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EXHIBIT 10.5
NOTICE: THIS CONTRACT IS SUBJECT TO ARBITRATION PURSUANT
TO THE SOUTH CAROLINA UNIFORM ARBITRATION ACT
NONCOMPETITION,
SEVERANCE AND EMPLOYMENT AGREEMENT
BETWEEN
THE SOUTH FINANCIAL GROUP, INC. AND MACK I. WHITTLE, JR.
This Noncompetition, Severance and Employment Agreement (this
"Agreement") is made and entered into as of this 13th day of October, 2000, by
and between Mack I. Whittle, Jr., an individual (the "Executive"), and The South
Financial Group, Inc., a South Carolina corporation and financial institution
holding company headquartered in Greenville, South Carolina (the "Company"). As
used herein, the term "Company" shall include the Company and any and all of its
subsidiaries where the context so applies.
W I T N E S S E T H
WHEREAS the Company's Board of Directors (the "Board") believes that
the Executive has been instrumental in the success of the Company since its
inception in 1986;
WHEREAS the Company desires to continue to employ the Executive as
Chief Executive Officer of the Company and in such other capacities as the
Executive is currently employed as of the date hereof;
WHEREAS the terms hereof are consistent with the executive compensation
objectives of the Company as established by the Board;
WHEREAS the Executive is willing to accept the employment contemplated
herein under the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto
agree 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
Chief Executive 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.
"Cause" shall mean (a) material criminal fraud, (b) gross negligence,
(c) intentional material damage to the property or business of the Company, or
(d) the commission of a material felony, 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) Executive is given thirty (30) days to
cure any alleged violation of this Agreement, (3) such written notice is
provided to the Executive a reasonable time before the Board meets to consider
any possible termination for cause, (4) 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, (5) 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 (6) 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 willful unless done or omitted to be
done by Executive not in good faith and without reasonable belief
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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) The acquisition, directly or indirectly, by any Person of
securities of the Company (not including in the securities beneficially
owned by such Person any securities acquired directly from the Company)
representing an aggregate of 20% or more of the combined voting power
of the Company's then outstanding voting securities other than an
acquisition by:
(A) any employee plan established by the
Company;
(B) the Company 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 the Company in
substantially the same proportions as their
ownership of the Company; or
(E) merger, consolidation, or similar
transaction of the Company with any other
corporation which is duly approved by the
stockholders of the Company;
(ii) During any period of up to two consecutive years,
individuals who, at the beginning of such period, constitute the Board
cease for any reason to constitute at least a majority thereof,
provided that any person who becomes a director subsequent to the
beginning of such period and whose nomination for election is approved
by at least two-thirds of the directors then still in office who either
were directors at the beginning of such period or whose election or
nomination for election was previously so approved (other than a
director (A) whose initial assumption of office is in connection with
an actual or threatened election contest relating to the election of
the directors of the Company, as such terms are used in Rule 14a-11 of
Regulation 14A under the Exchange Act, or (B) who was designated by a
Person who has entered into an agreement with the Company to effect a
transaction described in clause (i), (iii) or (iv) hereof) shall be
deemed a director as of the beginning of such period;
(iii) The stockholders of the Company approve a merger or
consolidation of the Company with any other corporation other than (A)
a merger or consolidation that would result in the voting securities of
the Company 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 51% of the combined voting power of the voting securities of the
Company or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (B) a merger or
consolidation effected to implement a recapitalization of the Company
(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 the Company (not including in the
securities beneficially owned by such Person any securities acquired
directly from the Company) representing 25% or more of the combined
voting power of the Company's then outstanding voting securities; or
(C) a plan of complete liquidation of the Company or an agreement for
the sale or disposition of the Company of all or substantially all of
the Company's assets; or
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(iv) The occurrence of any other event or circumstance which
is not covered by (i) through (iii) above which the Board determines
affects control of the Company and, in order to implement the purposes
of this Agreement as set forth above, adopts a resolution that such
event or circumstance constitutes a Change in Control for the purposes
of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
successor statute, rule or regulation of similar effect.
