EXHIBIT 10.1
STATE OF NORTH CAROLINA
COUNTY OF HYDE
THIS AGREEMENT, made as of the 1st day of January, 1998, by and
between The East Carolina Bank, a North Carolina corporation ("ECB") and Xxxxxx
X. Xxxxxx, III, a resident of Hyde County, North Carolina (the "Officer"),
W I T N E S S E T H:
WHEREAS, the Officer and ECB have previously agreed that the Officer
shall be an employee of ECB under the terms of an agreement which became
effective on September 11, 1995; and,
WHEREAS, the parties have agreed to certain modifications thereof
and have agreed to restate their agreement as modified; and,
WHEREAS, the document fully supercedes the said September 1, 1995,
agreement between the parties; and,
WHEREAS, the Board of Directors of ECB, acting through its executive
committee, exclusive of the Officer, has determined that the continued retention
of the services of the Officer on a long term basis as described herein is in
the best interest of ECB in that (a) such action promotes the stability of the
management of ECB, (b ) such action enables ECB to retain the services of a
well-qualified employee with extensive contacts in the financial services
community, and (c) it secures the continued services of the Officer
notwithstanding any change of control of ECB; and,
WHEREAS, the services of the Officer, his experience and knowledge
of the affairs of ECB, and his reputation and contacts in ECB's industry are
extremely valuable to ECB; and,
WHEREAS, ECB considers the establishment and maintenance of a sound
and vital management to be a part of its overall corporate strategy and to be
essential to protecting and enhancing the best interests of ECB and its
stockholders; and,
WHEREAS, the parties desire to enter into this Agreement in order to
clearly set fourth the terms and conditions of the Officer's employment
relationship with ECB;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties hereby agree as follows:
1. ECB hereby engages the employment of the Officer and the Officer
hereby accepts such engagement of employment upon the terms and conditions
stated herein. The Officer shall render such administrative and management
services to ECB as are customarily performed by persons situated in a similar
capacity and as directed by the Board of Directors.
The Officer shall promote the business of ECB and perform such other
duties as shall from time to time be reasonably prescribed by the Board of
Directors.
2. ECB shall pay to the Officer during the term of this Agreement as
compensation for all services rendered by him to ECB a base salary in such
amounts and at such intervals as shall be commensurate with his duties and
responsibilities hereunder and as determined by the Board of Directors. The
Officer's initial base salary under this agreement is $112,000.00 per annum. The
Officer's base salary may be modified from time to time to reflect the duties
required of the Officer. In reviewing the Officer's base salary the Board of
Directors of ECB shall consider the overall performance of the Officer and the
service of the Officer rendered to ECB and its subsidiaries, as well as
increases in the cost of living and may also provide for performance or merit
increases. The Officer's performance shall be reviewed annually. Participation
in ECB's cash incentive, deferred compensation, stock option, stock purchase,
discretionary bonus, pension, life insurance, and other employee benefit plans
and participation in any fringe benefits shall not cause a reduction in the base
salary payable to the Officer; provided however, that the enumeration of the
programs herein described are no representation that ECB has or will have any of
such programs. The Officer will be entitled to such customary fringe benefits,
vacation and sick leave as are consistent with the normal practices and
established policies of ECB.
3. During the term of this Agreement, the Officer shall be entitled,
in an equitable manner based on the terms of any bonus and incentive plans that
have been approved, or may from time to time be approved, by the Board of
Directors, with all other key management personnel of ECB, to such incentives
and discretionary bonuses as may be authorized, declared and paid by the Board
of Directors to ECB's key management employee's. No other compensation provided
for in this Agreement shall be deemed a substitute for the Officer's right to
such incentives and discretionary bonuses when, if, and as declared by the Board
of Director's. Provided that ECB shall have the right to terminate any existing
bonus or incentive plans now existing or hereafter initiated so long as such
termination is of general applicability and not specifically limited to the
Officer.
4. The Officer shall be entitled to participate in any plan relating
to incentive and deferred compensation, stock options, stock purchase, pension,
thrift, profit sharing, group life insurance, medical coverage, disability
coverage, education, or other retirement or employee benefits that ECB has
adopted, or may from time to time adopt, for the benefit of its executive
employees and for employees generally, subject to the eligibility rules of such
plans. Provided that ECB shall have the right to terminate any existing or
future benefits so long as such termination is of general applicability and not
specifically limited to the Officer.
