AMENDED AND RESTATED EMPLOYMENT AGREEMENT
EXHIBIT
10.30
AMENDED
AND RESTATED EMPLOYMENT AGREEMENT
THIS
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement") is made and entered
into effective as of the 31st day of December, 2008 (the “Effective Date”) by
and among FNB United Corp., a North Carolina corporation (“FNB”), CommunityONE
Bank, National Association, a national banking corporation formerly known as
First National Bank and Trust Company and wholly owned subsidiary of FNB (the
“Bank”), and Xxxxxxx X. Xxxxxx, President of each of FNB and the Bank
(the “Executive”). FNB and the Bank are hereinafter sometimes
referred to together or individually as the “Employer.”
WITNESSETH:
WHEREAS,
the Executive is currently employed as the President of each of FNB and the Bank
pursuant to the terms of an employment agreement between the Executive and the
Bank dated as of January 1, 2006 (the “Prior Agreement”) and is highly
knowledgeable about their businesses, operations, markets and customers;
and
WHEREAS,
the Executive is a valued executive of the Employer and, to induce the Executive
to continue employment with the Employer and to enhance the Executive’s job
security, the Employer entered into the Prior Agreement to provide compensation
to the Executive in certain events, including but not limited to the Executive’s
termination of employment following a change in control of the Employer;
and
WHEREAS,
because the Executive is familiar with and will continue to gain extensive
knowledge regarding the Employer’s products, relationships, trade secrets and
confidential information relating to the Employer and its business, products,
processes and developments and has generated and will continue to generate
confidential information in the course of his duties, the Employer wished to
protect its long-term interests by having the Executive enter into certain
nondisclosure and noncompetition covenants set forth in the Prior Agreement;
and
WHEREAS,
the parties desire to amend and restate the Prior Agreement to bring the Prior
Agreement into compliance with Section 409A of the Internal Revenue Code of
1986, as amended from time to time (including corresponding provisions of
succeeding law) (the “Code”), the regulations promulgated thereunder, and other
guidance issued thereunder by the Department of the Treasury and/or the Internal
Revenue Service (“Section 409A”); and
WHEREAS;
the parties intend that this Agreement shall amend, restate and supersede the
Prior Agreement in its entirety, and that from and after the effective date of
this Agreement, the Prior Agreement shall be of no further force and effect;
and
WHEREAS,
none of the conditions or events included in the definition of the term “golden
parachute payment” that is set forth in Section 18(k)(4)(A)(ii) of the Federal
Deposit Insurance Act [12 U.S.C. 1828(k)(4)(A)(ii)] and in Federal Deposit
Insurance Corporation Rule
359.1(f)(1)(ii)
[12 CFR 359.1(f)(1)(ii)] exists or, to the best knowledge of the Employer, is
contemplated insofar as the Employer or any affiliates are
concerned.
NOW, THEREFORE, in consideration of the
terms contained herein, including the compensation the Employer agrees to pay to
the Executive upon certain events, the Executive's continued employment with the
Employer, the Executive's covenants and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Employer and
the Executive hereby agree as follows:
1. Employment
and Duties.
(a) Employment. During
the Employment Term (as defined in Section 3 below), and upon the terms and
conditions set forth in this Agreement, the Employer shall employ the Executive,
and the Executive shall serve, as President and Chief Executive Officer of each
of FNB and the Bank. As such, the Executive shall have the responsibilities,
duties and authority reasonably accorded to, expected of, and consistent with
those positions and will report directly to the board of directors of each of
FNB and the Bank (hereinafter sometimes referred to together or individually as
the “Board”). The Executive shall serve the Employer faithfully,
diligently, competently, and to the best of his ability, and he shall
exclusively devote his full time, energy, and attention to the business of the
Employer and to the promotion of the Employer’s interests throughout the
Employment Term. The Executive shall faithfully adhere to, execute
and fulfill all lawful requests, instructions and policies made by the Board or
its authorized agent(s).
(b) No Other
Employment. Without the written consent of FNB’s board of
directors, during the Employment Term, the Executive shall not render services
to or for any person, firm, corporation, or other entity or organization in
exchange for compensation, regardless of the form in which such compensation is
paid and regardless of whether it is paid directly or indirectly to the
Executive. The foregoing limitation shall not be construed as prohibiting the
Executive from managing his personal affairs in a manner that does not interfere
with the proper performance of his duties and responsibilities as President or
making or managing personal investments in such form or manner as will not
require his services in the operation or affairs of the companies or enterprises
in which such investments are made and will not violate Section 6
below.
(c) Board of Directors of
FNB. The Executive is currently serving as a director of
FNB. FNB shall nominate the Executive for election as a director at
such times as necessary so that the Executive will, if elected by shareholders,
remain a director of FNB throughout the term of this Agreement. The
Executive hereby consents to serve as a director of FNB, and the Executive
hereby consents to being named as a director of FNB in documents filed by FNB
with the Securities and Exchange Commission. The Executive shall be
deemed to have resigned as a director of FNB effective immediately after
termination of the Executive’s employment under Section 4 of this Agreement
other than by reason of the Executive’s retirement under Section 4(g),
regardless of whether the Executive submits a formal, written resignation as
director.
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(d) Board of Directors of the
Bank. The Executive is currently serving as a director
of the Bank. The Board shall undertake every lawful effort to ensure
that the Executive continues throughout the term of his employment to be elected
or reelected as a director of the Bank. The Executive shall be deemed
to have resigned as a director of the Bank effective immediately after
termination of the Executive’s employment under Section 4 of this Agreement
other than by reason of the Executive’s retirement under Section 4(g),
regardless of whether the Executive submits a formal, written resignation as
director.
2. Compensation. For
all services rendered by the Executive during the Employment Term as defined in
Section 3 below, the Employer shall compensate the Executive as
follows:
(a) Base
Salary. During the Employment Term, the Employer shall pay the
Executive an annual salary in an amount not less than the amount of the
Executive’s annual salary as of the Effective Date (such salary as it may be
increased from time to time being hereinafter referred to as the “Base
Salary”). Such salary shall be payable in accordance with the
Employer’s customary payroll practices and shall be subject to all applicable
federal and state withholding, payroll and other taxes. During the
Employment Term, the Base Salary shall be reviewed annually by the Compensation
Committee of FNB’s board of directors or by such other board committee as has
jurisdiction over executive compensation and may be increased from time to time
consistent with such review.
(b) Perquisites, Benefits and Other
Compensation. During the Employment Term, the Executive
shall be entitled to receive additional benefits and compensation from the
Employer in such form and to such extent as specified below:
(i) Benefit Plans and
Programs. The Executive will be entitled to participate, in
accordance with the provisions thereof, in all group health, disability and life
insurance, and all bonus, pension, retirement and other employee benefit plans
and programs made available by the Employer to its employees generally or to its
senior officers. Without limiting the generality of the foregoing,
the Executive shall be entitled to participate, in accordance with the
provisions thereof, in the Employer’s arrangement for performance compensation
for stakeholders (or any successor plan) (the “Stakeholders Plan”) and the FNB
United/CommunityONE Executive Short-Term Incentive Plan (hereinafter together
referred to as the “Bonus Plans”). In addition, the Executive shall
be eligible to participate in the Employer’s stock-based incentive compensation
plans then available to other employees or executives of the Employer in
accordance with the provisions of such plans and with awards thereunder
determined by FNB’s board of directors or by the Compensation Committee of the
Board, in its sole discretion.
(ii) Supplemental
Plan. The Executive will be entitled to participate, in
accordance with the provisions thereof, in the FNB Supplemental Executive
Retirement Plan, as such plan may be amended from time to time.
