AMENDED AND RESTATED EMPLOYMENT AGREEMENT
EXHIBIT
10.32
AMENDED
AND RESTATED EMPLOYMENT AGREEMENT
THIS
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered
into as of the 31st day of December, 2008, by and between CommunityONE Bank,
National Association, a national banking corporation formerly known as First
National Bank and Trust Company with its principal office and place of business
located in Asheboro, North Carolina (the “Bank”), and R. Xxxxx Xxxxxxxx (the
“Employee”).
W I T N E S S E T H:
WHEREAS,
the Employee is currently employed by the Bank pursuant to the terms of an
employment agreement between the Employee and the Bank dated as of April 10,
2000, as amended by the first amendment thereto dated as of June 30, 2006 (the
“Prior Agreement”); and
WHEREAS,
the parties desire to amend and restate the Prior Agreement to bring the Prior
Agreement into compliance with Section 409A of the Internal Revenue Code of
1986, as amended from time to time (including corresponding provisions of
succeeding law) (the “Code”), the regulations promulgated thereunder, and other
guidance issued thereunder by the Department of the Treasury and/or the Internal
Revenue Service (“Section 409A”), to extend the term of the Employee’s
employment with the Bank, and to induce the Employee to continue employment with
the Bank by providing for the payment of compensation to the Employee upon the
Employee’s termination following a change in control of the Bank or its parent,
FNB United Corp., a North Carolina corporation and registered bank holding
company (“FNB”); and
WHEREAS;
the parties intend that this Agreement shall supersede the Prior Agreement in
its entirety, and that from and after the effective date of this Agreement, the
Prior Agreement shall be of no further force and effect; and
WHEREAS,
none of the conditions or events included in the definition of the term “golden
parachute payment” that is set forth in Section 18(k)(4)(A)(ii) of the Federal
Deposit Insurance Act [12 U.S.C. 1828(k)(4)(A)(ii) and in Federal Deposit
Insurance Corporation Rule 359.1(f)(1)(ii)[12 CFR 359.1(f)(1)(ii) exists or, to
the best knowledge of the Bank, is contemplated insofar as the Bank or any of
its affiliates are concerned;
NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and in consideration of the premises and the
mutual covenants and obligations herein contained, the parties hereto agree as
follows:
1. Employment. The
Bank hereby employs the Employee, and the Employee hereby accepts employment
with the Bank, for the term set forth in Section 2 below, in the position and
with the duties and responsibilities set forth in Section 3 below, and upon the
other terms and conditions hereinafter stated.
2. Term. The
term of this Agreement shall commence as of the date hereof and shall continue
until December 31, 2010 (the “Term”).
3. Position and
Responsibilities. The Employee shall serve as an Executive
Vice President of the Bank, or in such other appropriate position and with such
duties as the Bank may in the future designate. In such capacity, the
Employee shall at all times report to, and his activities shall at all times be
subject to the direction and control of, the principal executive officer of the
Bank or his designee. The Employee shall devote substantially all of
his business time, attention and services to discharge faithfully and diligently
his duties and responsibilities under this Agreement and to use his best efforts
for both the successful operation of the Bank’s business and the successful
implementation of the policies established by the Bank or FNB.
4. Compensation and
Benefits. During the term of this Agreement, the Bank shall
provide to the Employee the following compensation and benefits:
(a) Salary. In
consideration of the services to be rendered by the Employee to the Bank and the
Employee’s covenants hereunder, the Bank shall pay to the Employee a base salary
at the rate of $180,000 per annum (such salary as it may be increased from time
to time being hereinafter referred to as the “Base Salary”). The
Employee shall receive from the Bank a formal review of Employee’s performance
at least as frequently as annually, and Employee may be considered for merit
increases to his Base Salary in accordance with the Bank’s policies and
practices for employee compensation as established or modified from time to
time. Except as may otherwise be agreed, the Base Salary shall be
payable in accordance with the Bank’s policies and practices for employee
compensation as established or modified from time to time; provided that the
Base Salary shall be payable not less frequently than monthly. Salary
payments shall be subject to all applicable federal and state withholding,
payroll and other taxes.
(b) Group Benefit Plans and
Programs. The Employee will be entitled to participate, in
accordance with the provisions thereof, in any group health, disability and life
insurance, and any bonus, pension, retirement and other employee benefit plans
and programs made available by the Bank or FNB to their employees
generally. Without limiting the generality of the foregoing,
the Employee shall be entitled to participate, in accordance with the provisions
thereof, in the Bank’s or FNB’s arrangement for performance compensation for
stakeholders (or any successor plan) and the FNB United/CommunityONE Executive
Short-Term Incentive Plan (hereinafter together referred to as the “Stakeholders
Plan”).
