EXHIBIT 10.2
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement") is made
and entered into as of November 17, 2008, by and among the Citizens South Bank
(the "Bank"), a federally chartered savings bank and a wholly-owned subsidiary
of the Citizens South Banking Corporation (the "Company"), and James Louis
Brewer (the "Executive").
WHEREAS, the Executive is currently employed as a Senior Vice President of
the Bank, pursuant to an employment agreement between the Bank and the Executive
originally entered into as of September 1, 2007 (the "Original Agreement");
WHEREAS, the Bank desires to assure itself of the continued services of
Executive and in consideration for such continued services is willing to
establish minimum severance benefits for the Executive in the event of a
termination of employment;
WHEREAS, the Bank desires to amend and restate the Original Agreement in
order to make changes to comply with Section 409A of the Internal Revenue Code
of 1986, as amended (the "Code"), as well as certain other changes;
WHEREAS, the Bank desires to ensure that the Bank is assured of the
continued availability of the Executive's services as provided in this
Agreement;
WHEREAS, the Executive is willing to serve the Bank on the terms and
conditions hereinafter set forth; and
NOW THEREFORE, in consideration of these premises, the mutual covenants
contained herein, and other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows.
ARTICLE 1
EMPLOYMENT
The Bank hereby employs the Executive as Senior Vice President in
accordance with the terms and conditions of this Agreement and for the period
stated in Article 3. The Executive hereby accepts employment in accordance with
the terms and conditions of this Agreement, effective on the date first written
above (the "Effective Date") and for the period stated in Article 3. The
Executive also agrees to serve as an officer or director of any subsidiary or
affiliate of the Bank, if elected. For purposes of this Agreement, the term
"affiliate" means any entity that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with, the
Bank.
ARTICLE 2
DUTIES
As Senior Vice President of the Bank, the Executive shall serve under the
direction of the Bank's President and Chief Executive Officer ("CEO"), and the
Bank's Board of Directors (the "Board"). The Executive shall report directly to
the Executive Vice President, Commercial Banking Group, or such other executive
officer as directed by the President and CEO. He shall serve the Bank
faithfully, diligently, competently, and to the best of his ability, and he
shall exclusively devote his full time, energy, and attention to the business of
the Bank and to the promotion of the Bank's interests throughout the term of
this Agreement. Without the written consent of the President and CEO, the
Executive shall not render services to or for any person, firm, corporation, or
other entity or organization in exchange for compensation, regardless of the
form in which such compensation is paid and regardless of whether it is paid
directly or indirectly to the Executive. Nothing in this Article 2 shall prevent
the Executive from managing his personal investments and affairs, provided that
doing so does not interfere with the proper performance of his duties and
responsibilities with the Bank.
ARTICLE 3
TERM OF EMPLOYMENT
The term of this Agreement shall commence as of the date first above
written and shall expire on September 1, 2010.
ARTICLE 4
COMPENSATION AND OTHER BENEFITS
4.1 BASE SALARY. In consideration of the Executive's performance of his
obligations under this Agreement, the Bank shall pay or cause to be paid to the
Executive a salary at the annual rate of not less than $135,000, payable in such
installments as employees in general are paid. The Executive's salary may be
increased but may not be reduced without his written consent. It is anticipated
that the Executive's salary will be increased annually in conjunction with his
annual performance review. The Executive's salary, as the same may be increased
from time to time, is referred to in this Agreement as the "Base Salary."
4.2 BENEFIT PLANS AND PERQUISITES. The Executive shall be entitled
throughout the term of this Agreement to participate in any and all officer or
employee compensation, bonus, incentive, and benefit plans in effect from time
to time and available to employees and officers in general (on such terms as
such plans are made available to employees and officers), including, without
limitation, plans providing pension, medical, dental, disability, and group life
benefits, including the Bank's 401(k) Plan, and to receive any and all other
fringe benefits provided from time to time, provided that the Executive
satisfies the eligibility requirements for any such plans or benefits.
