EXHIBIT NO. 10.5 - FORM OF SPECIAL TERMINATION AGREEMENT, AS
AMENDED, BETWEEN FIDELITY BANCORP, INC. AND XXXXXXX XXXXX
FIDELITY BANCORP, INC.
SPECIAL TERMINATION AGREEMENT
This AGREEMENT is made effective as of April 1, 2002 by and
between Fidelity Bancorp, Inc. (the "Company"), a corporation
organized under the laws of the State of Delaware, with its
office at 0000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx and Xxxxxxx
Xxxxx ("Executive"). The term "Bank" refers to Fidelity Federal
Savings Bank, a wholly owned subsidiary of the Company.
WHEREAS, the Company recognizes the substantial contribution
Executive has made to the Company and the Bank and wishes to
provide Executive with the protections provided by this Agreement
for the period provided for in this Agreement; and
WHEREAS, Executive has been elected to, and has agreed to serve
in the position of Senior Vice President Commercial Lending for
the Bank, a position of substantial responsibility;
NOW, THEREFORE, in consideration of the contributions and
responsibilities of Executive, and upon the other terms and
conditions hereinafter provided, the parties hereto agree as
follows:
1. TERM OF AGREEMENT WITH AUTOMATIC RENEWAL PROVISION
The term of this Agreement shall be deemed to have commenced as
of the date first above written and shall continue for a period
of twelve (12) full calendar months thereafter. Commencing on
the first anniversary date of this Agreement and continuing at
each anniversary date thereafter, the Agreement shall renew for
an additional year such that the remaining term shall be one (1)
year unless written notice is provided to Executive at least ten
(10) days and not more than twenty (20) days prior to any such
anniversary date, that this Agreement shall cease at the end of
twelve (12) months following such anniversary date; provided,
however, that upon a Change in Control the term shall be
automatically renewed for a period of twelve (12) full calendar
months. Prior to the written notice period for non-renewal, the
Board of Directors of the Holding Company ("Board") will conduct
a formal performance evaluation of the Executive for purposes of
determining whether to not renew the Agreement, and the results
thereof shall be included in the minutes of the Board's meeting.
2. DEFINITIONS
(a) Change in Control. The term "Change in Control" shall mean
a change in control of the Bank or the Company of a nature that:
(i) would be required to be reported in response to 1(a) of the
current report on Form 8-K, as in effect on the date hereof,
pursuant to Section 13 or 15(d) of the Securities Exchange Act of
0000 (xxx "Xxxxxxxx Xxx"); or (ii) results in a Change in Control
of the Bank or the Company within the meaning of the Home Owners'
Loan Act of 1933 and the Rules and Regulations promulgated by the
Office of Thrift Supervision ("OTS") (or its predecessor agency),
as in effect on the date hereof (provided that in applying the
definition of change in control or presumptive change in control
or acting in concert or presumptive acting in concert as set
forth under the Rules and Regulations of the OTS, ownership by a
person or group, including a presumptive group, of at least 15%
of the voting stock of the Bank or the Company shall be required,
and provided further that ownership of stock by a tax qualified
employee benefit plan of the Bank or the Company shall not be
subject to presumptions of control or acting in concert); or
(iii) without limitation, such a Change in Control shall be
deemed to have occurred at such time as (a) any "person" (as the
term is used in Sections 13(d) and 14(d) of the Exchange Act) is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, or securities of the
Bank or Company representing 20% or more of the combined voting
power of the Bank's or Company's outstanding securities except
for any securities of the Bank purchased by the Company in
connection with the conversion of the Bank to the stock form and
any securities purchased by the Bank's employee stock ownership
plan and trust; or (b) individuals who constitute the Board of
Directors of the Company on the date hereof (the "Incumbent
Board") cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent
to the date hereof whose election was approved by a vote of at
least three-quarters of the directors comprising the Incumbent
Board, or whose nomination for election by the Company's
stockholders was approved by the Company's Nominating Committee
serving under an Incumbent Board, shall be, for purposes of this
clause (b), considered as though he were a member of the
Incumbent Board; or (c) a plan of reorganization, merger,
consolidation sale of all or substantially all the assets of the
Bank or Company or similar transaction occurs in which the Bank
or the Company is not the surviving entity.
