EXHIBIT 10.1
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (this "Agreement"), dated as of June 25, 2004
(the "Effective Date"), is entered into by and among Empire Financial Holding
Company, a Florida corporation (the "Company"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇").
WHEREAS, ▇▇▇▇▇ was a co-founder of the Company and has been a director,
officer and employee of the Company since from its creation;
WHEREAS, the Company and ▇▇▇▇▇ have entered into that certain
employment agreement, dated March 22, 2000 (the "Employment Agreement"); and
WHEREAS, the parties wish to provide for the severance of ▇▇▇▇▇ from
the Company, upon the terms and provisions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
respective representations, warranties, covenants, agreements and conditions
hereinafter set forth, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. RESIGNATION.
Simultaneously with the execution of this Agreement, ▇▇▇▇▇ will resign
as an officer, director and employee of the Company and each of its
subsidiaries.
2. EMPLOYMENT AGREEMENT.
As of the Effective Date, the Company and ▇▇▇▇▇ agree that the
Employment Agreement shall be terminated in all respects, with the exception of
the provisions of Article 6: "Restrictive Covenants", which Article shall
survive the execution of this Agreement in accordance with its respective terms,
except for Section 6.3 which shall survive the execution of this Agreement, but
shall be modified and amended as follows:
6.3 NON-COMPETITION. While employed by the Company and for a
period of two years thereafter, the Executive shall not, directly or
indirectly, whether as principal, agent, shareholder (except as set
forth below) or in any other capacity, whether or not compensation is
received, engage or participate in any activity for, be employed by,
assist or have an equity interest in (other than as a passive investor
of no more than five percent with no involvement in the management or
conduct of the affairs of business of such entity) any business or
other entity which directly or indirectly is engaged or plans to engage
in the State of Florida in a business or operation similar to the
securities business and operations conducted by the Company and its
wholly-owned subsidiaries as of June 22, 2004 (other than investment
banking services), including, without limitation (a) retail discount
and full service brokerage operations, (b) the provision of services to
independent registered representatives, (c) retail and wholesale order
execution and market making services and (d) registered
investment advisory services. The Executive acknowledges that the
Company: /s/DAW ▇▇▇▇▇: /s/KMG
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provisions of this Section 6.3 are reasonably necessary for the
purposes of protecting the Company's and its subsidiaries' legitimate
business interest and goodwill. It is accordingly the intention of the
parties that this Section 6.3 be enforceable to the fullest extent
permissible under applicable law. The Executive agrees, however, that
in the event any restriction or limitation of this Section 6.3, or any
portion thereof, shall be declared or held to be invalid or
unenforceable by a court of competent jurisdiction, then such
restriction or limitation shall be deemed amended to substitute or
modify it, as either or both may be necessary, to render it valid and
enforceable.
3. SEVERANCE PAYMENTS.
The Company agrees to make severance payment to ▇▇▇▇▇ in the amount of
$10,000 per month, subject to any applicable tax withholding, for 36 months
commencing on August 1, 2004. In the event that the Company (a) is more than 15
days late with respect to any payment, (b) sells all or substantially all of its
assets, (c) merges into another entity and is not surviving the entity, (d)
issues shares of its common stock or other securities convertible into shares of
its common stock that resulted in the number of shares that ▇▇▇▇▇ beneficially
owns as of the date of this Agreement constituting less than 30% of the
Company's then outstanding common stock after giving effect to the conversion or
exercise of all outstanding securities of the Company, then upon the occurrence
of any such event the entire remaining severance payments shall automatically
become due and payable with interest at eight percent per annum from the date of
such event. The Company agrees that it will not exercise any right of set-off
against the payments required to be made pursuant to the provisions of this
Section.
4. REGULATORY FILINGS.
The Company shall promptly cause Empire Financial Group, Inc. to file a
Form U-5 with the National Association of Securities Dealers, Inc.("NASD") to
reflect that ▇▇▇▇▇ voluntarily resigned from the Company and each of its
subsidiaries on the Effective Date and any other regulatory filings required to
be made in connection with ▇▇▇▇▇'▇ voluntary resignation from the Company and
its subsidiaries. The Company agrees that prior to filing any amendment to such
Form U-5 and any of such regulatory filings it will provide ▇▇▇▇▇ the
opportunity to review and discuss such amendment.
5. REPRESENTATIONS AND WARRANTIES.
5.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to ▇▇▇▇▇ as follows:
(a) CORPORATE POWER. The Company has the requisite
corporate power and authority to enter into this
Agreement and consummate the transactions
contemplated hereby.
(b) AUTHORITY. This Agreement and the transactions
contemplated hereby have been authorized by all
necessary corporate action of the Company and is a
valid and binding agreement of the Company
enforceable against the Company in accordance with
its terms.
Company: /s/DAW ▇▇▇▇▇: /s/KMG
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(c) NO DEFAULTS. The execution, delivery and performance
of this Agreement and the consummation of the
transactions contemplated hereby, do not and will not
constitute a breach or violation of, or a default
under, the Company's articles of incorporation or
bylaws.