The Officer shall also be entitled to participate in any other
fringe benefits which are now or may be or may become applicable to ECB's
executive employees, including the payment of reasonable expenses for attending
annual and periodic meetings of trade associations, and any other benefits which
are commensurate with the duties and responsibilities to be performed by the
Officer under this Agreement. Additionally, the Officer shall be entitled to
such vacation and sick leave as shall be established under uniform employee
policies promulgated by the Board of Directors. ECB shall reimburse the Officer
for all out-of-pocket reasonable and necessary business expenses which the
Officer may incur in connection with his service on behalf of ECB, subject to
the reimbursement policy of ECB as adopted and modified by the Board of
Directors from time to time. Also, the Officer shall be entitled to undertake
and be reimbursed for the reasonable cost of a complete physical examination
each year.
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5. (a) The initial term of employment under this Agreement commenced
on January 1, 1998 (the Commencement Date) and shall continue until the third
(3rd) anniversary of the Commencement Date. The initial term of employment under
this Agreement shall terminate at the close of the business day on December 31,
2000 (the Initial Termination Date.) On January 1 of each year, beginning on
January 1, 1999, this Agreement will be extended for an additional year, unless
either party to the Agreement notifies the other in writing within 90 (ninety)
days prior to an Anniversary Date of a desire to seek a final termination or
amendment of the Agreement. Following such duly executed notice, this Agreement
will cease to be extended automatically, and shall end automatically at the then
expiration date which shall be no less than two years and 90 (ninety) days from
the said notice.
(b) The Officer's employment under this Agreement shall be
terminated upon the death of the Officer prior to the Termination Date, in which
event the Officer's estate shall be entitled to receive the compensation due the
Officer through the last day of the calendar month in which the Officer's death
shall have occurred. The Officer's employment under this Agreement shall be
terminated upon the total permanent disability of the Officer during the term of
this Agreement in which event the Officer shall receive all compensation,
including incentives and bonuses, through the date of determination of such
disability and for a period of 90 days thereafter. For purposes of this Section,
the Officer shall be deemed to have suffered total permanent disability upon the
determination of such status by the United States Social Security
Administration, or upon such certification as may be required by any insurance
policy carried by ECB insuring against such disability (or in the absence of
such a policy, a certificate to such effect by the Officer's regular physician).
(c) The Officer's employment under this Agreement may be
terminated at any time prior to the Termination Date by the Officer upon ninety
(90) days prior written notice to ECB. Upon such termination, the Officer shall
be entitled to receive the compensation and benefits payable to the Officer
under this Agreement through the effective date of such termination.
(d) The Board may terminate the Officer's employment at any time
prior to the Termination Date for "cause", in which event the Officer shall have
no right to receive compensation or other benefits hereunder for any period
after such termination for "cause". Termination for "cause" shall mean
termination of employment because of the Officer's personal dishonesty,
incompetence, willful material misconduct, breach of fiduciary duty involving
personal profit, intentional failure to perform stated duties, willful material
violation of any law, rule, or regulation (other than minor traffic infractions
or other similar misdemeanor offenses) or final cease-and-desist order, or a
material breach of any provision of this Agreement.
(e) Notwithstanding the foregoing provisions of this Section 5,
ECB may terminate the employment of the Officer hereunder without cause at any
time during the term of this agreement upon ninety (90) days prior written
notice to the Officer provided, however, that in the event of involuntary
termination of the Officer's employment without cause under this Agreement the
Officer shall be entitled to receive the remaining monthly sums due throughout
the remaining life of the contract and ECB shall carry the Officer's medical and
disability insurance for a like period.
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(f) In the event of involuntary termination of the Officer's
employment in connection with or within 3 months after any change in control of
ECB, or, in the event of a voluntary termination of the Officer's employment in
connection with or within 3 months of any change of control of ECB under which
the Officer shall have incurred a reduction of compensation or a reduction of
responsibilities (irrespective of title) or shall have been required to change
his workplace to a location greater than 75 miles from Engelhard, North
Carolina, then, the Officer shall be entitled to receive the greater of (i) the
severance payment offered by the Corporation in such notice of termination, or,
(ii) the following sums:
A. A lump sum equal to 2.99 times the average annual salary paid to
the Officer over the three prior 12 month periods, plus
B. A lump sum equal to 2.99 times the average annual cash bonuses
and incentives paid to the Officer over the three prior 12 month
periods, plus
C. The Officer shall be carried on the medical and disability
programs of the Corporation for the remaining period of the
contract from the date of termination.
6. (a) The Officer shall devote his full efforts and entire business
time to the performance of the Officer's duties and responsibilities under this
Agreement.
