Exhibit 10
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
effective as of the 1st day of January, 2006 (the "Effective Date") by and among
FNB Corp., a North Carolina corporation ("FNB"), First National Bank and Trust
Company, a national banking association and wholly owned subsidiary of FNB (the
"Bank"), and Xxxxxxx X. Xxxxxx, President of each of FNB and the Bank (the
"Executive"). FNB and the Bank are hereinafter sometimes referred to together or
individually as the "Employer."
WITNESSETH:
WHEREAS, the Executive is currently employed as the President of each of
FNB and the Bank and is highly knowledgeable about their businesses, operations,
markets and customers;
WHEREAS, the Executive is a valued executive of the Employer and, to induce
the Executive to continue employment with the Employer and to enhance the
Executive's job security, the Employer desires to enter into this Agreement that
will provide compensation to the Executive in certain events, including but not
limited to the Executive's termination of employment following a change in
control of the Employer;
WHEREAS, because the Executive has become familiar with and will continue
to gain extensive knowledge regarding the Employer's products, relationships,
trade secrets and confidential information relating to the Employer and its
business, products, processes and developments and has generated and will
continue to generate confidential information in the course of his duties, the
Employer wishes to protect its long-term interests by having the Executive enter
into certain nondisclosure and noncompetition covenants set forth in this
Agreement; and
WHEREAS, the Bank and the Executive are parties to an employment agreement
dated as of December 27, 1995, but the parties hereto intend that this
Employment Agreement shall supersede in its entirety the December 27, 1995
employment agreement, and that from and after the effective date of this
Employment Agreement the December 27, 1995 employment agreement shall be of no
further force or 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 Employer, is contemplated insofar as the
Employer or any affiliates are concerned.
NOW, THEREFORE, in consideration of the terms contained herein, including
the compensation the Employer agrees to pay to the Executive upon certain
events, the Executive's continued employment with the Employer, the Executive's
covenants and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Employer and the Executive hereby agree as
follows:
1. Employment and Duties.
(a) Employment. During the Employment Term (as defined in Section 3 below),
and upon the terms and conditions set forth in this Agreement, the Employer
shall employ the Executive, and the Executive shall serve, as President and
Chief Executive Officer of each of FNB and the Bank. As such, the Executive
shall have the responsibilities, duties and authority reasonably accorded to,
expected of, and consistent with those positions and will report directly to the
board of directors of each of FNB Corp. and the Bank (hereinafter sometimes
referred to together or individually as the "Board"). The Executive shall serve
the Employer faithfully, diligently, competently, and to the best of his
ability, and he shall exclusively devote his full time, energy, and attention to
the business of the Employer and to the promotion of the Employer's interests
throughout the Employment Term. The Executive shall faithfully adhere to,
execute and fulfill all lawful requests, instructions and policies made by the
Board or its authorized agent(s).
(b) No Other Employment. Without the written consent of FNB's board of
directors, during the Employment Term, the Executive shall not render services
to or for any person, firm, corporation, or other entity or organization in
exchange for compensation, regardless of the form in which such compensation is
paid and regardless of whether it is paid directly or indirectly to the
Executive. The foregoing limitation shall not be construed as prohibiting the
Executive from managing his personal affairs in a manner that does not interfere
with the proper performance of his duties and responsibilities as President or
making or managing personal investments in such form or manner as will not
require his services in the operation or affairs of the companies or enterprises
in which such investments are made and will not violate Section 6 below.
(c) Board of Directors of FNB. The Executive is currently serving as a
director of FNB. FNB shall nominate the Executive for election as a director at
such times as necessary so that the Executive will, if elected by shareholders,
remain a director of FNB throughout the term of this Employment Agreement. The
Executive hereby consents to serve as a director of FNB, and the Executive
hereby consents to being named as a director of FNB in documents filed by FNB
with the Securities and Exchange Commission. The Executive shall be deemed to
have resigned as a director of FNB effective immediately after termination of
the Executive's employment under Section 4 of this Agreement other than by
reason of the Executive's retirement under Section 4(g), regardless of whether
the Executive submits a formal, written resignation as director.
(d) Board of Directors of the Bank. The Executive is currently serving as a
director of the Bank. The Board shall undertake every lawful effort to ensure
that the Executive continues throughout the term of his employment to be elected
or reelected as a director of the Bank. The Executive shall be deemed to have
resigned as a director of the Bank effective immediately after termination of
the Executive's employment under Section 4 of this Agreement other than by
reason of the Executive's retirement under Section 4(g), regardless of whether
the Executive submits a formal, written resignation as director.
2. Compensation. For all services rendered by the Executive during the
Employment Term as defined in Section 3 below, the Employer shall compensate the
Executive as follows:
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(a) Base Salary. During the Employment Term, the Employer shall pay the
Executive an annual salary in an amount not less than the amount of the
Executive's annual salary as of the Effective Date (such salary as it may be
increased from time to time being hereinafter referred to as the "Base Salary").
Such salary shall be payable in accordance with the Employer's customary payroll
practices and shall be subject to all applicable federal and state withholding,
payroll and other taxes. During the Employment Term, the Base Salary shall be
reviewed annually by the Compensation Committee of FNB's board of directors or
by such other board committee as has jurisdiction over executive compensation
and may be increased from time to time consistent with such review.