"Confidential Information" shall mean all business and other
information relating to the business of the Company, 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 does not include confidential business
information which does not constitute a trade secret under applicable law two
years after any expiration or termination of this Agreement.
"Disability" or "Disabled" shall mean the Executive's inability as a
result of physical or mental incapacity to substantially perform Executive's
duties for the Company on a full-time basis, with or without accommodation, for
a period of six (6) months.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Involuntary Termination" shall mean the termination of Executive's
employment by the Executive which, in the sole judgment of the Executive, is due
to (i) a change of the Executive's responsibilities, position (including status
as Chief Executive 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 five 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, South Carolina
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.
"Person" shall mean any individual, corporation, bank, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or other entity.
"Potential Change in Control" shall mean:
(i) The purchase or other acquisition by any person, entity,
or group of persons, within the meaning of Section 13(d) or 14(d) of
the Securities Exchange Act of 1934 (the "Act"), or any comparable
successor provisions, other than the trustee of any other trust or plan
maintained for the benefit of employees of the Company, or beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Act)
of 5% or more of either the outstanding shares of common stock or the
combined voting power of the Company's then outstanding voting
securities entitled to vote generally;
(ii) The announcement by any person of an intention to take
actions which might reasonably result in a business combination between
the Company and an entity which has a market capitalization equal to or
greater than 80% of the Company;
(iii) The issuance of a proxy statement with respect to an
election of directors of the Company for which there is proposed one or
more directors who are not recommended by the Board of
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Directors of the Company or its nominating committee, where the
election of such proposed director or directors would result in a
Change in Control;
(iv) Submission to the Board of Directors of nominations
which, if approved, would change the executive officer configuration of
the Company (at the executive vice president level and above) by 50% or
more;
(v) The filing of any regulatory application by any person
seeking to effect a Change in Control; or
(VI) THE RECEIPT BY THE COMPANY OF ANY OTHER INDICATION OF THE INTENT BY ANY
PERSON TO SEEK TO EFFECT A CHANGE IN CONTROL.
"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 Chief Executive Officer of a company such as
the Company, including, without limitation, those specified in the Company's
Bylaws. 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. Executive shall be a member of the Management Operating
Committee (MOC) and shall be a non-voting attendee of the Company's Compensation
Committee. 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. Executive may continue to serve on the boards of directors for
which he is currently a member and such other similar boards of directors as he
shall from time to time see fit to serve. The Company shall have no obligations
as a result of Executive's service.
4. Term. Unless earlier terminated as provided herein, the Executive's
employment hereunder shall be for a rolling term of ten or more years (the
"Term") commencing on the date hereof. This Agreement shall be deemed to extend
each day for an additional day automatically and without any action on behalf of
either party hereto until Executive turns fifty-five; upon Executive's
fifty-fifth birthday, such "Term" shall be converted to a fixed term of ten
years and shall expire (without any action on behalf of either party hereto) on
Executive's sixty-fifth birthday; this Agreement shall terminate upon the
expiration of such Term. 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 ten 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 clause (i), (ii)
or (iii) of Section 5.1, the Company's obligations hereunder
shall
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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 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, Executive shall be entitled to
receive immediately a lump sum as severance upon such
termination, aggregate compensation and benefits provided in
Section 6 equal to three times Executive's annual compensation
being paid at the time of termination. For purposes of
determining compensation which is not fixed (such as a bonus),
the annual amount of such unfixed compensation shall be deemed
to be equal to the average of such compensation over the three
year period immediately prior to the termination.
5.1.4 In the event of such termination pursuant to
clause (iv) of Section 5.1, (A) all rights of Executive
pursuant to awards of share grants or options granted by the
Company shall be deemed to have vested and shall be released
from all conditions and restrictions, except for restrictions
on transfer pursuant to the Securities Act of 1933, as
amended, and (B) the Executive shall be deemed to be credited
with service with the Company for such remaining Term for the
purposes of the Company's benefit plans; (C) the Executive
shall be deemed to have retired from the Company and shall be
entitled as of the termination date, 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 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 (D) if any
provision of this Section 5.1.4 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 Executive, Executive's dependents, beneficiaries
and estate. Subject to applicable legal limits to the
contrary, in the event of termination pursuant to clause (iv)
of Section 5.1, Executive shall have three (3) years from the
date of such termination to exercise any outstanding stock
options.
