EXHIBIT 10.3
THIS CONTRACT IS SUBJECT TO ARBITRATION PURSUANT
TO THE SOUTH CAROLINA UNIFORM ARBITRATION ACT.
EMPLOYMENT AGREEMENT
This Agreement is entered into by and among CAROLINA NATIONAL
CORPORATION ("CNC"), CAROLINA NATIONAL BANK & TRUST COMPANY (the "Bank"), a
wholly owned subsidiary of CNC and XXXXX X. XXXXXX (the "Employee").
RECITALS:
Whereas, CNC and the Bank each wishes to employ the Employee as its
chief executive officer, and the Employee wishes to accept such employment with
CNC and the Bank; and
Whereas, CNC, the Bank and the Employee mutually desire that their
employment relationships be set forth under the terms of a written employment
agreement.
In consideration of the foregoing and of the promises and mutual
agreements set forth below, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto do
hereby agree as follows :
1. Employment. CNC and the Bank each agrees to employ the Employee, and
the Employee agrees to serve CNC and the Bank, on the terms and conditions, set
forth herein.
2. Term of Employment. The employment of the Employee by CNC and the
Bank, as provided under Section 1, shall commence on the date of the opening of
the Bank and end on the second anniversary of such date (the "Term of
Employment") unless further extended in writing with the express reference to
this Agreement or sooner terminated as hereinafter provided. Commencing on the
day following the opening of the Bank, and on each day thereafter, the Term of
Employment shall automatically be extended for an additional day unless prior to
such extension the Employee, CNC or the Bank gives written notice to the other
parties that the Term of Employment will not thereafter be extended. The
provisions of this Agreement related to Employee's employment, other than the
provisions contained in Sections 8 through 19, will not apply after the Term of
Employment has expired and any continuing employment of the Employee thereafter
will be at-will and not subject to the terms and conditions of this Agreement,
except as provided expressly herein.
3. Position and Duties. The Employee shall serve on a full-time basis
as President and chief executive officer of CNC and the Bank and shall be
responsible for all duties, authorities and responsibilities as set forth in the
Bylaws of CNC and the Bank, respectively, and shall assume such additional
responsibilities and authority as may from time to time be assigned to him by
the Board of Directors of CNC or the Bank. The Employee shall perform his
responsibilities and duties in the best interests of CNC and the Bank.
4. Place of Performance. In connection with the Employee's employment
hereunder, the Employee shall be based at the Bank's office located in Columbia,
South Carolina, subject to reasonable travel to the business of the Bank.
5. Compensation and Benefits. In consideration of the Employee's
performance of his duties hereunder, the Bank shall provide the Employee with
the following compensation and benefits during the term of his employment
hereunder. To the extent not provided by the Bank, such compensation and
benefits will be provided by CNC.
a. Base Salary. During his full-time employment, Employee
shall receive a per annum base salary of $135,000.00, payable in equal
installments in arrears on the last day of the month or such other
payroll period as the Bank may adopt for employees generally. During
the term of the Employee's employment under this Agreement, the Bank's
Board of Directors periodically will review and may increase (but not
decrease) the Employee's base salary rate, all in accordance with the
Bank's salary administration policies and procedures in effect from
time to time; and each change in the base salary amount listed in this
Section shall become the new base salary amount. The Bank shall have no
obligation to increase the Employee's base salary rate at any
particular time or in any particular amount, and any such increase
shall be in the sole and absolute discretion of the Board of Directors
of the Bank.
b. Bonus and Incentive Compensation. CNC and the Bank shall
set up an incentive compensation plan for senior management employees
providing for cash bonuses to be paid at least annually upon
achievement of stated goals and criteria. The Employee shall
participate in such plan and shall be eligible to receive cash bonuses
pursuant to the plan if CNC and the Bank achieve the performance levels
established by the board of directors from time to time.
c. Stock Options. CNC will provide the Employee with stock
options to be furnished by a stock option plan to be adopted by CNC.
