INDEMNIFICATION AGREEMENT
DATE: October 7, 1996
PARTIES: PFC Acquisition Corp.
0000 Xxxxx Xxxxx Xxxxx
Xxxxx 000
Xxxxx, XX 00000 ("PFC Acquisition")
United Community Bancshares, Inc.
0000 Xxxxx Xxxxx Xxxxx
Xxxxx 000
Xxxxx, XX 00000 ("United")
The Park Financial Corporation Common
Stock Revocable Trust, Under Agreement
Dated May 28, 1980
c/o J. Xxxxx Xxxxxxx, Esq.
Xxxxxxxxx & Xxxxxx P.L.L.P.
0000 XXX Xxxxxx
00 Xxxxx 0xx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000 (the "Trust")
Xxxxx Xxxxxxx Xxxx
[home address
is listed]
Xxxxxxx X. Xxxxxxx
[home address
is listed]
Xxxxxx X. Xxxxxxx, Xx.
[home address
is listed]
Xxxxxxx Xxxxxxx
[home address
is listed]
Xxxxxx Xxxxxxx XxXxxxxx
[home address
is listed]
RECITALS:
A. Xxxxx Xxxxxxx Xxxx, Xxxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxx, Xx.,
Xxxxxxx Xxxxxxx and Xxxxxx Xxxxxxx XxXxxxxx are all of the beneficiaries of the
Trust.
B. The Trust currently owns 340,000 shares (which represent 70.07% on a
fully-diluted basis) of the issued and outstanding capital stock of Park
Financial Corporation, a Minnesota corporation (the "Company").
C. PFC Acquisition, United, the Trust and the Company are all parties to
that certain Merger Agreement dated the date hereof (the "Merger Agreement").
D. To induce PFC Acquisition and United to enter into the Merger
Agreement, the Trust and its beneficiaries agreed to provide PFC Acquisition and
United with certain indemnification rights as provided in this Agreement.
AGREEMENTS:
IN CONSIDERATION of the premises, and the mutual covenants set forth herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
1. DEFINED TERMS. All capitalized terms used herein and not otherwise
defined herein have the same meanings as ascribed to them in the Merger
Agreement.
2. LIMITED INDEMNIFICATION. The Trust, Xxxxx Xxxxxxx Xxxx, Xxxxxxx X.
Xxxxxxx, Xxxxxx X. Xxxxxxx, Xx., Xxxxxxx Xxxxxxx and Xxxxxx Xxxxxxx XxXxxxxx
(collectively the "Indemnifying Parties"), jointly and severally, agree to
indemnify and hold harmless United, PFC Acquisition, the Surviving Corporation
and/or the Bank, as the case may be, from and against any and all claims,
losses, damages, liabilities or expenses (including reasonable attorneys' fees
and expenses, expert fees and other litigation costs) arising or incurred within
six years after the Merger Effective Time, as a result of any claims, actions or
proceedings made or brought against United, PFC Acquisition, the Surviving
Corporation and the Bank, or any one or more of them, by the Indemnifying
Parties (or any related parties and affiliates of the Indemnifying Parties), and
the other shareholders of the Company, or any one or more of them, for any or no
reason. Notwithstanding the foregoing, the Indemnifying Parties shall have no
obligation to indemnify United and PFC Acquisition with respect to any claim,
action or proceeding which is finally determined by a court of competent
jurisdiction to have resulted solely from United's or PFC Acquisition's breach
of the Merger Agreement.
3. NOTICE AND OPPORTUNITY TO DEFEND. United, PFC Acquisition, the
Surviving Corporation and/or the Bank, as the case may be, shall promptly, and
in all events within ninety (90) days of obtaining actual knowledge thereof (the
"Notifying Party"), notify the Indemnifying Parties of the existence of any
claim, demand or other matter requiring a defense to which the Indemnifying
Parties' obligations under Section 2 would apply. The Notifying Party shall
give the Indemnifying Parties a reasonable opportunity to defend the claim,
demand or matter at the Indemnifying Parties' own expense and with counsel
selected by the Indemnifying Parties and satisfactory to the Notifying Party;
provided that the
Notifying Party shall at all times also have the right to fully participate in
the defense at its own expense. Any such claim, demand or other matter shall
not be settled or compromised without the consent of the Notifying Party;
provided, however, if the Notifying Party does not consent to such settlement or
compromise, such claim, demand or other matter shall not be settled or
compromised, but the Indemnifying Parties' obligation to indemnify with respect
hereto shall be limited to the amount for which such claim, demand or other
matter could have been settled or compromised, together with the cost of defense
through the date such matter could have been settled or compromised. If the
Indemnifying Parties shall, within a reasonable time after receipt of notice,
fail to defend, the Notifying Party shall have the right, but not the
obligation, to undertake the defense, and to compromise or settle, exercising
reasonable business judgment, the claim, demand or other matter on behalf, for
the account and at the risk of the Indemnifying Parties.