5.2. REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇. ▇▇▇▇▇ represents and
warrants to the Company that (a) this Agreement is a legal, valid and binding
obligation of ▇▇▇▇▇, enforceable against ▇▇▇▇▇ in accordance with its terms and
(b) ▇▇▇▇▇ has returned to the Company, previously or simultaneously with the
execution of this Agreement, all books, documents and records of the Company
(whether copies or originals and whether on paper or stored electronically,
including tape recordings or any conversations involving any employee of the
Company) that are, directly and indirectly, in his possession, custody or
control. Notwithstanding the foregoing, ▇▇▇▇▇ shall have the right to retain
copies of any minutes or resolutions adopted by the board of directors or any
committee thereof prior to the Effective Date, copies of his Company employee
file and other documents or files approved by the President of the Company.
▇▇▇▇▇ acknowledges and agrees that copies of any of the minutes, files or
documents retained by ▇▇▇▇▇ pursuant to the provisions of the immediately
proceeding sentence shall continue to be governed by the non-disclosure
provisions contained in 6.1(a) of the Employment Agreement, other than pursuant
to court order or subpoena compelling such disclosure. Should ▇▇▇▇▇ or ▇▇▇▇▇'▇
representatives receive any such subpoena or court order compelling disclosure,
▇▇▇▇▇ shall immediately notify the Company so that it may have the opportunity
to interpose an objection.
6. MUTUAL RELEASE.
(a) The Company, on behalf of itself and its officers, directors and
employees solely in their capacity as officers, directors and employees of the
Company and on behalf of the Company's subsidiaries, successors and assigns
(collectively, the "Company Releasing Parties") do hereby irrevocably remise,
release and forever discharge and shall hold harmless and indemnify (if any
other person or entity files a claim by, on behalf of, or through any Company
Releasing Party), ▇▇▇▇▇ from any and all costs (including costs of suit,
attorney's fees and expenses), expenses, monies due or owing, suits,
arbitrations, debts, obligations, claims, damages, demands, liabilities, actions
and causes of action of every kind and character, known or unknown, by the
Company Releasing Parties as of the date hereof, whether contingent or absolute,
which any Company Releasing Party has had or now has against ▇▇▇▇▇, accruing by
reason of any cause, matter or thing whatsoever from the beginning of time to
the date hereof, arising out of or related to ▇▇▇▇▇'▇ employment by the Company
and any of its subsidiaries or to ▇▇▇▇▇ serving as an officer or director of the
Company or any of its subsidiaries.
(b) ▇▇▇▇▇, on behalf of himself individually and in any capacity,
including, without limitation, as an officer, director, or employee of the
Company or any of its subsidiaries and his affiliates, successors, and assigns
(collectively, the "▇▇▇▇▇ Releasing Parties") does hereby irrevocably remise,
release, acquit and forever discharge and shall hold harmless and indemnify (if
any other person or entity makes a claim by, on behalf of, or through any ▇▇▇▇▇
Releasing Party), the Company and its officers, directors, shareholders,
Company: /s/DAW ▇▇▇▇▇: /s/KMG
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subsidiaries, agents, legal counsel, accountants, service providers, employees,
successors and assigns (collectively, the "Company Released Parties") from any
and all costs (including costs of suit, attorney's fees and expenses), expenses,
monies due or owing (except for amounts held by the Company Released Parties in
the ordinary course of business in brokerage accounts), suits, arbitrations,
debts, obligations, claims, damages, demands, liabilities, actions and causes of
action of every kind and character, known or unknown, by ▇▇▇▇▇ as of the date
hereof, whether contingent or absolute, which any ▇▇▇▇▇ Releasing Party has had
or now has against any Company Released Party accruing by reason of any cause,
matter or thing whatsoever from the beginning of time to the date hereof arising
out of or related to ▇▇▇▇▇'▇ employment by the Company and any of its
subsidiaries or to ▇▇▇▇▇ serving as an officer or director of the Company or any
of its subsidiaries.
(c) Claims released pursuant to the releases in this Section 6 include
claims based on or arising out of fraud, negligence, gross negligence, libel,
slander or other tortious act on the part of any person or entity being released
pursuant hereto.
(d) It is the specific intent and purpose of this instrument to be a
full, final and complete, remise, release, discharge, compromise, settlement,
accord and satisfaction of any and all claims or causes of action of every kind
and character, whether known or unknown, and whether specifically mentioned or
not, which may exist or might be claimed to exist from the beginning of time to
the effective date hereof relating to ▇▇▇▇▇'▇ employment by the Company and any
of its subsidiaries or to ▇▇▇▇▇ serving as an officer or director of the Company
or any of its subsidiaries.
(e) Each of the parties hereto acknowledges that it may hereafter
discover facts different from, or in addition to, those which it or he, as the
case may be, now believes to be true with respect to any and all of the
liabilities, claims, causes of action, damages, costs or demands herein
released.
(f) Each of the parties hereto acknowledges that it is fully informed
and aware of its or his, as the case may be, rights to receive independent legal
advice regarding the advisability of entering into this release and has received
independent legal advice from its or his, as the case may be, attorney with
regard to the advisability of executing this release. Each of the parties hereto
further acknowledges that it or he, as the case may be, has made an
investigation of the facts pertaining to this release as it or he, as the case
may be, has deemed necessary, and, further, acknowledges that it or his, as the
case may be, has not relied upon any statement or representation of others.
(g) Notwithstanding anything in this Section to the contrary, neither
party shall release the other party for any obligation of the other party
contained in this Agreement or in the provisions of the Employment Agreement
referred to in Section 2.
