Exhibit (10)F
EMPLOYMENT AGREEMENT
Amending Employment Agreement Dated June 2, 2003
THIS EMPLOYMENT AGREEMENT (the "Agreement"), amending the employment
agreement dated June 2, 2003, is entered into this 16th day of December 2004,
by and between FNB CORPORATION (hereinafter referred to as "FNB"), a bank
holding company, with its principal office located at 000 Xxxxx Xxxxx,
Xxxxxxxxxxxxxx, Xxxxxxxx, organized and existing under the laws of the
Commonwealth of Virginia, which owns all of the outstanding stock of First
National Bank, FNB Southwest, N.A., Salem Bank & Trust, N.A., and Bedford
Federal Savings Bank, N.A., and XXXXXXX X. XXXXX, Xx., residing at 0000
Xxxxxxxxx Xxxx, Xxxxx, Xxxxxxxx, 00000 (hereinafter referred to as "Heath").
WITNESSETH:
WHEREAS, FNB desires to continue the services of Heath as its President
and Chief Executive Officer and Heath desires to render such services;
NOW THEREFORE, in consideration of the representations, warranties and
mutual covenants set forth herein, the parties agree as follows:
1. Employment. FNB hereby retains Heath as its President and Chief
Executive Officer and Heath hereby accepts such employment, all upon and
subject to the terms and conditions hereinafter set forth.
2. Term. The term of employment under this Agreement shall commence
as of the date of this Agreement and shall continue in full force and
effect until December 31, 2005 (the initial "Employment Term"), and
thereafter Heath's employment will be automatically renewed for
additional one (1) year Employment Terms, unless (i) Heath or FNB, by
written notice to the other party no later than ninety (90) days prior
to the expiration of an Employment Term, elects not to renew this
Agreement for the period following such Employment Term or (ii) this
Agreement is terminated, during its original term or in any renewal
period, pursuant to the provisions of Section 7, hereof. The provisions
of this Section 2 shall be read in a manner consistent with the
provisions of Sections 7 and 8 of this Agreement.
3. Duties.
(a) Heath agrees that during the term of his employment
hereunder he shall devote substantially his full business time,
efforts, skill and abilities to the business of FNB in accordance
with the reasonable directions and orders of the Board of
Directors and will use his best efforts to promote the interests
of FNB and its subsidiaries. Heath, with the approval of the
Executive Committee, may take reasonable amounts of time to (i)
serve as director or in some other capacity for other
organizations or entities which, in the opinion of the Executive
Committee, would benefit FNB, (ii) manage his personal investments
if his investment activities do not interfere with his duties
under this Agreement, (iii) engage in charitable, educational,
religious, civic and similar types of activities, (iv) accept
occasional speaking engagements, attend business related seminars
and similar activities, to the extent his attendance at such
activities do not inhibit or interfere with the performance of his
duties hereunder or inhibit or conflict with the business of FNB,
and (v) take permitted leaves of absence, sick leave and permitted
vacation periods as approved by the Executive Committee. The
Executive Committee shall have discretion to resolve any question
that may arise as to whether any of the activities referenced in
(i), (ii), (iii), (iv), and (v) of this Section benefit FNB, or
interfere or conflict with, inhibit, or prohibit Heath's
performance of his duties under this Agreement.
(b) Heath will render his services to FNB as its President and
Chief Executive Officer and shall perform the duties and services
incident, usual and customary to that position and such other
duties consistent with such office as may be assigned to him from
time to time by the Board of Directors or the Executive Committee.
In addition, Heath may hold, with the approval of the Executive
Committee, such other offices or positions in any FNB subsidiary
to which, from time to time, he may be appointed or elected.
Unless specifically authorized in writing by the Executive
Committee, Heath shall not receive any other employment
compensation, incentive pay or director's fees which have not been
disclosed to and specifically approved by FNB's Executive
Committee.
