[NOTE: ON DECMEBER 1, 1995, THE REGISTRANT ENTERED INTO THE FOLLOWING AGREEMENT
WITH THE FOLLOWING EXECUTIVE OFFICERS: JACK R. HUYETT, PRESIDENT AND CHIEF
ADMINISTRATIVE OFFICER; BETTY H. CARROLL, SENIOR VICE PRESIDENT; ALFRED B.
WHITT, SENIOR VICE PRESIDENT, SENIOR FINANCIAL OFFICER AND SECRETARY; AND F.
DIXON WHITWORTH, JR., EXECUTIVE VICE PRESIDENT]
EXECUTIVE SEVERANCE AGREEMENT
This Agreement ("Agreement") is entered into as of the ____ day of
December, 1995, by and between F&M National Corporation, a Virginia corporation
(the "Company"), and _________________ (the "Executive").
1. PURPOSE
The Company considers the establishment and maintenance of a sound and
vital management to be essential to protecting and enhancing the best interests
of the Company and its shareholders. In this connection, the Company recognizes
that, as is the case with many publicly held corporations, the possibility of a
Change in Control (as defined herein) may arise and the uncertainty and
questions which it may raise among management may result in the departure or
distraction of management personnel to the detriment of the Company and its
shareholders. Accordingly, the Board of Directors of the Company (the "Board")
has determined that appropriate steps should be taken to reinforce and encourage
the continued attention and dedication of certain members of the management of
the Company to their assigned duties without distraction in circumstances
arising from the possibility of a Change in Control of the Company. In
particular, the Board believes it important, should the Company or its
shareholders receive a proposal for transfer of control of the Company, that the
Executive be able to assess and advise the Board whether such proposal would be
in the best interests of the Company and its shareholders and to take such other
action regarding such proposal as the Board might determine to be appropriate,
without being influenced by the uncertainties of the Executive's own situation.
Nothing in this Agreement shall be construed as creating an express or implied
contract of employment and, except as otherwise agreed in writing between the
Executive and the Company, the Executive shall not have any right to be retained
in the employ of the Company prior to a Change in Control of the Company.
2. TERM OF AGREEMENT
The term of this Agreement shall be deemed to have commenced on
December 1, 1995 (the "Commencement Date") and shall continue in effect through
December 31, 1998; provided, however, that commencing on January 1, 1998, and
each January 1st thereafter, the term of this Agreement shall automatically be
extended for one additional year unless, not later than September 30 of such
year, the Company shall have given notice that this Agreement shall not be
extended. Notwithstanding the delivery of any notice of non-renewal, if a Change
in Control of the Company occurs during the original or any extended term of
this Agreement, this Agreement shall continue in effect for a period of 36
months beyond the month in which such Change in Control occurred. In no event
shall the term of this Agreement extend beyond the end of the month in which the
Executive's 65th birthday occurs.
3. CHANGE IN CONTROL
No benefits shall be payable hereunder unless there shall have been a
Change in Control of the Company as set forth below. For all purposes of this
Agreement, a "Change in Control" shall mean:
(a) The acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person"), of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
the then outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock"); provided, however, that the following acquisitions shall
not constitute a Change in Control: (i) any acquisition directly from the
Company (excluding an acquisition by virtue of the exercise of a conversion
privilege), (ii) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company, or (iii) any acquisition by any
corporation pursuant to a transaction described in subsection (c) of this
Section 3 if, upon consummation of the transaction, all of the conditions
described in subsection (c) are satisfied;
(b) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute a majority of such Board;
provided, however, that any individual becoming a director subsequent to the
date hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least two-thirds 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
either an actual or threatened election contest (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board; or
(c) Approval by the shareholders of the Company of either (1) a
reorganization, merger, share exchange or consolidation of the Company by, with
or into any other corporation or (2) the sale or disposition of all or
substantially all of the assets of the Company (any of the foregoing
transactions, a "Reorganization"); provided, however, that approval by the
shareholders of a Reorganization shall not constitute a Change in Control if,
upon consummation of the Reorganization, each of the following conditions is
satisfied:
(i) more than 60% of the then outstanding shares of common stock
of the corporation resulting from the Reorganization is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were
beneficial owners of the Outstanding Company Common Stock
immediately prior to the Reorganization in substantially the
same proportions as their ownership, immediately prior to such
transaction, of the Outstanding Company Common Stock;
(ii) no Person (excluding any employee benefit plan (or related
trust) of the Company) beneficially owns, directly or
indirectly, 20% or more of either (1) the then outstanding
shares of common stock of the corporation resulting from the
transaction or (2) the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors; and
(iii) at least a majority of the members of the board of directors
of the corporation resulting from the Reorganization were
members of the Incumbent Board at the time of the execution of
the initial agreement providing for the Reorganization.
