EXHIBIT 10.1
AMENDED
EMPLOYMENT AGREEMENT
BY AND AMONG
FEDERAL TRUST CORPORATION,
FEDERAL TRUST BANK,
AND
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
THIS EMPLOYMENT AGREEMENT is made, entered into, and is effective as of
this 18th day of December, 1998 ("Effective Date"), by and between Federal Trust
Corporation, a Florida corporation ("Company"), Federal Trust Bank, a federally
chartered stock savings bank which has its principal office in Winter Park,
Florida ("Bank") and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ("Executive").
WHEREAS, Executive is presently employed by the Company and the Bank in
the capacity of President and Chief Executive Officer of these entities and
possesses considerable experience and an intimate knowledge of the business and
affairs of the Company and the Bank, their policies, methods, personnel, and
operations; and
WHEREAS, the Company's primary subsidiary is the Bank; and
WHEREAS, the Company and the Bank recognize that Executive's
contributions have been substantial and meritorious and, as such, Executive has
demonstrated unique qualifications to act in an executive capacity for the
Company and the Bank; and
WHEREAS, the Company and the Bank are desirous of assuring the
continued employment of Executive in the above stated capacities, and Executive
is desirous of having such assurance;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements of the parties set forth in this Agreement, and of
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE 1. TERM OF EMPLOYMENT
The Company and the Bank hereby agree to employ Executive and Executive
hereby agrees to continue to serve the Company and the Bank, in accordance with
the terms and conditions set forth herein, for an initial period of three years,
commencing as of the Effective Date of this Agreement, as indicated above. Upon
each new day of the three year period of employment from the Effective Date
until the Executive's 65th birthday, the term of this Agreement automatically
shall be extended for one additional day, to be added to the end of the
then-existing three year term. Accordingly, at all times prior to (i) the
Executive's attaining age 65 and (ii) a notice of employment termination (or an
actual termination), the term of this Agreement shall be three full years.
However, either party may terminate this Agreement by giving the other party
written notice of intent not to renew. Additionally, the automatic extensions of
the term of this Agreement shall immediately be suspended upon termination of
Executive by reason of death, Disability (see Section 6.2), or Retirement (see
Section 6.1), or an employment termination made voluntarily by Executive (other
than for Good Reason pursuant to Section 6.7), or involuntarily for Cause
(pursuant to Section 6.5), or for any of the reasons set out in Section 6.6. The
provisions applicable to such suspensions of the term of this Agreement are set
forth in those Sections pertaining to each of such types of employment
termination.
In the event Executive gives notice of employment termination, the term
of this Agreement shall expire upon the ninetieth (90th) day following the
delivery to the Company and the Bank of such notice of employment termination.
Except as otherwise provided in the following paragraph with respect to a
voluntary termination for Good Reason (see Section 6.7), a voluntary employment
termination by Executive shall result in the termination of the rights and
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obligations of the parties under this Agreement; provided, however, that the
terms and provisions of Article 9 shall continue to apply.
In the event the Company and the Bank desire to involuntarily terminate
the employment of Executive (for purposes of this Agreement, a voluntary
employment termination by Executive for Good Reason shall be treated as an
involuntary termination of the Executive's employment without Cause), the
Company and the Bank shall each deliver to Executive a notice of employment
termination, and the following provisions shall apply:
(a) In the event the involuntary termination is for Cause (see
Section 6.5 herein), the term of this Agreement shall
terminate on the 90th day following delivery to Executive of
such notice of termination. Such a termination for Cause shall
result in the termination of all rights and obligations of the
parties under this Agreement; provided, however, that the
terms and provisions of Article 9 shall continue to apply, and
Section 6.5 shall apply until payments required thereunder
have been made.
(b) In the event the involuntary termination is without Cause,
Executive shall be entitled to receive the severance benefits
set forth in Section 6.4 herein; provided, however, that the
terms and provisions of Article 9 shall continue to apply and
Section 6.4 shall apply until payments required thereunder
have been made.
ARTICLE 2. POSITION AND RESPONSIBILITIES
During the term of this Agreement, Executive agrees to serve as
President and Chief Executive Officer of the Company and of the Bank, and as a
member of the Company's and the Bank's Board of Directors if so elected. In his
capacity as President and Chief Executive Officer of the Company and of the
Bank, Executive shall report directly to the Board of Directors of the Company
(with respects to his functions as an Executive of the Company) and to the Board
of Directors of the Bank (with respects to his functions as an Executive of the
Bank). Executive shall serve as the first in command and have management
responsibility over the operations of the Company and of the Bank. Executive
shall also perform such executive services for the Bank as may be consistent
with his titles or be assigned to him by the Board of Directors of either the
Company, the Bank, or both. Executive shall have the same status, privileges,
and responsibilities normally inherent in such capacities in financial
institutions of similar size and characteristics.
