Agreement between the Federal Home Loan Bank of New York and Mr. Paul B. Hroux

 

 

BY HAND

 

August 8, 2019

 

 

 

 

Dear Paul:

 

As we discussed, your employment with the Federal Home Loan Bank of New York ("FHLBNY") terminated at the close of FHLBNY business on Monday, September 30, 2019. To ease your transition, and recognize your significant contributions to the Bank we are prepared to offer you severance benefits under the Bank’s Severance Pay Plan plus an additional 16 weeks for a total of 52 weeks, in exchange for and subject to your signing this Agreement.

 

1. Severance Benefits

 

Before you read the below, it is important for you to recognize that all payments made under the terms of this Agreement are subject to all applicable Federal, state and local withholding tax obligations.

 

a) If you execute this Agreement without revocation, the severance benefits (including a cash severance payment, outplacement services and a payment intended for medical coverage) described in the attached FHLBNY Severance Pay Plan ("Severance Plan") and in the “Severance Benefits” section of this agreement will apply to your termination. The cash severance payment and medical coverage payment portions of the severance benefits will be paid in a lump sum on a scheduled payroll date occurring before February 28, 2020, with payment conditioned on (1) FHLBNY having received a signed copy of this Agreement in accordance with the directions provided below and (2) the revocation period described in Section 6 having expired without revocation. The date this payment is made is referred to as the “Payment Date.”

 

b) Your severance benefits will include a cash payment equal to 52 weeks of salary $437,142, at your rate of pay as of the date of termination. Regardless of whether or not you sign this Agreement, your previously deferred incentive compensation will be paid out in accordance with the terms of the Bank's Incentive Compensation Plan in March 2020, 2021 and 2022, and your Executive Change in Control Agreement, effective as of February 27, 2019, remains in place.

 

c) In addition, you will be entitled to outplacement counseling services provided by the firm Lee Hecht Harris (“LHH”) for a period of 36 weeks beginning on the date Payment Date, to commence no later than four (4) weeks after the Payment Date. If you wish to avail yourself of such services, please contact Jason Yanoff, VP, Client Relations of LHH at ###-###-####.

 

d) If you were a participant in the FHLBNY’s Employee Medical Benefits Plan (“Medical Plan”) at the date of termination of employment, your medical, vision and dental benefits under the Medical Plan will terminate on or about that date. You may choose the option, regardless of whether or not you execute this Agreement, of continuing your medical, vision and dental benefits under the Medical Plan at your cost, with payments for such coverage due by you to the administrator of FHLBNY’s Medical Plan continuation coverage program. However, if you execute this Agreement, the FHLBNY will provide you with a payment in the amount of $29,168 intended to defray a portion of the cost of your elected Medical Plan continuation coverage. Payment of this lump sum amount shall be made in accordance with Section 1(a) above and at the same time as the cash payment described in Section 1(b) above. Please keep in mind that said payments to the administrator of the FHLBNY's Medical Plan continuation coverage program are your responsibility. Your retiree medical benefits, if applicable, will not be changed by this Agreement, and these benefits will be provided in accordance with the terms of the medical plan.

 

 

2. Release

 

