EXHIBIT 10.3
EMPLOYEE BENEFITS AGREEMENT
BETWEEN
F.N.B. CORPORATION
AND
FIRST NATIONAL BANKSHARES OF FLORIDA, INC.
DATED AS OF _________, 2003
EMPLOYEE BENEFITS AGREEMENT
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS AND REFERENCES...........................................................................................1
SECTION 1.1 Definitions............................................................................................1
SECTION 1.2 References.............................................................................................5
ARTICLE II GENERAL PRINCIPLES..................................................................................................6
SECTION 2.1 Assumption of Liabilities..............................................................................6
SECTION 2.2 SpinCo Group Participation In Parent Plans.............................................................6
SECTION 2.3 Establishment or Assumption of the SpinCo Plans........................................................6
SECTION 2.4 Terms of Participation by Transferred Individuals......................................................6
ARTICLE III DEFINED BENEFIT PLANS..............................................................................................7
SECTION 3.1 F.N.B. Corporation Retirement Income Plan..............................................................7
ARTICLE IV DEFINED CONTRIBUTION PLANS..........................................................................................7
SECTION 4.1 Savings Plans..........................................................................................7
ARTICLE V HEALTH AND WELFARE PLANS.............................................................................................8
SECTION 5.1 Assumption of Health and Welfare Plan Liabilities......................................................8
SECTION 5.2 Parent Short-Term Disability Arrangements..............................................................9
SECTION 5.3 COBRA and HIPAA........................................................................................9
SECTION 5.4 Leave of Absence Programs..............................................................................9
SECTION 5.5 Post-Distribution Transitional Arrangements............................................................9
SECTION 5.6 Application of Article V to the SpinCo Group..........................................................10
ARTICLE VI EXECUTIVE COMPENSATION MATTERS.....................................................................................11
SECTION 6.1 F.N.B. Restricted Stock and Incentive Bonus Plan......................................................11
SECTION 6.2 Stock Options.........................................................................................12
SECTION 6.3 Deferred Compensation Plans...........................................................................12
SECTION 6.4 Rabbi Trust...........................................................................................13
SECTION 6.5 Employment Agreements.................................................................................13
SECTION 6.6 Automobile Program....................................................................................13
SECTION 6.7 Director Benefits.....................................................................................13
SECTION 6.8 Vacation Pay/Paid Time-Off............................................................................14
SECTION 6.9 Split Dollar Life Insurance...........................................................................14
ARTICLE VII GENERAL...........................................................................................................14
SECTION 7.1 Sharing of Participant Information....................................................................14
SECTION 7.2 Restrictions on Extension of Option Exercise Periods, Amendment or Modification of Option
Terms and Conditions..................................................................................14
SECTION 7.3 Reporting and Disclosure and Communications to Participants...........................................14
SECTION 7.4 Plan Audits...........................................................................................15
SECTION 7.5 Beneficiary Designations/Release of Information/Right of Reimbursement................................16
SECTION 7.6 Requests for Internal Revenue Service Rulings and United States Department of Labor
Opinions..............................................................................................16
SECTION 7.7 Fiduciary and Related Matters.........................................................................16
SECTION 7.8 No Third-Party Beneficiaries; Non-Termination of Employment...........................................16
SECTION 7.9 Consent of Third Parties..............................................................................16
SECTION 7.10 Effect if Distribution Does Not Occur.................................................................17
SECTION 7.11 Relationship of Parties...............................................................................17
SECTION 7.12 Affiliates............................................................................................17
SECTION 7.13 Dispute Resolution....................................................................................17
Page
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SECTION 7.14 Indemnification.......................................................................................17
SECTION 7.15 W-2 Matters...........................................................................................17
SECTION 7.16 Confidentiality.......................................................................................18
SECTION 7.17 Notices...............................................................................................18
SECTION 7.18 Interpretation........................................................................................18
SECTION 7.19 Severability..........................................................................................18
SECTION 7.20 Governing Law/Execution...............................................................................18
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EMPLOYEE BENEFITS AGREEMENT
THIS EMPLOYEE BENEFITS AGREEMENT, dated as of the ____ day of
_________, 2003, is by and between F.N.B. Corporation, a Florida corporation
("Parent"), and First National Bankshares of Florida, Inc., a Florida
corporation ("SpinCo").
WHEREAS, Parent's Board of Directors has determined that it is in the
best interests of Parent and its shareholders to separate Parent's existing
businesses into two independent businesses; and
WHEREAS, in furtherance of the foregoing, on August 12, 2003, SpinCo
was formed and became a wholly owned subsidiary of Parent; and
WHEREAS, Parent intends to accomplish the separation of SpinCo through
a distribution of the stock of SpinCo to the shareholders of Parent that is
intended to be tax free pursuant to section 355 of the Internal Revenue Code of
1986, as amended (the "Distribution"); and
WHEREAS, Parent and SpinCo have entered into an Agreement and Plan of
Distribution, dated as of ______________, 2003 (the "Distribution Agreement"),
and several other agreements that will govern certain matters relating to the
Distribution and the relationship of Parent and SpinCo and their respective
Subsidiaries following the Distribution; and
WHEREAS, pursuant to the Distribution Agreement, Parent and SpinCo have
agreed to enter into this Agreement for the purpose of allocating assets,
liabilities, and responsibilities with respect to certain employee compensation
and benefit plans and programs between them.
NOW, THEREFORE, in consideration of the mutual promises contained
herein and in the Distribution Agreement, the parties agree as follows:
ARTICLE I
DEFINITIONS AND REFERENCES
SECTION 1.1 Definitions. For purposes of this Agreement, capitalized terms
used (other than the formal names of Parent Plans (as defined below)) and not
otherwise defined shall have the respective meanings assigned to them below or
as assigned to them in the Distribution Agreement (as defined above):
(a) "Action" has meaning given that term in the Distribution Agreement.
(b) "Agreement" means this Employee Benefits Agreement, including all
the attached Appendices.
(c) "ASO Contract" means an administrative services contract, related
prior practice, or related understanding with a third-party administrator that
pertains to any Parent Health and Welfare Plan or any SpinCo Health and Welfare
Plan.
(d) "Award" means a long-term or short-term award under an Incentive
Plan or, as the context or facts may require, any other award under another
incentive or special bonus, incentive, or award program or arrangement.
(e) "Code" means the Internal Revenue Code of 1986, as amended, and the
Treasury regulations promulgated thereunder, including any successor
legislation.
(f) "Conversion Formula" means the appropriate formula which shall be
applied in adjusting the exercise price and award size of Options under the
Parent Stock Incentive Plans and in determining the exercise price and number of
SpinCo Options under the SpinCo Incentive Plans. The Conversion Formula shall be
based on the closing per share prices of Parent Common Stock and SpinCo Common
Stock as reported on the New York Stock Exchange on the first trading day
following the Distribution Date or such other prices as jointly agreed upon by
SpinCo and Parent, and shall be determined and applied in such a manner as to
maintain (1) the aggregate spread of such Options, which is the difference
between the exercise price per share of Parent Common Stock covered by the
Option and the price per share of Parent Common Stock immediately preceding the
Distribution, multiplied by the total number of shares covered by the Option;
and (2) the ratio of the exercise price per share covered by the Option to the
price per share of Parent Common Stock immediately preceding the Distribution.
(g) "Deferred Compensation Plans," when immediately preceded by
"Parent" means the F.N.B. Deferred Compensation Plan, the F.N.B. Corporation
Basic Retirement Plan, the F.N.B. Corporation ERISA Excess Profit Sharing and
Lost Match Plan, and the F.N.B. Corporation Directors' Compensation Plan. When
immediately preceded by "SpinCo," "Deferred Compensation Plans" means the
deferred compensation plans to be assumed, established or maintained by SpinCo
pursuant to Section 2.3.
(h) "Director" means any director of Parent immediately prior to the
Distribution other than Xxxx X. Xxxx or Xxxxxxx X. Xxxxxxxxx.