The services of Executive shall be rendered principally in Winter Park,
Florida, but it is understood that he shall do such traveling on behalf of the
Company and/or the Bank as may be reasonably required.
ARTICLE 3. STANDARD OF CARE
During the term of this Agreement, Executive agrees to devote
substantially his full working time, attention, and energies to the Company's
and the Bank's business and shall not be engaged in any other business activity,
whether or not such business activity is pursued for gain, profit, or other
pecuniary advantage. However, Executive may serve as a director of other
companies so long as such service is not injurious to the Company or the Bank,
and provided that such service is approved by both the Board of the Company and
of the Bank as may be required under their respective Bylaws.
Executive covenants, warrants, and represents that he shall:
(a) Devote his full and best efforts to the fulfillment of his
employment obligations; and
(b) Exercise the highest degree of loyalty and the highest
standards of conduct in the performance of his
duties.
This Article 3 shall not be construed as preventing Executive from
investing assets in such form or manner as
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will not require his services in the daily operations of the affairs of the
companies in which such investments are made.
ARTICLE 4. COMPENSATION
The Bank shall be primarily responsible for providing to Executive his
salary, bonus, and other benefits and perquisites available to him pursuant to
this Agreement (except for the benefit outlined in Section 4.3, for which the
Company is primarily liable). The Company shall proportionally reimburse the
Bank, on an annual basis, for the time that Executive spends performing duties
for the Company. For example, if Executive spends, in a particular year, 20% of
his time working for the Company, the Company shall then reimburse the Bank 20%
of the annual cost to the Bank of complying with this Agreement. As remuneration
for all services to be rendered by Executive during the term of this Agreement,
and as consideration for complying with the covenants herein, the Bank shall pay
and provide to Executive the following:
4.1 BASE SALARY. The Bank shall pay Executive a Base Salary in an
amount which shall be established from time to time by the Board of Directors of
the Bank or the Board's designee; provided, however, that such Base Salary shall
not be less than one hundred and forty thousand dollars ($140,000.00) per year
and if subsequently increased shall not be less than such increased amount
("Base Salary"). This Base Salary shall be paid to Executive in equal
semimonthly installments throughout the year, consistent with the normal payroll
practices of the Bank.
The Base Salary shall be reviewed at least annually following the
Effective Date of this Agreement, while this Agreement is in force, to ascertain
whether, in the judgment of the Board of the Bank or the Board's designee, such
Base Salary should be increased, based primarily on Executive's performance
during the year. If so increased, the Base Salary as stated above shall,
likewise, be increased for all purposes of this Agreement.
4.2 PERFORMANCE BONUS. Executive shall be entitled to a Performance
Bonus based upon the profitability of the Bank. The Performance Bonus is
triggered when the Bank's after tax earnings equal or exceed 0.50 percent of the
average quarterly assets on an annualized basis. The Bank shall pay Executive a
bonus equal to three percent (3%) of the Bank's quarterly net income before
taxes (excluding extraordinary gains or losses. The Performance Bonus amounts
shall be determined as of the close of each fiscal quarter and shall be paid to
Executive within 45 days of each quarter-end. Aggregate quarterly bonuses in any
one fiscal year shall not exceed the amount of Employee's Base Salary for such
fiscal year.
4.3 LONG-TERM INCENTIVES. During the term of this Agreement, Executive
shall be entitled to participate in any and all long-term incentive programs at
a level that is commensurate with his position with the Company.
4.4 RETIREMENT BENEFITS. The Bank shall provide Executive all the
benefits to which he is entitled under the Salary Continuation Plan (and any
subsequent amendments thereto), which was adopted by the Bank in January of 1997
and approved by the OTS on April 4, 1997. The obligations of the Bank and
pursuant to this Section 4.4 shall survive the termination of this Agreement.
4.5 EXECUTIVE BENEFITS. The Bank shall provide Executive all benefits
to which other executives and Executives of the Bank are entitled to receive, as
commensurate with Executive's position, subject to the eligibility requirements
and other provisions of such plans or arrangements. Such benefits shall include,
but not be limited to, group term life insurance, comprehensive health and major
medical insurance for Executive and his wife, dental and life insurance, and
short-term and long-term disability insurance.
