FIDELITY FEDERAL BANK & TRUST
EMPLOYMENT AGREEMENT
FOR
VINCE A. ELHILOW
This Agreement (this "Agreement") is made effective as of the ___ day of
December, 2005 by and between Fidelity Federal Bank & Trust (the "Bank"), a
federally chartered stock savings bank, with its principal administrative office
at 205 Datura Street, West Palm Beach, Florida 33401, and Vince A. Elhilow
("Executive"). Any references to the "Company" herein shall mean Fidelity
Bankshares, Inc., a Delaware corporation which is the stock holding company of
the Bank.
WHEREAS, Executive is currently employed as the President and Chief
Executive Officer of the Bank; and
WHEREAS, the Bank and Executive are parties to an employment agreement
dated January 1, 2004, which was entered into when the Bank converted from
mutual to stock form as the subsidiary of Fidelity Bankshares, MHC, a federally
chartered mutual holding company; and
WHEREAS, new Section 409A of the Internal Revenue Code ("Code"), which is
initially effective in 2005, has deemed certain employment agreements to be
deferred compensation, subject to its provisions; and
WHEREAS, the Bank and Executive desire at this time to update the
employment agreement to, among other things, comply with Code Section 409A.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:
1. POSITION AND RESPONSIBILITIES
During the period of his employment hereunder, Executive agrees to serve as
President and Chief Executive Officer of the Bank and the Company, respectively.
During said period, Executive also agrees to serve as a director of the Bank and
the Company and, if elected, as an officer and director of any subsidiary or
affiliate of the Bank. Failure to reelect Executive as President and Chief
Executive Officer of the Bank and the Company without the consent of Executive
during the term of this Agreement shall constitute a breach of this Agreement.
2. TERMS AND DUTIES
(a) The period of Executive's employment under this Agreement shall begin
as of the date first above written and shall continue for thirty-six (36) full
calendar months thereafter. Commencing on the first anniversary date of this
Agreement ("Anniversary Date") and continuing on each Anniversary Date
thereafter, this Agreement shall renew for an additional year such that the
remaining term shall be three (3) years unless written notice of non-renewal
("Non-Renewal Notice") is provided to Executive at least thirty (30) days and
not more than sixty (60) days prior to any such Anniversary Date, in which case
his employment shall cease at the end of thirty-six (36) months following such
Anniversary Date. Prior to each notice period for non-renewal, the disinterested
members of the Board of Directors of the Bank and the Company ("Board") will
conduct a comprehensive performance evaluation and review of Executive for
purposes of determining whether to extend the Agreement, and the results thereof
shall be included in the minutes of the Board's meeting.
(b) During the period of his employment hereunder, except for periods of
absence occasioned by illness, reasonable vacation periods, and reasonable
leaves of absence, Executive shall faithfully perform his duties hereunder
including activities and services related to the organization, operation and
management of the Bank and the Company.
(c) Notwithstanding anything herein to the contrary, Executive's employment
with the Bank may be terminated by the Bank or Executive during the term of this
Agreement, subject to the terms and conditions of this Agreement. However,
Executive shall not perform, in any respect, directly or indirectly, during the
pendency of his temporary or permanent suspension or termination from the Bank,
duties and responsibilities as President and Chief Executive Officer of the
Company.
3. COMPENSATION AND REIMBURSEMENT
(a) The compensation specified under this Agreement shall constitute the
salary and benefits paid for the duties described in Section 2. The Bank shall
pay Executive as compensation a salary of not less than $465,000 per year ("Base
Salary"). Such Base Salary shall be payable monthly, or in accordance with the
normal payroll practices of the Bank. During the period of this Agreement,
Executive's Base Salary shall be reviewed at least annually; the first such
review will be made no later than January 31 of each year during the term of
this Agreement and shall be effective from the first day of said month through
the end of the calendar year. Such review shall be conducted by a Committee
designated by the Board, and the Board may increase, but not decrease,
Executive's Base Salary (any increase in Base Salary shall become the "Base
Salary" for purposes of this Agreement). In addition to the Base Salary provided
in this Section 3(a), the Bank shall provide Executive at no cost to Executive
with all such other benefits as are provided uniformly to permanent full-time
employees of the Bank.
