**Exhibit 10.11**

 

**SALARYCONTINUATION AGREEMENT**

 

This Salary Continuation Agreement (the “Agreement”)is made this 19th day of January, 2005, by and among First CapitalBank Holding Corporation, a Florida corporation (the “Company”), First NationalBank of Nassau County, a national bank organized under the laws of the UnitedStates (the “Bank”) (the “Company and the Bank being referred to hereincollectively as the “Employer”) and Timothy S. Ayers (the “Executive”).

 

**WITNESSETH**

 

WHEREAS, the Bank is a national bankorganized under the laws of the United States and operating in Nassau County,Florida;

 

WHEREAS, Executive is the Senior VicePresident of Employer; and

 

WHEREAS, the parties desire to enter intothis agreement to provide for certain severance payments to Executive in theevent there is a Change in Control (as defined herein) and in accordance of theterms and conditions of this Agreement.

 

NOW, THEREFORE, in consideration of Executive’sservices to Employer, the mutual covenants contained herein, and other good andvaluable consideration, the receipt and sufficiency of which are herebyacknowledged, the parties hereto, intending to be legally bound, do herebyagree as follows:

 

1.                                       Definitions

 

a.                                       “**Cause**” shall mean (A) the commission by the Executive ofa willful act (including, without limitation, a dishonest or fraudulent act) ora grossly negligent act, or the willful or grossly negligent omission to act bythe Executive, which is intended to cause, causes, or is reasonably likely tocause material harm to the Employer (including harm to its businessreputation); (B) the indictment of the Executive for the commission orperpetration by the Executive of any felony or any crime involving dishonesty,moral turpitude or fraud; (C) the material breach by the Executive of thisAgreement that, if susceptible of cure, remains uncured 10 days followingwritten notice to the Executive of such breach; (D) the exhibition by theExecutive of a standard of behavior within the scope of his employment that ismaterially disruptive to the orderly conduct of the Employer’s businessoperations (including, without limitation, substance abuse or sexualmisconduct) to a level which, in the Board of Directors’ good faith andreasonable judgment, is materially detrimental to the Employer’s best interest,that, if susceptible of cure, remains uncured 10 days following written noticeto the Executive of such specific inappropriate behavior, (E) the receiptof any form of notice, written or otherwise, that any regulatory agency havingjurisdiction over the Employer intends to institute any form of formal orinformal (e.g., a memorandum of understanding which relates to the Executive’sperformance) regulatory action against the Executive or the Employer if theBoard of Directors in good faith determines that the subject matter of suchaction involves acts or omissions by or under the supervision of the Executiveor that termination of the Executive would advance the Employer’s compliancewith the purpose of the action or would assist the Employer in avoiding orreducing the restrictions or adverse effects to the Employer related to theregulatory action; or 

 

----

 

(F) the failure of the Executive to render the services hereunderin accordance with an appropriate performance standard determined in the solediscretion of the Board of Directors;

 

b.                                      “**Change In Control**” shall mean the occurrence during the Termof any of the following events, unless such event is a result of a Non-ControlTransaction:

 

(i)                  The individualswho, as of the date of this Agreement, are members of the Board of Directors ofthe Company (the “**Incumbent Board**”)cease for any reason to constitute at least 50% of the Board of Directors ofthe Company; provided, however, that if the election, ornomination for election by the Company’s shareholders, of any new director wasapproved in advance by a vote of at least 50% of the Incumbent Board, such newdirector shall, for purposes of this Agreement, be considered as a member ofthe Incumbent Board; provided, further, that no individual shallbe considered a member of the Incumbent Board if such individual initiallyassumed office as a result of either an actual or threatened election contest, orother actual or threatened solicitation of proxies, proxy contest, or consents byor on behalf of any person other than the Board of Directors of the Company,including by reason of any agreement intended to avoid or settle any electioncontest or proxy contest.

 

(ii)               An acquisition(other than directly from the Company) of any voting securities of the Company(the “**Voting Securities**”) by any “**Person**” (as the term “person” is used for purposes of Section 13(d) or14(d) of the Exchange Act) immediately after which such Person has “**Beneficial Ownership**” (within the meaning of Rule 13d-3promulgated under the Exchange Act) of 50% or more of the combined voting powerof the Company’s then outstanding Voting Securities; provided, however,that in determining whether a Change in Control has occurred, Voting Securitieswhich are acquired in a Non-Control Acquisition shall not constitute anacquisition which would cause a Change in Control.