The Executive shall be entitled to five weeks of paid vacation. The
Bank shall pay to Executive, at the end of each fiscal year, double his regular
daily rate of compensation (pursuant to the Base Salary) for each day of
vacation he did not take and, instead, worked for either the Company or the
Bank.
4.6 PERQUISITES. The Bank shall provide to Executive, at the Bank's
cost, all perquisites to which other similarly situated executives of the Bank
are entitled to receive and such other perquisites which are suitable to the
character of Executive's position with the Bank and adequate for the performance
of his duties hereunder.
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The Bank shall provide Executive with a vehicle of like make and model
as would be suitable to the character of Executive's position with the Company
(the "Executive's Company Car"). The Bank shall reimburse Executive for the
costs of maintaining the Executive Company Car, including repairs completed at
any time while this Agreement is in effect.
4.7 RIGHT TO CHANGE PLANS. The Bank shall not be obligated to
institute, maintain, or refrain from changing, amending, or discontinuing any
benefit plan, program, or perquisite, so long as such changes are similarly
applicable to executive officers (Vice President or above) generally.
4.8 MINIMUM CAPITAL STOCK INVESTMENT AND REPURCHASE OF STOCK. Executive
agrees to maintain his minimum capital stock investment in the Company (1993
stock purchase of 8,453 shares, ["Shares"]) for as long as this Agreement
remains in effect. Upon voluntary termination for Good Reason as defined in
Section 6.7, involuntary termination (other than for Cause as provided in
Section 6.5) the Company agrees to repurchase from Executive at book value or
the fair market value, whichever is greater, all or any portion of the Shares
which he wishes to sell to the Company. In the event the Company is dissolved,
liquidated, or reorganized where the Bank is the surviving entity, and Executive
voluntarily terminates his employment for Good Reason or is involuntarily
terminated (other than for Cause), the Bank agrees to repurchase from Executive
at book value or at fair market value, whichever is greater, any capital stock
which he may then own in the Bank and which he wishes to sell to the Company;
provided, however, that such repurchase shall not be required to the extent that
the purchase would cause the Bank to fail to meet its minimum capital
requirements.
ARTICLE 5. EXPENSES
The Bank shall pay or reimburse Executive for all ordinary and
necessary expenses, in a reasonable amount, which Executive incurs in performing
his duties under this Agreement including, but not limited to, travel,
entertainment, professional dues and subscriptions, and all dues, fees, and
expenses associated with membership in various social clubs or professional,
business, and civic associations and societies in which Executive's
participation is in the best interest of the Company and/or the Bank.
ARTICLE 6. EMPLOYMENT TERMINATIONS
6.1 TERMINATION DUE TO RETIREMENT OR DEATH. In the event Executive's
employment is terminated while this Agreement is in force by reason of early or
normal retirement (as provided under the then established rules of the Bank's
tax-qualified retirement plan, "Retirement"), or death, Executive's benefits
shall be determined in accordance with the Bank's retirement, survivors'
benefits, insurance, and other applicable programs of the Bank then in effect.
Upon the effective date of such termination, the Bank's obligation under this
Agreement to pay and provide to Executive the elements of pay described in
Sections 4.1, 4.2, and 4.3 shall immediately expire. However, Executive shall
receive all other rights and benefits that he is vested in, pursuant to other
plans and programs of the Bank. In addition, subject to any conflicting terms of
any short-term incentive program which would provide for greater benefits
following such termination, the Bank shall pay to Executive (or Executive's
beneficiaries or estate, as applicable) a pro rata share any accrued bonus for
such fiscal year. This pro rata Bonus amount shall be determined at the sole
discretion of the Bank's Board of Directors, as a function of the number of days
in such fiscal year prior to the date of employment termination in relation to
the total number of days in such fiscal year. The pro rata Bonus shall be paid
within 45 days of the Effective Date of employment termination. Also, all
unvested stock awards (including, but not limited to, any stock options and
restricted stock) will vest in full on the date of termination.
6.2 TERMINATION DUE TO DISABILITY. If Executive becomes disabled or
incapacitated to the extent that he is unable to perform his duties as President
and Chief Executive Officer of the Company and the Bank, he shall nevertheless
continue to receive the following percentages of his compensation, exclusive of
any benefits which may be in effect for Executives of the Company and/or the
Bank, for the following periods of disability: 100% for the first six months and
75% thereafter for the remaining term of this Agreement. Upon returning to
active duties, Executive's full compensation as set forth in this Agreement
shall be reinstated. In the event that Executive returns to active
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employment on other than a full-time basis, then his compensation shall be
reduced in proportion to the time spent in said employment.
