EMPLOYMENT AGREEMENT
EXHIBIT
10.23
THIS
EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of the
23 day of August, 2006 (the “Effective Date”), by and
between Tower Financial Corporation, an Indiana corporation
(the “Company”) and Xxxxxxx X. Xxxxxx, a resident of Xxxxx
County, Indiana (the “Employee”).
WHEREAS,
the Company is in the business of operating a bank and financial services
holding company and, directly or through subsidiary entities, operates or
may
operate various banking, trust company and other permitted
businesses;
WHEREAS,
Company wishes to employ the Employee, and the Employee wishes to be employed
by
the Company, under the following terms and conditions,
NOW,
THEREFORE, for and in consideration of the foregoing recitals and of
the mutual covenants and agreements set forth herein, the parties, intending
to
be legally bound hereby, agree as follows:
1. Employment. The
Company hereby employs the Employee, for the Term set forth in Section 3,
as the Company’s Executive Vice President, Chief Financial Officer, and
Secretary. The Employee agrees to accept such employment upon the
terms and conditions set forth herein, and to devote his full-time, attention
and best efforts to the performance of his duties, as more fully described
below.
2. Duties. During
the Term, the Employee’s duties (“Duties”) shall consist of those Duties as are
consistent with the position of Executive Vice President, Chief Financial
Officer, and Secretary, or such other duties, for and on behalf of the Company
or any of its affiliates, with executive responsibilities commensurate with
a
position generally similar to that described in Section 1, as may from time
to time be assigned to him by the Company’s Chief Executive Officer or its Board
of Directors. The Employee’s Duties also include or may include, without
limitation, serving as an officer, director or employee of one or more Company
subsidiaries or affiliates.
The
Employee agrees that any programs, financial or other products, software,
systems or other intellectual property that may be developed by the Company,
with or without Employee’s participation and assistance, and whether or not
within the scope of Employee’s Duties hereunder, shall be deemed to constitute
works for hire belonging to the Company, and, in all events, shall be and
remain
the Company’s exclusive property; and Employee shall not assert (and hereby
relinquishes) any rights or claims therein or thereto.
3. Term. Subject
to the provisions of Sections 3(a) and 3(b), the term of this Agreement (the
“Term”) shall commence on the Effective Date and shall extend for a period of
two (2) years, through June 30, 2008.
(a) If,
prior to the ninetieth (90th) day
before the
expiration of the Term, the Company and the Employee fail to agree in writing
to
extend the Term for one additional period of two (2) years (the “Extended
Term”), the Term will in fact terminate as specified.
(b) If,
however, during the Term and without Cause as defined in Section 6(c),
either
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(i)
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the
Company terminates the Agreement,
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(ii) the
Company affirmatively provides written notice to the Employee, prior to the
ninetieth (90th) day
before the
expiration of the Term, that the Agreement will not be extended beyond the
expiration of the Term for one Extended Term, if any, or
(iii) the
Company and the Employee simply fail to mutually agree in writing prior to
the
ninetieth (90th) day
before the
expiration of the Term to extend the Term for the single two year Extended
Term,
if any,
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the
Term
will in fact expire as of the end of the Term, as specified herein, but the
Employee will be entitled to the severance benefits set forth in either
Section 6(e) (if Section 3(b)(i) or Section 3(b)(ii) applies) or
Section 6(f) (if Section 3(b)(iii) applies).
Following
the Term or the single Extended Term, if any, any continued employment, unless
pursuant to another written employment agreement, if any, shall be on an
at-will
basis, subject to such terms and conditions as the parties may mutually agree
in
writing.
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4.
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Compensation.
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(a) Base
Salary. During the Term or the
Extended Term, if any, unless otherwise mutually agreed in writing, the Employee
will receive an annual base salary of $160,000 (the “Base Salary”), payable in
accordance with the Company’s normal payroll practices in effect from time to
time. Such Base Salary shall be subject to periodic review, and may
be increased, but not decreased, from time to time at the Board of Director’s
sole discretion upon the recommendation of the Company’s Compensation
Committee.