(i) "Distribution" has the meaning given that term under the
Distribution Agreement.
(j) "Distribution Agreement" is defined in the preamble of this
Agreement.
(k) "Distribution Date" has the meaning given that term under the
Distribution Agreement.
(l) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended. Reference to a specific provision of ERISA also includes any
proposed, temporary, or final regulation in force under that provision.
(m) "Governmental Authority" means any federal, state, local, foreign,
or international court, government, department, commission, board, bureau,
agency, official, or other regulatory, administrative, or governmental
authority, including the Department of Labor, the Securities and Exchange
Commission, the Internal Revenue Service, and the Pension Benefit Guaranty
Corporation.
(n) "Group Insurance Policy" means a group insurance policy issued in
connection with any Parent Health and Welfare Plan or any SpinCo Health and
Welfare Plan, as applicable.
(o) "Health and Welfare Plans," when immediately preceded by "Parent"
means the health and welfare benefit plans, programs, and policies (including
the Reimbursement Plans) which are sponsored by Parent. When immediately
preceded by "SpinCo," "Health and Welfare Plans" means the benefit plans,
programs, and policies (including the Reimbursement Plans) corresponding to
those plans, programs, and policies sponsored by Parent as of the Distribution
Date, including those plans, programs, and policies listed in Appendix B to this
Agreement which will be sponsored by a member of the SpinCo Group immediately
after the Distribution Date.
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(p) "HMO" means a health maintenance organization that provides
benefits under the Parent Health and Welfare Plans or the SpinCo Health and
Welfare Plans, as applicable.
(q) "HMO Agreements" means contracts, letter agreements, practices, and
understandings with HMOs that provide medical, dental, prescription drug, or
vision services under the Parent Health and Welfare Plans or the SpinCo Health
and Welfare Plans, as applicable.
(r) "Incentive Plan," when immediately preceded by "Parent" means any
short-term or long-term compensation, bonus, stock-based or other incentive
compensation programs established or maintained by the Parent Group. When
immediately preceded by "SpinCo," "Incentive Plan" means any short-term or
long-term compensation, stock-based bonus, or incentive compensation programs to
be established or maintained by SpinCo pursuant to Section 2.3.
(s) "Individual Agreement" means an individual contract or agreement
(whether written or unwritten) entered into between a member of the Parent Group
or a member of the SpinCo Group and any employee or individual who will be an
employee of, or otherwise assigned to, the SpinCo Group immediately after the
Distribution Date that establishes the right of such individual to special
compensation or benefits, special bonuses, supplemental pension benefits, hiring
bonuses, loans, guaranteed payments, special allowances, tax equalization
payments, special expatriate compensation payments, disability benefits, or
other forms of compensation and benefits.
(t) "Liabilities" means any and all losses, claims, charges, debts,
premiums, demands, actions, costs, and expenses (including any current or future
benefit payments or other entitlements, and administrative and related costs and
expenses of any Plan, program, service or consulting agreement, or arrangement),
of any nature whatsoever, whether absolute or contingent, matured or unmatured,
liquidated or unliquidated, accrued or unaccrued, known or unknown, whether or
not imposed or determined by a court, whenever arising.
(u) "Material Feature" means any feature of a Plan that could
reasonably be expected to be of material importance to the sponsoring employer
or the participants and beneficiaries of the Plan, which could include,
depending on the type and purpose of the particular Plan, the class or classes
of employees eligible to participate in such Plan, the nature, type, form,
source, and level of benefits provided by the employer under such Plan and the
amount or level of contributions, if any, required or permitted to be made by
participants (or their dependents or beneficiaries) to such Plan.
(v) "Option" shall mean any stock option granted pursuant to a Parent
Incentive Plan prior to the Distribution.
(w) "Parent Common Stock" has the meaning given that term under the
Distribution Agreement.
(x) "Parent Group" has the meaning given that term under the
Distribution Agreement.
(y) "Participating Company" means any Person (other than an individual)
that is participating in a Plan sponsored by a member of the Parent Group or a
member of the SpinCo Group, as the context requires.
(z) "Person" means an individual, a general or limited partnership, a
corporation, a trust, a joint venture, an unincorporated organization, a limited
liability entity, any other entity, or any Governmental Authority.
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(aa) "Plan," when immediately preceded by "Parent" or "SpinCo," means
any plan, policy, program, payroll practice, on-going arrangement, contract,
trust, insurance policy, or other agreement or funding vehicle, whether written
or unwritten, providing benefits to employees or former employees of the Parent
Group or the SpinCo Group, as applicable.
(bb) "Rabbi Trust," when immediately preceded by "Parent" means the
Trust Agreement for the F.N.B. Corporation Directors' Compensation Plan. When
immediately preceded by "SpinCo", "Rabbi Trust" means the grantor trust to be
established by SpinCo pursuant to Section 6.4(a) that corresponds to the Parent
Rabbi Trust.
(cc) "Reimbursement Plans," when immediately preceded by "Parent,"
means the health care flexible spending account plans and the dependent care
flexible spending account plans, as applicable. When immediately preceded by
"SpinCo," "Reimbursement Plans" means the health care flexible spending account
plan and the dependent care flexible spending account plan to be established or
maintained by SpinCo pursuant to Section 2.3 that corresponds to the
corresponding Parent Reimbursement Plans.
(dd) "Retiree" means any person who prior to the Distribution Date
retires under a retirement plan or policy of Parent or its Subsidiaries.
(ee) "Savings Plan," when immediately preceded by "Parent," means the
F.N.B. Corporation Progress Savings 401(k) Plan that is sponsored by Parent and
will continue to be sponsored by Parent following the Distribution Date. When
immediately preceded by "SpinCo," "Savings Plan" means the F.N.B. Corporation
Salary Savings Plan that will be sponsored by SpinCo for periods immediately
after the Distribution Date.
(ff) "SpinCo Business" has the meaning given that term under the
Distribution Agreement.
(gg) "SpinCo Common Stock" has the meaning given that term under the
Distribution Agreement.
(hh) "SpinCo Group" has the meaning given that term under the
Distribution Agreement.
(ii) "SpinCo Mirror Plan" means any SpinCo Plans to be established that
will be substantially similar to a Parent Plan, as set forth on Appendix A
hereto.
(jj) "SpinCo Option" shall mean any stock option granted pursuant to a
SpinCo Incentive Plan.
(kk) "SpinCo Stand-Alone Plan" means any Plan maintained by Parent or
an affiliate of Parent, that, no later than the Distribution Date, will be
assumed, sponsored and maintained by SpinCo or a member of the SpinCo Group for
the exclusive benefit of Transferred Individuals, including but not limited to
the SpinCo Savings Plan, and those SpinCo Plans set forth and designated as
Stand-Alone Plans on Appendix A hereto.
(ll) "Subsidiary" has the meaning given that term under the
Distribution Agreement.
(mm) "Transferred Individual" means any individual who, as of the
Distribution Date:
(i) is actively employed by, or on a leave of absence
(including those individuals receiving short-term disability benefits
and those taking leave pursuant to the Family and Medical
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Leave Act of 1993, as amended) from, a member of the SpinCo Group (or
is deemed to be so employed or on leave in accordance with an agreement
between Parent and SpinCo); or
(ii) is not actively employed by, nor on a leave of absence
(including those individuals receiving short-term disability benefits
and those taking leave pursuant to the Family and Medical Leave Act of
1993, as amended) from, Parent or a member of the Parent Group, or
SpinCo or a member of the SpinCo Group, and:
a) whose most recent (through the Distribution Date)
active employment with Parent or a past or present affiliate
of Parent was with a member of the SpinCo Group or the SpinCo
Business, or the predecessors of such business; or
b) who otherwise is identified pursuant to a
methodology approved by Parent and SpinCo, which methodology
shall be consistent with the intent of the parties that former
employees of Parent or a past or present affiliate of Parent
and such other individuals who performed services for Parent
(including non-employees) will only be aligned with SpinCo if
they provided services to the SpinCo Group or SpinCo Business;
(iii) is employed by Parent as of the Distribution Date and is
designated as a Transferred Individual on Appendix D; or
(iv) is a Director of Parent prior to the Distribution Date
but will become a director of SpinCo immediately after the Distribution
Date.
