EMPLOYMENT AND CHANGE OF CONTROL AGREEMENT
Exhibit 99.1
EMPLOYMENT AND CHANGE
OF CONTROL AGREEMENT
OF CONTROL AGREEMENT
THIS EMPLOYMENT AND CHANGE OF CONTROL AGREEMENT (this “Agreement”) is made and entered into
this 22nd day of December, 2006 by and between FNB Southeast, a North Carolina
commercial bank (“Bank”) and a wholly owned subsidiary of FNB Financial Services Corporation, a
North Carolina corporation (“FNB”), and Xxxxxxx X. Xxxx, Xx. (“Executive”).
BACKGROUND
WHEREAS, Executive is hereby employed as the Chief Credit Officer and an Executive Vice
President of the Bank; and
WHEREAS, the expertise and experience of Executive and his relationships and reputation in the
financial institutions industry are extremely valuable to the Bank; and
WHEREAS, it is in the best interests of the Bank and FNB’s shareholders to maintain an
experienced and sound executive management team to manage the Bank and to further FNB’s overall
strategies to protect and enhance the value of its shareholders’ investments; and
WHEREAS, the Bank and Executive desire to enter into this Agreement to establish the scope,
terms and conditions of Executive’s employment by the Bank.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements
set forth herein, and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. Effective Date. The effective time and date of this Agreement shall be deemed to
be 12:00:01 o’clock, a.m., on the date of its making set forth above (the “Effective Date”).
2. Definitions. The following defined terms are defined in the referenced Sections of
this Agreement.
| Term | Section | |||
| Accrued Obligations | Section 8(a)(i)(A) | |||
| Base Salary | Section 6(a) | |||
| Bank Board | Section 6(a) | |||
| Benefit Plans | Section 6(c) | |||
| Business | Section 12(a) | |||
| Cause | Section 7(b) | |||
| Change of Control | Section 9(b) | |||
| Change of Control Termination | Section 9(a) | |||
| Change of Control Termination Date | Section 9(a) | |||
| Code | Section 8(c) | |||
| Continuing Period | Section 9(c)(ii) | |||
| Commissioner | Section 14(d) | |||
| Date of Termination | Section 7(d) | |||
| Disability | Section 7(a) | |||
| Disability Effective Date | Section 7(a) |
| Term | Section | |||
| Effective Date | Section 1 | |||
| Employment Period | Section 4 | |||
| FDIC | Section 15(d) | |||
| FNB Board | Section 6(a) | |||
| FNB Group | Section 12(a) | |||
| Group | Section 9(b) | |||
| Incumbent Directors | Section 9(b) | |||
| ISOs | Section 8(b) | |||
| 1934 Act | Section 9(b) | |||
| Notice of Termination | Section 7(c) | |||
| Other Benefits | Section 8(a)(v) | |||
| Options | Section 8(b) | |||
| Person | Section 9(b) | |||
| Remaining Employment Period | Section 8(a)(i)(B) | |||
| Restricted Period | Section 8(a)(iv) | |||
| Section 409A | Section 7(a) | |||
| Terminate | Section 7(a) | |||
| Welfare Benefit Plans | Section 6(d) |
3. Employment. Executive is hereby employed as the Chief Credit Officer and an
Executive Vice President of the Bank. Executive’s responsibilities, duties, prerogatives and
authority in such executive offices, and the clerical, administrative and other support staff and
office facilities provided to him, shall be those customary for persons holding such executive
offices of institutions that are a part of the financial institutions industry. In his executive
capacities Executive shall report to the President and Chief Executive Officer of FNB and the Bank.
4. Employment Period. Unless earlier terminated in accordance with Sections 7 or 9
hereof, Executive’s employment shall be for a thirty-six (36) month term beginning as of the
Effective Date and ending at 11:59:59 o’clock, p.m., on the last day of such term (the “Employment
Period”).
5. Extent of Service. During the Employment Period, and excluding any periods of
vacation, sick or other leave to which Executive is entitled under this Agreement, Executive agrees
to devote reasonable attention and time to the business and affairs of the Bank commensurate with
his offices, and, to the extent necessary to discharge the responsibilities assigned to Executive
hereunder, to use Executive’s reasonable best efforts to perform faithfully and efficiently his
responsibilities and duties under this Agreement.
6. Compensation and Benefits.
(a) Base Salary. During the Employment Period, the Bank will pay to Executive a base
salary at the rate of at least $175,000 per year (“Base Salary”), less normal withholdings, payable
in equal monthly or more frequent installments as are customary under the Bank’s payroll practices
from time to time. The President and Chief Executive Officer of FNB and the Bank shall review
Executive’s total compensation annually and may adjust Executive’s Base Salary from year to year,
but during the Employment Period neither the President and Chief Executive Officer of FNB and the
Bank, the Compensation Committee of the Boards of FNB and the Bank, the Board of Directors of FNB
(“FNB Board”) nor the Board of Directors of the Bank (the “Bank Board”) may decrease Executive’s
Base Salary below $175,000, and periodic increases, once granted, shall not be subject to
revocation. The annual review of Executive’s total compensation by the President and Chief
Executive Officer of FNB and the Bank will consider, among other things, changes in the cost of
living, Executive’s own performance and FNB’s consolidated performance.