There shall be deducted from the amounts paid to Executive hereunder
during any period of disability any amounts actually paid to the Executive
pursuant to any disability insurance or other such similar program which the
Company and/or the Bank have instituted or may institute on behalf of their
Executives for the purpose of compensating Executives in the event of
disability.
For the purpose of this Agreement, Executive shall be deemed disabled
or incapacitated if Executive, due to physical or mental illness, shall have
been absent from his duties with the Bank, on a full-time basis for 90 days;
provided that, if Executive shall not agree with a determination to terminate
him because of disability or incapacity, the question of Executive's ability
shall be submitted to an impartial and reputable physician selected by the
parties hereto and such physician's determination on the question of disability
or incapacity shall be binding.
6.3 VOLUNTARY TERMINATION BY THE EXECUTIVE. Executive may terminate
this Agreement at any time by giving the Board of Directors of the Company and
of the Bank written notice of intent to terminate, delivered at least 60
calendar days prior to the effective date of such termination. This Section 6.3
shall not apply if Executive terminates employment because of Retirement. The
Bank shall pay Executive his full Base Salary, at the rate then in effect as
provided in Section 4.1 herein, through the effective date of termination, plus
all other benefits to which the Executive has a vested right at that time (for
this purpose, Executive shall not be paid any bonus with respect to the fiscal
quarter in which voluntary termination under this Section 6.3 occurs). In the
event that the voluntary termination is for Good Reason, the terms of Section
6.7 herein shall govern the parties' rights and obligations hereunder.
6.4 INVOLUNTARY TERMINATION BY THE COMPANY AND/OR THE BANK WITHOUT
CAUSE. At any time during the term of this Agreement, the Board of the Company
or of the Bank may terminate Executive's employment, as provided under this
Agreement, for reasons other than death, Disability, Retirement, or for Cause,
by notifying Executive in writing of the Bank's and/or the Company's intent to
terminate, at least 90 calendar days prior the effective date of such
termination.
Subject to the terms of Article 7 herein, following the expiration of
the 90-day notice period, the Bank shall pay to Executive a lump sum cash
payment equal to the present value of the sum of the following amounts:
(a) The Base Salary which would have been paid to Executive
throughout the remaining years of the term of this Agreement;
(b) The Performance Bonus amount for the fiscal quarter in which the
termination became effective;
(c) The annualized long-term incentive award for the year in which
termination occurs, at the higher of the targeted level of award
or anticipated actual, multiplied by the remaining years of the
term of this Agreement; and
(d) The amount of Executive's annual club dues in the year of
termination, multiplied by the remaining years of the term of
this Agreement.
For purposes of making the present value calculations described above,
the Bank's Board shall treat such payments as if they were made at the point in
time in the future when each such payment is scheduled to have been made. Such
present value calculations shall at the Federal Discount Rate plus 2.5%.
All unvested stock awards (including, but not limited to, any stock
options and restricted stock) will vest on the date of termination. Further, the
Bank shall continue Executive's health and welfare benefit coverage for the
entire three-year period following employment termination (including health
insurance for his wife), at the same cost, and on the same terms as existed
immediately prior to employment termination. The Bank shall also transfer to
Executive title to the Executive's Company Car, without cost to Executive, and
shall pay to Executive a lump sum cash payment in an amount necessary to fully
gross-up the income tax effect of said transfer.
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The Bank and Executive thereafter shall have no further obligations
under this Agreement. Notwithstanding the foregoing, in the event Executive
obtains comparable employment, the Bank's obligation to continue Executive's
health and welfare benefit coverage pursuant to this Section 6.4 shall
immediately cease. The payments described in this Section 6.4 shall be in part
to compensate Executive for being subject to the provisions of Article 9
hereafter, even though Executive's employment has been terminated without Cause
or for Good Reason as provided in Section 6.7.
6.5 TERMINATION FOR CAUSE. Nothing in this Agreement shall be construed to
prevent the Board of the Bank from terminating Executive's employment under this
Agreement for "Cause."
