EMPLOYMENT AGREEMENT
Exhibit
10.1
This
Employment Agreement
(“Agreement”), dated as of January 25, 2008, is made and entered into between
Capital Bank
(hereinafter the “Bank”), and Xxxxx X. Xxxxxx (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 Banking 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.
4. Compensation
and
Benefits.
(a) Base
Salary.
Employee’s initial
annual base salary for all services rendered shall be
Two Hundred Thousand and No/100 Dollars ($200,000.00) (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) Car
Allowance.
Employee
shall receive a car allowance of Nine Hundred and No/100 Dollars
($900.00) per month.
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(e) 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.
(f) 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.
5. Termination
of Employment
and Post-Termination Compensation.
(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.
(c) Post-Termination
Compensation.
(i) In
the
event of termination for Cause, the Bank’s obligation to compensate Employee
ceases on the date of termination except as to the amounts of salary due
at that
time.
(ii) In
the
event of a termination for death or Disability, the Bank’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 unless such cessation is for termination
by the
Bank for Cause,
(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
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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.
8. Change
in
Control.
(a) Definition.
For
purposes of this
Agreement, “Change in Control” shall mean any of the following:
(i) Any
“person” (as such term is used in Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the “Act”)) acquiring “beneficial ownership”
(as such term is used in Rule 13d-3 under the Act), directly or indirectly,
of
securities of 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 the Bank approve a complete liquidation or dissolution of
the
Bank, or a sale or other disposition of all or substantially all of the capital
stock or assets of the Bank, but excluding for this purpose any sale or
disposition of all or substantially all of the capital stock or assets of
the
Bank to an “affiliate” (as defined in Rule 12b-2 under the Act) of
CBC.
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 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 severance
payments and the cost of any 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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EMPLOYEE
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/s/
Xxxxx X. Xxxxxx
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January
25, 2008
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Xxxxx
X. Xxxxxx
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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
25, 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
25, 2008
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Date
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