The options shall be for the number of shares of CNC common stock which
equals five percent (5%) of the shares of CNC common stock subscribed
for in the public offering to capitalize the Bank. The options shall
provide for: (i) an exercise price of $10.00 per share; (ii) a
termination date ten years after the date of grant; and (iii) vesting
one-fifth upon grant and one-fifth on each anniversary of the grant. In
the event that the Employee terminates his employment with the Bank
without Good Reason (as hereinafter defined) or is terminated by the
Bank with Cause (as hereinafter defined), the options shall terminate
thirty days after the date of termination of employment.
d. Insurance. The Bank will provide the Employee with group
medical, dental, disability and life insurance, including family
coverage, if any.
e. Automobile. The Bank shall pay Employee an automobile
allowance of $750.00 per month.
f. Dues. The Bank shall pay Employee's initiation fees and
regular monthly dues for one downtown dining club and, at a later date
with the approval of the Board of Directors, one country or golf club.
g. Other Benefits. The Employee shall enjoy such other
benefits as the Bank shall provide to its employees generally.
6. Compensation and Benefits in the Event of Termination. In the event
of the termination of the Employee's employment by the Bank or by the Employee
during the term of this Agreement, compensation and benefits shall be paid as
set forth below.
a. Definitions. For purposes of this Agreement, the following
terms shall have the meanings indicated:
(i) "Cause" shall mean
(A) the breach by Employee of any material
provision of this Agreement, provided that Bank gives
the Employee written notice of such failure and such
failure is not cured within thirty (30) days
thereafter;
(B) the willful and continued failure by the
Employee to substantially perform his duties under
this Agreement (other than the Employee's inability
to perform, with or without reasonable accommodation,
resulting from his incapacity due to physical or
mental illness or impairment), after a demand for
substantial performance is delivered to him by the
Bank, which demand specifically identifies the manner
in which the Employee is alleged to have not
substantially performed his duties;
(C) the willful engaging by the Employee in
misconduct (criminal, immoral or otherwise) which is
materially injurious to the Bank;
(D) the Employee's conviction of a felony;
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(E) the commission by the Employee in the
course of his employment of an act of fraud,
embezzlement, theft or proven dishonesty, or any
other illegal act or practice, which would constitute
a felony, (whether or not resulting in criminal
prosecution or conviction), or any act or practice
which has resulted in the Employee becoming
unbondable under CNC's "banker's blanket bond;"
(F) failure by the Employee to comply with
clear provisions of law and regulations applicable to
the Bank which is materially injurious to the Bank;
or
(G) removal or permanent prohibition from
participating in the affairs of the Bank by an order
or consent issued under Section 8(e)(4) or (g)(1) of
the Federal Deposit Insurance Act.
(ii) "Date of Termination" shall mean:
(A) if the Employee's employment is
terminated by reason of his death, his date of death;
(B) if the Employee's employment is
terminated for Disability, thirty (30) days after
Notice of Termination is given (provided that the
Employee shall not have returned to the performance
of his duties as provided under sub-paragraph (iii)
of this paragraph a; or
(C) if the Employee's employment is
terminated by action of either party for any other
reason, the date specified in the Notice of
Termination; provided, however, that if within thirty
(30) days after any Notice of Termination is given,
the party receiving such Notice of Termination
notifies the other party that a dispute exists
concerning the termination, the Date of Termination
shall be the date on which the dispute is finally
resolved, either by mutual written agreement of the
parties, or by a final judgment, order or decree of
an arbitrator, a panel of arbitrators or a court of
competent jurisdiction (the time for appeal therefrom
having expired and no appeal having been perfected).
