Exhibit 10.1
CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement ("Agreement"), dated as of May 3, 2004 is
made and entered into by Capital Bank (hereinafter the "Bank"), and Xxxxx X.
Xxxxxxxx (hereinafter the "Employee").
The Bank recognizes that the possibility of a Change of Control (as
further defined in this Agreement) exists and that a Change of Control can
result in significant distractions of its key management personnel.
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. 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 Capital Bank
Corporation, the parent holding company of the Bank ("CBC") 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. 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 the Bank.
(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 one (1) year 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 one (1) year after the occurrence of a Change
in Control, Employee terminates his employment with the Bank for "Good
Reason." For purposes of this Section 5(b), "Good Reason" shall mean the
occurrence after a Change in Control of any of the following events or
conditions:
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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, except in connection with the termination of his employment
for Disability, Cause, or death, or by Employee other than for Good
Reason. For purposes of this section, a change in Employee's status,
title, position, etc., shall also include his position and
responsibilities with respect to CBC;
(B) a reduction in Employee's base salary;
(C) the Bank's requiring Employee to be based at any
place outside of Raleigh, North Carolina, except for reasonably
required travel on the Bank's business which is not substantially
greater than such travel requirements prior to the Change in
Control;
(D) the failure by the Bank to continue in effect any
compensation, welfare, or benefit plan or other perquisite in which
Employee is participating at the time of a Change in Control without
substituting plans providing Employee with substantially similar or
greater benefits taken in the aggregate, or the taking of any action
by the Bank which would adversely affect Employee's participation in
or materially reduce Employee's benefits under, any of such plans or
deprive Employee of any material fringe benefit enjoyed by Employee
at the time of the Change in Control;
(E) any material breach by the Bank of any express
provision of this Agreement; or
(F) 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 and time
frames described above in this Section 1 prior to October 1, 2008 ("Expiration
Date"), 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 the following paid in
substantially equal monthly payments without interest commencing one month
after the date of termination:
(a) If prior to October 1, 2007, two 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, in the event the termination
occurs no later than twelve (12) months after the
occurrence of a Change in Control payable for 24
months. No amounts will be payable if termination
occurs more than 12 months from the date of the
Change in Control.
(b) If after October 1, 2007 and prior to the
Expiration Date, one times the amount of
Employee's current annual base salary plus the
amount of bonus paid to Employee, if any, in the
prior bonus year, in the event the termination
occurs no later than twelve (12) months after the
occurrence of a Change in Control payable for 12
months. No amounts will be payable if termination
occurs more than 12 months from the date of the
Change of Control.
(ii) a continuation of benefits for the period of time
Employee receives the severance benefits described in Section 1(c)(i)
above as follows: During such time, the Bank shall maintain and Employee
shall be entitled to participate in all life insurance, retirement,
health, accidental death and dismemberment, and disability plans and other
benefit programs paid by the Bank for Employee in which Employee
participated 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
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substantially similar to, or greater than, those which he is entitled to
receive under any such plan or program; and
(iii) a lump sum payment (or otherwise as specified by
Employee to the extent permitted by the applicable plan) of any and all
amounts contributed to a Bank pension or retirement plan which Employee is
entitled to under the terms of any such plan. In the event Employee fails
to execute the general release described above, he shall receive any such
payments in accordance with the payment provisions of the applicable
plan(s).
(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
Internal Revenue Code of 1986, as amended (the "Code"), and but for this Section
1 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 thereof (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.
2. Non-Solicitation. 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 Bank's business and that
the Bank'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 2: are reasonably necessary to protect
the legitimate business interests of the Bank; are described with sufficient
accuracy and definiteness to enable him to understand the scope of the
restrictions imposed on him; and were disclosed to him prior to the commencement
of his employment, such employment being conditioned on his execution of an
agreement containing such terms. Accordingly and in consideration of the Bank'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
(a) for the period of time Employee receives or is entitled to
payments under the provisions of Section 1(c) above, on Employee's own or
another's behalf, whether as an officer, director, stockholder, partner,
associate, owner, employee, consultant or otherwise, directly or indirectly:
(i) solicit or do business that is the same, similar to, or
otherwise in competition with the business engaged in by the Bank from or
with persons or entities who are customers of the Bank or who were
customers of the Bank at any time during the last year of Employee's
employment with the Bank; or
(ii) employ, offer employment to, or otherwise solicit for
employment, any employee or other person who is then currently an employee
of the Bank or who was employed by the Bank during the last year of
Employee's employment with the Bank.
3. 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 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 Bank'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.
All records, files or other objects maintained by or under the control,
custody or possession of the Bank or its agents in their capacity as agents
shall be and remain the Bank's property. Upon termination of his employment,
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.
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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.
4. Survival. The terms and conditions of Sections 2 and 3 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. All provisions of this Agreement shall
terminate on October 1, 2008 if no Change in Control has occurred prior to that
date.
5. Remedies. Employee agrees that his breach or threatened violation of
Sections 2 and 3, will result in immediate and irreparable harm to the Bank for
which legal remedies would be inadequate. Therefore, in addition to any legal or
other relief to which the Bank may be entitled, (a) the Bank 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 1 and (c) Employee will indemnify the Bank for all
expenses, including attorneys' fees, in seeking to enforce these paragraphs.
6. 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.
7. 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.
8. 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 2 or 3 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.
9. 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. Employee may not assign this
Agreement without the Bank's prior written consent.
10. 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.
EMPLOYEE
/s/ Xxxxx Xxxxxxxx 7/2/04
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Xxxxx X. Xxxxxxxx Date
CAPITAL BANK
By: /s/ B. Xxxxx Xxxxxx 7/2/04
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Date
CAPITAL BANK CORPORATION
By: /s/ B. Xxxxx Xxxxxx 7/2/04
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Date
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