STATE OF NORTH CAROLINA COUNTY OF BUNCOMBE
STATE
OF NORTH CAROLINA
COUNTY
OF BUNCOMBE
THIS
AGREEMENT
entered
into as of February 18, 2005 by and between THE
BANK OF ASHEVILLE (hereinafter
referred to as the “Bank”) and XXXX
X. XXXXXXX (hereinafter
referred to as “Employee”).
W
I T N E S S E T H:
WHEREAS,
the
expertise and experience of Employee and his relationships and reputation in
the
financial institutions industry are extremely valuable to the Bank;
and
WHEREAS,
it is
in the best interests of the Bank and the shareholders of its parent bank
holding company, Weststar Financial Services Corporation (“Weststar”) to
maintain an experienced and sound executive management team to manage the Bank
and to further the Bank’s overall strategies to protect and enhance the value of
its shareholders’ investments; and
WHEREAS,
the
Bank and Employee desire to enter into this Agreement to establish the scope,
terms and conditions of Employee’s employment by the Bank; and
WHEREAS,
the
Bank and Employee desire to enter into this Agreement also to provide Employee
with security in the event of a change of control of the Bank or Weststar and
to
ensure the continued loyalty of Employee during any such change of control
in
order to maximize shareholder value as well as the continued safe and sound
operation of the Bank.
NOW,
THEREFORE,
for and
in consideration of the premises and mutual promises, covenants and conditions
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which hereby are acknowledged, the Bank and Employee hereby
agree as follows:
1. Employment.
The
Bank hereby agrees to employ Employee, and Employee hereby agrees to serve
as an
officer of the Bank, all upon the terms and conditions stated herein. As an
officer of the Bank, Employee will (i) serve as Senior Vice President and Senior
Credit Officer of the Bank, and (ii) have such other duties and
responsibilities, and render to the Bank such other management services, as
are
customary for persons in Employee’s position with the Bank or as shall otherwise
be reasonably assigned to him from time to time by the Bank. Employee shall
faithfully and diligently discharge his duties and responsibilities under this
Agreement and shall use his best efforts to implement the policies established
by the Bank.
Employee
hereby agrees to devote such number of hours of his working time and endeavors
to the employment granted hereunder as Employee and the Bank shall deem to
be
necessary to discharge his duties hereunder, and, for so long as employment
hereunder shall exist, Employee shall not engage in any other occupation which
requires a significant amount of Employee’s personal attention during the Bank’s
regular business hours or which otherwise interferes with Employee’s attention
to or performance of his duties and responsibilities as an officer of the Bank
hereunder except with the prior written consent of the Bank. However, nothing
herein contained shall restrict or prevent Employee from personally, and for
Employee’s own account, trading in stocks, bonds, securities, real estate or
other forms of investment for Employee’s own benefit so long as said activities
do not interfere with Employee’s attention to or performance of his duties and
responsibilities as an officer of the Bank hereunder.
During
the term of this Agreement, Employee shall be allowed, in his sole discretion,
to maintain his primary work location in Asheville, North Carolina.
2. Compensation.
For all
services rendered by Employee to the Bank under this Agreement, the Bank shall
pay Employee a base salary at a rate of Ninety-Five Thousand Dollars and
00/100’s ($95,000.00) per annum; provided that the rate of such salary shall be
reviewed by the President of the Bank not less often than annually. Salary
paid
under this Agreement shall be payable in cash not less frequently than monthly.
All compensation hereunder shall be subject to customary withholding taxes
and
such other employment taxes as are required by law. In the event of a Change
in
Control (as defined in Paragraph 8), Employee’s base salary shall be increased
not less than six percent (6%) annually during the term of this
Agreement.
3. Participation
in Retirement and Employee Benefit Plans; Fringe
Benefits.