(b) Cause. The term "Cause" shall mean termination of the
Executive's employment because of the Executive's (i) personal
dishonesty; (ii) material incompetence; (iii) willful misconduct;
(iv) breach of fiduciary duty involving personal profit; (v)
intentional failure to perform stated duties; (vi) willful
violation of any law, rule, regulation (other than traffic
violations or similar offenses) or final cease and desist order;
or (vii) material breach of any material provision of this
Agreement. In determining material incompetence, the acts or
omissions shall be measured against standards generally
prevailing in the savings institutions industry. For purposes of
this subsection, no act, or failure to act, on Executive's part
shall be "willful" unless done, or omitted to be done, not in
good faith and without reasonable belief that the action or
omission was in the best interests of the Company or its
affiliates. Executive shall be entitled to thirty (30) days'
prior written notice (the "Notice of Termination") of the Bank's
intention to terminate Executive's employment for Cause, and such
Notice of Termination shall specify the grounds for such
termination, afford the Executive a reasonable opportunity to
cure any conduct or act (if curable) alleged as grounds for such
termination; provide the Executive with a reasonable opportunity
to present to the Board of Directors of the Company, together
with counsel, the Executive's position regarding any dispute
relating to the existence of such Cause. Executive shall not be
deemed to have been terminated for Cause unless and until there
shall have been delivered to Executive a copy of a resolution
duly adopted by the affirmative vote of not less than a majority
of the members of the Board at a meeting of the Board called and
held for that purpose (after reasonable notice to the Executive),
finding that in the good faith opinion of the Board, the
Executive was guilty of conduct justifying termination for Cause
and specifying the particulars thereof in detail. The Executive
shall not have the right to receive compensation or other
benefits for any period after termination for Cause. Any stock
options or limited rights granted to Executive under any stock
option plan or any unvested awards granted under any other stock
benefit plan of the Bank, the Company or any subsidiary thereof,
shall become null and void effective upon Executive's Date of
Termination for Cause.
(c) Constructive Discharge. The term "Constructive Discharge"
shall mean the Executive's voluntary termination in connection
with or following a Change in Control during the term of this
Agreement, which termination is a result of: (i) any demotion, or
loss of title, office or significant authority; (ii) reduction in
annual compensation or benefits; or (iii) relocation of
Executive's principal place of employment by more than 30 miles
from its location immediately prior to the Change in Control.
3. TERMINATION BENEFITS
(a) The Executive shall be entitled to the severance and benefits
provided for in this Section 3 if either in connection with or
following a Change in Control (as herein defined) during the term
of this Agreement: (i) the Executive is terminated by the Company
or its successor, other than for Cause; or (ii) the Executive is
Constructively Discharged. The Executive shall be entitled to
severance pay or liquidated damages, or both, equal to the sum
of: (A) the annual average of the two (2) preceding years' base
salary calculated for the two year period immediately preceding
the date such amount is to be determined; plus (B) the highest
bonus paid to the Executive during the two preceding years,
calculated for the two year period immediately preceding the date
such amount is to be determined; plus (C) the sum of the
Company's and Bank's contributions to the Bank's Employee Stock
Ownership Plan and the Bank's 401(k) Plan (and not the
Executive's contributions to the Bank's 401(k) Plan) made on
behalf of the Executive for the two year period immediately
preceding the date such amount is to be determined, divided by
two (2). For purposes of determining base salary under this
Subsection, the Executive shall be deemed to have been paid
during any period of leave at the base salary rate in effect as
of the date the leave commenced. In addition, if Executive shall
have been employed by the Bank for less than one (1) year as of
the date any amount hereunder is to be determined, then the
amounts under (A) and (C) above shall be determined by
annualizing the amounts paid, and if Executive shall have been
employed by the Bank for more than one (1) year but less than two
(2) years, then the amounts under (A) and (C) above shall be
determined after annualizing the amounts paid during the second
year of employment.