(c) Supplemental
Plans. The Bank assumed the obligations of Richmond Savings
Bank, Inc., SSB (“Richmond Savings”) with respect to that Employee
Income Plan Deferred Compensation Agreement and Split Dollar Agreement each
dated January 1, 1987 and subsequently amended January 1, 1992 (collectively,
the “Supplemental Plans”) and shall continue the Supplemental Plans in effect in
accordance with the terms thereof; provided, however, that nothing herein shall
prohibit the Bank from terminating either or both Supplemental Plans upon the
Employee’s voluntary termination of employment (other than Employee’s
termination in connection with a Change in Control pursuant to Section 5(f)(ii))
or upon a termination for Cause (as defined below).
(d) Club
Dues. The Bank shall pay or reimburse the Employee for the
monthly dues and assessments necessary for Employee to maintain the status of an
active member of the Beacon Country Club or such other clubs as are reasonably
necessary to the
2
conduct
of the Bank’s business and as the principal executive of the Bank may from time
to time approve.
(e) Vacation. The
Employee shall be entitled to such vacation and other leave as may be provided
by the Bank or FNB to their employees in similar positions generally; provided,
however, that, to the extent that the amount of vacation and other leave to
which the Employee is entitled is related to the Employee’s years of service to
the Bank or FNB, the Employee shall be given credit for each year of service as
an employee of Richmond Savings.
(f) Automobile. The
Bank shall provide the Employee with a suitable vehicle for his exclusive use in
the discharge of his duties hereunder and shall pay all operating and service
expenses, including automobile insurance, related to such
vehicle. Any personal use of such vehicle by the Employee will be
appropriately accounted for and reported as additional
compensation.
(g) Business
Expenses. The Bank shall reimburse the Employee for any
reasonable out-of-pocket business and travel expenses incurred by the Employee
in the ordinary course of performing his duties for the Bank upon presentation
by the Employee, from time to time, of appropriate documentation therefor and in
accordance with the Bank’s policies and practices as established or modified
from time to time.
(h) Convention
Attendance. The Bank shall pay all registration, travel,
accommodation and meal expenses for the Employee and his spouse to attend the
annual convention of the North Carolina Bankers Association each
year.
5. Termination. The
Employee’s term of employment under this Agreement may be terminated before the
end of the Term as set forth in this Section 5. Notwithstanding
anything contained herein to the contrary, the Employee’s employment with the
Bank shall not be considered to have terminated for purposes of the Employee’s
receiving any compensation or other benefits otherwise provided under this
Agreement unless (i) he would be considered to have incurred a “separation from
service” within the meaning of Section 409A from the Bank and any other entity that,
along with the Bank, would be considered a “service recipient” within the
meaning of Section 409A or (ii) the payment of such compensation or such other
benefits would not be subject to Section 409A.
(a) Death. In
the event of the death of the Employee during his employment under this
Agreement, this Agreement shall be terminated as of the date of
death. In such event, the Bank shall pay the Employee’s Base Salary,
at the rate in effect at the time of his death and through the last day of the
calendar month in which such death occurs, to the Employee’s designated
beneficiary, or, in the absence of such designation, to the estate or other
legal representative of the Employee. Any rights and benefits the
Employee’s estate or any other person may have under employee benefit plans and
programs of the Bank, or any benefit plans or agreements of Richmond Savings or
its parent, Carolina Fincorp, Inc. (“Carolina”), that were assumed by the Bank
or FNB in connection with FNB’s acquisition of Carolina, in the event of the
Employee’s death shall be determined in accordance with the terms of such plans
and programs.
3
(b) Long-Term
Disability. If the Employee suffers any disability while
employed under this Agreement that prevents him from performing his duties under
this Agreement for a period of 90 consecutive days, then, unless otherwise then
agreed in writing by the parties hereto, the employment of the Employee under
this Agreement shall, at the election of the Bank, be terminated effective as of
the ninetieth day of such period. Upon termination of the Employee’s
employment by reason of disability under this Section 5(b), the Employee shall
be entitled to receive his Base Salary, at the rate in effect on the date of
such termination, less any disability insurance payments paid to the Employee on
a policy maintained for the benefit of the Employee by the Bank or FNB, through
the end of the then current term of this Agreement. Such salary
continuation shall be subject to all applicable federal and state withholding
taxes and any postponement of payment that may be required pursuant to Section
20 below. Any rights and benefits the Employee may have under
employee benefit plans and programs of the Bank, or any benefit plans or
agreements of Richmond Savings or Carolina that were assumed by the Bank or FNB
in connection with FNB’s acquisition of Carolina, in the event of the Employee’s
disability, including rights and benefits under retirement plans and programs,
shall be determined in accordance with the terms of such plans and
programs.
