**EXHIBIT 10.5**

 

**EMPLOYMENT AGREEMENT**

 

**THIS EMPLOYMENT AGREEMENT** (“Agreement”) madeand entered into as of September 24, 2001 by and between Steven G. Deaton, a resident of the State of Georgia (“Employee”) and CNB Holdings, Inc., a Georgia bank holding company and Chattahoochee National Bank, CNB Holdings’ whollyowned subsidiary (collectively “CNB”). 

 

WITNESSETH: 

 

WHEREAS, CNB andEmployee each desire to enter into, or continue, an employment relationship with the other; and 

 

WHEREAS, CNB and Employee each deem it necessary and desirable, for their mutual protection, to execute a written document setting forth the terms and conditions of said relationship; 

 

NOW, THEREFORE, in consideration of the employment of Employeeby CNB, of the premises and the mutual promises and covenants contained herein, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree asfollows: 

 

1. *Employment and Duties.*CNBhereby employs Employee to serve as Executive Vice President and Senior Lending Officer and to perform such duties and responsibilities as customarily performed by persons acting in such capacity. During the 

 

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term of this Agreement, Employee will devote his full time and effort to his duties hereunder. 

 

2. *Term.*The period of the Employee’s employmentunder this Agreement shall be deemed to have commenced as of the date of this Agreement, and shall continue for a period of forty calendar months thereafter, unless the Employee dies before the end of such forty months, in such case the period ofemployment shall continue until the end of the month of such death. 

 

*3. Compensation.*For all services rendered by Employee during the term of this Agreement, CNB agrees to pay Employee in accordance with the terms outlined in Exhibit A net of applicable withholdings. 

 

*4. Expenses.* So long as employee is employed hereunder,Employee is entitled to receive reimbursement for, or seek payment directly by CNB of, all reasonable expenses which are consistent with the normal policy of CNB in the performance of Employee’s duties hereunder, provided that Employee accountsfor all such expenses in writing. 

 

5. *EmployeeBenefits.*So long as employee is actively employed hereunder*,*Employee will be entitled to participate in the employee benefit programs covering the Employee’s employment and duties as described in Exhibit A of this agreement, ifany, provided and paid for by CNB for its employees generally. 

 

6. *Paid Time Off.* Employee shall be entitled to twenty-five (25) Paid Time Off days, twenty (20) of which may be scheduled in advance. 

 

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7.*Confidentiality.* In Employee’s position as an employee of CNB, Employee has had and will have access to confidential information, trade secrets and other proprietary information of vital importance to CNB and has and will also developrelationships with customers, employees and others who deal with CNB which are of value to CNB. CNB requires as a condition to Employee’s employment with CNB that Employee agrees to certain restrictions on Employee’s use of proprietaryinformation and valuable relationships developed during Employee’s employment with CNB. In consideration of the terms and conditions contained herein, the parties hereby agree as follows: 

 

7.1 CNB and Employee mutually agree and acknowledge that CNBmay entrust Employee with highly sensitive confidential, restricted and proprietary information concerning various Business Opportunities (as hereinafter defined), customer lists, and personnel matters. Employee acknowledges that he shall bear afiduciary responsibility to CNB to protect such information from use or disclosure that is not necessary for the performance of Employee’s duties hereunder, as an essential incident of Employee’s employment with CNB. 

 

7.2 For the purposes of this Section, the followingdefinitions shall apply: 

 

7.2.1 “**TradeSecret**” shall mean the identity of customers of CNB, the whole or any portion or phase of any scientific or technical information, design, process, procedure, formula or improvement that is valuable and secret (in the sense that it is notgenerally known to competitors of CNB) and which is defined as a “trade secret” under Georgia law pursuant to the Georgia Trade Secrets Act. 

