EXHIBIT 2.3
EXECUTION COPY
EMPLOYEE BENEFITS AGREEMENT
BETWEEN
F.N.B. CORPORATION
AND
FIRST NATIONAL BANKSHARES OF FLORIDA, INC.
DATED AS OF JANUARY 1, 2004
EMPLOYEE BENEFITS AGREEMENT
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS AND REFERENCES....................................................................1
SECTION 1.1 Definitions..........................................................................1
SECTION 1.2 References...........................................................................5
ARTICLE II GENERAL PRINCIPLES...........................................................................5
SECTION 2.1 Assumption of Liabilities............................................................5
SECTION 2.2 Termination of Participating Company Status..........................................6
SECTION 2.3 Establishment or Assumption of the SpinCo Plans......................................6
SECTION 2.4 Terms of Participation by Transferred Individuals....................................6
ARTICLE III DEFINED BENEFIT PLANS.......................................................................7
SECTION 3.1 F.N.B. Corporation Retirement Income Plan............................................7
ARTICLE IV DEFINED CONTRIBUTION PLANS...................................................................7
SECTION 4.1 Savings Plans........................................................................7
ARTICLE V HEALTH AND WELFARE PLANS......................................................................7
SECTION 5.1 Assumption of Health and Welfare Plan Liabilities....................................7
SECTION 5.2 Parent Short-Term Disability Arrangements............................................8
SECTION 5.3 COBRA and HIPAA......................................................................8
SECTION 5.4 Leave of Absence Programs............................................................9
SECTION 5.5 Post-Distribution Transitional Arrangements..........................................9
SECTION 5.6 Application of Article V to the SpinCo Group........................................10
ARTICLE VI EXECUTIVE COMPENSATION MATTERS..............................................................11
SECTION 6.1 F.N.B. Restricted Stock and Incentive Bonus Plan....................................11
SECTION 6.2 Stock Options.......................................................................12
SECTION 6.3 Deferred Compensation Plans.........................................................12
SECTION 6.4 Rabbi Trust.........................................................................13
SECTION 6.5 Employment Agreements...............................................................13
SECTION 6.6 Automobile Program..................................................................13
SECTION 6.7 Director Benefits...................................................................13
SECTION 6.8 Vacation Pay/Paid Time-Off..........................................................14
SECTION 6.9 Split Dollar Life Insurance.........................................................14
ARTICLE VII GENERAL....................................................................................14
SECTION 7.1 Sharing of Participant Information..................................................14
SECTION 7.2 Restrictions on Extension of Option Exercise Periods, Amendment or
Modification of Option Terms and Conditions.........................................14
SECTION 7.3 Reporting and Disclosure and Communications to Participants.........................15
SECTION 7.4 Plan Audits.........................................................................15
SECTION 7.5 Beneficiary Designations/Release of Information/Right of Reimbursement..............16
SECTION 7.6 Requests for Internal Revenue Service Rulings and United States
Department of Labor Opinions........................................................16
SECTION 7.7 Fiduciary and Related Matters.......................................................16
SECTION 7.8 No Third-Party Beneficiaries; Non-Termination of Employment.........................16
SECTION 7.9 Consent of Third Parties............................................................16
SECTION 7.10 Effect if Distribution Does Not Occur...............................................17
SECTION 7.11 Relationship of Parties.............................................................17
SECTION 7.12 Affiliates..........................................................................17
SECTION 7.13 Dispute Resolution..................................................................17
Page
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SECTION 7.14 Indemnification.....................................................................17
SECTION 7.15 W-2 Matters.........................................................................17
SECTION 7.16 Confidentiality.....................................................................18
SECTION 7.17 Notices.............................................................................18
SECTION 7.18 Interpretation......................................................................18
SECTION 7.19 Severability........................................................................18
SECTION 7.20 Governing Law/Execution.............................................................18
SECTION 7.21 Amendments to Plans.................................................................18
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EMPLOYEE BENEFITS AGREEMENT
THIS EMPLOYEE BENEFITS AGREEMENT, dated as of the 1st day of January,
2004, is by and between F.N.B. Corporation, a Florida corporation ("Parent"),
and First National Bankshares of Florida, Inc., a Florida corporation
("SpinCo").
WHEREAS, Parent's Board of Directors has determined that it is in the
best interests of Parent and its shareholders to separate Parent's existing
businesses into two independent businesses; and
WHEREAS, in furtherance of the foregoing, on August 12, 2003, SpinCo was
formed and became a wholly owned subsidiary of Parent; and
WHEREAS, Parent intends to accomplish the separation of SpinCo through a
distribution of the stock of SpinCo to the shareholders of Parent that is
intended to be tax free pursuant to section 355 of the Internal Revenue Code of
1986, as amended (the "Distribution"); and
WHEREAS, Parent and SpinCo have entered into an Agreement and Plan of
Distribution, dated as of December 30, 2003 (the "Distribution Agreement"), and
several other agreements that will govern certain matters relating to the
Distribution and the relationship of Parent and SpinCo and their respective
Subsidiaries following the Distribution; and
WHEREAS, pursuant to the Distribution Agreement, Parent and SpinCo have
agreed to enter into this Agreement for the purpose of allocating assets,
liabilities, and responsibilities with respect to certain employee compensation
and benefit plans and programs between them.
NOW, THEREFORE, in consideration of the mutual promises contained herein
and in the Distribution Agreement, the parties agree as follows:
ARTICLE I
DEFINITIONS AND REFERENCES
SECTION 1.1 Definitions. For purposes of this Agreement,
capitalized terms used (other than the formal names of Parent Plans (as defined
below)) and not otherwise defined shall have the respective meanings assigned to
them below or as assigned to them in the Distribution Agreement (as defined
above):
(a) "Action" has meaning given that term in the Distribution Agreement.
(b) "Agreement" means this Employee Benefits Agreement, including all
the attached Appendices.
(c) "ASO Contract" means an administrative services contract, related
prior practice, or related understanding with a third-party administrator that
pertains to any Parent Health and Welfare Plan or any SpinCo Health and Welfare
Plan.
(d) "Award" means a long-term or short-term award under an Incentive
Plan or, as the context or facts may require, any other award under another
incentive or special bonus, incentive, or award program or arrangement.
(e) "Code" means the Internal Revenue Code of 1986, as amended, and the
Treasury regulations promulgated thereunder, including any successor
legislation.
(f) "Conversion Formula" means the appropriate formula which shall be
applied in adjusting the exercise price and award size of Options under the
Parent Stock Incentive Plans and in
determining the exercise price and number of SpinCo Options under the SpinCo
Incentive Plans. The Conversion Formula shall be based on the closing per share
prices of Parent Common Stock (with a due xxxx) and SpinCo Common Stock (on a
when-issued basis) as reported on the New York Stock Exchange on the last
trading day immediately preceding the Distribution Date or such other prices as
jointly agreed upon by SpinCo and Parent, and shall be determined and applied in
such a manner as to maintain (1) the aggregate spread of such Options, which is
the difference between the exercise price per share of Parent Common Stock
covered by the Option and the closing price per share of Parent Common Stock
(with a due xxxx) immediately preceding the Distribution, multiplied by the
total number of shares covered by the Option; and (2) the ratio of the exercise
price per share covered by the Option to the closing price per share of Parent
Common Stock (with a due xxxx) immediately preceding the Distribution.
(g) "Deferred Compensation Plans," when immediately preceded by "Parent"
means the F.N.B. Deferred Compensation Plan, the F.N.B. Corporation Basic
Retirement Plan, the F.N.B. Corporation ERISA Excess Profit Sharing and Lost
Match Plan, and the F.N.B. Corporation Directors' Compensation Plan. When
immediately preceded by "SpinCo," "Deferred Compensation Plans" means the
deferred compensation plans to be assumed, established or maintained by SpinCo
pursuant to Section 2.3.
(h) "Director" means any director of Parent immediately prior to the
Distribution other than Xxxx X. Xxxx or Xxxxxxx X. Xxxxxxxxx.
(i) "Distribution" has the meaning given that term under the
Distribution Agreement.
(j) "Distribution Agreement" is defined in the preamble of this
Agreement.
(k) "Distribution Date" has the meaning given that term under the
Distribution Agreement.
(l) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended. Reference to a specific provision of ERISA also includes any
proposed, temporary, or final regulation in force under that provision.
(m) "Governmental Authority" means any federal, state, local, foreign,
or international court, government, department, commission, board, bureau,
agency, official, or other regulatory, administrative, or governmental
authority, including the Department of Labor, the Securities and Exchange
Commission, the Internal Revenue Service, and the Pension Benefit Guaranty
Corporation.