7. REGISTRATION RIGHTS.
(a) Upon the written request of ▇▇▇▇▇ requesting that the Company
effect pursuant to this Section the registration of Registrable Securities (as
herein after defined) beneficially owned by ▇▇▇▇▇ under the Securities Act of
1933, as amended (the "Securities Act"), the Company shall within 30 days after
receiving such written request file a registration statement covering the
Company: /s/DAW ▇▇▇▇▇: /s/KMG
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sale of such Registrable Securities and, as expeditiously as reasonably
possible, use its commercially reasonable efforts to effect the registration
under the Securities Act of such Registrable Securities. The term "Registrable
Securities" means (i) shares of Common Stock, $.01 par value, of the Company,
now owned or hereafter acquired by ▇▇▇▇▇, including, without limitation, through
the exercise of stock options or warrants or the conversion of preferred stock
or indebtedness, or (ii) any securities of the Company or securities of any
successor corporation issued in exchange for, or in replacement of, such Common
Stock. If ▇▇▇▇▇ proposes to distribute the Registrable Securities in an
underwritten offering, then the Company shall have the right to select the lead
book running underwriter, and ▇▇▇▇▇ shall have the right to select one
co-managing underwriter reasonably acceptable to the Company. The Company shall
not be obligated to take any action to effect any registration requested by
▇▇▇▇▇ pursuant to this Agreement (i) before December 31, 2004; (ii) after the
Company has effected two registrations at the request of ▇▇▇▇▇ pursuant to this
Section 7(a) or (iii) after December 31, 2008.
(b) If the Company, at any time prior to December 31, 2008, proposes to
register any of its equity securities under the Securities Act (by reason of
registration rights granted to any person, other than ▇▇▇▇▇, or otherwise) on
any form other than Form S-4 or Form S-8 (or any similar form then in effect),
whether or not for sale for its own account, and if the registration form
proposed to be used may be used for the registration of the Registrable
Securities, the Company will in each such case give prompt written notice (and
in any event at least 20 days' prior written notice prior to effectiveness of
such registration statement) to ▇▇▇▇▇ of its intention to do so, such notice to
specify the securities to be registered, the proposed amounts thereof and the
date not less than 15 days thereafter by which the Company must receive ▇▇▇▇▇'▇
written indication of whether he will include any Registrable Securities owned
by ▇▇▇▇▇ in such registration statement and advising ▇▇▇▇▇ of its rights under
this Section 7(b). Upon the written request of ▇▇▇▇▇ made on or before the date
specified in such notice (which request shall specify the number of shares of
Registrable Securities intended to be disposed of by ▇▇▇▇▇), the Company will
use its commercially reasonable efforts to cause all such Registrable Securities
which ▇▇▇▇▇ shall have so requested the registration thereof, to be registered
under the Securities Act (with the securities that the Company at the time
proposes to register), to the extent requisite to permit the sale or other
disposition (in accordance with the intended methods thereof as aforesaid) by
▇▇▇▇▇. No registration effected pursuant to a request or requests referred to in
this Section 7(b) shall be deemed to have been effected pursuant to Section
7(a). Notwithstanding anything to the contrary in this Section 7(b), the Company
shall have the right to discontinue any registration under this Section 7(b) at
any time prior to the effective date of such registration if the registration of
other securities giving rise to such registration under this Section 7(b) is
discontinued; but no such discontinuation shall preclude an immediate or
subsequent request for registration pursuant to Section 7(a).
(c) The Company may suspend the effectiveness of any such registration
statement in the event, and for such period of time as, such a suspension is
required by the rules and regulations of the Securities and Exchange Commission
("SEC") as applied to the Company, and may suspend use of the prospectus
included in the Registration Statement if such prospectus ceases to meet the
requirements of Section 10 of the Securities Act. The Company will immediately
advise ▇▇▇▇▇ of any such suspension, and will use its commercially reasonable
efforts to cause such suspension to terminate at the earliest possible date.
▇▇▇▇▇ agrees that following receipt of any such notice, and until such
Company: /s/DAW ▇▇▇▇▇: /s/KMG
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suspension is terminated, ▇▇▇▇▇ will not make use of the suspended prospectus
and will make no sales requiring delivery of such prospectus.
(d) Whenever required under this Section to effect the registration of
any Registrable Securities, the Company shall, as expeditiously as reasonably
possible:
(i) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its commercially
reasonable efforts to cause such registration to become effective as
provided in Section 7(a) above, and keep such registration statement
effective for at least nine months.
(ii) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to
comply with the provisions of the Act with respect to the disposition
of all securities covered by such registration statement and notify the
holders of the filing and effectiveness of such Registration Statement
and any amendments or supplements.
(iii) Furnish to ▇▇▇▇▇ such numbers of copies of a current
prospectus conforming with the requirements of the Act, copies of the
registration statement, any amendment or supplement thereto and any
documents incorporated by reference therein and such other documents as
▇▇▇▇▇ may reasonably require in order to facilitate the disposition of
Registrable Securities owned by ▇▇▇▇▇.
(iv) Use its commercially reasonable efforts to register and
qualify the securities covered by such registration statement under
such securities or "Blue Sky" laws of such jurisdictions in the United
States as shall be reasonably requested by ▇▇▇▇▇ and keep such
registration or qualification effective as long as required to permit
sale of Registrable Securities thereunder, provided that the Company
shall not be required in connection therewith or as a condition thereto
to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions.
(v) Notify ▇▇▇▇▇ immediately of the happening of any event as
a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing, and use its commercially reasonable
efforts to promptly update and/or correct such prospectus.
