Exhibit 10.5
EMPLOYMENT AGREEMENT BETWEEN
FIRST COMMUNITY NATIONAL BANCORP, INC.
AND XXXXX X. XXXXXXXX
This Employment Agreement ("Agreement"), dated for purposes of
identification, June 1, 1999, is made and entered into between First Community
National BanCorp., Inc. ("Employer"), a corporation organized for the sole
purpose of organizing and holding the stock of a national banking association to
be chartered through the Office of the Comptroller of the Currency of the United
States ("OCC"), and Xxxxx X. XxXxxxxx ("Employee").
WHEREAS, Employer is in the process of forming a new national banking
association, Community First Bank, N.A. ("Bank");
WHEREAS, Employer desires to employ Employee as President and Chief
Executive Officer of the Employer; WHEREAS, Employer desires the Employee also
to serve as President and Chief Executive Officer of the Bank; and
WHEREAS, Employee is willing to accept such positions with the Employer
and Bank.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements hereinafter set forth, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. As used in this Agreement, the following
capitalized terms have the indicated meanings unless the context clearly
requires otherwise:
1.01. "Bank Board" means the Board of Directors of the Bank.
1.02. "Board" means the Board of Directors of the Employer.
1.03. "Cause" means (a) the continued failure by Employee to perform
his duties hereunder (other than any such failure resulting from his incapacity
due to physical or mental illness) after a written demand for performance is
delivered to the Employee by the Board (excluding Employee) and which failure
has not been cured as hereinafter provided, which demand specifically identifies
the manner in which the Board believes that Employee has not performed his
duties; or (b) the engaging by the Employee in illegal conduct or any conduct
which is demonstrably and materially injurious to the Employer or Bank; or (c)
the issuance of a removal order or similar order by a governmental regulatory
agency with appropriate jurisdiction prohibiting Employee from participating in
the affairs of the Employer or Bank. Any act or failure to act based upon
authority given pursuant to a resolution duly adopted by the Board or Bank Board
or based upon the advice of counsel for the Employer or Bank shall be
conclusively presumed to be done, or omitted to be done, by the Employee in good
faith and in the best interests of the Employer and Bank and shall not be a
basis for termination for Cause. It is also expressly understood that the
Employee's attention to matters not directly related to the business of the
Employer or Bank shall not provide a basis for termination for Cause so long as
the Board or Bank Board has approved Employee's engagement in such activities.
Upon the issuance of a written demand for performance under this Section,
Employee shall have 30 days in which to correct the deficiency, and if the
Employee corrects such deficiency within this period the deficiency shall not
constitute Cause. If the Employee does not correct the deficiency within the
thirty (30) day period, such deficiency shall constitute Cause for purposes of
the termination of this Agreement, if the Board (without Employee) so decides.
The conditions constituting Cause under Section 1.04 (b) or (c) above shall not
require prior notice, a written demand for performance or an opportunity to
cure.
1.04. "Date of Termination" means the date Employee's employment
hereunder is deemed terminated as follows: (a) the date specified in the Notice
of Termination in the event that Employee's employment is terminated (whether by
Employee or Employer), other than on account of Employee's death, Disability or
Retirement, (b) if Employee's employment is to be terminated by Employer for
Disability, thirty (30) days after Notice of Termination is given (provided that
in the case of Disability the Employee shall not have returned to the
performance of his duties on a full-time basis during such thirty (30) day
period), (c) if Employee's employment is terminated by death, the date of
Employee's death, or (d) if Employee retires, the date of Employee's Retirement.
1.05. "Disability" means (a) as a result of Employee's inability due to
physical or mental illness, Employee shall have been absent from the full-time
performance of his duties with the Employer and/or Bank for six (6) consecutive
months, and (b) within thirty (30) days after Notice of Termination is given
Employee shall not have returned to the full-time performance of his duties.
1.06. "Employer" and "Bank" includes any corporation or other entity
which is the surviving or continuing entity in respect of any merger,
consolidation or form of business combination in which the Employer or Bank,
respectively, ceases to exist.
1.07. "Employment Year" means the 12-month period beginning with the
Opening Date and each 12-month period beginning on the annual anniversary of
such Opening Date thereafter.
1.08. "Notice of Termination" means a written notice that Employee's
employment with Employer and Bank is terminated pursuant to Section 1.04(a) that
specifies a date as to which such termination shall be effective, which
effective date (except in the case of termination by Employer for Cause, which
may be made effective as of the date of the Notice of Termination) shall be at
least 15 days after the date of the Notice of Termination.
