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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") dated as of July 20, 1999,
is made by and between First National Bancorporation, Inc., a South Carolina
corporation (the "Employer" or the "Company") which is the proposed bank holding
company for First National Bank of Spartanburg (Proposed), a proposed national
bank (the "Bank"), and Xxxxx X. Xxxxxxx, an individual resident of South
Carolina (the "Executive").
The Employer is in the process of organizing the Bank, and the
Executive has agreed to serve as President and Chief Executive Officer of the
Bank and the Company. Upon organization of the Bank, the Employer and the
Executive contemplate that this Agreement will be assigned by the Employer to
the Bank and that the Bank will assume the duties of the Company hereunder
(except pursuant to Section 3). Following any such assignment, the term
"Employer" as used herein from time to time shall refer to the Bank.
The Employer recognizes that the Executive's contribution to the growth
and success of the Bank during its organization and initial years of operations
will be a significant factor in the success of the Bank. The Employer desires to
provide for the employment of the Executive in a manner which will reinforce and
encourage the dedication of the Executive to the Bank and promote the best
interests of the Bank and its shareholders. The Executive is willing to serve
the Employer on the terms and conditions herein provided. Certain terms used in
this Agreement are defined in Section 17 hereof.
In consideration of the foregoing, the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Employment. The Employer shall employ the Executive, and the
Executive shall serve the Employer, as President and Chief Executive Officer of
the Bank and the Company upon the terms and conditions set forth herein. The
Executive shall also serve on the Board of Directors of the Company and the
Bank. The Executive shall have such authority and responsibilities consistent
with his position as are set forth in the Company's or the Bank's Bylaws or
assigned by the Company's or the Bank's Board of Directors (the "Board") from
time to time. The Executive shall devote his full business time, attention,
skill and efforts to the performance of his duties hereunder, except during
periods of illness or periods of vacation and leaves of absence consistent with
Bank policy. The Executive may devote reasonable periods to service as a
director or advisor to other organizations, to charitable and community
activities, and to managing his personal investments, provided that such
activities do not materially interfere with the performance of his duties
hereunder and are not in conflict or competitive with, or adverse to, the
interests of the Company or the Bank.
2. Term. Unless earlier terminated as provided herein, the
Executive's employment under this Agreement shall commence on the date hereof
and be for a term (the "Term") of three years. At the end of each year of the
Term, the Term shall be extended for an additional year so
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that the remaining term shall continue to be three years; provided that the
Executive or the Bank may at any time, by written notice, fix the Term to a
finite term of three years commencing with the year of the notice.
Notwithstanding the foregoing, the Term of employment hereunder will end on the
date that the Executive attains the retirement age, if any, specified in the
Bylaws of the Bank for directors of the Bank.
3. Compensation and Benefits.
(a) Executive's annual salary is $99,500, plus his
medical insurance premium. The salary will increase to $110,000 per year on day
the bank opens for business. The Board (or an appropriate committee of the
Board) shall review the Executive's salary at least annually and may increase
the Executive's salary if it determines in its sole discretion that an increase
is appropriate.
(b) The Executive shall receive a cash bonus in the
amount of $10,000 on the date that the Bank opens for business (the "Opening
Date"). For each anniversary of the Opening Date thereafter, the Executive shall
be eligible to receive a cash bonus equaling up to 5% of the net pretax
consolidated income of the Company (determined in accordance with generally
accepted accounting principals) if the Bank achieves certain performance levels
established by the board of directors from time to time (the "Bonus Plan").
(c) The Executive shall participate in the Bank's
long-term equity incentive program and be eligible for the grant of stock
options, restricted stock, and other awards thereunder or under any similar plan
adopted by the Company. As soon as an appropriate stock option plan is adopted
by the Board, the Company shall grant to the Executive an option to purchase a
number of shares of Common Stock equal to 5% of the number of shares sold in the
offering. The award agreement for the stock option shall provide that one-fifth
of the shares subject to the option will vest on each of the first five
anniversaries of the Opening Date, but only if the Executive remains employed by
the Company on such date, and shall contain other customary terms and
conditions. Nothing herein shall be deemed to preclude the granting to the
Executive of warrants or options under a director option plan in addition to the
options granted hereunder.
