EMPLOYMENT AND NON-COMPETITION
AGREEMENT
THIS
EMPLOYMENT AND NON-COMPETITION AGREEMENT (this “
Agreement ”), made and entered into this ___day of
, 2007, between CapitalSouth Bank, an Alabama banking corporation
(“ Employer ”), and Mr. Bill Marsh (the
“ Executive ”).
WHEREAS,
CapitalSouth Bancorp, a Delaware corporation and a registered bank
holding company (“ CapitalSouth ”), and
Monticello Bancshares, Inc., a Florida corporation (“
Monticello ”), have executed an Agreement and Plan of
Merger (the “ Merger Agreement ”), joined in by
Mr. Jake Bowen, a resident of Duval County, Florida, pursuant
to which Monticello will be merged into CapitalSouth (the “
Merger ”), and it is contemplated, but not required,
that, in the sole discretion of CapitalSouth and in connection with
the consummation of the Merger Agreement and pursuant to the terms
of a certain Bank Merger Agreement (the “ Bank Merger
Agreement ”), Monticello Bank, a federal savings bank
(“ Monticello Bank ”), will be merged with and
into CapitalSouth Bank, an Alabama banking corporation (“
CapitalSouth Bank ”);
WHEREAS,
the Executive is currently employed by Monticello and Monticello
Bank as President;
WHEREAS,
pursuant to Section 5.15 of the Merger Agreement, following
the Effective Time of the Merger as that term is defined in the
Merger Agreement (the “ Effective Time ”),
Employer desires to retain the services of the Executive and the
Executive desires to be employed by Employer for the term of this
Agreement and upon the terms and conditions hereinafter
described;
WHEREAS,
it is a condition precedent to the Merger that the Executive
execute this Agreement; and
WHEREAS,
the parties intend and desire that this Agreement supersede and
replace in all respects the Existing Agreement and any and all
other employment and change of control agreements or arrangements
between the Executive and Monticello and Monticello
Bank.
NOW,
THEREFORE, in consideration of the promises, mutual covenants set
forth in this Agreement, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, do hereby agree as
follows:
SECTION 1:
EMPLOYMENT OF EXECUTIVE; DUTIES AND RESPONSIBILITIES
1.1 Employment
of Executive . Employer shall employ the Executive, and the
Executive shall provide services to Employer subject to the terms
and conditions of this Agreement.
1.2 Term of
Agreement . The term of this Agreement and the commencement of
employment of the Executive by Employer shall begin on the Closing
Date, as that term is
defined in the
Merger Agreement (the “ Closing Date ”), and
this Agreement and the obligations of Employer hereunder (but not
in derogation of the continuing obligations of Executive hereunder)
shall terminate on the last day of the 18 th calendar month following the Closing Date (the
“ Original Agreement Term ”) unless employment
of the Executive is sooner terminated pursuant to the provisions of
Section 3 hereof (the “ Agreement Term
”).
1.3 Offices and
Positions of Executive . During the Agreement Term, except as
otherwise mutually agreed by Employer and the Executive and subject
to Section 3 hereof, the Executive shall serve as a senior
regional executive in the Jacksonville, Florida Market of Employer,
or in such other executive capacity in the Jacksonville, Florida
Market of Employer for which Executive is suited by background and
training, as Employer, in Employer’s sole discretion, deems
appropriate.
1.4 Duties and
Responsibilities . During the Agreement Term, the Executive
shall perform such duties and responsibilities as the management of
Employer shall assign to the Executive from time to time and which
can reasonably be expected to be performed by a person serving in a
similar position. The Executive agrees to devote such of his full
business time and energy to the business of Employer as is needed
and shall perform his duties in a trustworthy and business-like
manner, all for the purposes of advancing the interests of
Employer. The Executive shall report to the Chief Executive Officer
of Employer or his designee.
SECTION 2:
COMPENSATION; REIMBURSEMENT; AND BENEFITS
2.1 Base
Salary . During the Agreement Term, Employer shall pay to the
Executive an aggregate annual base salary (the “ Base
Salary ”) at a rate of $140,300 per annum, which shall
not be reduced at any time during the term of the Agreement Term.
The Executive’s Base Salary shall be subject to annual review
in accordance with the existing procedures of Employer.
2.2 Payment of
Base Salary . Employer shall pay the Base Salary due the
Executive in accordance with the policy of Employer as in effect
from time to time for the payment of salaries.
2.3 Other
Benefits . The Executive shall be entitled to participate on
the same basis as other similarly situated personnel of
CapitalSouth and its affiliates and subsidiaries in all incentive
and benefit programs or arrangements, including cash bonus and
stock programs, made available by CapitalSouth and its affiliates
and subsidiaries to such employees; provided that it is understood
that the foregoing does not include any automobile or club dues
allowance. For purposes of such benefit programs or arrangements,
the Executive shall be credited for the Executive’s prior
service with Monticello and Monticello Bank in accordance with
Section 6.3 of the Merger Agreement, and for purposes of such
incentive programs or arrangements (including stock programs), the
Executive shall be credited for all of the Executive’s prior
service with Monticello and Monticello Bank. The Executive shall be
subject to the appropriate performance bonus programs in which
other similarly situated personnel of CapitalSouth and its
affiliates and subsidiaries participate. As of the date of this
Agreement, such appropriate performance bonus program is the
Executive Incentive Plan.
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2.4 Business
Expenses . Employer shall reimburse the Executive for all
reasonable expenses incurred by him in accordance with the standard
policies and procedures of Employer in the course of rendering his
services pursuant to this Agreement; provided ,
however , that the Executive shall promptly submit such
reasonable documentation as may be requested by Employer to verify
such expenditures.
