E XHIBIT 10.1
S TATE OF N ORTH C AROLINA
C OUNTY OF H YDE
E MPLOYMENT A GREEMENT
T HIS E MPLOYMENT A GREEMENT (the “Agreement”) is entered into as
of the 26th day of August, 2009 (the “Effective
Date”), by and between A. D WIGHT U TZ (“Executive”), T
HE E AST C AROLINA B ANK (the “Bank”) and ECB B
ANCORP , I NC .
( “Bancorp”).
W ITNESSETH :
W HEREAS , Executive currently is employed by the Bank as
its President and Chief Executive Officer and has been elected as
President and Chief Executive Officer of Bancorp; and
W HEREAS , the Bank desires and has agreed to continue to
employ Executive as its President and Chief Executive Officer, and
Executive desires and has agreed to continue in the employment of
the Bank; and
W HEREAS , the Bank and Executive desire to set forth the
terms and conditions of Executive’s continued employment with
the Bank in a written agreement and, for that purpose, the Bank and
Executive have agreed to enter into this Agreement; and
W HEREAS , Bancorp has agreed to join as a party to this
Agreement for purposes of its separate agreements set forth
herein.
N OW ,
T HEREFORE
, in consideration of the premises
and mutual promises, covenants, and conditions hereinafter set
forth, and for other good and valuable considerations, the receipt
and sufficiency of which hereby are acknowledged, the Bank, Bancorp
and Executive hereby agree as follows:
1.
Employment . The Bank agrees to continue to employ
Executive, and Executive accepts continued employment with the
Bank, upon the terms and conditions stated in this
Agreement. For so long as Executive is employed by and serves
as President and Chief Executive Officer of the Bank, Bancorp
agrees that Executive also will be elected and serve as President
and Chief Executive Officer of Bancorp. As an employee and officer
of the Bank, and as an officer of Bancorp, Executive will
(a) serve as President and Chief Executive Officer of
the Bank and Bancorp and/or in such other or additional executive
position or positions as shall be specified from time to time by
the Bank’s and Bancorp’s Boards of Directors,
(b) promote the Bank and Bancorp and their business
and engage in business development activities on the Bank’s
and Bancorp’s behalf, and (c) have such
functional managerial duties, responsibilities and authority
consistent with his position and/or as shall be assigned to him by
the Bank’s and Bancorp’s Boards of Directors from time
to time.
2. Term
. Subject to the right of
either Executive or the Bank to terminate Executive’s
employment at any time as provided herein, the term of
Executive’s employment with the Bank under this Agreement
(the “Term of Employment”) shall be for a period
beginning on the Effective Date and ending on July 1, 2012
(the “Expiration Date”); provided, however, that
on July 1, 2010, and on July 1 of each year thereafter,
and without any further action by the Bank or Executive, the
Expiration Date and Term of Employment automatically shall be
extended for one
additional year unless the Bank gives written
notice to Executive not less than six months prior to any such date
that the Expiration Date and Term of Employment will not be so
extended. Unless sooner terminated as provided in this Agreement,
following the Bank’s giving of such written notice the Term
of Employment will expire on the Expiration Date, as it may
previously have been extended as described above. If, following the
Expiration Date or other termination of this Agreement, Executive
remains employed by the Bank, such employment shall be on an
“at will” basis.
3. Cash Compensation;
Incentive Compensation Plans . For all services rendered by Executive as an
officer and employee of the Bank under this Agreement, during the
Term of Employment the Bank shall pay Executive a base salary at an
initial annual rate of T WO H UNDRED F ORTY -F IVE T HOUSAND AND N O /100 S D OLLARS ($245,000.00) (“Base Salary”), which will increase
to an annual rate of T WO H UNDRED F IFTY -N INE T HOUSAND S EVEN H UNDRED AND N O /100 S D OLLARS ($259,700.00) effective on January 1, 2010, if Executive
remains actively employed by the Bank on that date. Thereafter, the
Bank’s Board of Directors will review Executive’s Base
Salary at least annually and, subject to the recommendation of its
Compensation Committee, the Board may, at its sole discretion,
increase Executive’s Base Salary rate from time to time
during the Term of Employment. Base Salary paid under this
Agreement shall be payable in accordance with the Bank’s
normal payroll policies and procedures in effect from time to
time.