Subject
to the terms and conditions of this Agreement, Employee shall be entitled to
participate in any and all employee benefit programs and compensation plans
from
time to time maintained by the Bank and available to all employees of the Bank,
all in accordance with the terms and conditions (including eligibility
requirements) of such programs and plans of the Bank, resolutions of the Bank’s
Board of Directors establishing such programs and plans, and the Bank’s normal
practices and established policies regarding such programs and plans.
2
The
Bank
shall reimburse Employee for all reasonable expenses incurred by him in the
performance of his duties under this Agreement and documented to the reasonable
satisfaction of the Bank pursuant to established policies.
4. Term.
Unless
sooner terminated as provided in this Agreement and subject to the right of
either Employee or the Bank to terminate Employee’s employment at any time as
provided herein, the term of this Agreement and Employee’s employment with the
Bank hereunder shall be for a period commencing on the date hereof and
continuing for a period of one (1) year. Within thirty (30) days prior to the
first anniversary of this Agreement, and within thirty (30) days of each
anniversary thereafter, the President and Chief Executive Officer of the Bank
shall determine whether the term shall be extended. Should the President and
Chief Executive Officer of the Bank make such an affirmative decision to extend
the Agreement, one additional year to the term of this Agreement shall be added
at the end of the first anniversary of this Agreement and, with subsequent
affirmative decisions to extend, on each anniversary date thereafter.
5. Confidentiality
and Non-Competition.
Employee hereby acknowledges and agrees that (i) in the course of his service
as
an officer of the Bank, he will gain substantial knowledge of and familiarity
with the Bank’s customers and its dealings with them, and other information
concerning the Bank’s business, all of which constitutes valuable assets and
privileged information that is particularly sensitive due to the fiduciary
responsibilities inherent in the banking business; and, (ii) in order to protect
the Bank’s interest in and to assure it the benefit of its business, it is
reasonable and necessary to place certain restrictions on Employee’s ability to
compete against the Bank and on his disclosure of information about the Bank’s
business and customers. For that purpose, and in consideration of the Bank’s
agreements contained herein, Employee covenants and agrees as provided
below.
For
the
purposes of this Paragraph 5, the following terms shall have the meanings set
forth below:
Customer.
The term
“Customer” means any Person with whom, as of the effective date of termination
of this Agreement or Employee’s employment with the Bank for any reason, the
Bank has or has had a depository, loan and/or other banking
relationship.
Financial
Institution.
The term
“Financial Institution” means any federal or state chartered bank, savings bank,
savings and loan association or credit union, or any
3
holding
company for or corporation that owns or controls any such entity, or any other
Person engaged in the business of making loans of any type or receiving
deposits, other than the Bank.
Person.
The
term “Person” means any natural person or any corporation, partnership,
proprietorship, joint venture, limited liability company, trust, estate,
governmental agency or instrumentality, fiduciary, unincorporated association
or
other entity.
(a) Confidentiality
Covenant.
Employee covenants and agrees that any and all data, figures, projections,
estimates, lists, files, records, documents, manuals or other such materials
or
information (financial or otherwise) relating to the Bank and its banking
business, regulatory examinations, financial results and condition, lending
and
deposit operations, customers (including lists of the Bank’s customers and
information regarding their accounts and business dealings with the Bank),
policies and procedures, computer systems and software, shareholders, employees,
officers and directors (herein referred to as “Confidential Information”) are
proprietary to the Bank and are valuable, special and unique assets of the
Bank’s business to which Employee will have access during his employment with
the Bank. Employee agrees that (i) all such Confidential Information shall
be
considered and kept as the confidential, private and privileged records and
information of the Bank, and (ii) at all times during the term of his employment
with the Bank and following the termination of this Agreement or his employment
for any reason, and except as shall be required in the course of the performance
by Employee of his duties on behalf of the Bank or otherwise pursuant to the
direct, written authorization of the Bank, Employee will not: divulge any such
Confidential Information to any other Person or Financial Institution; remove
any such Confidential Information in written or other recorded form from the
Bank’s premises; or make any use of any Confidential Information for his own
purposes or for the benefit of any Person or Financial Institution other than
the Bank. However, following the termination of Employee’s employment with the
Bank, this subparagraph (a) shall not apply to any Confidential Information
which then is in the public domain (provided that Employee was not responsible,
directly or indirectly, for permitting such Confidential Information to enter
the public domain without the Bank’s consent), or which is obtained by Employee
from a third party which or who is not obligated under an agreement of
confidentiality with respect to such information.
