Employment Agreement

Last CEO Contract

Separation Agreement with Last CEO

HARTON LETTER AGREEMENT

Exhibit 10.1

 

November 18, 2008

 

Mr. H. Lynn Harton

104 South Main Street

Greenville, South Carolina 29601

 

 

Re:

Interim Chief Executive Officer Position

 

Dear Lynn:

 

We are pleased to offer you the position of Interim Chief Executive Officer of The South Financial Group, Inc. (the “Company”) effective from the time that you sign this letter agreement (the “Agreement”) until such time as the Company has selected a full-time Chief Executive Officer.

 

In consideration for your service as Interim Chief Executive Officer and so long as you serve as Interim Chief Executive Officer, you shall receive a monthly stipend of $25,000, which shall be paid to you in accordance with the Company’s regular payroll policies as may be in effect from time to time (the “Stipend”). The Stipend shall not be taken into account in computing any compensation or benefits to be paid to you under any plan, program, agreement or arrangement of the Company or any of its affiliates, including, without limitation, any severance benefits that may become payable to you under the Amended and Restated Noncompetition, Severance and Employment Agreement, dated as of February 25, 2008, by and between you and Carolina First Bank (the “Employment Agreement”) or the Supplemental Executive Retirement Agreement dated as of January 29, 2007, by and between you and the Company (the “SERP”).

 

You further agree that neither the elimination of the Stipend nor the return to your position as Senior Executive Vice President of the Company at the end of the period that you serve as Interim Chief Executive Officer shall give rise to your right to resign due to an Involuntary Termination (as defined in the Employment Agreement), a “good reason” resignation, or a constructive termination or term of similar import under any plan, program, agreement or arrangement of the Company or any of its affiliates, including without limitation, under the Employment Agreement or the SERP.

 

This agreement will be governed by and construed and enforced in accordance with the laws of the State of South Carolina without regard to principles of conflicts of laws. The Company may withhold from any amounts payable under this Agreement any taxes as are required to be withheld under applicable law. Your employment by the Company will continue to be “at will,” which means that your employment may be terminated by either you or the Company at any time. This agreement supersedes any other agreement between you and the Company or its affiliates with respect to the subject matter hereof, except for the Employment Agreement and the SERP, in each case, as modified hereby.

 

Regards,

/s/ John C. B. Smith, Jr.

John C. B. Smith, Jr.

Chairman

Board of Directors of the Company

 

 

/s/ H. Lynn Harton

November 18, 2008

 

H. Lynn Harton

Date

 

 

- 3 -

 









Exhibit 10.20

STRICTLY CONFIDENTIAL

NOTICE: THIS CONTRACT IS SUBJECT TO ARBITRATION PURSUANT
TO THE SOUTH CAROLINA UNIFORM ARBITRATION ACT

AMENDED AND RESTATED NONCOMPETITION,
SEVERANCE AND EMPLOYMENT AGREEMENT
Between
CAROLINA FIRST BANK and HERBERT LYNN HARTON

     This Amended and Restated Noncompetition, Severance and Employment Agreement (this “Agreement”) is made and entered into as of this February 25, 2008, by and between Herbert Lynn Harton, an individual (the “Executive”), and Carolina First Bank, a South Carolina corporation headquartered in Greenville, South Carolina (the “Company”) and wholly owned subsidiary of The South Financial Group, Inc. (“TSFG”).

RECITALS

     The Company’s Board of Directors (the “Board”) believes that the Executive has been instrumental in the success of the Company.

     The Company desires to continue to employ the Executive as Executive Vice President — Chief Risk and Credit Policy Officer of the Company and in such other capacities as the Executive is currently employed as of the date hereof.

     The terms hereof are consistent with the executive compensation objectives of the Company as established by the Board.

     The Executive is willing to accept the employment contemplated herein under the terms and conditions set forth herein.

     This Agreement amends and restates the original agreement between the Executive and the Company dated on or about March 1, 2007.

AGREEMENT

     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 as follows:

     1. Employment. Subject to the terms and conditions hereof, the Company hereby employs the Executive and Executive hereby accepts such employment as the Executive Vice President — Chief Risk and Credit Policy Officer of the Company 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.

     “Agreement” shall have the meaning set forth in the preamble.

     “Annual Base Salary” shall have the meaning set forth in Section 6.1.

     “Annual Bonus Amount” shall mean the average of the annual cash bonuses earned by Executive under any written short-term (i.e. one year) plan (regardless of whether a particular bonus has yet been paid or whether any portion thereof was deferred) as a result of employment by the Company and its affiliates over the three year period immediately preceding the date of termination. In calculating the Annual Bonus Amount: (i) if one of the year’s bonuses in the calculation period was based on a period of less than 12 full months, then such annual bonus amount shall be annualized; (ii) if Executive was employed for less than

 


 

three years and had not yet earned a bonus in year two and/or year three (as applicable) because Executive was not employed at December 31 of that year, then the Annual Bonus Amount shall be calculated based solely on the years in which Executive was employed at the end of the year; (iii) if Executive shall not have been employed long enough to earn a cash bonus, then the Annual Bonus Amount will be deemed to be the Executive’s target bonus amount.

     “Board” shall mean the Board of Directors of TSFG.

     “Cause” shall mean:

     (i) In the absence of a Change in Control: (a) fraud; (b) embezzlement; (c) conviction of the Executive of any felony; (d) a material breach of, or the wilful failure or refusal by the Executive to perform and discharge the Executive’s duties, responsibilities and obligations under this Agreement; (e) any act of moral turpitude or wilful misconduct by the Executive intended to result in personal enrichment of the Executive at the expense of the Company, or any of its affiliates or which has a material adverse impact on the business or reputation of the Company or any of its affiliates (such determination to be made by the Board in its reasonable judgment); (f) intentional material damage to the property or business of the Company; (g) gross negligence; or (h) the ineligibility of the Executive to perform Executive’s duties because of a ruling, directive or other action by any agency of the United States or any state of the United States having regulatory authority over the Company.

     (ii) After a Change in Control: (a) material criminal fraud, (b) gross negligence, (c) material dereliction of duties, (d) intentional material damage to the property or business of the Company, or (e) the commission of a material felony, in each case, as determined in the reasonable discretion of the Board, but only if (1) the Executive has been provided with written notice of any assertion that there is a basis for termination for cause which notice shall specify in reasonable detail specific facts regarding any such assertion, (2) such written notice is provided to the Executive a reasonable time before the Board meets to consider any possible termination for cause, (3) at or prior to the meeting of the Board to consider the matters described in the written notice, an opportunity is provided to the Executive and Executive’s counsel to be heard before the Board with respect to the matters described in the written notice, (4) any resolution or other Board action held with respect to any deliberation regarding or decision to terminate the Executive for cause is duly adopted by a vote of a majority of the entire Board of the Company at a meeting of the Board called and held and (5) the Executive is promptly provided with a copy of the resolution or other corporate action taken with respect to such termination. No act or failure to act by the Executive shall be considered wilful unless done or omitted to be done by Executive not in good faith and without reasonable belief that Executive’s action or omission was in the best interests of the Company. The unwillingness of the Executive to accept any or all of a change in the nature or scope of Executive’s position, authorities or duties, a reduction in Executive’s total compensation or benefits, a relocation that he deems unreasonable in light of Executive’s personal circumstances, or other action by or upon request of the Company in respect of Executive’s position, authority, or responsibility that he reasonably deems to be contrary to this Agreement, may not be considered by the Board to be a failure to perform or misconduct by the Executive.

     “Change in Control” shall mean:

     (i) when any Person or Persons acting as “group” (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act and within the meaning of Section 409A of the Code and applicable regulations thereunder) acquires directly or indirectly, securities of TSFG representing an aggregate of more than 50% of the combined voting power of TSFG’s then outstanding voting securities other than an acquisition by:

 

(A)

 

any employee plan established by TSFG;

 

 

(B)

 

TSFG or any of its affiliates (as defined in Rule 12b-2 promulgated under the Exchange Act);

 

 

(C)

 

an underwriter temporarily holding securities pursuant to an offering of such securities;

 

 

(D)

 

a corporation owned, directly or indirectly, by stockholders of TSFG in substantially the same proportions as their ownership of TSFG; or

2


 

 

(E)

 

except as provided in clause (iii) below, merger or consolidation of TSFG with any other corporation which is duly approved by the stockholders of TSFG; or

     (ii) when a majority of the board of directors of TSFG is replaced during any 12-month period and such new appointments are not approved by a majority of the members of the current board prior to the date of appointment or election; or

     (iii) The consummation of a merger, sale of substantially all assets, consolidation or similar transaction between TSFG and any other corporation other than (A) such a transaction that would result in the voting securities of TSFG outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of any company, at least a majority of the combined voting power of the voting securities of TSFG or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation; or (B) such a transaction effected to implement a recapitalization of TSFG (or similar transaction) in which no Person is or becomes the beneficial owner (as defined in clause (i) above), directly or indirectly, of securities of TSFG (not including in the securities beneficially owned by such Person any securities acquired directly from TSFG) representing a majority of the combined voting power of TSFG’s then outstanding voting securities; or (C) a plan of complete liquidation of TSFG.

     “Code” shall mean the Internal Revenue Code of 1986, as amended, or any successor statute, rule or regulation of similar effect.

     “Company” shall have the meaning set forth in the preamble.

     “Compensation” shall mean the sum of (i) Executive’s Annual Base Salary (as defined in Section 6.1), and (ii) Executive’s Annual Bonus Amount.

     “Competitor” shall have the meaning set forth in Section 9.

