment arrangements which the
Employer has determined will reinforce and encourage the
continued dedication of the Executive to the Employer and will
promote the best interests of the Employer and the
Company’s shareholders. The Executive is willing to
terminate his interests and rights under the existing employment
agreement with the Bank and to continue to serve the Employer on
the terms and conditions herein provided.
In
consideration of the foregoing, the mutual covenants contained
herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
1.
Employment
. The Employer shall continue to employ the
Executive, and the Executive shall continue to serve the
Employer, as Senior
Credit Officer and
Senior Vice President of the Company and the Bank upon the terms
and conditions set forth herein. The Executive shall have such
authority and responsibilities consistent with his position as
are set forth in the Company's or the Bank's Bylaws or assigned
by the Company's or the Bank's board of directors (collectively,
the “Board”) from time to time. The Executive shall
devote his full business time, attention, skill and efforts to
the performance of his duties hereunder, except during periods
of illness or periods of vacation and leaves of absence
consistent with Bank policy. The Executive may devote reasonable
periods to service as a director or advisor to other
organizations, to charitable and community activities, and to
managing his personal investments, provided that such activities
do not materially interfere with the performance of his duties
hereunder and are not in conflict or competitive with, or
adverse to, the interests of the Company or the Bank. The
Executive agrees to conduct himself in accordance with the code
of ethics for officers and employees adopted by the
Employer, as amended
from time to time.
2.
Term . Unless earlier terminated as provided
herein, the Executive's employment under this Agreement shall
commence on the date hereof and be for a term of three years
(the “Term”). At the end of each day of the Term,
the Term shall be extended for an additional day so that the
remaining term shall continue to be three years; provided that
the Executive or the Employer may at any time, by written
notice, fix the Term to a finite term of three years commencing
with the date of the notice, in which case the Agreement shall
continue through its
remaining
term but shall not be extended absent written agreement by both
the Employer and the Executive.
3.
Compensation and
Benefits .
a. The
Employer shall pay the Executive an annual base salary of $127,500
which shall be paid in
accordance with the Employer’s standard payroll
procedures, which shall be no less frequently than monthly. The
Employer shall have the right to increase this salary from time
to time in accordance with the salary payment practices of the
Employer. The Board shall review the Executive's salary at least
annually and may increase the Executive's base salary if it
determines in its sole discretion that an increase is
appropriate.
b. The
Executive shall participate in the Employer’s long-term
equity incentive program and be eligible for the grant of stock
options, restricted stock, and other awards thereunder or under
any similar plan adopted by the Employer. Any options or similar
awards shall be issued to Executive at an exercise price of not
less than the stock's current fair market value as of the date
of grant, and the number of shares subject to such grant shall
be fixed on the date of grant.
c. The
Executive shall participate in all retirement, health, welfare,
insurance, and other benefit plans or programs of the Employer
now or hereafter applicable generally to employees of the
Employer or to a class of employees that includes senior
executives of the Employer.
d. The Employer
shall reimburse the Executive for reasonable travel and other
expenses, including cell phone expenses related to the
Executive's duties, which are incurred and accounted for in
accordance with the normal practices of the Employer. The
Employer shall reimburse the Executive for such expenses within
sixty days of Executive's notice to Employer of such
expense.
e. The
Employer shall provide the Executive with annual paid time off,
which includes sick leave, in accordance with the
Employer’s Benefit policy, and which shall be taken in
accordance with any banking rules or regulations governing paid
time off leave. Except as allowed in accordance with the
Employer’s Benefit policy, paid time off days may not be
carried forward into following calendar years, and any payments
made by the Employer to the Executive as compensation for paid
time off days shall be paid in accordance with the
Employer’s standard payroll procedures, which shall be no
less frequently than monthly.
f. The
Executive shall be eligible to receive cash bonuses based on the
Executive's achievement of specified goals and criteria. These
goals and criteria may include both annual and long-term goals,
may provide for vesting over a specified time period, and shall
be established annually by the Human Resources Committee of the
Board. For purposes of this Agreement, a bonus shall not be
deemed to be earned prior to the date it is actually paid to the
Executive except to the extent that the Employer specifically
provides otherwise in a writing delivered to the Executive. Any
bonus payment made pursuant to this Section 3(f) shall be made
the earlier of (i) 70 days after the previous year end for which
the bonus was
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earned by the Executive and became a payable of the
Employer or (ii) the first pay period following the Employer's
press release announcing its previous year's financial
performance.
