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Exhibit 10.5
EMPLOYMENT AGREEMENT
THIS AGREEMENT, entered into as of this 1st day of July, 1998, by and between:
STEPHEN J. GURGOVITS, an individual residing in Sharon,
Pennsylvania 16146 (the "Officer"),
and
F.N.B. CORPORATION, a Pennsylvania corporation (the "Employer"),
WITNESSETH THAT:
WHEREAS, the Officer is the Vice Chairman of the Employer and the
President and Chief Executive Officer of First National Bank of Pennsylvania, a
wholly-owned banking subsidiary of the Employer ("First National"); and the
Employer and First National desire to assure themselves of the continued benefit
of the Officer's services and experience, and the parties desire that said
employment relationship be established upon the terms and conditions herein set
forth; and
WHEREAS, the Officer and First National are parties to an Employment
Agreement dated January 1, 1990, as amended by an Amendment to said Employment
Agreement dated November 21, 1994; and
WHEREAS, as additional consideration for this Employment Agreement the
parties desire to terminate the January 1, 1990 Employment Agreement and any
amendments thereto and thereby forever rescind all obligations thereunder; and
WHEREAS, Officer and Employer intend all policies and procedures of the
Employer and its parent company, F.N.B. Corporation, as modified from time to
time, to remain in full force and effect.
NOW, THEREFORE, in consideration of the premises and covenants herein
contained, and intending to be legally bound, the parties hereto agree as
follows:
SECTION 1 RECITALS
The foregoing recitals are incorporated by reference as if fully set forth
herein.
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SECTION 2 TERM OF AGREEMENT.
The initial term of the Agreement shall commence on the date of execution
("Commencement Date") and continue until sixty (60) months thereafter unless
sooner terminated under Sections 4, 5 or 6. On the first anniversary of the
Commencement Date and thereafter on each succeeding anniversary of the
Commencement Date the term of employment shall automatically extend for an
additional twelve (12) month period. However, either party may terminate the
automatic renewal by providing the other party written notice of termination at
least ninety (90) days prior to the next succeeding Commencement Date
anniversary. Notwithstanding the provisions governing the terms of this
Agreement, this Agreement shall be immediately terminated upon the death of the
Officer. In no event shall the term of the Agreement renew beyond December 31,
2008.
SECTION 3 COMPENSATION.
In consideration for services rendered to the Employer under this Agreement, the
Employer shall pay and provide to the Officer the following compensation and
benefits:
(A) SALARY. The Employer shall pay the Officer a minimum base
salary at the rate of $315,000 per year during the term
hereof, to be paid in accordance with the Employer's normal
payroll practice, with such minimum base salary to be adjusted
from time to time to reflect (i) such merit increases as the
Board of Directors of the Employer may determine are
appropriate and (ii) annual cost of living increases
commensurate with those given other key executive officers of
First National.
(B) LIFE INSURANCE. The Employer shall promptly pay or reimburse
the premiums due and payable for $811,000 in the aggregate of
"split-dollar" life insurance on the life of the Officer
presently in force under Policy Nos. 3009275, 3010740, 3142301
and 3176134 issued by Guardian Life Insurance Company, or such
other comparable policy or policies as the Employer and the
Officer may select from time to time by mutual agreement. All
such policies shall be owned by the Officer; and provided an
amount equal to 100% of all premiums paid by the Employer in
maintaining all such policies shall be repaid to the Employer,
the death benefits thereunder shall be payable to one or more
beneficiaries as designated by the Officer.
(C) PARTICIPATION IN PERFORMANCE AND INCENTIVE COMPENSATION AND
BONUS PLANS. At the discretion of the Compensation Committee
of the Employer, the Officer shall be entitled to participate
in incentive compensation, stock option and such other bonus
plans comparable to those given to similarly-positioned
officers of the Employer or its present or future subsidiaries
or affiliates only during the term of his employment with the
Employer.
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(D) FRINGE BENEFITS. The Officer shall be entitled to vacations,
retirement benefits and other fringe benefits, including but
not limited to Employer's 401(k) Plan, Retirement Income Plan,
Basic Retirement Plan, Stock Option Plan or other plans that
may be established hereafter and group life, disability and
health insurance coverages, comparable with those furnished to
similarly positioned officers of the Employer and consistent
with the prevailing compensation policies and practices of the
Employer (now and in the future) as they may change from time
to time, with respect to similarly-positioned officers of the
Employer or its present or future subsidiaries or affiliates.
SECTION 4 RESIGNATION.
