Exhibit 10.4
EMPLOYMENT
AGREEMENT
This Employment Agreement (Agreement) dated as
February 8, 2008, is made by and between Atlantic
Bancshares, Inc., (Company) a South Carolina corporation which
is the holding company for Atlantic Community Bank (Bank), a South
Carolina state bank, (collectively referred to as Employer) and
Michelle M. Pennell (Executive).
In
consideration of the mutual covenants herein contained, the parties
agree as follows:
Section 1 –
Duties
Employer shall employ Executive and the
Executive shall serve the Employer as Chief Financial Officer and
Executive Vice President of the Bank and of the Company upon the
terms can conditions set forth herein. Executive shall have
such authority and responsibilities consistent with her position as
set forth in the Company’s or Bank’s bylaws or as
assigned by the Company’s and the Bank’s Boards of
Directors (collectively referred to as Board of Directors) or the
Company’s Chief Executive Officer. Executive shall
devote her full business time, attention, skill and efforts to the
performance of her duties hereunder. Executive may devote
reasonable period to service as a director or advisor to other
organizations, to charitable and community activities, provided
that, in the Board’s sole opinion, such activities do not
materially interfere with and are not in conflictive with or
adverse to, the interests of the Company or the Bank. Executive
shall be subject to all Bank policies and benefits as are other
employees, except as may otherwise be stated herein.
Section 2 –
Term
A.
Unless earlier terminated
as provided herein, Executive’s employment under this
Agreement shall commence on February 8, 2008, and be for a
term of three years. Executive agrees to remain in the
exclusive employ of Employer until February 8, 2011, and
neither to accept other employment nor to become employed by any
other employer until such termination date, unless the termination
date is affected as hereinafter provided.
B.
In the event written
notice is not given by either party to this Agreement 60 days prior
to the termination date, this Agreement shall be extended on the
same terms and conditions as herein provided, all for an additional
period of three (3) years. Agreement shall continue thereafter
for three-year periods unless either party hereto gives 60 days
written notice to the other party that the party does not wish to
extend this Agreement.
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C.
Nothing in this Agreement
shall prevent, limit or otherwise interfere with the right of
Company and Bank to terminate the services of Executive at any
time, subject only to the provisions set forth in Section 4 of
this Agreement.
D.
Nothing in this Agreement
shall prevent, limit or otherwise interfere with the right of the
Executive to resign at any time from her position with Employer,
subject only to the provision set forth in Section 4 of this
Agreement.
Section 3 –
Compensation & Benefits
A.
Starting February 8,
2008, Employer shall pay Executive an annual base salary of
$110,000.00 (One Hundred Ten
Thousand and no/100 Dollars) in accordance with the
Employer’s normal payroll practices, which shall mean no less
frequently than monthly. The Chief Executive Officer shall
review Executive’s performance and salary periodically and
may increase Executive’s base salary if he determines in his
sole discretion that an increase is appropriate.
B.
Executive shall
participate in Employer’s long-term equity incentive program
and be eligible to purchase stock options in accordance with the
stock incentive plan approved by the Company’s
shareholders. Any options or similar awards shall be issued
to Executive at an exercise price of not less than the
stock’s current fair market value as of the date of
grant.
C.
Executive shall
participate in all retirement, health, welfare, and other benefit
plans or programs of Employer now or as may be adopted for all
employees or adopted for a class of employees that includes
Executive. Employer shall pay the Executive’s coverage
for medical and dental benefits excluding the minimal required
co-pay payment.
D.
Employer shall provide
Executive with an automobile allowance of $350.00 per
month.
E.
Employer may pay for
membership dues for Executive’s membership in various civic
organizations. In addition, Employer shall pay membership
fees and annual dues, subject to approval by the Chief Executive
Officer.
F.
Employer shall reimburse
Executive for reasonable travel and other expenses, including cell
phone, related to Executive’s duties which are incurred and
accounted for in accordance with Bank policies. Executive
shall be issued a corporate credit card to be used for business
related expenses in accordance with Bank policies. The
Employer shall reimburse the Executive for such expenses within 60
days of Executive’s notice to Employer of such
expense.
G.
Employer shall provide
Executive with four weeks paid vacation per year which shall be
taken in accordance with Bank policies and in accordance with any
banking rules or regulations governing vacation leave.
Paid time off days may not be
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carried
forward into following calendar years, and any payments made by the
Employer to the Executive as compensation for paid time off days
shall be paid in accordance with the Employer’s normal
payroll practices, which shall mean no less frequently than
monthly.
H.