1.09. "Opening Date" means the first day of the month coinciding with
or following the later of the following three dates, although all of the
following events must occur in order for there to be an Opening Date hereunder:
(a) the Employer has accepted subscriptions and payment in full for a minimum of
625,000 shares of Employer common stock pursuant to the initial public offering
of such stock; (b) the Employer has obtained regulatory approval to acquire the
stock of the Bank and thereafter to become a bank holding company; and (c) the
Bank has received preliminary approval of its application for a charter from the
OCC.
1.10. "Person" has the meaning ascribed to that term in Sections
3(a)(9) and 13(d)(3) of the Exchange Act.
1.11. "Retirement" means Employee's voluntary termination of all
employment hereunder after the attainment of age sixty-five (65).
1.12. "Successor" means any Person that succeeds to, or has the
practical ability to control (either immediately or with the passage of time)
the Employer's business directly, by merger or consolidation, or indirectly by
purchase of the Employer's voting securities, all or substantially all of its
assets or otherwise.
SECTION II. TERM OF EMPLOYMENT AND DUTIES.
2.01. Employment with Employer and Bank. Employer hereby employs
Employee as of June 1, 1999, as President and Chief Executive Officer of
Employer. Unless this Agreement terminates prior to the Opening Date, Employee's
duties with Bank shall commence on the Opening Date or, if later, the date
Employer (or organizers) receives notification from the OCC that the articles of
association and organization certificate are accepted by the OCC. Employee shall
be expected to perform such services as are generally performed by the president
and chief executive officer of a bank holding company, in the case of Employer,
and of a commercial bank in the case of the Bank. Employer agrees to use its
best efforts to have Employee nominated for the Board and elected to the Bank
Board and to have him serve on the Executive Committee or equivalent committee
of each of such entities.
2.02. Acceptance of Employment. Employee accepts such employment and
shall devote his full-time, attention and best efforts to the diligent
performance of his duties herein specified and as an officer of Employer and
Bank. While employed hereunder, Employee will not, without the prior express
written consent of the Board, accept employment with any other individual,
corporation, partnership, governmental authority or other entity, or engage in
any other venture for profit which the Board may consider to be in conflict with
Employer's or Bank's best interest or to be in competition with Employer's or
Bank's business, or which may interfere in any way with Employee's performance
of his duties hereunder. It is understood and agreed that Employee has the right
to participate in passive investments including income producing real estate.
2.03. Responsibilities before Opening Date. Prior to the Opening Date,
in his capacity as Employee of Employer, Employee shall use his reasonable best
efforts to promote the timely and efficient means of accomplishing the approval
of the applicable governmental authorities of the Employer' s/Bank's application
for a bank charter, licenses, permits, approvals and similar matters necessary
and appropriate for the Employer and the Bank to engage lawfully in the
commercial banking business and operations contemplated hereby, and the
purchasing or leasing of necessary equipment, furnishings and buildings for the
Employer's and Bank's respective commercial banking operations. Employee shall
act on behalf of Employer in meeting with various persons in connection with
obtaining all licenses and approvals necessary for the Bank and Employer and
assisting in any manner designated by Employer, including arrangements for the
marketing and selling of shares of common stock of the Employer during the
initial offering of such common stock.
2.04. Term of Employment. Unless Employee's employment with Employer is
terminated prior to the Opening Date, Employee shall be employed by Employer
pursuant hereto until the third year anniversary of the Opening Date unless
Employee's employment is sooner terminated as set forth herein; provided,
however, that beginning with the first anniversary of the Opening Date and each
anniversary thereafter, the term of Employee's employment shall automatically be
extended for one additional Employment Year unless at least ninety (90) days
prior to such anniversary date, the Employer or the Employee shall have given
written notice that the Employee's employment shall not be extended beyond the
current Employment Year.
2.05. Offices. Termination of employment hereunder shall include
termination of employment as President and Chief Executive Officer of both the
Employer and the Bank.
SECTION III. COMPENSATION AND RELATED MATTERS.
3.01. Base Salary. From the date hereof and until the Date of
Termination. Employee shall have an annual base salary of NINETY THOUSAND AND
NO/100 DOLLARS ($90,000.00).
3.02. Employee Benefits. On and after Opening Date, subject to meeting
applicable eligibility provisions, Employee shall be entitled to medical and
health insurance coverage standard for community banking organizations.
SECTION IV. RIGHTS ON TERMINATION OF EMPLOYMENT.
4.01. Before Opening Date. In the event the Date of Termination occurs
prior to the Opening Date, neither party shall have any liability or further
obligation under this Agreement to the other except for rights earned through
the Date of Termination.
4.02. Termination for Cause by Employer or Termination for Any Reason
by Employee. If Employer terminates Employee's employment for Cause or if
Employee terminates his employment for any reason and in each case the Date of
Termination is after the Opening Date, the Employer shall pay the Employee his
full base salary through the Date of Termination at the rate in effect at the
time Notice of Termination is given. No Notice of Termination is required
hereunder in the event of Employee's death, and the foregoing amounts shall be
determined on the date of death, if applicable.