4.
Termination
.
a. The
Executive's employment under this Agreement may be
terminated prior to the end of the Term only as provided in this
Section 4.
b. The
Agreement will be terminated upon the death of the Executive. In
this event, the Employer shall pay Executive's estate any sums
due him as base salary and/or reimbursement of expenses through
the end of the month during which death occurred in accordance
with the Employer's normal payroll practices, which shall mean
no less frequently than monthly. The Employer shall also pay the
Executive's estate any bonus earned or accrued through the date
of death. Any bonus for previous years which was not yet paid
will be paid pursuant to the terms as set forth in Section 3(f).
Any bonus that is earned in the year of death will be paid on
the earlier of (i) 70 days after the year end in which the
Executive died or (ii) the first pay period following the
Employer's press release announcing its financial performance
for the year in which the Executive died. To the extent that the
bonus is performance-based, the amount of the bonus will be
calculated by taking into account the performance of the Company
for the entire year and prorated through the date of Executive's
death.
c. The
Employer may terminate the Executive's Employment upon the
Disability of the Executive for a period of 180 days. During the
period of any Disability leading up to the Executive’s
Termination of Employment under this provision, the Employer
shall continue to pay the Executive his full base salary at the
rate then in effect and all perquisites and other benefits
(other than any bonus) in accordance with the Employer's normal
payroll schedule (and in no event less frequently than monthly)
until the Executive becomes eligible for benefits under any
long-term disability plan or insurance program maintained by the
Employer, provided that the amount of any such payments to the
Executive shall be reduced by the sum of the amounts, if any,
payable to the Executive for the same period under any other
disability benefit or pension plan covering the Executive.
Furthermore, the Employer shall pay the Executive any bonus
earned or accrued through the date of Disability. Any bonus for
previous years which was not yet paid will be paid pursuant to
the terms as set forth in Section 3(f). Any bonus that is earned
in the year of Disability will be paid on the earlier of (i) 70
days after the year end in which Executive became Disabled or
(ii) the first pay period following the Employer's press release
announcing its financial performance for the year in which the
Executive became Disabled. Nothing herein shall prohibit the
Employer from hiring an acting senior credit officer prior to the expiration of this 180-day
period.
d. The
Employer may terminate the Executive's Employment for Cause upon
delivery of a Notice of Termination to the Executive. If the
Executive's employment is terminated for Cause under this
provision, the Executive shall receive only any sums due him as
base salary and/or reimbursement of expenses through the date of
termination, which shall
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be paid in
accordance with the Employer’s normal payroll practices,
which shall mean no less frequently than monthly.
e. The
Employer may terminate the Executive's employment without Cause upon delivery of
a Notice of Termination to the Executive. If the Executive's employment is terminated without Cause
under this provision, subject to the possibility of a six-month
delay described below in this Section 4(e), beginning on the
first day of the month following date of the Executive's termination, and continuing on the first
day of the month for a
number of months equal to the lesser of (i) the number of
Executive's full years of service with the Employer or (ii) 12
months, the Employer shall pay to the Executive severance compensation in an amount equal
to 100% of his then current monthly base salary. Employer shall
also pay the Executive any bonus earned or accrued through the
date of termination (including any amounts awarded for previous
years but which were not yet vested). Any bonus for previous
years which was not yet paid will be paid pursuant to the terms
as set forth in Section 3(f). Any bonus that is earned in the
year of the Executive's termination will be paid on the earlier of
(i) 70 days after the year end in which the Executive was terminated or (ii) the first pay
period following the Employer's press release announcing its
previous year's financial performance. If when
Executive's employment terminates he is a specified
employee within the meaning of Section 409A of the Internal
Revenue Code, and if the benefits under this Section 4(e) would
be considered deferred compensation under Section 409A, and
finally if an exemption from the six-month delay requirement of
Section 409A(a)(2)(B)(i) is not available, the following
benefits under this Section 4(e) shall be paid to the
Executive as follows: severance compensation in an
amount equal to the
number of months deferred times 100% of his then current monthly base salary, any
bonus for previous years which was not yet paid, and any bonus
that is earned in the year of the Executive's termination will be paid in a single lump
sum on the date that is six months and one day following date
of Executive's
termination; thereafter on the
first day of the month until such amount as determined above
shall have been paid in full, the Employer shall pay to the
Executive severance compensation in an amount equal
to 100% of his then current monthly base salary.
