Exhibit (10)E
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") entered into this 23rd day
of February 2006, by and between FNB CORPORATION (hereinafter referred to as
"FNB"), a bank holding company, with its principal office located at 000
Xxxxx Xxxxx, Xxxxxxxxxxxxxx, Xxxxxxxx, organized and existing under the laws
of the Commonwealth of Virginia, which owns all of the outstanding stock of
First National Bank, FNB Southwest, N.A., Salem Bank & Trust, N.A., and
Bedford Federal Savings Bank, N.A., and XXXXXXX X. XXXXX, Xx., residing at
0000 Xxxxxxxxx Xxxx, Xxxxx, Xxxxxxxx, 00000 (hereinafter referred to as
"Heath").
WITNESSETH:
WHEREAS, FNB and Heath entered into an Employment Agreement dated June
2, 2003 and an amended employment agreement dated December 16, 2004; and
WHEREAS, both parties wish to extend the term and modify certain
provisions set out in said agreements and to continue the services of Heath
as its President and Chief Executive Officer and Heath desires to render such
services.
NOW THEREFORE, in consideration of the representations, warranties and
mutual covenants set forth herein, the parties agree as follows:
1. Employment. FNB hereby retains Heath as its President and Chief
Executive Officer and Heath hereby accepts such employment, all upon and
subject to the terms and conditions hereinafter set forth.
2. Term. This agreement shall be for a term of two years beginning
January 1, 2006 and shall automatically renew on the first day of each
year thereafter for an additional period of one year on each automatic
renewal date for an Employment Term of two (2) years, unless (i) Heath
or FNB, by written notice to the other party no later than Ninety (90)
days prior to the expiration of an employment term, elects not to renew
such Employment Term or (ii) this Agreement is terminated, during its
original term or in any renewal period, pursuant to the provisions of
Section 7, hereof or (iii) Heath shall have attained the age of sixty
four (64). The provisions of this Section 2 shall be read in a manner
consistent with the provisions of Sections 7 and 8 of this Agreement.
3. Duties.
(a) Heath agrees that during the term of his employment hereunder
he shall devote substantially his full business time, efforts,
skill and abilities to the business of FNB in accordance with the
reasonable directions and orders of the Board of Directors and will
use his best efforts to promote the interests of FNB and its
subsidiaries. Heath, with the approval of the Executive Committee,
may take reasonable amounts of time to (i) serve as director or in
some other capacity for other organizations or entities which, in
the opinion of the Executive Committee, would benefit FNB, (ii)
manage his personal investments if his investment activities do not
interfere with his duties under this Agreement, (iii) engage in
charitable, educational, religious, civic and similar types of
activities, (iv) accept occasional speaking engagements, attend
business related seminars and similar activities, to the extent his
attendance at such activities do not inhibit or interfere with the
performance of his duties hereunder or inhibit or conflict with the
business of FNB, and (v) take permitted leaves of absence, sick
leave and permitted vacation periods as approved by the Executive
Committee. The Executive Committee shall have discretion to
resolve any question that may arise as to whether any of the
activities referenced in (i), (ii), (iii), (iv), and (v) of this
Section benefit FNB, or interfere or conflict with, inhibit, or
prohibit Heath's performance of his duties under this Agreement.
(b) Heath will render his services to FNB as its President and
Chief Executive Officer and shall perform the duties and services
incident, usual and customary to that position and such other
duties consistent with such office as may be assigned to him from
time to time by the Board of Directors or the Executive Committee.
In addition, Heath may hold, with the approval of the Executive
Committee, such other offices or positions in any FNB subsidiary to
which, from time to time, he may be appointed or elected. Unless
specifically authorized in writing by a majority of independent
directors or a compensation committee comprised solely of
independent directors, hereinafter referred to as the "Compensation
Committee," Heath shall not receive any other employment
compensation, incentive pay, or director's fees, which have not
been disclosed to and specifically approved by FNB's Compensation
Committee.
