EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of May 19, 2000, between XXXXXX X. XXXX, an
individual residing at 00000 Xxxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxx 00000
("Executive"), FIDELITY FEDERAL BANCORP, an Indiana corporation (the "Company")
and UNITED FIDELITY BANK, FSB (the "Bank"), a wholly-owned subsidiary of the
Company.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Executive is currently employed as the Executive Vice President,
Chief Financial Officer and Treasurer of the Company and Executive Vice
President, Chief Operating Officer and Treasurer of the Bank; and
WHEREAS, the Company and the Bank expressly acknowledge that Executive has
heretofore performed a significant role in the furtherance of the Company's and
the Bank'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
Chief Financial Officer and the Bank desires to continue the employment of
Executive as its Executive Vice President, Chief Operating Officer and
Treasurer, and effective July 1, 2000 the Bank desires the Executive to become
its President and Chief Executive Officer, 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 and the Bank 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
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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 Chief Financial Officer of the Company, and
the Bank hereby employs Executive and Executive hereby accepts such employment
as Executive Vice President, Chief Operating Officer and Treasurer of the Bank,
on the terms and subject to the conditions hereinafter set forth. Effective July
1, 2000, Executive shall be promoted from the offices of Executive Vice
President, Chief Operating Officer and Treasurer of the Bank and assume the role
and office of the President and Chief Executive Officer of the Bank. In such
capacities, Executive shall perform such functions with respect to the business
and affairs of the Company, the Bank, and the Subsidiaries (as defined below)
consistent with his position, as the Board of the Company or the Bank shall
determine from time to time; provided, however, that Executive shall not be
required to perform his duties at the principal offices of the Bank if the Bank
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 expense of the Company or the Bank, as appropriate, 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 the
Bank 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 or the Bank in connection with any legal action
involving the Company, the Bank, or any of their 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 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 both the Company and the Bank determines by
resolution, after reviewing the performance of the Executive, to extend this
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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 or the Bank prior to such anniversary.
(c) In addition to the expiration of the Employment Term as provided above,
subject to the provisions of Paragraph 2(f) hereof, this Agreement and
Executive's employment by the Company and the Bank shall terminate on the Date
of Termination (as hereinafter defined) as follows:
(i) automatically upon Executive's death;
(ii) at the the option of the Company or the Bank 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 period of sixty (60)
consecutive 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 option of the Company or the Bank 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 option of the Company or the Bank 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 or the
Bank, except as a result of his death, his disability or for Cause, (B) the
failure of the Company or the Bank to cause any resulting or surviving
owner of the Company's or the Bank's business or any transferee of the
Company or the Bank to assume all of the Company's and the Bank's
continuing obligations hereunder, or (C) a material breach by the Company
or the Bank of any of its obligations to Executive arising hereunder.
(d) Any termination pursuant to subparagraph (c) shall be communicated by a
Notice of Termination from the terminating party to the other party. "Notice of
Termination"
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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
or the Bank pursuant to subparagraph (c)(iii) or (c)(iv) above; or (D) thirty
(30) days after a Notice of Termination is given to the Company or the Bank, if
Executive's employment is terminated pursuant to subparagraph (c)(v) above.
(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 Executive shall receive from the Company and/or the Bank an annual
base salary ("Base Salary") equal in the aggregate to $140,000 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. The amount of the
Base Salary shall be allocated on an equitable basis between the Company and the
Bank, based upon the good faith determination by the Executive and the Board of
Directors of the Company and the Bank as to the amount of time spent by the
Executive with respect to the business of the Company and the business of the
Bank.
(b) On the Effective Date, the Executive shall be granted options to
purchase 25,000 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.
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4. Compensation Upon Termination and During Disability.
(a) If Executive's employment shall be terminated by his death, the Company
and/or the Bank shall pay to his estate Executive's unpaid Base Salary for the
period through the Date of Termination from the Company's and/or the Bank'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
and/or the Bank shall continue to pay Executive his Base Salary during the
Disability Period. If the Company or the Bank terminates Executive following the
Disability Period, the Company and/or the Bank shall pay Executive his Base
Salary for the period from the Company's and/or the Bank'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 the Bank or by the Executive without Good Reason, the Company and/or the Bank
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.
