EXHIBIT 10.3
FIDELITY FEDERAL SAVINGS BANK OF FLORIDA
SEVERANCE AGREEMENT
This AGREEMENT is made effective as of the 7th of January, 1994, by and
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between Fidelity Federal Savings Bank of Florida, a federally chartered stock
savings bank (the "Bank"), and Xxxxxx X. Xxxxxx ("Executive"). Any reference to
"Company" herein shall mean Fidelity Bankshares, MHC or any successor thereto.
WHEREAS, the Bank recognizes the substantial contribution Executive has
made to the Bank and wishes to protect his position therewith for the period
provided in this Agreement; and
WHEREAS, Executive has been elected to, and has agreed to serve in the
position of Chief Financial Officer and Senior Vice President for the Bank, a
position of substantial responsibility;
NOW, THEREFORE, in consideration of the contribution and of Executive, and
upon the other terms and conditions hereinafter provided, the parties hereto
agree as follows:
1. TERM OF AGREEMENT
The term of this Agreement shall be deemed to have commenced as of the date
first above written and shall continue for a period of thirty six (36) full
calendar months thereafter. Commencing on the first anniversary date of this
Agreement and continuing at each anniversary date thereafter, the Board of
Directors of the Bank ("Board") may extend the Agreement for an additional year.
The Board will conduct a performance evaluation of the Executive for purposes of
determining whether to extend the Agreement, and the results thereof shall be
included in the minutes of the Board's meeting. If Executive is also a director
then he or she shall abstain from any and all voting with respect to the
extension of the term of such Executive's Agreement.
2. PAYMENTS TO EXECUTIVE UPON CHANGE IN CONTROL
(a) Upon the occurrence of a Change in Control of the Bank (as herein
defined) followed at any time during the term of this Agreement by the voluntary
or involuntary termination of Executive's employment, other than for Cause, as
defined in Section 2(c) hereof, the provisions of Section 3 shall apply. Upon
the occurrence of a Change in Control, Executive shall have the right to elect
to voluntarily terminate his employment at any time during the term of this
Agreement following any demotion, loss of title, office or significant
authority, reduction in his annual compensation or benefits, or relocation of
his principal place of employment by more than 30 miles from its location
immediately prior to the Change in Control.
(b) A "Change in Control" of the Bank shall mean:
(1) a reorganization, merger, merger conversion, consolidation or sale
of all or substantially all of the assets of the Bank or the Company or a
similar transaction occurs in which the Bank or the Company is not the resulting
entity;
(2) individuals who constitute the board of directors of the Bank or
the board of directors of the Company on the date hereof (the "Incumbent Board")
cease for any reason to constitute a majority thereof; provided that any person
becoming a director subsequent to the date hereof whose election was approved by
a vote of at least three-quarters of the directors comprising the Incumbent
Board, or whose nomination for election by the Company's stockholders was
approved by the same
nominating committee serving under an Incumbent Board, shall be, for purposes of
this clause (ii), considered as though he were a member of the Incumbent Board;
or
(3) a change in control within the meaning of 12 C.F.R. (S) 574.4
occurs, as determined by the board of directors of the Bank or the Company;
provided, however, that a change in control shall not be deemed to occur under
paragraphs (1) or (3) of this Section 2 if the transaction(s) constituting a
change in control is approved by a majority of the board of directors of the
Bank or the Company, as the case may be.
