SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 10, 1998
THE FIRST BANCSHARES, INC.
(Exact name of registrant
as specified in its charter)
Mississippi 33-9428 64-0862173
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
6480 U.S. Highway 98 West, Hattiesburg, Mississippi 39404
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (601) 268-8998
N/A
(Former name or former address, if changed since last report.)
Page 1 of 4 Pages
The Exhibit Index Appears on Page 4<PAGE>
ITEM 5. OTHER EVENTS.
On June 10, 1998, an Employment Agreement by and between the Company and
The First National Bank of the Pine Belt in organization (the "Bank") and
William M. Renovich (the "Executive") was executed in order to place Mr.
Renovich as President and Chief Executive Officer of the Bank, and intends to
assure the Executive that his employment will be of a reasonably secure nature.
On June 19, 1998 a Bank Development Agreement by and among the Company and
16 individual organizers of The First National Bank of the Pine Belt (the
"Bank") was executed. The Bank will be organized as a wholly-owned subsidiary
of the Holding Company and is anticipated to be a national bank, chartered by
the Office of the Comptroller of the Currency.
A copy of the above mentioned agreements are filed as Exhibits 10.1 and
10.2 to this Current Report on Form 8-K.
2<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE FIRST BANCSHARES, INC.
By: /s/ David E. Johnson
David E. Johnson, Chief Executive Officer
Dated: June 19, 1998.
3<PAGE>
Exhibit Index
Exhibit No. Description Sequential Page Number
- ----------- ----------- ----------------------
10.1 Employment Agreement dated June 10, Page 5
1998 by and between the Company and
The First National Bank of the Pine
Belt and William M. Renovich.
10.2 Bank Development Agreement dated Page 23
June 19, 1998 by and among the Company
and the organizers of The First
National Bank of the Pine Belt.
4
Exhibit 10.1
EMPLOYMENT AGREEMENT
Employment Agreement (this "Agreement") dated as of June 10, 1998, by and
between The First Bancshares, Inc., a Mississippi corporation (the "Employer"),
which is the proposed bank holding company for The First National Bank of the
Pine Belt, a proposed national bank (the "Bank"), and William M. Renovich, an
individual residing in Laurel, Jones County, Mississippi (the "Executive").
W I T N E S S E T H:
WHEREAS, the Employer intends to employ the Executive as President and CEO of
the Bank, which is proposed, and intends to assure the Executive that his
employment will be of a reasonably secure nature; and
WHEREAS, the Employer desires to provide for the employment of the Executive
pursuant to this Agreement; and
WHEREAS, the Executive desires to be employed by the Employer pursuant to this
Agreement; and
WHEREAS, it is the intent of the parties that this Agreement will be assigned
to the Bank;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Employer and the
Executive hereby agree as follows:
Section 1. Definitions. For the purpose of this Agreement, the terms used as
headings in this Section 1, and parenthetically defined elsewhere in this
Agreement, shall have the indicated meanings.
1.1. Adequate Justification. The occurrence after a Change in Control of any
of the following events or conditions: (i) a material failure of the Employer
to comply with the terms of this Agreement, (ii) any relocation of the
Executive outside the Territory, as amended from time to time, that is not
approved by a majority of the members of the Board of Directors who were part
of the Organizing Group, or (iii) other than as provided for herein, any
substantial diminution in the Executive's authority or the Executive's
responsibilities that is not approved by a majority of the members of the Board
of Directors who were a part of the Organizing Group.
1.2. Affiliate. Any business entity controlled by, controlling or under
common control with the Employer.
1.3. Board of Directors. The Board of Directors of the Employer.
1.4. Business. The operation of a depository financial institution,
including, without limitation, the solicitation and acceptance of deposits of
money and commercial paper, the solicitation and funding of loans, and the
provision of other banking services, and any other related business engaged in
by the Employer or any of its Affiliates as of the date of termination.
1.5. Cause. As defined in Section 7.3(a)(iii).
1.6. Change in Control. The occurrence during the Term of any of the
following events:
(a) The individuals who, as of the date of this Agreement, are members of the
Board of Directors (the "Incumbent Board") cease for any reasons to constitute
at least a majority of the Board of Directors; provided, however, that if the
election, or nomination for election by the Employer's shareholders, of any new
director was approved in advance by a vote of at least a majority of the
Incumbent Board, such new director shall, for purposes of this Agreement, be
considered as a member of the Incumbent Board; provided, further, that no
individual shall be considered a member of the Incumbent Board if such
individual initially assumed office as result of either an actual or threatened
"Election Contest" (as described in Rule 14a-11 promulgated under the
Securities Exchange Act of 1934 (the "Exchange Act") or other actual or
threatened solicitation of proxies or consents by or on behalf of any person
other than the Board of Directors (a "Proxy Contest"), including by reason of
any agreement intended to avoid or settle any Election Contest or Proxy
Contest.
(b) An acquisition (other than directly from the Employer) of any voting
securities of the Employer (the "Voting Securities") by any "Person" (as the
term "person" is used for purposes of Section 13(d) or 14(d) of the Exchange
Act) immediately after which such Person has "Beneficial Ownership" (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 25% or more of the
combined voting power of the Employer's then outstanding Voting Securities;
provided, however, that in determining whether a Change in Control has
occurred, Voting Securities which are acquired in a Non-Control Acquisition
shall not constitute an acquisition which would cause a Change in Control.
(c) Approval by the shareholders of the Employer of: (i) a merger,
consolidation, or reorganization involving the Employer, unless such merger,
consolidation, or reorganization is a Non-Control Transaction; (ii) a complete
liquidation or dissolution of the Employer; or (iii) an agreement for the sale
or other disposition of all or substantially all of the assets of the Employer
to any Person (other than a transfer to a Subsidiary).
(d) A notice of an application is filed with the Federal Reserve Board (the
"FRB") pursuant to Regulation "Y" of the FRB under the Change in Bank Control
Act or the Bank Holding Employer Act for permission to acquire control of the
Employer or any of its banking subsidiaries.
1.7 COBRA. Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended.
1.8. Common Stock. The common stock of the Employer, par value $1.00 per
share.
1.9. Competing Business. Any business that, in whole or in part, is the same
or substantially the same as the Business.
1.10. Confidential Business Information. Any non-public information of a
competitively sensitive or personal nature, other than Trade Secrets, acquired
by the Executive, directly or indirectly, in connection with the Executive's
employment (including his employment with the Employer prior to the date of
this Agreement), including (without limitation) oral and written information
concerning the Employer or its Affiliates relating to financial position and
results of operations (revenues, margins, assets, net income, etc.), annual and
long-range business plans, marketing plans and methods, account invoices, oral
or written customer information, and personnel information. Confidential
Business Information also includes information recorded in manuals, memoranda,
projections, minutes, plans, computer programs, and records, whether or not
legended or otherwise identified by the Bank and its Affiliates as Confidential
Business Information, as well as information which is the subject of meetings
and discussions and not so recorded. Confidential Business Information shall
not include information that was available to the Executive on a non-
confidential basis prior to its disclosure to the Executive. Provided, however,
that Confidential Business Information disclosed by the Executive in violation
of this Agreement or otherwise placed in the public domain without the express
written consent of the Employer may not be used by the Executive on any action
arising under or related to this Agreement.
1.11. Escrow Period. The period from the date hereof to the date the escrow
agent releases the subscription proceeds from escrow.
1.12. Secondary Offering. The public offering of the Common Stock to raise
capital for the formation of the Bank.
1.13. Non-Control Acquisition. An acquisition by (a) an employee benefit plan
(or a trust forming a part thereof maintained by (i) the Employer or (ii) any
corporation or other Person of which a majority of its voting power or its
equity securities or equity interest is owned directly or indirectly by the
Employer (a "Subsidiary"), (b) the Employer or any Subsidiary, or (c) any
person in connection with a Non-Control Transaction.
1.14. Non-Control Transaction. A transaction described in clauses (a) and (b)
below:
(a) the shareholders of the Employer, immediately before such merger,
consolidation, or reorganization, own, directly or indirectly, immediately
following such merger, consolidation, or reorganization, at least two-thirds of
the combined voting power of the outstanding voting securities of the
corporation resulting from such merger, consolidation, or reorganization (the
"Surviving Corporation") in substantially the same proportion as their
ownership of the Voting Securities immediately before such merger,
consolidation, or reorganization, and
(b) the individuals who were members of the Incumbent Board immediately prior
to the execution of the agreement providing for such merger, consolidation, or
reorganization constitute at least two-thirds of the members of the board of
directors of the Surviving Corporation.