(b) Bonus. During
the Term or the extended Term, if any, unless otherwise mutually agreed in
writing, the Employee will be eligible to receive a bonus at such times and
in
such amounts, if any, as the Company’s Board of Directors, on the recommendation
of its Compensation Committee, may determine, in the exercise of its sole
and
exclusive discretion. Any such bonus compensation may be either
performance based, consistent with the requirements of Section 162 of the
Internal Revenue Code of 1986, as amended, or discretionary, in whole or
in
part, and may be based upon the provisions of the Company’s Officer Incentive
Plan or awarded in the exercise of the Board’s discretion, upon the
recommendation of its Compensation Committee, in recognition of the Employee’s
performance of his Duties in an extraordinary manner deserving of additional
compensation. Nothing in this Agreement, however, shall limit the
Board’s discretion to adopt, amend or terminate any performance-based or any
other bonus plan.
(c) Stock
Options; Restricted Stock. During the
Term or the Extended Term, if any, the Employee shall be eligible to participate
in such other stock option, restricted stock or other equity-based incentive
plans, including any plans contemplating the potential grant of incentive
stock
options, non-qualified stock options, restricted stock, or various other
equity
based awards, that may be adopted by the Company from time to time;
provided, however, that nothing herein shall be deemed to
entitle the Employee to any specific benefit grant or award (any such grant
or
award to be solely discretionary with the Board, upon the recommendation
of the
Compensation Committee) or to limit the Board’s discretion to adopt, amend or
terminate any plan or program.
(d) Other
Benefit Plans. The Company agrees
that, if otherwise eligible, the Employee will be covered by or will be entitled
to participate in any vacation programs, 401(k) plans or programs, disability
or
life insurance plans or programs, medical and/or hospitalization plans, and/or
in any and all other benefit plans which may be adopted from time to time
by the
Company during the Term or the Extended Term, if any, for the general benefit
of
the Company’s senior executives. Nothing herein, however, shall limit
the Company’s ability to exercise the discretion provided to it under any such
benefit plan, or otherwise in its discretion to adopt, amend or terminate
any
such benefit plan or program.
(e) Business
Expenses. The Company shall reimburse
the Employee for all ordinary and necessary business-related expenses incurred
by him while carrying out
his employment responsibilities hereunder. Such
reimbursement shall be in accordance with the Company’s policies and practices
regarding the types or amounts of business expenses for which the Employee
may
be entitled to reimbursement hereunder, including any required
pre-authorizations, and to establish policies regarding such
reimbursements.
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5.
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Agreement
to Maintain
Confidentiality.
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(a) Without
the Company’s prior consent, the Employee shall not divulge any confidential
business information, and he agrees and covenants that all confidential business
information regarding the Company’s business practices and processes, its
marketing plans and methods, its operations analyses and software, customer
and
client lists and identities, however developed or generated, as well as
information concerning customer preferences and current or prospective business
opportunities, its financial and budgetary information, business development
ideas and strategies, and its other trade information, trade secrets, know-how,
and other information regarding the Company’s affairs (“Confidential Business
Information”) has been and will continue to be received and held by the Employee
in the strictest confidence. The Employee agrees not to divulge to
any other person or use for his personal benefit or for
the benefit of any other person, any such Confidential Business Information,
except insofar as that person has a need to know such Confidential Business
Information in the ordinary course of the Company’s business and for its
benefit. The Employee further agrees that, upon expiration of the
Term or the Extended Term, if any, or upon earlier termination of the Agreement,
regardless of reason or by whom terminated, he will not
exploit and will surrender to the Company any and all documents, records
and
rights, in whatever form, that may be in his possession or
control containing any such Confidential Business Information, as well as
any
and all other property that may belong to the Company, including, without
limitation, computer hardware and software, pagers, PDAs, Blackberries, cell
phones and other electronic equipment, notes, reports, studies and all
electronically stored information.
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(b) For
purposes of this Agreement, information shall not be deemed to constitute
“Confidential Business Information” to the extent that the information (i) is in
the public domain, or hereafter becomes generally known or available outside
the
Company through no action or omission on the part of the Employee in violation
of this Agreement, (ii) is furnished to any person by the Company without
restriction on disclosure, (iii) becomes known to the Employee from a source
other than the Company, without a breach of any obligation hereunder, (iv)
is
required to be disclosed by law (in which case the Employee will give prompt
written notice to the Company of any such required disclosure to the extent
such
notice would not be prohibited by law), or (v) is disclosed after written
approval for disclosure has been granted by the Company.