     “Confidential Information” shall mean all business and other information relating to the business of the Company and its affiliates, including without limitation, technical or nontechnical data, programs, methods, techniques, processes, financial data, financial plans, product plans, and lists of actual or potential customers, which (i) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other Persons, and (ii) 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. Confidential Information shall not include any of the foregoing that does not constitute a trade secret under applicable law two years after any expiration or termination of this Agreement.

     “Disability” or “Disabled” shall mean 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 which results in (i) Executive being unable to engage in any substantial gainful activity or (ii) Executive receiving income replacement benefits for a period of not less than 3 months under an accident and health plan (including disability benefits) covering employees of the Company. In addition, Executive will be deemed disabled if determined to be totally disabled by the Social Security Administration, or if determined to be disabled in accordance with a disability insurance program provided the definition of disability applied under such disability insurance program complies with the requirements of the preceding sentence.

     “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

     “Executive” shall have the meaning set forth in the preamble.

3


 

     “Noncompete Period” shall have the meaning set forth in Section 9.

     “Involuntary Termination” shall mean the termination of Executive’s employment by the Executive following a Change in Control which, in the sole judgment of the Executive, is due to (i) a change of the Executive’s responsibilities, position (including status as Executive Vice President — Chief Risk and Credit Policy Officer of the Company, its successor or ultimate parent entity, office, title, reporting relationships or working conditions), authority or duties (including changes resulting from the assignment to the Executive of any duties inconsistent with Executive’s positions, duties or responsibilities as in effect immediately prior to the Change in Control); or (ii) a change in the terms or status (including the rolling three year termination date) of this Agreement; or (iii) a reduction in the Executive’s compensation or benefits; or (iv) a forced relocation of the Executive outside the Greenville metropolitan area; or (v) a significant increase in the Executive’s travel requirements (collectively “Status Changes”); provided, however, Executive must elect to terminate Executive’s employment within two (2) years of the Status Change on which Executive bases Executive’s employment termination.

     “Other Benefits” means (i) any unpaid base salary through the date of termination and (ii) amounts that are vested benefits or that Executive is otherwise entitled to receive under any plan, policy, practice or program of or any other contract or agreement with the Company or its affiliates (other than this Agreement) at or subsequent to the date of termination in accordance with the terms of such plan, policy, practice or program or contract or agreement, except as explicitly modified by this Agreement. Notwithstanding the foregoing, “Other Benefits” shall not include any severance pay or benefits under any severance plan, program or policy of the Company and its affiliates. Without limiting the generality of the foregoing, the Executive’s resignation under this Agreement for any reason, shall in no way affect the Executive’s ability to terminate employment by reason of the Executive’s “retirement” under any compensation and benefits plans, programs or arrangements of the Company or its affiliates, including without limitation any retirement or pension plans or arrangements or to be eligible to receive benefits under any compensation or benefit plans, programs or arrangements of the Company or its affiliates, including without limitation any retirement or pension plan or arrangement of the Company or its affiliates or substitute plans adopted by the Company or its successors, and any termination which otherwise qualifies as Involuntary Termination shall be treated as such even if it is also a “retirement” for purposes of any such plan.

     “Person” shall mean any individual, corporation, bank, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or other entity.

     “Vesting Benefits” shall mean the following: (i) all rights of Executive pursuant to equity compensation grants including stock options granted by the Company shall vest and shall be released from all conditions and restrictions, except for restrictions on transfer pursuant to the Securities Act of 1933, as amended; (ii) subject to applicable legal limits to the contrary, including limits applicable to incentive stock options under the Code, Executive shall have the lesser of (a) three years from the date of such termination or (b) until the end of the scheduled term of any such stock option to exercise any outstanding stock options; (iii) Executive shall be entitled to any benefits to which Executive is entitled under the Supplemental Executive Retirement Agreement in accordance with the terms thereof; and (iv) for three years after Executive’s date of termination, or such longer period as may be provided by the terms of the appropriate plan, program, practice or policy, (the “Benefit Continuation Period”), the Company shall continue health care and life insurance benefits to the Executive and/or the Executive’s family at least equal to those that would have been provided to them in accordance with the plans, programs, practices and policies providing health care and life insurance benefits and at the benefit level as if the Executive’s employment had not been terminated or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliates and their families; provided, however, that, the health care benefits provided during the Benefit Continuation Period shall be provided in such a manner that such benefits (and the costs and premiums thereof) are excluded from the Executive’s income for federal income tax purposes and, if the Company reasonably determines that providing continued coverage under one or more of its health care benefit plans contemplated herein could be taxable to the Executive, the Company

4


 

shall provide such benefits at the level required hereby through the purchase of individual insurance coverage; provided, however, that if the Executive becomes re-employed with another employer and is eligible to receive health care and life insurance benefits under another employer-provided plan, the health care and life benefits provided hereunder shall be secondary to those provided under such other plan during such applicable period of eligibility.

     “Voluntary Termination” shall mean the termination by Executive of Executive’s employment following a Change in Control which is not the result of any of clauses (i) through (v) set forth in the definition of Involuntary Termination above.

     3. Duties. During the Term hereof, the Executive shall have such duties and authority as are typical of the Executive Vice President — Chief Risk and Credit Policy Officer of a company such as the Company, including, without limitation, those specified in the Company’s Bylaws. Executive agrees that during the Term hereof, he will devote Executive’s full time, attention and energies to the diligent performance of Executive’s duties. Executive shall not, without the prior written consent of the Company, at any time during the Term hereof (i) accept employment with, or render services of a business, professional or commercial nature to, any Person other than the Company, (ii) engage in any venture or activity which the Company may in good faith consider to be competitive with or adverse to the business of the Company or of any 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 (iii) engage in any venture or activity which the Board may in good faith consider to interfere with Executive’s performance of Executive’s duties hereunder.

     4. Term. Unless earlier terminated as provided herein, Executive’s employment hereunder shall be for a rolling term of three years commencing on the date hereof (the “Term”). This Agreement shall be deemed to extend each day for an additional day automatically without any action on behalf of either party hereto; provided, however, that either party may, by written notice to the other, 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.

     5. Termination. This Agreement may be terminated as follows:

          5.1 The Company. The Company shall have the right to terminate Executive’s employment hereunder at any time during the Term hereof (i) for Cause, (ii) if the Executive becomes Disabled, (iii) upon the Executive’s death, or (iv) without Cause.

               5.1.1 If the Company terminates Executive’s employment under this Agreement pursuant to clauses (i) of Section 5.1, the Company’s obligations hereunder shall cease as of the date of termination; provided, however, if Executive is terminated for Cause after a Change in Control, then such termination shall be treated as a Voluntary Termination as contemplated in and subject to the terms of Section 5.2.3 below without the application of Section 5.2.4 below.

               5.1.2 If the Company terminates Executive’s employment under this Agreement pursuant to clauses (ii) or (iii) of Section 5.1, the Company’s obligations hereunder shall cease as of the date of termination except that Executive or Executive’s estate will be entitled to receive (1) the Other Benefits and (2) immediately in a lump sum a pro-rata portion of the targeted Annual Incentive Bonus under Section 6.2 for the portion of the year actually worked by Executive prior to Executive’s Disability or death.

               5.1.3 If the Company terminates Executive pursuant to clause (iv) of Section 5.1 and there has been a Change in Control, Executive shall be entitled to receive (1) the Other Benefits and (2) immediately in a lump sum as severance upon such termination, an amount equal to three times Executive’s Compensation. If the Company terminates Executive pursuant to clause (iv) of Section 5.1 and in the absence of a Change in Control, Executive shall be entitled to receive (1) the Other Benefits and (2) immediately in a lump sum as severance upon such termination, an amount equal to the product of (a) the Compensation and (b) the number of years and portions thereof remaining in the Term.

               5.1.4 In the event of such termination pursuant to clause (iv) of Section 5.1, the Executive shall be entitled to the Vesting Benefits.

5


 

          5.2 By Executive. Executive shall have the right to terminate Executive’s employment hereunder if (i) the Company materially breaches this Agreement and such breach is not cured within 30 days after written notice of such breach is given by Executive to the Company; (ii) there is a Voluntary Termination; or (iii) there is an Involuntary Termination.

               5.2.1 If Executive terminates Executive’s employment other than pursuant to clauses (i), (ii) or (iii) of Section 5.2, the Company’s obligations under this Agreement shall cease as of the date of such termination.

               5.2.2 If Executive terminates Executive’s employment hereunder pursuant to clause (i) of Section 5.2 and there has been a Change in Control, or pursuant to clause (iii) of Section 5.2, Executive shall be entitled to receive (1) the Other Benefits and (2) immediately in a lump sum as severance upon such termination, an amount equal to three times Executive’s Compensation. If the Executive terminates Executive’s employment pursuant to clause (i) of Section 5.2 and in the absence of a Change in Control, Executive shall be entitled to receive (1) the Other Benefits and (2) immediately in a lump sum as severance upon such termination, an amount equal to one times Executive’s Compensation.

               5.2.3 If Executive terminates Executive’s employment pursuant to clause (ii) of Section 5.2, Executive shall be entitled to receive (1) the Other Benefits and (2) immediately in a lump sum as severance upon such termination, an amount equal to one times Executive’s Compensation.

               5.2.4 In addition, in the event of such termination pursuant to any of clauses (i) through (iii) of this Section 5.2, the Executive shall be entitled to the Vesting Benefits.

     6. Compensation. In consideration of Executive’s services and covenants hereunder, Company shall pay to Executive the compensation and benefits described below (which compensation shall be paid in accordance with the normal compensation practices of the Company, provided that Executive’s salary pursuant to Section 6.1 shall be payable not less frequently than monthly):

          6.1 Annual Salary. During the Term hereof, the Company shall pay to Executive a base salary established by the Company which for the first year of the Term shall be $275,000.00 (the “Annual Base Salary”). Executive’s salary will be reviewed at the beginning of each of its fiscal years and, in the sole discretion of the Company, may be increased for such year (but not decreased). All references herein to Annual Base Salary shall refer to Executive’s base salary as so increased.

