Exhibit 10.16
NOTE: Each director of the Registrant has entered into the following form of
indemnification agreement with the Registrant effective as of February
13, 2007.
FORM OF
DIRECTOR INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT, effective as of February 13, 2007, by and
between Fidelity Bancorp, Inc., a Pennsylvania corporation (the "Company"), and
[Name of Director] (the "Indemnitee").
WHEREAS, it is essential to the Company to retain and attract as
directors and officers the most capable persons available;
WHEREAS, Indemnitee is a director and/or officer of the Company and/or
is serving at the request of the Company as a director and/or officer of its
wholly owned subsidiary, Fidelity Bank, PaSB (the "Bank");
WHEREAS, the Company and the Indemnitee recognize the increased risk of
litigation and other claims being asserted against directors and officers of
financial institutions and their holding companies in today's environment;
WHEREAS, the Company's Articles of Incorporation provide that the
Company shall indemnify any person who is or was a director, officer, employee
or agent of the Company or who is or was serving at the Company's request as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses actually and reasonably
incurred by him in connection with the defense or settlement of an action or
suit;
WHEREAS, the Company's Articles of Incorporation further provide that
the indemnification and advancement expenses provided in Article 9 thereof shall
not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any insurance or other agreement, vote of
stockholders or directors or otherwise;
WHEREAS, in recognition of Indemnitee's need for substantial protection
against personal liability in order to assure Indemnitee's continued service to
the Company and/or the Bank, in an effective manner and in part to provide
Indemnitee with specific contractual assurance that the indemnification
protection provided by the Company's Articles of Incorporation and Bylaws, the
Pennsylvania Business Corporation Law, and Federal laws and regulations will be
available to Indemnitee (regardless of, among other things, any change in the
Pennsylvania Business Corporation Law, Federal laws and regulations or any
amendment to the Company's Articles of Incorporation or Bylaws limiting the
indemnification rights of
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Indemnitee or any change in the composition of the Company's or the Bank's Board
of Directors, or any acquisition transaction relating to the Bank or the
Company), and in order to induce Indemnitee to continue to provide services to
the Company and to the Bank as an officer and/or director thereof, the Company
wishes to provide in this Agreement for Indemnification of and the advancing of
expenses to Indemnitee to the fullest extent (whether partial or complete)
permitted by law and as set forth in this Agreement, and, to the extent
insurance is maintained, for the continued coverage of Indemnitee under the
Company's and Bank's directors' and officers' liability insurance policies;
NOW, THEREFORE, in consideration of the promises and commitments
between the parties and of Indemnitee continuing to serve the Company directly,
or at its request, with another enterprise, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. Certain Definitions.
(a) Change in Control: shall mean an event of a nature that
(I) would be required to be reported in response to Item 5.01 of the current
report on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or
15(d) of the Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx"); or (II)
results in a direct or indirect acquisition of control of the Company or the
Bank, within the meaning of the Bank Holding Company Act of 1956 or the Change
in Bank Control Act, and the Rules and Regulations promulgated thereunder, as in
effect on the date hereof; or (III) without limitation, such a Change in Control
shall be deemed to have occurred at such time as (a) any "person" (as the term
is used in Section 13(d) and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 promulgated under the Exchange
Act), directly or indirectly, of securities or other ownership interests of the
Bank, or the Company, representing twenty-five percent (25%) or more of the
combined voting power of the outstanding securities of the Bank, or the Company,
except for any securities purchased by an employee stock ownership plan and
trust sponsored by the Bank or the Company or (b) individuals who constitute the
Board of Directors of the Bank, or of the Company, on the date hereof
("Incumbent Board") cease for any reason to constitute at least a majority of
the Board thereof; provided that any person becoming a director subsequent to
the date hereof whose election was approved by a vote of at least three-quarters
of the directors comprising the Board of the Bank, or the Company, on the date
hereof, or whose nomination for election by the Bank's or Company's shareholders
or stockholders was approved by the same nominating committee serving under an
Incumbent Board, shall be, for purposes of this clause (b), considered as though
he were a member of the Incumbent Board or (c) the occurrence of a plan of
reorganization, merger, consolidation, sale of all or substantially all the
assets of the Bank or the Company, or a similar transaction in which the Bank or
the Company is not the resulting entity.
