EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of May 19, 2000, between M. XXXXX XXXXX, an
individual residing at 0000 Xxxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxx 00000
("Executive"), and FIDELITY FEDERAL BANCORP, an Indiana corporation (the
"Company").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Executive is currently employed as the President and Chief
Executive Officer of the Company; and
WHEREAS, the Company expressly acknowledges that Executive has heretofore
performed a significant role in the furtherance of the Company's business
activities; and
WHEREAS, on January 21, 2000 the Company and Pedcor Investments, a limited
liability company, entered into a Stock Purchase Agreement (the "Stock Purchase
Agreement") pursuant to which Pedcor Investments, a limited liability company
has agreed to purchase from the Company and the Company has agreed to sell to
the Purchaser or its permitted assigns (including Pedcor Bancorp and Pedcor
Holdings, LLC) (collectively, the "Purchaser") shares of Common Stock (as
hereinafter defined) of the Company (such transaction being hereinafter referred
to as the "Acquisition"); and
WHEREAS, the obligation of the Purchaser to consummate the Acquisition is
expressly conditioned upon the execution and delivery of this Agreement by
Executive on the date hereof and the performance of his obligations under this
Agreement by Executive from and after the Effective Date (as hereinafter
defined);
WHEREAS, the Company desires to continue the employment of Executive as its
President and Chief Executive Officer commencing on the Effective Date and to be
assured of its right to his services, on the terms and conditions hereinafter
set forth, and Executive desires to continue to be so employed commencing on the
Effective Date on such terms and conditions; and
WHEREAS, Executive expressly understands and agrees that his failure to
continue employment with the Company on the Effective Date upon the terms and
conditions set forth in this Agreement will cause substantial damages to the
Company and the Purchaser;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and conditions herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. Employment; Duties. The Company hereby employs Executive and Executive
hereby accepts such employment as President and Chief Executive Officer of the
Company, on the terms and subject to the conditions hereinafter set forth. In
such capacity and subject to the authority
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of the Company's Board of Directors ("Board"), Executive shall perform such
functions with respect to the business and affairs of the Company, consistent
with his position, as the Board or the board of directors of the Subsidiaries
(as defined below) shall determine from time to time. Executive shall be based
and shall perform his duties at the Company's present principal offices;
provided, however, that Executive shall not be required to perform his duties at
the principal offices of the Company if the Company should move its principal
offices during the Employment Term to a location in excess of thirty-five (35)
miles from Evansville, Indiana. Executive shall travel at the Company's expense
to the extent necessary to perform his duties hereunder. Executive shall devote
his full business time and energies to the business and affairs of the Company
and shall not accept other employment or perform any services for any other
person, firm or corporation; provided, however, that Executive may devote
reasonable amounts of time to activities having a charitable, educational or
other public interest purpose if and to the extent such activities do not
substantially interfere with Executive's performance of his responsibilities
hereunder. Executive shall, upon reasonable notice, furnish such information and
proper assistance to the Company and its affiliates as reasonably may be
required by the Company in connection with any legal action involving the
Company or any of its affiliates. Executive agrees to use his best efforts,
skills and abilities to promote and protect the interests of the Company and all
of its subsidiaries now or hereafter organized (the "Subsidiaries"), including
United Fidelity Bank, FSB (the "Bank") and to perform his duties hereunder.
Executive agrees to serve as a director or officer of any of the Company's
subsidiaries or controlled affiliates requesting his services, and to perform
such services for such subsidiaries or controlled affiliates, consistent with
his office, as its Board of Directors or other governing body shall request.
2. Term; Termination.
(a) Executive's employment pursuant hereto shall become effective on
the Effective Date (as hereinafter defined) and shall remain in effect,
subject to renewal pursuant to subparagraph (b) of this Paragraph 2 and to
earlier termination pursuant to subparagraph (c) of this Paragraph 2, until
the third anniversary of the Effective Date (the "Initial Expiration
Date"). The term of employment hereunder, commencing with the Effective
Date and including any renewals or extensions hereof, is hereinafter
referred to as the "Employment Term."
(b) Subject to the provisions of subparagraph (c) of this Paragraph 2,
this Agreement may be extended for additional periods of one year
commencing on the Initial Expiration Date and on each anniversary of the
Initial Expiration Date (each such anniversary date being referred to
herein as an "Extension Date") if the Board of Directors of the Company
determines by resolution, after reviewing the performance of the Executive,
to extend this Agreement prior to the Initial Expiration Date and/or
Extension Date and such extension is not objected to by Executive pursuant
to written notice to the Company prior to such anniversary.