If the Officer voluntarily resigns as an officer or employee of the Employer or
its significant present or future subsidiaries or affiliates, the Officer shall
no longer be considered an employee for any purpose and the Officer shall not be
entitled to any compensation or benefits after the effective date of the
Officer's resignation. Notwithstanding the foregoing, nothing contained herein
shall affect the Officer's vested rights, if any.
SECTION 5 TERMINATION FOR PROPER CAUSE.
(A) The occurrence of any of the following events or circumstances
shall constitute "Proper Cause" for termination, at the
election of the Board of Directors of the Employer, of the
employment of the Officer under this Agreement:
(1) the perpetration of defalcations by the Officer
involving the Employer or any of its present or future
subsidiaries or affiliates, as established by
certified public accountants employed by the Employer,
or willful, reckless or grossly negligent conduct of
the Officer entailing a substantial violation of any
material provision of the laws, rules, regulations or
orders of any governmental agency applicable to the
Employer or its subsidiaries and affiliates;
(2) the repeated and deliberate failure by the Officer
after advance written notice to comply with reasonable
policies or directives of the Employer or the Chairman
of the Board of Directors of the Employer; or
(3) the Officer shall breach this Agreement in any other
material respect and fail to cure such breach within
30 calendar days after the Officer receives written
notice of such breach from the Employer.
(B) If Employer terminates the Officer for Proper Cause, the
Officer shall not be an employee nor shall the Officer be
entitled to any compensation or benefits after the effective
date of the Officer's termination. Notwithstanding the
foregoing, nothing contained herein shall affect the Officer's
vested rights, if any.
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SECTION 6 TERMINATION WITHOUT CAUSE.
(A) SEPARATION PAY. Employer may terminate this Agreement at any
time whether or not such termination constitutes "Proper
Cause" as defined in Section 5 hereof. In the event Employer
terminates Officer's employment without Proper Cause as
defined in Section 5 hereof:
(1) The Officer shall not be considered an employee after
the effective date of the termination.
(2) Employer shall pay to Officer an amount equal to the
Officer's salary for the remaining portion of the
Term of the Agreement (as described at Section 2
hereof).
(3) Employer shall pay the Officer the Separation Pay in
bi-monthly installments less all withholdings
required by law and authorized deductions.
(4) Officer will not be entitled to receive any benefits
or bonuses described in Section 3(b) and (c) hereof.
(5) Officer will be entitled to receive such Separation
Pay only if the Officer executes and does not revoke
a Release of all claims and liabilities in form
prescribed by Employer.
(6) In the event of the death of Officer during the Term
of the Agreement (as described at Section 2 hereof)
the Officer shall be entitled to the lesser of the
amount equal to Officer's salary for the remainder of
said Term of Agreement or twelve (12) months.
(7) (i) In the Event Officer is terminated without cause
with eighteen (18) or more months remaining on the
balance of the Term of the Agreement as described in
Section 2 hereof, the Employer shall be obligated to
pay on behalf of Officer the group life and health
insurance coverages described in Section 3(c) hereof,
less the same contribution as required by employee's
group life and health insurance coverages pursuant to
prevailing policies and practices of the Employer
with respect to similarly positioned officers of
Employer, for the balance of the Term of this
Agreement.
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(ii) In the event Officer is terminated without cause
with less than eighteen (18) months remaining on the
balance of the Term of this Agreement as described in
Section 2 hereof, the Employer shall be obligated to
pay on behalf of Officer the group life and health
insurance coverages described in Section 3(c) hereof
for a minimum period of eighteen (18) months after
the Officer's termination, less the same contribution
as required by employee's group life and health
insurance coverages pursuant to prevailing policies
and practices of the Employer with respect to
similarly positioned officers of Employer or its
present or future subsidiaries or affiliates, and the
health insurance coverage provided under this Section
6(7)(ii) shall be considered the health/medical
coverage that the Employer is obligated to make
available under the Consolidated Omnibus Budget
Reconciliation Act (COBRA).
(8) Nothing herein shall restrict the Officer's vested
rights, if any, pursuant to Employer's 401(k) Plan,
Retirement Income Plan, Basic Retirement Plan and
Stock Option Plan or other Employer plans that may be
established hereafter. Notwithstanding the Officer
receiving any payments under the terms of this
Section 6(a), on the date of the Officer's
termination, all vesting, for purposes of the
Employer's 401(k) Plan, Retirement Income Plan, Basic
Retirement Plan and Stock Option Plan, or other such
plans now in existence or are established in the
future, shall cease.