(c) The
provisions of this Section 5 shall survive any expiration of the Term or
the Extended Term, if any, or the prior termination of this
Agreement.
6. Termination
of Employment.
(a) Termination
Due to Death. Employee’s employment
with the Company will automatically terminate immediately upon
his death, and Employee’s estate or designated
beneficiary, in addition to any life insurance benefit payable to the Employee
or his designated beneficiary, will be entitled to
(i) any earned but unpaid Base Salary to the date of termination, (ii) in
the discretion of the Board, upon the recommendation of the Compensation
Committee, any pro rata bonus for the partial calendar year to the date of
Employee’s death, and (iii) any unpaid vacation and unreimbursed expenses
payable hereunder. Unless otherwise required, and subject to the provisions
of
Section 8(a), all payments shall be made within 30 days of Employee’s
termination of employment, except for the pro rata bonus, which shall be
paid
within 2½ months of the end of the fiscal year in which the termination
occurred. Except for the foregoing payment amounts, Employee shall be entitled
to no other compensation, benefits or payments.
(b) Termination
Due to Disability. If, during the Term
or the Extended Term, if any, the Employee suffers a “Disability” as defined
herein, the Company, in the exercise of its sole discretion, shall be entitled
to terminate Employee’s employment hereunder, immediately upon written notice to
the Employee of such decision, subject, however, to the payment to the Employee
of (i) any earned but unpaid Base Salary, (ii) in the discretion of the
Board upon the recommendation of the Compensation Committee, any pro rata
bonus
for the partial calendar year to the date of such notice, and (iii) unpaid
vacation and unreimbursed expenses payable hereunder. For purposes of this
Agreement, “Disability” shall mean a physical or mental impairment that entitles
the Employee to receive benefits under the Company’s long-term disability plan,
if any, or otherwise, upon the determination by the Company, after consultation
with a medical doctor selected by the Company, that the Employee, for a
continuing period of one hundred fifty (150) days, has been unable, in spite
of
reasonable accommodation, to perform the essential functions required of
his position. Unless otherwise required, and subject to
the provisions of Section 8(a), all payments shall be made within 30 days
of
Employee’s termination of employment, except for the pro rata bonus, which shall
be paid within 2½ months of the end of the fiscal year in which the termination
occurred. Except for the foregoing payment amounts, Employee shall be entitled
to no other compensation, benefits or payments.
(c) Termination
by Company for
Cause. During the Term or the Extended
Term, if any, the Company shall be entitled to terminate Employee’s employment
hereunder for “Cause,” as defined below, by providing written notice to the
Employee of such decision. For purposes of this Agreement, Cause
shall mean (i) the commission by the Employee of an act of malfeasance,
dishonesty, fraud or breach of trust against the Company or any of its
affiliates, employees, clients or vendors, (ii) the continued non-performance
or
breach by the Employee of any of his material Duties or
obligations hereunder, after a written demand by the Company for correction
of
such non-performance or breach is delivered to the Employee, which specifically
identifies the section or sections of the Agreement or the non-performance
of
the specific Duties which the Company asserts have been the subject of the
non-performance or the breach and the manner in which the Company asserts
that
the Employee has not performed or has breached the obligations referenced
therein, and which is not cured by the Employee within thirty (30) days of
his
receipt of such written demand; or (iii) the Employee’s indictment, conviction
of or plea of guilty or no contest to any felony or any crime involving moral
turpitude.
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Upon
termination of this Agreement for Cause, the Company shall pay the Employee
any
earned but unpaid Base Salary to the date of termination, any earned and
unpaid
vacation and any unreimbursed expenses otherwise payable hereunder; provided,
however, that nothing herein shall be deemed to preclude the Company from
asserting a damage claim, if any, against the Employee by reason of
circumstances related to the termination for Cause. All such payments
shall be made within 30 days of Employee’s termination of
employment. Except for the foregoing payment amounts, Employee shall
be entitled to no other compensation, benefits or payments.