Executive shall not be entitled to
receive any separate or additional base salary or other cash
compensation for his services as an officer of Bancorp.
Subject to the other terms of this
Agreement (specifically including Paragraphs 11, 12 and 13 below),
during the Term of Employment Executive shall be eligible to
participate in any bonus, stock-based compensation or other
incentive compensation plans maintained by the Bank from time to
time and in which the Bank’s and Bancorp’s executive
officers are participants; provided, however, that the terms
of those plans, the level of Executive’s participation, and
the terms and amount of payments, compensation or awards he may
receive thereunder, shall be within the sole discretion of the
Bank’s and Bancorp’s Boards of Directors and subject to
applicable restrictions under the “CPP Rules” (as that
term is defined in Paragraph 11).
4. Employee Benefit
Plans; Fringe Benefits; Income Taxes .
(a) Benefit
Plans . During
the Term of Employment, Executive shall be eligible to participate
in any and all employee benefit plans or programs maintained by or
for the Bank that are generally available to and which cover all
the Bank’s employees, subject to the rules applicable to such
plans or programs prevailing from time to time. Except as
otherwise specifically provided herein, Executive’s
participation in such plans and programs and entitlement to
benefits (including vacation and other leave) shall be subject to
and in accordance with the terms and conditions (including
eligibility requirements) of and laws and regulations applicable to
such plans and programs, resolutions of the Bank’s Board of
Directors establishing such plans and programs, and the
Bank’s normal practices and established policies regarding
such plans and programs; provided, however, that Executive
shall be eligible to receive two weeks of paid vacation during
2009, and four weeks of paid vacation during each calendar year
thereafter.
Executive 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.
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(b) Long Term Care Insurance. During
the Term of Employment, the Bank will pay, or reimburse Executive
for, premiums for existing long-term care insurance policies
covering Executive and his spouse (policy numbers U000875677 and
U02611242) issued through the Federal Long Term Care Insurance
Program administered by Long Term Care Partners, LLC for John
Hancock Life Insurance Company and Metropolitan Life Insurance
Company.
(c) Automobile. During the Term of
Employment, the Bank will provide Executive with the use of an
automobile which shall be purchased and owned, or leased, in the
name of the Bank. The selection of that automobile, and any
periodic replacement thereof, shall be within the discretion of the
Bank’s Board of Directors.
(d) Expense Reimbursement. Subject to
and in accordance with its normal accounting and reimbursement
policies and procedures in effect from time to time, the Bank will
reimburse Executive for reasonable travel and other
business-related expenses incurred in connection with the
performance of his duties under this Agreement.
(e) Income
Taxes . All cash
or other compensation payable or provided to Executive 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. Executive shall be
solely responsible for any income or other taxes (including excise
taxes) owed on account of his receipt from the Bank or Bancorp of
any compensation or benefits under this Agreement and, to the
extent that the Bank reasonably believes itself obligated to do so,
the Bank and Bancorp may withhold any such taxes from cash or other
compensation payable to Executive.
5. Standards of
Performance and Conduct . During the Term of Employment, Executive
shall:
(a) unless otherwise approved in writing by the
Board of Directors, remain a full-time resident of Hyde County and
reside within a 20-mile radius of Engelhard, North
Carolina;
(b) faithfully and diligently discharge his
obligations under this Agreement and perform the duties associated
with his positions with the Bank and Bancorp, or otherwise assigned
to him from time to time by the Bank’s or Bancorp’s
Board of Directors, in a manner which is competent and reasonably
satisfactory to the Boards of Directors;
(c) devote his full business time, attention, skill
and efforts to the performance of his assigned duties as an officer
of the Bank and Bancorp, subject to reasonable absences during
periods of illness, vacation and other permitted leaves of absence
consistent with the Bank’s personnel policies and procedures;
provided, however , that subject to the terms of and any
prior approval required by the “Code of Conduct” (as
defined below), and to the other terms of this Agreement, Executive
may devote personal time to service as a director or member of, or
an advisor to, other organizations, to charitable and community
activities, and to managing his personal investments, so long as
those activities do not materially interfere with the performance
of his duties under this Agreement and are not in conflict with, or
adverse to, the interests of the Bank or Bancorp;
(d) comply with and use his best efforts to
implement the Bank’s and Bancorp’s policies and
procedures currently in effect or as are established from time to
time by the Bank’s or Bancorp’s Board of Directors;
and
(e) at all times and in all material respects,
comply with any code of conduct or ethics policies applicable to
Executive and/or the Bank’s and Bancorp’s employees,
officers and directors in general, as 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
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pronouncements or standards promulgated
thereunder, which are applicable to the Bank and Bancorp and their
officers, employees, directors, business, and
operations.