(b) Expenses: includes attorneys' fees and all other costs,
travel expenses, fees of experts, transcript costs, filing fees, witness fees,
telephone charges, postage, delivery, service fees, expenses and obligations of
any nature whatsoever paid or incurred in connection
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with investigating, defending, being a witness in or participating in (including
an appeal), or preparing to defend, be a witness in or participate in any claim
relating to any Indemnifiable Event.
(c) Indemnifiable Event: any event or occurrence that takes
place either prior to or after execution of this Agreement related to the fact
that Indemnitee is or was a director, officer, employee, agent, associate,
fiduciary, manager, member, partner, promoter, trustee of or holding a similar
position with the Bank or the Company, or any affiliate thereof, or is or was
serving at the request of the Company as a director, officer, employee, trustee,
agent, associate, fiduciary, manager, member, partner, promoter, trustee of or
holding a similar position with another corporation, partnership, joint venture,
employee benefit plan, trust or other enterprise, or by reason of anything done
or not done by Indemnitee in any such capacity. Without limitation of any
indemnification provided hereunder, an Indemnitee serving (i) another
corporation, partnership, joint venture or trust of which twenty percent (20%)
or more of the voting power or residual economic interest is held, directly or
indirectly, by the Company or the Bank, or (ii) any employee benefit plan of the
Company or the Bank or any entity referred to in clause (i), in any capacity
shall be deemed to be doing so at the request of the Company or the Bank.
(d) Liability: any obligation incurred with respect to a
proceeding to pay a judgment, settlement, penalty, or fine including an excise
tax assessed with respect to an employee benefit plan.
(e) Potential Change in Control: shall be deemed to have
occurred if: (i) the Bank or the Company enters into an agreement or
arrangement, the consummation of which would result in the occurrence of a
Change in Control; (ii) any person (including the Bank or the Company) publicly
announces an intention to take or to consider taking actions which if
consummated would constitute a Change in Control; or (iii) the Board adopts a
resolution to the effect that, for purposes of this Agreement, a Potential
Change in Control has occurred.
(f) Proceeding: any threatened, pending or completed action,
suit, proceeding or alternate dispute resolutions mechanism, or any inquiry,
hearing or investigation, whether conducted by the Bank, the Company or any
other party, the Indemnitee in good faith believes might lead to the institution
of any such action, suit, proceeding or alternate resolution mechanism, whether
civil, criminal, administrative, or investigative and whether formal or
informal.
(g) Reviewing Party: any appropriate person or body consisting
of a member or members of the Board of Directors of the Company or any other
person or body appointed by the Board of Directors of the Company who is not a
party to the particular claim for which Indemnitee is seeking indemnification,
or Independent Legal Counsel.
(h) Independent Legal Counsel: Independent Legal Counsel shall
refer to an attorney, selected in accordance with the provisions of Section 3
hereof, who shall not have
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otherwise performed services for the Bank, the Company or Indemnitee within the
last five years (other than in connection with seeking indemnification under
this Agreement). Independent Legal Counsel shall not be any person who, under
the applicable standards of professional conduct then prevailing, would have a
conflict of interest in representing any of the Bank, the Company or Indemnitee
in an action to determine Indemnitee's rights under this Agreement, nor shall
Independent Legal Counsel be any person who has been sanctioned or censured for
ethical violations of applicable standards of professional conduct.
2. Basic Indemnification Arrangement.
(a) In the event Indemnitee was, is or becomes at any time a
party to or witness or other participant in, or is threatened to be made a party
to or witness or other participant in, a Proceeding by reason of (or arising in
part out of) an Indemnifiable Event, the Company shall indemnify Indemnitee to
the fullest extent now or hereafter authorized or permitted by law (including
indemnification to the fullest extent the Company may provide for by agreement)
as soon as practicable but in any event no later than thirty days after written
demand is presented to the Company, against any and all Liabilities and
Expenses, (including all interest, assessments and other charges paid or payable
in connection with or in respect of such Liabilities and Expenses) of such
Proceeding and any federal, state, local or foreign taxes imposed on the
Indemnitee as a result of the actual or deemed receipt of any payments under
this Agreement (including the creation of the trust referred to in Section 4
hereof). If so requested by Indemnitee, the Company shall advance (within five
business days of such request) any and all Expenses to Indemnitee (an "Expense
Advance"). Notwithstanding anything in this Agreement to the contrary, prior to
a Change in Control, Indemnitee shall not be entitled to indemnification
pursuant to this Agreement in connection with any Proceeding initiated by
Indemnitee against the Company, or against any director or officer thereof
unless the Company have joined in or consented to the initiation of such
Proceeding.