(b) Perquisites, Benefits and Other Compensation. During the Employment
Term, the Executive shall be entitled to receive additional benefits and
compensation from the Employer in such form and to such extent as specified
below:
(i) Benefit Plans and Programs. The Executive will be entitled to
participate, in accordance with the provisions thereof, in all group health,
disability and life insurance, and all bonus, pension, retirement and other
employee benefit plans and programs made available by the Employer to its
employees generally or to its senior officers. Without limiting the generality
of the foregoing, the Executive shall be entitled to participate, in accordance
with the provisions thereof, in the Employer's arrangement for performance
compensation for stakeholders (or any successor plan) (the "Stakeholders Plan")
and the CEO supplement for the Stakeholders Plan. In addition, the Executive
shall be eligible to participate in the Employer's stock-based incentive
compensation plans then available to other employees or executives of the
Employer in accordance with the provisions of such plans and with awards
thereunder determined by FNB's board of directors or by the Compensation
Committee of the Board, in its sole discretion.
(ii) Supplemental Plan. The Executive will be entitled to participate, in
accordance with the provisions thereof, in the FNB Supplemental Executive
Retirement Plan, as such plan may be amended from time to time.
(iii) Club Dues. The Employer shall pay or reimburse the Executive for the
monthly dues and assessments necessary for the Executive to maintain the status
of an active member of the Asheboro Country Club and Pinewood Country Club or
such other clubs as are reasonably necessary to the conduct of the Employer's
business and as the Compensation Committee of FNB's board of directors may from
time to time approve. The Employer shall also pay or reimburse the Executive for
the dues and expenses incurred by the Executive for membership in such civic
clubs or groups as are reasonably necessary to the conduct of the Employer's
business and as may be approved by the Compensation Committee.
(iv) Vacation. The Executive shall be entitled to paid annual vacation and
sick leave in accordance with the policies established from time to time by the
Employer.
(v) Automobile. The Employer shall provide the Executive 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 Executive will be
appropriately accounted for and reported as additional compensation.
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(vi) Business Expenses. The Employer shall reimburse the Executive for any
reasonable out-of-pocket business and travel expenses incurred by the Executive
in the ordinary course of performing his duties for the Employer upon
presentation by the Executive, from time to time, of appropriate documentation
therefor and in accordance with the Employer's policies and practices as
established or modified from time to time.
(vii) Meeting and Convention Attendance. The Employer shall pay all
registration, travel, accommodation and meal expenses for the Executive to
attend such meetings and conferences as are approved by the Board or an
appropriate committee of the Board. The Employer shall also pay all
registration, travel, accommodation and meal expenses for the Executive and his
spouse to attend the annual conventions of the American and North Carolina
Bankers Associations each year.
3. Term. The initial term of this Agreement shall be for a period of three
years commencing on the Effective Date. On the first anniversary of the
Effective Date of this Employment Agreement and on each anniversary thereafter,
this Employment Agreement shall be extended automatically for one additional
year unless FNB's board of directors determines that the term shall not be
extended. If the board of directors determines not to extend the term, it shall
promptly notify the Executive in writing. If the board of directors decides not
to extend the term of this Agreement, this Agreement shall nevertheless remain
in full force until its term expires. The board of director's decision not to
extend the term of this Agreement shall not - by itself - give the Executive any
rights under this Agreement to claim an adverse change in his position,
compensation, or circumstances or otherwise to claim entitlement to severance
benefits under this Agreement. Unless sooner terminated, this Agreement and the
Executive's employment hereunder shall terminate on December 31 of the year in
which the Executive attains age 65. The Executive's total term of employment
with the Employer during the initial and any extended term is collectively
defined and sometimes referred to under this Agreement as the "Employment Term."
4. Termination. The Executive's term of employment under this Agreement may
be terminated before the end of the initial term or any extension thereof as
follows:
(a) Death. In the event of the death of the Executive during his employment
under this Agreement, this Agreement shall be terminated as of the date of
death. In such event, the Employer shall pay the Executive'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 Executive's designated beneficiary, or,
in the absence of such designation, to the estate or other legal representative
of the Executive. In addition, the Employer shall pay to the Executive's
designated beneficiary, or, in the absence of such designation, to the estate or
other legal representative of the Executive, at the same time as bonus payments
for the year of death would otherwise be payable under the Stakeholders Plan, a
prorated bonus for the year of death that the Executive would have received if
he had been employed throughout such year and had received the same performance
rating as he received for the immediately preceding year, prorated on a daily
basis as of the date of the Executive's death. Any rights and benefits the
Executive's estate or any other person may have under employee benefit plans and
programs of the Employer in the event of the Executive's death shall be
determined in accordance with the terms of such plans and programs.
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(b) Long-Term Disability. If the Executive 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 Executive under
this Agreement shall, at the election of the Employer, be terminated effective
as of the ninetieth day of such period. Upon termination of the Executive's
employment by reason of disability under this Section 4(b), the Executive 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 Executive
on a policy maintained for the benefit of the Executive by the Employer, through
the end of the then current term of this Agreement. Any rights and benefits the
Executive may have under the employee benefit plans and programs of the Employer
in the event of the Executive's disability 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 Executive to perform his customary or other comparable duties
with the Employer, with or without reasonable accommodation. In the event that
the Executive and the Employer are unable to agree as to whether the Executive
is suffering a disability, the Executive and the Employer 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 Executive is suffering a disability shall be
based upon the determination of a majority of the three physicians. The Employer
shall pay the reasonable fees and expenses of all physicians selected pursuant
to this Section 4(b).
