Contract

Exhibit (10)M EMPLOYMENT AGREEMENT THIS AGREEMENT, made and entered into this 1st day of April, 2002, by andbetween FNB SOUTHWEST, NATIONAL ASSOCIATION, a national banking associationheadquartered in Roanoke, Virginia (“Employer” or “Southwest”) and FNBCORPORATION, (“FNB” or the “Corporation”) a multi-bank holding companyorganized and existing under the laws of the Commonwealth of Virginia whichowns all of the outstanding stock of First National Bank, FNB Southwest, N.A.and Salem Bank & Trust, N.A., and D.W. SHILLING, a resident of theCommonwealth of Virginia (sometimes hereinafter referred to as “Employee”). WITNESSETH: WHEREAS, Employee has been a principal executive of Employer for a numberof years, and in such capacity has developed an intimate and thoroughknowledge of Employer’s business methods, trade secrets, and operations, aswell as personal relationships with key individual employees of Employer andother banks and companies with which Employer does business; WHEREAS, the retention of Employee’s services for and on behalf ofEmployer and/or its subsidiaries, is of material importance to thepreservation and enhancement of the value of Employer’s business; WHEREAS, Employer recognizes that, as is the case with many publicly heldcorporations, the possibility of a change of control may arise and that suchpossibility, and the uncertainty and questions which it may raise amongmanagement, may result in the departure or distraction of management personnelto the detriment of Employer and its shareholders; WHEREAS, the Board of Directors of Employer (the “Board”) has determinedthat appropriate steps should be taken to reinforce and encourage thecontinued attention and dedication of members of Employer’s management totheir assigned duties without distraction by the possibility of a change ofcontrol; and WHEREAS, the Board believes it important, should Employer or itsshareholders receive a proposal for transfer of control of Employer, thatEmployee be able to assess such proposal and advise the Board thereon, withoutbeing influenced by the uncertainties of Employee’s own employment status. NOW, THEREFORE, in consideration of the foregoing and the mutualcovenants herein set forth, Employer and Employee do hereby agree as follows: 1I. Active Term 1.1 Employer hereby employs Employee as President and Chief ExecutiveOfficer of Southwest to perform executive services as hereinafter provided,and Employee hereby accepts said employment and agrees to render such servicesto the Employer on the terms and conditions set forth in this Agreement. ThisAgreement shall be for a term of three years beginning on the date ofexecution of this Agreement and shall automatically renew on the anniversarydate of the Agreement for an additional period of one year on each renewaldate until there is a change in control (as hereinafter defined) or theEmployee attains age 62; and consequently, upon the anniversary date each yearuntil the Employee attains age 62, the Agreement will be automaticallyextended and have a remaining term of three years. 1.2 During the term of this Agreement, Employee agrees to perform suchduties as are customarily performed by one holding an executive managementposition with a commercial bank, including but not limited to those duties asset forth in a written job description. In addition, the Employee shallperform such executive services for Employer as may from time to time beassigned to Employee by the President of FNB Corporation, the Board of FNB orSouthwest or any Committee of the either Board. 1.3 During the term of this Agreement, Employee shall devote his bestefforts, including such portion of his time and effort as he has customarilyprovided in recent years, to the affairs and business of the Employer and itsaffiliates. 1.4 In the event Employer completes an affiliation with any otherinstitution in which there is no change in control (as hereinafter defined)and, as a result of the affiliation, the Employee occupies a position of lessauthority than that of an executive officer with a commercial bank, theEmployee may elect to terminate employment under Section 7.2 of this Agreementand receive the compensation as provided therein. 