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EMPLOYMENT AGREEMENT
Among
BNCCORP, Inc.,
BNC National Bank
and
XXXXX X. XXXXX
Dated as of June 15, 1998
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EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") among BNCCORP, Inc., a
Delaware corporation (the "Company"), BNC National Bank, a national banking
association (the "Bank"), and Xxxxx X. Xxxxx (the "Executive"), is dated as of
June 15, 1998 (the "Commencement Date").
W I T N E S S E T H:
WHEREAS, as of the Commencement Date, the Bank desires to employ the
Executive as President and the Executive wishes to accept such employment;
WHEREAS, Executive is expected to make a major contribution to the
profitability, growth and financial strength of the Company and the Bank;
WHEREAS, the Company and the Bank consider the continued services of
Executive to be in the best interests of the Company and its stockholders and
the Bank and desire to assure the continued services and undivided loyalty of
the Executive on behalf of the Company and the Bank on an objective and
impartial basis and without distraction or conflict of interest in the event of
an attempt to obtain control of the Company;
WHEREAS, in consideration of the covenants of the Company and the Bank
contained herein, the Executive is willing to remain in the employ of the Bank
upon the terms and conditions specified below; and
WHEREAS, in order to induce Executive to remain in the employ of the
Bank, this Agreement sets forth the compensation and benefits payable to
Executive, including the severance benefits that the Company or the Bank agree
will be provided to Executive if Executive's employment with the Bank is
terminated.
NOW, THEREFORE, in consideration of the promises and respective covenants
and agreements that the parties herein contain, and intending to be legally
bound, the parties hereto agree as follows:
The Company and the Bank and the Executive agree as follows:
1. Employment Capacity and Term. Subject to the terms and conditions of
this Agreement, the Bank hereby agrees to employ Executive, and Executive agrees
to serve, as the President of the Bank for the period beginning on the
Commencement Date, through June 15, 2001, and from year to year thereafter
subject to the right of the Executive or the Company to terminate this Agreement
as of any subsequent anniversary date by written notice given to the other party
at least 90 days prior to such anniversary date. Termination of this Agreement
by either party in accordance with the preceding sentence shall not require a
statement of the reasons therefore. All provisions herein governing a party's
rights and obligations upon the termination of Executive's employment shall
survive the termination of this Agreement.
2. Duties; Place of Performance.
a. Duties. As the President of the Bank, the Executive shall
perform the duties normally associated with such office(s), such additional
duties as may be prescribed from time to time by the Board of Directors of the
Bank or the Company and such duties as are described in the
Bank's Bylaws as being duties or responsibilities of the President of the Bank.
Executive shall report to and be subject to the supervision of the President of
the Company. The Executive accepts such employment and agrees that, during the
term of this Agreement, the Executive will devote all of his business time and
attention to the business of the Company and the Bank and that he will not be
employed by any other business or engage in any other business activity that
would materially interfere with his ability to perform the duties required of
him under this Agreement or would constitute a conflict between his personal or
financial interests and the business or financial interests of the Company or
the Bank.
b. Place of Performance. In connection with the Executive's
employment by the Bank, the Executive shall be based at the principal executive
offices of the Company and the Bank in Bismarck, North Dakota, except for
required travel relating to the business of the Company or the Bank to an extent
substantially consistent with the Executive's prior business travel practices.
3. Compensation and Benefits. The Executive shall be provided with the
compensation and benefits described below:
a. Salary. An annual salary of $140,000, payable in equal monthly
installments. This salary may be increased from time to time by the Company's
Board of Directors and, if so increased, shall not thereafter be decreased
during the term of this Agreement.
b. Bonus. An annual incentive bonus with respect to the services
provided by the Executive. The amount of the annual incentive bonus shall be
determined from time to time by the Compensation Committee of the Company's
Board of Directors. The parties acknowledge and agree that the award of bonuses
by the Compensation Committee is discretionary and that this Section 3(b)
imposes no obligation on the Company to award a bonus to the Executive.
