Cto Employment Agreement

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 From and after the Effective Date, the Prior Agreement will be superseded in its entirety by this Agreement.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


-2- 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


-3- 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 conclusivel ...