1.5 Employee’s services shall be rendered principally in Roanoke,Virginia but Employee shall travel on behalf of Employer, its subsidiaries oraffiliates, as may reasonably be required.II. Competitive Activities 2.1 During the term of this Agreement and for an additional yearfollowing the termination of this agreement, Employee shall not, directly orindirectly engage or participate in the management of, consult with, become adirector of, or render advisory or other services for, or in connection with,or make any financial investment in, any entity primarily engaging infinancial or investment services which competes with FNB in the Employer’strading area. For purposes of this Agreement, “Employer’s trading area” shallbe deemed to include all areas located within fifty (50) miles by highway fromthe nearest location of an office of FNB Corporation or one of its affiliates(as constituted at the termination of Employee’s employment with Southwest).Notwithstanding the foregoing, the Employee may invest in any such financialor investment firm, corporation, business entity or enterprise so long as theinvestment is “passive” (as such term is defined in the Internal Revenue Codeor its implementing regulations). Notwithstanding anything to the contrarycontained in this Agreement, while Employee is employed by Employer during theterm of this Agreement, Employee shall have no employment contract or other 2written or oral agreement concerning his employment as an officer of theEmployer with any entity or person other than the Employer. 2.2 Employee acknowledges that by virtue of his employment withSouthwest, Employee shall be privy to confidential information concerning theactivities and affairs of FNB, its subsidiaries and affiliates, if any,including trade secrets and other confidential matters. During the term ofemployment, should Employee render services to someone else in violation ofSection 2.1 hereof, other than as expressly authorized by the Board, Employershall be entitled to immediate equitable relief to restrain such conduct.Such equitable relief shall be in addition to any other remedies to whichEmployer may be entitled under law. Except for the purpose of carrying outEmployee’s duties hereunder, Employee shall not remove or retain, or makecopies or reproductions of any inquiries, calculations, letters, papers, orinformation of any type or description relating to the business of Employer,its subsidiaries or affiliates, if any, and Employee shall not divulge toothers any information or data acquired by him while in Employer’s employrelating to methods, processes, or other trade secrets or confidentialinformation owned or utilized by Southwest. Employer shall acquire the soleand exclusive rights to any innovations, ideas, and concepts, whether or notsubject to patent or trademark protection, and all copyrightable materialswhich are conceived by Employee during his employment, which relate to thebusiness of Employer or any of its subsidiaries or affiliates, which areconfidential, and which are not readily ascertainable from persons or othersources outside Employer and its subsidiaries and affiliates.III. Compensation 3.1 Employer shall compensate and pay Employee for his services asfollows: a. Employee shall be paid a salary at an annual rate set by theBoard from time to time. At a minimum, the base salary shall equal or exceedthe base salary paid Employee at the time of the execution of this agreement. b. Employee shall be reimbursed, in a manner consistent withpolicies of Employer presently or later established for executive personnel,for all reasonable expenses directly incurred by the Employee in the dischargeof any duties hereunder; c. Employee shall receive all fringe benefits that Employee hasreceived immediately prior to the execution of this Agreement, including, butnot limited to, the use of an Employer’s car and memberships at country clubs,health and civic clubs; provided, however, that expenses for meetings andconferences shall not exceed $15,000 annually(excluding VBA) and membershipsand club charges shall not exceed $12,000. Fringe benefits shall not beconsidered to include health, life, disability and dental insurance providedto the Employee through group welfare benefit plans sponsored by FNB nor toretirement benefits provided to Employee through retirement plans sponsored byFNB. Fringe benefits in excess of the amount specified herein shall besubject to Board approval. d. Employee shall receive all FNB sponsored welfare and retirementplan benefits as shall be made generally and proportionally available to otherexecutive employees of Employer. Employer shall receive an annual completephysical examination to be performed by a physician of Employee’s choice witha report of the results provided to Employer. 