EXHIBIT 10.12 TO FORM 10-KSB
FOUR OAKS BANK & TRUST COMPANY
SEVERANCE COMPENSATION AGREEMENT
THIS AGREEMENT is entered into as of this 26 day of January, 1995, by
and between FOUR OAKS BANK & TRUST COMPANY, a North Carolina banking corporation
(the "Bank"), and XXXXX X. XXXX, ("Employee").WITNESSETH
WHEREAS, the Bank considers the maintenance of a vital management group
to be essential to protecting and enhancing the best interests of the Bank and
its shareholders;
WHEREAS, the Bank recognizes that, as is the case with many publicly
held corporations, there is a possibility of a change in control of the Bank,
and that the uncertainty and questions which such a possibility raise may result
in the departure or distraction of management personnel to the detriment of the
Bank and its shareholders;
WHEREAS, the Bank's Board of Directors has determined that appropriate
steps should be taken (1) to reinforce and encourage the continued attention and
dedication of members of the Bank's management to their assigned duties without
distraction arising from the possibility of a change in control of the Bank and
(2) to dispel any concerns that Employee may have about taking an active part in
the defense against an inappropriate attempt to bring about a change in control
of the Bank; and
WHEREAS, the purpose of this Agreement to assure Employee that, in the
event of termination of employment after a change of control (to the extent set
forth this Agreement), Employee will continue to receive compensation for a
period which should be sufficient for Employee to find other employment.
NOW, THEREFORE, in consideration of the mutual agreements set forth in
this Agreement, the legal sufficiency and adequacy of which are hereby
acknowledged, the parties agree as follows:
1. Employment. Employee agrees that so long as she is employed by the
Bank, Employee shall devote her 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 (2) years from the Effective
Date unless sooner terminated upon:
(i) Employee's written notice to the Bank that he is
terminating this Agreement effective upon a specified date
not less than one month after his notice is given;
(ii) Employee's death;
(iii) Employee's illness or other disability
incapacitating Employee from performing her duties for six (6)
consecutive months as determined in good faith by Chief Executive Officer, the
Board of Directors of the Bank or a committee of the Board;
(iv) A determination by the Chief Executive Officer or the Board of
Directors of the Bank that Employee is no longer a key executive employee and
the delivery of notice to Employee of such determination and the termination of
this Agreement. Such termination shall be effective upon the delivery of the
notice or at a later date specified in the notice, provided, however, such
determination shall not be made, and if made, shall have no effect, after a
Change in Control.
(b) Unless this Agreement is terminated in accordance with
subparagraph 2(a), on each anniversary of the Effective Date of this Agreement,
the term of this Agreement automatically shall be extended for an additional
successive period of one year, unless either the Employee or the Bank shall give
written notice to the other at least three (3) months before such anniversary
date that the term of this Agreement shall not be extended.
(c) In the event of a Change in Control of the Bank at any time before the
termination of this
Agreement, the term of this Agreement shall be automatically extended to the
earlier of (i) a date two (2) years after the date such Change in Control
occurred and (ii) the occurrence of an event of termination described in clause
2(a)(ii) or (iii).
(d) In the event of a Termination (as later defined) of Employee's
employment during the term of this Agreement, the term of this Agreement shall
be automatically extended until all obligations under the Agreement are fully
performed.
3. Change in Control. For purposes of this Agreement, a "Change in
Control" means one or more of the following occurrences: (a) A corporation,
person or group acting in concert as described in Section 14(d)(2) of the
Securities Exchange Act of 1934, as amended ("Exchange Act"), holds or acquires
beneficial ownership within the meaning of Rule 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 fifty percent (50%) of the shares which voted
in the election of directors of the Bank at the shareholders' meeting
immediately preceding such determination, or (ii) more than thirty-three percent
(33%) of the Bank's then outstanding shares entitled to vote.
(b) A merger or consolidation to which the Bank is a party (other than a pro
forma transaction for a purpose such as changing the state of incorporation or
name of the Bank), if either (i) the Bank is not the surviving corporation, or
(ii) the directors of the Bank immediately before the merger or consolidation
constitute less than a majority of the Board of Directors of the surviving
corporation; provided, however, the occurrence described in clause (i) shall not
constitute a Change in Control if the holders of the Bank's voting capital stock
immediately before the merger or consolidation have the same proportional
ownership of voting capital stock of the surviving corporation immediately after
the merger or consolidation.
(c) All or substantially all of the assets of the Bank are sold, leased, or
disposed of in one transaction or a series of related transactions.
(d) An agreement, plan, contract, or other arrangement is entered into providing
for any occurrence which, as defined in this Agreement, would constitute a
Change in Control.
