Exhibit 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement"), dated as of July 22, 2003, is
made and entered into by Capital Bank (hereinafter the "Bank"), and B. Xxxxx
Xxxxxx (hereinafter the "Employee").
The Bank desires to employ Employee and Employee desires to accept such
employment on the terms set forth below.
In consideration of the mutual promises set forth below and other good
and valuable consideration, the receipt and sufficiency of which the parties
acknowledge, the Bank and Employee agree as follows:
1. Employment. The Bank employs Employee and Employee accepts
employment on the terms and conditions set forth in this Agreement.
2. Nature Of Employment. Employee shall serve as Executive Vice
President and Chief Lending Officer and shall have such responsibilities and
authority consistent with such position as may be reasonably assigned to him by
the Bank. Employee shall devote his full time and attention and best efforts to
perform successfully his duties and advance the Bank's interests. Employee shall
abide by the Bank's policies, procedures, and practices as they may exist from
time to time.
During this employment, Employee shall have no other employment of any
nature whatsoever without the prior consent of the Bank; provided, however, this
Agreement shall not prohibit Employee from personally owning and dealing in
stocks, bonds, securities, real estate, commodities or other investment
properties for his own benefit.
3. Compensation and Benefits.
(a) Base Salary. Employee's initial base salary for all
services rendered shall be One Hundred Thirty Thousand and No/100 Dollars
($130,000.00) per year, payable in accordance with the Bank's policies,
procedures, and practices as they may exist from time to time. Employee's salary
shall be reviewed annually.
(b) Relocation Expenses. Employee shall be reimbursed by the
Bank for the following relocation expenses: reasonable expenses for packing,
unpacking, storage and transporting household goods and furniture; mileage for
moving personal cars; the realtor's fee for the sale of Employee's current
personal residence up to a maximum of six percent (6%) of the sales price;
temporary living expenses for up to ninety (90) days (not to exceed Six Thousand
Seven Hundred Fifty Dollars ($6,750); and reasonable travel expenses for up to
five (5) house hunting trips (not to exceed One Thousand Five Hundred Dollars
($1,500)). Employee shall also be entitled to reimbursement for closing costs on
any mortgage loan obtained for the purchase of a new personal residence so long
as that mortgage loan is obtained through the Bank. In addition, Employee will
be entitled to a gross-up for estimated income taxes due as a result of the
reimbursement amounts provided pursuant to this Section 3(b).
(c) Signing Bonus. Employee shall be entitled to a one-time
signing bonus in the amount of Fifteen Thousand and No/100 Dollars ($15,000.00)
payable in a lump sum, less all applicable withholdings, within fourteen (14)
days following the date on which the initial term of this Agreement commences.
(d) Employee's Obligation to Reimburse Bank. If Employee
should voluntarily terminate his employment by notice of non-renewal pursuant to
Section 4 or with notice pursuant to Section 5(a), then Employee hereby agrees
to reimburse the Bank for the signing bonus and the relocation expense
reimbursement in accordance with the following schedule: if such termination by
Employee is within the first twelve (12) months of his employment, he shall
reimburse the Bank one hundred percent (100%) of said signing bonus and
relocation expense reimbursement; if such termination is within the second
twelve (12) months of Employee's employment with the Bank, he shall reimburse
the Bank fifty percent (50%) of said signing bonus and relocation expense
reimbursement.
(e) Incentive Plan. Employee shall be eligible to participate
in the Bank's Management Incentive Plan in accordance with the terms,
conditions, and eligibility requirements of that Plan.
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Exhibit 10.1
(f) Benefits. Employee may participate in any medical
insurance or other employee benefit plans and programs which may be made
available from time to time to other Bank employees at Employee's level;
provided, however, that Employee's participation in such benefit plans and
programs is subject to the applicable terms, conditions, and eligibility
requirements of those plans and programs, some of which are within the plan
administrator's discretion, as they may exist from time to time.
(g) Automobile. Employee shall be entitled to use an
automobile provided by the Bank in accordance with the Bank's policies and
practices as they may exist from time to time.
(h) Expenses. Employee shall be reimbursed by the Bank for any
reasonable expenses incurred by Employee on behalf of the Bank or in connection
with Employee's performance of his duties hereunder. Such reimbursement shall be
in accordance with the Bank's practices or policies as they may exist from time
to time.