(iii) Club
Dues. The Employer shall pay or reimburse the Executive for
the monthly dues and assessments necessary for the Executive to maintain the
status of an active member of the Asheboro Country Club and Pinewood Country
Club or such other clubs as
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are
reasonably necessary to the conduct of the Employer’s business and as the
Compensation Committee of FNB’s board of directors may from time to time
approve. The Employer shall also pay or reimburse the Executive for
the dues and expenses incurred by the Executive for membership in such civic
clubs or groups as are reasonably necessary to the conduct of the Employer’s
business and as may be approved by the Compensation Committee.
(iv) Vacation. The
Executive shall be entitled to paid annual vacation and sick leave in accordance
with the policies established from time to time by the Employer.
(v) Automobile. The
Employer shall provide the Executive with a suitable vehicle for his exclusive
use in the discharge of his duties hereunder and shall pay all operating and
service expenses, including automobile insurance, related to such
vehicle. Any personal use of such vehicle by the Executive will be
appropriately accounted for and reported as additional
compensation.
(vi) Business
Expenses. The Employer shall reimburse the Executive for any
reasonable out-of-pocket business and travel expenses incurred by the Executive
in the ordinary course of performing his duties for the Employer upon
presentation by the Executive, from time to time, of appropriate documentation
therefor and in accordance with the Employer’s policies and practices as
established or modified from time to time.
(vii) Meeting and Convention
Attendance. The Employer shall pay all registration, travel,
accommodation and meal expenses for the Executive to attend such meetings and
conferences as are approved by the Board or an appropriate committee of the
Board. The Employer shall also pay all registration, travel,
accommodation and meal expenses for the Executive and his spouse to attend the
annual conventions of the American and North Carolina Bankers Associations each
year.
3. Term. The initial
term of this Agreement shall be for a period of three years commencing on the
Effective Date. On the first anniversary of the Effective Date of
this Employment Agreement and on each anniversary thereafter, this Agreement
shall be extended automatically for one additional year unless FNB’s board of
directors determines that the term shall not be extended. If the
board of directors determines not to extend the term, it shall promptly notify
the Executive in writing. If the board of directors decides not to
extend the term of this Agreement, this Agreement shall nevertheless remain in
full force until its term expires. The board of director’s decision
not to extend the term of this Agreement shall not – by itself – give the
Executive any rights under this Agreement to claim an adverse change in his
position, compensation, or circumstances or otherwise to claim entitlement to
severance benefits under this Agreement. Unless sooner terminated,
this Agreement and the Executive’s employment hereunder shall terminate on
December 31 of the year in which the Executive attains age 65. The
Executive's total term of employment with the Employer during the initial and
any extended term is collectively defined and sometimes referred to under this
Agreement as the "Employment Term."
4. Termination. The
Executive’s term of employment under this Agreement may be terminated before the
end of the initial term or any extension thereof as set forth in this Section
4. Notwithstanding anything contained herein to the contrary, the
Executive’s
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employment
with the Employer shall not be considered to have terminated for purposes of the
Executive’s receiving any compensation or other benefits otherwise provided
under this Agreement unless (i) he would be considered to have incurred a
“separation from service” within the meaning of Section 409A from the
Employer and any
other entity that, along with the Employer, would be considered a “service
recipient” within the meaning of Section 409A or (ii) the payment of such
compensation or such other benefits would not be subject to Section
409A.
(a) Death. In the
event of the death of the Executive during his employment under this Agreement,
this Agreement shall be terminated as of the date of death. In such
event, the Employer shall pay the Executive’s Base Salary, at the rate in effect
at the time of his death and through the last day of the calendar month in which
such death occurs, to the Executive’s designated beneficiary, or, in the absence
of such designation, to the estate or other legal representative of the
Executive. In addition, the Employer shall pay to the Executive’s
designated beneficiary, or, in the absence of such designation, to the estate or
other legal representative of the Executive, at the same time as bonus payments
for the year of death would otherwise be payable under the Stakeholders Plan, a
prorated bonus for the year of death that the Executive would have received if
he had been employed throughout such year and had received the same performance
rating as he received for the immediately preceding year, prorated on a daily
basis as of the date of the Executive’s death. Any rights and
benefits the Executive’s estate or any other person may have under employee
benefit plans and programs of the Employer in the event of the Executive’s death
shall be determined in accordance with the terms of such plans and
programs.
(b) Long-Term
Disability. If the Executive suffers any disability while
employed under this Agreement that prevents him from performing his duties under
this Agreement for a period of 90 consecutive days, then, unless otherwise then
agreed in writing by the parties hereto, the employment of the Executive under
this Agreement shall, at the election of the Employer, be terminated effective
as of the ninetieth day of such period. Upon termination of the
Executive’s employment by reason of disability under this Section 4(b), the
Executive shall be entitled to receive his Base Salary, at the rate in effect on
the date of such termination, less any disability insurance payments paid to the
Executive on a policy maintained for the benefit of the Executive by the
Employer, through the end of the then current term of this
Agreement. Such salary continuation shall be subject to all
applicable federal and state withholding taxes and any postponement of payment
that may be required pursuant to Section 15 below. Any rights and
benefits the Executive may have under the employee benefit plans and programs of
the Employer in the event of the Executive’s disability shall be determined in
accordance with the terms of such plans and programs.
For purposes of this Agreement,
“disability” shall mean the inability, by reason of bodily injury or physical or
mental disease, or any combination thereof, of the Executive to perform his
customary or other comparable duties with the Employer, with or without
reasonable accommodation. In the event that the Executive and the
Employer are unable to agree as to whether the Executive is suffering a
disability, the Executive and the Employer shall each select a physician and the
two physicians so chosen shall make the determination or, if they are unable to
agree, they shall select a third physician, and the determination as to whether
the Executive is suffering a disability shall be based upon the determination of
a majority of the three physicians.
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The
Employer shall pay the reasonable fees and expenses of all physicians selected
pursuant to this Section 4(b).
(c) Termination for
Cause. Nothing herein shall prevent the Employer from
terminating the Executive’s employment at any time for Cause (as hereinafter
defined). Upon termination for Cause, the Executive shall receive his
Base Salary only through the date that such termination becomes effective and
the amount of any compensation previously deferred by the Executive, provided
that the payment of any such deferred amount will be made in accordance with the
provisions of the plan, program or arrangement of the Employer permitting the
deferral. Neither the Executive nor any other person shall be
entitled to any further payments from the Employer, for salary or any other
amounts. Notwithstanding the foregoing, any rights and benefits the
Executive may have under the employee benefit plans and programs of the Employer
following a termination of the Executive’s employment for Cause shall be
determined in accordance with the terms of such plans, agreements and
programs.
For purposes of this Agreement,
termination for Cause shall mean a termination by the Employer of the
Executive’s employment by a vote of the majority of the Board members then in
office, as a result of (i) an intentional, willful and continued failure by
the Executive to perform his duties in the capacities indicated above (other
than due to disability); (ii) an intentional, willful and material breach
by the Executive of his fiduciary duties of loyalty and care to the Employer;
(iii) an intentional, willful and knowing violation by the Executive of any
provision of this Agreement; (iv) an intentional, willful and knowing
violation by the Executive of the Employer’s Code of Business Ethics or Code of
Ethics for Senior Financial Officers; (v) a conviction of, or the entering
of a plea of nolo contendere by the Executive for any felony or any crime
involving fraud or dishonesty, or (vi) a willful and knowing violation of
any material federal or state banking law or regulation applicable to the
Employer or the occurrence of any event described in Section 19 of the Federal
Deposit Insurance Act or any other act or event as a result of which the
Executive becomes unacceptable to, or is removed, suspended or prohibited from
participating in the conduct of the Employer’s affairs by any regulatory
authority having jurisdiction over the Employer; provided, however, that the
Board has given the Executive advance notice of such termination for Cause,
including the reasons therefor, together with a reasonable opportunity for the
Executive to appear with counsel before the Board and to reply to such
notice.