4. TERMINATION FOLLOWING CHANGE IN CONTROL
If any of the events described in Section 3 hereof constituting a
Change in Control of the Company shall have occurred, the Executive shall be
entitled to the benefits provided in Section 5 hereof upon the subsequent
termination of the Executive's employment with the Company during the term of
this Agreement, unless such termination is (i) because of death of the
Executive, (ii) by the Company for Cause or Disability or (iii) by the Executive
other than for Good Reason (all as such capitalized terms are hereinafter
defined).
(a) Disability. Termination by the Company of the Executive's
employment based on "Disability" shall mean termination because of the
Executive's inability to perform his duties with the Company on a full time
basis for 180 consecutive days or a total of at least 240 days in any twelve
month period as a result of the Executive's incapacity due to physical or mental
illness (as determined by an independent physician selected by the Board).
(b) Cause. Termination by the Company of the Executive's employment for
"Cause" shall mean termination for (i) gross incompetence, gross negligence,
willful misconduct in office or breach of a material fiduciary duty owed to the
Company or any subsidiary or affiliate thereof; (ii) conviction of a felony, a
crime of moral turpitude or commission of an act of embezzlement or fraud
against the Company or any subsidiary or affiliate thereof; (iii) any material
breach by the Executive of a material term of this Agreement, including, without
limitation, material failure to perform a substantial portion of his duties and
responsibilities hereunder; or (iv) deliberate dishonesty of the Executive with
respect to the Company or any subsidiary or affiliate thereof.
(c) Good Reason; Window Period. The Executive shall be entitled to
terminate his employment (i) for "Good Reason" as defined below or (ii) during
the "Window Period" by the Executive without any reason. For purposes of this
Agreement, the "Window Period" shall mean the 45-day period immediately
following the first anniversary of the date on which a Change in Control
occurred. For purposes of this Agreement, termination for "Good Reason" shall
mean termination based on:
(i) the assignment to the Executive of any duties inconsistent
with the position he held with the Company immediately prior
to the Change in Control, or a significant adverse alteration
in the nature or status of the Executive's responsibilities or
the conditions of the Executive's employment from those in
effect immediately prior to such Change in Control;
(ii) a reduction by the Company in the Executive's base salary as
in effect immediately prior to the Change in Control or a
reduction in the Executive's Recent Average Bonus (defined as
the bonus paid or payable, including by reason of deferral, to
the Executive by the Company in respect of the two calendar
years immediately preceding the year in which the Change in
Control occurs;
(iii) the failure by the Company to pay to the Executive any portion
of his compensation or to pay to the Executive any portion of
an installment of deferred compensation under any deferred
compensation program of the Company within 10 days of the date
such compensation is due (it being understood and agreed that
each annual bonus shall be paid no later than the end of the
third month of the year next following the year for which the
annual bonus is awarded, unless the Executive shall elect to
defer the receipt of such annual bonus);
(iv) the Company's requiring the Executive to be based at any
office that is greater than thirty-five (35) miles from where
the Executive's office is located immediately prior to the
Change in Control, except for required travel on the Company's
business to an extent substantially consistent with the
business travel obligations which the Executive undertook on
behalf of the Company prior to the Change in Control;
(v) the failure by the Company to obtain an agreement reasonably
satisfactory to the Executive from any successor to assume and
agree to perform this Agreement; or
(vi) the failure by the Company to continue in effect any Plan (as
hereinafter defined) in which the Executive is
participating at the time of the Change in Control of the
Company (or Plans providing the Executive with at least
substantially similar benefits) other than as a result of the
normal expiration of any such Plan in accordance with its
terms as in effect at the time of the Change in Control, or
the taking of any action, or the failure to act, by the
Company which would adversely affect the Executive's
continued participation in any of such Plans on at least as
favorable a basis to the Executive as is the case on the
date of the Change in Control, or which would materially
reduce the Executive's benefits in the future under any of
such Plans or deprive the Executive of any material
benefit enjoyed by the Executive at the time of the Change
in Control.
