EXHIBIT 10(V)
STATE OF NORTH CAROLINA
COUNTY OF CATAWBA
EMPLOYMENT AGREEMENT
THIS AGREEMENT entered into as of December 31, 2002 by and between CATAWBA
VALLEY BANK (hereinafter referred to as the "Bank") and XXXXXX X. XXXXXXXXX
(hereinafter referred to as "Employee").
W I T N E S S E T H:
WHEREAS, the expertise and experience of Employee and his relationships and
reputation in the financial institutions industry are extremely valuable to the
Bank; and
WHEREAS, it is in the best interests of the Bank and the shareholders of
its parent holding company, United Community Bancorp ("UCB"), to maintain an
experienced and sound executive management team to manage the Bank and to
further the Bank's overall strategies to protect and enhance the value of UCB's
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 of UCB and 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 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
Regional President of the Bank's offices in Xxxxxx County, North Carolina and
surrounding counties, and (ii) have such other duties and responsibilities, and
render to the Bank such other management services, as are customary for persons
in Employee's position with the Bank or as shall otherwise be reasonably
assigned to him from time to time by the Bank. Employee shall faithfully and
diligently discharge his duties and responsibilities under this Agreement and
shall use his best efforts to implement the policies established by the Bank.
Employee hereby agrees to devote such number of hours of his working time and
endeavors to the employment granted hereunder as Employee and the Bank shall
deem to be necessary to discharge his duties hereunder, and, for so long as
employment hereunder shall exist, Employee shall not engage in any other
occupation which requires a significant amount of Employee's personal attention
during the Bank's regular business hours or which otherwise interferes with
Employee's attention to or performance of his duties and responsibilities as an
officer of the Bank hereunder except with the prior written consent of the Bank.
However, nothing herein contained shall restrict or prevent Employee from
personally, and for Employee's own account, trading in stocks, bonds,
securities, real estate or other forms of investment for Employee's own benefit
so long as said activities do not interfere with Employee's attention to or
performance of his duties and responsibilities as an officer of the Bank
hereunder.
During the term of this Agreement, Employee shall be allowed, in his
sole discretion, to maintain his primary work location in Xxxxxx County, North
Carolina.
2. Compensation. For all services rendered by Employee to the Bank
under this Agreement, the Bank shall pay Employee a base salary at a rate of One
Hundred Fifty Thousand Dollars and 00/100's ($150,000.00) per annum; provided
that the rate of such salary shall be reviewed and it may be increased, but not
decreased, 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.
Employee shall be eligible to receive an annual bonus of up to twenty-five
percent (25%) of his then current base salary based upon performance criteria as
applies to all other executive officers of the Bank.
3. Participation in Retirement and Employee Benefit Plans; Fringe
Benefits. Subject to the terms and conditions of this Agreement, Employee shall
be entitled to participate in any and all employee benefit programs and
compensation plans from time to time
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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) 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;
(ii) Provide Employee with a car allowance in the amount equal to the
lease payments for Employee's 2002 Jeep Cherokee Limited;
(iii) Provide Employee and his spouse health and dental insurance
until each reaches the age of seventy (70) years;
(iv) Pay the premiums for disability insurance for Employee equal to
two-thirds (2/3) of Employee's then current base salary;
(v) Pay the premiums on the $500,000 term life insurance policy owned
by the spouse of Employee with such premiums to be paid until Employee attains
the age of seventy (70) years;
(vi) Permit Employee four (4) weeks of annual paid vacation;
(vii) Permit Employee to participate in any stock option plans of UCB
then in effect on the same level as all other executive vice presidents; and
(viii) Pay country club and civic club dues and subscriptions to trade
publications in effect on the date of this Agreement.
4. Term. Unless sooner terminated as provided in this Agreement and
subject to the right of either Employee or the Bank to terminate Employee's
employment at any time as provided herein, the term of this Agreement and
Employee's employment with the Bank hereunder shall be for a period commencing
on the date hereof and continuing for a period of two (2) years.