(vi) Furnish to ▇▇▇▇▇ included therein an opinion of counsel
to the Company covering compliance of the registration statement, as to
form, with the requirements of the Act and the rules thereunder, and
covering the matters covered in the opinion filed as an exhibit to the
registration statement.
(vii) List the Common Stock covered by such registration
statement on any securities exchange or national market in the United
States on which the Common Stock of the Company is then listed.
Company: /s/DAW ▇▇▇▇▇: /s/KMG
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(e) In the case of a registration under Section 7(b), if the Company or
holders of securities initially requesting or demanding such registration have
determined to enter into an underwriting agreement in connection therewith, all
Registrable Securities to be included in such registration shall be subject to
such underwriting agreement and ▇▇▇▇▇ may not participate in such registration
unless ▇▇▇▇▇ agrees to sell ▇▇▇▇▇'▇ Registrable Securities on the basis provided
in the underwriting arrangements approved by such holders and completes and/or
executes all questionnaires, indemnities, underwriting agreements and other
reasonable documents which must be executed under the terms of such underwriting
arrangements.
(f) In the case of a registration pursuant to Section 7(a), if the lead
book running underwriter and any co-managing underwriter of such offering shall
advise the Company and ▇▇▇▇▇ in writing that the total amount of securities
requested to be included therein exceeds the amount of securities which can be
sold in such offering or the amount of securities which can be sold in such
offering at the price at which securities could be sold without such inclusion,
the Company shall include in such registration: (i) first, all Registrable
Securities of ▇▇▇▇▇, (ii) second, all shares of Common Stock proposed to be sold
by the Company and (iii) third, according to such priorities as the Company may
agree with the holders of other securities seeking to participate in any
registration.
(g) In the case of a registration pursuant to Section 7(b), if the
managing underwriter of such offering shall advise the Company and ▇▇▇▇▇ in
writing that the total amount of securities requested to be included therein
exceeds the amount of securities which can be sold in such offering or the
amount of securities which can be sold in such offering at the price at which
securities could be sold without such inclusion, the Company shall include in
such registration: (i) first, all shares of Common Stock of the Company or the
person exercising any contractual right to cause the preparation of the
registration statement by the Company, as the case may be, (ii) second, all
shares of Common Stock of the Company, in the event that the Company caused the
preparation of the registration statement pursuant to a contractual obligation,
and (iii) third, all shares of Registrable Securities proposed to be sold by
▇▇▇▇▇ and the holders of other securities of the Company seeking to participate
in any registration allocated PRO RATA among such sellers, including ▇▇▇▇▇, on
the basis of the total number of shares of Common Stock requested to be included
therein by such sellers.
(h) If a registration under this Agreement shall be in connection with
an underwritten public offering, ▇▇▇▇▇ shall be deemed to have agreed by
acquisition of the Registrable Securities not to effect any public sale or
distribution (including the filing of a Form 144 indicating an intention to sell
or making any sale pursuant to Rule 144 under the Securities Act) of any
Registrable Securities and not to effect any such public sale or distribution of
any other equity security of the Company or of any security convertible into or
exchangeable or exercisable for any equity security of the Company (other than
as part of such underwritten public offering) within 30 days before or 120 days
after the effective date of such registration statement.
(i) Notwithstanding anything to the contrary contained in this
Agreement, ▇▇▇▇▇ shall not have any right to request that the Company effect
pursuant to Section 7(a) the registration of any Registrable Securities under
the Securities Act or to request that any Registrable Securities owned by ▇▇▇▇▇
Company: /s/DAW ▇▇▇▇▇: /s/KMG
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be included by the Company in any registration pursuant to Section 7(b), to the
extent that ▇▇▇▇▇ has the right, by complying with the provisions of Rule 144
promulgated under the Securities Act (or any similar rule or regulation
promulgated by the Commission), to sell all such Registrable Securities to be
included in such registration. The Company agrees that to the extent ▇▇▇▇▇
proposes to sell or dispose of any Registrable Securities relying on the
exemption contained in Rule 144 promulgated under the Securities Act (or any
similar rule or regulation promulgated by the Commission), the Company will
obtain, at its expense, an opinion of its legal counsel relating to such
proposed sale or other disposition.
(j) In connection with any registration pursuant to this Agreement, the
Company will, whether or not any registration pursuant to this Agreement shall
become effective, from time to time promptly upon receipt of bills or invoices
relating thereto, pay all expenses, other than Selling Expenses (as hereinafter
defined), incident to its performance of or compliance with this Agreement (the
"Company Registration Expenses"), including without limitation all registration,
filing and NASD fees, fees and expenses of compliance with securities or blue
sky laws, word processing, duplicating and printing expenses, messenger and
delivery expenses, fees and disbursements of counsel for the Company and the
Company's independent public accountants and other persons retained by the
Company. All expenses, other than Company Registration Expenses, including
without limitation, fees and expenses of the ▇▇▇▇▇'▇ counsel, financial advisors
and accountants, fees and expenses related to underwriting discounts and
commissions applicable to the Registrable Securities to be sold by ▇▇▇▇▇, shall
be paid by ▇▇▇▇▇ (collectively, "Selling Expenses").
(k) For purposes of this Section, Registrable Securities beneficially
owned by ▇▇▇▇▇ shall include any Registrable Securities owned by any trust,
partnership, corporation or other entity directly or indirectly controlled by
▇▇▇▇▇.
