Exhibit 99
CHANGE IN CONTROL AND NON-COMPETITION AGREEMENT
THIS AGREEMENT is made effective as of May 9, 2005 by and among Harbor
Federal Savings Bank (the "Bank"), Harbor Florida Bancshares, Inc. ("Bancshares"
or the "Holding Company") and Xxxxxxx X. Xxxxx (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.
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.
The term of this Agreement shall commence as of the date first above
written and shall continue for a period of two (2) years, eleven (11) months and
ten (10) days thereafter. Commencing on or before April 19, 2006 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.
(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.
(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) A the effective date of the Agreement and prior to December 31st each year
thereafter, Executive shall make the election referred to in Section 4(a)
hereof with respect to whether any amounts payable under said Section 4(a)
during the following year 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.
(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.
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
(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.
(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.
(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).
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.
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.
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.
The validity, interpretation, performance, and enforcement of this
Agreement shall be governed by Florida law.
14. ARBITRATION.
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
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:
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 13th day
of May, 2005.
ATTEST: HARBOR FEDERAL SAVINGS BANK
/s/ BY: /s/
---------------------------- ------------------------------------
J. Xxx Xxxxxxx Xxxxxxx X. Xxxxx, Xx.
ATTEST: HARBOR FLORIDA BANCSHARES, INC.
/s/ BY: /s/
---------------------------- ------------------------------------
J. Xxx Xxxxxxx Xxxxxxx X. Xxxxx, Xx.
ATTEST:
WITNESS:
/s/ BY: /s/
---------------------------- ------------------------------------
Xxxx X. Xxxx Xxxxxxx X. Xxxxx
Executive