(n) "Group Insurance Policy" means a group insurance policy issued in
connection with any Parent Health and Welfare Plan or any SpinCo Health and
Welfare Plan, as applicable.
(o) "Health and Welfare Plans," when immediately preceded by "Parent"
means the health and welfare benefit plans, programs, and policies (including
the Reimbursement Plans) which are sponsored by Parent. When immediately
preceded by "SpinCo," "Health and Welfare Plans" means the benefit plans,
programs, and policies (including the Reimbursement Plans) corresponding to
those plans, programs, and policies which will be sponsored by a member of the
SpinCo Group immediately after the Distribution Date.
(p) "HMO" means a health maintenance organization that provides benefits
under the Parent Health and Welfare Plans or the SpinCo Health and Welfare
Plans, as applicable.
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(q) "HMO Agreements" means contracts, letter agreements, practices, and
understandings with HMOs that provide medical, dental, prescription drug, or
vision services under the Parent Health and Welfare Plans or the SpinCo Health
and Welfare Plans, as applicable.
(r) "Incentive Plan," when immediately preceded by "Parent" means any
short-term or long-term compensation, bonus, stock-based or other incentive
compensation programs established or maintained by the Parent Group. When
immediately preceded by "SpinCo," "Incentive Plan" means any short-term or
long-term compensation, stock-based bonus, or incentive compensation programs to
be established or maintained by SpinCo pursuant to Section 2.3.
(s) "Individual Agreement" means an individual contract or agreement
(whether written or unwritten) entered into between a member of the Parent Group
or a member of the SpinCo Group and any employee or individual who will be an
employee of, or otherwise assigned to, the SpinCo Group immediately after the
Distribution Date that establishes the right of such individual to special
compensation or benefits, special bonuses, supplemental pension benefits, hiring
bonuses, loans, guaranteed payments, special allowances, tax equalization
payments, special expatriate compensation payments, disability benefits, or
other forms of compensation and benefits.
(t) "Liabilities" means any and all losses, claims, charges, debts,
premiums, demands, actions, costs, and expenses (including any current or future
benefit payments or other entitlements, and administrative and related costs and
expenses of any Plan, program, service or consulting agreement, or arrangement),
of any nature whatsoever, whether absolute or contingent, matured or unmatured,
liquidated or unliquidated, accrued or unaccrued, known or unknown, whether or
not imposed or determined by a court, whenever arising.
(u) "Material Feature" means any feature of a Plan that could reasonably
be expected to be of material importance to the sponsoring employer or the
participants and beneficiaries of the Plan, which could include, depending on
the type and purpose of the particular Plan, the class or classes of employees
eligible to participate in such Plan, the nature, type, form, source, and level
of benefits provided by the employer under such Plan and the amount or level of
contributions, if any, required or permitted to be made by participants (or
their dependents or beneficiaries) to such Plan.
(v) "Option" shall mean any stock option granted pursuant to a Parent
Incentive Plan prior to the Distribution.
(w) "Parent Common Stock" has the meaning given that term under the
Distribution Agreement.
(x) "Parent Group" has the meaning given that term under the
Distribution Agreement.
(y) "Participating Company" means any Person (other than an individual)
that is participating in a Plan sponsored by a member of the Parent Group or a
member of the SpinCo Group, as the context requires.
(z) "Person" means an individual, a general or limited partnership, a
corporation, a trust, a joint venture, an unincorporated organization, a limited
liability entity, any other entity, or any Governmental Authority.
(aa) "Plan," when immediately preceded by "Parent" or "SpinCo," means
any plan, policy, program, payroll practice, on-going arrangement, contract,
trust, insurance policy, or other agreement or funding vehicle, whether written
or unwritten, providing benefits to employees or former employees of the Parent
Group or the SpinCo Group, as applicable.
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(bb) "Rabbi Trust," when immediately preceded by "Parent" means the
Trust Agreement for the F.N.B. Corporation Directors' Compensation Plan. When
immediately preceded by "SpinCo", "Rabbi Trust" means the grantor trust to be
established by SpinCo pursuant to Section 6.4(a).
(cc) "Reimbursement Plans," when immediately preceded by "Parent," means
the health care flexible spending account plans and the dependent care flexible
spending account plans, as applicable. When immediately preceded by "SpinCo,"
"Reimbursement Plans" means the health care flexible spending account plan and
the dependent care flexible spending account plan to be established or
maintained by SpinCo pursuant to Section 2.3 that corresponds to the
corresponding Parent Reimbursement Plans.
(dd) "Retiree" means any person who prior to the Distribution Date
retires under a retirement plan or policy of Parent or its Subsidiaries.
(ee) "Savings Plan," when immediately preceded by "Parent," means the
F.N.B. Corporation Progress Savings 401(k) Plan that is sponsored by Parent and
will continue to be sponsored by Parent following the Distribution Date. When
immediately preceded by "SpinCo," "Savings Plan" means the F.N.B. Corporation
Salary Savings Plan that will be sponsored by SpinCo for periods immediately
after the Distribution Date.
(ff) "SpinCo Business" has the meaning given that term under the
Distribution Agreement.
(gg) "SpinCo Common Stock" has the meaning given that term under the
Distribution Agreement.
(hh) "SpinCo Group" has the meaning given that term under the
Distribution Agreement.
(ii) "SpinCo Mirror Plan" means any SpinCo Plans to be established that
will be substantially similar to a Parent Plan, as set forth on Appendix A
hereto.
(jj) "SpinCo Option" shall mean any stock option granted pursuant to a
SpinCo Incentive Plan.
(kk) "SpinCo Stand-Alone Plan" means any Plan maintained by Parent or an
affiliate of Parent, that, no later than the Distribution Date, will be assumed,
sponsored and maintained by SpinCo or a member of the SpinCo Group for the
exclusive benefit of Transferred Individuals, including but not limited to the
SpinCo Savings Plan, and those SpinCo Plans set forth and designated as
Stand-Alone Plans on Appendix A hereto.
(ll) "Subsidiary" has the meaning given that term under the Distribution
Agreement.
(mm) "Transferred Individual" means any individual who, as of the
Distribution Date:
(i) is actively employed by, or on a leave of absence (including
those individuals receiving short-term disability benefits and those
taking leave pursuant to the Family and Medical Leave Act of 1993, as
amended) from, a member of the SpinCo Group (or is deemed to be so
employed or on leave in accordance with an agreement between Parent and
SpinCo); or
(ii) is not actively employed by, nor on a leave of
absence (including those individuals receiving short-term
disability benefits and those taking leave pursuant to the
Family and Medical Leave Act of 1993, as amended) from, Parent
or a member of the Parent Group, or SpinCo or a member of the
SpinCo Group, and:
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a) whose most recent (through the Distribution Date)
active employment with Parent or a past or present affiliate of
Parent was with a member of the SpinCo Group or the SpinCo
Business, or the predecessors of such business; or
b) who otherwise is identified pursuant to a methodology
approved by Parent and SpinCo, which methodology shall be
consistent with the intent of the parties that former employees
of Parent or a past or present affiliate of Parent and such
other individuals who performed services for Parent (including
non-employees) will only be aligned with SpinCo if they provided
services to the SpinCo Group or SpinCo Business;
(iii) is employed by Parent as of the Distribution Date and is
designated as a Transferred Individual on Appendix C; or
(iv) is a Director of Parent prior to the Distribution Date but
will become a director of SpinCo immediately after the Distribution
Date.
An alternate payee under a qualified domestic relations order
(within the meaning of Code ss. 414(p) and ERISA ss. 206(d)), alternate
recipient under a qualified medical child support order (within the
meaning of ERISA ss. 609(a)), beneficiary, or covered dependent, in each
case, of an employee or former employee described in (i), (ii) or (iii)
above shall also be a Transferred Individual with respect to the
interest of such alternate payee, alternate recipient, beneficiary, or
covered dependent in that employee's or former employee's benefit under
the applicable Plans. Such an alternate payee, alternate recipient,
beneficiary, or covered dependent shall not otherwise be considered a
Transferred Individual with respect to his or her own benefits under any
applicable Plans, unless he or she is a Transferred Individual by virtue
of either of subparagraphs (i), (ii) or (iii) above. In addition, Parent
and SpinCo may agree to designate any other individuals, or group of
individuals, as Transferred Individuals.