(b) Incentive Plans. During the Employment Period, Executive shall be entitled (i) to
participate in all of executive management incentive plans of FNB and/or the Bank, and any
successor or substitute plans; (ii) to participate in long-term incentive plans of FNB and/or the
Bank, and any successor or substitute plans; and, (iii) to participate in all stock option, stock
grant and similar plans of FNB, and any successor or substitute plans, in each of the foregoing
cases in at least as favorable a manner as any participant who is a member of the senior executive
management of the Bank at the same level as Executive.
(c) Savings and Retirement Plans. During the Employment Period, Executive shall be
entitled to participate in all savings, pension and retirement plans (including supplemental
retirement plans), practices, policies and programs applicable generally to senior executive
employees of FNB and/or the Bank (the “Benefit Plans”), and on at least as favorable a basis as any
other participant who is a member of the senior executive management of the Bank at the same level
as Executive.
(d) Welfare Benefit Plans. During the Employment Period, Executive and/or Executive’s
family, as the case may be, shall be eligible for participation in and shall receive all benefits
under all welfare benefit plans, practices, policies and programs provided by FNB and/or the Bank
(including, without limitation, medical, hospitalization, prescription, dental, disability,
employee life, group life, accidental death and dismemberment, and travel accident insurance plans
and programs) to the extent applicable generally to senior executive employees of the Bank
(“Welfare Benefit Plans”).
(e) Expenses. During the Employment Period, Executive shall be entitled to receive
prompt reimbursement for all reasonable expenses incurred by Executive in accordance with the
policies, practices and procedures of FNB and the Bank to the extent applicable generally to other
senior executive employees of the Bank.
(f) Fringe and Similar Benefits. During the Employment Period, Executive shall be
entitled to fringe benefits in accordance with the plans, practices, programs and policies of the
Bank in effect for its senior executive employees.
(g) Vacation, Sick and Other Leave. During the Employment Period, Executive shall be
entitled annually to a minimum of twenty (20) business days of paid vacation and shall be entitled
to those number of business days of paid disability, sick and other leave specified in the
employment policies of the Bank.
7. Termination of Employment (Other Than In Connection With A Change Of Control).
(a) Death or Disability. Executive’s employment with the Bank shall Terminate
automatically upon Executive’s death during the Employment Period. If the Bank Board determines in
good faith that the Disability of Executive has occurred during the Employment Period (pursuant to
the definition of Disability set forth below), it may give to Executive written notice in
accordance with Section 7(d) and 15(g) of this Agreement of its intention to Terminate Executive’s
employment. In such event, Executive’s employment with the Bank shall Terminate effective on the
60th day after receipt of such written notice by Executive (the “Disability Effective Date”),
provided that, within the thirty (30) days after such receipt, Executive shall not have returned to
full-time performance of Executive’s duties. For purposes of this Agreement, Terminate shall mean,
when used in connection with a cessation of employment, that the Executive has incurred a
separation from service as defined in Section 409A of the Internal Revenue Code of 1986, as amended
(“Section 409A”). For purposes of this Agreement, “Disability” shall mean the absence of Executive
from Executive’s duties with the Bank on a full-time basis for ninety (90) consecutive business
days as a result of incapacity due to mental or physical illness or injury which is determined to
be total and permanent by a physician selected by the Bank Board, or the insurers of the Bank, and
acceptable to Executive or Executive’s legal representative, which acceptance shall not be
unreasonably withheld, subject to (i) the Bank’s obligations, and Executive’s rights, under (A) the
Americans With Disabilities Act, 42 U.S. C. §§ 1210 et seq., and (B) the Family and Medical Leave
Act, 29 U. S.C. §§ 2601 et seq. (and the regulations promulgated under the foregoing Acts), and
(ii) the exclusion from such ninety (90) business day calculation of any business days constituting
vacation days under Section 6(g) and any business days which an employee is permitted to be absent
under the disability, sick or other leave policies of the Bank.
(b) Cause. The Bank may Terminate Executive’s employment with the Bank for Cause.