An alternate payee under a qualified domestic relations order
(within the meaning of Code ss. 414(p) and ERISA ss. 206(d)), alternate
recipient under a qualified medical child support order (within the
meaning of ERISA ss. 609(a)), beneficiary, or covered dependent, in
each case, of an employee or former employee described in (i), (ii) or
(iii) above shall also be a Transferred Individual with respect to the
interest of such alternate payee, alternate recipient, beneficiary, or
covered dependent in that employee's or former employee's benefit under
the applicable Plans. Such an alternate payee, alternate recipient,
beneficiary, or covered dependent shall not otherwise be considered a
Transferred Individual with respect to his or her own benefits under
any applicable Plans, unless he or she is a Transferred Individual by
virtue of either of subparagraphs (i), (ii) or (iii) above. In
addition, Parent and SpinCo may agree to designate any other
individuals, or group of individuals, as Transferred Individuals.
Subject to the other provisions of this definition, an
individual may be a Transferred Individual pursuant to this definition
regardless of whether such individual is, as of the Distribution Date,
alive, actively employed, on a temporary leave of absence from active
employment, on layoff, terminated from employment, retired or on any
other type of employment, post-employment, or independent contractor
status relative to Parent or SpinCo or to a Parent or SpinCo Plan.
Nothing contained in this Agreement shall permit, or be
construed or interpreted to permit, any non-employee of Parent or
SpinCo to participate, at any time, in any Plan of Parent or SpinCo.
SECTION 1.2 References. Unless the context clearly indicates
otherwise, reference to a particular Article, Section, subsection or paragraph
means the Article, Section, subsection or paragraph so delineated in this
Agreement.
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ARTICLE II
GENERAL PRINCIPLES
SECTION 2.1 Assumption of Liabilities. Except for each
Liability that is expressly retained in writing by Parent or excluded in writing
by Parent from those being assumed by SpinCo and unless otherwise provided for
elsewhere in this Agreement, SpinCo hereby assumes and agrees to pay, perform,
fulfill, and discharge, in accordance with their respective terms and
conditions, all of the following (regardless of when or where such Liabilities
arose or arise or were or are incurred): (i) all Liabilities to or relating to
Transferred Individuals, and their dependents and beneficiaries, under or with
respect to employee compensation programs, Plans or policies to the extent
relating to, arising out of or resulting from future, present, or former
employment with SpinCo, a member of the SpinCo Group, Parent or a member of the
Parent Group, (including Liabilities under Parent Plans and SpinCo Plans), (ii)
all Liabilities under any Individual Agreements relating to Transferred
Individuals, and (iii) all other Liabilities relating to, arising out of, or
resulting from obligations, liabilities, and responsibilities expressly assumed
or retained by a member of the SpinCo Group or a SpinCo Plan pursuant to this
Agreement.
SECTION 2.2 SpinCo Group Participation In Parent Plans. Unless
otherwise provided in this Agreement, to the extent applicable, effective as of
the Distribution Date, SpinCo and each member of the SpinCo Group shall cease to
be a Participating Company in any of the Parent Plans remaining with Parent, and
Parent and each member of the Parent Group shall cease to be a Participating
Company in any Plan assumed by SpinCo or a member of the SpinCo Group.
SECTION 2.3 Establishment or Assumption of the SpinCo Plans.
(a) Assumption of SpinCo Stand-Alone Plans. Unless otherwise provided
in this Agreement, effective no later than the Distribution Date, SpinCo or a
member of the SpinCo Group shall assume or cause to be assumed, the SpinCo
Stand-Alone Plans set forth on Appendix A to this Agreement for the benefit of
Transferred Individuals and other current, future and former employees of the
SpinCo Group. SpinCo and Parent shall take all action necessary to provide for
such assumption of the SpinCo Stand-Alone Plans, including any necessary
amendments, and the name of the Plans shall be changed as and where appropriate.
(b) Establishment of SpinCo Mirror Plans. Unless otherwise provided in
this Agreement, effective no later than the Distribution Date, SpinCo or a
member of the SpinCo Group shall adopt or cause to be adopted, the SpinCo Mirror
Plans for the benefit of Transferred Individuals and other current, future, and
former employees of the SpinCo Group, all as set forth in Appendix A to this
Agreement. The foregoing SpinCo Mirror Plans as in effect immediately after the
Distribution Date shall be substantially identical in all Material Features to
the corresponding Parent Plans as in effect as of the Distribution Date.
SECTION 2.4 Terms of Participation by Transferred Individuals.
The SpinCo Plans shall be, with respect to Transferred Individuals, in all
respects the successors in interest to, shall recognize all rights and
entitlements as of the Distribution Date under, and shall not provide benefits
that duplicate benefits provided by, the corresponding Parent Plans for such
Transferred Individuals. Parent and SpinCo shall agree on methods and
procedures, including amending the respective Plan documents, to prevent
Transferred Individuals from receiving duplicative benefits from the Parent
Plans and the SpinCo Plans. SpinCo shall not permit any SpinCo Plan to commence
benefit payments to Transferred Individuals until it receives written notice
from Parent regarding the date on which payments under the corresponding Parent
Plan shall cease. With respect to Transferred Individuals, each SpinCo Plan
shall provide that all benefit or other elections, all designations of
beneficiaries, all service, all compensation, and all other benefit-affecting
determinations that, as of the Distribution Date, were recognized under the
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corresponding Parent Plan (for periods immediately before the Distribution Date)
shall, as of immediately after the Distribution Date, receive full recognition,
credit, and validity and be taken into account under such SpinCo Plan to the
same extent as if such items originally occurred under such SpinCo Plan, except
to the extent that duplication of benefits would result. The provisions of this
Agreement for the transfer of assets, if any, from certain trusts relating to
Parent Plans to the corresponding trusts relating to SpinCo Plans are based upon
the understanding and agreement of the parties that each such SpinCo Plan will
assume all Liabilities under the corresponding Parent Plan to or relating to
Transferred Individuals, as provided for herein. If there are any legal or other
authoritative reasons that any such Liabilities are not effectively assumed by
the appropriate SpinCo Plan, then the amount of assets transferred to the trust
relating to such SpinCo Plan from the trust relating to the corresponding Parent
Plan shall be recomputed, ab initio, as set forth in this Agreement but taking
into account the retention of any such Liabilities by such Parent Plan, and
assets shall be transferred by the trust relating to such SpinCo Plan to the
trust relating to such Parent Plan so as to place each such trust in the
position it would have been in, had the initial asset transfer been made in
accordance with such recomputed amount of transferred Liabilities and assets.
ARTICLE III
DEFINED BENEFIT PLANS
SECTION 3.1 F.N.B. Corporation Retirement Income Plan. All Transferred
Individuals who are participants in the F.N.B. Corporation Retirement Income
Plan shall have their benefits in such plan frozen as of the Distribution Date.
These Transferred Individuals will be deemed "terminated vested participants"
for purposes of this plan and shall be treated in accordance with the terms of
the plan. No SpinCo Mirror Plan will be established for the F.N.B. Corporation
Retirement Income Plan in connection with the Distribution.
ARTICLE IV
DEFINED CONTRIBUTION PLANS
SECTION 4.1 Savings Plans. Effective no later than the Distribution Date,
SpinCo or a member of the SpinCo Group shall take all action necessary to assume
and become the plan sponsor of the SpinCo Savings Plan and shall be responsible
for all Liabilities relating to the SpinCo Savings Plan. The SpinCo Savings Plan
shall recognize and maintain all contribution and investment elections made by
Transferred Individuals under the SpinCo Savings Plan as such elections were
last in effect during the period immediately prior to the Distribution Date and
shall apply such elections under the SpinCo Savings Plan for the remainder of
the period or periods for which such elections are by their terms applicable
(subject in all cases to applicable election change rights of the Transferred
Individuals). The Xxxxx Xxxxxxxx Insurance, Inc. 401(k) Profit Sharing and Trust
Plan, which is presently sponsored by Xxxxx Xxxxxxxx Insurance, Inc.
