Exhibit 10.3
HARBOR CAPITAL NATIONAL BANK
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (this "Agreement") dated as of _________, 1999,
is entered by and between Harbor Capital National Bank, a national bank (the
"Bank") and Xxxxxxx X. Xxxxx ("Employee").
The Bank and Employee, in consideration of the mutual promises set forth
herein and for other valuable consideration the sufficiency of which is hereby
acknowledged and intending to be legally bound, agree as follows:
1. Employment. The Bank agrees to employ Employee, and Employee agrees
----------
to accept employment with the Bank. Employee agrees to perform his duties and
responsibilities in accordance with the terms and conditions set forth herein.
1.1(a) Employment Term. The term of this Agreement (the "Employment Term")
---------------
shall be for three years and commence on ______ __, 1999 and, unless previously
terminated in accordance with Section 7 of this Agreement or extended by mutual
agreement of the parties, shall terminate on __________, 2001 (the _____
anniversary on such date) upon 90 days prior written notice by either party. If
neither party gives prior written notice of termination, this Agreement shall
automatically renew for a one year term and successive one year terms thereafter
until such time as one party gives 90 days prior written notice by either party
of a termination.
1.1.(b) Effective Date. The Effective Date of this Agreement is _______,
--------------
19__.
1.2 Duties and Responsibilities
---------------------------
(a) During the Employment Term, Employee shall serve as President of the
Bank and shall perform all duties and accept all responsibilities incidental to
such position or as may be assigned to him from time to time by the Bank's Board
of Directors. Employee shall devote his productive time, ability, attention,
and energies to the fulfillment of said duties during the Employment Term.
During such time, the Employee shall not directly or indirectly render any
services of a business, commercial, or professional nature to any other person
or organization except for entities affiliated with the Bank, whether or not for
compensation, without the prior written consent of the Bank.
(b) Employee represents to the Bank that he is not subject or a party to
any employment, non-competition, non-disclosure or other agreement, covenant,
understanding or restriction which would prohibit Employee from executing this
Agreement and performing fully his duties and responsibilities hereunder, or
which would in any manner, directly or indirectly, limit or affect the duties
and responsibilities which may now or in the future be assigned to Employee by
the Bank.
1.3(a) Compensation. The Bank shall pay Employee a base salary at the
------------
annual rate of $100,000. The Bank agrees that the Employee's base salary will
be reviewed annually by the Bank's
Board of Directors to determine, in light of the performance of Employee and the
Bank, if an increase is appropriate. Such increases shall be in the sole
discretion of the Bank's Board of Directors. All compensation under this
Agreement shall be paid less withholding required by law or agreed to by
Employee, and shall be payable as determined by the Board of Directors of the
Bank. The Bank also agrees to pay Employee $10,000, unless already paid by HCNB
Bancorp, Inc., ("HCNB"), on the date HCNB has collected in escrow the minimum
amount necessary to break escrow in its initial public offering or upon a
determination by the board of directors of HCNB that HCNB has abandoned efforts
to raise capital.
1.3(b). Bank and Employee agree that the Bank will offer Employee an
incentive compensation plan, the terms of which to be agreed upon by the
parties.
2. Other Benefits.
--------------
2.1 Vacation. For the duration of the Employment Term, Employee shall be
--------
entitled vacation per the policies of the Bank as applicable to executive level
employees. Earned but unused vacation will be forfeited at the end of each
calendar year.
2.2 Plan Benefits. Upon the opening of the Bank, the Bank shall provide
-------------
to Employee the following benefits: family health, dental and vision insurance,
life insurance equal to one year's base salary and officers and directors
liability insurance. From the date of commencement of this Agreement until the
opening of the Bank, the Bank shall reimburse Employee in an amount equal to the
amount Employee pays for COBRA coverage from his previous employer. Employee
shall be eligible to participate in any executive stock option plan and/or
retirement plan offered by the Bank.
2.3 Supplemental Disability. The Bank agrees to provide to the Employee
-----------------------
disability insurance coverage in an amount equal to 60% of Employee's base
salary.
2.4. Automobile. Bank shall provide to Employee during the term of
----------
this Agreement an automobile allowance of $1,000.00 per month.
3. Non-Disclosure of Confidential Information and Records.
------------------------------------------------------
3.1 During the term of his employment, Employee will have access to the
Bank's proprietary information or information which is entrusted to the Bank,
including information relating to business plans and to business as conducted or
anticipated to be conducted, and to past, current or anticipated products,
employees, and services ("Confidential Information").
