STATE OF NORTH CAROLINA
COUNTY OF CATAWBA
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), is made as of the 1st day of
December, 1999, by and between PEOPLES BANK, Newton, North Carolina, a North
Carolina banking institution (the "Bank"), and XXXXXXX X. XXXX (the
"Employee")and is joined in by PEOPLES BANCORP OF NORTH CAROLINA, INC., a North
Carolina corporation (the "Holding Company");
W I T N E S S E T H :
WHEREAS the Employee has heretofore been employed and currently is
rendering services to the Bank as Senior Vice President; Commercial Business
Development and,
WHEREAS the Bank is a North Carolina banking corporation and the
Holding Company is a North Carolina bank holding company and the sole
shareholder of the Bank; and,
WHEREAS the Bank considers the continued availability of the Employee's
services to be important to the management and conduct of the Bank's and Holding
Company's business, and desires to secure for the Bank and Holding Company the
continued availability of the Employee's services; and,
WHEREAS the Employee is willing to make his services available to the
Bank and Holding Company on the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows:
1. Employment. The Employee is employed as Senior Vice President,
----------------
Commercial Business Development. The Employee shall render administrative and
management services to the Bank, such as are customarily performed by persons
situated in a similar executive capacity. He shall promote the business of the
Bank and Holding Company and perform such other duties as shall from
time to time be reasonably described by the President of the Bank.
2. Compensation.
------------------
A. Base Salary. The Bank shall pay the Employee during the term
---------------
of this Agreement a base salary at the rate of $93,482 per annum,
payable in monthly installments or more frequently as the Bank elects;
provided, that the rate of such salary shall be reviewed annually by
the Bank. Such rate of salary may be increased (but not decreased) from
time to time in such amounts as the Bank, in its discretion, may
decide.
B. Management Incentive Plan. The Employee shall be entitled to
-----------------------------
participate in an equitable manner with other key management personnel
of the Bank in the Bank's management incentive plan adopted in 1998.
3. Discretionary Bonuses. The Employee shall be entitled to
---------------------------
participate in an equitable manner with all other key management personnel of
the Bank in discretionary bonuses authorized and declared by the Directors of
the Bank. No other compensation provided for in this Agreement shall be deemed a
substitute for the Employee's right to participate in such discretionary bonuses
when and as are declared by the Board of Directors.
4. Additional Benefits.
-------------------------
A. Participation in Retirement and Medical Plan. The Employee
-------------------------------------------------
shall be entitled to participate in any plan of the Bank relating to
pension, profit sharing or other retirement benefits and health,
medical and disability coverage, or reimbursement plans that the Bank
may adopt for the benefit of its employees subject to the eligibility
rules of such plan.
B. Officer Benefits/Expenses. The Employee shall be eligible to
------------------------------
participate in any fringe benefits which may be or become applicable to
the Bank's executive employees, commensurate with the responsibilities
and functions to be performed by the Employee under this Agreement.
Additionally, the
Employee shall be entitled to four (4) weeks of paid vacation, as an
exception to uniform employee policies promulgated by the Directors,
and such sick leave as is established by such policies. The Bank shall
reimburse the Employee for all out-of-pocket reasonable and necessary
business expenses which the Employee shall incur in connection with his
services on behalf of the Bank. Additionally, the Employee shall be
entitled to life insurance in the amount of two times his annual
salary; the same amount in accidental death and dismemberment
insurance; dependent life insurance upon his spouse in the amount of
Two Thousand Dollars ($2,000.00); and disability insurance as which
will compensate the Employee 66-2/3% of his salary after he is out of
work pursuant to company policy for thirty (30) calendar days. The
Employer shall pay all premiums for the insurance noted above.