5.2 By Executive. Executive shall have the right to terminate
Executives 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 Executives 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 and Executive shall
be subject to the confidentiality provisions set forth in
Section 8 hereof and the noncompetition provisions set forth
in Section 9 hereof for a period of one (1) year without the
additional compensation provided in Section 9.
5.2.2 If Executive terminates Executives employment
hereunder pursuant to either clause (i) or (iii) of Section
5.2, Executive shall be entitled to receive Executive's base
salary and other benefits due Executive through the
termination date, less applicable taxes and other
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deductions, and receive immediately in a lump sum as
severance, aggregate compensation and benefits provided in
Section 6 equal to three times Executive's annual compensation
being paid at the time of termination. For purposes of
determining compensation which is not fixed (such as a bonus),
the annual amount of such unfixed compensation shall be deemed
to be equal to the average of such compensation over the three
year period immediately prior to the termination.
5.2.3 If Executive terminates Executive's employment
pursuant to clause (ii) of Section 5.2, Executive shall be
entitled to receive Executive's base salary and other benefits
due Executive through the termination date less applicable
taxes and other deductions and receive immediately in a lump
sum as severance aggregate compensation and benefits provided
in Section 6 equal to one times Executive's annual
compensation being paid at the time of Voluntary Termination
and Executive shall be subject both to the confidentiality
provisions set forth in Section 8 hereof and the
noncompetition provisions set forth in Section 9 hereof for a
period of one (1) year without the additional compensation
provided in Section 9. For purposes of determining
compensation which is not fixed (such as a bonus), the annual
amount of such unfixed compensation shall be deemed to be
equal to the average of such compensation over the three year
period immediately prior to the termination.
5.2.4 In addition, in the event of such termination
pursuant to any of clauses (i) through (iii) of this Section
5.2, (A) all rights of Executive pursuant to awards of share
grants or options granted by the Company shall be deemed to
have vested and shall be released from all conditions and
restrictions, except for restrictions on transfer pursuant to
the Securities Act of 1933, as amended, and (B) the Executive
shall be deemed to be credited with service with the Company
for such remaining Term for the purposes of the Company's
benefit plans, and (C) the Executive shall be deemed to have
retired from the Company and shall be entitled as of the
termination date, 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 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 (D) if any provision of
this Section 5.2.4 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 Executive, Executive's dependents, beneficiaries
and estate. Subject to applicable legal limits to the
contrary, in the event of termination pursuant to clauses (i)
through (iii) of Section 5.2, Executive shall have three (3)
years from the date of such termination to exercise any
outstanding stock options.
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 and shall be subject to such deductions
and withholdings as are required by law or policies of the Company in effect
from time to time, 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 an annual base salary established by the Board which
for the first year of the Term shall be not less than the highest
annual salary rate of the Executive for the past three years.
Executive's salary will be reviewed by the Board at the beginning of
each of its fiscal years and, in the sole discretion of the Board, may
be increased, but not decreased, for such year; provided, however, on
each anniversary date of this Agreement during the Term hereof,
Executive's annual base salary shall be increased by five percent (5%).
Following a Change in Control, the base salary shall be increased
annually by a percentage at
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least equal to the average annual increase over the past three years
but in no event shall the increase be less than five percent (5%) and
during the Term hereof cannot be reduced.
6.2 Annual Incentive Bonus. During the Term hereof, the Board
may pay to Executive an annual incentive cash bonus in accordance with
the terms of the Short Term Incentive Compensation Plan.
6.3 Long Term Incentive Compensation Plan. During the Term
hereof, the Board may pay to Executive long term incentive cash bonuses
in accordance with the Long Term Incentive Compensation Plan.
6.4 Supplemental Executive Benefit Plan. During the Term
hereof, Executive shall be entitled to participate in The South
Financial Group Supplemental Executive Benefit Plan.