3.2 In further consideration of Employee's employment and continued
employment, and other benefits provided to Employee by the Bank, Employee agrees
as follows: (i) except as required by Employee's duties to the Bank, not to at
any time directly or indirectly disclose to or use for others or appropriate for
his own personal use or cause to be used by others any Confidential Information
without first obtaining the written consent of the Board of Directors of the
Bank to do so; (ii) all
2
records and other writings of Confidential Information prepared by Employee, or
which come into his possession or control, or which he has access to, are and
shall remain the exclusive property of the Bank, and upon termination of
Employee's employment, Employee will not remove any such records or copies
thereof, but all shall be left with the Bank, and any such records or copies not
with the Bank in an Employee's possession or control, shall be, upon termination
of employment, immediately returned to the Bank along with any other property of
the Bank.
3.3 The requirements of this Section 3 shall apply during the time of
Employee's employment with the Bank and thereafter with no time limitation,
unless it can be demonstrated conclusively that such Confidential Information
has through no act or fault of Employee become part of the public domain.
4. Non-Competition.
---------------
4.1 During the Employment Term, Employee will not, unless acting pursuant
thereto or with the prior written consent of the Board of Directors of the Bank,
directly or indirectly, own, manage, operate, join, control, finance or
participate in the ownership, management, operation, control or financing of, or
be connected as an officer, director, employee, partner, principal, agent,
representative, consultant or otherwise with or use or permit his name to be
used in connection with, any federally chartered or state chartered bank,
savings and loan, thrift or other financial institution offices of which are
located in Xxxxxxxxxx County or the Bank's service area.
4.2 The foregoing restriction shall not be construed to prohibit the
ownership by Employee of not more than five percent (5%) of any class of
securities of any corporation which is engaged in the business of banking having
a class of securities registered pursuant to the Securities Exchange Act of
1934, provided that such ownership represents a passive investment and that
neither Employee nor any group of persons, including Employee in any way, either
directly or indirectly, manages or exercises control of any such corporation,
guarantees any of its financial obligations, otherwise takes any part in its
business, other than exercising his rights as a shareholder, or seeks to do any
of the foregoing.
4.3 This Covenant Not to Compete is an inducement to cause the Bank to
execute this Agreement and is a condition to, and consideration for, such
employment and continued employment, raises, promotions, severance, and other
benefits provided to Employee by the Bank.
5. No Solicitation. Employee agrees that, for a period of one (1) year
---------------
after the employment of the Employee by the Bank or any of its affiliates has
ended (whether or not such employment is pursuant to this Agreement), he will
not either directly or indirectly, (i) call on or solicit any person,
institution, corporation, trust or other entity who or which at the time of such
termination was, or within one (1) year prior thereto had been, a customer of
the Bank or any of its affiliates in connection with the activities prohibited
by Section 5 hereof or (ii) solicit the employment of any person who was
employed by the Bank or any of its affiliates on a full or part time basis at
the time of Employee's termination of employment, unless such person (a) was
involuntarily discharged
3
by the Bank or such affiliates, or (b) voluntarily terminated his relationship
with the Bank or such affiliate prior to Employee's termination of employment.
6. Equitable Relief.
----------------
6.1 Employee acknowledges that the restrictions contained in Sections 3, 4
and 5 are reasonable and necessary to protect the legitimate interests of the
Bank and its affiliates, that the Bank would not have entered into this
Agreement in the absence of such restrictions and that any violation of any
provision of these Sections will result in irreparable injury to the Bank and
its affiliates. Employee further represents and acknowledges that (i) he has
been advised by the Bank to consult his own legal counsel in respect of this
Agreement, and (ii) that he has had full opportunity, prior to execution of this
Agreement, to review thoroughly this Agreement with his counsel.
6.2 Employee agrees that the Bank's remedy at law for a breach of
paragraphs 3, 4, and 5 would be inadequate and that the Bank shall be entitled
to preliminary and permanent injunctive relief, without the necessity of
providing actual damages, as well as an equitable accounting of all earnings,
profits and other benefits arising from any violation of Sections 3, 4, or 5,
which rights shall be cumulative and in addition to any other rights or remedies
to which the Bank may be entitled. In the event that any of the provisions of
Sections 3, 4, or 5 should ever be adjudicated to exceed the time, geographic or
other limitations permitted by applicable law in any jurisdiction, then such
provisions shall be deemed reformed in such jurisdiction to the maximum time,
geographic or other limitations permitted by applicable law.