4.3 VACATION. The Executive shall be entitled to paid annual vacation and
sick leave in accordance with the policies established from time to time by the
Bank. The Executive shall not be entitled to any additional compensation for
failure to use allotted vacation or sick leave, nor shall the Executive be
entitled to accumulate unused sick leave or vacation days from one year to the
next, unless permitted under the policies of the Bank then in effect.
4.4 INDEMNIFICATION.
(a) The Bank shall indemnify Executive to the fullest extent permitted
against all expenses and liabilities reasonably incurred by him in connection
with or arising out of any action, suit or proceeding in which he may be
involved by reason of his having been an officer of the Bank (whether or not he
continues to be an officer at the time of incurring such expenses or
liabilities) such expenses and liabilities to include, but not be limited to,
judgments, court costs and attorneys' fees and the cost of reasonable
settlements (such settlements must be approved by the Board), provided that the
Bank shall not be required to indemnify or reimburse Executive for legal
expenses or liabilities incurred in connection with an action, suit or
proceeding arising from any illegal or fraudulent act committed by Executive.
Any such indemnification shall be made consistent with Section 545.121 of the
Office of Thrift Supervision ("OTS") Regulations and Section 18(k) of the
Federal Deposit Insurance Act, 12 U.S.C. ss. 1828(k), and the regulations issued
thereunder in 12 C.F.R. Part 359.
(b) No indemnification shall be made unless the Bank gives the OTS at least
60 days' notice of its intention to make such indemnification. Such notice shall
state the facts on which the action arose, the terms of any settlement, and any
disposition of the action by a court. Such notice, a copy thereof, and a
certified copy of the resolution containing the required determination by the
Board, and shall be sent to the regional director of the OTS, who shall promptly
acknowledge receipt thereof. The notice period shall run from the date of such
receipt. No such indemnification shall be made if the OTS advises the Bank in
writing within such notice period, of its objection thereto.
ARTICLE 5
TERMINATION OF EMPLOYMENT
5.1 TERMINATION BY THE EMPLOYER.
(a) Death or Disability. The Executive's employment shall terminate
automatically and without further obligation on the date of the Executive's
death (other than the payment of Base Salary through the date of death).
The Bank may terminate this Agreement if the Executive is disabled. For
purposes of this Agreement, the Executive shall be deemed to be "disabled" if
the Executive: (i) is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment that can be
expected to result in death, or last for a continuous period of not less than 12
months; (ii) by reason of any medically determinable physical or mental
impairment that can be expected to result in death, or last for a continuous
period of not less than 12 months, the Executive is receiving income replacement
benefits for a period of not less than three months under an accident and health
plan covering employees of the Bank; or (iii) is determined to be totally
disabled by the Social Security Administration. The Executive shall be entitled
to receive benefits under any short or long-term disability plan maintained by
the Bank.
(b) Termination Without Cause. With written notice to the Executive thirty
(30) days in advance, the Bank may terminate the Executive's employment for any
reason and without Cause. If requested by the Bank in the aforementioned notice,
upon receipt of the notice Executive shall refrain from performing services at
the offices of the Bank, and/or refrain from acting or holding himself out to
the public as acting on behalf of the Bank (and any affiliates thereof).
Notwithstanding the foregoing, if Executive is requested to refrain from
providing any further services as outlined in the preceding sentence, he shall
nevertheless be entitled to receive his Base Salary and all benefits previously
provided him for the duration of the thirty day notice period.
(c) Termination With Cause. Effective on the date on which termination
notice is given to the Executive and without the requirement of advance notice
to the Executive, the Bank may terminate the Executive's employment with Cause.
