Exhibit 10.8
EXHIBIT 10.8 TO FOUR OAKS 10-KSB
BANK OF FOUR OAKS
SEVERANCE COMPENSATION AGREEMENT
THIS AGREEMENT is made and entered into this 1st day of January, 1989
("Effective Date") by and between BANK OF FOUR OAKS, a North Carolina banking
corporation (the "Bank"), and Xxxxxxx X. Xxxxxxx ("Employee").
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 is to assure Employee that in
the event of termination of employment after a change of control (to the extent
set forth in 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.
(a) The term of this Agreement shall be for two 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 the Board of Directors of the Bank or a committee of the Board;
(iv) Employee's retirement; or
(v) A determination by 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 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 years after the date
such Change in Control occurred and (ii) the occurrence of an event of
termination described in clause 2 (a)(ii), (iii) or (iv).
(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 13d-3 promulgated under the Exchange Act of a number of shares of voting
capital stock of the Bank which constitutes either (i) more than 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 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 of 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 or retirement.
(b) "Cause" means: (i) the willful and continued failure by
Employee for a significant period of time substantially to 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
Board of Directors or a committee of the Board which specifically identifies the
manner in which the 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 to 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 two (2) times Employee's most
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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
twenty-four (24) 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 due 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 two years 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) Limitation of 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.
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(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: Bank of Four Oaks
000 X. Xxxxxxx Xxxxxx
Xxxx Xxxx Xxxxx Xxxxxxxx 00000
If to Employee: Xxxxxxx X. Xxxxxxx
0000 Xxxxxx Xxxxx Xxxx
Xxxxxxxxxx, 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 provisions 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.
BANK OF FOUR OAKS
BY: /s/ Xxxxxx X. Xxxxxxx
--------------------------
(Corporate Seal) Authorized Officer
Attest:
/s/ Ayden X. Xxx, Xx. /s/ Xxxxxxx X. Xxxxxxx (SEAL)
-------------------------- -------------------------
Xxxxxxx X. Xxxxxxx
Employee
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