("Xxxxxxxx"), shall continue to be sponsored by Xxxxxxxx for periods immediately
after the Distribution Date. Xxxxxxxx, as a member of the SpinCo Group, shall be
responsible for all Liabilities relating to the Xxxxx Xxxxxxxx Insurance, Inc.
401(k) Profit Sharing and Trust Plan. Any employees of the Parent Group who are
participants in the Xxxxx Xxxxxxxx Insurance, Inc. 401(k) Profit Sharing and
Trust Plan and are not Transferred Individuals shall be deemed terminated for
purposes of this plan and shall be treated in accordance with the terms of such
plan.
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ARTICLE V
HEALTH AND WELFARE PLANS
SECTION 5.1 Assumption of Health and Welfare Plan Liabilities.
(a) Assumption by SpinCo. Effective no later than the Distribution
Date, SpinCo shall establish, or cause to be established, the SpinCo Health and
Welfare Plans. Immediately after the Distribution Date, all Liabilities for or
relating to Transferred Individuals under the Parent Health and Welfare Plans,
shall cease to be Liabilities of Parent or the Parent Health and Welfare Plans
and shall be assumed by SpinCo and the corresponding SpinCo Health and Welfare
Plans. Thus, SpinCo and the SpinCo Health and Welfare Plans shall be responsible
for all Liabilities that pertain to Transferred Individuals regardless of when
incurred, including all reported claims that are unpaid, all incurred but not
reported claims as of the Distribution Date, and all claims incurred after the
Distribution Date that pertain to Transferred Individuals under the Parent
Health and Welfare Plans and the SpinCo Health and Welfare Plans. SpinCo shall
be required to make all payments due or payable to Transferred Individuals under
the appropriate SpinCo Health and Welfare Plans for the period beginning
immediately after the Distribution Date, including all reported claims that are
unpaid and all incurred but not reported claims as of the Distribution Date. All
treatments which have been pre-certified for or are being provided on an
on-going basis to a Transferred Individual under the Parent Health and Welfare
Plans as of the Distribution Date shall continue to be provided without
interruption under the appropriate SpinCo Health and Welfare Plan until such
treatment is concluded or discontinued pursuant to applicable plan rules and
limitations, and SpinCo and the SpinCo Health and Welfare Plans shall be
responsible for all Liabilities relating to, arising out of, or resulting from
such pre-certified or on-going treatments as of the Distribution Date.
Notwithstanding the preceding provisions of this Section 5.1, neither SpinCo nor
a SpinCo Health and Welfare Plan shall assume any Liability with respect to: (i)
a claim incurred on or prior to the Distribution Date for which Parent or a
Parent Health and Welfare Plan has insurance coverage, or (ii) any benefit claim
for which Parent is responsible under Section 5.3.
(b) Certain Audit Procedures with Respect to Health and Welfare Plans.
At periodic intervals beginning immediately after the Distribution Date, Parent
and SpinCo shall examine their respective payments and receipts for health and
welfare coverages to ascertain whether Parent has mistakenly made or received
payments for coverages with respect to Transferred Individuals and whether
SpinCo has mistakenly made or received payments for coverages with respect to
participants and beneficiaries in the Parent Health and Welfare Plans (other
than Transferred Individuals). If any such mistaken payments have been made or
received by Parent or SpinCo, such mistaken payments and receipts shall first be
netted against each other by Parent and SpinCo and thereafter such net payments
or net receipts shall be further netted against the other party's net payments
or net receipts. The party with the remaining amount of mistaken payments shall
transfer such amount in cash to the other party at such time or times as agreed
upon by Parent and SpinCo, but not less than semi-annually. Furthermore, at
periodic intervals beginning immediately after the Distribution Date, Parent and
SpinCo shall examine the payment of benefits and claims, and reimbursements for
expenses, by their respective Health and Welfare Plans to ascertain whether any
Parent Health and Welfare Plan has mistakenly paid claims or benefits, or
reimbursed expenses, with respect to Transferred Individuals and whether any
SpinCo Health and Welfare Plan has mistakenly paid claims or benefits, or
reimbursed expenses, with respect to participants and beneficiaries in the
Parent Health and Welfare Plans (other than Transferred Individuals). If any
such mistaken payments or reimbursements have been made by any Parent or SpinCo
Health and Welfare Plan, such mistaken payments and reimbursements shall be
netted against the other corresponding Health and Welfare Plan's mistaken
payments and reimbursements. The Health and Welfare Plan with the remaining
amount of mistaken payments and reimbursements shall transfer such amount in
cash to the other party's corresponding Health and Welfare Plan at such time or
times as agreed upon by Parent and SpinCo, but not less than semi-annually.
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SECTION 5.2 Parent Short-Term Disability Arrangements. Any
final determinations made by Parent with respect to short-term disability claims
by Transferred Individuals prior to the Distribution Date shall be final and
binding. Parent shall transfer to SpinCo, effective immediately after the
Distribution Date, and SpinCo shall assume responsibility for (i) administering
all short-term disability claims incurred by Transferred Individuals before the
Distribution Date that are administered by Parent as of the Distribution Date,
and (ii) all Liabilities under any Parent short-term disability arrangements to
Transferred Individuals as of the Distribution Date, in the same manner, and
using the same methods and procedures, as Parent used in determining and paying
such claims. Effective immediately after the Distribution Date, SpinCo shall
have sole discretionary authority to make any necessary determinations with
respect to such claims, including entering into settlements with respect to such
claims, and shall be solely responsible for any costs, Liabilities or related
expenses of any nature whatsoever related to such claims, payments or
obligations.
SECTION 5.3 COBRA and HIPAA. Effectively immediately after the
Distribution Date, SpinCo or a member of the SpinCo Group shall be responsible
for administering compliance and providing coverage in accordance with the
health care continuation coverage requirements for "group health plans" under
Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA"), and the portability requirements (including the requirements
for issuance of certificates of creditable coverage) under the Health Insurance
Portability and Accountability Act of 1996 with respect to all Transferred
Individuals and other employees and former employees of SpinCo or a member of
the SpinCo Group and any beneficiaries and dependents thereof who experience a
COBRA qualifying event or loss of coverage under the SpinCo Health and Welfare
Plans after the Distribution Date. Effective immediately after the Distribution
Date, SpinCo or a member of the SpinCo Group shall be responsible for filing all
necessary employee change notices with respect to these persons identified in
the previous sentence in accordance with applicable law.
SECTION 5.4 Leave of Absence Programs. Effective immediately
after the Distribution Date, SpinCo shall, or shall cause a member of the SpinCo
Group to, assume sole responsibility for the administration and compliance of
all leaves of absences and related programs (including compliance with the
Family and Medical Leave Act of 1993, as amended) affecting Transferred
Individuals.
SECTION 5.5 Post-Distribution Transitional Arrangements.
(a) Continuance of Elections, Co-Payments, and Maximum Benefits.
(i) SpinCo shall cause the SpinCo Health and Welfare Plans to
recognize and maintain all coverage and contribution elections made by
Transferred Individuals under the Parent Health and Welfare Plans, as
such elections were last in effect during the period immediately prior
to the Distribution Date, and shall apply such elections under the
SpinCo Health and Welfare Plans for the remainder of the period or
periods for which such elections are by their terms applicable (subject
to applicable election change rights). Parent shall cause the claims
administrator for the Parent Health and Welfare Plans to transfer to
the claims administrator for the SpinCo Health and Welfare Plans all
data necessary to maintain such coverage and elections.
