EMPLOYMENT AGREEMENT
Exhibit 10.4
THIS
AGREEMENT is entered into as of April 1, 2000, by and between PIEDMONT BANK, a North
Carolina banking corporation (hereinafter referred to as the “Bank”) and XXXXXXX X. XXXX of
Statesville, North Carolina (hereinafter referred to as the “Officer”).
For and in consideration of their mutual promises, covenants and conditions hereinafter set
forth, and other good and valuable consideration, the receipt and sufficiency of which hereby is
acknowledged, the parties agree as follows:
1. Employment. The Bank agrees to employ the Officer and the Officer agrees to accept
employment upon the terms and conditions stated herein as the President and Chief Executive Officer
of the Bank. The Officer shall render such administrative and management services to the Bank as
are customarily performed by persons situated in a similar executive capacity. The Officer shall
promote the business of the Bank and perform such other .duties as shall, from time to time, be
reasonably assigned by the Board of Directors of the Bank (the “Directors”). Upon the request of
the Directors, the Officer shall disclose all business activities or commercial pursuits in which
Officer is engaged, other than Bank duties.
2. Compensation. The Bank shall pay the Officer during the term of this Agreement, as
compensation for all services rendered by the Officer to the Bank, a base salary at the rate of
$100,165 per annum, payable in cash not less frequently than monthly. The rate of such salary
shall be reviewed by the Directors not less often than annually and if increased, shall not be
decreased during the term of this Agreement. Such rate of salary, or increased rate of salary, as
the case may be, may be further increased from time to time in such amounts as the Directors, in
their discretion, may decide. In determining salary increases, the Directors shall compensate the
Officer for increases in the cost of living and may also provide for performance or merit
increases. Participation in the Bank’s incentive compensation, deferred compensation, discretionary
bonus, profit-sharing, retirement and other employee benefit plans and participation in any fringe
benefits shall not reduce the salary payable to the Officer under this Paragraph. In the event of a
Change in Control (as defined in Paragraph 10), the Officer’s rate of salary shall be increased not
less than five percent annually during the term of this Agreement. Any payments made under this
Agreement shall be subject to such deductions as are required by law or regulation or as may be
agreed to by the Bank and the Officer.
3. Discretionary Bonuses. During the term of this Agreement, the Officer shall be
entitled to such discretionary bonuses as may be authorized, declared and paid by the Directors to
the Bank’s key management employees. No other compensation provided for in this Agreement shall be
deemed a substitute for the Officer’s right to such discretionary bonuses when and as declared by
the Directors.
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4. Participation in Retirement and Employee Benefit Plans; Fringe Benefits.
(a) The Bank shall provide family medical and dental coverage and disability insurance for the
Officer and the Officer shall also be entitled to participate in any plan relating to deferred
compensation, stock options, stock purchases, pension, thrift, profit sharing, group life
insurance, education, or other retirement or employee benefits that the Bank has adopted, or may,
from time to time adopt, for the benefit of its executive employees or for employees generally,
subject to the eligibility rules of such plans.
(b) The Bank shall provide the Officer with the use of a late model automobile suitable to the
status of the chief executive officer of the Bank of a type and for lease terms to be approved the
Executive Committee of the Bank. The Bank shall pay for all reasonable expenses, including, but not
limited to, insurance coverage and gasoline, by the Officer in connection with the operation and
maintenance of such automobile. Replacement of the automobile shall be made only with the approval
of the Board and in accordance with the policies of the Bank in effect from time to time relating
to the replacement of automobiles.
(c) The Officer shall be insured by the Bank under a term insurance policy providing a death
benefit of up to $250,000 with such members of the Officer’s family named as beneficiaries as the
Officer may determine.
(d) The Bank shall pay the expenses of the Officer for membership and dues in the Statesville
Country Club and The Point Country Club, in one civic club, and for a family membership in a health
facility.