(d) Termination Other than for Cause and
Not in Connection with a Change in Control. The Employer may
terminate the Executive’s employment under this Agreement at any time upon 90
days written notice to the Executive for whatever reason it deems appropriate,
or for no reason. In the event such termination by the Employer
occurs and is not due to death as provided in Section 4(a) above, disability as
provided in Section 4(b) above or for Cause as provided in Section 4(c) above,
the Employer shall (i) continue the Executive’s Base Salary, at the rate in
effect at the time of such termination, through the end of the then current term
of this Agreement, (ii) pay to the Executive for the year of termination
and for each subsequent calendar year or portion thereof through the end of the
then current term of this Agreement an amount (prorated in the case of any
partial year) equal to the average of the bonuses paid to the Executive under
the Bonus Plans for the three calendar years immediately preceding the year of
termination, such payments to be made at the normal times for payment of bonuses
under the Bonus Plans, and (iii) pay to the Executive the amount of any
compensation previously deferred
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by the
Executive, provided that the payment of any such deferred amount will be made in
accordance with the provisions of the plan, program or arrangement of the
Employer permitting the deferral. All compensation continuation shall
be subject to applicable federal and state withholding taxes and any
postponement of payment that may be required pursuant to Section 15
below. Any rights and benefits the Executive may have under employee
benefit plans and programs of the Employer following a termination of the
Executive’s employment by the Employer other than for Cause, including rights
and benefits under retirement plans and programs, shall be determined in
accordance with the terms of such plans and programs; provided that all stock
options and restricted stock awards granted to the Executive and outstanding as
of the date of termination (other than those under which vesting is
performance-based or is dependent upon the satisfaction of conditions other than
continued employment) shall become immediately and fully vested and the
Executive shall have up to three years to exercise all such outstanding options
following the date of termination but in no event beyond their specified
term. Notwithstanding the foregoing, no such accelerated vesting or
change in exercise period shall be permitted if it would cause an option or
restricted stock award that is not otherwise subject to Section 409A to become
subject to Section 409A or if it would cause an option or restricted stock award
that is subject to Section 409A to violate Section 409A.
In
addition to the foregoing, in the event of a termination pursuant to this
Section 4(d) and provided the Executive properly elects coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”),
the Employer shall reimburse the Executive for one hundred percent (100%) of all
applicable premiums for continuation coverage for the Executive under the group
health plan of the Employer in which the Executive was a participant at the time
of the termination of his employment. On a monthly basis following a
termination pursuant to this Section 4(d), the Employer shall pay to Executive a
cash payment that shall equal the premium costs that the Executive paid on an
after-tax basis over the preceding month period for such COBRA coverage until
the earlier of (w) the end of the term remaining under this Agreement at the
time the Executive’s employment is terminated, (x) December 31 of the year the
Executive attains age 65, (y) the date on which the Executive is eligible to
participate in a group health plan of another employer as a full-time employee,
or (z) the Executive’s death; provided, however that, as of the nineteenth month
following a termination pursuant to this Section 4(d), the Executive shall not
be entitled to further reimbursement for premium costs for such COBRA
coverage.
In the
event the Executive is eligible to be covered by the Postretirement Medical and
Life Insurance Benefits Plan, or any successor or similar plan, of the Employer
at the time of his termination pursuant to this Section 4(d), the Executive may
elect, in lieu of electing COBRA continuation coverage under the provisions of
the immediately preceding paragraph, to participate in such Postretirement
Medical and Life Insurance Benefits Plan of the Employer. On a monthly basis
following a termination pursuant to this Section 4(d), the Employer shall pay to
the Executive a cash payment that shall equal the premium costs that the
Executive paid on an after-tax basis over the month period for coverage under
such Postretirement Medical and Life Insurance Benefits Plan, as adjusted to
reflect the Employer’s subsidized cost-sharing arrangement, if any, that is
otherwise provided to all similarly situated employees based on their years of
service with the Employer until the earlier of (w) the end of the term remaining
under this Agreement at the time the Executive’s employment is terminated, (x)
December 31 of the year the Executive attains age 65, (y) the date on which the
Executive is eligible to participate in
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a group
health plan of another employer as a full-time employee, or (z) the Executive’s
death; provided, however that, as of the nineteenth month following the
Executive’s termination pursuant to this Section 4(d), the Executive shall not
be entitled to further reimbursement for premium costs for coverage under such
Postretirement Medical and Life Insurance Benefits Plan. After the 18th month
following a termination pursuant to this Section 4(d), the Executive shall
continue to be entitled to participate in the Postretirement Medical and Life
Insurance Benefits Plan of the Employer and to receive the Employer’s subsidized
cost-sharing arrangement, if any, that is otherwise provided to all similarly
situated employees based on their years of service with the
Employer.
In
addition to the foregoing, in the event of a termination pursuant to this
Section 4(d) the Employer shall reimburse the Executive for one hundred percent
(100%) of all applicable premiums actually paid by the Executive for disability
insurance and, if the Executive does not elect to participate in the
Postretirement Medical and Life Insurance Benefits Plan of the Employer pursuant
to the immediately preceding paragraph, life insurance policies following
termination of employment not to exceed, in scope or benefit, any group
disability or life insurance plan made available by the Employer to similarly
situated employees in which the Executive was a participant at the time of his
termination of employment. On a monthly basis following a termination
pursuant to this Section 4(d), the Employer shall pay to the Executive a cash
payment that shall equal the premium costs that the Executive paid on an
after-tax basis over the month period for coverage under such disability and, if
applicable, life insurance policies until the earlier of (w) the end of the term
remaining under this Agreement at the time the Executive’s employment is
terminated, (x) December 31 of the year the Executive attains age 65, (y) the
date on which the Executive is eligible to participate in a group disability
and, if applicable, life insurance plan of another employer as a full-time
employee, or (z) the Executive’s death; provided, however that, as of the
nineteenth month following the Executive’s termination pursuant to this Section
4(d), the Executive shall not be entitled to further reimbursement for premium
costs for coverage under such disability and, if applicable, life insurance
policies.
In no
event shall the amount of expenses eligible for reimbursement under this Section
4(d) for any calendar year affect the expenses eligible for reimbursement in
another calendar year. In no event shall any reimbursement made
pursuant to the two immediately preceding paragraphs be made later than the last
day of the calendar year following the year in which the Executive incurred the
expenses being reimbursed. Any reimbursement payments made pursuant
to either of the two immediately preceding paragraphs shall be subject to any
postponement of payment that may be required by Section 15. In the
event a termination by the Employer of the Executive’s employment under this
Agreement occurs within 24 months following a Change in Control (as defined in
Section 5(c)) and is not due to death as provided in Section 4(a) above,
disability as provided in Section 4(b) above, or for Cause as provided in
Section 4(c) above, then the Executive’s rights to compensation shall be
governed by Section 5 and not this Section 4(d).