4.03. Termination by Employer Without Cause After Opening Date. Upon
the termination of the Employee's employment by Employer without Cause, if the
Date of Termination is after the Opening Date, Employer shall pay Employee a
lump sum payment equal to the total base salary that Employee would have earned
had Employee continued in the Employer's employ through the remaining term of
employment, without reference to his termination, such base salary to be at the
rate in effect at the time Notice of Termination is given.
4.04. Other Terminations. In the event of any termination of Employee's
employment which is not provided for in Section 4.01, 4.02, and 4.03, Employee
shall be entitled to no compensation or other benefits whatsoever beyond the
Date of Termination.
4.05. Offset. The amount of any payment provided for in this Section IV
shall not be reduced, offset or subject to recovery by the Employer, Bank or
Successor by reason of any compensation earned by Employee as the result of
employment by another employer after the Date of Termination, or otherwise.
SECTION V. STOCK OPTIONS.
5.01. Grant of Option. If this Agreement has not terminated prior to
the Opening Date, Employee is hereby granted on the Opening Date (the "Date of
Grant") the following options to purchase Employer common stock, upon the
following terms and conditions, at a purchase price equal to the fair market
value of Employer common stock on the Date of Grant:
(a) The option to acquire 10,000 shares of Employer common
stock which shall be exercisable on or after the first anniversary of the
Opening Date.
(b) The option to acquire 10,000 shares of Employer common
stock which shall be exercisable on or after the second anniversary of the
Opening Date.
(c) The option to acquire 10,000 shares of Employer common
stock which shall be exercisable on or after the third anniversary of the
Opening Date.
Any option which is not exercisable at the Date of Termination shall
expire on the Date of Termination. All options which may be exercised, but which
have not been exercised shall expire thirty (30) days after the termination of
Employee's employment if such employment is terminated by Employer for Cause or
by Employee for any reason. All options which have not sooner expired shall
expire on the ten-year anniversary of the Date of Grant. In the event of
Employee's death, any options held by him which were exercisable at the time of
his death may be exercised by the person designated in Employee's will or by the
proper legal representative of the Employee. No stock option granted hereunder
shall be transferable by Employee other than by will or the laws of descent and
distribution, and an option may be exercised during the lifetime of Employee
only by him or his guardian or legal representative.
5.02. Restrictions. The options granted hereunder and the shares of
common stock issuable upon exercise of such options have not been registered
under the Securities Act of 1933 ("Securities Act"), or under the Blue Sky or
other securities laws of any state, and cannot be sold or offered for sale
unless subsequently so registered or an exemption from registration is
available. Employee understands that these securities are being issued in
reliance on ss. 4(2) of the Securities Act and other available exemptions from
registration under federal and state securities laws and that he may be required
to hold the securities indefinitely. All certificates representing the
securities shall be subject to stop transfer orders and shall bear an
appropriate restrictive legend. Employee agrees that he will not dispose of any
of the securities except in a manner and fashion which is in total compliance
with the law and unless and until either (i) Employer shall have received an
opinion of legal counsel satisfactory to it that such disposition does not
violate the Securities Act and regulations promulgated thereunder and any
applicable state securities laws or regulations, or (ii) the securities have
been validly registered under the Securities Act and any applicable state Blue
Sky or securities law. The foregoing notwithstanding, Employer shall, at its
expense, register any stock issuable pursuant to the exercise of an option
hereunder under the Securities Act and any applicable state Blue Sky or
securities law upon Employee's request, provided, however, that the federal
registration can be accomplished on Form S-8, and provided further, that such
registration shall in no event occur on a date prior to sixty (60) days after
the close of the Employer's initial public offering of its common stock.
5.03. Rule 16b-3. This Section V shall only be effective if this
Agreement is approved by the affirmative votes of the holders of the majority of
the securities of the Employer present, or represented, and entitled to vote at
a meeting duly held in accordance with the laws of the Commonwealth of Virginia.
Employer agrees to schedule a timely meeting of its original shareholders to
consider this approval, or in lieu of such meeting, shall timely obtain a
unanimous consent of the original shareholders approving these options. The
transactions under this Section V are intended to comply with Rule 16b-3 (or its
successor), as amended from time to time, promulgated pursuant to the Exchange
Act, and the Employer may, but shall not be required to, submit any proposed
amendment to this Section to its shareholders for their approval to assure
continued compliance if such proposed amendment would (i) materially increase
the benefits accruing to Employee under this Section; (ii) materially increase
the number of securities which may be issued under this Section; or (iii)
materially modify the requirements as to eligibility for participation in this
Section. Furthermore, any portion of this Section dealing with the amount and
price of securities to be awarded or awarded to Employee, which specifies the
timing of awards to Employee, or which sets forth the formula that determines
the amount, price and timing using objective criteria such as earnings of the
issuer, value of the securities, years of service, job classification, and
compensation levels shall not be amended more than once every six months other
than to comply with changes in the Code, the Employee Retirement Income Security
Act of 1974, as amended, or the rules promulgated thereunder.
