EMPLOYEE DEATH BENEFIT AND POST-RETIREMENT NONCOMPETITION
AND CONSULTATION AGREEMENT
THIS AGREEMENT, made and entered into and effective as of the 10th
day of November, 1986, by and between THE FIDELITY BANK, a North Carolina
banking corporation with its principal office in Fuquay-Varina, Wake County,
North Carolina (hereinafter referred to as "Employer"); and XXXXXXX X. XXXX, XX.
(hereinafter referred to as "Employee");
W I T N E S S E T H:
WHEREAS, Employee has provided long-time guidance, leadership and
direction in the growth, management and development of Employer, during which
time Employee has learned trade secrets, confidential procedures and
information, and technical and sensitive plans of Employer; and,
WHEREAS, Employer values the efforts, abilities and accomplishments
of Employee as an important member of management and desires to continue to have
Employee's experience and knowledge available to it following Employee's
retirement from employment with Employer; and,
WHEREAS, Employer desires to limit Employee's availability to other
employers or entities which are in competition with Employer following
Employee's retirement from employment with Employer; and,
WHEREAS, Employer, as part of a plan adopted for a class of
employees of Employer, has offered to Employee a noncompetition arrangement
together with a limited, when-called, independent contractor consultation
service arrangement and a death benefit arrangement for Employee's designated
beneficiary or Estate, as applicable, and the parties hereto have reached an
agreement concerning the independent contractor consulting relationship, the
noncompetition arrangement, the death benefit arrangement and other matters
contained herein and desire to set forth the terms and conditions thereof.
NOW, THEREFORE, for and in consideration of the mutual promises and
undertakings herein set forth, the parties hereto do agree as follows:
1. RETIREMENT DATE. The term "Retirement Date," as used herein,
shall be defined for purposes of this Agreement as the last day of the calendar
month in which Employee attains the age of sixty-five (65) or as such date prior
or subsequent thereto as shall be agreed upon between Employer and Employee.
Employer and Employee hereby acknowledge that compulsory retirement
before attaining age seventy (70) is not enforceable except as provided by law.
Employer and Employee further agree that no provision herein shall be construed
as requiring Employee's retirement before attaining age seventy (70) except as
may now or hereafter be permitted by law; however, Employee acknowledges
Employer's continuing policy, in an effort to provide opportunities and
continuity, to encourage retirement at age sixty-five (65) and to require
retirement at age sixty-five (65) where permissible by law.
2. DEATH BENEFITS. In the event Employee dies while employed by
Employer prior to Employee's Retirement Date, Employer will pay the sum of
Sixteen Thousand Six Hundred Five and No/100 Dollars ($16,605.00) per year,
payable in monthly installments of One Thousand Three Hundred Eighty-Three and
75/100 Dollars ($1,383.75), for a period of ten (10) years, to such individual
or individuals as Employee shall have designated in writing filed with Employer
or, in the absence of such designation, to the Estate of Employee. The first
payment shall be made not later than two (2) months following Employee's death.
Payments hereunder shall be payable each month without deductions and the
recipient shall be solely responsible for the payment of all income and other
taxes and assessments applicable on said payments.
3. CONSULTATION PAYMENTS. In the event Employee retires from
employment on Employee's Retirement Date, Employee shall be paid by Employer the
sum of Three Hundred Forty-Five and
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94/100 Dollars ($345.94) per month, beginning not later than two (2) months
after Employee's Retirement Date, for a period of ten (10) years following
Employee's Retirement Date or until death, whichever first occurs. Such monthly
payments shall be paid for and in consideration of Employee's Consultation
Services, as provided herein; such sum to be payable to Employee whether or not
Employee's Consultation Services have been utilized by Employer. Consultation
Payments hereunder shall be payable each month without deductions and Employee
agrees to be solely responsible for the payment of all income and other taxes
out of said funds and all Social Security, self-employment and any other taxes
or assessments, if any, applicable on said compensation. For and in
consideration of said monthly Consultation Payments to Employee, Employee will
provide support, sponsorship, advisory and Consultation Services as an
independent contractor to Employer, as and when Employer may request, which
services may be provided with respect to all phases of Employer's business and
particularly those phases in which Employee has particular expertise and
knowledge. Employee's services shall be limited to those of an independent
consultant, shall not be on a day-to-day regularly scheduled operational basis
and shall be provided only when Employee is reasonably available and willing.
Employer shall make available to Employee such office space and equipment as are
reasonably necessary for Employee to carry out the obligations under this
Agreement and shall reimburse Employee for any extraordinary expenses incurred
in carrying out the obligations hereunder. Effective as of Employee's Retirement
Date, Employee and Employer agree that Employee shall be, under the terms of
this Agreement, an independent contractor, and Employee agrees that his rights
and privileges and his obligations are as provided in this Agreement as to
matters covered herein.
If Employee should die during said ten (10) year period, payments
under this Paragraph shall terminate. Future payments, if
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any, to Employee's designated beneficiary or Employee's Estate shall be made in
accordance with the provisions of Paragraph 5 of this Agreement.