1.15. Opening Date. The date of the opening of the Bank.
1.16. Organizing Group. Roy H. Boutwell, George W. (Bill) Chancellor, Michael
W. Chancellor, Hoppy Cole, Peeler G. Lacey, M.D., Charles R. Lightsey, Eric E.
(Ric) Lindstrom, John J. McGraw, M.D., P.E. (Gene) Mulloy, Trent Mulloy, David
L. Rice, III, D.M.D., J. Douglas Seidenburg, C.P.A., Ralph T. Simmons, Nick
Welch, William H. Wells, Mrs. James C. (Jo) Waites, and any other person that
the Board of Directors may add from time to time prior to the opening of the
Bank.
1.17. Term. As defined in Section 7.1.
1.18. Territory. A radius of 50 miles from (i) the main office of the Bank,
(ii) any branch office of the Bank or (iii) any office of the Employer or its
affiliates or holding company or companies.
1.19. Trade Secret. Any information, including, but not limited to, technical
or non-technical data, a formula, a pattern, a compilation, a program, a plan,
a device, a method, a technique, a drawing, a process, financial data,
financial plans, product plans, or a list of actual or potential customers or
suppliers, which: (a) derives economic value, actual or potential, from not
being generally known to, and not being readily ascertainable by proper means
by, other persons who can obtain economic value from its disclosure or use, and
(b) is the subject of efforts that are reasonable under the circumstances to
maintain its secrecy.
1.20. UBPR. As defined in Section 5.3(b).
Section 2. Employment. (a) The Employer hereby employs the Executive to
serve in the positions described in Section 3 below during the Term and to
perform those acts and duties for, and to furnish services to, the Bank, the
Employer, and their Affiliates as may be designated from time to time by the
Board of Directors. The Executive hereby accepts such employment. The
Executive will have such executive or managerial duties as the Board of
Directors shall direct from time to time. In the performance of his duties
hereunder, the Executive shall comply with all laws, rules, and regulations
which may be applicable to the Employer and the Bank from time to time.
(b) The Executive shall use his best efforts to promote the interests of the
Employer, the Bank, and their Affiliates and shall devote his full business
time and attention to his employment under this Agreement. The Executive may
devote a reasonable amount of time to serve as a director or advisor to
charitable and community activities and to manage his personal investments;
provided, however, that such activities and investments do not materially
interfere with the performance of his duties hereunder and are not in conflict
or competitive with, or adverse to, the interests of the Employer, the Bank and
their Affiliates, in the sole judgment of the Board of Directors.
Section 3. Titles. The Executive shall hold the title of vice president of
the Employer until the Opening Date, at which time the Agreement will be
assigned to the bank and the Executive shall hold the title of President and
CEO of the Bank.
Section 4. Comepnsation and Benefits; Disability.
4.1. Compensation. The Employer shall pay the Executive a salary at a rate of
$85,000.00 per annum in accordance with the salary payment practices of the
Employer. The Board of Directors shall determine, in its sole discretion, with
the Executive abstaining from participating in the consideration of and vote on
the matter, whether a salary increase for the Executive is merited based upon
annual performance and a cost of living review.
4.2. Bonus. For the first, second and third years after the Opening Date, the
Executive shall be eligible to receive a cash bonus equal to 10% or more of the
Executive's base salary, with the Executive abstaining from participating in
the consideration of and vote on the matter, based upon the Bank meeting the
performance goals set forth in Section 5.3 hereof for such years. Thereafter,
Executive shall be eligible to receive a cash bonus of 15% or more of his base
salary, based upon such tangible criteria (including, without limitation,
compliance with the Bank's business plan, meeting the performance goals for
such year, and the Bank's overall asset quality and earnings) as the Board of
Directors shall establish.
4.3. Other Benefits. During the term, the Employer shall provide the
Executive with life insurance in an amount of $250,000.00 payable to the
beneficiary named by the Executive, dental and health insurance, disability
insurance providing coverage for 60% of the Executive's base salary, and such
other benefits or plans as are generally afforded other personnel of the
Employer. During the Escrow Period and until such time as coverage is obtained
by the Employer for its employees, the Employer shall provide the Executive:
(i) reimbursement of the Executive's COBRA health insurance coverage, (ii)
disability insurance providing coverage for 60% of the executive's base salary
and (iii) life insurance in an amount of $250,000.00 payable to the beneficiary
named by the Executive; and, after the Escrow Period, the Employer will provide
the Executive with an automobile (with a cost not to exceed $22,500) owned or
leased by the Employer of a make and model appropriate to the Executive's
status.
The requirement of providing disability, life and/or health insurance for the
Executive is conditioned upon the insurability of the Executive, and the
availability of the level of coverage set forth herein at standard rates. If
the Executive is not insurable at standard rates, or if the Employer is unable
to place the coverage at the level set forth in this Agreement at a reasonable
cost to Employer, then the Employer will only be responsible for the cost of
standard coverage.
Employer shall also pay Executive's initiation fee at Laurel Country Club of
$1,200.00, as well as Executive's routine monthly dues at Laurel Country Club
(currently $128.00 per month). In addition, the Employer shall pay the
Executive's dues pertaining to the Rotary Club in Laurel, Mississippi.
4.4. Vacation and Sick Leave. The Executive shall be allowed three weeks paid
vacation per year during the Term, or any extensions or renewals thereof.
Vacation time shall not be allowed to carry over from year to year, and
Executive may not take more than two weeks vacation at any single time.
Vacation dates over one week at a time shall be subject to Board approval.
Executive shall also be entitled to ten days of sick leave per year during the
Term, or any extensions or renewals thereof, which shall not be allowed to
carry over from year to year.
4.5. Severance Package. In the event that the Bank fails to commence
operations or receive regulatory approval, the Employer shall pay to the
Executive severance compensation in an amount equal to 100% of his then current
monthly base salary each month for a period ending on the earlier of 12 months
from the date of termination or the date on which the Executive obtains a new
employment position.
4.6. Committees. The Executive shall serve on all committees of the board of
directors of the Bank except for the audit committee. If the loan committee
approves a loan over the objection of the Executive, the loan committee shall
take the loan to the full board of directors of the Bank for approval. The
compensation committee and the board of directors of the Bank shall appoint the
CEO. The compensation committee and the board of directors of the Bank shall
also appoint two senior vice-presidents of the Bank, based upon the
recommendation of the CEO. The board of directors of the Bank shall authorize
the CEO and senior vice-presidents to appoint all other executive officers and
to hire all other employees of the Bank.
Section 5. Stock Options.
5.1. Grant of Options. (a) If the Executive is still employed under the
provisions of the Agreement following the Secondary Offering, the Employer
hereby agrees to grant to the Executive an option to purchase the number of
shares of Common Stock equal to 2.5% of the number of shares sold in the
Secondary Offering. The award agreement for the stock options will provide
that one-third of the options to purchase Common Stock shall vest on each of
the first three anniversaries of the Opening Date, but only if the Executive
remains employed by the Employer on such date and the Bank has met the
performance goals set forth in Section 5.3 hereof for such year. In addition,
the award agreement will provide that (i) the options shall be subject to
immediate vesting in the event of a Change in Control pursuant to Section 5.2
hereof; (ii) all options shall be exercisable at any time during the seven
years following their vesting at a price per share equal to the public offering
price in the Secondary Offering (subject to standard antidilution adjustments
in the event of stock splits, dividends or combinations); (iii) all unexercised
options will expire 180 days after termination of employment for any reason;
and (iv) all options shall be transferable and assignable by the Executive or
by any other person entitled hereunder to exercise any such rights on the same
basis as any other option granted to the other directors of the Employer, if
any.
(b) The parties understand that the Employer may adopt another incentive stock
option plan or increase the size of the Employer's existing incentive stock
option plan (with customary provisions and benefits) at a meeting of the
shareholders after the effective date of this Agreement. Upon the shareholders
adoption of an incentive stock option plan, or approval to increase the size of
the existing plan, all of the Executive's options shall be converted into
incentive stock options under the same terms as if the options had originally
been incentive stock options when granted, except that the Executive
acknowledges that the exercise price cannot be less than the fair market value
on the date of such meeting.
5.2. Acceleration in the Event of a Change in Control. If the event of a
Change in Control, the restrictions on any outstanding incentive awards
(including restricted stock) granted to the Executive under any incentive plan
or arrangement shall lapse and such incentive award shall become 100% vested;
all stock options and stock appreciation rights granted to the Executive shall
become immediately exercisable and shall become 100% vested; and all
performance units granted to the Executive shall become 100% vested.