(e) At the Executive’s Option with Good
Reason. The Executive may terminate his employment with Good
Reason (as defined below) upon at least 60 days advance notice to Employer;
provided that the termination will take effect at the end of the 60-day notice
period unless the event or circumstance constituting Good Reason is cured by the
Employer or
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unless
the notice of termination with Good Reason is revoked by the Executive within
such 60-day period. In the event of such a voluntary termination of
employment with Good Reason, the Employer shall (i) continue the
Executive’s Base Salary, at the rate in effect at the time of such termination,
through the end of the then current term of this Agreement, (ii) pay to the
Executive for the year of termination and for each subsequent calendar year or
portion thereof through the end of the then current term of this Agreement an
amount (prorated in the case of any partial year) equal to the average of the
bonuses paid to the Executive under the Bonus Plans for the three calendar years
immediately preceding the year of termination, such payments to be made at the
normal times for payment of bonuses under the Bonus Plans, and (iii) pay to
the Executive the amount of any compensation previously deferred by the
Executive, provided that the payment of any such deferred amount will be made in
accordance with the provisions of the plan, program or arrangement of the
Employer permitting the deferral. All compensation continuation shall
be subject to applicable federal and state withholding taxes and any
postponement of payment that may be required pursuant to Section 15
below. Any rights and benefits the Executive may have under employee
benefit plans and programs of the Employer following a termination by the
Executive of his employment for Good Reason, including rights and benefits under
retirement plans and programs, shall be determined in accordance with the terms
of such plans and programs; provided that all stock options and restricted stock
awards granted to the Executive and outstanding as of the date of termination
(other than those under which vesting is performance-based or is dependent upon
the satisfaction of conditions other than continued employment) shall become
immediately and fully vested and the Executive shall have up to three years to
exercise all such outstanding options following the date of termination but in
no event beyond their specified term. Notwithstanding the foregoing,
no such accelerated vesting or change in exercise period shall be permitted if
it would cause an option or restricted stock award that is not otherwise subject
to Section 409A to become subject to Section 409A or if it would cause an option
or restricted stock award that is subject to Section 409A to violate Section
409A.
In
addition to the foregoing, in the event of a termination pursuant to this
Section 4(e) and provided the Executive properly elects coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”),
the Employer shall reimburse the Executive for one hundred percent (100%) of all
applicable premiums for continuation coverage for the Executive under the group
health plan of the Employer in which the Executive was a participant at the time
of the termination of his employment. On a monthly basis following a
termination pursuant to this Section 4(e), the Employer shall pay to Executive a
cash payment that shall equal the premium costs that the Executive paid on an
after-tax basis over the preceding month period for such COBRA coverage until
the earlier of (w) the end of the term remaining under this Agreement at the
time the Executive’s employment is terminated, (x) December 31 of the year the
Executive attains age 65, (y) the date on which the Executive is eligible to
participate in a group health plan of another employer as a full-time employee,
or (z) the Executive’s death; provided, however that, as of the nineteenth month
following a termination pursuant to this Section 4(e), the Executive shall not
be entitled to further reimbursement for premium costs for such COBRA
coverage.
In the
event the Executive is eligible to be covered by the Postretirement Medical and
Life Insurance Benefits Plan, or any successor or similar plan, of the Employer
at the time of his termination pursuant to this Section 4(e), the Executive may
elect, in lieu of electing COBRA
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continuation
coverage under the provisions of the immediately preceding paragraph, to
participate in such Postretirement Medical and Life Insurance Benefits Plan of
the Employer. On a monthly basis following a termination pursuant to this
Section 4(e), the Employer shall pay to the Executive a cash payment that shall
equal the premium costs that the Executive paid on an after-tax basis over the
month period for coverage under such Postretirement Medical and Life Insurance
Benefits Plan, as adjusted to reflect the Employer’s subsidized cost-sharing
arrangement, if any, that is otherwise provided to all similarly situated
employees based on their years of service with the Employer until the earlier of
(w) the end of the term remaining under this Agreement at the time the
Executive’s employment is terminated, (x) December 31 of the year the Executive
attains age 65, (y) the date on which the Executive is eligible to participate
in a group health plan of another employer as a full-time employee, or (z) the
Executive’s death; provided, however that, as of the nineteenth month following
the Executive’s termination pursuant to this Section 4(e), the Executive shall
not be entitled to further reimbursement for premium costs for coverage under
such Postretirement Medical and Life Insurance Benefits Plan. After the 18th
month following a termination pursuant to this Section 4(e), the Executive shall
continue to be entitled to participate in the Postretirement Medical and Life
Insurance Benefits Plan of the Employer and to receive the Employer’s subsidized
cost-sharing arrangement, if any, that is otherwise provided to all similarly
situated employees based on their years of service with the
Employer.
In
addition to the foregoing, in the event of a termination pursuant to this
Section 4(e) the Employer shall reimburse the Executive for one hundred percent
(100%) of all applicable premiums actually paid by the Executive for disability
insurance and, if the Executive does not elect to participate in the
Postretirement Medical and Life Insurance Benefits Plan of the Employer pursuant
to the immediately preceding paragraph, life insurance policies following
termination of employment not to exceed, in scope or benefit, any group
disability or life insurance plan made available by the Employer to similarly
situated employees in which the Executive was a participant at the time of his
termination of employment. On a monthly basis following a termination
pursuant to this Section 4(e), the Employer shall pay to the Executive a cash
payment that shall equal the premium costs that the Executive paid on an
after-tax basis over the month period for coverage under such disability and, if
applicable, life insurance policies until the earlier of (w) the end of the term
remaining under this Agreement at the time the Executive’s employment is
terminated, (x) December 31 of the year the Executive attains age 65, (y) the
date on which the Executive is eligible to participate in a group disability
and, if applicable, life insurance plan of another employer as a full-time
employee, or (z) the Executive’s death; provided, however that, as of the
nineteenth month following the Executive’s termination pursuant to this Section
4(e), the Executive shall not be entitled to further reimbursement for premium
costs for coverage under such disability and, if applicable, life insurance
policies.
In no
event shall the amount of expenses eligible for reimbursement under this Section
4(e) for any calendar year affect the expenses eligible for reimbursement in
another calendar year. In no event shall any reimbursement made
pursuant to the two immediately preceding paragraphs be made later than the last
day of the calendar year following the year in which the Executive incurred the
expenses being reimbursed. Any reimbursement payments made pursuant
to either of the two immediately preceding paragraphs shall be subject to any
postponement of payment that may be required by Section 15.
10
For
purposes of this Agreement, termination with Good Reason means a termination of
the Executive’s employment by the Executive due to a failure of the Employer or
any successor to fulfill its obligations under this Agreement in any material
respect, including (a)any failure to elect or reelect or to appoint or reappoint
the Executive to the office of President and Chief Executive Officer of each of
FNB and the Bank or as a member of each of their boards of directors, or
(b) any other material change by the Employer in the functions, duties or
responsibilities of the Executive’s position as chief executive officer with the
Employer that would reduce the ranking or level, dignity, responsibility,
importance or scope of such position, or (c) any imposition on the
Executive of a requirement to be permanently based at a location more than 50
miles from the principal office of the Employer as of the date of this Agreement
without the consent of the Executive, or (d) any reduction without the
consent of the Executive in the Executive’s annual salary below the Base Salary
then provided for under Section 2(a).
In the event a termination by the
Executive of his employment under this Agreement occurs within 24 months
following a Change in Control (as defined in Section 5(c)) and such termination
is for Good Reason, then the Executive’s rights to compensation shall be
governed by Section 5 and not this Section 4(e).
(f) At the Executive’s Option without
Good Reason. The Executive may terminate his employment
without Good Reason at any time upon at least 60 days advance written notice to
the Employer; provided, however, that the Employer, in its discretion, may cause
such termination to be effective at any time during such notice
period. In the event of such a voluntary termination of employment
without Good Reason, the Executive will be entitled to receive only any earned
but unpaid Base Salary and the other benefits of this Agreement through the date
on which the Executive's termination becomes
effective. Notwithstanding the foregoing, any rights and benefits the
Executive may have under employee benefit plans and programs of the Employer
following a voluntary termination of the Executive’s employment without Good
Reason, including rights and benefits under retirement plans and programs, shall
be determined in accordance with the terms of such plans and
programs.