For purposes of this Agreement, “Cause” shall mean:
| (i) | the willful and continued failure of Executive to perform substantially Executive’s duties with the Bank, other than any such failure resulting from Disability, after a written demand for substantial performance is delivered to Executive by the President and Chief Executive Officer or Bank Board which specifically identifies the manner in which the President and Chief Executive Officer or Bank Board believe that Executive has not substantially performed Executive’s duties; | ||
| (ii) | the willful engaging by Executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to FNB and the Bank; | ||
| (iii) | continued insubordination with respect to directives of the Bank Board and/or the President and Chief Executive Officer of FNB and the Bank after receipt of a written warning from the Bank or the President and Chief Executive Officer, as applicable, with respect thereto; or | ||
| (iv) | a willful act by Executive which constitutes a material breach of his fiduciary duty to FNB and/or the Bank which is intended by Executive to injure the reputation or business of FNB and/or the Bank. |
For purposes of this provision, no act or failure to act on the part of Executive shall be
considered “willful” unless it is done, or omitted to be done, by Executive in bad faith or without
reasonable belief that Executive’s action or omission was in the best interests of FNB and the
Bank. Any act, or failure to act, based upon authority given pursuant to resolutions duly adopted
by the Bank Board or based upon the
advice of counsel for the Bank shall be conclusively presumed to be done, or omitted to be done, by
Executive in good faith and in the best interests of FNB and the Bank and to not constitute
insubordination.
(c) Notice of Termination. Any Termination by the Bank for Disability or Cause shall
be communicated by Notice of Termination to the other party thereto given in accordance with
Section 15(g) of this Agreement. For purposes of this Agreement, a “Notice of Termination” means a
written notice which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive’s employment under the provision so
indicated, and (iii) if the Date of Termination (as defined below) is other than the date of
receipt of such notice, specifies the Termination date (which date shall be not more than 30 days
after the giving of such notice except as otherwise provided in Section 7(a)). The failure by the
Bank to set forth in the Notice of Termination any fact or circumstance which contributes to a
showing of Disability or Cause shall not waive any right of Executive or the Bank hereunder or
preclude Executive or the Bank from asserting such fact or circumstance in enforcing Executive’s or
the Bank’s rights hereunder.
(d) Date of Termination. “Date of Termination” means (i) if Executive’s employment is
Terminated by the Bank for Cause, the date of receipt of the Notice of Termination or any later
date specified therein, as the case may be, (ii) if Executive’s employment is Terminated by the
Bank other than for Cause or Disability or other than by reason of death, the date of receipt of
the Notice of Termination, and (iii) if Executive’s employment is Terminated by reason of death or
Disability, the Date of Termination shall be the date of death of Executive or the Disability
Effective Date, as the case may be.
8. Obligations of the Bank Upon Termination (Other Than In Connection With A Change Of
Control).
(a) Other Than For Cause, Death or Disability. If, during the Employment Period, the
Bank shall Terminate Executive’s employment other than for Cause, death or Disability (and, in the
cases of Cause or Disability, other than in connection with a Change of Control), then in
consideration of Executive’s services rendered prior to such Termination;
(i) The Bank shall pay to Executive a lump sum in cash on the 30th day after the Date of
Termination the aggregate of the following amounts:
| A. | the sum of (1) Executive’s Base Salary through the Date of Termination to the extent not theretofore paid, and (2) any accrued vacation and sick leave pay, in each case to the extent not theretofore paid (the sum of the amounts described in clauses (1) and (2) shall be hereinafter referred to as the “Accrued Obligations”); | ||
| B. | the amount equal to the product of (1) the number of days remaining in the Employment Period from and after the Date of Termination (the “Remaining Employment Period”), and (2) Executive’s Base Salary divided by 365; and | ||
| C. | the product of (1) Executive’s aggregate cash bonus for the last completed fiscal year, whether paid to Executive under Section 6 above or otherwise paid to Executive, and (2) a Fraction, the |
| numerator of which is the number of days in the current fiscal year through the Date of Termination and the denominator of which is 365. |
| (ii) | for the Remaining Employment Period, or such longer period as may be provided by the terms of the appropriate plan, program, practice or policy, the Bank shall continue to provide benefits to Executive and/or Executive’s family at least equal to those which would have been provided to them in accordance with the Welfare Benefit Plans described in Section 6(d) of this Agreement if Executive’s employment had not been terminated; provided, however, that if Executive becomes re-employed with another employer and is eligible to receive substantially the same benefits under the other employer’s plans as Executive would receive under the Welfare Benefit Plans under this item (ii), the benefits provided under this item (ii) shall be secondary to those provided under such other employer’s plans during such applicable period of eligibility. For purposes of determining eligibility and years-of-service credit (but not the time of commencement of benefits) of Executive for retiree benefits pursuant to such Welfare Benefit Plans, to the extent permitted by the terms of the Welfare Benefit Plans, Executive shall be considered to have remained employed throughout the Remaining Employment Period and to have retired on the last day of such period; and | ||
| (iii) | to the extent not theretofore paid or provided, the Bank shall timely pay or provide to Executive any other amounts or benefits required to be paid or provided herein or which Executive is eligible to receive under any Welfare Benefit Plan or any other plan, program, policy or practice or contract or agreement of FNB or the Bank (such other amounts and benefits shall be hereinafter referred to as the “Other Benefits”); | ||
| (iv) | provided, however, that notwithstanding any provision of this Agreement to the contrary, Executive shall forfeit his right to receive, or, to the extent such amounts have previously been paid to Executive, shall repay in full to the Bank, with interest at 8% per annum within thirty (30) days of a final determination of Executive’s liability therefor as set forth below, the sum of the amounts described in Section 8(a)(i)(A) and (B) of this Agreement if any time during the Employment Period or the Remaining Employment Period (the “Restricted Period”) Executive violates the restrictive covenants set forth in Section 12 of this Agreement. Any determination of whether Executive has violated such covenants shall be made by arbitration in Greensboro, North Carolina under the Rules of Commercial Arbitration (the “Rules”) of the American Arbitration Association, which Rules are deemed to be incorporated by reference herein. |
Further provided, however, that if the Executive is a “specified employee”
as defined in Section 409A, then the payment(s) under this Section 8(a)
shall be made and/or shall begin on the first day of the seventh month
following the date of the Executive’s Termination if so required by Section
409A.