4. Compensation and Benefits.
(a) Salary. In consideration of the services to be rendered by
Heath hereunder, including, without limitation, any services
rendered by him as an officer or director of FNB, or as an officer
or Director of any FNB subsidiary or affiliate, FNB agrees to pay
to Heath, and Heath agrees to accept as compensation, for each
period of service during the initial Employment Term, an annual
salary (the "Salary"), payable in monthly installments pursuant to
FNB's normal payroll practices, in accordance with Schedule 4(a)
attached hereto. Heath's Salary shall be subject to all
applicable withholding and other taxes. The amount of Salary
shall be subject to adjustment by FNB's Board of Directors as of
the first day of each Employment Term following the initial
Employment Term based upon a performance evaluation and salary
recommendation by the Compensation Committee. Any increase in
Salary will be made only if the Compensation Committee determines
that an increase is warranted and FNB's Board of Directors
approves such recommendation.
(b) Incentive Compensation. Heath shall be eligible to receive
annual incentive compensation in accordance with performance goals
and earnings targets established annually by the Executive
Committee and approved by FNB's Board of Directors. Heath's
annual incentive compensation may be in the form of a cash bonus
and/or stock options, stock grants, or such other forms of
compensation as the Compensation Committee and FNB's Board of
Directors deem appropriate. Initial compensation for the initial
period of this Agreement shall be in accordance Schedule 4(a)
attached hereto.
(c) Benefits. During the term of his employment hereunder,
Heath shall be eligible to receive:
(i) All FNB sponsored welfare, insurance and retirement
plan benefits generally available to other executive
employees of FNB, which shall include, but not be limited
to, BOLI benefits as may from time to time be allocated by
the Board of Directors or the Executive Committee.
(ii) Vacation and sick leave in accordance with FNB's
policies from time to time in effect for officers and
executive employees of FNB.
(iii) A complete annual physical examination at FNB's
expense by a local physician of Heath's choice. Heath
agrees that a report of the results of the physical
examination will be provided to FNB's Executive Committee
upon the Executive Committee's request.
(iv) Should Heath die prior to the termination of this
Agreement, FNB shall pay to Heath's spouse if she survives,
if not, then to his estate his base compensation for the
entire month in which his death occurs and shall pay to his
spouse if she survives, if not, then to his estate,
beginning with the month succeeding his death, an amount
equal to one-half of Heath's base compensation for a period
of twelve months. In addition, if Heath's spouse is covered
by an Employer-sponsored health plan at the time of Heath's
death, FNB shall also pay, on behalf of Heath's spouse, the
premium costs associated with maintaining such spouse's
health care coverage for a period of 36 months after Heath's
death or until such spouse becomes covered by Medicare,
whichever is last to occur. Except as modified by this
provision, all other compensation and benefits payable
hereunder shall cease by their terms.
(v) Should Heath become disabled prior to the termination
of this Agreement, FNB shall pay Heath an amount equal to
one-half of his base compensation for the remaining term of
this Agreement and shall pay on Heath's behalf all premium
costs associated with maintaining health care coverage for
Heath and Heath's spouse until each of them reaches age 65
or qualifies for Medicaid, whichever is earlier. These
payments shall be in addition to, and not in lieu of, any
expenses Heath may be otherwise entitled to under any group
or individual disability plan that provides long-term
disability benefits to Heath. Except as modified by this
provision, all other compensation and benefits payable
hereunder shall cease by their terms. For the purpose of
this paragraph, disability shall be defined as the inability
of Heath to perform the duties imposed upon him under the
terms and conditions of this contract. The Board of
Directors shall have the sole authority to determine when or
if Heath has become disabled and unable to perform his
duties as set forth herein.
(vi) It is expressly understood and agreed if Heath's
spouse still has health care coverage when she attains the
age of 65, as provided in the above paragraph, or if Heath's
employment is terminated for any reason and his spouse
elects to continue health care coverage, which is
customarily available to the spouse and dependents of
retired employees, she may do so at her expense.
(d) Changes in Compensation and Benefits. Nothing in this
Agreement shall prevent the Board of Directors from, at any time,
increasing the compensation and fringe benefits to be paid to
Heath in the event the Board, in its sole discretion, shall deem
it advisable so to do in order to compensate Heath for his
services.