Subject to the other provisions of this definition, an individual
may be a Transferred Individual pursuant to this definition regardless
of whether such individual is, as of the Distribution Date, alive,
actively employed, on a temporary leave of absence from active
employment, on layoff, terminated from employment, retired or on any
other type of employment, post-employment, or independent contractor
status relative to Parent or SpinCo or to a Parent or SpinCo Plan.
Nothing contained in this Agreement shall permit, or be
construed or interpreted to permit, any non-employee of Parent or SpinCo
to participate, at any time, in any Plan of Parent or SpinCo.
SECTION 1.2 References. Unless the context clearly indicates
otherwise, reference to a particular Article, Section, subsection or paragraph
means the Article, Section, subsection or paragraph so delineated in this
Agreement.
ARTICLE II
GENERAL PRINCIPLES
SECTION 2.1 Assumption of Liabilities. Except for each Liability
that is expressly retained in writing by Parent or excluded in writing by Parent
from those being assumed by SpinCo and unless otherwise provided for elsewhere
in this Agreement, SpinCo hereby assumes and agrees to pay, perform, fulfill,
and discharge, in accordance with their respective terms and conditions, all of
the following (regardless of when or where such Liabilities arose or arise or
were or are incurred): (i) all Liabilities to or relating to Transferred
Individuals, and their dependents and beneficiaries, under or with respect to
employee compensation programs, Plans or policies to the extent relating to,
arising out of or
5
resulting from future, present, or former employment with SpinCo, a member of
the SpinCo Group, Parent or a member of the Parent Group, (including Liabilities
under Parent Plans and SpinCo Plans), (ii) all Liabilities under any Individual
Agreements relating to Transferred Individuals, and (iii) all other Liabilities
relating to, arising out of, or resulting from obligations, liabilities, and
responsibilities expressly assumed or retained by a member of the SpinCo Group
or a SpinCo Plan pursuant to this Agreement.
SECTION 2.2 Termination of Participating Company Status. Unless
otherwise provided in this Agreement, to the extent applicable, effective as of
the Distribution Date, SpinCo and each member of the SpinCo Group shall cease to
be a Participating Company in any of the Parent Plans remaining with Parent, and
Parent and each member of the Parent Group shall cease to be a Participating
Company in any Plan assumed by SpinCo or a member of the SpinCo Group.
SECTION 2.3 Establishment or Assumption of the SpinCo Plans.
(a) Assumption of SpinCo Stand-Alone Plans. Unless otherwise provided in
this Agreement, effective no later than the Distribution Date, SpinCo or a
member of the SpinCo Group shall assume or cause to be assumed, the SpinCo
Stand-Alone Plans set forth on Appendix A to this Agreement for the benefit of
Transferred Individuals and other current, future and former employees of the
SpinCo Group. SpinCo and Parent shall take all action necessary to provide for
such assumption of the SpinCo Stand-Alone Plans, including any necessary
amendments, and the name of the Plans shall be changed as and where appropriate.
(b) Establishment of SpinCo Mirror Plans. Unless otherwise provided in
this Agreement, effective no later than the Distribution Date, SpinCo or a
member of the SpinCo Group shall adopt or cause to be adopted, the SpinCo Mirror
Plans for the benefit of Transferred Individuals and other current, future, and
former employees of the SpinCo Group, all as set forth in Appendix A to this
Agreement. The foregoing SpinCo Mirror Plans as in effect immediately after the
Distribution Date shall be substantially identical in all Material Features to
the corresponding Parent Plans as in effect as of the Distribution Date. Nothing
in this Agreement shall prohibit SpinCo from choosing to enter into ASO
Contracts, Group Insurance Policies, HMO Agreements, letters of understanding or
other arrangements with new or different vendors with respect to the SpinCo
Mirror Plans to be established pursuant to this Section 2.3.
SECTION 2.4 Terms of Participation by Transferred Individuals.
The SpinCo Plans shall be, with respect to Transferred Individuals, in all
respects the successors in interest to, shall recognize all rights and
entitlements as of the Distribution Date under, and shall not provide benefits
that duplicate benefits provided by, the corresponding Parent Plans for such
Transferred Individuals. Parent and SpinCo shall agree on methods and
procedures, including amending the respective Plan documents, to prevent
Transferred Individuals from receiving duplicative benefits from the Parent
Plans and the SpinCo Plans. SpinCo shall not permit any SpinCo Plan to commence
benefit payments to Transferred Individuals until it receives written notice
from Parent regarding the date on which payments under the corresponding Parent
Plan shall cease. To the extent permitted by applicable law, with respect to
Transferred Individuals, each SpinCo Plan shall provide that all benefit or
other elections, all designations of beneficiaries, all service, all
compensation, and all other benefit-affecting determinations that, as of the
Distribution Date, were recognized under the corresponding Parent Plan (for
periods immediately before the Distribution Date) shall, as of immediately after
the Distribution Date, receive full recognition, credit, and validity and be
taken into account under such SpinCo Plan to the same extent as if such items
originally occurred under such SpinCo Plan, except to the extent that
duplication of benefits would result. The provisions of this Agreement for the
transfer of assets, if any, from certain trusts relating to Parent Plans to the
corresponding trusts relating to SpinCo Plans are based upon the understanding
and agreement of the parties that each such SpinCo Plan will assume all
Liabilities under the corresponding Parent Plan to or relating to Transferred
Individuals, as provided for herein. If there are any legal or other
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authoritative reasons that any such Liabilities are not effectively assumed by
the appropriate SpinCo Plan, then the amount of assets transferred to the trust
relating to such SpinCo Plan from the trust relating to the corresponding Parent
Plan shall be recomputed, ab initio, as set forth in this Agreement but taking
into account the retention of any such Liabilities by such Parent Plan, and
assets shall be transferred by the trust relating to such SpinCo Plan to the
trust relating to such Parent Plan so as to place each such trust in the
position it would have been in, had the initial asset transfer been made in
accordance with such recomputed amount of transferred Liabilities and assets.
ARTICLE III
DEFINED BENEFIT PLANS
SECTION 3.1 F.N.B. Corporation Retirement Income Plan. All
Transferred Individuals who are participants in the F.N.B. Corporation
Retirement Income Plan shall be deemed "terminated vested participants" for
purposes of this plan and shall be treated in accordance with the terms of the
plan. No SpinCo Mirror Plan will be established for the F.N.B. Corporation
Retirement Income Plan in connection with the Distribution.
ARTICLE IV
DEFINED CONTRIBUTION PLANS
SECTION 4.1 Savings Plans. Effective no later than the
Distribution Date, SpinCo or a member of the SpinCo Group shall take all action
necessary to assume and become the plan sponsor of the SpinCo Savings Plan and
shall be responsible for all Liabilities relating to the SpinCo Savings Plan.
The SpinCo Savings Plan shall recognize and maintain all contribution and
investment elections made by Transferred Individuals under the SpinCo Savings
Plan as such elections were last in effect during the period immediately prior
to the Distribution Date and shall apply such elections under the SpinCo Savings
Plan for the remainder of the period or periods for which such elections are by
their terms applicable (subject in all cases to applicable election change
rights of the Transferred Individuals). The Xxxxx Xxxxxxxx Insurance, Inc.
401(k) Profit Sharing and Trust Plan, which is presently sponsored by Xxxxx
Xxxxxxxx Insurance, Inc. ("Xxxxxxxx"), shall continue to be sponsored by
Xxxxxxxx for periods immediately after the Distribution Date. Xxxxxxxx, as a
member of the SpinCo Group, shall be responsible for all Liabilities relating to
the Xxxxx Xxxxxxxx Insurance, Inc. 401(k) Profit Sharing and Trust Plan. Any
employees of the Parent Group who are participants in the Xxxxx Xxxxxxxx
Insurance, Inc. 401(k) Profit Sharing and Trust Plan and are not Transferred
Individuals shall be deemed terminated for purposes of this plan and shall be
treated in accordance with the terms of such plan.
ARTICLE V
HEALTH AND WELFARE PLANS
SECTION 5.1 Assumption of Health and Welfare Plan Liabilities.