(ii) SpinCo shall cause the SpinCo Health and Welfare Plans to
recognize and give credit for (A) all amounts applied to deductibles,
out-of-pocket maximums, and other applicable benefit coverage limits
with respect to such expenses which have been incurred by Transferred
Individuals under the Parent Health and Welfare Plans for the remainder
of the benefit limit year in which the Distribution occurs, and (B) all
benefits paid to Transferred Individuals under the
9
Parent Health and Welfare Plans, during and prior to the benefit limit
year in which the Distribution occurs, for purposes of determining when
such persons have reached their maximum benefits under the SpinCo
Health and Welfare Plans.
(iii) SpinCo shall recognize and cover under the SpinCo Health
and Welfare Plans all eligible employee groups covered by the Parent
Health and Welfare Plans (pertaining to Transferred Individuals) as of
the Distribution Date (determined under the applicable Plan documents).
(iv) SpinCo shall (A) provide coverage to Transferred
Individuals under the SpinCo Health and Welfare Plans without the need
to undergo a physical examination or otherwise provide evidence of
insurability, and (B) recognize and maintain all irrevocable
assignments, elections and beneficiary designations made by Transferred
Individuals in connection with their life insurance coverage under the
Parent Health and Welfare Plans and any predecessor plans.
(b) Parent Reimbursement Plans. To the extent any Transferred
Individual contributed to an account under the Parent Reimbursement Plans during
the calendar year that includes the Distribution Date, effective immediately
after the Distribution Date, SpinCo shall recognize any such Transferred
Individual's account balance, determined as of the Distribution Date, and SpinCo
shall thereafter be solely responsible for making any and all payments relative
to such account balance of the Transferred Individual for all claims during such
calendar year under the applicable SpinCo Reimbursement Plan. All elections by
Transferred Individuals in effect immediately prior to the Distribution Date
shall continue and be recognized by SpinCo, and the Distribution alone shall not
be considered an event that gives any participant the right to change any prior
election. As soon as practicable after the Distribution Date, Parent shall
calculate as of the Distribution Date the aggregate net balance in the accounts
of Transferred Individuals under the Parent Reimbursement Plans, expressed
relative to the contributions received from such Transferred Individuals. If the
contributions received from a Transferred Individual exceed the reimbursements
made to or on behalf of such Transferred Individual, the Transferred Individual
shall be deemed to have a positive account balance. In turn, if the
contributions received from a Transferred Individual are less than the
reimbursements made to or on behalf of such Transferred Individual, the
Transferred Individual shall be deemed to have a negative account balance. If
the aggregate net balance in the accounts of all such Transferred Participants
is a positive number, then Parent shall pay this amount in cash to SpinCo as
soon as practicable after the Distribution Date, and if the aggregate net
balance in the accounts of all such Transferred Participants is a negative
number, then SpinCo shall pay this amount in cash to Parent as soon as
practicable after the Distribution Date.
SECTION 5.6 Application of Article V to the SpinCo Group. Any
reference in this Article V to "SpinCo" shall include a reference to another
member of the SpinCo Group when and to the extent SpinCo has caused the other
member of the SpinCo Group to (a) become a party to an ASO Contract, Group
Insurance Policy, HMO Agreement, letter of understanding or arrangement
associated with a SpinCo Health and Welfare Plan, (b) become a self-insured
entity for the purposes of one or more SpinCo Health and Welfare Plans, (c)
assume all or a portion of the Liabilities or the administrative
responsibilities with respect to benefits which arose before the Distribution
Date under any Parent Health and Welfare Plan and which were expressly assumed
by SpinCo pursuant to this Agreement, or (d) take any other action, extend any
coverage, assume any other Liability or fulfill any other responsibility that
SpinCo would otherwise be required to take under the terms of this Article V,
unless it is clear from the context that the particular reference is not
intended to include another member of the SpinCo Group. In all such instances in
which a reference in this Article V to "SpinCo" includes a reference to another
member of the SpinCo Group, SpinCo shall be responsible to Parent for ensuring
that the other member of the SpinCo Group complies with the applicable terms of
this Agreement and that the Transferred Individuals employed by such member of
the SpinCo Group shall have the same rights and entitlements to benefits
10
under the applicable SpinCo Health and Welfare Plans that the Transferred
Individual would have had, if he or she had instead been employed by SpinCo.
ARTICLE VI
EXECUTIVE COMPENSATION MATTERS
SECTION 6.1 F.N.B. Restricted Stock and Incentive Bonus Plan.
(a) Annual Incentive Awards. For the performance period ended
December 31, 2003, Parent shall pay to participants (excluding Transferred
Individuals) any amounts earned under the Parent Restricted Stock and Incentive
Bonus Plan at the time and in the manner provided under the terms of such plan
and SpinCo shall pay to participants who are also Transferred Individuals any
amounts earned under the Parent Restricted Stock and Incentive Bonus Plan at the
time and in the manner provided under the terms of such plan.
(b) Restricted Stock Awards.
(i) Each Award that consists of unvested restricted shares of
Parent Common Stock that is outstanding as of the Distribution Date and
is held by a Transferred Individual shall be converted, effective
immediately after the Distribution Date, into a new Award under a
SpinCo Incentive Plan consisting of number of unvested restricted
shares of SpinCo Common Stock with a value equal to the economic value
of the unvested restricted shares of Parent Common Stock constituting
such Award as of the last trading day immediately preceding the
Distribution Date. The number of unvested restricted shares of SpinCo
Common Stock shall be determined by dividing the "economic value" of
the Parent Common Stock subject to such Award by the closing price per
share of SpinCo Common Stock on the first trading day following the
Distribution Date as reported on the New York Stock Exchange, rounded
down to the nearest whole share. Each such converted Award shall
otherwise have the same terms and conditions as were applicable to the
corresponding Parent Award as of the Distribution Date, except that
references to Parent shall be amended to refer to SpinCo and dividend
equivalent payments, if any, shall be payable after the Distribution
Date with reference to dividends on SpinCo Common Stock.
(ii) Each Award that consists of unvested restricted shares of
Parent Common Stock that is outstanding as of the Distribution Date and
is held by a Person other than a Transferred Individual shall be
adjusted, effective immediately after the Distribution Date, such that
the number of unvested shares of Parent Common Stock subject to such
Award immediately after the Distribution Date shall have a value equal
to the economic value of the unvested restricted shares of Parent
Common Stock constituting such Award as of the last trading day
immediately preceding the Distribution Date. The number of unvested
restricted shares of Parent Common Stock subject to the adjusted Award
shall be determined by dividing the economic value of the Parent Common
Stock subject to such Award by the closing price per share of Parent
Common Stock on the first trading day following the Distribution Date
as reported on The Nasdaq National Market, rounded down to the nearest
whole share. For purposes of this Section 6.1(b), the "economic value"
of the Parent Common Stock subject to such Award shall be determined by
multiplying the number of unvested restricted shares of Parent Common
Stock by the closing price per share of Parent Common Stock on the last
trading day immediately preceding the Distribution Date as reported by
The Nasdaq National Market.
(iii) Each vested share of Parent Common Stock subject to an
Award shall be entitled to receive a share of SpinCo Common Stock in
the same manner as every other outstanding share of Parent Common Stock
on the Distribution Date.
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SECTION 6.2 Stock Options.
(a) Options Held by Transferred Individuals. Each Option that is
outstanding as of the Distribution Date and is held by a Transferred Individual,
other than a Director or Retiree (which shall be treated as provided in Section
6.2(c) below), shall be replaced immediately after the Distribution Date, with a
SpinCo Option under a SpinCo Incentive Plan. The number of Shares of SpinCo
Common Stock subject to each SpinCo Option and the exercise price of each such
SpinCo Option shall be determined by application of the Conversion Formula to
the corresponding Option held by a Transferred Individual, other than a Director
or Retiree (except as provided in Section 6.2(c) below). Each such SpinCo Option
shall otherwise have the same terms and conditions as were applicable to the
corresponding Option as of the Distribution Date, except that references to
Parent and the Parent Group shall be amended to refer to SpinCo and the SpinCo
Group. SpinCo shall be the obligor with respect to such SpinCo Options and shall
be solely responsible for all stock option grants and payments under the SpinCo
Incentive Plans, with respect to, but not limited to, recordkeeping,
administrative costs and fees, payroll taxes, plan maintenance, option exercise
and related tax filings. SpinCo shall, as soon as practicable after the
Distribution Date, provide Transferred Individuals, and Directors and Retirees
who receive SpinCo Options pursuant to Section 6.2(c), an agreement or notice
relating to such Person's options under the SpinCo Incentive Plans.