 

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7.2.2“**Confidential Information**” shall mean any data or information, other than Trade Secrets, which is material to CNB and not generally known by the public. Confidential Information shall include, but not be limited to, BusinessOpportunities of CNB (as hereinafter defined), the details of this Agreement, CNB’s business plans and financial statements and projections, and the costs of the services CNB may offer or provide to the customers they serve, to the extent suchinformation is material to CNB and not generally known to the public. 

 

7.2.3 “**Business Opportunities**” shall mean any specialized information or plans of CNB concerning the provision of financial services to the public, together with all related information concerning thespecifics of any contemplated financial services regardless of whether CNB has contacted or communicated with such target person or business. 

 

7.2.4 Notwithstanding the definitions of Trade Secrets, Confidential Information, and Business Opportunities set forth above, TradeSecrets, Confidential Information, and Business Opportunities shall not include any information: 

 

(i) that is or becomes generally known to the public; 

 

(ii) that is already known by Employee or is developed by Employee after termination of employment through entirely independent efforts;

 

(iii) that Employee obtains from an independentsource having a bona fide right to use and disclose such information; 

 

(iv) that is required to be disclosed by law, except to the extent eligible for special treatment under an appropriate protective order; or 

 

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(v) thatCNB’s Board of Directors approves for release. 

 

7.3 Employee shall not, without the prior approval of CNB’s Board, during his employment with CNB and for so long thereafter as the information or data remain Trade Secrets, use or disclose, or negligently permit anyunauthorized person who is not an employee of CNB to use, disclose, or gain access to, any Trade Secrets of CNB, its subsidiaries or affiliates, or of any other person or entity making Trade Secret’s available for CNB’s use. 

 

7.4 Employee shall not, without the prior written consent ofCNB, during his employment with CNB and for a period of two (2) years thereafter as long as the information or data remain competitively sensitive, use or disclose, or negligently permit any unauthorized person who is not employed by CNB to use,disclose, or gain access to, any Confidential Information to which the Employee obtained access by virtue of his employment with CNB, except as provided in Section 7.2 of this Agreement. 

 

*8. Observance of Security Measures.*During Employee’s employment with CNB, Employee is requiredto observe all security measures adopted to protect Trade Secrets, Confidential Information, and Business Opportunity of CNB. 

 

*9. Return of Materials*. Upon the request of CNB and, in any event, upon the termination of his employment with CNB, Employee shalldeliver to CNB all memoranda, notes, records, manuals or other documents, including all copies of such materials, pertaining to the performance of Employee’s services hereunder or containing Trade Secrets of Confidential Information, whethermade or complied by Employee or furnished to him from any source by virtue of his employment with CNB. 

 

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10.*Severability*. Employee acknowledges and agrees that the covenants contained in Sections 7 through 9 of this Agreement shall be construed as covenants independent of one another and distinct from the remaining terms and conditions of thisAgreement, and severable from every other contract and course of business between CNB and Employee, and that the existence of any claim, suit or action by Employee against CNB, whether predicated upon this or any other agreement, shall notconstitute a defense to CNB’s enforcement of any covenant contained in Sections 7 through 9 of this Agreement. 

 

11. *Specific Performance*. Employee acknowledges and agrees that the covenants contained in Sections 7 through 9 of this Agreementshall survive any termination of employment, as applicable, with or without cause, at the instigation or upon the initiative of either party. Employee further acknowledges and agrees that the ascertainment of damages in the event of Employee’sbreach of any covenant contained in Sections 7 through 9 of this Agreement would be difficult, if at all possible. Employee therefore acknowledges and agrees that CNB shall be entitled in addition to and not in limitation of any other rights,remedies, or damages available to CNB in arbitration, at law or in equity, upon submitting whatever affidavit the law may require, and posting any necessary bond, to have a court of competent jurisdiction enjoin Employee from committing any suchbreach. 