8. INDEMNIFICATION.
(a) Pursuant to the terms of the articles of incorporation and bylaws
of each of the Company and its subsidiaries, each of the Company and its
subsidiaries have agreed to indemnify any of its present and former officer,
director, agent or employee to the fullest extent permitted by law. The Company
and ▇▇▇▇▇ desire to set forth in this Agreement the terms and provisions
pursuant to which ▇▇▇▇▇ will be indemnified by the Company and each of its
subsidiaries. The Company, on behalf of itself and its subsidiaries, shall
indemnify ▇▇▇▇▇ in the event that ▇▇▇▇▇ is or becomes a party to, or other
participant in, or is threatened to be made a party to, or other participant in,
any Proceeding against any and all Expenses. Such payment of Expenses shall be
made by the Company as soon as practicable, but in any event no later than 30
days after written demand by ▇▇▇▇▇ therefor is presented to the Company
accompanied by proper receipts or other documentation evidencing or supporting
the payment of such Expense by ▇▇▇▇▇ or with respect to a judgment or award
against ▇▇▇▇▇, such earlier time as a court or arbitration tribunal may have
ordered. In consideration of the Company's payment or reimbursement of such
Expenses, ▇▇▇▇▇ agrees that he shall promptly reimburse the Company for an
amount equal to all such Expenses paid or reimbursed by the Company relating to
such Proceeding, but only if, when and to the extent that a final decision as
contemplated by Section 8(j) by a court having jurisdiction determines that such
indemnification by the Company relating to any Proceeding was not lawful.
Company: /s/DAW ▇▇▇▇▇: /s/KMG
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(b) Notwithstanding any other provision of this Agreement, to the
extent that ▇▇▇▇▇ has been successful on the merits or otherwise, including,
without limitation, the dismissal of any Proceeding without prejudice, in
defense of any Proceeding or in the defense of any claim, issue or matter
therein, ▇▇▇▇▇ shall be indemnified against all Expenses incurred by ▇▇▇▇▇ in
connection therewith and the Company shall not be entitled to be reimbursed by
▇▇▇▇▇ for such Expenses.
(c) The Company and ▇▇▇▇▇ acknowledge and agree that neither the
settlement by the Company of any claims, issue or matter against ▇▇▇▇▇ in any
Proceeding nor the advancement of Expenses by the Company on ▇▇▇▇▇'▇ behalf
shall, of itself, create a presumption that ▇▇▇▇▇ was entitled to
indemnification by the Company nor shall the termination of any Proceeding by
judgment, order, settlement or conviction or upon the plea of NOLO contendere or
its equivalent create a presumption that ▇▇▇▇▇ was not entitled to
indemnification by the Company.
(d) ▇▇▇▇▇ shall, as a condition precedent to ▇▇▇▇▇'▇ right to be
indemnified, give the Company notice in writing as soon as practicable of any
Proceeding for which indemnification of ▇▇▇▇▇ by the Company will or could be
sought; provided, however, that the failure or delay of ▇▇▇▇▇ to provide timely
notice shall not effect ▇▇▇▇▇'▇ right to indemnification by the Company, except
to the extent the rights of ▇▇▇▇▇ or the Company are actually prejudiced by such
failure or delay. The Company acknowledges and agrees that ▇▇▇▇▇ has advised the
Company of the Proceedings related to the trading of mutual fund shares by the
Company on behalf of its customers that may be commenced against ▇▇▇▇▇ by the
U.S. Securities and Exchange Commission and the Attorney General of the State of
New York and the Proceeding currently pending in Florida state court brought by
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ against the Company, ▇▇▇▇▇ and certain officers and directors
of the Company and the Company agrees to pay or reimburse ▇▇▇▇▇'▇ Expenses with
respect to such Proceedings in accordance with the terms of this Agreement.
(e) Each of ▇▇▇▇▇ and the Company shall give the other such information
and cooperation as the other may reasonably request or require, and as shall be
within the other's power, in connection with the investigation or defense of, or
participation in, any Proceeding, including, without limitation, providing the
other with reasonable access to any information, documents, records, and/or
copies thereof that may be in the possession, custody or control of the other
that is relevant to any Proceeding.
(f) The Company shall be entitled to assume the defense of any
Proceeding with counsel approved by ▇▇▇▇▇, which approval shall not be
unreasonably withheld or delayed, upon the delivery to ▇▇▇▇▇ of written notice
of its election so to do (whether or not ▇▇▇▇▇ has previously retained counsel
with respect to such Proceeding). After delivery of such notice, approval of
such counsel by ▇▇▇▇▇ and the retention of such counsel by the Company, the
Company will not be liable to ▇▇▇▇▇ under this Agreement for any fees of counsel
subsequently incurred by ▇▇▇▇▇ with respect to the same Proceeding; PROVIDED
that ▇▇▇▇▇ shall have the right to employ ▇▇▇▇▇'▇ counsel as co-counsel in any
such Proceeding at ▇▇▇▇▇'▇ expense. After the Company assumes the defense of any
Proceeding, the Company shall have the right to conduct such defense as it sees
fit in its sole discretion, provided that the Company shall have the right to
settle any claim against ▇▇▇▇▇, only if such settlement provides for a full
release of ▇▇▇▇▇ with
Company: /s/DAW ▇▇▇▇▇: /s/KMG
------- -------
9
respect to the matters covered by such Proceeding. Until the Company assumes the
defense of such Proceeding, ▇▇▇▇▇ (i) shall assume the defense of such
Proceeding with counsel approved by the Company, which approval shall not be
unreasonably withheld or delayed, (ii) shall be entitled to the payment or
reimbursement of all Expenses as provided in this Agreement and (iii) shall have
the right to conduct such defense as he sees fit in his sole discretion,
provided that ▇▇▇▇▇ shall have the right to settle any claim against ▇▇▇▇▇ only
with the approval of the Company, which approval shall not be unreasonably
withheld or delayed, and only if such settlement provides for a full release of
the Company with respect to the matters covered by such Proceeding.