(a) Assumption by SpinCo. Effective no later than the Distribution Date,
SpinCo shall establish, or cause to be established, the SpinCo Health and
Welfare Plans. Immediately after the Distribution Date, all Liabilities for or
relating to Transferred Individuals under the Parent Health and Welfare Plans,
shall cease to be Liabilities of Parent or the Parent Health and Welfare Plans
and shall be assumed by SpinCo and the corresponding SpinCo Health and Welfare
Plans. Thus, SpinCo and the SpinCo Health and Welfare Plans shall be responsible
for all Liabilities that pertain to Transferred Individuals regardless of when
incurred, including all reported claims that are unpaid, all incurred but not
reported claims as of the Distribution Date, and all claims incurred after the
Distribution Date that pertain to Transferred Individuals under the Parent
Health and Welfare Plans and the SpinCo Health and Welfare Plans. SpinCo shall
be required to make all payments due or payable to Transferred Individuals under
the appropriate SpinCo Health and Welfare Plans for the period beginning
immediately after the Distribution
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Date, including all reported claims that are unpaid and all incurred but not
reported claims as of the Distribution Date. To the extent permitted by the
applicable Plans, all treatments which have been pre-certified for or are being
provided on an on-going basis to a Transferred Individual under the Parent
Health and Welfare Plans as of the Distribution Date shall continue to be
provided without interruption under the appropriate SpinCo Health and Welfare
Plan until such treatment is concluded or discontinued pursuant to applicable
plan rules and limitations, and SpinCo and the SpinCo Health and Welfare Plans
shall be responsible for all Liabilities relating to, arising out of, or
resulting from such pre-certified or on-going treatments as of the Distribution
Date. Notwithstanding the preceding provisions of this Section 5.1, neither
SpinCo nor a SpinCo Health and Welfare Plan shall assume any Liability with
respect to: (i) a claim incurred on or prior to the Distribution Date for which
Parent or a Parent Health and Welfare Plan has insurance coverage, or (ii) any
benefit claim for which Parent is responsible under Section 5.3.
(b) Certain Audit Procedures with Respect to Health and Welfare Plans.
At periodic intervals beginning immediately after the Distribution Date, Parent
and SpinCo shall examine their respective payments and receipts for health and
welfare coverages to ascertain whether Parent has mistakenly made or received
payments for coverages with respect to Transferred Individuals and whether
SpinCo has mistakenly made or received payments for coverages with respect to
participants and beneficiaries in the Parent Health and Welfare Plans (other
than Transferred Individuals). If any such mistaken payments have been made or
received by Parent or SpinCo, such mistaken payments and receipts shall first be
netted against each other by Parent and SpinCo and thereafter such net payments
or net receipts shall be further netted against the other party's net payments
or net receipts. The party with the remaining amount of mistaken payments shall
transfer such amount in cash to the other party at such time or times as agreed
upon by Parent and SpinCo, but not less than semi-annually. Furthermore, at
periodic intervals beginning immediately after the Distribution Date, Parent and
SpinCo shall examine the payment of benefits and claims, and reimbursements for
expenses, by their respective Health and Welfare Plans to ascertain whether any
Parent Health and Welfare Plan has mistakenly paid claims or benefits, or
reimbursed expenses, with respect to Transferred Individuals and whether any
SpinCo Health and Welfare Plan has mistakenly paid claims or benefits, or
reimbursed expenses, with respect to participants and beneficiaries in the
Parent Health and Welfare Plans (other than Transferred Individuals). If any
such mistaken payments or reimbursements have been made by any Parent or SpinCo
Health and Welfare Plan, such mistaken payments and reimbursements shall be
netted against the other corresponding Health and Welfare Plan's mistaken
payments and reimbursements. The Health and Welfare Plan with the remaining
amount of mistaken payments and reimbursements shall transfer such amount in
cash to the other party's corresponding Health and Welfare Plan at such time or
times as agreed upon by Parent and SpinCo, but not less than semi-annually.
SECTION 5.2 Parent Short-Term Disability Arrangements. Any final
determinations made by Parent with respect to short-term disability claims by
Transferred Individuals prior to the Distribution Date shall be final and
binding. Parent shall transfer to SpinCo, effective immediately after the
Distribution Date, and SpinCo shall assume responsibility for (i) administering
all short-term disability claims incurred by Transferred Individuals before the
Distribution Date that are administered by Parent as of the Distribution Date,
and (ii) all Liabilities under any Parent short-term disability arrangements to
Transferred Individuals as of the Distribution Date, in the same manner, and
using the same methods and procedures, as Parent used in determining and paying
such claims. Effective immediately after the Distribution Date, SpinCo shall
have sole discretionary authority to make any necessary determinations with
respect to such claims, including entering into settlements with respect to such
claims, and shall be solely responsible for any costs, Liabilities or related
expenses of any nature whatsoever related to such claims, payments or
obligations.
SECTION 5.3 COBRA and HIPAA. Effectively immediately after the
Distribution Date, SpinCo or a member of the SpinCo Group shall be responsible
for administering compliance and providing coverage in accordance with the
health care continuation coverage requirements for "group
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health plans" under Title X of the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended ("COBRA"), and the portability requirements (including
the requirements for issuance of certificates of creditable coverage) under the
Health Insurance Portability and Accountability Act of 1996 with respect to all
Transferred Individuals and other employees and former employees of SpinCo or a
member of the SpinCo Group and any beneficiaries and dependents thereof who
experience a COBRA qualifying event or loss of coverage under the SpinCo Health
and Welfare Plans after the Distribution Date. Effective immediately after the
Distribution Date, SpinCo or a member of the SpinCo Group shall be responsible
for filing all necessary employee change notices with respect to these persons
identified in the previous sentence in accordance with applicable law.
SECTION 5.4 Leave of Absence Programs. Effective immediately
after the Distribution Date, SpinCo shall, or shall cause a member of the SpinCo
Group to, assume sole responsibility for the administration and compliance of
all leaves of absences and related programs (including compliance with the
Family and Medical Leave Act of 1993, as amended) affecting Transferred
Individuals.
SECTION 5.5 Post-Distribution Transitional Arrangements.
(a) Continuance of Elections, Co-Payments, and Maximum Benefits.
To the extent permitted by the applicable Health and Welfare
Plan and applicable law:
(i) SpinCo shall cause the SpinCo Health and Welfare Plans to
recognize and maintain all coverage and contribution elections made by
Transferred Individuals under the Parent Health and Welfare Plans, as
such elections were last in effect during the period immediately prior
to the Distribution Date, and shall apply such elections under the
SpinCo Health and Welfare Plans for the remainder of the period or
periods for which such elections are by their terms applicable (subject
to applicable election change rights). Parent shall cause the claims
administrator for the Parent Health and Welfare Plans to transfer to the
claims administrator for the SpinCo Health and Welfare Plans all data
necessary to maintain such coverage and elections.
(ii) SpinCo shall cause the SpinCo Health and Welfare Plans to
recognize and give credit for (A) all amounts applied to deductibles,
out-of-pocket maximums, and other applicable benefit coverage limits
with respect to such expenses which have been incurred by Transferred
Individuals under the Parent Health and Welfare Plans for the remainder
of the benefit limit year in which the Distribution occurs, and (B) all
benefits paid to Transferred Individuals under the Parent Health and
Welfare Plans, during and prior to the benefit limit year in which the
Distribution occurs, for purposes of determining when such persons have
reached their maximum benefits under the SpinCo Health and Welfare
Plans.
(iii) SpinCo shall recognize and cover under the SpinCo Health
and Welfare Plans all eligible employee groups covered by the Parent
Health and Welfare Plans (pertaining to Transferred Individuals) as of
the Distribution Date (determined under the applicable Plan documents).
(iv) SpinCo shall (A) provide coverage to Transferred
Individuals under the SpinCo Health and Welfare Plans without the need
to undergo a physical examination or otherwise provide evidence of
insurability, and (B) recognize and maintain all irrevocable
assignments, elections and beneficiary designations made by Transferred
Individuals in connection with their life insurance coverage under the
Parent Health and Welfare Plans and any predecessor plans.
9
(b) Parent Reimbursement Plans. To the extent any Transferred Individual
contributed to an account under the Parent Reimbursement Plans during the
calendar year that includes the Distribution Date, effective immediately after
the Distribution Date, SpinCo shall recognize any such Transferred Individual's
account balance, determined as of the Distribution Date, and SpinCo shall
thereafter be solely responsible for making any and all payments relative to
such account balance of the Transferred Individual for all claims during such
calendar year under the applicable SpinCo Reimbursement Plan. All elections by
Transferred Individuals in effect immediately prior to the Distribution Date
shall continue and be recognized by SpinCo, and the Distribution alone shall not
be considered an event that gives any participant the right to change any prior
election. As soon as practicable after the Distribution Date, Parent shall
calculate as of the Distribution Date the aggregate net balance in the accounts
of Transferred Individuals under the Parent Reimbursement Plans, expressed
relative to the contributions received from such Transferred Individuals. If the
contributions received from a Transferred Individual exceed the reimbursements
made to or on behalf of such Transferred Individual, the Transferred Individual
shall be deemed to have a positive account balance. In turn, if the
contributions received from a Transferred Individual are less than the
reimbursements made to or on behalf of such Transferred Individual, the
Transferred Individual shall be deemed to have a negative account balance. If
the aggregate net balance in the accounts of all such Transferred Participants
is a positive number, then Parent shall pay this amount in cash to SpinCo as
soon as practicable after the Distribution Date, and if the aggregate net
balance in the accounts of all such Transferred Participants is a negative
number, then SpinCo shall pay this amount in cash to Parent as soon as
practicable after the Distribution Date.
