EXHIBIT 10.11
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of April 14,
2003 ("Effective Date") between Franklin Bank, N.A. ("Bank") and Xxxxx X. Xxxxx
("Xxxxx").
RECITALS
Bank wishes to continue employment of Xxxxx as its President and Chief
Executive Officer and Xxxxx wishes to accept such continued employment under the
terms and conditions set forth in this Agreement.
IT IS AGREED as follows:
EMPLOYMENT. Bank hereby employs Xxxxx as its President and Chief Executive
Officer. Xxxxx accepts such employment. Xxxxx shall continue as a Director on
the Board of Directors of Bank. Xxxxx shall also serve as President and Chief
Executive Officer, and as a Director on the Board of Directors, of Franklin
Bancorp ("Bancorp"). Xxxxx shall also continue in his role as interim Chief
Financial Officer of Bank and Bancorp until a replacement is found and hired.
TERM. The term of employment under this Agreement shall commence on the
Effective Date and shall terminate, unless otherwise terminated earlier under
Section 11, on December 31, 2003. Except as to consulting services provided in
Section 18, employment beyond December 31, 2003 shall only be pursuant to a new
Employment Agreement, as mutually agreed to by the parties, with negotiations
for such new agreement commencing on or before December 1, 2003.
DUTIES. Xxxxx shall devote his full-time efforts to the proper and
faithful performance of all duties customarily discharged by a President and
Chief Executive Officer for a financial institution, including without
limitation (a) supervision of day-to-day operations, (b) overseeing, recruiting,
assembling and/or training Bank's management team, (c) formulation and
implementation of operational policies, (d) management of all personnel
functions consistent with Bank's overall policies, (e) initiation and
supervision of inside and outside marketing activities and (f) any additional
duties assigned to him from time to time by the Board of Directors of Bank.
Xxxxx agrees to use his best efforts and comply with all fiduciary and
professional standards in the performance of his duties hereunder. There may be
occasions that Xxxxx may choose to work offsite, in his discretion as his work
and responsibilities permit. Said offsite work shall not be considered vacation
days and will not be a breach of this Agreement. Xxxxx shall have primary
responsibility for hiring a Chief Financial Officer and Senior Vice President
for Retail Operations for the Bank, subject to the approval of its Board of
Directors. Xxxxx shall make nominations to the Compensation Committee of the
Board of Directors for the Senior Vice President for Retail Operations' position
and to the Audit Committee of the Board of Directors for the Chief Financial
Officer position. The respective Committees and the Board of Directors will act
expeditiously on Xxxxx'x recommendations, and absent any unforeseen
circumstances, shall decide on such candidates within no more than fifteen (15)
days after Xxxxx'x recommendation. Notwithstanding the foregoing, Xxxxx will not
have responsibility for the hiring of a Chief Credit Officer and a Chief Lending
Officer, as those functions will be handled by Bank's Board of Directors. All
future payouts under existing or new severance agreements will not be the
responsibility of Xxxxx.
BASE SALARY. Xxxxx shall be paid a base salary of Two Hundred Sixty
Thousand Dollars ($260,000.00) per annum, less applicable withholding, in equal
monthly payments or more frequently in accordance with Bank's regular practice.
The foregoing base salary shall be retroactive to January 1, 2003. The
retroactive increment due to Xxxxx for the period from January 1, 2003 to the
present will be included in the first payroll after execution of this Agreement.
EXECUTIVE BONUS. Xxxxx will be eligible for the 2003 Executive Bonus Plan
based on the Bonus Plan that is currently in effect, a copy of which is attached
to this Agreement as Exhibit B.
LONGEVITY BONUS. If Xxxxx'x employment as President/CEO has not been
terminated before December 1, 2003, then on December 31, 2003, Bank shall pay
Xxxxx a one-time longevity bonus of $50,000 less applicable withholding.
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VACATION. Xxxxx shall be entitled to six (6) weeks of paid vacation time
for 2003.
STOCK OPTIONS. Concurrent with this Agreement, the Board of Directors
shall approve the issuance to Xxxxx of 2,000 stock options pursuant to the
Executive Stock Option Plan. Such options shall vest on the date of Xxxxx'x
termination of employment with Bank. With respect to the 2,700 options
previously granted to Xxxxx at the exercise price of $18.70, 900 each on
December 18, 2003, 2004 and 2005, such options will be immediately vested upon
the signing of this Agreement.