(g) The Company shall not be liable under this Agreement to make any
payment in connection with any Proceeding against ▇▇▇▇▇ to the extent ▇▇▇▇▇ has
otherwise actually received payment (under any insurance policy or otherwise) of
the amounts otherwise indemnifiable by the Company to ▇▇▇▇▇.
(h) Both the Company and ▇▇▇▇▇ acknowledge that in certain instances,
federal law or applicable public policy may prohibit the Company from
indemnifying its directors, officers, or employees. ▇▇▇▇▇ understands and
acknowledges that the Company may be required in the future to undertake with
the Securities and Exchange Commission to submit the question of ▇▇▇▇▇'▇ right
to indemnification to a court in certain circumstances for a determination of
the Company's right under public policy to indemnify ▇▇▇▇▇; provided, however,
that the Company shall continue to comply with its indemnification obligations
to ▇▇▇▇▇ contained in this Section.
(i) The Company shall, from time to time, make the good faith
determination whether or not it is practicable for the Company to obtain and
maintain a policy or policies of insurance providing the officers and directors
of the Company with coverage for losses from wrongful acts. Among other
considerations, the Company will weigh the costs of obtaining such insurance
coverage against the protection afforded by such coverage. In all policies of
director and officer liability or other insurance, ▇▇▇▇▇ shall have the same
rights and benefits as are accorded to the Company's directors and officers.
Notwithstanding the foregoing, the Company shall have no obligation to obtain or
maintain such insurance if the Company determines in good faith that such
insurance is not reasonably available, if the premium costs for such insurance
are disproportionate to the amount of coverage proved, if the coverage provided
by such insurance is limited by exclusions so as to provide an insufficient
benefit, or if the Company does not have the financial resources to pay for such
insurance.
(j) Notwithstanding anything to the contrary contained in this
Agreement or otherwise:
(i) ▇▇▇▇▇ agrees that he shall promptly reimburse the Company
for an amount equal to all Expenses paid or reimbursed by the Company
relating to any Proceeding, if a final decision by a court having
jurisdiction shall have determined that such indemnification is not
lawful (but only after either the final adjudication of the claims,
issues or matter against ▇▇▇▇▇ relating to such Proceeding has occurred
or after such claims, issue or matter against ▇▇▇▇▇ has been settled
and after payment of Expenses has been made or reimbursed to ▇▇▇▇▇ in
connection with such Proceeding) and, thereafter, the Company shall not
Company: /s/DAW ▇▇▇▇▇: /s/KMG
------- -------
10
be required to otherwise indemnify or advance Expenses to ▇▇▇▇▇ with
respect to such Proceeding;
(ii) The Company shall have no obligation to indemnify or
advance Expenses to ▇▇▇▇▇ with respect to Proceedings initiated or
brought voluntarily by ▇▇▇▇▇ and not by way of defense; or
(iii) The Company shall have no obligation to indemnify or
advance Expenses to ▇▇▇▇▇ with respect to any Proceeding for an
accounting of profits arising from the purchase and sale by ▇▇▇▇▇ of
securities of the Company in violation of Section 16(b) of the
Securities Exchange Act of 1934, as amended, the rules and regulations
promulgated thereunder, or any similar provisions of any federal, state
or local statute.
(k) As used in this Section, the following terms and phrases shall have
the meanings set forth below:
(i) "EXPENSES" shall include any and all expenses (including
reasonable attorneys' fees) costs, obligations, judgments, fines,
interest, penalties and amounts paid in settlement (if such settlement
is approved in advance by the Company, which approval shall not be
unreasonably withheld or delayed) reasonably incurred by ▇▇▇▇▇ in
connection with investigating, defending, or participating in
(including on appeal) a Proceeding.
(ii) "PROCEEDING" shall mean any threatened, pending or
completed action, suit, proceeding, arbitration or alternative dispute
resolution mechanism, or any hearing, inquiry or investigation that
▇▇▇▇▇ in good faith believes might lead to the institution of any such
action, suit, proceeding, arbitration or alternative dispute resolution
mechanism, whether brought by or in the right of the Company or any of
its subsidiaries or by a third party, and whether civil, criminal,
administrative, investigative or other, in which ▇▇▇▇▇ was or is or
becomes a party to or other participant in, or is threatened to be made
a party to or other participant by reason of (or arising in part out
of) any event or occurrence related to the fact that ▇▇▇▇▇ is or was a
director, officer or employee of the Company or any of its
subsidiaries, or is or was serving at the request of the Company or any
of its subsidiaries as a director, officer or employee of another
corporation, partnership, joint venture, trust or other enterprise, or
by reason of any action or inaction on the part of ▇▇▇▇▇ while serving
in such capacity.