(i) Stock Options. Within thirty (30) days following
Employee's commencement of employment, Employee shall be granted an option for
ten thousand (10,000) shares of Capital Bank Corporation common stock at the
closing market price for the most recent trading day prior to the grant. These
options shall be incentive stock options and shall vest twenty percent (20%) per
year beginning one (1) year from the date of the grant, and shall be exercisable
over a ten (10) year period.
(j) Vacation. Employee shall be entitled to two (2) weeks of
vacation during calendar year 2003 and thereafter vacation entitlement shall be
in accordance with the Bank's policies. Such vacation shall be taken in
accordance with the Bank's policies and practices as they may exist from time to
time.
4. Term Of Employment. Unless terminated earlier as provided herein,
the original term of employment under this Agreement shall be for a one (1) year
period commencing on the date hereof. Upon the expiration of the original term
of employment or any subsequent term, this Agreement shall be automatically
renewed for an additional one (1) year period unless, prior to the renewal date,
either party gives the other thirty (30) days written notice of intent not to
renew.
5. Termination of Employment and Post-Termination Compensation.
(a) With Notice. Either the Bank or Employee may terminate
this Agreement during the original or any extension term of employment by giving
thirty (30) days written notice to the other party.
(b) Cause, Disability, or Death. The Bank may terminate
Employee's employment immediately for "Disability," "Cause," or in the event of
Employee's death. For purposes of this Agreement, Disability shall mean
Employee's mental or physical inability to perform the essential functions of
his duties satisfactorily for a period of one hundred eighty (180) consecutive
days or one hundred eighty (180) days within a 365-day period as determined by
the Bank in its reasonable discretion and in accordance with applicable law. For
purposes of this Agreement, "Cause" shall mean: (i) any act of Employee
involving dishonesty; (ii) any violation by Employee of any Bank rule,
regulation, or policy; (iii) gross negligence committed by Employee; (iv)
failure of Employee to perform his duties hereunder; or (v) Employee's breach of
any of the express obligations of this Agreement.
(c) Good Reason Prior to a Change in Control. Employee may
terminate this Agreement for Good Reason prior to a Change in Control by giving
thirty (30) days written notice to the Bank. For purposes of this Section 5(c),
Good Reason shall mean the occurrence of any of the following events or
conditions without Employee's prior written consent and prior to a Change in
Control:
(i) a change in Employee's status, title, position,
or responsibilities (including reporting responsibilities) which, in
Employee's reasonable judgment represents an adverse change from his
status, title, position, or responsibilities in effect immediately
prior thereto; the assignment to Employee of any duties or
responsibilities which, in Employee's reasonable judgment, are
inconsistent with his status, title, position or responsibilities; or
any removal of Employee from or failure to reappoint or re-elect him to
any of such positions, status, or title, except in connection with the
termination of his employment for Disability, Cause, or death, or by
Employee other than for Good Reason;
(ii) the Bank's requiring Employee to be based at any
place outside a thirty (30) mile radius from Raleigh, North Carolina,
except for reasonably required travel on the Bank's business;
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Exhibit 10.1
(iii) any purported termination of Employee's
employment for Cause or Disability without grounds therefore;
(iv) any material breach by the Bank of any provision
of this Agreement; or
(v) the Bank's notice of nonrenewal pursuant to
Section 4.
(d) Post-Termination Compensation.
(i) In the event of termination for Cause, the Bank's
obligation to compensate Employee ceases on the date of termination
except as to the amounts of salary due at that time.
(ii) In the event of a termination for death or
Disability, the Bank shall pay Employee or Employee's estate any salary
and prorated bonuses to which he may be entitled as of the date of
termination.
(iii) If, during the first three (3) years following
Employee's commencement of employment, there has been no Change in
Control and the Bank terminates Employee's employment without Cause or
Employee terminates his employment for Good Reason (as defined in this
Section 5), then Employee shall be entitled to receive an amount equal
to his most recent annual compensation (including any bonus), payable
in substantially equal amounts over the twelve (12) month period
following such termination. In addition, Employee shall be entitled to
participate in all life insurance, health, accidental death and
dismemberment, and disability plans and other benefit programs in which
Employee is entitled to participate immediately prior to the
termination, provided that Employee's continued participation is
possible under the general terms and provisions of such plans and
programs. Employee's continued participation in such plans and programs
shall be at no greater cost to Employee than the cost he bore for such
participation immediately prior to termination. If Employee's
participation in any such plan or program is barred, the Bank shall
arrange upon comparable terms, and at no greater cost to Employee than
the cost he bore for such plans and programs prior to termination, to
provide Employee with benefits substantially similar to, or greater
than, those which he is entitled to receive under any such plan or
program.