(c) In addition to the expiration of the Employment Term as
hereinabove provided, subject to the provisions of Paragraph 2(f) hereof,
this Agreement and Executive's employment by the Company shall terminate on
the Date of Termination (as hereinafter defined) as follows:
(i) automatically upon Executive's death;
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(ii) at the Company's option if, as a result of Executive's
incapacity due to physical or mental illness, he is unable to perform
the duties of his employment hereunder for a continuous period of
sixty (60) days or an aggregate of ninety (90) days in any one hundred
eighty (180) day period (each such period being hereinafter referred
to as a "Disability Period");
(iii) at the Company's option at any time for Cause. "Cause"
shall mean (A) action by Executive involving personal dishonesty;
incompetence; willful misconduct; breach of fiduciary duty involving
personal profit; intentional failure to perform stated duties; willful
violation of any law, rule or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order; or
gross negligence which has or may reasonably be expected to have a
material adverse effect on the financial condition or reputation of
the Company or the Bank; (B) termination of Executive pursuant to the
requirement or direction of a federal or state regulatory agency
having jurisdiction over the Company or the Bank; (C) conviction of
Executive of the commission of any criminal offense involving
dishonesty or breach of trust; (D) any material breach by Executive of
a term, condition or covenant of this Agreement; or (E) the engagement
by Executive in any activity constituting a material breach of
Paragraph 9, 10 or 11 of this Agreement. The Company reserves the
right to institute litigation against Executive to recover damages in
the event that the Company or its Subsidiaries or Affiliates suffers
damages as a result of the Executive engaging in any of the conduct
specified in clauses (A) through (E) of this Section 2(c)(iii);
(iv) at the Company's option at any time without Cause; or
(v) by Executive for Good Reason. "Good Reason" shall mean (A)
any removal of Executive as a principal executive officer of the
Company, except as a result of his death, his disability or for Cause,
(B) the failure of the Company to cause any resulting or surviving
owner of the Company's business or any transferee of the Company to
assume all of the Company's continuing obligations hereunder, or (C) a
material breach by the Company of any of its obligations to Executive
arising hereunder.
(d) Any termination pursuant to subparagraph (b) or (c) shall be
communicated by a Notice of Termination from the terminating party to the
other party. "Notice of Termination" shall mean a written notice indicating
the specific provision of this Agreement upon which such termination is
based and, in the case of a termination pursuant to subparagraph(c)(ii),
(c)(iii) or (c)(v), setting forth in reasonable detail the facts and
circumstances giving rise to such termination.
(e) As appropriate under the circumstances, "Date of Termination"
shall mean, as applicable: (A) the date of Executive's death; (B) thirty
(30) days after a Notice of Termination is given to Executive, if
Executive's employment is terminated pursuant to subparagraph (c)(ii)
above; (C) the date specified in the Notice of Termination if Executive's
employment is terminated by the Company pursuant to subparagraph (c)(iii)
or (c)(iv) above; or (D) thirty (30) days after a Notice of Termination is
given to the Company, if Executive's employment is terminated pursuant to
subparagraph (c)(v) above.
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(f) All obligations under the Agreement shall be terminated, except to
the extent determined that the continuation of the Agreement is necessary
for the continued operation of the Bank (i) by the Director of the Office
of Thrift Supervision or his or her designee, at the time the Federal
Deposit Insurance Corporation or the Resolution Trust Corporation enters
into an agreement to provide assistance to or on behalf of the Bank under
the authority contained in Section 13(c) of the Federal Deposit Insurance
Act; or (ii) by the Director of the Office of Thrift Supervision or his or
her designee at the time the Director of the Office of Thrift Supervision
or his or her designee approves a supervisory merger to resolve problems
related to operation of the Bank or when the Bank is determined by the
Director of the Office of Thrift Supervision to be in an unsafe or unsound
condition. Any rights of the parties that have already vested, however,
shall not be affected by such action.
3. Compensation.
(a) The Company shall pay Executive an annual base salary ("Base
Salary") equal to $195,000 during the Employment Term and during any
renewal year of the Employment Term (subject to any increases which the
Board, in its sole discretion, may approve). Base Salary shall be payable
in equal installments in accordance with the Company's regular payroll
practices for executive level employees, as determined from time to time by
the Board, but in no event less frequently than monthly.