          6.2 Annual Incentive Bonus. During Executive’s employment, the Executive shall participate in the Management Incentive Compensation Plan or any successor thereto on terms equal to similarly situated officers.

          6.3 Long Term Incentive Compensation Plan. During Executive’s employment, the Executive shall participate in the Long Term Incentive Plan or any successor thereto on terms equal to similarly situated officers.

          6.4 Supplemental Executive Benefit Plan. During Executive’s employment, Executive shall be entitled to participate in a Supplemental Executive Retirement Agreement.

          6.5 Equity Compensation Awards. During Executive’s employment, the Company may grant Executive equity compensation awards based on the Company’s common stock as determined by the Company.

          6.6 Miscellaneous Benefits. During Executive’s employment, Executive shall be entitled to participate in any other employee benefit plan, programs, policies or other arrangements generally provided by the Company to its comparable ranking executives for so long as the Company provides such benefits. The Company also agrees to provide Executive, during the Term hereof, with a $1.0 million term life insurance policy. The Company also agrees to provide a country club membership for the Executive. During the Term, Executive shall also be entitled to participate in all other benefits accorded general Company employees.

     7. Excess Parachute Payments.

          7.1 Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any Payment would be subject to the Excise Tax, then Executive shall be entitled to receive an additional payment (the “Gross-Up Payment”) in an amount such that, after payment by Executive of all taxes (and any interest or penalties imposed with respect to such

6


 

taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, but excluding any income taxes and penalties imposed pursuant to Section 409A of the Code, Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing provisions of this Section 7.1, if it shall be determined that Executive is entitled to the Gross-Up Payment, but that the Parachute Value of all Payments does not exceed 110% of the Safe Harbor Amount, then no Gross-Up Payment shall be made to Executive and the amounts payable under this Agreement shall be reduced so that the Parachute Value of all Payments, in the aggregate, equals the Safe Harbor Amount. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing the cash severance payments. For purposes of reducing the Payments to the Safe Harbor Amount, only the cash severance payments payable under this Agreement (and no other Payments) shall be reduced. If the reduction of the amount of cash severance payments payable under this Agreement would not result in a reduction of the Parachute Value of all Payments to the Safe Harbor Amount, no amounts payable under the Agreement shall be reduced pursuant to this Section 7.1. The Company’s obligation to make Gross-Up Payments under this Section 7 shall not be conditioned upon Executive’s termination of employment.

          7.2 Subject to the provisions of Section 7.3, all determinations required to be made under this Section 7, including whether and when a Gross-Up Payment is required, the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by Pricewaterhouse Coopers, or such other nationally recognized certified public accounting firm as may be designated by Executive (the “Accounting Firm”). The Accounting Firm shall provide detailed supporting calculations both to the Company and Executive within 15 business days of the receipt of notice from Executive that there has been a Payment or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, Executive may appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any determination by the Accounting Firm shall be binding upon the Company and Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments that will not have been made by the Company should have been made (the “Underpayment”), consistent with the calculations required to be made hereunder. In the event the Company exhausts its remedies pursuant to Section 7.3 and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of Executive.

          7.3 The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable, but no later than 10 business days after Executive is informed in writing of such claim. The Executive shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which Executive gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that the Company desires to contest such claim, Executive shall:

 

1.

 

give the Company any information reasonably requested by the Company relating to such claim,

 

 

2.

 

take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,

 

 

3.

 

cooperate with the Company in good faith in order effectively to contest such claim; and

 

 

4.

 

permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest, and shall indemnify and hold Executive

7


 

harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 7.3, the Company shall control all proceedings taken in connection with such contest, and, at its sole discretion, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the applicable taxing authority in respect of such claim and may, at its sole discretion, either pay the tax claimed to the appropriate taxing authority on behalf of Executive and direct Executive to sue for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that, if the Company pays such claim and directs Executive to sue for a refund, the Company shall indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties) imposed with respect to such payment or with respect to any imputed income in connection with such payment; and provided, further, that any extension of the statute of limitations relating to payment of taxes for the taxable year of Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which the Gross-Up Payment would be payable hereunder, and Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

          7.4 If, after the receipt by Executive of a Gross-Up Payment or payment by the Company of an amount on Executive’s behalf pursuant to Section 7.3, Executive becomes entitled to receive any refund with respect to the Excise Tax to which such Gross-Up Payment relates or with respect to such claim, Executive shall (subject to the Company’s complying with the requirements of Section 7.3, if applicable) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after payment by the Company of an amount on Executive’s behalf pursuant to Section 7.3, a determination is made that Executive shall not be entitled to any refund with respect to such claim and the Company does not notify Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then the amount of such payment shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

          7.5 Any Gross-Up Payment, as determined pursuant to this Section 7, shall be paid by the Company to Executive within five days of the receipt of the Accounting Firm’s determination; provided that, the Gross-Up Payment shall in all events be paid no later than the end of Executive’s taxable year next following Executive’s taxable year in which the Excise Tax (and any income or other related taxes or interest or penalties thereon) on a Payment are remitted to the Internal Revenue Service or any other applicable taxing authority or, in the case of amounts relating to a claim described in Section 7.3 that does not result in the remittance of any federal, state, local and foreign income, excise, social security and other taxes, the calendar year in which the claim is finally settled or otherwise resolved. Notwithstanding any other provision of this Section 7, the Company may, in its sole discretion, withhold and pay over to the Internal Revenue Service or any other applicable taxing authority, for the benefit of Executive, all or any portion of any Gross-Up Payment, and Executive hereby consents to such withholding.

          7.6 Definitions. The following terms shall have the following meanings for purposes of this Section 7.

     “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.

     “Parachute Value” of a Payment shall mean the present value as of the date of the change of control for purposes of Section 280G of the Code of the portion of such Payment that constitutes a “parachute payment” under Section 280G(b)(2), as determined by the Accounting Firm for purposes of determining whether and to what extent the Excise Tax will apply to such Payment.

     A “Payment” shall mean any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of Executive, whether paid or payable pursuant to this Agreement or otherwise.

     The “Safe Harbor Amount” means 2.99 times Executive’s “base amount,” within the meaning of Section 280G(b)(3) of the Code.

8


 

     8. Confidentiality. Executive shall hold in a fiduciary capacity for the benefit of the Company all Confidential Information relating to the Company or any of its affiliates, and their respective businesses, which shall have been obtained by Executive during Executive’s employment by the Company or any of its affiliates. After termination of Executive’s employment with the Company for any reason, Executive shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it. Upon the termination or expiration of Executive’s employment hereunder, Executive agrees to deliver promptly to the Company all Company files, customer lists, management reports, memoranda, research, Company forms, financial data and reports and other documents supplied to or created by Executive in connection with Executive’s employment hereunder (including all copies of the foregoing) in Executive’s possession or control and all of the Company’s equipment and other materials in Executive’s possession or control.

     9. Noncompetition and Nonsolicitation Agreement.

          9.1 During the term hereof and for the two year period following the date of termination of employment for any reason (the “Noncompete Period”), Executive shall not directly or indirectly enter into an employment relationship or a consulting arrangement (or other economically beneficial arrangement) with any other bank, thrift, or other lending institution, including such entities “in organization”, headquartered in any county in which the Company has material banking operations (a “Competitor”) which would both (1) involve Executive engaging in the same or substantially similar activities as those he provided to the Company at the time of his termination and (2) after a Change in Control, which would also involve Executive having significant customer oversight over any customers (if any) overseen at the time of the Change in Control. The obligations contained in this Section 9 shall not prohibit Executive from being an owner of not more than 5% of the outstanding stock of any class of a corporation which is publicly traded, so long as Executive has no active participation in the business of such corporation.

          9.2 During the Noncompete Period, Executive shall not directly or indirectly, either as an independent contractor, employee, consultant, agent, partner, joint venturer or otherwise through another person or entity, including but not limited to a Competitor, (i) solicit, induce or attempt to induce (or aid any person or entity in doing so) any employee of Company to leave the employ of Company or in any way interfere with the relationship between Company and any employee thereof or (ii) hire or engage any person who was an employee of Company or any subsidiary at any time during the six month period preceding Executive’s hiring or engagement of such employee.

          9.3 If, at the time of enforcement of this Section 9, a court shall hold that the duration, scope or area restrictions stated herein are unreasonable under circumstances then existing, the parties agree that the maximum duration, scope or area reasonable under such circumstances shall be substituted for the stated duration, scope or area and that the court shall be allowed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by law and that such revised restrictions may be enforced against Executive.

          9.4 In the event of the breach or a threatened breach by Executive of any of the provisions of this Section 9, Company, in addition and supplementary to other rights and remedies existing in its favor, may apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce or prevent any violations of the provisions hereof (without posting a bond or other security). In addition, in the event of an alleged breach or violation by Executive of this Section 9, the Noncompete Period shall be tolled until such breach or violation has been duly cured.

          9.5 The Noncompete Period shall be extended commensurately for any period of time during which the covenants set forth in this Section 9 are contested. Executive agrees that the restrictions contained in this Section 9 are reasonable.

     10. Assignment.

          10.1 This Agreement is personal to Executive, and, without the prior written consent of the Company, shall not be assignable by Executive other than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by Executive’s legal representatives.

9


 

          10.2 This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. Except as provided in Section 10.3, without the prior written consent of Executive this Agreement shall not be assignable by the Company.

          10.3 The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. “Company” means the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid that assumes and agrees to perform this Agreement by operation of law or otherwise.