"Cause" shall be determined by the appropriate Board of Directors
(determined by where the conduct or action in question was taken) in the
exercise of good faith and reasonable judgment; and shall be defined as the
conviction of the Executive for the commission of an act of fraud, embezzlement,
theft, or other criminal act constituting a felony under U.S. laws involving
moral turpitude; or the gross neglect of the Executive in the performance of any
or all material covenants under this Agreement, for reasons other than
Executive's death, Disability, or Retirement. The Board, by majority vote, shall
make the determination of whether Cause exists, after providing the Executive
with notice of the reasons the Board believes Cause may exist, and after giving
Executive the opportunity to respond to the allegation that Cause exists. In the
event this Agreement is terminated by the Board for Cause, the Company shall pay
Executive his Base Salary through the effective date of the employment
termination and Executive shall immediately thereafter forfeit all rights and
benefits (other than vested benefits) he would otherwise have been entitled to
receive under this Agreement. The Bank and Executive, thereafter, shall have no
further obligations under this Agreement provided, however, that the provisions
of Article 9 shall continue to apply.
6.6 OTHER REASONS FOR SUSPENSION/TERMINATION. The following are additional
reasons for this Agreement to be suspended or terminated:
(a) If Executive is suspended from office and/or temporarily
prohibited from participating in the conduct of the Bank's
affairs pursuant to notice served under Section 8(e)(3) or
Section 8(g)(1) of the Federal Deposit Insurance Act
("FDIA") (12 U.S.C. Section 1818[e][3] and Section
1818[g][1]), Company's and the Bank's obligations under this
Agreement 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 Executive all or part of the compensation withheld
while its obligations under this Agreement were suspended,
and (ii) reinstate (in whole or in part) any of its
obligations which were suspended.
(b) If Executive is removed from office and/or permanently
prohibited from participating in the conduct of the Bank's
affairs by an order issued under Section 8(e)(4) or Section
8(g)(1) of the FDIA (12 U.S.C. Sections 1818[e][4] and
[g][1]), all obligations of the Executive and the Company
under this Agreement shall terminate as of the effective date
of the order, but vested rights of the Executive and of the
Company and/or the Bank, as of the date of termination, shall
not be affected.
(c) All obligations under this Agreement may be terminated
pursuant to 12 C.F.R. Section 563.39(b)(5) (except to the
extent that it is determined that continuation of the
Agreement for the continued operation of Bank is necessary):
(i) by the Director of the Office of Thrift Supervision
("OTS"), or his/her designee, at the time the Federal
Deposit Insurance Corporation ("FDIC") enters into an
agreement to provide assistance to or on behalf of Bank
under the authority contained in Section 13(c) of the FDIA
(12 U.S.C. Section 1823[c]); or (ii) by the Director of the
OTS, or his/her designee, at the time the Director or
his/her designee approves a supervisory merger to resolve
problems related to operation of Bank or when Bank is
determined by the Director of the OTS in final agency action
to be in an unsafe or unsound condition, but vested rights
of the Executive and of the Bank, as of the date of
termination, shall not be affected.
(d) If Bank is in default, as defined in Section 3(x)(1) of the
FDIA (12 U.S.C. Section 1818[x][1]) to mean an adjudication
or other official determination by any court of competent
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jurisdication, the appropriate federal banking agency or
other public authority pursuant to this Agreement shall
terminate as of the date of default, but vested rights of
the Executive as of the date of termination, shall not be
affected.
6.7 TERMINATION FOR GOOD REASON. At any time during the term of this
Agreement, Executive may terminate this Agreement for Good Reason (as defined
below) by giving the Board of Directors of the Company and/or of the Bank 60
calendar days written notice of intent to terminate, which notice sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
such termination. Executive's ability to terminate for Good Reason is contingent
upon his agreement to allow the Company and/or the Bank to remedy, within such
60 day period, the events constituting Good Reason.
Upon the failure of the Company and/or the Bank to remedy the events
constituting Good Reason prior to the expiration of the 60 day notice period,
the Good Reason termination shall become effective, and the Bank shall pay and
provide Executive the benefits set forth in Section 6.4 herein (as if the
termination were an involuntary termination without Cause.)
