EXHIBIT 10.2
STATE OF NORTH CAROLINA
COUNTY OF BUNCOMBE
EMPLOYMENT AGREEMENT
THIS AGREEMENT entered into as of March 20, 1998, by and between THE BANK
OF ASHEVILLE (hereinafter referred to as the "Bank") and Xxxxxxx X. Xxxx
(hereinafter referred to as "Hall").
WITNESSETH:
WHEREAS, the Bank desires to retain Hall's services as an officer of the
Bank for the period specified herein, and Hall is willing to serve as an officer
of the Bank for such period; and, the parties desire to enter into this
Agreement to set forth the terms and conditions of Hall's employment with 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 Hall hereby agree as follows:
1. Employment. The Bank hereby agrees to employ Hall, and Hall hereby
agrees to serve as an officer of the Bank, all upon the terms and conditions
stated herein. As an officer of the Bank, Hall will (i) serve as 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 Hall's position with the Bank or as shall otherwise be reasonably assigned to
him from time to time by the Bank.
Hall 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.
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Xxxx hereby agrees to devote to the employment granted hereunder such
number of hours as such efforts and endeavors as the Bank shall deem to be
necessary to discharge his duties hereunder, and, for so long as employment
hereunder shall exist, Hall shall not engage in any other occupation which
requires any significant amount of Hall's personal attention during the Bank's
regular business hours or which otherwise interferes with Hall'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 Hall from personally, and for Hall's
own account, trading in stocks, bonds, securities, real estate or other forms of
investment for Hall's own benefit so long as said activities do not interfere
with Hall's attention to or performance of his duties and responsibilities as an
officer of the Bank hereunder.
2. Compensation. For all services rendered by Hall to the Bank under this
Agreement, the Bank shall provide Hall a total compensation package in the
amount of Seventy Four Thousand dollars and 00/100's ($74,000) per annum. The
Board of Directors shall review this amount no less often than annually, 30 days
after the Bank's fiscal year end. 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 9), Hall's base salary shall be increased not less than five percent
(5%) annually during the term of this Agreement.
In addition to the base salary, the Bank will provide Hall or pay for his
benefit the following:
(a) Medical insurance premiums to provide coverage for Hall and his
dependents;
(b) Life insurance premiums;
(c) Automobile Allowance in the amount of $400 per month.
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3. Participation in Retirement and Employee Benefit Plan; Establishment of
Bonus Plans; Fringe Benefits. Subject to the terms and conditions of this
Agreement, Hall 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 program
and plans, and the Bank's normal practices and established policies regarding
such programs and plans.
The Bank shall develop and implement during the first year of the term of
this Agreement an incentive cash bonus plan whereby Hall will be entitled to
receive an annual cash bonus upon his attainment of prescribed goals set forth
in such plan.
In addition to the other compensation and benefits described in this
Agreement, the Bank shall promptly reimburse Hall 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 or appropriate officers
of the Bank pursuant to established procedures.
4. Vacation. Hall shall be entitled to paid vacation leave of three weeks
each year.
5. Term. Unless sooner terminated as provided in this Agreement and subject
to the right of either Hall or the Bank to terminate Hall's employment at any
time as provided herein, the initial term of this Agreement and Hall's
employment with the Bank hereunder shall commence upon January 1, 1998 and shall
continue for a period of two (2) years. On the second anniversary of the date of
this Agreement, and if Hall has successfully met objectives as set forth in the
Business Plan or agreed to performance plans, the term of this Agreement shall
be extended for an additional one year period beyond the then effective
expiration date unless written notice from the Bank to Hall or from Hall to the
Bank is received 90 days prior to the anniversary date notifying the other
party that this Agreement shall not be so extended. It is contemplated that the
Chief Executive Officer will review
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EMPLOYMENT AGREEMENT
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Xxxx'x performance annually and make a determination whether to renew this
Agreement prior to the 90 day notice period.
6. Confidentiality. Hall 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 familiarity with the Bank's customers and the bank's dealings
with them, and other information concerning the Bank's business, all of which
constitute valuable assets and privileged information which 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
to the benefit of its business, it is reasonable and necessary to place certain
restrictions on Hall to prevent him from competing with the Bank and to prevent
him from disclosing information about the Bank's business and customers. For
that purpose, and in consideration of this Employment Agreement, Hall
covenants and agrees with the Bank as follows:
For the purpose of this Paragraph 6, the following terms shall have these
meanings:
Customer. The term "Customer" means any Person with whom, as of the
effective date of termination of this Agreement or Hall's employment with the
Bank for any reason, the Bank has or has had a depository, loan or any other
bank 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 or corporation which 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. Hall covenants and agrees with the Bank that
any and all data, figures, projections, estimates, lists, files, records,
documents, manuals and all other such materials or information (financial or
otherwise) relating to the Bank and its banking business, regulatory
examinations, financial results and conditions, lending and deposit
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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
and its business to which Hall will have access during his employment with the
Bank. Hall 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 Hall will not: (a) divulge any such Confidential Information to any
other Person or Financial Institution; (b) remove any such Confidential
Information in written or other recorded form from the Bank's premises; or (c)
make any use of any Confidential Information for his own purpose or for the
benefit of any Person or Financial Institution other than the Bank.
