STATE OF NORTH CAROLINA
COUNTY OF CATAWBA
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), made as of the 1st day of
December, 1999, by and between PEOPLES BANK, Newton, North Carolina, a North
Carolina banking institution (the "Bank"), and XXXX X. XXXXX (the "Employee")and
is joined in by PEOPLES BANCORP OF NORTH CAROLINA, INC., a North Carolina
corporation (the "Holding Company");
W I T N E S S E T H:
WHEREAS the Employee has heretofore been employed and currently is
rendering services to the Bank as President and Chief Executive Officer; and,
WHEREAS the Bank is a North Carolina banking corporation and the Holding
Company is a North Carolina bank holding company and the sole shareholder of the
Bank; and,
WHEREAS the Bank considers the continued availability of the Employee's
services to be important to the management and conduct of the Bank's and Holding
Company's business, and desires to secure for the Bank and Holding Company the
continued availability of the Employee's services; and,
WHEREAS the Employee is willing to make his services available to the Bank
on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto agree as follows:
1. Employment. The Employee is employed as the President and Chief
---------------
Executive Officer of the Bank. The Employee shall render administrative and
management services to the Bank, such as are customarily performed by persons
situated in a similar executive capacity. He shall promote the business of the
Bank and Holding Company and perform such other duties as shall from
time-to-time be reasonably described by the Board of Directors of the Bank (the
"Directors").
2. Compensation.
-----------------
A. Base Salary. The Bank shall pay the Employee during the term of
---------------
this Agreement a base salary at the rate of $167,306 per annum, payable in
cash in equal monthly installments or otherwise as agreed by the parties,
provided that the rate of such salary shall be reviewed by the Directors
not less often than annually. Such rate of salary, or increased rate of
salary, as the case may be, may be further increased (but not decreased)
from time-to-time in such amounts as the Directors, in their discretion,
may decide.
B. Management Incentive Plan. The Employee shall be entitled to
-----------------------------
participate in an equitable manner with other key management personnel of
the Bank in the Bank's management incentive plan adopted in 1998.
3. Discretionary Bonuses. The Employee shall be entitled to participate
--------------------------
in an equitable manner with all other key management personnel of the Bank in
discretionary bonuses authorized and declared by the Directors of the Bank. No
other compensation provided for in this Agreement shall be deemed a substitute
for the Employee's right to participate in such discretionary bonuses when and
as are declared by the Board of Directors.
4. Additional Benefits.
------------------------
A. Participation in Retirement and Medical Plan.
-------------------------------------------------
The Employee shall be entitled to participate in any plan of the
Bank relating to pension, profit sharing or other retirement
benefits and medical and disability coverage, or reimbursement
plans that the Bank may adopt for the benefit of its employees
subject to the eligibility rules of such plan.
B. Officer Benefits/Expenses. The Employee shall be
------------------------------
eligible to participate in any fringe benefits which may be or
become applicable to the Bank's executive employees, commensurate
with the responsibilities and functions to be performed by the
Employee under this Agreement. Additionally, the Employee shall
be entitled to such vacation and sick
leave as shall be established under uniform employee policies
promulgated by the Directors. The Bank shall reimburse the
Employee for all out-of-pocket reasonable and necessary business
expenses which the Employee shall incur in connection with his
services on behalf of the Bank.
Additionally, the Employee shall be entitled to four (4)
weeks vacation and sick leave as shall be established.
5. Term. The initial term of employment under this Agreement shall be
---------
for the period commencing December 1, 1999 and ending three (3) calendar years
after such date. At the end of each one-year period following such commencing
date, this Agreement shall automatically be extended for an additional one (1)
year period beyond the then-effective expiration date, unless written notice
from the Bank or the Employee is received sixty (60) days prior to an
anniversary date advising the other party that this Agreement shall not be
further extended.
6. Other Compensation. The Bank shall provide to the Employee an
-----------------------
automobile for use by the employee during his employment with the Bank. The
Employee shall select the make of the automobile, subject to the approval of the
Board of Directors, and the Employee shall assume and be responsible for all tax
consequences as same shall be determined by the accountants for the Bank with
regard to personal use, business use, and taxability of such benefit to the
employee. The Employee shall be compensated for maintenance, gas expense, and
other expenses associated with said automobile as same shall pertain to business
use only, and shall submit to the Bank a written summary with respect to the use
of said vehicle and the business expenses associated with same on a monthly
basis.
