Exhibit 10.1
THIS
EMPLOYMENT AGREEMENT IS SUBJECT TO ARBITRATION PURSUANT TO THE
SOUTH CAROLINA UNIFORM ARBITRATION ACT, SECTION 15-48-10
ET SEQ., AS AMENDED.
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT
AGREEMENT (this “ Agreement ”) is made as of the
28th day of May, 2008 (the “ Effective Date
”) by and between Coastal Carolina Bancshares, Inc., a
South Carolina corporation (the “ Company ”),
and Michael D. Owens (“ Executive ”). Upon the
formation of the Company’s proposed national bank association
subsidiary (the “Bank”), the Bank shall become party
hereto pursuant to the provisions set forth herein. The
Company and the Bank are collectively referred to herein as
“Employer.”
W I T N
E S S E T H
WHEREAS, the
Company as successor by merger to Coastal Carolina Dream Team, LLC,
and the Executive are parties to a Consulting and Employment
Agreement dated November 1, 2007 (the “Current
Agreement”); and
WHEREAS, the
Company and the Executive desire to terminate the Current Agreement
and replace it with this Agreement which shall amend and restate in
its entirety the Current Agreement.
NOW THEREFORE, in
consideration of the mutual covenants and agreements set forth
herein and intending to be legally bound hereby, the parties agree
as follows:
1.
Position and Duties. Employer agrees to employ
Executive, and Executive agrees to serve, as President and Chief
Executive Officer (“CEO”) of the Company and, upon its
formation, of the Bank.
Executive
acknowledges that the business of the Bank shall be the operation
of a depository financial institution, including, without
limitation, the solicitation and acceptance of deposits of money
and commercial paper, the solicitation and funding of loans, and
the provision of other banking services, and any other related
business engaged in by the Bank or any business entity controlled
by, controlling or under common control with the Bank.
Executive
acknowledges that the business of the Company shall be to own the
Bank and to provide resources therefor, and to own such other
subsidiaries as the Company properly forms or acquires from time to
time, if any.
Executive will
have such executive or managerial duties for the Company and the
Bank as are specified in the then-current by-laws, or by the Board
of Directors, of the respective organization. Further, Executive
agrees to serve, without additional compensation, if elected, in
any other senior executive position of the Company or
the
Bank that may be
reasonably required of him, including as a Director of the Company
and the Bank, and as an Officer or Director or both of any
subsidiary or affiliate of the Company or the Bank in accordance
with Section 7 below.
Executive, shall
at all times, comply with all laws, rules and regulations
which maybe applicable to the Bank and/or the Company.
Executive shall
devote his full-time and best efforts to his employment with the
Employer and shall apply substantially that degree of skill and
diligence in rendering services to the Company, its subsidiaries
and the Bank as would be applied by a person of ordinary prudence
and comparable experience under similar circumstances. In
connection therewith, Executive shall report to and be subject to
the direction of the Company’s, and after its formation the
Bank’s, Board of Directors. Notwithstanding the
foregoing, Executive may devote a reasonable amount of his time to
his personal investments and business affairs (including service as
a director of unaffiliated companies) and to civic and charitable
activities; provided, however, Executive shall not accept any
position as a director of any unaffiliated for-profit business
organization without the prior approval of the Company’s
Board of Directors, which approval shall not be unreasonably
withheld.
2.
Compensation.
(a)
Annual Salary . Executive shall be entitled to receive
an annual base salary of $130,000 per year until the date on which
the organizers receive preliminary approval from the OCC for a
charter for the Bank at which time Executive’s salary shall
be increased to $180,000 a year (the “ Annual Salary
”). Executive’s Annual Salary shall be payable in
accordance with the Employer’s instituted payroll practice,
prorated for any partial employment period. Such amount shall be
allocated between the Company and the Bank based on the mutual
consent of the Board of Directors of the Company (the
“Company Board”) and the Board of Directors of the Bank
(the “Bank Board”). The Annual Salary may be increased
from time to time by either or both Boards, in their sole
discretion, but shall not be decreased without the written consent
of Executive. The Company Board, in exercising its discretion,
shall consider Executive’s annual performance in light of the
specific goals and objectives for Executive which the Company and
Bank Boards shall establish annually in writing, after consultation
with Executive.
(b)
Performance Bonus . Commencing with the 2008 calendar year
and provided the Bank has received all necessary regulatory
approvals to commence operations as a banking institution,
Executive shall be eligible to receive such annual (January 1
– December 31 and prorated for any partial calendar
year) performance bonuses as the Company and Bank Boards determine
is warranted by Executive’s performance in light of
Employer’s performance goals and objectives under a
to-be-established bonus plan (the “Bonus Plan”) which
may include, for illustrative purposes only, measures of such items
as internal controls, loan documentation, credit underwriting,
interest rate exposure, asset growth, asset quality, earnings,
examination and audit results and employee and customer retention.
