EMPLOYMENT AGREEMENT
Exhibit
10.2
This
Employment Agreement
(“Agreement”), dated as of January 31, 2008, is made and entered into between
Capital Bank
(hereinafter the “Bank”), and Xxxxxxx X. Xxxxx (hereinafter
“Employee”).
The
Bank
desires to continue 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 Financial
Officer and shall have such responsibilities and authority as may be
reasonably
assigned to him by the Bank. Employee shall also serve as Executive Vice
President of Capital Bank Corporation (“CBC” and, along with the Bank, sometimes
collectively referred to herein as the “Corporation”). Employee shall devote his
full time and attention and best efforts to perform successfully his
duties and
advance the Bank’s and CBC’s interests. Employee shall abide by the Bank’s and
CBC’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 or those of his immediate family.
3. Term.
Subject
to the earlier
termination provisions set forth in Section 5, the original term of this
Agreement shall be one (1) year commencing as of the date set forth above.
Upon
expiration of the original term or any renewal term, the term shall be
automatically renewed for an additional one (1) year period unless, at
least
thirty (30) days prior to the renewal date, either party gives notice
of its
intent not to continue the relationship. During any renewal term, the
terms,
conditions and provisions set forth in this Agreement shall remain in
effect
unless modified in accordance with Section 13.
(a) Base
Salary.
Employee’s initial
annual base salary for all services rendered shall be
One Hundred and Eighty Five and No/100 Dollars ($185,000.00) (less any
applicable taxes and withholdings), payable in accordance with the Bank’s
policies, procedures, and practices as they may exist from time to time.
Employee’s salary periodically may be reviewed and adjusted at the Bank’s
discretion in accordance with the Bank’s policies, procedures and practices as
they may exist from time to time.
(b) Incentive
Plan. Employee
shall be eligible to participate in the Capital Bank Corporation Equity
Incentive Plan in accordance with the applicable terms, conditions, and
eligibility requirements of that Plan, some of which are in the plan
administrator’s discretion, as they may exist from time to time.
(c) 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
or CBC
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.
(d) Expenses.
Employee
shall be
reimbursed by the Bank for any reasonable and necessary business 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.
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(e) Vacation.
Employee
shall be
entitled to four (4) weeks of vacation during calendar year 2008 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.
(a) With
Notice. Either
the Bank or Employee may terminate this Agreement and the employment
relationship created hereunder without cause at any time 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 material
violation by Employee of any Bank or CBC rule, regulation, or policy;
(iii) gross negligence
committed by Employee; (iv) material failure
of
Employee to perform his duties hereunder; or (v) Employee’s breach of
any of the express obligations of this Agreement.
(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’s obligation to
compensate Employee ceases on the date of termination, except as to any
accrued
compensation and any pro rata bonuses to which he may be entitled as
of the date
of termination. The Bank shall pay any such amounts to Employee or Employee’s
estate.
(iii) If
there
has been no Change in Control and the Bank terminates Employee’s employment
without Cause, then Employee, upon his execution of an enforceable general
release in a form prepared by the Bank, shall be entitled to (A) receive an amount
equal to his then current annual base salary plus the amount of bonus
paid to
Employee, if any, in the prior bonus year (less any applicable taxes
and
withholdings), payable in substantially equal amounts over a twelve (12)
month
period in accordance with the payroll schedule applicable to Employee
immediately prior to the termination of employment and beginning with
the first
month after the date of termination of employment (for purposes of Section
409A
of the Internal Revenue Code of 1986, as amended (the “Code”), as applicable,
each installment payment shall be considered a separate payment); and
(B) for the period
of
time Employee receives payments pursuant to Section 5(c)(iii)(A), participate
in
all life insurance, health, accidental death and dismemberment, and disability
plans paid by the Bank for Employee in which Employee participates immediately
prior to the termination, provided that Employee’s continued participation is
possible under the applicable terms, conditions and eligibility requirements
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. Provided, however, no installment payments
or
benefits shall be provided until the required general release becomes
effective.
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6. Non-Solicitation/Non-Compete.
