UNITED STATES
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): May 14, 2007
SECURITY FEDERAL CORPORATION
(Exact name of registrant as specified in its charter)
South Carolina 0-16120 57-0858504
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
238 Richland Avenue, West, Aiken, South Carolina 29801
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number (including area code): (803) 641-3000
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions.
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry Into a Material Definitive Agreement.
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On May 14, 2007, Security Federal Insurance, Inc., a subsidiary of
Security Federal Bank, entered into a revised employment agreement with Gerald
D. Jennings. Security Federal Bank is a wholly owned subsidiary of Security
Federal Corporation.
The revised employment agreement provides that during the period that
Terry L. Gilman is employed by Security Federal Insurance, Inc., Mr. Jennings
will receive 16% (rather than his current 20%) of the combined after tax net
income of Security Federal Insurance, Inc. and the Collier-Jennings Companies
in excess of $125,000, prior to the amortization of goodwill by Security
Federal Insurance, Inc., as determined by Security Federal Insurance, Inc. in
accordance with Generally Accepted Accounting Principles.
For additional information regarding the terms of the revised employment
agreement reference is made to the revised employment agreement that is
attached hereto as Exhibits 10.1 and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits
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(c) Exhibits
10.1 Employment Agreement with Gerald D. Jennings
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.
SECURITY FEDERAL CORPORATION
Date: May 15, 2007 By: /s/Timothy W. Simmons
-----------------------------
Timothy W. Simmons
Chief Executive Officer
Exhibit 10.1
Employment Agreement with Gerald D. Jennings
EMPLOYMENT AGREEMENT
[Gerald D. Jennings]
This AGREEMENT (the "Agreement") is made as of the 30th day of June 2006
and amended as of the 14th day of May 2007, by and among Security Federal
Insurance, Inc., a South Carolina corporation and the Collier-Jennings
Companies, as hereinafter defined (collectively the "Employer"), and Gerald D.
Jennings (the "Employee").
WITNESSETH
WHEREAS, the Employee is currently a shareholder, officer, and employee
of Collier Jennings Financial Corporation and The Auto Insurance Store, Inc.,
both of which are South Carolina corporations, and Security Federal Auto
Insurance, Inc. and Security Federal Premium Pay Plans, Inc. all Georgia
corporations and all with offices in North Augusta, South Carolina, that sell
insurance products and related services (the "Collier-Jennings Companies");
WHEREAS, on June 9, 2006, Security Federal Corporation ("Security
Federal") and the Employee entered into an Merger Agreement and Plan of Merger
(the "Merger Agreement") pursuant to which the Security Federal will acquire
the Collier-Jennings Companies as specifically set forth in the Merger
Agreement;
WHEREAS, on June 30, 2006, the Employee and Collier Jennings Real Estate,
LLC executed a pledge and security agreement ("Pledge Agreement") in
accordance with the Merger Agreement;
WHEREAS, upon consummation of the transactions contemplated by the Merger
Agreement, Employer intends to employ Employee as President each of the
Employer's entities.
WHEREAS, the parties recognize that the Employee's services were
essential to the development of the Collier-Jennings Companies' customer base
and will be essential to the maintenance and continued development of customer
relations and goodwill with regard to similar products and services offered by
the Employer and, therefore, that the Employee's services are and will be
special, unique and extraordinary;
WHEREAS, the Employer recognizes the importance of the Employee to the
Employer and the ability of the Employee to continue to develop and retain
customers for the Employer;
WHEREAS, it is a condition precedent to the obligation of the Employer to
consummate the transactions contemplated by the Merger Agreement that the
Employee enter into and on the Closing Date (as defined in the Merger
Agreement) be bound by an employment agreement with the Employer that provides
the Employer with appropriate protection for its confidential information;
WHEREAS, the parties agree that the Employee will be subject to certain
restrictive covenants necessary to protect the value of the Employer's
business, including, without limitation, confidential, proprietary and trade
secret information and customer lists and information, and goodwill among
customers, employees and vendors.
NOW THEREFORE, in consideration of good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Employer and the
Employee covenant and agree as follows:
1. Employment. The Employer agrees to employ the Employee and the
Employee agrees to be employed by the Employer on the terms and conditions set
forth in this Agreement.