c. Other Benefits. The Executive shall be entitled to the benefits
and perquisites maintained by the Company for its employees generally, or for
its senior executives in particular, on the same basis and subject to the same
requirements and limitations as may be applicable to other senior executive
employees of the Company. The Company shall not directly or indirectly make any
changes in any benefit plan or arrangement or perquisite that would adversely
affect the Executive's rights or benefits thereunder, unless such changes do not
result in a proportionately greater reduction in the rights of or benefits to
the Executive compared with any other executive officer of the Company. The
Company agrees that where credited service of the Executive for the Company is
relevant in determining eligibility for benefits under any benefit plan or
arrangement, the Executive's credited service for the Company shall be deemed to
have commenced on the Commencement Date.
d. Partial Year; Proration. Any payments or benefits payable to the
Executive hereunder in respect of any fiscal year of the Company during which
the Executive is employed for less than the entire fiscal year shall, unless
otherwise provided in the applicable benefit plan, be prorated in accordance
with the number of days in such fiscal year during which the Executive is so
employed.
e. Life Insurance. The Company or the Bank shall maintain a life
insurance policy on the Executive in an amount not less than $1 million and the
Executive shall have the right to name the beneficiaries under such policy. Upon
termination of the Executive's employment, the Executive shall have the option
of purchasing the policy from the Company or the Bank for the cash surrender
value of the policy.
4. Other Benefits.
a. Vehicle. The Company or the Bank shall provide the Executive
with the use of a current model automobile of the Executive's choosing, subject
to approval by the President of the Company, and shall pay insurance and
maintenance expenses related to such automobile.
b. Club Membership. The Company or the Bank shall pay the
Employee's monthly membership dues at a country club in the Bismarck/Mandan area
as selected by the Executive.
c. Expenses. The Executive shall be reimbursed for reasonable
out-of-pocket expenses incurred from time to time on behalf of the Company, the
Bank or any subsidiary of the Company in the performance of his duties under
this Agreement, in accordance with standard Company procedures and upon the
presentation of such supporting invoices, receipts, documents and forms as the
Company reasonably requests.
d. Facilities; Secretarial Assistance. The Executive shall be
provided with office space, secretarial assistance and such other facilities and
services as shall be suitable to the Executive's position and adequate for the
performance of his duties.
5. Termination of Employment.
a. Death. The Executive's status as an employee shall terminate
upon the Executive's death during the term of this Agreement.
b. Disability. If (i) the Executive is incapable because of
physical or mental illness of satisfactorily discharging his duties under this
Agreement for a period of 90 consecutive days and (ii) a duly qualified
physician chosen by the Company and acceptable to the Executive or his legal
representatives so certifies in writing, the Company's Board may determine that
the Executive has become disabled. If the Company's Board makes such a
determination, the Company shall have the right, at any time during the period
that such disability continues to terminate the status of Executive as an
employee by notifying the Executive, in writing, of such termination in
accordance with Section 5(e). Any such termination shall become effective 30
days after such notice of termination is given (the "Disability Effective
Date"), unless within such 30-day period the Executive becomes capable of
resuming the duties contemplated hereby (and a physician chosen by the Company
and acceptable to the Executive or his legal representatives so certifies in
writing) and the Executive in fact resumes such duties. The Executive's
incapacity due to physical or mental illness to discharge the duties assigned by
this Agreement shall not constitute a breach of this Agreement by the Executive.
The Executive's death due to physical or mental illness to discharge the duties
assigned by this Agreement shall not constitute a breach of this Agreement by
the Executive.
c. By the Company for Cause. The Company may terminate the
Executive's status as an employee for Cause by notifying the Executive, in
writing, of such termination in accordance with Section 5(e). As used herein,
"Cause" shall mean (i) the willful and continuing failure by the Executive to
perform the duties contemplated by this Agreement (other than any failure
resulting from a certified disability of the type specified in Section 5(b))
within a reasonable period of time after a written demand for substantial
performance as delivered to the Executive by a duly authorized member or
representative of the Company's Board which specifically identifies the manner
in which it is alleged that the Executive has not substantially performed such
services, (ii) the conviction of a felony or (iii) the willful engaging by the
Executive in gross misconduct injurious to the Company or the Bank. For purposes
of this Agreement, an act or failure to act on the
Executive's part shall be considered "willful" if done or omitted to be done
without a reasonable belief that such action or omission was in, or not opposed
to, the best interests of the Company or the Bank. Any act or failure to act by
the Executive that is based upon authority given pursuant to a resolution duly
adopted by the Company's Board or based upon the advice of counsel for the
Company shall be presumed to be done or omitted to be done by the Executive with
a reasonable belief that such action was in, or not opposed to, the best
interests of the Company or the Bank. Notwithstanding the foregoing, the
Executive's employment may not be terminated for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution duly adopted
by the affirmative vote of not less than three-fourths of the entire membership
of the Company's Board (not counting the Executive) at a meeting of the
Company's Board and held for the purpose (after reasonable notice to the
Executive and an opportunity for the Executive, together with his counsel, to be
heard before the Company's Board), finding that in the good faith opinion of the
Company's Board the Executive was guilty of the conduct set forth in clauses
(i), (ii) or (iii) of this paragraph and specifying the particulars thereof.