4. Compensation and Benefits.
(a) Salary. In consideration of the services to be rendered by
Heath hereunder, including, without limitation, any services
rendered by him as an officer or director of FNB, or as an officer
or Director of any FNB subsidiary or affiliate, FNB agrees to pay
to Heath, and Heath agrees to accept as compensation, for each
period of service during the initial Employment Term, an annual
salary of $273,000 (the "Salary"), payable in monthly installments
pursuant to FNB's normal payroll practices. Heath's Salary shall
be subject to all applicable withholding and other taxes. The
amount of Salary shall be subject to adjustment by FNB's Board of
Directors annually based upon a performance evaluation and salary
recommendation by the Compensation Committee. Any increase in
Salary will be made only if the Compensation Committee determines
that an increase is warranted and FNB's Board of Directors approves
such recommendation.
(b) Incentive Compensation. Heath shall be eligible to receive
annual incentive compensation in accordance with performance goals
and earnings targets established annually by the Compensation
Committee and approved by FNB's Board of Directors. Heath's annual
incentive compensation may be in the form of a cash bonus and/or
stock options, stock grants, or such other forms of compensation as
the Compensation Committee and FNB's Board of Directors deem
appropriate. Initial incentive compensation for the initial period
of this Agreement shall be in accordance with the "At-Risk
Compensation Plan" that provides for at-risk compensation awards to
its full-time employees, including Heath, who meet established
criteria.
(c) Benefits. During the term of his employment hereunder,
Heath shall be eligible to receive:
(i) All FNB sponsored welfare, insurance and retirement
plan benefits generally available to other executive
employees of FNB, which shall include, but not be limited to,
BOLI benefits as may from time to time be allocated by the
Board of Directors or the Compensation Committee.
(ii) Vacation and sick leave in accordance with FNB's
policies from time to time in effect for officers and
executive employees of FNB.
(iii) A complete annual physical examination at FNB's
expense by a local physician of Heath's choice. Heath agrees
that a report of the results of the physical examination will
be provided to FNB's Executive Committee upon the Executive
Committee's request.
(iv) Should Heath die prior to the termination of this
Agreement, FNB shall pay to Heath's spouse if she survives,
if not, then to his estate his base compensation for the
entire month in which his death occurs and shall pay to his
spouse if she survives, if not, then to his estate, beginning
with the month succeeding his death, an amount equal to one-
half of Heath's base compensation for a period of twelve
months. In addition, if Heath's spouse is covered by an
Employer-sponsored health plan at the time of Heath's death,
FNB shall also pay, on behalf of Heath's spouse, the premium
costs associated with maintaining such spouse's health care
coverage for a period of 36 months after Heath's death or
until such spouse becomes covered by Medicare, whichever is
last to occur. Except as modified by this provision, all
other compensation and benefits payable hereunder shall cease
by their terms.
(v) Should Heath become disabled prior to the termination
of this Agreement, FNB shall pay Heath an amount equal to
one-half of his base compensation for the remaining term of
this Agreement and shall pay on Heath's behalf all premium
costs associated with maintaining health care coverage for
Heath and Heath's spouse until each of them reaches age 65 or
qualifies for Medicaid, whichever is earlier. These payments
shall be in addition to, and not in lieu of, any expenses
Heath may be otherwise entitled to under any group or
individual disability plan that provides long-term disability
benefits to Heath. Except as modified by this provision, all
other compensation and benefits payable hereunder shall cease
by their terms. For the purpose of this paragraph,
disability shall be defined as the inability of Heath to
perform the duties imposed upon him under the terms and
conditions of this contract. The Board of Directors shall
have the sole authority to determine when or if Heath has
become disabled and unable to perform his duties as set forth
herein.
(vi) It is expressly understood and agreed if Heath's
spouse still has health care coverage when she attains the
age of 65, as provided in the above paragraph, or if Heath's
employment is terminated for any reason and his spouse elects
to continue health care coverage, which is customarily
available to the spouse and dependents of retired employees,
she may do so at her expense.
(d) Changes in Compensation and Benefits. Nothing in this
Agreement shall prevent the Board of Directors from, at any time,
increasing the compensation and fringe benefits to be paid to Heath
in the event the Board, in its sole discretion, shall deem it
advisable so to do in order to compensate Heath for his services.