5. Term. The initial term of employment under this Agreement shall
----------
be for the period commencing December 1, 1999 and ending three (3) calendar
years after such date. At the end of each one-year period following such
commencing date, this Agreement shall automatically be extended for an
additional one (1) year period beyond the then-effective expiration date, unless
written notice from the Bank or the Employee is received sixty (60) days prior
to an anniversary date advising the other party that this Agreement shall not be
further extended, or in the event the Employee and Employer agree to a further
extension before the expiration of this Agreement. The parties intend that this
Agreement shall be a continuing employment agreement, unless written notice is
given as provided in this Paragraph, or unless this Agreement is otherwise
terminated as provided in this Agreement.
6. Loyalty/Non-Competition.
-----------------------------
A. The Employee shall devote his full efforts and entire
business time to the performance of his duties under this Agreement.
B. During the term of this Agreement, or any renewals or
extensions thereof, and for a period of one (1) year after termination,
the Employee shall not, within Catawba, Alexander, Iredell or Lincoln
Counties, North Carolina, 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 depository institution or financial services
business which competes with the Bank or the Holding Company without
the prior written consent of the Bank. Notwithstanding the foregoing,
the Employee shall be free without such consent to purchase or hold as
an investment or otherwise up to 5% of the outstanding stock or other
securities of any corporation which has its securities publicly traded
on any recognized securities exchange or in any over-the-counter
market.
The Employee shall hold in confidence all knowledge or
information of a confidential nature with respect to the business of
the Bank or the Holding Company, received by him 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 Employee acknowledges that it would not be possible to
ascertain the amount of monetary damages in the event of a breach by
the Employee under the provisions of this Paragraph 6. The Employee
agrees that in the event of the breach of this Paragraph, injunctive
relief enforcing the terms of this Paragraph is an appropriate remedy.
The Bank and Employee further agree that in the event the
Bank shall terminate the employment of the Employee for cause or should
the Employee resign his employment during any period of the term of his
employment contract, then and in that event, the non-competition
provisions of this Agreement shall be applicable. If, however, the Bank
should terminate the employment of the Employee without cause during
the last year of said Agreement, the non-competition provisions of this
Agreement shall not be applicable, and the Bank shall not proceed with
respect to the remedies as set forth above.
7. Standards. The Employee shall perform his duties 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 Board of Directors. The Bank shall provide the Employee
with
the working facilities and staff customary at the Bank for similar executives
and necessary for him to perform his duties.
8. Termination and Termination Pay.
-------------------------------------
A. The Employee's employment under this Agreement shall be
terminated upon the following occurrences:
(1) The death of the Employee during the term of this which
event the Employee's estate shall be entitled to receive the
compensation due the Employee through the last day of the
calendar month in which his death shall have occurred and for a
period of three (3) months thereafter.
(2) The Employee's employment under this Agreement may be
terminated by the Bank at any time or by the Employee upon sixty
(60) days written notice to the Employee or the Bank, as the case
may be. Upon such termination by the Employee or by the Bank "for
cause," the Employee shall be entitled to receive compensation
under this Agreement through the effective date of such
termination and such other benefits, if any, as may be provided
by the terms of other plans and programs of the Bank in the event
of termination.
Any such termination by the Bank other than termination "for
cause" shall not prejudice the Employee's right to compensation
or benefits under this Agreement. The Employee shall have no
right to receive compensation or benefits for any period after
termination "for cause." Termination "for cause" shall include
termination because of Employee's personal dishonesty, in-
competence, 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 any material breach of any provision of this
Agreement.
(3) If the Employee is removed or permanently prohibited
from participating in the conduct of the Bank's affairs by any
order issued by any regulatory agency, all obligations of the
Bank under this Agreement shall terminate as of the effective
date of the order. The rights of the Employee vested prior to the
date of such order shall not be affected.
(4) All obligations under this Agreement may be terminated:
(a) by the Federal Deposit Insurance Corporation at
the time it enters into an agreement to provide assistance
to or on behalf of the Bank under the authority contained in
its Rules and Regulations; and,
(b) by any regulatory or supervisory agency which
enters any orders to resolve problems related to the
operation of the Bank, or when the Bank is determined to be
in an unsafe or unsound condition. Any rights of the
Employee vested prior to such time shall not be affected by
any such determination or order.