7. Loyalty/Non-Competition.
----------------------------
A. The Employee shall devote his full efforts and entire
business time to the performance of his duties under this
Agreement.
B. During the term of this Agreement, or any renewals or
extensions thereof, and for a period of one (1) year after
termination, the Employee shall not, within Catawba, Alexander,
Iredell or Lincoln Counties, North Carolina, directly or
indirectly, own, manage, operate, join, control or participate in
the
management, operation or control of or be employed by or
connected in any manner with any depository institution or
financial services business which competes with the Bank or the
Holding Company without the prior written consent of the Bank.
Notwithstanding the foregoing, the Employee shall be free without
such consent to purchase or hold as an investment or otherwise up
to 5% of the outstanding stock or other securities of any
corporation which has its securities publicly traded on any
recognized securities exchange or in any over-the-counter market.
The Employee shall hold in confidence all knowledge or
information of a confidential nature with respect to the business
of the Bank or the Holding Company, received by him during the
term of this Agreement, and will not disclose or make use of such
information without the prior written consent of the Bank.
The Employee acknowledges that it would not be possible to
ascertain the amount of monetary damages in the event of a breach
by the Employee under the provisions of this Paragraph 7. The
Employee agrees that in the event of the breach of this
Paragraph, injunctive relief enforcing the terms of this
Paragraph is an appropriate remedy.
The Bank and Employee further agree that in the event the
Bank shall terminate the employment of the Employee for cause or
should the Employee resign his employment during any period of
the term of his employment contract, then and in that event, the
non-competition provisions of this Agreement shall be applicable.
If, however, the Bank should terminate the employment of the
Employee without cause during the last year of said Agreement,
the non-competition provisions of this Agreement shall not be
applicable, and the Bank shall not proceed with respect to the
remedies as set forth above.
8. Standards. The Employee shall perform his duties under this Agreement
--------------
in accordance with such reasonable standards expected of employees with
comparable positions in comparable organizations and as may be established from
time-to-time by the Board of Directors. The Bank shall provide the Employee with
the working facilities and staff customary for similar executives and necessary
for him to perform his duties.
9. Termination and Termination Pay.
------------------------------------
A. The Employee's employment under this Agreement shall be
terminated upon the following occurrences:
(1) The death of the Employee during the term of this
Agreement, in which the Employee's estate shall be entitled
to receive the compensation due the Employee through the
last day of the calendar month in which his death shall have
occurred and for a period of three (3) months thereafter.
(2) The Employee's employment under this Agreement may
be terminated at any time by a majority vote of the
Directors or by the Employee upon sixty (60) days written
notice to the Employee or the Bank, as the case may be. Upon
such termination by the Employee or by the Directors "for
cause," the Employee shall be entitled to receive
compensation under this Agreement through the effective date
of such termination and such other benefits, if any, as may
be provided by the terms of other plans and programs of the
Bank in the event of termination.
Any such termination by the Directors other than termination
"for cause" shall not prejudice the Employee's right to
compensation or benefits under this Agreement. The Employee
shall have no right to receive compensation or benefits for
any period after termination "for cause." Termination "for
cause" shall include termination because of the Employee's
personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful
violation of any law, rule or regulation (other than traffic
violations or similar
offenses), or final cease and desist order, or any material
breach of any provision of this Agreement.
(3) If the Employee is removed or permanently
prohibited from participating in the conduct of the Bank's
affairs by any order issued by any regulatory agency all
obligations of the Bank under this Agreement shall terminate
as of the effective date of the order. The rights of the
Employee vested prior to the date of such order shall not be
affected.
(4) All obligations under this Agreement may be
terminated:
(a) by the Federal Deposit Insurance
Corporation at the time it enters into an
agreement to provide assistance to or on
behalf of the Bank under the authority
contained in its Rules and Regulations; and,
(b) by any regulatory or supervisory
agency which enters any orders to resolve
problems related to the operation of the
Bank, or when the Bank is determined to be in
an unsafe or unsound condition. Any rights of
the Employee vested prior to such time shall
not be affected by any such determination or
order.
10. Suspension of Employment.
-----------------------------
A. The suspension of the Employee from office or temporary prohibition
from participation by the Employee in the conduct of the affairs of the Bank
pursuant to notice served by any supervisory or regulatory agency, unless stayed
by appropriate proceedings, shall suspend, as of the date of such service, all
obligations of the Bank under the terms of this Agreement.