(b) In addition to the amount determined under subsection (a),
the Company shall cause to be continued the Executive's life,
medical, dental and disability coverage substantially identical
to the coverage maintained by the Bank for the Executive prior to
Executive's termination. Such coverage shall cease upon the
expiration of the earlier of: (i) twelve (12) months; or (ii)
Executive's employment by another employer and coverage under
plans that provided Executive with substantially identical
coverage.
(c) The amount payable under subsection (a) hereof shall be paid
to the Executive, or in the event of Executive's subsequent
death, his beneficiary or beneficiaries, or his estate as the
case may be. Payment shall be made in one lump sum within ten
(10) business days of the Executive's Date of Termination;
provided, however, that the Executive may elect, prior to
termination of employment and the right to receive any amounts
hereunder, to have the amount payable in equal monthly
installments over twelve (12) months.
(d) Notwithstanding the preceding paragraphs of this Section 3
and except as provided in this subsection (d), in the event that
it shall be determined that any payment, benefit or other
entitlement under this Agreement and any other plan or
arrangement of the Bank or the Company (the "Total Payments")
would constitute an "Excess Parachute Payment" within the meaning
of Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code") and thereby be subject to the excise tax imposed by
Section 4999 of the Code or any similar successor provision or
any interest or penalties with respect to such excise tax
(collectively the "Excise Tax"), then, except in the case of a de
Minimus Excess Amount (as defined below), the Executive shall be
entitled to receive an additional payment (a "Gross-Up Payment")
in an amount such that after payment by the Executive of all
taxes imposed upon the Gross-Up Payment (including any federal,
state and local income, payroll and excise taxes and any interest
or penalties imposed with respect to such taxes), the Executive
retains an amount of the Gross Up Payment equal to the Excise Tax
imposed upon the Total Payments (not including any Gross-Up
Payment). If, at a later date, the Internal Revenue Service
assesses a deficiency against the Executive for the Excise Tax
which is greater than that which was determined at the time such
amounts were paid, then the Company shall pay to the Executive
the amount of such unreimbursed Excise Tax plus any interest,
penalties and reasonable professional fees or expenses incurred
by the Executive as a result of such assessment, including all
such taxes with respect to any such additional amount. The
highest marginal tax rate applicable to individuals at the time
of the payment of such amounts will be used for purposes of
determining the federal and state income and other taxes with
respect thereto. The Company shall withhold from any amounts
paid under this Agreement the amount of any Excise Tax or other
federal, state or local taxes then required to be withheld.
Computations of the amount of the Gross-Up Payment paid under
this subparagraph shall be conclusively made by the Company's
independent accountants, in consultation, if necessary, with the
Company's independent legal counsel. If, after the Executive
receives any Gross-Up Payment or other amount pursuant to this
subparagraph, the Executive receives any refund with respect to
the Excise Tax, the Executive shall promptly pay the Company the
amount of such refund within ten (10) days of receipt by the
Executive. Notwithstanding the foregoing, in the event that the
amount by with the present value of the Total Payments which
would constitute an Excess Parachute Payment is less than 3% of
the Total Payments, then such Excess Parachute Payment shall be
deemed to be a "de Minimus Excess Amount" and the Executive shall
not be entitled to a Gross-Up Payment. In such a case, the Total
Payments will be reduced to an amount (the "Non-Triggering
Amount"), the value of which is one dollar ($1.00) less than an
amount equal to three (3) times Executive's "base amount," as
determined in accordance with Code Section 280G; provided that
such reduction shall not be made unless the Non-Triggering Amount
would be greater than the aggregate value of the Total Payments
(without such reduction) minus the amount of Excise Tax required
to be paid by Executive thereon. The allocation of the reduction
required by the preceding sentence shall be determined by the
Executive.