(b) Death. If Executive’s employment is Terminated by reason of Executive’s death
during the Employment Period, this Agreement shall terminate without further obligations to
Executive’s legal representatives under this Agreement, except that; (i) Accrued Obligations shall
timely be paid as provided below; (ii) Other Benefits shall be timely paid or provided as described
below; (iii) all stock options that are “incentive stock options” (“ISOs”), as described in Section
422 of the Internal Revenue Code of 1986, as amended (the “Code”), previously granted to Executive
that vested at or prior to the Date of Termination shall remain exercisable for the longer of
twelve (12) months and the exercise period in effect immediately prior to the Date of Termination;
(iv) all nonqualified stock options shall remain exercisable for the period of exercise in effect
immediately prior to the Date of Termination; (v) all Options previously granted to Executive and
scheduled to vest in the year of death shall immediately vest and be exercisable for the exercise
period set forth in the applicable grants; and (vi) Executive’s rights to all benefits under all
Benefit Plans that are “non-qualified” plans shall be 100% vested, regardless of Executive’s age or
years of service, at the time of Executive’s death. Accrued Obligations shall be paid to
Executive’s estate or beneficiary, as applicable, in a lump sum in cash on the 30th day
after the Date of Termination. With respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 8(b) shall include, without limitation, and Executive’s estate
and/or beneficiaries shall be entitled to receive, all benefits under FNB’s and the Bank’s plans,
programs, practices and policies relating to death benefits, if any, as are applicable generally to
senior executive employees of the Bank and their beneficiaries, and on the same basis as such
senior executive employees and their beneficiaries. Without limiting the foregoing, for one (1)
year after Executive’s death, the Bank shall pay any premium required for any “qualified
beneficiary” to continue his or her health care coverage in accordance with Title 1, Part 6 of the
Employee Retirement Security Act of 1974, as amended.
(c) Disability. If Executive’s employment is Terminated by reason of Executive’s
Disability during the Employment Period, this Agreement shall terminate without further obligations
to Executive, except that: (i) Accrued Obligations shall be timely paid as provided below; (ii)
Other Benefits shall be timely paid or provided as described below; (iii) all Options that are ISOs
and that vested at or prior to the Date of Termination shall remain exercisable for the lesser of
twelve (12) months and the period of exercise in effect immediately prior to the Date of
Termination; (iv) all Options previously granted and scheduled to vest in the year in which the
Date of Termination occurs shall immediately vest and be exercisable (A) in the case of ISOs, for
twelve (12) months from the Date of Termination, and (B) in the case of Options that are not ISOs,
for the exercise period set forth in the applicable grant; and (v) all other Options that vested at
or prior to the Date of Termination shall remain exercisable for the period of exercise in effect
immediately prior to the Date of Termination. Accrued Obligations shall be paid to Executive in a
lump sum in cash on the 30th day after the Date of Termination. Provided, however, that
if the Executive is a “specified employee” as defined in Section 409A, then the payment(s) under
this Section 8(c) shall be made and/or shall begin on the first day of the seventh month following
the date of the Executive’s Termination if so required by Section 409A. With respect to the
provision of Other Benefits, the term Other Benefits as utilized in this Section 8(c) shall
include, without limitation, and Executive shall be entitled after the Date of Termination to
receive, all disability and other benefits under all Welfare Benefit Plans and all other plans,
programs, practices, and policies of FNB and the Bank relating to disability, if any, as are
applicable generally to senior executive employees of the Bank and their families, and on the same
basis as such senior executive employees and their families.