5.3. Performance Levels. For each twelve month period beginning on the first
day of the first month following the Bank's commencement of banking business,
and as a condition to the vesting of the options in such year (except in the
event of a Change in Control), the Bank must meet the following performance
criteria:
(a) earnings for the Bank shall meet or exceed 50% of the projections
identified in the application of the Bank to the Office of the Comptroller of
the Currency for the second year of operations of the Bank, 60% of the
projections for the third year, and 70% of the projections for each year
thereafter; and
(b) for the fiscal quarter ending with or immediately prior to the Bank's
fiscal year, the Bank's ratio of non-performance loans to total loans, as
determined in the Uniform Bank Performance Report (the "UBPR"), shall not
exceed by more than ten percent (10%) the ratio of non-performance loans to
total loans for banks in the Bank's peer group, as defined in the UBPR.
Section 6. Expenses. Pursuant to the Employer's customary policies in force
at the time of payment, the Executive shall be promptly reimbursed, against
presentation of vouchers or receipts therefor, for all expenses properly and
reasonably incurred by him on behalf of the Employer or its Affiliates in the
performance of his duties hereunder. In addition, during the Escrow Period,
the Employer shall provide the Executive reimbursement for automobile mileage
incurred on the Employer's business and appropriately documented at the
standard mileage rate allowed by the Internal Revenue Service guidelines.
Section 7. Termination.
7.1. Term. The Executive's employment hereunder shall be for a term
commencing on the date hereof and ending on the third anniversary of the
Opening Date (the "Term"), unless further extended or sooner terminated as
provided below.
7.2. Extension of Term. On the last day of this Agreement, the term of the
Executive's employment shall be automatically extended for one additional
three-year term without further action by the parties unless, prior to the last
day of this Agreement, either party shall serve 30 days written notice upon the
other of its intention that this Agreement shall not be so extended; provided,
that if the Employer does not renew this Agreement for an additional three-year
term pursuant to this Section, the Employer shall pay the Executive severance
compensation in an amount equal to 100% of his then current monthly base salary
each month for a period ending nine months from the last day of this Agreement.
7.3. Termination. (a) Notwithstanding the provisions of Section 7.1 or
Section 7.2, the Executive's employment hereunder shall terminate upon the
occurrence of any of the following events:
(i) The death of the Executive, in which event such employment shall terminate
automatically.
(ii) The disability of the Executive, which renders him unable to perform the
essential functions of his job, and for which reasonable accommodation is
unavailable. For purposes of this Agreement, a "disability" is defined as a
physical or mental impairment that substantially limits one or more major life
activities; and a "reasonable accommodation" is one that does not impose an
undue hardship on the Employer. The Executive acknowledges that the position
of CEO and President is one that requires the full time and energy of the
Executive and that any accommodation based on part-time employment would pose
an undue hardship on the Employer.
(iii) Upon the determination of Cause for termination, in which event such
employment may be terminated by written notice at the election of the Employer.
For purposes of this Agreement, "Cause" shall consist of any of (A) the
commission by the Executive of a willful act (including, without limitation, a
dishonest or fraudulent act) or a grossly negligent act, or the willful or
grossly negligent omission to act by the Executive, which is intended to cause,
causes or is reasonably likely to cause material harm to the Employer
(including harm to its business reputation), (B) the indictment of the
Executive for the commission or perpetration by the Executive of any felony or
any crime involving dishonesty, moral turpitude or fraud, (C) the material
breach by the Executive of this Agreement that, if susceptible of cure, remains
uncured 30 days following written notice to the Executive of such breach, (D)
the receipt of any form of notice, written or otherwise, that any regulatory
agency having jurisdiction over the Employer or the Bank intends to institute
any form of formal or informal regulatory action against the Executive or the
Employer or the Bank (provided, that the respective board of directors
determines in good faith, with the Executive abstaining from participating in
the consideration of and vote on the matter, that the subject matter of such
action involves acts or omissions by or under the supervision of the Executive
or that termination of the Executive would materially advance the Employer's or
the Bank's compliance with the purpose of the action or would materially assist
the Employer or the Bank in avoiding or reducing the restrictions or adverse
effects to the Employer or the Bank related to the regulatory action); (E) the
Executive exhibits a standard of behavior within or without the scope of his
employment that is materially disruptive to the orderly conduct of the
Employer's business operations (including, without limitation, substance abuse
or sexual misconduct) to a level which, in the Board of Directors' good faith
and reasonable judgment, with the Executive abstaining from participating in
the consideration of and vote on the matter, is materially detrimental to the
Employer's best interest, that, if susceptible of cure remains uncured 30 days
following written notice to the Executive of such specific inappropriate
behavior; (F) as provided in Section 2(b), the failure of the Executive to
devote his full business time and attention to his employment under this
Agreement that, if susceptible of cure, remains uncured 30 days following
written notice to the Executive of such failure; or (G) the failure of the Bank
to meet the performance criteria as set forth in Section 5.3.
(b) If the Executive's employment is terminated by the Employer pursuant to
Section 7.3(a)(i), the Executive's estate shall receive any sums due him as
base salary and/or reimbursement of expenses through the end of the month
during which death occurred, plus a pro rata share of any bonus under Section
4.2 and options vested under Section 5 if otherwise payable with respect to the
fiscal year during which the Executive died which was earned as of the date of
the Executive's death as a result of the Bank achieving the goals determined by
the Board of Directors.
(c) In the event of the physical or mental incapacity (other than incapacity
caused by involuntary disability) of the Executive which, if continued for a
sufficient period, would provide the Employer with grounds for termination of
the Executive's employment under Section 7.3(a)(ii), the Employer shall
continue to pay the Executive his full base salary at the rate then in effect
under Section 4.1 and all prerequisites and other benefits (other than any
bonus under Section 4.2 and options vested under Section 5) until the Executive
becomes eligible for benefits under any long-term disability plan or insurance
program maintained by the Employer. Furthermore, the Executive shall receive
his pro rata share of any bonus under Section 4.2 or options vested under
Section 5 which was earned on the date the Executive became disabled as a
result of the Bank achieving the goals determined by the Board of Directors.
Provided, however, that the Executive shall not receive any benefits under this
paragraph if the disability results in whole or in part from substance abuse,
including but not limited to prescription or nonprescription drugs, or alcohol.
Nothing in this Section 7.3(c) shall preclude the Employer from terminating the
Executive's employment under Section 7.3(a)(iii).
(d) If the Executive's employment is terminated for Cause pursuant to Section
7.3(a)(iii), or if the Executive resigns without Adequate Justification, the
Executive shall receive any sums due him as base salary and/or reimbursement of
expenses through the date of such termination. Adequate Justification shall
only be deemed to have occurred if not cured by the Employer within 30 days
following receipt of written notice from the Executive which specifies with
particularity the events which constitute such Adequate Justification.
(e) If the Employer terminates the Executive other than pursuant to clauses
(i), (ii), or (iii) of Section 7.3(a), the Employer shall pay to the Executive
severance compensation in an amount equal to 100% of his then current monthly
base salary each month for a period ending on the date which is twelve months
from the date of termination. If the Employer terminates the Executive other
than pursuant to clauses (i), (ii), or (iii) of Section 7.3(a) the Employer
shall also pay the Executive his pro rata share of any bonus pursuant to
Section 4.2 or options vested under Section 5 which was earned as of the date
of his termination by achievement of the goals determined by the Board of
Directors.
(f) After a Change in Control, the Executive shall have the option of
receiving, within 30 days of the Change in Control, any sums due him under
Section 4.1 and reimbursement of expenses through the date of the Change in
Control plus severance compensation payable in one lump sum payment in an
amount equal to twelve months salary.
(g) With the exceptions of (i) the provisions of Section 7.3(b), (ii) the
provisions of Section 7.3(c), (iii) the provisions of Section 7.3(d), (iv) the
provisions of Section 7.3(e), and (v) the provisions of Section 7.3(f), and the
express terms of any benefit plan under which the Executive is a participant,
it is agreed that, upon termination of the Executive's employment, the Employer
shall have no obligation to the Executive for, and the Executive waives and
relinquishes, any further compensation or benefits (exclusive of COBRA
benefits). At the time of termination of employment, the Employer and the
Executive shall enter into a mutually satisfactory form of release
acknowledging such remaining obligations arising out of or in connection with
the Executive's employment by the Employer, including the circumstances of such
termination.
(h) In the event that the Executive's employment is terminated for cause under
Section 7.3(a)(iii) or the Executive is no longer a shareholder of the Employer
for any reason, the Executive shall (and does hereby) tender his resignation as
a director of the Employer and its Affiliates effective as of the date of
termination.
