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Exhibit 10.02
STATE OF NORTH CAROLINA
COUNTY OF DAVIE
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement")
is entered into as of the 23rd day of December, 2008 (the
"Effective Date"), by and between BANK OF THE CAROLINAS (the
"Bank") and MICHAEL D. LARROWE ("Employee").
WITNESSETH:
WHEREAS , Employee currently is employed by the Bank as its
Executive Vice Chairman pursuant to an Employment Agreement dated
August 4, 2008 (the "Original Agreement"); and,
WHEREAS , the Bank desires to continue to employ Employee
as its Executive Vice Chairman, and Employee desires to continue in
the employment of the Bank; and,
WHEREAS , Employee and the Bank have agreed to certain
modifications of and to restate the Original Agreement as described
herein; and
WHEREAS , the Bank and Employee desire to set forth the
terms and conditions of Employee’s continued employment with
the Bank in a written agreement and, for that purpose, the Bank and
Employee have agreed to enter into this Agreement; and,
WHEREAS , this Amended and Restated Employment Agreement
is intended to supersede and replace the Original Agreement dated
August 4, 2008.
NOW, THEREFORE , in consideration of the premises and
mutual promises, covenants, and conditions hereinafter set forth,
including without limitation the significant benefits described in
Paragraphs 6 and 8 which Employee hereby acknowledges and agrees he
would not be entitled to but for this Agreement, and for other good
and valuable considerations, the receipt and sufficiency of which
hereby are acknowledged, the Bank and Employee hereby agree as
follows:
1. Employment . The Bank agrees to continue to
employ Employee, and Employee accepts such continued employment
with the Bank, upon the terms and conditions stated in this Amended
and Restated Employment Agreement which supersedes and replaces in
its entirety the Bank’s and Employee’s Original
Agreement dated August 4, 2008. As an employee of the Bank,
Employee will (a) serve as Executive Vice Chairman of
the Bank and/or in such other or additional executive position or
positions as shall be specified from time to time by the
Bank’s Board of Directors, (b) promote the Bank
and its business and engage in business development activities on
the Bank’s behalf, and (c) have such functional
managerial duties and responsibilities as shall be assigned to him
by the Bank from time to time.
2. Term . Unless sooner terminated as provided in
this Agreement, and subject to the right of either Employee or the
Bank to terminate Employee’s employment at any time as
provided herein, the term of Employee’s employment with the
Bank (the "Term of Employment") began under the Original Agreement
on July 22, 2008, for a continually renewing period of three
(3) years, and shall continue under this Agreement with the
effect that on July 22, 2009, and on July 22 of each year
thereafter to and including July 22, 2020, and without any
further action by the Bank or Employee, the Term of
Employment automatically shall be extended by one
additional year such that the then current unexpired Term of
Employment under this Agreement will be extended to again be three
(3) years; provided, however , that either party may
prevent the Term of Employment from renewing or extending by giving
written notice to the other at least 90 days prior to the renewal
date indicating that party’s intention not to renew/extend
this Agreement. In that event, the Term of Employment shall expire
at the end of the then-current unexpired term. Upon the extension
that occurs on July 22, 2020, if applicable, the Term of
Employment shall become a fixed three (3) years, shall not be
further extended, and shall expire at the close of the Bank’s
business on July 22, 2023. If, following the date of
expiration, Employee remains employed by the Bank, such employment
shall be on an "at will" basis.
3. Cash Compensation . For all services rendered
by Employee to the Bank under this Agreement, during the Term of
Employment the Bank shall pay Employee a base salary at an annual
rate of TWO HUNDRED FIFTY THOUSAND AND NO/100S DOLLARS
($250,000) ("Base Salary").
As an executive officer of the Bank, Employee shall be eligible
to participate in the Bank’s Management Incentive Program for
any bonus opportunities. Employee’s Base Salary may be
increased from time to time during the Term of Employment at the
discretion of the Bank’s Board of Directors. Base Salary paid
under this Agreement shall be payable not less frequently than
monthly in accordance with the Bank’s payroll policies and
procedures.
4. Employee Benefit Plans; Fringe Benefits; Income Taxes;
Expenses .
(a) Benefit Plans . During the Term of Employment,
Employee shall be eligible to participate in any and all employee
benefit programs maintained by or for the Bank that are generally
available to and which cover all the Bank’s officers at
Employee’s job level or classification, subject to the rules
applicable to such plans or programs prevailing from time to time.
