AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit
10.2
AMENDED
AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated
Employment Agreement (“Agreement”), effective as of the 17th day of September,
2008 (the “Effective Date”), is made and entered into between Capital Bank (hereinafter the
“Bank”), and Xxxx Xxxxxxx (hereinafter
“Employee”).
The Bank
and Employee entered into an Employment Agreement dated August 2, 2006 (the
“Prior Agreement”). The Bank and Employee hereby amend and restate
the Prior Agreement in its entirety in part to evidence compliance with Section
409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the
regulations thereunder (collectively, “Section 409A”).
The Bank
desires to employ Employee and Employee desires to accept such employment on the
terms set forth below.
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. Employment. The Bank employs
Employee and Employee accepts employment on the terms and conditions set forth
in this Agreement.
2. Nature Of
Employment. Employee shall
serve as Executive Vice President and Chief Credit Officer and shall have such
responsibilities and authority consistent with such position as may be
reasonably assigned to him by the Bank. Employee shall also serve as
Executive Vice President of Capital Bank Corporation (“CBC” and, along with the
Bank, sometimes collectively referred to herein as the
“Corporation”). Employee shall devote his full time and attention and
best efforts to perform successfully his duties and advance the Bank’s and CBC’s
interests. Employee shall abide by the Bank’s and CBC’s policies,
procedures, and practices as they may exist from time to
time.
During this employment, Employee shall
have no other employment of any nature whatsoever without the prior consent of
the Bank; provided, however, this Agreement shall not prohibit Employee from
personally owning and dealing in stocks, bonds, securities, real estate,
commodities or other investment properties for his own benefit or those of his
immediate family.
3. Term. Subject to the
earlier termination provisions set forth in Section 5, the original term of this
Agreement shall be one (1) year commencing as of the Effective
Date. Upon expiration of the original term or any renewal
term, the term shall be automatically renewed for an additional one (1) year
period unless, at least thirty (30) days prior to the renewal date, either party
gives notice of its intent not to continue the relationship. During
any renewal term, the terms, conditions and provisions set forth in this
Agreement shall remain in effect unless modified in accordance with Section
13.
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4. Compensation and
Benefits.
(a) Base
Salary. Employee’s annual
base salary for all services rendered shall be One Hundred Eighty Five Thousand
and No/100 Dollars ($185,000) (less any applicable taxes and withholdings),
payable in accordance with the Bank’s policies, procedures, and practices as
they may exist from time to time. Employee’s salary periodically may
be reviewed and adjusted at the Bank’s discretion in accordance with the Bank’s
policies, procedures and practices as they may exist from time to
time.
(b) Incentive
Plan. Employee shall be
eligible to participate in the Bank’s Annual Incentive Plan in accordance with
the applicable terms, conditions, and eligibility requirements of that Plan,
some of which are in the plan administrator’s discretion, as they may exist from
time to time.
(c) Benefits. Employee may
participate in any medical insurance or other employee benefit plans and
programs which may be made available from time to time to other Bank or CBC
employees at Employee’s level; provided, however, that Employee’s participation
in such benefit plans and programs is subject to the applicable terms,
conditions, and eligibility requirements of those plans and programs, some of
which are within the plan administrator’s discretion, as they may exist from
time to time.
(d) Car
Allowance. Employee shall
receive a car allowance of Nine Hundred and No/100 Dollars ($900.00) per
month.
(e) Expenses. Employee shall be
reimbursed by the Bank for any reasonable and necessary business expenses
incurred by Employee on behalf of the Bank or in connection with Employee’s
performance of his duties hereunder. Such reimbursement shall be in
accordance with the Bank’s practices or policies as they may exist from time to
time.
(f) Vacation. Employee shall be
entitled to vacation in accordance with the Bank’s policies. Such vacation shall
be taken in accordance with the Bank’s policies and practices as they may exist
from time to time.
5. Termination of Employment
and Post-Termination Compensation.
(a) With
Notice. Either the Bank
or Employee may terminate this Agreement and the employment relationship created
hereunder without cause at any time by giving thirty (30) days’ written notice
to the other party.
(b) Cause
Disability, or Death. The Bank may
terminate Employee’s employment immediately for “Disability,” “Cause,” or in the
event of Employee’s death. For purposes of this Agreement, Disability
shall mean Employee’s mental or physical inability to
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perform
the essential functions of his duties satisfactorily for a period of one hundred
eighty (180) consecutive days or one hundred eighty (180) days within a 365-day
period as determined by the Bank in its reasonable discretion and in accordance
with applicable law. For purposes of this Agreement, “Cause” shall
mean: (i) any act of Employee involving dishonesty; (ii) any material violation
by Employee of any Bank or CBC rule, regulation, or policy; (iii) gross negligence
committed by Employee; (iv) material failure of Employee to perform his
duties hereunder; or (v) Employee’s breach of any of the express obligations of
this Agreement.