(i) In the event that the Employer terminates the Executive, other than
pursuant to Section 7.3(a)(iii), the Employer shall, within 10 days after
termination, offer to repurchase all of the Executive's Common Stock, at a
purchase price equal to the fair market value of the Common Stock, as
determined by the Board of Directors in good faith. In the event that the
Employer terminates the Executive pursuant to Section 7.3(a)(iii), the
Executive shall be required to sell all of his Common Stock, and he shall be
deemed to have offered such Common Stock, to the Employer at a purchase price
equal the fair market value of the Common Stock, as determined by the Board of
Directors in good faith.
Section 8. Confidential Information and Related Matters.
8.1. Confidential Information. (a) The Executive agrees to maintain in strict
confidence, and not use or disclose except pursuant to written instructions
from the Employer, any Trade Secret of the Employer and its Affiliates, for so
long as the pertinent data or information remains a Trade Secret, provided that
the obligation to protect the confidentiality of any such information or data
shall not be excused if such information or data ceases to qualify as a Trade
Secret as a result of the acts or omissions of the Executive.
(b) The Executive agrees to maintain in strict confidence and, except as
necessary to perform his duties for the Employer, not to use or disclose any
Confidential Business Information for so long as the pertinent data or
information remains Confidential Business Information.
(c) Upon termination of employment, the Executive shall leave with the
Employer all business records, contracts, calendars, telephone lists,
rolodexes, and other materials or business records relating to the Employer and
its Affiliates, its business or customers, including all physical, electronic,
and computer copies thereof, whether or not the Executive prepared such
materials or records himself. Upon such termination, the Executive shall
retain no copies of any such materials, provided, however, the Executive may
remove and retain all personal items and materials.
(d) The Executive may disclose Trade Secrets or Confidential Business
Information pursuant to any order or legal process requiring him (in his legal
counsel's reasonable opinion) to do so; provided, however, that for a period of
two years following the date of termination of this Agreement, the Executive
shall first have notified the Employer of the request or order to so disclose
the Trade Secrets or Confidential Business Information in sufficient time (at
least ten business days) to allow the Employer to seek an appropriate
protective order.
8.2. Agreement Not to Compete. If the Executive leaves the employ of
Employer for any reason other than following a Change in Control, then for a
period of one year following the date of termination, the Executive shall not
(without the prior written consent of the Employer) compete with the Employer
or any of its Affiliates by, directly or indirectly, forming, serving as an
organizer, director or officer of, or consultant to, or acquiring or
maintaining more than a 1% passive investment in, a depository financial
institution or holding company therefor if such depository institution or
holding company has one or more offices or branches located in the Territory.
8.3. Agreement Not to Solicit Customers. If the Executive leaves the employ of
Employer for any reason other than following a Change in Control, then for a
period of one year following the date of termination, the Executive shall not
(except on behalf of or with the prior written consent of the Employer), either
directly or indirectly, on the Executive's own behalf or in the service or on
behalf of others, (i) solicit, divert, or appropriate to or for a Competing
Business, or (ii) attempt to solicit, divert, or appropriate to or for a
Competing Business, any person or entity that was a customer of the Employer or
any of its Affiliates on the date of termination and is located in the
Territory.
8.4. Agreement Not to Solicit Employees. If the Executive leaves the employ of
Employer for any reason other than following a Change in Control, then for a
period of one year following the date of termination, the Executive will not,
either directly or indirectly, on the Executive's own behalf or in the service
or on behalf of others, (i) solicit, divert, or hire away, or (ii) attempt to
solicit, divert, or hire away, to any business located in the Territory, any
employee of or consultant to the Employer or any of its Affiliates engaged or
experienced in the Business, regardless of whether the employee or consultant
is full-time or temporary, the employment or engagement is pursuant to written
agreement, or the employment is for a determined period or is at will.
8.5. Extension of Term of Restrictions. If the Executive violates any of the
restrictions set forth in Sections 8.1 to 8.4 of this Agreement, the duration
of such restriction shall be extended by a number of days equal to the number
of days in which the Executive shall have been determined to be or shall have
admitted to being in violation of such restriction.
8.6 Remedies. The Executive acknowledges and agrees that great loss and
irreparable damage would be suffered by the Employer is the Executive should
breach or violate any of the terms or provisions of the covenants and
agreements set forth in Sections 8.1 to 8.4 of this Agreement. The Executive
further acknowledges and agrees that each of these covenants and agreements is
reasonably necessary to protect and preserve the interests of the Employer and
its Affiliates. The parties agree that money damages for any breach of
Sections 8.1 to 8.4 of this Agreement by the Executive are impossible to
measure, that the Employer is entitled to preliminary and permanent injunctive
relief in the event that the Executive violates any of the terms or provisions
of the covenants set forth in Sections 8.1 to 8.4, and that the Executive or
any of the Executive's affiliates, as the case may be, will, to the extent
permitted by law, waive in any proceeding initiated to enforce such provisions
any claim or defense that an adequate remedy at law exists, as well as any
requirements of bond. The existence of any claim, demand, action, or cause of
action against the Employer, whether predicated upon this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Employer of
any of the covenants or agreements in this Agreement; provided, however, that
nothing in this Agreement shall be deemed to deny the Executive the right to
defend against this enforcement on the basis that the Employer has no right to
its enforcement under the terms of this Agreement.
8.7. Severability; Reformation. The Executive acknowledges and agrees that
(i) the covenants and agreements contained in Sections 8.1 to 8.4 of this
Agreement are the essence of this Agreement; (ii) that the Executive has
receive good, adequate and valuable consideration for each of these covenants;
(iii) each of these covenants is reasonable and necessary to protect and
preserve the interests and properties of the Employer and the Business; (iv)
the Employer, through its Affiliates, is and will be engaged in and throughout
the Territory in the Business; (v) a Competing Business could be engaged in
from any place in the Territory; and (vi) the Employer has a legitimate
business interest in restricting the Executive's activities throughout the
Territory. The Executive also acknowledges and agrees that (i) irreparable
loss and damage will be suffered by the Employer should the Executive breach
any of these covenants and agreements; (ii) each of these covenants and
agreements in Sections 8.1 to 8.4 is separate, distinct and severable not only
from the other covenants and agreements but also from the remaining provisions
of this Agreement; and (iii) the unenforceability of any covenants or
agreements shall not affect the validity or enforceability of any of the other
covenants or agreements or any other provision or provisions of this Agreement.
The Executive acknowledges and agrees that if any of the provisions of Sections
8.1 to 8.4 of this Agreement shall ever be deemed to exceed the time, activity,
or geographic limitations permitted by applicable law, then such provisions
shall be and hereby are reformed to the maximum time, activity, or geographical
limitations permitted by applicable law.
8.8. Modification of Section 8 and Definitions. The Executive and the
Employer hereby agree that they will negotiate in good faith to amend this
Agreement from time to time to modify the terms of this Section 8, the
definition of the term "Territory," and the definition of the term "Business",
to reflect changes in the Employer's business and affairs so that the scope of
the limitations placed on the Executive's activities by this Section 8
accomplishes the parties' intent in relation to the then current facts and
circumstances. Any such amendment shall be effective only when completed in
writing and signed by the Executive and the Employer.
Section 9. Key-Man Life Insurance. The Executive will cooperate with Employer
in placing and maintaining key-man life insurance on the Executive in the
amount of $500,000.00, with the proceeds payable to the Employer or its
designee as beneficiary.
Section 10. Notices. All notices and other communications provided for or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if delivered personally or sent by registered or certified mail (return
receipt requested) postage prepaid to the parties at the following addresses
(or at such other address for any party as shall be specified by like notice,
provided that notices of a change of address shall be effective only upon
receipt thereof):
(a) If to the Employer:
David E. Johnson, CEO
The First Bancshares, Inc.
P. O. Box 15549
Hattiesburg, MS 39404-5549
-and-
Ralph T. Simmons
1808 North 7th Avenue
Laurel, MS 39440
With a copy (which shall not constitute notice) to:
Robert D. Gholson, Esq.
Law Offices of Robert D. Gholson, P.A.
P.O. Box 6523
Laurel, MS 39441-6523
(b) If to the Executive:
William M. Renovich
4 Bay Circle
Laurel, MS 39440
With a copy (which shall not constitute notice) to:
Harold W. Melvin, Esq.
Melvin Law Office
P.O. Box 2661
Laurel, MS 39442-2661
Section 11. Miscellaneous.
