EXHIBIT 10.7
EMPLOYMENT AGREEMENT
THIS
AGREEMENT is made effective as of April 11, 2002, by and
between SouthEast Bank & Trust (the “Bank”),
Athens, Tennessee, and Sidney W. Breaux (the
“Executive”).
WHEREAS,
the Bank wishes to assure itself of the services of Executive for
the period provided in this Agreement; and
WHEREAS,
the Executive is willing to serve in the employment of the Bank on
a full-time basis for said period.
NOW,
THEREFORE, in consideration of the mutual covenants herein
contained, and upon the other terms and conditions hereinafter
provided, the parties hereby agree as follows:
1.
POSITION AND RESPONSIBILITIES.
During the period of his employment
hereunder, Executive agrees to serve as Executive
Vice-President/Credit Administration of the Bank.
2. TERMS
AND DUTIES.
(a) The term of this Agreement
shall be deemed to have commenced as of the date first above
written and shall continue for a period of thirty-six
(36) full calendar months thereafter. Commencing on the first
anniversary date, which is defined as the last day of the 36-month
term, the Agreement will renew automatically for an additional
thirty-six (36) months unless the Agreement is otherwise
terminated or amended by mutual agreement upon delivery of notice
to the other party of intent not to renew within one hundred eighty
(180) days of the renewal date. Unless amended by the parties
hereto in writing, the term of this Agreement shall continue in
this fashion in thirty-six-month intervals. Upon the expiration of
this Agreement for a period of twelve (12) months, the
Executive agrees that he will not compete with the Bank in any city
or town in which the Bank operates a branch or main office. For
purposes of this paragraph, the term “compete” shall
have the same meaning as that more fully described in
Paragraph 10, Non-Competition. The provisions of Paragraph
2(a) do not apply to a termination of this Agreement by reason of
Change in Control, as defined in Paragraph 5(a) hereof; disability
as defined in Paragraph 6(a) hereof; death; retirement, as defined
in Paragraph 7 hereof; for cause, as defined in
Paragraph 8 hereof; or Executive’s resignation pursuant
to the conditions set forth in Paragraph 4(a) hereof.
(b) During the period of his
employment hereunder, except for periods of absence occasioned by
illness, vacation periods, and leaves of absence, Executive shall
devote substantially all his business time, attention, skill, and
efforts to the faithful performance of his duties hereunder
including activities and services related to the organization,
operation and management of the Bank; provided, however, that, from
time to time, Executive may serve, or
Exhibit 10.7-1
continue
to serve, on the boards of directors of, and hold any other offices
or positions in, companies or organizations, which will not
materially affect the performance of Executive’s duties
pursuant to this Agreement.
3.
COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified
under this Agreement shall constitute the salary and benefits paid
for the duties described in Sections 1 and 2. The Bank shall
pay Executive as compensation a salary of ninety thousand dollars
($90,000.00) per year (“Base Salary”). Such Base Salary
shall be payable in accordance with the customary payroll practices
of the Bank. During the period of this Agreement, Executive’s
Base Salary shall be reviewed at least annually; the first such
review will be made no later than one (1) year from the date
of this Agreement. Such review shall be conducted by a Committee
designated by the Board, and the Board may increase
Executive’s Base Salary. In addition to the Base Salary
provided in this Section 3(a), the Bank shall provide to
Executive at no additional cost to Executive all such other
benefits as are provided to regular full-time employees of the
Bank.
(b) Executive will be entitled
to participate in or receive benefits under any employee benefit
plans including, but not limited to, stock options, retirement
plans, supplemental retirement plans, pension plans, profit-sharing
plans, health-and-accident plans, medical coverage or any other
employee benefit plan or arrangement made available by the Bank in
the future to its senior executives and key management employees,
subject to, and on a basis consistent with, the terms, conditions
and overall administration of such plans and arrangements.
Executive will be entitled to incentive compensation and bonuses as
provided in any plan, or pursuant to any arrangement of the Bank,
in which Executive is eligible to participate. Nothing paid to the
Executive under any such plan or arrangement will be deemed to be
in lieu of other compensation to which the Executive is entitled
under this Agreement, except as provided under
Section 5(e).
(c) Executive will be reimbursed
for reasonable travel and entertainment expenses.
(d) The Bank will reimburse the
Executive for the monthly dues, the capital improvement fund fee
and applicable taxes as well as the per month standard meal
allowance charge and business-related entertainment at the
Springbrook Golf and Country Club (“Country Club”),
Niota, Tennessee. Executive will pay for any personal expenditures
at the Country Club not related to the business of the Bank.
Executive will maintain accurate records segregating business and
personal expenditures at the Country Club.
4.
PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an
Event of Termination (as herein defined) during the
Executive’s term of employment under this Agreement, the
provisions of this Section shall apply. As used in this Agreement,
an “Event of Termination” shall mean and include any
one or more of the following: (i) the termination of
Executive’s full-time employment hereunder due to expiration
of this Agreement pursuant to Paragraph 2(a); (ii) the
termination by the Bank of Executive’s full-time employment
hereunder for any reason other than a Change in Control
as
Exhibit 10.7-2
defined
in Paragraph 5(a) hereof or for Cause as defined in
Paragraph 8 hereof; disability, as defined in Paragraph 6(a)
hereof; death; retirement, as defined in Paragraph 7 hereof;
(iii) Executive’s resignation from the Bank’s
employment, upon (A), unless consented to by the Executive, a
material change in Executive’s function, duties, or
responsibilities, which change would cause Executive’s
position to become one of lesser responsibility, importance, or
scope from the position and attributes thereof described in
Paragraphs 1 and 2, above, (any such material change shall be
deemed a continuing breach of this Agreement); (B) a
relocation of Executive’s principal place of employment by
more than fifty(50) miles from its location at the effective date
of this Agreement, or a material reduction in the benefits and
perquisites to Executive from those being provided as of the
effective date of this Agreement; (C) the liquidation or
dissolution of the Bank; or (D) any breach of this Agreement
by the Bank. Upon the occurrence of any event described in clauses
(A), (B), (C), or (D), above, Executive shall have the right to
elect to terminate his employment under this Agreement by
resignation upon not less than sixty (60) days prior written
notice to the Bank given within a reasonable period of time not to
exceed, except in case of a continuing breach, four (4)calendar
months after the event giving rise to said right to elect.
(b) Upon the occurrence of an
Event of Termination, the Bank shall pay Executive, or, in the
event of his subsequent death, his beneficiary or beneficiaries, or
his estate, as the case may be, as severance pay or liquidated
damages, or both, a lump sum payment equal to twelve (12)
months’ Base Salary.
(c) Upon the occurrence of an
Event of Termination, the Bank will cause to be continued life,
medical, dental and disability coverage substantially identical to
the coverage maintained by the Bank for Executive prior to his
termination for a period of twelve (12) months at the
Bank’s expense. A COBRA notice will issue upon the date of
termination. Any COBRA-mandated coverage extensions beyond the
first twelve (12) months will be at the option of the
Executive and paid for by him as provided by law unless he has
secured other coverage from another source extinguishing his
coverage rights.
5.
CHANGE IN CONTROL.
(a) No benefit shall be paid
under this Paragraph 5 unless there shall have occurred a
Change in Control of the Bank. For purposes of this Agreement, a
“Change in Control” of the Bank shall be deemed to
occur if and when:
(i) there occurs an acquisition
in one or more transactions of at least 15 percent but less
than 25 percent of the Common Stock by any Person, or by two
or more Persons acting as a group (excluding officers and directors
of the Bank), and the adoption by the Board of Directors of a
resolution declaring that a change in control of the Bank has
occurred; or
(ii) there occurs a merger,
consolidation, reorganization, recapitalization or similar
transaction involving the securities of the Bank upon the
consummation of which more than 50 percent in voting power of
the voting securities of the surviving corporation(s) is held by
Persons other than former shareholders of the Bank; or
Exhibit 10.7-3
(iii) 25 percent or more
of the directors elected by shareholders of the Bank to the Board
of Directors are persons who were not listed as nominees in the
Bank’s then most recent proxy statement (the “New
Directors”).
(b) If any of the events
described in Paragraph 5(a) hereof constituting a Change in Control
have occurred or the Board of the Bank has determined that a Change
in Control has occurred, Executive shall be entitled to the
benefits provided in Paragraphs (c), (d) and (e) of this
Paragraph 5 upon his subsequent involuntary termination of
employment at any time during the term of this Agreement (or
voluntary termination following a Change of Control following any
demotion, loss of title, office or significant authority, reduction
in his annual compensation or benefits, or relocation of his
principal place of employment by more than 50 miles from its
location immediately prior to the Change in Control), unless such
termination is because of his death, retirement as provided in
Paragraph 7, termination for Cause, or termination for
Disability.
(c) Upon the occurrence of a
Change in Control followed by the Executive’s termination of
employment, the Bank shall pay Executive, or in the event of his
subsequent death, his beneficiary or beneficiaries, or his estate,
as the case may be, as severance pay or liquidated damages, or
both, a sum equal to one (1) time the Executive’s
“base amount,” currently in effect, within the meaning
of §280G(b)(3) of the Internal Revenue Code of 1986
(“Code”), as amended. Such payment shall be made in a
lump sum paid within ten (10) days of the Executive’s
Date of Termination.
(d) Upon the occurrence of a
Change in Control followed by the Executive’s termination of
employment, the Bank will cause to be continued life, medical,
dental and disability coverage substantially identical to the
coverage maintained by the Bank for Executive prior to his
severance. In addition, Executive shall be entitled to receive the
value of employer contributions that would have been made on the
Executive’s behalf over the remaining term of the agreement
to any tax-qualified retirement plan sponsored by the Bank as of
the Date of Termination. Such coverage and payments shall cease
upon the expiration of twelve (12) months.
(e) Upon the occurrence of a
Change in Control the Executive shall be entitled to receive
benefits due him under, or contributed by the Bank on his behalf,
pursuant to any retirement, incentive, profit sharing, bonu
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