6. Nomination for
Election as a Director. Executive currently serves as a director of
Bancorp and the Bank. Until the Expiration Date or, if earlier,
termination of Executive’s service as the Bank’s and
Bancorp’s President and Chief Executive Officer, at the end
of each term of office as a director of Bancorp, Bancorp’s
Board of Directors will nominate Executive for reelection for a new
term as a director of Bancorp at Bancorp’s next annual
meeting of shareholders; and, subject to his reelection by
shareholders as a director of Bancorp, Bancorp (in its capacity as
the Bank’s sole shareholder) will reelect Executive each year
as a director of the Bank; provided, however , that, at the
end of any term of office, Bancorp’s Board of Directors shall
not be obligated to nominate Executive for reelection by
shareholders as a director of Bancorp, and Bancorp shall not be
obligated to reelect him as a director of the Bank, unless he
satisfies all then current qualification and eligibility
requirements pertaining to Bancorp’s and the Bank’s
directors under applicable laws or regulations and Bancorp’s
and the Bank’s Bylaws. Following his nomination each year by
the Board of Directors, Executive’s service as a director of
Bancorp shall be subject to his election by a vote of
Bancorp’s shareholders.
In the event that Executive’s
employment with the Bank, or his service as President and Chief
Executive Officer of the Bank and Bancorp, under this Agreement
terminates for any reason, Executive’s service as a director
of Bancorp and the Bank also will terminate, and Executive hereby
tenders his resignation as a director of Bancorp and the Bank
effective as of the date of any such termination of his employment
or service as President and Chief Executive Officer.
7. Termination and
Termination Pay .
Subject to the limitations set forth in Paragraphs 11, 12 and 13
below, and except to the extent otherwise provided in Paragraph 8
in the case of a “Change in Control” (as defined in
that Paragraph), Executive’s and the Bank’s rights and
obligations with respect to termination of the Term and Employment
and Executive’s employment under this Agreement shall be as
described in this Paragraph.
(a) By
Executive . The
Term of Employment and Executive’s employment under this
Agreement may be terminated at any time by Executive upon 30
days’ written notice to the Bank. Upon such termination,
Executive shall be entitled to receive Base Salary earned under
this Agreement through the effective date of such termination but
which remains unpaid (and which shall be paid on or before the end
of the Bank’s then current pay period) and, thereafter, the
Bank shall have no further obligations (for any payments, benefits
or otherwise) under this Agreement.
(b) Death, Retirement or
Disability . The
Term of Employment and Executive’s employment under this
Agreement automatically shall be terminated upon his death,
“Retirement” or, subject to the Bank’s
obligations and Executive’s rights under Title I of the
Americans with Disabilities Act, Section 504 of the
Rehabilitation Act, and the Family and Medical Leave Act, if
applicable, and any other applicable federal, state or local laws,
“Disability” during the Term of Employment. Upon
any such termination, Executive (or, in the case of
Executive’s death, his estate) shall be entitled to receive
any Base Salary Executive shall have earned through the date of
such termination but which remains unpaid (and which shall be paid
on or before the end of the Bank’s then current pay period),
and, thereafter, the Bank shall have no further obligations (for
any payments, benefits or otherwise) under this
Agreement.
“Retirement” shall mean
a termination of Executive’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
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which Executive is a participant, or any other
termination of employment that Executive and the Bank mutually
agree in writing to treat as a Retirement.
“Disability” shall mean
a mental or physical impairment that, in the sole opinion of the
Bank’s Board of Directors, renders Executive unable to
perform the essential functions of his employment for a period of
90 days or more.
(c) By the
Bank . The Bank
may terminate the Term of Employment and Executive’s
employment under this Agreement at any time for “Cause”
(as defined below) or without Cause.