6. Change in Control.
(a) Definition. For purposes of this Agreement, "Change in
Control" shall mean any of the following:
(i) Any "person" (as such term is used in Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Act")) acquiring "beneficial ownership") (as such term is used in
Rule 13d-3 under the Act), directly or indirectly, of securities of
Capital Bank Corporation, the parent holding company of the Bank
("CBC") representing fifty percent (50%) or more of the combined voting
power of CBC's then outstanding voting securities (the "Voting Power"),
but excluding for this purpose an acquisition by CBC or an "affiliate"
(as defined in Rule 12b-2 under the Act) or by an employee benefit plan
of CBC or of an affiliate.
(ii) The individuals who constitute the Board of
Directors of CBC ("Board") on the effective date hereof or their
successors duly appointed in the ordinary course (collectively, the
"Incumbent Directors") cease to constitute at least a majority of the
Board. Any director whose nomination is approved by a majority of the
Incumbent Directors shall be considered an Incumbent Director;
provided, however, that no Director whose initial assumption of office
is in connection with an actual or threatened election contest relating
to the election of the directors of CBC shall be considered an
Incumbent Director.
(iii) The shareholders of CBC approve a
reorganization, share exchange, merger or consolidation related to CBC
or the Bank following which the owners of the Voting Power of CBC
immediately prior to the closing of such transaction do not
beneficially own, directly or indirectly, more than fifty percent (50%)
of the Voting Power of the Bank.
(iv) The shareholders of the Bank approve a complete
liquidation or dissolution of the Bank, or a sale or other disposition
of all or substantially all of the capital stock or assets of the Bank,
but excluding for this purpose any sale or disposition of all or
substantially all of the capital stock or assets of the Bank to an
"affiliate" (as defined in Rule 12b-2 under the Act) of CBC.
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Exhibit 10.1
A Change in Control shall not include a transaction, or series of transactions,
whereby CBC or the Bank becomes a subsidiary of a holding company if the
shareholders of the holding company are substantially the same as the
shareholders of CBC prior to such transaction or series of series of
transactions.
(b) Change in Control Termination. After the occurrence of a
Change in Control, Employee shall be entitled to receive payments and benefits
pursuant to this Agreement in the following circumstances:
(i) if within the period beginning ninety (90) days
prior to and ending two (2) years after the occurrence of a Change in
Control, the Bank terminates Employee's employment for any reason other
than Cause, Disability, or death; or
(ii) if within two (2) years after the occurrence of
a Change in Control, Employee terminates his employment with the Bank
for "Good Reason." For purposes of this Section 6(2), "Good Reason"
shall mean the occurrence after a Change in Control of any of the
following events or conditions:
(A) a change in Employee's status, title,
position, or responsibilities (including reporting
responsibilities) which, in Employee's reasonable judgment
represents an adverse change from his status, title, position,
or responsibilities in effect immediately prior thereto; the
assignment to Employee of any duties or responsibilities
which, in Employee's reasonable judgment, are inconsistent
with his status, title, position or responsibilities; or any
removal of Employee from or failure to reappoint or re-elect
him to any of such positions, status, or title, except in
connection with the termination of his employment for
Disability, Cause, or death, or by Employee other than for
Good Reason;
(B) a reduction in Employee's base salary;
(C) the Corporation's requiring Employee to
be based at any place outside a thirty (30) mile radius from
Raleigh, North Carolina, except for reasonably required travel
on the Corporation's business which is not substantially
greater than such travel requirements prior to the Change in
Control;
(D) the failure by the Corporation to
continue in effect any compensation, welfare, or benefit plan
in which Employee is participating at the time of a Change in
Control without substituting plans providing Employee with
substantially similar or greater benefits, or the taking of
any action by the Corporation which would adversely affect
Employee's participation in or materially reduce Employee's
benefits under, any of such plans or deprive Employee of any
material fringe benefit enjoyed by Employee at the time of the
Change in Control;
(E) any purported termination of Employee's
employment for Cause or Disability without grounds therefore;
(F) any material breach by the Corporation
of any provision of this Agreement; or
(G) the failure of the Corporation to obtain
an agreement, satisfactory to Employee, from any successor or
assign of the Corporation to assume and agree to perform this
Agreement.