2. Capacity. Beginning on the day immediately following the Closing
Date, the Employee shall serve as President of each of the Employer's
entities. In such capacity, the Employee shall manage the sales and servicing
of insurance and related products and services on behalf of the Employer or
its related or affiliated entities according to their specifications and shall
perform such other services and duties commensurate with his status as an
executive officer of the Employer in connection with the business, affairs and
operations of the Employer and shall be responsible for such services as may
be assigned or delegated to the Employee from time to time under the authority
of the Employer. In such capacity the Employee shall also take all actions
necessary to maintain all such licenses or regulatory approvals necessary to
engage in the activities contemplated by this Agreement, including without
limitation an insurance producers license with authority to negotiate
insurance policies in the State of South Carolina.
3. Term. Subject to the provisions of Section 7, the term of
employment pursuant to this Agreement shall be five (5) years from the Closing
Date (the "Term"). Reference herein to the Term of this Agreement shall refer
to both such initial term and any extended terms.
4. Compensation and Benefits. The compensation and benefits payable to
the Employee under this Agreement shall be as follows:
(a) Compensation. For all services rendered by the Employee under
this Agreement, the Employer shall pay the Employee an annual salary as set
forth in Exhibit A. In addition, the Employee shall be entitled to receive on
an annual basis during the term of this Agreement and no later than 90 days
following the close of the Employer's fiscal year, twenty percent (20%) of the
combined after tax net income of Security Federal Insurance, Inc. and the
Collier-Jennings Companies in excess of one hundred and twenty five thousand
and no/100 dollars ($125,000.00) prior to the amortization of goodwill as
determined by the Employer in accordance with Generally Accepted Accounting
Principles. Notwithstanding the foregoing, for so long as Terry L. Gilman is
employed by the Employer and receives five percent (5%) of the Employer's net
income, the percentage in the preceding sentence to be received by the
Employee from the Employer's net income shall be reduced from twenty percent
(20%) to sixteen percent (16%). For the period between the Closing Date and
March 31, 2007, the one hundred twenty five and no/100
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dollars ($125,000.00) shall be reduced by the pro rata portion of the period
of time that has elapsed during the year.
(b) Regular Benefits and Fringe Benefits. The Employee shall also
be entitled to participate in any employee benefit plans, medical insurance
plans, life insurance plans, disability income plans, retirement plans, and
other benefit plans or fringe benefits which the Employer or Security Federal
Bank may from time to time have in effect for all or most of its employees.
Such participation shall be subject to the terms regarding such participation
as may be set forth in the Merger Agreement and the terms of the applicable
plan documents, generally applicable policies of the Employer or Security
Federal Bank, applicable law and the discretion of the Board of Directors of
the Employer or Security Federal Bank ("Board of Directors") or any
administrative or other committee provided for in or contemplated by any such
plan. Nothing contained in this Agreement shall be construed to create any
obligation on the part of the Employer or Security Federal Bank to establish
any such plan or to maintain the effectiveness of any such plan which may be
in effect from time to time.
(c) Vacations; Leave. The Employee shall be entitled (i) to
annual paid vacation and sick leave in accordance with the policies
established by the Board of Directors for officers of the Employer or Security
Federal Bank with comparable titles and (ii) to voluntary leaves of absence,
with or without pay, from time to time at such times and upon such conditions
as the Board of Directors may determine in its discretion.
(d) Taxation of Payments and Benefits. The Employer shall
undertake to make deductions, withholdings and tax reports with respect to
payments and benefits under this Agreement to the extent that it reasonably
and in good faith believes that it is required to make such deductions,
withholdings and tax reports. Payments under this Agreement shall be in
amounts net of any such deductions or withholdings. Nothing in this Agreement
shall be construed to require the Employer to make any payments to compensate
the Employee for any adverse tax effect associated with any payments or
benefits or for any deduction or withholding from any payment or benefit.
(e) Exclusivity of Salary and Benefits/Offset. The Employee shall
not be entitled to any employment compensation payments or benefits other than
those provided under this Agreement other than reimbursement of expenses
reasonably incurred at the direction of the Employer. Payments hereunder may
be subject to valid off-set of amounts due and owing to Employee by Employer.