BENEFITS. During his employment under this Agreement, Xxxxx may
participate in all Bank sponsored retirement plans, 401(k) plans, life insurance
plans, medical insurance plans, disability insurance plans, employee stock
ownership plans and such other benefit plans generally available from time to
time to other executive employees of Bank or Franklin Bancorp for which he
qualifies under the terms of the plans. Xxxxx'x participation in any benefits
under any benefit plan shall be on the terms and subject to the conditions
specified in such plan. Notwithstanding the foregoing, Xxxxx shall not
participate in the group long-term disability plan provided by Bank. After
December 31, 2003 (or such later date for the end of Xxxxx'x employment with
Bank if Bank and Xxxxx agree to an extension of employment beyond December 31,
2003), the following benefits shall be continued for Xxxxx by Bank for three (3)
years: health, dental, prescription and vision insurance, executive and group
life insurance, and executive long term disability insurance. If Xxxxx'x
participation in any such benefit plan is barred, Bank shall arrange to provide
Xxxxx with substantially similar benefits or Bank's cost equivalent of such
benefits.
REIMBURSEMENT OF EXPENSES. Bank will reimburse Xxxxx for the reasonable
and necessary expenses incurred by him in the performance of his duties under
this Agreement in accordance with Bank's policies in effect from time to time.
TERMINATION OF EMPLOYMENT. Xxxxx'x employment under this Agreement shall
terminate on the earliest of the following events in subsections (a) through
(e).
Xxxxx'x employment under this Agreement may be terminated at any time by
the Board of Directors of Bank (and by the Board of Directors of Franklin
Bancorp). Xxxxx'x employment is "at-will."
Xxxxx'x employment under this Agreement shall terminate on December 31,
2003.
Xxxxx'x employment under this Agreement shall terminate upon his
retirement, resignation or death. If Xxxxx resigns, he agrees to give thirty
(30) days prior written notice of his resignation.
Xxxxx'x employment under this Agreement shall terminate upon thirty (30)
days written notice by Bank to Xxxxx of a termination due to Disability,
provided such notice is delivered during the period of Disability. The term
"Disability" shall mean, for purposes of this Agreement, the inability of Xxxxx,
due to injury, illness, disease or bodily or mental infirmity, to engage in the
performance of his material duties of employment with Bank as contemplated by
Section 3 herein for (i) any period of ninety (90) consecutive days or (ii) a
period of one hundred fifty days (150) in any consecutive twelve (12) months,
provided that interim returns to work of less than ten (10) consecutive business
days in duration shall not be deemed to interfere with a determination of
consecutive absent days if the reason for absence before and after the interim
return are the same. Benefits to which Xxxxx is entitled under any disability
policy or plan provided by Bank shall reduce the base salary paid to Xxxxx
during any period of Disability on a dollar-for-dollar basis.
Bank shall have the right to terminate Xxxxx'x employment for the
following:
Xxxxx'x conviction of a felony;
intentional failure to perform Xxxxx'x duties as set forth in this
Agreement which failure is not remedied by Xxxxx after receipt by him of a
written notice from the Board of Directors of Bank or Franklin Bancorp
specifying the required action and the time period within which the action must
be taken, which period shall not be less than three (3) days; or
the order of any court or supervising governmental agency with
jurisdiction over the affairs of Bank or any subsidiary or affiliate;
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If Xxxxx'x employment terminates pursuant to Sections 11(b), (c), (d) or
(e) herein, Bank shall be obligated to continue to pay Xxxxx'x salary and, to
the extent earned, accrued and unpaid, executive bonus and furnish the then
existing benefits under Section 9 up to the date of termination only (except as
otherwise set forth in this Agreement).
If Xxxxx'x employment is terminated by Bank for any reason other than
pursuant to Sections 11(b), (c), (d) or (e) herein, except as otherwise set
forth in this Agreement, Bank shall continue to pay Xxxxx'x salary and the then
existing benefits under Section 9 up to December 31, 2003 and, to the extent
earned, accrued, and unpaid to the date of termination, annual executive bonus
and longevity bonus.
Notwithstanding anything herein to the contrary, if Xxxxx is replaced by
Bank as President/CEO prior to December 1, 2003, for any reason other than
pursuant to Sections 11(b), (c), (d) or (e) herein, he shall remain at Bank
providing services if requested by Bank for thirty (30) days after the new
President/CEO has begun his/her employment.
Xxxxx shall resign as an officer and director of Bank and Bancorp upon
termination of his employment.
CONFIDENTIALITY. During Xxxxx'x employment with Bank and at all times
after the termination of such employment, regardless of the reason for such
termination, Xxxxx shall hold all Confidential Information relating to Bank in
strict confidence and in trust for Bank and shall not disclose or otherwise
communicate, provide or reveal in any manner whatsoever any of the Confidential
Information to anyone other than Bank without the prior written consent of Bank.
"Confidential Information" includes, without limitation, financial information,
related trade secrets (including, without limitation, Bank's business plan,
methods and/or practices) and other proprietary business information of Bank
which may include, without limitation, market studies, customer and client
lists, referral lists and other items relative to the business of Bank.
"Confidential Information" shall not include information which is or becomes in
the public domain through no action by Xxxxx or information which is generally
disclosed by Bank to third parties without restrictions on such third parties.