SECTION 5.6 Application of Article V to the SpinCo Group. Any
reference in this Article V to "SpinCo" shall include a reference to another
member of the SpinCo Group when and to the extent SpinCo has caused the other
member of the SpinCo Group to (a) become a party to an ASO Contract, Group
Insurance Policy, HMO Agreement, letter of understanding or arrangement
associated with a SpinCo Health and Welfare Plan, (b) become a self-insured
entity for the purposes of one or more SpinCo Health and Welfare Plans, (c)
assume all or a portion of the Liabilities or the administrative
responsibilities with respect to benefits which arose before the Distribution
Date under any Parent Health and Welfare Plan and which were expressly assumed
by SpinCo pursuant to this Agreement, or (d) take any other action, extend any
coverage, assume any other Liability or fulfill any other responsibility that
SpinCo would otherwise be required to take under the terms of this Article V,
unless it is clear from the context that the particular reference is not
intended to include another member of the SpinCo Group. In all such instances in
which a reference in this Article V to "SpinCo" includes a reference to another
member of the SpinCo Group, SpinCo shall be responsible to Parent for ensuring
that the other member of the SpinCo Group complies with the applicable terms of
this Agreement and that the Transferred Individuals employed by such member of
the SpinCo Group shall have the same rights and entitlements to benefits under
the applicable SpinCo Health and Welfare Plans that the Transferred Individual
would have had, if he or she had instead been employed by SpinCo.
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ARTICLE VI
EXECUTIVE COMPENSATION MATTERS
SECTION 6.1 F.N.B. Restricted Stock and Incentive Bonus Plan.
(a) Annual Incentive Awards. For the performance period ended December
31, 2003, Parent shall pay to participants (excluding Transferred Individuals)
any amounts earned under the Parent Restricted Stock and Incentive Bonus Plan at
the time and in the manner provided under the terms of such plan and SpinCo
shall pay to participants who are also Transferred Individuals any amounts
earned under the Parent Restricted Stock and Incentive Bonus Plan at the time
and in the manner provided under the terms of such plan.
(b) Restricted Stock Awards.
(i) Each Award that consists of unvested restricted shares of
Parent Common Stock that is outstanding as of the Distribution Date and
is held by a Transferred Individual shall be converted, effective
immediately after the Distribution Date, into a new Award under a SpinCo
Incentive Plan consisting of such number of unvested restricted shares
of SpinCo Common Stock with a value equal to the economic value of the
unvested restricted shares of Parent Common Stock constituting such
Award as of the last trading day immediately preceding the Distribution
Date. The number of unvested restricted shares of SpinCo Common Stock
shall be determined by dividing the "economic value" of the Parent
Common Stock subject to such Award by the closing price per share of
SpinCo Common Stock as reported on the New York Stock Exchange (on a
when-issued basis) on the last trading day immediately preceding the
Distribution Date, rounded down to the nearest whole share. Each such
converted Award shall otherwise have the same terms and conditions as
were applicable to the corresponding Parent Award as of the Distribution
Date, except that references to Parent shall be amended to refer to
SpinCo and dividend equivalent payments, if any, shall be payable after
the Distribution Date with reference to dividends on SpinCo Common
Stock.
(ii) Each Award that consists of unvested restricted shares of
Parent Common Stock that is outstanding as of the Distribution Date and
is held by a Person other than a Transferred Individual shall be
adjusted, effective immediately after the Distribution Date, such that
the number of unvested shares of Parent Common Stock subject to such
Award immediately after the Distribution Date shall have a value equal
to the economic value of the unvested restricted shares of Parent Common
Stock constituting such Award as of the last trading day immediately
preceding the Distribution Date. The number of unvested restricted
shares of Parent Common Stock subject to the adjusted Award shall be
determined by dividing (x) the economic value of the Parent Common Stock
subject to such Award immediately preceding the Distribution Date by (y)
the difference between the closing price per share of Parent Common
Stock (with a due xxxx) and the closing price per share of SpinCo Common
Stock (on a when-issued basis) as reported on the New York Stock
Exchange on the last trading day immediately preceding the Distribution
Date, rounded down to the nearest whole share. For purposes of this
Section 6.1(b), the "economic value" of the Parent Common Stock subject
to such Award shall be determined by multiplying the number of unvested
restricted shares of Parent Common Stock subject to such Award by the
closing price per share of Parent Common Stock (with a due xxxx) on the
last trading day immediately preceding the Distribution Date as reported
by the New York Stock Exchange.
(iii) Each vested share of Parent Common Stock subject to an
Award shall be entitled to receive a share of SpinCo Common Stock in the
same manner as every other outstanding share of Parent Common Stock on
the Distribution Date.
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SECTION 6.2 Stock Options.
(a) Options Held by Transferred Individuals. Each Option that is
outstanding as of the Distribution Date and is held by a Transferred Individual,
other than a Director or Retiree (which shall be treated as provided in Section
6.2(c) below), shall be replaced immediately after the Distribution Date, with a
SpinCo Option under a SpinCo Incentive Plan. The number of Shares of SpinCo
Common Stock subject to each SpinCo Option and the exercise price of each such
SpinCo Option shall be determined by application of the Conversion Formula to
the corresponding Option held by a Transferred Individual, other than a Director
or Retiree (except as provided in Section 6.2(c) below). Each such SpinCo Option
shall otherwise have the same terms and conditions as were applicable to the
corresponding Option as of the Distribution Date, except that references to
Parent and the Parent Group shall be amended to refer to SpinCo and the SpinCo
Group. SpinCo shall be the obligor with respect to such SpinCo Options and shall
be solely responsible for all stock option grants and payments under the SpinCo
Incentive Plans, with respect to, but not limited to, recordkeeping,
administrative costs and fees, payroll taxes, plan maintenance, option exercise
and related tax filings. SpinCo shall, as soon as practicable after the
Distribution Date, provide Transferred Individuals, and Directors and Retirees
who receive SpinCo Options pursuant to Section 6.2(c), an agreement or notice
relating to such Person's options under the SpinCo Incentive Plans.
(b) Options Held by Persons other than Transferred Individuals. Each
Option that is outstanding as of the Distribution Date and is held by a Person
other than (i) a Transferred Individual or (ii) a Director or Retiree (which
shall be treated as provided in Section 6.2(c) below), shall be adjusted by
application of the Conversion Formula to such Option. Each such Option shall
otherwise have the same terms and conditions as were applicable to the such
Option as of the Distribution Date. Parent shall, as soon as practicable after
the Distribution Date, provide to such Persons whose Options are adjusted
pursuant to this Section 6.2(b), an agreement or notice relating to the
adjustment to such Person's Options.
(c) Options held by Directors or Retirees. Each Option that is
outstanding as of the Distribution Date and is held by a Director or Retiree
shall be treated as follows:
(i) fifty percent (50%) of the number of shares of Parent Common
Stock subject to each such Option, rounded down to the nearest whole
share, shall be converted to SpinCo Options in accordance with Section
6.2(a) as if such Director or Retiree was a Transferred Individual with
respect to that portion of such Director's or Retiree's Option; and
(ii) fifty percent (50%) of the number of shares of Parent
Common Stock subject to each such Option, rounded down to the nearest
whole share, shall be adjusted in accordance with Section 6.2(b) as if
such Director or Retiree was not a Transferred Individual with respect
to that portion of such Director's or Retiree's Option.
SECTION 6.3 Deferred Compensation Plans.
(a) Establishment of SpinCo Deferred Compensation Plans. Effective no
later than the Distribution Date, SpinCo shall take all action necessary to
establish the SpinCo Deferred Compensation Plans that are SpinCo Mirror Plans.