(d) The Executive shall participate in all retirement,
welfare and other benefit plans or programs of the Employer now or hereafter
applicable generally to employees of the Employer or to a class of employees
that includes senior executives of the Employer.
(e) The Employer shall provide the Executive with a term
life insurance policy providing for death benefits totaling $500,000 payable to
the Executive's spouse and heirs (and may provide for additional death benefits
of up to $500,000 payable to the Employer), and the Executive shall cooperate
with the Employer in the securing and maintenance of such policy. The Employer
shall also pay for an accident liability policy on the Executive totaling
$1,000,000 to protect the Employer from damages or lawsuits resulting from
injuries to third parties caused by the Executive.
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(f) Prior to the Opening Date, the Employer shall provide
the Executive with a reasonable allowance each month for an automobile.
Beginning upon the Opening Date, the Company shall provide Executive with either
an automobile (at a cost not to exceed $30,000) owned or leased by the Company
of a make and model appropriate to the Executive's status, or a monthly
automobile allowance not to exceed $700 per month. The Company shall provide for
reasonable expenses associated with the automobile, including, but not limited
to insurance, taxes, etc.
(g) In addition, commencing on the Opening Date, the
Employer shall pay Executive's membership dues pertaining to an area country
club and The Piedmont Club for so long as the Executive remains the President
and CEO of the Employer and this Agreement remains in force.
(h) The Employer shall reimburse the Executive for
reasonable travel and other business development expenses related to the
Executive's duties which are incurred and accounted for in accordance with the
normal practices of the Employer.
4. Termination.
(a) The Executive's employment under this
Agreement may be terminated prior to the end of the Term only as follows:
(i) upon the death of the Executive;
(ii) upon the disability of the Executive for a
period of 180 days which, in the opinion of the Board of
Directors, renders him unable to perform the essential
functions of his job and for which reasonable accommodation
is unavailable. For purposes of this Agreement, a
"disability" is defined as a physical or mental impairment
that substantially limits one or more major life activities,
and a "reasonable accommodation" is one that does not impose
an undue hardship on the Employer;
(iii) by the Employer for Cause upon delivery of a
Notice of Termination to the Executive;
(iv) by the Executive by Notice of Termination
which follows a Change in Control and either (i) follows the
occurrence of a Good Reason or (ii) is delivered within a
90-day period beginning on the one year anniversary of the
occurrence of a Change in Control;
(v) by the Employer if its effort to organize
the Bank is abandoned;
(vi) by the Executive effective upon the 30th
day after delivery of a Notice of
Termination; or
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(vii) by the Employer effective upon the 30th day
after delivery of a Notice of Termination.
(b) If the Executive's employment is terminated
because of the Executive's death under Section 4(a)(i), the Executive's estate
shall receive any sums due him as base salary and/or reimbursement of expenses
through the end of the month during which death occurred, plus any bonus earned
or accrued under the Bonus Plan through the date of death (including any amounts
awarded for previous years but which were not yet vested) and a pro rata share
of any bonus with respect to the current fiscal year which had been earned as of
the date of the Executive's death.
(c) During the period of any incapacity leading
up to the termination of the Executive's employment under Section 4(a)(ii), the
Employer shall continue to pay the Executive his full base salary at the rate
then in effect and all perquisites and other benefits (other than any bonus)
until the Executive becomes eligible for benefits under any long-term disability
plan or insurance program maintained by the Employer, provided that the amount
of any such payments to the Executive shall be reduced by the sum of the
amounts, if any, payable to the Executive for the same period under any
disability benefit or pension plan of the Employer or any of its subsidiaries.