(g) Retirement. The
Executive’s employment under this Agreement shall terminate upon the date of the
Executive’s retirement, which date (hereinafter referred to as the “Retirement
Date”) shall be the earlier to occur of (i) December 31 of the year in which the
Executive attains age 65, and (ii) the date on which the Executive voluntarily
terminates his employment upon satisfaction of the requirements for early
retirement under the Employer’s retirement plans. In the event of the
Executive’s retirement, (i) the Executive shall be entitled to receive all
earned but unpaid Base Salary through the Retirement Date; (ii) the
Employer shall pay to the Executive, at the same time as bonus payments for the
year in which the Retirement Date occurs would otherwise be made under the
Stakeholders Plan, subject to any postponement of such payment that may be
required by Section 15, a prorated bonus for such year equal to the amount of
the bonus the Executive would have received if he had been employed throughout
such year; prorated on a daily basis as of the Retirement Date; (iii) all stock
options and restricted stock awards granted to the Executive and outstanding as
of the date the Retirement Date (other than those under which vesting is
performance-based or is dependent upon the satisfaction of conditions other than
continued employment) shall become immediately and fully vested; and
(iv) the Executive shall receive such retirement and other benefits as he
is entitled to receive under, and in accordance with, the terms of the
Employer’s retirement and other benefit plans. Notwithstanding the
foregoing, no such accelerated vesting provided for in clause (iii)
11
above
shall be permitted if it would cause an option or restricted stock award that is
not otherwise subject to Section 409A to become subject to Section 409A or if it
would cause an option or restricted stock award that is subject to Section 409A
to violate Section 409A.
5. Termination
Following a Change in Control.
(a) Change in Control Cash
Benefits. If the Executive’s employment is terminated by the
Employer other than for Cause or by the Executive with Good Reason within 24
months following a Change in Control, then the Executive shall be entitled to
receive an aggregate amount in cash equal to 2.99 multiplied by the Executive’s
average annual cash compensation for the five fiscal years immediately preceding
the Change in Control. Such amount shall be payable on the date that
is six months after termination of employment.
(b) Benefit Plans. In
addition to the benefit set forth in Section 5(a), in the event of a termination
pursuant to Section 5(a) and provided the Executive properly elects coverage
under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
(“COBRA”), the Employer shall reimburse the Executive for one hundred percent
(100%) of all applicable premiums for continuation coverage for the Executive
under the group health plan of the Employer in which the Executive was a
participant at the time of the termination of his employment. On a
monthly basis following a termination pursuant to Section 5(a), the Employer
shall pay to Executive a cash payment that shall equal the premium costs that
the Executive paid on an after-tax basis over the preceding month period for
such COBRA coverage until the earlier of (w) the end of the term remaining under
this Agreement at the time the Executive’s employment is terminated, (x)
December 31 of the year the Executive attains age 65, (y) the date on which the
Executive is eligible to participate in a group health plan of another employer
as a full-time employee, or (z) the Executive’s death; provided, however that,
as of the nineteenth month following a termination pursuant to Section 5(a), the
Executive shall not be entitled to further reimbursement for premium costs for
such COBRA coverage.
In the event the Executive is eligible
to be covered by the Postretirement Medical and Life Insurance Benefits Plan, or
any successor or similar plan, of the Employer at the time of his termination
pursuant to Section 5(a), the Executive may elect, in lieu of electing COBRA
continuation coverage under the provisions of the immediately preceding
paragraph, to participate in such Postretirement Medical and Life Insurance
Benefits Plan of the Employer. On a monthly basis following a termination
pursuant to Section 5(a), the Employer shall pay to the Executive a cash payment
that shall equal the premium costs that the Executive paid on an after-tax basis
over the month period for coverage under such Postretirement Medical and Life
Insurance Benefits Plan, as adjusted to reflect the Employer’s subsidized
cost-sharing arrangement, if any, that is otherwise provided to all similarly
situated employees based on their years of service with the Employer until the
earlier of (w) the end of the term remaining under this Agreement at the time
the Executive’s employment is terminated, (x) December 31 of the year the
Executive attains age 65, (y) the date on which the Executive is eligible to
participate in a group health plan of another employer as a full-time employee,
or (z) the Executive’s death; provided, however that, as of the nineteenth month
following the Executive’s termination pursuant to Section 5(a), the Executive
shall not be entitled to further reimbursement for premium costs for coverage
under such Postretirement Medical and Life Insurance Benefits Plan. After the
18th month following a termination pursuant to Section 5(a), the Executive
shall
12
continue
to be entitled to participate in the Postretirement Medical and Life Insurance
Benefits Plan of the Employer and to receive the Employer’s subsidized
cost-sharing arrangement, if any, that is otherwise provided to all similarly
situated employees based on their years of service with the
Employer.
In addition to the foregoing, in the
event of a termination pursuant to Section 5(a) the Employer shall reimburse the
Executive for one hundred percent (100%) of all applicable premiums actually
paid by the Executive for disability insurance and, if the Executive does not
elect to participate in the Postretirement Medical and Life Insurance Benefits
Plan of the Employer pursuant to the immediately preceding paragraph, life
insurance policies following termination of employment not to exceed, in scope
or benefit, any group disability or life insurance plan made available by the
Employer to similarly situated employees in which the Executive was a
participant at the time of his termination of employment. On a
monthly basis following a termination pursuant to Section 5(a), the Employer
shall pay to the Executive a cash payment that shall equal the premium costs
that the Executive paid on an after-tax basis over the month period for coverage
under such disability and, if applicable, life insurance policies until the
earlier of (w) the end of the term remaining under this Agreement at the time
the Executive’s employment is terminated, (x) December 31 of the year the
Executive attains age 65, (y) the date on which the Executive is eligible to
participate in a group disability and, if applicable, life insurance plan of
another employer as a full-time employee, or (z) the Executive’s death;
provided, however that, as of the nineteenth month following the Executive’s
termination pursuant to Section 5(a), the Executive shall not be entitled to
further reimbursement for premium costs for coverage under such disability and,
if applicable, life insurance policies.
In no
event shall the amount of expenses eligible for reimbursement under this Section
5(b) for any calendar year affect the expenses eligible for reimbursement in
another calendar year. In no event shall any reimbursement made
pursuant to the two immediately preceding paragraphs be made later than the last
day of the calendar year following the year in which the Executive incurred the
expenses being reimbursed. Any reimbursement payments made pursuant
to either of the two immediately preceding paragraphs shall be subject to any
postponement of payment that may be required by Section 15.
The
Employer shall also cause the Executive to become fully vested in any
qualified and nonqualified plans, programs or arrangements in which the
Executive participated if the plan, program or arrangement does not address the
effect of a Change in Control; provided, that (x) such vesting does not cause
any such plan, program or arrangement that is not otherwise subject to Section
409A to become subject to Section 409A and (y) such vesting does not cause any
such plan, program or arrangement that is subject to Section 409A to violate
Section 409A. Subject to the foregoing, any rights and benefits the
Executive may have under the employee benefit plans and programs of the Employer
following a termination of the Executive’s employment by the Employer other than
for Cause or by the Executive with Good Reason shall be determined in accordance
with the terms of such plans and programs.