9. Suspension of Employment.
------------------------------
A. The suspension of the Employee from office or temporary
prohibition from participation by the Employee in the conduct of the
affairs of the Bank pursuant to notice served by any supervisory or
regulatory agency, unless stayed by appropriate proceedings, shall
suspend, as of the date of such service, all obligations of the Bank
under the terms of this Agreement.
B. In the event the charges specified in a notice served as
provided in Subparagraph A of this Section shall be dismissed, the Bank
shall:
(1) pay the Employee the compensation withheld from such
Employee pursuant to the suspension of the Bank's obligation as
required in Subparagraph A of this Section; and,
(2) reinstate the obligations suspended as required in
Subparagraph A of this section.
10. Change in Control.
-----------------------
A. In the event of a "Change in Control" (as defined in
Subparagraph (C) below), the term of employment under this Agreement
automatically shall be extended to a period of three (3) years
beginning on the date of the Change in Control, and the Bank or its
successor shall be bound by the terms of this Agreement and shall be
prohibited, during the remainder of such term, from:
(1) Assigning Employee 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 equivalent titles in effect at such
time; or
(2) Adjusting Employee's annual base salary rate other than
in accordance with the provisions of Subparagraph (B) below; or
(3) Reducing in level, scope or coverage or eliminating
Employee's life insurance, medical or hospitalization insurance,
disability insurance, profit sharing plans, stock option plans,
stock purchase plans, deferred compensation plans, management
retention plans, retirement plans, stock ownership plans or
similar plans or benefits being provided by the Bank or the
Holding Company to the Employee
other than those arising from the Bank's management incentive
plan as of the effective date of the Change in Control; or
(4) Transferring Employee to a location which is an
unreasonable distance from his current principal work location,
without the Employee's express written consent.
B. In the event of a Change in Control, the Employee's base
salary shall be adjusted to include an amount equal to the average of
the two previous years' bonuses arising from the Bank's management
incentive plan, and/or discretionary bonuses, if any, and such
adjusted base salary shall be increased by not less than six percent
(6%) annually beginning at the date of the Change in Control and
continuing each year for the three-year term thereafter.
C. For the purposes of this Agreement, the term "Change in
Control" shall mean any of the following events:
(1) a change in control of a nature that would be required to be
reported in response to Item 1 of the Current Report on Form 8-K,
as in effect on the date hereof, pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"); or
(2) such time as any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act), other than a person who
beneficially owned as of January 1, 1998, more than 5% of the
Bank's securities, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Holding Company or Bank
representing 20 percent or more of the combined voting power of
the outstanding Common Stock of the Holding Company or Common
Stock of the Bank, as applicable; or
(3) individuals who constitute the Board or board of
directors of the Holding Company on the date hereof (the
"Incumbent Board" and "Incumbent Holding Company Board,"
respectively) cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director
subsequent to the date hereof whose election was approved by a
vote of at least three-quarters of the directors comprising the
Incumbent Board or Incumbent Holding Company Board, as
applicable, or whose nomination for election by the Bank's or
Holding Company's shareholders was approved by the Bank's or
Holding Company's Board of Directors or Nominating Committee, as
applicable, shall be considered as though he or she were a member
of the Incumbent Board or Incumbent Holding Company Board, as
applicable; or
(4) either the Holding Company or the Bank consolidates or
merges with or into another corporation, association or entity or
is otherwise reorganized, where neither the Holding Company nor
the Bank, respectively, is the surviving corporation in such
transaction; or
(5) all or substantially all of the assets of either the
Holding Company or the Bank are sold or otherwise transferred to
or are acquired by any other 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,
Employee, Bank and Holding Company agree in writing that the same
shall not be treated as a Change in Control for purposes of this
Agreement.
D. In the event any dispute shall arise between the Employee
and the Bank or Holding Company (or any successor) 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 Employee to enforce the terms of
this Paragraph 10 or in defending against any action taken by the
Holding Company or the Bank, the Bank shall reimburse the Employee for
all costs and expenses incurred in such proceedings or actions,
including attorney's fees, in the event the Employee prevails in any
such action.