(e) The Officer shall also be entitled to participate in any other fringe benefits which are
now or may be or become applicable to the Bank’s executive employees, including the payment of
reasonable expenses for attending annual and periodic meetings of trade associations, and any other
benefits which are commensurate with the duties and responsibilities to be performed by the Officer
under this Agreement. Additionally, the Officer shall be entitled to such vacation and sick leave
as shall be established under uniform employee policies promulgated by the Directors. The Bank
shall reimburse the Officer for all out-of-pocket reasonable and necessary business expenses which
the Officer may incur in connection with the Officer’s services on behalf of the Bank.
5. Term. The initial term of employment under this Agreement shall be for the period
commencing upon the effective date of this Agreement and ending three calendar years from the
effective date of this Agreement. On each anniversary of the effective date of this Agreement, the
term of this Agreement shall automatically be extended for an additional one year period beyond the
then effective expiration date unless written notice from the Bank or the Officer is received 90
days prior to an anniversary date advising the other that this Agreement shall not be further
extended; provided that the Directors shall review the Officer’s performance annually and make a
specific determination pursuant to such review to renew this Agreement prior to the 90 days’
notice.
6. Loyalty; Noncompetition.
(a) The Officer shall devote his full efforts and entire business time to the
performance of the Officer’s duties and responsibilities under this Agreement.
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(b) During the term of this Agreement, or any renewals thereof, and for a period of one year
after termination, the Officer agrees he will not, within Iredell County, North Carolina, or within
30 miles of any Bank office opened during the term of this Agreement, directly or indirectly, own,
manage, operate, join, control or participate in the management, operation or control of, or be
employed by or connected in any manner with any business which competes with the Bank or any of its
subsidiaries without the prior written consent of the Bank; provided, however, that the
provisions of this Paragraph shall not apply in the event the Officer’s employment is unilaterally
terminated by the Bank for Cause, (as such term is defined in Paragraph 8(c) hereof) or in the
event the Officer terminates his employment with the Bank after the occurrence of a “Termination
Event” (as such term is defined in Paragraph 10(b) hereof) following a “Change of Control” (as
such term is defined in Paragraph 10(d) hereof). Notwithstanding the foregoing, the Officer shall
be free, without such consent, to purchase or hold as an investment or otherwise, up to five
percent of the outstanding stock or other security of any corporation which has its securities
publicly traded on any recognized securities exchange or in any over-the counter market.
(c) The Officer agrees he will hold in confidence all knowledge or information of a
confidential nature with respect to the business of the Bank or any subsidiary received by the
Officer during the term of this Agreement and will not disclose or make use of such information
without the prior written consent of the Bank. The Officer agrees that he will be liable to the
Bank for any damages caused by unauthorized disclosure of such information. Upon termination of his
employment, the Officer agrees to return all records or copies thereof of the Bank or any
subsidiary in his possession or under his control which relate to the activities of the Bank or any
subsidiary.
(d) The Officer acknowledges that it would not be possible to ascertain the amount of monetary
damages in the event of a breach by the Officer under the provisions of this Paragraph 6. The
Officer agrees that, in the event of a breach of this Paragraph 6, injunctive relief enforcing the
terms of this Paragraph 6 is an appropriate remedy. If the scope of any restriction contained in
this Paragraph 6 is determined to be too broad by any court of competent jurisdiction, then such
restriction shall be enforced to the maximum extent permitted by law and the Officer consents that
the scope of this restriction may be modified judicially.
7. Standards. The Officer shall perform his duties and responsibilities under this
Agreement in accordance with such reasonable standards expected of employees with comparable
positions in comparable organizations and as may be established from time to time by the Directors.
The Bank will provide the Officer with the working facilities and staff customary for similar
executives and necessary for the Officer to perform his duties.
8. Termination and Termination Pay. (a) The Officer’s employment under this Agreement
shall be terminated upon the death of the Officer during the term of this Agreement, in which
event, the Officer’s estate shall be entitled to receive the compensation due the Officer through
the last day of the calendar month in which the Officer’s death shall have occurred and for a
period of one month thereafter.