Parent and SpinCo shall take all action necessary, including any necessary
amendments to such plans, to cause the amounts credited to the accounts of
Transferred Individuals under the Parent Deferred Compensation Plans to be
transferred to the applicable SpinCo Deferred Compensation Plans.
The Transferred Individuals' termination of employment with the Parent
Group as a result of the Distribution shall not constitute a termination of
employment for purposes of the Parent or SpinCo Deferred Compensation Plans. All
elections by the Transferred Individuals that were controlling under the
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terms of the applicable Parent Deferred Compensation Plan prior to the
Distribution shall continue under the applicable SpinCo Deferred Compensation
Plan until changed under the terms of such Plan. All investment choices of
Transferred Individuals under the Parent or SpinCo Deferred Compensation Plans
shall also be continued in effect; provided, however, that any portion of a
Transferred Individual's account balance that is deemed to be invested in
phantom shares of Parent Common Stock shall be converted into deemed investments
in phantom shares of SpinCo Common Stock in a manner similar to the conversion
of unvested shares of restricted stock as provided in Section 6.1(b)(i) hereof.
With respect to participants in the Parent Deferred Compensation Plans who are
not Transferred Individuals, any portion of such participant's account balance
that is deemed to be invested in phantom shares of Parent Common Stock shall
continue to be deemed invested in phantom shares of Parent Common Stock and
shall be adjusted in a manner similar to the adjustment of shares of unvested
restricted stock as provided in Section 6.1(b)(ii) hereof. Nothing herein shall
restrict Parent's or SpinCo's rights to amend or terminate their respective
Plans in the future.
(b) Transfer of Corporate-Owned Life Insurance. The corporate-owned life
insurance policies which are jointly owned by Parent and a member of the SpinCo
Group on the Distribution Date that have been held by Parent or its affiliates
to help fund its obligations under Parent's various employee benefit Plans will
continue after the Distribution Date to be governed by the management plan (the
"Management Plan") by and among Parent, First National Bank of Pennsylvania and
First National Bank of Florida. Any changes to the Management Plan after the
Distribution Date, including, but not limited to, changes regarding policy
contracts, distribution of reports, selection and allocation of investment
divisions, policy surrender, policy value withdrawals, policy loans, or the
transfer to SpinCo or its affiliates of any such corporate-owned life insurance
policies, shall require the written consent of all parties to the Management
Plan, which consent shall not be unreasonably withheld.
SECTION 6.4 Rabbi Trust. Effective no later than the
Distribution Date, SpinCo shall establish, or cause to be established, the
SpinCo Rabbi Trust as a grantor trust subject to Code Sections 671 et seq.,
which shall be substantially similar in all Material Features to the Parent
Rabbi Trust and shall hold those shares of SpinCo Common Stock to be issued in
the Distribution with respect to shares of Parent Common Stock held in the
Parent Rabbi Trust. SpinCo shall appoint First National Wealth Management
Company as trustee under the SpinCo Rabbi Trust.
SECTION 6.5 Employment Agreements. On or before the Distribution
Date, Parent shall assign and SpinCo shall assume the employment agreements with
the Transferred Individuals listed in Appendix B. Except as set forth in the
assignment agreements with respect to each individual employment agreement,
SpinCo shall be solely responsibly for all Liabilities related to the SpinCo
employment agreements with the Transferred Individuals.
SECTION 6.6 Automobile Program. As of the Distribution Date,
SpinCo shall assume all of Parent's Liabilities and obligations with respect to
the motor vehicles leased by Parent for Transferred Individuals pursuant to
lease agreements under any Parent executive automobile program.
SECTION 6.7 Director Benefits.
(a) F.N.B. Corporation Directors' Compensation Plan. Effective not later
than the Distribution Date, SpinCo shall establish a SpinCo Directors'
Compensation Plan that, except as necessary to give effect to the provisions of
this Section 6.7(a), is substantially identical in all Material Features to the
F.N.B. Corporation Directors' Compensation Plan. In connection with the
Distribution, Parent shall either (i) cause the trustee of the Parent Rabbi
Trust to transfer the shares of SpinCo Common Stock which relate to shares of
Parent Common Stock previously deferred by participants in the F.N.B. Directors'
Compensation Plan to the SpinCo Rabbi Trust as set forth in Section 6.4, or (ii)
cause such shares of SpinCo Common Stock to be distributed directly to such
SpinCo Rabbi Trust in the
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Distribution. SpinCo shall assume and be solely responsible for (x) all
Liabilities under the F.N.B. Corporation Directors' Compensation Plan relating
to the deferred payment of cash compensation to individuals who are Transferred
Individuals and (y) all Liabilities under the F.N.B. Corporation Directors'
Compensation Plan relating to the deferred payment of shares of SpinCo Common
Stock to participants in the F.N.B. Corporation Directors' Compensation Plan
(including those individuals who are not Transferred Individuals), but in the
case of clause (y), only to the extent attributable to the SpinCo Common Stock
distributed by Parent in the Distribution with respect to the Parent Common
Stock held in the Parent Rabbi Trust. Parent shall retain all Liabilities under
the F.N.B. Corporation Directors' Compensation Plan relating to the deferred
payment of shares of Parent Common Stock to participants in the F.N.B.
Corporation Directors' Compensation Plan (including those individuals who are
Transferred Individuals).
(b) Directors' Stock Option Plan. Effective not later than the
Distribution Date, SpinCo shall establish the SpinCo Directors' Stock Option
Plan that is substantially identical in all Material Features to the F.N.B.
Corporation 1998 Directors' Stock Option Plan. All outstanding options held by
Directors of Parent, including those Directors who will become directors of
SpinCo, shall be treated as provided in Section 6.2(c).
SECTION 6.8 Vacation Pay/Paid Time-Off. As of the Distribution
Date, the SpinCo Group shall recognize all of the Transferred Individuals'
accrued and unused vacation benefits consistent with the terms of the vacation
policies of Parent applicable to the Transferred Individuals as is in effect on
the Distribution Date and shall assume or retain liability for all unpaid
vacation pay, sick pay, and personal leave accrued by Transferred Individuals as
of the Distribution Date.
SECTION 6.9 Split Dollar Life Insurance. On or before the
Distribution Date, Parent shall take all action necessary to implement the
proposals approved by Parent's Compensation Committee at a meeting of such
committee held on December 15, 2003 with respect to all split-dollar life
insurance arrangements or policies entered into between employees of Parent and
SpinCo, on the one hand, and Parent, on the other hand.
ARTICLE VII
GENERAL
SECTION 7.1 Sharing of Participant Information. Subject to
applicable laws on confidentiality, Parent and SpinCo shall share, Parent shall
cause each applicable member of the Parent Group to share, and SpinCo shall
cause each applicable member of the SpinCo Group to share, with each other and
their respective agents and vendors (without obtaining releases) all participant
information necessary for the efficient and accurate administration of each of
the Parent Plans and the SpinCo Plans with respect to periods ending on or
before the Distribution Date. Parent and SpinCo and their respective authorized
agents shall, subject to applicable laws on confidentiality, be given reasonable
and timely access to, and may make copies of, all information relating to the
subjects of this Agreement in the custody of the other party, to the extent
necessary for such administration. Until the Distribution Date, all participant
information shall be provided in the manner and medium applicable to
Participating Companies in the Parent Plans generally, and thereafter until
December 31, 2004, all participant information shall be provided in a manner and
medium that is compatible with the data processing systems of Parent as in
effect on the Distribution Date, unless otherwise agreed to by Parent and
SpinCo.
SECTION 7.2 Restrictions on Extension of Option Exercise
Periods, Amendment or Modification of Option Terms and Conditions. SpinCo agrees
that, without the prior written consent of Parent, neither SpinCo nor any of its
affiliates or Subsidiaries shall take any action to extend the exercise period
of or to provide for additional vesting with respect to any SpinCo options which
were issued
14
pursuant to Section 6.2 in replacement of Parent options for Transferred
Individuals, including providing such Transferred Individuals with leaves of
absences or special termination or severance arrangements.
SECTION 7.3 Reporting and Disclosure and Communications to
Participants. SpinCo shall assist, and SpinCo shall cause each other applicable
member of the SpinCo Group to assist, Parent in complying with all reporting and
disclosure requirements of ERISA for plan years ending on or before December 31,
2003, including the preparation of Form 5500 annual reports for the Parent
Plans, where applicable.
SECTION 7.4 Plan Audits.
(a) Audit Rights with Respect to Information Provided.