5. Extent of Service. During the Employee's employment under this
Agreement, the Employee shall, subject to the direction and supervision of the
Employer, devote the Employee's full business time, best efforts and business
judgment, skill and knowledge to the advancement of the Employer's interests
and to the discharge of the Employee's duties and responsibilities under this
Agreement. The Employee shall not engage in any other business activity,
except as may be approved by the Employer; provided that nothing in this
Agreement shall be construed as preventing
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the Employee from and only to the extent they do not interfere or conflict
with his job performance with Employer:
(a) investing the Employee's personal assets in any company or
other entity in a manner not prohibited by Section 6 of this Agreement and in
such form or manner as shall not require any material activities on the
Employee's part in connection with the operations or affairs of the companies
or other entities in which such investments are made; or
(b) engaging in religious, charitable or other community or
non-profit activities that do not impair the Employee's ability to fulfill the
Employee's duties and responsibilities under
this Agreement.
(c) Engaging in the activities of Imagine Studios, Inc. and ISI
Music Corporation, both South Carolina corporations, with offices in North
Augusta, South Carolina that perform, record, manufacture and publish musical
compositions.
(d) Performing his duties and obligations as an officer and
director of the South Carolina Association of Auto Insurance Agents, Inc. and
including the Employee's duties as an officer and director of Assurance Data
Systems, Inc., a South Carolina corporation that is a joint venture among the
association and Assurance Systems, Inc. of Atlanta, Georgia to provide
information technology services to insurance producers in South Carolina. The
Employee currently receives no compensation for his activities on behalf of
the association of Assurance Data Systems, Inc. and has no expectations of
receiving compensation at any time in the future from such activities.
(e) Engaging in the real estate investment and property management
activities of Collier Jennings Real Estate, LLC, a South Carolina limited
liability company.
6. Confidentiality/Non-Solicitation/Non-Disclosure.
(a) Definitions. For purposes of this Section 6:
(i) "Restricted Term" means the period ending three
(3) years from the date of the termination of the Employee's
employment with the Employer, regardless of reason.
(ii) "Services" means the solicitation, sale, or
renewal of insurance policies and related products and any other
products or services offered by the Employer.
(iii) "Confidential Information" means
information belonging to the Employer (including, for purposes of
this Agreement, each of the Employer's affiliated and related
entities), whether reduced to writing (or in a form from which
such information can be obtained, translated, or derived into
reasonably usable form),
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or maintained in Employee's mind or memory, which derives
independent economic value from not being readily known to or
ascertainable by proper means by others who can obtain economic
value from the disclosure or use of such information, including
without limitation, financial information, reports, and forecasts;
inventions, improvements and other intellectual property; trade
secrets; know-how; software and related code; market or sales
information or plans; Customer lists, including without limitation
to information concerning the assets, wealth or other personal or
financial information regarding a Customer; and business plans,
prospects and opportunities (such as possible acquisitions or
dispositions of businesses or facilities) which have been discussed
or considered by the management of the Employer or its affiliates.
Confidential Information includes information developed by Employee
in the course of Employee' employment by the Employer, as well as
other information to which Employee may have access in connection
with Employee's employment. Confidential Information also includes
the confidential information of others with which the Employer or
its affiliates has a business relationship. Notwithstanding the
foregoing, Confidential Information does not include information in
the public domain, unless due to breach of Employee's obligations
under this Section 6.
(iv) "Customer" means any person, insurance agency,
producer or other entity from whom the Employer or the Employee has
solicited, or to, or for, whom the Employer or the Employee has sold
any product or performed any service, whether or not for
compensation, within a period of twelve (12) months preceding the
termination of the Employee's employment with the Employer.
(b) Nonsolicitation of Customers. During the Restricted Term,
regardless of the reason for termination of his employment, the Employee will
not, directly or indirectly, in any capacity:
(i) solicit the business or patronage of any
Customer for any other person or entity for the purpose of providing
Services on behalf of any person other than the Employer,
(ii) divert, entice, or otherwise take away from the
Employer the business or patronage of any Customer, or attempt to do
so,
(iii) solicit or induce any Customer to terminate
or reduce any aspects of its relationship with the Employer, or
(iv) provide or assist with the provision of
insurance to a Customer (except in his capacity as an employee of
the Employer).