Except as otherwise specifically provided herein, Employee’s
participation in such plans and programs shall be subject to and in
accordance with the terms and conditions (including eligibility
requirements) of such plans and programs, resolutions of the
Bank’s Board of Directors establishing such programs and
plans, and the Bank’s normal practices and established
policies regarding such plans and programs.
Employee acknowledges that the terms and provisions of the
Bank’s employee benefit plans and programs from time to time
may be determined only by reading the actual plan documents under
which the Bank or the plan administrator, as applicable, may make
certain administrative determinations with discretion, and that the
Bank reserves the right to modify or terminate each plan or program
and any benefits provided thereunder.
(b) Annual Vacation Leave . During the Term of
Employment, all matters pertaining to the entitlement to, and the
accrual and scheduling of, vacation leave shall be determined under
the Bank’s standard leave policies and procedures in effect
from time to time; provided, however , that the minimum
amount of annual vacation leave to which Employee shall be entitled
shall be three weeks or, if longer, the number of weeks provided
for in those policies and procedures for persons in
Employee’s position or job classification.
(c) Income Taxes . All cash payments or other
compensation payable or provided to Employee under this Agreement
shall be subject to customary withholding of taxes and such other
deductions or withholdings as are required by law or customary for
the Bank’s employees. Employee shall be solely responsible
for any income taxes owed on account of his receipt from the Bank
of any such payments or any employee or fringe benefits under this
Agreement and, to the extent that the Bank reasonably believes
itself obligated to do so, the Bank may withhold any such taxes
from cash compensation or other payments payable to Employee.
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(d) Expense Reimbursement; Professional
Dues . Subject to the conditions described below, during
the Term of Employment the Bank shall reimburse Employee for
(i) reasonable business expenses incurred by Employee in the
performance of his duties under this Agreement, provided
that those expenses are of a type that are reimbursable under
employee expense reimbursement policies adopted by the Bank from
time to time, and (ii) fees required to be paid to
Virginia, North Carolina, West Virginia, South Carolina and
Tennessee state licensing boards, and reasonable out-of-pocket
expenses associated with mandatory continuing professional
education, in each such case to the extent required in order to
renew and maintain in effect his licenses to practice in those
states as a certified public accountant, and dues paid to maintain
his memberships in the American Institute of Certified Public
Accountants and the corresponding state professional associations
in each of the above states. As a condition of reimbursement for
any of the above, Employee shall promptly submit verification of
the nature and amount of such expenses in accordance with the
Bank’s reimbursement policies and in sufficient detail to
comply with rules and regulations promulgated by the Internal
Revenue Service. Reimbursement for expenses shall be determined
separately for each tax year, and without regard to the amount of
reimbursement for any other tax year, and must be requested and
paid no later than the end of the calendar year following the year
during which the expenses were incurred.
5. Standards of Performance and Conduct . During
the Term of Employment, Employee faithfully and diligently shall
discharge his obligations under this Agreement, and he shall
perform the duties associated with his positions with the Bank in a
manner which is reasonably competent and satisfactory to the Bank,
and Employee shall comply with and use his best efforts to
implement the Bank’s policies and procedures currently in
effect or as are established from time to time by the Bank.
In the execution of his employment duties under this Agreement,
Employee shall, at all times and in all material respects, comply
with any code of conduct or ethics policies applicable to Employee
and/or the Bank’s employees in general in effect as of the
Effective Date or as may be adopted, amended or supplemented from
time to time subsequent thereto (the "Code of Conduct"), and with
all federal and state statutes, and all rules, regulations,
administrative orders, statements of policy, and other
pronouncements or standards promulgated thereunder, which are
applicable to the Bank and its employees, business, and
operations.
6. Termination and Termination Pay .
(a) By Employee without Good Reason . The Term of
Employment and Employee’s employment under this Agreement may
be terminated at any time by Employee upon 90 days’ written
notice (the "Notice Period") to the Bank. The Bank, in its sole
discretion, may elect for Employee not to serve out part or all of
the Notice Period. Upon such termination, Employee shall be
entitled to receive compensation earned under this Agreement
through the final day of Employee’s active employment and,
thereafter, the Bank shall have no further obligations
hereunder.