Good Reason shall mean, without Executive's express prior written
consent, the occurrence of any one or more of the following:
(a) The assignment of Executive to duties materially inconsistent
with Executive's authorities, duties, responsibilities, and
status (including titles and reporting requirements) as an
officer of the Company or of the Bank, or a material reduction
or alteration in the nature or status of Executive's
authorities, duties, or responsibilities from those in effect
as of the Effective Date (or as subsequently increased), other
than an insubstantial and inadvertent act that is remedied by
the Company and/or the Bank promptly after receipt of notice
thereof by the Executive;
(b) The Bank's or the Company's requiring Executive to be based at
a location in excess of 35 miles from the location of
Executive's principal job location or office as of the
Effective Date, except for required travel on the Company's or
the Bank's business to an extent substantially consistent with
Executive's present business obligations;
(c) A reduction by the Bank of Executive's Base Salary as in
effect on the Effective Date, or as the same shall be increase
from time to time;
(d) An intentional material reduction by the Company or the
Bank of Executive's aggregate incentive opportunities under
the Company's or Bank's short- and long-term incentive
programs, as such opportunities exist on the Effective Date,
or as such opportunities may be increased after the
Effective Date. For this purpose, a reduction in Executive's
incentive opportunities shall be deemed to have occurred in
the event his targeted annualized award opportunities and/or
the degree of probability of attainment of such annualized
award opportunities, are materially diminished from the
levels and probability of attainment that existed as of the
Effective Date or as such opportunity and/or degree of
probability have been increased from time to time;
(e) The failure of the Company or the Bank to maintain Executive's
relative level of coverage under the Bank's Executive benefit
or retirement plans, policies, practices, or arrangements in
which Executive participates as of the Effective Date, both in
terms of the amount of benefits provided and the relative
level of the executive's participation. For this purpose, the
Company or the Bank may eliminate and/or modify existing
programs and coverage levels; provided, however, that the
Executive's level of coverage under all such programs must be
at least as great as is such coverage provided to executives
who have the same or lesser levels of reporting
responsibilities within the organization;
(f) The failure of the Company or the Bank to obtain a
satisfactory agreement from any successor to the Company
and/or the Bank to assume and agree to perform the Company's
and the Bank's obligations under this Agreement, as
contemplated in Article 11 herein; and
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(g) Any purported termination by the Company and/or the Bank of
Executive's employment that is not effected pursuant to a
notice of termination satisfying the requirements of Article 1
herein, and for purposes of this Agreement, no such purported
termination shall be effective.
Executive's right to terminate employment for Good Reason shall not be
affected by Executive's incapacity due to physical or mental illness.
Executive's continued employment shall not constitute a consent to, or a waiver
of rights with respect to, any circumstance constituting Good Reason herein.
Upon a termination of Executive's employment for Good Reason at any time during
the term of this Agreement, Executive shall be entitled to receive the same
payments and benefits as he is entitled to receive following an involuntary
termination of his employment by the Company and/or the Bank without Cause, as
specified in Section 6.4 herein.
6.8 CHANGE IN CONTROL. In the event of a change in control (with
respect to either the Company or the Bank), as defined in 12 C.F.R. Section
574.4(a) or (b) of the OTS regulations, the Company and/or the Bank shall pay
"delayed recognition bonus" equal to three times Executive's annual
compensation, times the price/book value ration at which the Company or the Bank
is acquired in recognition of Executive having agreed to defer payment of a
higher Base Salary during the first three years of employment in order that the
Company and Bank could reduce their employee compensation costs while the
Company underwent reorganization and the Company and the Bank addressed and
corrected regulators concerns.
ARTICLE 7. NO DUTY TO MITIGATE
Executive shall not be required to mitigate the amount of any payment
provided to him by the Bank as a result of Executive's termination.
ARTICLE 8. EXCISE TAX GROSS-UP
8.1 EQUALIZATION PAYMENT. In the event that Executive becomes entitled
to severance benefits under Sections 6.4, 6.7, or 6.8 herein ("Severance
Benefits"), if any of the Severance Benefits will be subject to the tax (the
"Excise Tax") imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), or any similar tax that may hereafter be imposed, the Bank
shall pay to Executive in cash an additional amount (the "Gross-Up Payment")
such that the net amount retained by Executive after deduction of (i) any Excise
Tax on the Severance Benefits and (ii) any Federal, state, and local income tax
and Excise Tax on the Gross-Up Payment provided for by this Section 8.1, shall
be equal to the Severance Benefits. Such payment shall be made by the Company or
the Bank to Executive as soon as practicable following the effective date of
termination, but in no event beyond 30 days from such date.