For
purposes of this Agreement, “disability” shall mean the inability, by reason of
bodily injury or physical or mental disease, or any combination thereof, of the
Employee to perform his customary or other comparable duties with the
Bank. In the event that the Employee and the Bank are unable to agree
as to whether the Employee is suffering a disability, the Employee and the Bank
shall each select a physician and the two physicians so chosen shall make the
determination or, if they are unable to agree, they shall select a third
physician, and the determination as to whether the Employee is suffering a
disability shall be based upon the determination of a majority of the three
physicians. The Bank shall pay the reasonable fees and expenses of
all physicians selected pursuant to this Section 5(b).
(c) Termination for
Cause. Nothing herein shall prevent the Bank from terminating
the Employee’s employment at any time for Cause (as hereinafter
defined). Upon termination for Cause, the Employee shall receive his
Base Salary only through the date that such termination becomes
effective. Neither the Employee nor any other person shall be
entitled to any further payments from the Bank, for salary or any other
amounts. Notwithstanding the foregoing, any rights and benefits the
Employee may have under employee benefit plans and programs of the Bank, or any
benefit plans or agreements of Richmond Savings or Carolina that were assumed by
the Bank or FNB in connection with FNB’s acquisition of Carolina, following a
termination of the Employee’s employment for Cause shall be determined in
accordance with the terms of such plans, agreements and programs.
For purposes of this Agreement,
termination for Cause shall mean termination by the Bank of the Employee’s
employment as a result of (i) an intentional, willful and continued failure by
the Employee to perform his duties in the capacities indicated above (other than
due to disability); (ii) an intentional, willful and material breach by the
Employee of his fiduciary duties of loyalty and care to the Bank; (iii) an
intentional, willful and knowing violation by the Employee of any provision of
this Agreement; (iv) a conviction of, or the entering of a plea of nolo
contendere by the Employee for any felony or any crime involving fraud or
dishonesty, or (v) a willful and knowing violation of any material federal or
state banking law or regulation applicable to the Bank or the occurrence of any
event described in Section 19 of the Federal
4
Deposit
Insurance Act or any other act or event as a result of which the Employee
becomes unacceptable to, or is removed, suspended or prohibited from
participating in the conduct of the Bank’s affairs by any regulatory authority
having jurisdiction over the Bank or FNB.
(d) Termination Other Than For
Cause and Not in Connection with a Change in Control. The Bank
may terminate the Employee’s employment under this Agreement at any time upon 90
days written notice to the Employee for whatever reason it deems appropriate, or
for no reason. In the event such termination by the Bank occurs and
is not (i) due to death as provided in Section 5(a) above, (ii) due to
disability as provided in Section 5(b) above, (iii) for Cause as provided in
Section 5(c) above, or (iv) in connection with or within 24 months after a
Change in Control as provided in Section 5(f), the Bank shall continue the
Employee’s Base Salary, at the rate in effect at the time of such termination
through the end of the Term of this Agreement. In addition, the Bank
shall pay to the Employee for the year of termination and for each subsequent
calendar year or portion thereof through the end of the Term of this Agreement
an amount (prorated in the case of any partial year) equal to the average
bonuses paid to the Employee under the Stakeholders Plan for the three calendar
years immediately preceding the year of termination, such payments to be made at
the normal times for payment of bonuses under the Stakeholders
Plan. All compensation continuation shall be subject to all
applicable federal and state withholding taxes and any postponement of payment
that may be required pursuant to Section 20 below. Any rights and
benefits the Employee may have under employee benefit plans and programs of the
Bank or FNB, or under any benefit plans or agreements of Richmond Savings or
Carolina that were assumed by the Bank or FNB in connection with FNB’s
acquisition of Carolina, following a termination of the Employee’s employment
pursuant to this Section 5(d), including rights and benefits under retirement
plans and programs, shall be determined in accordance with the terms of such
plans, agreements and programs.
In
addition to the foregoing, in the event of a termination pursuant to this
Section 5(d) and provided the Employee properly elects coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”),
the Bank shall reimburse the Employee for one hundred percent (100%) of all
applicable premiums for continuation coverage for the Employee under the group
health plan of the Bank in which the Employee was a participant at the time of
the termination of his employment. On a monthly basis following a
termination pursuant to this Section 5(d), the Bank shall pay to Employee a cash
payment that shall equal the premium costs that the Employee paid on an
after-tax basis over the preceding month period for such COBRA coverage until
the earlier of (x) the end of the term remaining under this Agreement at the
time the Employee’s employment is terminated, (y) the date on which the Employee
is eligible to participate in a group health plan of another employer as a
full-time employee, or (z) the Employee’s death; provided, however that, as of
the nineteenth month following a termination pursuant to this Section 5(d), the
Employee shall not be entitled to further reimbursement for premium costs for
such COBRA coverage.