(B) TERMINATION OF SEPARATION PAY. Notwithstanding the foregoing
or any other provision of this Agreement, the Officer shall
not be entitled to any further separation payments and the
separation pay period shall end upon the occurrence of any of
the following:
(1) Officer files suit or submits any matter to
arbitration in violation of the Release executed in
connection with Section 6(a)(5) hereof.
(2) Officer violates any term or condition of this
Agreement, including, but not limited to, the
Non-Competition and Confidentiality provisions of
this Agreement.
(3) Officer's misappropriation of trade secrets.
(4) Employer learns that the Officer committed a material
breach of the Agreement during the terms of this
Agreement.
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SECTION 7 NON-COMPETITION.
(A) For purposes of this Agreement, reference to the term
"Competitive Enterprise" shall mean any bank holding company,
or insured depository institution (including an institution in
the organization stage or in the process of applying for or
receiving appropriate regulatory approval), including without
limitation, any federal or state chartered bank, savings bank,
savings and loan association, savings association or credit
union offering services or products similar to those presently
or in the future offered by the Employer or its subsidiary,
First National Bank of Pennsylvania ("Bank").
(B) During the two (2) year period immediately following
termination of Officer's employment (which may include,
without limitation, his resignation or any event specified in
Sections 5 and 6 hereof) (hereinafter referred to as
"Restricted Period"), the Officer shall not:
(1) accept a position as director, officer, employee,
consultant, advisor or agent of any Competitive
Enterprise which is located in any county, in which
the Bank or its present or future subsidiaries
operate an office or facilities;
(2) in any way, directly or indirectly, for the purpose
of selling any product or service in any county in
which the Bank has offices or facilities, that
compete with a product or service offered by the Bank
or its present or future subsidiary(ies), solicit,
divert, or entice any existing or potential
customer(s) or business(es) of the Bank or its
present or future subsidiary(ies) which are
identified by the Bank as a customer or business with
whom the Officer solicited, became aware of, or
transacted business during his employment with the
Bank;
(3) employ or assist in employing any present employee of
the Employer or any of its affiliates (whether or not
such employment is full time or is pursuant to a
written contract), for the purpose of having such
employee perform services for any Competitive
Enterprise or other organization in competition with
the business of the Employer or any of its present or
future subsidiaries or affiliates; and
(4) in any way, directly or indirectly, make any oral or
written statement, comments, or other communications
designed or intended to impugn, disparage or
otherwise malign the reputation, ethics, competency,
morality or qualifications of the Employer or its
affiliates, or any directors, or customers thereof.
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(C) Without limitation of the Employer's rights and remedies under
this Agreement or as otherwise provided by law or in equity,
it is understood and agreed between the parties that the right
of the Officer to receive and retain any payments otherwise
due under this Agreement shall be suspended and canceled if
and for so long as he shall be in violation of the foregoing
covenant. If and when the Officer shall have cured such
violation within twenty (20) days of receipt of written notice
from Employer and shall have tendered to the Employer any and
all economic benefits directly or indirectly received or
receivable by the Officer arising therefrom, the Officer's
right to receive payments under this Agreement shall be
automatically reinstated but only for the remainder of the
period during which such payments are due him.
(D) If the Employer terminates Officer without Proper Cause as
defined in Section 5 hereof, and if the Officer shall duly
have complied with and observed the covenants of this Section
7, the Officer may be discharged from the covenants of this
Section 7 at any time during the Restricted Period by filing
with the Employer a duly executed statement satisfactory to
Employer, releasing the Employer and, if applicable, its
insurance carriers, from any and all obligations under the
terms of this Agreement.
SECTION 8 CONFIDENTIALITY.
(A) For purposes of this Agreement, "Proprietary Information"
shall mean any information relating to the business of the
Employer or any of its present or future subsidiaries or
affiliates that has not previously been publicly released by
authorized representatives of the Employer or any authorized
representatives of any of its present or future subsidiaries
or affiliates, and shall include (but shall not be limited to)
Employer information encompassed in all marketing and business
plans, financial information, costs, pricing information,
customer and client lists and relationships between Employer
and dealers, distributors, sales representatives, wholesalers,
customers, clients, suppliers, and others who have business
dealings with Employer, and all methods, concepts, or ideas in
or reasonably related to the business of the Employer or any
of its present or future subsidiaries or affiliates and not in
the public domain.
