Exhibit 10.r
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated and effective this 17th day of August, 1998, between
FIRST BANCORP (a North Carolina corporation) (the "Company") and David G. Grigg
(the "Employee"). References to the "Company" herein shall be deemed to refer to
the Company and its subsidiaries taken as a whole, unless the context requires
or the Agreement provides otherwise.
The Company desires to employ the Employee, and Employee desires to be
employed by the Company, on the terms and subject to the conditions hereinafter
set forth. Accordingly, in consideration of employment, the compensation the
Company agrees to pay the Employee, the mutual covenants contained herein, and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties mutually agree as follows:
1. Employment and Term. The Company (or one of its subsidiaries) will employ
Employee, and Employee will be employed by the Company for a term of two (2)
years, initially as President of Montgomery Data Services, Inc., commencing on
the date hereof, unless sooner terminated as hereinafter provided. The term of
this Agreement shall automatically be extended for an additional period of one
(1) year on each anniversary of the date of this Agreement unless either party
gives the other written notice on or prior to such anniversary date that such
extension will not occur.
2. Duties. Employee shall at all times faithfully and diligently perform
Employee's obligations under this Agreement and act in the best interests of the
Company and its affiliated companies. Employee's duties hereunder shall be to
act in such office or capacity as the Company may direct or change from time to
time, and Employee shall perform all duties necessary or advisable in order to
carry out such functions in an efficient manner. Employee shall, during the term
of Employee's employment hereunder, devote Employee's full time, best efforts
and ability, skill, and attention exclusively to the furtherance of the business
objectives and interests of the Company and its affiliated companies during such
hours and in such a manner as is generally customary for employees of Employee's
position in businesses of the Company's type.
3. Compensation.
(a) Salary. For services rendered by Employee hereunder, the Company shall
pay Employee an annual salary of not less than $80,000 payable in accordance
with the customary payroll practices of the Company. Employee's salary shall be
subject to increase upon annual reviews of the Employee's performance. Employee
will receive an annual increase that is at least as much as any percentage
increase in the U.S. Consumer Price Index during the twelve months preceding the
date of Employee's annual review. Any such increase will be considered in
determining the Employee's base salary for all purposes hereunder.
(b) Reimbursement of Expenses. The Company shall pay or reimburse Employee
for all reasonable and necessary travel and other expenses incurred by Employee
in performing Employee's obligations under this Agreement, provided that
Employee shall present to the Company from time to time an itemized account of
such expenses in any form required by the Company. The Company further agrees to
furnish Employee with such other assistance and accommodations as shall be
suitable to the character of Employee's position with the Company and adequate
for the performance of Employee's duties hereunder.
(c) Employee shall be entitled to such insurance, pension, profit-sharing
and other benefit plans as are or may be available generally to employees of the
Company to the extent permitted by applicable laws or government regulations.
Employee will also be eligible for participation in the Company's Supplemental
Employee Retirement Plan, Split Dollar Insurance Plan and Stock Option Plan.
(d) Employee shall be entitled to reasonable time off for vacation, sick
leave, bereavement leave, jury duty and military obligations as are or may
become available to employees of the Company in positions similar to those of
Employee, as provided by the Company's policies as they may be in effect from
time to time.
4. Termination. In addition to the termination of the terms specified in
Section 1 hereunder, employment may be terminated under any of the following
provisions:
(a) The employment of the Employee under this Agreement may be terminated
immediately by the Company if the Company finds that the Employee shall have (i)
demonstrated gross negligence or willful misconduct in the execution of
Employee's duties, (ii) committed an act of dishonesty or moral turpitude, or
(iii) been convicted of a felony or other serious crime. All future compensation
and benefits, not then accrued, will automatically terminate if Employee is
terminated under this subparagraph (a).
(b) The employment of the Employee under this Agreement shall be automatically
terminated on the date of the Employee's death.
(c) Employer may terminate Employee's employment hereunder for any reason
other than as provided in subparagraphs (a) and (b), but in such case Employer
shall be obligated to pay Employee's base salary to Employee for the remainder
of the term specified in Section 1 hereof (the "Remaining Term").
(d) Employment hereunder may be terminated voluntarily by Employee on
forty-five (45) days' written notice to the Company's Chief Executive Officer or
Chairman of the Company's Board of Directors, in which case Employee will
receive his compensation, vested rights and employee benefits accrued through
the date of termination of employment.