Such goals and objectives (the “ Performance
Goals ”) are to be established by Executive and the
Company and Bank Boards annually prior to the first day of the
applicable annual period. If such Performance Goals for the year
are met at the threshold level, Executive will be entitled to a
bonus equal to 20% of his Annual Salary; if the Performance Goals
for the year are met at the target level, Executive will
be
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entitled to a bonus
equal to 30% of his Annual Salary; and if the Performance Goals are
met at the maximum level, Executive will be entitled to a bonus
equal to 50% of his Annual Salary. Performance Goals and the
threshold, target and maximum levels will be established each year,
in accordance with the provisions of the Bonus Plan. All
performance bonuses shall be payable in accordance with the terms
of the Bonus Plan. The payment of any bonus to Executive pursuant
to a Bonus Plan will be contingent upon the following:
(i) prior to the
award of any bonus to Executive, the Bank Board shall consider, and
document its findings in the minutes of the meeting wherein the
issue was considered, Executive’s performance in light of the
Performance Goals as established by Executive and the Company and
Bank Boards as set forth above;
(ii) the most
recent Uniform Financial Institution Rating of the Bank, known as
the CAMEL Rating, shall be not less favorable than a
“2” except in the event a less favorable rating was
outside of the Executive’s control and supervision;
and
(iii) the Bank (if
it has been capitalized) shall be “well capitalized” as
defined under regulations promulgated by the FDIC pursuant to the
Federal Deposit Insurance Corporation Improvement Act of
1991.
(c) Stock
Options; Warrants .
(i) The Company
shall grant to Executive on the date the Bank opens for business
stock options (“Options”) in an amount equal to 3.3% of
the number of shares of the Company’s common stock sold in
the Company’s initial stock offering. The Options shall vest
in five (5) equal annual installments commencing on the first
anniversary of the date of grant.
(ii) If Executive
purchases shares of the Company’s common stock in the
Company’s initial stock offering, and if the Company grants
to its founders and organizers warrants to purchase additional
shares of the Company’s common stock, the Company shall also
grant to Executive warrants to acquire additional shares of the
Company’s stock on the same basis as other similarly situated
organizers.
(d)
Equity Based Compensation. In each year of
employment, Executive shall be eligible to receive appropriate
awards of stock options, restricted stock and/or other equity based
compensation under such terms and conditions as determined by the
Company Board, in its sole discretion.
3.
Fringe Benefits, Vacation Time, Expenses and Perquisites.
(a)
Benefit Plan Participation . Employer anticipates it will
establish and implement benefit plans and programs that are
warranted by the Employer’s performance, and that will
contain such terms and conditions as are selected by the Bank
Board, in its discretion. Subject thereto, Executive shall be
eligible to participate in or receive benefits under all corporate
employment benefit plans made available by Employer to its
executives and key management employees including, but not limited
to, any salary continuation, life insurance, supplemental executive
retirement, profit sharing,
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savings, disability
insurance, medical or health-and-accident plan or arrangement,
subject to and on a basis consistent with the terms, conditions and
overall administration of such plans and arrangements.
(b)
Vacation Time Allowances . Executive shall be entitled each
calendar year to twenty (20) business days of vacation, prorated
for any partial year, during which time Executive’s
compensation will continue to be paid. Each year, Executive
shall take ten (10) of the twenty (20) vacation days
consecutively. Unused vacation days shall not accumulate from year
to year.
(c)
Business Expense Reimbursement . Commencing on the
Employment Date, Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by him (in
accordance with the policies and procedures established by
Employer) in performing services hereunder, provided that Executive
properly accounts therefor in accordance with corporate
policy.
(d)
Automobile Allowance . Employer shall provide to Executive a
vehicle for Executive’s use during his employment and will
pay, or reimburse the Executive, for all taxes, gasoline, insurance
and maintenance related to said vehicle. Executive shall use
said vehicle for Employer business purposes and
activities.
(e) Club
Dues . Employer will pay all fees and dues for
Executive’s use of an Employer owned membership in the Dunes
Club.
(f) Cell
Phone . Employer will provide Executive with a cell phone and
pay the monthly fees in connection therewith.
(g)
Moving Expenses . Employer will reimburse Executive for all
reasonable insured moving expenses, based on the lower of two
quotes from national moving companies, related to Executive’s
move of his family to the Myrtle Beach area and any reasonably
necessary expenses of storage of home furnishings for a period not
to exceed six months. Additionally, Employer shall pay the real
estate commission and the closing costs for the sale of
Executive’s existing home in Georgia.
(h)
Health Insurance. Executive, upon being eligible, may
participate in the Bank health care plan and other related
benefits. Until a health insurance group policy is available to
Bank employees, the Employer shall reimburse Executive for his
monthly COBRA payments that he submits to an insurance company for
continuing health insurance coverage.
4.
Confidential Information and Restrictive Covenants. Executive
acknowledges that he has performed services or will perform
services hereunder which directly affect the Employer’s
business. Accordingly, the parties deem it necessary to enter into
the protective provisions set forth below, the terms and conditions
of which have been negotiated by and between the parties
hereto.
