EXHIBIT 10.5
Employment Agreement dated Feb. 18, 2000
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
this 18th day of February, 2000 by and among Centura Banks, Inc., a North
Carolina corporation ("Centura"); Centura Bank, a wholly owned subsidiary of
Centura (the "Bank"); and Michael S. Patterson (hereinafter, "Executive"), to be
effective as of the Effective Date, as defined in Section 1.
BACKGROUND
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Executive currently serves as the President and Chief Executive Officer
of Triangle Bancorp, Inc. ("Triangle") and of Triangle Bank and Trust, a
subsidiary of Triangle Bancorp ("Triangle Bank"), pursuant to the terms of that
certain Employment Agreement, dated as of December 28, 1993, among Triangle,
Triangle Bank and Executive, as the same may have been amended (the "Prior
Agreement"). From and after the Effective Date, the Prior Agreement will be
superseded in its entirety by this Agreement.
Centura and Triangle have entered into that certain Agreement and Plan
of Reorganization, dated as of August 22, 1999 (the "Merger Agreement"),
pursuant to which the Triangle will be acquired by Centura, pursuant to the
merger of Triangle into a subsidiary of Centura (the "Merger").
Centura desires to retain Executive as the Chairman of the Boards of
Directors of Centura and the Bank from and after the Merger, in accordance with
the terms of this Agreement. Executive is willing to serve as such in accordance
with the terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Effective Date. The effective date of this Agreement (the "Effective
Date") will be the date on which the effective time of the Merger occurs.
2. Positions.
(a) Director Position. Subject to all legal limitations and
conditions applicable to service as a director of Centura and the Bank, (i) the
Boards of Directors of Centura and the Bank shall nominate and use their best
efforts to secure the election of Executive as a director of Centura and of the
Bank during the term of this Agreement, and (ii) if so elected, Executive shall
serve as member of Executive Committee of the Board of Directors of Centura.
(b) Officer Position. Executive will be employed as Chairman
of the Boards of Directors of Centura and of the Bank. Executive's
responsibilities under this Agreement shall be in accordance with the policies
and objectives established by such Boards, and shall be consistent with the
responsibilities of similarly situated executives of comparable banks and bank
holding companies. In each such capacity, Executive will report directly to the
applicable Board of Directors of Centura.
3. Employment Period. Unless earlier terminated herein in accordance
with Section 6 hereof, Executive's employment shall be for a term (the
"Employment Period") beginning on the Effective Date and extending through the
90th day following the Executive's 58th birthday (the "Expiration Date").
4. Extent of Service. During the Employment Period, and excluding any
periods of vacation and sick leave to which Executive is entitled, Executive
agrees to devote reasonable business time and attention during normal business
hours to the performance of his duties hereunder; provided, however, that it
shall not be a violation of this Agreement for Executive to (i) devote
reasonable periods of time to charitable and community activities and, with the
approval of Centura, industry or professional activities, and/or (ii) manage
personal business interests and investments, so long as such activities do not
materially interfere with the performance of Executive's responsibilities under
this Agreement.
5. Compensation and Benefits.
(a) Base Salary. During the Employment Period, Centura will pay
to Executive a base salary equal to the base salary payable to the Chief
Executive Officer of Centura during such period and not less than $550,000 per
year ("Base Salary"), less normal withholdings, payable in equal monthly or more
frequent installments as are customary under Centura's payroll practices from
time to time. On the Effective Date, Centura shall pay to Executive a lump-sum
cash payment equal to the difference between (i) the amount of Base Salary
Executive would have earned under this Agreement between January 1, 2000 and the
Effective Date and (ii) the amount of base salary Executive received from
Triangle between January 1, 2000 and the Effective Date.