(b) On the Effective Date, the Executive shall be granted options to
purchase 50,000 shares of Common Stock at an exercise price of $4.00 per
share and otherwise substantially upon the terms and conditions set forth
in the form of Option Agreement attached as Exhibit A hereto. Such options
shall not be "incentive stock options" within the meaning of the Internal
Revenue Code.
4. Compensation Upon Termination and During Disability.
(a) If Executive's employment shall be terminated by his death, the
Company shall pay to his estate Executive's unpaid Base Salary for the
period through the Date of Termination from the Company's regular payroll.
In addition, Executive shall continue to participate in the employee
benefit, retirement and compensation plans and receive other benefits as
provided in Paragraph 6(a) hereof through the Date of Termination.
(b) In the event of Executive's physical or mental disability, the
Company shall continue to pay Executive his Base Salary during the
Disability Period. If the Company terminates Executive following the
Disability Period, the Company shall pay Executive his Base Salary for the
period from the Company's regular payroll through the Date of Termination.
In addition, Executive shall continue to participate in the employee
benefit, retirement and compensation plans and receive other benefits as
provided in Paragraph 6(a) hereof through the Date of Termination.
(c) If Executive's employment shall be terminated for Cause by the
Company or by the Executive without Good Reason, the Company shall continue
to pay Executive his Base Salary through the Date of Termination. In
addition, Executive shall continue to participate
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in the employee benefit, retirement and compensation plans and receive
other benefits as provided in Paragraph 6(a) hereof through the Date of
Termination.
(d) If Executive's employment is terminated by the Company without
Cause or by the Executive for Good Reason and such termination does not
occur after a Change in Control (as hereinafter defined), (i) the Company
shall continue to pay Executive his Base Salary for a period equal to the
remaining Employment Term payable in semi-monthly installments during such
remaining period, and (ii) in lieu of the COBRA coverage otherwise
available to the Executive and provided that the Executive's continued
participation is permissible under the terms and provisions of the employee
health plans and programs in which the Executive participated immediately
prior to the Date of Termination, the Company shall maintain in full force
and effect for the continued benefit of the Executive for a period equal to
the remaining Employment Term, all such plans and programs. The Executive
shall pay all costs associated with obtaining the benefits described in
this subparagraph (d) for the entire period following the Date of
Termination, but will be promptly reimbursed for such costs by the Company.
In the event that the Executive's participation in any such plan or program
is or becomes barred or unavailable, the Company shall pay to the Executive
the difference between the cost the Executive would have incurred pursuant
to the terms of this Agreement had he been able to continue participation
in such plans and programs and the cost to the Executive of obtaining
substantially comparable health benefits. Executive's entitlement to
benefits pursuant to this subparagraph (d) shall be reduced to the extent
that Executive is eligible for comparable health benefits in connection
with employment with an employer other than the Company.
(e) If Executive's employment is terminated by the Company without
Cause or by the Executive for Good Reason at any time within twelve months
after a Change of Control, then the Company shall pay Executive the amounts
specified in subparagraphs (e)(i) and (e)(iii) below at the times and in
the manner specified therein, less any withholding payments required under
applicable federal, state or local income tax, other tax or social security
laws or similar statutes and shall provide Executive with the benefits
specified in subparagraph (e)(ii) below:
(i) an aggregate amount payable in 48 equal semi-monthly
installments commencing with the Company's first regularly scheduled
payroll payment date after the Date of Termination or, at the option
of the Executive, in a lump-sum payable no later than thirty (30) days
after the Date of Termination equal to the lesser of (A) 2.99 times
the average annual Base Salary plus 2.99 times the average annual
bonus paid to the Executive by the Company and any subsidiaries of the
Company during the five most recent taxable years (annualized if such
year is a "short" year for tax purposes) immediately preceding the
Date of Termination and (B) 2.99 times the annual Base Salary in
respect of the fiscal year in which the Date of Termination occurs and
2.99 times the annual bonus paid to the Executive by the Company
and/or all subsidiaries during the last fiscal year immediately
preceding the Date of Termination;
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(ii) in lieu of the COBRA coverage otherwise available to the
Executive and provided that the Executive's continued participation is
permissible under the terms and provisions of the employee health
plans and programs in which the Executive participated immediately
prior to the Date of Termination, the Company shall maintain in full
force and effect for the continued benefit of the Executive for three
(3) years following the Date of Termination, all such plans and
programs. The Executive shall pay all costs associated with obtaining