For purposes of this Agreement, "Cause" means the Executive's personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving
personal profit, material breach of the Bank's Code of Ethics, material
violation of the Sarbanes-Oxley requirements for officers of public companies
that in the reasonable opinion of the CEO or the Board will likely cause
substantial financial harm or substantial injury to the reputation of the Bank,
willfully engaging in actions that in the reasonable opinion of the CEO or the
Board will likely cause substantial financial harm or substantial injury to the
business reputation of the Bank, intentional failure to perform stated duties,
willful violation of any law, rule or regulation (other than routine traffic
violations or similar offenses) or final cease-and-desist order, or material
breach of any provision of the contract.
5.2 TERMINATION BY THE EXECUTIVE. The Executive may terminate his
employment with written notice to the Bank thirty (30) days in advance, whether
with or without Good Reason. If the Executive terminates with Good Reason, the
termination will take effect at the conclusion of the 30-day period unless the
event or circumstance constituting Good Reason is cured by the Bank or unless
the notice of termination for Good Reason is revoked by the Executive within the
30-day period. For purposes of this Agreement, "Good Reason" means the
occurrence of any of the following events:
(a) REDUCED BASE SALARY OR BENEFITS: a material reduction in the benefits
and perquisites, including a reduction in Base Salary, being provided to
Executive relative to those being provided as of the Effective Date (except for
any reduction that is part of a reduction in pay or benefits that is generally
applicable to officers or employees),
(b) REDUCED RESPONSIBILITIES OR STATUS: assignment to the Executive of
duties that are materially inconsistent with the Executive's position as Senior
Vice President,
(c) MATERIAL BREACH: a material breach of this Agreement by the Bank that
is not corrected within thirty (30) days following notice from Executive, and
(d) RELOCATION OF THE EXECUTIVE: requiring the Executive to change his
principal work location, to any location that is more than fifty (50) miles from
the location on the date of this Agreement.
5.3 NOTICE. Any purported termination by the Bank or by the Executive shall
be communicated by written notice of termination to the other. The notice must
state the specific termination provision of this Agreement relied upon. Except
for termination for Cause, which becomes effective upon receipt by Executive of
the notice, a termination of employment shall become effective 30 days after
receipt of the notice. If termination is for Cause or with Good Reason, the
notice must state in reasonable detail the facts and circumstances forming the
basis for termination.
ARTICLE 6
COMPENSATION AND BENEFITS AFTER TERMINATION
6.1 CAUSE. If the Executive's employment terminates for Cause, the
Executive shall receive the Base Salary to which he was entitled through the
date on which termination becomes effective and any other benefits that may be
available to him under the Bank's benefit plans and policies in effect on the
date of termination. Executive shall not be entitled to any further payments or
benefits.
6.2 TERMINATION BY THE EXECUTIVE OTHER THAN FOR GOOD REASON. If the
Executive terminates employment other than for Good Reason, the Executive shall
receive the Base Salary to which he is entitled, and any other benefits that may
be available to him under the Bank's benefit plans and policies, through the
date on which his termination becomes effective.
6.3 CONTINUED BASE SALARY IN THE CASE OF TERMINATION BECAUSE OF DISABILITY.
If the Executive's employment terminates because of disability, the Executive
shall receive the benefits provided under any disability program sponsored by
the Bank. To the extent that such benefits are less than Executive's Base
Salary, the Bank shall pay the Executive an amount equal to the difference
between such disability plan benefits and the amount of Executive's Base Salary
for the remaining term of this Agreement. Any payments required hereunder shall
commence within thirty (30) days from the Executive's termination due to
disability and be payable in semi-monthly installments.