B. In the event the charges specified in a notice served as provided in
Subparagraph A of this Section shall be dismissed, the Bank shall:
(1) pay the Employee the compensation withheld from
such Employee pursuant to the suspension of the Bank's
obligation as required in Subparagraph A of this Section;
and,
(2) reinstate the obligations suspended as required in
Subparagraph A of this section.
11. Change in Control.
----------------------
A. In the event of a "Change in Control" (as defined in
Subparagraph (C) below), the term of employment under this Agreement
automatically shall be extended to a period of three (3) years
beginning on the date of the Change in Control, and the Bank or its
successor shall be bound by the terms of this Agreement and shall be
prohibited, during the remainder of such term, from:
(1) Assigning Employee any duties and/or
responsibilities that are inconsistent with his position,
duties, responsibilities or status at the time of the
Change in Control, or requiring that he report to any
person or body other than the Board of Directors of the
Bank and Holding Company; or
(2) Adjusting Employee's annual base salary rate
other than in accordance with the provisions of
Subparagraph (B) below; or
(3) Reducing in level, scope or coverage or
eliminating Employee's life insurance, medical or
hospitalization insurance, disability insurance, profit
sharing plans, stock option plans, stock purchase plans,
deferred compensation plans, management retention plans,
retirement plans, stock ownership plans or similar plans
or benefits being provided by the Bank
or the Holding Company to the Employee other than those
arising from the Bank's management incentive plan as of
the effective date of the Change in Control; or
(4) Transferring Employee to a location which is an
unreasonable distance from his current principal work
location, without the Employee's express written consent.
B. In the event of a Change in Control, the Employee's base
salary shall be adjusted to include an amount equal to the average
of the two previous years" bonuses arising from the Bank's
management incentive plan, and/or discretionary bonuses, if any, and
such adjusted base salary shall be increased by not less than six
percent (6%) annually beginning at the date of the Change in Control
and continuing each year for the three-year term thereafter.
C. For the purposes of this Agreement, the term "Change in
Control" shall mean any of the following events:
(1) a change in control of a nature that would be
required to be reported in response to Item 1 of the
Current Report on Form 8-K, as in effect on the date
hereof, pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); or
(2) such time as any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act), other than
a person who beneficially owned as of January 1, 1998,
more than 5% of the Bank's securities, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of
the Holding Company or Bank representing 20 percent or
more of the combined voting power of the outstanding
Common Stock of the Holding Company or Common Stock of the
Bank, as applicable; or
(3) individuals who constitute the Board or board of
directors of the Holding Company on the date hereof (the
"Incumbent Board" and "Incumbent Holding Company Board,"
respectively) cease for any reason to constitute at least
a majority thereof, provided that any person becoming a
director subsequent to the date hereof whose election was
approved by a vote of at least three-quarters of the
directors comprising the Incumbent Board or Incumbent
Holding Company Board, as applicable, or whose nomination
for election by the Bank's or Holding Company's
shareholders was approved by the Bank's or Holding
Company's Board of Directors or Nominating Committee, as
applicable, shall be considered as though he or she were a
member of the Incumbent Board or Incumbent Holding Company
Board, as applicable; or
(4) either the Holding Company or the Bank
consolidates or merges with or into another corporation,
association or entity or is otherwise reorganized, where
neither the Holding Company nor the Bank, respectively, is
the surviving corporation in such transaction; or
(5) all or substantially all of the assets of either
the Holding Company or the Bank are sold or otherwise
transferred to or are acquired by any other entity or
group.
Notwithstanding the other provisions of this Paragraph 11, a
transaction or event shall not be considered a Change in Control if,
prior to the consummation or occurrence of such transaction or
event, Employee, Bank and Holding Company agree in writing that the
same shall not be treated as a Change in Control for purposes of
this Agreement.
D. In the event any dispute shall arise between the Employee
and the Bank or Holding Company (or any successor) as to the terms
or interpretation of this Agreement, including this Paragraph 11,
whether instituted by formal legal proceedings or otherwise,
including any action taken by the Employee to enforce the terms of
this Paragraph 11 or in defending against any action taken by the
Holding Company or the Bank, the Bank shall reimburse the Employee
for all costs and expenses incurred in such proceedings or actions,
including attorney's fees, in the event the Employee prevails in any
such action.