(b) Non-Competition
Covenant.
During
the term of this Agreement and for a period of two years after termination,
Employee agrees that he will not, within
4
Buncombe
County, North Carolina, directly or indirectly own, manage, operate, join,
control or participate in the organization, management, operation or control
of
or be employed by or connected in any manner with, any financial institution
which competes with the Bank without the prior written consent of the President
and Chief Executive Officer of the Bank and provided, however, that the
provisions of this Section 5(b) shall not apply in the event that Employee’s
employment hereunder is terminated by the President and Chief Executive Officer
of the Bank without “Cause” as such term is defined in Section 6(d) hereof, and
in the event that no additional non-competition agreement is made as part of
a
separate severance agreement giving rise to Employee’s termination of this
Agreement.
(c) Remedies
for Breach.
Employee understands and agrees that a breach or violation by him of the
covenants contained in Paragraph 5 of this Agreement will be deemed a material
breach of this Agreement and will cause irreparable injury to the Bank, and
that
it would be difficult to ascertain the amount of monetary damages that would
result from any such violation. In the event of Employee’s actual or threatened
breach or violation of the covenants contained in Paragraph 5, the Bank shall
be
entitled to bring a civil action seeking an injunction restraining Employee
from
violating or continuing to violate those covenants or from any threatened
violation thereof, or for any other legal or equitable relief relating to the
breach or violation of such covenant. Employee agrees that, if the Bank
institutes any action or proceeding against Employee seeking to enforce any
of
such covenants or to recover other relief relating to an actual or threatened
breach or violation of any of such covenants, Employee shall be deemed to have
waived the claim or defense that the Bank has an adequate remedy at law and
shall not urge in any such action or proceeding the claim or defense that such
a
remedy at law exists. However, the exercise by the Bank of any such right,
remedy, power or privilege shall not preclude the Bank or its successors or
assigns from pursuing any other remedy or exercising any other right, power
or
privilege available to it for any such breach or violation, whether at law
or in
equity, including the recovery of damages, all of which shall be cumulative
and
in addition to all other rights, remedies, powers or privileges of the
Bank.
Notwithstanding
anything contained herein to the contrary, Employee agrees that the provisions
of Paragraph 5(a) above and the remedies provided in this Paragraph 5(c) for
a
breach by Employee shall be in addition to, and shall not be deemed to supersede
or to otherwise restrict, limit or impair the rights of the Bank under the
Trade
Secrets Protection Act
5
contained
in Article 24, Chapter 66 of the North Carolina General Statutes, or any other
state or federal law or regulation dealing with or providing a remedy for the
wrongful disclosure, misuse or misappropriation of trade secrets or other
proprietary or confidential information.
(d) Survival
of Covenants.
Employee’s covenants and agreements and the Bank’s rights and remedies provided
for in this Paragraph 5 shall survive any termination of this Agreement or
Employee’s employment with the Bank.
6. Termination
and Termination Pay.
(a) Employee’s
employment under this Agreement may be terminated at any time by Employee upon
sixty (60) days written notice to the Bank. Upon such termination, Employee
shall be entitled to receive compensation through the effective date of such
termination; provided, however, that the Bank, in its sole discretion, may
elect
for Employee not to serve out part or all of said notice period.
(b) Employee’s
employment under this Agreement shall be terminated upon the death of Employee
during the term of this Agreement. Upon any such termination, Employee’s estate
shall be entitled to receive any compensation due to Employee computed through
the last day of the calendar month in which his death shall have occurred but
which remains unpaid.
