CHANGE IN CONTROL AND NON-COMPETITION AGREEMENT
THIS AGREEMENT is made effective as of October 19, 2002 by and among
Harbor Federal Savings Bank (the "Bank"), Harbor Florida Bancshares, Inc.
("Bancshares" or the "Holding Company") and H. Xxxxxxx Xxxxxxxx (the
"Executive").
WHEREAS, the Bank recognizes the substantial contribution Executive
makes to the Bank and wishes to protect Executive's position therewith for
the period provided in this Agreement: and
WHEREAS, the Executive acknowledges that he will become familiar with
confidential and proprietary information of the Bank and Bancshares in the
course of his employment duties: and
WHEREAS, the Executive has been elected to, and has agreed to serve in
the position of Senior Vice President for the Bank, a position of
substantial responsibility: and
NOW, THEREFORE, in consideration of the contribution and
responsibilities of Executive, and upon the other terms and conditions
hereinafter provided, the parties hereto agree as follows:
1. GENERAL.
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Employee is, except as described in Section 4, an employee at will and
serves at the pleasure of the Chief Executive Officer and the Board of
Directors of the Bank (the "Board").
2. TERM OF AGREEMENT.
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The term of this Agreement shall commence as of the date first above
written and shall continue for a period of two (2) year and sic (6) months
thereafter. Commencing on or before April 19, 2003 and continuing each year
thereafter, the Board may extend this Agreement for an additional year. The
Board will review the Agreement and the Executive's performance annually
for purposes of determining whether to extend the Agreement, and the
results thereof shall be included in the minutes of the Board's meeting.
3. PAYMENTS TO EXECUTIVE UPON CHANGE IN CONTROL.
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(a) Upon the occurrence of a Change in Control (as herein defined) of
the Bank, or Bancshares, followed at any time within one (1) year of a
Change in Control, and during the term of this Agreement, by the voluntary
or involuntary termination of Executive's employment, other than for Cause
as defined in Section 3(c) hereof, the provisions of Section 4 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 relocation
of his principal place of employment by more than 50 miles from its
location immediately prior to the Change in Control.
(b) For purposes of this Agreement, a "Change in Control" of the Bank
or the Holding Company shall mean (a) merger or consolidation where the
Bank or the Holding Company is not the consolidated or surviving
association, (b) transfer of all or substantially all of the assets of the
Bank or the Holding Company, (c) voluntary or involuntary dissolution of
the Bank or the Holding Company or (d) change in control as defined under
the Change in Bank Control Act of 1978. The surviving or resulting
association, the transferee of Bank's or the Holding Company's assets or
the control person shall be bound by and have the benefit of the provisions
of the Agreement and the Bank or the Holding Company shall take all actions
necessary to insure that such association, transferee or control person is
bound by the provisions of this Agreement.
(c) Executive shall not have the right to receive termination benefits
pursuant to Section 4 hereof upon Termination for Cause. The term
"Termination for Cause" shall mean termination because of the Executive's
personal dishonesty, incompetence, willful misconduct, any breach of
fiduciary duty involving personal profit, 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, or 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 banking 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 a majority
of the Board of Directors of the Bank at a meeting of the Board called and
held for that purpose (after reasonable notice to the Executive and an
opportunity for him, together with counsel, to be heard before the Board at
such meeting and which such meeting shall be held not more than 30 days
from the date of notice during which period Executive may be suspended with
pay), finding that in the good faith opinion of the Board, the Executive
was guilty of conduct justifying Termination for Cause.
4. TERMINATION BENEFITS.
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(a) Upon the occurrence of a Change of 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 and the company shall 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 or liquidated damages, or both, a sum
equal to his then current annual salary. At the election of the Executive
such payment may be made in a lump sum or paid in equal monthly
installments during the twelve (12) months following the Executive's
termination. In the event that no election is made, payment to the
Executive will be in equal monthly installments.
(b) Upon the occurrence of a Change of Control of the Bank or the
Holding Company 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,
except to the extent such coverage may be changed in its application to all
Bank employees. Such coverage and payments shall cease upon the earlier of
the expiration of twelve (12) months or the Executive obtaining other
coverage.
(c) At the effective date of this Agreement, and annually on April 19,
Executive shall make the election referred to in Section 4(a) hereof with
respect to whether the amounts payable under said Section 4(a) shall be
paid in a lump sum or on a monthly basis. Such election shall be
irrevocable for the year for which such election is made and shall continue
in effect until the executive has made his next annual election.
(d) Notwithstanding the preceding paragraphs of this Section 4, 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. The allocation of the reduction required hereby among the
Termination Benefits provided by the preceding paragraphs of this Section 4
shall be determined by the Executive.
5. NOTICE OF TERMINATION.
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(a) Any purported termination by the Bank or by Executive shall be
communicated by Notice of Termination to the other parties thereto. 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 the date specified in the Notice
of Termination which, in the instance of Termination for Cause, shall be
immediate.
6. SOURCE OF PAYMENTS.
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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. The Holding Company, however, guarantees payment and provision of all
amounts and benefits due hereunder to the Executive, and if such amounts
and benefits due from the Bank are not timely paid or provided by the Bank,
such amounts and benefits shall be paid or provided by the Holding Company.