11.1 Representations and Covenants. In order to induce the Employer to enter
into this Agreement, the Executive makes the following representations and
covenants to the Employer and acknowledges that the Employer is relying upon
such representations and covenants:
(a) No restrictive covenants and/or non-compete agreements exist to which the
Executive is a party or otherwise bound which will interfere with or in any way
impede his ability to perform all of the terms and conditions of this
Agreement.
(b) The Executive, during the term of this Agreement, shall use his best
efforts to disclose to the Board of Directors by any effective method any bona
fide information known by him concerning the Bank or an Affiliate that would
have any material negative impact (in excess of $50,000) on the Employer or an
Affiliate.
11.2 Valuation of Stock. In the event of any disagreement between the
Executive and the Employer regarding the fair market value of the Common Stock,
the question of fair market value of the Common Stock shall be submitted to an
impartial and reputable appraiser selected by the mutual agreement of the
Executive and the Employer, or, failing such agreement, two appraisers (one of
which shall be selected by the Employer and the other by the Executive). The
determination of the question of the fair market value of the Common Stock by
such appraiser or appraisers shall be final and binding on the Executive and
the Employer for purposes of this Agreement. The Employer shall pay the
reasonable fees and expense of such appraiser or appraisers.
11.3 Assignability. This Agreement shall be assignable by the Employer to the
Bank, upon the formation of the Bank.
11.4 Entire Agreement. This Agreement contains the entire understanding of the
parties as to the subject matter hereof and fully supersedes all prior oral and
written agreements and understandings between the parties with respect to such
subject matter.
11.5 Amendment; Waiver. This Agreement may not be amended, supplemented,
canceled, or discharged, except by written instrument executed by the party
against whom enforcement is sought. No failure to exercise, and no delay in
exercising, any right, power or privilege hereunder shall operate as a waiver
thereof. No waiver of any breach of this Agreement shall be deemed to be a
waiver of any preceding or succeeding breach of this Agreement.
11.6. Binding Effect; Assignment. The Executive's rights and obligations
under this Agreement may not be assigned by him, except that his right to
receive accrued but unpaid compensation, unreimbursed expenses and other
rights, if any, provided under this Agreement which survive termination of this
Agreement shall pass after death to the personal representatives of his estate.
11.7. Headings. The headings contained in this Agreement (except those in
Section 1) are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
11.8. Counterparts. This Agreement may be executed in one or more copies,
each of which shall be deemed an original.
11.9. Governing Law. This Agreement has been executed and delivered in the
State of Mississippi, and its validity, interpretations, performance, and
enforcement shall be governed by the internal laws but not the conflicts of law
rules of such State. Venue for any action arising out of or related to this
Agreement shall be the Chancery Court for the Second Judicial District of Jones
County, Mississippi.
11.10 Agreement to Arbitrate. The parties agree that all controversies,
disputes, or claims between the parties arising out of or related to this
Agreement or the validity of this Agreement or any other agreement between the
parties or any other provision of any such agreements, will be submitted for
arbitration on demand of either party. All arbitration proceedings shall take
place in Hattiesburg, Mississippi or the closest hearing site to Hattiesburg,
Mississippi offered by the American Arbitration Association. If either party
is not a resident of or does not maintain a presence in the above-designated
State in which the designated hearing site is situated, then such party hereby
agrees to submit personally to the jurisdiction of arbitration proceeding with
respect to any award entered thereon, to the jurisdiction of the court of
competent subject matter jurisdiction located in the above designated state and
county. Except as otherwise provided in this Agreement, arbitration
proceedings will be heard by one arbitrator in accordance with the then current
commercial arbitration rules of the American Arbitration Association. All
matters relating to arbitration will be governed by the Federal Arbitration Act
(9 U.S.C. Section 1 et seq.) and not by any state arbitration law.
11.11. Further Assurances. Each party agrees at any time, and from time to
time, to execute, acknowledge, deliver and perform and cause to be executed,
acknowledged, delivered and performed, all such further acts, deeds,
assignments, transfers, conveyances, powers of attorney and assurances as may
be necessary or proper to carry out the provisions and intent of this
Agreement.
11.12. Gender; Number. In this Agreement, the use of one gender (e.g., "he",
"she" and "it") shall mean each other gender; and the singular shall mean the
plural, and vice versa, all as the context may require.
11.13. Severability. The parties acknowledge that the terms of this Agreement
are fair and reasonable at the date signed by them. However, in light of the
possibility of a change of conditions or differing interpretations by a court
of what is fair and reasonable, the parties stipulate as follows: if any one
or more of the terms, provisions, covenants or restrictions of this Agreement
shall be determined by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired, or invalidated; further, if any one or more of
the provisions contained in this Agreement shall for any reason be determined
by a court of competent jurisdiction to be excessively broad as to duration,
geographical scope, activity or subject, it shall be construed, by limiting or
reducing it, so as to be enforceable to the extent compatible with then
applicable law.
11.14. Consents. Any consent, approval or authorizations required hereunder
shall mean the written consent, approval or authorization of the chairman of
the board of the Employer or such other officer as may be designated in writing
by the Board of Directors.
11.15. Indemnification and Expenses. Both the Employer and the Bank will
indemnify the Executive and his legal representatives to the fullest extent
permitted by the laws of the State of Mississippi or any other state where the
Employer shall be incorporated from time to time and the existing or any future
bylaws of either of the Employer or the Bank, against all costs, charges and
expenses whatsoever incurred or sustained by him or his legal representatives
in connection with any action, suit or proceeding to which he or his legal
representatives may be made a party by reason of his being or having been a
director or officer of the Employer or the Bank (other than an action, suit or
proceeding against the Executive under this Agreement), and the Executive shall
be entitled to the protection of any insurance policies the Employer or the
Bank elect to maintain generally for the benefit of its directors and officers.
To the extent permitted by law, the Bank and the Employer shall advance all
reasonable costs, charges and expenses incurred by the Executive in defending
himself against any action referred to in this Section.
IN WITNESS WHEREOF, the Employer has caused this Agreement to be executed and
its seal to be affixed hereunto by its officers thereunto duly authorized, and
the Executive has signed and sealed this Agreement, effective as of the date
first above written.
THE FIRST BANCSHARES, INC.
BY: /s/ David E. Johnson
David E. Johnson, CEO
/s/ William M. Renovich
WILLIAM M. RENOVICH
<PAGE>
STATE OF MISSISSIPPI
COUNTY OF JONES
Personally appeared before me, the undersigned authority in and for the
jurisdiction aforesaid, the within named DAVID E. JOHNSON, CEO of FIRST
BANCSHARES, INC., a Mississippi Corporation, who acknowledged that he executed
and delivered the above and foregoing Employment Agreement on the day and year
therein mentioned as the act and deed of said corporation, having been first
duly authorized so to do.
Given under my hand and official seal this the 8th day of June, 1998.
/s/ Linda Carol Shelby
Notary Public
My commission expires:
June 13, 1999
STATE OF MISSISSIPPI
COUNTY OF JONES
Personally appeared before me, the undersigned authority in and for the
jurisdiction aforesaid, the within named WILLIAM M. RENOVICH, who acknowledged
that he executed and delivered the above and foregoing Employment Agreement on
the day and year therein mentioned.
Given under my hand and official seal this the 10th day of June, 1998.
/s/ Kerri S. Waites
Notary Public
My commission expires:
December 29, 2000
EXHIBIT 10.2
BANK DEVELOPMENT AGREEMENT
This Bank Development Agreement (the "Agreement") is made as of this 19th
day of June, 1998, by and among The First Bancshares, Inc., a Mississippi
corporation (the "Holding Company"), and the undersigned organizers (the
"Organizers") of First National Bank of the Pine Belt (in organization) (the
"Bank").
The Holding Company and the Organizers have jointly pursued the formation
of the Bank in Laurel, Mississippi. This Agreement formalizes the ongoing
terms of this joint pursuit.
NOW, THEREFORE, in consideration of these premises and the mutual
covenants hereafter set forth, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
Statement of Agreement
1. Structure. The Bank will be organized as a wholly-owned subsidiary
of the Holding Company and is anticipated to be a national bank, chartered by
the Office of the Comptroller of the Currency.
2. Capitalization. The initial capitalization of the Bank is expected
to be $5,000,000 (or such other amount as may be necessary to satisfy
applicable regulatory requirements). This initial capitalization is
anticipated to be funded as set forth in Section 5 below and will be
accomplished pursuant to the terms of a Conditional Subscription Agreement
between the Holding Company and the Bank, substantially in the form attached
hereto as Exhibit A.
3. Development. Each of the parties has agreed to cooperate in all
aspects of the development of the Bank and to exercise their good faith and
best efforts to accomplish the goals contemplated by this Agreement.