(d) Cause. If Executive’s employment shall be Terminated for Cause during the
Employment Period, this Agreement shall terminate without further obligations to Executive, except
that (i) the Accrued Obligations shall be paid in a lump sum in cash on the 30th day after the Date
of Termination, and (ii) Other Benefits shall be paid or provided in a timely manner, in each case
to the extent theretofore unpaid; provided, however, that Executive’s right to continue to
participate in Welfare Benefit Plans shall terminate on the 30th day following the Date of
Termination, subject to his rights under the Consolidated Omnibus Budget Reconciliation Act of
1985, 29 U.S.C. §§ 1161 et seq. Further
provided, however, that if the Executive is a “specified employee” as defined in Section 409A, then
the payment(s) under this Section 8(d) shall be made and/or shall begin on the first day of the
seventh month following the date of the Executive’s Termination if so required by Section 409A.
9. Termination In Connection With a Change of Control.
(a) Change of Control Termination. In the event that during the Employment Period,
the Bank Terminates Executive’s employment, other than for Cause or Disability, or the Executive
Terminates his employment because the Bank requires Executive to perform his duties and
responsibilities from a location other than FNB’s executive officers in Greensboro, North Carolina
or reduce his duties, responsibilities, prerogatives and authority as set forth in Section 3, in
any such case at the time of or within one (1) year after a Change of Control (each a “Change of
Control Termination”), Executive shall be entitled to receive the payments and benefits specified
in this Section 9. The date on which FNB and the Bank or Executive receives notice in accordance
with Section 15(g) of a Change of Control Termination shall be deemed the “Change of Control
Termination Date.”
(b) Definition of Change of Control. A “Change of Control” shall be deemed to have
occurred upon (i) any “Person” or “Group” (as defined in or pursuant to Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the “1934 Act”), but not including FNB, the Bank,
any subsidiary of either FNB or the Bank, or any “employee benefit plan” (as defined in or pursuant
to the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1002(3), and as used herein
“Person” or “Group”) becoming the “beneficial owner” (as defined in Rule 13d-3 under the 0000 Xxx)
or otherwise acquiring control, directly or indirectly, of securities of FNB representing
twenty-five percent (25%) or more of the voting power of FNB’s then outstanding securities; (ii)
the acquisition by any Person or Group in any manner of the ability to elect, or to control the
election, of a majority of the directors of FNB or the Bank; (iii) the merger of FNB or the Bank
into another entity, the merger of any entity into FNB or the Bank or the acquisition of assets by
FNB or the Bank, in any such case with the result that the beneficial owners of FNB’s outstanding
securities immediately prior to such transaction do not beneficially own more than sixty percent
(60%) of FNB’s outstanding securities after the consummation of such transaction; (iv) the sale or
other transfer of more than fifty percent (50%) of the assets of FNB or the Bank to any entity not
controlled by FNB; (v) the consummation of any transaction by FNB or the Bank that results (A) in
the majority of either the FNB Board or the Bank Board after the consummation of such transaction
not being composed of Incumbent Directors or (B) the beneficial owners of FNB’s outstanding
securities immediately prior to the consummation of such a transaction not beneficially owning more
than sixty percent (60%) of FNB’s outstanding securities after such transaction; or (vi) the
occurrence of any other event or circumstance which is not described in the foregoing provisions of
this Section 9(b) but which the FNB Board determines affects control of FNB and/or the Bank and
constitutes a Change of Control for purposes of this Agreement. The term “Incumbent Director”
shall mean any director who as of the Effective Date was a member of the FNB Board or the Bank
Board, or any individual becoming a member of the FNB Board or the Bank Board subsequent to the
Effective Date whose election by FNB’s shareholders or by the shareholder of the Bank, as
applicable, was recommended by at least two-thirds (2/3) of the then Incumbent Directors on the FNB
Board or the Bank Board, as applicable. Notwithstanding the foregoing, a Change of Control shall
not include any transaction to which Executive consents in a writing specifically noting this
provision Of this Agreement.
