EXHIBIT 10.14
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made as of the 1st day of
January, 2002 (the "Effective Date"), by and between TOWER FINANCIAL
CORPORATION, an Indiana corporation (the "Company"), and XXXXXX X. XXXXXXXX (the
"Executive").
RECITALS
1. The Company is engaged in the business of operating a bank.
2. The Executive has demonstrated his ability to serve as President and
Chief Executive Officer of the Company.
3. The parties desire to set forth in writing the terms and conditions
upon which the Executive's employment with the Company will continue.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions set forth herein, the Company and the Executive agree
as follows:
ARTICLE I
EMPLOYMENT TERM
The term of this Agreement (the "Employment Term") shall be from the
Effective Date through December 31, 2006. Notwithstanding the foregoing, the
Employment Term is subject to termination prior to the expiration thereof under
the terms and conditions set forth in Article VIII.
ARTICLE II
EMPLOYMENT
During the Employment Term, the Executive shall be employed by the
Company as its President and Chief Executive Officer or in such other capacity
as shall be approved by the Board of Directors of the Company. In such capacity,
the Executive shall have the duties, authority and powers granted to the
Executive by the Company's Board of Directors from time to time. Such duties
shall include, without limitation, acting as President and Chief Executive
Officer of Tower Bank & Trust Company, a subsidiary of the Company.
ARTICLE III
DEVOTION TO DUTIES
During the Employment Term, the Executive shall devote his full time,
attention, skill and effort to the operations of the Company and shall not
engage in any other business activity requiring any substantial amount of his
time (whether or not such business activity is pursued for gain, profit or
pecuniary advantage). With prior written approval from the Executive Committee,
the Executive may engage in other business interests which do not materially
prevent the Executive from performing his contemplated services hereunder on
behalf of Company.
ARTICLE IV
REGULAR COMPENSATION
The Company shall pay to the Executive as compensation for his services
and for his covenants and other obligations hereunder an annual base salary (the
"Salary") in the amount of Two Hundred Four Thousand Five Hundred Eighty Dollars
($204,580.00), payable in accordance with the regular and customary payroll
practices of the Company. The Salary may be increased from time to time by
action of the Board of Directors of the Company.
ARTICLE V
BONUS COMPENSATION
The Board of Directors of the Company may authorize the payment to the
Executive of additional compensation by way of salary, bonus or otherwise, as it
deems appropriate, during the term of this Agreement or any extension hereof.
All compensation shall be subject to customary withholding and other employment
taxes required with respect to compensation paid by a corporation to an
employee. Notwithstanding the foregoing, upon the establishment by the Company
of its anticipated management bonus program, the Executive shall, upon
compliance with goals set from time to time by the Board of Directors of the
Company in its sole discretion, be eligible to qualify for an annual performance
bonus equal to a minimum of twenty percent (20%) of the Executive's annual
Salary. Such annual performance bonus may be increased up to a maximum of one
hundred percent (100%) of the Executive's annual salary in the event of
extraordinary performance by the Executive in any year as determined by the
Board of Directors of the Company.
ARTICLE VI
STOCK OPTIONS
The Executive shall be eligible to participate in such stock option or
incentive plans as may be adopted by the Company from time to time; provided,
however, the Company reserves the right to determine the number of options, if
any, and the terms of such grant.
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ARTICLE VII
EXPENSES AND FRINGE BENEFITS
Section 7.01. Fringe Benefits Generally.
(a) The Company shall reimburse the Executive for all ordinary and
necessary business expenses incurred by him while carrying out his employment
responsibilities under this Agreement. The Executive shall be entitled to
participate in such vacation policies; medical, dental, life and disability
insurance programs; 401(k), profit sharing and any other retirement plans; and
other fringe benefit plans or programs as the Company from time to time shall
establish for its senior management and/or other full time employees, provided
he is otherwise qualified to participate in such plans or programs. The Company
retains the right to establish limits on the types or amounts of business
expenses that the Executive may incur and to abolish or alter the terms of any
fringe benefit plan or program that it may establish.
(b) The Company shall also establish a nonqualified, unfunded defined
benefit plan for the benefit of the Executive, substantially in the form
attached hereto as Exhibit A. Executive acknowledges that he is not eligible for
employer contributions under the nonqualified defined contribution plan
established by the Company.
