Exhibit 10.01
S TATE OF N ORTH C AROLINA
C OUNTY OF D AVIE
E MPLOYMENT A GREEMENT
T HIS E MPLOYMENT A GREEMENT (the “Agreement”) is entered into as
of 4th day of August, 2008 (the “Effective Date”), by
and between B ANK OF THE C AROLINAS (the “Bank”) and M
ICHAEL D. L ARROWE (“Employee”).
W ITNESSETH :
W HEREAS , Employee was employed as the Bank’s
Executive Vice Chairman effective on May 12, 2008;
and,
W HEREAS , Employee’s experience and knowledge of
the Bank’s operations, customers, and affairs, and his
knowledge of and standing and reputation in the Bank’s market
area, will be of continuing benefit to the Bank in the future; and,
for that reason, the Bank desires for Employee to continue as an
employee of the Bank for the Term of Employment specified below and
to restrict Employee’s ability to compete against the Bank in
the Bank’s banking markets for a reasonable period following
any termination of Employee’s employment; and,
W HEREAS , Employee desires to remain as an employee of
the Bank and to accept the Bank’s offer of continued
employment on the basis described herein; and,
W HEREAS , 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.
N OW ,
T HEREFORE
, 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 herein. 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 under this Agreement (the “Term of Employment”)
shall begin on July 22, 2008 and be for a continually renewing
period of three (3) years, 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 T WO H UNDRED F IFTY T HOUSAND AND N O /100 S D OLLARS ($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.
(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.
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 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 in any
material respect 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) or more days
after 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 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 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 ter