4. NOTICE OF TERMINATION
(a) Any purported termination by the Company, or by the
Executive shall be communicated by Notice of Termination to the
other party hereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a written notice which shall indicate the
specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's
employment under the provision so indicated.
(b) "Date of Termination" shall mean (A) if Executive's
employment is terminated for Disability, thirty (30) days after a
Notice of Termination is given (provided that he shall not have
returned to the performance of his duties on a full-time basis
during such thirty (30) day period), and (B) if his employment is
terminated for any other reason, the date specified in the Notice
of Termination.
(c) If, within thirty (30) days after any Notice of Termination
is given, the party receiving such Notice of Termination notifies
the other party that a dispute exists concerning the termination,
except upon the occurrence of a Change in Control and voluntary
termination by the Executive in which case the Date of
Termination shall be the date specified in the Notice, the Date
of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by
a binding arbitration award, or by a final judgment, order or
decree of a court of competent jurisdiction (the time for appeal
there from having expired and no appeal having been perfected)
and provided further that the Date of Termination shall be
extended by a notice of dispute only if such notice is given in
good faith and the party giving such notice pursues the
resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, the Comapny
will continue to pay Executive his full compensation in effect
when the notice giving rise to the dispute was given (including,
but not limited to, Base Salary) and continue him as a
participant in all compensation, benefit and insurance plans in
which he was participating when the notice of dispute was given,
until the dispute is finally resolved in accordance with this
Agreement. Amounts paid under this Section are in addition to
all other amounts due under this Agreement and shall not be
offset against or reduce any other amounts due under this
Agreement.
5. SOURCE OF PAYMENTS
All payments provided in this Agreement shall be paid in cash or
check from the general funds of the Company. The Company
guarantees payment and provision of all amounts and benefits due
hereunder to the Executive and, if such amounts and benefits due
from the Bank are not timely paid or provided by the Bank for any
reason including the Bank being prohibited from making such
payments, such amounts and benefits shall be paid or provided by
the Company.
6. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFIT PLANS
This Agreement contains the entire understanding between the
parties hereto and supercedes any prior agreement between the
Company and the Executive, except that this Agreement shall not
affect or operate to reduce any benefit or compensation inuring
to the Executive of a kind elsewhere provided. No provision of
this Agreement shall be interpreted to mean that the Executive is
subject to receiving fewer benefits than those available to
Executive without reference to this Agreement.
7. NO ATTACHMENT
(a) Except as required by law, no right to receive payments
under this Agreement shall be subject to anticipation,
commutation, alienation, sale, assignment, encumbrance, charge,
pledge, or hypothecation, or to execution, attachment, levy, or
similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action
shall be null, void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the
benefit of, the Executive, the Bank and the Company and its and
their respective successors and assigns.
8. MODIFICATION AND WAIVER
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the
enforcement of any provision of this Agreement, except by written
instrument of the party charged with such waiver or estoppel. No
such written waiver shall be deemed a continuing waiver unless
specifically stated therein, and each such waiver shall operate
only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or
as to any act other than that specifically waived.
9. REINSTATEMENT OF BENEFITS UNDER BANK AGREEMENT
In the event the Executive is suspended and/or temporarily
prohibited from participating in the conduct of the Bank's
affairs by a notice described in Section 9(b) of the Special
Termination Agreement, as of April 1, 2002, between Executive and
the Bank (the "Bank Agreement") during the term of this Agreement
and a Change in Control, as defined herein, occurs the Company
will assume it obligation to pay and the Executive will be
entitled to receive all of the termination benefits provided for
under Section 3 of the Bank Agreement upon the notification of
the Company of the Bank's receipt of a dismissal of charges in
the Notice.
10. EFFECT OF ACTION UNDER BANK AGREEMENT
Notwithstanding any provision herein to the contrary, to the
extent that payments and benefits are paid to or received by
Executive under the Special Termination Agreement, as of April 1,
2002, between Executive and Bank, the amount of such payments and
benefits paid by the Bank will be subtracted from any amount due
simultaneously to Executive under similar provisions of this
Agreement.
