EXHIBIT 10
STATE OF NORTH CAROLINA
COUNTY OF GUILFORD
EMPLOYMENT AGREEMENT
THIS AGREEMENT entered into as of July 24, 2001 by and between CAROLINA
BANK (hereinafter referred to as the "Bank") and Xxxxx Xxxxx (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 to maintain an
experienced and sound 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 in control in the
Bank or its parent holding company, Carolina Bank Holdings, Inc. and to insure
the continued loyalty of Employee during any such change in 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 considerations, 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
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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 Chief Financial 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
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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 Guilford
County, North Carolina.
2. Compensation. For all services rendered by Employee to the
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Bank under this Agreement, the Bank shall pay Employee a base salary at a rate
of Ninety Thousand Dollars and 00/100's ($90,000.00) per annum; provided that
the rate of such salary shall be reviewed by the Board of Directors 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.
In addition to the foregoing, Employee shall be entitled to
receive cash bonuses on an annual basis during the term of this Agreement as may
be determined by the Board of Directors of the Bank or its Compensation
Committee.
3. Participation in Retirement and Employee Benefit Plans;
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Fringe Benefits. Subject to the terms and conditions of this Agreement, Employee
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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.
In addition to the other compensation and benefits described
in this Agreement, the Bank shall :
(i) Provide Employee with three weeks of paid
vacation leave notwithstanding the policy for the Bank for all other employees.
(ii) The Bank shall assume payment of dues to a civic
club of Employee's choice provided that Employee shall be responsible for all
personal expenses for use of such club;
(iii) 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;
(iv) The Bank shall provide to Employee major medical
insurance coverage, including health, term life, disability, and dental, at no
cost to Employee, his spouse or dependent children which will be under policies
at least equivalent to the insurance coverage generally provided to active
full-time employees of the Bank from time to time;
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4. Term. Unless sooner terminated as provided in this
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Agreement and subject to the right of either Employee or the Bank to terminate
Employee's employment at any time as provided herein, the initial 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 three (3)
years. At the end of each year of this Agreement, the term of this Agreement
shall automatically be extended for an additional one year period unless written
notice from the Bank or Employee is received thirty (30) days prior to such date
notifying the other party that this Agreement shall not be further extended.
5. Confidentiality; Noncompetition. Employee hereby
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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.
(a) Covenant Not to Compete. Employee will not
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"Compete" (as defined below), directly or indirectly, with the Bank within [a
twenty-five (25) mile radius of any full service office of the Bank (the
"Relevant Market") as follows:
(i) if this Agreement is terminated by the
Bank without "cause" (as defined in paragraph 6(d) hereof) Employee shall not
"Compete" for a period of time equal to the greater of twelve (12) months or the
period of time Employee is receiving compensation pursuant to the terms of this
Agreement; or
(ii) if this Agreement is terminated by
Employee for any reason, Employee shall not "Compete" for a period of twelve
(12) months from the date of termination of this Agreement by Employee.
For the purposes of this Paragraph 5, the following terms
shall have the meanings set forth below:
Compete. The term "Compete" means: (i)
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soliciting or securing deposits from any Person residing in the Relevant Market
for any Financial Institution; (ii) soliciting any Person residing in the
Relevant Market to become a borrower from any Financial Institution, or
assisting (other than through the performance of ministerial or clerical duties)
any Financial Institution in making loans to any such Person; (iii) including or
attempting to induce any Person who was a Customer of the Bank on the date of
termination of Employee's employment with the Bank, to change such Customer's
depository, loan and/or other banking relationship from the Bank to another
Financial Institution; (iv) acting as a consultant, officer, director,
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independent contractor, or employee of any Financial Institution that has its
main or principal office in the Relevant Market, or, in acting in any such
capacity with any other Financial Institution, to maintain an office or be
employed at or assigned to or to have any direct involvement in the management,
business or operation of any office of such Financial Institution located in the
Relevant Market; or (v) communicating to any Financial Institution the names or
addresses or any financial information concerning any Person who was a Customer
of the Bank at the date of Employee's termination of this Agreement.
Customer. The term "Customer" means any
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Person with whom, as of the effective date of termination of this Agreement or
during Employee's employment with the Bank, the Bank has or has had a
depository, loan and/or other banking relationship.
Financial Institution. The term "Financial
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Institution" means any federal or state chartered bank, savings bank, savings
and loan association or credit union, any subsidiary thereof, or any 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
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person or any corporation, partnership, proprietorship, joint venture, limited
liability company, trust, estate, governmental agency or instrumentality,
fiduciary, unincorporated association or other entity.
(b) Confidentiality Covenant. Employee covenants and
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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 and employees (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 (b) shall
not apply to any Confidential Information which then is in the public domain
(provided that Employee was
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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.
(c) Remedies for Breach. Employee understands and
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agrees that a breach or violation by him of the covenants contained in Paragraph
5(a) and 5(b) 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(a) or 5(b), 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) and 5(b) 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 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
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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.
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(a) Employee's employment under this Agreement may be
terminated at any time by Employee upon ninety (90) 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
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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 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 a period of time equal to the balance of the term of this
Agreement. Following any termination of Employee's employment by the Bank for
"Cause", 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 (5) business days following
such notice Employee cures or corrects the same to the
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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 Insurance
Corporation, the North Carolina Commissioner of Banks, the Federal Reserve Board
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 officer of, or a party affiliated with, the Bank or any of its
affiliates or subsidiaries;
(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;
and,
(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
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anything contained in this Agreement to the contrary, it is understood and
agreed that the Bank (or 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 Regulatory Authority to be insolvent, in default or operating in
an unsafe or unsound manner, or if (b) in the
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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, the Federal
Reserve 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 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
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(a) In the event of a "Change in Control" (as defined
in Subparagraph (d) below), of the Bank or its holding company, Carolina Bank
Holdings, Inc. ("Holdings"), Employee shall be entitled to terminate this
Agreement upon the occurrence within twelve (12) 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 effective date;
(iii) Employee's life insurance, major
medical 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
(iv) Employee is transferred to a location
outside of Guilford County, 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 all amounts
due and owing to the end of the term of this Agreement and 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:
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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 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 Holdings or the Bank,
or acquires control of in any manner the election of a majority of the directors
of Holdings or the Bank;
(ii) The Bank or Holdings consolidates or
merges with or into another corporation, association, or entity, or is otherwise
reorganized, where neither the Bank nor holdings is the surviving corporation in
such transaction; or
(iii) All or substantially all of the assets
of the Bank or Holdings 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 8, a
transaction or event shall not be considered a Change in Control (i) 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 twelve (12) 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 twelve 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. Notwithstanding anything contained in this Agreement to the contrary,
any payments to be made to or for the benefit of Employee which are deemed to be
"parachute payments" as that term is defined in Section 28OG(b) (2) of the Code,
shall be modified or reduced to the extent deemed to be necessary by the Bank's
Board of Directors to avoid the imposition of an excise tax on Employee under
Section 4999 of the Code or the disallowance of a deduction to the Bank under
Section 28OG(a) of the Code.
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(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.
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(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, share exchange, 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
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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
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deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof.
13. Entire Agreement. This Agreement contains the entire
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agreement of the parties with respect to the transactions described herein and
supersedes any and all other oral or written agreements heretofore made, and
there are no representations or inducements by or to, or any agreements between,
any of the parties hereto other than those contained herein in writing.
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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.
CAROLINA BANK
By: /s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
President and Chief Executive Officer
ATTEST:
/s/ Xxxxx Xxxxxx
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Assistant Secretary
/s/ Xxxxx Xxxxx
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Xxxxx Xxxxx
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