Exhibit 10.5
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
Karen B. Sprague (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 Operating 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 $95,000.00
(Ninety-Five 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
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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 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
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termination of
Executive’s employment for any reason, Employer shall have no
obligation to Executive for, and Executive waives and relinquishes
any further 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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Section 6 - Protection of
Tr
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