(c) Change in Control Benefits. In the event that Employee's
employment with the Bank terminates under any of the circumstances described
above in this Section 6, Employee shall be entitled to receive all of the
following:
(i) all accrued compensation and any pro rata bonuses
to which he may be entitled and which Employee may have earned up to
the date of termination;
(ii) a severance payment equal to 2.99 times the
amount of Employee's most recent annual compensation, including the
amount of his most recent annual bonus. The severance payment shall be
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Exhibit 10.1
paid in substantially equal monthly installments without interest,
commencing one month after the date of termination;
(iii) a continuation of benefits. The Bank shall
maintain and Employee shall be entitled to participate in, for three
(3) years after the date of termination, all life insurance, health,
accidental death and dismemberment, and disability plans and other
benefit programs in which Employee was entitled to participate
immediately prior to the termination, provided that Employee's
continued participation is possible under the general terms and
provisions of such plans and programs. Employee's continued
participation in such plans and programs shall be at no greater cost to
Employee than the cost he bore for such participation immediately prior
to termination. If Employee's participation in any such plan or program
is barred, the Bank shall arrange upon comparable terms, and at no
greater cost to Employee than the cost he bore for such plans and
programs prior to termination, to provide Employee with benefits
substantially similar to, or greater than, those which he is entitled
to receive under any such plan or program; and
(iv) a lump sum payment (or otherwise as specified by
Employee to the extent permitted by the applicable plan) of any and all
amounts contributed to a Bank pension or retirement plan which Employee
is entitled to under the terms of any such plan.
(d) Limitation on Payments. To the extent that any of the
payments and benefits provided for under this Agreement or otherwise payable to
Employee constitute "parachute payments" within the meaning of section 280G of
the Internal Revenue Code of 1986, as amended (the "Code"), and but for this
Section 6 would be subject to the excise tax imposed by Section 4999 of the
Code, the Bank shall reduce the aggregate amount of such payments and benefits
such that the present value thereof (as determined under the Code and the
applicable regulations) is equal to 2.99 times Employee's "base amount" as
defined in Section 280G(b)(3) of the Code.
7. Covenant Not to Compete; Non-Solicitation. Employee acknowledges
that by virtue of Employee's employment with the Bank, Employee shall have
access to and control of confidential and proprietary information concerning the
Bank's business and that the Bank's business depends to a considerable extent on
the individual skills, efforts, and leadership of Employee. Additionally,
Employee acknowledges that the covenants contained in this Section 7 are
reasonably necessary to protect the legitimate business interests of the Bank
and are reasonable with respect to scope, time, and territory and are described
with sufficient accuracy and definiteness to enable him to understand the scope
of the restrictions imposed on him. Accordingly and in consideration of the
Bank's commitments to Employee under this Agreement, Employee expressly
covenants and agrees that Employee shall not, without the prior consent of the
Bank, during his employment and
(a) for one (1) year following the termination of his
employment regardless of the reason for the termination, within the geographical
areas set forth below, be employed (or otherwise engaged) in a management
capacity, any other capacity providing the same or similar services that
Employee provided to the Bank, or any capacity connected with the then primary
business activities of the Bank, by any person or entity that engages in the
then primary business activities of the Bank;
(b) for two (2) years following the termination of his
employment regardless of the reason for the termination except that, if such
termination should occur prior to a Change in Control, then the restrictive
period shall be one (1) year, on Employee's own or another's behalf, whether as
an officer, director, stockholder, partner, associate, owner, employee,
consultant or otherwise, directly or indirectly:
(i) solicit or do business that is the same, similar
to, or otherwise in competition with the business engaged in by the
Bank from or with persons or entities who are customers of the Bank,
who were customers of the Bank at any time during the last year of
Employee's employment with the Bank, or to whom the Bank made proposals
for business at any time during the last year of Employee's employment
with the Bank; or
(ii) employ, offer employment to, or otherwise
solicit for employment, any employee or other person who is then
currently an employee of the Bank or who was employed by the Bank
during the last year of Employee's employment with the Bank.