(d) Termination
by Employee During the Term or Extended
Term. The Employee may voluntarily
terminate employment with the Company without reason at any time during the
Term
or the Extended Term, if any, and, if so terminated, shall be entitled to
(i)
earned but unpaid Base Salary to the date of termination, (ii) in the discretion
of the Board, upon the recommendation of the Compensation Committee, any
pro
rata bonus for the partial calendar year to the date of termination, and
(iii)
any earned and unpaid vacation and unreimbursed expenses otherwise payable
hereunder. Unless otherwise required, and subject to the provisions of Section
8(a), all payments shall be made within 30 days of Employee’s termination of
employment, except for any pro rata bonus, which, if awarded, shall be paid
within 2½ months of the end of the fiscal year in which the termination
occurred. Except for the foregoing payment amounts, Employee shall be
entitled to no other compensation, benefits or payments.
(e) Termination
by Company Without Cause. If, during
the Term or the Extended Term, if any, the Company either terminates this
Agreement and Employee’s employment hereunder, as contemplated by
Section 3(b)(i), or gives written notice during the Term of non-extension
as contemplated by Section 3(b)(ii), in either case without Cause as
defined in Section 6(c), the Employee shall be entitled to
(i) if
there are less than six (6) remaining months in the Term or, if applicable,
in
the Extended Term, (A) continued payments of Base Salary each month for the
duration of the Term or, if applicable, the Extended Term, subject in any
event
to Employee’s continued performance of his obligations described in
Sections 7(a) and 7(b), (B) in the discretion of the Board, upon the
recommendation of the Compensation Committee, a pro rata portion of any bonus
for the partial calendar year of the Term or, if applicable, the Extended
Term
within which the termination occurred, to the date of termination, subject
in
any event to Employee’s continued performance of
his obligations described in Sections 7(a) and 7(b),
(C) any earned and unpaid vacation and unreimbursed expenses due the
Employee to the point of termination, and (D) subject in any event to Employee’s
continued performance of his obligations described in Sections 7(a) and
7(b), continued payments of Base Salary over and above the amount described
in
Section 6(e)(i)(A), for an additional period of eighteen (18) months,
payable periodically in accordance with the Company’s normal payroll periods and
practices; or
(ii) if
there are more than six (6) remaining months in the Term or, if applicable,
the
Extended Term, (A) in the discretion of the Board, upon the recommendation
of
the Compensation Committee, a pro rata portion of any bonus for the partial
calendar year of the Term or, if applicable, the Extended Term within which
the
termination occurred, to the date of termination, subject in any event to
Employee’s continued performance of his obligations
described in Sections 7(a) and 7(b), (B) any earned and unpaid vacation and
unreimbursed expenses due the Employee to the point of termination, and (C)
continued payments of Base Salary, payable periodically in accordance with
the
Company’s normal payroll periods and practices, for an aggregate period of
twenty-four (24) months following termination, subject in any event to
Employee’s continued performance of his obligations described in
Sections 7(a) and 7(b).
For
the
avoidance of doubt, notwithstanding anything to the contrary set forth herein,
any payments required to be made pursuant to the provisions of
Sections 6(e)(i)(A), 6(e)(i)(B), 6(e)(i)(D), 6(e)(ii)(A) or 6(e)(ii)(C)
herein shall be payable to the Employee only if and so long as the Employee
has
been and continues to be in compliance with the provisions of Sections 7(a)
and
7(b) of this Agreement; and provided that in the event that, even after
having received payments thereunder, in whole or in part, the Employee breaches
his covenants and obligations pursuant to
Section 7(a) and/or 7(b) or is found to have been in breach of any or both
of such provisions prior to or concurrently with having received any of the
foregoing payments, the Company shall be entitled, through institution of
legal
proceedings, to recover its payments to the Employee, in addition to any
and all
other remedies to which the Company may be entitled by reason of such breach,
including the remedy set forth in Section 7(c).
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If
the
Employee’s employment is terminated hereunder by the Company without Cause, all
unvested stock options held by the Employee shall be deemed fully vested,
effective as of the date of termination; provided that all such vested
stock options shall be exercisable by the Employee, subject, however, to
the
provisions of the particular Company plan or program pursuant to which the
stock
options were granted and to the terms of the actual stock option agreement
and
option, only during the ninety (90) day period following the date of
termination.
Except
for the foregoing payment amounts, and provisions regarding stock options
and
restricted stock, Employee shall be entitled to no other compensation, benefits
or payments.