Your acceptance of the aforementioned severance benefits (including, the cash severance payment, outplacement services and medical coverage payment) shall constitute your agreement to irrevocably and unconditionally release the FHLBNY, as well as its present and former directors, officers, employees, assigns, administrators, agents, insurers, and attorneys, jointly and individually, from any and all claims, known or unknown, arising out of, or regarding, your employment with the FHLBNY, or termination thereof, or compensation from the FHLBNY, including, but not limited to, claims pertaining to (i) Title VII of the Civil Rights Act of 1964, as amended; (ii) the Americans with Disabilities Act, as amended; (iii) the Employee Retirement Income Security Act of 1974, as amended (excluding claims for accrued, vested benefits under any employee benefit plan of the FHLBNY in accordance with the terms of such plan and applicable law); (iv) the Age Discrimination in Employment Act, as amended, or the Older Workers Benefit Protection Act; (v) the Civil Rights Acts of 1866, 1871 and 1991; (vi) the Equal Pay Act; (vii) the New York State Labor Law and the New York State and City Human Rights Laws; (viii) the New Jersey Law Against Discrimination; (ix) Section 806 of the Sarbanes Oxley Act of 2002; (x) the Family and Medical Leave Act, and all other federal, state or local laws pertaining to leave; (xi) alleged discrimination, harassment (whether sexual or otherwise) or retaliation in employment (whether based on federal, state or local law, statutory or decisional); and (xii) the terms and conditions of your employment with the FHLBNY, the termination of such employment, and/or any of the events relating directly or indirectly to or surrounding your employment or termination; (xiii) the Constitutions of the United States, New York and New Jersey.

 

You acknowledge and agree that you do not have, nor have ever had, any claims or causes of action against FHLBNY (or its present and former directors, officers, and employees, assigns, administrators, agents, insurers, and attorneys) that in any way arise out of, involving or relating to sexual harassment under Section 5-336 of the New York General Obligations Law or Section 5003-b of the New York Civil Practice Law and Rules.

 

You acknowledge and agree that other than your final paycheck which will include payment for any unused accrued paid time off and vacation (if any), you agree that you have been properly paid for, and have received all compensation and benefits amounts due from FHLBNY relating to your employment, including, but not limited to, all wages and incentives, and that no other amounts are due to you except as expressly set forth in this Agreement and except as may be due under the terms of any (if any) applicable written retirement, incentive or deferred compensation plan or agreement. FHLBNY will reimburse you for any reasonable and ordinary business expenses incurred, if any, within 45 days of the approval of any expense reports (which must be submitted within fifteen (15) days of the date of this Agreement).

 

Notwithstanding the foregoing, nothing in this Agreement (including, for the avoidance of doubt, the restrictions and conditions in Sections 2(a) – (e) below) shall be construed to prevent you from filing a charge with or participating in an investigation conducted by any governmental agency, including, without limitation, the United States Equal Employment Opportunity Commission (“EEOC”), the Securities and Exchange Commission (“SEC”), the National Labor Relations Board, the Occupational Health and Safety Administration or applicable state, city or federal agency (“Government Agencies”), to the extent required or permitted by law, including SEC compliance investigations. You further understand that this Agreement does not limit your ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company. This Agreement does not limit your right to receive an award for information provided to any Government Agencies.

 

In addition to the foregoing, you agree as follows:

 

a) you will use your best efforts to cooperate with the FHLBNY in connection with any investigation, administrative proceeding or litigation which may occur relating to any matter in which you were involved or of which you have knowledge;

 

b) in the event you are subpoenaed by any person or entity (including, but not limited to, any government agency) to give testimony (in a deposition, court proceeding or otherwise) which in any way relates to your employment with the FHLBNY, you will use your best efforts to give prompt notice of such request to the Director of Human Resources and will make no disclosure until the FHLBNY has had a reasonable opportunity to contest the right of the requesting person or entity to such disclosure;

 

c) the terms and conditions of this Agreement are and shall be deemed to be confidential, and shall not be disclosed by you to any person or entity without the prior written consent of the Director of Human Resources, except (i) if required by law, including the FHLBNY’s required SEC filings including the filing of Form 8-K disclosing this Agreement or (ii) to your accountants, attorneys or spouse;

 

d) this Agreement may not be used as evidence in any subsequent proceeding except in a proceeding to enforce the terms of this Agreement; and

 

e) you will not engage in any conduct that is injurious to the FHLBNY’s reputation or interest, including, but not limited to, publicly disparaging (or inducing or encouraging others to publicly disparage) the FHLBNY or its employees, whether in interviews, oral statements, written materials, electronically displayed materials, materials or information displayed on Internet-related sites, or otherwise (for the avoidance of doubt, this provision 2(e) does not limit your right to provide truthful testimony under oath when required or compelled to do so by operation of law, consistent with provision 2(b) of this Agreement).

