EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of this 4th
day of February, 2000 by and between Upstate Bancshares Corporation (the
"Company"), and Marvin Boyd ("Employee").
WHEREAS the Company wishes to employ Employee under the terms set forth
herein;
WHEREAS Employee wishes to be employed by the Company under the terms set
forth herein;
NOW THEREFORE, in consideration of the respective covenants and agreements
of the parties herein contained, and intending to be legally bound hereby, the
Company and Employee agree as follows:
1. Definitions. The following terms shall have the corresponding
definitions when used herein:
Cause. Cause shall mean Poor Job Performance, fraud, gross negligence,
dereliction of duties, intentional misconduct, intentional material damage to
the property or business of the Company, or the commission of a felony (for
which the Company only needs to have reasonable grounds for its belief). Cause
shall also arise if applicable regulatory authorities fail to confirm Employee
as President and Chief Executive Officer of the Company or issues a directive
prohibiting Employee from serving as President and Chief Executive Officer of
the Company.
Confidential Information. Confidential Information shall mean all business
and other information relating to the business of the Company or the Company,
including without limitation, technical or nontechnical data, programs, methods,
techniques, 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 or proprietary information and is separately protectable at law or
in equity as a trade secret or proprietary information. 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.
Disabled or Disability. Disabled or Disability shall mean the sufferance or
contraction by Employee of an illness or other injury which, with or without
reasonable accommodation, prevents him from performing the essential functions
of his job and duties as described herein for a consecutive period of three (3)
months or more. If there should be any dispute between the parties as to the
Employee's physical or mental disability at any time, such question shall be
settled by the majority opinion of three impartial reputable physicians, one of
whom shall be selected by the Company, another by the Employee, and the third by
the two physicians selected by the Company and the Employee. The certificate of
two such physicians as to the matter in dispute shall be final and binding on
the parties.
Person. Person shall mean any individual, corporation, Company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or other entity.
1
<PAGE>
Poor Job Performance. Poor Job Performance shall mean the failure of
Employee to perform in accordance with the standards applicable to Employee as
reasonably established by the Board of Directors of the Company.
2. EMPLOYMENT. The Company hereby agrees to employ Employee, subject to the
terms and conditions contained herein, in the capacity of President and Chief
Executive Officer. Employee hereby agrees to serve the Company in such capacity
upon the terms and conditions contained herein. The Company hereby agrees to
provide Employee with office facilities, personnel and other amenities
reasonably necessary to perform his duties hereunder. On or before March 1,
2000, Employee agrees to become a resident of (and principally reside in)
Greenville County or Spartanburg County. The Company also agrees to cause
Employee to be appointed President and Chief Executive Officer of the Company's
subsidiary bank.
The Company agrees to nominate Employee as part of management's slate to
serve on the Board of Directors of the Company, such service to be on the same
terms as outside directors.
3. TERM. This Agreement shall have a term of three years commencing as of
the date hereof.
4. EMPLOYEE RESPONSIBILITIES. Employee agrees during the term of his
employment hereunder to devote all of his business time, attention and energy
(other than an minor amount of time to passive investments and similar matters)
to the business of the Company and to use his best efforts, skills and abilities
to promote the Company's business and interests and to perform such duties
consistent with the position to which he has been appointed.
5. COMPENSATION. The Company shall pay Employee and Employee shall accept
from the Company the compensation set forth below in full payment for services
rendered by him hereunder, including, without limitation, all services as an
officer of the Company or any of its affiliates.
(a) The Company shall pay to Employee, as base pay, a salary at an annual
rate of $75,000, which amount will be increased a minimum of 7% per year.
(However, this shall not preclude the directors from increasing the base salary
in excess of the 7%.) Such compensation shall be payable in accordance with
customary payroll practices of the Company (but not less often than monthly).
