EXHIBIT 10.10 TO FORM 10-KSB
FOUR OAKS BANK & TRUST COMPANY
SEVERANCE COMPENSATION AGREEMENT
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THIS AGREEMENT is entered into as of this 10th day of October, 1994, by
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and between FOUR OAKS BANK & TRUST COMPANY, a North Carolina banking
corporation (the "Bank"), and W. XXXX XXXXX, III ("Employee").
W I T N E S S E T H
WHEREAS, the Bank considers the maintenance of a vital management group
to be essential to protecting and enhancing the best interests of the Bank and
its shareholders;
WHEREAS, the Bank recognizes that, as is the case with many publicly
held corporations, there is a possibility of a change in control of the Bank,
and that the uncertainty and questions which such a possibility raise may result
in the departure or distraction of management personnel to the detriment of the
Bank and its shareholders;
WHEREAS, the Bank's Board of Directors has determined that appropriate
steps should be taken (1) to reinforce and encourage the continued attention and
dedication of members of the Bank's management to their assigned duties without
distraction arising from the possibility of a change in control of the Bank and
(2) to dispel any concerns that Employee may have about taking an active part in
the defense against an inappropriate attempt to bring about a change in control
of the Bank; and
WHEREAS, the purpose of this Agreement to assure Employee that, in the
event of termination of employment after a change of control (to the extent set
forth this Agreement), Employee will continue to receive compensation for a
period which should be sufficient for Employee to find other employment.
NOW, THEREFORE, in consideration of the mutual agreements set forth in
this Agreement, the legal sufficiency and adequacy of which are hereby
acknowledged, the parties agree as follows:
1. Employment. Employee agrees that so long as he is employed by the
Bank, Employee shall devote his full-time efforts during normal business hours
to the business and affairs of the Bank and shall support decisions and
determinations of the Board of Directors
and Bank policy including, but not limited to, any decision or determination
with respect to responding to an approach or attempt to effect a Change in
Control (as later defined).
2. Term.
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(a) The term of this Agreement shall be for two (2) years from
the Effective Date unless sooner terminated upon:
(i) Employee's written notice to the Bank that he is
terminating this Agreement effective upon a specified date not less than one
month after his notice is given;
(ii) Employee's death;
(iii) Employee's illness or other disability
incapacitating Employee from performing his duties for six (6)consecutive months
as determined in good faith by Chief Executive Officer, the Board of Directors
of the Bank or a committee of the Board;
(iv) A determination by the Chief Executive Officer or the
Board of Directors of the Bank that Employee is no longer a key executive
employee and the delivery of notice to Employee of such determination and the
termination of this Agreement. Such termination shall be effective upon the
delivery of the notice or at a later date specified in the notice; provided,
however, such determination shall not be made, and if made, shall have no
effect, after a Change in Control;
(b) Unless this Agreement is terminated in accordance with
subparagraph 2(a), on each anniversary of the Effective Date of this Agreement,
the term of this Agreement automatically shall be extended for an additional
successive period of one year, unless either the Employee or the Bank shall give
written notice to the other at least three (3) months before such anniversary
date that the term of this Agreement shall not be extended.
(c) In the event of a Change in Control of the Bank at any
time before the termination of this Agreement, the term of this Agreement shall
be automatically extended to the earlier of (i) a date two (2) years after the
date such Change in Control occurred and (ii) the occurrence of an event of
termination described in clause 2(a)(ii) or (iii).
(d) In the event of a Termination (as later defined) of
Employee's employment during the term of this Agreement, the term of this
Agreement shall be automatically extended until all obligations under the
Agreement are fully performed.
3. Change in Control. For purposes of this Agreement, a
"Change in Control" means one or more of the following occurrences:
(a) A corporation, person or group acting in concert as
described in Section 14(d)(2) of the Securities Exchange Act of 1934, as amended
("Exchange Act"), holds or acquires beneficial ownership within the meaning of
Rule l3d-3 promulgated under the Exchange Act of a number of shares of voting
capital stock of the Bank which constitutes either (i) more than fifty percent
(50%) of the shares which voted in the election of directors of the Bank at the
shareholders' meeting immediately preceding such determination, or (ii) more
than thirty-three percent (33%) of the Bank's then outstanding shares entitled
to vote.
(b) A merger or consolidation to which the Bank is a party
(other than a pro forma transaction for a purpose such as changing the state of
incorporation or name of the Bank), if either (i) the Bank is not the surviving
corporation, or (ii) the directors of the Bank immediately before the merger or
consolidation constitute less than a majority of the Board of Directors of the
surviving corporation; provided, however, the occurrence described in clause (i)
shall not constitute a Change in Control if the holders of the Bank's voting
capital stock immediately before the merger or consolidation have the same
proportional ownership of voting capital stock of the surviving corporation
immediately after the merger or consolidation.
(c) All or substantially all of the assets of the Bank are
sold, leased, or disposed of in one transaction or a series of related
transactions.
(d) An agreement, plan, contract, or other arrangement is
entered into providing for any occurrence which, as defined in this Agreement,
would constitute a Change in Control.
4. Termination Following Change in Control.
(a) Termination of Employee's employment after the occurrence
of a Change in Control ("Termination") entitles Employee to the benefits
described in Paragraphs 5 and 6, unless such Termination is (i) by the Bank for
cause or because of disability or (ii) because of Employee's death.