 

 

3. Process for Acceptance of Severance Benefits

 

If you wish to accept the aforementioned severance benefits, your acceptance must be communicated by signing this Agreement in the space provided below and returning an originally-executed copy to me by no later than 5:00 p.m. on September 23, 2019. At your option, you may deliver your acceptance to me before September 23, 2019. (If you execute this Agreement, you may wish to retain a copy for your personal records.)

 

You are advised to consult with an attorney before signing this Agreement.

 

4. Failure to Accept the Severance Benefits

 

If you do not sign and return this Agreement to me by 5:00 p.m. on September 23, 2019, the offer of severance benefits as described herein shall be void.

 

5. Revocation of Your Previous Acceptance of the Severance Benefits

 

If you decide to accept the severance benefits (including the cash severance payment, outplacement services and medical coverage payment) described herein, you may revoke that acceptance by notifying me in writing, with my receipt of such notice within seven (7) days of the date that you executed this Agreement. However, if you exercise this right of revocation, you will not receive the severance benefits (including the cash severance payment, outplacement services and medical coverage payment) described herein.

 

6. Disputes Concerning this Agreement

 

It is understood and agreed that this Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, without regard to the conflict of laws provisions thereof. Actions to enforce the terms of this Agreement shall be submitted to the exclusive jurisdiction of any state or federal court sitting in the County of New York, State of New York.

 

If any provision of this Agreement shall be determined by the Federal Housing Finance Agency or held by a court of competent jurisdiction to be illegal, void, or unenforceable, such provision shall be of no force and effect. However, the illegality or unenforceability of such provision shall have no effect upon, and shall not impair the enforceability of, any other provision of this Agreement; provided, however, that upon any finding by a court that the release provided for in the first paragraph of the “Release” section of this Agreement is illegal, void, or unenforceable, you agree to execute a release that is legal and enforceable; and provided further that any breach of the terms in the remaining portion of the “Release” section shall constitute a material breach of this Agreement as to which the FHLBNY may seek appropriate relief in court.

 

7. Effect of Your Signature

 

Your signature below shall constitute an acknowledgement that: (a) you have carefully read this Agreement in its entirety; (b) you have had an opportunity to consider fully the terms of this Agreement; (c)  you are executing this Agreement in exchange for good and valuable consideration, in addition to anything of value to which you are otherwise entitled; (d) you have been advised by the FHLBNY in writing to consult with an attorney in connection with this Agreement; (e) you fully understand the significance of all of the terms and conditions of this Agreement and have had the opportunity to discuss it with your attorney, or have had a reasonable opportunity to do so; (f) you have had answered to your satisfaction any questions you may have asked with regard to the meaning and significance of any of the provisions of this Agreement; and (g) you are signing this Agreement voluntarily and of your own free will and assent to all the terms and conditions contained herein.

 

If you have any questions about or otherwise wish to discuss this matter, please feel free to contact me at ###-###-####.

 

 

 

 

   Attachment: Severance Plan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.01 “Bank” means the Federal Home Loan Bank of New York and its successors.

 

1.02 “Change in Control” or “CIC” means a ‘Change in Control’ as that term is defined in the Employee Change of Control Agreement executed between the Bank and the Bank’s Chief Executive Officer, as may be amended from time to time.

 

1.03 "Code" means and refers to the Internal Revenue Code of 1986, as amended.

 

1.04 “Date of Employment” means and refers to the most recent date on which an individual began employment by the Bank as an Employee.

 

1.05 “Effective Date” means September 20, 2018.

 

1.06 “Employee” means and refers to any individual who is a regular employee of the Bank who works twenty (20) hours a week or more and excludes interns and other individuals employed by the Bank whose employment is intended not to exceed one thousand (1,000) hours in any twelve (12) month period.