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(b) The Officer’s employment under this Agreement may be terminated at any time by the Officer
upon 60 days’ written notice to the Directors. Upon such termination, the Officer shall be entitled
to receive compensation through the effective date of such termination.
(c) The Directors may terminate the Officer’s employment at any time, but any termination by
the Directors, other than termination for Cause, shall not prejudice the Officer’s right to
compensation or other benefits under this Agreement. The Bank shall provide written notice
specifying the grounds for termination for Cause. The Officer shall have no right to receive
compensation or other benefits for any period after termination for Cause. Termination for Cause
shall include termination because of the Officer’s personal dishonesty or moral turpitude,
incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule, or regulation (other than
traffic violations or similar offenses) or final cease-and-desist order, or material breach of any
provision of this Agreement. Notwithstanding such termination, the obligations under Paragraph 6(c)
shall survive any termination of employment.
(d) Subject to the Bank’s obligations and the Officer’s rights under (i) Title I of the
Americans with Xxxxxxxxxxxx Xxx, §000 of the Rehabilitation Act, and the Family and Medical Leave
Act, and to (ii) the vacation leave, disability leave, sick leave and any other leave policies of
the Bank, the Officer’s employment under this Agreement automatically shall be terminated in the
event the Officer becomes disabled during the term of this Agreement and it is determined by the
Bank that the Officer is unable to perform the essential functions of the Officer’s job under this
Agreement for sixty (60) business days or more during any 12-month period. Upon any such
termination, the Officer shall be entitled to receive any compensation the Officer shall have
earned prior to the date of termination but which remains unpaid, and shall be entitled to any
payments provided under any disability income plan of the Bank which is applicable to the Officer.
In the event of any disagreement between the Officer and the Bank as to whether the Officer
is physically or mentally incapacitated such as will result in the termination of the Officer’ s
employment pursuant to this Paragraph 8(d), the question of such incapacity shall be submitted to
an impartial physical licensed to practice medicine in North Carolina for determination and who
will be selected by mutual agreement of the Officer 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 the Officer),
and such determination of the question of such incapacity by such physician or physicians shall be
final and binding on the Officer 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 8(d).
9. Additional
Regulatory Requirements. Notwithstanding anything contained in this
Agreement to the contrary, it is understood and agreed that the Bank (or any of its successors 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 governmental agency having jurisdiction over the Bank
(hereinafter referred to as “Regulatory Authority”) to be insolvent, in default or operating in an
unsafe or unsound manner; or,
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(b) in the reasonable 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 as now in effect or hereafter
amended, (ii) would be prohibited by or would violate any applicable rules, regulations, orders or
statements of policy, whether now existing or hereafter promulgated, of any Regulatory Authority,
or (iii) otherwise would be prohibited by any Regulatory Authority.
10. Change in Control. (a) In the event of a termination of the Officer’ s employment
in connection with, or within twenty-four (24) months after, a “Change in Control” (as defined in
Subparagraph (d) below) of the Bank other than for Cause (as defined in Paragraph 8), the Officer
shall be entitled to receive liquidated damages as set forth in Subparagraph (c) below. Said sum
shall be payable as provided in Subparagraph (e) below.