(c) Unfair Competition. For a period of twenty four (24) months
from the termination of employment, regardless of the reason for termination
of his employment, the
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Employee will not, directly or indirectly, in any capacity, whether as owner,
partner, director, shareholder, consultant, agent, employee, co-venturer or
otherwise, engage, participate, assist or invest in any business activity
involving the development, production, sale, provision or marketing of
Services in Aiken, Lexington or Richland counties in the State of South
Carolina and Columbia and Richmond counties in the State of Georgia. The
foregoing will not prevent the Employee from owning up to one percent (1%) of
the outstanding securities of a publicly-held corporation which competes with
Employer or any of Employer's affiliates or from being employed by or
affiliated or associated with any person or entity after termination of his
employment with the Employer so long as he does not have any direct or
indirect involvement on behalf of any such person or entity with respect to
developing, producing, selling, providing or marketing insurance or other
financial products or services. Subsequent to the termination of employment
with the Employer Gerald D. Jennings may form an insurance company subject to
his continued compliance with the provisions of Section 6 and the provisions
of this Agreement.
(d) Nonsolicitation of Employees. During the Restricted Term,
regardless of the reason for termination of his employment, the Employee will
not directly or indirectly, in any capacity:
(i) hire or employ, directly or indirectly through
any enterprise with which he is associated, any current employee of
the Employer or any of Employer's parent companies, subsidiaries or
affiliates, or any individual who had been employed by the Employer
or any of the Employer's affiliates, within one (1) year preceding
the termination of the Employee's employment without the express
written consent of the Employer; or
(ii) recruit, solicit or induce (or in any way assist
another person or enterprise in recruiting, soliciting or inducing)
any employee or consultant of the Employer or any of the Employer's
parent companies, subsidiaries or affiliates, to terminate his or
her employment or other relationship therewith.
(e) Acknowledgments. The Employee acknowledges and agrees that the
restrictions set forth in this Section 6 are intended to protect the interests
of the Employer in its commercial relationships and goodwill (with Customers,
prospective Customers, vendors, consultants and employees), including, without
limitation, commercial relationships and goodwill acquired by the Employer
through the transaction with the Employee, or developed while the Employee was
employed by the Employer, and are reasonable and appropriate for these
purposes.
(f) Confidentiality. The Employee understands and agrees that the
Employee's employment creates a relationship of confidence and trust between
the Employee and the Employer with respect to all Confidential Information. At
all times, both during the Employee's employment with the Employer and after
its termination, the Employee will keep in confidence and trust all such
Confidential Information, and will not use or disclose any such Confidential
Information without the written consent of the Employer, for any purpose
including without limitation solicitation of
6
insurance policies or related products or services, except as may be necessary
in the ordinary course of performing the Employee's duties to the Employer.
In addition, and without limitation upon any remedy provided herein,
the Employee agrees that the confidential and proprietary information
heretofore referenced as "Confidential Information" are considered "trade
secrets" under South Carolina Code Section 39-8-10 et. seq., "The South
Carolina Trade Secrets Act," and that the Employer is entitled to avail itself
of any and all remedies provided for by that Act for any misappropriation, or
any threatened misappropriation, of such information regardless of where or
when that misappropriation or threatened misappropriation might take place.
(g) Return of Property. All documents, records, data, apparatus,
equipment and physical property, whether or not pertaining to Confidential
Information, which are furnished to the Employee by the Employer or are
produced by the Employee in connection with the Employee's employment will be
and remain the sole property of the Employer. The Employee will return to the
Employer, all such materials and property, including any material or medium
from which any Confidential Information may be ascertained or derived, as and
when requested by the Employer. In any event, the Employee will return all
such materials and property immediately upon termination of the Employee's
employment for any reason. The Employee will not retain any such material or
property or any copies, compilations, or analyses thereof after such
termination.
