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Exhibit
10.18
SEVERANCE AND RELEASE
AGREEMENT
THIS SEVERANCE AND RELEASE
AGREEMENT (this “Agreement”) is made and entered by and
among JAMES V. SUSKIEWICH (the “Executive”), FEDERAL
TRUST CORPORATION (the “Company”), and FEDERAL TRUST
BANK (the “Bank”), a wholly owned subsidiary of the
Company (the Company and the Bank collectively being the
“Corporation”) effective as of the last date written
below.
WHEREAS, the Executive has
been employed by the Company under the terms of that Employment
Agreement by and between the Executive and the Company and dated
October 1, 2005 (the “Employment
Agreement”);
WHEREAS, the Company
exercised its right under the Employment Agreement to terminate the
employment of the Executive, without cause, by delivering to him a
Notice of Termination on September 14, 2007 (the “Notice
Date”);
WHEREAS, under the Employment
Agreement, the Executive is entitled to certain severance payments
and benefits upon delivering to the Company a full release for any
potential claims related to the Employment Agreement or the
Executive’s employment with the Company; and
WHEREAS, under that Salary
Continuation Agreement by and between the Executive and the Bank,
as last amended and restated by that Addendum dated
December 31, 2005 (the “Salary Continuation
Agreement”), the Executive is entitled to certain additional
compensation upon the termination of his employment, subject to
modification as provided herein to comply with the requirements of
Section 409A of the Internal Revenue Code of 1986, as amended,
and the regulations thereunder (collectively, “Section
409A”);
NOW, THEREFORE, in
consideration of the mutual promises and covenants in this
Agreement, the Executive and the Corporation agree as
follows:
1. Recitals . The
parties hereto acknowledge and agree that the above-stated recitals
are true and accurate, and they form an integral part of this
Agreement.
2. Removal and
Termination . From and after the Notice Date, the Executive is
removed from all offices of and appointments by the Corporation.
The Executive’s employment by the Corporation will be
terminated at the end of the day on October 14, 2007 (the
“Termination Date”).
3. Compensation Prior to
the Termination Date . Prior to and including the Termination
Date, the Executive shall be entitled to all compensation set forth
in Schedule B to the Employment Agreement (“Schedule
B”). All payments of any such compensation shall be subject
to all taxes and withholding required under applicable federal and
state law, and shall be paid in accordance with the
Corporation’s customary payroll practices.
4. Compensation After the
Termination Date .
a. After the Termination
Date, subject to the obligations of the Executive under this
Agreement, in addition to accrued and unpaid amounts payable to the
Executive pursuant to Paragraph 3 above, the Executive shall be
entitled to the compensation described in Exhibit 1 attached
hereto and incorporated herein by this reference. The Company and
the Bank shall be jointly and severally responsible for payment of
such compensation described in Paragraph 4 of Exhibit 1
(“Salary Continuation Payments”). All payments of any
such compensation shall be subject to all taxes and withholding
required under applicable federal and state law, and shall be paid
in accordance with the Corporation’s customary payroll
practices.
b. The parties hereto
acknowledge and agree that the payment of Salary Continuation
Payments is subject to the provisions of Section 409A,
including, but not limited to, the six month delay rule, as
addressed in Paragraph 4 of Exhibit 1 , and the restriction
on acceleration upon a change of control, as addressed in
Section 4.c. below.
c. In the event of a Change
of Control (as defined below), the Salary Continuation Payments
payable to the Executive or his spouse after the date of such
Change of Control shall be accelerated so that the present value of
such remaining amounts payable as of the date of such Change of
Control (determined by applying an annual discount rate of eight
percent (8%) and assuming a life expectancy for the Executive
or his spouse, as the case may be, of 82 years) shall be due and
payable within sixty (60) days after the date of such Change
of Control. For purposes of this paragraph, “Change of
Control” means a change in control with respect to either the
Bank or the Company, as defined in 12 C.F.R. Section 574.4(a)
or (b) of the Office of Thrift Supervision, provided such
change of control also qualifies as a change in the ownership or
effective control of the Company or the Bank, or a change in the
ownership of a substantial portion of the assets of the Company or
the Bank, within the meaning of Section 409A. The Executive
acknowledges and agrees that, notwithstanding the provisions of the
Salary Continuation Agreement, the Executive is required by
Section 409A to immediately make an election with respect to
the acceleration of Salary Continuation Payments in the event of a
Change of Control, and this Paragraph b constitutes such
election.
d. The parties hereto
acknowledge and agree that, after the Termination Date, except for
the compensation described in this Paragraph 4, the Corporation and
its subsidiaries shall owe to the Executive no other compensation
or benefits.
5. Indebtedness . The
Executive represents and warrants that the Executive is not
indebted to the Corporation (other than indebtedness secured by a
mortgage on the Executive’s residence). To the knowledge of
the Corporation, the Executive is not indebted to the Corporation
(other than indebtedness secured by a mortgage on the
Executive’s residence).