(c) Post-Termination
Compensation.
(i) In
the event of termination for Cause or prior to a Change in Control, termination
upon the expiration of the original or any renewal term of this Agreement, the
Bank’s obligation to compensate Employee ceases on the date of termination
except as to the amounts of salary due at that time.
(ii) In
the event of a termination for death or Disability, the Bank’s obligation to
compensate Employee ceases on the date of termination, except as to any accrued compensation and any pro rata bonuses to which he may
be entitled as of the date of termination. The Bank shall pay any
such amounts to Employee or Employee’s estate.
(iii) If
there has been no Change in Control and the Bank terminates Employee’s
employment without Cause or Employee terminates his employment for Good Reason
(as defined below), then Employee, upon his execution of an enforceable general release in a form prepared
by the Bank, shall be entitled to (A) receive an amount equal to his then
current annual base salary plus the amount of bonus paid to Employee, if any, in
the prior bonus year (less any applicable taxes
and withholdings), payable in substantially equal amounts over a twelve
(12) month period in accordance with the payroll schedule applicable to
Employee immediately prior to the termination of employment and beginning with the first
month after the date of termination of employment
(for purposes of Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”), as applicable, each installment payment shall be considered a
separate payment); and (B) for the period of
time Employee receives payments pursuant to Section 5(c)(iii)(A), participate in
all life insurance, health, accidental death and dismemberment, and disability
plans paid by the Bank for Employee in which Employee participates 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 substantially similar to, or greater than, those which he is
entitled to receive under any such plan or program. Provided, however,
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no installment payments or benefits shall be provided
until the required general release becomes effective.
For
purposes of this Agreement, Good Reason shall mean the occurrence of any of the
following events or conditions without Employee’s prior written
consent:
(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 (including positions, titles, and
responsibilities with any affiliate), except in connection with the termination
of his employment for Disability, Cause, or death, or by Employee other than for
Good Reason;
(B) the
Bank’s requiring Employee to be based at any place outside a thirty (30) mile
radius from its headquarters at 000 Xxxxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxx
Xxxxxxxx, except for reasonably required travel on the Bank’s
business;
(C) any
material breach by the Bank of any express provision of this
Agreement.
6. Non-Solicitation/Non-Compete. 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 Corporation’s and/or its affiliates’ business and that the
Corporation’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 6: are reasonably
necessary to protect the legitimate business interests of the Corporation; 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 Corporation’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, subject to Section 6(c)
below, for one (1) year following the cessation of his employment regardless of
the reason for the cessation,
(a) on
Employee’s own or another’s behalf, whether as an officer, director,
stockholder, partner, associate, owner, employee, consultant or
otherwise:
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(i) within
any city, metropolitan area or county in which the Corporation does business or
is located, engage in any business activity (or assist others to engage in any
business activity) that directly competes with the
Corporation;
(ii) solicit
or do business that is the same, similar to, or otherwise in competition with
the business engaged in by the Corporation from or with persons or entities who
are customers of the Corporation, who were customers of the Corporation at any
time during the last year of Employee’s employment with the Bank, or to whom the
Corporation made proposals for business at any time during the last year of
Employee’s employment with the Bank; or
(iii) employ,
offer employment to, or otherwise solicit for employment, any employee or other
person who is then currently an employee of the Corporation or who was employed
by the Corporation during the last year of Employee’s employment with the
Bank.
(b) within
any city, metropolitan area or county in which the Corporation does business or
is located, be employed or otherwise engaged by any entity that engages in the
same, similar or otherwise competitive business as the Corporation, to provide
the same or similar services that Employee provided to the
Corporation.
(c) (i) If (A) the Bank terminates
Employee’s employment without Cause or Employee terminates his employment for
Good Reason and (B)
Employee waives in writing his right to receive payments pursuant to Section
5(c)(iii) hereof, the non-competition and non-solicitation restrictions
contained in this Section 6 shall terminate on the later of (A) the cessation of
Employee’s employment with the Bank or (B) the Bank’s receipt of
Employee’s waiver described in this Section 6(c)(i). (ii) In the event that
Employee’s employment terminates under any of the circumstances described in
Section 8(b) (“Change in Control Termination”), the non-competition and non-solicitation
restrictions contained in this Section 6 shall terminate six (6) months
following cessation of Employee’s employment with the Bank.
7. 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 or CBC 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 or CBC’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.
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All
records, files or other objects maintained by or under the control, custody or
possession of the Bank, CBC, or their agents in their capacity as agents shall
be and remain the Bank’s or CBC’s property respectively. Upon
termination of his employment or upon the Bank’s or
CBC’s earlier request, 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.
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.
8. 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 CBC, the parent holding company of the Bank, 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 in any twelve (12) month period. 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 CBC.