f. The
Executive may terminate his employment at any time by delivering
a Notice of Termination at least 14 days prior to such
termination, and such termination shall not in and of itself be,
nor shall it be deemed to be, a breach of this Agreement. If the
Executive terminates his employment under this provision, the
Executive shall receive any sums due him as base salary and/or
reimbursement of expenses through the date of such termination,
which shall be paid in accordance with the Employer’s
normal payroll practices, which shall mean no less frequently
than monthly.
g. Upon the
occurrence of a Change in Control, and regardless of whether
the Executive
remains employed by the
Employer or its successor following a Change in Control,
the Executive
shall be entitled to the
following:
(i) within 15
days, the Employer shall pay the Executive cash compensation in an amount equal
to 100% of
his then current annual base
salary multiplied by two as well as any bonus earned or accrued
through the date of the Change in Control, subject to the
provisions of Section 4(k) below;
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(ii) for a
period of two years, the Employer shall at its expense continue,
on behalf of the Executive, the life insurance, disability,
medical, dental, and hospitalization benefits provided (x) to
the Executive at any time during the 90 day period prior to the
Change in Control or at any time thereafter or (y) to other
similarly situated executives who continue in the employ of the
Employer. Such coverage and benefits (including deductibles and
costs) shall be no less favorable to the Executive and his
dependents and beneficiaries than the most favorable of such
coverages and benefits referred to above.
The Employer's obligation hereunder with
respect to the foregoing benefits shall be limited to the extent
that the Executive obtains any such benefits pursuant to a
subsequent employer's benefit plans, in which case the Employer
may reduce the coverage of any benefits it is required to
provide the Executive hereunder as long as the aggregate
coverages and benefits of the combined benefit plans is no less
favorable to the Executive than the coverages and benefits
required to be provided hereunder. This subsection (ii) shall
not be interpreted so as to limit any benefits to which the
Executive or his dependents or beneficiaries may be entitled
under any of the Employer's employee benefit plans, programs or
practices following the Executive's Termination of Employment,
including without limitation, retiree medical and life insurance
benefits. Employer shall not, by virtue of this provision, be
under any obligation to continue to maintain any particular plan
or program; and
(iii) the
restrictions on any outstanding incentive awards (including
restricted stock) granted to the Executive under the Company's
or the Bank’s long-term equity incentive program or any
other incentive plan or arrangement shall lapse and such awards
shall become 100% vested, all stock options and stock
appreciation rights granted to the Executive shall become
immediately exercisable and shall become 100% vested, and all
performance units granted to the Executive shall become 100%
vested.
h. With the
exceptions of the provisions of this Section 4, and the express
terms of any benefit plan under which the Executive is a
participant, it is agreed that, upon Executive's Termination of
Employment, the Employer shall have no obligation to the
Executive for, and the Executive waives and relinquishes, any
further compensation or benefits (exclusive of COBRA benefits).
Unless otherwise stated in this Section 4, the effect of
termination on any outstanding incentive awards, stock options,
stock appreciation rights, performance units, or other
incentives shall be governed by the terms of the applicable
benefit or incentive plan and/or the agreements governing such
incentives. At the time of Termination of Employment, and as a
condition to the Employer’s obligation to pay any
severance hereunder, the Employer and the Executive shall enter
into a release substantially in the form attached hereto as
Exhibit A acknowledging such remaining obligations and
discharging both parties, as well as the Employer's officers,
directors and employees with respect to their actions for or on
behalf of the Employer, from any other claims or obligations
arising out of or
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in connection with the Executive's employment by
the Employer, including the circumstances of such
termination.