(c) In
the
event Employee becomes disabled during the term of his employment hereunder
and
it is determined by the Bank that Employee is permanently unable to perform
his
duties under this Agreement, the Bank shall continue to compensate Employee
at
the level of compensation described in Paragraph 2 above, and shall continue
to
provide Employee each of the other benefits set forth or described in this
Agreement, for the remaining term of this Agreement, less any other payments
provided under any disability income plan of the Bank which is applicable to
Employee. In the event of any disagreement between Employee and the Bank as
to
whether Employee is physically or mentally incapacitated such as will result
in
the termination of Employee’s employment pursuant to this Paragraph 6(c), the
question of such incapacity shall be submitted to an impartial and reputable
physician for determination, selected by mutual agreement of Employee and the
Bank or, failing such agreement, by two (2) physicians (one (1) of whom shall
be
selected by the Bank and the other by Employee), and such determination of
the
question of such incapacity by such physician or physicians shall be
final
6
and
binding on Employee and the Bank. The Bank shall pay the reasonable fees and
expenses of such physician or physicians in making any determination required
under this Paragraph 6(c).
(d) The
Bank
may terminate Employee’s employment at any time for any reason with or without
“Cause” (as defined below), but any termination by the Bank other than
termination for “Cause” (as defined below) shall not prejudice Employee’s right
to compensation or other benefits under this Agreement for its remaining term.
Following any termination of Employee’s employment by the Bank for “Cause” (as
defined below), Employee shall have no further rights under this Agreement
(including any right to receive compensation or other benefits for any period
after such termination).
For
purposes of this Paragraph 6(d) , the Bank shall have “Cause” to terminate
Employee’s employment upon:
(i) A
determination by the Bank, in good faith, that Employee
(A)
has
breached in any material respect any of the terms or conditions of this
Agreement, or (B)
is
engaging or has engaged in willful misconduct or conduct which is detrimental
to
the business prospects of the Bank or which has had or likely will have a
material adverse effect on the Bank’s business or reputation. Prior to any
termination by the Bank of Employee’s employment for a breach, failure to
perform or conduct described in this subparagraph (i), the Bank shall give
Employee written notice which describes such breach, failure to perform or
conduct and if during a period of five business (5) days following such notice
Employee cures or corrects the same to the reasonable satisfaction of the Bank,
then this Agreement shall remain in full force and effect. However,
notwithstanding the above, if the Bank has given written notice to Employee
on a
previous occasion of the same or a substantially similar breach, failure to
perform or conduct, or of a breach, failure to perform or conduct which the
Bank
determines in good faith to be of substantially similar import, or if the Bank
determines in good faith that the then current breach, failure to perform or
conduct is not reasonably curable, then termination under this subparagraph
(i)
shall be effective immediately and Employee shall have no right to cure such
breach, failure to perform or conduct.
(ii) The
violation by Employee of any applicable federal or state law, or any applicable
rule, regulation, order or statement of policy promulgated by any governmental
agency or authority having jurisdiction over the Bank or any of its affiliates
or subsidiaries (a “Regulatory Authority”, including without limitation the
Federal Deposit
7
Insurance
Corporation, the North Carolina Commissioner of Banks or any other banking
regulator having legal jurisdiction over the Bank), which results from
Employee’s gross negligence, willful misconduct or intentional disregard of such
law, rule, regulation, order or policy statement and results in any substantial
damage, monetary or otherwise, to the Bank or any of its affiliates or
subsidiaries or to the Bank’s reputation;
(iii) The
commission in the course of Employee’s employment with the Bank of an act of
fraud, embezzlement, theft or proven personal dishonesty (whether or not
resulting in criminal prosecution or conviction);
(iv) The
conviction of Employee of any felony or any criminal offense involving
dishonesty or breach of trust, or the occurrence of any event described in
Section 19 of the Federal Deposit Insurance Act or any other event or
circumstance which disqualifies Employee from serving as an employee or
executive officer of, or a party affiliated with, the Bank or its bank holding
company;
(v) Employee
becomes unacceptable to, or is removed, suspended or prohibited from
participating in the conduct of the Bank’s affairs (or if proceedings for that
purpose are commenced) by any Regulatory Authority; or
(vi) The
occurrence of any event believed by the Bank, in good faith, to have resulted
in
Employee being excluded from coverage, or having coverage limited as to Employee
as compared to other covered officers or employees, under the Bank’s then
current “blanket bond” or other fidelity bond or insurance policy covering its
directors, officers or employees.