(b) Options Held by Persons other than Transferred Individuals. Each
Option that is outstanding as of the Distribution Date and is held by a Person
other than (i) a Transferred Individual or (ii) a Director or Retiree (which
shall be treated as provided in Section 6.2(c) below), shall be adjusted by
application of the Conversion Formula to such Option. Each such Option shall
otherwise have the same terms and conditions as were applicable to the such
Option as of the Distribution Date. Parent shall, as soon as practicable after
the Distribution Date, provide to such Persons whose Options are adjusted
pursuant to this Section 6.2(b), an agreement or notice relating to the
adjustment to such Person's Options.
(c) Options held by Directors or Retirees. Each Option that is
outstanding as of the Distribution Date and is held by a Director or Retiree
shall be treated as follows:
(i) fifty percent (50%) of the number of shares of Parent
Common Stock subject to each such Option, rounded down to the nearest
whole share, shall be converted to SpinCo Options in accordance with
Section 6.2(a) as if such Director or Retiree was a Transferred
Individual with respect to that portion of such Director's or Retiree's
Option; and
(ii) fifty percent (50%) of the number of shares of Parent
Common Stock subject to each such Option, rounded down to the nearest
whole share, shall be adjusted in accordance with Section 6.2(b) as if
such Director or Retiree was not a Transferred Individual with respect
to that portion of such Director's or Retiree's Option.
SECTION 6.3 Deferred Compensation Plans.
(a) Establishment of SpinCo Deferred Compensation Plans. Effective no
later than the Distribution Date, SpinCo shall take all action necessary to
establish the SpinCo Deferred Compensation Plans that are SpinCo Mirror Plans,
and the amounts credited to the accounts of Transferred Individuals under the
Parent Deferred Compensation Plans shall be transferred to the applicable SpinCo
Deferred Compensation Plans.
The Transferred Individuals' termination of employment with the Parent
Group as a result of the Distribution shall not constitute a termination of
employment for purposes of the Parent or SpinCo Deferred Compensation Plans. All
elections by the Transferred Individuals that were controlling under the terms
of the applicable Parent Deferred Compensation Plan prior to the Distribution
shall continue under the applicable SpinCo
12
Deferred Compensation Plan until changed under the terms of such Plan. All
investment choices of Transferred Individuals under the Parent or SpinCo
Deferred Compensation Plans shall also be continued in effect; provided,
however, that any account balance that is deemed to be invested in whole or in
part in phantom shares of Parent Common Stock shall be converted into deemed
investments in phantom shares of SpinCo Common Stock in an equitable manner
determined by SpinCo. Nothing herein shall restrict Parent's or SpinCo's rights
to amend or terminate their respective Plans in the future.
(b) Transfer of Corporate-Owned Life Insurance. The corporate-owned
life insurance policies which are jointly owned by Parent and a number of the
SpinCo Group on the Distribution Date that have been held by Parent or its
affiliates to help fund its obligations under Parent's various employee benefit
Plans will continue after the Distribution Date to be governed by the management
plan (the "Management Plan") by and among Parent, First National Bank of
Pennsylvania and First National Bank of Florida. Any changes to the Management
Plan after the Distribution Date, including, but not limited to, changes
regarding policy contracts, distribution of reports, selection and allocation of
investment divisions, policy surrender, policy value withdrawals, policy loans,
or the transfer to SpinCo or its affiliates of any such corporate-owned life
insurance policies, shall require the written consent of all parties to the
Management Agreement, which consent shall not be unreasonably withheld.
SECTION 6.4 Rabbi Trust.
(a) Effective no later than the Distribution Date, SpinCo shall
establish, or cause to be established, the SpinCo Rabbi Trust as a grantor trust
subject to Code Sections 671 et seq., which shall be substantially similar in
all Material Features to the Parent Rabbi Trust. SpinCo shall appoint First
National Wealth Management Company as trustee under the SpinCo Rabbi Trust.
(b) As soon as practicable after the Distribution Date, Parent shall
determine the amount of the liabilities under the Parent Plans that are payable
from the Parent Rabbi Trust as of the Distribution Date and the amount of such
liabilities attributable to Transferred Individuals. Parent shall then cause the
trustee of the Parent Rabbi Trust to transfer to the trustee of the SpinCo Rabbi
Trust an amount in cash equal to the present value of liabilities attributable
to Transferred Individuals, to the extent such liabilities are funded under the
Parent Rabbi Trust as of the Distribution Date. To the extent that the Parent
Rabbi Trust holds shares of Parent Common Stock or other property for the
benefit of Transferred Individuals, Parent shall cause the trustee of the Parent
Rabbi Trust to transfer such shares or other property to the trustee of the
SpinCo Rabbi Trust.
SECTION 6.5 Employment Agreements. On or before the
Distribution Date, Parent shall assign and SpinCo shall assume the employment
agreements with the Transferred Individuals listed in Appendix C. Except as set
forth in the assignment agreements with respect to each individual employment
agreement, SpinCo shall be solely responsibly for all Liabilities related to the
SpinCo employment agreements with the Transferred Individuals.
SECTION 6.6 Automobile Program. As of the Distribution Date,
SpinCo shall assume all of Parent's Liabilities and obligations with respect to
the motor vehicles leased by Parent for Transferred Individuals pursuant to
lease agreements under any Parent executive automobile program.
SECTION 6.7 Director Benefits.
(a) F.N.B. Corporation Directors' Compensation Plan. Effective not
later than the Distribution Date, SpinCo shall establish a SpinCo Directors'
Compensation Plan that is substantially identical in all Material Features to
the F.N.B. Corporation Directors' Compensation Plan, and SpinCo
13
shall assume and be solely responsible for all Liabilities under the F.N.B.
Corporation Directors' Compensation Plan relating to individuals who become
directors of SpinCo. As soon as practicable after the Distribution Date, Parent
shall cause the trustee of the Parent Rabbi Trust to transfer such property or
shares attributable to Transferred Individuals to the SpinCo Rabbi Trust as set
forth in Section 6.4.
(b) Directors' Stock Option Plan. Effective not later than the
Distribution Date, SpinCo shall establish the SpinCo Directors' Stock Option
Plan that is substantially identical in all Material Features to the F.N.B.
Corporation 1998 Directors' Stock Option Plan. All outstanding options held by
Directors of Parent, including those Directors who will become directors of
SpinCo, shall be treated as provided in Section 6.2(c).
SECTION 6.8 Vacation Pay/Paid Time-Off. As of the Distribution
Date, the SpinCo Group shall recognize all of the Transferred Individuals'
accrued and unused vacation benefits consistent with the terms of the vacation
policies of Parent applicable to the Transferred Individuals as is in effect on
the Distribution Date and shall assume or retain liability for all unpaid
vacation pay, sick pay, and personal leave accrued by Transferred Individuals as
of the Distribution Date.
SECTION 6.9 Split Dollar Life Insurance. On or before the
Distribution Date, Parent shall take all action necessary to implement the
proposals approved by Parent's Compensation Committee at a meeting of such
committee held on December __, 2003 with respect to all split-dollar life
insurance arrangements or policies entered into between employees of Parent and
SpinCo, on the one hand, and Parent, on the other hand.