Notwithstanding the foregoing, the division of responsibilities related to the
organization and formation of the Bank shall be as follows:
A. Subject to the Organizers' approval of all material documents
and issues related thereto, which approval shall not be unreasonably withheld,
the Holding Company shall be responsible for the legal and accounting aspects
of organization of the Bank and all state and federal regulatory approvals.
B. Subject to the Holding Company's approval, which approval shall
not be unreasonably withheld, the Organizers may procure and provide
professional bank consultant services to the Holding Company to assist with the
formation of the Bank and all state and federal regulatory approvals.
C. The Organizers shall be responsible for the acquisition or
leasing of certain real or personal property related to the proposed operation
of the Bank, but the Holding Company shall be consulted and have opportunity
for input and comment on the selection of such property and all material
documents and issues related hereto.
D. Until such time as the parties mutually agree to the contrary, the
Holding Company shall have the right to approve the annual budget and all
capital expenditures for the Bank.
4. Allocation of Expenses.
A. Expenses Paid By Holding Company.
1. Legal and Accounting Fees. The Holding Company shall be
responsible for, and shall advance, all legal and accounting fees incurred by
the Holding Company or Bank which are associated with the Public Offering (as
defined below) and the formation of the Bank.
2. Pre-Opening Employee Expenses. As set forth in that
certain Employment Agreement by and between William M. Renovich and the Holding
Company, dated June 10, 1998 (the "Employment Agreement"), Mr. Renovich is
employed, initially as an employee of the Holding Company, to assist with the
formation of the Bank, and then as President and CEO of the Bank, for an
initial term of three years. Subject to reimbursement as set forth in Section
4(B)(2) hereof, until the Bank assumes the payment of Mr. Renovich's salary and
benefits as set forth in Section 9 hereof, the Holding Company shall be
responsible for, and shall advance, salary, FICA, perquisites and fringe
benefits to Mr. Renovich as set forth in the Employment Agreement.
B. Expenses Paid By Organizers. Subject to reimbursement as set
forth in Section 6, the Organizers shall advance the costs and expenses related
to the following:
1. General Expenses. All costs and expenses, other than the
costs and expenses to be paid by the Holding Company as set forth in Section
4(A), incurred by any party in connection with the formation of the Bank,
including but not limited to acquisition or leasing of real or personal
property, professional bank consulting fees, legal and other professional fees
related to the internal affairs among the organizers and the acquisition of
real or personal property as contemplated herein, FDIC and other federal
regulatory fees, and state filing fees, shall be the responsibility of, and
shall be advanced by, the Organizers.
2. Reimbursement of a Portion of Mr. Renovich's Salary
Expenses. Until the Bank assumes the payment of Mr. Renovich's salary and
benefits as set forth in Section 9, the Holding Company shall advance and pay
all salary, FICA, perquisites and fringe benefits to Mr. Renovich as set forth
in the Employment Agreement and Section 4(A)(2) above. Notwithstanding the
forgoing, 60% of the expenses for Mr. Renovich's salary, FICA, perquisites and
fringe benefits incurred by the Holding Company for the period commencing with
Renovich's employment by the Holding Company and ending upon the opening date
of the Bank shall be billed to the Organizers by the Holding Company and
immediately reimbursed by the Organizers to the Holding Company.
C. Funding of Organizers' Expense Obligations. To facilitate the
payment of such expenses by the Organizers, the Organizers will obtain a
$300,000 line of credit (the "Line of Credit") from The First National Bank of
South Mississippi, a wholly-owned subsidiary of the Holding Company, and will
enter into a contribution agreement among the Organizers to allocate liability
for the Line of Credit. The contribution agreement will provide that each
Organizer will be jointly and severally liable for the Line of Credit, up to a
maximum of $35,000 per Organizer.
5. Public Offering. The initial capitalization and reimbursement of
organizational costs for the Bank are anticipated to be funded from the
proceeds of a proposed estimated $5,000,000 to $10,000,000 public offering of
securities (at a price of $15.00 per share) to be conducted by the Holding
Company (the "Public Offering"). Such capitalization may, in the Holding
Company's sole discretion, be funded from sources other than the Public
Offering. The Organizers agree to cooperate in good faith with the preparation
of all documents related to the Public Offering as reasonably requested from
time to time by the Holding Company. The Organizers further agree to abide by
all applicable restrictions under federal and state securities laws which apply
to the Public Offering and the Holding Company's participation in the
development of the Bank. The parties agree that the Organizers will be
allocated five-eighths (5/8) of the offering to sell in the Jones County market
and the current members of the Board of Directors of the Holding Company will
be allocated three-eighths (3/8) of the offering of Holding Company securities
to sell in the Forrest/Lamar County markets in the Public Offering. It is
further agreed that: (a) no individual (or household) may purchase more than
$250,000.00 worth of stock in the Public Offering; and (b) the maximum amount
of stock that the Organizers will be allowed to purchase in the Public Offering
will be $2,500,000.00.
6. Reimbursement.
A. Reimbursement to Organizers. Upon the first of the following to
occur, the Holding Company shall assume the Line of Credit or otherwise satisfy
or cause the Bank to satisfy the Line of Credit (from the Bank's initial
capitalization or other source) thereby causing each Organizer to be relieved
of liability pursuant to the Line of Credit, up to an aggregate of $300,000:
1. The Bank lawfully opens for business and commences banking
operations, and the Organizers are not in material breach of this Agreement; or
2. The Organizers in the aggregate have irrevocably subscribed
and paid for at least $2,000,000 of securities in the Holding Company, and the
Bank fails to become licensed as a lawfully chartered bank as a result of facts
or circumstances which are the result or product of, in whole or in substantial
part, a negligent, willful or intentional act or omission of the Holding
Company or any authorized representative of the Holding Company.
B. No Reimbursement to Organizers. The Holding Company shall not
assume the Line of Credit or otherwise satisfy the Line of Credit, and the
Organizers shall remain liable for the Line of Credit in all circumstances
other than those set forth in Section 6(A) above, including any circumstance in
which the Bank fails to open for business for any reason other than as the
result or product of, in whole or in substantial part, a negligent, willful or
intentional act or omission of the Holding Company or any authorized
representative of the Holding Company. In any such case, the allocation of
expenses provided for in Section 4 above shall control.
7. Bank Directors. The Holding Company agrees to structure the initial
Board of Directors of the Bank to include and to be limited to each of the
Organizers, plus the Chief Executive Officer and the Chief Financial Officer of
the Holding Company, who are currently David E. Johnson and Charles Ruffin.
Upon the organization of the Bank, the Holding Company further agrees to elect
and re-elect each of the Organizers to the Board of Directors of the Bank until
such time as the Board of Directors of the Bank, by a two-thirds vote (with or
without cause) with the concurrence of the Holding Company, which concurrence
shall not be unreasonably withheld, requests that one or more of the Bank's
directors be replaced. In this event, the Holding Company shall replace the
appropriate directors of the Bank, in accordance with the instructions of the
Bank's Board of Directors, at the earliest practicable time in accordance with
the Bank's bylaws and applicable regulatory restrictions. Notwithstanding the
foregoing, the Board of Directors of the Bank shall not include any individual:
(i) who does not agree to serve on the Board of Directors, (ii) who is
prohibited by federal or state law, rule, or regulation, or the Bank's bylaws
or otherwise fails to receive the approval of the relevant bank regulatory
agencies, to serve on the board of directors of a bank or subsidiary of a
publicly held company, (iii) who has materially violated this Agreement, or
(iv) who is not approved by the Board of the Holding Company, which approval
will not be unreasonably withheld. The Holding Company hereby approves each of
the initial 16 Organizers who have executed this Agreement to serve on the
Bank's initial Board of Directors.
8. Holding Company Directors.
A. In the event (i) the Organizers in the aggregate have
irrevocably subscribed and paid for at least $2,000,000 of securities of the
Holding Company, and (ii) the incorporation and organization of the Bank is
completed and the Bank lawfully opens for business, the following shall occur:
1. The Holding Company will adopt appropriate corporate
resolutions to expand the size of the Holding Company's Board of Directors by a
sufficient number of members to permit the appointment of the nominees
described in Section 8(A)(2); and
2. Subject to the approval of the Holding Company, which shall
not be unreasonably withheld, a majority of the Board of Directors of the Bank
shall select four members of the Board of Directors of the Bank to be appointed
by the Holding Company's Board of Directors to fill four vacancies on the
Holding Company's Board of Directors which exist or are created pursuant to
Section 8(A)(1).