     11. Notices. All notices, requests, demands, and other communications required or permitted hereunder shall be in writing and shall be deemed to have been duly given if delivered or seven days after mailing if mailed, first class, certified mail postage prepaid:

 

 

 

 

 

 

 

To the Company:

 

Carolina First Bank, c/o TSFG
104 South Main Street
Greenville, South Carolina 29601
Attn: Mary A. Jeffrey

 

 

 

 

 

 

 

To Executive:

 

At the most recent address for Executive on file at the Company.

     Any party may change the address to which notices, requests, demands, and other communications shall be delivered or mailed by giving notice thereof to the other party in the same manner provided herein.

     12. Provisions Severable/Savings Clause. If any provision or covenant, or any part thereof, of this Agreement should be held by any court to be invalid, illegal or unenforceable, either in whole or in part, such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of the remaining provisions or covenants, or any part thereof, of this Agreement, all of which shall remain in full force and effect. With respect to any provision or covenant of Section 8 or 9 finally determined by a court of competent jurisdiction to be unenforceable, Executive, the Company and its affiliates hereby agree that such court shall have jurisdiction to reform such provision or covenant so that it is enforceable to the maximum extent permitted by law, and the parties agree to abide by such court’s determination. If any of the provisions or covenants of Section 8 or 9 are determined to be wholly or partially unenforceable in any jurisdiction, such determination shall not be a bar to or in any way diminish the rights of the Company or its affiliates, as applicable, to enforce any such provision or covenant in any other jurisdiction.

     13. Remedies.

          13.1 Executive acknowledges that if he breaches or threatens to breach Executive’s covenants and agreements in this Agreement, such actions may cause irreparable harm and damage to the Company which could not be compensated in damages. Accordingly, if Executive breaches or threatens to breach this Agreement, the Company shall be entitled to injunctive relief, in addition to any other rights or remedies of the Company.

          13.2 All claims, disputes and other matters in question between Executive and the Company arising out of or related to the interpretation of this Agreement or the breach of this Agreement, except as specifically governed by the foregoing provisions where there may be irreparable harm and damage to the Company which could not be compensated in damages, shall be decided by arbitration in accordance with the rules of the American Arbitration Association. This agreement to arbitrate shall be specifically enforceable under applicable law in any court having jurisdiction. The award rendered by the arbitrator shall be final and judgment may be entered upon it in accordance with the applicable law of any court having jurisdiction thereof.

10


 

     14. No Mitigation. In no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement, and such amounts shall not be reduced whether or not Executive obtains other employment.

     15. Waiver. Failure of either party to insist, in one or more instances, on performance by the other in strict accordance with the terms and conditions of this Agreement shall not be deemed a waiver or relinquishment of any right granted in this Agreement or of the future performance of any such term or condition or of any other term or condition of this Agreement, unless such waiver is contained in a writing signed by the party making the waiver.

     16. Amendments and Modifications. This Agreement may be amended or modified only by a writing signed by other parties hereto.

     17. Governing Law. The validity and effect of this agreement shall be governed by and construed and enforced in accordance with the laws of the State of South Carolina without regard to principles of conflicts of laws.

     18. Withholding. The Company may withhold from any amounts payable under this Agreement such United States federal, state or local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

     19. Compliance With Section 409A. Within the time period permitted by the applicable Treasury Regulations, the Company may, in consultation with the Executive, modify the Agreement, in the least restrictive manner necessary and without any diminution in the value of the payments to the Executive, in order to cause the provisions of the Agreement to comply with the requirements of Section 409A of the Code, so as to avoid the imposition of taxes and penalties on the Executive pursuant to Section 409A of the Code. Notwithstanding any provision of this Agreement to the contrary, in the event that the Executive is a “specified employee” within the meaning of Section 409A of the Code (as determined in accordance with the methodology established by the Company as in effect on the date of termination), amounts that would otherwise be payable under Section 5 during the six-month period immediately following the date of termination shall instead be paid, with interest on any delayed payment at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code, or provided on the first business day after the date that is six months following the Executive’s “separation from service” within the meaning of Section 409A of the Code. The Company and the Executive shall take all steps necessary (including with regard to any post-termination services by the Executive) to ensure that any termination described in this Agreement constitutes a “separation from service” within the meaning of Section 409A of the Code, and notwithstanding anything contained herein to the contrary, the date on which such separation from service takes place shall be the “date of termination”.

     20. Enforceability of Confidentiality, Noncompetition and Nonsolicitation Provisions. The provisions of Sections 8 and 9, including all subparts thereof, shall be enforceable regardless of the reason for termination of Executive’s employment and without regard to whether the employment is terminated by Executive or the Company. Executive expressly agrees that should Executive terminate the employment relationship on the grounds of a breach by the Company, as provided at Section 5.2(i) or an Involuntary Termination, as provided at Section 5.2(ii), such breach or Involuntary Termination shall not have any affect upon the enforceability of the provisions of Sections 8 and 9, including all subparts thereof, and Executive may not assert any such breach or Involuntary Termination as a defense to an action to enforce the provisions of Sections 8 and 9, including all subparts thereof. The existence of any claim or cause of action of Executive against the Company, whether predicated in this Agreement or otherwise, shall not constitute a defense to the enforcement of Sections 8 or 9 by the Company.

     21. Remedies after a Change in Control. The terms of this Section 14 will apply in the absence of a Change in Control.

11


 

          21.1 The Executive acknowledges that if he breaches or threatens to breach Executive’s covenants and agreements in this Agreement, such actions may cause irreparable harm and damage to the Company which could not be compensated in damages. Accordingly, if Executive breaches or threatens to breach this Agreement, the Company shall be entitled to injunctive relief, in addition to any other rights or remedies of the Company.

          21.2 All claims, disputes and other matters in question between the Executive and the Company arising out of or related to the interpretation of this Agreement or the breach of this Agreement, except as specifically governed by the foregoing provisions where there may be irreparable harm and damage to the Company which could not be compensated in damages, shall be decided by arbitration in accordance with the rules of the American Arbitration Association. This agreement to arbitrate shall be specifically enforceable under applicable law in any court having jurisdiction. The award rendered by the arbitrator shall be final and judgment may be entered upon it in accordance with the applicable law of any court having jurisdiction thereof.

          21.3 In the event that the Executive is reasonably required to engage legal counsel to enforce Executive’s rights hereunder against the Company, Executive shall be entitled to receive from the Company Executive’s reasonable attorneys’ fees and costs. In order to comply with Section 409A of the Code, in no event shall the payments by the Company under this Section 21.3 be made (i) with respect to expenses incurred following the 20th anniversary of the date on which the dispute arose and (ii) later than the end of the calendar year next following the calendar year in which such fees and expenses were incurred, provided, that the Executive shall have submitted an invoice for such fees and expenses at least 10 days before the end of the calendar year next following the calendar year in which such fees and expenses were incurred. The amount of such legal fees and expenses that the Company is obligated to pay in any given calendar year shall not affect the legal fees and expenses that the Company is obligated to pay in any other calendar year, and the Executive’s right to have the Company pay such legal fees and expenses may not be liquidated or exchanged for any other benefit.

12


 

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

 

 

 

 

 

 

EXECUTIVE
 

 

 

/s/ Lynn Harton  

 

 



CAROLINA FIRST BANK 

 

 

 

By:  

/s/ Mary A. Jeffrey  

 

 

13



WHITTLE EMPLOYMENT AGREEMENT

NOTICE: THIS CONTRACT IS SUBJECT TO ARBITRATION PURSUANT

TO THE SOUTH CAROLINA UNIFORM ARBITRATION ACT

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT by and between The South Financial Group, Inc., a South Carolina corporation (the “Company”), and Mack I. Whittle, Jr. (the “Executive”) is dated as of the 3rd day of September, 2006 (the “Agreement”).

 

IT IS HEREBY AGREED AS FOLLOWS:

 

1.             Effective Date. The “Effective Date” shall mean the date hereof.

 

2.             Employment Period. The Company hereby agrees to employ the Executive, and the Executive hereby agrees to serve the Company, subject to the terms and conditions of this Agreement, for the period commencing on the Effective Date and ending on the Executive’s 65th birthday, unless prior to such date the employment of the Executive is terminated pursuant to this Agreement (the “Employment Period”).

 

3.             Terms of Employment. (a) Position and Duties. (i) (A) During the Employment Period, the Executive shall serve as Chairman and Chief Executive Officer of the Company with such authority, duties and responsibilities as are customarily assigned to such position. The Executive shall report directly to the Board of Directors of the Company (the “Board”). The Company shall use its best efforts to cause the Executive to be elected to serve on the Board. The Executive shall be a member of the Management Operating Committee. (B) The Executive’s services shall be performed in Greenville, South Carolina, and the Executive shall be provided such office, and administrative, office automation, voice and network data support commensurate with Executive’s position and requirements and consistent with those provided other high-ranking officers of the Company.

 

(ii)           During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote his full business attention and time to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executive’s reasonable best efforts to perform faithfully and efficiently such responsibilities. During the Employment Period, it shall not be a violation of this Agreement for the Executive to (A) subject to the approval of the Board, serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions and (C) manage personal investments, so long as such activities do not materially interfere with the performance of the Executive’s responsibilities as an employee of the Company in accordance with this Agreement.

 

(b)         Compensation (i) Base Salary. During the Employment Period, the Executive shall receive an annual base salary (“Annual Base Salary”) at a rate of not less than $835,000 payable in accordance with the Company’s normal payroll policies. The Executive’s Annual Base Salary shall be reviewed, and may be increased but not decreased, at least annually by the Board pursuant to its normal performance review policies for senior executives. Any increase in Annual Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. Annual Base Salary shall not be reduced after any such increase and the term Annual Base Salary as utilized in this Agreement shall refer to Annual Base Salary as so increased.