In the
event the Employee is eligible to be covered by the Postretirement Medical and
Life Insurance Benefits Plan, or any successor or similar plan, of the Bank at
the time of his termination pursuant to this Section 5(d), the Employee may
elect, in lieu of electing COBRA continuation coverage under the provisions of
the immediately preceding paragraph, to participate in such Postretirement
Medical and Life Insurance Benefits Plan of the Bank. On a monthly basis
following a termination pursuant to this Section 5(d), the Bank shall pay to
the
5
Employee
a cash payment that shall equal the premium costs that the Employee paid on an
after-tax basis over the month period for coverage under such Postretirement
Medical and Life Insurance Benefits Plan, as adjusted to reflect the Bank’s
subsidized cost-sharing arrangement, if any, that is otherwise provided to all
similarly situated employees based on their years of service with the Bank until
the earlier of (x) the end of the term remaining under this Agreement at the
time the Employee’s employment is terminated, (y) the date on which the Employee
is eligible to participate in a group health plan of another employer as a
full-time employee, or (z) the Employee’s death; provided, however that, as of
the nineteenth month following the Employee’s termination pursuant to this
Section 5(d), the Employee shall not be entitled to further reimbursement for
premium costs for coverage under such Postretirement Medical and Life Insurance
Benefits Plan. After the 18th month following a termination pursuant to this
Section 5(d), the Employee shall continue to be entitled to participate in the
Postretirement Medical and Life Insurance Benefits Plan of the Bank and to
receive the Bank’s subsidized cost-sharing arrangement, if any, that is
otherwise provided to all similarly situated employees based on their years of
service with the Bank.
In
addition to the foregoing, in the event of a termination pursuant to this
Section 5(d) the Bank shall reimburse the Employee for one hundred percent
(100%) of all applicable premiums actually paid by the Employee for disability
insurance and, if the Employee does not elect to participate in the
Postretirement Medical and Life Insurance Benefits Plan of the Bank pursuant to
the immediately preceding paragraph, life insurance policies following
termination of employment not to exceed, in scope or benefit, any group
disability or life insurance plan made available by the Bank to similarly
situated employees in which the Employee was a participant at the time of his
termination of employment. On a monthly basis following a termination
pursuant to this Section 5(d), the Bank shall pay to the Employee a cash payment
that shall equal the premium costs that the Employee paid on an after-tax basis
over the month period for coverage under such disability and, if applicable,
life insurance policies until the earlier of (x) the end of the term remaining
under this Agreement at the time the Employee’s employment is terminated, (y)
the date on which the Employee is eligible to participate in a group disability
and, if applicable, life insurance plan of another Bank as a full-time employee,
or (z) the Employee’s death; provided, however that, as of the nineteenth month
following the Employee’s termination pursuant to this Section 5(d), the Employee
shall not be entitled to further reimbursement for premium costs for coverage
under such disability and, if applicable, life insurance policies.
In no
event shall the amount of expenses eligible for reimbursement under this Section
5(d) for any calendar year affect the expenses eligible for reimbursement in
another calendar year. In no event shall any reimbursement made
pursuant to the two immediately preceding paragraphs be made later than the last
day of the calendar year following the year in which the Employee incurred the
expenses being reimbursed. Any reimbursement payments made pursuant
to either of the two immediately preceding paragraphs shall be subject to any
postponement of payment that may be required by Section 20. In the
event a termination by the Bank of the Employee’s employment under this
Agreement occurs within 24 months following a Change in Control (as defined in
Section 5(f)(iv)) and is not due to death as provided in Section 5(a) above,
disability as provided in Section 5(b) above, or for Cause as provided in
Section 5(c) above, then the Employee’s rights to compensation shall be governed
by Section 5(f).
6
(e) At the Employee’s
Option. The Employee may terminate his employment at any time
upon at least 60 days advance written notice to the Bank; provided, however,
that the Bank, in its discretion, may cause such termination to be effective at
any time during such notice period. Except as provided pursuant to
Section 5(f) below, in the event of such a voluntary termination of employment,
the Employee will be entitled to receive only any earned but unpaid Base Salary
and the other benefits of this Agreement through the date on which the
Employee's termination becomes effective. Notwithstanding the
foregoing, any rights and benefits the Employee may have under employee benefit
plans and programs of the Bank, or any benefit plans or agreements of Richmond
Savings or Carolina that were assumed by the Bank or FNB in connection with
FNB’s acquisition of Carolina, following a voluntary termination of the
Employee’s employment pursuant to this Section 5(e), including rights and
benefits under retirement plans and programs, shall be determined in accordance
with the terms of such plans, agreements and programs.