d. By the Executive for Good Reason. The Executive may terminate
his status as an employee for Good Reason by notifying the Company, in writing,
of such termination in accordance with Section 5(e). The termination by the
Executive of his status as an employee for Good Reason shall be deemed to be a
justifiable termination and shall excuse the Executive from further duties under
this Agreement. As used herein, the term "Good Reason" shall mean:
(i) The occurrence of any of the following during the term of
this Agreement:
A. any removal of the Executive from, or any failure
to reappoint or reelect the Executive to, the position of President of the Bank,
except in connection with a termination by the Company of the Executive's
employment for Cause or on account of disability or death of the Executive;
B. a diminution in the Executive's duties,
responsibilities or position in the management of the Bank, including, without
limitation, the assignment to Executive of duties or responsibilities that are
inconsistent with the Executive's position as President, the demotion of the
Executive or the failure of the Company or the Bank to perform the obligations
under Section 3 or 4, which failure continues for a period of ten days after the
Executive gives the Company notice thereof;
C. requiring the Executive to be based anywhere
other than in Bismarck, North Dakota, except for required travel in the ordinary
course of the Company's or Bank's business;
(ii) a reduction in the Executive's annual salary or a
failure to pay to the Executive any installment of his annual salary or to pay
any other amounts required to be paid under this Agreement, which failure
continues for a period of 30 days after written notice thereof is given by the
Executive to the Company;
(iii) the failure by the Company to obtain the assumption of
its obligations under this Agreement by any successor or assign as contemplated
in Section 8;
(iv) any purported termination of the Executive's status as
an employee which is not effected pursuant to a Notice of Termination satisfying
the requirements of Section 5(e), or which is not justified as a termination
based on Cause;
(v) any material breach of this Agreement by the Company or
the Bank which has not been cured within 30 days following the giving of notice
by the Executive to the Company of such breach; or
(vi) any Change in Control.
As used in this Section, a "Change in Control" is deemed to have occurred
at such time as (A) any "person" or "group" of persons (as such terms are used
in Sections 13(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), other than a trustee or fiduciary holding securities under an
employee benefit plan of the Company, acquires "beneficial ownership" (as
defined in Rule 13d-3 under the Exchange Act) directly or indirectly, of 30% or
more of the Company's common stock, $.0l par value per share (the "Common
Stock"), other than an acquisition of Common Stock approved by at least
two-thirds of the Continuing Directors at any time when there is outstanding no
other proposal that would result in a change in control of the Company and which
had not been approved by at least two-thirds of the Continuing Directors, or (B)
a majority of the Company's Board is not comprised of Continuing Directors. As
used in this Section, "Continuing Directors" means any of the Directors in
office on the Commencement Date or any Director whose nomination for election to
the Board of Directors was approved by the vote of two-thirds of the Directors
in office on the Commencement Date or Directors whose nomination was previously
so approved.
e. Notice of Termination. Notice of
termination of the Executive's status as an employee must be communicated in a
writing delivered to the other party as provided in Section 9 (a notice of
termination complying with this sentence is referred to in this Agreement as a
"Notice of Termination"). Any Notice of Termination that purports to terminate
Executive's employment for Cause or for Good Reason shall specify the provision
or provisions of this Agreement relied upon by the party giving such notice and
shall set forth in reasonable detail the facts and circumstances claimed by such
party to provide a basis for termination of the Executive's employment under the
provision(s) so indicated.
f. Date of Termination. "Employment Termination Date" means
(i) if Executive's employment is terminated by the Company or the Bank for
Cause, or by Executive for Good Reason, the date of delivery of the Notice of
Termination or any later date specified therein, as the case may be, (ii) if the
Executive's employment is terminated by the Company or the Bank other than for
Cause or disability, the Date of Termination shall be the date on which the
Company or the Bank notifies the Executive of such termination and (iii) if
Executive's employment is terminated by reason of his death or disability, the
Date of Termination shall be the date of death of Executive or the Disability
Effective Date, as the case may be.