6.4 TERMINATION BY THE BANK WITHOUT CAUSE AND TERMINATION BY EXECUTIVE FOR
GOOD REASON OTHER THAN FOLLOWING A CHANGE IN CONTROL. If the Bank terminates the
Executive's employment without Cause or if the Executive terminates employment
for Good Reason, the Executive shall (i) continue to receive his Base Salary and
other employee benefits through the date of the termination, (ii) receive a lump
sum cash payment from the Bank equal to one-half of the Base Salary in effect
immediately prior to the notice of termination, which payment shall be made by
the Bank no later than the date of termination, or in the event the Executive is
a Specified Employee (within the meaning of Treasury Regulations
ss.1.409A-1(i)), and to the extent necessary to avoid penalties under Code
Section 409A, payment shall be made to the Executive on the first day of the
seventh month following the date of termination, and (iii) continue to receive
life insurance and non-taxable medical and dental coverage, substantially
identical to the coverage maintained by the Bank for the Executive immediately
prior to his termination (except to the extent such coverage is changed in
application to all employees or officers), which coverage shall continue for a
period of six (6) months following the date of termination.
The Bank and the Executive acknowledge and agree that the compensation and
benefits under this Section 6.4 shall not apply if the Bank terminates the
Executive's employment without Cause or if the Executive terminates employment
for Good Reason, in either case as of or following a Change in Control, as
provided in Section 7.
6.5 SEPARATION FROM SERVICE. For purposes of Section 6.4, termination by
the Bank without Cause and the Executive's termination of employment for Good
Reason as used herein shall be construed to require a "Separation from Service"
as defined in Code Section 409A and the Treasury Regulations promulgated
thereunder, provided, however, that the Bank and the Executive reasonably
anticipate that the level of bona fide services the Executive would perform
after termination would permanently decrease to a level that is less than 50% of
the average level of bona fide services performed (whether as an employee or an
independent contractor) over the immediately preceding 36-month period.
ARTICLE 7
CHANGE IN CONTROL BENEFITS
7.1 CHANGE IN CONTROL TERMINATION BENEFITS.
(a) TERMINATION OF EXECUTIVE OR THE EXECUTIVE'S VOLUNTARY RESIGNATION FROM
THE BANK'S EMPLOY FOR ANY REASON AFTER A CHANGE IN CONTROL. If a Change in
Control occurs during the term of this Agreement, the Executive shall be
entitled to the lump sum cash payment specified in paragraph (b) and the
benefits provided in (c) below if the Executive's employment is involuntarily
terminated by the Bank without Cause at any time after the Change in Control or
if the Executive voluntarily resigns from employment for any reason at any time
after the Change in Control.
(b) LUMP SUM CASH PAYMENT. the Bank shall make or cause to be made a lump
sum cash payment to the Executive in an amount equal to the greater of (i) the
Base Salary in effect immediately prior to the Change in Control, or (ii) the
Base Salary in effect immediately prior to the termination of employment. The
payment required under this paragraph (b) is payable no later than five (5)
BUSINESS DAYS AFTER THE EXECUTIVE'S EMPLOYMENT terminates, or in the event the
Executive is a Specified Employee (within the meaning of Treasury Regulations
ss.1.409A-1(i)), and to the extent necessary to avoid penalties under Code
Section 409A, payment shall be made to the Executive on the first day of the
seventh month after the Executive's employment terminates.
(c) INSURANCE COVERAGE. Executive shall be entitled to continued life
insurance and non-taxable medical and dental coverage, substantially identical
to the coverage maintained by the Bank (or its successor) for Executive
immediately prior to his termination (except to the extent such coverage is
changed in application to all employees or officers), which coverage shall
continue for a period of twelve (12) months following the effective date of
termination.
(d) SEPARATION FROM SERVICE. For purposes of Section 7.1, the Executive's
termination of employment following a Change in Control shall be construed to
require a "Separation from Service" as defined in Code Section 409A and the
Treasury Regulations promulgated thereunder, provided, however, that the Bank
and the Executive reasonably anticipate that the level of bona fide services the
Executive would perform after termination would permanently decrease to a level
that is less than 50% of the average level of bona fide services performed
(whether as an employee or an independent contractor) over the immediately
preceding 36-month period.