12. Disability. If, by reason of physical or mental disability during the
---------------
term hereof, Employee is unable to carry out the normal and usual duties of his
employment hereunder, the Employee shall receive his full salary from the Bank
for up to twenty (20) working days for which he is unable to work. Medical
disability shall require a doctor's statement indicating the date the Employee
became disabled as well as a statement that he is medically able to return to
work before he can resume his duties. If, after thirty (30) consecutive days (1
month), he is still unable to return to work, he will be covered by the
disability insurance policy of the Bank. The disability insurance policy of the
Bank shall pay 66-2/3% of full salary to a maximum of $7,500.00 per month. In
the event of total disability, hospitalization insurance as carried by the Bank
for the Employee shall continue for two (2) years, or until the Employee
qualifies under Social Security Health Insurance. While disabled, the Employee
will keep his original date of employment and all seniority benefits for up to
twelve (12) weeks. Group insurance will be kept in force (Employee will continue
to pay for dependent insurance); however, if the Employee does not return to
work from medical leave after twelve (12) weeks, the Bank may recover the
premiums paid to maintain the coverage. A "return to work" occurs when an
Employee returns to work for at least thirty (30) days. Upon returning to work
from such disability, the Employee shall be restored to his previous position or
to an equivalent position with equivalent benefits, pay, and other conditions of
employment.
13. Successors and Assigns.
----------------------------
A. This Employment Agreement shall enure to the benefit of
and be binding upon any corporate or other successor of the Bank
which shall acquire, directly or indirectly, by conversion, merger,
consolidation, purchase or otherwise, all or substantially all of
the assets of the Bank.
B. Since the Bank is contracting for the unique and personal
skills of the Employee, the Employee shall be precluded from
assigning or delegating his rights or duties hereunder without first
obtaining the written consent of the Bank.
14. Amendments. No amendments or additions to this Agreement shall be
---------------
binding unless in writing by both parties, except as herein otherwise provided.
15. Applicable Law. This Agreement shall be governed by all respects
-------------------
whether as to validity, construction, capacity, performance or otherwise, by the
laws of the State of North Carolina, except to the extent that federal law shall
be deemed to apply.
16. Severability. The provisions of this Agreement shall be deemed
-----------------
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
17. Entire Agreement; Counterparts.
-----------------------------------
A. This Agreement constitutes the entire agreement between the
Employee and the Bank with respect to the subject matter hereof and
supersedes all prior agreements with respect thereto. This Agreement
may be executed in one or more counterparts, all of which taken
together shall constitute one and the same instrument.
B. This Agreement replaces the Agreement between the parties dated
February 22, 1994 and the Addendum to the original agreement and all
other agreements between the parties prior to the date hereof
respecting the subject matter hereof. Any and all prior agreements
shall be cancelled and have no further force or effect when this
Agreement becomes effective.
18. Notices. Any notice or other communication required or permitted
------------
under this Agreement shall be effective only if it is writing, delivered in
person or by reliable overnight courier service or deposited in the mail,
postage prepaid, return receipt requested and addressed as follows:
Address of the Bank: Peoples Bank, Xxxx Xxxxxx Xxx 000, Xxxxxx, Xxxxx
Xxxxxxxx, 00000.
Address of the Holding Company: Peoples Bancorp of North Carolina, Inc.,
Xxxx Xxxxxx Xxx 000, Xxxxxx, Xxxxx Xxxxxxxx, 00000.
Address(es) of the Employee: Xxxx X. Xxxxx, 0000 Xxxxxxxxx Xxxxxx Xxxx,
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000, with a duplicate copy to Xxxx X. Xxxxx,
X.X. Xxx 000, Xxxxxx, Xxxxx Xxxxxxxx, 00000.
Notices given in person or by overnight courier service shall be deemed
given when delivered to the address required by this section, and notices given
by mail shall be deemed given three (3) days after deposit in the mail. Any
party hereto may designate, by written notice to the other party in accordance
herewith, any other address to which notices addressed to him shall be sent.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first written.
PEOPLES BANK, a North Carolina banking
Corporation
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxxxx, Chairman
Board of Directors
/s/ Xxxx X. Xxxxx
-------------------------------------
Xxxx X. Xxxxx
The Foregoing Agreement is joined in and agreed to by Peoples Bancorp of North
Carolina, Inc.
PEOPLES BANCORP OF NORTH CAROLINA, INC.,
a North Carolina Corporation
by: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------------------
Xxxxxx X. Xxxxxxxxx, Chairman
Board of Directors