Upon any such termination by the
Bank under this Paragraph 7(c) without Cause (other
than under the circumstances described in Paragraph 8 below),
Executive shall be entitled to receive from the Bank, and the Bank
shall be obligated to pay or cause to be paid to Executive,
continued Base Salary for the then current unexpired Term of
Employment (without any further extensions) at a rate equal to 100%
of Executive’s Base Salary rate in effect at the time of the
termination of Executive’s employment (which payments shall
be made on the same schedule as Executive’s Base Salary was
paid by the Bank during the Term of Employment). Except as
provided in Paragraph 8 below, the above payment shall be in lieu
of any other payments or benefits provided for in this Agreement
and, with the exception of the above payments, upon any such
termination without Cause Executive shall have no
further rights, and the Bank shall have no further obligations (for
any payments, benefits or otherwise), under this
Agreement.
Upon any such termination with
Cause , Executive shall be entitled to receive Base Salary
earned under this Agreement through the effective date of such
termination but which remains unpaid (and which shall be paid on or
before the end of the Bank’s then current pay period) and,
thereafter, Executive shall have no further rights, and the Bank
shall have no further obligations (for any payments, benefits or
otherwise), under this Agreement.
For purposes of this Paragraph 7(c),
the Bank shall have “Cause” to terminate
Executive’s employment if:
(i) (A)
Executive has breached in any
material respect any of the terms or conditions of this Agreement
or of the Code of Conduct, 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, other than a breach of the Code of Conduct, shall not
give the Bank “Cause” to terminate Executive’s
employment if such breach or failure is corrected or cured by
Executive to the Bank’s reasonable satisfaction (which shall
not be unreasonably withheld by the Bank) within 30 days following
written notice thereof to Executive), or (B) Executive
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 Bancorp or which has had or likely will
have an adverse effect on the Bank’s or Bancorp’s
business or reputation;
(ii)
The material violation by Executive
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
or Bancorp, including but not limited to the North Carolina
Commissioner of Banks, the Federal Deposit Insurance Corporation,
the Federal Reserve Board, the Securities and Exchange
Commissioner, or any other regulator (a “Regulatory
Authority”), that results from Executive’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 Bancorp
to their reputation;
(iii)
The commission in the course of
Executive’s employment with or service as an officer of the
Bank or Bancorp of an act of fraud, embezzlement, theft, or
proven
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personal dishonesty (whether or not such act or
charge results in criminal indictment, charges, prosecution, or
conviction);
(iv)
The conviction of Executive 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 Executive from serving as an
employee, officer or director of, or a party affiliated with, the
Bank or Bancorp; or, in the event Executive becomes unacceptable
to, or is removed, suspended, or prohibited from participating in
the conduct of the Bank’s or Bancorp’s affairs (or if
proceedings for that purpose are commenced), by any Regulatory
Authority; or
(v) The exclusion of Executive by the carrier or
underwriter from coverage under the Bank’s and
Bancorp’s then current “blanket bond” or other
fidelity bond or insurance policy covering its or their employees,
officers, and directors, or the occurrence of any event that the
Bank believes, in good faith, will result in Executive being
excluded from such coverage, or having coverage limited as to
Executive as compared to other covered employees, officers or
directors, pursuant to the terms and conditions of such
“blanket bond” or other fidelity bond or insurance
policy.
8. Change in Control of
the Bank .