For purposes of this Section 4(c), any good faith determination of "Good Reason"
made by the Executive shall be conclusive.
For purposes of this Agreement, "Plan" shall mean any compensation plan
or any employee benefit plan such as a thrift, pension, profit sharing, medical,
disability, accident, life insurance plan or a relocation plan or policy or any
other plan, program or policy of the Company intended to benefit employees.
(d) Notice of Termination. Any termination by the Company on the one
hand or by the Executive following a Change in Control for Good Reason or during
the Window Period shall be communicated by written Notice of Termination to the
other party hereto. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific termination provision in
this Agreement relied upon.
(e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive during the Window Period or for Good Reason, the date of receipt of
the Notice of Termination or any later date specified therein, as the case may
be, (ii) if the Executive's employment is terminated by the Company other than
for Cause or Disability, the date specified in the Notice of Termination (which
shall not be less than 30 nor more than 60 days from the date such Notice of
Termination is given), and (iii) if the Executive's employment is terminated for
Disability, 30 days after Notice of Termination is given, provided that the
Executive shall not have returned to the full-time performance of his duties
during such 30-day period.
5. COMPENSATION UPON TERMINATION.
(a) If, during the Employment Period, the Company shall terminate the
Executive's employment other than for Cause or Disability or the Executive shall
terminate his employment either for Good Reason or during the Window Period,
then the Company shall pay to and provide for the Executive, without regard to
any contrary provisions of any Plan, the following:
(i) the sum of: (1) the Executive's base salary through the
Date of Termination at the rate in effect just prior to the
time a Notice of Termination is given; (2) the amount, if
any, of any incentive or bonus compensation theretofore
earned which has not yet been paid; (3) the product of the
annual bonus paid or payable, including by reason of
deferral, for the most recently completed year and a
fraction, the numerator of which is the number of days in the
current year through the Date of Termination and the
denominator of which is 365; and (4) any benefits or awards
(including both the cash and stock components) which
pursuant to the terms of any Plans have been earned or
become payable, but which have not yet been paid to the
Executive (including amounts which previously had been
deferred at the Executive's request) (the sum of the
amounts described in clauses (1), (2), (3) and (4) are
referred to as the "Accrued Obligations");
(ii) in lieu of any further salary payments subsequent to the Date
of Termination, an amount equal to 2.0 times the Executive's
Earnings (as defined below) (the "Severance Allowance"); and
(iii) the Company shall maintain in full force and effect, at
the sole cost of the Company (except for the regular
contributions of the Executive as described below, if any),
for the continued benefit of the Executive and his dependents
for a period terminating on the earliest of (a) 24 months
after the Date of Termination, or (b) the commencement date
of equivalent benefits from a new employer, all insured
and self-insured employee welfare benefit Plans in which
the Executive was entitled to participate immediately prior
to the Date of Termination, provided that the Executive's
continued participation is possible under the general terms
and provisions of such Plans (and any applicable funding
media) and the Executive continues to pay an amount equal to
his regular contribution under such Plans prior to the
Change in Control for such participation. In the event that
the Executive's participation in any such Plan is barred,
the Company, at its sole cost and expense, shall arrange
to have issued for the benefit of the Executive and his
dependents individual policies of insurance providing
benefits substantially similar (on an after-tax basis) to
those which the Executive otherwise would have been entitled
to receive under such Plans pursuant to this Section
5(a)(iii) or, if such insurance is not available at a
reasonable cost to the Company, the Company shall
otherwise provide the Executive and his dependents with
equivalent benefits (on an after-tax basis). The Executive
shall not be required to pay any premiums or other charges in
an amount greater than that which the Executive would have
paid in order to participate in such Plans.
(b) For purposes of Section 5(a)(ii), "Earnings" means the average
annual compensation payable by the Company and includible in the gross income of
the Executive for the taxable years during the period consisting of the most
recent five taxable years ending before the date on which the Change in Control
occurs (or such portion of such period during which the Executive performed
personal services for the Company).