Furthermore, the Executive shall receive any bonus earned or accrued under the
Bonus Plan through the date of incapacity (including any amounts awarded for
previous years but which were not yet vested) and a pro rata share of any bonus
with respect to the current fiscal year which had been earned as of the date of
the Executive's incapacity.
(d) If the Executive's employment is terminated
for Cause under Section 4(a)(iii), or if the Executive resigns under Section
4(a)(vi), the Executive shall receive any sums due him as base salary and/or
reimbursement of expenses through the date of such termination.
(e) If the Executive's employment is terminated
by the Executive pursuant to clause 4(a)( iv), in addition to other rights and
remedies available in law or equity, the Executive shall be entitled to the
following:
(i) the Employer shall pay the Executive in cash
within fifteen days of the date of termination severance
compensation in an amount equal to his then current monthly
base salary multiplied by [12, 18, 24], plus any bonus earned
or accrued under the Bonus Plan through the date of
termination (including any amounts awarded for previous years
but which were not yet vested) and a pro rata share of any
bonus with respect to the current fiscal year which had been
earned as of the date of termination.
(ii) for a period of one year, the Employer shall
at its expense continue on behalf of the Executive and his
dependents and beneficiaries the life insurance, disability,
medical, dental, and hospitalization benefits provided (x) to
the Executive at any time during the 90-day period prior to
the Change in Control or at any time thereafter or (y) to
other similarly situated executives who continue in the employ
of the Employer during the Continuation Period. Such coverage
and benefits (including
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deductibles and costs) shall be no less favorable to the Executive and
his dependents and beneficiaries than the most favorable of such
coverages and benefits during any of the periods referred to above.
The Employer's obligation hereunder with respect to the foregoing
benefits shall be limited to the extent that the Executive obtains any
such benefits pursuant to a subsequent employer's benefit plans, in
which case the Employer may reduce the coverage of any benefits it is
required to provide the Executive hereunder as long as the aggregate
coverages and benefits of the combined benefit plans is no less
favorable to the Executive than the coverages and benefits required to
be provided hereunder. This subsection (ii) shall not be interpreted
so as to limit any benefits to which the Executive or his dependents
or beneficiaries may be entitled under any of the Employer's employee
benefit plans, programs, or practices following the Executive's
termination of employment, including, without limitation, retiree
medical and life insurance benefits; and
(iii) the restrictions on any outstanding
incentive awards (including restricted stock) granted to the Executive
under the Company's or the Bank's long-term equity incentive program
or any other incentive plan or arrangement shall lapse and such awards
shall become 100% vested, all stock options and stock appreciation
rights granted to the Executive shall become immediately exercisable
and shall become 100% vested, all performance units granted to the
Executive shall become 100% vested, and the restrictive covenants
contained in Section 9 shall not apply to the Executive.
(f) If the Executive's employment is terminated pursuant
to Section 4(a)(v), the Employer shall pay to the Executive severance
compensation in an amount equal to 100% of his then current monthly base salary
each month for three months from the date of termination and this Agreement
shall be terminated in its entirety, including the effects of Section 9 below.
(g) If the Employer terminates the Executive's
employment pursuant to clause 4(a)(vii), the Employer shall pay to the
Executive severance compensation in an amount equal to 100% of his then current
monthly base salary each month for [12, 18, 24] months from the date of
termination, plus any bonus earned or accrued under the Bonus Plan through the
date of termination (including any amounts awarded for previous years but which
were not yet vested) and a pro rata share of any bonus with respect to the
current fiscal year which had been earned as of the date of the Executive's
termination.