3 e. Employee shall receive the number of paid vacation days in eachcalendar year determined by Employer from time to time for its executiveofficers, but not less than four weeks in any calendar year (prorated in anycalendar year during which the Employee is employed hereunder for less thanthe entire year in accordance with the number of days in such calendar yearduring which he is employed). f. Should Employee die prior to the termination of this Agreement,the Employer shall pay to the Employee’s estate his base compensation for theentire month in which the Employee’s death occurs and shall pay to Employee’sestate, beginning with the month succeeding the Employee’s death, an amountequal to one-half of the Employee’s base compensation for a period of twelvemonths. In addition, if Employee’s spouse is covered by an Employer-sponsoredhealth plan at the time of the Employee’s death, Employer shall also pay, onbehalf of Employee’s spouse, the premium costs associated with maintainingsuch spouse’s health care coverage for a period of 36 months after Employee’sdeath or until such spouse becomes covered by Medicare, whichever is earlier.Except as modified by this provision, all other compensation and benefitspayable hereunder shall cease by their terms. g. Should Employee become disabled prior to the termination of thisAgreement, the Employer shall pay Executive an amount equal to one-third ofEmployee’s base compensation for the remaining term of the this Agreement andshall pay on Employee’s behalf all premium costs associated with maintaininghealth care coverage for Employee and Employee’s spouse until Employee reachesage 65 or qualifies for Medicaid, whichever is earlier. These payments shallbe in addition to, and not in lieu of, any Employee may be otherwise entitledto under any group or individual disability plan that provides long-termdisability benefits to Employee. Except as modified by this provision, allother compensation and benefits payable hereunder shall cease by their terms. All payments made payable to Employee under this Agreement shall besubject to withholding for applicable taxes, social security or othergovernmental levies and to any other deductions authorized by or forEmployee’s benefit, under any welfare or retirement plan established for ormade generally available to employees of Employer. 3.2 Nothing in this Agreement shall prevent the Board from, at any time,increasing the compensation and fringe benefits to be paid to Employee in theevent the Board, in its sole discretion, shall deem it advisable so to do inorder to compensate Employee for his services.IV. Termination Prior to Change, Including Termination for Cause, and Related Provisions 4.1 Employer shall have the right, at any time prior to a change ofcontrol of Employer(as hereinafter defined) upon written notice of not lessthan thirty (30) days, to terminate the Employee’s employment hereunder. Insuch event, Employer shall continue to compensate Employee for all salary andbenefits payable hereunder in accordance with the provisions of this Agreementas if the Agreement had not been unilaterally terminated by Employer. 4 4.2 In the event that, prior to a change of control of Employer (ashereinafter defined), employment is terminated for cause (as hereinafterdefined), Employee shall have no right to compensation or other benefits forany period after such termination. For purpose of this subsection, the term”cause” shall mean personal dishonesty, incompetence, willful misconduct,willful breach of fiduciary duty, willful violation of any law, rule orregulation (other than traffic violations or similar offenses), willfulviolation of a final cease and desist order, willful or intentional breach orneglect of Employee’s duties hereunder, persistent negligence, or misconductin the performance of Employee’s duties.V. Change in Control 5.1 For purposes of this Agreement, a “change in control” of Employershall have occurred at such time as (a) the closing of a corporatereorganization in which Southwest becomes a subsidiary of a holding company,the majority of the common stock of which is owned, in aggregate, by personswho did not own the majority of the common stock of FNB Corporation (or itssuccessor) immediately prior to the reorganization; (b) individuals whoconstitute the Board of FNB Corporation on the date hereof (the “IncumbentBoard”) cease for any reason to constitute at least a majority thereof;provided that any person becoming a director subsequent to the date hereofwhose nomination for election was approved by a vote of at least three-quarters (3/4) of the directors comprising the Incumbent Board shall beconsidered as though such person were a member of the Incumbent Board forpurposes of this subsection; (c) the closing of the merger of Southwest withor into another person; or (d) the closing of the sale, conveyance or othertransfer of substantially all of the assets of Southwest to another person. 