The Executive shall be
eligible to receive cash bonuses based on the Executive’s
achievement of specified goals and criteria. These goals and
criteria may include both annual and long-term goals, may provide
for vesting over a specified time period, and shall be established
annually by the Compensation Committee of the Board of
Directors. For purposes of this Agreement, a bonus shall not
be deemed to be earned prior to the date it is actually paid to the
Executive except to the extent that the Employer specifically
provides otherwise in a writing delivered to the Executive.
Any bonus payment made pursuant to this
Section 3(H) shall be made the earlier of (i) 70
days after the previous year end for which the bonus was earned by
the Executive and became a payable of the Employer or (ii) the
first pay period following the Employer’s press release
announcing its previous year’s financial
performance.
Section 4 –
Termination
A.
Executive’s
employment under the Agreement may be terminated prior to the end
of the term only as provided in this Section 4.
B.
Death
. The Agreement will
terminate upon the death of Executive. In this event,
the Employer shall pay Executive’s estate any sums due her as
base salary and/or reimbursement of expenses through the end of the
month during which death occurred in accordance with the
Employer’s normal payroll practices, which shall mean no less
frequently than monthly. The Employer shall also pay the
Executive’s estate any bonus earned or accrued through the
date of death including any amounts awarded for previous years but
which were not yet vested. Any bonus for previous years which was
not yet paid will be paid pursuant to the terms as set forth in
Section 3(H). Any bonus that is earned in the year of
death will be paid on the earlier of (i) 70 days after the
year end in which the Executive died or (ii) the first pay
period following the Employer’s press release announcing its
financial performance for the year in which the Executive
died. To the extent that the bonus is performance-based, the
amount of the bonus will be calculated by taking into account the
performance of the Company for the entire year and prorated through
the date of Executive’s death.
C.
Disability
. Employer may
terminate this Agreement upon the Disability of Executive for a
period of ninety (90) days. In this event, the Employer shall
pay Executive any sums due her as base salary and/or reimbursement
of expenses through the date of termination in accordance with the
Employer’s normal payroll practices, which shall mean no less
frequently than monthly.
D.
For Cause
. Employer may
terminate this Agreement for cause upon delivery of a Notice of
Termination to Executive. If Executive is terminated for
cause under this provision Executive shall receive only any sums
due her as base salary and
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reimbursement
of expenses through the date of termination in accordance with the
Employer’s normal payroll practices, which shall mean no less
frequently than monthly. For purposes of this paragraph,
cause is defined as:
(i) The commission or omission by
Executive of any act, which in Employer’s sole opinion, is
intended to cause, causes, or is reasonably likely to cause harm to
Employer, including harm to its business reputation;
(ii) The indictment of Executive for the
commission or perpetration by Executive of any crime involving
dishonesty, moral turpitude, or fraud;
(iii) The material breach by Executive of
this Agreement;
(iv) Violation of Employer policies by
Executive;
(v) Receipt of any form of notice, written
or otherwise, that any regulatory agency having jurisdiction over
Employer intends to institute any formal or informal regulatory
action against Executive or Employer;
(vi) Exhibition by Executive of a standard
of behavior that is disruptive to the orderly conduct of the
Employer’s Business to a level which, in the Board of
Director’s sole opinion, is detrimental to Employer’s
best interest; or
(vii) Failure of Executive to devote her
full business time and attention to her employment.
E.
Without
Cause .
Employer may terminate this Agreement without cause upon delivery
of a Notice of Termination to Executive. If Executive is
terminated without cause under this provision, Employer shall pay
to Executive severance compensation a lump sum amount equal to her
then current monthly base salary for twelve (12) months, plus any
bonus earned or accrued through the date of termination, including
any amounts awarded for previous years but which were not yet
vested. If when Executive’s employment terminates she
is a specified employee within the meaning of Section 409A of
the Internal Revenue Code, and if the benefits under this
Section 4(E) would be considered deferred compensation
under Section 409A, and finally if an exemption from the
six-month delay requirement of
Section 409A(a)(2)(B)(i) is not available, the lump sum
amount due under this Section 4(E) shall be paid to the
Executive on the date that is six months and one day following date
of Executive’s termination.
F.
Resignation
. Executive may
terminate this Agreement at any time by delivery of a Notice of
Resignation to Employer with a minimum of 30 days notice. If
Executive resigns under this provision, Employer shall pay
Executive any sums due her as base salary and reimbursement of
expenses through the effective date of resignation, and any other
amounts due to Executive pursuant to the
Employer’s
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policies;
provided however, that if Executive fails to give at least 30 days
notice, Executive may forfeit right to payment of accrued and
unpaid vacation time. Any such amounts payable under this
Section 4(F) will be paid in accordance with the
Employer’s normal payroll practices, which shall mean no less
frequently than monthly.