6.5 Stock Options and Restricted Stock. During the Term
hereof, the Board shall grant Executive options to purchase Company
Common Stock and restricted stock in accordance with the terms of the
Company's Long Term Incentive Compensation Plan.
6.6 Other Benefits. Executive shall be entitled to share in
any other employee benefits generally provided by the Company to its
most highly ranking executives for so long as the Company provides such
benefits. The Company also agrees to provide Executive with a
Company-paid automobile or automobile allowance, reasonable club dues
for one country club and two business club(s), personal tax advisory
services, and a $5,000,000.00 life insurance policy and such disability
insurance as may be purchased by $18,000.00 per year in premiums.
Executive shall also be entitled to participate in all other benefits
accorded general Company employees. If the Executive becomes disabled
and if the proceeds of the disability policy purchased by the Company
are insufficient to fund the Company's obligation hereunder as if the
Executive were not disabled, the Company will fund the difference.
6.7 The payments hereunder are not subject to mitigation in
the event Executive receives compensation and is no longer actively
employed.
7. Excess Parachute Payments.
7.1 It is the intention of the parties hereto that the
severance payments and other compensation provided for herein (other
than payments pursuant to Section 9) are reasonable compensation for
Executive's services to the Company and shall not constitute "excess
parachute payments" within the meaning of Section 280G of the Code and
any regulations thereunder. In the event that the Company's independent
accountants acting as auditors for the Company on the date of a Change
in Control determine that the payments provided for herein constitute
"excess parachute payments," then the compensation payable hereunder
shall be reduced to the point that such compensation shall not qualify
as "excess parachute payments."
7.2 To the extent that payments under Section 9 cause a
"parachute payment," as defined in Section 280G(b)(2) of the Code, the
Company shall indemnify Executive and hold Executive harmless against
all claims, losses, damages, penalties, expenses, and excise taxes
relating thereto. To effect this indemnification, the Company shall pay
Executive an additional amount that is sufficient to pay any excise tax
imposed by Section 4999 of the Code on the payments and benefits to
which Executive is entitled without the additional amount plus any
penalties or interest imposed by the Internal Revenue Service in regard
to such amounts, plus another additional amount sufficient to pay all
the excise and income taxes on the additional amounts. The
determination of any additional amount that must be paid under this
section at any time shall be made in good faith by the independent
auditors then employed by the Company.
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 affiliated companies, and their respective
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businesses, which shall have been obtained by the Executive during the
Executive's employment by the Company or any of its affiliated companies. After
termination of Executive's employment with 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. 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. In no event shall an asserted
violation of the provisions of this Section 8 constitute a basis for deferring
or withholding any amounts otherwise payable to the Executive under this
Agreement.
9. Noncompetition and Nonsolicitation Agreement. If this Agreement is
terminated by the Company pursuant to Section 5.1(iv) or by Executive pursuant
to Section 5.2(i), (ii), (iii), or 5.2.1, Executive shall not enter into an
employment relationship or a consulting arrangement with any other federally
insured depository institution headquartered or having a physical presence in
the State of South Carolina, or any county in the States of Florida or North
Carolina in which the Company or its affiliates has a physical presence or
conducts business operations (hereinafter a "competitor") within five years of
the date of the termination of employment or such lesser time as may be
applicable under Section 5.2.1 or 5.2.3 above (the "Noncompete Period"). 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.
9.1 During the Noncompete Period, Executive shall not directly
or indirectly through another entity (i) induce or attempt to induce
any employee of Company to leave the employ of Company, including but
not limited to a competitor, or in any way interfere with the
relationship between Company and any employee thereof, (ii) hire any
person who was an employee of Company or any subsidiary at any time
during the time that Executive was employed by Company, or (iii) induce
or attempt to induce any customer, supplier, or other entity in a
business relation with Company to cease doing business with Company, or
in any way interfere with the relationship between any such customer,
supplier, or business relation and Company or do business with a
competitor.