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
Corporation’s and/or its affiliates’ business and that the Corporation’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 6 are reasonably necessary to protect the legitimate
business interests of the Corporation 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 Corporation’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, subject to Section 6(c) below, for one (1) year following
the cessation of his employment regardless of the reason for the
cessation,
(a) on
Employee’s own or another’s behalf, whether as an officer, director,
stockholder, partner, associate, owner, employee, consultant or
otherwise:
(i) within
any city, metropolitan area or county in which the Corporation does business
or
is located, engage in any business activity (or assist others to engage
in any
business activity) that directly competes with the Corporation;
(ii) solicit
or do business that is the same, similar to, or otherwise in competition
with
the business engaged in by the Corporation from or with persons or entities
who
are customers of the Corporation, who were customers of the Corporation
at any
time during the last year of Employee’s employment with the Bank, or to whom the
Corporation made proposals for business at any time during the last year
of
Employee’s employment with the Bank; or
(iii) employ,
offer employment to, or otherwise solicit for employment, any employee
or other
person who is then currently an employee of the Corporation or who was
employed
by the Corporation during the last year of Employee’s employment with the
Bank.
(b) within
any city, metropolitan area or county in which the Corporation does business
or
is located, be employed or otherwise engaged by any entity that engages
in the
same, similar or otherwise competitive business as the Corporation, to
provide
the same or similar services that Employee provided to the
Corporation.
(c) (i) If
(A) the
Bank terminates
Employee’s employment without Cause and (B) Employee waives
in
writing his right to receive payments pursuant to Section 5(c)(iii) hereof,
the
non-competition and non-solicitation restrictions contained in this Section
6
shall terminate on the later of (A) the cessation
of
Employee’s employment with the Bank or (B) the Bank’s receipt of
Employee’s waiver described in this Section 6(c)(i). (ii) In the event
that
Employee’s employment terminates under any of the circumstances described in
Section 8(b) (“Change in Control Termination”), the non-competition and
non-solicitation restrictions contained in this Section 6 shall terminate
six
(6) months following cessation of Employee’s employment with the
Bank.
7. 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 or CBC 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 the
Bank’s or CBC’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.
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All
records, files or other objects
maintained by or under the control, custody or possession of the Bank,
CBC, or
their agents in their capacity as agents shall be and remain the Bank’s or CBC’s
property respectively. Upon termination of his employment or upon the
Bank’s or
CBC’s earlier request, Employee shall return to the Bank all property
(including, but not limited to, credit cards, keys, company car, cell
phones,
computer hardware and software, records, files, manuals and other documents
in
whatever form they exist, whether electronic, hard copy or otherwise
and all
copies, notes or summaries thereof) 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.
(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 CBC, the parent holding company of the Bank, 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 in any twelve (12) month period. 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 CBC.
(iv) The
shareholders of CBC approve a complete liquidation or dissolution of
CBC, or a
sale or other disposition of all or substantially all of the capital
stock or
assets of CBC, but excluding for this purpose any sale or disposition
of all or
substantially all of the capital stock or assets of CBC to an “affiliate” (as
defined in Rule 12b-2 under the Act) of CBC.
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 three (3) 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
three (3) years after the occurrence of a Change in Control, Employee
terminates
his employment with the Bank for “Good Reason.” For purposes of this Section
8(b), “Good Reason” shall mean the occurrence of any of the following events or
conditions without Employee’s prior written consent:
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(A) a
change
in Employee’s status, title, position, or responsibilities (including reporting
responsibilities) which represents a material adverse change from his
status,
title, position, or responsibilities in effect immediately prior thereto;
the
assignment to Employee of any duties or responsibilities which are materially
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 (including positions, titles, and responsibilities
with any affiliate), except in connection with the termination of his
employment
for Disability, Cause, or death, or by Employee other than for Good Reason;
provided, however, that no such change, assignment, or removal shall
constitute
Good Reason so long as Employee suffers no reduction in Base Salary as
a result
of such change, assignment, or removal;
(B) the
Bank’s requiring Employee to be based at any place outside a thirty (30) mile
radius from its headquarters at 000 Xxxxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxx
Xxxxxxxx, except for reasonably required travel on the Bank’s
business;
(C) any
material breach by the Bank of any express provision of this Agreement;
or
(D) the
failure of CBC to obtain an agreement, satisfactory to Employee, from
any
successor or assign of CBC 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 8 at any time,
Employee
shall be entitled to receive 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 and, upon Employee’s execution of an enforceable general release in
a form prepared by the Bank, severance payments and benefits according
to the
following schedule and terms:
(i) a
severance payment equal to: 2.99 times the amount of Employee’s then current
annual base salary plus the amount of bonus paid to Employee, if any,
in the
prior bonus year (less any applicable taxes and withholdings), in the
event the
termination occurs no later than twelve (12) months after the occurrence
of a
Change in Control; 2.0 times the amount of Employee’s then current annual base
