Exhibit 10.11
Employee Severance Agreement Between
Federal Trust Corporation and Xxxxx X. Xxxxxxxxx
EMPLOYEE SEVERANCE AGREEMENT
By and Among
FEDERAL TRUST BANK
FEDERAL TRUST CORPORATION
AND XXXXX X. XXXXXXXXX
THIS EMPLOYEE SEVERANCE AGREEMENT ("Agreement") is being entered into
by and among Federal Trust Bank, a Federal Savings Bank, its holding company,
Federal Trust Corporation, Winter Park, Florida (collectively hereafter
"Employer"), and Xxxxx X. Xxxxxxxxx ("Employee").
WHEREAS, in recognition of Employee's significant contribution to
Employer, Employer wishes to protect Employee's position therewith for the
period provided in this Agreement in the event of death, a Change in Control of
the Employer, or a termination without cause; and
WHEREAS, Employee has developed an intimate and thorough knowledge of
Employer's business methods and operations;
NOW THEREFORE, in consideration of Employee's contribution and
responsibilities, Employer hereby agrees to provide Employee with certain
severance benefits as specifically provided herein.
SECTION 1. TERM OF AGREEMENT. The term of this Agreement shall be for
two (2) years commencing on September 1, 1997, and terminating August 31, 1999,
unless further extended or sooner terminated in accordance with the terms and
conditions set forth herein. On August 31, 1998, and on each "Anniversary Date"
thereafter, the term of this Agreement shall be extended for one (1) additional
year, unless Employer gives Employee written notice in advance of the
Anniversary Date of its intent not to extend the term of this Agreement.
SECTION 2. PAYMENTS TO EMPLOYEE UPON CHANGE IN CONTROL.
(a) Upon the occurrence of a "Change in Control" (as defined in
subparagraph [b] of this Section) followed at any time during the term of this
Agreement by the involuntary termination of Employee's employment, other than
for "just cause", as defined in Section 4(a) hereof, the provision of Section 3
shall apply. Upon the occurrence of a Change in Control, Employee shall have the
right to voluntarily terminate his employment, but in such event the provisions
of Section 3 shall not apply, unless Employee's voluntary termination is for
"good reason". Employee may voluntarily terminate his employment for good reason
at any time during the remaining term of this Agreement following a Change in
Control or within one (1) year of a Change in Control, whichever period is
greater (defined herein as the "Protected Period") and invoke the provisions of
Section 3 herein if he is demoted, there is a significant change in his title or
authority, reduction in his annual compensation, or relocation of his principal
place of employment by more than fifty (50) miles from the location where he
performed his job functions immediately prior to the Change in Control.
(b) "Change in Control" is defined herein to mean an event that would
be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended
("Exchange Act") or any successor disclosure item; provided that, without
limitation, such a Change in Control (as set forth in 12 U.S.C. Section
1841[a][2] of the Bank Holding Company Act of 1956, as amended) shall be deemed
to have occurred if any person (as such term is used in Sections 13[d] and 14[d]
of the Exchange Act in effect on the date first written above), other than any
person who on the date hereof is a director or officer of the Employer, (i)
directly or indirectly, or acting through one or more other persons, owns,
controls or has power to vote 25% or more of any class of the then outstanding
voting securities of the Employer; or (ii) controls in any manner the election
of the directors of the Employer. For purposes of this Agreement, a "Change in
Control" shall be deemed not to have occurred in connection with a
reorganization, consolidation, or merger of Employer where the stockholders of
the Employer, immediately before the consummation of the transaction, will own
over 50% of the total combined voting power of all classes of stock entitled to
vote of the surviving entity immediately after the transaction.
SECTION 3. TERMINATION BENEFITS.
(a) Upon the occurrence of a Change in Control during the Protected
Period, in the event Employee is terminated (other than termination for just
cause as defined in Section 4[a] herein), Employer or its successors shall pay
Employee, or in the event of his subsequent death, his beneficiary or
beneficiaries or his estate, as the case may be, as severance pay or liquidated
damages, or both, a sum equal to one (1) year's "highest annual base salary".
For purposes of this Agreement, Employee's highest annual base salary shall mean
the Employee's highest base salary during the three (3) years immediately
preceding Employee's termination or for the period of time since the date
Employee was hired, whichever is shorter. Such payment shall be made in
substantially equal monthly installments on the last day of each month, or if
these days are nonbusiness days, the immediate preceding business day,
commencing with the month in which date of termination occurs. At the discretion
of Employer, Employee may receive the full amount of the severance in one lump
sum payment.