(4) In the event that the Company converts from the mutual form of
organization to the stock form of organization on a stand-alone basis at any
time subsequent to the effective date of this Agreement ("Stock Holding
Company"), a "change in control" of the Bank or the Stock Holding Company for
purposes of this Agreement shall mean an event of a nature that : (I) would be
required to be reported in response to Item 1 of the current report on Form 8-K,
as in effect on the date hereof; pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx"); or (II) results in a
Change in Control of the Bank or the Stock Holding Company within the meaning of
the Home Owners' Loan Act of 1933 and the Rules and Regulations promulgated by
the Office of Thrift Supervision (or its predecessor agency), as in effect on
the date hereof; or (III) without limitation, such a change in control shall be
deemed to have occurred at such time as (a) any "person" (as the term is used in
Section 13(d) and 14(d) of the Exchange Act) other than the Stock Holding
Company is or becomes a "beneficial owner" (as defined in Rule 13-d under the
Exchange Act) directly or indirectly, of securities of the Bank representing 25%
or more of the Bank's outstanding securities ordinarily having the right to vote
at the election of directors except for any securities of the Bank purchased by
the Stock Holding Company in connection with the Reorganization and any
securities purchased by the Bank's employee stock ownership plan and trust shall
not be counted in determining whether such plan is the beneficial owner of more
than 25% of the Bank's securities; or (b) individuals who constitute the
Incumbent Board cease for any reason to constitute at least a majority thereof;
provided that any person becoming a director subsequent to the date hereof whose
election was approved by a vote of at least three-quarters of the directors
comprising the Incumbent Board, or whose nomination for election by the Stock
Holding Company's stockholders was approved by the same Nominating Committee
serving under an Incumbent Board, shall be, for purposes of this clause (a),
considered as though he were a member of the Incumbent Board; or (c) a
reorganization, merger, consolidation, sale of all or substantially all the
assets of the Bank or the Stock Holding Company or similar transaction occurs in
which the Bank or the Stock Holding Company is not the resulting entity and to
which the Incumbent Board does not consent; (d) a proxy statement soliciting
proxies from stockholders of the Bank, by someone other than the current
management of the Bank, seeking stockholder approval of a plan of
reorganization, merger or consolidation of the Stock Holding Company of the Bank
or similar transaction with one or more corporations as a result of which the
outstanding shares of the class of securities then subject to the plan or
transaction are exchanged or converted into cash or property or securities not
issued by the Bank or the Stock Holding Company; or (e) a tender offer is made
for 25% or more of the voting securities of the Bank and the shareholders owning
beneficially or of record 25% or more of the outstanding securities of the Bank
have tendered or offered to sell their shares pursuant to such tender offer and
such tendered shares have been accepted by the tender offeror.
Notwithstanding, the foregoing, a "Change in Control" of the Bank or the
Company shall not be deemed to have occurred if the Company ceases to own at
least 51% of all outstanding shares of stock of the Bank in connection with a
conversion of the Holding Company from mutual to stock form.
(c) Executive shall not have the right to receive termination benefits
pursuant to Section 3 hereof upon Termination for Cause. The term "Termination
for Cause" shall mean termination because of the Executive's intentional failure
to perform stated duties, personal dishonesty, incompetence, willful misconduct,
any breach of fiduciary duty involving personal profit, willful violation of any
law, rule, regulation (other than traffic violations or similar offenses) or
final cease and desist order, or any material breach of any material provision
of this Agreement. In determining incompetence, the acts or omissions shall be
measured against standards generally prevailing in the savings institution
industry. Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered to
him a copy of a resolution duly adopted by the affirmative vote of not less than
three-fourths of the members of the Board at a meeting of the Board called and
held for that purpose (after reasonable notice to Executive and an opportunity
for him, together with counsel, to be heard before the Board), finding that in
the good faith opinion of the Board, Executive was guilty of conduct justifying
Termination for Cause and specifying the particulars thereof in detail. The
Executive shall not have the right to receive compensation or other benefits for
any period after Termination for Cause.
3. TERMINATION
(a) Upon the occurrence of a Change in Control, followed at any time during
the term of this Agreement by the voluntary or involuntary termination of the
Executive's employment other than for Termination for Cause, the Bank shall be
obligated to pay the Executive, or in the event of his subsequent death, his
beneficiary or beneficiaries, or his estate, as the case may be, as severance
pay, a sum equal to three times the average of the three preceding years' annual
base salary, including bonuses and any other cash compensation paid or accrued
by the executive during such years, and the amount of any benefits received
pursuant to any employee benefit plans on behalf of the Executive maintained by
the Bank during such years, excluding benefits continued pursuant to (b) below.
If the Executive has been employed by the Bank for less than one year, then the
severance pay shall be a sum equal to thirty-six times the average monthly
salary, including bonuses and any other cash compensation paid or accrued by the
Executive during such period, and the amount of any benefits received pursuant
to any employee benefit plans on behalf of the Executive maintained by the Bank
during such period, excluding benefits continued pursuant to (b) below, for the
period over which the Executive has been employed by the Bank. At the election
of the Executive, or his estate, as the case may be, which election is to be
made within thirty (30) days of the Date of Termination (as defined in Section
4(b)), such payment may be made in a lump sum or paid in equal monthly
installments during the thirty-six (36) months following the Executive's
termination. In the event that no election is made, payment to the Executive
will be made on a monthly basis during the remaining term of this Agreement.