 

 

 

 

 

 

(ii)           Annual Bonus. With respect to each fiscal year ending during the Employment Period, the Executive shall be eligible to receive an annual bonus (“Annual Bonus”) determined and paid at the sole discretion of the Company pursuant to terms and conditions of the Management Performance Incentive Plan (or any successor plan thereto).

 

(iii)          Equity-Based Grants and Long-Term Incentives. On the Effective Date, the Company shall grant the Executive 400,000 restricted stock units (the “Initial RSUs”), all in accordance with the terms of the Company’s 2004 Long-Term Incentive Plan (the “LTIP”), except as otherwise provided herein. The Initial RSUs will vest in seven equal annual installments commencing on the first anniversary of the Effective Date but will vest immediately on a termination without Cause, a termination by the Executive for Good Reason, upon the Executive’s death or Disability or upon a Change in Control. For purposes of this Agreement, “Change in Control” shall be as defined in the LTIP as of the date of this Agreement. Dividend equivalents shall accrue on the Initial RSUs as and when cash dividends are paid on the Company’s common stock. Such dividend equivalents shall be converted into additional restricted stock units which shall be vested on the same basis as the underlying Initial RSUs to which the dividend equivalents relate. The Initial RSUs and any additional restricted stock units accrued as dividend equivalents shall, to the extent vested, be paid in the form of shares of the Company’s common stock on January 31 of the year following the year of the Executive’s termination of employment with the Company. The award of Initial RSUs shall be documented in an award agreement under the LTIP reflecting the terms and provisions described herein. In addition to the Initial RSUs, the Executive shall remain eligible to receive awards under the LTIP (or any successor plan thereto) consistent with the Company’s compensation practices with respect to its executive officers.

 

(iv)          Other Employee Benefit Plans. During the Employment Period, the Executive and/or the Executive’s family, as the case may be, shall be eligible for participation in and shall receive all benefits under savings and retirement plans that are tax-qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended (the “Code”), in plans that are supplemental to any such tax-qualified plans, including, without limitation, The South Financial Group Supplemental Executive Benefit Plan, and welfare benefit plans, practices, policies and programs provided by the Company, but not any severance plan, practice, policy or program, on a basis that is no less favorable than those generally applicable or made available to other senior executives of the Company. The Executive shall be eligible for participation in fringe benefits and perquisite plans, practices, policies and programs (including, without limitation, expense reimbursement plans, practices, policies and programs) on a basis that is commensurate with his position and no less favorable than those provided to the Executive immediately prior to the Effective Date.

 

(v)           Expenses. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all expenses incurred by the Executive in accordance with the Company’s policies for its senior executives.

 

(vi)          Vacation. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the plans, policies, programs and practices of the Company as in effect with respect to the senior executives of the Company.

 

4.             Termination of Employment. (a) Death or Disability. The Executive’s employment shall terminate automatically upon the Executive’s death during the Employment Period. If the Company determines in good faith that the Disability of the Executive has occurred during the Employment Period (pursuant to the definition of Disability set forth below), it may provide the Executive with written notice in accordance with Section 12(b) of this Agreement of its intention to terminate the Executive’s employment. In such event, the Executive’s employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Executive (the “Disability Effective Date”), provided that, within the 30 days after such receipt, the Executive shall not have returned to full-time performance of the Executive’s duties. For purposes of this Agreement, “Disability” shall mean the absence of the Executive

 

2

 

 

from the Executive’s duties with the Company on a full-time basis for 120 consecutive days or longer (or an aggregate period of 180 days or longer) as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive’s legal representative.

 

(b)           By the Company. The Company may terminate the Executive’s employment during the Employment Period either (A) for Cause or (B) without Cause. For purposes of this Agreement, “Cause” shall mean:

(i)            the willful and continued failure of the Executive to perform substantially the Executive’s duties with the Company or one of its affiliates (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Board or its representative, which specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive’s duties, or

(ii)           the willful engaging by the Executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company or its affiliates, or

(iii)          conviction of a felony or any crime involving dishonesty or moral turpitude or guilty or nolo contendere plea by the Executive with respect thereto; or

(iv)          a material breach of Section 8 of this Agreement.

For purposes of this provision, no act or failure to act on the part of the Executive shall be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s act or omission was in the best interests of the Company. Any act, or failure to act, based upon express authority given pursuant to a resolution duly adopted by the Board with respect to such act or omission or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company. The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board (not including the Executive) at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive is guilty of the conduct described in subparagraph (i), (ii), or (iv) above, and specifying the particulars thereof in detail.

 

(c)           By the Executive. The Executive’s employment may be terminated by the Executive either (A) for Good Reason or (B) without Good Reason. For purposes of this Agreement, “Good Reason” shall mean in the absence of a written consent of the Executive:

(i)            the assignment to the Executive of any duties materially inconsistent in any respect with the Executive’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 3(a) of this Agreement, or any other action by the Company which results in a material diminution in such position, authority, duties or responsibilities, excluding for this purpose any action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive;

(ii)           any failure by the Company to comply with any of the provisions of Section 3(b) of this Agreement, other than a failure not occurring in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive;

 

3

 

 

 

(iii)          the Company requiring the Executive to be based at any office or location more than 35 miles from that provided in Section 3(a)(i)(B) hereof, provided that reasonable travel required in connection with Executive’s reporting relationships and responsibilities to the Board shall not be deemed a breach hereof;

(iv)          any purported termination by the Company of the Executive’s employment otherwise than as expressly permitted by this Agreement; or

(v)           any failure by the Company to comply with Section 11(c) of this Agreement.

(d)           Notice of Termination. Any termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 12(b) of this Agreement. For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than 30 days after the giving of such notice). The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.

 

(e)           Date of Termination. “Date of Termination” means (i) if the Executive’s employment is terminated by the Company for Cause, or by the Executive with or without Good Reason, the date of receipt of the Notice of Termination or any later date specified therein within 30 days of such notice, as the case may be, (ii) if the Executive’s employment is terminated by the Company other than for Cause or Disability, the Date of Termination shall be the date on which the Company notifies the Executive of such termination and (iii) if the Executive’s employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date, as the case may be.

 

(f)            Resignation. Upon termination of the Executive’s employment for any reason, the Executive agrees to resign, as of the Date of Termination, to the extent applicable, from any positions that the Executive holds with the Company and its affiliated companies, the Board (and any committees thereof) and the Board of Directors (and any committees thereof) of any of the affiliated companies.

 

5.             Obligations of the Company upon Termination. (a) Good Reason; Other Than for Cause, Death or Disability. If, during the Employment Period, the Company shall terminate the Executive’s employment other than for Cause, death or Disability or the Executive shall terminate employment for Good Reason:

 

(i)            the Company shall pay to the Executive in a lump sum in cash within 30 days after the Date of Termination the aggregate of the following amounts:

 

A.           the sum of (1) the Executive’s accrued Annual Base Salary and any accrued vacation pay through the Date of Termination, (2) the Executive’s business expenses that have not been reimbursed by the Company as of the Date of Termination that were incurred by the Executive prior to the Date of Termination in accordance with the applicable Company policy, and (3) the Executive’s Annual Bonus earned for the fiscal year immediately preceding the fiscal year in which the Date of Termination occurs if such bonus

 

4

 

 

has not been paid as of the Date of Termination (the sum of the amounts described in clauses (1) through (3), shall be hereinafter referred to as the “Accrued Obligations”); and

 

B.           the product of (1) the average annual bonus paid to the Executive in respect of the three final years prior to the Date of Termination (the “Reference Bonus”), and (2) a fraction, the numerator of which is the number of days from January 1 in the fiscal year in which the Date of Termination occurs through the Date of Termination, and the denominator of which is 365 (the “Pro Rata Bonus”); and

 

(ii)           the Company shall pay to the Executive a lump sum in cash within 30 days after the Date of Termination, equal to the product of (1) three and (2) the sum of (x) the Executive’s Annual Base Salary and (y) the Reference Bonus; and

 

(iii)          the Initial RSUs and any stock options and other equity incentives shall vest and become immediately exercisable, as the case may be; all vested stock options held by the Executive granted after the Effective Date shall be exercisable for the remainder of their term, without regard to any provisions relating to earlier termination of the stock options based on termination of employment; and all vested stock options held by the Executive granted before the Effective Date shall be exercisable in accordance with the terms of the applicable award agreement(s) and the terms of the Noncompetition, Severance and Employment Agreement between the parties hereto dated October 13, 2000 (the “Equity Benefits”); and

 

(iv)          the Executive shall be deemed to be credited with service with the Company through the date of his 65th birthday for the purposes of the Company’s benefit plans; the Executive shall be deemed to have retired from the Company and shall be entitled as of the Date of Termination, or at such later time as he may elect to commence receiving the total combined qualified and non-qualified retirement benefit to which he is entitled hereunder, or the Executive’s total non-qualified retirement benefit hereunder if under the terms of the Company’s qualified retirement plan for salaried employees he is not entitled to a qualified benefit; and if any provision of this Section 5(a)(iv) cannot, in whole or in part, be implemented and carried out under the terms of the applicable compensation, benefit, or other plan or arrangement of the Company because the Executive has ceased to be an actual employee of the Company, because the Executive has insufficient or reduced credited service based upon Executive’s actual employment by the Company, because the plan or arrangement has been terminated or amended after the effective date of this Agreement, or because of any other reason, the Company itself shall pay or otherwise provide the equivalent of such rights, benefits and credits for such benefits to the Executive, the Executive’s dependents, beneficiaries and estate (the “Retirement Benefits”); and

(v)           for three years after the Date of Termination, the Company shall continue to provide to the Executive and his eligible dependents the welfare benefits, fringe benefits and perquisites set forth in Section 3(b)(iv) above as if the Executive remained an active employee of the Company (the “Welfare and Fringe Benefits”); and

 

(vi)          to the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or which the Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of the Company and its affiliated companies through the Date of Termination (such other amounts and benefits shall be hereinafter referred to as the “Other Benefits”). As used in this Agreement, the term “affiliated companies” shall include any company controlled by, controlling or under common control with the Company.