the benefits described in this subparagraph (e)(ii) for the first
twenty-four (24) months following the Date of Termination, but will be
promptly reimbursed for such costs by the Company. The Executive shall
not be entitled to reimbursement for the costs relating to such
benefits for the final twelve (12) months of coverage. In the event
that the Executive's participation in any such plan or program is or
becomes barred or unavailable, the Company shall pay to the Executive
the difference between the cost the Executive would have incurred
pursuant to the terms of this Agreement had he been able to continue
participation in such plans and programs and the cost to the Executive
of obtaining substantially comparable health benefits. Executive's
entitlement to benefits pursuant to this subparagraph (e)(ii) shall be
reduced to the extent that Executive is eligible for comparable health
benefits in connection with employment with an employer other than the
Company; and
(iii) the Company will permit Executive or his personal
representative(s) or heir(s), during a period of thirty (30) days
following the Date of Termination (but in no event later than the date
of expiration or forfeiture of the subject stock options), to require
the Company, upon written request, to purchase all outstanding stock
options previously granted to Executive under any Company stock option
plan at a cash purchase price equal to the amount by which the
aggregate "fair market value" (as hereinafter defined) of the shares
subject to such options on the Date of Termination exceeds the
aggregate exercise price for such options; provided that the Company
shall not be required to purchase any such stock options which have
expired or were forfeited pursuant to the terms of such plan or any
stock option agreement issued pursuant to the terms of such plan. For
purposes of this subparagraph (e)(iii), "fair market value" shall mean
the mid-point between the reported closing bid and ask prices for the
shares of such option stock as quoted by the North American Securities
Dealer Automated Quotation System ("NASDAQ"). If the option stock is
not quoted on NASDAQ, the "fair market value" shall be determined by
the Board based upon quotations of the entities which make a market in
the Company's option stock. In the event no entity makes a market in
the Company's option stock, "fair market value" shall mean the amount
agreed upon by the Executive and the Company. If the Executive and the
Company are unable to reach an agreement regarding the "fair market
value" of the option stock within ten (10) days of the Date of
Termination specified in the Notice of Termination, then the Executive
and the Company shall each select an appraisal firm and the two firms
shall determine the fair market value of the option stock. If the two
appraisal firms cannot agree upon the "fair market value" within
thirty (30) days of their appointment, they shall appoint a third
appraisal firm and the decision of a majority of the three (3)
appraisal firms shall be final and binding on the Executive and the
Company; provided, however, the Executive may elect, by notifying the
Company within thirty (30) days after the Date of Termination, to have
the following definition of "fair market value" apply for purposes of
this subparagraph (e)(iii): the per share book value of the Company's
option stock, calculated in accordance with generally accepted
accounting principles as of the last day of the month coinciding with
or immediately preceding the Date of Termination. The costs of any
appraisals required pursuant to this subparagraph (e)(iii) shall be
paid one-half by the Company and one-half by the Executive or his
personal representative(s) or heir(s), as applicable.
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(f) If Executive is suspended and/or temporarily prohibited from
participating in the conduct of the Company's or any affiliate's affairs by
a notice served under Section 8(e)(3) or (g)(1) of the Federal Deposit
Insurance Act (12 U.S.C. Section 1818(e)(3) and (g)(1)), the Company's
obligations under this Agreement (including, without limitation, the
payment of Base Salary) shall be suspended as of the date of service of
such notice, unless stayed by appropriate proceedings. If the charges in
the notice are dismissed, the Company shall (i) pay Executive all or part
of the compensation withheld while its obligations under this Agreement
were suspended and (ii) reinstate (in whole or in part) any of it
obligations which were suspended.
(g) If Executive is removed and/or permanently prohibited from
participating in the conduct of the Company's or any affiliate's affairs by
an order issued under Section 8(e)(4) or (g)(1) of the Federal Deposit
Insurance Act (12 U.S.C. Section 1818(e)(4) and (g)(1)), all obligations of
the Company under this Agreement shall terminate as of the effective date
of such order. In connection therewith, the Company shall continue to pay
Executive his Base Salary through the Date of Termination. In addition,
Executive shall continue to participate in the employee benefit, retirement
and compensation plans and receive other benefits as provided in Paragraph
6(a) hereof through the Date of Termination. If the Company is in default
(as defined in Section 3(x)(1) of the Federal Deposit Insurance Act), all
obligations under this Agreement shall terminate as of the date of default,
but this provision shall not affect any vested rights of Executive or of
the Company.
(h) Any payments made to Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon their compliance with 12
U.S.C. Section 1828(k) and any regulations promulgated thereunder.