9. NON-DISPARGEMENT.
▇▇▇▇▇ hereby agrees not to make (including orally, in writing or
utilizing the Internet) any disparaging or negative comment to any other person
or entity regarding (a) the Company Released Parties or their legal counsel, (b)
his work conditions or (c) the circumstances surrounding this Agreement or his
separation from the Company. The Company hereby agrees not to make (including
orally, in writing or utilizing the Internet) any disparaging or negative
comment to any other person or entity regarding (a) ▇▇▇▇▇ or his legal counsel,
(b) the
Company: /s/DAW ▇▇▇▇▇: /s/KMG
------- -------
11
circumstances surrounding this Agreement or ▇▇▇▇▇'▇ separation from the Company,
or (c) regarding the quality or nature of ▇▇▇▇▇'▇ performance of services for
the Company.
10. MISCELLANEOUS.
10.1. NO ASSIGNMENT. Except as provided herein, the parties hereby
represent and warrant to each other that they have not made any sale,
assignment, transfer, conveyance or other disposition of any of their actual or
potential claims, actions, cross-claims, counterclaims, defenses and causes of
action against each other and that they are authorized to execute, deliver and
perform under this Agreement.
10.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties contained herein or made in writing by any party in connection
herewith will survive the execution and delivery of this Agreement indefinitely.
10.3. TIME IS OF THE ESSENCE. Time is of the essence.
10.4. ARBITRATION; VENUE. Except with respect to an action for specific
performance or for any injunctive or other equitable relief sought by any party
and except with respect to the enforcement of any obligation of the Company or
▇▇▇▇▇ contained in Section 8, any controversy between the parties regarding this
Agreement and any claims arising out of this Agreement or its breach shall be
required to be submitted to binding arbitration. Either party shall have the
right to commence arbitration proceedings. The arbitration proceedings shall be
conducted by three arbitrators pursuant to the arbitration rules of the NASD.
The arbitration shall be conducted in Orlando, Florida and the arbitrators shall
have the right to award actual damages, but shall not have the right to award
attorneys' fees and costs, punitive, special, exemplary or consequential damages
against any party. Any arbitral award resulting from such proceeding or
settlement in connection therewith shall be held in strict confidence by the
parties hereto, unless the disclosure of such award or settlement is required by
law. Sole and exclusive venue for enforcement of any arbitral award, for any
injunctive or other equitable relief and for any proceedings between ▇▇▇▇▇ and
the Company arising out of Section 8 shall be in the trial courts in and for
Seminole County, Florida.
10.5. WAIVER. The failure of any party to declare any default
immediately upon occurrence thereof, or delay in taking any action in connection
therewith, shall not waive such default, but the parties hereto shall have the
right to declare any such default at any time. No waiver by any party of a
default by another party shall be implied, and no express waiver by any party
shall affect any default other than the default specified in such waiver and
then only for the time and extension stated therein. No waiver of any term,
provision, condition or covenant of this Agreement by any party shall be deemed
to imply or constitute a further waiver by any party of any other term,
provision, condition or covenant of this Agreement. Notwithstanding any
applicable law, the terms of this Section and the other provisions of this
Agreement may not be waived by any prior, contemporaneous, concurrent, or
subsequent course of dealing, course of conduct or trade practice.
10.6. ARMS-LENGTH AGREEMENT. The parties hereto mutually acknowledge
and agree that this Agreement and the matters memorialized herein have been
fully negotiated with the assistance of counsel at arms-length. The parties
Company: /s/DAW ▇▇▇▇▇: /s/KMG
------- -------
12
further stipulate and agree that (a) the choice of law, venue and jurisdiction
clauses contained in this Agreement are reasonable, (b) neither party had
overwhelming bargaining power and (c) all parties were represented by counsel of
their choice and were fully advised concerning this Agreement.
10.7. ENTIRE AGREEMENT. The parties are not relying upon any prior,
contemporaneous, or concurrent oral, tacit, or written representation,
statement, letter agreement, understanding, side-deal, inducement, warranty, or
utterance as an inducement to enter into this Agreement. This written Agreement
constitutes the entire understanding of the parties with respect to the
disposition of the matters contained herein and all oral, tacit, or written
representations, side-deals, conversations, inducements, understandings,
warranties, utterances or agreements made prior to, contemporaneously with,
and/or concurrently with the execution and delivery of this Agreement are merged
into this written document and are of no further force and effect.
10.8. MODIFICATIONS. No change, modification or waiver of any provision
of this Agreement shall be valid or binding unless it is in writing and signed
by all parties to this Agreement. Notwithstanding any applicable law, the terms
of this Section and all other provisions of this Agreement may not be waived by
any prior, contemporaneous, concurrent, or subsequent course of dealing, course
of conduct, trade practice, or attempted modification.
10.9. SUCCESSORS AND PARTIES IN INTEREST. This Agreement is binding
upon all parties and, as applicable, its or his officers, directors,
shareholders, affiliates, parent companies, subsidiaries, related entities,
employees, representatives, legal representatives, assigns, transferees,
predecessors, heirs, partners, principals, attorneys and agents.
10.10. CONSTRUCTION. This Agreement was negotiated and prepared jointly
by the parties hereto and their respective legal counsel. The provisions of this
Agreement shall be construed according to their fair meaning and neither for nor
against any party hereto irrespective of which party caused such provisions to
be drafted. The headings in this Agreement are only for convenience and cannot
be used in interpretation.
10.11. ATTORNEYS' FEES. In any proceeding to enforce or concerning this
Agreement, neither party be entitled to recover their attorneys' fees and costs
from the other party.