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(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 three (3) years
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 three (3) years after the occurrence of a Change in Control, Employee
terminates his employment with the Bank for “Good Reason.” For purposes of this
Section 8(b), “Good Reason” shall include 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
described above in this Section 8 at any time, Employee shall be entitled to
receive all accrued compensation and any pro rata bonuses to which he may be
entitled and which Employee may have earned up to the date of termination and,
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: 2.99 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 (less any applicable taxes
and withholdings), in the event the termination occurs no later than
twelve (12) months after the occurrence of a Change in Control; 2.0 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
(less any applicable taxes and withholdings), in the event the
termination occurs more than twelve (12) months but within (up to and including)
twenty-four (24) months after the occurrence of a Change in Control; or 1.0
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 (less any applicable taxes and withholdings), in
the event the termination occurs more than
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twenty-four
(24) months but within (up to and including) thirty-six (36) months after the
occurrence of a Change in Control. The severance payment shall be
paid in substantially equal monthly installments without interest, over a period
of thirty-six (36), twenty-four (24), or twelve (12) months, respectively, in accordance with the payroll schedule applicable to
Employee immediately prior to the termination of employment and beginning
with the first month after the date of termination
of employment (for purposes of Section 409A of the Code, as applicable, each
installment payment shall be considered a separate payment);
and
(ii) a
cash payment in an amount equal to the premiums
that Employee would pay in order to secure COBRA continuation coverage for
health insurance under the Bank’s medical plan and for the premiums Employee
would pay for life insurance, accidental death and dismemberment and disability
insurance to continue such insurance during the applicable severance periods
following termination of employment (irrespective of whether COBRA otherwise
would terminate prior to expiration of any such severance period) (“Premium
Payment”); and the additional federal, state, and local income and other taxes
that will result from the Premium Payment (the “Premium Tax
Gross-up”). This Premium Payment and the Premium Tax Gross-up shall
be paid in a single lump-sum cash payment, less any applicable taxes and
withholdings, within thirty (30) days after the date of termination of
employment.
Provided, however, no installment payments or other cash
payment shall be provided until the required general release becomes
effective.
(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 Code, and but for this Section 8 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 of
such payment of benefits and any other “parachute payments” amounts (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.
9. Survival. The terms and
conditions of Sections 6 and 7 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.
10. Remedies. Employee agrees
that his breach or threatened violation of Sections 6 and 7 will result in
immediate and irreparable harm to the Bank or CBC for which legal remedies would
be inadequate. Therefore, in addition to any legal or other relief to
which the Bank or CBC may be entitled, (a) the Bank or CBC 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
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payable
pursuant to Sections 5 and/or 8, and (c) Employee will indemnify the Bank or CBC
for all expenses, including attorneys’ fees, in seeking to enforce those
Sections.
11. Delayed
Distribution to Key Employees. If the Bank
determines in accordance with Sections 409A and 416(i) of the Code and the
regulations promulgated thereunder, in the Bank’s sole discretion, that Employee
is a Key Employee of the Bank on the date his employment with the Bank
terminates and that a delay in benefits provided under this Agreement is
necessary to comply with Code Section 409A(a)(2)(B)(i), then any severance
payments and any continuation of benefits or reimbursement of benefit costs
provided by this Agreement shall be delayed for a period of six (6) months
following Employee’s termination date (the “409A Delay Period”). In
such event, any severance payments and the cost of any continuation of benefits
provided under this Agreement that would otherwise be due and payable to
Employee during the 409A Delay Period shall be paid to Employee in a lump sum
cash amount in the month following the end of the 409A Delay
Period. For purposes of this Section 11, “Key Employee” shall mean an
employee who, on an Identification Date (“Identification Date” shall mean each
December 31) is a key employee as defined in Section 416(i) of the Code without
regard to paragraph (5) thereof. If Employee is identified as a Key
Employee on an Identification Date, then Employee shall be considered a Key
Employee for purposes of this Agreement during the period beginning on the first
April 1 following the Identification Date and ending on the following
March 31.
12. 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.
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13. 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.
14. Severability. If a court of
competent jurisdiction holds that any provision or subpart 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 6 or 7 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.
15. 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. The Bank, at its discretion, may assign this
Agreement. Employee may not assign this Agreement without the Bank’s
prior written consent.
16. 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.
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EMPLOYEE
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By: /s/ Xxxx
Xxxxxxx
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September 17,
2008
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Xxxx
Xxxxxxx
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Date
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CAPITAL
BANK
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By: /s/ B. Xxxxx
Xxxxxx
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September 17,
2008
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B. Xxxxx
Xxxxxx
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Date
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CAPITAL BANK
CORPORATION
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By: /s/ B. Xxxxx
Xxxxxx
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September 17,
2008
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B. Xxxxx
Xxxxxx
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Date
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