(c) Termination for Cause. Nothing herein shall prevent the Employer from
terminating the Executive's employment at any time for Cause (as hereinafter
defined). Upon termination for Cause, the Executive shall receive his Base
Salary only through the date that such termination becomes effective and the
amount of any compensation previously deferred by the Executive, provided that
the payment of any such deferred amount will be made in accordance with the
provisions of the plan, program or arrangement of the Employer permitting the
deferral. Neither the Executive nor any other person shall be entitled to any
further payments from the Employer, for salary or any other amounts.
Notwithstanding the foregoing, any rights and benefits the Executive may have
under the employee benefit plans and programs of the Employer following a
termination of the Executive'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 a
termination by the Employer of the Executive's employment by a vote of the
majority of the Board members then in office, as a result of (i) an intentional,
willful and continued failure by the Executive to perform his duties in the
capacities indicated above (other than due to disability); (ii) an intentional,
willful and material breach by the Executive of his fiduciary duties of loyalty
and care to the Employer; (iii) an intentional, willful and knowing violation by
the Executive of any provision of this Agreement; (iv) an intentional, willful
and knowing violation by the Executive of the Employer's Code of Business Ethics
or Code of Ethics for Senior Financial Officers; (v) a conviction of, or the
entering of a plea of nolo contendere by the Executive for any felony or any
crime involving fraud or dishonesty, or (vi) a willful and knowing violation of
any material federal or state banking law or regulation applicable to the
Employer or the occurrence of any event described in Section 19 of the Federal
Deposit Insurance Act or any other act or event as a result of which the
Executive becomes unacceptable to, or is removed, suspended or prohibited from
participating in the conduct of the Employer's affairs by any regulatory
authority having jurisdiction over the Employer; provided, however, that the
Board has given the Executive advance notice of such termination for Cause,
including the reasons therefor, together with a reasonable opportunity for the
Executive to appear with counsel before the Board and to reply to such notice.
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(d) Termination Other than for Cause. The Employer may terminate the
Executive's employment under this Agreement at any time upon 90 days written
notice to the Executive for whatever reason it deems appropriate, or for no
reason. In the event such termination by the Employer occurs and is not due to
death as provided in Section 4(a) above, disability as provided in Section 4(b)
above or for Cause as provided in Section 4(c) above, the Employer shall (i)
continue the Executive's Base Salary, at the rate in effect at the time of such
termination, through the end of the then current term of this Agreement, (ii)
pay to the Executive for the year of termination and for each subsequent
calendar year or portion thereof through the end of the then current term of
this Agreement an amount (prorated in the case of any partial year) equal to the
average of the bonuses paid to the Executive under the Stakeholders Plan and the
CEO supplement for 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, and (iii) pay
to the Executive the amount of any compensation previously deferred by the
Executive, provided that the payment of any such deferred amount will be made in
accordance with the provisions of the plan, program or arrangement of the
Employer permitting the deferral. All compensation continuation shall be subject
to applicable federal and state withholding taxes. Any rights and benefits the
Executive may have under employee benefit plans and programs of the Employer
following a termination of the Executive's employment by the Employer other than
for Cause shall be determined in accordance with the terms of such plans and
programs; provided that all stock options and restricted stock awards granted to
the Executive and outstanding as of the date of termination (other than those
under which vesting is performance-based or is dependent upon the satisfaction
of conditions other than continued employment) shall become immediately and
fully vested and the Executive shall have up to three years to exercise all such
outstanding options following the date of termination but in no event beyond
their specified term. In addition to and notwithstanding the foregoing, in the
event of a termination pursuant to this Section 4(d), the Employer shall
continue to provide to the Executive either group health, disability and life
insurance benefits upon substantially the same terms and conditions (including
contributions required by the Executive for such benefits) as those of the
applicable employee benefit plans in effect from time to time as applied to the
Employer's employees generally or the economic equivalent thereof until the
first to occur of: (i) the Executive's return to employment with the Employer or
another employer; (ii) December 31 of the year in which the Executive attains
age 65; (iii) the Executive's death, (iv) the end of the term remaining under
this Agreement at the time the Executive's employment is terminated; or (v)
December 31 of the second calendar year following the year in which the
Executive's employment is terminated.
In the event a termination by the Employer of the Executive's employment
under this Agreement occurs within 24 months following a Change in Control (as
defined in Section 5(c)) and is not due to death as provided in Section 4(a)
above, disability as provided in Section 4(b) above, or for Cause as provided in
Section 4(c) above, then the Executive's rights to compensation shall be
governed by Section 5 and not this Section 4(d).