6.3 Employee irrevocably and unconditionally (i) agrees that any suit,
action or other legal proceeding arising out of this Agreement, including
without limitation, any action commenced by the Bank for preliminary and
permanent injunctive relief and other equitable relief, may be brought in the
United States District Court for the District of Maryland, or if such court does
not have jurisdiction or will not accept jurisdiction, in any court of general
jurisdiction in Xxxxxxxxxx County, Maryland, (ii) consents to the non-exclusive
jurisdiction of any such court in any such suit, action or proceeding, and (iii)
waives any objection which Employee may have to the laying of venue of any such
suit. Employee also irrevocably and unconditionally consents to the service of
any process, pleadings, notices or other papers in a manner permitted by the
notice provisions of Section 11 of this Agreement.
6.4 Employee agrees that he will provide, and that the Bank may similarly
provide, a copy of Sections 3, 4, and 5 of this Agreement to any business or
enterprise (i) which he may directly or indirectly own, manage, operate,
finance, join, control or participate in the ownership, management, operation,
financing, or control of, or (ii) with which he may be connected as an officer,
director, employee, partner, principal, agent, representative, consultant or
otherwise, or in connection with which he may use or permit his name to be used;
provided, however, that this provision shall not apply in respect of Section 5
of this Agreement after expiration of the time periods set forth therein.
4
7. Termination. This Agreement shall terminate prior to the expiration
-----------
of its term set forth in Section 1.1 above, upon the occurrence of any one of
the following events:
7.1 Disability. In the event that Employee becomes unable to perform his
----------
duties hereunder for a period of six consecutive months or otherwise is deemed
to be disabled within the meaning of the Company's then existing disability
benefit program, this Agreement may be terminated by the Company and the Company
shall have no further liability or obligation to Employee for compensation;
provided, however, that if the Employee becomes disabled during the employment
term, the Company shall pay to him or his legal representatives an amount equal
to the installment of his salary set forth in Section 1.3 hereof for the month
in which he becomes disabled which have been earned but not yet paid. Employee
agrees, in the event of any dispute under this Section 6.1, to submit to up to
three physical examinations by licensed physicians selected by the Employee and
the Company in any four month period. In the event of a disagreement among such
physicians, Employee and the Company agree to be bound by the concurring
conclusions of two such physicians. This Section shall be interpreted in
compliance with the Family Medical Leave Act to the extent that the provisions
of that law would apply.
7.2 Death. In the event that Employee dies during the Employment Term,
-----
the Company shall pay to his executors, legal representatives or administrators
an amount equal to the installment of his salary set forth in Section 1.3 hereof
for the month in which he dies, which have been earned but not yet paid and
thereafter except as otherwise provided in this Agreement, the Company shall
have no further liability or obligation hereunder to his executors, legal
representatives, administrators, heirs or assigns or any other person claiming
under or through him, provided, however, that Employee's estate or designated
beneficiaries shall be entitled to receive the payments described for such
recipients under any death benefit plan which may be in effect for executive-
level employees of the Company and in which Employee participated.
7.3 Termination by Company For Cause. Nothing in this Agreement shall be
--------------------------------
construed to prevent its termination by the Company at any time for "cause"
without prior notice. For purposes of this Agreement, "cause" shall mean the
failure of Employee to perform or observe any of the terms or provisions of this
Agreement or to comply fully with the lawful directives of the Members of the
Company, dishonesty, misconduct, conviction of a crime or otherwise causing
embarrassment to the Company and its public reputation, substance abuse,
misappropriation of funds, disparagement of the Company or failure to comply
with Company policy.
7.4 Termination by Either Party Without Cause. This Agreement may be
-----------------------------------------
terminated by either party for any reason whatsoever, by giving 30 days' prior
written notice of termination to the other party. If Employee is terminated
without cause pursuant to this Section 7.4, Employee shall continue to receive
compensation and benefits as provided in this Agreement.
7.5 Effect of Termination at Employee's Election. In the event of the
--------------------------------------------
termination of this Agreement by Employee prior to the completion of the
Employment Term, the Employee shall be entitled to the base compensation earned
prior to the date of termination as provided for in this
5
Agreement under Section 1.3, computed pro-rata up to and including the date of
termination. The Employee shall be entitled to no other compensation.
7.6 Effect of Termination at The Company's Election. In the event of the
-----------------------------------------------
termination of this Agreement by the Company for any reason other than for
cause, the Employee shall be entitled to the base compensation earned prior to
the date of termination as provided for in this Agreement, computed pro-rata up
to and including the date of termination plus a continued salary (at the then
current rate and) which shall terminate on the sooner of six months, the
remaining term under this Agreement, or at such time as the Employee has found
other employment comparable with Employee's employment with the Bank. Employee
shall use his best efforts to obtain such employment. Any amounts paid to
Employee pursuant to such new employment shall be deducted from any amounts owed
under the Section 3.6. In addition, if any employment of Employee is with a
competing Financial Institution in the Xxxxxxxxxx County metropolitan area)
Company's obligation under this Agreement shall immediately cease. The Employee
shall be entitled to no further compensation under this Agreement as of the date
of termination. In the event of termination of the Agreement by the Company for
cause, the Employee will be entitled to compensation earned to the date of
termination as provided for under Section 1.3.(a) computed pro-rata up to the
date of termination.