Notwithstanding the foregoing provisions of this Section 5(a), to the extent required in order to comply with Section 409A of the Code, cash amounts that would otherwise be payable under this Section 5(a) during the six-month period immediately following the Date of Termination shall instead be paid, with interest on any

 

5

 

 

delayed payment at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code (“Interest”), on the first business day after the date that is six months following the Executive’s “separation from service” within the meaning of Section 409A.

 

(b)           Death. If the Executive’s employment is terminated by reason of the Executive’s death during the Employment Period, this Agreement shall terminate without further obligations to the Executive’s legal representatives under this Agreement, other than for (i) payment of Accrued Obligations, (ii) the timely payment or provision of Other Benefits, (iii) payment of the Pro Rata Bonus, except that the Pro Rata Bonus shall be calculated based on the Executive’s target Annual Bonus for the year of death rather than based on the Reference Bonus, and (iv) full vesting of the Initial RSUs (and related dividend equivalents). Accrued Obligations shall be paid to the Executive’s estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination and the Pro Rata Bonus shall be paid to the Executive’s estate or beneficiary, as applicable, on the date specified in Section 5(a)(i). With respect to the provision of Other Benefits, the term Other Benefits as utilized in this Section 5(b) shall include death benefits otherwise provided under Section 3(b)(iv) above. In the event of the Executive’s death after his termination of employment, but prior to the receipt of all amounts to which he is entitled under this Agreement, all remaining amounts to which he is entitled shall be paid to his estate or beneficiary, as applicable.

 

(c)           Disability. If the Executive’s employment is terminated by the Company by reason of the Executive’s Disability during the Employment Period, this Agreement shall terminate without further obligations to the Executive, other than for (i) payment of Accrued Obligations, (ii) the timely payment or provision of Other Benefits, (iii) payment of the Pro Rata Bonus, except that the Pro Rata Bonus shall be calculated based on the Executive’s target Annual Bonus for the year in which the Disability Effective Date occurs rather than based on the Reference Bonus, and (iv) full vesting of the Initial RSUs (and related dividend equivalents), provided, that to the extent required in order to comply with Section 409A of the Code, amounts and benefits to be paid or provided under this Section 5(c) shall be paid, with Interest, or provided to the Executive on the first business day after the date that is six months following the Executive’s “separation from service” within the meaning of Section 409A. Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination and the Pro Rata Bonus shall be paid to the Executive on the date specified in Section 5(a)(i). With respect to the provision of Other Benefits, the term Other Benefits as utilized in this Section 5(c) shall include, and the Executive shall be entitled after the Disability Effective Date to receive, disability benefits otherwise provided under Section 3(b)(iv) above.

 

(d)           Cause; Other than for Good Reason. If the Executive’s employment shall be terminated by the Company for Cause or the Executive terminates his employment without Good Reason during the Employment Period, this Agreement shall terminate without further obligations to the Executive other than the obligation to pay to the Executive (i) the Accrued Obligations through the Date of Termination and (ii) Other Benefits, in each case to the extent theretofore unpaid. Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days after the Date of Termination, provided, that to the extent required to comply with Section 409A of the Code, amounts or benefits to be paid or provided under this Section 5(d) shall be paid, with Interest, or provided to the Executive, on the first business day after the date that is six months following the Executive’s “separation from service” within the meaning of Section 409A.

 

6.             Full Settlement. The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and, such amounts shall not be reduced whether or not the Executive obtains other employment.

 

 

6

 

 

 

7.             Certain Additional Payments by the Company. (a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Company or any of its affiliates to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 7) (a “Payment”) would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding anything else to the contrary set forth herein, if the Accounting Firm (as defined below) determines that the aggregate amount of all Payments the Executive will receive would not equal or exceed 110% of the Reduced Amount, the Severance Amount will be reduced by the amount necessary, if any, so that the Payments are equal to the Reduced Amount.

 

For purposes of this Section 7, a “Payment” shall mean any payment or distribution in the nature of compensation to or for the benefit of the Executive, whether paid or payable pursuant to this Agreement or otherwise; “Present Value” shall mean such value as determined in accordance with Sections 280G(b)(2)(A)(ii) and 280G(d)(4) of the Code; and “Reduced Amount” shall mean an amount expressed in Present Value that maximizes the aggregate Present Value of Payments without causing any Payment to be taxable under Section 4999 of the Code.

 

(b)           Subject to the provisions of Section 7(c), all determinations required to be made under this Section 7, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by a nationally recognized certified public accounting firm reasonably acceptable to the Executive as may be designated by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 7, shall be paid by the Company to the Executive or directly to the Internal Revenue Service, in the sole discretion of the Company, within five days of the later of (i) the due date for the payment of any Excise Tax, and (ii) the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 7(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.

 

(c)           The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after the Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the

 

7

 

 

Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall:

 

(i)            give the Company any information reasonably requested by the Company relating to such claim,

 

(ii)           take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,

 

(iii)          cooperate with the Company in good faith in order effectively to contest such claim, and

 

(iv)          permit the Company to participate in any proceedings relating to such claim;

 

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 7(c), the Company shall control all proceedings taken in connection with such contest, and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either pay the tax claimed to the appropriate taxing authority on behalf of the Executive and direct the Executive to sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that, if the Company pays such claim and directs the Executive to sue for a refund, the Company shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such payment or with respect to any imputed income in connection with such payment; and provided, further, that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which the Gross-Up Payment would be payable hereunder, and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

 

(d)           If, after the receipt by the Executive of a payment by the Company of an amount on the Executive’s behalf pursuant to Section 7(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Company’s complying with the requirements of Section 7(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon and after taxes applicable thereto). If, after payment by the Company of an amount on the Executive’s behalf pursuant to Section 7(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then the amount of such payment shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

8.             Covenants. (a) The parties acknowledge that the provisions and covenants contained in this Section 8 are ancillary and material to this Agreement and that the limitations contained herein are reasonable in geographic and temporal scope and do not impose a greater restriction or restraint than is necessary to protect the goodwill and other legitimate business interests of the Company and its

 

8

 

 

affiliates. The parties also acknowledge and agree that the provisions of this Section 8 do not adversely affect the Executive’s ability to earn a living in any capacity that does not violate the covenants contained herein.

(b)           The Executive agrees that, during his employment with the Company and at all times thereafter, he shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or any of its affiliates, and their respective businesses, which shall have been obtained by the Executive during the Executive’s employment by the Company or during his consultation with the Company after his termination of employment, and which shall not be or become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement). Except in the good faith performance of his duties for the Company, the Executive shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it.

(c)          For the one-year period following his termination of employment with the Company, the Executive shall not solicit any individual who is, on the date of his termination of employment, employed by the Company or its affiliates to terminate or refrain from renewing or extending such employment or to become employed by or become a consultant to any other individual or entity other than the Company or its affiliates and the Executive shall not initiate discussion with any such employee for any such purpose or authorize or knowingly cooperate with the taking of any such actions by any other individual or entity on behalf of the Executive’s employer.

(d)          The Executive agrees that, while he is employed by the Company and during the one-year period thereafter or two-year period in the case of a termination of employment following a Change in Control, he will not engage in Competition (as defined below). The Executive shall be deemed to be engaging in “Competition” if he directly or indirectly, owns, manages, operates, controls or participates in the ownership, management, operation or control of or is connected as an officer, employee, partner, director, consultant or otherwise with, or has any financial interest in, any business engaged in the financial services business (a “Competing Business”) in any state in which the Company or its affiliates as of the Date of Termination operates a commercial banking or other material financial services business which is a material part of such business and is in material competition with the business conducted by the Company at the time of the termination of his employment with the Company or its affiliates. Notwithstanding the foregoing sentence, the Executive shall not be deemed to be engaging in Competition under the circumstances described in the foregoing sentence if the Executive (i) does not own or control the Competing Business, (ii) does not serve as a director or a consultant to the Competing Business, and (iii) does not have any management or operational responsibility for the Competing Business in any state in which the Company or its affiliates operates a material business as of the Date of Termination. Ownership for personal investment purposes only of less than 2% of the voting stock of any publicly held corporation shall not constitute a violation hereof.

(e)          The Executive acknowledges that the Company would be irreparably injured by a violation of this Section 8 and he agrees that the Company, in addition to any other remedies available to it for such breach or threatened breach, shall be entitled to a preliminary injunction, temporary restraining order, or other equivalent relief, restraining the Executive from any actual or threatened breach of Section 8. If a bond is required to be posted in order for the Company to secure an injunction or other equitable remedy, the parties agree that said bond need not be more than a nominal sum. In no event shall an asserted violation of the provisions of Section 8 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement.

(f)            The Executive agrees that, consistent with the Executive’s business and personal affairs, during and after his employment by the Company, he will assist the Company and its affiliates in the defense of any claims, or potential claims that may be made or threatened to be made against any of them in

 

9

 

 

action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), and will assist the Company and its affiliates in the prosecution of any claims that may be made by the Company or its affiliates in any Proceeding, to the extent that such claims may relate to the Executive’s employment or the period of Executive’s employment by the Company. The Executive agrees, unless precluded by law, to promptly inform the Company if the Executive is asked to participate (or otherwise become involved) in any Proceeding involving such claims or potential claims. The Executive also agrees, unless precluded by law, to promptly inform the Company if the Executive is asked to assist in any investigation (whether governmental or private) of the Company or its affiliates (or their actions), regardless of whether a lawsuit has then been filed against the Company or its affiliates with respect to such investigation. The Company agrees to reimburse the Executive for all of the Executive’s reasonable out-of-pocket expenses associated with such assistance, including travel expenses and any attorneys’ fees and shall pay a reasonable per diem fee for the Executive’s services.