4. NONCOMPETITION PAYMENTS. In the event Employee retires from employment on
Employee's Retirement Date, Employee shall be paid by Employer the sum of One
Thousand Thirty-Seven and 81/100 Dollars ($1,037.81) per month, beginning not
later than two (2) months after Employee's Retirement Date, for a period of ten
(10) years following Employee's Retirement Date or until death, whichever first
occurs. Such monthly payments shall be paid for and in consideration of
Employee's Covenant Not To Compete as provided herein. The Noncompetition
Payments hereunder shall be payable each month without deductions and Employee
agrees to be solely responsible for the payment of all income or other taxes or
assessments, if any, applicable on said payments. For and in consideration of
said monthly Noncompetition Payments to Employee, Employee agrees that he will
not become an officer or employee of, provide any consultation to nor
participate in any manner with any other entity of any type or description
involved in any major element of business which Employer is performing at
Employee's Retirement Date nor will Employee perform or seek to perform any
consultation or other type of work or service with any other firm, person or
entity, directly or indirectly, in any such business which competes with
Employer, whether done directly or indirectly, in ownership, consultation,
employment or otherwise. Employee agrees not to reveal to outside sources,
without the consent of Employer, any matters, the revealing of which could, in
any manner, adversely affect or disclose Employer's business or any part
thereof, unless required by law to do so. This Covenant Not To Compete by
Employee is limited to the geographic area of North Carolina, shall exist for
and during the term of all payments to be made under this Covenant Not To
Compete, whether made directly by Employer or as otherwise provided herein, plus
a term of twelve (12) months thereafter, and
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shall not prevent Employee from purchasing or acquiring, as an investor only, a
financial interest of less than five percent (5%) in a business or other entity
which is in competition with Employer.
Employee acknowledges that the remedy at law for breach of
Employee's Covenant Not To Compete will be inadequate and that Employer shall be
entitled to injunctive relief as to any violation thereof; however, nothing
herein shall be construed as prohibiting Employer from pursuing any other
remedies available to it, in addition to injunctive relief, whether at law or in
equity, including the recovery of damages. In the event Employee shall breach
any condition of Employee's Covenant Not To Compete, then Employee's right to
any of the payments becoming due under Paragraphs 3 and 4 of this Agreement
after the date of such breach shall be forever forfeited and Employee's
designated beneficiary's or Employee's Estate's right to any payments under this
Agreement shall likewise be forever forfeited. This forfeiture is in addition to
and not in lieu of any of the above-described remedies of Employer and shall be
in addition to any injunctive or other relief as described herein. Employee
further acknowledges that any breach of Employee's Covenant Not To Compete shall
be deemed a material breach of this Agreement.
If Employee should die during said ten (10) year period, payments
under this Paragraph shall terminate. Future payments, if any, to Employee's
designated beneficiary or Employee's Estate shall be made in accordance with the
provisions of Paragraph 5 of this Agreement.
5. CONTINUATION OF PAYMENTS. Upon Employee's death during said ten
(10) year period of payments hereunder, the sum of One Thousand Three Hundred
Eighty-Three and 75/100 Dollars ($1,383.75) per month shall be paid to
Employee's designated beneficiary or Employee's Estate, as applicable, beginning
the first calendar month following the date of Employee's death and continuing
thereafter until the expiration of said ten (10) year
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period. Once the Consultation and/or Noncompetition Payments are begun, whether
paid by Employer or as otherwise provided herein, the maximum payment period
under this Agreement is ten (10) years. Payments hereunder shall be payable each
month without deductions and the recipient shall be solely responsible for all
income and other taxes and assessments applicable on said payments.
6. FORFEITURE OF BENEFITS. This Agreement is subject to termination
by Employer at any time and without stated cause. ln the event Employer shall
terminate this Agreement, Employee shall forfeit all rights to receive any
payment provided for herein. Likewise, in the event Employee does not retire
from employment on Employee's Retirement Date or Employee's employment is
terminated, either voluntarily or involuntarily, for reasons other than death or
retirement, Employee shall forfeit all rights to receive any payment provided
for herein. Employee acknowledges and agrees that any benefit provided for
herein is merely a contractual benefit and that nothing contained herein shall
be construed as conferring upon Employee any vested benefits or any vested
rights to receive any payment provided for herein and that any and all payments
provided for herein shall be subject to a substantial risk of forfeiture until
such time as said payments are actually made by Employer. Employee also
acknowledges that the contractual benefit provided for herein is specifically
conditioned upon Employee's retirement from employment on Employee's Retirement
Date.
7. CLAIMS PROCEDURE. If any benefits become payable under the
Agreement, Employee (or Employee's beneficiary in the case of Employee's death)
shall file a claim for benefits by notifying Employer orally or in writing. If
the claim is wholly or partially denied, Employer shall provide a written notice
within ninety (90) days specifying the reasons for the denial, any additional
material or information necessary to receive benefits, and the steps to be taken
if a review of the denial is desired.