5.2 For purposes of this Agreement, the term “person” shall include anyindividual, corporation, partnership, group, association or other “person”, assuch term is used in section 14(d) of the Exchange Act, other than FNB, anyentity in which FNB owns a majority of the voting interest or any employeebenefit plan(s) sponsored by FNB.VI. Termination Following Change in Control 6.1 Employer recognizes that a change in control as defined in Section Vmay directly affect the direction and philosophy of FNB and its affiliates. Achange in control may also affect Employee’s responsibilities and positionwith the Employer. Should a change in control occur, Employee shall beentitled to a lump sum payment equal to the Employee’s annual basecompensation immediately prior to the change in control which payment shall bedue and payable within thirty (30) days after the change in control. Employeewill be entitled also to the compensation provided in subsection 7.2 ofSection VII hereof, upon Employee’s determination to terminate his employmentwith Employer or upon termination by Employer or upon termination by Employerof Employee’s employment with Employer. 6.2 Any termination by Employer or by Employee following a change incontrol shall be communicated by written notice of termination (“Notice ofTermination”) to the other party hereto. Such Notice of Termination shallspecify the date as of which employment shall terminate (“Date ofTermination”), which Date of Termination shall not be more than sixty (60)days from the date of the Notice of Termination. 5VII. Compensation Upon Termination; Other Agreements 7.1 During any period following a change in control that Employee failsto perform his duties as a result of incapacity due to physical or mentalillness, Employee shall continue to receive a salary which, when added toinsurance benefits received as compensation and social security benefits, willequal the Employee’s rate of compensation immediately prior to the illness.Any benefits or awards under any plans shall continue to accrue during suchperiod of illness, to the extent not inconsistent with such Plans, untilEmployee’s employment is terminated pursuant to and in accordance with SectionVI hereof. Thereafter, Employee’s compensation and benefits shall bedetermined in accordance with subsection 7.2 hereof and the plans then ineffect. 7.2 Subject to Section X hereof, if within thirty-six (36) months of thedate after which a change in control as defined in Section V above, Employee’semployment with Employer shall be terminated by the Employer or by Employee,then Employee shall be entitled, without regard to any contrary provisions ofany Plan, to the following benefits: (A) For the period which the greater of (i) the remaining term ofemployment provided in this Agreement or (ii) thirty-six (36) months,commencing on the Date of Termination, Employer shall continue to provideEmployee with membership in a country club (the payment of dues andassessments to be paid by Employer and all other charges such as for food orspecial member events to be paid by Employee), and shall make provisions sothat Employee’s medical insurance benefits, life insurance and accidentinsurance plan coverage and all other welfare and retirement plan and fringebenefits associated with Employee’s employment will continue to be on termsand at levels substantially the same as those existing on the day prior to theDate of Termination; (B) Employer shall transfer to Employee title to the automobile whichhas been furnished to Employee for his use immediately prior to Termination.The transfer of ownership of the vehicle shall be at no expense (excluding anyincome tax consequences) to Employee. (C) For the period which is the greater of (i) the remaining term ofemployment provided for in this Agreement or (ii) thirty-six (36) months,commencing on the Date of Termination, Employee shall receive the AnnualCompensation theretofore received by Employee from Employer. Payment shall bemade each month when the Employer’s payroll is customarily paid unlessEmployee irrevocably elects to receive all salary compensation due hereunderin a lump sum which shall be paid within thirty (30) days of the Employee’selection. Should Employee elect to receive a lump sum settlement instead ofmonthly payments, the amount payable shall be reduced to the present value ofmonthly payments by using the one year certificate of deposit rate then ineffect at Southwest. For purposes of this Agreement, “Annual Compensation”shall mean Employee’s current annual base salary immediately preceding thechange in control in accordance with Section 3.1(a) hereof. (D) The Employee shall be fully vested under the Corporation’squalified and nonqualified deferred compensation or retirement plans andretain all of his rights under such plans as of the date when the lastcompensation under this Agreement is due to be paid to Employee. 