6. Obligations of the Company Upon Termination.
a. Death. If Executive's employment is terminated by his death, in
addition to all other death benefits provided by the Company and the Bank, the
Company or the Bank shall pay to Executive's spouse or, if he leaves no spouse,
to his estate, in a lump sum in cash within 30 days of the Date of Termination
the sum of the pro rata amount of Executive's annual base salary earned through
the Date of Termination to the extent due but not paid and any compensation
previously deferred by Executive (together with any accrued interest thereon)
and any accrued vacation pay, in each case to the extent not previously paid
(collectively, "Accrued Obligations"). The Company or the Bank shall also timely
pay or provide to such person any other amounts or compensation required to be
furnished to Executive under any benefit plan or arrangement ("Other Benefits").
b. Disability. During any period that Executive is deemed to be
disabled under Section 5(b) ("disability period"), Executive shall continue to
receive his full annual base salary at the rate then in effect for such period
until his employment is terminated pursuant to Section 5(b), provided that
payments so made to Executive shall be reduced by the sum of the amounts, if
any, payable to Executive under disability benefit plans of the Company. Upon
termination of Executive's employment under Section 5(b), the Company or the
Bank shall pay to Executive in a lump sum in cash within 30 days of the Date of
Termination all Accrued Obligations and shall timely furnish to Executive all
Other Benefits.
c. Cause. If Executive's employment shall be terminated for Cause
by the Company or the Bank, or voluntarily terminated by Executive other than
for Good Reason, this Agreement shall terminate without further obligation to
Executive other than for Accrued Obligations, which shall be paid in a lump sum
in cash within 30 days of the Date of Termination, and for Other Benefits, which
the Company or the Bank shall timely furnish to Executive.
d. Other than Death, Disability or Cause; Good Reason; Change in
Control. If during the term of this Agreement (i) the Company or the Bank shall
terminate Executive's employment, other than for death, disability or Cause, or
(ii) Executive shall terminate his employment for Good Reason or following a
Change in Control of the Company, then, in addition to all amounts or
compensation to which he is entitled pursuant to the Company's or the Bank's
termination policies and plans then in effect,
(A) Executive shall receive as severance pay an amount equal to one
fourth (1/4) of his Compensation Amount, payable in a lump sum within 30 days of
the Date of Termination. For purposes of this Section 6(d), the term
"Compensation Amount" shall mean Executive's annual base salary plus all cash
bonuses paid to Executive during the most recent twelve- month period ending
before the Date of Termination;
e. Change in Control Benefit. If Executive terminates his
employment following a Change in Control of the Company, then the Company or the
Bank shall pay to Executive, contemporaneously with payments due under Section
6(d) and in addition to any other amounts due, (i) the amount of any excise tax
imposed on Executive by Section 4999 or any successor provision of the Internal
Revenue Code of 1986, as amended, as a result of any determination or finding
that amounts received by Executive are "excess parachute payments" under such
section, (ii) the amount of any similar excise tax imposed on Executive by state
law and (iii) the amount of Executive's federal and state income and excise tax
liability generated by the payment to Executive of all amounts provided by
clauses (i), (ii) and (iii) of this Section 6(e).
7. Covenant Not To Compete. If Executive terminates his employment other
than for Good Reason, then for a period of two years from the date of such
termination of employment, Executive shall not directly or indirectly, solicit
any customers of the Company or the Bank or otherwise disrupt any previously
established relationships existing between a customer and the Company or the
Bank or own, manage, operate, control, be employed by, participate in, or be
connected in any manner with the ownership, management, operation or control of
any bank, savings and loan association, financial institution or any other
entity providing lending or deposit services located in either the City of
Bismarck or the County of Burleigh, North Dakota; provided, however, that the
Executive may own passive investments of not more than 5% of the outstanding
securities of any similar business (but without otherwise participating in such
business) if such securities are listed on a national or regional securities
exchange or quotations of such securities are published on a
national interdealer quotation system, or are registered under Section 12(g) or
15(d) of the Securities Exchange Act of 1934, as amended.