(B) The Officer agrees to regard and preserve as confidential all
Proprietary Information that has been or may be developed or
obtained by the Officer in the course of his employment with
the Employer and its subsidiaries and affiliates, whether he
has such information in his memory or in writing or other
physical form. The Officer shall not, without written
authorization from the Employer, use for his benefit or
purposes, nor disclose to others at any time, either during
the term of Officer's employment or thereafter, except as
required by the conditions of his employment hereunder, any
Proprietary Information connected with the business or
development of the Employer or its subsidiaries or affiliates.
This prohibition shall not apply after the Proprietary
Information has been voluntarily disclosed to the public,
independently developed and disclosed by others, or otherwise
enters the public domain through lawful means.
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SECTION 9 REMOVAL OF DOCUMENTS OR OBJECTS.
The Officer agrees not to remove from the premises of the Employer or any of its
present or future subsidiaries or affiliates, except as an employee of the
Employer in pursuit of the business of the Employer or any of its present or
future subsidiaries or affiliates, or except as specifically permitted in
writing by the Employer, any document or object containing or reflecting any
Proprietary Information. The Officer recognizes that all such documents,
tangible and intangible property and objects, whether developed by him or by
someone else, are the exclusive property of the Employer.
SECTION 10 INJUNCTIVE RELIEF.
(A) It is understood and agreed by and between the parties hereto
that the services to be rendered by the Officer hereunder are
of a special, unique, extraordinary and intellectual
character, which gives them a peculiar value, the loss of
which may not be reasonably or adequately compensated in
damages, and additionally that a breach by the Officer of the
covenants set out in Sections 7, 8, and 9 of this Agreement
will cause the Employer great and irreparable injury and
damage. The Officer hereby expressly agrees that the Employer
shall be entitled to the remedies of injunction, specific
performance and other equitable relief to prevent a breach of
Sections 7, 8, and 9 of this Agreement by the Officer. This
provision shall not, however, be construed as a waiver of any
of the remedies which the Employer may have for damages or
otherwise.
(B) As a result of the uncertainty in determining damages,
Employer and Officer, as a reasonable mode of determining
damages, agree that upon a determination of the Officer's
breach of Section 7, 8, or 9, Employer shall be entitled to
damages equal to one (1) year of the Officer's base salary at
the time Officer's employment with Employer ceases, and they
agree that the damages are liquidated damages and not a
penalty. Furthermore, the Employer's liquidated damages are in
addition to and not in lieu of Employer's right to seek
injunctive relief.
SECTION 11 SUBSIDIARIES AND AFFILIATES.
It is understood and agreed by the parties hereto that, at the election and
direction of the Employer's Board of Directors and without modification of the
terms and provisions hereof, the Officer shall also serve as an officer of any
one or more present or future subsidiaries or affiliates of the Employer and,
when and as so determined by the Board and any such subsidiary or affiliate, the
rights, duties and obligations of the Officer and Employer expressed and implied
in this Agreement shall inure to the benefit of and bind any such subsidiary or
affiliate with the same force and effect as would be obtained if the subsidiary
or affiliate were a party hereto jointly and severally with the Employer.
SECTION 12 SUCCESSORS, ASSIGNS, ETC.
(A) This Agreement shall be binding upon, and shall inure to the
benefit of, the Officer and the Employer and their respective
permitted successors, assigns, heirs, legal representatives
and beneficiaries.
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(B) 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 or
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; provided, however, that nothing
in this Section 12 shall preclude the assumption of such
rights by executors, administrators or other legal
representatives of the Officer or his estate and their
assigning any rights hereunder to the person or persons
entitled thereto.
(C) Nothing in this Agreement shall preclude the Employer from
consolidating or merging into or with or transferring all or
substantially all of its assets to another corporation which
assumes this Agreement and all obligations and undertakings of
the Employer hereunder. Upon such a consolidation, merger or
transfer of assets and assumption, the term "Employer" as used
herein shall mean such other corporation and this Agreement
shall continue in full force and effect.
SECTION 13 MERGER OR CONSOLIDATION.