(c) Definition of Change in
Control. For the purposes of this Agreement, the term “Change
of Control” shall mean a change in control as defined in Section 409A, including
–
(i) Change in ownership: a change
in ownership of the Bank occurs on the date any one person, or more than one
person acting as a group, acquires ownership of
13
stock of
FNB or the Bank, that together with stock of FNB or the Bank held by such person
or group, constitutes more than 50% of the total fair market value or total
voting power of stock of FNB or the Bank,
(ii) Change in effective control:
(x) any one
person, or more than one person acting as a group, acquires (or has acquired
during the 12-month period ending on the date of the most recent acquisition by
such person or persons) ownership of stock possessing 30% or more of the total
voting power of the stock of FNB or the Bank, or (y) a majority of the
board of directors of FNB is replaced during any 12-month period by directors
whose appointment or election is not endorsed by a majority of the board of
directors of FNB before the date of the appointment or election; provided,
however, for purposes of this Section 5(c)(ii), the terms FNB or the Bank shall
refer to the relevant corporation identified in Treasury Regulation
1.409A-3(i)(5)(ii) for which no other corporation is a majority shareholder for
purposes of that regulation, or
(iii) Change in ownership of a substantial
portion of assets: a change in ownership of a substantial portion of the
assets of the Bank or FNB occurs on the date that any one person, or more than
one person acting as a group, acquires (or has acquired during the 12-month
period ending on the date of the most recent acquisition by such person or
persons) assets of FNB or the Bank having a total gross fair market value equal
to or exceeding 40% of the total gross fair market value of all of the assets of
FNB or the Bank, as applicable, immediately before the acquisition or
acquisitions. For this purpose, gross fair market value means the
value of the assets of FNB or the Bank, as applicable, or the value of the
assets being disposed of, determined without regard to any liabilities
associated with the assets.
(d) No Multiple Severance
Payments. If the Executive receives payment under this Section
5, he shall not be entitled to any severance benefits under Section
4.
(e) No Solicitation of Change in
Control. The Executive will not solicit, counsel or encourage
any third party to offer, propose or pursue, or to solicit, counsel or encourage
another third party to offer, propose or pursue, any acquisition, merger or
other change in control of FNB or the Bank without the prior authorization of
the Board of Directors of the Bank or FNB as reflected in the minutes of a
regular or special meeting, or in a written consent action, of the Board of
Directors of the Bank or FNB. Any violation of this Section 5(e)
occurring in connection with an offer, proposal or pursuit by a third party to
engage in an acquisition, merger or other change in control of FNB or the Bank
shall be deemed to constitute a forfeiture by the Executive of all of his rights
under Sections 5(a) and 5(b) hereof.
(f) Gross-Up for
Taxes.
(i) If
the Executive receives the cash payment under Section 5(a) and acceleration of
benefits under any benefit, compensation, or incentive plan or arrangement with
the Employer (collectively, the “Total Benefits”), and if any part of the Total
Benefits is subject to excise taxes (the “Excise Tax”) under section 280G and
section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), the
Employer shall pay to the Executive at the time specified in subsection (iii)
below an additional amount (the “Gross-Up Payment”) such that the net amount
retained by the Executive, after deduction of any Excise Tax on the Total
Benefits
14
and any
U.S federal, state, and for local income or payroll tax upon the Gross-Up
Payment, but before deduction for any U.S. federal, state and local income or
payroll tax on the Total Benefits, shall be equal to the Total
Benefits. For purposes of calculating the Gross-Up Payment, the
Executive shall be deemed to pay income taxes at the highest applicable marginal
rate of federal, state or local income taxation for the calendar year in which
the Gross-Up Payment is to be made.
(ii) Subject
to any determination made by the Internal Revenue Service (the “IRS”), all
determinations as to whether a Gross-Up Payment is required and the amount of
Gross-Up Payment and the assumptions to be used in arriving at the determination
shall be made by the Employer’s independent certified public accountants or tax
counsel selected by such accountants or both (the “Accountants”) in accordance
with the principles of section 280G of the Code. All fees and
expenses of the Accountants will be borne by the Employer. Subject to
any determinations made by the IRS, determinations of the Accountants under this
Agreement with respect to (x) the initial amount of any Gross-Up Payment and (y)
any subsequent adjustment of such payment shall be binding on the Employer and
the Executive.
(iii) The
Gross-Up Payment calculated pursuant to Section 5(f)(ii) shall be paid no later
than the 30th day
following an event occurring that subjects the Executive to the Excise Tax;
provided, however, that if the amount of such Gross-Up Payment or portion
thereof cannot be reasonably determined on or before such day, the Employer
shall pay to the Executive the amount of the Gross-Up Payment no later than 10
days following the determination of the Gross-Up Payment by the
Accountants. Notwithstanding the foregoing, the Gross-Up Payment
shall be paid to or for the benefit of the Executive no later than 15 business
days prior to the date by which the Executive is required to pay the Excise Tax
or any portion of the Gross-Up Payment to any federal, state or local taxing
authority, without regard to extensions and shall be subject to any delay
required by Section 15.
(iv) In
the event that the Excise Tax is subsequently determined by the Accountants to
be less than the amount taken into account hereunder at the time the Gross-Up
Payment is made, the Executive shall repay to the Employer, at the time that the
amount of such reduction in Excise Tax is finally determined, the portion of the
prior Gross-Up Payment attributable to such reduction (plus the portion of the
Gross-Up Payment attributable to the Excise Tax and U.S. federal, state and
local income tax imposed on the portion of the Gross-Up Payment being repaid by
the Executive if such repayment results in a reduction in Excise Tax or a U.S.
federal, state and local income tax deduction), plus interest on the amount of
such repayment at the rate provided in section 1274(b)(2)(B) of the
Code. Notwithstanding the foregoing, in the event any portion of the
Gross-Up Payment to be refunded to the Employer has been paid to any U.S.
federal, state and local tax authority, repayment thereof (and related amounts)
shall not be required until actual refund or credit of such portion has been
made to the Executive and interest payable to the Employer shall not exceed the
interest received or credited to the Executive by such tax authority for the
period it held such portion. The Executive and the Employer shall
cooperate in good faith in determining the course of action to be pursued (and
the method of allocating the expense thereof) if the Executive’s claim for
refund or credit is denied. However, if agreement cannot be reached,
the Employer shall decide the appropriate course of action to pursue provided
that the action does not adversely affect any issues the Executive may have with
respect to his tax return, other than the Excise Tax.
15
(v) In
the event that the Excise Tax is later determined by the Accountants or the IRS
to exceed the amount taken into account hereunder at the time the Gross-Up
Payment is made (including by reason of any payment the existence or amount of
which cannot be determined at the time of the Gross-Up Payment), the Employer
shall make an additional Gross-Up Payment to or for the benefit of the Executive
in respect of such excess (plus any interest or penalties payable with respect
to such excess) at the time that the amount of such excess is finally
determined; provided, that such payment shall be made no later than the end of
Executive’s taxable year next following the Executive’s taxable year in which
the Executive remits the related taxes to any federal, state or local taxing
authority.
(vi) In
the event of any controversy with the IRS (or other taxing authority) with
regard to the Excise Tax, the Executive shall permit the Employer to control
issues related to the Excise Tax (at its expense), provided that such issues do
not potentially materially adversely affect the Executive. In the
event issues are interrelated, the Executive and the Employer shall in good
faith cooperate so as not to jeopardize resolution of either or any
issue. In the event of any conference with any taxing authority as to
the Excise Tax or associated income taxes, the Executive shall permit the
representative of the Employer to accompany the Executive, and the Executive and
the Executive’s representative shall cooperate with the Employer and its
representative.
(vii) The
Employer shall be responsible for all charges of the Accountant. Any
amounts paid pursuant to this Section 5(f)(vii) shall be made no later than the
last day of the calendar year following the year in which the expenses were
incurred. In no event shall the amount of expenses eligible for
payment by the Company under this Section 5(f)(vii) for any calendar year affect
the expenses eligible for payment in another calendar year, and in no event may
the right to payments under this paragraph be liquidated or exchanged for any
other right or benefit.
(viii) The
Employer and the Executive shall promptly deliver to each other copies of any
written communications, and summaries of any oral communications, with any
taxing authority regarding the Excise Tax.