i. The
Company is aware that upon the occurrence of a Change in
Control, the Board or a shareholder of the Company may then
cause or attempt to cause the Company to refuse to comply with
its obligations under this Agreement, or may cause or attempt to
cause the Company to institute, or may institute, litigation
seeking to have this Agreement declared unenforceable, or may
take, or attempt to take, other action to deny the Executive the
benefits intended under this Agreement. In these circumstances,
the purpose of this Agreement could be frustrated. It is the
intent of the parties that the Executive not be required to
incur the legal fees and expenses associated with the protection
or enforcement of the Executive’s rights under this
Agreement by litigation or other legal action because such costs
would substantially detract from the benefits intended to be
extended to the Executive hereunder, nor be bound to negotiate
any settlement of the Executive’s rights hereunder under
threat of incurring such costs. Accordingly, if at any time
after a Change in Control, it should appear to the Executive
that the Company is acting or has acted contrary to or is
failing or has failed to comply with any of its obligations
under this Agreement for the reason that it regards this
Agreement to be void or unenforceable or for any other reason,
or that the Company has purported to terminate the
Executive’s employment for Cause or is in the course of
doing so in either case contrary to this Agreement, or in the
event that the Company or any other person takes any action to
declare this Agreement void or unenforceable, or institutes any
litigation or other legal action designed to deny, diminish or
recover (other than as required by law) from the Executive the
benefits provided or intended to be provided to the Executive
hereunder, and the Executive has acted in good faith to perform
the Executive’s obligations under this Agreement, the
Company irrevocably authorizes the Executive from time to time
to retain counsel of the Executive’s choice at the expense
of the Company to represent the Executive in connection with the
protection and enforcement of the Executive’s rights
hereunder, including without limitation representation in
connection with termination of the Executive’s employment
contrary to this Agreement or with the initiation or defense of
any litigation or other legal action, whether by or against the
Executive or the Company or any director, officer, shareholder
or other person affiliated with the Company, in any
jurisdiction. The reasonable fees and expenses of counsel
selected from time to time by the Executive as hereinabove
provided shall be paid or reimbursed to the Executive by the
Company on a regular, periodic basis upon presentation by the
Executive of a statement or statements prepared by such counsel.
If other officers or key executives of the Company have retained
counsel in connection with the protection and enforcement of
their rights under similar agreements between them and the
Company, and, unless in the Executive’s sole judgment use
of common counsel could be prejudicial to the Executive or would
not be likely to reduce the fees and expenses chargeable
hereunder to the Company, the Executive agrees to use the
Executive’s best efforts to agree with such other officers
or executives to retain common counsel.
j. The
parties intend that the severance payments and other
compensation provided for herein are reasonable compensation for
the Executive's services to the Employer and shall not
constitute “excess parachute payments” within the
meaning of Section 280G of the Internal Revenue Code of 1986 and
any regulations thereunder. In the event that the Employer's
independent accountants acting as auditors for the Employer on
the date of a
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Change in
Control determine that the payments provided for herein
constitute “excess parachute payments,” then the
compensation payable hereunder shall be reduced to an amount the
value of which is $1.00 less than the maximum amount that could
be paid to the Executive without the compensation being treated
as “excess parachute payments” under Section 280G.
The allocations of the reduction required hereby among the
termination benefits payable to the Executive shall be
determined by the Executive.
k. If the
Executive is suspended or temporarily prohibited from
participating, in any way or to any degree, in the conduct of
the Employer's affairs by (1) a notice served under section 8(e)
or (g) of Federal Deposit Insurance Act (12 U.S.C. 1818 (e) or
(g)) or (2) as a result of any other regulatory or legal action
directed at the Executive by any regulatory or law enforcement
agency having jurisdiction over the Executive (each of the
foregoing referred to herein as a "Suspension Action"), and if
this Agreement is not terminated, the Employer's obligations
under this Agreement shall be suspended as of the earlier of the
effective date of such Suspension Action or the date on which
the Executive was provided notice of the Suspension Action,
unless stayed by appropriate proceedings. If the charges
underlying the Suspension Action are dismissed, the Bank
shall:
(i) pay on
the first day of the first month following such dismissal of
charges (or as pr