(b) Remedies for Breach. Hall understands and agrees that a breach or
violation by him of any covenant contained in Paragraph 6(a) of this Agreement
would constitute a material breach of this Agreement and would cause
irreparable damage and injury to the Bank for which the Bank would not have an
adequate remedy at law in that it would be difficult to ascertain the amount of
monetary damages which would result from any such breach or violation. In the
event of Hall's actual or threatened breach or violation of any covenant
contained in Paragraph 6(a), Hall agrees the Bank shall be entitled to bring
a civil action seeking a temporary restraining order and preliminary and
permanent injunction restraining Hall from violating or continuing to violate
any of these covenants or from threatening to violate any of them and seeking
any other legal or equitable relief relating to the breach or violation of any
of these covenants. Hall agrees if the Bank institutes any such civil action
against Hall, Hall shall have waived any claim or defense that the Bank has an
adequate remedy at law and shall not plead or contend in any such civil action
any claim or defense that the Bank has adequate remedy at law. Moreover, the
parties agree the exercise by the Bank of its right to seek in injunctive
relief shall not preclude the Bank or its successors or assigns from pursuing
any other remedy or exercising any other right, power or privilege
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EMPLOYMENT AGREEMENT
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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 and remedies, available to the Bank.
Further, Hall agrees the provisions of Paragraph 6(a) above and the
remedies provided in this Paragraph 6(b) 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 Statues, or the rights of the Bank
under 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. Hall's covenants and agreements and the Bank's
rights and remedies provided for in this Paragraph 6 shall survive any
termination of this Agreement or termination of Hall's employment with the Bank
regardless of the reason for such termination.
7. Termination and Termination Pay.
(a) Hall's employment under this Agreement shall be terminated by his death
and his estate shall be entitled to receive any unpaid compensation due him
computed through the last day of the calendar month in which his death occurs.
(b) Hall shall have cause to terminate his employment by the Bank if he
determines in good faith that the Bank has breached in any material respect
any of the terms or conditions of this Agreement. Prior to any such termination
by Hall upon his determination in good faith the Bank has breached in a material
respect any of the terms or conditions of this Agreement, Hall shall give the
Bank written notice which describes such breach and if the Bank within five
days following its receipt of such notice cures or corrects the breach to the
reasonable satisfaction of Hall, this Agreement shall remain in full force and
effect.
(c) Hall may terminate his employment at any time without cause provided
(i) Hall provides at least 90 days notice to the Bank of his intention to
terminate his
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employment by the Bank and (ii) Hall agrees to be bound by a covenant not to
compete by his employment with any Financial Institution in Buncombe County for
a period of not less than 1 year.
(d) The Bank may terminate Hall's employment at any time with cause or
without cause as "Cause" is defined below.
If Hall's employment is terminated for any reason other than for cause, the
termination shall not prejudice Hall's right to compensation for other benefits
under this Agreement for the remaining term of the Agreement.
On the other hand, if Hall's employment is terminated for cause, Hall shall
not thereafter have any rights under this Agreement (including the right to
receive any compensation or other benefits for any period after the date of
termination for cause).
For the purpose of Paragraph 7(d), the Bank shall be entitled to terminate
Hall's employment for cause upon any one or more of the following seven grounds:
(i) A determination by the Bank's Board of Directors that, due to Hall's
actions or influence, there has been a material adverse divergence from the
Business Plan.
(ii) A determination by the Bank, in good faith, that Hall (A) has
breached in any material respect any of the terms or conditions of this
Agreement, or (B) is engaged 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 Hall's employment for such a breach,
failure to perform, or conduct described in this subparagraph (ii) the Bank
shall give Hall written notice which describes such breach, failure to perform,
or conduct and if, during a period of five (5) days following such notice, Hall
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 Hall on a previous occasion of
the same or 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
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subparagraph (ii) shall be effective immediately and Hall shall have no right to
cure such breach, failure to perform, or conduct.
(iii) The violation by Hall 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), which results from Hall'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;
(iv) The commission in the course of Hall'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);
(v) The conviction of Hall 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 Hall from serving as an employee or executive
officer of, or a party affiliated with, the Bank or its bank holding company; if
any.
(vi) Hall 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.
(vii) The occurrence of any event believed by the Bank, in good faith, to
have resulted in Hall being excluded from coverage, or having coverage limited
as to Hall 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.
8. Disability. In the event Hall becomes disabled during the term of his
employment and it is determined Hall is permanently unable to perform his duties
under this
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Agreement, Hall's employment under this Agreement shall terminate. The Bank
shall continue to compensate Hall at the level of compensation set forth in
Paragraph "2" above, and provide Hall each of the other benefits described in
this Agreement, for a period of one year or the remaining term of this Agreement
(whichever is less), so long as Hall remains disabled, less all other payments
to which Hall is entitled under any insurance or disability plan of the Bank
applicable to Hall and such disability payments as Hall may be entitled to
receive from Social Security or any other source.
