Sidhu ADVISORS FDT, LLC
Jay S. Sidhu
Chief Executive Office
cell (610)301-6476
jsidhu@sidhuadvisors.com
August 11, 2008
Board of Directors
Federal Trust Corporation
312 West 1st Street
Sanford, FL 32771
Re: Non-binding Letter of Intent
Gentlemen:
Sidhu Advisors FDT, LLC is sending this letter as an indication of interest
in order to allow Sidhu Advisors FDT, LLC or a newly formed affiliate thereof
("Sidhu") to determine the attractiveness of entering into a transaction with
Federal Trust Corporation ("FDT"). Sidhu is pleased to submit this non-binding
letter of intent (this "Letter Agreement") outlining its interest in FDT, all on
the terms and subject to the conditions described below.
1. Transaction. By this Letter Agreement, Sidhu indicates its interest in
entering into a definitive agreement (the "Transaction Agreement") for an
investment, acquisition or similar transaction whereby Sidhu will invest (or
otherwise expend) at least $30 million in FDT (collectively, the "Transaction")
following the completion of a review, satisfactory to Sidhu in its sole
discretion, of the business, operations, assets, financial condition, results of
operation, prospects, asset values, and liabilities of FDT and its subsidiary.
The Transaction Agreement or related documents will contain representations,
warranties, covenants, conditions to the parties' obligations thereunder, and
other provisions mutually agreeable to the parties which are customary for a
transaction of the sort, size and character contemplated by the parties,
including, without limitation, the following:
o conditions precedent providing that completion of the Transaction is
subject to the approval of FDT's stockholders and FDT's primary
regulator;
o the irrevocable agreement by each member of FDT's board of directors to
(i) recommend the Transaction to FDT's stockholders, and (ii) vote
shares of FDT stock beneficially owned by such director, at a
stockholders' meeting duly convened to consider the Transaction, in
favor of the Transaction; and
o a non-solicitation agreement, as well as a termination fee payable to
Sidhu in certain circumstances.
2. Standby Purchase Agreement. During the Term (defined below) of this
Letter Agreement, neither party shall terminate the Standby Purchase Agreement,
dated May 12, 2008, between FDT and Sidhu.
485 Madison Avenue The Center City Executive Centre 511 Granada Drive
20th Floor 607 Washington Street Palm Coast, FL 32137
New York, NY 10022 Reading, PA 19601 (386) 446-1508
(212) 537-0418 (610) 478-2310
SidhuAdvisors
Board of Directors
Federal Trust Corporation
August 11, 2008
Page 2
3. Notice. FDT shall immediately inform Sidhu of any offers or inquiries
from third parties regarding any possible merger, consolidation, sale of the
capital stock of FDT or any of its affiliated entities, or the sale of all or
substantially all of the assets of FDT or any of its affiliated entities
(collectively, an "Acquisition Transaction"), including all details of such
offer or inquiry. Before FDT accepts any offer or proposal or enters into an
agreement for an Acquisition Transaction (collectively, the "Competing
Proposal"), Sidhu shall have the right to enter into an Acquisition Transaction
with FDT on the same terms and conditions contained in the Competing Proposal.
4. Term. Unless otherwise extended by written agreement, this Letter
Agreement shall remain in full force and effect until August 25, 2008, unless
earlier terminated by (i) the execution of a definitive Transaction Agreement or
(ii) the mutual agreement of the parties (collectively, the "Term").
5. Public Announcements. Any and all public announcements or releases
related to this Letter Agreement or the Transaction by either party shall be
approved by both parties prior to dissemination.
6. Costs; Expenses. Each party shall bear its own legal, accounting, and
other expenses relating to this proposed Transaction, except as provided
otherwise in the Transaction Agreement.
7. Access to Funding. Sidhu will have the financial resources available to
it to complete its investment of at least $30.0 million in the Transaction, with
no financing contingency in the definitive Transaction Agreement or other need
to solicit funds to invest such amount after the execution of the definitive
Transaction Agreement.
8. Regulatory Applications. Sidhu agrees that it will use commercially
reasonable efforts to file the requisite and appropriate control applications
with FDT's primary regulator as soon as practicable following the execution of a
definitive Transaction Agreement. To its knowledge, Sidhu is unaware of any
reason, specific to Sidhu, why FDT's primary regulator will not approve the
Transaction.
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This Letter Agreement is subject, in all respects, to the negotiation,
execution and delivery of the Transaction Agreement. This Letter Agreement is
not intended by the parties hereto to create a legally binding obligation on the
part of the parties and neither party shall be liable for any damages resulting
from the failure to close the transactions contemplated hereby, except with
respect to the provisions of Paragraphs 2 through 6 hereof, which shall be
binding.
SidhuAdvisors
Board of Directors
Federal Trust Corporation
August 11, 2008
Page 3
If this letter accurately sets forth your understanding of our mutual
intent, please sign this Letter Agreement where indicated below and return it to
us.
SIDHU ADVISORS FDT, LLC
By \s\ Jay S. Sidhu
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Jay S. Sidhu, Chief Executive Officer
Accepted this 11th day of
August, 2008, as to all
terms and conditions
FEDERAL TRUST CORPORATION
By \s\ Dennis T. Ward
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