7. Additional
Regulatory Requirements.
Notwithstanding anything contained in this Agreement to the contrary, it is
understood and agreed that the Bank (or its successor in interest) shall not
be
required to make any payment or take any action under this Agreement if
(a)
the Bank
is declared by any Regulatory Authority to be insolvent, in default or operating
in an unsafe or unsound manner, or if (b)
in the
opinion of counsel to the Bank such payment or action (i)
would be
prohibited by or would violate any provision of state or federal law applicable
to the Bank, including without limitation the Federal Deposit Insurance Act
and
Chapter 53 of the North Carolina General Statutes as now in effect or hereafter
amended, (ii)
would be
prohibited by or would violate any applicable rules, regulations, orders or
statements of
8
policy,
whether now existing or hereafter promulgated, of any Regulatory Authority,
or
(iii)
otherwise
would be prohibited by any Regulatory Authority.
8. Change
in Control
(a) In
the
event of a “Change in Control” (as defined in Subparagraph (d) below), of the
Bank, Employee shall be entitled to terminate this Agreement upon the occurrence
within twenty-four (24) months following a change in control of any Termination
Event as defined in Subparagraph (b) below.
(b) A
Termination Event shall mean the occurrence of any of the following events:
(i) Employee
is assigned any duties and/or responsibilities that are inconsistent with his
position, duties, responsibilities, or status at the time of the Change in
Control or with his reporting responsibilities or titles with the Bank in effect
at such time;
(ii) Employee’s
annual base salary is reduced below the amount in effect as of the effective
date of a Change in Control or as the same shall have been increased from time
to time following such Change in Control;
(iii) Employee’s
life insurance, medical or hospitalization insurance, disability insurance,
dental insurance, stock option plans, stock purchase plans, deferred
compensation plans, management retention plans, retirement plans, or similar
plans or benefits being provided by the Bank to Employee as of the effective
date of the Change in Control are reduced in their level, scope, or coverage,
or
any such insurance, plans, or benefits are eliminated, unless such reduction
or
elimination applies proportionately to all salaried employees of the Bank who
participated in such benefits prior to such Change in Control; or
9
(iv) Employee
is transferred to a location outside of Asheville, North Carolina without
Employee’s express written consent.
A
Termination Event shall be deemed to have occurred on the date such action
or
event is implemented or takes effect.
(c) In
the
event that Employee terminates this Agreement or the Bank terminates this
Agreement pursuant to this Paragraph 8, the Bank will be obligated to pay or
cause to be paid to Employee the greater of (i) all amounts due and owing to
the
end of the term of this Agreement, or (ii) an amount equal to two hundred
ninety-nine percent (299%) of Employee’s “base amount” as defined in Section
28OG(b) (3) (A) of the Internal Revenue Code of 1986, as amended (the
“Code”).
(d) For
the
purposes of this Agreement, the term Change in Control shall mean any of the
following events:
(i) After
the
effective date of this Agreement, any “person” (as such term is defined in
Section 7 (j) (8) (A) of the Change in Bank Control Act of 1978), directly
or
indirectly, acquires beneficial ownership of voting stock, or acquires
irrevocable proxies or any combination of voting stock and irrevocable proxies,
representing thirty-five percent (35%) or more of any class of voting securities
of the Bank or Weststar or acquires control of in any manner the election of
a
majority of the directors of the Bank or Weststar;
(ii) The
Bank
or Weststar consolidates or merges with or into another corporation,
association, or entity, or is otherwise reorganized, where neither the Bank
nor
Weststar is the surviving corporation in such transaction; or
(iii) All
or
substantially all of the assets of the Bank or Weststar are sold or otherwise
transferred to or are acquired by any other corporation, association, or other
person, entity, or group.