3. The Board of Directors of the Bank may, by a two-thirds
vote (with or without cause), replace any or all of the four individuals
initially selected by the Board of Directors of the Bank to serve on the
Holding Company's Board of Directors. Only members of the Board of Directors
of the Bank shall be eligible to be selected under this provision. Any
individuals selected by the Board of Directors of the Bank under this provision
shall be subject to the approval of the Holding Company. In the event of a
replacement selection by the Board of Directors of the Bank, the Holding
Company's Board of Directors shall replace the appropriate individuals on the
Holding Company's Board of Directors at the earliest practicable time in
accordance with the Holding Company's bylaws. The Holding Company's Board of
Directors shall also nominate and recommend the newly-selected individuals for
election to the Holding Company's Board of Directors at the Holding Company's
next annual meeting of shareholders.
B. Upon the satisfaction of the conditions precedent set forth in
Section 8(A) above, the Holding Company's Board of Directors shall nominate and
recommend for election to the Board of Directors of the Holding Company at the
next annual shareholder meeting of the Holding Company after the satisfaction
of the conditions precedent, four Directors of the Bank submitted to the Board
of Directors of the Holding Company by the Board of Directors of the Bank.
C. In the event that the conditions precedent set forth in Section
8(A) above have been satisfied, upon the expiration of the term of each
proposed director set forth in Section 8(B) above, the Board of Directors of
the Holding Company hereby agrees annually to nominate and recommend for
election or re-election as a director of the Holding Company the appropriate
number of individuals, whose names are submitted by the Board of Directors of
the Bank, to allow for the Bank's continued representation by four members of
the Bank's Board of Directors on the Holding Company's Board of Directors. All
individuals whose names are submitted to the Holding Company's Board of
Directors under this provision shall be subject to the approval of the Holding
Company, which shall not be unreasonably withheld.
D. Notwithstanding anything contained herein to the contrary, the
Holding Company shall not elect, nominate or recommend for election as a
director of the Holding Company any individual: (i) who does not agree to elect
or serve on the board of directors of the Holding Company, (ii) who is
prohibited by federal or state law, rule, or regulation, or the Holding
Company's bylaws, or otherwise fails to receive the approval of the relevant
bank regulatory agencies to serve on the board of directors of a bank or
publicly held company, or (iii) who has materially violated this Agreement.
The obligation of the Holding Company to elect or nominate directors under this
Section 8 shall terminate in the event the Bank ceases to be a wholly-owned
subsidiary of the Holding Company or the Organizers materially breach this
Agreement.
9. Mr. Renovich's Salary Assumption. Upon the Bank's lawful
commencement of business in Laurel, Mississippi, the Bank shall assume the
Holding Company's obligations under the Employment Agreement and shall pay to
Mr. Renovich, for the remainder of the initial term of the Employment Agreement
and any extensions thereof, his salary, FICA, perquisites, and fringe benefits
in pay periods as determined by the Bank, but no event less frequently than
monthly, unless Mr. Renovich's employment has been sooner terminated pursuant
to his Employment Agreement.
10. Assignment of Property Interests. Upon the incorporation and initial
capitalization of the Bank in an amount necessary to satisfy all applicable
state and federal bank regulatory requirements (or at any sooner time
designated by the Holding Company in its discretion, and then only upon the
Holding Company relieving the Organizers of liability under the Line of
Credit), the Organizers shall convey or assign to the Bank any and all right,
title and interest in and to any and all real or personal property which is
associated with or related to the proposed operation of the Bank, and which is
acquired by, or held in the name of, one or more Organizers or any entity
controlled by one or more Organizers, including but not limited to any fee
interest, leasehold interest, or option to acquire a fee or leasehold interest.
In the event of such conveyance or assignment as described in this Section 10,
the real and personal property conveyed, or interest therein which is assigned,
shall be free and clear of all liens or encumbrances except liens or
encumbrances in favor of the Holding Company or any subsidiary of the Holding
Company.
11. Office Support. Until the initial capitalization of the bank in an
amount necessary to satisfy all applicable state and federal bank regulatory
requirements, the Organizers will make available facilities, furniture,
fixtures, equipment, and clerical support for the initial operations of the
Bank.
12. Lock-Up. In consideration for the incurring of costs and expenses by
the Holding Company and the Organizers for the transactions contemplated
herein, for a period commencing the date hereof and ending on June 30, 1999:
(a) each of the Organizers agrees not to participate directly or indirectly in
any activity related to the formation of a new financial institution, or the
affiliation with or expansion of an existing financial institution, within a
50-mile radius of Laurel, Mississippi, other than the Bank contemplated herein
or a modification thereof which is to be a wholly-owned subsidiary of the
Holding Company, provided, however, that this restriction on the Organizers
shall not apply in the event that the Holding Company fails to receive
preliminary regulatory approval from the Federal Reserve to own 100% of the
stock of the Bank by December 31, 1998, as a result of facts or circumstances
which are not the result or product of, in whole or in substantial part, any
negligent, willful or intentional act or omission of one or more Organizers,
and (b) the Holding Company agrees not to participate directly or indirectly in
any activity related to the formation of a new financial institution within a
50-mile radius of Laurel, Mississippi, other than the Bank contemplated herein
or a modification hereof, which is to be affiliated with all the Organizers who
have neither materially violated either this Agreement or any other agreement
related to the formation of the Bank contemplated hereby and who have not
withdrawn from participation in this venture. After June 30, 1999 the parties'
restrictions, if any, on the ownership of, and participation in, other
competing financial institutions shall be governed and dictated by the parties'
fiduciary and other duties, if any, arising from the relationship of the
parties on such date and any applicable state and federal rule or regulation
applicable hereto. Each party hereto has carefully read and considered the
provisions of this Section 12, and, having done so, agrees that the
restrictions set forth in this Section 12 are fair and reasonable and are
reasonably required for the protection of the interests of each party hereto.
The parties hereto acknowledge that each party's services hereunder are a
special and unusual character with a unique value to the other parties hereto,
the loss of which cannot adequately be compensated by damages in an action at
law. In the event of a breach or threatened breach by a party hereto of any of
the provisions of this Section 12, the other parties hereto, or any one of
them, in addition to and not in limitation of, any other rights, remedies, or
damages available under this Agreement, shall be entitled to a permanent
injunction in order to prevent or restrain any such breach by the breaching
party or such party's partners, agents, representatives, servants, employers,
employees, consulting clients, or any and all persons directly or indirectly
acting for or with such breaching party.
13. Publicity and Confidentiality. All press releases and public
announcements about the Bank and any other activities contemplated by this
Agreement require the prior approval of the Holding Company after consultation
with securities counsel for the Holding Company. Each of the Organizers (i)
will abide by any disclosure and confidentiality guidelines to be provided from
time to time by the Holding Company and its counsel, (ii) will not make any
disclosures that are harmful to the development of the Bank unless legally
required to do so, in which case the Organizer shall notify the Holding Company
and its counsel before making any disclosure in order to give the Holding
Company and its counsel an opportunity to protest or appeal the requirement for
the disclosure, and (iii) will not make any disclosure respecting any matters
contemplated in this Agreement that will adversely affect the Holding Company's
compliance with federal or state securities laws. The Holding Company will,
with assistance of its counsel, adopt an insider trading policy, which shall
contain appropriate provisions for trading in the stock of the Holding Company
by insiders during certain periods or "trading windows" following the release
to the public of material information concerning the Holding Company. No
Organizer will trade in any of the Holding Company's stock when in possession
of material nonpublic information respecting the Holding Company, whether or
not during a "trading window." Each Organizer will at all times abide by all
insider-trading and other compliance policies as determined and distributed to
the Organizers by the Holding Company and its counsel from time to time.
14. Stock Options. Subject to the approval of its shareholders, and
assuming a $7.5 million offering, the Holding Company will grant the following
numbers of options to purchase shares of the common stock of the Holding
Company, at fair market value as of the date of grant, to the following groups
of individuals on a date after the successful opening of the Bank:
A. Approximately 30,000 options in the aggregate to the initial
members of the Board of Directors of the Bank;
B. Approximately 20,000 options in the aggregate to the initial
executive officers of the Bank; and
C. Approximately 15,000 options in the aggregate to members of the
Holding Company's Board of Directors (excluding those members appointed
from the Board of Directors of the Bank).
In the event the offering is either greater than or less than $7.5
million, the number of options provided for in this section 14 will be adjusted
proportionately.
15. Termination. This Agreement shall terminate upon the mutual written
consent of the Holding Company and a majority of the Organizers.