(b) Notwithstanding the foregoing, (i) the obligations of
the Company under Section 2(a) shall be subject to the condition that the
Reviewing Party shall not have determined (in a written opinion, in any case in
which the Independent Legal Counsel referred to in Section 3 hereof is involved)
that Indemnitee would not be permitted to be indemnified under applicable law,
and (ii) the obligation of the Company to make an Expense Advance pursuant to
Section 2(a) shall be subject to the condition that, if, when and to the extent
that the Reviewing Party determines that Indemnitee would not be permitted to be
so indemnified under applicable law, the Company shall be entitled to be
reimbursed by Indemnitee (who hereby agrees to reimburse the Company) for all
such amounts theretofore paid; provided, however, that if Indemnitee has
commenced legal proceedings in a court of competent jurisdiction to secure a
determination that Indemnitee should be indemnified under applicable law, any
determination made by the Reviewing Party that Indemnitee would not be permitted
to be indemnified under applicable law shall not be binding and Indemnitee shall
not be required to reimburse the Company for any Expense Advance until a final
judicial determination is made with respect thereto (as to which all rights of
appeal therefrom have been exhausted or lapsed). Indemnitee's obligation to
reimburse the Company for Expense
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Advances shall be unsecured and no interest shall be charged thereon. If there
has not been a Change in Control, the Reviewing Party shall be selected by the
Board of Directors, and if there has be a Change in Control, (other than a
Change in Control which has been approved a majority of the Company's Board of
Directors, who were directors immediately prior to such Change in Control) the
Reviewing Party shall be the Independent Legal Counsel referred to in Section 3
hereof. If there has been no determination to be indemnified in whole or in part
under applicable law, Indemnitee shall have the right to commence litigation in
any court in the Commonwealth of Pennsylvania or in the United States' courts
having subject matter jurisdiction thereof and in which venue is proper seeking
an initial determination by the court or challenging any such determination by
the Reviewing Party or any aspect thereof, or the legal or factual bases
therefor and the Company hereby consents to service of process and to appear in
any such proceeding. Any determination by the Reviewing Party otherwise shall be
conclusive and binding on the Company and Indemnitee.
(c) In the event that Indemnitee is serving as a director,
officer or employee of the Bank, the Company shall cause the Bank to diligently,
promptly, on good faith, and at its own expense pursue any regulatory or other
approvals required for indemnification of the Indemnitee under federal
regulations and all appeals or requests for reconsideration of any regulatory
objection to or denial of such indemnification.
3. Change in Control. The Company agrees that if there is a Change in
Control (other than a Change in Control which has been approved by a majority of
the Company's Board of Directors, who were directors immediately prior to such
Change in Control) then Independent Legal Counsel shall be selected by
Indemnitee and approved by the Company (which approval shall not be unreasonably
withheld) and such Independent Legal Counsel shall determine whether the
Indemnitee is entitled to indemnity payments and Expense Advances under this
Agreement or any other agreement or the Articles of Incorporation or Bylaws of
the Company, now or hereafter in effect relating to claims for Indemnifiable
Events. Such Independent Legal Counsel, among other things, shall render its
written opinion to the Company, and Indemnitee as to whether and to what extent
the Indemnitee will be permitted to be indemnified. The Company agrees to pay
the reasonable fees of the Independent Legal Counsel and to indemnify fully such
Independent Legal Counsel against any and all expenses (including attorneys'
fees), claims, liabilities and damages arising out of or relating to this
Agreement or the engagement of Independent Legal Counsel pursuant hereto.