(h) With the exceptions of the provisions of this
Section 4, and the express terms of any benefit plan under which the Executive
is a participant, it is agreed that, upon termination of the Executive's
employment, the Employer shall have no obligation to the Executive for, and the
Executive waives and relinquishes, any further compensation or benefits
(exclusive of COBRA benefits). Unless otherwise stated in this Section 4, the
effect of termination on any outstanding incentive awards, stock options, stock
appreciation rights, performance units, or other incentives shall be governed
by the terms of the applicable benefit or incentive plan and/or the agreements
governing such incentives. At the time of termination of employment, the
Employer and the Executive shall enter into a mutually satisfactory form of
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release acknowledging such remaining obligations and discharging both parties,
as well as the Employer's officers, directors and employees with respect to
their actions for or on behalf of the Employer, from any other claims or
obligations arising out of or in connection with the Executive's employment by
the Employer, including the circumstances of such termination.
(i) In the event that the Executive's employment is
terminated for any reason, the Executive shall tender his resignation as a
director of the Employer and effective as of the date of termination.
(j) The parties intend that the severance payments and
other compensation provided for herein are reasonable compensation for the
Executive's services to the Employer and shall not constitute "excess parachute
payments" within the meaning of Section 280G of the Internal Revenue Code of
1986 and any regulations thereunder. In the event that the Employer's
independent accountants acting as auditors for the Employer on the date of a
Change in Control determine that the payments provided for herein constitute
"excess parachute payments," then the compensation payable hereunder shall be
increased, on a tax gross-up basis, so as to reimburse the Executive for the
tax payable by the Executive, pursuant to Section 4999 of the Internal Revenue
Code, on such "excess parachute payments," taking into account all taxes
payable by the Executive with respect to such tax gross-up payments hereunder,
so that the Executive shall be, after payment of all taxes, in the same
financial position as if no taxes under Section 4999 had been imposed upon him.
5. Ownership of Work Product. The Employer shall own all Work
Product arising during the course of the Executive's employment (prior, present
or future). For purposes hereof, "Work Product" shall mean all intellectual
property rights, including all Trade Secrets, U.S. and international
copyrights, patentable inventions, and other intellectual property rights in
any programming, documentation, technology or other work product that relates
to the Employer, its business or its customers and that Executive conceives,
develops, or delivers to the Employer at any time during his employment, during
or outside normal working hours, in or away from the facilities of the
Employer, and whether or not requested by the Employer. If the Work Product
contains any materials, programming or intellectual property rights that the
Executive conceived or developed prior to, and independent of, the Executive's
work for the Employer, the Executive agrees to point out the pre-existing items
to the Employer and the Executive grants the Employer a worldwide,
unrestricted, royalty-free right, including the right to sublicense such items.
The Executive agrees to take such actions and execute such further
acknowledgments and assignments as the Employer may reasonably request to give
effect to this provision.
6. Protection of Trade Secrets. The Executive agrees to maintain
in strict confidence and, except as necessary to perform his duties for the
Employer, the Executive agrees not to use or disclose any Trade Secrets of the
Employer during or after his employment. "Trade Secret" means information,
including a formula, pattern, compilation, program, device, method, technique,
process, drawing, cost data or customer list, that: (i) derives economic value,
actual or potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value
from its disclosure or use; and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.
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7. Protection of Other Confidential Information. In addition,
the Executive agrees to maintain in strict confidence and, except as necessary
to perform his duties for the Employer, not to use or disclose any Confidential
Business Information of the Employer during his employment and for a period of
24 months following termination of the Executive's employment. "Confidential
Business Information" shall mean any internal, non-public information (other
than Trade Secrets already addressed above) concerning the Employer's financial
position and results of operations (including revenues, assets, net income,
etc.); annual and long-range business plans; product or service plans;
marketing plans and methods; training, educational and administrative manuals;
customer and supplier information and purchase histories; and employee lists.
The provisions of Sections 6 and 7 above shall also apply to protect Trade
Secrets and Confidential Business Information of third parties provided to the
Employer under an obligation of secrecy.
8. Return of Materials. The Executive shall surrender to the
Employer, promptly upon its request and in any event upon termination of the
Executive's employment, all media, documents, notebooks, computer programs,
handbooks, data files, models, samples, price lists, drawings, customer lists,
prospect data, or other material of any nature whatsoever (in tangible or
electronic form) in the Executive's possession or control, including all copies
thereof, relating to the Employer, its business, or its customers. Upon the
request of the Employer, Executive shall certify in writing compliance with the
foregoing requirement.