Section 7.02. Additional Fringe Benefits. In addition to the fringe
benefits set forth in Section 7.01, the Executive shall be entitled to the
payment by the Company of the Executive's annual dues at the Fort Xxxxx Country
Club, and expenses related to the Executive's use of such Country Club for
matters related to the business of the Company. During the term of this
Agreement, the Company shall reimburse Executive for the actual annual cost he
incurs for Five Hundred Thousand Dollars ($500,000.00) in term life insurance.
The Company shall have no obligation to seek or provide such policy, but only
provide reimbursement. Further, the Company shall provide Executive with the use
of an automobile, which the Executive shall select with the consent of the
Company, and shall pay all other reasonable maintenance, expense and fuel
charges related to such vehicle. Executive shall be solely responsible for any
imputed income incurred as a result of any fringe benefits.
ARTICLE VIII
TERMINATION
Section 8.01. Reasons for Termination. The Employment Term of the
Executive shall be terminated upon the occurrence of any of the following
events:
(a) Immediately upon the death of the Executive.
(b) At the Company's option, upon the Executive's (i) violation of a
material Company policy or failure to perform any of his material duties or
obligations under this Agreement; or (ii) upon any dishonesty or any kind of
willful misconduct of the Executive, including but not limited to, theft of or
other unauthorized personal use of Company funds. The Executive may be
terminated under paragraph 8.01(b)(i) only following thirty (30) days written
notice to the Executive explaining the basis of the termination and his failure
to cure such breach
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within thirty (30) days of the date of the Company's notice. The Executive may
be terminated under paragraph 8.01(b)(ii) only following ten (10) days written
notice to the Executive of the basis for the termination and an opportunity to
dispute the same.
(c) At the Company's option, if the Executive shall suffer a permanent
disability. For purposes of this Agreement, "permanent disability" shall be
defined as the Executive's inability through physical or mental illness or other
cause to perform the essential functions of Executive's position, with or
without reasonable accommodation, in the reasonable opinion of the Company, for
a continuous period of six (6) months during the term of this Agreement.
(d) At the Company's option, without cause, upon thirty (30) days'
prior written notice.
(e) At the Executive's option, without cause, at any time.
(f) At the Executive's option, upon the Company's breach of any of its
material obligations under this Agreement or for Good Cause; provided that
Executive has given the Company at least ten (10) days' prior written notice of
the nature of such breach and the Company has failed to cure such breach within
such thirty (30) day period. For purposes herein, "Good Cause" means without the
Executive's express written consent, the assignment to the Executive of any
duties or responsibilities inconsistent with the Executive's position, or a
change in the Executive's reporting responsibilities, titles or offices as
described under Article II, or any removal of the Executive from, or any failure
to re-elect the Executive to, any such positions, except in connection with the
termination of the Executive's For Cause, or his disability, retirement or
death.
Section 8.02. Compensation Upon Termination.
(a) Should the employment of the Executive be terminated under
subsection (a) or (c) of Section 8.01 of this Agreement, the Company shall pay
to the Executive (or his personal representative), within ten business days
after the date of termination, a sum equal to the aggregate amount of Salary
that was paid to the Executive under this Agreement for the one (1) month period
preceding such date of termination, excluding any payments under Article V.
(b) Should the employment of the Executive be terminated under
subsection (b) or (e) of Section 8.01 of this Agreement, the Executive shall be
paid his Salary up to the date of termination and any bonus compensation accrued
but unpaid for any prior Employment Year.
(c) Should the employment of the Executive be terminated under
subsection (d) or (f) of Section 8.01 of this Agreement, the Company shall pay
to the Executive, within ten business days after the date of termination, a sum
equal to the aggregate amount of Salary that the Executive would be entitled to
receive under this Agreement for the balance of the Employment Term; provided,
however, that in no event shall such payment be in an amount less than two (2)
year's Salary at the then-effective rate paid to Executive.