(iii) "Disability" shall mean the Employee's failure
to satisfactorily perform the essential functions of his
office on a full-time basis for one hundred and eighty (180)
consecutive days, with or without accommodation, by reason of
the Employee's incapacity resulting from physical or mental
illness or impairment, except where within fifteen (15) days
after Notice of Termination is given following such absence,
the Employee shall have returned to the satisfactory, full
time performance of such duties. Any determination of
Disability hereunder shall be made by the Board of Directors
of the Bank in good faith and on the basis of the certificates
of at least three (3) qualified physicians chosen by it for
such purpose, one (1) of whom shall be the Employee's regular
attending physician.
(iv) "Good Reason" shall mean either:
(A) Failure by CNC or the Bank to comply
with any material provision of this Agreement,
provided that the Employee gives CNC or the Bank, as
the case may be, written notice of such failure and
such failure is not cured within thirty (30) days
thereafter;
(B) Failure by the Bank to obtain, by
operation of law or contract, the assumption of its
obligations under this Agreement by any successor;
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(C) The failure by the Bank to comply with
Section 5 of this Agreement;
(D) Any purported termination of the
Employee's employment by action of the Bank which is
not effected pursuant to a Notice of Termination;
(E) Imposition of a requirement that the
Employee report to any person or group of persons,
other than the respective boards of directors of CNC
and the Bank, or entity; or
(F) Termination of the Employee's employment
by CNC, but not the Bank, other than for Cause.
(v) "Notice of Termination" shall mean a written
notice which shall include the specific termination provision
under this Agreement relied upon, and shall set forth in
reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Employee's employment.
Any purported termination of the Employee's employment
hereunder by action of either party shall be communicated by
delivery of a Notice of Termination to the other party.
(vi) "Retirement" shall mean termination of the
Employee's employment pursuant to CNC's or the Bank's regular
retirement policy applicable to the position held by the
Employee at the time of such termination or the Employee's
attainment of age 68 whichever is later.
b. Termination For Cause, Disability, Death, Retirement or Other Than for
Good Reason. If the Employee's employment hereunder is terminated
during the Term of Employment by action of CNC or the Bank for Cause;
by action of the Employee not for Good Reason, or by reason of the
Employee's death, Disability or Retirement, the following compensation
and benefits shall be paid and provided the Employee (or his
beneficiary):
(i) The Employee's base salary provided under
paragraph a. of Section 5 through the last day of the month in
which the Date of Termination occurs, at the annual rate in
effect at the time Notice of Termination is given (or death
occurs), to the extent unpaid prior to such Date of
Termination;
(ii) Any bonus under paragraph b. of Section 5 which
has been awarded prior to the Date of Termination, to the
extent unpaid prior to such date;
(iii) Any benefits to which the Employee (or his
beneficiary) may be entitled as a result of such termination,
under the terms and conditions of the pertinent plans or
arrangements in effect at the time of the Notice of
Termination under paragraph d. of Section 5; and
(iv) Any amounts due the Employee with respect to
paragraph e. or paragraph f. of Section 5 as of the Date of
Termination.
c. Termination for Good Reason or Other Than For Cause. In the event the
Employee's employment hereunder is terminated during the Term of
Employment other than by death, Disability or Retirement, and (i) by
action of the Employee for Good Reason, or (ii) by action of the Bank
other than for Cause, the Bank shall pay and provide the Employee the
compensation and benefits stipulated under paragraph b. immediately
above; provided, however, in addition thereto and without setoff, the
following compensation shall be paid and provided the Employee for a
period of two years after the Date of Termination:
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(A) the Bank shall continue to pay to the
Employee the base salary provided for in Section 5.a.
above (at the Employee's base salary rate provided
for in that Section immediately prior to the Date of
Termination),
(B) the Bank shall continue to pay the
employee the automobile allowance,
(C) at its sole cost and expense, the Bank
will continue to provide the Employee with the
insurance coverages he would have had had he remained
as an employee of the Bank or with insurance
coverages substantially equivalent thereto, or, at
the Bank's request (and so long as such coverage
reasonably can be obtained by the Employee himself),
the Employee will obtain substantially equivalent
insurance coverages from insurance companies chosen
by him and the Bank promptly will reimburse Employee
for premium costs actually incurred by him from time
to time for the same, and
(D) all unexercised stock options granted to
the Employee pursuant to Section 5c. shall
immediately vest and become exercisable; provided,
however, that any option which by its terms would
terminate prior to its expiration date because of the
termination of the Employee's employment shall be
extended to terminate on its original expiration
date.