(b) Upon the occurrence of a Change in Control of the Bank followed at any
time during the term of this Agreement by the Executive's voluntary or
involuntary termination of employment, other than for Termination for Cause, the
Bank shall cause to be continued life, medical, dental and disability coverage
substantially identical to the coverage maintained by the Bank for the Executive
prior to his severance. Such coverage and payments shall cease upon expiration
of thirty-six (36) months.
(c) Upon the occurrence of a Change in Control, the Executive will have
such rights as specified in the Bank's 1993 Incentive Stock Option Plan or any
other employee benefit plan with respect to options and such other rights as may
have been granted to the Executive under such plans.
(d) Upon a Change in Control, the Executive will be entitled to the
benefits under the Bank's Recognition and Retention Plans or any other such
plan.
(e) In the event that the Executive is receiving monthly payments pursuant
to Section 3(a) hereof, on an annual basis, thereafter, the Executive shall
elect whether the balance of the amount payable under the Agreement at that time
shall be paid in a lump sum or on a pro rata basis. Such election shall be
irrevocable for the year for which such election is made.
(f) Notwithstanding the preceding paragraphs of this Section 3: (i) in no
event shall the aggregate payments or benefits to be made or afforded to
Executive under said paragraphs (the "Termination Benefits") constitute an
"excess parachute payment" under Section 280G of the Code or any successor
thereto, and in order to avoid such a result Termination Benefits will be
reduced, if necessary, to an amount (the "Non-Triggering Amount"), the value of
which is one dollar ($1.00) less than an amount equal to three (3) times
Executive's "base amount", as determined in accordance with said Section 280G;
and (ii) in no event shall the aggregate compensation to Executive under this
agreement or any other severance or employment contract exceed three times the
Executive's annual salary within the meaning of RB 27-a. The allocation of the
reduction required hereby among Termination Benefits provided by the preceding
paragraphs of this Section 3 shall be determined by the Executive.
4. NOTICE OF TERMINATION AFTER CHANGE IN CONTROL
(a) Any purported termination by the Bank or by Executive shall be
communicated by Notice of Termination to the other party hereto. For purposes
of this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.
(b) "Date of Termination" shall mean (A) if Executive's employment is
terminated for Disability, thirty (30) days after a Notice of Termination is
given (provided that he shall not have returned to the performance of his duties
on a full-time basis during such thirty (30) day period), and (B) if his
employment is terminated for any other reason, the date specified in the Notice
of Termination (which, in the case of a Termination for Cause, shall be
immediate). Except as set forth below in paragraph (c), in no event shall the
Date of Termination exceed 30 days from the date Notice of Termination is given.
(c) If, within thirty (30) days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, except upon the occurrence of a
Change in Control and voluntary termination by the Executive in which case the
date of termination shall be the date specified in the Notice, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding arbitration award, or
by a final judgment, order or decree of a court of competent jurisdiction (the
time for appeal there from having expired and no appeal having been perfected)
and provided further that the Date of Termination shall be extended by a notice
of dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, the Bank will continue to pay
Executive his full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, Base Salary) and continue him
as a participant in all compensation, benefit and insurance plans in which he
was participating when the notice of dispute was given, until the earlier of 120
days from the date of the Notice of Termination or the date upon which the
dispute is finally resolved in accordance with this Agreement. Amounts paid
under this Section are in addition to all other amounts due under this Agreement
and shall not be offset against or reduce any other amounts due under this
Agreement. Notwithstanding the foregoing, no compensation or benefits shall be
paid to the Executive in the event
the Executive is Terminated for Cause. In the event that such Termination for
Cause is found to have been wrongful or such dispute is otherwise decided in the
Executive's favor, the Executive shall be entitled to receive all compensation
and benefits which accrued for up to a period of nine months after the
Termination for Cause.
5. SOURCE OF PAYMENTS
It is intended by the parties hereto that all payments provided in this
Agreement shall be paid in cash or check from the general funds of the Bank.
6. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFIT PLANS
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior agreement between the Bank and Executive, except that
this Agreement shall not affect or operate to reduce any benefit or compensation
inuring to Executive of a kind elsewhere provided. No provision of this
Agreement shall be interpreted to mean that Executive is subject to receiving
fewer benefits than those available to him without reference to this Agreement.
7. NO ATTACHMENT
(a) 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 affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive, the Bank and their respective successors and assigns.