7. NON-COMPETITION AND CONFIDENTIAL INFORMATION
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(a) During the term of this Agreement, and for one (1) year after the
date the Executive is terminated by the Bank or Bancshares, whether
voluntarily or involuntarily, with or without cause, the Executive shall
not compete directly or indirectly in the Florida counties of St. Lucie,
Martin, Indian River, Brevard, Volusia or Okeechobee (collectively, the
"Counties") with any business then being conducted by the Bank or
Bancshares without their prior written consent. The term "compete" means
rendering any service by the Executive, whether as an employee, director,
consultant, independent contractor, partner, co-venturer or investor
(excluding any interest of the Executive through investment of up to an
aggregate of 10% in the equity or debt securities or equivalent partnership
interest of any person required to register under Section 12(g) of the
securities Exchange Act of 1934) to or on behalf of any organization,
including but not limited to any commercial bank, savings bank, savings and
loan association, credit union, mortgage banking company, insurance company
or brokerage firm, conducting any business then competitive to that of the
Bank or Bancshares in the Counties.
(b) The Executive acknowledges that during his employment he has
learned, will learn and will have access to confidential information
regarding Bancshares or the Bank and its customers and business. The
Executive agrees and covenants not to disclose or use for his own benefit
or the benefit of any person or entity with which he may be associated any
confidential information unless or until the Bank or Bancshares consents to
such disclosure or use of such information becomes common knowledge in the
industry or otherwise legally in the public domain.
8. MODIFICATION AND WAIVER.
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(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 for the
future or as to any act other than that specifically waived.
9. REQUIRED REGULATORY PROVISIONS.
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(a) The Board of Directors may terminate the Executive's employment at
any time, but any termination by the Board of Directors, other than
Termination for Cause, shall not prejudice the Executive's right to
compensation or other benefits under this Agreement. The Executive shall
not have the right to receive compensation or other benefits for any period
after Termination for Cause as defined in Section 3 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) U.S.C. ss. 1818(e)(3)) or 8(g) (12
U.S.C. ss. 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 U.S.C. ss. 1818(e)) or 8(g) (12 U.S.C. ss. 1818(g)) of the
Federal Deposit Insurance Act, as mended 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
U.S.C.ss.1813(x)(1)) of the Federal Deposit Insurance Act, as mended 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 under this contract shall be terminated, except to
the extent determined that continuation of the contract is necessary for
the continued operation of the institution: (i) by the Director of the
Office of Thrift Supervision (or his or her designee) at the time the
Federal Deposit Insurance Corporation or the Resolution Trust Corporation
enters into an agreement to provide assistance to or on behalf of the Bank
under the authority contained in Section 13(c) of the Federal Deposit
Insurance Act; or (ii) by the Director of the Office of Thrift Supervision
(or his or her designee) at the time the Director (or his or her designee)
approves a supervisory merger to resolve problems related to operation of
the Bank or when the Bank is determined by the Director 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. REINSTATEMENT OF BENEFITS UNDER SECTION 9(b).
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In the event the Executive is suspended and/or temporarily prohibited
from participating in the conduct of the Bank's affairs by a notice
described in section 9(b) hereof (the "Notice") during the terms of this
Agreement and a Change in control, as defined herein, occurs, the Bank will
assume its obligation to pay and the Executive will be entitled to receive
all of the termination benefits provided for under Section 4 of this
Agreement upon the Bank's receipt of a dismissal of charges in the Notice.
11. SEVERABILITY.
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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.
12. HEADINGS FOR REFERENCE ONLY.
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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.
13. GOVERNING LAW.
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The validity, interpretation, performance, and enforcement of this
Agreement shall be governed by Florida law.
14. ARBITRATION.
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Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration 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 the 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.
15. PAYMENT OF COSTS AND LEGAL FEES.
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All reasonable costs and legal fees paid or incurred by the Executive
pursuant to any dispute or question of interpretation relating to this
Agreement shall be paid or reimbursed by the Bank (which payments are
guaranteed by the Company pursuant to Section 6 hereof) if Executive is
successful on the merits pursuant to a legal judgment, arbitration or
settlement.
16. SIGNATURES:
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IN WITNESS WHEREOF, Harbor Federal Savings Bank and Harbor Florida
Bancshares, Inc. each has caused this Agreement to be executed by its duly
authorized officers, and Executive has signed this Agreement, as of the
19th day of October, 2002.
ATTEST: HARBOR FEDERAL SAVINGS BANK
/s/ /s/
__________________________ BY: __________________________________
Xxxx Xxxxxxxxx Xxxxxxx X. Xxxxx, Xx.
ATTEST: HARBOR FLORIDA BANCSHARES, INC.
/s/ /s/
___________________________ BY: __________________________________
Xxxx Xxxxxxxxx Xxxxxxx X. Xxxxx
WITNESS:
/s/ /s/
___________________________ BY: __________________________________
Xxxxx Xxxxxxx H. Xxxxxxx Xxxxxxxx