(b) Incentive, Savings and Retirement Plans. During the
Employment Period, Executive shall be entitled to participate in all bonus,
incentive (including but not limited to stock options, other stock-based awards
and performance awards), savings and retirement plans, practices, policies and
programs applicable generally to senior executive officers of Centura and the
Bank ("Peer Executives"), and such participation shall be on a basis at least as
favorable as that of the Chief Executive Officer of Centura. Without limiting
the foregoing:
(i) during the Employment Period, Executive will be
granted, under Centura's incentive plans, stock options to acquire common stock
of Centura and other incentive awards in amounts and having terms that are at
least as favorable as such awards made to the Chief Executive Officer of
Centura. All bonus, incentive and other
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awards to be provided to Executive for 2000 shall be made on the basis of
Executive having been employed by Centura all of calendar year 2000; and
(ii) during the Employment Period, Executive shall be a
participant in a Supplemental Executive Retirement Agreement with Centura (the
"Centura SERP") having substantially the same terms as that certain Supplemental
Executive Retirement Agreement between Centura and Cecil W. Sewell, Jr., dated
as of May 14, 1996, as amended on October 2, 1996 and December 24, 1998, or, if
more favorable, any subsequent supplemental executive retirement plan or
agreement between Centura or the Chief Executive Officer of Centura.
(c) Welfare Benefit Plans. During the Employment Period,
Executive and Executive's family shall be eligible for participation in, and
shall receive all benefits under, the welfare benefit plans, practices, policies
and programs provided by Centura and its affiliated companies (including,
without limitation, medical, prescription, dental, disability, employee life,
group life, accidental death and travel accident insurance plans and programs)
("Welfare Plans") to the extent applicable to the Chief Executive Officer of
Centura. Without limiting the foregoing, Centura shall (i) expressly assume the
obligations of Triangle under that certain Split Dollar Life Insurance Agreement
and that certain Triangle Bancorp, Inc. Deferred Compensation Agreement, both
dated as of January 1, 1996, by and between Executive and Triangle (together,
the "Split Dollar Contracts") and, to the extent necessary to fulfill such
obligations, shall maintain in effect the Triangle Bancorp, Inc. Split Dollar
Life Insurance Plan referred to in the Split Dollar Contracts and (ii) continue
in effect the disability policies maintained by Triangle and Triangle Bank for
Executive immediately prior to the Effective Date (unless Centura otherwise
provides Executive with disability benefit coverage that is at least as
favorable to Executive as that provided under such disability policies).
Notwithstanding the foregoing, upon the written notice from Executive to
Centura, Executive shall be deemed for purposes of the Split Dollar Life
Insurance Agreement to have terminated employment (other than by reason of
death, disability or after age 65) as of a date specified by Executive in such
notice (which specified date shall be at least six months after the date of the
notice), notwithstanding the Executive's continued employment by Centura. Upon
such deemed termination of employment, Executive shall have such rights and be
entitled to such payments as are provided for in the Split Dollar Contracts in
the event of Executive's actual termination of employment (other than by reason
of death, disability or after age 65) as of the date of deemed termination of
employment.
(d) Expenses. During the Employment Period, Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
Executive in accordance with the policies, practices and procedures of Centura
and its affiliated companies to the same extent applicable to the Chief
Executive Officer of Centura.
(e) Fringe Benefits. During the Employment Period, Executive
shall be entitled to fringe benefits in accordance with the plans, practices,
programs and policies of Centura and its affiliated companies in effect for Peer
Executives and, in particular, Executive shall be provided fringe benefits no
less favorable than those provided to the
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Chief Executive Officer of Centura. In all events, Executive shall be entitled
to fringe benefits at least as favorable as those he was receiving immediately
prior to the Effective Date. Without limiting the foregoing, in the event that
Executive relocates from Raleigh, North Carolina to Rocky Mount, North Carolina,
Executive shall be entitled to reimbursement for all moving expenses incurred by
Executive and, at Executive's request, Centura shall purchase Executive's
residence at fair market value, as determined by an appraiser selected by
Executive and reasonably acceptable to Centura.
(f) Vacation. During the Employment Period, Executive will be
entitled to six weeks of paid vacation, or, if greater, the amount of paid
vacation to which the Chief Executive Officer of Centura is entitled.