(b) The Bank will provide Executive with employee benefit plans,
arrangements and perquisites substantially equivalent to those in which
Executive was participating or otherwise deriving benefit from immediately prior
to the beginning of the term of this Agreement, and the Bank will not, without
Executive's prior written consent, make any changes in such plans, arrangements
or perquisites which would adversely affect Executive's rights or benefits
thereunder. Without limiting the generality of the foregoing provisions of this
Section 3(b), Executive will be entitled to participate in or receive benefits
under any employee benefit plans of the Bank or the Company including, but not
limited to, retirement plans, supplemental retirement plans, pension plans,
profit-sharing plans, stock option and restricted stock plans,
health-and-accident plans, medical coverage and any other employee benefit plan
or arrangement made available by the Bank in the future to its senior executives
and key management employees, subject to and on a basis consistent with the
terms, conditions and overall administration of such plans and arrangements.
Executive will be entitled to incentive compensation and bonuses as provided in
any plan of the Bank in which Executive is eligible to participate. Nothing paid
to Executive under any such plan or arrangement will be deemed to be in lieu of
other compensation to which Executive is entitled under this Agreement.
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(c) In addition to the benefits provided under paragraph (b) of this
Section, Executive and his spouse shall be entitled to continuing health care
coverage upon Executive's retirement or other termination of employment with the
Bank, other than termination for Cause, which coverage shall be fully paid by
the Bank and shall be substantially similar to the coverage provided for
Executive and his spouse prior to Executive's termination of employment. Such
health care coverage shall survive the termination of, or expiration of, this
Agreement, and shall continue for the lifetime of each of Executive and his
spouse, provided however, that upon each such person's eligibility for Medicare
coverage, the Bank shall provide health care coverage to such person at the
highest level of coverage provided or made available by the American Association
of Retired Persons (AARP) to its members residing in the locale where Executive
resides, which coverage shall be supplemental his or her Medicare coverage for
his or her lifetime.
(d) The Bank shall pay or reimburse Executive for all reasonable travel and
other reasonable expenses incurred by Executive in performing his obligations
under this Agreement and may provide such additional compensation in such form
and such amounts as the Board may from time to time determine.
4. OUTSIDE ACTIVITIES
Executive may serve as a member of the board of directors of business,
community and charitable organizations subject to the approval of the Board,
provided that in each case such service shall not materially interfere with the
performance of his duties under this Agreement or present any conflict of
interest. Such service to and participation in outside organizations shall be
presumed for these purposes to be for the benefit of the Bank, and the Bank
shall reimburse Executive his reasonable expenses associated therewith.
5. WORKING FACILITIES AND EXPENSES
Executive's principal place of employment shall be at the Bank's principal
executive offices. The Bank shall provide Executive, at his principal place of
employment, with a private office and other support services and facilities that
are suitable to his position with the Bank and necessary or appropriate in
connection with the performance of his duties under this Agreement. The Bank
shall provide Executive with an automobile suitable to the position of President
and Chief Executive Officer of the Bank, and such automobile may be used by
Executive in carrying out his duties under this Agreement as well as for his
personal use. The Bank shall reimburse Executive for the cost of maintenance,
use and servicing of such automobile. The Bank shall also reimburse Executive
for his ordinary and necessary business expenses incurred in connection with the
performance of his duties under this Agreement, including, without limitation,
travel and reasonable entertainment expenses and fees for memberships in such
clubs and organizations that Executive and the Board mutually agree are
necessary and appropriate to further the business of the Bank. Reimbursement of
such expenses shall be made upon presentation to the Bank of an itemized account
of the expenses in such form as the Bank may reasonably require.
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6. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION OR CHANGE IN CONTROL
The provisions of this Section shall in all respects be subject to the
terms and conditions stated in Sections 9 and 16.
(a) The provisions of this Section 6(a) shall apply upon the occurrence of
an Event of Termination (as herein defined) during Executive's term of
employment under this Agreement. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following:
(i) the termination by the Bank or the Company of Executive's full-time
employment hereunder for any reason other than (A) Disability or Retirement, as
defined in Section 7 below, or (B) Termination for Cause as defined in Section 8
hereof; or
(ii) Executive's resignation from the Bank's employ, upon any
(A) failure to elect or reelect or to appoint or reappoint
Executive as President and Chief Executive Officer of the Bank
and/or the Company,
(B) material change in Executive's function, duties, or
responsibilities, which change would cause Executive's
position to become one of lesser responsibility, importance,
or scope from the position and attributes thereof described in
Section 1 above,
(C) relocation of Executive's principal place of employment by
more than 30 miles from its location at the effective date of
this Agreement,
(D) liquidation or dissolution of the Bank or Company other
than liquidations or dissolutions that are caused by
reorganizations that do not affect the status of Executive, or
(E) breach of this Agreement by the Bank.