(f) Termination in Connection
with a Change of Control.
(i) In
the event of a termination of the Employee's employment by the Bank in
connection with, or within twenty-four (24) months after, a "Change of Control"
(as defined in Section 5(f)(iv) below) of FNB or the Bank, for reasons other
than for Cause (as defined in Section 5(c)), death or disability (as defined in
Section 5(b)), the Employee shall be entitled to receive the sum and benefits
set forth in Section 5(f)(iii) below. The termination of the
Employee’s employment by the Bank shall be deemed a Termination Event for
purposes of Section 5(f)(iii) below.
(ii) The
Employee shall have the right to resign his employment with the Bank and
terminate this Agreement upon the occurrence of any of the following events (the
"Termination Events") within twenty-four (24) months following a Change of
Control of FNB or the Bank:
|
|
(1)
|
The
Employee is assigned any duties and/or responsibilities that constitute a
material diminution of the Employee’s authority, duties or
responsibilities at the time of the Change of
Control;
|
|
|
(2)
|
The
Employee's annual Base Salary rate is reduced below the annual amount in
effect as of the effective date of a Change of Control or as the same
shall have been increased from time to time following such effective
date;
|
|
|
(3)
|
The
Employee's life insurance, medical or hospitalization insurance,
disability insurance, stock option plans, stock purchase plans, deferred
compensation plans, management retention plans, retirement plans, or
similar plans or benefits being provided by the Bank to the Employee as of
the effective date of the Change of Control are reduced in their level,
scope, or coverage, or any such insurance, plans, or benefits are
eliminated, unless such reduction
|
7
or
elimination applies proportionately to all salaried employees of the Bank who
participated in such benefits prior to such Change of Control;
|
|
(4)
|
The
Employee is required to transfer performance of his day-to-day services
required hereunder to a location which is more than fifty (50) miles from
the Employee's current principal work location, without the Employee's
express written consent; or
|
|
|
(5)
|
The
Bank shall have committed a material breach of this
Agreement.
|
A
Termination Event shall be deemed to have occurred on the date such action or
event is implemented or takes effect.
(iii)
In the event that the Employee resigns his employment and terminates this
Agreement pursuant to Section 5(f)(ii) above or his employment is terminated by
the Bank pursuant to Section 5(f)(i) above, the Bank will be obligated: (A) to
pay or cause to be paid to the Employee an amount equal to two times the
Employee’s total cash compensation, including salary and bonus, paid during the
calendar year ended immediately prior to the Change of Control or the
Termination Event, whichever is higher, and (B) to provide to the Employee the
benefits set forth in the second, third and fourth paragraphs of Section 5(d)
above. The Bank shall also cause the Employee to become fully vested
in any qualified and nonqualified plans, programs or arrangements in which the
Employee participated if the plan, program or arrangement does not address the
effect of a Change of Control; provided, that (x) such vesting does not cause
any such plan, program or arrangement that is not otherwise subject to Section
409A to become subject to Section 409A and (y) such vesting does not cause any
such plan, program or arrangement that is subject to Section 409A to violate
Section 409A. Subject to the foregoing, any rights and benefits the
Employee may have under employee benefit plans and programs of the Bank or FNB,
or under any benefit plans or agreements of Richmond Savings or Carolina that
were assumed by the Bank or FNB in connection with FNB’s acquisition of
Carolina, following a termination of the Employee’s employment other than by the
Bank for Cause, including rights and benefits under retirement plans and
programs, shall be determined in accordance with the terms of such plans,
agreements and programs.
(iv) For
the purposes of this Agreement, the term “Change of Control” shall mean a change
in control as defined in Section 409A, including –
|
|
(1)
|
Change in ownership: a
change in ownership of the Bank occurs on the date any one person, or more
than one person acting as a group, acquires ownership of stock of FNB or
the Bank, that together with stock of FNB or the Bank held by such person
or group, constitutes more than 50% of the total fair market value or
total voting power of stock of FNB or the
Bank,
|
8
|
|
(2)
|
Change in effective
control: (x) any one person,
or more than one person acting as a group, acquires (or has acquired
during the 12-month period ending on the date of the most recent
acquisition by such person or persons) ownership of stock possessing 30%
or more of the total voting power of the stock of FNB or the Bank, or
(y) a
majority of the board of directors of FNB is replaced during any 12-month
period by directors whose appointment or election is not endorsed by a
majority of the board of directors of FNB before the date of the
appointment or election; provided, however, for purposes of this Section
5(f)(iv)(2), the terms FNB or the Bank shall refer to the relevant
corporation identified in Treasury Regulation 1.409A-3(i)(5)(ii) for which
no other corporation is a majority shareholder for purposes of that
regulation, or
|
|
|
(3)
|
Change in ownership of a
substantial portion of assets: a change in ownership of a
substantial portion of the assets of the Bank or FNB occurs on the date
that any one person, or more than one person acting as a group, acquires
(or has acquired during the 12-month period ending on the date of the most
recent acquisition by such person or persons) assets of FNB or the Bank
having a total gross fair market value equal to or exceeding 40% of the
total gross fair market value of all of the assets of FNB or the Bank, as
applicable, immediately before the acquisition or
acquisitions. For this purpose, gross fair market value means
the value of the assets of FNB or the Bank, as applicable, or the value of
the assets being disposed of, determined without regard to any liabilities
associated with the assets.