5. Reimbursement of Expenses.
(a) Heath shall be reimbursed for reasonable and necessary
expenses incurred by him in performing his employment hereunder,
provided such expenses are adequately documented and submitted in
accordance with FNB's policies. The Executive Committee shall
have discretion to resolve any question that may arise as to
whether expenses are reasonable and necessary. Such expenses
shall include:
(i) reasonable and necessary expenses directly incurred by
Heath for travel, transportation, accommodations, meals and
entertainment, including those incurred while in attendance
at industry conventions and meetings, in connection with the
performance by Heath of his duties for FNB, which shall
include reasonable and necessary expenses for travel,
lodging, and meals incurred by Heath's spouse when she
travels with Heath on FNB's business, to the extent
consistent with FNB's policy with respect to travel by
spouses of FNB's executives; and
(ii) all other reasonable and necessary expenses directly
incurred by Heath for the promotion of the business of FNB,
including, but not limited to, home entertainment expenses.
(b) Expenses for meetings and conferences, excluding meetings
sponsored by the Virginia Bankers Association, shall not exceed in
the aggregate $15,000 annually, unless approved in advance by
FNB's Executive Committee.
(c) Dues and other membership charges in professional and
community associations, and civic clubs shall not exceed in the
aggregate $12,000 annually.
6. Lease of Automobile. FNB has provided (by way of a lease) an
automobile for the exclusive use of Heath. The leased automobile has a
lease term of thirty-six (36) months. At the end of such lease term,
but only if this Agreement is still in effect, Heath will be provided
with a new leased automobile (after relinquishing the other leased
vehicle) of a comparable model. The model of the vehicle is subject to
approval by FNB's Executive Committee. FNB shall pay all lease costs,
insurance premiums and maintenance costs relating to the lease of such
automobile(s), provided such expenses are adequately documented in
accordance with FNB's policies. The automobile shall be used by Heath
primarily in connection with the performance by Heath of his duties
under this Agreement and primarily for the benefit of FNB but may
nevertheless be incidentally used by Heath for his personal purposes.
When used for personal purposes, such as vacations or out of state
personal trips, Heath shall be solely responsible for gas usage.
7. Termination of Employment.
(a) Termination for Cause. FNB may at any time immediately
terminate the employment of Heath hereunder for Cause. If
terminated for Cause, the date of the termination ("Termination
Date"), unless otherwise stated, shall be the date on which the
termination decision is made by the Board of Directors. For
purposes of this Agreement, "Cause" shall mean:
(i) embezzlement or any other act or offense involving
misuse or misappropriation of money, property, or other
resources of FNB, its subsidiaries, or customers.
(ii) the commission of fraud, conviction of a felony, any
act involving moral turpitude, dishonesty, habitual
drunkenness, use of illegal substances, or willful violation
of law.
(iii) any act of disloyalty to FNB or its subsidiaries,
persistent negligence, and any act involving gross
negligence, breach of fiduciary duty, conflict of interest,
or misconduct in the performance of the duties or
obligations hereunder.
(iv) the repeated failure, inability, or refusal to
perform the duties and responsibilities of President and
Chief Executive Officer or the specific directives of the
Board of Directors or the Executive Committee, the violation
of FNB's Code of Conduct or standards of behavior, or any
other personal conduct which in the sole judgment of FNB's
Board of Directors is likely to damage the reputation of
FNB, exposes FNB to liability, or renders Heath personally
unfit to serve as President and Chief Executive of the
Company.
(v) the breach of any of the terms of Sections 9 or 10
hereof.
If the employment of Heath is terminated pursuant to this Section
7(a), FNB shall have no further obligations to Heath hereunder
after the Termination Date other than the payment of accrued
Salary and benefits under Section 4(a) and 4(c)(i)-(ii) hereof
through the Termination Date.
(b) Discretionary Termination by FNB. FNB may, at any time,
and in its sole discretion, terminate the employment of Heath
without cause for any or no reason by delivering to him a notice
of termination ("Termination Notice"). Such termination shall be
effective on the date of the Termination Notice; provided,
however, that FNB shall be obligated to pay Heath earned and
accrued but unpaid Salary and benefits through the date of the
Termination Notice, and any Incentive Compensation earned and
awarded but not yet received pursuant to Section 4(b) of this
Agreement, and, in addition, severance compensation as set forth
in Section 8(a) hereof.
(c) Voluntary Termination by Heath. If at any time during the
Employment Term Heath resigns from the employ of FNB, FNB shall be
obligated to pay Heath earned and accrued but unpaid Salary and
benefits through the date of his termination, but shall have no
obligation to pay Heath any incentive compensation awarded but not
yet received or any severance compensation.