5. Confidentiality. Employee hereby acknowledges and agrees that (i)
in the course of his service as an officer of the Bank, he will gain substantial
knowledge of and
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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
disclosure of information about the Bank's business and customers. For that
purpose, and in consideration of the Bank's agreements contained herein,
Employee covenants and agrees as provided below.
For the purposes of this Paragraph 5, the following terms shall have
the meanings set forth below:
Customer. The term "Customer" means any Person with whom, as
of the effective date of termination of this Agreement or Employee's employment
with the Bank for any reason, the Bank has or has had a depository, loan and/or
other banking relationship.
Financial Institution. The term "Financial Institution"
means any federal or state chartered bank, savings bank, savings and loan
association or credit union, or any holding company for or corporation that owns
or controls any such entity, or any other Person engaged in the business of
making loans of any type or receiving deposits, other than the Bank.
Person. The term "Person" means any natural person or any
corporation, partnership, proprietorship, joint venture, limited liability
company, trust, estate, governmental agency or instrumentality, fiduciary,
unincorporated association or other entity.
(a) Confidentiality Covenant. Employee covenants and agrees that
any and all data, figures, projections, estimates, lists, files, records,
documents, manuals or other such materials or information (financial or
otherwise) relating to the Bank and its banking business, regulatory
examinations, financial results and condition, lending and deposit operations,
customers (including lists of the Bank's customers and information regarding
their accounts and business dealings with the Bank), policies and procedures,
computer systems and software, shareholders, employees, officers and directors
(herein referred to as "Confidential Information") are proprietary to the Bank
and are valuable, special and unique assets of the Bank's business to which
Employee will have access during his employment with the Bank. Employee agrees
that (i) all such Confidential Information shall be considered and kept as the
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confidential, private and privileged records and information of the Bank, and
(ii) at all times during the term of his employment with the Bank and following
the termination of this Agreement or his employment for any reason, and except
as shall be required in the course of the performance by Employee of his duties
on behalf of the Bank or otherwise pursuant to the direct, written authorization
of the Bank, Employee will not: divulge any such Confidential Information to any
other Person or Financial Institution; remove any such Confidential Information
in written or other recorded form from the Bank's premises; or make any use of
any Confidential Information for his own purposes or for the benefit of any
Person or Financial Institution other than the Bank. However, following the
termination of Employee's employment with the Bank, this subparagraph (a) shall
not apply to any Confidential Information which then is in the public domain
(provided that Employee was not responsible, directly or indirectly, for
permitting such Confidential Information to enter the public domain without the
Bank's consent), or which is obtained by Employee from a third party which or
who is not obligated under an agreement of confidentiality with respect to such
information.
(b) Remedies for Breach. Employee understands and agrees that a
breach or violation by him of the covenants contained in Paragraph 5(a) 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), 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
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in equity, including the recovery of damages, all of which shall be cumulative
and in addition to all other rights, remedies, powers or privileges of the Bank.
Notwithstanding anything contained herein to the contrary,
Employee agrees that the provisions of Paragraph 5(a) above and the remedies
provided in this Paragraph 5(b) 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.
(c) Survival of Covenants. Employee's covenants and agreements
and the Bank's rights and remedies provided for in this Paragraph 5 shall
survive any termination of this Agreement or Employee's employment with the
Bank.
6. Termination and Termination Pay.
(a) Employee's employment under this Agreement may be terminated
at any time by Employee upon sixty (60) days written notice to the Bank. Upon
such termination, Employee shall be entitled to receive compensation through the
effective date of such termination; provided, however, that the Bank, in its
sole discretion, may elect for Employee not to serve out part or all of said
notice period.
(b) Employee's employment under this Agreement shall be
terminated upon the death of Employee during the term of this Agreement. Upon
any such termination, Employee's estate shall be entitled to receive any
compensation due to Employee computed through the last day of the calendar month
in which his death shall have occurred but which remains unpaid.