(b) "Cause" means: (i) the willful and continued failure by
Employee for a significant period of time to substantially perform his duties
with the Bank (other than any such failure resulting from his disability) after
a demand for substantial performance is delivered to Employee by the Bank's
Chief Executive Officer, Board of Directors, or a committee of the Board which
specifically identifies the manner in which the Chief Executive Officer or Board
of Directors
believes that Employee has not substantially performed his duties;
(ii) the willful engaging by Employee in gross misconduct materially and
demonstrably injurious to the Bank or (iii) the conviction of Employee of any
crime involving fraud or dishonesty. No act, or failure or act, on Employee's
part shall be considered "willful" unless done, or omitted to be done, by
Employee, not in good faith and without reasonable belief that his action or
omission was in the best interests of the Bank. The burden of establishing the
validity of any Termination for cause shall rest upon the Bank.
5. Benefits. In the event of Employee's Termination for any
reason except those set forth in clauses 4(a)(i) or (ii), the Bank shall pay
Employee as severance pay an amount equal to one and one-half (1 1/2) times
Employee's most recent annual compensation, including the amount of his most
recent annual bonus at the time of termination ("Severance Pay"). The Severance
Pay shall be paid in eighteen (18) equal monthly installments without interest,
commencing one month after termination, unless and until the Employee obtains
other full-time employment, at which time the balance of the Severance Pay shall
be paid within thirty (30) days in a lump sum amount.
6. Other Benefits. In addition, in the event of Employee's
Termination, the Bank shall:
(a) Maintain in full force and effect, for eighteen (18)
months after the date of Termination, or unless and until Employee obtains other
full-time employment, all life insurance, health (medical and dental),
accidental death and dismemberment and disability plans or programs in which
Employee is entitled to participate immediately prior to the date of Termination
and include Employee as a participant in such plans on the same terms as he
participated before Termination; provided that Employee's continued
participation is possible under the general terms and provisions of such plans
and programs. In
the event that Employee's participation in any such plan or program is barred,
the Bank shall arrange upon comparable terms to provide Employee with benefits
substantially similar to those which he would be entitled to receive under such
plans and programs. At the end of the period of coverage, Employee shall have
the option to have assigned to him, at no cost and with no apportionment of
prepaid premiums, any assignable insurance policy owned by the Bank and relating
specifically to Employee.
(b) To the extent permitted by the applicable plan, pay
Employee in a lump sum (or otherwise as specified by Employee to the extent
permitted by the applicable plan) any and all amounts contributed to a Bank
pension or retirement plan (other than any nonqualified deferred compensation
plan) to which Employee is entitled under the terms of any such plan.
7. No Duty to Mitigate. Employee shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise, nor shall the amount of any payment or benefit as provided for be
reduced by any compensation earned by Employee as the result of employment by
another employer or by retirement benefits after the date of Termination, or
otherwise except as specifically provided in this Agreement.
8. Miscellaneous.
(a) Limit on Effect. This Agreement shall have no effect on
any termination of Employee's employment before a Change in Control or after the
termination of this Agreement, or upon any termination of employment at any time
as a result of disability, retirement, or death, or as a result of Employee's
voluntary termination of this Agreement and, in such event, Employee shall
receive only those benefits to which Employee would have become entitled before
a Change in Control. After a change in Control and during its term, this
Agreement is in lieu of any other Bank severance policy involving cash payments,
but not in lieu of other Bank severance policies including, but not limited to,
those items provided in Paragraph 6. This Agreement does not entitle Employee to
employment for any term whatsoever.
(b) Successors.
(i) The Bank will require any successor (whether direct or
indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of the Bank to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Bank would be required to perform if no such succession had
taken place. Failure of the Bank to obtain such agreement before
the effectiveness of any such succession shall entitle the Employee immediately
to the benefits provided in Paragraphs 5 and 6 hereof.
(ii) Employee may not assign this Agreement, but this
Agreement shall inure to the benefit of and be enforceable by Employee's
personal or legal representatives, executors, administrators, heirs,
distributees, devisees and legatees. If Employee should die while any amounts
would still be payable to Employee under this Agreement if Employee had
continued to live, all such amounts, unless otherwise provided in this
Agreement, shall be paid in accordance with the terms of this Agreement to
Employee's devisee, legatee or other designee or, if there be no such designee,
to his estate.
(c) Expenses. The Bank agrees that if Employee is entitled to
Severance Pay or other benefits under this Agreement and the Bank or its
survivor disputes the obligation to pay Severance Pay or other benefits and
Employee prevails, in whole or in part, the Bank or its survivor shall then
promptly pay or reimburse Employee for all expenses incurred by Employee in such
dispute, including, but not limited to, attorneys' fees and associated costs.
(d) Notice. All necessary notices, demands, or requests
required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given when delivered in person or mailed by United
States certified mail, postage prepaid, to the parties at the addresses set
forth below or to such other address as either party may have furnished to the
other.
If to Bank: Four Oaks Bank & Trust Company
6144 U.S. 000 Xxxxx
Xxxx Xxxx, Xxxxx Xxxxxxxx 00000
If to Employee: W. Xxxx Xxxxx, III
000 Xxx Xxxx
Xxxxxx, Xxxxx Xxxxxxxx 00000
(e) Modifications. No provisions of this Agreement may be
modified, waived or discharged unless such modification, waiver or discharge is
agreed to in writing signed by the Employee and the Bank. No waiver by either
party at any time of any breach by the other party of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time.
(f) Counterparts; Interpretation. This Agreement may be
executed in several identical counterparts, each of which when so executed shall
be deemed an original, but all such counterparts shall constitute one and the
same instrument. The validity, interpretation, construction, and performance of
this Agreement, shall be governed by the laws of the State of North Carolina.
The invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
FOUR OAKS BANK & TRUST COMPANY
By: /s/ Ayden X. Xxx, Xx.
Pres. & CEO
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Authorized Officer
ATTEST:
/s/ Xxxxx X. Xxxxx
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Secretary
[SEAL]
/s/ W. Xxxx Xxxxx, III
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W. LEAN XXXXX, III
Employee