(c) The restrictions set forth in this Section 7 apply to the following
geographical areas:
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Xxxxxxx 00.0
(x) Xxxx Xxxxxx, Xxxxx Xxxxxxxx;
(ii) any city, metropolitan area, or county in which
the Bank maintains an office on the date of termination of Employee's
employment and over which officer Employee had substantial
responsibility.
8. Proprietary Information and Property. Employee shall not, at any
time during or following employment with the Bank, disclose or use, except in
the course of his employment with the Bank or as may be required by law, any
confidential or proprietary information of the Bank received by Employee while
employed hereunder, whether such information is in Employee's memory or embodied
in writing or other physical form.
Confidential or proprietary information is information which is not
generally available to the general public, or Bank's competitors, or
ascertainable through common sense or general business knowledge; including, but
not limited to data, compilations, methods, financial data, financial plans,
business plans, product plans, lists of actual or potential customers, and
marketing information regarding executives and employees.
All records, files or other objects maintained by or under the control,
custody or possession of the Bank or its agents in their capacity as agents
shall be and remain the Bank's property. Upon termination of his employment,
Employee shall return to the Bank all property (including, but not limited to,
equipment, records, files, documents, credit cards, and keys) which he received
in connection with his employment. At the Bank's request, Employee shall bring
current all such records, files or documents before returning them.
Upon notice of cessation of his employment with the Bank, Employee
shall fully cooperate with the Bank in winding up his pending work and
transferring his work to those individuals designated by the Bank.
The terms and conditions of this Section 8 shall survive expiration or
termination of this Agreement or Employee's employment and shall not be affected
by any change or modification of this Agreement unless specific reference is
made to this Section 8.
9. Remedies. Employee agrees that his breach or threatened violation of
Sections 7 and 8, will result in immediate and irreparable harm to the Bank for
which legal remedies would be inadequate. Therefore, in addition to any legal or
other relief to which the Bank may be entitled, the Bank may seek legal and
equitable relief, including but not limited to, preliminary and permanent
injunctive relief.
10. Waiver Of Breach. The Bank's or Employee's waiver of any breach of
a provision of this Agreement shall not waive any subsequent breach by the other
party.
11. Entire Agreement. This Agreement: (i) supersedes all other
understandings and agreements, oral or written, between the parties with respect
to the subject matter of this Agreement; and (ii) constitutes the sole agreement
between the parties with respect to this subject matter. Each party acknowledges
that: (i) no representations, inducements, promises or agreements, oral or
written, have been made by any party or by anyone acting on behalf of any party,
which are not embodied in this Agreement; and (ii) no agreement, statement or
promise not contained in this Agreement shall be valid. No change or
modification of this Agreement shall be valid or binding upon the parties unless
such change or modification is in writing and is signed by the parties.
12. Severability. If a court of competent jurisdiction holds that any
provision or sub-part thereof contained in this Agreement is invalid, illegal or
unenforceable, that invalidity, illegality or unenforceability shall not affect
any other provision in this Agreement. Additionally, if any of the provisions,
clauses or phrases set forth in Section 7 or 8 of this Agreement are held
unenforceable by a court of competent jurisdiction, then the parties desire that
such provision, clause or phrase be "blue-penciled" or rewritten by the court to
the extent necessary to render it enforceable.
13. Parties Bound. The terms, provisions, covenants and agreements
contained in this Agreement shall apply to, be binding upon and inure to the
benefit of the Bank's successors and assigns. Employee may not assign this
Agreement without the Bank's prior written consent.
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Exhibit 10.1
14. Governing Law. This Agreement and the employment relationship
created by it shall be governed by North Carolina law. The parties hereby
consent to exclusive jurisdiction in North Carolina for the purpose of any
litigation relating to this Agreement and agree that any litigation by or
involving them relating to this Agreement shall be conducted in the court of
Wake County or the federal court of the United States for the Eastern District
of North Carolina.
IN WITNESS WHEREOF, the parties have entered into this Agreement on the
day and year written below.
EMPLOYEE
/s/ B. Xxxxx Xxxxxx July 22, 2003
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B. Xxxxx Xxxxxx Date
CAPITAL BANK
By: /s/ Xxxxx X. Xxxx July 22, 2003
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Date
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