9. Restrictive Covenants.
(a) No Solicitation of Customers. During the Executive's
employment with the Employer, and for a period of twelve months thereafter, or
during any period the Employer is paying Executive severance under Section 4 if
longer than twelve months, the Executive shall not (except on behalf of or with
the prior written consent of the Employer), either directly or indirectly, on
the Executive's own behalf or in the service or on behalf of others, (A)
solicit, divert, or appropriate to or for a Competing Business, or (B) attempt
to solicit, divert, or appropriate to or for a Competing Business, any person or
entity that is or was a customer of the Employer or any of its Affiliates on the
date of termination and is located in the Territory and with whom the Executive
has had material contact.
(b) No Recruitment of Personnel. During the Executive's
employment with the Employer, and for a period of twelve months thereafter, or
during any period the Employer is paying Executive severance under Section 4 if
longer than twelve months, the Executive shall not, either directly or
indirectly, on the Executive's own behalf or in the service or on behalf of
others, (A) solicit, divert, or hire away, or (B) attempt to solicit, divert, or
hire away, to any Competing Business located in the Territory, any employee of
or consultant to the Employer or any of its Affiliates engaged or experienced in
the Business, regardless of whether the employee or consultant is full-time or
temporary, the employment or engagement is pursuant to written agreement, or the
employment is for a determined period or is at will.
(c) Non-Competition Agreement. During the Executive's
employment with the Employer, and for a period of twelve months thereafter, or
during any period the Employer is
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paying Executive severance under section 4 if longer than twelve months, the
Executive shall not (without the prior written consent of the Employer) compete
with the Employer or any of its Affiliates by, directly or indirectly, forming,
serving as an organizer, director or officer of, or consultant to, or acquiring
or maintaining more than a 1% passive investment in, a depository financial
institution or holding company therefor if such depository institution or
holding company has one or more offices or branches located in the Territory.
Notwithstanding the foregoing, the Executive may serve as an officer of or
consultant to a depository institution or holding company therefor even though
such institution operates one or more offices or branches in the Territory, if
the Executive's employment does not directly involve, in whole or in part, the
depository financial institution's or holding company's operations in the
Territory.
10. Independent Provisions. The provisions in each of
the above Sections 9(a), 9(b), and 9(c) are independent, and the
unenforceability of any one provision shall not affect the enforceability of
any other provision.
11. Successors; Binding Agreement. The rights and
obligations of this Agreement shall bind and inure to the benefit of the
surviving corporation in any merger or consolidation in which the Employer is a
party, or any assignee of all or substantially all of the Employer's business
and properties. The Executive's rights and obligations under this Agreement may
not be assigned by him, except that his right to receive accrued but unpaid
compensation, unreimbursed expenses and other rights, if any, provided under
this Agreement which survive termination of this Agreement shall pass after
death to the personal representatives of his estate.
12. Notice. For the purposes of this Agreement, notices
and all other communications provided for in the Agreement shall be in writing
and shall be deemed to have been duly given when personally delivered or sent
by certified mail, return receipt requested, postage prepaid, addressed to the
respective addresses last given by each party to the other; provided, however,
that all notices to the Employer shall be directed to the attention of the
Employer with a copy to the Secretary of the Employer. All notices and
communications shall be deemed to have been received on the date of delivery
thereof.
13. Governing Law. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of South
Carolina without giving effect to the conflict of laws principles thereof. Any
action brought by any party to this Agreement shall be brought and maintained
in a court of competent jurisdiction in State of South Carolina.
14. Non-Waiver. Failure of the Employer to enforce any
of the provisions of this Agreement or any rights with respect thereto shall in
no way be considered to be a waiver of such provisions or rights, or in any way
affect the validity of this Agreement.