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(e) At the Executive's Option with Good Reason. The Executive may terminate
his employment with Good Reason (as defined below) upon at least 60 days advance
notice to Employer; provided that the termination will take effect at the end of
the 60-day notice period unless the event or circumstance constituting Good
Reason is cured by the Employer or unless the notice of termination with Good
Reason is revoked by the Executive within such 60-day period. In the event of
such a voluntary termination of employment with Good Reason, the Employer shall
(i) continue the Executive's Base Salary, at the rate in effect at the time of
such termination, through the end of the then current term of this Agreement,
(ii) pay to the Executive for the year of termination and for each subsequent
calendar year or portion thereof through the end of the then current term of
this Agreement an amount (prorated in the case of any partial year) equal to the
average of the bonuses paid to the Executive under the Stakeholders Plan and the
CEO supplement for 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, and (iii) pay
to the Executive the amount of any compensation previously deferred by the
Executive, provided that the payment of any such deferred amount will be made in
accordance with the provisions of the plan, program or arrangement of the
Employer permitting the deferral. All compensation continuation shall be subject
to applicable federal and state withholding taxes. Any rights and benefits the
Executive may have under employee benefit plans and programs of the Employer
following a termination by the Executive of his employment for Good Reason shall
be determined in accordance with the terms of such plans and programs; provided
that all stock options and restricted stock awards granted to the Executive and
outstanding as of the date of termination (other than those under which vesting
is performance-based or is dependent upon the satisfaction of conditions other
than continued employment) shall become immediately and fully vested and the
Executive shall have up to three years to exercise all such outstanding options
following the date of termination but in no event beyond their specified term.
In addition to and notwithstanding the foregoing, in the event of a termination
pursuant to this Section 4(e), the Employer shall continue to provide to the
Executive either group health, disability and life insurance benefits upon
substantially the same terms and conditions (including contributions required by
the Executive for such benefits) as those of the applicable employee benefit
plans in effect from time to time as applied to the Employer's employees
generally or the economic equivalent thereof until the first to occur of: (i)
the Executive's return to employment with the Employer or another employer; (ii)
December 31 of the year in which the Executive attains age 65; (iii) the
Executive's death, (iv) the end of the term remaining under this Agreement at
the time the Executive's employment is terminated; or (v) December 31 of the
second calendar year following the year in which the Executive's employment is
terminated.
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For purposes of this Agreement, termination with Good Reason means a
termination of the Executive's employment by the Executive due to a failure of
the Employer or any successor to fulfill its obligations under this Agreement in
any material respect, including (a)any failure to elect or reelect or to appoint
or reappoint the Executive to the office of President and Chief Executive
Officer of each of FNB and the Bank or as a member of each of their boards of
directors, or (b) any other material change by the Employer in the functions,
duties or responsibilities of the Executive's position as chief executive
officer with the Employer that would reduce the ranking or level, dignity,
responsibility, importance or scope of such position, or (c) any imposition on
the Executive of a requirement to be permanently based at a location more than
50 miles from the principal office of the Employer as of the date of this
Agreement without the consent of the Executive, or (d) any reduction without the
consent of the Executive in the Executive's annual salary below the Base Salary
then provided for under Section 2(a).
In the event a termination by the Executive of his employment under this
Agreement occurs within 24 months following a Change in Control (as
defined in Section 5(c)) and such termination is for Good Reason, then the
Executive's rights to compensation shall be governed by Section 5 and not this
Section 4(e).
(f) At the Executive's Option without Good Reason. The Executive may
terminate his employment without Good Reason at any time upon at least 60 days
advance written notice to the Employer; provided, however, that the Employer, in
its discretion, may cause such termination to be effective at any time during
such notice period. In the event of such a voluntary termination of employment
without Good Reason, the Executive 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 Executive's termination becomes effective. Notwithstanding the
foregoing, any rights and benefits the Executive may have under employee benefit
plans and programs of the Employer following a voluntary termination of the
Executive's employment without Good Reason shall be determined in accordance
with the terms of such plans and programs.
(g) Retirement. The Executive's employment under this Agreement shall
terminate upon the date of the Executive's retirement, which date (hereinafter
referred to as the "Retirement Date") shall be the earlier to occur of (i)
December 31 of the year in which the Executive attains age 65, and (ii) the date
on which the Executive voluntarily terminates his employment upon satisfaction
of the requirements for early retirement under the Employer's retirement plans.
In the event of the Executive's retirement, (i) the Executive shall be entitled
to receive all earned but unpaid Base Salary through the Retirement Date; (ii)
the Employer shall pay to the Executive, at the same time as bonus payments for
the year in which the Retirement Date occurs would otherwise be made under the
Stakeholders Plan, a prorated bonus for such year equal to the amount of the
bonus the Executive would have received if he had been employed throughout such
year, prorated on a daily basis as of the Retirement Date; (iii) all stock
options and restricted stock awards granted to the Executive and outstanding as
of the date the Retirement Date (other than those under which vesting is
performance-based or is dependent upon the satisfaction of conditions other than
continued employment) shall become immediately and fully vested; and (iv) the
Executive shall receive such retirement and other benefits as he is entitled to
receive under, and in accordance with, the terms of the Employer's retirement
and other benefit plans.
5. Termination Following a Change in Control.
(a) Change in Control Cash Benefits. If the Executive's employment is
terminated by the Employer other than for Cause or by the Executive with Good
Reason within 24 months following a Change in Control, then the Executive shall
be entitled to receive an aggregate amount in cash equal to 2.99 multiplied by
the Executive's average annual cash compensation for the five fiscal years
immediately preceding the Change in Control. Such amount shall be payable on the
date that is six months after termination of employment.
