Exhibit 10.17
EMPLOYMENT AND CHANGE
OF CONTROL AGREEMENT
THIS EMPLOYMENT AND CHANGE OF CONTROL AGREEMENT (this "Agreement") is made
and entered into this 1st day of July, 2004 by and among FNB Financial Services
Corporation, a North Carolina corporation ("FNB"), FNB Southeast, a North
Carolina commercial bank ("Bank"), and Xxxxxxxx X. Xxxxxxx ("Executive").
BACKGROUND
WHEREAS, Executive is the Executive Vice President and Chief Operating
Officer of FNB and pursuant hereto is employed as the President of the Bank, the
banking subsidiary of FNB; and
WHEREAS, the expertise and experience of Executive, his knowledge of the
affairs of FNB, the Bank and the Bank's subsidiaries, and his relationships and
reputation in the financial institutions industry are extremely valuable to FNB
and the Bank; and
WHEREAS, it is in the best interests of FNB, the Bank and FNB's
shareholders to maintain an experienced and sound executive management team to
manage FNB and the Bank and to further FNB's overall strategies to protect and
enhance the value of its shareholders' investments; and
WHEREAS, FNB, the Bank and Executive desire to enter into this Agreement
to establish the scope, terms and conditions of Executive's employment by FNB
and 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)
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(c)
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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)
Welfare Benefit Plans Section 6(d)
3. Employment. Executive is employed as the Executive Vice President and
Chief Operating Officer of FNB and pursuant hereto is employed as the President
and Chief Operating Officer of the Bank. In addition, Executive shall be the
President and Chief Executive Officer of the subsidiaries of the Bank and the
subsidiaries of FNB other than 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 publicly
held corporations generally and of holding companies and institutions that are a
part of the financial institution industry specifically. In his executive
capacities Executive shall report to the Board of Directors of FNB or the Bank,
as applicable.
4. Employment Period. Unless earlier terminated in accordance with
Sections 7 or 9 hereof, Executive's employment shall be for a thirty (30) month
term beginning as of the Effective Date and ending as of December 31, 2006 (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 FNB and 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, FNB and/or the Bank
will pay to Executive a base salary at the rate of at least $225,000 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 Compensation Committee of FNB's Board of Directors ("FNB
Board") shall review Executive's total compensation annually and in its sole
discretion may adjust Executive's Base Salary from year to year, but during the
Employment Period neither the Compensation Committee, the FNB Board nor the
Board of Directors of the Bank (the "Bank Board") may decrease Executive's Base
Salary below $225,000, and periodic increases, once granted, shall not be
subject to revocation. The annual review of Executive's total compensation by
the Compensation Committee 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, other than
the President and Chief Executive Officer of FNB, who is a member of the senior
executive management of FNB and/or the Bank.
(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, other than the President and Chief Executive Officer of FNB,
who is a member of the senior executive management of FNB and/or the Bank.
(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 ("Welfare Benefit Plans").
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(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 FNB and/or 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 FNB and the Bank in effect for their senior
executive employees. In addition, he shall be entitled to an annual automobile
allowance payment of $12,000. FNB and the Bank shall pay the operating expenses
of such automobile.
(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 FNB and
the Bank. In addition, Executive shall receive up to five (5) business days of
paid leave to attend continuing education programs in order to maintain his
status as a certified public accountant.
(h) Allocation. FNB and the Bank may allocate between them for
accounting and taxation purposes the payment of compensation to Executive under
this Agreement on the basis of such factors as they deem relevant and
appropriate; provided, however, that FNB and the Bank shall be jointly and
severally liable and obligated to fulfill all obligations to Executive under
this Agreement.
7. Termination of Employment (Other Than In Connection With A Change Of
Control).
(a) Death or Disability. Executive's employment with FNB and the
Bank shall terminate automatically upon Executive's death during the Employment
Period. If the FNB Board and the Bank Board determine in good faith that the
Disability of Executive has occurred during the Employment Period (pursuant to
the definition of Disability set forth below), they may give to Executive
written notice in accordance with Section 7(d) and 15(g) of this Agreement of
their intention to terminate Executive's employment. In such event, Executive's
employment with FNB and 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 30 days after such receipt, Executive shall not have
returned to full-time performance of Executive's duties. For purposes of this
Agreement, "Disability" shall mean the absence of Executive from Executive's
duties with FNB and the Bank on a full-time basis for 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 FNB Board
and the Bank Board, or the insurers of FNB and the Bank, and acceptable to
Executive or Executive's legal representative, which acceptance shall not be
unreasonably withheld, subject to (i) FNB's and the Bank's obligations, and
Executive's rights, under (A) the Americans with Disabilities Act, 42 U.S.C.
xx.xx. 1210 et seq., and (B) the Family and Medical Leave Act, 29 U.S.C. xx.xx.
2601 et seq. (and the regulations promulgated under the foregoing Acts), and
(ii) the exclusion from such 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 FNB and the Bank.