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(d) Should the employment of the Executive be terminated under
subsection (a), (c), (d) or (f) of Section 8.01 of this Agreement, the Company
shall pay to the Executive (or his personal representative), in addition to the
Salary specified in subsection (a) or (c), as applicable, of this Section 8.02,
any bonus compensation accrued but unpaid for any prior Employment Year. Except
for a termination as a result of Executive's death, no pro-rated portion of any
bonus compensation for the current Employment Year shall be payable. In the
event of death, Executive's estate shall be eligible to receive a pro-rated
bonus, subject to the terms of the bonus program. Bonus compensation for the
prior Employment Year and, in the event of death, the current Employment Year
shall be paid within sixty (60) days after the end of such Employment Year.
(e) Payments to the Executive under this Section 8.02 shall be
considered severance pay in consideration of the Executive's past service and in
consideration of his continued service from the date hereof. The Company may, at
its discretion, withhold from such payments any federal, state, city, county or
other taxes. In the event of the termination of the employment of the Executive
for any reason described in Section 8.01 of this Agreement, the severance pay
provided for by this Section 8.02 shall constitute the entire obligation of the
Company to the Executive and full settlement of any claim under law or in equity
that the Executive might otherwise assert against the Company or any of its
employees, officers or directors on account of such termination, except for any
compensation or other payments to which the Executive may be entitled under any
termination benefits or similar agreement then in effect between the Company and
the Executive.
(f) In order to receive any benefit under this Section 8.02, Executive
must execute a Release Agreement in the form attached as Exhibit B.
Section 8.03. Reimbursement for Certain Litigation Expenses. In the
event of litigation to determine whether the Executive's employment was properly
terminated under subsection (b) or (f) of Section 8.01, the prevailing party
shall be entitled to recover all reasonable costs and expenses, including
reasonable attorneys' fees, incurred in connection with such litigation.
ARTICLE IX
CONFIDENTIAL BUSINESS INFORMATION
The Executive agrees and covenants that all confidential information
regarding the practices and procedures of the Company and its affiliates, their
methods of marketing, know-how, trade information, trade secrets, customer or
client lists, licensing arrangements, accounts and requirements, and other
information regarding the affairs of the Company and its affiliates
(collectively, the "Confidential Business Information") shall be received and
held in the strictest confidence. The Executive agrees not to divulge any such
Confidential Business Information to any person or entity except as authorized
in the normal execution of assigned duties on behalf of the Company, without the
prior consent of the Company. The Executive further agrees to surrender to the
Company any and all documents and records in whatever form that may be in his
possession or control containing Confidential Business Information upon the
expiration or termination of the Employment Term. The provisions of this Article
IX shall survive any termination or expiration of this Agreement.
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ARTICLE X
NON-COMPETITION
Section 10.01. Non-Competition. During the Employment Term and for the
Non-Compete Period immediately following any termination of the Employment Term
pursuant to Section 8.01 of this Agreement (except for subsection (a) or (c) of
Section 8.01), the Executive shall not, directly or indirectly, anywhere within
a one hundred-mile radius around the City of Fort Xxxxx, Indiana, have any
material (defined for purposes of this Section to include any investment
representing one percent (1%) or more of the equity interest of any entity
described in this Section) investment in, or engage, directly or indirectly,
whether as an individual or sole proprietor or as owner, partner, principal,
shareholder, officer, director, manager, agent, consultant, formal or informal
advisor, or by or through the lending of any form of assistance, in any business
offering products or services the same as or competitive with the products or
services that, during the Employment Term, are (or are planned to be) offered or
supplied by the Company or its subsidiaries.
Section 10.02. Non-Solicitation. During the Employment Term and for the
Non-Compete Period immediately following any termination of the Employment Term
pursuant to Section 8.01 of this Agreement (except for subsection (a) or (c) of
Section 8.01), the Executive shall 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 affiliates as of the date of termination for the purpose of conducting
any business which directly or indirectly provides financial services similar in
nature to the financial services provided by Tower Bank & Trust Company. As used
herein, the term "prospective customers or clients" shall mean individuals or
entities whom the Company or its affiliates have contacted within the twelve
(12) months immediately preceding the termination of the Employment Term for the
purpose of conducting business with the Company or such affiliate.