10.12. CHOICE OF LAW. This Agreement shall be construed in accordance
with the laws of the State of Florida, and any dispute arising out of, connected
with, related to, or incidental to the relationship between the parties in
connection with this Agreement, whether arising in tort, contract, equity, or
otherwise, shall be resolved in accordance with the internal laws (as opposed to
the conflicts of laws provisions) and decisions of the State of Florida and, to
the extent applicable, federal law.
10.13. SEVERABILITY. Wherever possible, each portion of this Agreement
shall be interpreted in such a manner as to be valid, effective and enforceable
under the applicable law. If any portion of this Agreement is held to be
invalid, illegal, against public policy, or unethical by a court of competent
jurisdiction or other regulatory or administrative authority, under the terms
hereof, such provision shall be severed therefrom and such invalidity shall not
affect any other portion of this Agreement, the balance of which shall remain
in, and have its intended, full force and effect.
Company: /s/DAW ▇▇▇▇▇: /s/KMG
------- -------
13
10.14. NOTICES. All notices permitted under this Agreement shall be
sent to:
FOR ▇▇▇▇▇: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
WITH A COPY TO: ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
▇▇ ▇▇▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
FOR THE COMPANY: Empire Financial Holding Company
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇., President
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
WITH A COPY TO: ▇▇▇▇▇▇▇▇▇ Traurig, LLP
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
or such other addresses which the parties may designate in writing from time to
time.
10.15. COUNTERPARTS. If the parties deem it expedient, this Agreement
may be executed in counterparts, with each counterpart being of equal dignity.
10.16. FURTHER DOCUMENTS. In the event that further documents are
required or permitted to be executed in order to effectuate the purposes of this
Agreement, then each of the Company and ▇▇▇▇▇ hereby covenant and agree that
they shall execute such documents within three business days of receipt of such
request, together with a copy of the proposed documents.
10.17. MUTUAL SIGNATURE. The parties expressly acknowledge and agree
that this Agreement is not binding on any party unless and until it has been
signed by all parties in the spaces provided below or in counterparts and unless
and until payment has been made as contemplated hereunder.
10.18. LEGALITY. The parties represent, warrant and covenant that they
know of no reason why this Agreement is in violation of any federal, state, or
local statute, regulation, rule or ordinance.
10.19. NON-ADMISSION OF LIABILITY. Neither this Agreement nor anything
contained herein shall constitute or is to be construed as an admission by any
party hereto as evidence of any liability, wrongdoing or unlawful conduct.
Company: /s/DAW ▇▇▇▇▇: /s/KMG
------- -------
14
10.20. JURY TRIAL. AS A MATERIAL INDUCEMENT TO ENTER INTO THIS
AGREEMENT, THE PARTIES HEREBY WAIVE ANY RIGHT TO A JURY TRIAL OR TO HAVE A JURY
PARTICIPATE IN RESOLVING A DISPUTE, WHETHER SOUNDING IN TORT, CONTRACT, EQUITY,
OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT.
Company: /s/DAW ▇▇▇▇▇: /s/KMG
------- -------
15
IN WITNESS WHEREOF, the parties hereto have executed this Severance
Agreement on the date first set forth above.
EMPIRE FINANCIAL HOLDING COMPANY,
a Florida corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇.
---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇.
President
▇▇▇▇▇ ▇. ▇▇▇▇▇, individually
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
STATE OF FLORIDA )
) SS:
COUNTY OF SEMINOLE )
The foregoing instrument was sworn to and acknowledged before me June
25, 2004 by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇., President of EMPIRE FINANCIAL HOLDING
COMPANY, a Florida corporation. He personally appeared before me, is personally
known to me or produced ______personally known______ as identification, and did
take an oath.
Notary: /s/ ▇▇▇▇ ▇▇▇▇▇
---------------
Print Name: ▇▇▇▇ ▇▇▇▇▇
-----------
Notary Public, State of Florida
My commission expires: April 3, ▇▇▇▇
-------------
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ )
) SS:
COUNTY OF SEMINOLE )
The foregoing instrument was sworn to and acknowledged before me June
25, 2004 by ▇▇▇▇▇ ▇. ▇▇▇▇▇, individually. He personally appeared before me, is
personally known to me or produced _____personally known_____ as identification,
and did take an oath.
Notary: /s/ ▇▇▇▇ ▇▇▇▇▇
---------------
Print Name: ▇▇▇▇ ▇▇▇▇▇
-----------
Notary Public, State of Florida
My commission expires: April 3, 2006
-------------
16
For good and valuable consideration, the receipt and adequacy of which
is hereby acknowledged, Empire Financial Group, Inc. and Empire Investment
Advisors, Inc., each jointly and severally, unconditionally guarantee to ▇▇▇▇▇
▇. ▇▇▇▇▇ the punctual payment (without setoff or defense) of all financial
obligations of Empire Financial Holding Company contained in Section 8 of the
foregoing Severance Agreement.
EMPIRE FINANCIAL GROUP, INC.,
a Florida corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇.
---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇.
President
EMPIRE INVESTMENT ADVISORS, INC.,
a Florida corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇.
---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇.
President
Notary: /s/ ▇▇▇▇ ▇▇▇▇▇
---------------
Print Name: ▇▇▇▇ ▇▇▇▇▇
-----------
Notary Public, State of Florida
My commission expires: April 3, 2006
-------------
17