(f) Non-Extension
by the Company. If, as contemplated by
the provisions of Section 3(b)(iii), and in accordance with the
requirements thereof, the Company, without Cause, and the Employee, during
the
Term, simply fail to mutually agree in writing to extend the Term for the
single
Extended Term contemplated thereby, then
(i) subject
only to the mutual agreement of both the Company and the Employee, (A)
Employee’s employment hereunder may continue to the end of the Term, but not the
Extended Term, with the Employee’s Duties, compensation, benefits and all other
terms and conditions set forth herein continuing to the end of the Term,
without
change, and (B) following the expiration of the Term, the Employee’s employment
shall terminate as contemplated, but Employee, subject in any event to
Employee’s continued performance of his obligation described in
Sections 7(a) and 7(b), shall be entitled to continue to receive an amount
equal in aggregate to the sum of his Base Salary multiplied by eighteen (18)
months, payable, however, periodically in accordance with the Company’s normal
payroll periods and practices, but ratably over a period of twenty-four (24)
months following termination of employment, or
(ii) in
the event that the Company and the Employee do not mutually agree that Employee
shall continue performing his Duties to the end of the Term, then, subject
to
his continued performance of his obligations described in Sections 7(a) and
7(b), the Employee shall be entitled to receive, (A) Base Salary to the end
of
the Term, (B) earned vacation pay and any unreimbursed expenses otherwise
due and payable hereunder to the point of termination, (C) in the discretion
of
the Board, and upon the recommendation of the Compensation Committee, any
pro
rata portion of any bonus to the point of termination, and, if the Board
so
determines, for the remaining portion of the Term, all in accordance with
the
Company’s normal payroll practices and procedures, and (D) the Employee shall be
entitled to continue to receive an amount equal in aggregate to the sum of
his Base Salary multiplied by eighteen (18) months,
payable, however, periodically in accordance with the Company’s normal payroll
periods and practices but ratably over a period of twenty-four (24) months
following termination employment.
Notwithstanding
anything to the contrary set forth herein, any payments required to be made
pursuant to the provisions of Sections 6(f)(i)(B), 6(f)(ii)(A), 6(f)(ii)(C)
and 6(f)(ii)(D) herein shall be payable to the Employee only if the Employee
has
been and continues to be in compliance with the provisions of Sections 7(a)
and
7(b) of this Agreement; and provided that in the event that, after
receiving payments thereunder, in whole or in part, the Employee thereafter
breaches his covenants and obligations pursuant to Section 7(a) and/or 7(b)
or is found to have been in breach of any or both of such provisions prior
to or
concurrently with having received any of the foregoing payments, the Company
shall be entitled, through institution of legal proceedings, to recover its
payments to the Employee, in addition to any and all other remedies to which
the
Company may be entitled by reason of such breach, including the remedy set
forth
in Section 7(c).
If
the
Term is not extended, as contemplated by the provisions of
Sections 3(b)(ii) and this 6(f), then, subject to the following paragraphs,
vesting of any stock options and the satisfaction of any time-based restrictions
on any restricted stock theretofore issued to the Employee, shall continue
to
operate in the manner contemplated as for any other employee during the balance
of the original Term, and, effective as of the end of the Term, any then
unvested stock options shall be deemed vested but exercisable only during
the
90-day period following the end of the Term.
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If
the
Employee’s actual employment terminates as of the date of the non-renewal notice
and prior to the end of the Term, any of the Employee’s stock options unvested
as of that date shall be deemed fully vested, subject to their exercise,
if at
all, only within the 90-day period following the date employment ends, and
any
time-based restrictions in connection with any restricted stock held by the
Employee as of the date of termination of employment, shall likewise be deemed
satisfied to the extent of the remaining period during which the Employee
is
entitled to receive compensation hereunder.
Subject
to the provisions of Section 8(a), all payments required to be made
pursuant to the provisions of Sections 6(e)(i)(C), 6(e)(ii)(B) and
6(f)(ii)(B) shall be made within 30 days of Employee’s termination of
employment, and any pro rata bonus, if awarded, shall be paid within
2½ months of the end of the fiscal year in which the termination
occurred.