6. Unconditional General
Releases .
a. In consideration of the
compensation to the Executive provided above, the adequacy and
receipt of which is hereby acknowledged, the Executive, on behalf
of himself and his heirs, personal or legal representatives,
successors and assigns, agrees that the Executive is hereby forever
giving up and waiving any claims, whether known or
unknown,
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the Executive may have against the
Corporation, its affiliates, their employees, officers, directors,
lawyers, or agents for any personal or monetary relief for the
Executive that is based, in whole or in part, on conduct that
occurred before the date the Executive signs this Agreement. By
waiving and giving up such claims, the Executive understands that
the Executive is releasing the Corporation, its affiliates, their
employees, officers, directors, lawyers, and agents from any
liability or obligation for any expense, damage, or losses the
Executive might claim based on, among other things, the following:
(a) the Executive’s employment with the Corporation or
the termination of that employment; (b) any Corporation
policy, practice, contract or agreement; (c) any tort or
personal injury; (d) any policies, practices, laws or
agreements governing the payment of wages, commissions or other
compensation; (e) any laws governing employment discrimination
including, but not limited to, the Rehabilitation Act of 1973,
Title VII of the Civil Rights Act of 1964, as amended, the Age
Discrimination in Employment Act, the Older Worker Benefit
Protection Act, the Americans with Disabilities Act, the Family and
Medical Leave Act, the Executive Retirement Income Security Act,
the Florida Civil Rights Act, and any ordinance or local authority;
(f) any laws or agreements that provide for punitive,
exemplary or statutory damages; and (g) any laws or agreements
that provide for payment of attorneys’ fees, costs or
expenses; in each case, except as specifically provided in this
Agreement.
b. In consideration of the
covenants and obligations of the Executive provided in this
Agreement, the adequacy of which is hereby acknowledged, the
Corporation, on behalf of itself and its affiliates, legal
representatives, successors and assigns, agrees that the
Corporation is hereby forever giving up and waiving any claims,
whether known or unknown, the Corporation and its affiliates may
have against the Executive for any personal or monetary relief for
the Corporation and its affiliates that is based, in whole or in
part, on conduct that occurred before the date the Corporation
signs this Agreement.
7. Claims Not Waived .
The Executive understands that this Agreement does not waive
(a) any claims that the Executive may have for compensation
for illness or injury or medical expenses under any workers’
compensation statute, (b) any claims that the Executive may
have as a shareholder of the Company, or (c) any claim that by
law cannot be waived or released. The Executive also understands
that even though he has waived and released the claims described in
Paragraph 6, the Executive is not prohibited from filing a charge
or cooperating with any government agency for matters not waived
and released.
8. Covenant Not to
Compete; Confidentiality .
a. For a period of six
(6) months after the Termination Date, the Executive shall not
directly or indirectly:
i. Engage in the services of,
carry on, participate in, render services to, own any interest in,
share in the earnings of, or invest in the obligations or
securities of, any business in the Territory (as hereinafter
defined) which is the same or similar to the business of the
Corporation, whether as an individual for his own account or for or
with any other person, firm, corporation, partnership, joint
venture, trust, enterprise or any entity whatsoever;
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ii. Reveal or make available
to any person or entity any information or technology with regard
to the business of the Corporation, except as may be required by
law, or use or attempt to use his knowledge concerning the business
of the Corporation in any manner which may injure, cause loss or
otherwise be detrimental, or may be intended to injure, cause loss
or be otherwise detrimental, to the business of the Corporation, or
which may benefit, or may be intended to benefit, any other person
or entity which is engaged in the same or similar business as the
business of the Corporation; or
iii. Consult with or render
services of any nature to any person or entity that is engaged in
the Territory in a business which is the same or similar to the
business of the Corporation.
For purposes of this Paragraph 8,
“Territory” shall mean Seminole, Lake, Volusia,
Flagler, and Orange Counties, all in the State of
Florida.
b. The Executive will not at
any time use for his own benefit, copy or make known in any manner
to any person, firm, corporation or other entity the contents of
any agreements (including this Agreement), memoranda,
correspondence, writings, drawings, reports, charts, or other
media, of or related to information, data, methods, systems,
processes, concepts or technologies, used or developed by the
Executive and/or the Corporation, including, without limitation,
any and all trade secrets (as defined under Florida law),
proprietary information or other confidential information acquired
by Executive in connection with the Executive’s employment
with the Corporation. The Executive understands and agrees that the
lists of existing or prospective customers, vendors, and
contractors of the Corporation, as such may exist from time to
time, and information concerning such customers, vendors, and
contractors are valuable, special and unique assets of the
Corporation’s business which are entitled to protection under
the provisions of this Paragraph 8.
c. If any of the covenants in
this Paragraph 8 should be found unreasonable by a court of
competent jurisdiction, a lesser restriction shall be enforced
against the Executive. The provisions of this Paragraph 8 are
severable and if any one or more provisions should be determined by
a court of competent jurisdiction to be invalid or
otherw
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