8. Severance Compensation.
(a) Severance Payments. In the event that Heath's employment
hereunder is terminated by FNB pursuant to Section 7(b) hereof, or
is not renewed by FNB pursuant to Section 2(i) of the Agreement,
FNB shall pay to Xxxxx xxxxxxxxx compensation in the form of
continued installment payments of his Salary for a period of not
less than twelve (12) months. In addition, the Association shall
provide Heath with the opportunity for continuation of the medical
benefits and insurance described in Section 4(c)(i) hereof, to
which Heath is then entitled and participating, for the period of
time set forth in the immediately preceding sentence, or in the
case of medical benefits to the extent required by the
Consolidated Omnibus Budget Reconciliation Act. Heath shall not
be entitled to receive any other compensation or benefits under
this Agreement, except as specified in Section 7(b), after the
termination of his employment and shall have no other claim
against FNB by reason of the Agreement.
(b) Continuation of Other Benefits. Notwithstanding any
provision of this Agreement, in the event of Heath's termination
of employment for any reason, he will be entitled, in addition to
any other rights and benefits under this Agreement, to all
benefits provided by law or accrued and vested under any plan of
FNB applicable to him in accordance with its terms. In addition
thereto, Heath will be given retiree status, if necessary, to
provide eligibility for group health care coverage for his spouse;
however, if Heath is involuntarily terminated then such coverage
shall be at no expense to the corporation.
9. Disclosure and Assignment of Discoveries.
(a) Heath shall (without any additional compensation) promptly
disclose in writing to the Executive Committee all ideas,
processes, devices and business concepts (hereinafter referred to
collectively as "Discoveries"), whether or not patentable or
copyrightable, which he, while employed by FNB conceives,
develops, acquires or reduces to practice, whether alone or with
others and whether during or after usual working hours, and which
are related to FNB's business or interests, or arise out of or in
connection with the duties performed by him hereunder; and Heath
hereby transfers and assigns to FNB all rights, title and interest
in and to such Discoveries. Upon the request of FNB, Heath shall
(without any additional compensation), from time to time during or
after the expiration or termination of his employment, execute
such further instruments and do all such other acts and things as
may be deemed necessary or desirable by FNB to protect and/or
enforce its rights in respect to such Discoveries.
(b) For purposes of this Section 9 and the following Section 10,
the reference to FNB shall mean and include any and all
subsidiaries, and affiliated corporations in existence from time
to time.
10. Non-Disclosure of Confidential Information: Non-Competition
(a) Heath represents that he has been informed that it is the
policy of FNB to maintain as secret and confidential all
information (1) relating to the products, processes and/or
business concepts used by FNB, and (2) relating to the customers
and employees of FNB ("Confidential Information"), and Heath
further acknowledges that such Confidential Information is of
great value to FNB and is the property of FNB. The parties
recognize that the services to be performed by Heath are special
and unique, and that by reason of his employment by FNB, he will
acquire Confidential Information as aforesaid. The parties
confirm that it is necessary to protect FNB's goodwill and,
accordingly, Heath hereby agrees that he will not directly or
indirectly (except where authorized by the Executive Committee for
the benefit of FNB):
(i) at any time during his employment hereunder or after
he ceases to be employed by FNB, divulge to any persons,
firms or corporations other than FNB (hereinafter referred
to collectively as "Third Parties"), or use, or cause to
authorize any third parties to use, any such Confidential
Information, or any other information regarded as
confidential and valuable by FNB which he knows or should
know is regarded as confidential and valuable by FNB
(whether or not any of the foregoing information is actually
novel or unique or is actually known to others); or
(ii) at any time during his employment hereunder and for a
period of time equal to one (1) year after he ceases to be
employed by FNB, referred to herein as the "Restricted
Period", solicit or cause or authorize, directly or
indirectly, to be solicited for employment, for or on behalf
of himself or Third Parties, any persons who were at any
time within one (1) year prior to the cessation of his
employment hereunder, employees of FNB;
(iii) at any time during his employment hereunder and
during the Restricted Period, employ or cause or authorize,
directly or indirectly, to be employed, for or on behalf of
himself or Third Parties, any such employees of FNB;
(iv) at any time during his employment hereunder and
during the Restricted Period, unless agreed to by FNB in
writing, accept employment in FNB's trading area (defined
herein as all areas located within fifty (50) miles by
highway from an office then operated by FNB or one of its
subsidiaries) as an owner, director, officer, manager, or
agent in any business, firm, corporation, partnership, or
other entity which is engaged in banking activities that are
essentially the same as that of FNB.