9.             Remedies in the Absence of a Change in Control. The terms of this Section 9 will apply in the absence of a Change in Control. (a) The Executive acknowledges that if he breaches or threatens to breach the Executive’s covenants and agreements in this Agreement, such actions may cause irreparable harm and damage to the Company which could not be compensated in damages. Accordingly, if the Executive breaches or threatens to breach this Agreement, the Company shall be entitled to injunctive relief, in addition to any other rights or remedies of the Company.

(b)           All claims, disputes and other matters in question between the Executive and the Company arising out of or related to the interpretation of this Agreement or the breach of this Agreement, except as specifically governed by the foregoing provisions where there may be irreparable harm and damage to the Company which could not be compensated in damages, shall be decided by arbitration in accordance with the rules of the American Arbitration Association. This agreement to arbitrate shall be specifically enforceable under applicable law in any court having jurisdiction. The award rendered by the arbitrator shall be final and judgment may be entered upon it in accordance with the applicable law of any court having jurisdiction thereof.

(c)           In the event that the Executive is reasonably required to engage legal counsel to enforce Executive’s rights hereunder against the Company, the Executive shall be entitled to receive from the Company Executive’s reasonable attorneys’ fees and costs; provided that the Executive shall not be entitled to receive those fees and costs related to matters, if any, which were the subject of litigation and with respect to which a judgment is rendered against the Executive.

10.           Remedies in the Event of a Change in Control. The terms of this Section 10 shall apply in the event of a Change in Control. (a) The Executive acknowledges that if he breaches or threatens to breach Executive’s covenants and agreements in this Agreement, such actions may cause irreparable harm and damage to the Company which could not be compensated in damages. Accordingly, if the Executive breaches or threatens to breach this Agreement, the Company shall be entitled to injunctive relief, in addition to any other rights or remedies of the Company. All claims, disputes and other matters in question between the Executive and the Company arising out of or related to the interpretation of this Agreement or the breach of this Agreement shall be decided under and governed by the laws of the State of South Carolina.

(b)           The Company is aware that upon the occurrence of a Change in Control, the Board or a stockholder 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

 

10

 

 

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 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 to recover 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, stockholder 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 representing other officers or key executives of the Company 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.

11.           Successors. (a) This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive. This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives, heirs or legatees and the Executive by written notice to the Company may designate any beneficiary with respect to any amounts due under this Agreement upon the Executive’s death.

 

(b)           This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

 

(c)           The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

 

12.           Miscellaneous. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of South Carolina, without reference to principles of conflict of laws. If, under any such law, any portion of this Agreement is at any time deemed to be in conflict with any applicable statute, rule, regulation or ordinance, such portion shall be deemed to be modified or altered to conform thereto. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

 

 

11

 

 

 

(b)           All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other parties or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

 

If to the Executive:

At the most recent address

on file at the Company.

 

With a copy to:

Kennedy, Covington, Lobdell & Hickman, L.L.P.

214 North Tryon Street, Suite 4700

Charlotte, NC 28202

Attention: Raleigh A. Shoemaker, Esq.

 

If to the Company:

104 South Main Street

Greenville, SC 29601

Attention: Chief Legal Officer

 

or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.

 

(c)           The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. If any provision of this Agreement shall be held invalid or unenforceable in part, the remaining portion of such provision, together with all other provisions of this Agreement, shall remain valid and enforceable and continue in full force and effect to the fullest extent consistent with the law.

 

(d)           Notwithstanding any other provision of this Agreement, the Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

 

(e)           The Executive’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Section 4(c)(i)-(v) of this Agreement, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement, except as specifically provided in a written consent pursuant to Section 4(c).

 

(f)            Except as otherwise expressly provided herein, from and after the Effective Date, this Agreement shall supersede any other employment, severance or change of control agreement between the parties and between the Executive with respect to the subject matter hereof, including, without limitation, the Noncompetition, Severance and Employment Agreement between the parties dated October 13, 2000. Any provision of this Agreement that by its terms continues after the expiration of the Employment Period or the termination of the Executive’s employment shall survive in accordance with its terms.

 

(g)           If any compensation or benefits provided by this Agreement may result in the application of Section 409A of the Code, the Company shall, in consultation with the Executive, modify the Agreement in the least restrictive manner necessary in order to exclude such compensation from the definition of “deferred compensation” within the meaning of such Section 409A or in order to comply with the provisions of Section 409A, other applicable provision(s) of the Code and/or any rules, regulations or other regulatory guidance issued under such statutory provisions and without any diminution in the value of the payments to the Executive.

 

 

12

 

 

 

(h)           The Executive hereby warrants that the Executive is free to enter into this Agreement and to perform the services described herein. The Company hereby warrants that this Agreement and the equity awards provided hereunder have been duly authorized

 

 

[SIGNATURES ON NEXT PAGE]

 

13

 

 

 

IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the authorization from its Board of Directors, the Company has caused this Agreement to be executed in its name on its behalf, all as of the day and year first above written.

 

MACK I. WHITTLE, JR.

 

/s/ Mack I. Whittle, Jr.                                

 

 

THE SOUTH FINANCIAL GROUP, INC.

 

By: /s/ John C. B. Smith, Jr.

Name: John C. B. Smith, Jr.

Title: Lead Independent Director

 

 

14



EX-10 2 whittle-separationltr.htm SEPARATION LETTER

September 2, 2008

 

Mr. Mack I. Whittle, Jr.

[Address omitted]

 

Dear Mack:

 

This letter confirms the understanding between you and The South Financial Group, Inc. (the “Company”) with respect to the terms and conditions of your retirement from employment with the Company.

 

1. Retirement. You will retire from employment with the Company and resign your positions as President and Chief Executive Officer of the Company as of the earlier of (a) December 30, 2008 and (b) any date prior to December 30, 2008 specified by the Board of Directors of the Company (the “Retirement Date”). As of your Retirement Date, you will also resign from (i) all positions you hold at the Company’s subsidiaries and (ii) your position as Chairman of the Board of Directors of the Company, although you will continue to serve as a director (but not as Chairman) for the remainder of your elected term.

 

2. Transition. You and the Company understand and agree that the Company has or will commence an executive search for a successor Chief Executive Officer (the “Successor CEO”), and you agree to cooperate with the Company in connection with its search. You will continue to serve as Chairman, President and Chief Executive Officer in a full-time capacity until your Retirement Date, with such duties as the Board of Directors of the Company may reasonably assign to you.

 

3. Payments and Benefits Upon Retirement. As of your Retirement Date, you will be entitled to the payments and benefits set forth in this Section 3 and the attached Settlement Sheet in full satisfaction of all of the Company’s obligations to you on account of your retirement, including but not limited to obligations under the amended and restated employment agreement between you and the Company dated September 3, 2006 (the “Employment Agreement”), as follows:

 

(a) The Company will pay to you the Accrued Obligations, the Pro Rata Bonus, and cash severance payment described in Sections 5(a)(i) and 5(a)(ii) of the Employment Agreement in a lump sum cash payment within 30 days after your Retirement Date, in each case in the amount specified in Item (a) of the Settlement Sheet.

 

(b) The Company will cause the unvested Initial RSUs (the “Unvested Initial RSUs”), stock options, and other equity incentives (all identified in Items (b)(i)-(b)(vi) of the Settlement Sheet), and any dividend equivalent units to be issued pursuant to the terms of the Initial RSUs between the date hereof and your Retirement Date (the “Future Initial RSU Dividend Equivalents”), to vest and remain exercisable (in the case of stock options) in accordance with Section 5(a)(iii) of the Employment Agreement. The Board will also cause you to vest in the cash dividends payable to you under the terms of the

 

restricted stock units subject to “Performance Goals” (within the meaning of the applicable award agreements) upon the vesting of such performance-based restricted stock units (the “Performance-Based Dividends”). Vested Initial RSUs (and associated dividend equivalent units) will be paid in stock in accordance with the terms of the Initial RSUs on January 31, 2009. The Performance-Based Dividends will be paid promptly after January 1, 2009, but in no event later than March 15, 2009.

 

(c) For purposes of the Company’s Supplemental Executive Benefit Plan (the “SERP”), you will be credited with service with the Company through the date of your 65th birthday. Your total benefit under the SERP will be the amount specified in Item (c) of the Settlement Sheet and will be paid in the form specified in such Item (c).

 

(d) Your vested benefit under each of the Company’s 2005 Executive and Director Deferred Compensation Plan (the “2005 Plan”) and the Company’s Executive and Director Deferred Compensation Plan (the “2000 Plan”) will be paid to you as a “Retirement Benefit” (within the meaning of Article 7 of each such plan) in accordance with the terms of the applicable plan and your elections in force thereunder. The amount of your vested benefit (and the date as of which such amount is determined) in each of the 2005 Plan and the 2000 Plan is specified in Item (d) of the Settlement Sheet. From and after the date hereof, in no event will any additional deferrals or other contributions (matching or otherwise) be credited to you under the 2005 Plan or the 2000 Plan.