Section 10.03. Specific Enforcement. The Executive acknowledges that
any violation of any provision of this Article X 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 Article by the Executive, he
agrees that, in addition to all other remedies that the Company may have at law
or in equity, the Company shall be entitled to injunctive relief, including,
without limitation, temporary restraining orders and temporary injunctions to
restrain any violation of this Article. If a court of competent jurisdiction
finds that the Executive has violated any of the restrictions set forth in this
Article, then the period of all restrictions set forth in this Article
automatically shall be extended by the number of days that the court determines
the Executive to have been in violation of such restriction. In addition to
other relief to which it shall be entitled, the Company shall be entitled to
recover from the Executive the reasonable costs and reasonable attorneys' fees
incurred by the Company in seeking enforcement of this Article. In addition, if
the Executive should breach Sections 10.01 or 10.02 as determined by a court of
competent jurisdiction, Executive shall repay any and all benefits payable under
Section 8.02 or Article XIII.
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Section 10.04. Non-Compete Period. The Non-Compete Period shall be the
longer of (i) two (2) years; or (ii) the longer period used to calculate his
severance payment under Section 8.02 or Article III.
ARTICLE XI
CHANGE IN CONTROL
Section 11.01. Termination After Change of Control Benefit. If within
four (4) months before or sixteen (16) months after a Change of Control of the
Company as defined in Section 11.01(a), the Company shall terminate the
Executive's employment other than pursuant to Section 8.01(a), (b) or (c) hereof
or if the Executive shall terminate his employment for Good Cause, then in any
of such events, the Company shall pay to the Executive a benefit as defined in
Section 11.01(b).
(a) Change of Control. The term Change of Control shall have the
following meaning:
(i) A reorganization, merger, consolidation or other form of
corporate transaction or series of transactions, in each case, with
respect to which persons who were the stockholders of the Company
immediately prior to such reorganization, directly or indirectly, own
less than fifty percent (50%) of the combined voting power entitled to
vote generally in the election of directors of the reorganized, merged
or consolidated entity's then outstanding voting securities;
(ii) A liquidation or dissolution of the Company;
(iii) The acquisition by any person, entity or "group," within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, (excluding any employee benefit plan of the Company or its
subsidiaries which acquires beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Securities Exchange Act) of more than
fifty percent (50%) of either the then outstanding shares of common
stock or the combined voting power of the Company's then outstanding
voting securities entitled to vote generally in the election of
directors; or
(iv) As the result of, or in connection with, any tender or
exchange offer, merger, consolidation or other business combination,
sale or disposition of all or substantially all of the Company's
assets, or contested election, or any combination of the foregoing
transactions (a "Transaction"), the persons who were directors of the
Company immediately before the Transaction shall cease to constitute a
majority of the Board of Directors of the Company or any successor to
the Company.
(b) Amount. Upon a termination of the Executive's employment under the
circumstances described in this Section 11.01, the Executive will receive the
greater of a Change of Control Benefit equal to 2.99 times the Executive's
Salary at the date of the Change of Control or the amount payable under Section
8.02(c).
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No other benefits or amounts shall be payable under Section 8.02.
(c) Limitation of Benefit. Notwithstanding anything to the contrary in
this Agreement, if there are payments to the Executive which constitute
"parachute payments," as defined in Section 280G of the Code, then the payments
made to the Executive shall be limited to the greater of (x) One Dollar ($1.00)
less than the amount which would cause the payments to the Executive (including
payments to the Executive which are not included in this Agreement) to be
subject to the excise tax imposed by Section 4999 of the Code, and (y) the
payments to the Executive (including payments to the Executive which are not
included in the Agreement) after taking into account the excise tax imposed by
Section 4999 of the Code. The calculations shall be done by an outside party
directed by the Company.
(d) Release. The Executive must execute and not rescind the Release
prior to receiving any payment under this Article.
(e) Attorney's Fees. To the extent that the Executive prevails in a
court of competent jurisdiction regarding such dispute, the Company shall
reimburse Executive his reasonable attorney's fees and costs incurred in such
action. Any amounts to be reimbursed hereunder will be paid to the Executive
within fifteen (15) days of a written consent for the same.
ARTICLE XII
GENERAL
Section 12.01. Severability. Should any clause, portion or section of
this Agreement be unenforceable or invalid for any reason, such unenforceability
or invalidity shall not affect the enforceability of validity of the remainder
of this Agreement. Should any particular covenant in this Agreement be held
unreasonable or unenforceable for any reason, including, without limitation, the
time period, geographical area, and scope of activity covered by such covenant,
then such covenant shall be given effect and enforced to whatever extent would
be reasonable and enforceable.