7.2 DEFINITION OF CHANGE IN CONTROL. For purposes of this Agreement,
"Change in Control" means any one of the following events occurs:
(a) CHANGE IN OWNERSHIP OF THE COMPANY OR THE BANK. A change in the
ownership of the Company or the Bank (collectively, as applicable, the
"Employers") shall occur on the date that any one person, or more than one
person acting as a group (as defined in Treasury Regulation Section
1.409A-3(i)(5)(v)(B)), acquires ownership of stock of the Employers that,
together with stock held by such person or group, constitutes more than 50
percent of the total fair market value or total voting power of the stock of the
Employers. However, if any one person or more than one person acting as a group,
is considered to own more than 50 percent of the total fair market value or
total voting power of the stock of the Employers, the acquisition of additional
stock by the same person or persons is not considered to cause a change in the
ownership of the Employers (or to cause a change in the effective control of the
Employers (within the meaning of paragraph (b) below). An increase in the
percentage of stock owned by any one person, or persons acting as a group, as a
result of a transaction in which the corporation acquires its stock in exchange
for property will be treated as an acquisition of stock for purposes of this
section. This paragraph (a) applies only when there is a transfer of stock of a
corporation (or issuance of stock of a corporation) and stock in such
corporation remains outstanding after the transaction
(b) CHANGE IN THE EFFECTIVE CONTROL OF THE COMPANY OR THE BANK. A change in
the effective control of the Employers shall occur on the date that either (i)
any one person, or more than one person acting as a group (as defined in
Treasury Regulation Section 1.409A-3(i)(5)(v)(B)), acquires (or has acquired
during the 12-month period ending on the date of the most recent acquisition by
such person or persons) ownership of stock of the corporation possessing 30
percent or more of the total voting power of the stock of such corporation; or
(ii) a majority of members of the corporation's board of directors is replaced
during any 12-month period by directors whose appointment or election is not
endorsed by a majority of the members of the corporation's board of directors
prior to the date of the appointment or election, provided that for purposes of
this paragraph (b)(ii), the term corporation refers solely to a corporation for
which no other corporation is a majority shareholder. In the absence of an event
described in paragraph (i) or (ii), a change in the effective control of a
corporation will not have occurred. If any one person, or more than one person
acting as a group, is considered to effectively control a corporation (within
the meaning of this paragraph (b)), the acquisition of additional control of the
corporation by the same person or persons is not considered to cause a change in
the effective control of the corporation (or to cause a change in the ownership
of the corporation within the meaning of paragraph (a)). Persons will not be
considered to be acting as a group solely because they purchase or own stock of
the same corporation at the same time, or as a result of the same public
offering.
(c) CHANGE IN THE OWNERSHIP OF A SUBSTANTIAL PORTION OF THE COMPANY'S OR
BANK'S ASSETS. A change in the ownership of a substantial portion of the
Employer's assets shall occur on the date that any one person, or more than one
person acting as a group (as defined in Treasury Regulation Section
1.409A-3(i)(5)(vii)(C)), acquires (or has acquired during the 12-month period
ending on the date of the most recent acquisition by such person or persons)
assets from the corporation that have a total gross fair market value equal to
or more than 40% of the total gross fair market value of all of the assets of
the corporation immediately prior to such acquisition or acquisitions. For this
purpose, gross fair market value means the value of the assets of the
corporation, or the value of the assets being disposed of, determined without
regard to any liabilities associated with such assets. There is no Change in
Control under this paragraph (c) when there is a transfer to an entity that is
controlled by the shareholders of the transferring corporation immediately after
the transfer.
Each of the subparagraphs (a) through (c) of this Section shall be
construed and interpreted consistent with the requirements of Code Section 409A
and any Treasury Regulations or other guidance issued thereunder.
7.3 NO MULTIPLE SEVERANCE PAYMENTS. If the Executive receives payment under
Section 7.1 he shall not be entitled to any additional severance benefits under
Section 6.4 of this Agreement.