8. MODIFICATION AND WAIVER
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(b) 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 or 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.
9. REQUIRED PROVISIONS
(a) The Bank may terminate the Executive's employment at any time.
Executive shall not have the right to receive compensation or other benefits for
any period after Termination for Cause as defined in Section 2(c) hereinabove.
(b) If the Executive is suspended from office and/or temporarily prohibited
from participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) (12 USC 1818(e)(3)) or 8(g) (12 USC 1818(g)) of the Federal
Deposit Insurance Act, as amended by the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, the Bank's obligations under this contract
shall be suspended as of the date of service, unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the Bank may in its
discretion (i) pay the Executive all or part of the compensation withheld while
their contract obligations were suspended and (ii) reinstate (in whole or in
part) any of the obligations which were suspended.
(c) If the Executive is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued under
Section 8(e) (12 USC (S)1818(e)) or 8(g) (12 USC (S)1818(g)) of the Federal
Deposit Insurance Act, as amended by the Financial Institutions Reform, Recovery
and Enforcement Act of 1989, all obligations of the Bank under this contract
shall terminate as of the effective date of the order, but vested rights of the
contracting parties shall not be affected.
(d) If the Bank is in default as defined in Section 3(x) (12 USC
1813(x)(1)) of the Federal Deposit Insurance Act, as amended by the Financial
Institutions Reform, Recovery and Enforcement Act of 1989, all obligations of
the Bank under this contract shall terminate as of the date of default, but this
paragraph shall not affect any vested rights of the contracting parties.
(e) All obligations of the Bank under this contract shall be terminated,
except to the extent determined that continuation of the contract is necessary
for the continued operation of the Bank, (i) by the Federal Deposit Insurance
Corporation, at the time the Resolution Trust Corporation or FDIC enters into an
agreement to provide assistance to or on behalf of the Bank under the authority
contained in Section 13(c) (12 USC (S)1823(c)) of the Federal Deposit Insurance
Act, as amended by the Financial Institutions Reform, Recovery and Enforcement
Act of 1982; or (ii) by the Office of Thrift Supervision ("OTS") at the time the
OTS or its District Director approves a supervisory merger to resolve problems
related to the operations of the Bank or when the Bank is determined by the OTS
or FDIC to be in an unsafe or unsound condition. Any rights of the parties that
have already vested, however, shall not be affected by such action.
10. SEVERABILITY
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
11. HEADINGS FOR REFERENCE ONLY
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
12. GOVERNING LAW
The validity, interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the State of Florida, unless
preempted by Federal law as now or hereafter in effect.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by the employee within fifty
(50) miles from the location of the Bank, in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in
any court having jurisdiction; provided, however, that subject to Section 3(c)
hereof, Executive shall be entitled to seek specific performance of his right to
be paid until the Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement.
13. PAYMENT OF LEGAL FEES
All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Bank if Executive is successful on the merits pursuant to a
legal judgment, arbitration or settlement.
14. INDEMNIFICATION
The Bank shall provide the Executive (including his heirs, executors and
administrators) with coverage under a standard directors' and officers'
liability insurance policy at its expense, or in lieu thereof, shall indemnify
the Executive (and his heirs, executors and administrators) to the fullest
extent permitted under federal law and as provided in the Bank's Charter and
Bylaws against all expenses and liabilities reasonably incurred by him in
connection with or arising out of any action, suit or proceeding in which he may
be involved by reason of his having been a director or officer of the Bank
(whether or not he continues to be a director or officer at the time of
incurring such expenses or liabilities), such expenses and liabilities to
include, but not be limited to, judgments, court costs and attorneys' fees and
the cost of reasonable settlements.
15. SUCCESSOR TO THE BANK
The Bank shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Bank, expressly and
unconditionally to assume and agree to perform the Bank's obligations under this
Agreement, in the same manner and to the same extent that the Bank would be
required to perform if no such succession or assignment had taken place.
16. SIGNATURES
IN WITNESS WHEREOF, Fidelity Federal Savings Bank of Florida has caused
this Agreement to be executed by its duly authorized officer, and Executive has
signed this Agreement on the day and date first above written.
ATTEST: FIDELITY FEDERAL SAVINGS BANK OF FLORIDA
_____________________ By: ______________________________________
Xxxxx X. Xxxxxxx, President
and Chief Executive Officer
WITNESS:
_____________________ By: ______________________________________
Xxxxxxx X. Xxxxxx, Executive