5. Reimbursement of Expenses.
(a) Heath shall be reimbursed for reasonable and necessary
expenses incurred by him in performing his employment hereunder,
provided such expenses are adequately documented and submitted in
accordance with FNB's policies. The Compensation Committee shall
have discretion to resolve any question that may arise as to
whether expenses are reasonable and necessary. Such expenses shall
include:
(i) reasonable and necessary expenses directly incurred by
Heath for travel, transportation, accommodations, meals and
entertainment, including those incurred while in attendance
at industry conventions and meetings, in connection with the
performance by Heath of his duties for FNB, which shall
include reasonable and necessary expenses for travel,
lodging, and meals incurred by Heath's spouse when she
travels with Heath on FNB's business, to the extent
consistent with FNB's policy with respect to travel by
spouses of FNB's executives; and
(ii) all other reasonable and necessary expenses directly
incurred by Heath for the promotion of the business of FNB,
including, but not limited to, home entertainment expenses.
(b) Expenses for meetings and conferences, excluding meetings
sponsored by the Virginia Bankers Association, shall not exceed in
the aggregate $15,000 annually, unless approved in advance by FNB's
Compensation Committee.
(c) Dues and other membership charges in professional and
community associations, and civic clubs shall not exceed in the
aggregate $12,000 annually.
6. Lease of Automobile. FNB has provided (by way of a lease) an
automobile for the exclusive use of Heath. The leased automobile has a
lease term of thirty-six (36) months. At the end of such lease term,
but only if this Agreement is still in effect, Heath will be provided
with a new leased automobile (after relinquishing the other leased
vehicle) of a comparable model. The model of the vehicle is subject to
approval by FNB's Compensation Committee. FNB shall pay all lease
costs, insurance premiums and maintenance costs relating to the lease of
such automobile(s), provided such expenses are adequately documented in
accordance with FNB's policies. The automobile shall be used by Heath
primarily in connection with the performance by Heath of his duties
under this Agreement and primarily for the benefit of FNB but may
nevertheless be incidentally used by Heath for his personal purposes.
When used for personal purposes, such as vacations or out of state
personal trips, Heath shall be solely responsible for gas usage.
7. Termination of Employment.
(a) Termination for Cause. FNB may at any time immediately
terminate the employment of Heath hereunder for Cause. If
terminated for Cause, the date of the termination ("Termination
Date"), unless otherwise stated, shall be the date on which the
termination decision is made by the Board of Directors. For
purposes of this Agreement, "Cause" shall mean:
(i) embezzlement or any other act or offense involving
misuse or misappropriation of money, property, or other
resources of FNB, its subsidiaries, or customers.
(ii) the commission of fraud, conviction of a felony, any
act involving moral turpitude, dishonesty, habitual
drunkenness, use of illegal substances, or willful violation
of law.
(iii) any act of disloyalty to FNB or its subsidiaries,
persistent negligence, and any act involving gross
negligence, breach of fiduciary duty, conflict of interest,
or misconduct in the performance of the duties or obligations
hereunder.
(iv) the repeated failure, inability, or refusal to perform
the duties and responsibilities of President and Chief
Executive Officer or the specific directives of the Board of
Directors or the Executive Committee, the violation of FNB's
Code of Conduct or standards of behavior, or any other
personal conduct which in the sole judgment of FNB's Board of
Directors is likely to damage the reputation of FNB, exposes
FNB to liability, or renders Heath personally unfit to serve
as President and Chief Executive of the Company.
(v) the breach of any of the terms of Sections 9 or 10
hereof.
If the employment of Heath is terminated pursuant to this Section
7(a), FNB shall have no further obligations to Heath hereunder
after the Termination Date other than the payment of accrued Salary
and benefits under Section 4(a) and 4(c)(i)-(ii) hereof through the
Termination Date.