(g) Change
in Control. In the event that a change in control
occurs, as defined herein, then,
(i) if
either during the Term or the Extended Term, if any, and in addition to and
not
in lieu of the payments and benefits to which Employee may be entitled under
Section 6(d) (if Employee should elect to voluntarily terminate his employment),
but subject only to Employee’s willingness, in connection with the proposed or
actual change in control transaction (and if requested to do so by the Company),
to continue to perform his duties and responsibilities hereunder for a period
not to exceed one hundred thirty-five(135) days following the change in control
(the “Post CIC Term”), and if Employee does so agree, Employee may at any time
prior to or during the Post CIC Term, to voluntarily terminate his employment
hereunder, by written notice, effective (unless earlier or later agreed in
writing) at the conclusion of the Post CIC Term, to
(A) continued
payments of Base Salary for an additional period of eighteen (18) months
following termination of employment, payable periodically in accordance with
the
Company’s normal payroll periods ad practices,
(B) to
the shortened non-competitive and non-solicitation restrictive periods set
forth
in Section 6(g)(iv), and
(C) to
have all unvested stock options then held by Employee fully vest, as of the
date
of termination of employment; provided that all such vested stock
options shall be exercisable by Employee, subject in any event to the provisions
of the particular Company plan or program pursuant to which the stock options
were granted and to the terms of the actual stock option agreement and option,
only during the ninety (90) day period following the date of
termination;
(ii) if
during the Term and, without Cause, the Company elects to terminate Employee’s
employment within the scope of Section 3(b)(i) or elects to give written
notice
of non-extension within the scope of 3(b)(ii), or if the Company and Employee
fail to mutually agree to extend the Term as contemplated by Section 3(b)(iii),
Employee shall continue to be entitled to the severance benefits described
in
Section 6(e)(i), 6(e)(ii) or 6(f), as the case may be, but Employee shall
be
entitled to the shortened non-competition and non –solicitation restrictive
periods set forth in Section 6(g)(iv); or
(iii) if
during the Extended Term, if any, and unless, by the time of expiration hereof,
Employee and the Company (or the Company’s successor after the change in
control) have entered into a new employment agreement, satisfactory
to Employee, in replacement of or to succeed this Agreement, Employee shall
be
entitled
(A) to
elect, under Section 6(g)(i) to voluntarily terminate this Agreement and
to
become entitled to the severance benefits described therein, or
(B) to
elect to continue to be entitled to his rights and benefits under this
Agreement, to the end of the Extended Term, and, thereafter, to become entitled
to
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(x) continued
payment of Base Salary for an additional period of twelve (12) months following
termination of employment, payable periodically in accordance with the Company’s
normal payroll periods and practices, and
(y) the
shortened non-competition and non-solicitation restrictive periods set forth
in
Section 6(g)(iv); and
(iv) for
purposes of the non-competition and non-solicitation restrictions set forth
in
Section 7(a) and 7(b), the restrictive period for purposes of Section 7(a)
(non-competition) shall be shortened to six (6) months, and the restrictive
period for purposes of Section 7(b) (non-solicitation) shall be shortened
to
twelve (12) month, in either case following termination of employment and
without regard to the fact that continued severance payments of Base Salary
may
continue hereunder beyond the expiration of such restrictive
periods.
For
purposes of this Section 6(g), “change in control” shall mean: the
direct or indirect sale, transfer, conveyance or other disposition, in one
or a
series of related transactions, of all or substantially all of the properties
or
assets of the Company; the assumption by any “person” or “group” (as such terms
are used in Section 13(d) and 14(d) of the Securities Act of 1934, as amended)
of the beneficial ownership, directly or indirectly, of Company securities
representing more than 50% of the combined voting power of the Company’s then
outstanding securities eligible to vote for the election of the board of
directors; the consummation of a merger, consolidation, statutory share exchange
or similar form of corporate transaction involving the Company or any of
its
subsidiaries that requires the approval of the Company’s shareholders (a
“Business Combination”), unless immediately following such Business Combination,
50% or more of the total voting power of the survivor or, if applicable,
the
ultimate parent corporation that directly or indirectly has beneficial ownership
of 100% of the voting securities eligible to elect directors of the supervisor
,
is represented by the Company’s voting securities that were outstanding
immediately prior to such Business Combination (before or after conversation)
and such voting power among the holders thereof is in substantially the same
proportion as the voting power of such voting securities among the holders
thereof immediately prior to the Business Combination; or the adoption of
a plan
relating to the liquidation or dissolution of the Company. In
addition, for purposes of the definition of “change in control,” if the
incumbent directors cease to constitute at least a majority of the board
of
directors of the Company, and this change has occurred in connection with
a
hostile transaction not approved by the incumbent board prior to the change
in
control, such circumstance shall likewise constitute a change in
control.