4. Establishment of Trust. In the event of a Potential Change in
Control, the Company shall, upon written request by Indemnitee, create a trust
for the benefit of Indemnitee and from time to time upon written request of
Indemnitee shall fund such trust in an amount sufficient to satisfy any and all
Expenses reasonably anticipated at the time of each such request to be incurred
in connection with investigating, preparing for and defending any claim relating
to an Indemnifable Event, and any and all judgments, fines, penalties and
settlement amounts of any and all claims relating to an Indemnifiable Event from
time to time actually paid or claimed, reasonably anticipated or proposed to be
paid. The amount or amounts to be deposited in the trust pursuant to the
foregoing funding obligation shall be determined by the
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Reviewing Party, in any case in which the Independent Legal Counsel referred to
above is involved. The terms of the trust shall provide that upon a Change in
Control (i) the trust shall not be revoked or the principal thereof invaded,
without the written consent of Indemnitee, (ii) the trustee shall advance,
within five business days of a request by Indemnitee, any and all Expenses to
Indemnitee (and Indemnitee hereby agrees to reimburse the trust under the
circumstances under which Indemnitee would be required to reimburse the Company
under Section 2(b) of this Agreement), (iii) the trust shall continue to be
funded by the Company, in accordance with the funding obligation set forth
above, (iv) the trustee shall promptly pay to Indemnitee all amounts for which
Indemnitee shall be entitled to indemnification pursuant to this Agreement or
otherwise, and (v) all unexpected funds in such trust shall revert to the
Company, upon a final determination by the Reviewing Party or a court of
competent jurisdiction, as the case may be, that Indemnitee has been fully
indemnified under the terms of this Agreement. The trustee shall be chosen by
Indemnitee. Nothing in this Section 4 shall relieve the Company of any of its
obligations under this Agreement. All income earned on the assets held in the
trust shall be reported as income by the Company for federal, state and foreign
tax purposes.
5. Indemnification for Additional Expenses. The Company shall indemnify
Indemnitee against any and all expenses (including attorneys' fees) and, if
requested by Indemnitee, shall (within five business days of such request)
advance such expenses to Indemnitee, which are incurred by Indemnitee in
connection with any claim asserted against or in connection with any action
brought by Indemnitee for (i) indemnification or advance payment of Expenses by
the Company under this Agreement or any other agreement or Articles of
Incorporation or Bylaws of the Company now or hereafter in effect relating to
claims for Indemnifiable Event and/or (ii) recovery under any directors' and
officers' liability insurance policies maintained by the Company or the Bank
regardless of whether Indemnitee ultimately is determined to be entitled to such
indemnification, advance expense payment or insurance recover, as the case may
be.
6. Partial Indemnity, Etc. If Indemnitee is entitled under any
provisions of this Agreement to indemnification by the Company or the Bank for
some or a portion of the Liabilities and Expenses, but not, however, for all of
the total amount thereof, the Company shall nevertheless indemnify Indemnitee
for the portion thereof to which Indemnitee is entitled. Moreover,
notwithstanding any other provision of this agreement, to the extent that
Indemnitee has been successful on the merits or otherwise in defense of any or
all Proceedings relating in whole or in part to an Indemnifiable Event or in
defense of any issue or matter therein, including dismissal without prejudice,
Indemnitee shall be indemnified against all Expenses incurred in connection
therewith.
7. Defense to Indemnification, Burden of Proof and Presumptions. It
shall be a defense to any action brought by the Indemnitee against the Company
to enforce this Agreement (other than an action brought to enforce a claim for
Expenses incurred in defending a Proceeding in advance of its final disposition
where the required undertaking has been tendered to the Company) that the
Indemnitee has not met the standards of conduct that make it
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permissible under the Pennsylvania Business Corporation Law for the Company to
indemnify the Indemnitee for the amount claimed. In connection with any
determination by the Reviewing Party or otherwise as to whether the Indemnitee
is entitled to be indemnified hereunder, the burden of proof shall be on the
Company to establish the Indemnitee is so entitled. Neither the failure of the
Company (including its Board of Directors, Independent Legal Counsel,
shareholders or stockholders) to have made a determination prior to the
commencement of such action by the Indemnitee that indemnification of the
claimant is proper under the circumstances because he or she has met the
applicable standard of conduct set forth in the Pennsylvania Business
Corporation Law, nor an actual determination by the Company (including its Board
of Directors, Independent Legal Counsel, shareholders or stockholders) that the
Indemnitee has not met such applicable standard of conduct, shall be a defense
to the action or create a presumption that the Indemnitee has not met the
applicable standard of conduct. For purposes of this Agreement, the termination
of any claim, action, suit or proceeding, by judgment, order, settlement
(whether with or without court approval) or conviction, or upon a plea of nolo
contendere, the entry of any order of probation before judgment or their
equivalent, shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court has
determined that indemnification is not permitted by applicable law.