6 7.3 The amount of any payment provided for in this Section VII shall notbe reduced, offset or subject to recovery by the Employer by reason of anycompensation earned by Employee as a result of subsequent employment byanother employer. 7.4 Notwithstanding the other provisions of this Section VII, shouldEmployer terminate Employee for cause as defined in subsection 4.2, no furthercompensation shall be paid to Employee after the Date of Termination.Otherwise, Employee shall be entitled to the full compensation provided forherein after his Termination, whether such Termination is initiated byEmployee or Employer.VIII. Successors; Binding Agreement 8.1 This Agreement shall inure to the benefit of and be binding upon anycorporate or other successor of FNB which shall result from a change incontrol of FNB as defined in Section V hereof. FNB shall require any suchsuccessor, by an agreement in form and substance satisfactory to Employee,expressly to assume and agree to perform this Agreement in the same manner andto the same extent as Employer would be required to perform if no suchsuccession had taken place. 8.2 This Agreement shall inure to the benefit and be enforceable byEmployee’s personal or legal representatives, executors, administrators,successors, heirs, distributees, devisees and legatees.IX. Fees and Expenses 9.1 Both Employer and the Employee covenant and agree that in the eventof a breach or default of either party of any of the terms of this agreement,then the defaulting party shall reimburse the non-defaulting party for any andall legal expenses incurred to enforce the contract, including reasonableattorney’s fees.X. Taxes 10.1 All payments to be made to Employee under this Agreement will besubject to required withholding of federal, state and local income andemployment taxes. 10.2 Notwithstanding anything to the contrary in this Agreement, in theevent that mutually satisfactory independent auditors (the “Auditors”) shalldetermine that any payment or distribution by Employer to or for Employee’sbenefit (whether paid or payable or distributed or distributable pursuant tothe terms of this Agreement or otherwise) (a “Payment”) would be a “parachutepayment” as defined in Section 280G of the Code, then the aggregate presentvalue of amounts payable or distributable to or for Employee’s benefitpursuant to this Agreement (such payments or distributions pursuant to thisAgreement are hereinafter referred to as “Agreement Payments”) shall bereduced (but not below zero) to the Reduced Amount. For purposes of thissubsection 10.2 of this Section X, the “Reduced Amount” shall be an amountexpressed in present value which maximizes the aggregate present value ofAgreement Payments such that the aggregate present value of Payments does notconstitute a parachute payment. 10.3 If the Auditors determine that any Payment would be a “parachutepayment” as defined in Section 280G of the Code, Employer shall promptly giveEmployee notice to that effect and a copy of the detailed calculation thereofand of the Reduced Amount. Employee may then elect, in his sole discretion,which and how much of Agreement Payments shall be eliminated or reduced (aslong as after such election the aggregate present value of the Agreement 7Payments equals the Reduced Amount), and the Employee shall advise Employer inwriting of Employee’s election within ten (10) days of Employee’s receipt ofnotice. If no such election is made by Employee, Employer may elect which andhow much of the Agreement Payments shall be eliminated or reduced (as long asafter such election the aggregate present value of the Agreement Paymentsequals the Reduced Amount) and shall notify Employee promptly of suchelection. For purposes of this subsection 10.3 of this Section X, presentvalue shall be determined in accordance with Section 280G(D)(4) of the Code.All determinations made by the Auditors under this paragraph shall be madewithin sixty (60) days of the Notice of Termination. In accordance withSection VII hereof and as promptly as practicable following such determinationand the elections hereunder, Employer shall pay or distribute to or for theEmployee’s benefit in the future such amounts as become due to Employee underthis Agreement. 