6. Covenant Not to
Compete. For a period commencing on the date hereof and
continuing until (i) one year after the
date of expiration of the Employment Term or the date that any termination of
Executive’s employment under this Agreement becomes effective or (ii) the last day of the
period after the date that any termination of the Executive’s employment under
this Agreement becomes effective in which the Executive is entitled to receive
any Base Salary pursuant to Section 4 hereof, whichever is later, the Executive
will not, without the written consent of FNB or the Bank, directly or
indirectly:
(a) own
any interest in, manage, operate, control, be employed by, render consulting or
advisory services to, or participate in or be connected with the management or
control of any business that is then engaged, or proposing to engage, in the
operation of a bank, savings bank, credit union, mortgage company, savings and
loan association or similar financial institution that conducts any of its
operations within the counties in North Carolina in which the Employer or any
affiliate conducts operations as of the Effective Date and within any other
counties in North Carolina or in any other states added during the Employment
Term by the
16
Employer’s,
or any affiliate’s, conducting operations therein; provided, however, that the
Executive may, without violating this Agreement, own as a passive investment not
in excess of three percent (3%) of the outstanding capital stock of any such
business whose stock is publicly traded or quoted on the NASDAQ over-the-counter
market, the New York Stock Exchange, the American Stock Exchange, the National
Daily Quotation System “Pink Sheets” or the OTC Bulletin Board;
(b) influence
or attempt to influence any customer of the Employer or any affiliate to
discontinue its use of the Employer’s (or such affiliate’s) services or to
divert such business to any other person, firm or corporation;
(c) interfere
with, disrupt or attempt to disrupt the relationship, contractual or otherwise,
between the Employer or any affiliate and any of its respective customers,
suppliers, principals, distributors, lessors or licensors; and
(d) solicit
any officer or executive of the Employer or any affiliate, whose base annual
salary at the time of the Executive’s termination was $20,000 or more, to work
for any other person, firm or corporation.
It is
expressly agreed that the provisions and covenants in this Section 6 shall not
apply and shall be of no force or effect in the event that (i) the Employer
fails to honor its obligations under this Agreement after termination of the
Executive’s employment, or (ii) the Executive’s employment hereunder is
terminated within 24 months after a Change in Control either by the Employer
other than for Cause or by the Executive with Good Reason.
In the
event the Executive breaches any of the provisions contained herein and the
Employer seeks compliance with such provisions by judicial proceedings, the time
period during which the Executive is restricted by such provisions shall be
extended by the time during which the Executive has actually competed with the
Employer or been in violation of any such provision and any period of litigation
required to enforce the Executive’s obligations under this
Agreement.
The
Executive and the Employer intend that Section 6 of this Agreement be enforced
as written. However, if one or more of the provisions contained in
Section 6 shall for any reason be held to be unenforceable because of the
duration or scope of such provision or the area covered thereby, the Executive
and the Employer agree that the court making such determination shall have the
full power to reform, by “blue penciling” or any other means, the duration,
scope and/or area of such provision and in its reformed form such provision
shall then be enforceable and shall be binding on the parties.
7. Covenant Not to Disclose Confidential
Information. The Executive hereby acknowledges and
agrees that (i) in the course of his service as an executive of the Employer, he
has and will gain substantial knowledge of and familiarity with the Employer’s
customers and its dealings with them, and other information concerning the
business of the Employer, all of which constitute valuable assets and privileged
information that is particularly sensitive due to the fiduciary responsibilities
inherent in the Employer’s business; and (ii) to protect the interest in and to
assure the benefit of the business of the Employer, it is reasonable and
necessary to place
17
certain
restrictions on the Executive’s ability to disclose information about the
business and customers of the Employer. For that purpose, and in
consideration of the agreements contained herein, the Executive covenants and
agrees that any and all data, figures, projections, estimates, lists, files,
records, documents, manuals or other such materials or information (financial or
otherwise) relating to the Employer and its business, regulatory examinations,
financial results and condition, lending and deposit operations, customers
(including lists of the customers and information regarding their accounts and
business dealings with the Employer), policies and procedures, computer systems
and software, shareholders, executives, officers and directors (herein referred
to as “Confidential Information”) are proprietary to the Employer and are
valuable, special and unique assets of the business to which the Executive will
have access during his employment hereunder. The Executive shall
consider, treat and maintain all Confidential Information as the confidential,
private and privileged records and information of the
Employer. Further, at all times during the term of his employment and
following the termination of his employment under this Agreement for any reason,
and except as shall be required in the course of the performance by the
Executive of his duties on behalf of the Employer or otherwise pursuant to the
direct, written authorization of the Employer, the Executive will not divulge
any Confidential Information to any other person, firm, corporation, employer,
bank or similar financial institution, remove any such Confidential Information
in written or other recorded form from the Employer’s premises, or make any use
of the Confidential Information for his own purposes or for the benefit of any
person, firm, corporation, employer, bank or similar financial institution other
than the Employer. However, following the termination of the
Executive’s employment with the Employer, this Section 7 shall not apply to any
Confidential Information which then is in the public domain (provided that the
Executive was not responsible, directly or indirectly, for permitting such
Confidential Information to enter the public domain without the Employer’s
consent), or which is obtained by the Executive from a third party which or who
is not obligated under an agreement of confidentiality with respect to such
information.
8. Acknowledgements.
(a) Reasonableness. The
Executive hereby acknowledges that the enforcement of Sections 6 and 7 of this
Agreement is necessary to ensure the preservation, protection and continuity of
the business, trade secrets and goodwill of the Employer, and that the
restrictions set forth in Sections 6 and 7 of this Agreement are reasonable as
to time, scope and territory and in all other respects.
(b) Survival of
Obligations. The Executive understands that his obligations
under Sections 6 and 7 of this Agreement will continue whether or not his
employment with the Employer is terminated voluntarily or involuntarily, or
whether for Cause, or other than for Cause, with Good Reason or without Good
Reason or not. The existence of any claim or cause of action by the
Executive against the Employer shall not constitute and shall not be asserted as
a defense to the enforcement by the Employer of this Agreement.
(c) Remedies. The
Executive acknowledges that in the event of any breach of the provisions of
Sections 6 and 7 hereof by the Executive, the Employer’s remedies at law would
be inadequate, and the Employer shall be entitled to an injunction (without any
bond or other security being required), restraining such breach, and costs and
attorneys' fees relating to
18
any such
proceeding or any other legal action to enforce the provisions of this
Agreement, but nothing herein shall be construed to preclude the Employer from
pursuing any other remedies at law or in equity available to it for any such
breach.
9. Assignment and Binding
Effect. This Agreement shall be binding upon, and shall
inure to the benefit of, the Executive and the Employer and, as permitted by
this Agreement, their respective successors and assigns. This
Agreement is personal to the Executive and, without the prior written consent of
the Employer, neither this Agreement nor any right or interest hereunder shall
be assignable by the Executive other than by will or the laws of descent and
distribution, and any attempt, voluntary or involuntary, to effect any such
prohibited assignment (including, without limitation, by transfer, charge,
pledge, hypothecation or sale) shall be null, void and of no
effect. The Employer will require any successor (whether direct or
indirect, by purchase, merger, consolidation, share exchange or otherwise) to
all or substantially all of the business or assets or both of the Employer to
assume expressly in writing and agree to perform this Agreement in the same
manner and to the same extent that the Employer would be required to perform it
if no such succession had taken place. As used in this Agreement,
“the Employer” shall mean the Employer as defined in the preamble and any
successor to the business or assets or both of FNB or the Bank as stated above
that assumes and agrees to perform this Agreement by operation of law or
otherwise.