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(b) Benefit Plans. In addition to the benefit set forth in Section 5(a), if
the Executive's employment is terminated by the Employer other than for Cause or
by the Executive with Good Reason within 24 months following a Change in
Control, then the Employer shall continue to provide to the Executive either
group health, disability and life insurance benefits upon substantially the same
terms and conditions (including any contributions required by the Executive for
such benefits) as those of the applicable benefit plans in effect from time to
time as applied to the Employer's employees generally or the economic equivalent
thereof. The foregoing benefits shall continue until the first to occur of: (i)
the Executive's return to employment with the Employer or another employer; (ii)
December 31 of the year in which the Executive attains age 65; (iii) the
Executive's death; (iv) the end of the term remaining under this Agreement at
the time the Executive's employment is terminated; or (v) December 31 of the
second calendar year following the year in which the Executive's employment is
terminated. The Employer shall also cause the Executive to become fully vested
in any qualified and nonqualified plans, programs or arrangements in which the
Executive participated if the plan, program or arrangement does not address the
effect of a Change in Control. Subject to the foregoing, any rights and benefits
the Executive may have under the employee benefit plans and programs of the
Employer following a termination of the Executive's employment by the Employer
other than for Cause or by the Executive with Good Reason shall be determined in
accordance with the terms of such plans and programs.
(c) Definition of Change in Control. For the purposes of this Agreement,
the term "Change in Control" shall mean any of the following events:
(i) After the effective date of this Agreement, any "person" (as such term
is defined in section 3(a)(9) of the Securities Exchange Act of 1934, as
amended, and as used in sections 13(d)(3) and 14(d)(2) of such Act), directly or
indirectly, acquires beneficial ownership of voting stock, or acquires
irrevocable proxies or any combination of voting stock and irrevocable proxies,
representing twenty-five percent (25%) or more of any class of voting securities
of FNB or the Bank, or acquires control of in any manner the election of a
majority of the directors of FNB or the Bank;
(ii) FNB or the Bank consolidates or merges with or into another
corporation, association, or entity, or is otherwise reorganized, where FNB or
the Bank is not the surviving corporation in such transaction and the holders of
the voting securities of FNB or the Bank immediately prior to such acquisition
own less than a majority of the voting securities of the surviving entity
immediately after the transaction; or
(iii) All or substantially all of the assets of FNB or the Bank are sold or
otherwise transferred to or are acquired by any other corporation, association,
or other person, entity, or group; or
(iv) Individuals who, as of the date hereof, constitute the Board of
Directors of FNB (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual becoming a
director after the date hereof whose election, or nomination for election by
FNB's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of any "person" (as defined above) other than FNB's
Board of Directors.
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(d) No Multiple Severance Payments. If the Executive receives payment under
this Section 5, he shall not be entitled to any severance benefits under Section
4.
(e) No Solicitation of Change in Control. The Executive will not solicit,
counsel or encourage any third party to offer, propose or pursue, or to solicit,
counsel or encourage another third party to offer, propose or pursue, any
acquisition, merger or other change in control of FNB or the Bank without the
prior authorization of the Board of Directors of the Bank or FNB as reflected in
the minutes of a regular or special meeting, or in a written consent action, of
the Board of Directors of the Bank or FNB. Any violation of this Section 5(e)
occurring in connection with an offer, proposal or pursuit by a third party to
engage in an acquisition, merger or other change in control of FNB or the Bank
shall be deemed to constitute a forfeiture by the Executive of all of his rights
under Sections 5(a) and 5(b) hereof.
(f) Gross-Up for Taxes.
(i) If the Executive receives the cash payment under Section 5(a) and
acceleration of benefits under any benefit, compensation, or incentive plan or
arrangement with the Employer (collectively, the "Total Benefits"), and if any
part of the Total Benefits is subject to excise taxes (the "Excise Tax") under
section 280G and section 4999 of the Internal Revenue Code of 1986, as amended
(the "Code"), the Employer shall pay to the Executive at the time specified in
subsection (iii) below an additional amount (the "Gross-Up Payment") such that
the net amount retained by the Executive, after deduction of any Excise Tax on
the Total Benefits and any U.S federal, state, and for local income or payroll
tax upon the Gross-Up Payment, but before deduction for any U.S. federal, state
and local income or payroll tax on the Total Benefits, shall be equal to the
Total Benefits. For purposes of calculating the Gross-Up Payment, the Executive
shall be deemed to pay income taxes at the highest applicable marginal rate of
federal, state or local income taxation for the calendar year in which the
Gross-Up Payment is to be made.
(ii) Subject to any determination made by the Internal Revenue Service (the
"IRS"), all determinations as to whether a Gross-Up Payment is required and the
amount of Gross-Up Payment and the assumptions to be used in arriving at the
determination shall be made by the Employer's independent certified public
accountants or tax counsel selected by such accountants or both (the
"Accountants") in accordance with the principles of section 280G of the Code.
All fees and expenses of the Accountants will be borne by the Employer. Subject
to any determinations made by the IRS, determinations of the Accountants under
this Agreement with respect to (x) the initial amount of any Gross-Up Payment
and (y) any subsequent adjustment of such payment shall be binding on the
Employer and the Executive.