10.4 As a result of the uncertainty in the application of Section 280Gof the Code, it is possible the Agreement Payments will have been made byEmployer which should not have been made (“Overpayment”) or that additionalAgreement Payments which will have not been made by Employer should have beenmade (“Underpayment”), in each case consistent with the calculation of theReduced Amount hereunder. In the event that the Auditors, based upon theassertion of a deficiency by the Internal Revenue Service against Employer orEmployee which the Auditor believes has a high probability of success,determines that an Overpayment has been made and such Overpayment shall betreated for all purposes as a loan to Employee which Employee shall repay toEmployer together with interest at the applicable federal rate for short-termobligations provided for in Section 7872(f)(2) of the Code; provided, however,that no amount shall be payable by Employee to Employer if and to the extentsuch payment would not be considered for federal income tax purposes to reducethe amount of Payments which are considered to be “parachute payments” withinthe meaning of Section 280G of the Code. In the event that the Auditors,based upon controlling precedent, determine that an Underpayment has occurred,any such underpayment shall be promptly paid by Employer to or for Employee’sbenefit together with interest at the applicable federal rate for short-termobligations provided for in Section 7872(f)(2) of the Code. 10.5 All determinations made by the Auditors pursuant to Section X shallbe binding upon Employer and Employee.XI. Survival 11.1 The respective obligations of, and benefits accorded, Employer andEmployee as provided in Sections III, VII, VIII, IX ,X ,XI, XII, XIII, XIV,XV, XVI, XVII of this Agreement shall survive termination of this Agreement.XII. Notices 12.1 For purposes of this Agreement, notices and all othercommunications provided for in this Agreement shall be in writing and shall bedeemed to have been duly given when delivered or mailed by United Statesregistered mail, return receipt requested, postage prepaid and addressed tothe addresses set forth on the first page of this Agreement, provided that allnotices to Employer shall be directed to the attention of the Chairman of the 8Board, or to such other addresses either party may have furnished to the otherin writing in accordance herewith; except that notice of change of addressshall be in effect only upon receipt.XIII. Miscellaneous 13.1 No provision of this Agreement may be modified, waived ordischarged unless such modification, waiver or discharge is agreed to inwriting signed by Employee and the Chairman of the Board or President ofEmployer (or highest ranking executive officer of Southwest or FNB Corporationother than Employee, if applicable). No waiver by either party hereto at anytime of any breach by the other party hereto of, or of compliance with, anycondition or provision of this Agreement to be performed by such other partyshall be deemed a waiver of similar or dissimilar provisions or conditions atthe same or at any prior or subsequent time. No agreements orrepresentations, oral or otherwise, express or implied, with respect to thesubject matter hereof have been made by either party which are not expresslyset forth in this Agreement. The validity, interpretation, construction andperformance of this Agreement shall be governed by the laws of theCommonwealth of Virginia.XIV. Validity 14.1 The invalidity or unenforceability of any provision of thisAgreement shall not affect the validity or enforceability of any otherprovision of this Agreement, which shall remain in full force and effect.XV. Related Agreements 15.1 To the extent that any provision of any other agreement betweenEmployer or any of its subsidiaries and Employee shall limit, qualify or beinconsistent with any provision of this Agreement, then for purposes of thisAgreement, while the same shall remain in force, the provision of thisAgreement shall control and such provision of such other agreement shall bedeemed to have been superseded, and to be of no force or effect, as if suchother agreement had been formally amended to the extent necessary toaccomplish such purpose.XVI. Counterparts 16.1 This Agreement may be executed in one or more counterparts whichshall be construed together as one constituted agreement.XVII. Governing Law 17.1 This Agreement shall be governed according to the laws of theCommonwealth of Virginia. Should either party bring suit to enforce theprovisions hereof, Employer and Employee expressly consent to the exclusivejurisdiction and venue of the Circuit Court of Montgomery County, Virginia toresolve such dispute. 9 IN WITNESS WHEREOF, the parties hereto have duly executed this Agreementas of the day and year first written above. Employer: FNB Southwest, N.A. /s/B.L. Rakes B.L. Rakes, Chairman Employee: /s/D.W. ShillingD.W. Shilling Agreed to and acknowledged by: FNB Corporation:/s/Kendall O. ClayKendall O. Clay, Chairman 10