8.2 TAX COMPUTATION. For purposes of determining whether any of the
Severance Benefits will be subject to the Excise Tax and the amounts of such
Excise Tax:
(a) Any other payments or benefits received or to be received by
Executive in connection with a change in control of the Company
or the Bank or Executive's termination of employment (whether
pursuant to the terms of this Plan or any other plan,
arrangement, or agreement with the Company and/or the Bank, or
with any individual, entity, or group of individuals or entities
(individually and collectively referred to in this Section 8.2 as
"Persons" whose actions result in a change in control of the
Company and/or Bank or any Person affiliated with the Company,
the Bank, or such Persons) shall be treated as "parachute
payments" within the meaning of Section 280G(b)(2) of the
Internal Revenue Code, and all "excess parachute payments" within
the meaning of Code Section 280G(b)(1) of the Code shall be
treated as subject to the Excise Tax, unless in the opinion of
tax counsel selected by the Company's and Bank's independent
auditors and acceptable to Executive, such other payments or
benefits (in whole or in part) do not constitute parachute
payments, or unless such excess parachute payments (in whole or
in part) represent reasonable compensation for services actually
rendered
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within the meaning of Code Section 280G(b)(4) of the Code in
excess of the base amount within the meaning of Section
280G(b)(3) of the Code, or are otherwise not subject to the
excise tax;
(b) The amount of the Severance Benefits which shall be treated as
subject to the Excise Tax shall be equal to the lesser of: (i)
the total amount of the Severance Benefits; or (ii) the amount
of excess parachute payments within the meaning of Code
Section 280G(b)(1) of the Code (after applying clause (a)
above); and
(c) The value of any noncash benefits or any deferred payment or
benefit shall be determined by the Company's and the Bank's
independent auditors in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code. The base amount shall
be determined by the Bank's independent auditors in accordance
with the principles of sections 280G(d)(3) of the Code.
For purposes of determining the amount of the Gross-Up Payment,
Executive shall be deemed to pay Federal income taxes at the highest marginal
rate of Federal income taxation in the calendar year in which the Gross-Up
Payment is to be made, and state and local income taxes at the highest marginal
rate of taxation in the state and locality of Executive's residence on the
effective date of employment, net of the maximum reduction in Federal income
taxes which could be obtained from deduction of such state and local taxes.
8.3 SUBSEQUENT RECALCULATION. In the event the Internal Revenue Service
adjusts the computation of the Company under Section 8.1 herein, which
adjustment becomes binding on the Service, the Company, the Bank, and the
Executive, so that Executive did not receive the greatest net benefit, the Bank
shall reimburse Executive for the full amount necessary to make Executive whole,
plus a market rate of interest.
ARTICLE 9. NONCOMPETITION
9.1 PROHIBITION ON COMPETITION. Without the prior written consent of
the Company and the Bank, during the term of this Agreement, and for six months
following the expiration of this Agreement, Executive shall not serve as an
officer or engage directly, or indirectly, in any business or enterprise which
is "in competition" with the Company and/or the Bank or its successors or
assigns. For purposes of this Agreement, a business or enterprise will be deemed
to be "in competition" if it is a banking institution, the headquarter of which
is within 100 miles from the location of Executive's principal job location or
office at the time of termination of employment. However, Executive shall not
thereby be precluded or prohibited from owning passive investments, including
investments in the securities of other financial institutions, so long as such
ownership does not require him to devote substantial time to management or
control of the business or activities in which he has invested.
9.2 DISCLOSURE OF INFORMATION. Executive recognizes that he has access
to and knowledge of certain confidential and proprietary information of the
Company and of the Bank which is essential to the performance of his duties
under this Agreement. Executive will not, during the term of his employment by
the Company and/or the Bank, or within six months following expiration of this
Agreement, in whole or in part, disclose such information to any person, firm,
corporation, association, or other entity for any reason or purpose whatsoever,
nor shall he make use of any such information for his own purposes.
9.3 SPECIFIC PERFORMANCE. The parties recognize that the Company and
the Bank will have no adequate remedy at law for breach by Executive of the
requirements of this Article 9 and, in the event of such breach, the Company the
Bank, and Executive hereby agree that, in addition to the right to seek monetary
damages, the Bank and/or the Company will be entitled to a decree of specific
performance, mandamus, or other appropriate remedy to enforce performance of
such requirements.
ARTICLE 10. INDEMNIFICATION
The Company and the Bank hereby covenant and agree to indemnify and
hold harmless Executive in a manner consistent with the provisions of the
Company's and the Bank's Article of Incorporation.