Provided, however if the payment under this Section 6 c., either alone
or together with other payments which the Employee has the right to
receive from the Bank, would constitute a "parachute payment" (as
defined in Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"), such severance payment shall be reduced to the
largest amount as will result in no portion of the severance payment
under this Section 6 being subject to the excise tax imposed by Section
4999 of the Code or the disallowance of a deduction to the Bank under
Section 280G(a) of the Code.
7. Federal Deposit Insurance Act Requirements. Notwithstanding anything
to the contrary herein:
a. If the Employee is suspended or temporarily prohibited from
participating in the Bank's affairs by a notice served under Section
8(e)(3) or (g)(1) of the Federal Deposit Insurance Act, the Bank's
obligations under this Agreement shall be suspended as of the date of
service unless stayed by appropriate proceedings. If the charges in the
notice are dismissed, the Bank may in its discretion (i) pay the
Employee all or part of the compensation withheld while the obligations
under this Agreement were suspended and (ii) reinstate (in whole or in
part) any of such obligations which were suspended.
b. If the Bank is in default (as defined in Section 3(x)(1) of
the Federal Deposit Insurance Act), all obligations under this
Agreement shall terminate as of the date of default, but this paragraph
shall not affect any vested rights of the parties hereto.
c. Any payments made to the Employee pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their
compliance with 12 U.S.C. Section 1828(k) or any successor provision
thereof and any regulations promulgated thereunder.
8. Confidentiality.
a. The Employee recognizes that his activities on behalf of
the Bank require considerable responsibility and trust. Relying on the
ethical responsibilities and undivided loyalty of the Employee, the
Bank has and will and CNC and its subsidiaries will in the future
entrust the Employee with highly sensitive confidential, restricted and
proprietary information involving Confidential Information (as defined
below).
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b. For the purposes of this Agreement, "Confidential
Information" means any data or information, that is material to the
Bank, CNC or the subsidiaries of CNC, and not generally known by the
public. To the extent consistent with the foregoing definition,
Confidential Information includes (without limitation): (i) the sales
records, profit and performance reports, pricing manuals, training
manuals, selling and pricing procedures, financing methods of the Bank,
CNC or the subsidiaries of CNC, and all other business records of the
Bank, CNC or the subsidiaries of CNC; (ii) the identities of the
customers of the Bank, CNC or the subsidiaries of CNC, their specific
demands, and their current and anticipated requirements for the
products of the Bank, CNC or the subsidiaries of CNC; (iii) the
business plans and internal financial statements and projections of the
Bank, CNC or the subsidiaries of CNC; and (iv) the specifics of any
specialized products or services of the Bank, CNC or the subsidiary of
CNC may offer or provide to its customers.
c. The Employee recognizes the proprietary and sensitive
nature of the Bank, CNC and its subsidiaries' Confidential Information.
The Employee agrees to abide by all of the Bank's and CNC's rules and
procedures designed to protect their Confidential Information and to
preserve and maintain all such information in strict confidence during
the Employee's employment by the Bank and as long thereafter as the
Confidential Information remains, in the sole opinion of the Bank, CNC
and its subsidiaries, proprietary and confidential to the Bank, CNC and
its subsidiaries. The Employee agrees not to use, disclose or in any
other way use or disseminate any Confidential Information to any person
not properly authorized by the Bank, CNC or the subsidiaries of CNC.