(i) Unless otherwise agreed by the Company and Executive, all
payments made to Executive (or his estate, as applicable) pursuant to
this Paragraph 4, whether during a Disability Period or after the Date
of Termination, shall be made in the amounts, at the times and subject
to the terms and conditions otherwise applicable to payments to
Executive pursuant to Paragraph 3 hereof, as if such payments were
made to Executive during the Employment Term.
5. Reimbursement of Expenses. In addition to the compensation and benefits
provided to Executive pursuant to other provisions of this Agreement, the
Company will reimburse Executive in a manner consistent with established
policies of the Company for reasonable out-of-pocket expenses actually incurred
or paid by him in the performance of his services hereunder, subject to
presentation of such expense statements, receipts, vouchers or other supporting
information as the Company may reasonably require.
6. Other Benefits. In addition to the compensation and benefits provided to
Executive pursuant to other provisions of this Agreement, during the Employment
Term, Executive shall be entitled to the following:
(a) participation in and receipt of benefits under (i) any retirement
plan or arrangement for the benefit of executive employees of the
Company,(ii) any health or other welfare plan or arrangement for the
benefit of executive employees of the Company, (iii) any bonus,
profit-sharing or deferred compensation plan or arrangement for the benefit
of executive employees
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of the Company and (iv) any other employee benefit plan, program or
arrangement, made available by Company to its executive employees; provided
that Executive's participation in any such plan, program or arrangement
shall be on a basis consistent with the terms, conditions and overall
administration of such plan, program or arrangement and Executive is
otherwise eligible to participate or receive benefits under such plan,
program or arrangement; and
(b) a number of paid vacation days, sick days and personal days which
are usual and customary for senior executive officers of corporations which
are similarly situated to the Company or provided to any other executive
level employees of the Company, but in no event shall the number of paid
vacation days in any year of the Employment Term exceed four (4) weeks.
7. Other Agreements. Executive represents and warrants to the Company that
he is not a party to any agreement, written or oral, and is not bound by the
terms of any written or oral agreement to which he is not a party, which
prohibits him from performing his duties under this Agreement or of serving the
Company in any other capacity. Executive agrees to indemnify the Company and
shall hold the Company harmless from and against any liability, loss, cost or
expense, including reasonable attorneys' fees and expenses, incurred by the
Company by reason of the inaccuracy of the representations and warranties made
by Executive in this Paragraph 7.
8. Life Insurance. Executive agrees that, if requested by the Company, he
will cooperate with the Company to obtain a policy or policies of life insurance
on his life in such amount(s) as the Company may determine, including submitting
to any appropriate medical examinations and completing and executing any
appropriate application(s) or similar form(s). Any such policy or policies shall
be for the benefit of the Company and the Company shall pay all premiums
thereunder.
9. Inventions, Etc. Executive agrees to promptly disclose in writing to the
Company all ideas, formulae, programs, systems, devices, processes, business
concepts, discoveries and inventions (hereinafter referred to collectively as
"Discoveries"), whether or not patentable, which he, while employed hereunder,
conceives, makes, develops, acquires or reduces to practice, whether alone or
with others and whether during or after usual working hours, and which are
related to the Company's business or interests, or are used or usable by the
Company, or arise out of or in connection with the duties performed by Executive
hereunder. Executive hereby transfers and assigns to the Company all right,
title and interest in and to all Discoveries, including any and all domestic and
foreign patent rights therein and any renewals thereof. On request of the
Company, Executive shall from time to time during or after the expiration or
termination of his employment by the Company, execute such further instruments
(including, without limitation, applications for letters patent and assignments
thereof) and do all such other reasonable and legal acts and things as may be
deemed necessary or desirable by the Company to protect and/or enforce its
rights in respect of Discoveries. All expenses of filing or prosecuting any
patent application shall be borne by the Company, but Executive shall cooperate
in filing and/or prosecuting any such application. Executive shall receive no
additional compensation for the performance of his obligations hereunder, except
as may be agreed to by the Company.
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10. Covenant Regarding Confidentiality. All information about the business
and affairs of the Company and its affiliates which is not generally available
to the public or disclosed by the Company or such affiliates, and any
information about the Company and its affiliates which becomes generally
available to the public as a result of a breach by any person of any
confidentiality obligation to the Company or any such affiliate (including,
without limitation, with respect to the Company and each such affiliate, its
secrets and information about its business, financial condition and performance,
prospects, products, technology, know-how, merchandising and advertising
programs and plans, and the names of its suppliers, customers and lenders and
the nature of its dealings with them), constitute "Company Confidential
Information." Executive acknowledges that he will have access to, and knowledge
of, Company Confidential Information, and that improper use or revelation of
same by Executive, whether during or after the termination of his employment by
the Company, could cause serious injury to the business of the Company and its
affiliates. Accordingly, Executive agrees that, except as required to perform
his duties under this Agreement, or as required by law, he will forever keep
secret and inviolate all Company Confidential Information which shall come into
his possession, and he will not disclose the same to any other person or
organization for so long as such Company Confidential Information is not
generally known by, or accessible to, the public. Executive further agrees that
he will not use any Company Confidential Information for his own benefit or
directly or indirectly for the benefit of any person or organization other than
the Company and its affiliates.