(g) Offices. For two years following the Effective Date, Centura
(i) shall maintain offices and provide secretarial support for Executive in both
Raleigh, North Carolina and Rocky Mount, North Carolina and (ii) shall not
require Executive to work in the Rocky Mount office more than three days per
week (unless Executive has relocated from Raleigh, North Carolina to Rocky
Mount, North Carolina).
(h) Past Service Credit. Executive shall be given full credit for
Executive's years of service with Triangle and its predecessors for all purposes
(other than for benefit accrual purposes, except as hereinafter provided) under
the plans, programs, policies, agreements and practices covering Executive
pursuant to this Section 5; provided, however, that Executive shall receive
prior service credit for all purposes (including benefit accrual purposes) under
the Centura SERP. Centura shall cause the Welfare Plans to (i) waive, with
respect to Executive, any waiting period and restrictions and limitations for
preexisting conditions or insurability, and (ii) credit Executive with any
deductible, co-payment, co-insurance, or maximum out-of-pocket payments made by
Executive under the Welfare Plans so as to reduce the amount of any deductible,
co-payment, co-insurance or maximum out-of-pocket payments payable by Executive
under the Welfare Plans.
6. Termination of Employment.
(a) Death or Disability. Executive's employment shall terminate
automatically upon Executive's death during the Employment Period. If Centura
determines in good faith that the Disability of Executive has occurred during
the Employment Period (pursuant to the definition of Disability set forth
below), it may give to Executive written notice of its intention to terminate
Executive's employment. In such event, Executive's employment with Centura shall
terminate effective on the 30th day after receipt of such written notice by
Executive (the "Disability Effective Date"), provided that, within the 30 days
after such receipt, Executive shall not have returned to full-time performance
of Executive's duties. For purposes of this Agreement, "Disability" shall have
the meaning assigned such term in the Centura SERP. In all events, the
determination of Disability shall be made by a physician selected by Executive
and reasonably acceptable to Centura.
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(b) Termination by Centura or the Bank. Centura or the Bank may
terminate Executive's employment during the Employment Period with or without
Cause. For purposes of this Agreement, "Cause" shall mean:
(i) the willful and continued failure of Executive to
perform substantially Executive's duties with Centura or the Bank (other than
any such failure resulting from incapacity due to physical or mental illness,
and specifically excluding any failure by Executive, after reasonable efforts,
to meet performance expectations), after a written demand for substantial
performance is delivered to Executive by the Board of Directors of Centura or
the Bank , as applicable, which specifically identifies the manner in which such
Board believes that Executive has not substantially performed Executive's
duties, or
(ii) the willful engaging by Executive in illegal conduct
or gross misconduct which is materially and demonstrably injurious to Centura or
the Bank.
For purposes of this provision, no act or failure to act, on the part of
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by Executive in bad faith and without reasonable belief that Executive's
action or omission was in the best interests of Centura or the Bank, as the case
may be. Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the applicable Board of Directors or based upon the
advice of counsel for Centura or the Bank shall be conclusively presumed to be
done, or omitted to be done, by Executive in good faith and in the best
interests of Centura or the Bank, as the case may be. The cessation of
employment of Executive shall not be deemed to be for Cause unless and until
there shall have been delivered to Executive a copy of a resolution duly adopted
by the affirmative vote of not less than two-thirds of the entire membership of
the applicable Board of Directors (excluding Executive) at a meeting of such
Board called and held for such purpose (after reasonable notice is provided to
Executive and Executive is given an opportunity, together with counsel, to be
heard before such Board), finding that, in the good faith opinion of such Board,
Executive is guilty of the conduct described in subparagraph (i) or (ii) above,
and specifying the particulars thereof in detail.