(iii) The Gross-Up Payment calculated pursuant to Section 5(f)(ii) shall be
paid no later than the 30th day following an event occurring that subjects the
Executive to the Excise Tax; provided, however, that if the amount of such
Gross-Up Payment or portion thereof cannot be reasonably determined on or before
such day, the Employer shall pay to the Executive the amount of the Gross-Up
Payment no later than 10 days following the determination of the Gross-Up
Payment by the Accountants. Notwithstanding the foregoing, the Gross-Up Payment
shall be paid to or for the benefit of the Executive no later than 15 business
days prior to the date by which the Executive is required to pay the Excise Tax
or any portion of the Gross-Up Payment to any federal, state or local taxing
authority, without regard to extensions.
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(iv) In the event that the Excise Tax is subsequently determined by the
Accountants to be less than the amount taken into account hereunder at the time
the Gross-Up Payment is made, the Executive shall repay to the Employer, at the
time that the amount of such reduction in Excise Tax is finally determined, the
portion of the prior Gross-Up Payment attributable to such reduction (plus the
portion of the Gross-Up Payment attributable to the Excise Tax and U.S. federal,
state and local income tax imposed on the portion of the Gross-Up Payment being
repaid by the Executive if such repayment results in a reduction in Excise Tax
or a U.S. federal, state and local income tax deduction), plus interest on the
amount of such repayment at the rate provided in section 1274(b)(2)(B) of the
Code. Notwithstanding the foregoing, in the event any portion of the Gross-Up
Payment to be refunded to the Employer has been paid to any U.S. federal, state
and local tax authority, repayment thereof (and related amounts) shall not be
required until actual refund or credit of such portion has been made to the
Executive and interest payable to the Employer shall not exceed the interest
received or credited to the Executive by such tax authority for the period it
held such portion. The Executive and the Employer shall cooperate in good faith
in determining the course of action to be pursued (and the method of allocating
the expense thereof) if the Executive's claim for refund or credit is denied.
However, if agreement cannot be reached, the Employer shall decide the
appropriate course of action to pursue provided that the action does not
adversely affect any issues the Executive may have with respect to his tax
return, other than the Excise Tax.
(v) In the event that the Excise Tax is later determined by the Accountants
or the IRS to exceed the amount taken into account hereunder at the time the
Gross-Up Payment is made (including by reason of any payment the existence or
amount of which cannot be determined at the time of the Gross-Up Payment), the
Employer shall make an additional Gross-Up Payment to or for the benefit of the
Executive in respect of such excess (plus any interest or penalties payable with
respect to such excess) at the time that the amount of such excess is finally
determined.
(vi) In the event of any controversy with the IRS (or other taxing
authority) with regard to the Excise Tax, the Executive shall permit the
Employer to control issues related to the Excise Tax (at its expense), provided
that such issues do not potentially materially adversely affect the Executive.
In the event issues are interrelated, the Executive and the Employer shall in
good faith cooperate so as not to jeopardize resolution of either or any issue.
In the event of any conference with any taxing authority as to the Excise Tax or
associated income taxes, the Executive shall permit the representative of the
Employer to accompany the Executive, and the Executive and the Executive's
representative shall cooperate with the Employer and its representative.
(vii) The Employer shall be responsible for all charges of the Accountant.
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(viii) The Employer and the Executive shall promptly deliver to each other
copies of any written communications, and summaries of any oral communications,
with any taxing authority regarding the Excise Tax.
6. Covenant Not to Compete. For a period commencing on the date hereof and
continuing until (i) one year after the date of expiration of the Employment
Term or the date that any termination of Executive's employment under this
Agreement becomes effective or (ii) the last day of the period after the date
that any termination of the Executive's employment under this Agreement becomes
effective in which the Executive is entitled to receive any Base Salary pursuant
to Section 4 hereof, whichever is later, the Executive will not, without the
written consent of FNB or the Bank, directly or indirectly:
(a) 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, or proposing to
engage, 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 the counties in North Carolina in which
the Employer or any affiliate conducts operations as of the Effective Date and
within any other counties in North Carolina or in any other states added during
the Employment Term by the Employer's, or any affiliate's, conducting operations
therein; provided, however, that the Executive may, without violating this
Agreement, own as a passive investment not in excess of three percent (3%) 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;
(b) influence or attempt to influence any customer of the Employer or any
affiliate to discontinue its use of the Employer's (or such affiliate's)
services or to divert such business to any other person, firm or corporation;
(c) interfere with, disrupt or attempt to disrupt the relationship,
contractual or otherwise, between the Employer or any affiliate and any of its
respective customers, suppliers, principals, distributors, lessors or licensors;
and
(d) solicit any officer or executive of the Employer or any affiliate,
whose base annual salary at the time of the Executive's termination was $20,000
or more, to work for any other person, firm or corporation.
It is expressly agreed that the provisions and covenants in this Section 6
shall not apply and shall be of no force or effect in the event that (i) the
Employer fails to honor its obligations under this Agreement after termination
of the Executive's employment, or (ii) the Executive's employment hereunder is
terminated within 24 months after a Change in Control either by the Employer
other than for Cause or by the Executive with Good Reason.
In the event the Executive breaches any of the provisions contained herein
and the Employer seeks compliance with such provisions by judicial proceedings,
the time period during which the Executive is restricted by such provisions
shall be extended by the time during which the Executive has actually competed
with the Employer or been in violation of any such provision and any period of
litigation required to enforce the Executive's obligations under this Agreement.