9. Return of Materials. Upon the request of the Bank, and in any event,
upon the termination of the Employee's employment, the Employee must return to
the Bank, CNC or the subsidiaries of CNC and leave at the disposal of the Bank,
CNC or the subsidiaries of CNC, all memoranda, notes, records, and other
documents or electronic files pertaining to the business of the Bank, CNC and
the subsidiaries of CNC, or the Employee's specific duties for such entities
(including all copies of such materials). The Employee must also return to the
Bank, CNC and the subsidiaries of CNC, and leave at the disposal of the Bank,
CNC and the subsidiaries of CNC, all materials involving any Confidential
Information of the respective entities.
10. Implementation. The covenants contained herein shall be construed
as covenants independent of one another, and as obligations distinct from any
other contract between the Employee and CNC or the Bank. Any claim the Employee
may have against CNC or the Bank shall not constitute a defense to enforcement
by the Bank of this Agreement. The covenants made by the Employee herein shall
survive termination of the Employee's employment, regardless of who causes the
termination and under what circumstances.
11. Restrictive Covenant. In consideration of the Bank's employment of
the Employee, the Employee agrees that in addition to any other limitation: (i)
for a period of twelve (12) months after the termination of this Agreement by
the Employee for other than Good Reason; or (ii) during the continuation of base
salary payments pursuant to Section 6.c. above, whichever is later, he will not,
within a twenty-five (25) mile radius of any operating office of CNC, any of its
subsidiaries, or the Bank, manage, operate or be employed by, participate in, or
be connected in any manner with the management, operation, or control of any
banking business whether or not carried on by a bank. The Employee further
agrees, that for a period of twelve (12) months after the termination of his
employment hereunder, by the Employee for other than Good Reason or the
completion of Base Salary payments pursuant to section 6.c. above, whichever is
later, he will not solicit the business or patronage, directly or indirectly,
from any customers of the Bank (or any other office of CNC or of a subsidiary of
CNC if Employee should have been employed by and located at such office) and the
Employee will not seek to or assist others to persuade any employee of the Bank
engaged in similar work or related to the Bank's work to discontinue employment
with the Bank or seek employment or engage in any business of the Bank.
Furthermore, the Employee will not communicate to any person, firm or
corporation any information related to customer lists, prices, secrets or other
Confidential Information which he might from time to time acquire with respect
to the business of the Bank, CNC, or its subsidiaries, or any of their
affiliates. The Employee agrees to disclose the contents of this Agreement to
any subsequent employer for a period of twelve (12) months following termination
of his employment hereunder, the termination of this Agreement or completion of
base salary payments pursuant to 6.c. above, whichever is later.
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12. Remedies for Breach of Employment Contract. Irreparable harm shall
be presumed if the Employee breaches any covenant of this Agreement. The
faithful observance of all covenants in this Agreement is an essential condition
to the Employee's employment, and the Bank, CNC and the subsidiaries of CNC are
depending upon absolute compliance. Damages would probably be very difficult to
ascertain if the Employee breached any covenant in this Agreement. This
Agreement is intended to protect the proprietary rights of the Bank, CNC and the
subsidiaries of CNC in many important ways. In light of these facts, the
Employee agrees that any court of competent jurisdiction should immediately
enjoin any breach of this Agreement, upon the request of the Bank, CNC, the
subsidiaries of CNC, and the Employee specifically releases the Bank, CNC, and
the subsidiaries of CNC, from the requirement to post any bond in connection
with a temporary or interlocutory injunctive relief, to the extent permitted by
law.
13. Withholding. Any provision of this Agreement to the contrary
notwithstanding, all payments made by the Bank hereunder to the Employee or his
estate or beneficiaries shall be subject to the withholding of such amounts, if
any, relating to tax and other payroll deductions as the Bank may reasonably
determine should be withheld pursuant to any applicable law or regulation. In
lieu of withholding such amounts, the Bank may accept other provisions to the
end that they have sufficient funds to pay all taxes required by law to be
withheld in respect of any or all such payments.