 

12. *Termination*. During the termof this agreement, employment, including without limitation, all compensation, salary, expenses, reimbursements, and employee benefits may be terminated as follows: 

 

12.1 At the election of CNB for Cause; 

 

12.2 At Employee’s election, uponCNB’s breach of any material 

 

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provision of this Agreement; 

 

12.3 “Cause” shall mean (i) conduct by Employee that amounts to fraud, dishonesty, gross negligence or willful misconduct in theperformance of duties hereunder; (ii) the conviction (from which no appeal may be, or is, timely taken) of Employee of a felony; or (iii) initiation of suspension or removal proceedings against Employee by federal or state regulatory authoritiesacting under lawful authority pursuant to provisions of federal or state law or regulation which may be in effect from time to time. No termination for Cause shall be effective unless it is approved by a two-thirds (2/3) vote of CNB’s Board ofDirectors, excluding the vote, if any, of Employee; or 

 

12.4 Upon Employee’s death, or at the election of either party, upon Employee’s disability resulting in inability to perform the duties described in Section 1 of this Agreement for a period of ninety (90) consecutive daysas determined by CNB’s Board of Directors in its sole discretion. 

 

13. *Notice*. All notice provided for herein shall be in writing and shall be deemed to be given when delivered in person or deposited in the United States Mail, registered or certified, return receipt requested, withproper postage prepaid and addressed as follows: 

 

CNB:
  
CNB Holdings, Inc.
   
7855 North Point Parkway, Suite 200
   
Alpharetta, Georgia 30022

With a copy to:
  
Troutman Sanders LLP
   
600 Peachtree Street, Suite 5200
   
Atlanta, Georgia 30308-2216
   
Attn: Thomas O. Powell, Esquire

Employee:
  
Steven G. Deaton
   
2670 Misty Morning Lane
   
Roswell, GA 30076

With a copy to:
   
 

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14.*Covenant Not to Compete*. 

 

14.1 Forpurposes of this Section 14, CNB and Employee conduct the following business in the following territories: 

 

14.1.1 CNB is engaged in the business of transacting business as a bank holding company with subsidiary banks which accept deposits, makeloans, cash checks and otherwise engage in the business of banking (“Business of CNB”). 

 

14.1.2 CNB (through its subsidiaries) actively conducts business in the geographic areas of Georgia at the business locations ofCNB’s subsidiaries set forth in Exhibit B of this Agreement. 

 

14.1.3 Employee has established business relationships and performs the duties described in Section 1 of this Agreement in the geographic area covered by a circle having a radius of fifty (50) miles from the location setforth as item 1 on EXHIBIT “B” of this Agreement, and will work predominately in such area while in the employ of CNB. 

 

14.2 Employee covenants and agrees that for a period of six (6) months after the termination of his employment with CNB without Cause,Employee shall not, directly or indirectly, as principal, agent, trustee, consultant or through the agency of any corporation, partnership, association, trust or other entity or person, on Employee’s own behalf or for others, provide the dutiesdescribed in Section 1 or this Agreement for any 

 

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entity or person conducting the Business of CNB within the geographic area covered by a circle having the radius of fifty (50) miles from thelocation set forth on EXHIBIT “B” of this Agreement. 

 

14.3 The covenants contained in this Section 14 shall be construed as agreements severable from and independent of each other and of any other provision of this or any other contract or agreement between the parties hereto. Theexistence of any claim or course of action by Employee against CNB, whether predicated upon this or any other contract or agreement, shall not constitute a defense to the enforcement by CNB of said covenants. 

 

15. Miscellaneous. 

 

15.1 This Agreement constitutes and expresses the wholeagreement of the parties in reference to the employment of Employee by CNB, and there are no representations, inducements, promises, agreements, arrangements, or undertakings oral or written, between the parties other than those set forth herein.

 

15.2 This Agreement shall be governed by thelaws of the State of Georgia. 

 

15.3 Should anyclause or any other provision of this Agreement be determined to be void or unenforceable for any reason, such determination shall not effect the validity or enforceability of any clause or provision of this Agreement, all of which shall remain infull force and effect. 