9.2 Subject to Sections 5.2.1 and 5.2.3 hereof, solely in
consideration of Executive's promises set forth in this Section 9 (and
in addition to any other severance compensation provided in this
Agreement), upon termination of the Executive pursuant to the terms
contained in this Section 9, Company agrees to pay Executive an amount
equal to ten (10) times Executive's annual cash compensation as
provided in Sections 6.1 and 6.2 being paid at the time of commencement
of the Noncompete Period; continue Executives coverage and funding
under Section 6.4 for ten (10) years following the commencement of the
Noncompete Period; and continue to provide an automobile, club dues,
personal tax advisory services, life insurance, and disability
insurance under Section 6.6 for ten (10) years following the
commencement of the Noncompete Period. For purposes of determining
compensation which is not fixed (such as a bonus), the annual amount of
such unfixed compensation shall be deemed to be equal to the average of
such compensation over the three year period immediately prior to the
termination. The amount payable under this Section 9.2 shall be in five
annual installments beginning on the first day of the Noncompete Period
and on the four subsequent anniversaries thereof.
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. Executive agrees that the restrictions contained in this
Section 9 are reasonable.
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
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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.
10. Trust. Notwithstanding anything to the contrary in this Agreement,
in lieu of direct payments to Executive under Section 5 of this Agreement, the
Company shall establish an irrevocable trust to fund and pay Executive the
maximum amount of obligations which could reasonably be expected to become
payable hereunder under any circumstances (which shall be a "rabbi trust" if so
requested by Executive), which trust (i) shall have as trustee an individual
acceptable to Executive, (ii) shall be fully funded upon a Potential Change in
Control, and (iii) shall contain such other terms and conditions as are
reasonably necessary in Executive's determination to ensure the Company's
compliance with its obligations hereunder. In the event the trust is funded due
to a Potential Change in Control and a Change in Control does not occur within
one (1) year of the latest occurrence of a Potential Change in Control, the
Company may recover any amounts contributed to and remaining in the trust. The
Company will pay all management and other fees associated with the
administration of the trust established pursuant to this Section 10.
11. Assignment. The parties acknowledge that this Agreement has been
entered into due to, among other things, the special skills of Executive, and
agree that this Agreement may not be assigned or transferred by Executive, in
whole or in part, without the prior written consent of Company.
12. 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: The South Financial Group, Inc.
Poinsett Plaza
104 South Main Street
Greenville, South Carolina 29601
Attn: Chairman of the Board
To Executive: Mack I. Whittle, Jr.
9 Hidden Hills Drive
Greenville, South Carolina 29605
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.
13. Provisions Severable. 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.
14. Remedies in the Absence of a Change in Control. The terms of this
Section 14 will apply in the absence of a Change in Control.
14.1 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.
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14.2 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.
14.3 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; provided that
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 Executive.
15. Remedies in the Event of a Change in Control. The terms of this
Section 15 shall apply in the event of a Change in Control.
15.1 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. 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.
15.2 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 Executive's rights under this Agreement by litigation or
other legal action because such costs would substantially detract from
the benefits intended to be extended to the Executive hereunder, nor be
bound to negotiate any settlement of 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 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 Executive hereunder,
and the Executive has acted in good faith to perform Executive's
obligations under this Agreement, the Company irrevocably authorizes
the Executive from time to time to retain counsel of Executive's choice
at the expense of the Company to represent Executive in connection with
the protection and enforcement of Executive's rights hereunder,
including without limitation representation in connection with
termination of 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
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and enforcement of their rights under similar agreements between them
and the Company, and, unless in Executive's sole judgment use of common
counsel could be prejudicial to Executive or would not be likely to
reduce the fees and expenses chargeable hereunder to the Company, the
Executive agrees to use Executive's best efforts to agree with such
other officers or executives to retain common counsel.
16. 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.
17. Amendments and Modifications. This Agreement may be amended or
modified only by a writing signed by other parties hereto.
18. 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.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
EXECUTIVE
/s/ Mack I. Whittle, Jr.
-------------------------
Mack I. Whittle, Jr.
THE SOUTH FINANCIAL GROUP, INC.
By: /s/ William R. Timmons, Jr.
---------------------------
Title: Chairman
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