11. Covenant Not to Compete.
(a) During the Employment Term and for a period of three (3) years
thereafter (whether Executive's employment shall have ended by reason of
the expiration of this Agreement or otherwise, and which period is
hereinafter referred to as the "Restricted Period"), Executive shall not,
directly or indirectly, engage in any business anywhere in the Restricted
Territory (as hereinafter defined) either as a stockholder, officer,
manager, employee, agent, representative, consultant, partner, member,
proprietor or principal in any other capacity, in any business engaged in
the wholesale and/or retail sub-prime mortgage lending business or net
branch banking or in the consumer indirect lending area (the "Restricted
Activities"), or directly or indirectly, own any interest in, manage,
operate, join, control, lend money or render financial or other assistance
to or participate in or be connected with, as a partner, stockholder,
member, proprietor, other principal, consultant or otherwise, any person
that otherwise competes with respect to the Restricted Activities with the
Company or such Subsidiaries, including the Bank. As a separate and
independent covenant, the Executive further agrees with the Company that,
during the Restricted Period, the Executive will not in any way, directly
or indirectly, for the purpose of conducting or engaging in the Restricted
Activities, solicit, advise or otherwise do, or attempt to do, business
with any customers of the Company or its affiliates with whom the Company
or its affiliates had any dealings during the one (1) year period
immediately preceding such solicitation or take away or interfere or
attempt to interfere with any employee (or person who was an employee
during the six (6) month period preceding the date of attempted hiring or
recruitment), customer, trade, business or patronage of the Company or its
affiliates, or induce or attempt to induce any of them to leave the employ
of the Company or its affiliates, or violate the terms of their contracts,
or any employment arrangements, with the Company or its affiliates.
Notwithstanding anything herein to the contrary, the ownership by Executive
of not more than five percent (5%) of any class of outstanding securities
of an issuer listed on a national securities exchange or regularly traded
in the over-the-counter market
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shall not constitute a violation of this Paragraph 11(a). The "Restricted
Territory" shall mean any location in the United States of America, and in
any other country, state, region, county, city or locality thereof where
the Company or any of its Subsidiaries, including the Bank or any of its
affiliates is transacting business during the Restricted Period or during a
period of five (5) years prior thereto has been transacting business. The
parties agree and intend that the covenants contained in this Paragraph
11(a) shall be construed as a series of separate covenants, one for each
applicable region, county, city, state or country. Except for geographic
coverage, each such separate covenant shall be deemed identical in terms.
(b) Executive acknowledges that the operation and conduct of the
business of the Company is special and unique and involves the use of trade
secrets and confidential information and that during the period of his
employment hereunder, Executive will acquire special knowledge and/or skill
that he could effectively utilize in competition with the Company and its
affiliates. Executive further acknowledges that the provisions of
Paragraphs 9, 10 and 11 hereof are essential to the goodwill and
profitability of the Company and its affiliates, and have provided
substantial inducement to the Company's agreement to execute and consummate
this Agreement, and that the application or operation thereof shall not
involve a substantial hardship upon his future business or livelihood.
Executive agrees that remedies at law for any breach by him of the
covenants contained in Paragraphs 9, 10 and 11 hereof will be inadequate,
and that in the event of a violation of the covenants therein, in addition
to any and all legal and equitable remedies which may be available to the
Company and its affiliates, the said covenants may be enforced by an
injunction in a suit in equity, without the necessity of proving actual
damage, and that a temporary injunction may be granted immediately upon the
commencement of any such suit and without notice. Should any court
determine that any of the separate covenants of this Paragraph 11 shall be
unenforceable in respect of geographic area, then such covenant shall be
deemed eliminated for the purpose of those proceedings to the extent
necessary to permit the remaining separate covenants to be enforced. If any
other provision of Paragraphs 9, 10 and 11 shall be deemed by an
appropriate court to be unenforceable for any reason, then such court shall
be empowered to substitute, to the extent enforceable, provisions similar
thereto or other provisions so as to provide the Company and its affiliates
to the fullest extent permitted by applicable law, the benefits intended by
Paragraphs 9, 10 and 11 hereof. Executive acknowledges that the covenants
contained in this Paragraph 11 are intended by the parties to be in
addition to and not in lieu of or in limitation of any other agreement or
covenant between Executive and the Company. Each of the provisions of
Paragraphs 9,10 and 11 hereof shall survive the termination of this
Agreement and the termination of Executive's employment by the Company.