(i) Subject to Section 7.4(a)(ii), each of Parent and SpinCo,
and their duly authorized representatives, shall have the right to
conduct audits at any time upon reasonable prior notice, at their own
expense, with respect to all information provided to it or to any Plan
recordkeeper or third-party administrator by the other party with
respect to all periods ending on or before the Distribution Date.
Subject to Section 7.4(a)(ii), the party conducting the audit shall have
the sole discretion to determine the procedures and guidelines for
conducting audits and the selection of audit representatives. The
auditing party shall have the right to make copies of any records at its
expense, subject to the confidentiality provisions set forth in the
Distribution Agreement, which are incorporated by reference herein. The
party being audited shall provide the auditing party's representatives
with reasonable access during normal business hours to its operations,
computer systems and paper and electronic files, and provide workspace
to its representatives. After any audit is completed, the party being
audited shall have the right to review a draft of the audit findings and
to comment on those findings in writing within five business days after
receiving such draft.
(ii) The auditing party's audit rights under this Section 7.4(a)
shall include the right to audit, or participate in an audit facilitated
by the party being audited, of any Subsidiaries and affiliates of the
party being audited and of any benefit providers and third parties with
whom the party being audited has a relationship, or agents of such
party, to the extent any such persons are affected by or addressed in
this Agreement (collectively, the "Non-parties"). The party being
audited shall, upon written request from the auditing party, provide an
individual (at the auditing party's expense) to supervise any audit of
any Non-party. The auditing party shall be responsible for supplying, at
its expense, additional personnel sufficient to complete the audit in a
reasonably timely manner.
(b) Audits Regarding Vendor Contracts. From immediately after the
Distribution Date through December 31, 2004, Parent and SpinCo and their duly
authorized representatives shall have the right to conduct joint audits with
respect to any vendor contracts that relate to both the Parent Health and
Welfare Plans and the SpinCo Health and Welfare Plans. The scope of such audits
shall encompass the review of all correspondence, account records, claim forms,
canceled drafts (unless retained by the bank), provider bills, medical records
submitted with claims, billing corrections, vendor's internal corrections of
previous errors and any other documents or instruments relating to the services
performed by the vendor under the applicable vendor contracts. Parent and SpinCo
shall agree on the performance standards, audit methodology, auditing policy and
quality measures and reporting requirements relating to the audits described in
this Section 7.4(b) and the manner in which costs incurred in connection with
such audits will be shared. In the event that the parties cannot agree on the
matters described in this Section 7.4(b), such matters shall be subject to the
dispute resolution process set forth in Section 7.13 of this Agreement.
(c) Audit Assistance. To the extent that either Parent or SpinCo is
required to respond to any Governmental Authority, vendor or recordkeeper audit,
or otherwise conducts an audit with respect to any
15
provision or obligation of the other party under this Agreement, Parent or
SpinCo, whichever is applicable, shall be required to fully cooperate with the
audit, including providing such records and data as may be necessary to respond
to any document or data request that may arise by reason of such audit. The
party being audited shall provide the auditing party's representatives with
reasonable access during normal business hours to its operations, computer
systems and paper and electronic files, and provide workspace to its
representatives. To the extent the results of an audit result in any correction
to the Liabilities involving any Transferred Individuals, Parent shall be solely
responsible for all such costs and expenses associated with such Liabilities and
any related corrections.
SECTION 7.5 Beneficiary Designations/Release of
Information/Right of Reimbursement. All beneficiary designations, authorizations
for the release of information and rights to reimbursement made by or relating
to Transferred Individuals under Parent Plans shall be transferred to and be in
full force and effect under the corresponding SpinCo Plans until such
beneficiary designations, authorizations or rights are replaced or revoked by,
or no longer apply, to the relevant Transferred Individual.
SECTION 7.6 Requests for Internal Revenue Service Rulings and
United States Department of Labor Opinions. SpinCo shall cooperate fully with
Parent on any issue relating to the transactions contemplated by this Agreement
for which Parent elects to seek a determination letter or private letter ruling
from the Internal Revenue Service or an advisory opinion from the United States
Department of Labor. Parent shall cooperate fully with SpinCo with respect to
any request for a determination letter or private letter ruling from the
Internal Revenue Service or advisory opinion from the United States Department
of Labor with respect to any of the SpinCo Plans relating to the transactions
contemplated by this Agreement. Any reasonable expenses incurred by the
cooperating party shall be borne by the party which is seeking cooperation.
SECTION 7.7 Fiduciary and Related Matters. The parties
acknowledge that Parent will not be a fiduciary with respect to the SpinCo Plans
and that SpinCo will not be a fiduciary with respect to the Parent Plans. The
parties also acknowledge that neither party shall be deemed to be in violation
of this Agreement if it fails to comply with any provisions hereof based upon
its good faith determination that to do so would violate any applicable
fiduciary duties or standards of conduct under ERISA or other applicable law.
Notwithstanding any other provision in this Agreement, the parties may take such
actions as necessary or appropriate to effectuate the terms and provisions of
this Agreement.
SECTION 7.8 No Third-Party Beneficiaries; Non-Termination of
Employment. This Agreement is not intended and shall not be construed as to
confer upon any Person other than the parties hereto any rights or remedies
hereunder. No provision of this Agreement or the Distribution Agreement shall be
construed to create any right, or accelerate entitlement, to any compensation or
benefit whatsoever on the part of any Transferred Individual or other future,
present, or former employee of the Parent Group or the SpinCo Group under any
Parent Plan or SpinCo Plan or otherwise. Without limiting the generality of the
foregoing, except as expressly provided in this Agreement: (i) neither the
Distribution nor the termination of the Participating Company status of a member
of the SpinCo Group shall cause any employee to be deemed to have incurred a
termination of employment which entitles such individual to the commencement of
benefits under any of the Parent Plans, any of the SpinCo Plans, or any of the
Individual Agreements; and (ii) nothing in this Agreement other than those
provisions specifically set forth herein to the contrary shall preclude Parent
or SpinCo, at any time after the Distribution Date, from amending, merging,
modifying, terminating, eliminating, reducing, or otherwise altering in any
respect any SpinCo Plan, any benefit under any Plan or any trust, insurance
policy or funding vehicle related to any SpinCo Plan.
SECTION 7.9 Consent of Third Parties. If any provision of this
Agreement is dependent on the consent of any third party (such as a vendor) and
such consent is withheld, Parent and
16
SpinCo shall use their reasonable best efforts to implement the applicable
provisions of this Agreement to the full extent practicable. If any provision of
this Agreement cannot be implemented due to the failure of such third party to
consent, Parent and SpinCo shall negotiate in good faith to implement the
provision in a mutually satisfactory manner. The phrase "reasonable best
efforts" as used in this Agreement shall not be construed to require the
incurrence of any non-routine or unreasonable expense or liability or the waiver
of any right.
SECTION 7.10 Effect if Distribution Does Not Occur. If the
Distribution does not occur, then all actions and events that are, under this
Agreement, to be taken or occur before or effective as of the Distribution Date,
immediately after the Distribution Date, or otherwise in connection with the
Distribution, shall not be taken or occur except to the extent specifically
agreed by SpinCo and Parent.
SECTION 7.11 Relationship of Parties. Nothing in this Agreement
shall be deemed or construed by the parties or any third party as creating the
relationship of principal and agent, partnership or joint venture between the
parties, it being understood and agreed that no provision contained herein, and
no act of the parties, shall be deemed to create any relationship between the
parties other than the relationship set forth herein.
SECTION 7.12 Affiliates. Each of Parent and SpinCo shall cause
to be performed, and hereby guarantees the performance of, all actions,
agreements and obligations set forth in this Agreement to be performed by
members of the Parent Group or members of the SpinCo Group, respectively, where
relevant.
SECTION 7.13 Dispute Resolution. Any controversy or claim
arising out of or relating to this Agreement, or the breach hereof, shall be
settled pursuant to the dispute resolution provisions described in the
Distribution Agreement.
SECTION 7.14 Indemnification. All Liabilities retained or
assumed or allocated to Parent or any member of the Parent Group pursuant to
this Agreement will be deemed to be Parent Liabilities (as defined in the
Distribution Agreement) and all Liabilities retained or assumed by or allocated
to SpinCo or any member of the SpinCo Group pursuant to this Agreement will be
deemed to be SpinCo Liabilities (as defined in the Distribution Agreement), and,
in each case, will be subject to the indemnification provisions set forth in the
Distribution Agreement.