ARTICLE VII
GENERAL
SECTION 7.1 Sharing of Participant Information. Subject to
applicable laws on confidentiality, Parent and SpinCo shall share, Parent shall
cause each applicable member of the Parent Group to share, and SpinCo shall
cause each applicable member of the SpinCo Group to share, with each other and
their respective agents and vendors (without obtaining releases) all participant
information necessary for the efficient and accurate administration of each of
the Parent Plans and the SpinCo Plans with respect to periods ending on or
before the Distribution Date. Parent and SpinCo and their respective authorized
agents shall, subject to applicable laws on confidentiality, be given reasonable
and timely access to, and may make copies of, all information relating to the
subjects of this Agreement in the custody of the other party, to the extent
necessary for such administration. Until the Distribution Date, all participant
information shall be provided in the manner and medium applicable to
Participating Companies in the Parent Plans generally, and thereafter until
_____________ , all participant information shall be provided in a manner and
medium that is compatible with the data processing systems of Parent as in
effect on the Distribution Date, unless otherwise agreed to by Parent and
SpinCo.
SECTION 7.2 Restrictions on Extension of Option Exercise
Periods, Amendment or Modification of Option Terms and Conditions. SpinCo agrees
that, without the prior written consent of Parent, neither SpinCo nor any of its
affiliates or Subsidiaries shall take any action to extend the exercise period
of or to provide for additional vesting with respect to any SpinCo options which
were issued pursuant to Section 6.2 in replacement of Parent options for
Transferred Individuals, including providing such Transferred Individuals with
leaves of absences or special termination or severance arrangements.
SECTION 7.3 Reporting and Disclosure and Communications to
Participants. SpinCo shall assist, and SpinCo shall cause each other applicable
member of the SpinCo Group to assist, Parent in complying with all reporting and
disclosure requirements of ERISA for plan years ending on or before
14
December 31, 2003, including the preparation of Form 5500 annual reports for the
Parent Plans, where applicable.
SECTION 7.4 Plan Audits.
(a) Audit Rights with Respect to Information Provided.
(i) Subject to Section 7.4(a)(ii), each of Parent and SpinCo,
and their duly authorized representatives, shall have the right to
conduct audits at any time upon reasonable prior notice, at their own
expense, with respect to all information provided to it or to any Plan
recordkeeper or third-party administrator by the other party with
respect to all periods ending on or before the Distribution Date.
Subject to Section 7.4(a)(ii), the party conducting the audit shall
have the sole discretion to determine the procedures and guidelines for
conducting audits and the selection of audit representatives. The
auditing party shall have the right to make copies of any records at
its expense, subject to the confidentiality provisions set forth in the
Distribution Agreement, which are incorporated by reference herein. The
party being audited shall provide the auditing party's representatives
with reasonable access during normal business hours to its operations,
computer systems and paper and electronic files, and provide workspace
to its representatives. After any audit is completed, the party being
audited shall have the right to review a draft of the audit findings
and to comment on those findings in writing within five business days
after receiving such draft.
(ii) The auditing party's audit rights under this Section
7.4(a) shall include the right to audit, or participate in an audit
facilitated by the party being audited, of any Subsidiaries and
affiliates of the party being audited and of any benefit providers and
third parties with whom the party being audited has a relationship, or
agents of such party, to the extent any such persons are affected by or
addressed in this Agreement (collectively, the "Non-parties"). The
party being audited shall, upon written request from the auditing
party, provide an individual (at the auditing party's expense) to
supervise any audit of any Non-party. The auditing party shall be
responsible for supplying, at its expense, additional personnel
sufficient to complete the audit in a reasonably timely manner.
(b) Audits Regarding Vendor Contracts. From immediately after the
Distribution Date through [_______________], Parent and SpinCo and their duly
authorized representatives shall have the right to conduct joint audits with
respect to any vendor contracts that relate to both the Parent Health and
Welfare Plans and the SpinCo Health and Welfare Plans. The scope of such audits
shall encompass the review of all correspondence, account records, claim forms,
canceled drafts (unless retained by the bank), provider bills, medical records
submitted with claims, billing corrections, vendor's internal corrections of
previous errors and any other documents or instruments relating to the services
performed by the vendor under the applicable vendor contracts. Parent and SpinCo
shall agree on the performance standards, audit methodology, auditing policy and
quality measures and reporting requirements relating to the audits described in
this Section 7.4(b) and the manner in which costs incurred in connection with
such audits will be shared. In the event that the parties cannot agree on the
matters described in this Section 7.4(b), such matters shall be subject to the
dispute resolution process set forth in Section 7.13 of this Agreement.
(c) Audit Assistance. To the extent that either Parent or SpinCo is
required to respond to any Governmental Authority, vendor or recordkeeper audit,
or otherwise conducts an audit with respect to any provision or obligation of
the other party under this Agreement, Parent or SpinCo, whichever is applicable,
shall be required to fully cooperate with the audit, including providing such
records and data as may be necessary to respond to any document or data request
that may arise by reason of such audit. The party being audited shall provide
the auditing party's representatives with reasonable access during normal
business hours to its operations, computer systems and paper and electronic
files, and provide
15
workspace to its representatives. To the extent the results of an audit result
in any correction to the Liabilities involving any Transferred Individuals,
Parent shall be solely responsible for all such costs and expenses associated
with such Liabilities and any related corrections.
SECTION 7.5 Beneficiary Designations/Release of Information/Right of
Reimbursement. All beneficiary designations, authorizations for the release of
information and rights to reimbursement made by or relating to Transferred
Individuals under Parent Plans shall be transferred to and be in full force and
effect under the corresponding SpinCo Plans until such beneficiary designations,
authorizations or rights are replaced or revoked by, or no longer apply, to the
relevant Transferred Individual.
SECTION 7.6 Requests for Internal Revenue Service Rulings and United
States Department of Labor Opinions. SpinCo shall cooperate fully with Parent on
any issue relating to the transactions contemplated by this Agreement for which
Parent elects to seek a determination letter or private letter ruling from the
Internal Revenue Service or an advisory opinion from the United States
Department of Labor. Parent shall cooperate fully with SpinCo with respect to
any request for a determination letter or private letter ruling from the
Internal Revenue Service or advisory opinion from the United States Department
of Labor with respect to any of the SpinCo Plans relating to the transactions
contemplated by this Agreement. Any reasonable expenses incurred by the
cooperating party shall be borne by the party which is seeking cooperation.
SECTION 7.7 Fiduciary and Related Matters. The parties acknowledge that
Parent will not be a fiduciary with respect to the SpinCo Plans and that SpinCo
will not be a fiduciary with respect to the Parent Plans. The parties also
acknowledge that neither party shall be deemed to be in violation of this
Agreement if it fails to comply with any provisions hereof based upon its good
faith determination that to do so would violate any applicable fiduciary duties
or standards of conduct under ERISA or other applicable law. Notwithstanding any
other provision in this Agreement, the parties may take such actions as
necessary or appropriate to effectuate the terms and provisions of this
Agreement.
SECTION 7.8 No Third-Party Beneficiaries; Non-Termination of
Employment. This Agreement is not intended and shall not be construed as to
confer upon any Person other than the parties hereto any rights or remedies
hereunder. No provision of this Agreement or the Distribution Agreement shall be
construed to create any right, or accelerate entitlement, to any compensation or
benefit whatsoever on the part of any Transferred Individual or other future,
present, or former employee of the Parent Group or the SpinCo Group under any
Parent Plan or SpinCo Plan or otherwise. Without limiting the generality of the
foregoing, except as expressly provided in this Agreement: (i) neither the
Distribution nor the termination of the Participating Company status of a member
of the SpinCo Group shall cause any employee to be deemed to have incurred a
termination of employment which entitles such individual to the commencement of
benefits under any of the Parent Plans, any of the SpinCo Plans, or any of the
Individual Agreements; and (ii) nothing in this Agreement other than those
provisions specifically set forth herein to the contrary shall preclude Parent
or SpinCo, at any time after the Distribution Date, from amending, merging,
modifying, terminating, eliminating, reducing, or otherwise altering in any
respect any SpinCo Plan, any benefit under any Plan or any trust, insurance
policy or funding vehicle related to any SpinCo Plan.