(b) The Company may pay Employee such bonuses as shall be determined solely
by the Company's Board of Directors based on its assessment of Employee's job
performance. Notwithstanding the foregoing:
(i) on the second anniversary hereof, the Company shall pay Employee a
bonus equal to 5% of the Company's net income in the four quarters
immediately preceding such second anniversary so long as (x) the ratio
of the Company's nonperforming assets to total loans is less than 1.0%
and (y) the Company's principal banking subsidiary has a CAMELS rating
of 2 or better; and
(ii) on the third anniversary hereof, the Company shall pay Employee a
bonus equal to 5% of the Company's net income in the four quarters
immediately preceding such third anniversary so long as (x) the ratio
of the Company's nonperforming assets to total loans is less than
1.25% and (y) the Company's principal banking subsidiary has a CAMELS
rating of 2 or better; and
(c) Employee shall be paid a car allowance of $400 per month for the first
year of the term of this Agreement and $500 per month thereafter.
(d) The Company shall purchase and maintain a $300,000 life insurance
policy on Employee, naming as beneficiary, the person of Employee's choosing.
2
<PAGE>
(e) Employee shall be entitled to such employee benefits (including
insurance) and other compensation as are applicable to other executive officers
of the Company who are similar to Employee in position and authority, including
any welfare and pension benefit plans adopted by the Company. The Company shall
reimburse Employee for all payments currently being made by him pursuant to
COBRA, until such time as the Company shall establish its own benefit plans. The
parties agree to negotiate in good faith with a view toward the establishment by
January 2001 of a mutually acceptable retirement plan for Employee. Until the
establishment of a retirement plan, the Company agrees to contribute $400 per
month into a self-directed retirement plan of Employee's choice.
(f) Upon the completion of the Company's initial public offering (the
"IPO"), the Company shall grant to Employee options to purchase 30,000 shares of
common stock having the terms set forth on Exhibit A.
(g) Employee shall be entitled to reimbursement of reasonable
Company-related expenses.
(h) Employee shall be paid a signing bonus of $5,000.
6. VACATION. Employee shall be entitled to paid vacation of an aggregate of
three weeks (15 business days) during the first year of the term of this
Agreement, and four weeks (20 business days) thereafter; provided that such
vacation shall not interfere with the performance of his duties hereunder.
7. TERMINATION. This Agreement shall continue in effect for the term set
forth in Paragraph 3 unless:
(a) the parties mutually agree to terminate this Agreement prior to the
expiration of its term;
(b) Employee terminates his employment hereunder on 180 days' notice;
(c) Employee is terminated for Cause;
(d) Employee dies or becomes Disabled. In the event that Employee becomes
Disabled, the Company, at its option, may at any time thereafter
terminate this Agreement by serving ninety (90) days' prior written
notice thereof on Employee. Employee's rights under this Agreement
shall terminate and come to an end upon the date set forth in said
notice as if such date were the termination date of this Agreement.
However, if prior to the date specified in such notice, Employee's
illness or incapacity shall have been terminated such that he is no
longer Disabled and Employee shall have taken up and is performing
such duties on a full-time basis, Employee shall be entitled to resume
employment hereunder as though such notice had not been given.
The Company shall give Employee at least 360 days prior notice of its intent not
to renew this Agreement at the end of its three year term. If such notice is not
given, this Agreement shall automatically renew for an additional three year
period on the same terms in effect at the end of its initial term.
8. EFFECT OF TERMINATION. Except as otherwise provided in this Agreement,
upon the termination of Employee's employment hereunder, Employee shall not be
entitled to receive any further compensation other than accrued benefits under
Company variable compensation or pension plans, if any, and shall be completely
relieved of his positions with the Company, its subsidiaries and affiliates,
3
<PAGE>
including any offices or directorships in such entities which Employee holds;
provided, however, that this provision shall not relieve either party from its
obligations hereunder or liability in the event of a breach of such provisions.
9. CONFIDENTIALITY. Employee will not at any time either during the term of
this Agreement or thereafter, except as authorized by the Company or required by
applicable law, divulge, furnish or make accessible to any person, firm,
corporation or other entity any Confidential Information.
10. RETURN OF INFORMATION. Employee, upon the termination of his
employment, irrespective of the time, manner or cause of termination will
surrender and deliver to the Company all lists, books, records and data of every
kind relating to or in connection with the customers and business of the Company
and/or any subsidiary or affiliate of the Company group and all property
belonging to the Company and/or any subsidiary or affiliate of the Company which
are in his possession or under his control.