In the event of the merger or consolidation of the Employer with another
corporation during this Agreement and as a result of such merger or
consolidation the shareholders of the Employer as of the day preceding such
transaction will own less than 51% of the outstanding voting securities of the
surviving corporation, or in the event that there is (in a single transaction or
series of related transactions) a sale or exchange of 80% or more of the Common
Stock of the Employer for securities of another entity in which shareholders of
the Employer will own less than 51% of such entity's outstanding voting
securities, or in the event of the sale by the Employer of a substantial portion
of its assets to an unrelated third party, the Officer shall have the right, at
his option, to terminate his employment under this Agreement upon 30 days'
advance written notice, provided such written notice shall have been delivered
to the Employer during the period beginning upon public announcement of the
subject transaction and ending not more than 60 days after the effective date of
such transaction. The Officer shall thereupon be entitled to receive from the
Employer a cash bonus (the "Cash Bonus") whose "present value" (as defined in
Section 280G(d)(4) of the Internal Revenue Code of 1986, as amended (the
"Code")) on the closing date of such transaction is equal to two hundred
ninety-nine percent (299%) of the Officer's "base amount" (as defined in Section
280(G)(b)(3) of the Code. Said present value of the Cash Bonus is hereinafter
referred to as the "Initial Present Value". The Cash Bonus shall be paid in
three installments as follows: an amount equal to one-third (1/3) of the Initial
Present Value shall be paid on the effective date of the termination of his
employment hereunder; an additional amount equal to one-third of the Initial
Present Value shall be paid on the last day of the sixth month following such
effective date; and a final amount equal to one-third of the Initial Present
Value shall be paid on the last day of the twelfth month following such
effective date. If the Officer does not elect to terminate this Agreement as
aforesaid, then this Agreement shall remain in effect and be assigned and
transferred to the Employer's successor in interest, and the Employer shall
cause such assignee to assume the Employer's obligations hereunder; and in such
event the Officer hereby confirms his agreement to continue to perform his
duties and obligations according to the terms and conditions hereof for such
assignee or transferee of this Agreement.
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SECTION 14 NOTICES.
All notices and other communications which are required or may be given under
this Agreement shall be in writing and shall be deemed to have been given if
delivered personally or sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed as follows:
(A) To the Employer at the address designated as its headquarters,
Attention: CEO.
With a copy to F.N.B. Corporation, One F.N.B. Boulevard -
4th Floor, Hermitage, PA 16148,
Attention: Corporate Counsel.
(B) To the Officer at his address provided to Employer from time
to time for salary and other similar purposes.
or to such other place as either party shall have specified by notice in writing
to the other.
SECTION 15 GOVERNMENTAL REGULATION.
Nothing contained in this Agreement shall be interpreted, construed or applied
to require the commission of any act contrary to law and whenever there is any
conflict between any provision of this Agreement and any statute, law ordinance,
order or regulation, the latter shall prevail; but in such event any such
provision of this Agreement shall be curtailed and limited only to the extent
necessary to bring it within applicable legal requirements.
SECTION 16 ARBITRATION.
Any dispute or controversy as to the validity, interpretation, construction,
application or enforcement of, or otherwise arising under or in connection with
this Agreement, shall be submitted at the request of either party hereto for
resolution and settlement through arbitration in Pennsylvania in accordance with
the rules then prevailing of the American Arbitration Association. Any award
rendered therein shall be final and binding on each of the parties hereto and
their heirs, executors, administrators, successors and assigns, and judgment may
be entered thereon in any court having jurisdiction. The foregoing provisions of
this Section 16 shall not be deemed to limit the rights and remedies reserved to
the Employer under and pursuant to Section 10 hereof.
SECTION 17 GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the laws of
the Commonwealth of Pennsylvania.
SECTION 18 DIVISIBILITY.
Should a court or arbitrator declare any provision hereof to be invalid, such
declaration shall not affect the validity of the Agreement as a whole or any
part thereof, other than the specific portion declared to be invalid.
SECTION 19 HEADINGS.
The headings to the Sections and paragraphs hereof are placed herein for
convenience of reference only and in case of any conflict the text of this
Agreement, rather than the headings, shall control.
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SECTION 20 ENTIRE AGREEMENT; AMENDMENT.
This Agreement sets forth the entire understanding of the parties in respect of
the subject matter contained herein and supersedes the Officer's January 1, 1990
Employment Agreement and amendments thereto and all prior agreements,
arrangements and understandings relating to the subject matter and may only be
amended by a written agreement signed by both parties hereto or their
duly-authorized representatives.
IN WITNESS WHEREOF, on the 19th day of January, 1999, the parties hereto have
executed this Agreement to be effective as of the date first above written.
WITNESS: STEPHEN J. GURGOVITS
/s/ Nancy J. Dillon /s/ Stephen J. Gurgovits
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ATTEST: F.N.B. CORPORATION
By: /s/ William J. Rundorff
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SECRETARY
Name:
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Title: EVP
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[SEAL]