10. Complete
Agreement. This Agreement replaces any previous
agreement relating to the same or similar subject matter which the Executive and
the Employer may have entered into with respect to the Executive's employment by
the Employer, including specifically the Agreement entered into between the
Executive and the Employer dated January 1, 2006. The Executive has
no oral representations, understandings or agreements with the Employer or any
of its officers, directors or representatives covering the same subject matter
as this Agreement. This written Agreement is the final, complete and exclusive
statement and expression of the Employment Agreement between the Employer and
the Executive and of all the terms of this Agreement, and it cannot be varied,
contradicted or supplemented by evidence of any prior or contemporaneous oral or
written agreements. Except as set forth in Section 15, this written Agreement
may not be later modified except by a further writing signed by a duly
authorized officer of the Employer and the Executive, and no term of this
Agreement may be waived except by writing signed by the party waiving the
benefit of such term.
11. Full Settlement; No Duty to
Mitigate. The Employer’s obligation to make any payment
provided for in this Agreement and otherwise to perform its obligations
hereunder shall be in lieu and in full settlement of all other severance
payments to the Executive under any other severance plan, arrangement or
agreement of the Employer and its affiliates, and in full settlement of any and
all claims or rights of the Executive for severance, separation or salary
continuation payments resulting from the termination of his
employment. In no event shall the Executive be obligated to seek
other employment or to take other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement, and
except as specifically provided herein, such amounts shall not be reduced
whether or not the Executive obtains other employment.
12. Payment of Legal
Fees. In the event of any litigation or other proceeding
between the Employer and the Executive with respect to the subject matter of
this Agreement
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and the
enforcement of rights hereunder, the Employer shall reimburse the Executive for
his reasonable costs and expenses relating to such litigation or other
proceeding, including reasonable attorneys’ fees and expenses, provided that
such litigation or other proceeding results in any: (i) settlement requiring
the Employer to make a payment, continue to make payments or provide any other
benefits to the Executive, or (ii) judgment, order or
award against the Employer in favor of the Executive or his spouse, legal
representative or heirs, unless such judgment, order or award is subsequently
reversed on appeal or in a collateral proceeding. At the request of
the Executive, costs and expenses (including reasonable attorneys’ fees) of up
to $100,000 incurred in connection with any litigation or other proceeding
referred to in this Section shall be paid by the Employer in advance of the
final disposition of the litigation or other proceeding referred to in this
Section shall be paid by the Employer in advance of the final disposition of the
litigation or other proceeding upon receipt of an undertaking by or on behalf of
the Executive to repay the amounts advanced if it is ultimately determined that
he is not entitled to reimbursement of such costs and expenses by the Employer
as set forth in this Section.
13. Source of Payment.
All payments provided for under this Agreement shall be paid in cash from the
general funds of the Employer. The Employer shall not be required to
establish a special or separate fund or other segregation of assets to assure
such payments, and, if the Employer shall make any investments to aid it in
meeting its obligations hereunder, the Executive shall have no right, title or
interest whatever in or to any such investments except as may otherwise be
expressly provided in a separate written instrument relating to such
investments. Nothing contained in this Agreement, and no action taken
pursuant to its provisions, shall create or be construed to create a trust of
any kind, or a fiduciary relationship, between the Employer and the Executive or
any other person. To the extent that any person acquires a right to
receive payments from the Employer hereunder, such right shall be no greater
than the right of an unsecured creditor.
14. Consultation with Counsel and
Interpretation of this Agreement. The Executive
acknowledges and agrees that he has had the assistance of counsel of his
choosing in the negotiation of this Agreement, or he has chosen not to have the
assistance of his own counsel. Both parties hereto having
participated in the negotiation and drafting of this Agreement, they hereby
agree that there shall not be strict interpretation against either party in
connection with any review of this Agreement in which interpretation thereof is
an issue.
15. Code §
409A. It is the intent of the parties that this
Agreement and all payments made hereunder shall be in compliance with the
requirements of section 409A of the Code and the regulations promulgated
thereunder. If any provision of this Agreement shall not be in
compliance with section 409A of the Code and the regulations thereunder, then
such provision shall be deemed automatically amended without further action on
the part of the Employer or the Executive to the minimum extent necessary to
cause such provision to be in compliance and such provision will thereafter be
given effect as so amended. If postponing payment of any amounts or
benefits due under this Agreement is necessary for compliance with the
requirements of section 409A of the Code and the regulations thereunder to avoid
adverse tax consequences to the Executive, then payment of such amounts shall be
postponed to comply with section 409A. Any and all payments that are
postponed under this Section 15 shall be paid to the Executive in a lump sum at
the earliest time that does not result in adverse tax consequences to the
Executive under section 409A.
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16. Notices. All
notices hereunder shall be (i) delivered by hand,
(ii) sent by
first-class certified mail, postage prepaid, return receipt requested, (iii) delivered by
overnight commercial courier, or (iv) transmitted by
telecopy or facsimile machine, to the following address of the party to whom
such notice is to be made, or to such other address as such party may designate
in the same manner provided herein:
If to the
Employer:
Attention: Compensation
Committee
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxx Xxxxxxxx
00000
With copy to:
Xxxxxx Xxxx Xxxxxx Xxxx &
Xxxxxxxxxx PLLC
Attention: Xxxxxxx X.
Xxxxxx
000 Xxxxx Xxx Xxxxxx
0000 Xxxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx
00000
If to the
Executive, to his last address as shown on the personnel records of the
Employer.
17. Headings. The
section headings herein are for reference purposes only and are not intended in
any way to describe, interpret, define or limit the extent or intent of the
Agreement or of any part hereof.
18. Governing Law. This
Agreement shall in all respects be construed according to the internal laws of
the State of North Carolina, without giving effect to any conflict of laws
provision or rule. By entering into this Agreement, the Executive
acknowledges that he is subject to the jurisdiction of both the federal and
state courts in the State of North Carolina. Any actions or
proceedings instituted under this Agreement shall be brought and tried solely in
courts located in Xxxxxxxx County, North Carolina or in the federal court having
jurisdiction in Asheboro, North Carolina. The Executive expressly
waives his rights to have any such actions or proceedings brought or tried
elsewhere.
19. Severability. In
case any one or more of the provisions contained in this Agreement for any
reason shall be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement and each such other provision shall to the full
extent consistent with law continue in full force and effect.
20. Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original and all of which together shall constitute one and the same
instrument.
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21. Compliance with Requirements of
Troubled Assets Relief Program. Notwithstanding anything herein to the
contrary, in the event that the Employer is a participant in the Troubled Assets
Relief Program (“TARP”), including, without limitation, the Capital Purchase
Program, established under the Emergency Economic Stabilization Act of 2008,
then during such time as the United States Department of the Treasury
(“Treasury”) holds an equity or debt position in the Employer, the terms of this
Agreement shall be deemed automatically amended without further action on the
part of the Employer or the Executive to comply with any applicable executive
compensation requirements of TARP, including, without limitation, (i) requiring
the Executive to relinquish to the Employer any bonus or incentive compensation
paid that is based on statements of earnings, gains, or other criteria that are
later proven to be materially inaccurate; and (ii) if necessary, reducing any
compensation of the Executive so as not to receive any excess “golden parachute”
payments (based on the applicable Code provision). The Executive shall waive any
claims he may have against the Employer or Treasury as a result of any
amendments to this Agreement required by TARP.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and year
first above written.
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By
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/s/
Xxxxxx X. Xxxxxx
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Xxxxxx
X. Xxxxxx
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Chair,
Compensation Committee
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of
the Board of Directors
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COMMUNITYONE
BANK, NATIONAL
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ASSOCIATION
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By
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/s/
Xxxxxx X. Xxxxxx
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Xxxxxx
X. Xxxxxx
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of
the Board of Directors
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EXECUTIVE:
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/s/
Xxxxxxx X. Xxxxxx
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Xxxxxxx
X.
Xxxxxx
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||
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