78
5. Other Obligations. All payments and benefits to Employee under this
Agreement shall be subject to Employee's compliance with the following
provisions:
(a) Assistance in Litigation. During the term of this Agreement and for
three full years after the expiration or termination hereof, Employee shall,
upon reasonable notice, furnish such information and proper assistance to the
Company as may reasonably be required by the Company in connection with any
litigation in which it or any of its subsidiaries or affiliates is, or may
become, a party. In connection with such assistance, if substantial effort or
expense is required of Employee after the termination of Employee's employment
hereunder, the Company will pay reasonable compensation to Employee and will
reimburse him for reasonable out-of-pocket expenses.
(b) Long-Term Disability. If the Employee has become disabled as determined
under the Company's long-term disability plan or policy then in effect and is
terminated from active employment, any remaining benefits of this contract shall
be reduced by any benefits received by the Employee under the Company's
long-term disability plan or policy. Additionally, if such a circumstance
occurs, the Employee is under an affirmative duty to actively seek and accept
reasonable alternative employment following termination. Any compensation
received by Employee following termination or compensation earnable with
reasonable diligence will be deducted from any future compensation due the
Employee under this Agreement. In the event the Employee fails to seek
reasonable alternative employment, the Company's obligation to pay future
compensation shall cease.
(c) Confidential Information. Employee acknowledges that in the course of
Employee's employment he will acquire knowledge of trade and business secrets
and other confidential data of the Company, its subsidiaries and any affiliated
companies. Such trade and business secrets and other confidential data may
include, but are not limited to, confidential product information, methods by
which the Company proposes to compete with its business competitors, strategic
plans, confidential reports prepared by business consultant(s) and similar
information relating to the Company's, its subsidiaries' or its affiliated
companies' products, customers, and operations. Employee recognizes that the
possible restrictions on Employee's activities are required for the reasonable
protection of the Company. Employee covenants not to knowingly disclose or
reveal to any unauthorized person such confidential business secrets or other
confidential data both during the term of this Agreement and for a period of two
(2) years following termination of this Agreement. Upon expiration or
termination of Employee's employment by the Company, Employee agrees to return
to the Company all documents (both originals and copies), including without
limitation, customer lists, books and records, form agreements, manuals, and
other information (in whatever form such information may exist, whether written,
recorded, in magnetic media, or other form) that comes into Employee's
possession during, by virtue of and in the course of Employee's employment and
which are in any way connected with or related to the Company's business.
It is further understood and agreed that the Company's right to require
Employee to keep confidential information secret shall not be in lieu of the
Company's right to monetary damages in the event Employee is in breach of any
obligation contained in this Agreement, and that in the event of any breach or
threatened breach of any of these covenants, the Company may either, with or
without pursuing any action for damages, obtain and enforce an injunction
prohibiting Employee from violating said covenants.
(d) Noncompetition Covenants and Other Covenants For Protection of the
Company. During the term of Employee's employment hereunder and during the
period following the termination of such employment specified below as the
"Restricted Period," Employee separately covenants for the benefit of the
Company as follows:
(i)Employee shall not, directly or indirectly, promote, be employed by,
participate or engage in any activity or business which is in competition with
the business of the Company, or any of its subsidiaries and affiliated
companies, including acting, either singly or jointly or as agent for, or as an
employee of, any person or persons, firm or corporation whether directly or
indirectly (as a director, shareholder or investor, partner, lessor, lessee,
proprietor, principal agent, independent contractor, representative, consultant
or otherwise), in the "Restricted Territory" (as defined below). Ownership by
Employee of 5% or less of the outstanding capital stock of any corporation which
is actively publicly traded will not be a violation of this covenant;
(ii) Employee covenants that Employee will not employ or assist others by
active solicitation to recruit and employ employees of the Company or any of the
Company's subsidiaries or affiliate companies; and
(iii)Employee agrees that Employee will not, directly or indirectly, on
behalf of himself or any third party, make any sales contacts with, or actively
solicit business from any customer of the Company or its subsidiaries or
affiliate companies, for any products or services competitive with those offered
by the Company or its subsidiaries or affiliated companies within the
"Restricted Territory" (as defined below).
The "Restricted Period" following termination of employment during which
Employee will observe the covenants contained in this Section 5(d) shall be (A)
one year following termination of employment under Section 4(a) hereof or if
Employee voluntarily terminates his employment hereunder and (B) for the
Remaining Term (as defined in Section 4(c) hereof) if employment is terminated
pursuant to Section 4(c) hereof.