Upon the occurrence of any event described in clauses (ii) (A), (B), (C), (D) or
(E) above, Executive shall have the right to elect to terminate his employment
under this Agreement by resignation upon sixty (60) days prior written notice
given within a reasonable period of time not to exceed four (4) calendar months
after the initial event giving rise to said right to elect. Notwithstanding the
preceding sentence, in the event of a continuing breach of this Agreement by the
Bank, Executive, after giving due notice within the prescribed time frame of an
initial event specified above, shall not waive any of his rights solely under
this Agreement and this Section by virtue of the fact that Executive has
submitted his resignation but has remained in the employment of the Bank and is
engaged in good faith discussions to resolve any occurrence of an event
described in clauses (A), (B), (C), (D) or (E) above.
(b) The provisions of this Section 6(b) and 6(d) shall apply upon the
occurrence of a Change in Control during the term of this Agreement, including
extensions hereof. In the event of a Change in Control of the Company or the
Bank, Executive shall be entitled to the payments set forth in Section 6(d)
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hereof. For purposes of this Agreement, a Change in Control of the Company or
the Bank shall mean (i) a change in ownership of the Company or the Bank under
paragraph (1) below, or (ii) a change in effective control of the Company or the
Bank under paragraph (2) below, or (iii) a change in the ownership of a
substantial portion of the assets of the Company or the Bank under paragraph (3)
below:
(1) Change in the ownership of the Company or the Bank. A change in the
ownership of the Company or the Bank shall occur on the date that any one
person, or more than one person acting as a group (as defined in Proposed
Treasury Regulation Section 1.409A-3(g)(5)(v)(B) or subsequent guidance),
acquires ownership of stock of the corporation that, together with stock held by
such person or group, constitutes more than 50 percent of the total fair market
value or total voting power of the stock of such corporation.
(2) Change in the effective control of the Company or the Bank. A change in
the effective control of the Company or the Bank shall occur on the date that
either (i) any one person, or more than one person acting as a group (as defined
in Proposed Treasury Regulation Section 1.409A-3(g)(5)(v)(B) or subsequent
guidance), acquires (or has acquired during the 12-month period ending on the
date of the most recent acquisition by such person or persons) ownership of
stock of the corporation possessing 35 percent or more of the total voting power
of the stock of such corporation; or (ii) a majority of members of the
corporation's board of Directors is replaced during any 12-month period by
Directors whose appointment or election is not endorsed by a majority of the
members of the corporation's board of Directors prior to the date of the
appointment or election, provided that this sub-section (ii) is inapplicable
where a majority shareholder of the Company or the Bank is another corporation.
(3) Change in the ownership of a substantial portion of the Company's or
the Bank's assets. A change in the ownership of a substantial portion of the
Company or the Bank's assets shall occur on the date that any one person, or
more than one person acting as a group (as defined in Proposed Treasury
Regulation Section 1.409A-3(g)(5)(v)(B) or subsequent guidance), acquires (or
has acquired during the 12-month period ending on the date of the most recent
acquisition by such person or persons) assets from the corporation that have a
total gross fair market value equal to or more than 40 percent of the total
gross fair market value of (i) all of the assets of the Company or the Bank, or
(ii) the value of the assets being disposed of, either of which is determined
without regard to any liabilities associated with such assets.
(4) For all purposes hereunder, the definition of Change in Control shall
be construed to be consistent with the requirements of Proposed Treasury
Regulation Section 1.409A-3(g) or subsequent guidance.