(b) Discretionary Termination by FNB. FNB may, at any time, and
in its sole discretion, terminate the employment of Heath without
cause for any or no reason by delivering to him a notice of
termination ("Termination Notice"). Such termination shall be
effective on the date of the Termination Notice; provided, however,
that FNB shall be obligated to pay Heath earned and accrued but
unpaid Salary and benefits through the date of the Termination
Notice, and any Incentive Compensation earned and awarded but not
yet received pursuant to Section 4(b) of this Agreement, and, in
addition, severance compensation as set forth in Section 8(a)
hereof.
(c) Voluntary Termination by Heath. If at any time during the
Employment Term Heath resigns from the employ of FNB, FNB shall be
obligated to pay Heath earned and accrued but unpaid Salary and
benefits through the date of his termination, but shall have no
obligation to pay Heath any incentive compensation awarded but not
yet received or any severance compensation.
8. Severance Compensation.
(a) Severance Payments. In the event that Heath's employment
hereunder is terminated by FNB pursuant to Section 7(b) hereof, or
is not renewed by FNB pursuant to Section 2(i) of the Agreement,
FNB shall pay to Xxxxx xxxxxxxxx compensation in the form of
continued installment payments of his Salary for a period of not
less than twelve (12) months. In addition, the Association shall
provide Heath with the opportunity for continuation of the medical
benefits and insurance described in Section 4(c) (i) hereof, to
which Heath is then entitled and participating, for the period of
time set forth in the immediately preceding sentence, or in the
case of medical benefits to the extent required by the Consolidated
Omnibus Budget Reconciliation Act. Heath shall not be entitled to
receive any other compensation or benefits under this Agreement,
except as specified in Section 7(b), after the termination of his
employment and shall have no other claim against FNB by reason of
the Agreement.
(b) Continuation of Other Benefits. Notwithstanding any
provision of this Agreement, in the event of Heath's termination of
employment for any reason, he will be entitled, in addition to any
other rights and benefits under this Agreement, to all benefits
provided by law or accrued and vested under any plan of FNB
applicable to him in accordance with its terms. In addition
thereto, Heath will be given retiree status, if necessary, to
provide eligibility for group health care coverage for his spouse;
however, if Heath is involuntarily terminated then such coverage
shall be at no expense to the corporation.
9. Disclosure and Assignment of Discoveries.
(a) Heath shall (without any additional compensation) promptly
disclose in writing to the Executive Committee all ideas,
processes, devices and business concepts (hereinafter referred to
collectively as "Discoveries"), whether or not patentable or
copyrightable, which he, while employed by FNB conceives, develops,
acquires or reduces to practice, whether alone or with others and
whether during or after usual working hours, and which are related
to FNB's business or interests, or arise out of or in connection
with the duties performed by him hereunder; and Heath hereby
transfers and assigns to FNB all rights, title and interest in and
to such Discoveries. Upon the request of FNB, Heath shall (without
any additional compensation), from time to time during or after the
expiration or termination of his employment, execute such further
instruments and do all such other acts and things as may be deemed
necessary or desirable by FNB to protect and/or enforce its rights
in respect to such Discoveries.
(b) For purposes of this Section 9 and the following Section 10,
the reference to FNB shall mean and include any and all
subsidiaries and affiliated corporations in existence from time to
time.