"Restricted Territory" is defined as the area within a fifty mile radius of
Troy, North Carolina. Notwithstanding the foregoing, the aforesaid limitations
on Employee contained in this Section 5(d) shall be null and void if Employee's
employment hereunder is terminated within one year following a Change in Control
(as defined in Section 8 hereof).
(e) It is further understood and agreed that the Company's right to require
Employee to keep confidential information secret or not to compete against the
Company for the agreed upon period shall not be in lieu of the Company's right
to monetary damages in the event Employee is in breach of any obligation
contained in this Agreement, and that in the event of any breach or threatened
breach of any of these covenants, the Company may either, with or without
pursuing any action for
79
damages, obtain and enforce an injunction prohibiting Employee from violating
said covenants.
(f) The parties hereby agree that all of the above obligations in this
Section 5 are reasonable in nature and are designed to reasonably protect the
Company's interests.
6. Source of Payment. Subject to the terms of any employee benefit plan
established by the Company and except as otherwise provided by law, all payments
provided under this Agreement shall be paid in cash from the general funds of
the Company, and no special or separate fund shall be established, and no other
segregation of assets shall be made to assure payment. Employee shall have no
right, title or interest whatsoever in or to any investments which the Company
may make to aid the Company in meeting its obligations hereunder. 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 for the benefit of
the Employee. To the extent that any person acquires a right to receive payments
from the Company hereunder, such right shall be no greater than the right of an
unsecured creditor of the Company.
7. Payments by Company. If the Company shall find that any person to whom any
amount is or was payable hereunder is unable to care for Employee's affairs
because of illness or accident, or is a minor, or has died, then the Company, if
it so elects, may direct that any payment due him or Employee's estate (unless a
prior claim therefor has been made by a duly appointed legal representative) or
any part thereof be paid or applied for the benefit of such person or to or for
the benefit of such person's spouse, children or other dependents, an
institution maintaining or having custody of such person, any other person
deemed by the Company to be a proper recipient on behalf of such person
otherwise entitled to payment, or any of them in such manner and proportion as
the Company may deem proper. Any such payment shall be in complete discharge of
the liability of the Company therefor.
8. Change in Control.
(a) If a "Change in Control" occurs while Employee is employed
by the Company, and Employee's employment is terminated by the Company or
Employee, for any reason or no reason, other than a termination pursuant to
Section 4(a) by the Company herein, within twelve months after the Change in
Control, the Company shall pay the Severance Payment provided in Section 8(b) to
Employee within ten days of Employee's date of termination of employment,
provide benefits pursuant to Section 8(c) and cause the acceleration of vesting
of benefits described in Section 8(d) to occur. Notwithstanding the foregoing,
Employee's termination of employment shall not be deemed due to a Change in
Control if such termination is due to Employee's death pursuant to Section 4(b),
Employee's disability pursuant to Section 5(b), Employee's retirement in
accordance with the Company's retirement policy, or pursuant to Section 4(a).
In the event of successive Changes of Control, the provisions of this
Agreement shall apply with respect to each Change of Control.
(b) Employee's Severance Payment shall be an amount equal to
the lesser of (i) 2 times the amount of Employee's base salary in effect on the
date of the Change in Control and (ii) the product of 2.99 and the "base amount"
as defined in Section 280G(b)(3) of the Internal Revenue Code of 1986, as
amended, and applicable rules and regulations thereunder.
(c) The Company shall provide to Employee and Employee's
spouse or other qualified dependents, at a cost to Employee no greater than the
cost of such benefits to Employee at the time of the Change in Control, such
hospitalization, health, medical and dental insurance benefits as were available
to Employee (and Employee's spouse or qualified dependents) immediately prior to
the Change in Control until the earlier to occur of (i) two years following the
date of the Change in Control or (ii) Employee accepting employment pursuant to
which he is eligible for comparable health insurance benefits.
(d) Any non-vested option to purchase securities of the
Company will vest and become immediately exercisable upon a Change in Control.