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The Executive and the Employer intend that Section 6 of this Agreement be
enforced as written. However, if one or more of the provisions contained in
Section 6 shall for any reason be held to be unenforceable because of the
duration or scope of such provision or the area covered thereby, the Executive
and the Employer agree that the court making such determination shall have the
full power to reform, by "blue penciling" or any other means, 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.
7. Covenant Not to Disclose Confidential Information. The Executive hereby
acknowledges and agrees that (i) in the course of his service as an executive of
the Employer, he has and will gain substantial knowledge of and familiarity with
the Employer's customers and its dealings with them, and other information
concerning the business of the Employer, all of which constitute valuable assets
and privileged information that is particularly sensitive due to the fiduciary
responsibilities inherent in the Employer's business; and (ii) to protect the
interest in and to assure the benefit of the business of the Employer, it is
reasonable and necessary to place certain restrictions on the Executive's
ability to disclose information about the business and customers of the
Employer. For that purpose, and in consideration of the agreements contained
herein, the Executive 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 Employer 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 Employer),
policies and procedures, computer systems and software, shareholders,
executives, officers and directors (herein referred to as "Confidential
Information") are proprietary to the Employer and are valuable, special and
unique assets of the business to which the Executive will have access during his
employment hereunder. The Executive shall consider, treat and maintain all
Confidential Information as the confidential, private and privileged records and
information of the Employer. 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 Executive of his duties on behalf of the Employer or otherwise pursuant
to the direct, written authorization of the Employer, the Executive will not
divulge any Confidential Information to any other person, firm, corporation,
employer, bank or similar financial institution, remove any such Confidential
Information in written or other recorded form from the Employer's premises, or
make any use of the Confidential Information for his own purposes or for the
benefit of any person, firm, corporation, employer, bank or similar financial
institution other than the Employer. However, following the termination of the
Executive's employment with the Employer, this Section 7 shall not apply to any
Confidential Information which then is in the public domain (provided that the
Executive was not responsible, directly or indirectly, for permitting such
Confidential Information to enter the public domain without the Employer's
consent), or which is obtained by the Executive from a third party which or who
is not obligated under an agreement of confidentiality with respect to such
information.
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8. Acknowledgements.
(a) Reasonableness. The Executive hereby acknowledges that the enforcement
of Sections 6 and 7 of this Agreement is necessary to ensure the preservation,
protection and continuity of the business, trade secrets and goodwill of the
Employer, and that the restrictions set forth in Sections 6 and 7 of this
Agreement are reasonable as to time, scope and territory and in all other
respects.
(b) Survival of Obligations. The Executive understands that his obligations
under Sections 6 and 7 of this Agreement will continue whether or not his
employment with the Employer is terminated voluntarily or involuntarily, or
whether for Cause, or other than for Cause, with Good Reason or without Good
Reason or not. The existence of any claim or cause of action by the Executive
against the Employer shall not constitute and shall not be asserted as a defense
to the enforcement by the Employer of this Agreement.
(c) Remedies. The Executive acknowledges that in the event of any breach of
the provisions of Sections 6 and 7 hereof by the Executive, the Employer's
remedies at law would be inadequate, and the Employer shall be entitled to an
injunction (without any bond or other security being required), restraining such
breach, and costs and attorneys' fees relating to any such proceeding or any
other legal action to enforce the provisions of this Agreement, but nothing
herein shall be construed to preclude the Employer from pursuing any other
remedies at law or in equity available to it for any such breach.
9. Assignment and Binding Effect. This Agreement shall be binding upon, and
shall inure to the benefit of, the Executive and the Employer and, as permitted
by this Agreement, their respective successors and assigns. This Agreement is
personal to the Executive and, without the prior written consent of the
Employer, neither this Agreement nor any right or interest hereunder shall be
assignable by the Executive other than by will or the laws of descent and
distribution, and any attempt, voluntary or involuntary, to effect any such
prohibited assignment (including, without limitation, by transfer, charge,
pledge, hypothecation or sale) shall be null, void and of no effect. The
Employer will require any successor (whether direct or indirect, by purchase,
merger, consolidation, share exchange or otherwise) to all or substantially all
of the business or assets or both of the Employer to assume expressly in writing
and agree to perform this Agreement in the same manner and to the same extent
that the Employer would be required to perform it if no such succession had
taken place. As used in this Agreement, "the Employer" shall mean the Employer
as defined in the preamble and any successor to the business or assets or both
of FNB or the Bank as stated above that assumes and agrees to perform this
Agreement by operation of law or otherwise.
10. Complete Agreement. This Agreement replaces any previous agreement
relating to the same or similar subject matter which the Executive and the
Employer may have entered into with respect to the Executive's employment by the
Employer, including specifically the Employment Agreement entered into between
the Executive and the Employer dated December 27, 1995. The Executive has no
oral representations, understandings or agreements with the Employer or any of
its officers, directors or representatives covering the same subject matter as
this Agreement. This written Agreement is the final, complete and exclusive
statement and expression of the Employment Agreement between the Employer and
the Executive and of all the terms of this Agreement, and it cannot be varied,
contradicted or supplemented by evidence of any prior or contemporaneous oral or
written agreements. Except as set forth in Section 15, this written Agreement
may not be later modified except by a further writing signed by a duly
authorized officer of the Employer and the Executive, and no term of this
Agreement may be waived except by writing signed by the party waiving the
benefit of such term.