(c) Change of Control Payments and Benefits. Upon a Change Of Control Termination:
| (i) | The Bank shall pay to Executive in a lump sum in cash on the 30th day after the date of the Change In Control Termination Date, or, if the Executive is a specified employee as defined in Section 409A, then on |
| the first day of the seventh month following the Change in Control Termination Date, the aggregate of the following amounts: |
| (A) | the sum of the Accrued Obligations; and | ||
| (B) | an amount equal to 2.99 times the total of Executive’s Base Salary; provided, however, that if Executive accepts employment by another employer, at an annual base compensation equal to or greater than Executive’s Base Salary, during the Continuing Period (as defined below) and the primary place of such employment is twenty-five (25) or fewer miles from the headquarters of FNB, no payment shall be due under this item (B) and any such payment previously made shall be repaid by Executive. |
| (ii) | for the number of days remaining in the Employment Period from and after the Change of Control Termination Date (the “Continuing Period”), or such longer period as may be provided by the terms of the appropriate plan, program, practice or policy, the Bank shall continue benefits to Executive and/or Executive’s family at least equal to those which would have been provided to them in accordance with the Welfare Benefit Plans described in Section 6(d) of this Agreement if Executive’s employment had not been terminated; provided, however, that if Executive becomes reemployed with another employer and is eligible to receive substantially the same benefits under the other employer’s plans as Executive would receive under the Welfare Benefit Plans under this item (ii), the benefits provided under this item (ii) shall be secondary to those provided under such other plans during such applicable period of eligibility. For purposes of determining eligibility and years-of-service credit (but not the time of commencement of benefits) of Executive for retiree benefits pursuant to such Welfare Benefit Plans, Executive shall be considered to have remained employed through the Continuing Period and to have retired on the last day of such period; and | ||
| (iii) | all Options previously granted to Executive that are unvested as of the Change of Control Termination Date shall be deemed vested, fully exercisable and non-forfeitable as of the Change of Control Termination Date (provided, however, that Options granted less than six (6) months before the Change of Control Termination Date shall not be exercisable until the first day subsequent to the six (6) months following their dates of grant) and all previously granted Options that are vested, but unexercised, on the Change of Control Termination Date shall remain exercisable, in each case for the period during which they would have been exercisable absent the termination of Executive’s employment; and | ||
| (iv) | Executive’s benefits under all Benefit Plans that are non-qualified plans shall be 100% vested, regardless of Executive’s age or years of service, as of the Change of Control Termination Date; and | ||
| (v) | Notwithstanding the foregoing provisions of this Section 9, Executive |
| may waive and release any amount, distribution, acceleration of vesting or other right described in this Section 9, in whole or part, such that the aggregate of all payments, distributions and benefits received by him shall not constitute an “excess parachute payment” within the meaning of Section 280G of the Code subject to the excise tax imposed by Section 4999 of the Code. |
10. Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or limit
Executive’s continuing or future participation in any plan, program, policy, or practice provided
by the Bank and for which Executive may qualify, nor shall anything herein limit or otherwise
affect such rights as Executive may have under any contract or agreement with FNB or the Bank.
Amounts which are vested benefits or which Executive is otherwise entitled to receive under any
plan, policy, practice or program of or any contract or agreement with FNB or the Bank at or
subsequent to a Date of Termination or Change of Control Termination Date shall be payable in
accordance with such plan, policy, practice or program or such contract or agreement except as
explicitly modified by this Agreement.
11. Full Settlement. The Bank’s obligation to make the payments provided for in this
Agreement and otherwise to perform their obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action which FNB or the Bank
may have against Executive or others. In no event shall Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable to Executive under
any of the provisions of this Agreement; provided, however, that Executive’s right to receive any
payment under Section 8(a)(i) and to receive benefits under Welfare Benefit Plans to the extent
that Executive obtains other employment shall be limited as provided in Sections 8(a)(i) and (ii).
The Bank agree to recognize as an indebtedness to Executive and shall pay as incurred all legal
fees and expenses which Executive may reasonably incur as a result of any contest (regardless of
the outcome thereof) by the Bank, Executive or others of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of performance thereof (including
as a result of any contest by Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the “applicable federal rate”
provided for in Section 7872(f)(2)(A) of the Code.
12. Covenants.
(a) Covenant Not to Compete. During the Restricted Period and if Executive’s
employment has been terminated for Cause or by reason of Disability, Executive shall not, within
the geographic areas composed of the circles surrounding the Bank’s banking offices existing from
time to time, with each circle having the applicable banking office as its center point and a
radius of twenty-five (25) miles (the “Territory”), directly or indirectly, in any capacity, render
his services, or engage or have a financial interest in, any business that shall be competitive
with any of those business activities in which FNB, the Bank or any of the Bank’s subsidiaries (the
“FNB Group”) is engaged as of the date of this Agreement, which business activities include the
provision of banking services (collectively, the “Business”); provided, however, that Executive’s
ownership of less than five percent (5%) of the outstanding securities of any entity engaged in the
Business that has a class of securities listed on a securities exchange or qualified for quotation
on any over-the-counter market shall not be a violation of the foregoing.
(b) Covenant Not to Solicit Customers. During the Restricted Period, within the
Territory Executive shall not, directly or indirectly, individually or on behalf of any other
person or entity (other than FNB or the Bank), offer to provide banking services to any person,
partnership, corporation, limited liability company, or other entity who is or was (i) a customer
of any member of the FNB Group during any part of the twelve (12) month period immediately prior to
the Date of Termination, or (ii) a
potential customer to whom any member of the FNB Group offered to provide banking services during
any part of the twelve (12) month period immediately prior to the Date of Termination.