(c) Upon the occurrence of an Event of Termination, as defined in Section
6(a)(i) or (ii), on the Date of Termination, as defined in Section 9(b) or, if
different, within the time frame set forth in any sub-paragraph below, the Bank
shall pay, provide or credit to Executive (or, in the event of his subsequent
death, his beneficiary or beneficiaries, or his estate, as the case may be):
(i) his earned but unpaid salary as of the date of termination of
employment with the Bank and the benefits to which he would be entitled as of
the date of termination as a former employee under the Bank's employee benefit
plans and programs and compensation plans and programs;
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(ii) as severance pay or liquidated damages, or both, a sum equal to three
(3) times the sum of (A) the highest annual rate of Base Salary and (B) the
highest annual bonus awarded to Executive during the prior three years. Payment
of the amount required hereunder shall be made no later than the first day of
the seventh month following Executive's Separation from Service if Executive is
a Specified Employee and such delay is required by Code Section 409A. For these
purposes, the terms "Specified Employee" and "Separation from Service" shall
have the meaning required by Code Section 409A. Such payments shall not be
reduced in the event Executive obtains other employment following termination of
employment;
(iii) at the Bank's expense, continued medical, dental and life insurance
coverage substantially identical to the coverage maintained by the Bank for
Executive prior to his termination of employment. Such medical and dental
coverage shall continue for the lifetime of each of Executive and his spouse as
provided in Section 3(c) hereof, and such life insurance shall cease thirty-six
(36) months following the Event of Termination;
(iv) any outstanding unvested stock options or shares of restricted stock
of the Company that have been awarded to him, which shall become fully vested as
of his termination of employment;
(v) within sixty (60) days (or within such shorter period to the extent
that information can be reasonably obtained) following his termination of
employment with the Bank, a lump sum payment in an amount equal to the present
value of the Bank's contributions that would have been made on Executive's
behalf under the Bank's 401(k) Plan and employee stock ownership plan (and any
other defined contribution plan maintained by the Bank) if he had continued
working for the Bank for a thirty-six (36) month period following his
termination, earning the Base Salary that would have been achieved during the
remaining unexpired term of this Agreement (assuming, if a Change in Control has
occurred, that the annual Base Salary increases at the rate of six percent (6%)
per year on each Anniversary Date over the remaining unexpired term of the
Agreement) and making the maximum amount of employee contributions permitted, if
any, under such plan or plans, where such present values are to be determined
using a discount rate of six percent (6%) per year;
(vi) within sixty (60) days (or within such shorter period to the extent
that information can reasonably be obtained) following his termination of
employment with the Bank, a lump sum payment in an amount equal to the excess,
if any, of (A) the present value of the benefits to which he would be entitled
under the Supplemental Executive Retirement Plan (and any other deferred
compensation plan for management or highly compensated employees that are
maintained by the Bank) if he had continued working for the Bank for the
thirty-six (36) month period following his termination at the Base Salary and
bonus that would have been achieved during the remaining unexpired term of this
Agreement (assuming, if a Change in Control has occurred, that annual Base
Salary and bonus each increase at the rate of six percent (6%) per year on each
Anniversary Date for the remaining unexpired term of the Agreement) over (B) the
present value of the benefits to which he is actually entitled under any such
plan, as of the date of his termination with the Bank, where the present values
are to be determined using a discount rate of six percent (6%) and the mortality
tables prescribed under Section 72 of the Code.
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(d) Upon the occurrence of a Change in Control, as defined in Section 6(b)
the Bank shall pay, provide or credit to Executive (or in the event of his
death, to his Beneficiary):
(i) as severance pay or liquidated damages, or both, a sum equal to three
(3) times the sum of (A) the highest annual rate of Base Salary and (B) the
highest annual bonus awarded to Executive during the prior three years. Payment
of the amount required hereunder shall be made in a lump sum on the effective
date of the Change in Control;
(ii) at the Bank's expense, continued medical, dental and life insurance
coverage substantially identical to the coverage maintained by the Bank for
Executive prior to the Change in Control. Such medical and dental coverage shall
continue for the lifetime of each of Executive and his spouse as provided in
Section 3(c) hereof, and such life insurance shall cease thirty-six (36) months
following the Executive's termination of employment;
(iii) any outstanding unvested stock options or shares of restricted stock
of the Company that have been awarded to him, which shall become fully vested as
of the effective date of the Change in Control;
(iv) at the time of or within sixty (60) days (or within such shorter
period to the extent that information can be reasonably obtained) following the
Change in Control, a lump sum payment in an amount equal to the present value of
the Bank's contributions that would have been made on Executive's behalf under
the Bank's 401(k) Plan and employee stock ownership plan (and any other defined
contribution plan maintained by the Bank) if he had continued working for the
Bank for a thirty-six (36) month period following his termination, earning the
Base Salary that would have been achieved during the remaining unexpired term of
this Agreement (assuming, if a Change in Control has occurred, that the annual
Base Salary increases at the rate of six percent (6%) per year on each
Anniversary Date over the remaining unexpired term of the Agreement) and making
the maximum amount of employee contributions permitted, if any, under such plan
or plans, where such present values are to be determined using a discount rate
of six percent (6%) per year;
(v) at the time of or within sixty (60) days (or within such shorter period
to the extent that information can reasonably be obtained) following the Change
in Control, a lump sum payment in an amount equal to the excess, if any, of (A)
the present value of the benefits to which he would be entitled under the
Fidelity Federal Savings Bank of Florida Supplemental Executive Retirement Plan
(and any other deferred compensation plan for management or highly compensated
employees that are maintained by the Bank) if he had continued working for the
Bank for the thirty-six (36) month period following his termination at the Base
Salary and bonus that would have been achieved during the remaining unexpired
term of this Agreement (assuming, if a Change in Control has occurred, that
annual Base Salary and bonus each increase at the rate of six percent (6%) per
year on each Anniversary Date for the remaining unexpired term of the Agreement)
over (B) the present value of the benefits to which he is actually entitled
under any such plan, as of the date of his termination with the Bank, where the
present values are to be determined using a discount rate of six percent (6%)
and the mortality tables prescribed under Section 72 of the Code.