10. Non-Disclosure of Confidential Information: Non-Competition
(a) Heath represents that he has been informed that it is the
policy of FNB to maintain as secret and confidential all
information (1) relating to the products, processes and/or business
concepts used by FNB, and (2) relating to the customers and
employees of FNB ("Confidential Information"), and Heath further
acknowledges that such Confidential Information is of great value
to FNB and is the property of FNB. The parties recognize that the
services to be performed by Heath are special and unique, and that
by reason of his employment by FNB, he will acquire Confidential
Information as aforesaid. The parties confirm that it is necessary
to protect FNB's goodwill and, accordingly, Heath hereby agrees
that he will not directly or indirectly (except where authorized by
the Executive Committee for the benefit of FNB):
(i) at any time during his employment hereunder or after
he ceases to be employed by FNB, divulge to any persons,
firms or corporations other than FNB (hereinafter referred to
collectively as "Third Parties"), or use, or cause to
authorize any third parties to use, any such Confidential
Information, or any other information regarded as
confidential and valuable by FNB which he knows or should
know is regarded as confidential and valuable by FNB (whether
or not any of the foregoing information is actually novel or
unique or is actually known to others); or
(ii) at any time during his employment hereunder and for a
period of time equal to one (1) year after he ceases to be
employed by FNB, referred to herein as the "Restricted
Period", solicit or cause or authorize, directly or
indirectly, to be solicited for employment, for or on behalf
of himself or Third Parties, any persons who were at any time
within one (1) year prior to the cessation of his employment
hereunder, employees of FNB;
(iii) at any time during his employment hereunder and during
the Restricted Period, employ or cause or authorize, directly
or indirectly, to be employed, for or on behalf of himself or
Third Parties, any such employees of FNB;
(iv) at any time during his employment hereunder and during
the Restricted Period, unless agreed to by FNB in writing,
accept employment in FNB's trading area (defined herein as
all areas located within fifty (50) miles by highway from an
office then operated by FNB or one of its subsidiaries) as an
owner, director, officer, manager, or agent in any business,
firm, corporation, partnership, or other entity which is
engaged in banking activities that are essentially the same
as that of FNB.
(v) at any time during his employment hereunder and during
the Restricted Period, solicit or cause or authorize,
directly or indirectly, to be solicited, for or on behalf of
himself or Third Parties, any business with respect to which
FNB is engaged, from Third Parties who were, at any time
within one (1) year prior to the cessation of his employment
hereunder, customers of FNB; or
(vi) at any time during his employment hereunder and during
the Restricted Period, accept or cause or authorize, directly
or indirectly, to be accepted, for or on behalf of himself or
any Third Party, any such business from any customers of FNB.
(b) Heath agrees that he will not, at any time, remove from FNB's
premises any drawings, notebooks, data and other documents and
materials relating to the business and procedures heretofore or
hereafter acquired, developed and/or used by FNB without prior
written consent of the Executive Committee, except as reasonably
necessary to the discharge of his duties hereunder.
(c) Heath agrees that, upon the expiration of his employment by
FNB for any reason, he shall forthwith deliver to FNB any and all
order books, customer lists, logs, drawings, notebooks and other
documents and materials, and all copies thereof, in his possession
or under his control relating to any Confidential Information or
any Discoveries or which is otherwise the property of FNB.
(d) Heath agrees that any breach, threatened breach, or alleged
breach by him of any provision of Section 9 and this Section 10
shall entitle FNB, in addition to any other legal remedies
available to it, to apply to any court of competent jurisdiction to
enjoin such breach, threatened breach, or alleged breach. The
parties understand and intend that each restriction agreed to by
Heath hereinabove shall be construed as separable and divisible
from every other restriction, and that the unenforceability, in
whole or in part, of any other restriction, will not effect the
enforceability of the remaining restrictions, and that one or more
or all of such restrictions may be enforced in whole or in part as
the circumstances warrant. No waiver of any one breach of the
restrictions contained in Section 9 and this Section 10 shall be
deemed a waiver of any future breach.
(e) Heath hereby acknowledges that he is fully cognizant of the
restrictions imposed upon him by Section 9 and this Section 10.
11. Conflicting Agreements. Heath hereby represents and warrants to
FNB that (1) neither the execution of this Agreement by him nor the
performance by him of any of his obligations or duties hereunder will
conflict with or violate or constitute a breach of the terms of any
employment or other agreements to which he is a party or by which he is
bound, and (2) he is not required to obtain the consent of any person,
firm, corporation or other entity in order to enter into this Agreement
or to perform any of his obligations or duties hereunder.
12. Life Insurance. Heath agrees that FNB may apply for and purchase
one or more life insurance policies on his life in such amount or
amounts as FNB deems appropriate. FNB shall be the sole beneficiary of
such policies and Heath hereby acknowledges that FNB has an insurable
interest in his life. Heath agrees to cooperate with FNB in obtaining
any insurance on his life or any disability insurance applicable to him
which FNB may desire to obtain for its own benefit and shall undergo
such physical and other examinations, and shall execute any consents or
applications, which FNB may request in connection with the issuance or
one or more of such insurance policies.