15. Enforcement. The Executive agrees that in the event
of any breach or threatened breach by the Executive of any covenant contained
in Section 9(a), 9(b), or 9(c) hereof, the resulting injuries to the Employer
would be difficult or impossible to estimate accurately, even though
irreparable injury or damages would certainly result. Accordingly, an award of
legal damages, if without other relief, would be inadequate to protect the
Employer. The Executive,
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therefore, agrees that in the event of any such breach, the Employer shall be
entitled to obtain from a court of competent jurisdiction an injunction to
restrain the breach or anticipated breach of any such covenant, and to obtain
any other available legal, equitable, statutory, or contractual relief. Should
the Employer have cause to seek such relief, no bond shall be required from the
Employer, and the Executive shall pay all attorney's fees and court costs which
the Employer may incur to the extent the Employer prevails in its enforcement
action.
16. Saving Clause. The provisions of this Agreement
shall be deemed severable and the invalidity or unenforceability of any
provision shall not affect the validity or enforceability of the other
provisions hereof. If any provision or clause of this Agreement, or portion
thereof, shall be held by any court or other tribunal of competent jurisdiction
to be illegal, void, or unenforceable in such jurisdiction, the remainder of
such provision shall not be thereby affected and shall be given full effect,
without regard to the invalid portion. It is the intention of the parties that,
if any court construes any provision or clause of this Agreement, or any
portion thereof, to be illegal, void, or unenforceable because of the duration
of such provision or the area or matter covered thereby, such court shall
reduce the duration, area, or matter of such provision, and, in its reduced
form, such provision shall then be enforceable and shall be enforced. The
Executive and the Employer hereby agree that they will negotiate in good faith
to amend this Agreement from time to time to modify the terms of Sections 9(a),
9(b), and 9(c), the definition of the term "Territory," and the definition of
the term "Business," to reflect changes in the Employer's business and affairs
so that the scope of the limitations placed on the Executive's activities by
Section 9 accomplishes the parties' intent in relation to the then current
facts and circumstances. Any such amendment shall be effective only when
completed in writing and signed by the Executive and the Employer.
17. Certain Definitions.
(a) "Affiliate" shall mean any business entity
controlled by, controlling or under common control with the Employer.
(b) "Business" shall mean the operation of a depository
financial institution, including, without limitation, the solicitation and
acceptance of deposits of money and commercial paper, the solicitation and
funding of loans and the provision of other banking services, and any other
related business engaged in by the Employer or any of its Affiliates as of the
date of termination.
(c) "Cause" shall consist of any of (A) the
commission by the Executive of a willful act (including, without limitation, a
dishonest or fraudulent act) or a grossly negligent act, or the willful or
grossly negligent omission to act by the Executive, which is intended to cause,
causes or is reasonably likely to cause material harm to the Employer
(including harm to its business reputation), (B) the indictment of the
Executive for the commission or perpetration by the Executive of any felony or
any crime involving dishonesty, moral turpitude or fraud, (C) the material
breach by the Executive of this Agreement that, if susceptible of cure, remains
uncured ten days following written notice to the Executive of such breach, (D)
the receipt of any form of notice, written or otherwise, that any regulatory
agency having jurisdiction over the Employer
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intends to institute any form of formal or informal (e.g., a memorandum of
understanding which relates to the Executive's performance) regulatory action
against the Executive or the Employer or the Employer (provided that the Board
of Directors determines in good faith, with the Executive abstaining from
participating in the consideration of and vote on the matter, that the subject
matter of such action involves acts or omissions by or under the supervision of
the Executive or that termination of the Executive would materially advance the
Employer's compliance with the purpose of the action or would materially assist
the Employer in avoiding or reducing the restrictions or adverse effects to the
Employer related to the regulatory action); (E) the exhibition by the Executive
of a standard of behavior within the scope of his employment that is materially
disruptive to the orderly conduct of the Employer's business operations
(including, without limitation, substance abuse or sexual misconduct) to a
level which, in the Board of Directors' good faith and reasonable judgment,
with the Executive abstaining from participating in the consideration of and
vote on the matter, is materially detrimental to the Employer's best interest,
that, if susceptible of cure remains uncured ten days following written notice
to the Executive of such specific inappropriate behavior; or (F) the failure of
the Executive to devote his full business time and attention to his employment
as provided under this Agreement that, if susceptible of cure, remains uncured
30 days following written notice to the Executive of such failure.