(c) The Severance Allowance (as defined in Section 5(a)(ii)) shall be
paid to the Executive not later than the thirtieth day following the Date of
Termination; provided, however, that if the amounts of such payment cannot be
finally determined on or before such day, the Company shall pay to the Executive
on such day an estimate, as determined in good faith by the Company, of the
Severance Allowance owed and shall pay the remainder of such payments (together
with interest thereon at the rate provided in Section 1274(b)(2)(B) of the
Internal Revenue Code of 1986, as amended (the "Code"), as soon as the amount
thereof can be determined, but in no event later than the sixtieth day after the
Date of Termination. The Executive may elect to receive, in lieu of a lump-sum
payment, the Severance Allowance in consecutive, equal monthly installments over
a period not to exceed 24 months, beginning on the first day of month following
the Date of Termination. The Accrued Obligations (as defined in Section 5(a)(i))
shall be paid to the Executive within 10 days after the Date of Termination.
(d) Except as specifically provided in Section 5(a)(iii) above, the
amount of any payment provided for in this Section 5 shall not be reduced,
offset or subject to recovery by the Company by reason of any compensation
earned by the Executive as the result of employment by another employer after
the Date of Termination, or otherwise.
(e) In the event any payment or distribution by the Company to or for
the benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section
5(e)) (a "Payment") would be subject to the excise tax imposed by Section 4999
of the Internal Revenue Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (collectively, the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including any income taxes and interest or penalties imposed with respect to
such taxes) and the Excise Tax imposed on the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed on the
Payments. All determinations required to be made under this Section 5(e),
including whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment, shall be made by Yount, Hyde & Barbour, P.C. (the "Accounting
Firm"), or such other accounting firm as may be mutually agreed to between the
Executive and the Company. All fees and expenses of such accounting firm shall
be borne solely by the Company, and any determination by the Accounting Firm
shall be binding upon the Company and the Executive. Any Gross-Up Payment, as
determined pursuant to this Section 5(e), shall be paid by the Company to the
Executive within ten days of the receipt of the Accounting Firm's determination.
6. BINDING AGREEMENT
(a) This Agreement shall be binding upon and inure to the benefit of
the Executive (and his personal representative), the Company and any successor
organization or organizations which shall succeed to substantially all of the
business and property of the Company, whether by means of merger, consolidation,
acquisition of all or substantially of all of the assets of the Company or
otherwise, including by operation of law.
(b) For purposes of this Agreement, the term "Company" shall include
any subsidiaries of the Company and 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 Company ceases to exist; provided, however,
that for purposes of determining whether a Change in Control has occurred
herein, the term "Company" shall refer to F&M National Corporation or its
successors.
7. FEES AND EXPENSES; MITIGATION
(a) The Company shall pay or reimburse the Executive, on a current
basis, for all costs and expenses, including without limitation court costs and
reasonable attorneys' fees, incurred by the Executive (i) in contesting or
disputing any termination of the Executive's employment or (ii) in seeking to
obtain or enforce any right or benefit provided by this Agreement, in each case
regardless of whether or not the Executive's claim is upheld by a court of
competent jurisdiction; provided, however, the Executive shall be required to
repay any such amounts to the Company to the extent that a court issues a final
and non-appealable order setting forth the determination that the position taken
by the Executive was frivolous or advanced by him or her in bad faith.
(b) The Executive shall not be required to mitigate the amount of any
payment the Company becomes obligated to make to the Executive in connection
with this Agreement, by seeking other employment or otherwise.
8. NOTICE
Any notices, requests, demands and other communications provided for by
this Agreement shall be sufficient if in writing and delivered in person or sent
by registered or certified mail, postage prepaid (in which case notice shall be
deemed to have been given on the third day after mailing), or by overnight
delivery by a reliable overnight courier service (in which case notice shall be
deemed to have been given on the day after delivery to such courier service) to
the Executive at the last address the Executive has filed in writing with the
Company, attention of the Chairman of the Board.
9. MISCELLANEOUS
No provision of this Agreement may be modified, waived or discharged
unless such modification, waiver or discharge is agreed to in a writing signed
by the Executive and the Chairman of the Board or President of the Company. No
waiver by either party hereto at any time of any breach by the other party
hereto of, or of compliance with, any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of 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.
10. GOVERNING LAW
The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the Commonwealth of Virginia.
11. 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.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by F&M National Corporation by its duly authorized officer, and by
the Executive, as of the date first above written.
F&M NATIONAL CORPORATION
By: ______________________
Name:
Title:
EXECUTIVE:
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[Name of Executive]