(h) Liquidated Damages. Employee acknowledges and understands that
in the event that during the Restricted Period, the Employee violates Section
6(b) of this Agreement, which results in any Customer of the Employer
terminating or transferring any insurance policy from the Employer, the
damages to the Employer will be difficult to ascertain and that an amount
equal to three (3) times the then applicable annual commission(s) for such
policy(ies) is a reasonable estimate of actual damages caused by such a
breach. Therefore, the parties agree that if any Customer of the Employer
transfers any insurance policy(ies) from the Employer to the Employee or any
company then employing the Employee or engaging his services, or if the
Employee's actions result in any Customer of the Employer terminating or
transferring any insurance policy from the Employer, Employee shall pay to
Employer as liquidated damages an amount equal to three (3) times the then
applicable annual commission(s) for such policy(ies). The Employer's right to
liquidated damages under this Section 6(h) is in addition to any other
remedies the Employer may have under this Agreement, including Section 11
below.
7. Termination and Termination Benefits. Notwithstanding the
provisions of Section 3, the Employee's employment under this Agreement shall
terminate under the following circumstances set forth in this Section 7.
(a) Termination by the Employer for Cause. The Employee's
employment under this Agreement may be terminated for Cause without further
liability on the part of the Employer effective immediately upon written
notice to the Employee. For purposes of the foregoing sentence,
7
the term "Cause" shall include the occurrence of one or more of the following
events involving the Employee:
(i) the revocation of any license, approval or
permit held by the Employee which is required for the Employee to
engage in the activities contemplated by this Agreement provided,
however, such revocation shall not constitute "cause" for the
termination of the Employee if such license, approval or permit is
reinstated within 30 days of its revocation;
(ii) a conviction for a crime involving a felony or
a breach of professional ethics or moral turpitude;
(iii) an adjudication of incompetency;
(iv) any substantial failure, inability or refusal
by the Employee to satisfactorily perform assigned employment
duties; or
(v) any other material breach of this Agreement or
the Employee's breach of Section 3.9 of the Merger Agreement.
In the event of termination for cause, unless otherwise specifically
provided in this Agreement or otherwise required by law, all compensation and
benefits payable to the Employee under this Agreement shall terminate on the
date of termination of the Employee's employment under this Agreement. Nothing
in this Section 7 shall be construed to affect the Employee's right to receive
COBRA continuation entirely at the Employee's own cost.
(b) Death of the Employee. The Employee's employment under this
Agreement shall terminate upon the death of the Employee.
(c) Termination by the Employer Without Cause. The Employee's
employment under this Agreement may be terminated by the Employer without
Cause upon written notice to the Employee. In the event of such termination
without Cause, Employee's compensation and benefits shall continue to be paid
for the remainder of the term set forth in Section 3 above.
(d) Termination Following A Change in Control.
(i) If following a Change in Control, the Employer
shall cause a Change in Duties or Salary of Employee, other than
termination for Cause and if there has not been a termination of
this Agreement pursuant to Section 7(c) above, the Employer
shall:
(x) pay the Employee his salary, including the
pro rata portion of any incentive award,
through the date of termination;
8
(y) continue to pay, for the remaining term of
this Agreement, for the life, health and
disability coverage that is in effect with
respect to the Employee and his eligible
dependents; and
(z) pay to the Employee in a cash, pro rata
over a twelve (12)month period after the
later of the date of such Change in Control
or the Date of Termination, an amount equal
to one twelfth (1/12) of one hundred and
twenty percent (120%) of the Employee's
"base amount" as determined under Section
280G of the Internal Revenue Code of 1986,
as amended.
(ii) Notwithstanding any other provision of this
Agreement, if payments and the value of benefits received or to be
received under this Agreement, together with any other amounts and
the value of benefits received or to be received by the Employee,
would cause any amount to be nondeductible by Security Federal or
any of the Consolidated Subsidiaries for federal income tax purposes
pursuant to or by reason of Section 280G of the Code, then payments
and benefits under this Agreement shall be reduced (not less than
zero) to the extent necessary so as to maximize amounts and the
value of benefits to be received by the Employee without causing any
amount to become nondeductible pursuant to or by reason of Section
280G of the Code. The Employee shall determine the allocation of
such reduction among payments and benefits to the Employee.