(e) "Control" means the power, directly or indirectly, to
direct the management or policies of the Company or to vote forty percent (40%)
or more of any class of voting securities of the Company. "Change in Control"
shall mean a change in Control of the Company, except that any merger,
consolidation or corporate reorganization in which the owners of the capital
stock entitled to vote ("Voting Stock") in the election of directors of the
Company prior to said combination own sixty-one percent (61%) or more of the
resulting entity's Voting Stock shall not be considered a change in control for
the purpose of this Agreement; provided, that, without limitation, a Change in
Control shall be deemed to have occurred if (i) any "person" (as that term is
used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934),
other than a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, is or becomes the beneficial owner (as that term is
used in Section 13(d) of the Securities Exchange Act of 1934), directly or
indirectly, of thirty-three percent (33%) or more of the Voting Stock of the
Company or its successors; (ii) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors of the Company or its successors (the "Incumbent Board") cease for any
reason to constitute at least a majority thereof; provided, that any person who
becomes a director of the Company after the beginning of such period whose
election was approved by a vote of at least three-quarters of the directors
comprising the Incumbent Board shall be considered a member of the Incumbent
Board; or (iii) there occurs the sale of all or substantially all of the assets
of the Company. Notwithstanding the foregoing, no Change in Control shall be
deemed to occur by virtue of any transaction which results in Employee, or a
group of persons including Employee, acquiring, directly or indirectly,
thirty-three percent (33%) or more of the combined voting power of the Company's
outstanding securities. For purposes of this subparagraph (e), references to the
"Company" shall be deemed to refer to First Bancorp only, and not to its
subsidiaries.
9. Modification and Waiver.
(a) Amendment of Agreement. This Agreement may not be modified or amended
except by an instrument in writing signed by the parties hereto.
80
(b) Waiver. No term or condition of this Agreement shall be deemed to have
been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term and condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
10. Severability. If, for any reason, any provision of this Agreement is held
invalid, such invalidity shall not affect any other provision of this Agreement
not held so invalid, and each such other provision shall to the full extent
consistent with law continue in full force and effect. If any provision of this
Agreement shall be held invalid in part, such invalidity shall in no way affect
the rest of such provision not held so invalid, and the rest of such provision,
together with all other provisions of this Agreement, shall to the full extent
consistent with law continue in full force and effect.
11. General Provisions.
(a) Nonassignability. Neither this Agreement nor any right or interest
hereunder shall be assignable by Employee, Employee's beneficiaries, or legal
representatives without the Company's prior written consent; provided, that
nothing in this paragraph shall preclude the executors, administrators, or other
legal representative of Employee or Employee's estate from assigning any rights
hereunder to the person or persons entitled thereto.
(b) No Attachment. Except as required by law, no right to receive payments
under this Agreement shall be subject to anticipation, commutation, alienation,
sale, assignment, encumbrance, charge, pledge of hypothecation or to execution,
attachment, levy or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null, void
and of no effect.
(c) Binding Effect. This Agreement shall be binding upon, and inure to the
benefit of, Employee and the Company and their respective successors and
assigns.
(d) Headings. Headings in this Agreement are for convenience only and shall
not be used to interpret or construe its provisions.
(e) Notice. For purposes of this Agreement, written notice shall be
effective if personally delivered or if sent by certified mail, return receipt
requested, to the following addresses or to such other addresses as either may
designate in writing to the other party:
Employee: David G. Grigg
--------------
Company: 341 North Main Street
Post Office Box 508
Troy, North Carolina 27371
Attention: Chief Executive Officer
For purpose of computing time, all time requirements under this Agreement will
start on the date mailed or if personally delivered, when delivered.
12. Governing Law. This Agreement has been executed and delivered in the
State of North Carolina, and its validity, interpretation, performance and
enforcement shall be governed by the laws of such State.
13. Effect of Prior Agreements. This Agreement contains the entire
understanding between the parties with reference to the employment of the
Employee, and supersedes any prior employment agreement, understanding or
arrangement between the Employee and the Company, its subsidiaries or
affiliates.
[signatures contained on next page]
81
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the day and year first above stated.
FIRST BANCORP
[CORPORATE SEAL] By: /s/James H. Garner
------------------
James H. Garner
Title: President and Chief Executive
Officer
Attest: /s/ Delores George
------------------
Delores George
Assistant Secretary
EMPLOYEE
/s/ David G. Grigg (SEAL)
-------------------
David G. Grigg
82
Independent Auditors' Consent
The Board of Directors
First Bancorp
We consent to incorporation by reference in the Amendment No. 1 to the
Registration Statement of First Bancorp on Form S-8 relating to the First
Bancorp 1994 Stock Option Plan and the Registration Statement on Form S-3D
relating to the Dividend Reinvestment and Common Stock Purchase Plan of First
Bancorp, of our report dated January 18, 2000, relating to the consolidated
balance sheets of First Bancorp and subsidiaries as of December 31, 1999 and
1998, and the related consolidated statements of income, comprehensive income,
shareholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1999, which report appears in the December 31, 1999
Annual Report on Form 10-K of First Bancorp.
/s/KPMG LLP
-----------
KPMG LLP
Raleigh, North Carolina
March 27, 2000
83