SOLICITATION OF CUSTOMERS. During his employment with Bank and for a
period of one year after the termination of Xxxxx'x employment, regardless of
the reason for the termination, Xxxxx shall not, whether directly or indirectly,
for his own benefit or for the benefit of any other person or entity, or as a
partner, stockholder, member, manager, officer, director, proprietor, employee,
consultant, representative, agent of any entity other than Bank, solicit,
directly or indirectly, any customer of Bank, or induce any customer of Bank to
terminate any association with Bank, or otherwise attempt to provide services to
any customer of Bank. Xxxxx shall prevent such solicitation to the extent he has
authority to prevent same and otherwise shall not interfere with the
relationship between Bank and its customers. This Section 13 shall not preclude
Xxxxx from serving as a director on the board of another financial institution
as long as he does not take part in any decisions with respect to customers of
Bank, for the one (1) year time period noted above.
SOLICITATION OF EMPLOYEES AND OTHERS. During his employment with Bank and
for a period of one year after termination of Xxxxx'x employment, Xxxxx shall
not, whether directly or indirectly, for his own benefit or for the benefit of
any other person or entity, or as a partner, stockholder, member, manager,
officer, director, proprietor, employee, consultant, representative, agent of
any entity other than Bank, solicit, for purposes of employment or association,
any employee or agent of Bank ("Solicited Person"), or induce any Solicited
Person to terminate such employment or association for purposes of becoming
employed or associated elsewhere, or hire or otherwise engage any Solicited
Person as an employee or agent of an entity with whom Xxxxx may be affiliated or
permit such, or otherwise interfere with the relationship between Bank and its
employees and agents. For purposes of this Agreement, an employee or agent of
Bank shall mean an individual employed or retained by Bank during the Term
and/or who terminates such association with Bank within a period of six (6)
months either prior to or after the termination of Xxxxx'x employment with Bank.
This Section 14 shall not preclude Xxxxx from serving as a director on the board
of another financial institution as long as he does not take part in any
decisions with respect to employees or agents of Bank, for the one (1) year time
period noted above.
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REMEDIES. In the event of a material breach or threatened material breach
of Section 12, Section 13 or Section 14, Bank, in addition to its other remedies
at law or in equity, shall be entitled to injunctive or other equitable relief
in order to enforce or prevent any violations of the aforementioned Sections.
SEVERABILITY AND SAVINGS. Each provision in this Agreement is separate. If
necessary to effectuate the purpose of a particular provision, the Agreement
shall survive the termination of Xxxxx'x employment with Bank. If any provision
of this Agreement, in whole or in part, is held to be invalid or unenforceable,
the parties agree that any such provision shall be deemed modified to make such
provision enforceable to the maximum extent permitted by applicable law. As to
any provision held to be invalid or unenforceable, the remaining provisions of
this Agreement shall remain in effect.
BINDING EFFECT. This Agreement shall be binding upon and shall inure to
the benefit of Bank and its successors and assigns. This Agreement shall be
binding upon and inure to the benefit of Xxxxx, his heirs and personal
representatives. This Agreement is not assignable by Xxxxx.
CONSULTING. After December 31, 2003, or, if the parties mutually agree to
the extension of employment, such later date that Xxxxx'x employment with Bank
terminates, Xxxxx shall provide consulting services to Bank, upon Bank's request
and with a frequency (if at all) in Bank's discretion at times mutually agreed
upon by the parties, at the rate of $200.00 per hour. Xxxxx shall render such
consulting services as an independent contractor and not as an employee of Bank.
MISCELLANEOUS. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by Bank and Xxxxx. The waiver or nonenforcement by Bank of a breach
by Xxxxx of any provision of this Agreement shall not be construed as a waiver
of any subsequent breach by Xxxxx. This Agreement, together with the Letter
Agreement dated April 3, 2003 between Xxxxx and Bank and the Mutual Release of
Claims and Covenant Not to Xxx dated April 14, 2003 between Xxxxx, Bank and
Bancorp constitute the parties' entire agreement and supersede any and all prior
agreements, representations or promises, oral or otherwise, express or implied.
Any notice under this Agreement must be in writing and delivered
personally or by overnight courier, sent by facsimile transmission or mailed by
registered or certified mail to the parties at their respective addresses.
This Agreement shall be governed by the laws of the State of Michigan.
Although this Agreement was drafted by Bank, the parties agree that it
accurately reflects the intent and understanding of each party and should not be
construed against Bank for the sole reason that it was the drafter if there is
any dispute over the meaning or intent of any provisions.
This Agreement may be executed in counterparts, which together shall
constitute one Agreement.
By their signatures below, the parties acknowledge that they have had
sufficient opportunity to read and consider, and that they have carefully read
and considered, each provision of this Agreement and that they are voluntarily
signing this Agreement.
The parties have executed this Agreement as of the Effective Date.
WITNESS:
/s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
------------------------------- FRANKLIN BANK, N.A.
By:
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Its:
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