(c) Termination by Executive. Executive's employment may be
terminated by Executive for Good Reason or no reason. For purposes of this
Agreement, "Good Reason" shall mean:
(i) without the written consent of Executive, the
assignment to Executive of any duties inconsistent in any material respect with
Executive's position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as in effect on the
Effective Date, or any other action by Centura or the Bank which results in a
diminution in such position, authority, duties or responsibilities, excluding
for this purpose an isolated, insubstantial and inadvertent action not taken in
bad faith and which is remedied by Centura or the Bank promptly after receipt of
notice thereof given by Executive;
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(ii) Centura or the Bank requiring Executive to be based
at a location that is more than 35 miles from Raleigh, North Carolina or Rocky
Mount, North Carolina;
(iii) a reduction in Executive's Base Salary and benefits
as in effect on the Effective Date or as the same may be increased from time to
time;
(iv) the failure by Centura or the Bank (a) to continue in
effect any compensation plan in which Executive participates as of the Effective
Date that is material to Executive's total compensation, unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan) has been
made with respect to such plan, or (b) to continue Executive's participation
therein (or in such substitute or alternative plan) on a basis not materially
less favorable, both in terms of the amount of benefits provided and the level
of Executive's participation relative to other participants; or
(v) the material breach of this Agreement by Centura or
the Bank.
(d) Notice of Termination. Any termination by Centura or the Bank
for Cause, or by Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated and (iii) specifies the termination
date (which date shall be not less than 60 days after the giving of such
notice). If a dispute exists concerning the provisions of this Agreement that
apply to Executive's termination of employment, the parties shall pursue the
resolution of such dispute with reasonable diligence. Within five (5) days of
such a resolution, any party owing any payments pursuant to the provisions of
this Agreement shall make all such payments together with interest accrued
thereon at the rate provided in Section 1274(b)(2)(B) of the Internal Revenue
Code of 1986, as amended (the "Code"). The failure by either party to set forth
in the Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of such party
hereunder or preclude such party from asserting such fact or circumstance in
enforcing such party's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if
Executive's employment is terminated other than by reason of death or
Disability, the date of receipt of the Notice of Termination, or any later date
specified therein (which shall not be less than 60 days after the date of
delivery of the Notice of Termination), or (ii) if Executive's employment is
terminated by reason of death or Disability, the Date of Termination will be the
date of death or the Disability Effective Date, as the case may be.
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(f) Board Resignations. Termination of Executive's employment for
any reason whatsoever shall constitute Executive's resignation from the Boards
of Directors of Centura and the Bank.
7. Obligations of Centura upon Termination.
(a) Termination by Executive for Good Reason; Disability;
Termination by Centura Other Than for Cause. If, during the Employment Period,
Centura shall terminate Executive's employment other than for Cause, Executive
shall terminate employment for Good Reason, or Executive's employment shall
terminate by reason of Disability:
(i) Centura shall pay to Executive in a lump sum in cash
within 30 days after the Date of Termination the sum of (1) Executive's Base
Salary through the Date of Termination to the extent not theretofore paid, (2)
the product of (x) Executive's highest annual bonus from Centura or Triangle,
including any bonus or portion thereof which has been earned but deferred, for
any of the last three full fiscal years prior to the Date of Termination (such
amount being referred to as the "Highest Annual Bonus") and (y) a fraction, the
numerator of which is the number of days in the current fiscal year through the
Date of Termination, and the denominator of which is 365, (3) any accrued
vacation pay to the extent not theretofore paid, and (4) unless Executive has
elected a different payout date in a prior deferral election, any compensation
previously deferred by Executive (together with any accrued interest or earnings
thereon) to the extent not theretofore paid (the sum of the amounts described in
clauses (1), (2), (3) and (4) shall be hereinafter referred to as the "Accrued
Obligations"); and
(ii) beginning on the last day of the month in which the
Date of Termination occurs and ending on the last day of the month in which the
Expiration Date occurs, Centura shall pay Executive a monthly amount equal to
the sum of (i) his monthly Base Salary as in effect on the Date of Termination,