11. Disability. If, by reason of physical or mental disability
----------------
during the term hereof, Employee is unable to carry out the normal and usual
duties of his employment hereunder, the Employee shall receive his full salary
from the Bank for up to twenty (20) working days for which he is unable to work.
Medical disability shall require a doctor's statement indicating the date the
Employee became disabled as well as a statement that he is medically able to
return to work before he can resume his duties. If, after thirty (30)
consecutive days, he is still unable to return to work, he will be covered by
the disability insurance policy of the Bank, if that policy applies under its
terms. While disabled, the Employee will keep his original date of employment
and all seniority benefits for up to twelve (12) weeks. Group insurance will be
kept in force (Employee will continue to pay for dependent insurance); however,
if the Employee does not return to work from medical leave after twelve (12)
weeks, the Bank may recover the premiums paid to maintain the coverage. A
"return to work" occurs when an Employee returns to work for at least thirty
(30) days. Upon returning to work from such disability, the Employee shall be
restored to his previous position or to an equivalent position with equivalent
benefits, pay, and other conditions of employment.
12. Successors and Assigns.
---------------------------
A. This Employment Agreement shall enure 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. Since the Bank is contracting for the unique and personal
skills of the Employee, the Employee shall be precluded from assigning
or delegating his rights or duties hereunder without first obtaining
the written consent of the Bank.
13. Amendments. No amendments or additions to this Agreement shall be
---------------
binding unless in writing by both parties, except as herein otherwise provided.
14. Applicable Law. This Agreement shall be governed in all respects,
--------------------
whether as to validity, construction, capacity, performance or otherwise, by the
laws of the State of North Carolina, except to the extent that federal law shall
be deemed to apply.
15. 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.
16. Entire Agreement; Counterparts.
-----------------------------------
A. This Agreement constitutes the entire agreement between the
Employee and the Bank with respect to the subject matter hereof and
supersedes all prior agreements with respect thereto. This Agreement
may be executed in one or more counterparts, all of which taken
together shall constitute one and the same instrument.
B. This Agreement replaces the Agreement between the parties dated
November 28, 1995 and all other agreements between the parties prior
to the date hereof respecting the subject matter hereof. Any and all
prior agreements shall be cancelled and have no further force or
effect when this Agreement becomes effective.
17. Notices. Any notice or other communication required or permitted
------------
under this Agreement shall be effective only if it is writing, delivered in
person or by reliable overnight courier service or deposited in the mail,
postage prepaid, return receipt requested and addressed as follows:
Address of the Bank: Peoples Bank, Xxxx Xxxxxx Xxx 000, Xxxxxx, Xxxxx
Xxxxxxxx, 00000.
Address of the Holding Company: Peoples Bancorp of North Carolina,
Inc., Xxxx Xxxxxx Xxx 000, Xxxxxx, Xxxxx Xxxxxxxx, 00000.
Address of the Employee: Xxxxxxx X. Xxxx, Xxxx Xxxxxx Xxx 000, Xxxxxxx, Xxxxx
Xxxxxxxx 00000.
Notices given in person or by overnight courier service shall be
deemed given when delivered to the address required by this section, and notices
given by mail shall be deemed given three (3) days after deposit in the mail.
Any party hereto may designate, by written notice to the other party in
accordance herewith, any other address to which notices addressed to him shall
be sent.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first written.
PEOPLES BANK, a North Carolina banking
Corporation
By: /s/ Xxxx X. Xxxxx
---------------------------------------
Xxxx X. Xxxxx, President/
Chief Executive Officer
/s/ Xxxxxxx X. Xxxx
---------------------------------------
Xxxxxxx X. Xxxx
The Foregoing Agreement is joined in and agreed to by Peoples Bancorp of North
Carolina, Inc.
PEOPLES BANCORP OF NORTH CAROLINA, INC., a
North Carolina Corporation
by: /s/ Xxxxx X. Xxxxx
--------------------------------------
Xxxx X. Xxxxx
President/Chief Executive Officer