(v) at any time during his employment hereunder and during
the Restricted Period, solicit or cause or authorize,
directly or indirectly, to be solicited, for or on behalf of
himself or Third Parties, any business with respect to which
FNB is engaged, from Third Parties who were, at any time
within one (1) year prior to the cessation of his employment
hereunder, customers of FNB; or
(vi) at any time during his employment hereunder and
during the Restricted Period, accept or cause or authorize,
directly or indirectly, to be accepted, for or on behalf of
himself or any Third Party, any such business from any
customers of FNB.
(b) Heath agrees that he will not, at any time, remove from
FNB's premises any drawings, notebooks, data and other documents
and materials relating to the business and procedures heretofore
or hereafter acquired, developed and/or used by FNB without prior
written consent of the Executive Committee, except as reasonably
necessary to the discharge of his duties hereunder.
(c) Heath agrees that, upon the expiration of his employment by
FNB for any reason, he shall forthwith deliver to FNB any and all
order books, customer lists, logs, drawings, notebooks and other
documents and materials, and all copies thereof, in his possession
or under his control relating to any Confidential Information or
any Discoveries or which is otherwise the property of FNB.
(d) Heath agrees that any breach, threatened breach, or alleged
breach by him of any provision of Section 9 and this Section 10
shall entitle FNB, in addition to any other legal remedies
available to it, to apply to any court of competent jurisdiction
to enjoin such breach, threatened breach, or alleged breach. The
parties understand and intend that each restriction agreed to by
Heath hereinabove shall be construed as separable and divisible
from every other restriction, and that the unenforceability, in
whole or in part, of any other restriction, will not effect the
enforceability of the remaining restrictions, and that one or more
or all of such restrictions may be enforced in whole or in part as
the circumstances warrant. No waiver of any one breach of the
restrictions contained in Section 9 and this Section 10 shall be
deemed a waiver of any future breach.
(e) Heath hereby acknowledges that he is fully cognizant of the
restrictions imposed upon him by Section 9 and this Section 10.
11. Conflicting Agreements. Heath hereby represents and warrants to
FNB that (1) neither the execution of this Agreement by him nor
the performance by him of any of his obligations or duties
hereunder will conflict with or violate or constitute a breach of
the terms of any employment or other agreements to which he is a
party or by which he is bound, and (2) he is not required to
obtain the consent of any person, firm, corporation or other
entity in order to enter into this Agreement or to perform any of
his obligations or duties hereunder.
12. Life Insurance. Heath agrees that FNB may apply for and purchase
one or more life insurance policies on his life in such amount or
amounts as FNB deems appropriate. FNB shall be the sole
beneficiary of such policies and Heath hereby acknowledges that
FNB has an insurable interest in his life. Heath agrees to
cooperate with FNB in obtaining any insurance on his life or any
disability insurance applicable to him which FNB may desire to
obtain for its own benefit and shall undergo such physical and
other examinations, and shall execute any consents or
applications, which FNB may request in connection with the
issuance or one or more of such insurance policies.
13. Change in Control.
(a) Definition of Change in Control.
For purposes of this Agreement, a "change in control" of FNB shall
have occurred at such time as (i) the closing of a corporate
reorganization in which FNB becomes a subsidiary of a holding
company, or is merged into another entity, the majority of the
common stock of which is owned, in aggregate, by persons who did
not own the majority of the common stock of FNB Corporation (or
its successor) immediately prior to the reorganization; or (ii)
individuals who constitute the Board of Directors of FNB
Corporation on the date hereof (the "Incumbent Board") cease for
any reason to constitute at least a majority thereof; provided
that any person becoming a director subsequent to the date hereof
whose nomination for election was approved by a vote of at least
three quarters (3/4) of the directors comprising the Incumbent
Board shall be considered as though such person were a member of
the Incumbent Board for purposes of this subsection. For purposes
of this Section 13, the term "person" shall include any
individual, corporation, partnership, group, association or other
"person", as such term is used in section 14(d) of the Exchange
Act, other than FNB, any entity in which FNB owns a majority of
the voting interest, or any employee benefit plan(s) sponsored by
FNB.