and (ii) one-twelfth of the Highest Annual Bonus; provided, however, that in the
case of Executive's termination of employment due to Disability, amounts paid
under this section 7(a)(ii) shall be offset by the amount of disability benefits
paid pursuant to the disability policy maintained for Executive; and
(iii) after the Date of Termination, unless the Date of
Termination occurs by reason of death or Disability, Centura shall enter into a
consulting arrangement with Executive such that he will be eligible to receive
stock options or other incentive awards under Centura's incentive plans and
during the period from the Date of Termination through the Expiration Date,
Centura shall grant to Executive stock options, or other incentive awards, in
the same amounts and having the same terms as such awards made to Chief
Executive Officer of Centura during such period (the "Continuing Incentive
Grants"); and
(iv) from the Date of Termination through the Expiration
Date, or such longer period as may be provided by the terms of the appropriate
plan, program,
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practice or policy, Centura shall continue benefits to Executive and/or
Executive's family that are at least equal, on an after-tax basis, to those
which would have been provided to them in accordance with the Welfare Plans
described in Section 5(c) of this Agreement if Executive's employment had not
been terminated or, if more favorable to Executive, as in effect generally at
any time thereafter with respect to the Chief Executive Officer of Centura and
his family, provided, however, that if Executive becomes re-employed with
another employer and is eligible to receive medical or other welfare benefits
under another employer provided plan, the medical and other welfare benefits
described herein shall be secondary to those provided under such other plan
during such applicable period of eligibility;
(v) to the extent not theretofore paid or provided,
Centura shall timely pay or provide to Executive any other amounts or benefits
required to be paid or provided or which Executive is eligible to receive under
any plan, program, policy or practice or contract or agreement of Centura and
its affiliated companies (such other amounts and benefits shall be hereinafter
referred to as the "Other Benefits"); and
(vi) all stock options and any other stock-based awards
outstanding immediately prior to the Date of Termination shall remain
outstanding and shall be treated for all purposes (except that in the event of
Executive's death, his estate or other beneficiary or successor shall be
entitled to exercise Executive's rights) as if Executive continued to be
employed by Centura until the Expiration Date; and
(vii) for purposes of the Centura SERP, (and unless the
termination of employment was due to Executive's death) Executive shall be
deemed to continue to be employed and receive his Base Salary (as in effect
immediately prior to his Termination Date) and his Highest Annual Bonus
(calculated as of the day before the Termination Date) for each year until the
Expiration Date.
(b) Death. If Executive's employment shall be terminated by
reason of his death during the Employment Period, Executive's estate or legal
representative shall have the option of selecting either (i) the payment and
benefits described in Section 7 hereof (but excluding the Death Benefits, as
hereinafter defined), or (ii) the Accrued Obligations, the Other Benefits and
the Death Benefits. For purposes of this Section 7(b), "Death Benefits" means
the death benefits payable with respect to Executive under such plans, programs,
practices and policies of Centura and its affiliates relating to death benefits
(including without limitation the Centura SERP) as apply to Executive, which
death benefits shall be provided in amounts and on a basis at least as favorable
to Executive as those provided to the Chief Executive Officer of Centura and
which in no event shall be less favorable to Executive than those applicable to
Executive immediately prior to the Effective Date.
(d) Cause or Voluntary Termination without Good Reason. If
Executive's employment shall be terminated for Cause during the Employment
Period, or if Executive voluntarily terminates employment during the Employment
Period without Good Reason, this Agreement shall terminate without further
obligations to Executive, other than for
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payment of Accrued Obligations (excluding the pro-rata bonus described in clause
2 of Section 7(a)(i)) and the timely payment or provision of Other Benefits.
(e) Expiration of Employment Period. If Executive's employment
shall be terminated due to the normal expiration of the Employment Period, this
Agreement shall terminate without further obligations to Executive, other than
for payment of Accrued Obligations and the timely payment or provision of Other
Benefits.
(g) Board Resignations. Termination of Executive's employment for
any reason whatsoever shall constitute Executive's resignation from the Boards
of Directors of Centura and the Bank.
8. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit Executive's continuing or future participation in any plan, program,
policy or practice provided by Centura or its affiliated companies and for which
Executive may qualify, nor, subject to Section 16(d), shall anything herein
limit or otherwise affect such rights as Executive may have under any contract
or agreement with Centura or its affiliated companies. Amounts which are vested
benefits or which Executive is otherwise entitled to receive under any plan,
policy, practice or program of or any contract or agreement with Centura or any
of its affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.
9. Gross-Up Payment.
(a) Anything in this Agreement to the contrary notwithstanding
and except as set forth below in this Section 9, in the event it shall be
determined that any payment or distribution by Centura to or for the benefit of
Executive (whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 9) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Code or any interest or
penalties are incurred by Executive with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after payment
by Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 9(c), all determinations
required to be made under this Section 9, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by a certified
public accounting firm selected by Executive and reasonably acceptable to
Centura as may be designated by
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Executive (the "Accounting Firm") which shall provide detailed supporting
calculations both to Centura and Executive within 15 business days of the
receipt of notice from Executive that there has been a Payment, or such earlier
time as is reasonably requested by Centura. All fees and expenses of the
Accounting Firm shall be borne solely by Centura. Any Gross-Up Payment, as
determined pursuant to this Section 9, shall be paid by Centura to Executive
within five days of the receipt of the Accounting Firm's determination. Any
determination by the Accounting Firm shall be binding upon Centura and
Executive. As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments will not have been made by
Centura that should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that Centura exhausts
its remedies pursuant to Section 9(c) and Executive thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by Centura to or for the benefit of Executive.
(c) The Executive shall notify Centura in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
Centura of a Gross-Up Payment (or an additional Gross-Up Payment). Such
notification shall be given as soon as practicable but no later than ten
business days after Executive is informed in writing of such claim and shall
apprise Centura of the nature of such claim and the date on which such claim is
requested to be paid. The Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which it gives such notice
to Centura (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If Centura notifies Executive in writing
prior to the expiration of such period that it desires to contest such claim,
Executive shall:
(i) give Centura any information reasonably requested by
Centura relating to such claim,
(ii) take such action in connection with contesting such
claim as Centura shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by Centura and reasonably
acceptable to Executive,
(iii) cooperate with Centura in good faith in order
effectively to contest such claim, and
(iv) permit Centura to participate in any proceedings
relating to such claim;
provided, however, that Centura shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation of the
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foregoing provisions of this Section 9(c), Centura shall control all proceedings
(to the extent applicable to the Excise Tax and Gross-Up Payment) taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and Executive agrees to prosecute such contest
to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as Centura shall reasonably
determine; provided, however, that if Centura directs Executive to pay such
claim and sue for a refund, Centura shall advance the amount of such payment to
Executive, on an interest-free basis and shall indemnify and hold Executive
harmless, on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to payment of
taxes for the taxable year of Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, Centura's control of the contest shall be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder and Executive
shall be entitled to settle or contest, as the case may be, any other issue
raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by Executive of an amount advanced by
Centura pursuant to Section 9(c), Executive becomes entitled to receive any
refund with respect to such claim, Executive shall (subject to Centura's
complying with the requirements of Section 9(c)) promptly pay to Centura the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by Executive of an amount
advanced by Centura pursuant to Section 9(c), a determination is made that
Executive shall not be entitled to any refund with respect to such claim and
Centura does not notify Executive in writing of its intent to contest such
denial of refund prior to the expiration of 30 days after such determination,
then such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
10. Costs of Enforcement. In any action taken in good faith relating to
the enforcement of this Agreement or any provision herein, Executive shall be
entitled to be paid any and all costs and expenses incurred by him in enforcing
or establishing his rights thereunder, including, without limitation, reasonable
attorneys' fees, whether suit be brought or not, and whether or not incurred in
trial, bankruptcy or appellate proceedings. Executive shall also be entitled to
be paid all reasonable legal fees and expenses, if any, incurred in connection
with any tax audit or proceeding to the extent attributable to the application
of Section 4999 of the Internal Revenue Code to any payment or benefit
hereunder. Such payments shall be made within five (5) business days after
delivery of Executive's respective written requests for payment accompanied with
such evidence of fees and expenses incurred as Centura reasonably may require.