8. Binding Effect.
a. This Agreement shall be binding upon and inure to the benefit of
the Company, the Bank and any of its successors or assigns.
b. This Agreement is personal to the Executive and shall not be
assignable by the Executive without the consent of the Company (there being no
obligation to give such consent) other than such rights or benefits as are
transferred by will or the laws of descent and distribution.
c. The Company will require any successor or assign (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the assets or businesses of the Company (i) to assume
unconditionally and expressly this Agreement and (ii) to agree to perform all of
the obligations under this Agreement in the same manner and to the same extent
as would have been required of the Company had no assignment or succession
occurred, such assumption to be set forth in a writing reasonably satisfactory
to the Executive. In the event of any such assignment or succession, the term
"Company" as used in this Agreement shall refer also to such successor or
assign.
9. Notices. Any notice or other communication required under this
Agreement shall be in writing, shall be deemed to have been given and received
when delivered in person, or, if mailed, shall be deemed to have been given when
deposited in the United States mail, first class, registered or certified,
return receipt requested, with proper postage prepaid, and shall be deemed to
have been received on the third business day thereafter, and shall be addressed
as follows:
If to the Company, addressed to:
BNCCORP, INC.
000 Xxxx Xxxx
Xxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxx
If to the Executive, addressed to:
Xxxxx X. Xxxxx
0000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
or such other address as to which any party hereto may have notified the other
in writing.
10. Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of North Dakota.
11. Entire Agreement. This Agreement and the documents referred to herein
contain the entire arrangement or understanding between the Executive, the
Company and the Bank relating to the employment of the Executive by the Bank. No
provision of the Agreement may be modified or amended except by an instrument in
writing signed by both parties.
12. Severability. If any term or provision of this Agreement, or the
application thereof to any person or circumstance, shall at any time or to any
extent be invalid or unenforceable, the remainder of this Agreement, or the
application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby and each term and provision of this Agreement shall be valid and
enforced to the fullest extent permitted by law.
13. Waiver of Breach. The waiver by either party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach thereof.
14. Beneficiaries. Whenever this Agreement provides for any payment to be
made to the Executive or his estate, such payment may be made instead to such
beneficiary or beneficiaries as the Executive may have designated in writing and
filed with the Company. The Executive shall have the right to revoke any such
designation from time to time and to redesignate any beneficiary or
beneficiaries by written notice to the Company.
15. Survival. The rights and obligations of the Company and the Executive
contained in Sections 6, 7, 8, 9 and 10 of this Agreement shall survive the
termination of the Agreement. Following the termination of this Agreement, each
party shall have the right to enforce all rights, and shall be bound by all
obligations, of such party that are continuing rights and obligations under this
Agreement.
16. Expenses of Enforcement. If either party shall successfully seek to
enforce any provision of this Agreement or to collect any amount claimed to be
due hereunder, such successful party shall be entitled to be reimbursed by the
other party for any and all of its out-of-pocket expenses, including reasonable
attorneys' fees, incurred in connection with such enforcement and/or collection.
17. Remedy; Exclusivity. No remedy specified herein shall be deemed to be
such party's exclusive remedy, and accordingly, in addition to all of the rights
and remedies provided for in this Agreement, the parties shall have all of the
rights and remedies provided to them by applicable law, rule or regulation.
18. No Obligation to Mitigate Damages. The Executive shall not be
required to mitigate damages or the amount of any payment provided for under
this Agreement by seeking other employment or otherwise, nor shall the amount of
any payment provided for under this Agreement be reduced by any compensation
earned by the Executive as a result of employment by another employer or by
retirement or other benefits, before the date of this Agreement or after the
date of termination of his employment with the Bank, or otherwise, provided that
the Executive shall have complied with the provisions hereof.
19. Company's Reservation of Rights. The Executive acknowledges and
understands that the Executive serves at the pleasure of the Bank's Board of
Directors and that the Bank has the right at any time to terminate Executive's
status as an employee of the Bank, or to change or diminish his status during
the Employment Term, subject to the rights of the Executive to claim the
benefits conferred by Section 6(d) if such action constitutes a termination by
the Bank without Cause.
20. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
BNCCORP, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxxxx
Authorized Officer
BNC NATIONAL BANK
By: /s/ Xxxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxxxx
Authorized Officer
Executive:
/s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