(a) Notwithstanding anything contained in Paragraph
7 to the contrary, and subject to the limitations set forth in
Paragraphs 11, 12 and 13 below, if:
(i) at the effective time of or any time within 18
months following a “Change in Control” (as defined
below), the Bank terminates Executive’s employment
without Cause (as defined in Paragraph 7(c) above)
and such termination occurs prior to the Expiration Date,
or
(ii)
at the effective time of or any time
within 18 months following a “Change in Control” (as
defined below), a “Termination Event” (as defined
below) occurs prior to the Expiration Date and, thereafter,
Executive voluntarily terminates his own employment with the Bank,
following the giving of written notice to the Bank and an
opportunity for the Bank to cure or remedy the Termination Event,
in the manner described in Paragraph 8(f) below, then (subject
to the limitations set forth herein) Executive shall be entitled to
receive from the Bank, and the Bank shall be obligated to pay or
cause to be paid to Executive, an amount equal to 2.99 times
Executive’s “base amount” as that term is defined
in Section 280G of the Internal Revenue Code of 1986, as
amended (the “Code”), payable in 36 equal monthly
installments which shall begin within 45 days following the
“Termination Date” (as defined below) and be made on
the same schedule as Executive’s Base Salary was paid by the
Bank during the Term of Employment. In addition, if Executive
chooses to exercise his rights to purchase continued individual
health, dental or other insurance coverages under the Bank’s
group insurance plans pursuant to the Consolidated Omnibus Budget
Reconciliation Act (“COBRA”), the Bank shall reimburse
Executive for the cost of his continued individual insurance
coverages for 18 months or, if less, the maximum period during
which such coverages are available to Executive under COBRA, but
not longer than the unexpired Term of Employment hereunder. The
above payment shall be in lieu of any other payments provided for
in this Agreement (including, without limitation, the payments
provided for in Paragraph 7 above), and, with the exception of the
above payments, upon any such termination following a Change in
Control, Executive shall have no further rights, and the Bank shall
have no further obligations, under this Agreement. For purposes of
this Agreement, the “Termination Date” will be the
effective date of the termination of Executive’s employment
which gives rise to the Bank’s payment obligation under this
Paragraph 8.
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(b) For purposes of this Agreement, but only to the
extent consistent with the definition of the term “change in
control” under Section 409A of the Internal Revenue Code
of 1986, as amended, and regulations promulgated thereunder, as
applicable (“Section 409A”), a “Change in
Control” shall be deemed to have occurred if, after the
Effective Date:
(i) any “Person” (for purposes of this
Paragraph 8, as such term is defined in Sections 3(a)(9) and
13(d)(3) of the Securities Exchange Act of 1934, as amended),
directly or indirectly, acquires beneficial ownership of more than
50% of any class of voting securities entitled to vote in the
election of directors of the Bank or Bancorp, or in any manner
acquires control of the election of a majority of the directors of
the Bank or Bancorp (excluding the Bank, Bancorp, any wholly-owned
subsidiary of the Bank or Bancorp, or any employee benefit plan
sponsored or maintained by the Bank or Bancorp); or
(ii)
the Bank or Bancorp consolidates or
merges with or into another corporation, or otherwise is
reorganized, where the Bank or Bancorp is not the resulting or
surviving corporation in such transaction, unless the transaction
involves only two or more of the Bank, Bancorp or a wholly-owned
subsidiary of the Bank or Bancorp; or
(iii)
all or substantially all the
Bank’s or Bancorp’s assets are sold or otherwise
transferred to or acquired by any other corporation, association or
other person, entity, or group.
However, notwithstanding anything
contained herein to the contrary, for purposes of this Agreement
the term “Change in Control” shall not include a
transaction approved by the Bank’s or Bancorp’s Board
of Directors that results in the Bank or Bancorp merging with,
transferring its assets to, or becoming the subsidiary of, a
corporation or entity newly formed at the direction of the
Bank’s or Bancorp’s Board of Directors for the purpose
of such transaction (including a corporation or entity so formed
for the purpose of serving as the Bank’s or Bancorp’s
parent bank holding company), and in connection with which
transaction the holders possessing, directly or indirectly, a
majority of the shares entitled to vote in the election of
Bancorp’s directors immediately before the transaction or
series of related transactions (other than those who exercise
statutory rights of dissent and appraisal) will hold, directly or
indirectly, a majority of the shares entitled to vote in the
election of directors of the surviving or transferee entity
immediately after the transaction or series of related
transactions. Further, and notwithstanding the other provisions of
this Paragraph 8, a transaction or event shall not be considered a
Change in Control if, prior to the consummation or occurrence of
such transaction or event, the Bank and Executive agree in writing
that the same shall not be treated as a Change in Control for
purposes of this Agreement, in which event Executive shall be
deemed to have forever waived all right to any payment under this
Agreement as a result of that transaction or event, but not to any
future transaction or event.
(c) For purposes of this Paragraph 8, all references
to the Bank or Bancorp shall include any “Successor”
(as defined below) to the Bank or Bancorp which shall have assumed
and become liable for the Bank’s or Bancorp’s
respective obligations hereunder (whether such assumption is by
agreement, oper