11. SEVERABILITY
If, for any reason, any provision of this Agreement, or any part
of any provision, is held invalid, such invalidity shall not
affect any other provision of this Agreement or any part of such
provision not held so invalid, and each such other provision and
part thereof shall to the full extent consistent with law
continue in full force and effect.
12. HEADINGS FOR REFERENCE ONLY
The headings of sections and paragraphs herein are included
solely for convenience of reference and shall not control the
meaning or interpretation of any of the provisions of this
Agreement.
13. GOVERNING LAW
This Agreement will be construed and the legal relations of the
parties hereto shall be determined in accordance with the laws of
the State of Illinois without reference to the law regarding
conflicts of law. With regard to each and every term and
condition of this Agreement and any and all agreements and
instruments subject to the terms hereof, the parties to this
Agreement understand and agree that the same have and has been
mutually negotiated, prepared and drafted, and that if at any
time the parties hereto desire or are required to interpret or
construe any such term or condition or any agreement or
instrument subject hereto, no consideration shall be given to the
issue of which party to this Agreement actually prepared, drafted
or requested any term or condition of this Agreement or any
agreement or instrument subject hereto.
14. ARBITRATION
Any dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by arbitration,
conducted before a panel of three arbitrators sitting in a
location selected by the Executive within fifty (50) miles from
the location of the Company, in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having
jurisdiction; provided, however, that Executive shall be entitled
to seek specific performance of his right to be paid until the
Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement.
In the event any dispute or controversy arising under or in
connection with Executive's termination is resolved in favor of
the Executive, whether by judgment, arbitration or settlement,
Executive shall be entitled to the payment of all back-pay,
including salary, bonuses and any other cash compensation, fringe
benefits and any compensation and benefits due Executive under
this Agreement.
15. PAYMENT OF LEGAL FEES
All reasonable legal fees paid or incurred by the Executive
pursuant to any dispute or question of interpretation relating to
this Agreement shall be paid or reimbursed by the Company if
Executive is successful on the merits pursuant to a legal
judgment, arbitration or settlement, which payments are
guaranteed by the Company pursuant to Section 5 hereof.
16. INDEMNIFICATION
The Company shall provide the Executive (including Executive's
heirs, executors and administrators) with coverage under a
standard directors' and officers' liability insurance policy at
its expense, or in lieu thereof, shall indemnify the Executive
(and Executive's heirs, executors and administrators) to the
fullest extent permitted under Delaware law and as provided in
the Company's certificate of incorporation against all expenses
and liability reasonably incurred by Executive in connection with
or arising out of any action, suit or proceeding in which
Executive may be involved by reason of his having been a director
or officer of the Company (whether or not Executive continues to
be a director or officer at the time of incurring such expenses
or liabilities), such expenses and liabilities to include, but
not be limited to, judgments, court costs and attorneys' fees and
the cost of reasonable settlements.
17. SUCCESSOR TO THE COMPANY
The Company shall require any successor or assignee, whether
direct or indirect, by purchase, merger, consolidation or
otherwise, to all or substantially all the business or assets of
the Bank or the Company, expressly and unconditionally to assume
and agree to perform the Company's obligations under this
Agreement, in the same manner and to the same extent that the
Company would be required to perform if no such succession or
assignment had taken place.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to
be executed by its duly authorized officer, and Executive has
signed this Agreement, as of the 1st day of April, 2002.
ATTEST: FIDELITY BANCORP, INC.
/s/ Xxxxxxxx Xxxxxx BY: /s/ Xxxxxx X. Xxxxxx
------------------- -------------------------
NAME: Xxxxxx X. Xxxxxx
TITLE: President
ATTEST: /s/ Xxxxxxx Xxxxx
/s/ Xxxxxxxx Xxxxxx ------------------
-------------------- XXXXXXX XXXXX