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(e) Notwithstanding the preceding paragraphs of this Section, in the event
that:
(i) the aggregate payments or benefits to be made or afforded to Executive
under said paragraphs (the "Parachute Benefits") would be deemed to include an
"excess parachute payment" under Section 280G of the Code or any successor
thereto, and
(ii) if such Parachute Benefits were reduced to an amount (the
"Non-Triggering Amount"), the value of which is one dollar ($1.00) less than an
amount equal to the total amount of payments permissible under Section 280G of
the Code or any successor thereto, then the Parachute Benefits to be paid to
Executive shall be so reduced so as to be a Non-Triggering Amount.
(f) Payments under Section 6(d) and 6(e) above shall be made irrespective
of whether termination of employment has occurred. Notwithstanding anything
herein to the contrary, Executive shall only be entitled to a payment under the
first to occur of an Event of Termination under Section 6(c) or a Change in
Control under Section 6(d). Payments under one of these alternatives shall
preclude any payments under the other.
7. TERMINATION UPON RETIREMENT, DISABILITY OR DEATH
For purposes of this Agreement, termination by the Bank of Executive's
employment based on "Retirement" shall mean termination in accordance with the
Bank's retirement policy or in accordance with any retirement arrangement
established with Executive's consent with respect to him. Upon termination of
Executive upon Retirement, Executive shall be entitled to all benefits under any
retirement plan of the Bank and other plans to which Executive is a party.
In the event Executive is unable to perform his duties under this Agreement
on a full-time basis for a period of six (6) consecutive months by reason of
illness or other physical or mental disability ("Disability"), the Bank may
terminate this Agreement, provided that the Bank shall continue to be obligated
to pay Executive his Base Salary for the remaining term of the Agreement, or one
year, whichever is the longer period of time, and provided further that any
amounts actually paid to Executive pursuant to any disability insurance or other
similar such program which the Bank has provided or may provide on behalf of its
employees generally or its senior executives or pursuant to any workman's or
social security disability program shall reduce the compensation to be paid to
Executive pursuant to this paragraph.
In the event of Executive's death during the term of the Agreement, his
estate, legal representatives or named beneficiaries (as directed by Executive
in writing) shall be paid Executive's Base Salary as defined in Paragraph 3(a)
at the rate in effect at the time Executive's death for a period of one (1) year
from the date of Executive's death.
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8. TERMINATION FOR CAUSE
The term "Termination for Cause" shall mean termination because of
Executive's personal dishonesty, incompetence, willful misconduct, any breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule, or regulation (other than minor
traffic violations or similar offenses) or final cease-and-desist order, or
material breach of any provision of this Agreement. In determining incompetence,
the acts or omissions shall be measured against standards generally prevailing
in the savings institution industry. For purposes of this paragraph, no act or
failure to act on the part of Executive shall be considered "willful" unless
done, or omitted to be done, by Executive not in good faith and without
reasonable belief that Executive's action or omission was in the best interest
of the Bank. Notwithstanding the foregoing, Executive shall not be deemed to
have been Terminated for Cause unless and until there shall have been delivered
to him a copy of a resolution duly adopted by the affirmative vote of not less
than three-fourths of the members of the Board at a meeting of the Board called
and held for that purpose (after reasonable notice to Executive and an
opportunity for him, together with counsel, to be heard before the Board),
finding that in the good faith opinion of the Board, Executive was guilty of
conduct justifying Termination for Cause and specifying the particulars thereof
in detail. Executive shall not have the right to receive compensation or other
benefits for any period after Termination for Cause. Any stock options granted
to Executive under any stock option plan of the Bank, the Company or any
subsidiary or affiliate thereof, shall become null and void effective upon
Executive's receipt of Notice of Termination for Cause pursuant to Section 9
hereof, and shall not be exercisable by Executive at any time subsequent to such
Termination for Cause.