(b) Cause. FNB and the Bank may terminate Executive's employment
with FNB and 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 FNB and
the Bank, other than any such failure resulting from
Disability, after a written demand for substantial
performance is jointly delivered to Executive by the FNB
Board and the Bank Board which specifically identifies
the manner in which the FNB Board and the 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 FNB Board and/or the Bank Board after receipt of a
written warning from the applicable Board(s) of
Directors 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.
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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 FNB Board or the Bank Board or based upon the advice of counsel for FNB
or 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 FNB and 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 FNB and 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 FNB and the Bank hereunder or preclude Executive
or FNB and the Bank from asserting such fact or circumstance in enforcing
Executive's or FNB's and the Bank's rights hereunder.
(d) Date of Termination. "Date of Termination" means (i) if
Executive's employment is terminated by FNB and 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 FNB and 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 FNB and 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, FNB and the Bank shall terminate Executive's employment other
than for Cause, death or Disability, (and, in 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) FNB and the Bank shall pay to Executive a lump sum in
cash within 30 days 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"); and
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.
(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, FNB and
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 under the Welfare Benefit Plans
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, Executive
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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, FNB and
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 FNB and the Bank, with interest at 8% per annum
within 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.
(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 ("Options") 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 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 (v) 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 within 30 days of
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 FNB and/or 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, FNB
and the Bank shall pay any premium required for any "qualified beneficiary" to
continue his or her health care coverage in accordance with Title1, 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
"incentive stock options" ("ISOs"), as described in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), 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 within 30 days of
the Date of Termination. 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 FNB and/or the Bank and their families, and on the same basis as such senior
executive employees and their families.
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(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 within 30 days of 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. xx.xx. 1161 et seq.
9. Termination In Connection With a Change of Control.
(a) Change of Control Termination. In the event that during the
Employment Period, FNB and the Bank terminate Executive's employment, other than
for Cause of Disability, require Executive to perform its duties and
responsibilities from a location other than FNB's executive offices 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. ss.
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 that 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) FNB and the Bank shall pay to Executive in a lump sum in
cash within 30 days after the date of the Change In
Control Termination Date the aggregate of the following
amounts:
(A) the sum of the Accrued Obligations;
(B) an amount equal to 2.99 times the total of
Executive's Base Salary;
(C) the product of (x) Executive's aggregate cash
bonus for the last completed fiscal year, whether
paid under Section 6 above and/or otherwise paid
to Executive, and (y) 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; and
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(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, FNB and 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 under the Welfare Benefit Plans 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 FNB or 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. FNB's and 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
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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 benefits under Welfare Benefit Plans
to the extent that Executive obtains other employment shall be limited as
provided in Sections 8(a)(ii). FNB and 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 FNB and 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, Executive
shall not, within the geographic areas composed of the circles surrounding the
Bank's existing banking offices, 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 FNB and 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 FNB
and the Bank other than for Cause, death or Disability (i.e., a termination
without Cause).
13. Assignment and Successors.
30
(a) Executive. This Agreement is personal to Executive and without
the prior written consent of FNB and 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 FNB and the Bank and their respective successors and
assigns. Each of FNB and 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,
"FNB" and the "Bank" shall mean FNB and the Bank as hereinbefore defined and any
successor to their respective businesses and/or assets as aforesaid which
assumes and agrees to perform this Agreement by Operation of law, or otherwise.
14. Regulatory Intervention. Not withstanding anything in this Agreement
to the contrary, the obligations of FNB and 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. ss.
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.
ss. 1818 (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. ss. 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. ss. 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.
(e) With regard to the provisions of this Section 14(a) through (d):
(i) FNB and the Bank agree to use their 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 FNB and/or
the Bank to resume its or their obligations to pay
compensation hereunder, FNB and/or 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.
ss. 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.
(g) It is intended by FNB, the Bank and Executive that if only one
of FNB and the Bank is prohibited from fulfilling its obligations under this
Agreement in any of the circumstances described in the above
31
provisions of this Section 14 (whether for a period or permanently), the other
shall remain obligated to fulfill all obligations of FNB and the Bank under this
Agreement.
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)(ii), 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 FNB or 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 among FNB, the Bank and Executive, with respect to
the subject matter hereof and supercedes 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 of effect.
(f) 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.
(g) 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 FNB and the Bank:
FNB Financial Services Corporation
000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Chairman of the Board
To Executive:
Xxxxxxxx X. Xxxxxxx
0 Xxxxxxx Xxxxx
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.
(h) 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.
32
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 FINANCIAL SERVICES CORPORATION
By: /s/ XXXXX X. XXXXXX
-------------------------------------------
Xxxxx X. Xxxxxx, Chairman of the Board
of Directors
FNB SOUTHEAST
By: /s/ XXXXX X. XXXXXX
-------------------------------------------
Xxxxx X. Xxxxxx, Chairman of the Board
of Directors
EXECUTIVE:
/s/ XXXXXXXX X. XXXXXXX
-------------------------------------------
Xxxxxxxx X. Xxxxxxx
33