|
(v) Except
to the extent otherwise provided in Section 20, amounts payable pursuant to this
Section 5(f) shall be paid in one lump sum within five business days following
the date of the termination of the Employee’s employment.
(vi) Following
a Termination Event that gives rise to the Employee's rights hereunder, the
Employee shall have six months from the date of occurrence of the Termination
Event to resign his employment, upon 60 days prior written notice to the Bank,
and terminate this Agreement pursuant to this Section 5(f)(ii); provided,
however that no such resignation and termination of employment shall give rise
to any rights under this Section 5(f)(ii) unless the effective date of the
resignation and termination is on or before the second anniversary of the date
of the Change in Control. Any such termination shall be deemed to
have occurred only upon delivery to FNB or the Bank, or any successors thereto,
of written notice of termination, which describes the Change of Control and
Termination Event. If the Employee does not so resign his employment and
terminate this Agreement within such six-month period, the Employee shall
thereafter have no further rights hereunder with respect to that Termination
Event, but shall retain rights, if any, hereunder with respect to any other
Termination Event as to which
9
the
24-month period following the Change of Control has not expired; provided,
however that no such resignation and termination of employment shall give rise
to any rights under this Section 5(f)(ii) unless the effective date of the
resignation and termination is on or before the second anniversary of the date
of the Change in Control.
(vii) It
is the intent of the parties hereto that all payments made pursuant to this
Agreement be deductible by FNB or the Bank for federal income tax purposes and
not result in the imposition of an excise tax on the Employee. Notwithstanding
anything contained in this Agreement to the contrary, any payments to be made to
or for the benefit of the Employee that are deemed to be "parachute payments" as
that term is defined in Section 280G(b)(2) of the Code shall be modified or
reduced to the extent deemed to be necessary by the Bank's Board of Directors to
avoid the imposition of an excise tax on the Employee under Section 4999 of the
Code or the disallowance of a deduction to the Bank under Section 280G(a) of the
Code.
6. No Solicitation of Change in
Control. The Employee will not solicit, counsel or encourage
any acquisition, merger or other change in control of FNB or the Bank without
the prior written approval of the Board of Directors of the Bank or
FNB. A violation of this Section 6 shall be deemed to constitute a
forfeiture by the Employee of all of his rights under Section 5(f)
hereof.
7. Noncompetition Covenant;
Nonsolicitation. For purposes of this Section 7 and the
following Sections 8 through 12, “Bank” shall mean the Bank, FNB and/or any of
its subsidiaries.
(a) For
a period commencing on the date hereof and continuing until (i) one (1) year
after the date of expiration of the term hereof or the date that any termination
of the Employee’s employment under this Agreement becomes effective or (ii) the
last day of the period after the date that any termination of the Employee’s
employment under this Agreement becomes effective in which the Employee is
entitled to receive any Base Salary pursuant to Section 5 hereof, whichever is
later, the Employee will not, directly or indirectly:
(i) own
any interest in, manage, operate, control, be employed by, render consulting or
advisory services to, or participate in or be connected with the management or
control of any business that is then engaged in the operation of a bank, savings
bank, credit union, mortgage company, savings and loan association or similar
financial institution that conducts any of its operations within 60 miles of
Rockingham, North Carolina; provided, however, that the Employee may, without
violating this Agreement, own as a passive investment not in excess of two
percent (2%) of the outstanding capital stock of any such business whose stock
is publicly traded or quoted on the NASDAQ over-the-counter market, the New York
Stock Exchange, the American Stock Exchange, the National Daily Quotation System
“Pink Sheets” or the OTC Bulletin Board;
10
(ii) influence
or attempt to influence any customer of the Bank to discontinue its use of the
Bank’s services or to divert such business to any other person, firm or
corporation;
(iii) interfere
with, disrupt or attempt to disrupt the relationship, contractual or otherwise,
between the Bank and any of its respective customers, suppliers, principals,
distributors, lessors or licensors; and
(iv) solicit
any officer or employee of the Bank, whose base annual salary at the time of the
Employee’s termination was $20,000 or more, to work for any other person, firm
or corporation.