(b) By Employee for Good Reason . The Term of
Employment and Employee’s employment under this Agreement may
be terminated by Employee at any time for "Good Reason" (as defined
below) upon delivery of written notice to the Bank, which notice
shall specify the grounds constituting Good Reason. Subject to
Paragraph 10 and the conditions set forth in Paragraph 7, if
Employee’s employment is terminated under this Paragraph
6(b), the Bank shall be obligated to pay Base Salary to Employee at
his then current Base Salary rate for the then current unexpired
Term of Employment hereunder (which payments shall be made on the
same schedule as Employee’s Base Salary was paid by the Bank
during the Term of Employment), and, if Employee chooses to
exercise his rights to purchase continued health insurance coverage
under the Bank’s health insurance plan pursuant to the
Consolidated Omnibus Budget Reconciliation Act ("COBRA"), the Bank
shall reimburse Employee for the cost of such continued insurance
coverage for the maximum period during which such coverage is
available to Employee under COBRA, but not longer than the
unexpired Term of Employment hereunder; and, thereafter, the Bank
shall have no further obligations hereunder.
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For purposes of this Paragraph 6(b), Employee
shall have "Good Reason" to terminate his employment upon the
occurrence of any of the following without Employee’s
consent:
(i) Employee’s Base Salary is materially reduced
below the annual rate set forth in this Agreement or below any
higher annual rate in effect from time to time during the Term of
Employment as a result of increases made following the date of this
Agreement;
(ii) Employee’s employment is changed and
Employee’s duties or responsibilities are materially reduced
such that Employee no longer serves as an executive officer or in a
position with similar duties;
(iii) Employee is transferred to a job location which is
more than 50 miles (by most direct highway route) from Mocksville,
North Carolina;
(iv) the Bank gives Employee written notice as described
in Paragraph 2 above of the Bank’s intent that this Agreement
not be renewed or extended on its next renewal date; or
(v) the Bank materially breaches the terms of this
Agreement;
provided, however , that the foregoing shall not
constitute Good Reason unless Employee provides the Bank with
written notice thereof within 90 days of the first occurrence of
the condition being claimed to constitute Good Reason, and such
condition continues uncorrected for thirty (30) days after the
Bank’s receipt of such written notice.
(c) Death or Retirement . The Term of Employment
and Employee’s employment under this Agreement automatically
shall be terminated upon his death during the Term of Employment or
upon the effective date of Employee’s "Retirement." Upon any
such termination, Employee (or, in the case of Employee’s
death, his estate) shall be entitled to receive any compensation
Employee shall have earned prior to the date of termination but
which remains unpaid. "Retirement" shall mean any termination of
Employee’s employment with the Bank which is treated as a
retirement (whether early, normal or delayed retirement) under the
terms of any qualified retirement benefit plan generally applicable
to the Bank’s salaried employees and in which Employee is a
participant, or any other termination of employment that Employee
and the Bank mutually agree in writing to treat as a
Retirement.
(d) By the Bank with Cause . The Bank may
terminate the Term of Employment and Employee’s employment
under this Agreement at any time for "Cause" (as defined below).
Upon any such termination with Cause , Employee shall
be entitled to receive compensation earned under this Agreement
through the final day of Employee’s active employment and,
thereafter, the Bank shall have no further obligations under this
Agreement.
For purposes of this Paragraph 6(d), the Bank shall have "Cause"
to terminate Employee’s employment if:
(i) (A) Employee has breached in any material respect any
of the terms or conditions of this Agreement, or has failed in any
material respect to perform or discharge his duties or
responsibilities of employment in the manner provided herein;
provided however , that such a breach or failure shall not
give the Bank "Cause" to terminate Employee’s employment if
such breach or failure is corrected or cured by Employee to the
Bank’s reasonable satisfaction (which shall not be
unreasonably withheld by the Bank) within 30 days following written
notice thereof to Employee, or (B) Employee has
breached the Code of Conduct in any material respect, or
(C) Employee is engaging or has engaged in willful
misconduct or conduct which is detrimental in any material respect
to the business or business
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prospects of the Bank or which has had, or is
more likely than not to have, a material adverse effect on the
Bank’s business or reputation;
(ii) The material violation by Employee of any applicable
federal or state law, or any applicable rule, regulation, order, or
statement of policy promulgated by any governmental agency or
authority having jurisdiction over the Bank, including but not
limited to the North Carolina Commissioner of Banks, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any
other regulator (a "Regulatory Authority"), that results from
Employee’s negligence, willful misconduct, or intentional
disregard of such law, rule, regulation, order, or policy statement
and results in any substantial damage, monetary or otherwise, to
the Bank or to the Bank’s reputation;
(iii) The commission during the course of
Employee’s employment with the Bank of an act of fraud,
embezzlement, theft, or proven personal dishonesty (whether or not
such act or charge results in criminal indictment, charges,
prosecution, or conviction);
(iv) The conviction of Employee of any felony or any
criminal offense involving dishonesty or breach of trust, or the
occurrence of any event described in Section 19 of the Federal
Deposit Insurance Act or any other event or circumstance which
disqualifies Employee from serving as an employee or executive
officer of, or a party affiliated with, the Bank; or, in the event
Employee becomes unacceptable to, or is removed, suspended, or
prohibited from participating in the conduct of the Bank’s
affairs (or if proceedings for that purpose are commenced), by any
Regulatory Authority; or
(v) The exclusion of Employee by the carrier or
underwriter from coverage under the Bank’s then current
"blanket bond" or other fidelity bond or insurance policy covering
its or their directors, officers, or employees, or the occurrence
of any event that the Bank believes, in good faith, will result in
Employee being excluded from such coverage, or having coverage
limited as to Employee as compared to other covered officers or
employees, pursuant to the terms and conditions of such "blanket
bond" or other fidelity bond or insurance policy.