13. Change in Control.
(a) Definition of Change in Control.
For purposes of this Agreement, a "change in control" of FNB shall
have occurred at such time as (i) the closing of a corporate
reorganization in which FNB becomes a subsidiary of a holding
company, or is merged into another entity, the majority of the
common stock of which is owned, in aggregate, by persons who did
not own the majority of the common stock of FNB Corporation (or its
successor) immediately prior to the reorganization; or (ii)
individuals who constitute the Board of Directors of FNB
Corporation on the date hereof (the "Incumbent Board") cease for
any reason to constitute at least a majority thereof; provided that
any person becoming a director subsequent to the date hereof whose
nomination for election was approved by a vote of at least three
quarters (3/4) of the directors comprising the Incumbent Board
shall be considered as though such person were a member of the
Incumbent Board for purposes of this subsection. For purposes of
this Section 13, the term "person" shall include any individual,
corporation, partnership, group, association or other "person", as
such term is used in section 14(d) of the Exchange Act, other than
FNB, any entity in which FNB owns a majority of the voting
interest, or any employee benefit plan(s) sponsored by FNB.
(b) Termination Following Change in Control.
FNB recognizes that a change in control as defined in Section 13(a)
may directly affect the direction and philosophy of FNB. A change
in control may also affect Heath's responsibilities and position
with FNB. Should a change in control occur that results in Heath
being replaced as President and Chief Executive Officer of FNB,
Heath, upon his involuntary termination or if he elects to
terminate his employment within thirty (30) days of the change in
control, shall be entitled to receive in a lump sum within the
aforesaid thirty (30) days of such termination compensation of two
times the base salary he is receiving at the time of termination of
employment. To be eligible for the foregoing benefit Heath agrees
to remain and serve as President and CEO for a period of thirty
(30) days following the day upon which the change of control occurs
if requested to do so by the surviving Board of Directors.
(c) It is expressly understood and agreed that all payments and
benefits provided to Heath which are parachute payments for federal
income tax purposes will be limited so that there are no excess
parachute payments subject to excise tax imposed on Heath or loss
of deductibilities for FNB and its affiliates.
(d) Any termination of Heath, whether involuntary or voluntary,
following a change in control shall be communicated by written
notice of termination ("Notice of Termination") to the other party
hereto. Such Notice of Termination shall specify the date as of
which employment shall terminate ("Date of Termination"), which
Date of Termination shall not be more than sixty (60) days from the
date of the Notice of Termination.
14. Notices. All notices, requests, demands or other communications
hereunder shall be deemed to have been given if delivered in writing
personally or by certified mail to each party at the address set forth
below, or at such other address as each party may designate in writing
to the other:
If to FNB:
Executive Committee
FNB Corporation
000 Xxxxx Xxxxx
Xxxxxxxxxxxxxx, XX 00000-0000
If to Heath:
Xxxxxxx X. Xxxxx, Xx.
0000 Xxxxxxxxx Xxxx
Xxxxx, XX 00000
15. Entire Agreement. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof,
supersedes all prior agreements between the parties, and may not be
changed or terminated orally. No change, termination, or attempted
waiver of any of the provisions hereof or thereof shall be binding
unless in writing and signed by the party against whom the same is
sought to be enforced.
16. Severability. In the event that any one or more of the provisions
of this Agreement shall be declared to be illegal or unenforceable under
any law, rule or regulation of any government having jurisdiction over
the parties hereto, such illegality or unenforceability shall not affect
the validity and enforceability of the other provisions of this
Agreement.
17. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
18. Governing Law. All matters concerning the validity and
interpretation of and performance under this Agreement shall be governed
by the laws of the Commonwealth of Virginia.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on this
23rd day of February 2006.
FNB CORPORATION
By:/s/Xxx X. Xxxxx
Name: Xxx. X. Xxxxx
Title: Chairman of the Board of Directors
By:/s/Xxxxxxx X. Xxxxx, Xx.
Name: Xxxxxxx X. Xxxxx, Xx.
Title: President and CEO