11. IRREPARABLE INJURY. Employee acknowledges that his compliance with his
duties and obligations hereunder is necessary to protect the goodwill and other
proprietary interests of the Company and the purposes and essence of this
Agreement. Employee acknowledges that a breach of his duties and obligations
hereunder will result in irreparable and continuing damage to the Company for
which there will be no adequate remedy at law; and agrees that, in the event of
any breach of any of the aforesaid duties and obligations, the Company and its
successors and assigns shall be entitled to equitable relief and to such other
and further relief as may be proper.
12. ASSIGNABILITY. Employee recognizes that this Agreement is personal to
the Company and none of Employee's obligations under this Agreement may be
assigned or delegated by him. The Company may assign all of its rights and
obligations hereunder by operation of law or upon the sale of all or
substantially all of its assets and business, and it shall be a condition of any
such assignment that the purchaser agree to assume all obligations of the
Company hereunder. The Company may also assign all of its rights and obligations
hereunder to its principal banking subsidiary.
13. SUCCESSORS TO THE COMPANY. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the Company and any
successor of the Company, including, without limitation, any corporation or
corporations acquiring directly or indirectly all or substantially all of the
assets of the Company whether by merger, consolidation, sale or otherwise (and
such successor shall thereafter be deemed "the Company" for the purposes of this
Agreement).
14. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given when delivered personally,
or as shown by other reasonable proof of receipt:
To Employee: Marvin Boyd
___________________________
___________________________
To Company: ___________________________
___________________________
___________________________
4
<PAGE>
15. MISCELLANEOUS. This Agreement constitutes the whole agreement among the
parties and shall be construed in accordance with the laws of the State of South
Carolina. No variation hereof and no discharge of the terms hereof shall be
deemed valid except as in writing and signed by the parties hereto. No waiver by
the Company or Employee of any breach by Employee or the Company of any
provision or condition of this Agreement by him or it to be performed shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same or
any prior or any subsequent time. In the event any provision of this Agreement
shall be deemed to be invalid or void under any applicable law, the remaining
provisions hereof shall not be affected thereby and shall continue in full force
and effect.
5
<PAGE>
IN WITNESS WHEREOF, this Agreement is executed as of the day and year first
above written.
Witness Security Bancshares, Inc.
________________________ By: /s/
Chairman
Witness MARVIN BOYD
________________________ /s/ Marvin Boyd
An Individual
6
<PAGE>
EXHIBIT A - Description of Option
Number and Type: Option to purchase 30,000 shares of Company common stock. The
options may be either incentive stock options or non-incentive stock
options (within the contemplation of the Internal Revenue Code of 1986, as
amended) at the election of Employee.
Exercise Price: $10 per share
Term: 10 years from the date of grant
Vesting: 1/3 on each of the first, second and third anniversaries of the date of
grant so long as Employee is employed by Company on such anniversaries;
provided, that 10,000 options shall not vest and shall be canceled if,
during the quarter immediately prior to the second anniversary of IPO, the
(x) the ratio of the Company's nonperforming assets to total loans is 1.0%
or greater and (y) the Company's principal banking subsidiary has a CAMELS
rating of 3 or worse; provided, further that 10,000 options shall not vest
and shall be canceled if during the quarter immediately prior to the third
anniversary of IPO, if the (x) the ratio of the Company's nonperforming
assets to total loans is 1.25% or greater and (y) the Company's principal
banking subsidiary has a CAMELS rating of 3 or worse. These options may be
reclaimed if the Company's ratio of nonperforming assets to loans and
CAMELS rating are brought back within the range indicated above for a
period of two consecutive quarters during the two years immediately
following the cancellation of options.
Termination: In the event that Employee's employment with the Company is
terminated for any reason (including death or disability), the options
shall be exercisable (or reclaimable) for a period of three months
thereafter by Employee or his representative, but only to the extent that
they were exercisable (or reclaimable) at the date of termination.
Assignability: Not assignable except pursuant to the laws of descent and
distribution or pursuant to the terms of a qualified domestic relations
order.
Other Matters: These options shall be evidenced by a written option grant having
such other terms as are typical of options of this type and not
inconsistent with the foregoing provisions of this Exhibit A.