(e) By the Bank without Cause . The Bank
may terminate the Term of Employment and Employee’s
employment under this Agreement at any time without Cause. Subject
to Paragraph 10 and the conditions set forth in Paragraph 7, if
Employee’s employment is terminated under this Paragraph
6(e), the Bank shall be obligated to pay Base Salary to Employee at
his then current Base Salary rate for the then current unexpired
Term of Employment hereunder (which payments shall be made on the
same schedule as Employee’s Base Salary was paid by the Bank
during the Term of Employment), and, if Employee chooses to
exercise his rights to purchase continued health insurance coverage
under the Bank’s health insurance plan pursuant to COBRA, the
Bank shall reimburse Employee for the cost of such continued
insurance coverage for the maximum period during which such
coverage is available to Employee under COBRA, but not longer than
the unexpired Term of Employment hereunder; and, thereafter, the
Bank shall have no further obligations hereunder.
7. Noncompetition; Nonsolicitation;
Confidentiality .
(a) Definitions . For purposes of this Paragraph
7, the following terms shall have the meanings set forth below:
Compete . The term "Compete" means:
(i) acting as an executive officer or in a position with
similar duties, whether as a consultant, officer, director,
advisory director, independent contractor, or employee, with any
Financial Institution that has its main or principal office in the
Relevant Market (as defined below), or, in acting in any such
capacity with any other Financial Institution, to maintain an
office or be employed at or
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assigned to or to have any direct involvement in
the management, supervision, business, marketing activities, or
solicitation of business for or operation of any office of such
Financial Institution located in the Relevant Market; or
(ii) communicating to any Financial Institution the names
or addresses or any financial information concerning any Person who
was a Customer of the Bank on the date of termination of
Employee’s employment with the Bank.
Customer . The term "Customer of the Bank" means
any Person with whom the Bank has a depository or loan
relationship, and/or to whom the Bank provides any other service or
product.
Financial Institution . The term "Financial
Institution" means (i) any federal or state chartered
bank, savings bank, savings and loan association, or credit union
(a "Depository Institution"), (ii) any holding company
for, or corporation that owns or controls, any Depository
Institution (a "Holding Company"), (iii) any
subsidiary or service corporation of any Depository Institution or
Holding Company, or any entity controlled in any way by any
Depository Institution or Holding Company, or (iv) any
other Person engaged in the business of making loans of any type,
soliciting or taking deposits, or providing any other service or
product that is provided by the Bank or one of its affiliated
corporations.
Person . The term "Person" means any natural
person or any corporation, partnership, proprietorship, joint
venture, limited liability company, trust, estate, governmental
agency or instrumentality, fiduciary, unincorporated association,
or other entity.
Relevant Market . The term "Relevant Market" means
any county in North Carolina or any other state in which the Bank
maintains a business office on the date of any termination of
Employee’s employment with the Bank.
Restriction Period . The term "Restriction Period"
means the one (1) year period commencing on the effective date
of any termination of Employee’s employment with the Bank,
whether by Employee or by the Bank, for any reason; provided,
however , that in the case of a termination of Employee’s
employment pursuant to Paragraph 6(b) or 6(e) above, the
Restriction Period shall be the length of the then current
unexpired Term of Employment during which the Bank is obligated to
continue to pay Base Salary to Employee, but, in such case, the
Restriction Period shall immediately expire upon a default by the
Bank in making the payments for which it is obligated.
Notwithstanding anything contained herein to the contrary, in the
event any payment required under Paragraph 6(b) or 6(e) is not made
by the Bank by the due date for that payment, the Bank shall not be
considered to be in default with respect to that payment for
purposes of this Paragraph 7 unless it shall fail to make that
payment within ten days after its receipt of written notice from
Employee that the payment has not been made.
(b) General . Employee hereby acknowledges a
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