9. NOTICE
(a) Any purported termination by the Bank or by Executive shall be
communicated by Notice of Termination to the other party hereto. For purposes of
this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.
(b) "Date of Termination" shall mean (A) if Executive's employment is
terminated for Disability, thirty (30) days after a Notice of Termination is
given (provided that he shall not have returned to the performance of his duties
on a full-time basis during such thirty (30) day period), and (B) if his
employment is terminated for any other reason, the date specified in the Notice
of Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given).
(c) If, within thirty (30) days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, except upon the voluntary termination
by Executive, in which case the Date of Termination shall be the date specified
in the Notice, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties, by a
binding arbitration award, or by a final judgment, order or decree of a court of
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competent jurisdiction (the time for appeal having expired and no appeal having
been perfected) and provided further that the Date of Termination shall be
extended by a notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such dispute with
reasonable diligence. Notwithstanding the pendency of any such dispute, the Bank
will continue to pay Executive his full compensation in effect when the notice
giving rise to the dispute was given (including, but not limited to, Base
Salary) and continue Executive as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement,
provided such dispute is resolved within the term of this Agreement. If such
dispute is not resolved within the term of the Agreement, the Bank shall not be
obligated, upon final resolution of such dispute, to pay Executive compensation
and other payments accruing beyond the term of the Agreement. Amounts paid under
this Section shall be offset against or reduce any other amounts due under this
Agreement.
10. POST-PAYMENT OBLIGATIONS
(a) All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with paragraph (b) of this Section during the
term of this Agreement and for one (1) full year after the expiration or
termination hereof.
(b) Executive shall, upon reasonable notice, furnish such information and
assistance to the Bank as may reasonably be required by the Bank in connection
with any litigation in which it or any of its subsidiaries or affiliates is, or
may become, a party.
11. NON-COMPETITION
(a) Upon any termination of Executive's employment hereunder, other than a
termination (whether voluntary or involuntary) in connection with a Change in
Control, as a result of which the Bank and/or the Company is paying Executive
the benefits entitled to Executive under Section 6 of this Agreement, Executive
agrees not to compete with the Bank and/or the Company for a period of one (1)
year following such termination in any city, town or county in which the Bank
and/or the Company has an office or has filed an application for regulatory
approval to establish an office, determined as of the effective date of such
termination, except as agreed to pursuant to a resolution duly adopted by the
Board. Executive agrees that during such period and within said area, cities,
towns and counties, Executive shall not work for or advise, consult or otherwise
serve with, directly or indirectly, any entity whose business materially
competes with the depository, lending or other business activities of the Bank
and/or the Company. The parties hereto, recognizing that irreparable injury
would result to the Bank and/or the Company, its business and property in the
event of Executive's breach of this Subsection 11(a), agree that in the event of
any such breach by Executive, the Bank and/or the Company would be entitled, in
addition to any other remedies and damages available, to an injunction to
restrain the violation hereof by Executive, Executive's partners, agents,
employers, employees and all persons acting for or with Executive. Nothing
herein shall be construed as prohibiting the Bank and/or the Company from
pursuing any other remedies available to the Bank and/or the Company for such
breach or threatened breach, including the recovery of damages from Executive.
(b) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Bank and affiliates
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thereof, as it may exist from time to time, is a valuable, special and unique
asset of the business of the Bank. Executive will not, during or after the term
of his employment, disclose any knowledge of the past, present, planned or
considered business activities of the Bank or affiliates thereof to any person,
firm, corporation, or other entity for any reason or purpose whatsoever (except
for such disclosure as may be required to be provided to any federal banking
agency with jurisdiction over the Bank or Executive). Notwithstanding the
foregoing, Executive may disclose any knowledge of banking, financial and/or
economic principles, concepts or ideas which are not solely and exclusively
derived from the business plans and activities of the Bank, and Executive may
disclose any information regarding the Bank or the Company which is otherwise
publicly available. In the event of a breach or threatened breach by Executive
of the provisions of this Section, the Bank will be entitled to an injunction
restraining Executive from disclosing, in whole or in part, the knowledge of the
past, present, planned or considered business activities of the Bank or
affiliates thereof, or from rendering any services to any person, firm,
corporation or other entity to whom such knowledge, in whole or in part, has
been disclosed or is threatened to be disclosed. Nothing herein will be
construed as prohibiting the Bank from pursuing any other remedies available to
the Bank for such breach or threatened breach, including the recovery of damages
from Executive.