(iii) The term "Change in Control" means (i) any
"person," as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")
(other than Security Federal, any Consolidated Subsidiaries (as
hereinafter defined), any person acting on behalf of Security
Federal as underwriter pursuant to an offering who is temporarily
holding securities in connection with such offering, any trustee or
other fiduciary holding securities under an employee benefit plan of
Security Federal, or any corporation owned, directly or indirectly,
by the stockholders of Security Federal in substantially the same
proportions as their ownership of stock of Security Federal), is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of Security
Federal representing 40% or more of the combined voting power of
Security Federal's then outstanding securities; (ii) the
stockholders of Security Federal approve a merger or consolidation
of Security Federal with any other corporation, other than (1) a
merger or consolidation which would result in the voting securities
of Security Federal outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 50% of the
combined voting power of the voting securities of Security Federal
or such surviving entity outstanding immediately after such merger
or consolidation or (2) a merger or consolidation effected to
implement a recapitalization of Security Federal (or similar
9
transaction) in which no person (as hereinabove defined) acquires
more than 25% of the combined voting power of Security Federal's
then outstanding securities; provided that the term "Change in
Control" shall not include an acquisition of securities by an
employee benefit plan of the Employer, Security Federal Bank or
Security Federal.
(iv) The term "Consolidated Subsidiaries" means any
subsidiary or subsidiaries of Security Federal (or its successors)
that are part of the affiliated group (as defined in Section 1504 of
the Internal Revenue Code of 1986, as amended (the "Code"), without
regard to subsection (b) thereof) that includes the Employer and
Security Federal Bank, including but not limited to Security
Federal.
(v) The term "Change in Duties or Salary" of
Employee shall mean any of: (a) a change in duties and
responsibilities of Employee for the Employer in effect at the time
a Change in Control occurs, which change results in the assignment
of duties and responsibilities inferior to those duties and
responsibilities of Employee at the time such Change in Control
occurs; (b) a reduction in rate of annual salary from such rate in
effect at the time of a Change in Control; or (c) a change in the
place of Employee assignment from North Augusta, South Carolina, to
any other city or geographical location that is located further than
25 miles from North Augusta, South Carolina.
8. Third-Party Agreements and Rights. The Employee hereby confirms
that the Employee is not bound by the terms of any agreement with any previous
employer or other party which restricts in any way the Employee's use or
disclosure of information or the Employee's engagement in any business. The
Employee represents to the Employer that the Employee's execution of this
Agreement, the Employee's employment with the Employer and the performance of
the Employee's proposed duties for the Employer will not violate any
obligations the Employee may have to any such previous employer or other
party. In the Employee's work for the Employer, the Employee will not disclose
or make use of any information in violation of any agreements with or rights
of any such previous employer or other party, and the Employee will not bring
to the premises of the Employer any copies or other tangible embodiments of
non-public information belonging to or obtained from any such previous
employment or other party.
9. Litigation and Regulatory Cooperation. During and after the
Employee's employment, the Employee shall cooperate fully with the Employer in
the defense or prosecution of any claims or actions now in existence or which
may be brought in the future against or on behalf of the Employer which relate
to events or occurrences that transpired before or while the Employee was
employed by the Employer. The Employee's full cooperation in connection with
such claims or actions shall include, but not be limited to, being available
to meet with counsel to prepare for discovery or trial and to act as a witness
on behalf of the Employer at mutually convenient times. During and after the
Employee's employment, the Employee also shall cooperate fully with the
Employer in connection with any investigation or review of any federal, state
or local regulatory
10
authority as any such investigation or review relates to events or occurrences
that transpired while the Employee was employed by the Employer. The Employer
shall reimburse the Employee for any reasonable out-of-pocket expenses
incurred in connection with the Employee's performance of obligations pursuant
to this Section 9.
10. Non-Disparagement. During and after the Employee's employment, the
Employee shall not make any statements that disparage the Employer or its
employees, officers, directors, services or business and the Employer shall
not make any statements that disparage the Employee.
11. Injunction. The Employee agrees that it would be difficult to
measure any damages caused to the Employer which might result from any breach
by the Employee of the promises set forth in this Agreement, and that in any
event, money damages would be an inadequate remedy for any such breach.