(b) Upon the occurrence of a Change in Control, followed at any time
during the Protected Period by Employee's involuntary termination of employment
(other than for termination for just cause) Employer or its successors shall
continue to provide life, health and disability coverage comparable to the
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coverage maintained by Employer for Employee prior to his severance. Such
coverage shall cease upon the earlier of Employee obtaining new employment and
receiving similar coverage through another company, which provides comparable
company-paid coverage, or one (1) year from the date of Employee's termination.
(c) In the event that Employee is involuntarily terminated (other than
for just cause) during the Protected Period or Employee voluntarily terminates
his employment for good reason, Employee shall have six (6) months within which
to exercise any stock options or limited rights that have been granted by
Employer.
SECTION 4. TERMINATION FOR JUST CAUSE.
(a) "Termination for just cause" shall mean termination because of
Employee's personal dishonesty, incompetence, willful misconduct, material
breach of fiduciary duty, intentional failure to perform stated duties, willful
violation of any law, rule, or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order. In determining
"incompetence", the acts or omissions shall be measured against standards
generally prevailing in the banking industry. For purposes of this Section no
act, or failure to act, on Employee's part shall be considered "willful" unless
done, or omitted to be done, by Employee not in good faith and without
reasonable belief that his action or omission was in the best interest of
Employer; provided that any act or omission to act on Employee's behalf in
reliance upon advise or written opinion of Employer's counsel shall not be
deemed to be willful.
(b) Upon termination for just cause, Employee shall not have any right
to receive termination benefits pursuant to Section 3 of this Agreement.
(c) If Employee is terminated for just cause while discussions are
underway between Employer and potential acquiror and those discussions result in
a Change in Control, Employee will be entitled to the termination benefits
provided in Section 3 of this Agreement if it is determined through arbitration,
mediation or litigation that Employee was wrongfully discharged. Employee shall
be entitled to reimbursement for all reasonable costs, including attorney's
fees, incurred in successfully challenging such discharge.
(d) If Employee is suspended from office and/or temporarily prohibited
from participating in the conduct of Employer's affairs pursuant to an action
brought by the Office of Thrift Supervision or the Federal Deposit Insurance
Corporation, (collectively "Regulatory Agency"), Employer's obligations under
this Agreement shall be suspended as of the date of such action. The obligations
of this Agreement shall be reinstated if the charges of the Regulatory Agency
are subsequently dismissed, or if the Employee is otherwise determined to be not
guilty of such charges. In the event of a Change in Control during the
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suspension period, the successor of Employer shall be required to pay Employee
the termination benefits provided in Section 3 of this Agreement upon the
occurrence of an event described in Section 2(a) of this Agreement.
(e) If Employee is removed from office and/or permanently prohibited
from participating in the conduct or affairs of Employer by a final order
resulting from an action brought by a Regulatory Agency, all obligations of
Employer under this Agreement shall terminate as of the effective date of such
order.
(f) In the event the Employee is terminated for just cause, any stock
options or limited rights granted to Employee under any stock option plan of the
Employer, shall become null and void effective upon Employee's receipt of notice
of termination for just cause and shall not be exercisable by Employee at any
time after the date of termination (i.e. the date specified in the Notice of
Termination) unless it is subsequently determined through arbitration, mediation
or litigation that Employee was wrongfully discharged.
SECTION 5. TERMINATION WITHOUT CAUSE. In the event employee is
terminated without cause as defined in Section 4.(a) herein, Employer shall pay
Employee as severance pay or liquidated damages, or both, a sum equal to six (6)
month base salary. In addition, Employer for a six (6) month period following
the date of termination, life, health, and disability coverage comparable to the
coverage maintained by Employer for Employee prior to his severance. Such
coverage will cease upon Employee obtaining new employment and receipt of
similar coverage through a new employer.
SECTION 6. DEATH OF EMPLOYEE. Upon the occurance of the death of
Employee, Employer shall pay a sum equal to six (6) months base salary to
Employee's beneficiary or beneficiaries or his estate, as the case may be. Such
payment shall be in a lump sum which shall be paid on or before 30 days from the
date of Employee's death.
SECTION 7. NOTICE OF TERMINATION. Any purported termination by
Employer, or by Employee shall be communicated by a 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
Employee's employment under the provision so indicated.
SECTION 8. SOURCE OF PAYMENTS. All of the payments provided under this
Agreement shall be paid in cash or check from the general funds of Employer or
its successor. No special or separate funds of Employer shall be established and
no other segregation of assets of Employer shall be made to assure payment.