4. PAYMENT INTO ESCROW. The Trust hereby agrees that if any one or more
of the Indemnifying Parties has failed to execute and deliver to PFC Acquisition
and United the separate signature page to this Indemnification Agreement on or
before November 30, 1996, then an amount equal to Three Hundred Thousand Dollars
($300,000) of the Merger Consideration payable to the Trust shall be placed and
held in escrow with a third party escrow agent for such period of time as may be
necessary to provide funds to pay any indemnification claims which may be made
under this Indemnification Agreement. In the event that each and every
Indemnifying Party has executed and delivered to PFC Acquisition and United a
separate signature page to this Agreement on or before November 30, 1996, then
the provisions of this Section 4 shall be of no further force and effect.
5. ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties hereto with respect to the indemnification contemplated
hereby and supersedes all prior agreements and understandings among the parties,
if any, with respect to such indemnification. The parties acknowledge and agree
that this Indemnification Agreement is a separate agreement from the Merger
Agreement, and in the event of any inconsistency between the provisions of the
Merger Agreement and this Agreement, the provisions of this Agreement shall
control.
6. HEADINGS. The headings of Sections herein are for purpose of
reference only and shall not limit or otherwise affect the meaning hereof.
7. AMENDMENT. No amendment, modification, termination or waiver of any
provision of this Agreement will be effective unless in writing and signed by
all parties hereto.
8. SUCCESSORS IN INTEREST. This Agreement will be binding upon and inure
to the benefit of the parties hereto and their respective successors, heirs and
permitted assigns.
9. PARTIAL INVALIDITY. Any provision of this Agreement which is
prohibited or unenforceable will be ineffective only to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof.
10. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given when
personally delivered or
deposited in the United States Mail, mailed first class, certified and return
receipt requested, addressed as indicated at the beginning of this Agreement.
Any party may, by notice so given to the other party, change the address to
which notices shall thereafter be sent. In all events, the postmark date of
such notice or notices shall be deemed the effective date of such notice for all
purposes hereunder.
11. WAIVERS. No failure or delay on the part of any party in exercising
any right, power or remedy hereunder will operate as a waiver thereof, nor will
any single or partial exercise of any right, power or remedy preclude any other
or further exercise thereof or the exercise of any other right, power or remedy
hereunder.
12. GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of Minnesota.
13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[THE SIGNATURE PAGES FOLLOW].
SIGNATURE PAGE
to
INDEMNIFICATION AGREEMENT
dated as of October 7, 1996
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
PFC ACQUISITION CORP.
By /s/
--------------------------------
Its Chairman
and
By /s/
--------------------------------
Its President
UNITED COMMUNITY BANCSHARES, INC.
By /s/
--------------------------------
Its Chairman
and
By /s/
--------------------------------
Its President
THE PARK FINANCIAL CORPORATION
COMMON STOCK REVOCABLE TRUST,
UNDER AGREEMENT DATED MAY 28, 1980
By /s/
--------------------------------
Xxxx Xxxxxxxxxx
A Trustee
and
By /s/
--------------------------------
Xxxxx Xxxxxxx Xxxx
A Trustee
and
By
--------------------------------
Xxxxxxx X. Xxxxxxx
A Trustee
/s/
-----------------------------------
Xxxxx Xxxxxxx Xxxx
-----------------------------------
Xxxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxx, Xx.
-----------------------------------
Xxxxxxx Xxxxxxx
-----------------------------------
Xxxxxx Xxxxxxx XxXxxxxx