(c) Covenant Not to Solicit Employees. During the Restricted Period, within the
Territory Executive shall not, directly or indirectly, individually or on behalf of any other
person or entity, solicit, recruit or entice, directly or indirectly, any employee of any member of
the FNB Group to leave the employment of such member to work with Executive or with any person,
partnership, corporation, limited liability company or other entity with whom Executive is or
becomes affiliated or associated.
(d) Reasonableness of Scope and Duration. The parties hereto agree that the covenants
and agreements contained in this Section 12 are reasonable in their time, territory and scope, and
they intend that they be enforced, and no party shall raise any issue of the reasonableness of the
time, territory or scope of any such covenants in any proceeding to enforce any such covenants.
(e) Enforceability. Executive agrees that monetary damages would not be a sufficient
remedy for any breach or threatened breach of the provisions of this Section 12, and that in
addition to all other rights and remedies available to the Bank, they shall be entitled to specific
performance and injunctive or other equitable relief as a remedy for any such breach or threatened
breach.
(f) Separate Covenants and Severability. The covenants and agreements contained in
this Section 12 shall be construed as separate and independent covenants. Should any part or
provision of any such covenant or agreement be held invalid, void or unenforceable in any court of
competent jurisdiction, no other part or provision of this Agreement shall be rendered invalid,
void or unenforceable by a court of competent jurisdiction, no other part or provision of this
Agreement shall be rendered invalid, void or unenforceable as a result. If any portion of the
foregoing provisions is found to be invalid or unenforceable by a court of competent jurisdiction
unless modified, it is the intent of the parties that the otherwise invalid or unreasonable term
shall be reformed, or a new enforceable term provided, so as to most closely effectuate the
provisions as is validly possible.
(g) Inapplicability. The provisions of this Section 12 shall not be operative upon,
or be in any way enforceable against Executive at or after, a Change of Control Termination or a
termination of Executive’s employment by the Bank other than for Cause, death or Disability (i.e.,
a termination without Cause).
13. Assignment and Successors.
(a) Executive. This Agreement is personal to Executive and without the prior written
consent of the Bank shall not be assignable by Executive otherwise than by will or the laws of
descent and distribution. This Agreement shall inure to the benefit of and be enforceable by
Executive’s legal representatives.
(b) FNB and the Bank. This Agreement shall inure to the benefit of and be binding
upon the Bank and their respective successors and assigns. The Bank will require any successor to
it (whether direct or indirect, by stock or asset purchase, merger, consolidation or otherwise) to
all or substantially all of its business or more than fifty percent (50%) of its assets to assume
expressly and agree to perform this Agreement in the same manner and to the same extent it would be
required to perform it if no such succession had taken place. As used in this Agreement, the
“Bank” shall mean the Bank as hereinbefore defined and any successor to its businesses and/or
assets as aforesaid which assumes and agrees to perform this Agreement by Operation of law, or
otherwise.
14. Regulatory Intervention. Notwithstanding anything in this Agreement to the
contrary, the obligations of the Bank under this Agreement are subject to the following terms and
conditions:
(a) If the Executive is suspended and/or temporarily prohibited from participating in the
conduct of FNB’s or the Bank’s affairs by a notice served under Section 8(e)(3) or (1) of the
Federal Deposit Insurance Act (12 U.S.C. § 1818 (e)(3) and (g)(1)), FNB’s or the Bank’s obligations
hereunder, as applicable, shall be suspended as of the date of service unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, all of FNB’s and the Bank’s obligations
which were suspended shall be reinstated.
(b) If Executive is removed and/or permanently prohibited from participating in the conduct of
FNB’s or the Bank’s affairs by an order issued under Section 8(e)(4) or (g)(1) of the Federal
Deposit Insurance Act (12 U.S.C. § 1 818 (e)(4) and (g)(1)), all obligations of FNB and the Bank
under this Agreement shall terminate as of the effective date of the order, but vested rights of
the parties shall not be affected.
(c) If the Bank is in default (as defined in Section 3(x)(1) of the Federal Deposit Insurance
Act (12 U.S. C. § 1813 (X)(1)), all obligations of the Bank under this Agreement shall terminate as
of the date of default, but any vested rights of Executive shall not be affected.