ARTICLE 8
POST TERMINATION OBLIGATIONS
8.1 NON-COMPETITION AND NON-SOLICITATION. The Executive hereby covenants
and agrees that, for a period of six months following any termination of his
employment, other than a termination of employment following a Change in
Control, he shall not, without the written consent of the Bank, either directly
or indirectly:
(i) solicit, offer employment to, or take any other action intended
(or that a reasonable person acting in like circumstances would expect) to
have the effect of causing any officer or employee of the Bank or any of
its affiliates to terminate his or her employment and accept employment or
become affiliated with, or provide services for compensation in any
capacity whatsoever to, any business whatsoever that competes with the
business of the Bank or any of its affiliates or has headquarters or
offices within 50 miles of the locations in which the Bank or its
affiliates has business operations or has filed an application for
regulatory approval to establish an office;
(ii) become an officer, employee, consultant, director, independent
contractor, agent, sole proprietor, joint venturer, greater than 5%
equity-owner or stockholder, partner or trustee of or provide services for
compensation in any capacity whatsoever to, any savings bank, savings and
loan association, savings and loan holding company, credit union, bank or
bank holding company, insurance company or agency, any mortgage or loan
broker or any other financial services entity or business whatsoever that
competes with the business of the Bank or any of its affiliates or has
headquarters or offices within 50 miles of Cornelius, North Carolina;
provided, however, that this restriction shall no apply if the Executive's
employment is terminated, either by Executive, with or without Good Reason,
or by the Bank, following a Change in Control; or
(iii) solicit, provide any information, advice or recommendation or
take any other action intended (or that a reasonable person acting in like
circumstances would expect) to have the effect of causing any customer of
the Bank or its affiliates to terminate an existing business or commercial
relationship with the Bank or its affiliates.
8.2 FURTHER ASSISTANCE. Executive shall, upon reasonable notice, furnish
such information - and assistance to the Bank and/or its affiliates, as may
reasonably be required by the Bank and/or its affiliates, in connection with any
litigation in which it or any of its subsidiaries or affiliates is, or may
become, a party; provided, however, that Executive shall not be required to
provide information or assistance with respect to any litigation between the
Executive and the Bank, or any of its affiliates.
8.3 EQUITABLE REMEDIES. All payments and benefits to the Executive under
this Agreement shall be subject to the Executive's compliance with this Section.
The parties hereto, recognizing that irreparable injury will result to the Bank,
its business and property in the event of the Executive's breach of this
Section, agree that, in the event of any such breach by the Executive, the Bank
will be entitled, in addition to any other remedies and damages available, to an
injunction to restrain the violation hereof by the Executive and all persons
acting for or with the Executive. The Executive represents and admits that the
Executive's experience and capabilities are such that the Executive can obtain
employment in a business engaged in other lines and/or of a different nature
than the Bank, and that the enforcement of a remedy by way of injunction will
not prevent the Executive from earning a livelihood. Nothing herein will be
construed as prohibiting the Bank from pursuing any other remedies for such
breach or threatened breach, including the recovery of damages from the
Executive.
ARTICLE 9
MISCELLANEOUS
9.1 SUCCESSORS AND ASSIGNS.
(a) THIS AGREEMENT IS BINDING ON THE BANK'S SUCCESSORS. This Agreement
shall be binding upon the Bank and any successor to the Bank, including any
persons acquiring directly or indirectly all or substantially all of the
business or assets of the Bank by purchase, merger, consolidation,
reorganization, or otherwise. Any such successor shall thereafter be deemed to
be "the Bank" for purposes of this Agreement. But this Agreement and the Bank's
obligations under this Agreement are not otherwise assignable, transferable, or
delegable by the Bank. By agreement in form and substance satisfactory to the
Executive, the Bank shall require any successor to all or substantially all of
the business or assets of the Bank expressly to assume and agree to perform this
Agreement in the same manner and to the same extent the Bank would be required
to perform if no such succession had occurred.
(b) THIS AGREEMENT IS ENFORCEABLE BY THE EXECUTIVE AND HIS HEIRS. This
Agreement will inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, and legatees.