8. Survival. Notwithstanding the termination of employment under this
--------
Agreement for any reason, the Employee's obligations under Sections 3 and 5
hereof shall survive and remain in full force and effect for the periods therein
provided, and the provisions for equitable relief in Section 6 of the Agreement
shall continue in force.
9. Governing Law. This Agreement shall be governed by and interpreted
-------------
under the laws of the State of Maryland without giving effect to any conflict of
laws provisions.
10. Litigation Expenses. In the event of a lawsuit by either party to
-------------------
enforce the provisions of this Agreement, the prevailing party shall be entitled
to recover reasonable costs, expenses and attorney's fees from the other party.
Disputes arising under Section 7 of the Agreement shall be submitted to an
arbitrator (who is agreeable to both parties). The decision of the arbitrator
shall be binding on both parties and the fees (including legal fees) and cost
attributable to that arbitration process will be assessed as part of that
process by the arbitrator. Such arbitration shall be held in the Xxxxxxxxxx
County metropolitan area and shall be conducted by the American Arbitration
Association (or other mutually selected arbitrators) ("AAA") by an arbitrator
selected using the AAA's procedures.
11. Notices. All notices and other communications required or permitted
-------
hereunder or necessary or convenient in connection herewith shall be in writing
and shall be deemed to have been given when hand delivered or mailed by
registered or certified mail, as follows (provided that notice of change of
address shall be deemed given only when received);
6
If to the Bank, to: Xxxxxxx X. Xxxxx
0000 X. Xxxx Xxxxx
Xxxxx 000X
Xxxxxxxxx, Xxxxxxxx 00000
copy to: Xxxxx X. Xxxxxxxxxxx, Xx., Esquire
Ober, Kaler, Xxxxxx & Xxxxxxx
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
If to Employee, to: Xxxxxxx X. Xxxxx
8501 High Timber Court
Xxxxxxxx Xxxx, Xxxxxxxx 00000
or to such other names and addresses as the Bank or Employee, as the case may
be, shall designate by notice to each other person entitled to receive notices
in the manner specified in this Section.
12. Contents of Agreement; Amendment and Assignment.
-----------------------------------------------
12.1 This Agreement supersedes all prior agreements and sets forth the
entire understanding among the parties with respect to the subject matter hereof
and cannot be changed, modified, extended or terminated except upon written
amendment approved by the Board of Directors of the Bank.. Without limitation,
nothing in this Agreement shall be construed as giving Employee any right to be
retained in the employ of the Bank beyond the expiration of the Employment Term
and Employee specifically acknowledges that he shall be an employee-at-will of
the Bank thereafter, and thus subject to discharge by the Bank with or without
cause and without compensation of any nature unless a new Agreement is executed
by both parties (or employment is continued at will).
12.2 All of the terms and provisions of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective heirs,
executors, administrators, legal representatives, successors and assigns of the
parties, except that the duties and responsibilities of Employee hereunder are
of a personal nature and shall not be assignable or delegatable in whole or in
part by Employee.
13. Severability. If any provision of this Agreement or application
------------
thereof to anyone or under any circumstance is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect any other provision or application of this Agreement which can be given
effect without the invalid or unenforceable provision or application and shall
not invalidate or render unenforceable such provision or application in any
other jurisdiction.
14. Remedies Cumulative; No Waiver. No remedy conferred upon the parties
------------------------------
by this Agreement is intended to be exclusive of any other remedy, and each and
every remedy shall be cumulative and shall be in addition to any other remedy
given hereunder or now or hereafter existing
7
at law or in equity. No delay or omission by the parties in exercising any
right, remedy or power hereunder or existing at law or in equity shall be
construed as a waiver thereof, and any such right, remedy or power may be
exercised by the parties from time to time and as often as may be deemed
expedient or necessary by such party in its sole discretion.
15. Miscellaneous. All section headings are for convenience only. This
-------------
Agreement may be executed in several counterparts, each of which is an original.
It shall not be necessary in marking proof of this Agreement or any counterpart
to produce or account for any of the other counterparts.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement as of the date first above written.
Attest: HARBOR CAPITAL NATIONAL BANK
______________________ By:________________________________________
Secretary Name:
Title:
Witness:
______________________ ____________________________________________
Xxxxxxx X. Xxxxx
8