(d) "Change in Control" shall mean the
occurrence during the Term of any of the following events, unless such event is
a result of a Non-Control Transaction:
(i) The individuals who, as of the
date of this Agreement, are members of the Board of Directors
of the Employer (the "Incumbent Board") cease for any reason
to constitute at least fifty percent of the Board of
Directors of the Employer; provided, however, that if the
election, or nomination for election by the Employer's
shareholders, of any new director was approved in advance by
a vote of at least fifty percent of the Incumbent Board, such
new director shall, for purposes of this Agreement, be
considered as a member of the Incumbent Board; provided,
further, that no individual shall be considered a member of
the Incumbent Board if such individual initially assumed
office as a result of either an actual or threatened
"Election Contest" (as described in Rule 14a-11 promulgated
under the Securities Exchange Act of 1934 (the "Exchange
Act"), or other actual or threatened solicitation of proxies
or consents by or on behalf of any person other than the
Board of Directors of the Employer (a "Proxy Contest"),
including by reason of any agreement intended to avoid or
settle any Election Contest or Proxy Contest.
(ii) An acquisition (other than directly from
the Employer) of any voting securities of the Employer (the
"Voting Securities") by any "Person" (as the term "person" is
used for purposes of Section 13(d) or 14(d) of the Exchange
Act) immediately after which such Person has "Beneficial
Ownership" (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of the combined voting
power of the Employer's then outstanding Voting Securities;
provided, however, that in determining whether a Change in
Control has occurred,
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Voting Securities which are acquired in a Non-Control
Acquisition shall not constitute an acquisition which would
cause a Change in Control.
(iii) Approval by the shareholders of the
Employer of: (i) a merger, consolidation, or reorganization
involving the Employer; (ii) a complete liquidation or
dissolution of the Employer; or (iii) an agreement for the
sale or other disposition of all or substantially all of the
assets of the Employer to any Person (other than a transfer
to a Subsidiary).
(iv) A notice of an application is filed with
the Office of Comptroller of the Currency (the "OCC") or the
Federal Reserve Board or any other bank or thrift regulatory
approval (or notice of no disapproval) is granted by the
Federal Reserve, the OCC, the Federal Deposit Insurance
Corporation, or any other regulatory authority for permission
to acquire control of the Employer or any of its banking
subsidiaries.
(e) "Competing Business" shall mean any business that,
in whole or in part, is the same or substantially the same as the Business.