(d) All obligations of the Bank under this Agreement shall be terminated, except to the extent
determined that continuation of the contract is necessary for the continued operation of the Bank,
if so ordered by the North Carolina Commissioner of Banks (the “Commissioner”), at the time the
Federal Deposit Insurance Corporation (“FDIC”) enters into an agreement to provide assistance to or
on behalf of the Bank under the authority contained in Section 13 (c) of the Federal Deposit
Insurance Act (12 U.S.C.§ 1823 (c)), or if so ordered by the Commissioner at the time the FDIC
approves a supervisory merger to resolve problems related to operation of the Bank or when the Bank
is determined by the Commissioner to be in an unsafe or unsound condition. Any rights of Executive
that shall have vested under this Agreement shall not be affected by such action. Provided that
any termination of this Agreement, in whole or in part, shall be in compliance with Section 409A to
the extent Section 409A applies to any portion of this Agreement.
(e) With regard to the provisions of this Section 14(a) through (d):
| (i) | The Bank agrees to use its best efforts to oppose any such notice of charges as to which there are reasonable defenses; | ||
| (ii) | In the event the notice of charges is dismissed or otherwise resolved in manner that will permit the Bank to resume its obligations to pay compensation hereunder, the Bank will promptly make such payment hereunder; and | ||
| (iii) | During any period of suspension under Section 14(a), the vested rights of Executive shall not be affected except to the extent precluded by such notice. |
(f) The Bank’s obligations to provide compensation or other benefits to Executive under this
Agreement shall be terminated or limited to the extent required by the provisions of any final
regulation or order of the FDIC promulgated under Section 18(k) of the Federal Deposit Insurance
Act (12 U.S.C. § 1828(k)) limiting or prohibiting any “golden parachute payment” as defined
therein, but only
to the extent that the compensation or payments to be provided by the Bank under this Agreement are
so prohibited or limited.
15. Miscellaneous.
(a) No Mitigation. Executive shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise and, except as
provided in Sections 8(a)(i) and (ii) and 9(C)(i)(B), no such payment shall be offset or reduced by
the amount of any compensation or benefits provided to Executive in any subsequent employment.
(b) Waiver. Failure of either part to insist, in one or more instances, on
performance by the other in strict accordance with the terms and conditions of this Agreement shall
not be deemed a waiver or relinquishment of any right granted in this Agreement or of the future
performance of any such term or condition or of any other term or condition of this Agreement,
unless such waiver is contained in a writing signed by the party making the waiver.
(c) Severability. If any provision or covenant, of any part thereof, of this
Agreement should be held by any court to be invalid, illegal or unenforceable, either in whole or
in part, such invalidity, illegality or unenforceability shall not affect the validity, legality
enforceability of the remaining provisions or covenants, or any part thereof, of this Agreement,
all of which shall remain in full force and effect.
(d) Other Agents. Nothing in this Agreement is to be interpreted as limiting the Bank
from employing other personnel on such terms and conditions as may be satisfactory to it.
(e) Entire Agreement. Except as provided herein, this Agreement contains the entire
agreement between the Bank and Executive with respect to the subject matter hereof and supersedes
and invalidates any previous employment and severance agreements or contracts with Executive. No
representations, inducements, promises or agreements, oral or otherwise, which are not embodied
herein, shall be of any force or effect.
(f) Compliance with Section 409A. It is intended that this Agreement shall conform
with all applicable Section 409A requirements to the extent Section 409A applies to any provisions
of the Agreement. Accordingly, in interpreting, construing or applying any provisions of the
Agreement, the same shall be construed in such manner as shall meet and comply with Section 409A,
and in the event of any inconsistency with Section 409A, the same shall be reformed so as to meet
the requirements of Section 409A.
(g) Governing Law. Except to the extent preempted by federal law, the laws of the
State of North Carolina shall govern this Agreement in all respects, whether as to its validity,
construction, capacity, performance or otherwise.
(h) Notices. All notices, requests, demands and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly given if delivered or
seven (7) days after mailing if mailed, first class, certified mail, postage prepaid:
| To the Bank: | ||
| FNB Southeast | ||
| 000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 000, | ||
| Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000 | ||
| Attention: President and Chief Executive Officer | ||
| To Executive: | ||
| Xxxxxxx X. Xxxx, Xx. | ||
| 0000 Xxxxxxx Xxxxxx | ||
| Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000 |
Any party may change the address to which notices, requests, demands and other communications shall
be delivered or mailed by giving notice thereof to the other party in the same manner provided
herein.
(i) Amendments and Modifications. This Agreement may be amended or modified only by a
writing signed by all parties hereto, which makes specific reference to this Agreement. Provided,
further, that any amendment or modification to this Agreement shall not be adopted unless it
complies with Section 409A to the extent Section 409A applies to this Agreement and/or to the
amendment or modification.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Employment and
Change of Control Agreement as of the date first above written.
| FNB SOUTHEAST | ||||||
| By: | |
|||||
| Xxxxxxxx X. Xxxxxxx President and Chief Executive Officer |
||||||
| EXECUTIVE: | ||||||
| Xxxxxxx X. Xxxx, Xx. | ||||||