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ARTICLE 11. ASSIGNMENT
11.1 ASSIGNMENT BY BANK OR COMPANY. This Agreement may and shall be
assigned or transferred to, and shall be binding upon and shall inure to the
benefit of, any successor of the Company or of the Bank, and any such successor
shall be deemed substituted for all purposes of the Company or the Bank under
the terms of this Agreement. As used in this Agreement, the term "successor"
shall mean any person, firm, corporation, or business entity which at any time,
whether by merger, purchase, or otherwise, acquires all or substantially all of
the assets or the business of the Company or of the Bank. Notwithstanding such
assignment, the Company and/or the Bank shall remain, with such successor,
jointly and severally liable for all its obligations hereunder.
Failure of the Company and/or the Bank to obtain the agreement of any
successor to be bound by the terms of this Agreement prior to the effectiveness
of any such succession shall be a breach of this Agreement, and shall
immediately entitle Executive to compensation from the Bank in the same amount
and on the same terms as the Executive would be entitled in the event of a
termination of employment, as provided in Section 6.4 herein.
Except as herein provided, this Agreement may not otherwise be assigned
by the Company and/or the Bank.
11.2 ASSIGNMENT BY EXECUTIVE. The services to be provided by Executive
to the Company and the Bank hereunder are personal to Executive, and his duties
may not be assigned by Executive; provided, however, that this Agreement shall
inure to the benefit of and be enforceable by Executive's personal or legal
representatives, executors, and administrators, successors, heirs, distributees,
devisees, and legatees. If Executive dies while any amounts payable to Executive
hereunder remain outstanding, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to
Executive's devisee, legatee, or other designee or, in the absence of such
designee, to Executive's estate.
ARTICLE 12. DISPUTE RESOLUTION AND NOTICE
12.1 DISPUTE RESOLUTION. Executive shall have the right and option to
elect to have any good faith dispute or controversy arising under or in
connection with this Agreement settled by litigation or by arbitration. The
venue for any litigation concerning the enforcement of this Agreement or a
breach of this Agreement shall be Orange County, Florida. If arbitration is
selected, such proceeding shall be conducted before a panel of three arbitrators
sitting in a location selected by the Executive, but within Orange County,
Florida, in accordance with the rules of the American Arbitration Association
then in effect. Judgment may be entered on the award of the arbitrators in any
court having competent jurisdiction.
All expenses of such litigation or arbitration, including the
reasonable fees and expenses of the legal representative for the Executive, and
necessary costs and disbursements incurred as a result of such dispute or legal
proceeding, and any prejudgment interest, shall be borne by the Bank and/or the
Company.
12.2 NOTICE. Any notices, requests, demands, or other communications
provided for by this Agreement shall be sufficient if in writing and if sent by
registered or certified mail to the Executive at the last address he has filed
in writing with the Company and the Bank or, in the case of the Bank or the
Company, to an executive officer of the Company and an executive officer of the
Bank, at the Company's and the Bank's principal offices.
ARTICLE 13. MISCELLANEOUS
13.1 ENTIRE AGREEMENT. This Agreement supersedes any prior agreements
or understandings, oral or written, between the parties hereto, or between the
Executive, the Bank, and the Company, with respect to the subject matter hereof,
and constitutes the entire agreement of the parties with respect thereto.
13.2 MODIFICATION. This Agreement shall not be varied, altered,
modified, canceled, changed, or in any way amended except by mutual agreement of
the parties in a written instrument executed by the parties hereto or
75
their legal representatives.
13.3 SEVERABILITY. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, the
remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and
13.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.
13.5 TAX WITHHOLDING. The Bank may withhold from any benefits payable
under this Agreement all federal, state, city, or other taxes as may be required
pursuant to any law or governmental regulation or ruling.
13.6 BENEFICIARIES. Executive may designate one or more persons or
entities as the primary and/or contingent beneficiaries of any amounts to be
received under this Agreement. Such designation must be in the form of a signed
writing acceptable to the Board or the Board's designee. Executive may make or
change such designation at any time.
ARTICLE 14. GOVERNING
To the extent not preempted by federal law, the provisions of this
Agreement shall be construed and enforced in accordance with the laws of the
State of Florida.
IN WITNESS WHEREOF, Executive has executed, the Company (pursuant to a
resolution adopted at a duly constituted meeting of the Company's Board of
Directors) has executed this Agreement, and the Bank (pursuant to a resolution
adopted at a duly constituted meeting of the Bank's Board of Directors) has
executed this Agreement as of December 18, 1998.
FEDERAL TRUST CORPORATION EXECUTIVE:
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
On behalf of the
Board of Directors
Attest:/s/▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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FEDERAL TRUST BANK
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
On behalf of the
Board of Directors
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