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SECTION 9. EFFECT ON PRIOR AGREEMENT AND EXISTING BENEFIT PLANS. This
Agreement is not intended to affect or operate to reduce any benefit or
compensation inuring to Employee of a kind elsewhere provided. No provision of
this Agreement shall be interpreted to mean that Employee is subject to
receiving fewer benefits than those which would be available to him without
reference to this Agreement.
SECTION 10. NO ATTACHMENT.
(a) Except as required by law, no right to receive payment 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
Employee, and Employer, and their respective successors and assigns.
SECTION 11. MODIFICATION AND WAIVER.
(a) This Agreement may not be materially modified or amended except as
agreed to by Employee.
(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.
SECTION 12. REINSTATEMENT OF BENEFITS UNDER SECTION 4(c) and
(d). In the event Employee is suspended and/or temporarily prohibited from
participating in the conduct or affairs of Employer by a Notice of Termination
during the term of this Agreement and a Change in Control occurs, Employee's
successor shall be obligated to pay Employee the termination benefits provided
for under Section 3 of this Agreement upon receipt of a dismissal of charges in
the Notice of Termination.
SECTION 13. ARBITRATION. The Parties Agree that any controversy or
claim arising out of or relating to this Agreement or any breach thereof,
including, without limitation, any claim that this Agreement or any portion
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thereof is invalid, illegal or otherwise voidable, shall be submitted to binding
arbitration before and in accordance with the rules of the American Arbitration
Association and judgement upon the determination and/or award of such
arbitrator(s) may be entered in any court having jurisdiction thereof. Provided,
however, that this clause shall not be construed to permit the award of punitive
damages to either party. The situs of arbitration shall be in Orange County,
Florida.
SECTION 14. ATTORNEYS FEES. In the event of an arbitration proceeding
occurring out of or involving this Agreement, the employee shall be entitled to
recovery of his reasonable attorneys' fees, expenses and costs, including fees
and costs to enforce an award, if the employee is successful in his claim.
Further, because of economic disparity between Employer and Employee, Employer
agrees to pay for Employee's reasonable attorney's fees and costs up to $5,000
to enforce the terms of this Agreement or recover damages for breach of this
agreement as follows: $3,000 at the commencement of the mediation proceedings
and an additional $2,000 six months thereafter. In the event the Employee is
unsuccessful in his claim or defense, the Employee shall reimburse Employer for
any attorney' fees, expenses and costs that have been advanced. If the Employee
is successful, any attorneys' fee award will be reduced by the amount of
attorney's fees and costs that have been advanced. Such reimbursement shall be
in addition to all rights to which the Employee is otherwise entitled under this
Agreement.
SECTION 15. SEVERABILITY. The invalidity or unenforceability of any
provision or provisions 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.
SECTION 16. HEADINGS FOR REFERENCE ONLY. The headings of the Sections
herein are included solely for convenience of reference and shall not control
the meaning or the interpretation of any of the provisions of this Agreement.
SECTION 17. APPLICABLE LAW. This Agreement shall be governed in all
respects and be interpreted by and under the laws of the State of Florida and
the regulations promulgated thereunder by the Florida Department of Banking and
Finance, except to the extent that such law may be preempted by applicable
federal law including regulations, or opinions and/or policy statements issued
by the Office of Thrift Supervision or the Federal Deposit Insurance
Corporation, in which event this Agreement shall be governed and be interpreted
by and under federal law to the extent such federal law or regulations apply.
SECTION 18. SUCCESSORS. Employer shall require any successor to the
business and/or assets of Employer in connection with a Change in Control to
assume and agree to perform its obligations under this Agreement in writing.
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SECTION 19. NO CONTRACT OF EMPLOYMENT. This Agreement shall not be
deemed to constitute an employment contract between Employer and Employee or to
be in consideration of or an inducement for the employment of Employee. Nothing
contained in this Agreement shall be deemed to give Employee the right to be
retained in the service of Employer or to interfere with the right of Employer
to discharge at any time.
SECTION 20. LIMITATION OF RIGHTS. Neither this Agreement, nor any
amendment thereof, nor the payment of any benefits hereunder, shall be construed
as giving Employee or other person any legal or equitable right against Employer
except as expressly herein.
IN WITNESS WHEREOF, Employer has duly executed this Agreement this 8th
day of September, 1997.
FEDERAL TRUST CORPORATION
______________________________ By: ______________________
Witness Xxxxx X. Xxxxxxxxxx
Chairman of the Board
FEDERAL TRUST BANK
______________________________ By: ______________________
Witness Xxxxx X. Xxxxxxxxxx
Chairman of the Board
______________________________ By: ______________________
Witness Xxxxx X. Xxxxxxxxx
Employee
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