10
Notwithstanding
the other provisions of this Paragraph 8, a transaction or event shall not
be
considered a Change in Control if, prior to the consummation or occurrence
of
such transaction or event, Employee and the Bank agree in writing that the
same
shall not be treated as a Change in Control for purposes of this
Agreement.
(e) Amounts
payable pursuant to this Paragraph 8 shall be paid, at the option of Employee
either in one lump sum or in equal monthly payments over the remaining term
of
this Agreement.
(f) Following
a Termination Event which gives rise to Employee’s rights hereunder, Employee
shall have twenty-four (24) months from the date of occurrence of the
Termination Event to terminate this Agreement pursuant to this Paragraph 8.
Any
such termination shall be deemed to have occurred only upon delivery to the
Bank
or any successor thereto, of written notice of termination which describes
the
Change in Control and Termination Event. If Employee does not so terminate
this
Agreement within such twenty-four month period, Employee shall thereafter have
no further rights hereunder with respect to that Termination Event, but shall
retain rights, if any, hereunder with respect to any other Termination Event
as
to which such period has not expired.
(g) It
is the
intent of the parties hereto that all payments made pursuant to this Agreement
be deductible by the Bank for federal income tax purposes and not result in
the
imposition of an excise tax on Employee. However, if any payments to be made
to
or for the benefit of Employee are deemed to be “parachute payments” as that
term is defined in Section 28OG(b)(2) of the Code, the Bank shall pay to
Employee the amount of any excise taxes imposed on Employee as well as any
additional tax imposed on Employee as a result of such payment.
(h) In
the
event any dispute shall arise between Employee and the Bank as to the terms
or
interpretation of this Agreement, including this Paragraph 8, whether instituted
by formal legal proceedings or otherwise, including any action taken by Employee
to enforce the terms of this Paragraph 8 or in defending against any action
taken by the Bank, the Bank shall reimburse Employee for all costs and expenses,
proceedings or actions, in the event Employee prevails in any such
action.
9. Successors
and Assigns.
11
(a) This
Agreement shall inure to the benefit of and be binding upon any corporate or
other successor of the Bank which shall acquire, directly or indirectly, by
conversion, merger, consolidation, purchase or otherwise, all or substantially
all of the assets of the Bank.
(b) The
Bank
is contracting for the unique and personal skills of Employee. Therefore,
Employee shall be precluded from assigning or delegating his rights or duties
hereunder without first obtaining the written consent of the Bank.
10. Modification;
Waiver; Amendments.
No
provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing and signed by the
parties hereto. No waiver by either party hereto, at any time, of any breach
by
the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver
of
similar or dissimilar provisions or conditions at the same or at any prior
or
subsequent time. No amendments or additions to this Agreement shall be binding
unless in writing and signed by both parties, except as herein otherwise
provided.
11. Applicable
Law.
This
Agreement shall be governed in all respects whether as to validity,
construction, capacity, performance or otherwise, by the laws of North Carolina,
except to the extent that federal law shall be deemed to apply.
12. Severability.
The
provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.
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IN WITNESS
WHEREOF,
the
parties have executed this Agreement under seal and in such form as to be
binding as of the day and year first hereinabove written.
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THE
BANK OF ASHEVILLE
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By:
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/s/
G. Xxxxxx Xxxxxxxxx
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|
|
G.
Xxxxxx Xxxxxxxxx, President
|
||
|
ATTEST:
|
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|
/s/
Xxxxxxx X. Xxxx
|
|||
|
Xxxxxxx
X. Xxxx, Secretary
|
|||
|
/s/
Xxxx X. Xxxxxxx
|
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|
Xxxx
X. Xxxxxxx
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13