12. SOURCE OF PAYMENTS
(a) All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Bank. Executive and the Bank, however,
acknowledge that pursuant to that certain Employment Agreement between Executive
and the Company dated as of the date of this Agreement (the "Company Employment
Agreement"), the Company has guaranteed payment and provision of all amounts and
benefits due hereunder to Executive and, if such amounts and benefits due from
the Bank are not timely paid or provided by the Bank, such amounts and benefits
shall be paid or provided by the Company.
(b) Notwithstanding any provision herein to the contrary, to the extent
that payments and benefits, as provided in this Agreement, are paid to or
received by Executive under the Company Employment Agreement, such compensation
payments and benefits will be subtracted from any amounts due simultaneously to
Executive under similar provisions of this Agreement.
(c) For financial statement purposes, ongoing payments pursuant to this
Agreement and the Company Employment Agreement (collectively, the "Agreements")
shall be allocated by the Bank and the Company on a quarterly basis in
proportion to the services rendered to the Bank and the Company, respectively.
Termination payments made pursuant to the provisions of Section 6 of each of the
Agreements shall be charged and paid in accordance with the terms of Section
6(c) of this Agreement and Section 11 of the Company Employment Agreement.
13. NO EFFECT ON EMPLOYEE BENEFITS PLANS OR PROGRAMS
The termination of Executive's employment during the term of this Agreement
or thereafter, whether by the Bank or by Executive, shall have no effect on the
vested rights of Executive under the Company's or the Bank's qualified or
non-qualified retirement, pension, savings, thrift, profit-sharing or stock
bonus plans, group life, health (including hospitalization, medical and major
medical), dental, accident and long term disability insurance plans or other
employee benefit plans or programs, or compensation plans or programs in which
Executive was a participant.
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14. NO ATTACHMENT
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive and the Bank and their respective successors and assigns.
15. ENTIRE AGREEMENT; MODIFICATION AND WAIVER
(a) This Agreement and the Company Employment Agreement contain the entire
agreement of the Executive, the Bank and the Company relating to the subject
matter hereof, and supercedes in its entirety any and all prior agreements,
understandings or representations between the parties relating to the subject
matter hereof, including but not limited to, that certain employment agreement
between the Bank and Executive dated January 7, 1994.
(b) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(c) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.
16. REQUIRED REGULATORY PROVISIONS
(a) The Bank may terminate Executive's employment at any time. Executive
shall not have the right to receive compensation or other benefits for any
period after Termination for Cause as defined in Section 8 hereinabove.
(b) If Executive is suspended from office and/or temporarily prohibited
from participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act (12 USC
ss.1818(e)(3) and ss.1818(g)(1)), the Bank's obligations under this contract
shall be suspended as of the date of service unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the Bank may in its
discretion (i) pay Executive all or part of the compensation withheld while its
contract obligations were suspended and (ii) reinstate (in whole or in part) any
of the obligations which were suspended.
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(c) If Executive is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued under
Section 8(e)(4) or 8g(1) of the Federal Deposit Insurance Act (12 USC ss.1818(e)
and ss.1818(g)(1)), all obligations of the Bank under this contract shall
terminate as of the effective date of the order, but vested rights of the
contracting parties shall not be affected.
(d) If the Bank is in default as defined in Section 3(x)(1) of the Federal
Deposit Insurance Act (12 USC ss.1813(x)(1)), all obligations of the Bank under
this contract shall terminate as of the date of default, but this paragraph
shall not affect any vested rights of the contracting parties.
(e) All obligations of the Bank under this contract shall be terminated,
except to the extent determined that continuation of the contract is necessary
for the continued operation of the Bank by the Director of the Office of Thrift
Supervision ("OTS") or his designee at the time (i) the Federal Deposit
Insurance Corporation ("FDIC") 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 (12 USC ss.1823(c)); or (ii) the Director of the
OTS or his designee approves a supervisory merger to resolve problems related to
the operation of the Bank or when the Bank is determined by the Director of the
OTS 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.