14. Notices. All notices, requests, demands and other communications
provided for by this Agreement shall be in writing and shall be sufficiently
given if and when mailed in the continental United States by registered or
certified mail, or personally delivered to the party entitled thereto, at the
address stated below or to such changed address as the addressee may have given
by a similar notice:
To the Bank: Chairman of the Board of Directors
Carolina National Bank & Trust Company
0000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
With a copy to: Haynsworth Xxxxxxx Xxxx, P.A.
Twelfth Floor
0000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxx, Xx.
To the Employee: Xxxxx X. Xxxxxx
President
Carolina National Bank & Trust Company
0000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
15. Successors; Binding Agreement. This Agreement shall inure to the
benefit of and be enforceable by the Employee's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Employee should die while any amount would still
be payable to him hereunder if he had continued to live, all such amounts,
except to the extent otherwise provided under this Agreement, shall be paid in
accordance with the terms of this Agreement to his devisee or other designee, or
if there be no such devisee or designee, to the Employee's estate.
16. Modification, Waiver or Discharge. No provision of this Agreement
may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Employee and authorized officers
of CNC and the Bank. 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 agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement; provided, however,
that this Agreement shall not supersede or in any way limit the right, duties or
obligations that the Employee or CNC or the Bank may have under any other
written agreement between such parties, under any employee pension benefit plan
or employee welfare benefit plan as defined under the Employee Retirement Income
Security Act of 1974, as amended, and maintained by CNC or the Bank, or under
any established personnel practice or policy applicable to the Employee.
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17. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
South Carolina without regard to the laws of such state governing conflicts of
laws.
18. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not effect the validity or enforceability of any other
provision of this Agreement, which latter shall remain in full force and effect.
19. Miscellaneous.
(a) No Right of Set-Off, Etc. There shall be no right of
set-off or counterclaim, in respect of any claim, debt or obligation
against any payments to the Employee, his beneficiaries or estates
provided for in this Agreement.
(b) No Adequate Remedy At Law. The Bank and the Employee
recognize that each party will have no adequate remedy at law for
breach by the other of any of the agreements contained herein and, in
the event of any such breach, CNC, the Bank and the Employee hereby
agree and consent that the others shall be entitled to decree of
specific performance, mandamus, or other appropriate remedy to enforce
performance of such agreements.
(c) Non-Assignability. No right, benefit, or interest
hereunder shall be subject to anticipation, alienation, sale,
assignment, encumbrance, charge, pledge, hypothecation, or setoff in
respect of any claim, debt or obligation, or to execution, attachment,
levy or similar process, or assignment by operation of law. Any
attempt, voluntary or involuntary, to effect any action specified in
the immediately preceding sentence shall, to the full extent permitted
by law, be null, void and of no effect. Any of the foregoing to the
contrary notwithstanding, this provision shall not preclude the
Employee from designating one or more beneficiaries to receive any
amount that may be payable after his death, and shall not preclude the
legal representative of the Employee's estate from assigning any right
hereunder to the person or persons entitled thereto under his will or,
in the case of intestacy applicable to his estate.
(d) Arbitration. Any controversy or claim arising out of or
relating to this Agreement shall be settled by binding arbitration by
three arbitrators pursuant to the Federal Arbitration Act or the South
Carolina Uniform Arbitration Act, as applicable, under the applicable
rules of the American Arbitration Association and judgment on any award
rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof; provided that any party may seek injunctive
relief to enforce provisions of this Agreement without initiating an
arbitration proceeding. The location of any arbitration shall be
Columbia, South Carolina. Any civil action seeking injunctive relief,
challenging an arbitration proceeding or award or otherwise related to
this Agreement will be instituted and maintained in the federal or
state courts for Richland County, South Carolina and the parties hereby
consent to the personal jurisdiction of said courts.
(e) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but
of which together will constitute one and the same instrument.
[SIGNATURES OMITTED]
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