2.5
Vacation . The Executive shall be afforded vacation in
accordance with and under the same terms and conditions as are
applicable to similarly situated personnel of Employer and its
affiliates. The Executive shall take into consideration the needs
of Employer in setting his vacation schedule.
SECTION 3:
TERMINATION OF EMPLOYMENT
3.1 Termination
of Agreement Term . The Agreement Term may be terminated in the
following manner:
(a)
Termination on Death or Disability . The Agreement Term
shall automatically terminate upon the death or Disability of the
Executive. The term “ Disability ” shall mean
the Executive’s physical or mental incapacity, as certified
by a physician, that renders him incapable of performing the
essential functions of the duties required of him by this Agreement
for six (6) months, even with reasonable
accommodation.
(b)
Termination upon Notice . The Agreement may be terminated by
the Executive upon thirty (30) days’ written notice to
Employer. The Agreement may be terminated by Employer for any other
reason other than for “ Cause ” (as defined in
Section 3.1(d) hereof), upon notice and continued payment of
salary to the Executive.
(c)
Resignation for Good Reason . The Executive may resign from
employment with Employer and terminate the Agreement Term for good
reason, other than after the occurrence of circumstances
constituting Cause (as defined in Section 3.1(d) below), upon
the occurrence of any of the following conditions (“ Good
Reason ”): (i) Employer reduces the
Executive’s then present Base Salary during the Agreement
Term; (ii) Employer requires the Executive’s relocation
to an office outside Duval, Clay, Nassau or St. Johns counties,
Florida; or (iii) the assignment to the Executive of any
duties inconsistent with Executive’s position as a senior
regional executive of the Employer. In any such case, the
Executive’s resignation for Good Reason shall be effective by
delivering to Employer, within thirty (30) days after the
occurrence of one of the conditions described above is known to the
Executive, a written notice specifying a date for termination of
the Executive’s employment which is not less than thirty
(30) days after the date of the notice, provided, that the
Executive cannot cure such “Good Reason,” to the
satisfaction of the Executive, during the thirty (30) day
period, stating that the Executive is resigning for Good Reason as
contemplated by this Section 3.1(c), and setting forth in
reasonable detail the facts and circumstances claimed to provide a
basis for the Executive’s resignation for Good Reason
hereunder.
(d)
Termination For Cause . The Agreement Term may be terminated
by Employer for “ Cause ” at any time during the
Agreement Term upon fifteen (15) days’ written notice to
the Executive, which notice shall state the facts constituting such
“Cause,” provided,
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that the
Executive cannot cure such “Cause,” to the satisfaction
of CapitalSouth, during the fifteen (15) day period. For the
purpose of this Section 3.1(d), the term “Cause”
shall mean (i) willful misconduct or gross malfeasance, or an act
or acts of gross negligence in the course of employment;
(ii) the Executive’s commission, conviction, admission
or confession of any felony or crime of moral turpitude;
(iii) willful violation of any law, rule, regulation (other
than traffic violations or similar offenses) or final
cease-and-desist order, (iv) if the Executive is removed
and/or permanently prohibited from participating in the conduct of
the Employer’s affairs by an order issued under
Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act
(12 U.S.C. Section 1818(e)(4) or (g)(1)); or (v) the
existence of a substantial and objective act of misfeasance or
nonfeasance by the Executive which is plainly sufficient, under
sound banking principles (as recognized by the Alabama State
Banking Department, the Federal Deposit Insurance Corporation, or
any other appropriate bank regulatory authority to the extent said
agencies would no longer approve the Executive to hold a comparable
executive position), to conclude that the Executive is unfit to
continue in the capacities stated in this Agreement. Employer shall
have the power to temporarily suspend Executive, with pay, from
duty if there is reasonable evidence of the possibility of Cause
until Cause is either proved or disproved; if disproved, full
reinstatement will immediately be effected.
3.2
Consequences of Termination .
(a)
For Cause; Death or Disability; Without Good Reason . In the
event Executive’s employment is terminated (i) by
Employer for Cause under Section 3.1(d) hereof, (ii) as a
result of the Executive’s death or Disability under
Section 3.1(a) hereof, or (iii) by the Executive under
Section 3.1(b) hereof, Employer shall be under no further
obligation to make payments or provide benefits to the Executive,
except for Base Salary earned but unpaid at the time of such
termination, payment for accrued vacation, reimbursable expenses
incurred by but not yet reimbursed to the Executive at the time of
such termination, any earned but unpaid incentive awards due to the
Executive, vested accrued retirement benefits, group health and any
other benefits coverage that is required to be continued by
applicable law.
(b)
Other than for Cause; Resignation for Good Reason . In the
event the Executive’s employment is terminated by Employer
other than for Cause under Section 3.1(d) hereof or the
Executive resigns for Good Reason under Section 3.1(c) hereof,
Employer shall pay to the Executive an amount equal to the product
of $140,300 (or Executive’s then present salary, if it is
different) multiplied by a fraction, the denominator of which is
365 and the numerator of which is the number of days remaining in
the Original Agreement Term, and shall be paid semi-monthly during
the remainder of what would have been the Original Agreement Term,
beginning on the next normal semi-monthly payroll of Employer
following separation from service.
(c)
Obligation of Employer to Make the Payments Under
Section 3.2(b) Hereof . Compliance by the Executive with
Section 4 hereof is a condition precedent to Employer’s
obligation to
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