SECTION 7.9 Consent of Third Parties. If any provision of this
Agreement is dependent on the consent of any third party (such as a vendor) and
such consent is withheld, Parent and SpinCo shall use their reasonable best
efforts to implement the applicable provisions of this Agreement to the full
extent practicable. If any provision of this Agreement cannot be implemented due
to the failure of such third party to consent, Parent and SpinCo shall negotiate
in good faith to implement the provision in a mutually satisfactory manner. The
phrase "reasonable best efforts" as used in this Agreement shall not
16
be construed to require the incurrence of any non-routine or unreasonable
expense or liability or the waiver of any right.
SECTION 7.10 Effect if Distribution Does Not Occur. If the Distribution
does not occur, then all actions and events that are, under this Agreement, to
be taken or occur before or effective as of the Distribution Date, immediately
after the Distribution Date, or otherwise in connection with the Distribution,
shall not be taken or occur except to the extent specifically agreed by SpinCo
and Parent.
SECTION 7.11 Relationship of Parties. Nothing in this Agreement shall
be deemed or construed by the parties or any third party as creating the
relationship of principal and agent, partnership or joint venture between the
parties, it being understood and agreed that no provision contained herein, and
no act of the parties, shall be deemed to create any relationship between the
parties other than the relationship set forth herein.
SECTION 7.12 Affiliates. Each of Parent and SpinCo shall cause to be
performed, and hereby guarantees the performance of, all actions, agreements and
obligations set forth in this Agreement to be performed by members of the Parent
Group or members of the SpinCo Group, respectively, where relevant.
SECTION 7.13 Dispute Resolution. Any controversy or claim arising out
of or relating to this Agreement, or the breach hereof, shall be settled
pursuant to the dispute resolution provisions described in the Distribution
Agreement.
SECTION 7.14 Indemnification. All Liabilities retained or assumed or
allocated to Parent or any member of the Parent Group pursuant to this Agreement
will be deemed to be Parent Liabilities (as defined in the Distribution
Agreement) and all Liabilities retained or assumed by or allocated to SpinCo or
any member of the SpinCo Group pursuant to this Agreement will be deemed to be
SpinCo Liabilities (as defined in the Distribution Agreement), and, in each
case, will be subject to the indemnification provisions set forth in the
Distribution Agreement.
SECTION 7.15 W-2 Matters. Pursuant to the alternative procedure set
forth in Internal Revenue Service Rev. Proc. 96-60, SpinCo will assume Parent's
obligations to furnish Forms W-2 to all Transferred Individuals for the year in
which the Distribution Date occurs. Parent will provide to SpinCo the
information not available to SpinCo relating to periods ending on the
Distribution Date necessary for SpinCo to prepare and distribute Forms W-2 to
Transferred Individuals for the year in which the Distribution Date occurs,
which will include all remuneration earned by Transferred Individuals before the
Distribution Date and Forms W-4 provided to Parent by Transferred Individuals to
the extent that SpinCo is not already in possession of such information. SpinCo
shall prepare and distribute such forms. To the extent permitted by applicable
law, in particular Code Sections 3121(a)(1) and 3306(b)(1), SpinCo shall be
deemed a successor employer to Parent with respect to Transferred Individuals
for purposes of calculating the annual wage limitation to which state and
federal payroll taxes apply.
17
SECTION 7.16 Confidentiality. Except as required by applicable law, for
the purpose of satisfying any obligation under this Agreement or with the
consent of the other party, neither Parent nor SpinCo shall disclose to any
Person (other than members of the Parent Group or the SpinCo Group) any
information (including, but not limited to, information regarding fees,
expenses, assets, Liabilities and Plan terms) relating to the Parent Plans,
SpinCo Plans or Transferred Individuals. Each of Parent and SpinCo shall be
permitted to disclose such information within the Parent Group and SpinCo Group
only to the extent reasonably necessary in the ordinary course of business.
SECTION 7.17 Notices. Any notice, demand, claim, or other communication
under this Agreement shall be in writing and shall be given in accordance with
the provisions for giving notice under the Distribution Agreement.
SECTION 7.18 Interpretation. Words in the singular shall be held to
include the plural and vice versa and words of one gender shall be held to
include the other genders as the context requires. The terms "hereof," "herein,"
and "herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole (including all Appendices
hereto) and not to any particular provision of this Agreement. The word
"including" and words of similar import when used in this Agreement shall mean
"including, without limitation," unless the context otherwise requires or unless
otherwise specified. The word "or" shall not be exclusive.
SECTION 7.19 Severability. The provisions of this Agreement are
severable and should any provision hereof be void, voidable or unenforceable
under any applicable law, such provision shall not affect or invalidate any
other provision of this Agreement, which shall continue to govern the relative
rights and duties of the parties as though such void, voidable or unenforceable
provision were not a part hereof.
SECTION 7.20 Governing Law/Execution. This Agreement shall be construed
in accordance with, and governed by, the laws of the State of Florida without
regard to the conflicts of law rules of such state, may not be assigned by
either party without the prior written consent of the other, and shall bind and
inure to the benefit of the parties hereto and their respective successors and
permitted assignees. This Agreement may not be amended or supplemented except by
an agreement in writing signed by Parent and SpinCo. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original
instrument, but all of which together shall constitute one and the same
Agreement.
[SIGNATURE PAGE FOLLOWS]
18
IN WITNESS WHEREOF, the parties have caused this Employee Benefits
Agreement to be duly executed as of the day and year first above written.
F.N.B. CORPORATION
By:
--------------------------------------------
Name:
Title:
FIRST NATIONAL BANKSHARES OF FLORIDA, INC.
By:
--------------------------------------------
Name:
Title:
19
APPENDIX A SPINCO STAND-ALONE PLANS AND MIRROR PLANS
STAND-ALONE PLANS/AGREEMENTS TO BE ASSUMED BY SPINCO (WITH APPROPRIATE NAME
CHANGES)
F.N.B. Corporation Salary Savings Plan
Xxxxx Xxxxxxxx Insurance, Inc. 401(k) Profit Sharing and
Trust Plan
F.N.B. Corporation Section 125 Flexible Benefits Plan
F.N.B. Corporation Employee Dental Plan
PARENT PLANS FOR WHICH SPINCO MIRROR PLANS WILL BE ESTABLISHED
Deferred Compensation Plans
F.N.B. Corporation Basic Retirement Plan
F.N.B. Corporation Deferred Compensation Plan
F.N.B. Corporation Excess Profit Sharing and Lost Match Plan
F.N.B. Corporation Directors' Compensation Plan
Health and Welfare Plans
F.N.B. Corporation Employee Assistance Program
F.N.B. Corporation Long-Term Disability, Life and AD&D
Insurance Plan
F.N.B. Corporation Termination Pay Plan
F.N.B. Corporation Section 125 Flexible Benefits Plan
Incentive Plans
F.N.B. Corporation 2001 Incentive Plan
F.N.B. Corporation 1998 Directors' Stock Option Plan
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APPENDIX B SPINCO HEALTH AND WELFARE PLANS
Health Plans (ERISA):
SpinCo Section 125 Flexible Benefits Plan
Group Insurance Plans (ERISA):
SpinCo Employee Assistance Program
SpinCo Termination Pay Plan
Disability Plans (ERISA):
SpinCo Long Term Disability, Life and AD&D Plan
* SpinCo shall have the right to rename, combine or disaggregate any of the
above Plans for any purpose, including the satisfaction of any disclosure
or reporting requirements under ERISA.
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APPENDIX C
Employment Agreements
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APPENDIX D
Transferred Individuals who are employed by Parent as of the Distribution Date
and will be employed by SpinCo following the Distribution Date.
The following persons who were employed by Parent prior to the Distribution Date
and will not be employed by either Parent or SpinCo following the Distribution
Date shall not be deemed to be Transferred Individuals for purposes of this
Agreement.
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