 

1.07 "Employment" means and refers to the legal relationship of employment between an Employee and the Bank.

 

1.08 “Exempt Employee” means and refers to an Employee who is exempt from the overtime pay provisions of the Fair Labor Standards Act of 1938, as amended.

 

1.09 “Non-Exempt Employee” means and refers to an Employee who is subject to the overtime pay provisions of the Fair Labor Standards Act of 1938, as amended.

 

1.10 “Officer” means and refers to an officer of the Bank who has been designated as such by the Board of Directors of the Bank.

 

1.11 “Outplacement Services” means and refers to internal and/or external professional assistance provided to Employees following their Termination of Employment with the Bank with respect to their search for new employment.

 

1.12 “Periods of Service” means and refers to the number of six (6) month periods, in the aggregate, for which an Employee is employed by the Bank, commencing with the Date of Employment of the Employee and ending with the date of Termination of the Employee’s Employment with the Bank, both dates inclusive, excluding any period of Employment which Terminated under circumstances under which the Employee was not eligible for Severance Benefits under this Plan.

 

 

 

1.14 “Plan Administrator” means and refers to the Director of Human Resources of the Bank.

 

1.15 “Reduction in Force” or “RIF” means and refers to a systematic series of Terminations of Employment of Employees by the Bank intended to lead to a permanent reduction in staffing.

 

1.16 “Release” means and refers to the elimination of a position with the Bank as part of a RIF, reorganization, or other management action, where no other Employment with the Bank is offered to an Employee and the Employment of the affected Employee is involuntarily Terminated.

 

1.17 “Resignation,” “Resign,” and "Resigned" mean and refer to a Termination of Employment with the Bank initiated by an Employee, other than a resignation requested by the Bank.

 

1.18 “Severance Benefits” means and refers to:

 

 

(B) solely in the event of a CIC, and notwithstanding the calculation provisions contained in Sections 3.04 and 3.05, (i) a lump sum payment for outplacement services as set forth in Section 3.08, plus (ii) a lump sum payment equal to the full “target” payout estimate from the prior year’s Bank Incentive Compensation Plan (“ICP”) if the Employee was participating in such ICP, it being understood that: (a) such payment will not be measured based on actual performance results, unless the Employee’s actual performance result was below target, in which case the Employee’s actual ICP payment will be taken into account; (b) if the Employee did not participate in the prior year’s ICP, the Employee will not receive any payment under this subsection; and (c) if the Employee was employed during a portion of the calendar year, the amount to be calculated (the target or the lesser amount) shall be annualized. (Any payments that may be otherwise earned and deferred under the ICP, or any other incentive or non-qualified savings plan that may be established by the Bank in the future, are outside the scope of this Plan and will be paid in accordance with the terms of such plans.)

 

1.19 "Termination of Employment" and "Terminated," when used with reference to and in conjunction with Employment, have the meaning set forth in Section 3.11 and, in all events, is considered a “separation from service” within the meaning of Treas. Reg. § 1.409A-1(h).

 

1.20 “Termination for Cause” means and refers to the Termination by the Bank of the employment of an Employee for (i) the commission of an illegal or unethical act, (ii) pleading “guilty” or “no contest” to or being indicted for or convicted of a felony under federal or state law or as a crime under federal or state law which involves Employee’s fraud or dishonesty, (iii) a violation of established Bank policy or practice, or (iv) the failure of the Employee to perform the duties of his or her position in a satisfactory manner, in each case as determined by the Plan Administrator in his sole and exclusive discretion.

 

1.21 "Year" means and refers to the taxable year of an Employee as such term is used in and for purposes of the Code.