(b) In consideration of employment of the Officer by ECB
hereunder during the term of this Agreement, the Officer agrees that in the
event of an involuntary termination of his employment, he will not, for a period
equal to the time compensation will be paid to the Officer under the provisions
of this or any termination agreement, within the borders of any county
contiguous to or in any county in which ECB, any financial institution
subsidiary of ECB, or any subsidiary of any such financial institution
subsidiary maintain offices, or 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 business which competes with
ECB or any of the other subsidiaries of ECB, without the prior written consent
of ECB. By example, direct competition does not include employment by a North
Carolina financial institution not headquartered in the counties in which ECB is
located but which may operate branches there, provided that the Officer shall
not live or work in the area above delineated and shall not have managerial
input or control of activities in that area. Notwithstanding the foregoing, the
Officer shall be free, without such consent, to purchase or hold as an
investment or otherwise up to five percent (5%) of the outstanding stock or
other securities of any corporation which has its securities publicly traded on
the New York Stock Exchange, the American Stock Exchange, or through the NASDAQ
exchange.
(c) In consideration of employment of the Officer by ECB
hereunder during the term of this Agreement, the Officer agrees that in the
event of an voluntary termination of his employment, he will not, for a period
of three (3) years, within the borders of any county contiguous to or in any
county in which ECB, any financial institution subsidiary of ECB, or any
subsidiary of any such financial institution subsidiary maintain offices, or
directly or indirectly own, manage, operate, join, control, or participate in
the management, operation, or control of or be
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employed by or connected in any manner with, any business which competes with
ECB or any of the other subsidiaries of ECB, without the prior written consent
of ECB. By example, direct competition does not include employment by a North
Carolina financial institution not headquartered in the counties in which ECB is
located but which may operate branches there, provided that the Officer shall
not live or work in the area above delineated and shall not have managerial
input or control of activities in that area. Notwithstanding the foregoing, the
Officer shall be free, without such consent, to purchase or hold as an
investment or otherwise up to five percent (5%) of the outstanding stock or
other securities of any corporation which has its securities publicly traded on
the New York Stock Exchange, the American Stock Exchange, or through the NASDAQ
exchange.
(d) The Officer will hold in strict confidence, during the term
of this Agreement and at all times thereafter, all knowledge or information of a
confidential nature with respect to the business of ECB and all subsidiaries of
ECB received by the Officer during the term of this Agreement and will not
disclose or make use of such information without the prior written consent of
the ECB.
The Officer acknowledges that it would be difficult or impossible
to ascertain the amount of monetary damages in the event of a breach by the
Officer under the provisions of this Section 6. The Officer agrees that, in the
event of a breach of this Section, injunctive relief enforcing the terms of this
Section is an appropriate remedy.
7. (a) The Officer shall perform his duties and responsibilities
under this Agreement in accordance with such reasonable standards expected of
employees with comparable positions in comparable organizations and the Bank's
policies and procedures, and as may be established from time to time by the
Board of Directors of ECB.
(b) The Officer represents that he has acquired and at all times
during the term of this agreement, including all extensions and renewals hereof,
will hold unencumbered stock of ECB in such amount as may be required by N. C.
G. S. Sec. 53-80, as amended from time to time.
8. (a) This Agreement shall inure to the benefit of, and be binding
upon, any corporate or other successor of ECB which shall acquire, directly or
indirectly by merger, share exchange, consolidation, purchase or otherwise, all
or substantially all of the assets of ECB.
(b) Because ECB is contracting for the unique and personal skills
of the Officer, the officer shall be precluded from assigning or delegating his
rights or duties hereunder without first obtaining the written consent of ECB.
9. No provision of this Agreement may be modified, waived, or
discharged unless such waiver, modification, or discharge agreed to in writing,
signed by the Officer and on behalf of the ECB by such Officer as may be
specifically designated by the Board of Directors. 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 amendments or additions to
this Agreement shall be binding unless in writing
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and signed by both parties, except as herein otherwise provided. All prior
negotiations, discussions, and agreements between the parties are merged herein.
10. 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 and any action relating to or arising from this
agreement shall be litigated only in the North Carolina General Court of
Justice.
11. 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.
IN TESTIMONY WHEREOF the parties hereto have executed this Agreement
in duplicate originals, one of which is to be retained by each of the parties,
to be effective as of the day and year first hereinabove written.
THE EAST CAROLINA BANK
By: /s/ X. X. Xxxxxxx, Xx.
_________________________________
Chairman of the Board of Directors
of The East Carolina Bank
/s/ Xxxxxx X. Xxxxxx, III
_____________________________________(SEAL)
Xxxxxx X. Xxxxxx, III
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