(c) In the event Employee becomes disabled during the term of his
employment hereunder and it is determined by the Bank that Employee is
permanently unable to perform his duties under this Agreement, the Bank shall
continue to compensate Employee at the level of compensation described in
Paragraph 2 above, and shall continue to provide Employee each of the other
benefits set forth or described in this Agreement, for the remaining term of
this Agreement, less any other payments provided under any disability income
plan or insurance of the Bank which is applicable to Employee. In the event of
any disagreement between Employee
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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). Any termination by the
Bank other than termination for "Cause", (as defined below) shall entitle the
Employee to receive severance pay equal to twelve (12) months of the Employee's
current compensation and other benefits at the time of Employee's termination.
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 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,
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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 or any other banking regulator having legal
jurisdiction over the Bank), which results from Employee's gross negligence,
willful misconduct or intentional disregard of such law, rule, regulation, order
or policy statement and results in any substantial damage, monetary or
otherwise, to the Bank or any of its affiliates or subsidiaries or to the Bank's
reputation;
(iii) The commission in the course of Employee's employment
with the Bank of an act of fraud, embezzlement, theft or proven personal
dishonesty (whether or not resulting in criminal prosecution or conviction);
(iv) The conviction of Employee of any felony or any
criminal offense involving dishonesty or breach of trust, or the occurrence of
any event described in Section 19 of the Federal Deposit Insurance Act or any
other event or circumstance which disqualifies Employee from serving as an
employee or executive officer of, or a party affiliated with, the Bank or its
bank holding company;
(v) Employee becomes unacceptable to, or is removed,
suspended or prohibited from participating in the conduct of the Bank's affairs
(or if proceedings for that purpose are commenced) by any Regulatory Authority;
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 anything
contained in this Agreement to the contrary, it is understood and agreed that
the Bank (or its
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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 opinion of counsel to the Bank such payment or action
(i) would be prohibited by or would violate any provision of state or federal
law applicable to the Bank, including without limitation the Federal Deposit
Insurance Act and Chapter 53 of the North Carolina General Statutes as now in
effect or hereafter amended, (ii) would be prohibited by or would violate any
applicable rules, regulations, orders or statements of policy, whether now
existing or hereafter promulgated, of any Regulatory Authority, or (iii)
otherwise would be prohibited by any Regulatory Authority.
8. Change in Control
(a) In the event of a "Change in Control" (as defined in
Subparagraph (d) below), of UCB, 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, medical or hospitalization
insurance, disability insurance, dental insurance, stock
option plans, stock purchase plans, deferred compensation
plans, management retention plans, retirement plans, or
similar plans or benefits being
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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 Xxxxxx
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:
(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 UCB, or
acquires control of in any manner the election of a majority
of the directors of UCB;
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(ii) UCB 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 UCB 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 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 (12) 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
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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.
(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.
(a) This Agreement shall inure to the benefit of and be binding
upon any corporate or other successor of the Bank which shall acquire, directly
or indirectly, by conversion, merger, consolidation, purchase or otherwise, all
or substantially all of the assets of the Bank.
(b) The Bank is contracting for the unique and personal skills of
Employee. Therefore, Employee shall be precluded from assigning or delegating
his rights or duties hereunder without first obtaining the written consent of
the Bank.
10. Modification; Waiver; Amendments. No provision of this Agreement
may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by the parties hereto. No waiver by
either party hereto, at any time, of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No amendments or
additions to this Agreement shall be binding unless in writing and signed by
both parties, except as herein otherwise provided.
11. Applicable Law. This Agreement shall be governed in all respects
whether as to validity, construction, capacity, performance or otherwise, by the
laws of North Carolina, except to the extent that federal law shall be deemed to
apply. The parties hereto agree that any action relating to this Agreement shall
be instituted and prosecuted in the Courts of
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Catawba County, North Carolina, and each party hereto does hereby waive any and
all defenses relating to venue and jurisdiction over the person.
12. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
13. Entire Agreement. This Agreement contains the entire 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.
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.
CATAWBA VALLEY BANK
By: /s/ R. Xxxxx Xxxxx
-----------------------------------
R. Xxxxx Xxxxx, President and CEO
ATTEST:
/s/ Xxxxxx Xxxxxx
---------------------------
Secretary
/s/ Xxxxxx X. Xxxxxxxxx
----------------------------------
Xxxxxx X. Xxxxxxxxx (SEAL)
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