(a)
Non-Competition . Executive expressly covenants and agrees
that during the Term (as such term is defined in Section 8
below) and for a period of eighteen (18) full months after
termination of his association with the Employer, for any reason
other than
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pursuant to subsection
(d), (e), (g), or (h) of Section 9 hereof, Executive
shall not directly or indirectly, either as a principal, agent,
employee, employer, stockholder, organizer, director, co-partner or
in any other individual or representative capacity whatsoever,
engage in the banking and financial services business, which
includes, but it is not limited to, the commercial banking,
insurance agency, wealth management, trust, savings and loan, and
mortgage banking businesses, and any other business in which the
Employer or any of its subsidiaries is engaged, or efforts to
organize a banking or other financial services business anywhere
within Horry, Georgetown, Florence, and Williamsburg Counties in
South Carolina and Brunswick and Pender Counties in North Carolina;
provided, however, that Executive shall not be prohibited hereunder
from passively investing in a business similar to the banking and
other financial business activities of the Employer or any of its
subsidiaries, if such investment is limited to less than one
percent of the capital stock or other securities of any such
corporation or other entity, except this restriction is not
applicable to Employee’s current holdings in Coastal
Bankshares, Inc.
(b)
Non-Solicitation of Employees . Executive agrees that during
the Term and for a period of eighteen (18) full months thereafter
he will (i) not solicit, entice, persuade or induce any other
employee of the Employer or any of its subsidiaries to leave the
employ or association of such entity, and (ii) refrain from
recruiting or hiring, or attempting to recruit or hire, directly or
by assisting others, any individual who is employed by the Employer
or any of its subsidiaries at the time of the attempted recruiting
or hiring.
(c)
Non-Solicitation of Customers . Executive agrees that during
the Term and for a period of eighteen (18) full months thereafter,
he will not, directly or indirectly, solicit any business from any
of the customers of the Employer or any of its subsidiaries, or
actively seek prospective customers of the Employer or any of its
subsidiaries, with whom Executive had material direct or indirect
contact within the last twenty-four (24) months of
Executive’s association hereunder for purposes of providing
products or services that are similar to or competitive with those
provided by the Employer or any of its subsidiaries, if the
Employer or any of its subsidiaries is also then still engaged in
such business.
5.
Unauthorized Disclosure. Executive shall not, without the
written consent of the Company Board or the Bank Board, as
applicable, or a person authorized thereby, knowingly disclose to
any person, other than an employee of Employer or a person to whom
disclosure is reasonably necessary or appropriate in connection
with the performance by Executive of his duties hereunder or as
required by law, any material confidential information obtained by
him while in the employ of Employer with respect to any of
Employer’s services, products, improvements, formulas,
designs or styles, processes, customers, methods of distribution or
any business practices the disclosure of which he knows or
reasonably should know will or is likely to be damaging to
Employer; provided, however, that confidential information shall
not include any information known generally to the public (other
than as a result of unauthorized disclosure by Executive) or any
information of a type not otherwise considered confidential by
persons engaged in the same business or a business similar to that
conducted by Employer.
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The covenants
contained in this Section 5 shall survive the termination of
Executive’s employment hereunder for any reason for a period
of two years; provided, however, that with respect to those items
of confidential information which constitute a trade secret under
applicable law, Executive’s obligations of confidentiality
and non-disclosure as set forth in this Section 5 shall
continue to survive after said two-year period to the greatest
extent permitted by applicable law. These rights of Employer are in
addition to those rights Employer has under the common law or
applicable statutes for the protection of trade secrets.
6.
Injunctive Relief. It is understood and agreed by the
parties hereto that the services to be rendered by Executive
hereunder are of a special, unique, extraordinary and intellectual
character, which gives them a peculiar value, the loss of which may
not be reasonably or adequately compensated in damages, and
additionally that a breach by Executive of the covenants set out in
Section 4 and 5 of this Agreement will cause Employer great
and irreparable injury and damage. Executive hereby expressly
agrees that Employer shall be entitled to the remedies of
injunction, specific performance and other equitable relief to
prevent a breach of Section 4 or 5 of this Agreement by
Executive. This provision shall not, however, be construed as a
waiver of any of the remedies which Employer may have for damages
or otherwise.
7.
Subsidiaries . It is understood and agreed by the
parties hereto that, at the election and direction of Employer and
without modification of the terms and provisions hereof, Executive
shall also serve as an executive officer or director or both of any
one or more subsidiaries of the Company or the Bank, when and as so
determined by Employer.
8.
Term of Employment . Executive’s employment under
this Agreement shall be for a term commencing on the Effective Date
and ending on the date 36 months after the date the Bank first
opens for business (the “Opening Date”), unless sooner
terminated in accordance with the provisions of this
Agreement. On the second anniversary of the Opening Date and
on each subsequent anniversary date of the Opening Date, this
Agreement and Executive’s term of employment hereunder shall
be extended for an additional one-year period beyond the then
effective expiration date, provided that the Company Board and the
Bank Board each determines, in duly adopted resolutions, that the
performance of Executive has met with the such Board’s
requirements and standards, and that this Agreement shall be
extended. Such period of employment, including, as extended, if
applicable, is hereinafter referred to as the
“Term.”
9.
Termination of Employment.
(a)
General; Termination Upon Death . Upon termination of
Executive’s employment for any reason, Executive or, in the
event of Executive’s death, Executive’s estate, shall
be entitled to Executi
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