(b) In addition to any rights the Officer might have to terminate this Agreement contained in
Paragraph 8, the Officer shall have the right to terminate this Agreement upon the occurrence of
any of the following events (the “Termination Events”) within twenty-four months following a Change
in Control of the Bank:
(i) Officer is assigned any duties and/or responsibilities that are inconsistent with
or constitute a demotion or reduction in the Officer’s position, duties, responsibilities
or status as such existed at the time of the Change in Control or with his reporting
responsibilities or titles with the Bank in effect at such time, regardless of Officer’s
resulting position; or
(ii) Officer’s annual base salary rate is reduced below the annual 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 effective date; or
(iii) Officer’s life insurance, medical or hospitalization insurance, disability
insurance, stock options plans, stock purchase plans, deferred compensation plans,
management retention plans, retirement plans or similar plans or benefits being provided by
the Bank to the Officer 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
(iv) Officer is transferred to a location which is an unreasonable distance from his
current principal work location without the Officer’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 the Officer terminates this Agreement pursuant to this Paragraph 10, the
Bank will be obligated to pay or cause to be paid to Officer liquidated damages in an amount equal
to 2.99 times the Officer’s “base amount” as defined in Section 280G(b)(3) 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:
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(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 beneficial ownership of voting
stock, or acquires irrevocable proxies or any combination of voting stock and irrevocable
proxies, representing twenty-five percent (25 %) or more of any class of voting securities
of the Bank, or acquires control of, in any manner, the election of a majority of the
Directors; or
(ii) The Bank consolidates or merges with or into another corporation, association or
entity, or is otherwise reorganized, where the Bank is not the surviving corporation in
such transaction; or
(iii) All or substantially all of the assets of the Bank are sold or otherwise
transferred to or are acquired by any other corporation, association or other person,
entity or group.
Notwithstanding the other provisions of this Paragraph 10, a transaction or event shall not be
considered a Change in Control if, prior to the consummation or occurrence of such transaction or
event, Officer and Bank agree in writing that the same shall not be treated as a Change in Control
for purposes of this Agreement.
(e) Such amounts payable pursuant to this Paragraph 10 shall be paid, at the option of the
Officer, either in one lump sum or in thirty-six (36) equal monthly payments following termination
of this Agreement.
(f) Following a Termination Event which gives rise to Officer’s rights hereunder, the Officer
shall have twelve (12) months from the date of occurrence of the Termination Event to terminate
this Agreement pursuant to this Paragraph 10. Any such termination shall be deemed to have
occurred only upon delivery to the Bank (or to any successor corporation) of written notice of
termination which describes the Change in Control and the Termination Event. If Officer does not so
terminate this Agreement within such twelve-month period, he 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 the Officer. Notwithstanding anything contained in this Agreement to the contrary,
any payments to be made to or for the benefit of the Officer which are deemed to be “parachute
payments” as that term is defined in Section 280G of the Code, shall be modified or reduced to the
extent deemed to be necessary by the Directors to avoid the imposition of excise taxes on the
Officer under Section 4999 of the Code or the disallowance of a deduction to the Bank under Section
280(a) of the Code.
(h) In the event any dispute shall arise between the Officer and the Bank as to the terms or
interpretation of this Agreement, including this Paragraph 10, whether instituted by formal legal
proceedings or otherwise, including any action taken by the Officer to enforce the terms of this
Paragraph 10 or in defending against any action taken by the Bank, the Bank shall reimburse the
Officer for all costs and expenses, proceedings or actions, in the event the Officer prevails in
any such action.
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11. Successors and Assigns. (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, purchase or otherwise, all or substantially all of the assets of
the Bank.
(b) Since the Bank is contracting for the unique and personal skills of the Officer, the
Officer shall be precluded from assigning or delegating his rights or duties hereunder without
first obtaining the written consent of the Bank.
12. Modification; Wavier; Amendments. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to in writing, signed
by the Officer and on behalf of the Bank by such officer as may be specifically designated by the
Board of Directors. 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 amendment or addition to this Agreement shall be
binding unless in writing and signed by both parties, except as herein otherwise provided.
13. 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.
14. 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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first
hereinabove written.
| PIEDMONT BANK | ||||||
| By: | /s/ X. X. Xxxxxxxxx, Xx.
|
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| Chairman of the Board | ||||||
Attest: |
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/s/ Xxxxxxxx X. Xxxxxx
|
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| OFFICER |
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| /s/ Xxxxxxx X. Xxxx
|
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