G.
Change of
Control .
Upon the occurrence of a Change in Control, and regardless of
whether the Executive remains employed by the Employer or its
successor following a Change in Control, the Executive shall be
entitled to the following:
(i) within fifteen (15) days, Employer
shall pay Executive in cash in an amount equal to her then current
monthly base salary multiplied by 36 plus any bonus earned or
accrued through the date of Change in Control (including any
amounts awarded for previous years but which were not yet
vested);
(ii) For a period of 36 months, payment of
premiums for medical and dental insurance, disability insurance,
and life insurance being provided to Executive prior to the change
in control or to other similarly situated executives who continue
in the employ of Employer.
Employer’s obligation hereunder with
respect to the benefits stated in this
Section 4G(ii) shall be limited to the extent that
Executive’s employment terminates and she becomes eligible
for any such benefits pursuant to a subsequent employer’s
benefit plans, in which case Employer may reduce the coverage of
any benefits it is required to provide Executive so long as the
aggregate coverage and benefits of the combined benefit plans is no
less favorable to Executive than the coverages and benefits
required to be provided hereunder; and
(iii) The restrictions on any outstanding
incentive awards (including restricted stock) granted to Executive
under Company’s or Bank’s long-term equity incentive
program or other incentive plan or arrangement shall lapse and such
awards shall become 100% vested, all stock options and stock
appreciation rights granted to Executive shall become immediately
exercisable and shall become 100% vested, all performance units
granted to Executive shall become 100% vested.
For
the purpose of this Section 4(G), all amounts paid to
Executive will be grossed up so as to account for any additional
federal and state income taxes that may be owed as a result of this
lump sum payment rather than periodic payments over 36
months.
H.
With the exceptions of the
provisions of this Section 4 and the express terms of any
benefit plan under which Executive is a participant, it is agreed
that, upon termination of Executive’s employment for any
reason, Employer shall have no obligation to Executive for, and
Executive waives and relinquishes any further
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compensation
or benefits, except for COBRA benefits. Unless otherwise
stated in this Section 4, the effect of termination on any
outstanding incentive awards, stock options, stock appreciations
rights, performance units or other incentives shall be governed by
the terms of the applicable plan. At the time of Termination
of Employment, and as a condition to the Employer’s
obligation to pay any severance hereunder, the Employer and the
Executive shall enter into a release substantially in the form
attached hereto as Exhibit A acknowledging such
remaining obligations and discharging both parties, as well as the
Employer’s officers, directors and employees with respect to
their actions for or on behalf of the Employer, from any other
claims or obligations arising out of or in connection with the
Executive’s employment by the Employer, including the
circumstances of such termination.
I.
The parties intend that
the severance payments and other compensation provided for herein
are reasonable compensation for Executive’s service to
Employer and shall not constitute “excess parachute
payments” within the meaning of Section 280G of the
Internal Revenue Code and any regulations thereunder. In the
event that Employer’s independent accountants acting as
auditors for Employer on the date of a Change in Control determine
that the payments provided for herein constitute “excess
parachute payments,” then the compensation payable hereunder
shall be increased, on a tax gross-up basis, so as to reimburse
Executive for the tax payable by Executive, pursuant to
Section 4999 of the Internal Revenue Code, on such
“excess parachute payments,” taking into account all
taxes payable by Executive with respect to such tax gross-up
payments hereunder, so that Executive shall be, after payment of
all taxes, in the same financial position as if no taxes under
Section 4999 of the Internal Revenue Code had been imposed
upon him.
Section 5 - Ownership of
Work Product
Employer shall own all work product arising
during the course of Executive’s employment (prior, present,
or future). For purposes hereof, “work product”
shall mean all intellectual property rights, including all trade
secrets, U.S. and international copyrights, patentable inventions,
and other intellectual property rights in any programming,
documentation, technology, or other work product that relates to
Employer, its Business or its customers and that the Executive
conceives, develops or delivers to Employer at any time during her
employment, during or outside normal working hours, in or away from
the facilities of Employer, and whether or not requested by
Employer. If the Work Product contains any materials, programming,
or intellectual property rights that the Executive conceived or
developed prior to and independent of the Executive’s work
for Employer, Executive agrees to point out the pre-existing items
to Employer and Executive grants Employer a worldwide,
unrestricted, royalty-free right, including the right to sublicense
such items.
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