 

15.4 Time is of theessence in this Agreement. 

 

15.5 This Agreementshall be binding upon and ensure to the benefit of the parties hereto and their successors and assigns. This Agreement shall not be assignable by any other parties hereto without the prior written consent of the other parties. 

 

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15.6 ThisAgreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which taken together shall constitute but a single instrument. 

 

 

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

 
    
“Employee”
   
/s/    STEVEN G. DEATON

Witness
                    
ATTEST:
   
“CNB”
              
CNB HOLDINGS, INC.

By:
    
By:
 
/s/    H.N. PADGET, JR.        

Secretary
     
H. N. Padget, Jr., President & C.E.O.
       
(CORPORATE SEAL)
          
By:
 
/s/    DAVID R.HINK        
        
David R. Hink, Chairman of the

Compensation Committee
                  
CHATTAHOOCHEE NATIONAL BANK

By:
    
By:
 
/s/    H.N. PADGET,JR.        

Secretary
     
H. N. Padget, Jr., President & C.E.O.
    
By:
 
/s/    DAVID R.HINK        

(BANK SEAL)
     
David R. Hink, Chairman of the

Compensation Committee
       
 

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EXHIBIT A

 

**Salary:**

 

Period
  
Annual Salary Rate

9/01-6/02
  
121,000

7/02-6/03
  
127,000

7/03-6/04
  
135,000

7/04-12/04
  
144,000
    
 

**Annual PerformanceBonus Plan:**

 

Payable each January, based on the Bank’sperformance exceeding targeted return on Bank’s average equity (“ROAE”) as calculated and determined in accordance with generally accepted accounting principals by the Bank’s independent certified public accountants as set forthbelow: 

 

For YE
  
ROAE

Target
  
Combined cash bonus

and ESOP contribution

2002
  
11.00%
  
$26,666

2003
  
15.00%
  
  41,265

2004
  
16.00%
  
  47,850

 

For the purposes of thisAgreement: (I) ROAE shall exclude any gains or losses on investment securities as required by Statement of Financial Accounting Standards No. 115; (ii) ROAE shall be determined after subtracting the sum of any amount paid to or for the benefit ofEmployee hereunder and all other bonuses and compensation paid to Bank’s employees for such period; (iii) any annual contribution made by CNB to its Employee Stock Option Plan (ESOP) for the benefit of Employee shall be subtracted from theAnnual Performance Bonus with the remainder payable by CNB in cash to Employee; and (iv) in the event CNB achieves at least 85% of its ROAE Target, then Employee will receive a like percentage of the corresponding Cash Bonus and ESOP contributionabove. 

 

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**TerminationCompensation** – If by: (I) CNB without cause during the term of this Agreement payment by CNB to Employee as termination compensation in an amount equal to 6 months of existing base salary plus medical, hospitalization and term lifeinsurance; (ii) CNB without Cause during the term of this Agreement, in the event of a Change in Control of CNB, 1 year of existing base salary for payment by CNB to Employee as termination compensation. Change of control of CNB means anytransaction, whether by merger, consolidation, asset sale, tender offer, reverse stock split or otherwise, which results in the acquisition of beneficial ownership (as such term is defined under the rules and regulations promulgated under theSecurities Exchange Act of 1934, as amended) by any person or entity or any group of persons or entities acting in concert, of 50% or more of the outstanding shares of common stock of CNB; or (iii) CNB with Cause or in the event CNB or the Bank aretaken over by bank regulatory authorities, no termination compensation to employee. Non-compete, as defined in this Agreement, in effect for a time period equal to the termination compensation. 

 

**Stock Options** – Awarded by the Compensation Committee annually atits sole discretion. 

 

**Auto allowance** – The greater ofactual miles driven paid at the IRS standard rate or $450/mo. 

 

**Club membership:**

Horseshoe Bend Country Club monthly dues. 

 

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EXHIBIT B

 

Chattahoochee National Bank 

7855 North Point Parkway 

Suite 200

Alpharetta, Georgia 30022 

 

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