 

(e) The Company will provide you with the Welfare and Fringe Benefits described in Section 5(a)(v) of the Employment Agreement to the extent specifically listed in Item (e) of the Settlement Sheet, provided that in lieu of providing such Welfare and Fringe Benefits (other than the Company’s matching gift program), the Company may, in its discretion, on or prior to December 30, 2008 and by written notice to you, instead pay to you the amount specified in Item (e) of the Settlement Sheet (the “Benefits Payment”) in cash. If the Company elects to pay to you the Benefits Payment, (i) the portion of the Benefits Payment that is attributable to benefits that would otherwise be provided to you during 2008 will be paid to you on your Retirement Date, (ii) the portion of the Benefits Payment that is attributable to benefits that would otherwise be provided to you after 2008 will be paid to you on January 2, 2009, and (iii) you will be eligible to elect continued group health plan coverage pursuant to COBRA. You agree that if the Company provides the Welfare and Fringe Benefits to you, the Company may, in its discretion provide continued health insurance coverage to you, in whole or in part, pursuant to the purchase of one or more individual health insurance policies which provide coverage substantially comparable to that provided by the Company’s health plans, and you agree to cooperate with the Company with respect to obtaining any such individual policies. At the time of issue, the insurer issuing the individual policies must be rated by a reputable national rating agency no lower than the rating assigned by such agency to the issuer (if any) of the Company’s group health insurance policy. With respect to the Company’s matching gift program, you will remain eligible to participate in that program in accordance with its terms to the extent provided in Item (e) of the Settlement Sheet.

 

-2-

(f) You will be eligible to receive your vested benefits under the Company’s employee benefit plans specified in Item (f) of the Settlement Sheet in accordance with the terms of such plans.

 

(g) With respect to the Carolina First Bank Split Dollar Agreement between you and Carolina First Bank dated June 19, 2001, you will retain your rights thereunder in accordance with its terms for three years following your Retirement Date. At the end of such three years, all of your interests and rights in respect of such agreement shall terminate. You will execute any documents as may be necessary or appropriate to effect such termination of your interests and rights.

 

(h) Your rights to payments under Section 7, Section 9(c) (including without limitation legal fees incurred in connection with this letter) and Section 10(b) under the Employment Agreement will continue in full force and effect.

 

You acknowledge and agree that this Section 3 and the Settlement Sheet set forth the Company’s sole obligations to you from and after your Retirement Date on account of your retirement and that neither you nor any other person are entitled to any other payment or benefit of any kind whatsoever from, or in respect of, the Company, any of its affiliates, or any of the Company’s, or any of its affiliates’, employee benefit or compensation plans, programs, policies or arrangements of any kind in connection with your employment with, and retirement from, the Company and its affiliates.

 

4. Employment Agreement. This letter constitutes a part of the Employment Agreement, which, except as modified by this letter, will continue in full force and effect. Without limiting the generality of the foregoing, Sections 4 (other than Section 4(c)(i)), 5, and 8 of the Employment Agreement (subject to Section 3 hereof and the other terms and conditions of this letter) remain in full force and effect, and if your employment with the Company is terminated prior to your Retirement Date due to death or Disability, by the Company for Cause, or by you for Good Reason (in each case as provided under Section 4 (other than Section 4(c)(i)) of the Employment Agreement), the provisions in Section 3 of this letter will not apply. Except as expressly provided in this letter and the Settlement Sheet (and notwithstanding anything to the contrary in the Employment Agreement or otherwise), effective on and after the date of this letter, you will no longer be eligible to receive any additional equity-based or other incentive awards under the Company’s 2004 Long-Term Incentive Plan or any other plan maintained by the Company. You agree that neither this Agreement, anything contemplated by it or relating to it, nor anything occurring prior to the date of this Agreement constitutes or will constitute grounds for your termination of employment for Good Reason under the Employment Agreement, and that, notwithstanding anything to the contrary herein, Section 4(c)(i) of your Employment Agreement no longer applies on and after the date hereof, subject to compliance with the requirements of Section 2 of this letter. For purposes of your Employment Agreement, as of your Retirement Date, (a) your Employment Period will end and (b) your Retirement Date will be your Date of Termination.

 

5. Miscellaneous. Capitalized terms not otherwise defined in this letter have the meanings assigned to such terms in the Employment Agreement. During the Employment

 

-3-

Period and at all times thereafter, you will refrain from any disparagement, direct or indirect, in whatever form, of the Company, its affiliates, and any of their present or former employees, agents, officers or directors, provided that this sentence does not apply to truthful testimony compelled by applicable law or legal process. The payments and benefits provided in this letter agreement and the Employment Agreement will be paid and provided only to the extent permitted under applicable law. This letter may be executed by the parties hereto in counterpart, each of which is deemed to be an original, but all such counterparts will together constitute one and the same instrument.

 

6. Section 409A. Notwithstanding anything to the contrary herein, to the extent necessary to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), amounts or benefits that would otherwise be payable hereunder during the six-month period following your separation from service (within the meaning of Section 409A of the Code) shall instead be paid, with interest on any delayed payment at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code, on the first business day after the date that is six months following your separation from service.

 

Please indicate your agreement with these terms by signing as indicated below and returning the original to me. I have enclosed a copy of this letter for your records.

 

Very truly yours,

 

THE SOUTH FINANCIAL GROUP, INC.

 

 

By: /s/ John C.B. Smith  

John C.B. Smith

Lead Independent Director

 

Accepted and agreed as of the date first

written above:

 

/s/ Mack I. Whittle, Jr.  

Mack I. Whittle, Jr.

 

-4-

 

 

 

Mack I. Whittle, Jr.

Settlement Sheet

 

Item

Benefit1

Value of Benefit

(a)

Accrued Obligations. (Section 5(a)(i)(A))

Accrued base salary:                                          $             TBD2
Accrued vacation pay:                                                    67,3083
Reimbursement of business expenses:                            TBD                                                                                  $             TBD

 

Pro-Rata Bonus. (Section 5(a)(i)(B))

$         506,7794

 

Severance equal to 3x the sum of your annual base salary and Reference Bonus. (Section 5(a)(ii))

3x Annual Base Salary:                                        $      2,625,000
3x Reference Bonus:                                                    1,524,500
                                                                                 $      4,149,500

(b)

Accelerated vesting of the following:

(i) Unvested Initial RSUs:
(ii) Stock options:
(iii) Employment-Based RSUs:
April 21, 2006 grant
May 15, 2007 grant
(iv) January 31, 2005 restricted stock grant
(v) 2007 MPIP restricted stock grant
(vi) Performance-Based RSUs5:
April 21, 2006 grant
May 15, 2007 grant
(Section 5(a)(iii))


                                                              Number6              Value7
                                                               311,970         $ 2,121,396
                                                                 40,000                    n/a8

                                                                    5,556                37,781
                                                                  12,000                81,600
                                                                    2,508                17,054
                                                                  14,925              101,490

                                                                  36,000              244,800
                                                                  33,334              226,671
                                                                 456,293       $ 2,830,792

_________________________

Unless otherwise specified, "Section" references in this column refer to Sections of the Employment Agreement.

All "TBD" amounts herein will be determined as of the Retirement Date.

Determined as of August 31, 2008. Amount will be adjusted based on vacation usage and accrual (if any) between August 31, 2008 and the Retirement Date.

Assumes a Retirement Date of 12/30/2008. Actual amount would be less if Retirement Date were to occur earlier. Calculation based on a full-year bonus of $508,167 and is pro-rated using a fraction where the numerator is the number of days worked during 2008 (including the Retirement Date), and the denominator is 366 (leap year).

Value of any Performance-Based Dividends to be paid in connection with the vesting of Performance-Based RSUs TBD.

Determined as of August 31, 2008. Actual number of awards that will accelerate in vesting on the Retirement Date will be adjusted (a) downward to reflect any vesting of awards in the ordinary course (in accordance with the original terms thereof) and (b) in the case of Unvested Initial RSUs only, upward to reflect the grant of any dividend equivalent units between August 31, 2008 and the Retirement Date.

Determined based on a closing price of $6.80 of TSFG stock on Nasdaq on August 29, 2008. Actual value will be based on the price of TSFG stock on the Retirement Date.

Options are underwater (having an exercise price of $25.95). However, acceleration of vesting may have a value under a Black-Scholes analysis.

 

(c)

Total SERP benefit of $13,317,000 ($887,800 annual benefit x 15 years), to be paid in 180 equal monthly installments (i.e., over 15 years) commencing within 30 days of your Retirement Date (subject in all events to 6-month delay rule described in Section 6 of this letter). (Section 5(a)(iv))

Present value as of 12/30/2008:                         $ 9,148,700

(d)

Retirement Benefits under the 2005 Plan and the 2000 Plan as of August 25, 2008.9 (Section 5(a)(iv))

2005 Plan:                                                             $    226,959
2000 Plan:                                                                     78,135
                                                                               $    305,094

(e)

Continued Welfare and Fringe Benefits for 3 years after Retirement Date (or cash equivalent thereof). (Section 5(a)(v))

Auto Allowance:                                           $     133,920
     Life, Disability and Long-Term Care:                 401,703
     Financial Planning:                                                 75,000
     Executive Physical:                                                 18,852
     Health benefits at family rate:                               46,784
     Tax gross-up on taxable perquisites10
     (other than auto allowance):                               380,758                                                                                 $ 1,057,017

 

Charitable match for 3 years after termination, not to exceed $15,000 per year. (Section 5(a)(v))


                                                                                $      45,000

(f )

Vested benefits under 401(k) Plan. (Section 5(a)(vi))

As determined under the terms of the plan.

 

 

_________________________

The actual amount of your Retirement Benefit will depend on the gains and losses applied to your account balances from and after August 25, 2008 based on the plans' terms regarding deemed investment of account balances.

10  For illustrative purposes, determined based on a 43.45% effective tax rate. The actual gross-up amount will be based on the highest marginal rates in effect for the year of payment. For the avoidance of doubt, the gross-up does not apply to the health benefits at family rate.