(c) THIS AGREEMENT IS PERSONAL IN NATURE AND IS NOT ASSIGNABLE. This
Agreement is personal in nature. Without written consent of the other parties,
no party shall assign, transfer, or delegate this Agreement or any rights or
obligations under this Agreement, except as expressly provided herein. Without
limiting the generality or effect of the foregoing, the Executive's right to
receive payments hereunder is not assignable or transferable, whether by pledge,
creation of a security interest, or otherwise, except for a transfer by the
Executive's will or by the laws of descent and distribution. If the Executive
attempts an assignment or transfer that is contrary to this Section 9.1, the
Bank shall have no liability to pay any amount to the assignee or transferee.
9.2 GOVERNING LAW, JURISDICTION AND FORUM. This Agreement shall be
construed under and governed by the internal laws of the State of North
Carolina, without giving effect to any conflict of laws provision or rule
(whether of the State of North Carolina or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
North Carolina. By entering into this Agreement, the Executive acknowledges that
he is subject to the jurisdiction of both the federal and state courts in the
State of North Carolina. Any actions or proceedings instituted under this
Agreement shall be brought and tried solely in courts located in Gaston County,
North Carolina or in the federal court having jurisdiction in Gastonia, North
Carolina. The Executive expressly waives his rights to have any such actions or
proceedings brought or tried elsewhere.
9.3 ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of the
parties concerning the employment of the Executive by the Bank, and any oral or
written statements, representations, agreements, or understandings made or
entered into prior to or contemporaneously with the execution of this Agreement,
are hereby rescinded, revoked, and rendered null and void by the parties.
Benefits payable under this Agreement shall not be reduced by other benefits
paid to the Executive by the Bank.
9.4 NOTICES. Any notice under this Agreement shall be deemed to have been
effectively made or given if in writing and personally delivered, delivered by
mail properly addressed in a sealed envelope, postage prepaid by certified or
registered mail, delivered by a reputable overnight delivery service, or sent by
facsimile. Unless otherwise changed by notice, notice shall be properly
addressed to the Executive if addressed to the address of the Executive on the
books and records of the Bank at the time of the delivery of such notice, and
properly addressed to the Bank if addressed to the Bank at 519 South New Hope
Road, Gastonia, North Carolina 28054-4040, Attention: Corporate Secretary.
9.5 SEVERABILITY. In the case of conflict between any provision of this
Agreement and any statute, regulation, or judicial precedent, the latter shall
prevail, but the affected provisions of this Agreement shall be curtailed and
limited solely to the extent necessary to bring them within the requirements of
law. If any provision of this Agreement is held by a court of competent
jurisdiction to be indefinite, invalid, void or voidable, or otherwise
unenforceable, the balance of this Agreement shall continue in full force and
effect unless such construction would clearly be contrary to the intentions of
the parties or would result in an injustice.
9.6 CAPTIONS AND COUNTERPARTS. The captions in this Agreement are solely
for convenience. The captions in no way define, limit, or describe the scope or
intent of this Agreement This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
9.7 NO DUTY TO MITIGATE. the Bank hereby acknowledges that it will be
difficult and could be impossible (a) for the Executive to find reasonably
comparable employment after his employment terminates, and (b) to measure the
amount of damages the Executive may suffer as a result of termination.
Additionally, the Bank acknowledges that its general severance pay plans do not
provide for mitigation, offset, or reduction of any severance payment received
thereunder. Accordingly, the Bank further acknowledges that the payment of
severance and termination benefits under this Agreement is reasonable and shall
be liquidated damages. The Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other
employment. Moreover, the amount of any payment provided for in this Agreement
shall not be reduced by any compensation earned or benefits provided as the
result of employment of the Executive or as a result of the Executive being
self-employed after termination of his employment.