7. Non-Competition
and Non-Solicitation.
(a) Non-Competition. The
Employee agrees that, during the Term or Extended Term, if any, and for a
period
of twenty-four (24) months immediately following the earlier to occur of
the
expiration of the Term or Extended Term, if any, or actual termination of
Employee’s employment hereunder, for whatever reason and by whomever initiated,
and whether or not the Employee is entitled to continue to receive compensation
under the provisions of Section 6(e), he will not, directly or indirectly,
anywhere within a seventy-five (75) mile radius of the City of Fort Xxxxx,
Indiana or any other community outside of Fort Xxxxx, Indiana in which the
Company or any of its subsidiaries has a banking or other business office
and
location, engage in any business offering products or services the same as
or
competitive with the products or services that, during the Term or the Extended
Term, if any, are (or are planned to be) offered or supplied by the Company
or
its subsidiaries, whether as an individual or sole proprietor or as owner,
partner, principal, stockholder, officer, director, manager, agent, consultant
or advisor, or by or through the lending of any other form of
assistance. For purposes of this restriction, which the Employee
agrees is reasonable and tailored specifically to protect the legitimate
business interests of the Company and its subsidiaries, while not restricting
the Employee’s ability to engage in the same or similar businesses outside the
restricted area, a passive investment in an enterprise that is competitive
with
the Company, without more, in an amount not exceeding two percent (2%) of
the
equity interest in such entity, shall not be deemed a violation of this
provision.
(b) Non-Solicitation. The
Employee agrees that, during the Term or the Extended Term, if any, and for
a
period of twenty-four (24) months immediately following the earlier to occur
of
the expiration of the Term or Extended Term, if any, or the earlier termination
of Employee’s employment hereunder, for whatever reason and by whomever
initiated, and whether or not the Employee is entitled to continue to receive
compensation under the provisions of Sections 6(e), or 6(f), he will not,
directly or indirectly (i) solicit, take away, hire, employ or endeavor to
employ any person employed by the Company, or (ii) solicit, take away or
attempt
to take away any of the existing or prospective customers or clients, vendors
or
licensors of the Company or any of its subsidiaries (as of the date of
expiration or actual termination of employment, whichever is later) for the
purpose of conducting any business which directly or indirectly provides
banking, financial or other services similar in nature to the services provided
by the Company or any of its subsidiaries. As used herein, the term
“prospective customers or clients” shall include persons or entities with whom
the Company or its subsidiaries have been in contact within the previous
twelve
(12) months for the purpose of establishing or conducting a business
relationship.
7
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(c)
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Specific
Enforcement.
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(i) The
Employee acknowledges that any violation of any provision of this Section 7
by him will cause irreparable damage to the Company, that such damage will
be
incapable of precise measurement, and that, as a result, the Company will
not
have an adequate remedy at law to redress the harm which such violation will
cause. Therefore, in the event of any violation of any provision of
this Section 7 by the Employee, the Employee agrees that, in addition to
all other remedies that the Company or any of its subsidiaries may have at
law
or in equity, including the right to discontinue paying any further compensation
under the provisions of Sections 6(e) or 6(f), or the right to xxx for damages,
the Company shall be entitled to injunctive relief, including, without
limitation, the right to obtain a temporary restraining order and a temporary
injunction to restrain any violation of this Section 7. In such
event, the Company shall not be required to post a bond in excess of the
minimum
bond required under the civil rules of the court having jurisdiction over
the
controversy.
(ii) In
the event that a court shall find that the Employee has violated any of the
restrictions set forth in this Section 7, then the period of all
restrictions set forth herein shall automatically be extended by the number
of
days that the court determined the Employee to have been in violation of
such
restriction. Furthermore, in addition to any other relief to which
the Company shall be entitled, the Company shall be entitled to recover from
the
Employee its reasonable costs and attorney fees incurred by the Company in
seeking enforcement of these provisions.