SECTION 7.15 W-2 Matters. Pursuant to the alternative procedure
set forth in Internal Revenue Service Rev. Proc. 96-60, SpinCo will assume
Parent's obligations to furnish Forms W-2 to all Transferred Individuals for the
year in which the Distribution Date occurs. Parent will provide to SpinCo the
information not available to SpinCo relating to periods ending on the
Distribution Date necessary for SpinCo to prepare and distribute Forms W-2 to
Transferred Individuals for the year in which the Distribution Date occurs,
which will include all remuneration earned by Transferred Individuals before the
Distribution Date and Forms W-4 provided to Parent by Transferred Individuals to
the extent that SpinCo is not already in possession of such information. SpinCo
shall prepare and distribute such forms. To the extent permitted by applicable
law, in particular Code Sections 3121(a)(1) and 3306(b)(1), SpinCo shall be
deemed a successor employer to Parent with respect to Transferred Individuals
for purposes of calculating the annual wage limitation to which state and
federal payroll taxes apply.
17
SECTION 7.16 Confidentiality. Except as required by applicable
law, for the purpose of satisfying any obligation under this Agreement or with
the consent of the other party, neither Parent nor SpinCo shall disclose to any
Person (other than members of the Parent Group or the SpinCo Group) any
information (including, but not limited to, information regarding fees,
expenses, assets, Liabilities and Plan terms) relating to the Parent Plans,
SpinCo Plans or Transferred Individuals. Each of Parent and SpinCo shall be
permitted to disclose such information within the Parent Group and SpinCo Group
only to the extent reasonably necessary in the ordinary course of business.
SECTION 7.17 Notices. Any notice, demand, claim, or other
communication under this Agreement shall be in writing and shall be given in
accordance with the provisions for giving notice under the Distribution
Agreement.
SECTION 7.18 Interpretation. Words in the singular shall be held
to include the plural and vice versa and words of one gender shall be held to
include the other genders as the context requires. The terms "hereof," "herein,"
and "herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole (including all Appendices
hereto) and not to any particular provision of this Agreement. The word
"including" and words of similar import when used in this Agreement shall mean
"including, without limitation," unless the context otherwise requires or unless
otherwise specified. The word "or" shall not be exclusive.
SECTION 7.19 Severability. The provisions of this Agreement are
severable and should any provision hereof be void, voidable or unenforceable
under any applicable law, such provision shall not affect or invalidate any
other provision of this Agreement, which shall continue to govern the relative
rights and duties of the parties as though such void, voidable or unenforceable
provision were not a part hereof.
SECTION 7.20 Governing Law/Execution. This Agreement shall be
construed in accordance with, and governed by, the laws of the State of Florida
without regard to the conflicts of law rules of such state, may not be assigned
by either party without the prior written consent of the other, and shall bind
and inure to the benefit of the parties hereto and their respective successors
and permitted assignees. This Agreement may not be amended or supplemented
except by an agreement in writing signed by Parent and SpinCo. This Agreement
may be executed in one or more counterparts, each of which shall be deemed an
original instrument, but all of which together shall constitute one and the same
Agreement.
SECTION 7.21 Amendments to Plans. To the extent not otherwise
described in this Agreement, each of Parent and SpinCo shall have the authority
to take all action necessary to cause any Plans to be amended in order to effect
the provisions of this Agreement, and until such time as formal amendments are
adopted to do so, such Plans shall be deemed amended as of the Distribution Date
in order to effect the provisions contained in this Agreement.
[SIGNATURE PAGE FOLLOWS]
18
IN WITNESS WHEREOF, the parties have caused this Employee Benefits
Agreement to be duly executed as of the day and year first above written.
F.N.B. CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Vice Chairman
FIRST NATIONAL BANKSHARES OF FLORIDA,
INC.
By: /s/ Xxxx X. Xxxx
-------------------------------------------------
Name: Xxxx X. Xxxx
Title: Chairman and Chief Executive Officer
19
APPENDIX A SPINCO STAND-ALONE PLANS AND MIRROR PLANS
STAND-ALONE PLANS/AGREEMENTS TO BE ASSUMED BY SPINCO (WITH APPROPRIATE NAME
CHANGES)
F.N.B. Corporation Salary Savings Plan
Xxxxx Xxxxxxxx Insurance, Inc. 401(k) Profit Sharing and Trust Plan
F.N.B. Corporation Section 125 Flexible Benefits Plan
F.N.B. Corporation Employee Dental Plan
PARENT PLANS FOR WHICH SPINCO MIRROR PLANS WILL BE ESTABLISHED
Deferred Compensation Plans
F.N.B. Corporation Basic Retirement Plan
F.N.B. Corporation Deferred Compensation Plan
F.N.B. Corporation Excess Profit Sharing and Lost Match Plan
F.N.B. Corporation Directors' Compensation Plan
Health and Welfare Plans
F.N.B. Corporation Employee Assistance Program
F.N.B. Corporation Long-Term Disability, Life and AD&D Insurance Plan
F.N.B. Corporation Termination Pay Plan
Incentive Plans
F.N.B. Corporation 2001 Incentive Plan
F.N.B. Corporation 1998 Directors' Stock Option Plan
A-1
APPENDIX B
Employment Agreements
Xxxxxx Xxxxx
X.X. Xxxxxxx
Xxxxx Xxxxxxx
Xxxxx X. Xxxxxxx
Xxxxxx X. Xxxx
Xxxxx X. Xxxx
Xxxxxx X. Xxxx (Xxxxxx)
Xxxxxx X. Xxxxxx
Xxxx X. Xxxx
Xxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxx
Xxxxxxx Xxxxxxx
Xxxxx Xxxxx
Xxxxxxx X. Xxxx
Xxxxxxxx X. Xxxx
Xxxxxxx X. Xxxxxx
Xxxx X. Xxxx
B-1
APPENDIX C
Transferred Individuals who are employed by Parent as of the Distribution Date
and will be employed by SpinCo following the Distribution Date.
Xxxxxx Xxxxxx
Xxxxxxx X. Xxxxx
Xxxx Xxx Xxxxxxxx
Xxxxx Xxxx
X.X. Xxxxxxx
Xxxx X. Xxxx
Xxxx Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxx
Xxxxx X. Xxxx
Xxxxxxxx Xxxxxx Xxxxxxx
Xxxxx Xxxxx
Xxxxxx Xxxxxxxx Xxxxxx Xx.
Xxxxxx Xxxxx
Xxxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxxx
Xxxx Xxxxxx
Xxxxx X. Xxxxxx
Xxx Xxxxxxx
Xxxxxxxx X. Xxxxx
Xxxxxx X. Xxxx
Xxxx X. Xxxx
Xxxxx Xxxx
Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
Xxxxxxx Xxxxx
Xxxx Xxxx
Xxxx Xxxxx
Xxxxx Xxxxxxxxxx
Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Xxxxx Xxxxxx
Xxxxx Xxxxxxx
Xxxx Xxxxxxxxxx
Xxxxxxx X. Xxxxx
Xxxxxx Xxxxx
Xxxxx X. Xxxxx
Xxxxxx X. Xxxxxxxx
Xxxx Xxxxxxxxx
Xxxxxx X. Xxxxxxxx
Xxxx X. Xxxxxx
Xxxxxxx Xxxxxx
Xxxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxx
Xxxxxx Xxxxxxx
Xxxx X. Xxxxxxxx
Xxxxxxxx X Xxxxxxx
Xxxxx X. Xxxxxxx
Xxxxxxx Xxxx
Xxxxxxxx Xxxxxxxx
Xxxxxxx X. Xxxxxxx
Xxxxxxx Xxxxx
Xxxxxxx Xxxxx
The following persons who were employed by Parent prior to the Distribution Date
and will not be employed by either Parent or SpinCo following the Distribution
Date shall not be deemed to be Transferred Individuals for purposes of this
Agreement; provided, however, that any Liabilities arising as a result of any
Action or threatened Action by any of the following persons relating to the
termination of such person's employment with Parent prior to the Distribution
Date shall be deemed "Shared Liabilities" as set forth on Schedule 1.1(eee) to
the Distribution Agreement and shall be treated in accordance with the terms of
that agreement.
Cass Xxxxxxxxx
Xxxxx Xxxx Xxxx
Xxxxxx X. Xxxxx
Xxxxx Xxxxxx
Xxxxx Xxxxxx
Xxxxxxx Xxxxxxxx
Xxxx Xxxxxx
Xxxx Xxxxxxx
Xxxxx Xxxx
Xxxxxx Xxxxxx
Xxxxxxx Xxxxxxx
Xxxxx Xxxxxx
C-1