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If a claim is denied and a review is desired, Employee (or
Employee's beneficiary in the case of Employee's death) shall notify Employer in
writing within sixty (60) days. In requesting a review, Employee or Employee's
beneficiary may submit any written issues and comments he or she feels are
appropriate. Employer shall then review the claim and provide a written decision
within sixty (60) days. This decision shall state the specific reasons for the
decision and shall include references to specific provisions on which the
decision is based.
8. ASSIGNMENT OF RIGHTS. Neither Employee nor any designated
beneficiary shall have any right to sell, assign, transfer or otherwise convey
the right to receive any payment hereunder.
9. PAYMENTS AND FUNDING. Any payments under this Agreement shall be
independent of, and in addition to, those under any other Plan, program or
agreement which may be in effect between the parties hereto, or any other
compensation payable to Employee or Employee's designee by Employer. This
Agreement shall not be construed as a contract of employment nor does it
restrict the right of Employer to discharge Employee at will or the right of
Employee to terminate employment at will.
Employer may, in its sole discretion, purchase an insurance policy
on the life of Employee to fund or assist in the funding of this Agreement.
Employee agrees to promptly supply to Employer and its selected or prospective
insurance carrier, upon request, any and all information requested, in order to
enable the insurance carrier to evaluate the risks involved in providing the
insurance requested by Employer. Any and all rights to any and all benefits
under such insurance policy on the life of Employee shall be solely the property
of Employer and all proceeds of such policy shall be payable by the insurer
solely to Employer, as owner of such policy. Employee specifically waives any
rights in any insurance policy on Employee's life owned by Employer pursuant to
this Agreement. Such policy shall not serve in any way as security
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to Employee for Employer's performance under this Agreement. The rights accruing
to Employee or any designee hereunder shall be solely those of an unsecured
creditor of Employer and shall be subordinate to the rights of the depositors of
Employer.
Employer may, in its sole discretion, discharge its liabilities
under this Agreement to Employee, Employee's designated beneficiary or
Employee's Estate at any time by the purchase of an annuity from a reputable
insurance or similar company authorized to do, and doing, business in North
Carolina and the assignment of the rights under said annuity to the benefit of
Employee, Employee's designated beneficiary or Employee's Estate. If this option
is exercised by Employer, all rights accruing to Employee, Employee's designated
beneficiary or Employee's Estate hereunder shall be governed solely by the
annuity contract and any election made under said annuity contract; and Employer
shall be fully discharged from any further liabilities to Employee, Employee's
designated beneficiary or Employee's Estate under this Agreement.
Employer may, in its sole discretion, discharge its liabilities
under this Agreement to Employee, Employee's designated beneficiary or
Employee's Estate at any time by determining the present value of the payments
due hereunder, said amount to be determined by the use of the U.S. Government
bond rate for the nearest year applicable to the time of the payments due
hereunder for the present value computation and once determined, by payment of
said amount in a lump sum to Employee, Employee's designated beneficiary or
Employee's Estate, as applicable.
10. SUICIDE. In the event Employee commits suicide within two (2)
years of the execution of this Agreement, all payments provided for herein to be
paid to Employee's designated beneficiary or Employee's Estate shall be
forfeited.
11. BINDING EFFECT. This Agreement shall be binding upon Employee, his
heirs, personal representatives and assigns and upon Employer, its successors
and assigns.
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12. AMENDMENT OF AGREEMENT. This Agreement may not be altered, amended
or revoked except by a written agreement signed by Employer and Employee.
13. INTERPRETATION. Where appropriate in this Agreement, words
used in the singular shall include the plural and words used in the masculine
shall include the feminine.
14. INVALID PROVISION. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if such invalid
or unenforceable provision were not contained herein.
15. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of North Carolina.
IN TESTIMONY WHEREOF, Employer has caused this Agreement to be
executed in its corporate name by its President, attested by its Secretary and
its corporate seal to be hereto affixed, all by the authority of its Board of
Directors duly given, and Employee has hereunto set his hand and adopted as his
seal the typewritten word "SEAL" appearing beside his name, as of the day and
year first above written.
THE FIDELITY BANK
By: /s/ Xxxxx X. Xxxxxxx
--------------------
President
ATTEST:
/s/ Xxxxxx X. Xxxxx
-------------------
Secretary
/s/Xxxxxxx X. Xxxx, Xx. (SEAL)
-----------------------
Xxxxxxx X. Xxxx, Xx.
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DESIGNATION OF BENEFICIARY
Pursuant to the terms of the Employee Death Benefit and
Post-Retirement Noncompetition and Consultation Agreement, dated as of November
10, 1986, between myself and Employer, I hereby designate the following
beneficiary(ies) to receive any payments which may be due under such Agreement
after my death.
Xxxxx X. Xxxx
----------------------------
Primary Beneficiary
------------------------------
Secondary Beneficiary
------------------------------
Secondary Beneficiary
This designation hereby revokes any prior designation which may have
been in effect.
Date: November 10, 1986
/s/ Xxxxxxx X. Xxxx, Xx.
------------------------
Xxxxxxx X. Xxxx, Xx.
/s/ Xxxxx X. Pore
-----------------
Witness
Acknowledged by:
/s/ Xxxxxx X. Xxxxx
-------------------
Assistant Vice President
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