4. Termination Following Change in Control.
(a) Termination of Employee's employment after the occurrence of a Change in
Control ("Termination") entitles Employee to the benefits described in
Paragraphs 5 and 6, unless such Termination is (i) by the Bank for cause or
because of disability or (ii) because of Employee's death.
(b) "Cause" means: (i) the willful and continued failure by Employee for a
significant period of time to substantially perform her duties with the Bank
(other than any such failure resulting from her disability) after a demand for
substantial performance is delivered to Employee by the Bank's Chief Executive
Officer, Board of Directors, or a committee of the Board which specifically
identifies the manner in which the Chief Executive Officer or Board or Directors
believes that Employee has not substantially performed her duties; (ii) the
willful engaging by Employee in gross misconduct materially and demonstrably
injurious to the Bank or (iii) the conviction of Employee of any crime involving
fraud or dishonesty. No act, or failure or act, on Employee's part shall be
considered "willful" unless done, or omitted to be done, by Employee, not in
good faith and without reasonable belief that her 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 recent annual
compensation, including the amount of her 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 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 twenty-four (24) months after the
date of Termination, or unless and until Employee obtains other full-time
employment, all life insurance, health (medical and dental), accidental death
and dismemberment and disability plans or programs in which Employee is entitled
to participate immediately prior to the date of Termination and include Employee
as a participant in such plans on the same terms as he participated before
Termination; provided that Employee's continued participation is possible under
the general terms and provisions of such plans and programs. In the event that
Employee's participation in any such plan or program is barred, the Bank shall
arrange upon comparable terms to provide Employee with benefits substantially
similar to those which she 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 her, at no cost and with no apportionment of prepaid
premiums, any assignable insurance policy owned by the Bank and relating
specifically to Employee.
(b) To the extent permitted by the applicable plan, pay Employee in a lump sum
(or otherwise as specified by Employee to the extent permitted by the applicable
plan) any and all amounts contributed to a Bank pension or retirement plan
(other than any nonqualified deferred compensation plan) to which Employee is
entitled under the terms of any such plan.
7. No Duty to Mitigate. Employee shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise, nor shall the amount of any payment or benefit as provided for be
reduced by any compensation earned by Employee as the result of employment by
another employer or by retirement benefits after the date of Termination, or
otherwise except as specifically provided in this Agreement.
8. Miscellaneous.
(a) Limit on Effect. This Agreement shall have no effect on any termination of
Employee's employment before a Change in Control or after the termination of
this Agreement, or upon any termination of employment at any time as a result of
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 continue to live, all such amounts, unless otherwise provided in
this Agreement, shall be paid in accordance with the terms of this Agreement to
Employees' devisee, legatee or other designee or, if there be no such designee,
to her estate.
(c) Expenses. The Bank agrees that if Employee is entitled to
Severance Pay or other benefits under this Agreement and the Bank or its
survivor disputes the obligation to pay Severance Pay or other benefits and
Employee prevails, in whole or in part, the Bank or its survivor shall then
promptly pay or reimburse Employee for all expenses incurred by Employee in such
dispute, including, but not limited to, attorneys' fees and associated costs.
(d) Notice. All necessary notices, demands, or requests required or permitted
under this Agreement shall be in writing and shall be deemed to have been duly
given when delivered in person or mailed by United States certified mail,
postage prepaid, to the parties at the addresses set forth below or to such
other address as either party may have furnished to the other.
If to Bank: Four Oaks Bank & Trust Company
6144 US 000 Xxxxx
Xxxx Xxxx, Xxxxx Xxxxxxxx 00000
If to Employee: Xxxxx X. Xxxx
00 Xxxxxx Xxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000
(e) Modifications. No provisions of this Agreement may be modified, waived or
discharged unless such modification, waiver or discharge is agreed to in writing
signed by the Employee and the Bank. No waiver by either party at any time of
any breach by the other party of, or compliance with, any condition or provision
of this Agreement to be performed by such other party shall be deemed a waiver
of similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
(f) Counterparts; Interpretation. This Agreement may be executed in several
identical counterparts, each of which when so executed shall be deemed an
original, but all such counterparts shall constitute one and the same
instrument. The validity, interpretation, construction, and performance of
this Agreement shall be governed by the laws of the State of North Carolina. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
FOUR OAKS BANK & TRUST COMPANY
By: /s/ Ayden X. Xxx, Xx. President
& CEO
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Authorized Officer
ATTEST:
/s/ Xxxxx X. Xxxxx
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Secretary
[SEAL]
/s/ Xxxxx X. Xxxx
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XXXXX X. XXXX
Employee