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11. Representations and Warranties. Executive hereby represents and
warrants to Centura that Executive is not a party to, or otherwise subject to,
any covenant not to compete with any person or entity, and Executive's execution
of this Agreement and performance of his obligations hereunder will not violate
the terms or conditions of any contract or obligation, written or oral, between
Executive and any other person or entity.
12. Confidential Information. Executive shall hold in a fiduciary
capacity for the benefit of Centura and the Bank all secret or confidential
information, knowledge or data relating to Centura or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
Executive during Executive's employment by Centura or any of its affiliated
companies and which shall not be or become public knowledge (other than by acts
by Executive or representatives of Executive in violation of this Agreement).
After termination of Executive's employment with Centura or such affiliated
companies, Executive shall not, without the prior written consent of Centura or
as may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than Centura and those
designated by it.
13. Assignment and Successors.
(a) This Agreement is personal to the Executive and without the
prior written consent of Centura shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon Centura and its successors and assigns.
(c) Centura will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Centura to assume expressly
and agree to perform this Agreement in the same manner and to the same extent
that Centura would be required to perform it if no such succession had taken
place. As used in this Agreement, "Company" shall mean Centura as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law, or otherwise.
14. Miscellaneous.
(a) Waiver. Failure of either party to insist, in one or more
instances, on performance by the other in strict accordance with the terms and
conditions of this Agreement shall not be deemed a waiver or relinquishment of
any right granted in this Agreement or of the future performance of any such
term or condition or of any other term or condition of this Agreement, unless
such waiver is contained in a writing signed by the party making the waiver.
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(b) Severability. If any provision or covenant, or any part
thereof, of this Agreement should be held by any court to be invalid, illegal or
unenforceable, either in whole or in part, such invalidity, illegality or
unenforceability shall not affect the validity, legality or enforceability of
the remaining provisions or covenants, or any part thereof, of this Agreement,
all of which shall remain in full force and effect.
(c) Other Agents. Nothing in this Agreement is to be interpreted as
limiting Centura from employing other personnel on such terms and conditions as
may be satisfactory to it.
(d) Entire Agreement. Except as provided herein, this Agreement
contains the entire agreement between Centura, the Bank and Executive with
respect to the subject matter hereof and, from and after the Effective Date,
this Agreement shall supersede any other agreement between or among the parties
with respect to the subject matter hereof, including without limitation, the
Prior Agreement.
(e) Governing Law. Except to the extent preempted by federal law,
and without regard to conflict of laws principles, the laws of the State of
North Carolina shall govern this Agreement in all respects, whether as to its
validity, construction, capacity, performance or otherwise.
(f) Notices. All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given if delivered or three days after mailing if
mailed, first class, certified mail, postage prepaid:
To Centura or the Bank: Centura Banks, Inc.
134 North Church Street
Rocky Mount, North Carolina 27804
Attention: Chief Executive Officer
To Executive: Michael S. Patterson
405 Lake Boone Trail
Raleigh, NC 27608
Any party may change the address to which notices, requests, demands and other
communications shall be delivered or mailed by giving notice thereof to the
other party in the same manner provided herein.
(g) Amendments and Modifications. This Agreement may be amended
or modified only by a writing signed by both parties hereto, which makes
specific reference to this Agreement.
(signatures on following page)
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Employment Agreement as of the date first above written.
CENTURA BANKS, INC.
By: /s/ Frank L. Pattillo
---------------------------
Frank L. Pattillo
Title: Vice Chairman
CENTURA BANK
By: /s/ Frank L. Pattillo
---------------------------
Frank L. Pattillo
Title: Vice Chairman
EXECUTIVE:
/s/ Michael S. Patterson
------------------------------
Michael S. Patterson
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