(b) It
is expressly agreed that the provisions and covenants in this Section 7 shall
not apply and shall be of no force or effect in the event that the Bank fails to
honor its obligations hereunder.
(c) The
Employee and the Bank intend that Section 7 of this Agreement be enforced as
written. However, if one or more of the provisions contained in
Section 7 shall for any reason be held to be unenforceable because of the
duration or scope of such provision or the area covered thereby, the Employee
and the Bank agree that the court making such determination shall have the power
to reform the duration, scope and/or area of such provision and in its reformed
form such provision shall then be enforceable and shall be binding on the
parties.
8. Confidentiality. The
Employee hereby acknowledges and agrees that (i) in the course of his service as
an employee of the Bank, he will gain substantial knowledge of and familiarity
with the Bank’s customers and its dealings with them, and other information
concerning the business of the Bank, all of which constitute valuable assets and
privileged information that is particularly sensitive due to the fiduciary
responsibilities inherent in the banking business; and (ii) to protect the
interest in and to assure the benefit of the business of the Bank, it is
reasonable and necessary to place certain restrictions on the Employee’s ability
to disclose information about the business and customers of the
Bank. For that purpose, and in consideration of the agreements
contained herein, the Employee covenants and agrees that any and all data,
figures, projections, estimates, lists, files, records, documents, manuals or
other such materials or information (financial or otherwise) relating to the
Bank and its business, regulatory examinations, financial results and condition,
lending and deposit operations, customers (including lists of the customers and
information regarding their accounts and business dealings with the Bank),
policies and procedures, computer systems and software, shareholders, employees,
officers and directors (herein referred to as “Confidential Information”) are
proprietary to the Bank and are valuable, special and unique assets of the
business to which the Employee will have access during his employment
hereunder. The Employee shall consider, treat and maintain all
Confidential Information as the confidential, private and privileged records and
information of the Bank. Further, at all times during the term of his
employment and following the termination of his employment under this Agreement
for any reason, and except as shall be required in the course of the performance
by the Employee of his duties on behalf of the Bank or otherwise pursuant to the
direct, written authorization of the Bank, the Employee will not divulge any
Confidential Information to any other person, firm, corporation, bank, savings
and loan association or similar financial institution, remove any such
Confidential Information in
11
written
or other recorded form from the Bank’s premises, or make any use of the
Confidential Information for his own purposes or for the benefit of any person,
firm, corporation, bank, savings and loan association or similar financial
institution other than the Bank. However, following the termination
of the Employee’s employment with the Bank, this Section 8 shall not apply to
any Confidential Information which then is in the public domain (provided that
the Employee was not responsible, directly or indirectly, for permitting such
Confidential Information to enter the public domain without the Bank’s consent),
or which is obtained by the Employee from a third party which or who is not
obligated under an agreement of confidentiality with respect to such
information.
9. Remedies Upon
Breach. Each party agrees that any breach of this Agreement by
either party could cause irreparable damage to the other party and that in the
event of such breach the other party shall have, in addition to any and all
remedies of law, the right to an injunction, specific performance or other
equitable relief to prevent the violation of the obligations of the breaching
party hereunder, without the necessity of posting a bond, plus the recovery of
any and all costs and expenses incurred by the enforcing party, including
reasonable attorneys’ fees in connection with the enforcement of this Agreement,
provided that the enforcing party shall have been successful on the merits or
otherwise in any proceeding related to the enforcement thereof.
10. Acknowledgments. The
Employee hereby acknowledges that the enforcement of Sections 7 and 8 of this
Agreement is necessary to ensure the preservation, protection and continuity of
the business, trade secrets and goodwill of the Bank, and that the restrictions
set forth in Sections 7 and 8 of this Agreement are reasonable as to time, scope
and territory and in all other respects.
11. Tolling
Period. In the event the Employee breaches any of the
provisions contained herein and the Bank seeks compliance with such provisions
by judicial proceedings, the time period during which the Employee is restricted
by such provisions shall be extended by the time during which the Employee has
actually competed with the Bank or been in violation of any such provision and
any period of litigation required to enforce the Employee’s obligations under
this Agreement.
12. Termination of Previous
Employment Agreement. The Employee specifically agrees that
the Employment Agreement dated November 22, 1996, as the same may have been
amended, by and between the Employee and Richmond Savings was terminated by the
Prior Agreement and is of no further force or effect, and the Employee has
waived in the Prior Agreement any and all of his rights, and released the Bank
and Richmond Savings from any and all obligations, under such
agreement.