salary plus the amount of bonus paid to Employee, if any, in the prior
bonus
year (less any applicable taxes and withholdings), in the event the termination
occurs more than twelve (12) months but within (up to and including)
twenty-four
(24) months after the occurrence of a Change in Control; or 1.0 times
the amount
of Employee’s then current annual base salary plus the amount of bonus paid to
Employee, if any, in the prior bonus year (less any applicable taxes
and
withholdings), in the event the termination occurs more than twenty-four
(24)
months but within (up to and including) thirty-six (36) months after
the
occurrence of a Change in Control. The severance payment shall be paid
in
substantially equal monthly installments without interest, over a period
of
thirty-six (36), twenty-four (24), or twelve (12) months, respectively,
in
accordance with the payroll schedule applicable to Employee immediately
prior to
the termination of employment and beginning with the first month after
the date
of termination of employment (for purposes of Section 409A of the Code,
as
applicable, each installment payment shall be considered a separate payment);
and
(ii) a
cash
payment in an amount equal to the premiums that Employee would pay in
order to
secure COBRA continuation coverage for health insurance under the Bank’s medical
plan and for the premiums Employee would pay for life insurance, accidental
death and dismemberment and disability insurance to continue such insurance
during the applicable severance periods following termination of employment
(irrespective of whether COBRA otherwise would terminate prior to expiration
of
any such severance period) (“Premium Payment”); and the additional federal,
state, and local income and other taxes that will result from the Premium
Payment (the “Premium Tax Gross-up”). This Premium Payment and the Premium Tax
Gross-up shall be paid in a single lump-sum cash payment, less any applicable
taxes and withholdings, within thirty (30) days after the date of termination
of
employment.
Provided,
however, no installment payments or other cash payment shall be provided
until
the required general release becomes effective.
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(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 Code, and but for this Section
8 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 of such payment of benefits and any other “parachute payments” amounts (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.
9. Survival.
The
terms and
conditions of Sections 6 and 7 shall survive termination of this Agreement
and/or Employee’s employment and shall not be affected by any change or
modification of this Agreement unless specific reference is made to such
sections.
10. Remedies.
Employee
agrees that
his breach or threatened violation of Sections 6 and 7 will result in
immediate
and irreparable harm to the Bank or CBC for which legal remedies would
be
inadequate. Therefore, in addition to any legal or other relief to which
the
Bank or CBC may be entitled, (a) the Bank or
CBC may
seek legal and equitable relief, including but not limited to, preliminary
and
permanent injunctive relief, (b) the Bank will
be
released of its obligations under this Agreement to make any payments
to
Employee, including but not limited to, those payable pursuant to Sections
5
and/or 8, and (c) Employee will
indemnify the Bank or CBC for all expenses, including attorneys’ fees, in
seeking to enforce those Sections.
11. Delayed
Distribution to Key Employees. If the
Bank determines in
accordance with Sections 409A and 416(i) of the Code and the regulations
promulgated thereunder, in the Bank’s sole discretion, that Employee is a Key
Employee of the Bank on the date his employment with the Bank terminates
and
that a delay in benefits provided under this Agreement and not otherwise
exempt
from Section 409A is necessary to comply with Code Section 409A(a)(2)(B)(i),
then any severance payments and any continuation of benefits or reimbursement
of
benefit costs provided by this Agreement shall be delayed for a period
of six
(6) months following Employee’s termination date (the “409A Delay Period”). In
such event, any such severance payments and the cost of any such continuation
of
benefits provided under this Agreement that would otherwise be due and
payable
to Employee during the 409A Delay Period shall be paid to Employee in
a lump sum
cash amount in the month following the end of the 409A Delay Period.
For
purposes of this Section 11, “Key Employee” shall mean an employee who, on an
Identification Date (“Identification Date” shall mean each December 31) is a key
employee as defined in Section 416(i) of the Code without regard to paragraph
(5) thereof. If Employee is identified as a Key Employee on an Identification
Date, then Employee shall be considered a Key Employee for purposes of
this
Agreement during the period beginning on the first April 1 following
the
Identification Date and ending on the following March 31.
12. 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.
13. 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.
14. 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
6 or 7 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.
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15. 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. The Bank, at its discretion, may assign this Agreement. Employee
may
not assign this Agreement without the Bank’s prior written consent.
16. 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.
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IN
WITNESS WHEREOF, the
parties have entered into this Agreement on the day and year written
below.
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/s/
Xxxxxxx X. Xxxxx
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January
31, 2008
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Xxxxxxx
X. Xxxxx
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Date
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CAPITAL
BANK
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By: /s/ B.
Xxxxx Xxxxxx
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January
31, 2008
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Date
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CAPITAL
BANK CORPORATION
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By: /s/ B.
Xxxxx
Xxxxxx
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January
31, 2008
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Date
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