9.8 AMENDMENT AND WAIVER. This Agreement may not be amended, released,
discharged, abandoned, changed, or modified in any manner, except by an
instrument in writing signed by each of the parties hereto. The failure of any
party hereto to enforce at any tune any of the provisions of this Agreement
shall in no way be construed to be a waiver of any such provision, nor in any
way to affect the validity of this Agreement or any part thereof or the right of
any party thereafter to enforce each and every such provision. No waiver or any
breach of this Agreement shall be held to be a waiver of any other or subsequent
breach.
ARTICLE 10
REQUIRED PROVISIONS
10.1 BANK'S RIGHT TO TERMINATE THE EXECUTIVE'S EMPLOYMENT. The Bank's Board
of Directors may terminate the Executive's employment at any time, but any
termination by the Board of Directors, other than termination for Cause, shall
not prejudice the Executive's right to compensation or other benefits under this
Agreement. The Executive shall not have the right to receive compensation or
other benefits for any period after termination for Cause.
10.2 SUSPENSION OF BANK'S OBLIGATIONS IF THE EXECUTIVE IS SUSPENDED. If the
Executive is suspended from office or temporarily prohibited from participating
in the Bank's affairs by a notice served under section 8(e)(3) (12 U.S.C.
1818(e)(3)) or 8(g) (12 U.S.C. 1818(g)) of the Federal Deposit Insurance Act,
Citizen South's obligations under this Agreement shall be suspended as of the
date of service, unless stayed by appropriate proceedings. If the charges in the
notice are dismissed, the Bank may in its discretion (1) pay the Executive all
or part of the compensation withheld while the Bank's obligations were suspended
and (2) reinstate in whole or in part any of the obligations that were
suspended.
10.3 TERMINATION OF BANK'S OBLIGATIONS IF THE EXECUTIVE IS REMOVED. If the
Executive is removed or permanently prohibited from participating in the Bank's
affairs by an order issued under section 8(e) (12 U.S.C. 1818(e)) or 8(g) (12
U.S.C. 1818(g)) of the Federal Deposit Insurance Act, all obligations of the
Bank under this Agreement shall terminate as of the effective date of the order,
but vested rights of the parties shall not be affected.
10.4 TERMINATION IF BANK IS IN DEFAULT. If the Bank is in default as
defined in section 3(x) (12 U.S.C. 1813(x)(1)) of the Federal Deposit Insurance
Act, all obligations of the Bank under this Agreement shall terminate as of the
date of default, but this paragraph 10.4 shall not affect any vested rights of
the parties.
10.5 TERMINATION ASSOCIATED WITH REGULATORY ACTION. All obligations of the
Bank under this Agreement shall terminate, except to the extent determined that
continuation of the contract is necessary for the continued operation of the
institution, (1) by the Director of the OTS or the Director's designee, when the
Federal Deposit Insurance Corporation enters into an agreement to provide
assistance to or on behalf of the Bank under the authority contained in section
13(c) of the Federal Deposit Insurance Act (12 U.S.C. 1823(c)), or (2) by the
Director or the Director' designee when the OTS approves a supervisory merger to
resolve problems related to the operations of the Bank or when the Bank is
determined by the OTS or by the Federal Deposit Insurance Corporation to be in
an unsafe or unsound condition. Vested rights of the parties shall not be
affected, however.
10.6 PAYMENTS ARE SUBJECT TO COMPLIANCE WITH 12 U.S.C. 1828(K). Any
payments made to the Executive under this Agreement or otherwise are subject to
and conditioned upon their compliance with section 18(k) of the Federal Deposit
Insurance Act (12 U.S.C. 1828(k)) and any regulations promulgated thereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
WITNESS: CITIZENS SOUTH BANK
/s/ Paul L. Teem, Jr. /s/ Kim S. Price
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Paul L. Teem, Jr. Kim S. Price
President and Chief Executive Officer
WITNESS: EXECUTIVE
/s/ Paul L. Teem, Jr. /s/ James Louis Brewer
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Paul L. Teem, Jr. James Louis Brewer