 

 

 

 

 

 

 

 

 

 

3.01 Participation. Participation in this Plan shall be extended to all Employees of the Bank.

 

3.02 Eligibility for Severance Benefits. An Employee who shall have completed at least two (2) Periods of Service shall be eligible for Severance Benefits under this Plan upon the Termination of the Employee’s Employment with the Bank under any of the following circumstances:

 

 

 

 

 

 

 

3.03 Disqualification for Severance Benefits. Anything contained in this Plan to the contrary notwithstanding, an Employee shall not be eligible for Severance Benefits under this Plan upon his or her termination of employment with the Bank where such termination is due to any of the following circumstances:

 

 

 

 

in each case, as determined by the Plan Administrator in his sole and absolute discretion. 

 

 

3.04 Computation of Severance Benefits. The amount of Severance Benefits payable under this Plan to an Employee qualifying for Severance Benefits under this Plan shall be determined based (i) upon the level of the Employee’s position with the Bank at the date of the termination of the Employee’s employment with the Bank and (ii) the Employee’s Periods of Service with the Bank:

 

 

 

 

in each case, subject to the provisions of Section 3.05.

 

 

 

 

(ii) In addition, an Employee who is eligible to receive Severance Benefits under this Plan who was, at the date of Termination of his or her Employment, a participant in the Federal Home Loan Bank of New York Medical Benefits Plan, and any related dental and vision plans, shall have the option to duly and timely elect to continue such participation under the provisions of the continuation coverage provisions adopted by the Bank (which is not subject to the Consolidated Omnibus Budget Reconciliation Act of 1986), subject to the coverage continuation rules for such benefits established by the Bank from time to time. In addition, the Bank will provide to Terminated Employees who continue with the plans described in this subsection 3.07(ii) a lump sum payment in an amount to be determined by the Bank and specified in the Severance Agreement executed in accordance with Section 3.09 below. This payment is intended to be used in connection with payments by Terminated Employees related to the plans described in this subsection 3.07(ii). Such lump sum payment shall be deemed to be part of the Severance Benefits paid under this Plan.

 

 

3.08 Outplacement Services. Except in the event of a CIC, the Bank may, on a case by case basis, but shall not be required to, provide Outplacement Services to Terminated Employees eligible for Severance Benefits under this Plan, the determination as to whether to provide Outplacement Services to any Employee being within the sole and exclusive discretion of the Plan Administrator; provided, that such Outplacement Services shall not be provided to a Terminated Employee beyond the last day of the second Year following the Year in which the Termination of Employment of the Employee occurred. Generally, individual counseling may be provided only to Officers and group counseling may be provided to other Exempt Employees and to Non-Exempt Employees.

 

 

In the event of a CIC, the Bank will provide to Terminated Employees a lump sum payment in the amount of $5,000 each that is intended to be used for job search-related expenses. Such lump sum payment shall be deemed to be part of the Severance Benefits paid under this Plan.

 

3.09 Severance Agreement. An Employee whose Employment with the Bank is Terminated under conditions making the Employee eligible for Severance Benefits under this Plan shall, as a condition of receiving such Severance Benefits, be required to sign an agreement, in the form prescribed by the Bank, setting forth the terms on which Severance Benefits are to be paid or provided to the Employee and the acceptance thereof by the Employee (the “Severance Agreement”). The Severance Agreement shall include a release of any claims the Employee may have, at the date of the agreement or thereafter, against the Bank and any present and former directors, officers, and employees of the Bank.

 

3.10 Termination of Employment. For all purposes of this Plan, the Employment of an Employee shall be deemed to have been Terminated, and a Termination of Employment of an Employee shall be deemed to have occurred, upon the earliest to occur of the following events:

 

 

 

 

 

 

3.11 Determinations by the Plan Administrator to be Final. All determinations of the Plan Administrator in the administration and application of the terms and provisions of this Plan shall be final and binding upon all Employees without any right of appeal.

 

3.12 Exceptional Cases. The Bank reserves the right, in its sole and absolute discretion, to modify the application of the terms and provisions of this Plan in the case of any Employee whose Employment with the Bank shall Terminate, subject to the approval of the President of the Bank; provided, that the modifications will not cause a violation of Section 409A of the Code.