8. Non-exclusivity, Etc. The rights of Indemnitee hereunder shall be in
addition to any other rights Indemnitee may have under the Articles of
Incorporation or Bylaws of the Company, the Charter or Bylaws of the Bank, or
the governing instruments of any other entity or the Pennsylvania Business
Corporation Law or Federal laws and regulations, or otherwise. To the extent
that a change in Pennsylvania Business Corporation Law or Federal laws and
regulations (whether by statute or judicial decision) permits greater
indemnification by agreement than would be afforded currently under the Articles
of Incorporation and Bylaws of the Company and this Agreement, it is the intent
of the parties hereto that Indemnitee shall enjoy by this Agreement the greater
benefits so afforded by such change.
9. No Construction as Employment Agreement. Nothing contained herein
shall be construed as giving Indemnitee any right to be retained in the employee
of the Company or any of its subsidiaries.
10. Liability Insurance. To the extent the Company or the Bank maintain
an insurance policy or policies providing directors' and officers' liability
insurance, Indemnitee shall be covered by such policy or policies, in accordance
with its or their terms, to the maximum extent of the coverage available for any
director or officer thereunder.
11. Amendments, Etc. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by the parties hereto. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any provisions hereof (whether or not similar) nor shall
such waiver constitute a continuing waiver.
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12. Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all papers required and shall de
everything that may be necessary to secure such rights, including the execution
of such documents necessary to enable the Company effectively to bring suit to
enforce such rights.
13. No Duplication of Payments. The Company shall not be liable under
this Agreement to make any payment in connection with any claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, Articles of Incorporation or Bylaws of the Company
or otherwise) of the amounts otherwise indemnifiable hereunder.
14. Specific Performance. The parties recognize that if any provision
of this Agreement is violated by the Company, Indemnitee may be without an
adequate remedy at law. Accordingly, in the event of any such violation, the
Indemnitee shall be entitled, if Indemnitee so elects, to institute proceedings,
either in law or at equity, to obtain damages, to enforce specific performance,
to enjoin such violation, or to obtain any relief or any combination of the
foregoing as Indemnitee may elect to pursue.
15. Binding Effect, Etc. This Agreements shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors, assigns, including any direct or indirect successor by
purchase, merger, consolidation or otherwise to all or substantially all of the
business and/or assets of the Company, spouses, heirs and personal and legal
representatives. The Company shall require and cause any successor (whether
direct or indirect by purchase, merger, reorganization, consolidation or
otherwise) to all, substantially all, or a substantial part, of the business
and/or assets of the Company, by written agreement in form and substance
satisfactory to Indemnitee, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform if no such succession had taken place. This Agreement shall
continue in effect regardless of whether Indemnitee continues to serve as a
director and/or officer of the Company or of any other enterprise at the
Company's request.
16. Severability. The provisions of this Agreement shall be severable
in the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
Furthermore, to the fullest extent possible, the provisions of this Agreement
(including, without limitations, each portion of this Agreement containing any
provision held to be invalid, void or otherwise unenforceable, that is not
itself invalid, void or unenforceable) shall be construed so as to give effect
to the intent manifested by the provision held invalid, illegal or
unenforceable.
17. Regulatory Limitations. Nothing herein shall be deemed to be an
agreement to pay any indemnification prohibited by Section 18(k) of the Federal
Deposit Insurance Act, 12
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U.S.C. ss.1828(k), or any orders or regulations issued by the Federal Deposit
Insurance Corporation thereunder; provided, however, that in the case of an
administrative proceeding or civil action initiated against Indemnitee by any
federal banking agency, the Company shall take such procedures and make such
determinations as may be required under such regulations to indemnify Indemnitee
in connection with such proceeding or action.
18. Governing Law. This Agreement shall be governed by and construed
and enforceable in accordance with the laws of the Commonwealth of Pennsylvania,
and applicable to contracts made and to be performed in such state without
giving effect to the principles of conflicts of laws, except as may conflict
with the laws of the United States of America.
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the date written above.
FIDELITY BANCORP, INC. INDEMNITEE
BY:
-------------------------- ---------------------------------
Xxxxxxx X. Xxxxxxx
President