(f) "Good Reason" shall mean the occurrence after a
Change in Control of any of the events or conditions described in subsections
(i) through (viii) hereof:
(i) a change in the Executive's status, title,
position or responsibilities (including reporting
responsibilities) which, in the Executive's reasonable
judgment, represents an adverse change from his status, title,
position or responsibilities as in effect at any time within
ninety days preceding the date of a Change in Control or at
any time thereafter; the assignment to the Executive of any
duties or responsibilities which, in the Executive's
reasonable judgment, are inconsistent with his status, title,
position or responsibilities as in effect at any time within
ninety days preceding the date of a Change in Control or at
any time thereafter; any removal of the Executive from or
failure to reappoint or reelect him to any of such offices or
positions, except in connection with the termination of his
employment for Disability or Cause, as a result of his death,
or by the Executive other than for Good Reason, or any other
change in condition or circumstances that in the Executive's
reasonable judgment makes it materially more difficult for the
Executive to carry out the duties and responsibilities of his
office than existed at any time within ninety days preceding
the date of Change in Control or at any time thereafter;
(ii) a reduction in the Executive's base salary
or any failure to pay the Executive any compensation or
benefits to which he is entitled within five days of the date
due;
(iii) the Employer's requiring the Executive to
be based at any place outside a 30-mile radius from the
executive offices occupied by the Executive
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immediately prior to the Change in Control, except for
reasonably required travel on the Employer's business which
is not materially greater than such travel requirements prior
to the Change in Control;
(iv) the failure by the Employer to (A) continue
in effect (without reduction in benefit level and/or reward
opportunities) any material compensation or employee benefit
plan in which the Executive was participating at any time
within ninety days preceding the date of a Change in Control
or at any time thereafter, unless such plan is replaced with
a plan that provides substantially equivalent compensation or
benefits to the Executive, or (B) provide the Executive with
compensation and benefits, in the aggregate, at least equal
(in terms of benefit levels and/or reward opportunities) to
those provided for under each other employee benefit plan,
program and practice in which the Executive was participating
at any time within ninety days preceding the date of a Change
in Control or at any time thereafter;
(v) the insolvency or the filing (by any party,
including the Employer) of a petition for bankruptcy of the
Employer, which petition is not dismissed within sixty days;
(vi) any material breach by the Employer of any
material provision of this Agreement;
(vii) any purported termination of the
Executive's employment for Cause by the Employer which does
not comply with the terms of this Agreement; or
(viii) the failure of the Employer to obtain an
agreement, satisfactory to the Executive, from any successor
or assign to assume and agree to perform this Agreement, as
contemplated in Section 11 hereof.
Any event or condition described in clause (i) through (viii) above
which occurs prior to a Change in Control but which the Executive reasonably
demonstrates (A) was at the request of a third party, or (B) otherwise arose in
connection with, or in anticipation of, a Change in Control which actually
occurs, shall constitute Good Reason for purposes of this Agreement,
notwithstanding that it occurred prior to the Change in Control. The Executive's
right to terminate his employment for Good Reason shall not be affected by his
incapacity due to physical or mental illness.
(g) Non-Control Transaction" shall mean a transaction
described below:
(i) the shareholders of the Employer,
immediately before such merger, consolidation or
reorganization, own, directly or indirectly, immediately
following such merger, consolidation or reorganization, at
least 50% of the combined voting power of the outstanding
voting securities of the corporation resulting from such
merger, consolidation or reorganization (the "Surviving
Corporation") in
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substantially the same proportion as their ownership of the
Voting Securities immediately before such merger,
consolidation or reorganization; and
(ii) immediately following such merger,
consolidation or reorganization, the number of directors on
the board of directors of the Surviving Corporation who were
members of the Incumbent Board shall at least equal the
number of directors who were affiliated with or appointed by
the other party to the merger, consolidation or
reorganization.
(h) "Territory" shall mean a radius of thirty miles from
(i) the main office of the Employer or (ii) any branch office of the Employer.
(i) "Notice of Termination" shall mean a written notice
of termination from the Employer or the Executive which specifies an effective
date of termination, indicates the specific termination provision in this
Agreement relied upon, and sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
18. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto and supersedes all prior agreements, if
any, understandings and arrangements, oral or written, between the parties
hereto with respect to the subject matter hereof.
19. 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.
IN WITNESS WHEREOF, the Employer has caused this Agreement to be
executed and its seal to be affixed hereunto by its officers thereunto duly
authorized, and the Executive has signed and sealed this Agreement, effective as
of the date first above written.
FIRST NATIONAL
BANCORPORATION, INC.
ATTEST:
/s/ Xxxxxxxx X. Xxxxx By: /s/ Xxxxxx Xxxxxxx
-------------------------------- --------------------------------
Witness Title: Chairman
/s/ Xxxxxx X. Xxxxxxx
--------------------------------
Witness EXECUTIVE
/s/ Xxxxx X. Xxxxxxx
--------------------------------
Xxxxx X. Xxxxxxx
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