 

(iii)            Consummation of: (i) amerger, consolidation, or reorganization involving the Company; (ii) acomplete liquidation or dissolution of the Company; or (iii) the sale orother disposition of all or substantially all of the assets of the Company toany Person (other than a transfer to a Subsidiary).

 

(iv)           A notice of anapplication is filed with the Office of Comptroller of the Currency (the “**OCC**”) or the Federal Reserve Board or any other bank orthrift regulatory approval (or notice of no disapproval) is granted by theFederal Reserve; the OCC, the Federal Deposit Insurance Corporation, or anyother regulatory authority for permission to acquire control of the Company orany of its banking subsidiaries; provided that if the application is filed inconnection with a transaction which has been approved by the Board, then theChange in Control shall not be deemed to occur until consummation of thetransaction.

 

2

----

 

c.                                       “**Good Reason**” shall mean the occurrence after a Change inControl of any of the events or conditions described in subsections (i) through(viii) hereof:

 

(i)                  a change in theExecutive’s status, title, position or responsibilities (including reportingresponsibilities) which, in the Executive’s reasonable judgment, represents anadverse change from his status, title, position or responsibilities as ineffect at any time within ninety days preceding the date of a Change in Controlor at any time thereafter; the assignment to the Executive of any duties orresponsibilities which, in the Executive’s reasonable judgment, areinconsistent with his status, title, position or responsibilities as in effectat any time within ninety days preceding the date of a Change in Control or atany time thereafter; any removal of the Executive from or failure to reappointor reelect him to any of such offices or positions, except in connection withthe termination of his employment for disability or Cause, as a result of hisdeath, or by the Executive other than for Good Reason, or any other change incondition or circumstances that in the Executive’s reasonable judgment makes itmaterially more difficult for the Executive to early out the duties andresponsibilities of his office than existed at any time within ninety dayspreceding the date of Change in Control or at any time thereafter;

 

(ii)               a reduction in theExecutive’s base salary or any failure to pay the Executive any compensation orbenefits to which he is entitled within 10 days of the date due;

 

(iii)            the Employer’srequiring the Executive to be based at any place outside a 30-mile radius fromthe executive offices occupied by the Executive immediately prior to the Changein Control, except for reasonably required travel on the Employer’s businesswhich is not materially greater than such travel requirements prior to theChange in Control;

 

(iv)           the failure by theEmployer to (A) continue in effect (without reduction in benefit leveland/or reward opportunities) any material compensation or employee benefit planin which the Executive was participating at any time within 90 days precedingthe date of a Change in Control or at any time thereafter, unless such plan isreplaced with a plan that provides substantially equivalent compensation orbenefits to the Executive, or (B) provide the Executive with compensationand benefits, in the aggregate, at least equal (in terms of benefit levelsand/or reward opportunities) to those provided for under each other employeebenefit plan program and practice in which the Executive was participating atany time within 90 days preceding the date of a Change in Control or at anytime thereafter;

 

(v)              the insolvency orthe filing (by any party, including the Company or the Employer) of a petitionfor bankruptcy of the Company or the Employer, which petition is not dismissedwithin 60 days;

 

3

----

 

(vi)           any material breach bythe Employer of any material provision of this Agreement;

 

(vii)        any purported terminationof the Executive’s employment for Cause by the Employer which does not complywith the terms of this Agreement; or

 

(viii)     the failure of the Employerto obtain an agreement, satisfactory to the Executive, from any successor orassign to assume and agree to perform this Agreement, as contemplated in Section 4hereof.

 

Any event or condition described in clause (i) through(viii) above which occurs prior to a Change in Control but which theExecutive reasonably demonstrates (A) was at the request of a third party,or (B) otherwise arose in connection with, or in anticipation of, a Changein Control which actually occurs, shall constitute Good Reason for purposes ofthis Agreement, notwithstanding that it occurred prior to the Change in Control.The Executive’s right to terminate his employment for Good Reason shall not beaffected by his incapacity due to physical or mental illness.