14
11. Full Settlement; No Duty to Mitigate. The Employer's obligation to make
any payment provided for in this Agreement and otherwise to perform its
obligations hereunder shall be in lieu and in full settlement of all other
severance payments to the Executive under any other severance plan, arrangement
or agreement of the Employer and its affiliates, and in full settlement of any
and all claims or rights of the Executive for severance, separation or salary
continuation payments resulting from the termination of his employment. In no
event shall the Executive be obligated to seek other employment or to take other
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement, and except as specifically provided herein,
such amounts shall not be reduced whether or not the Executive obtains other
employment.
12. Payment of Legal Fees. In the event of any litigation or other
proceeding between the Employer and the Executive with respect to the subject
matter of this Agreement and the enforcement of rights hereunder, the Employer
shall reimburse the Executive for his reasonable costs and expenses relating to
such litigation or other proceeding, including reasonable attorneys' fees and
expenses, provided that such litigation or other proceeding results in any: (i)
settlement requiring the Employer to make a payment, continue to make payments
or provide any other benefits to the Executive, or (ii) judgment, order or award
against the Employer in favor of the Executive or his spouse, legal
representative or heirs, unless such judgment, order or award is subsequently
reversed on appeal or in a collateral proceeding. At the request of the
Executive, costs and expenses (including reasonable attorneys' fees) of up to
$100,000 incurred in connection with any litigation or other proceeding referred
to in this Section shall be paid by the Employer in advance of the final
disposition of the litigation or other proceeding referred to in this Section
shall be paid by the Employer in advance of the final disposition of the
litigation or other proceeding upon receipt of an undertaking by or on behalf of
the Executive to repay the amounts advanced if it is ultimately determined that
he is not entitled to reimbursement of such costs and expenses by the Employer
as set forth in this Section.
13. Source of Payment. All payments provided for under this Agreement shall
be paid in cash from the general funds of the Employer. The Employer shall not
be required to establish a special or separate fund or other segregation of
assets to assure such payments, and, if the Employer shall make any investments
to aid it in meeting its obligations hereunder, the Executive shall have no
right, title or interest whatever in or to any such investments except as may
otherwise be expressly provided in a separate written instrument relating to
such investments. Nothing contained in this Agreement, and no action taken
pursuant to its provisions, shall create or be construed to create a trust of
any kind, or a fiduciary relationship, between the Employer and the Executive or
any other person. To the extent that any person acquires a right to receive
payments from the Employer hereunder, such right shall be no greater than the
right of an unsecured creditor.
15
14. Consultation with Counsel and Interpretation of this Agreement. The
Executive acknowledges and agrees that he has had the assistance of counsel of
his choosing in the negotiation of this Agreement, or he has chosen not to have
the assistance of his own counsel. Both parties hereto having participated in
the negotiation and drafting of this Agreement, they hereby agree that there
shall not be strict interpretation against either party in connection with any
review of this Agreement in which interpretation thereof is an issue.
15. Code ss. 409A. It is the intent of the parties that this Agreement and
all payments made hereunder shall be 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 of the
Code and the regulations thereunder, then such provision shall be deemed
automatically amended without further action on the part of the Employer or the
Executive to the minimum extent necessary to cause such provision to be in
compliance and such provision will thereafter be given effect as so amended. 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 Executive, then payment of
such amounts shall be postponed to comply with section 409A. Any and all
payments that are postponed under this Section 19 shall be paid to the Executive
in a lump sum at the earliest time that does not result in adverse tax
consequences to the Executive under section 409A.
16. 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 Employer:
FNB Corp.
Attention: Compensation Committee
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
With copy to:
Xxxxxx Xxxx Xxxxxx Xxxx & Xxxxxxxxxx P.L.L.C.
Attention: Xxxxxxx X. Xxxxxx
000 Xxxxx Xxx Xxxxxx
0000 Xxxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
If to the Executive, to his last address as shown on the personnel records
of the Employer.
17. Headings. The section headings herein are for reference purposes only
and are not intended in any way to describe, interpret, define or limit the
extent or intent of the Agreement or of any part hereof.
16
18. Governing Law. This Agreement shall in all respects be construed
according to the internal laws of the State of North Carolina, without giving
effect to any conflict of laws provision or rule. By entering into this
Agreement, the Executive acknowledges that he is subject to the jurisdiction of
both the federal and state courts in the State of North Carolina. Any actions or
proceedings instituted under this Agreement shall be brought and tried solely in
courts located in Xxxxxxxx County, North Carolina or in the federal court having
jurisdiction in Asheboro, North Carolina. The Executive expressly waives his
rights to have any such actions or proceedings brought or tried elsewhere.
19. 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 and each such other
provision shall to the full extent consistent with law continue in full force
and effect.
20. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
FNB CORP.
By /s/ Xxxxx X. Xxxxxxxx, Xx.
---------------------------
Xxxxx X. Xxxxxxxx, Xx.
Chair, Compensation Committee
of the Board of Directors
FIRST NATIONAL BANK AND TRUST COMPANY
By /s/ Xxxxx X. Xxxxxxxx, Xx.
----------------------------
Xxxxx X. Xxxxxxxx, Xx.
Chair, Compensation Committee
of the Board of Directors
EXECUTIVE:
/s/ Xxxxxxx X. Xxxxxx
----------------------
Xxxxxxx X. Xxxxxx
17