5.04. Forfeiture. If at any time while the options are exercisable, the
Board of Governors of the Federal Reserve System makes a formal capital call on
the Employer or the Comptroller of the currency makes a formal capital call on
the Bank, Employee will be required to exercise all exercisable options in whole
or part as may be needed for additional required capital or such exercisable
options shall be forfeited. Any options not required to be exercised under the
terms of any such capital call may be exercised under the original terms of this
Agreement.
5.05. Miscellaneous Considerations. The number of optioned shares shall
be adjusted from time to time to prevent dilution or enlargement of Employee's
rights caused by stock dividends, stock splits, recapitalizations, mergers,
consolidations, combinations or exchanges of shares, reorganizations,
liquidations and similar matters. An option may be exercised by giving written
notice of exercise to the Employer specifying the number of shares to be
purchased and by paying in full in cash the exercise price. Upon notification of
the amount due and prior to, or concurrently with, the delivery to Employee of a
certificate representing any shares purchased pursuant to the exercise of an
Option, Employee shall promptly pay to Employer any amount necessary to satisfy
applicable federal, state or local tax requirements.
SECTION VI. Certain Continuing Rights
6.01. Consulting and Continuation of Health Benefits Rights. After
Employee's Retirement, Employer agrees that, it shall retain Employee in the
capacity of Consultant, until Employee's seventieth (70th) birthday, on mutually
acceptable terms including but not limited to a mutually acceptable retainer and
it shall provide a continuation of Employee's medical and health benefits on at
least as favorable a basis as existing on the date of Employee's Retirement
until Employee's seventieth (70th) birthday.
6.02. Termination of Consulting and Health Benefits Rights. After
Employee's Retirement, Employer may terminate its obligations under Section 6.01
only for Cause or the death or Disability of Employee and such termination shall
be effective on the Date of Termination. Notwithstanding the foregoing, the
rights provided in this Section VI shall automatically terminate at any time
that Employee's employment with Employer terminates.
SECTION VII MISCELLANEOUS.
7.01. Agreement of Employer's Successor. Upon Employee's written
request, Employer will have any Successor, by agreement in form and substance
satisfactory to Employee, assent to the fulfillment by Employer of its
obligations under this Agreement. 7.02. Binding Agreement. This Agreement shall
inure to the benefit of and be enforceable by Employee's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Employee should die while any amount would still be
payable to Employee hereunder if the Employee had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to Employee's beneficiary designated in writing and
delivered to Employer, if any, and if none to Employee's estate.
7.03. Legal Fees. Each party shall pay its own legal fees and related
or other expenses incurred in connection with this Agreement, whether or not
such party prevails, including, without limitation all such fees and expenses,
if any, incurred in contesting or disputing any termination or seeking to obtain
or enforce any right or benefit provided by this Agreement.
7.04. Taxes. All payments to be made to Employee under this Agreement
will be subject to required withholding of federal, state and local and
employment and other taxes.
7.05. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered to Employee or the Chairman of the
Board of Employer or mailed by United States registered mail, return receipt
requested, postage prepaid and addressed, in the case of Employer, to the
attention of the Chairman of the Board at the following address:
First Community National BanCorp., Inc.
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxx
or, in the case of Employee, to the address set forth below the Employee's
signature, provided that all notices may be sent to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.
7.06. Modification; Waiver. No provision of this Agreement may be
modified, waived or discharged unless such modification, waiver or discharge is
agreed to in writing signed by Employee and the Chairman of the Board of
Employer. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of a
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the Commonwealth of Virginia.
To the extent that any provision of any other agreement between
Employer or any of its subsidiaries and Employee shall limit, qualify or be
inconsistent with any provision of this Agreement, then for purposes of this
Agreement, while the same shall remain in force, the provision of this Agreement
shall control and such provision of such other agreement shall be deemed to have
been superseded, and to be of no force or effect, as if such other agreement had
been formally amended to the extent necessary to accomplish such purpose.
7.07. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect. This
Agreement may be executed in several counterparts, each of which shall be deemed
to be an original but all of which together will constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
FIRST COMMUNITY NATIONAL BANCORP., INC.
By: ______________________________
___________________________________
Xxxxx X. XxXxxxxx