In the event Hall becomes disabled during the term of his employment and it
is determined that Hall is temporarily unable to perform his duties under this
Agreement, the Bank will continue to compensate Hall at the level of
compensation set forth in Paragraph "2" above for a period of ninety days.
If at any time a disagreement arises between Hall and the Bank as to
whether Hall is disabled or whether any disability of Hall is permanent or
temporary, either or both of such questions shall be submitted to an impartial,
reputable physician selected by agreement between Hall and the Bank. Should Hall
and the Bank be unable to agree upon such a physician to resolve either or both
of these questions, the Bank shall select a physician, Hall shall select a
physician, and these two physicians shall select a third physician. This panel
of three physicians shall resolve either or both of these questions and the
determination by the panel shall be final and binding upon Hall and the Bank.
The Bank shall pay the reasonable fees and expenses of the physician or
physicians making this determination.
9. Additional Regulatory Requirement. Notwithstanding 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 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
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EMPLOYMENT AGREEMENT
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hereafter amended, (ii) would be prohibited by or would violate any applicable
rules, regulations, orders or statements of policy, whether now existing or
hereafter promulgated, of any Regulatory Authority, or (iii) otherwise would be
prohibited by any Regulatory Authority.
10. Change in Control.
(a) In the event of a termination of Hall's employment in connection with,
or within twenty-four (24) months after, a "Change in Control" (as defined in
Subparagraph (d) below) of the Bank, for reasons other than for "cause" (as
defined in Paragraph 7(d) hereof), Hall shall be entitled to receive the sum set
forth in Subparagraph (c) below. Said sum shall be payable as provided in
Subparagraph (e) below.
(b) Hall shall have the right to terminate this Agreement upon the
occurrence of any of the following events (the "Termination Events") within
twenty-four (24) months following a Change in Control of the Bank:
(i) Hall is assigned any duties or responsibilities which 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 as such time;
(ii) Hall's annual base salary is reduced below the amount in
effect as of the effective date of a Change of Control or as the same
shall have been increased from time to time following such effective
date;
(iii) Hall's life insurance, medical or hospitalization
insurance, disability 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 Hall 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
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(iv) Hall is transferred to a location outside of Buncombe County,
North Carolina, with Hall'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 Hall terminates this Agreement or the Bank terminates this
Agreement pursuant to this Paragraph 10, the Bank will be obligated to pay or
cause to be paid to Hall an amount equal to two hundred ninety nine percent
(299%) of Hall'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 purpose 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 70)(8)(A) of the Changes 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
the Bank, or acquires control, in any manner of the election of a
majority of the directors of the Bank;
(ii) The Bank consolidates or merges with or into another
corporation, association, or entity, or is otherwise reorganized, as
the result of which the Bank is not the surviving corporation in such
transaction; or
(iii) All or substantially all of the assets of the Bank are
sold or otherwise transferred to or are acquired by any other
corporation, association, or other person, entity, or group;
"provided, however, that should the Bank reorganize itself into the
holding company form of organization, whereby the share holders of the
Bank immediately prior to such reorganization are substantially the
same share holders as
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the Bank's holding company, such reorganization shall not be considered
a "change in control" for the purpose of this agreement."
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, Hall and the Bank agree in writing
that the same shall not be treated as Change in Control for the purposes of this
Agreement.
(e) Amounts payable pursuant to this Paragraph 9 shall be paid, at the
option of Hall, 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 Hall's right
hereunder, Hall shall have twelve (12) months from the date of the occurrence
of the Termination Event to terminate this Agreement pursuant to this Paragraph
9. 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 Hall does not so
terminate this Agreement within such twelve months period, Hall 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 twelve month 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 purpose and
not result in the imposition of an excise tax on Hall. Notwithstanding anything
contained in this Agreement to the contrary, any payments to be made to or for
the benefit of Hall 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 Hall 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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11. Successors and Assigns.
(a) This Agreement shall insure 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 Hall.
Therefore, Hall shall be precluded from assigning his rights or delegating his
duties hereunder.
12. Modification; Waiver; Amendments. No provision of the Agreement may be
modified, waived or discharged unless such waiver, modification or
discharge is contained in a written Agreement executed by the parties
hereto. No waiver by either party hereto, at any time, of any breach by
the other party hereto of, or the failure of the other party to comply
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 effective
unless in writing and signed by both parties.
13. Applicable Law. This Agreement shall be governed in all respects by the
laws of North Carolina, except to the extent that federal law shall be deemed to
apply.
14. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
15. Entire Agreement. This Agreement contains the entire agreement between
the parties and its supersedes any and all other oral or written agreement(s)
heretofore made, and there are no representations or inducements by or to, or
and 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.
THE BANK OF ASHEVILLE
By: /s/ Xxxxxx X. Xxxxxxxxxx, Xx.
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Xxxxxx X. Xxxxxxxxxx, Xx.
President & Chief Executive Officer
Attest:
/s/ Xxxxx X. Xxxx
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Secretary
/s/ Xxxxxxx X. Xxxx (SEAL)
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Xxxxxxx X. Xxxx
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