Accordingly, the Employee agrees that if he breaches, or threatens to breach,
any portion of this Agreement, the Employer shall be entitled, in addition to
all other remedies that it may have, to an injunction or other appropriate
equitable relief to restrain any such breach without showing or proving any
actual damage to the Employer.
12. Breach by Employer. In the event that Employer fails or refuses to
fulfill its obligations under this Agreement in any material respect, unless
there has been a termination of the employment of the Employee for Cause, the
Pledge Agreement executed by the Employee and Collier Jennings Real Estate,
LLC shall be terminated and the pledged Shares payable pursuant to Section 1.2
of the Merger Agreement shall be immediately delivered to Collier Jennings
Real Estate, LLC and Employee shall be released from any obligations under
Section 6 of this Agreement other than the obligations of Sections 6(f) and
6(g); and the Employee shall be entitled to all compensation and benefits
under this Agreement for the remainder of the term of this Agreement.
13. Integration. This Agreement and the Merger Agreement constitute the
entire agreement between the parties with respect to the subject matter hereof
and supersede all prior agreements between the parties with respect to any
related subject matter.
14. Assignment; Successors and Assigns, etc. Neither the Employer nor
the Employee may make any assignment of this Agreement or any interest herein,
by operation of law or otherwise, without the prior written consent of the
other party. This Agreement shall inure to the benefit of and be binding upon
the Employer and the Employee, their respective successors, executors,
administrators, heirs, and permitted assigns.
15. Enforceability/Severability. If any portion or provision of this
Agreement is to any extent declared illegal or unenforceable by a court of
competent jurisdiction, then the court may amend such portion or provision so
as to comply with the law in a manner consistent with the intention of this
Agreement, and the remainder of this Agreement, or the application of such
illegal or unenforceable portion or provision in circumstances other than
those as to which it is so declared illegal or unenforceable, will not be
affected thereby, and each portion and provision of the Agreement will be
valid and enforceable to the fullest extent permitted by law. In the event
that any
11
provision of this Agreement is determined by any court of competent
jurisdiction to be unenforceable by reason of excessive scope as to
geographic, temporal or functional coverage, such provision will be deemed to
extend only over the maximum geographic, temporal and functional scope as to
which it may be enforceable.
16. Waiver. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
17. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by a nationally recognized overnight courier service or by
registered or certified mail, postage prepaid, return receipt requested, (a)
in the case of the Employee, at the last address the Employee has filed in
writing with the Employer or (b) in the case of the Employer, at its main
offices, attention of the Chairman of the Board of Directors.
18. Amendment. This Agreement may be amended or modified only by a
written instrument signed by the Employee and by a duly authorized
representative of the Employer.
19. Governing Law. This is a South Carolina contract and shall be
construed under and be governed in all respects by the laws of the State of
South Carolina, without giving effect to the conflict of laws principles of
such State.
20. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be taken to
be an original; but such counterparts shall together constitute one and the
same document.
* * * * *
12
IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Employer, by its duly authorized officer, and by the
Employee, as of the Effective Date.
SECURITY FEDERAL INSURANCE, INC.
/s/Timothy W. Simmons
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By: Timothy W. Simmons
Its: Duly Authorized Representative
The Collier-Jennings Companies:
COLLIER JENNINGS FINANCIAL CORPORATION
By: /s/Gerald D. Jennings
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Its: President
SECURITY FEDERAL AUTO INSURANCE, INC.
By: /s/Gerald D. Jennings
----------------------------------------
Its: President
THE AUTO INSURANCE STORE, INC.
By: /s/Gerald D. Jennings
----------------------------------------
Its: President
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SECURITY FEDERAL PREMIUM PAY PLAN, INC.
By: /s/Gerald D. Jennings
----------------------------------------
Its: President
EMPLOYEE:
/s/Gerald D. Jennings
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14
EXHIBIT A
Pursuant to the provisions of Section 4(a) of the Employment Agreement by
and among the Employer (as defined in the Employment Agreement) and Gerald D.
Jennings (the "Employee"), the Employer shall pay the Employee the following
annual salary:
Annual Salary: one hundred and twenty five thousand and no/100 dollars
($125,000.00).