(f) Notwithstanding anything herein contained to the contrary, any payments
to Executive by the Bank pursuant to this Agreement are subject to and
conditioned upon their compliance with Section 18(k) of the Federal Deposit
Insurance Act, 12 U.S.C. Section 1828(k), and the regulations promulgated
thereunder in 12 C.F.R. Part 359.
17. SEVERABILITY
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
18. HEADINGS FOR REFERENCE ONLY
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
19. GOVERNING LAW
This Agreement shall be governed by the laws of the State of Florida but
only to the extent not superseded by federal law.
20. ARBITRATION
Except as otherwise expressly provided elsewhere in this Agreement, in the
event that any dispute should arise between the parties as to the meaning,
effect, performance, enforcement, or other issue in connection with this
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Agreement, which dispute cannot be resolved by the parties, the dispute shall be
decided by final and binding arbitration of a panel of three arbitrators.
Proceedings in arbitration and its conduct shall be governed by the rules of the
American Arbitration Association ("AAA") applicable to commercial arbitrations
(the "Rules") except as modified by this Section. The Employee shall appoint one
arbitrator, the Company shall appoint one arbitrator, and the third shall be
appointed by the two arbitrators appointed by the parties. The third arbitrator
shall be impartial and shall serve as chairman of the panel. The parties shall
appoint their arbitrators within thirty (30) days after the demand for
arbitration is served, failing which the AAA promptly shall appoint a defaulting
party's arbitrator, and the two arbitrators shall select the third arbitrator
within fifteen (15) days after their appointment, or if they cannot agree or
fail to so appoint, then the AAA promptly shall appoint the third arbitrator.
The arbitrators shall render their decision in writing within thirty (30) days
after the close of evidence or other termination of the proceedings by the
panel, and the decision of a majority of the arbitrators shall be final and
binding upon the parties, nonappealable, except in accordance with the Rules and
enforceable in accordance with the Florida Arbitration Code or any applicable
successor legislation. Any hearings in the arbitration shall be held in the Palm
Beach County, Florida unless the parties shall agree upon a different venue, and
shall be private and not open to the public. Each party shall bear the fees and
expenses of its arbitrator, counsel, and witnesses, and the fees and expenses of
the third arbitrator shall be shared equally by the parties. The costs of the
arbitration, including the fees of AAA, shall be borne as directed in the
decision of the panel.
21. PAYMENT OF LEGAL FEES
All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Bank, provided that the dispute or interpretation has been
settled by Executive and the Bank or has been resolved in Executive's favor.
22. INDEMNIFICATION
During the term of this Agreement and for a period of six (6) years
thereafter, the Bank shall provide Executive (including his heirs, executors and
administrators) with coverage under a standard directors and officers liability
insurance policy at its expense, and shall indemnify Executive (and his heirs,
executors and administrators) to the fullest extent permitted under Federal law
against all expenses and liabilities reasonably incurred by him in connection
with or arising out of any action, suit or proceeding in which he may be
involved by reason of his having been a director or officer of the Bank (whether
or not he continues to be a director or officer at the time of incurring such
expenses or liabilities), such expenses and liabilities to include, but not be
limited to, judgments, court costs and attorneys fees and the cost of reasonable
settlements (such settlements must be approved by the Board of Directors of the
Bank). If such action, suit or proceeding is brought against Executive in his
capacity as an officer or director of the Bank, however, such indemnification
shall not extend to matters as to which Executive is finally adjudged to be
liable for willful misconduct in the performance of his duties.
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23. SUCCESSOR TO THE BANK
The Bank shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Bank or the Company, expressly
and unconditionally to assume and agree to perform the Bank's obligations under
this Agreement, in the same manner and to the same extent that the Bank would be
required to perform if no such succession or assignment had taken place.
[Remainder of Page Intentionally Blank]
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SIGNATURES
IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed by
its duly authorized officer, and Executive has signed this Agreement, effective
as of the date first above written.
ATTEST: FIDELITY FEDERAL BANK & TRUST
____________________ By:
Secretary -------------------------------------
Vince A. Elhilow
WITNESS: EXECUTIVE:
____________________ By:
-------------------------------------
Vince A. Elhilow
President and Chief Executive Officer
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