(c) Notwithstanding anything in this Paragraph 11 to the contrary, in
the event that Executive's employment is terminated by the Company without
Cause prior to the scheduled expiration of the Employment Term, the
provisions of this Paragraph 11 shall apply only for the period during
which Executive is paid Base Salary (or would have been paid the Base
Salary except for the election by the Executive to receive a lump-sum
payment pursuant to Paragraph 4(e)(i)) after termination pursuant to the
terms of this Agreement, plus one year.
12. Notices. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given or made
as of the date delivered if delivered personally or by facsimile (followed by
first class U.S. mail), or three days
10
after mailing if mailed by registered or certified mail (postage prepaid, return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice, except that notice of
changes of address shall be effective upon receipt):
If to the Company:
Fidelity Federal Bancorp
000 X. Xxxxx Xxxxx Xxxx - Xxxxx 0000
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Chairman of the Board of Directors
Telecopy No.: (000) 000-0000
with a copy to:
Krieg, DeVault, Alexander & Xxxxxxxx, LLP
Xxx Xxxxxxx Xxxxxx - Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
If to Executive, to him at his address set forth in the introductory
Paragraph of this Agreement.
13. Definitions. In addition to other terms defined elsewhere in this
Agreement, the following terms shall have the meanings set forth below:
"Change of Control" shall mean (a) consummation of any transaction in which
a person or entity was required to file an application or notice to acquire the
securities or assets of the Company or the Bank, whether by purchase, merger,
consolidation, share exchange or other combination or reorganization
(irrespective of which party is the surviving entity), or by sale, lease,
exchange, transfer, or other disposition of all or any substantial part of the
assets of the Company or the Bank (collectively referred herein as a
"Transaction"), under the federal Bank Holding Company Act of 1956 (12 U.S.C.
Section 1841 et seq), the federal Change in Bank Control Act (12 U.S.C. Section
1817(j)), the federal Savings and Loan Holding Company Act (12 U.S.C. Section
1467a) or the federal Bank Merger Act (12 U.S.C. Section 1828(c)), as such laws
may be amended from time to time or any regulations promulgated thereunder
(collectively, the "Governing Laws"). Notwithstanding anything herein to the
contrary, the following shall not be deemed to constitute a "Change of Control"
for purposes of this definition or for purposes of this Agreement: (i) the
Acquisition; (ii) the purchase by Purchaser, or any of their affiliates, or the
transfer by Purchaser to any of their affiliates, of shares of Common Stock;
(iii) consummation of any Transaction requiring approval under the Governing
Laws (1) involving the Company solely in connection with the acquisition by the
Company of any subsidiary, (2) involving a business combination or
reorganization in which the shareholders of the Company immediately prior to
such Transaction own at least a majority of the issued and outstanding voting
securities of the surviving entity immediately subsequent to such Transaction
and individuals who were directors of the Company immediately
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prior to such Transaction constitute at least a majority of the Board of
Directors of the surviving entity immediately subsequent to such Transaction or
(3) involving any employee benefit plan sponsored by the Company or any
subsidiary thereof; (iv) consummation of any acquisition of shares of Common
Stock requiring approval under the Governing Laws by individuals or entities who
at the date of this Agreement were either a director or officer of the Company
or the beneficial owner (either directly or indirectly) of ten percent (10%) or
more of the combined voting power of the Company's then outstanding securities;
or (v) consummation of any acquisition of the Common Stock requiring approval
under the Governing Laws by individuals or entities which would result in such
individuals or entities owning directly and/or beneficially less than 25% of the
combined voting power of the Company's then outstanding securities, unless after
such acquisition such individuals or entities would constitute the largest
shareholder of the Common Stock (for this purpose, the shares of Common Stock
owned by the Purchaser and its affiliates shall be aggregated).
"Common Stock" shall mean the common stock, stated value $1.00 per share,
of the Company.
"Effective Date" shall mean the date of this Agreement.