(b) Termination Following Change in Control.
FNB recognizes that a change in control as defined in Section
13(a) may directly affect the direction and philosophy of FNB. A
change in control may also affect Heath's responsibilities and
position with FNB. Should a change in control occur that results
in Heath being replaced as President and Chief Executive Officer
of FNB, Heath, upon his involuntary termination or if he elects to
terminate his employment within thirty (30) days of the change in
control, shall be entitled to receive in a lump sum within the
aforesaid thirty (30) days of such termination compensation of two
times the base salary he is receiving at the time of termination
of employment. To be eligible for the foregoing benefit Heath
agrees to remain and serve as President and CEO for period of
thirty (30) days following the day upon which the change of
control occurs if requested to do so by the surviving Board of
Directors.
(c) It is expressly understood and agreed that all payments and
benefits provided to Heath which are parachute payments for
federal income tax purposes will be limited so that there are no
excess parachute payments subject to excise tax imposed on Heath
or loss of deductibilities for FNB and its affiliates.
(d) Any termination of Heath, whether involuntary or voluntary,
following a change in control shall be communicated by written
notice of termination ("Notice of Termination") to the other party
hereto. Such Notice of Termination shall specify the date as of
which employment shall terminate ("Date of Termination"), which
Date of Termination shall not be more than sixty (60) days from
the date of the Notice of Termination.
14. Notices. All notices, requests, demands or other communications
hereunder shall be deemed to have been given if delivered in
writing personally or by certified mail to each party at the
address set forth below, or at such other address as each party
may designate in writing to the other:
If to FNB:
Executive Committee
FNB Corporation
000 Xxxxx Xxxxx
Xxxxxxxxxxxxxx, XX 00000-0000
If to Heath:
Xxxxxxx X. Xxxxx, Xx.
0000 Xxxxxxxxx Xxxx
Xxxxx, XX 00000
15. Entire Agreement. This Agreement contains the entire
understanding of the parties with respect to the subject matter
hereof, supersedes all prior agreements between the parties, and
may not be changed or terminated orally. No change, termination,
or attempted waiver of any of the provisions hereof or thereof
shall be binding unless in writing and signed by the party against
whom the same is sought to be enforced.
16. Severability. In the event that any one or more of the
provisions of this Agreement shall be declared to be illegal or
unenforceable under any law, rule or regulation of any government
having jurisdiction over the parties hereto, such illegality or
unenforceability shall not affect the validity and enforceability
of the other provisions of this Agreement.
17. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
18. Governing Law. All matters concerning the validity and
interpretation of and performance under this Agreement shall be
governed by the laws of the Commonwealth of Virginia.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement of this
16th day of December 2004.
FNB CORPORATION
By: /s/Xxxxxxx X. Xxxx
Name: Xxxxxxx X. Xxxx
Title: Chairman of the Board of Directors
By: /s/Xxxxxxx X. Xxxxx, Xx.
Name: Xxxxxxx X. Xxxxx, Xx.
Title: President and CEO
Schedule 4(a)
FNB CEO COMPENSATION - 2005
FORMULA:
Base Salary $248,000
Bonus Compensation
Base Pool $ 60,000
Target Performance Criteria
Bonus Criteria Pool Allocation
1. XXX Budgeted $ 9,000
2. ROA Budgeted $ 9,000
3. Earnings Budgeted $ 4,500
4. Assets 8% Growth $ 4,500
5. CAMELS 1 $ 9,000
6. Subjective Comp Committee Recommendation $24,000
1. XXX measured on a cash basis.
2. ROA measured on a cash basis.
3. Budgeted earnings approved by the Corporate Board of Directors.
4. Excluding acquisitions and mergers.
5. Bonus payable for each institution receiving CAMELS 1 rating.
6. Compensation Committee recommendation could range for 0 - $24,000.
Criteria would include, but not be limited to, CEO accomplishments
in management development, community relations, stockholder
relations, regulatory relations, and industry relations.
Total potential compensation, assuming one CAMELS 1 rating and maximum
allowance by Compensation Committee: $308,000
KOC ________ WPH, Jr. ________