 

d.                                      “**Non-Control Transaction**” shall mean a transaction describedbelow:

 

(i)                  the shareholdersof the Company, immediately before such merger, consolidation orreorganization, own, directly or indirectly, immediately following such merger,consolidation or reorganization, at least 50% of the combined voting power ofthe outstanding voting securities of the corporation resulting from suchmerger, consolidation or reorganization (the “**SurvivingCorporation**”) in substantially the same proportion as theirownership of the Voting Securities immediately before such merger,consolidation or reorganization; and

 

(ii)               immediatelyfollowing such merger, consolidation or reorganization, the number of directorson the board of directors of the Surviving Corporation who were members of theIncumbent Board shall at least equal the number of directors who wereaffiliated with or appointed by the other party to the merger, consolidation orreorganization.

 

e.                                       “**Notice of Termination**” shall mean a written notice oftermination from the Employer or the Executive which specifies an effectivedate of termination, indicates the specific termination provision in thisAgreement relied upon, and, in the case of a termination for Good Reason or forCause, sets forth in reasonable detail the facts and circumstances claimed toprovide a basis for termination of the Executive’s employment under theprovision so indicated.

 

2.                                       Paymentsto Executive

 

If Executive’s employment is terminated (a) Upona Change in Control, for any reason upon delivery of notice to the Employerwithin a 12 month period after the occurrence of a Change in Control; (b) forGood Reason pursuant to Section 1(c)(iv); or (c) if the Employerterminates the Executive Without Cause after a Change in Control, then, inaddition to other rights and remedies available in law or equity, the Executiveshall be entitled to the following (i) 

 

4

----

 

the Employer shall pay the Executive in cash within 15 days of suchtermination date any sums due him as base salary and/or reimbursement of expensesthrough the date of such termination plus any bonus earned or accrued under theBonus Plan through the date of termination (including any amounts awarded forprevious years but which were not yet vested) and a proratashare of any bonus with respect to the current fiscal year which had beenearned as of the date of the Executive’s termination (and any forfeiture inother restrictive provisions applicable to each award shall not apply); and (ii) theEmployer shall pay the Executive in cash within 15 days of such terminationdate one lump sum payment in an amount equal to the sum of (1) theExecutive’s then current annual base salary, and (2) the average bonusespaid to Executive during the three preceding fiscal years.

 

3.                                       GoverningLaw; Jurisdiction and Venue

 

This Agreement shall be governed by andconstrued and enforced in accordance with the laws of the State of Floridawithout giving effect to the conflict of laws principles thereof. The partiesagree to the exclusive jurisdiction and venue of the federal courts sitting inNassau County, Florida with regard to any actions that arise out of thisAgreement.

 

4.                                       Successors;Binding Agreement

 

This Agreement shall be binding upon andshall inure to the benefit of Employer and its successors and assigns. Neitherthis Agreement nor any right or interest hereunder shall be assignable ortransferable by Executive, his beneficiaries or legal representatives, exceptby will or by the laws of descent and distribution, This Agreement shall inureto the benefit of and be enforceable by Executive’s legal personalrepresentative.

 

5.                                       EntireAgreement

 

This Agreement constitutes the entireagreement between the parties hereto and supersedes all prior agreements, ifany, understandings and arrangements, oral or written, between the partieshereto with respect to the subject matter hereof.

 

6.                                       Counterparts

 

This Agreement may be executed in one ormore counterparts, each of which shall be deemed an original but all of whichtogether shall constitute one and the same instrument.

 
|   | EMPLOYER               |
|--------|------------------------|
|   |                   |
|   | FIRST CAPITAL BANK     |
|   | HOLDING CORPORATION, a |
|   | Florida corporation    |
|   |                   |
|   |                   |
|   | By:                    | /s/ Suellen R. Garner |   |
|   |                   | Name:Suellen R. Garner |
|   |                   | Title:Chairman |

 

5

----

 
|   | FIRST NATIONAL BANK OF |
|--------|------------------------|
|   | NASSAU COUNTY          |
|   |                   |
|   |                   |
|   | By:                    | /s/ Michael G. Sanchez |   |
|   |                   | Name: Michael G. Sanchez |
|   |                   | Title: President and CEO |
|   |                   |   |
|   |                   |   |
|   | EXECUTIVE              |
|   |                   |
|   |                   |
|   | /s/ Timothy S. Ayers   |   |
|   | Name: Timothy S. Ayers |
|        |                        |  |  |  |

 

6

----