(iii) If
the Employee should breach any of the provisions of Section 7(a) or (b),
the Employee shall be required to repay to the Company any and all benefits
payable under Sections 6(e) and (f) as a consequence of the termination of
his employment.
8. Miscellaneous.
(a) Special
Provision Regarding Section 409A of the Internal Revenue
Code. Notwithstanding anything in this
Agreement to the contrary, to the extent that any amount payable under this
Agreement may constitute an amount payable under a “nonqualified deferred
compensation plan,” as defined in Section 409A of the Internal Revenue Code of
1986, as amended, (the “Code”) such payment will be made by the Company in
compliance with any applicable requirements of Code Section 409A (including
the
requirement that payment be delayed for six (6 ) months following the Employee’s
“separation of service” if the Employee is a “specified employee” under Code
Section 409A, to the extent applicable).
(b) Other
Rights. This Agreement shall not
prevent or limit the Employee’s continuing or future participation in any
benefit, bonus, incentive or other plans, if any, provided by the Company
or any
of its subsidiaries and for which the Employee may qualify, nor shall this
Agreement limit or otherwise affect such rights as the Employee has under
any
other agreements with the Company or any of its subsidiaries. Amounts
which are vested benefits or which the Employee is otherwise entitled to
receive
under the terms of any plan of the Company or any of its subsidiaries and
any
other payment or benefit required by law at or after termination of employment
shall be payable in accordance with such plan or applicable law, except
as specifically provided by this Agreement.
(c) Entire
Agreement; Amendments. This Agreement
discharges and cancels all previous and contemporaneous agreements, both
written
and oral, between the Employee and the Company. This Agreement
constitutes the entire agreement between the parties with respect to the
subject
matter hereof. No agreements, representations or statements of any
party not contained herein shall be binding on either party, and no amendment
or
variation of the terms and conditions of this Agreement shall be valid unless
in
writing and signed by both parties.
8
(d) Assignability;
Successors of the Company.
(i) This
Agreement and the rights and duties created hereunder shall not be assignable
or
delegable by Employee. The Company may, at its option and without
Employee’s consent, assign its rights and duties hereunder to any successor
entity, Company affiliate or subsidiary, or any transferee of the Company’s
assets.
(ii) The
Agreement will be binding upon and inure to the benefit of the Company, the
Employee and their respective heirs, representatives and
successors. The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the
same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, the term “Company” means
the Company as hereinbefore defined and any successor to its business and/or
assets which assumes and agrees to perform this Agreement by operation of
law,
or otherwise.
(e) No
Waiver. No failure or delay by any
party to this Agreement to enforce any rights specified hereunder shall operate
as a waiver of such right, nor will any single or partial exercise of a right
preclude any further or later enforcement of the same right within the period
of
the applicable statute of limitations.
(f) Governing
Law. This Agreement and the
performance of the parties under this Agreement shall be construed in accordance
with the laws of the State of Indiana, regardless of the jurisdiction in
which
the action or proceeding may be commenced.
(g) Notices. All
notices and other communications provided for or contemplated by this Agreement
shall be in writing and shall be deemed to have been duly given when delivered
and received by the other party, or when sent by recognized overnight courier,
or by faxed communication (with overnight delivery of a hard copy thereof)
to
the following addresses and/or contact numbers:
|
If
to the Company:
|
Tower
Financial Corporation
|
Attn: Xxxxxx
X. Xxxxxxxx
000
Xxxx
Xxxxx Xxxxxx, Xxxxx 000
Xxxx
Xxxxx, XX 00000
|
|
If
to Employee:
|
Xxxxxxx
X. Xxxxxx, CPA
|
0000
Xxxxxxxxxx Xxxxx
Xxxx
Xxxxx, Xxxxxxx 00000
or
to
such other address or contact number as either party hereto will have furnished
to the other in writing in accordance with this Section 8, except that such
notice of change of address or contact number shall be effective only upon
receipt.
(h) Counterparts. This
Agreement may be exercised in any number of counterparts, each of which as
so
executed shall be deemed to be an original, and such counterparts shall together
be deemed to constitute but one agreement.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
| TOWER FINANCIAL CORPORATION | ||||
| By: |
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| Its: |
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| Date: |
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Date:
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