Section 12.02. Assignment; Successors in Interest. This Agreement,
being personal to the Executive, may not be assigned by him. The terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the successors and assigns of the Company, and the heirs, executors and personal
representatives of the Executive.
Section 12.03. Successors of the Company. 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, by agreement in form and substance satisfactory to the Executive,
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 it if no such
succession had taken place. Failure of the Company to obtain such agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled
hereunder if the Executive terminated the Executive's employment
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for Good Reason, except that for purposes of implementing the foregoing, the
date on which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" as hereinbefore and/or assets
as aforesaid which executes and delivers the agreement provided for in this
Article 12.03 or which otherwise becomes bound by all the terms and provisions
of this Agreement by operation of law.
Section 12.04. Governing Law. This Agreement and the performance of the
parties under this Agreement shall be construed in accordance with the laws of
Indiana, and any action or proceeding that may be brought, arising out of, in
connection with, or by reason of this Agreement shall be governed by the laws of
Indiana, to the exclusion of the law of any other forum, and regardless of the
jurisdiction in which the action or proceeding may be instituted.
Section 12.05. Waiver. Failure to insist upon strict compliance with
any of the terms, covenants or conditions of this Agreement shall not be deemed
a waiver of such term, covenant or condition, nor shall any waiver or
relinquishment of any right or power hereunder at any one or more times be
deemed a waiver or relinquishment of such right or power at any other time or
times.
Section 12.06. Modification and Entire Agreement. No modification,
amendments, extension or alleged waiver of this Agreement or any provision
thereof will be binding upon the Executive or the Company unless in writing and
signed by the Executive and a duly authorized officer of the Company. From and
after the Effective Date, this Agreement and any termination benefits agreement
or similar agreement between the Company and the Executive shall constitute the
entire employment arrangement between the Executive and the Company and shall
supersede and replace any and all prior agreements and understandings, written
or oral, relative to such employment.
Section 12.07. Notices. All notices and other communications required
or permitted under this Agreement shall be in writing and shall be deemed to
have been properly given if delivered by hand, sent by telecopy, or mailed,
certified or registered mail with postage and fees prepaid:
If to the Company, to: TOWER FINANCIAL CORPORATION
000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
If to the Executive, to: XXXXXX X. XXXXXXXX
00000 Xxxxxxx Xxxx Xxxxx
Xxxx Xxxxx, Xxxxxxx 00000
or to such other person or address as the party to whom such notice or
communication is to be given shall have notified the other party in accordance
with this Section 12.06. Any mailed communication shall be deemed to have been
given on the third "business day" (such term excluding, for purposes of this
Agreement, Saturdays, Sundays, and legal holidays) after the day of mailing. Any
communication sent by telecopy shall be deemed to have been given on the date
receipt of the telecopy transmission is confirmed.
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ARTICLE XIII
TRANSITIONAL DUTIES
(a) The parties acknowledge that the services of Executive to the
Company are significant, and an important aspect of the Company's future success
is the appropriate transfer of management duties from Executive to his
successor(s). In order to insure a smooth transition, the parties hereby agree
that the Executive shall continue to provide substantial services to the Company
and its management on a daily basis from January 1, 2007, until Executive
reaches age seventy (70). Executive shall be deemed to be a full-time employee
during this period and be paid the sum of at least Fifty Thousand Dollars
($50,000.00) per year for services rendered, unless otherwise mutually agreed to
by the parties. Notwithstanding the foregoing, either party may, with or without
cause, terminate Executive's duties under this Article XIII upon thirty (30)
days prior written notice. No further payment shall be due upon such
termination.
(b) In the event the Company gives notice that it will not continue
Executive's services under this Article Without Cause, then the monthly Accrued
Benefit under the plan described in Section 7.01(b) shall commence within thirty
(30) days of Executive's termination.
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.
TOWER FINANCIAL CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxxxx
---------------------------
Xxxxx X. Xxxxxxxxxxx,
Chief Financial Officer
("Company")
/s/ Xxxxxx X. Xxxxxxxx
---------------------------
Xxxxxx X. Xxxxxxxx
("Executive")
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