14. Conditions and Acknowledgment.
(a) This Agreement shall only become effective and binding upon the
Executive and upon the Company commencing upon and as of the Effective
Date; and
(b) By executing and delivering this Agreement, Executive expressly
acknowledges and agrees (i) that his continuation of employment by the
Company pursuant to the provisions of this Agreement constitutes a
significant condition to consummation of the Stock Purchase Agreement, (ii)
that Executive's failure to continue his employment with the Company from
and after the Effective Date upon the terms and conditions set forth in
this Agreement (unless Executive's employment by the Company is terminated
upon the terms and conditions set forth herein) will cause substantial
damages to the Company and to the Purchaser for which he, the Executive,
shall be personally liable, and (iii) upon the Effective Date, the
Severance Agreement dated December 1, 1997 by and between the Executive and
the Company shall terminate and be void and of no effect, and that
Executive shall have no rights and the Company shall have no obligations
thereunder.
15. General.
(a) This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Indiana applicable to contracts
made and to be performed entirely within such state (without regard to
principles of conflict of laws of Indiana or of any other jurisdictions).
(b) The Paragraph headings contained herein are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
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(c) This Agreement sets forth the entire agreement and understanding
of the parties relating to the subject matter hereof, and supersedes all
prior agreements, arrangements and understandings, written or oral, between
the parties.
(d) This Agreement and the benefits hereunder are personal to the
Company and Executive, and are not assignable or transferable, nor may the
services to be performed hereunder be assigned by Executive, the Company to
any person, firm or corporation; provided, however, that this Agreement and
the benefits hereunder may be assigned by the Company and/or will be
assigned (by operation of law) to any person, firm or corporation acquiring
all or substantially all of the assets or stock of the Company or to any
corporation into which the Company may be merged or consolidated, as long
as no such assignment operates to expand the Restricted Territory without
the consent of Executive.
(e) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company, to expressly
assume and agree to perform all of the provisions of this Agreement.
Failure of the Company to obtain such agreement prior to the effectiveness
of any such succession shall be deemed a material breach of this Agreement
and shall entitle Executive to terminate his employment with the Company
pursuant to subparagraph 2(c)(v) hereof.
(f) Anything in this Agreement to the contrary notwithstanding in the
event the Company's independent public accountants determine that any
payment by the Company to or for the benefit of Executive, whether paid or
payable pursuant to the terms of this Agreement, would be non-deductible by
the Company for federal income tax purposes as a result of Section 280G of
the Internal Revenue Code of 1986, as amended (the "Code"), then the amount
payable to or for the benefit of Executive pursuant to the Agreement shall
be reduced (but not below zero) to the Reduced Amount. For purposes of this
Paragraph 15(f), the "Reduced Amount" shall be the amount which maximizes
the amount payable to Executive without causing the payment to be
non-deductible to the Company as a result of the provisions of Section 280G
of the Code.
(g) All references in this Agreement to amounts to be paid or benefits
to be provided to or on behalf of Executive are to the gross amounts
thereof which are due hereunder. Except as otherwise provided herein, the
Company shall have the right to deduct therefrom or collect from Executive
all sums which may be required to be deducted or withheld under any
provision of law, including, but not limited to, social security payments,
income tax withholding, any other deduction required by law and any
interest, penalties or additions to tax imposed with respect thereto.
(h) This Agreement may be amended, modified, superseded, canceled,
renewed or extended, and the terms or covenants hereof may be waived, only
by a written instrument executed by both parties hereto, or in the case of
a waiver, by the party waiving compliance. The failure of either party at
any time to require performance of any provision hereof shall in no manner
affect the right of such party at a later time to enforce the same. No
waiver by either party of the breach of any term or covenant contained in
this Agreement, whether by
13
conduct or otherwise, in any one or more instances, shall be deemed to be,
or construed as, a further or continuing waiver of any such breach, or a
waiver of the breach of any other term or covenant contained in this
Agreement.
(i) This Agreement may be executed in counterparts, each of which
shall be an original and all of which taken together shall constitute one
and the same instrument.
(j) Subject to the provisions of Paragraph 11 hereof, if any term or
other provision of this Agreement is invalid, illegal or incapable of being
enforced by any rule of law or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and
effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any party.
Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate
in good faith to modify this Agreement so as to effect the original intent
of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the extent
possible.
* * * * * * * *
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
FIDELITY FEDERAL BANCORP
By:
-----------------------------
Name: Xxxx Xxxxxxxxxx
Title: Chairman of the Board
-----------------------------
M. XXXXX XXXXX
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