(d) If Executive's employment is terminated by the Company or the Bank
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 and/or
the Bank 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 and/or the Bank 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 and/or the Bank. In the event that the
Executive's participation in any such plan or program is or becomes barred or
unavailable, the Company and/or the Bank 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 or the Bank.
(e) If Executive's employment is terminated by the Company or the Bank
without Cause or by the Executive for Good Reason at any time within twelve
months after a Change of Control, then the Company and/or the Bank shall pay
Executive the amounts specified in
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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 plus 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;
(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 and/or the Bank 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 and/or the Bank. 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 and/or the Bank 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 or the
Bank; 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
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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.
(f) If Executive is suspended and/or temporarily prohibited from
participating in the conduct of the Company's, Bank'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
and the Bank'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 and/or the Bank 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, Bank'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 and the Bank under this Agreement shall terminate as of the
effective date of such order. In connection therewith, the Company and/or 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 or the
Bank 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 or of the Bank.
(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 or the Bank, and Executive, all
payments made to Executive (or his estate, as applicable) pursuant to this
Paragraph 4, whether
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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.
(j) The amounts to be paid to Executive pursuant to Paragraph 4 of this
Agreement shall be allocated on an equitable basis between the Company and the
Bank, based upon the good faith determination by the Board of Directors of the
Company and the Bank as to the amount of time spent by the Executive with
respect to the business of the Company and the business of the Bank.
5. Reimbursement of Expenses. In addition to the compensation and benefits
provided to Executive pursuant to other provisions of this Agreement, the
Company and/or the Bank will reimburse Executive in a manner consistent with
established policies of the Company and the Bank 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 or the Bank 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 or the
Bank,(ii) any health or other welfare plan or arrangement for the benefit of
executive employees of the Company or the Bank, (iii) any bonus, profit-sharing
or deferred compensation plan or arrangement for the benefit of executive
employees of the Company or the Bank, and (iv) any other employee benefit plan,
program or arrangement, made available by Company or the Bank 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 the Bank or provided to any other executive
level employees of the Company or the Bank, 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 and
the Bank 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 or the Bank in any other capacity. Executive agrees to
indemnify the Company and the Bank and shall hold each of them harmless from and
against any liability, loss, cost or expense, including reasonable attorneys'
fees and expenses, incurred by the
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Company or the Bank 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 or
the Bank, he will cooperate with the Company and/or the Bank to obtain a policy
or policies of life insurance on his life in such amount(s) as the Company or
the Bank 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 or the Bank and the Company and/or the Bank 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 or the Bank's business or interests, or are used or
usable by the Company or the Bank, or arise out of or in connection with the
duties performed by Executive hereunder. Executive hereby transfers and assigns
to the Company and/or the Bank 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 or the Bank, 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 or the Bank to protect and/or enforce their or its
rights in respect of Discoveries. All expenses of filing or prosecuting any
patent application shall be borne by the Company or the Bank, 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 in writing by the Company or the Bank.
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
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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 Solicit or 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 agrees with the Company that
he will not in any way, directly or indirectly, 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) 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.
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.
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(c) Notwithstanding anything in this Paragraph 11 to the contrary, in the
event that Executive's employment is terminated by the Company or the Bank
without Cause prior to the scheduled expiration of the Employment Term, the
provisions of this Paragraph 11 shall apply only for the period for 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 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 or the Bank:
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
817(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
11
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 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 and the Bank 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
and the Bank 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 and the Bank
from and after the Effective Date upon the terms and conditions set forth in
this Agreement (unless Executive's employment by the Company or the Bank is
terminated upon the terms and conditions set forth herein) will cause
substantial damages to the Company and the Bank 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.
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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.
(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,
the Bank and Executive, and are not assignable or transferable, nor may the
services to be performed hereunder be assigned by Executive, the Company or the
Bank to any person, firm or corporation; provided, however, that this Agreement
and the benefits hereunder may be assigned by the Company and the Bank 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 the
Bank or to any corporation into which the Company or the Bank 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 and/or the
Bank shall have the right to deduct therefrom or collect from Executive all sums
which may be required to be deducted or withheld
13
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 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.
14
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
UNITED FIDELITY BANK, fsb
By:
----------------------------------
Name: Xxxx Xxxxxxxxxx
Title: Chairman of the Board
"EXECUTIVE"
--------------------------------------
XXXXXX X. XXXX
15