16. Legal Compliance. This Agreement constitutes neither an offer or a
sell, nor a solicitation of an offer to buy, securities of any kind whatsoever.
The parties acknowledge that securities will only be offered or sold after
compliance with all applicable federal and state securities laws. Each of the
Organizers and the Holding Company represent and warrant to the other parties
hereto that execution and performance of this Agreement and the transactions
contemplated herein will not violate any contract, commitment, or other legal
requirement binding upon such party.
17. Modifications. This Agreement can only be modified by a written
agreement duly signed by the Holding Company and a majority of the Organizers.
Moreover, in order to avoid uncertainty, ambiguity and misunderstandings in
their relationships, the parties hereto covenant and agree not to enter into
any oral agreement or understanding inconsistent or in conflict with this
Agreement; and the parties hereto further covenant and agree that any oral
communication allegedly or purportedly constituting such an agreement or
understanding shall be absolutely null, void and without effect.
18. Waiver. Any waiver by a party of any breach or any term or condition
hereof shall be affective only if in writing and such writing shall not be
deemed to be a waiver of any subsequent or other breach, term or condition of
this Agreement.
19. Relationship of the Parties. Nothing herein shall be deemed to
create any partnership or joint venture relationship between the parties. No
party shall make any representation or statement (whether written or oral) to
any person or entity inconsistent with this Section 19.
20. Third Parties. The provisions of this Agreement are not intended to
be for, and shall not inure to, the benefit of any third parties, and no third
party shall be deemed to have any privity of contract with any of the parties
hereto by virtue of this Agreement.
21. Assignments. Neither this Agreement nor any rights hereunder may be
assigned or otherwise transferred by any party, except that the Holding Company
may assign this Agreement to any corporation controlled by or under common
control with the Holding Company.
22. Cumulative Remedies. All rights and remedies of a party hereunder
shall be cumulative and in addition to such rights and remedies as may be
available to a party at law or equity.
23. Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes
all prior or contemporaneous written or oral agreements and representations
between the parties with respect thereto.
24. Notices. Any notice, request, approval, consent, demand or other
communication shall be effective upon the first to occur of the following: (i)
upon receipt by the party to whom such notice, request, approval, consent,
demand or other communication is being given; or (ii) three business days after
being duly deposited in the United States mail, registered or certified, return
receipt requested, and addressed as follows:
Holding Company: The First Bancshares, Inc.
6480 U.S. Highway 98 W
P.O. Box 15549
Hattiesburg, Mississippi
Attn: David Johnson
Organizers: First National Bank of the Pine Belt
(in organization)
c/o Robert D. Gholson, P.A.
P.O. Box 6523
Laurel, Mississippi 39441-6523
The parties hereto may change their respective addresses by notice in writing
given to the other party to this Agreement.
25. Severability. If any provision or provisions of this Agreement shall
be held to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
26. Governing Law. This Agreement has been executed and delivered in the
State of Mississippi, and its validity, interpretations, performance, and
enforcement shall be governed by the internal laws but not the conflicts of law
rules of such State. Venue for any action arising out of or related to this
Agreement shall be the Chancery Court for the Second Judicial District of Jones
County, Mississippi.
27. Agreement to Arbitrate. The parties agree that all controversies,
disputes, or claims between the parties arising out of or related to this
Agreement or the validity of this Agreement or any other agreement between the
parties or any other provision of any such agreements, will be submitted for
arbitration on demand of either party. All arbitration proceedings shall take
place in Hattiesburg, Mississippi or the closest hearing site to Hattiesburg,
Mississippi offered by the American Arbitration Association. If either party
is not a resident of or does not maintain a presence in Mississippi in which
the designated hearing site is situated, then such party hereby agrees to
submit personally to the jurisdiction of the arbitration proceeding and, with
respect to any award entered thereon, to the jurisdiction of a court of
competent subject matter jurisdiction located in the above designated state and
county. Except as otherwise provided in this Agreement, arbitration
proceedings will be heard by one arbitrator in accordance with the then current
commercial arbitration rules of the American Arbitration Association. All
matters relating to arbitration will be governed by the Federal Arbitration Act
(9 U.S.C. Section 1 et seq.) and not by any state arbitration law.
28. No Inference Against Author. No provision of the Agreement shall be
interpreted against any party because such party or its legal representative
drafted such provision.
29. Captions and Headings/Usage. The captions and headings are inserted
in the Agreement for convenience only, and in no event be deemed to define,
limit or describe the scope or intent of this Agreement, or of any provision
hereof, nor in any way affect the interpretation of this Agreement. All
pronouns and defined terms appearing herein shall be deemed to include both the
singular and plural, and to refer to all genders, unless the context clearly
requires otherwise.
30. Counterparts. This Agreement may be executed simultaneously in
several counterparts, each of which shall be deemed an original but which
together shall constitute one and the same original.
[signatures on following page]<PAGE>
IN WITNESS HEREOF, the parties hereto have duly executed this Bank
Development Agreement to be legally binding and effective as of the date first
above written.
THE FIRST BANCSHARES, INC.
By: /s/ David E. Johnson
Its: Chief Executive Officer
ORGANIZERS OF THE FIRST NATIONAL BANK OF THE PINE BELT:
/s/ Charels R. Lightsey /s/ Josephine C. Waites
Charles R. Lightsey Josephine C. Waites
/s/ J. Douglas Seidenburg /s/ M. Ray Cole
J. Douglas Seidenburg M. Ray Cole
/s/ Peeler Lacey, M.D. /s/ Roy H. Boutwell
Peeler Lacey, M.D. Roy H. Boutwell
/s/ Trent A. Mulloy /s/ Ralph T. Simmons
Trent A. Mulloy Ralph T. Simmons
/s/ John J. McGraw, M.D. /s/ Nick Welch
John J. McGraw, M.D. Nick Welch
/s/ Michael W. Chancellor /s/ William H. Wells
Michael W. Chancellor William H. Wells
/s/ William M. Renovich /s/ Eric E. Lindstrom, Jr.
William M. Renovich Eric E. Lindstrom, Jr.
/s/ David L. Rice, III
David L. Rice, III, D.M.D.
<PAGE>
EXHIBIT A
Conditional Subscription Agreement
<PAGE>
CONDITIONAL SUBSCRIPTION AGREEMENT
TO: First National Bank of the Pine Belt (in organization)
________________________
Laurel, Mississippi 29267
Attn: _____________________
In consideration for your agreement to sell and issue shares of the common
stock (the "Shares") of First National Bank of the Pine Belt (in organization),
a national bank (the "Bank"), to the undersigned subscriber (the "Holding
Company"), and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Holding Company hereby
conditionally agrees to acquire from the Bank and does hereby conditionally
subscribe for 500,000 Shares at a cash purchase price of $10.00 per share, for
a total subscription price of $5,000,000.
It is expressly understood and agreed by the Bank and Holding Company that
the Holding Company's obligations to acquire and pay for the Shares is subject
to and conditioned upon satisfaction of each of the following: (a) the receipt
by the Holding Company of at least $2,000,000 in gross proceeds from the
purchase of Holding Company securities by the Organizers of the Bank; (b) the
filing of all applications and other documentation with the Office of the
Comptroller of the Currency and the Federal Deposit Insurance Corporation and
either receipt or continued active pursuit of all regulatory approvals for this
investment and the Bank's proposed banking business; (c) the Holding Company,
upon completion of this subscription, will be the sole shareholder of the Bank;
and (d) the absence of any materially adverse changes in condition or
circumstances which would make the acquisition, development, or operation of
the Bank's proposed banking business unlawful, impracticable, or commercially
unreasonable.
The Holding Company agrees that in order for any of the foregoing
conditions to be effective for the benefit of the Holding Company, the Holding
Company shall have exercised its good faith and best efforts towards the
satisfaction of such conditions to the fullest extent that the same is within
the control of the Holding Company and is commercially feasible.
This Agreement shall be governed by the laws of the state of Mississippi
and the parties hereto agree to jurisdiction and venue, subject to proper
service of process, in the State of Mississippi. All terms and provisions
hereof are severable in the event of unenforceability of any one or more of
them. The terms hereof may only be amended, modified, or waived in writing
signed by the party to be bound thereby.
[signatures on following page]
<PAGE>
IN WITNESS WHEREOF, the Holding Company has executed this Conditional
Subscription Agreement to be effective as of the _____ day of _____________,
1998.
HOLDING COMPANY
THE FIRST BANCSHARES, INC.
By: ________________________________
Its: ________________________________
ACCEPTED as of the _____ day
of ______________, 1998.
First National Bank of the Pine Belt (in organization)
By: _________________________
Its: _________________________