13. Severability. In
case any one or more of the provisions contained in this
Agreement for any reason shall be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement but this Agreement shall
be construed as if such invalid, illegal or unenforceable provisions had never
been contained herein.
12
14. Consent and Waiver by Third
Parties. The Employee hereby represents and warrants that his
employment with the Bank on the terms and conditions set forth herein and his
execution and performance of this Agreement do not constitute a breach or
violation of any other agreement, obligation or understanding with any third
party. The Employee represents that he is not bound by any agreement
or any other existing or previous business relationship which conflicts with, or
may conflict with, the performance of his obligations hereunder or prevents the
full performance of his duties and obligations hereunder.
15. Waivers and
Modifications. This Agreement may be modified, and the rights
and remedies of any provision hereof may be waived, only in accordance with this
Section 15. No waiver by either party of any breach by the other or any
provision hereof shall be deemed to be a waiver of any later or other breach
thereof or as a waiver of any other provision of this Agreement. This
Agreement sets forth all of the terms of the understandings between the parties
with reference to the subject matter set forth herein and may not be waived,
changed, discharged or terminated orally or by any course of dealing between the
parties, but only by an instrument in writing signed by the party against whom
any waiver, change, discharge or termination is sought.
16. Assignment. The
Employee acknowledges that the services to be rendered by him are unique and
personal. Accordingly, the Employee may not assign any of his rights
or delegate any of his duties or obligations under this
Agreement. The Bank shall have the right to assign this Agreement to
FNB or any of its subsidiaries or to its successors under law, and the rights
and obligations of the Bank under this Agreement shall inure to the benefit of,
and shall be binding upon, the successors and permitted assigns of the
Bank.
17. Notices. All
notices hereunder shall be (i) delivered by hand, (ii) sent by first-class
certified mail, postage prepaid, return receipt requested, (iii) delivered by
overnight commercial courier, or (iv) transmitted by telecopy or facsimile
machine, to the following address of the party to whom such notice is to be
made, or to such other address as such party may designate in the same manner
provided herein:
If to the
Bank:
CommunityONE
Bank, National Association
Attention: Xx.
Xxxxxxx X. Xxxxxx, President
000
Xxxxxx Xxxxxx
Xxxxxxxx,
Xxxxx Xxxxxxxx 00000
With copy
to:
Xxxxxx
Xxxx Xxxxxx Xxxx & Xxxxxxxxxx PLLC
Attention:
Xxxxxxx X. Xxxxxx
000 Xxxxx
Xxx Xxxxxx
0000
Xxxxxxxxxxx Xxxxx
Xxxxxxxxxx,
Xxxxx Xxxxxxxx 00000
If to the
Employee, to his last address as shown on the personnel records of the
Bank.
13
18. Survival of
Obligations. The Employee’s obligations under Sections 7
through 12 of this Agreement shall survive the termination of his employment
with the Bank regardless of the manner of such termination and shall be binding
upon his heirs, executors and administrators. The existence of any
claim or cause of action by Employee against the Bank or FNB shall not
constitute and shall not be asserted as a defense to the enforcement by the Bank
of this Agreement.
19. Governing
Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of North Carolina.
20. Code §
409A. To the extent any payments under this Agreement are
subject to Section 409A, it is the intent of the parties that this Agreement and
all such payments shall be made in compliance with the requirements of Section
409A of the Code and the regulations promulgated thereunder. If any
provision of this Agreement shall not be in compliance with Section 409A and the
regulations thereunder and payment pursuant to such provision is not otherwise
exempt from Section 409A, then such provision shall be deemed automatically
amended without further action on the part of the Bank or the Employee to the
minimum extent necessary to cause such provision to be in compliance with
Section 409A and such provision will thereafter be given effect as so
amended. Notwithstanding anything herein to the contrary, if
postponing payment of any amounts due under this Agreement is necessary for
compliance with the requirements of Section 409A of the Code and the regulations
thereunder to avoid adverse tax consequences to the Employee, then payment of
such amounts shall be postponed to comply with Section 409A. Any and
all payments that are postponed under this Section 20 shall be paid to the
Employee in a lump sum at the earliest time that does not result in adverse tax
consequences to the Employee under Section 409A.
IN WITNESS WHEREOF, the parties hereto
have executed this Agreement as of the date first above written.
|
CommunityONE
Bank, National Association
|
||
|
By
|
/s/
Xxxxxxx X. Xxxxxx
|
|
|
Xxxxxxx
X. Xxxxxx, President
|
||
|
/s/
R. Xxxxx Xxxxxxxx
|
||
|
R.
Xxxxx Xxxxxxxx
|
||
14
