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EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made as of the 1st day of
December, 1998 (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 holding
company.
2. The Executive is experienced in banking related matters and is
suitable to the Company's Board of Directors 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 November 30, 2001; provided, however, that such term
automatically shall be extended for an additional year on December 1, 2001 and
on December 1 of each year thereafter unless either party hereto gives written
notice to the other party not to so extend prior to June 1 of the year for which
notice is given, in which case no further automatic extension shall occur and
the term of this Agreement shall end on November 30 one (1) year subsequent to
the date of the latest preceding automatic extension; provided further, however,
that 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 and by the
Executive. 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 to be formed for the purpose of operating a bank in Fort Xxxxx, Indiana.
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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). Notwithstanding the above, the Executive may engage in
other business interests or investments which do not materially prevent the
Executive from performing his contemplated services hereunder on behalf of
Company.
ARTICLE IV
REGULAR COMPENSATION
During the first year of the Employment Term, the Company shall pay to
the Executive as compensation for his services and for his covenants and other
obligations hereunder a salary (the "Salary") in the amount of One Hundred
Forty-Five Thousand Dollars ($145,000.00), 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 thirty percent (30%) 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.
Notwithstanding the foregoing, the Executive will receive options sufficient to
allow the Executive to purchase at the initial offering price a minimum of forty
thousand (40,000) shares of Company stock upon (i) the successful completion of
the Company's initial public offering and (ii) the obtaining of all necessary
federal and state approvals allowing the Company to establish and operate Tower
Bank & Trust Company, which options shall
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be subject to the terms and conditions of the 1998 Stock Option and Incentive
Plan adopted by the Board of Directors of the Company and the vesting provisions
promulgated thereunder.
ARTICLE VII
EXPENSES AND FRINGE BENEFITS
Section 7.01. Fringe Benefits Generally. 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.
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
following during the term hereof:
(a) Payment by the Company of COBRA/health insurance premiums payable
by the Executive from the Effective Date hereof until such time as the Company
has established a health insurance coverage program, provided that such payment
shall not include any amounts allocable to the Executive for "employee and
spouse contribution"; and
(b) 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.
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 repeated violation of
a material Company policy or repeated failure to perform any of his material
duties or obligations under this Agreement, or upon any dishonesty of any kind
or 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 this paragraph 8.01(b) only following 10 days' written notice
to the Executive of the reason for termination and an opportunity to dispute
such reason.
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(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 opinion of the Company, any substantial
duties assigned to him hereunder for the continuous period of six 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; provided that Executive has given the
Company at least ten days' prior written notice of the nature of such breach and
the Company has failed to cure such breach within such ten-day period.
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-month period
preceding such date of termination.
(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 one (1)
year's Salary at the then-effective rate paid to Executive.
(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, as well
as a pro-rated portion of any bonus compensation for the current Employment Year
based on the ratio of the number of days elapsed in the current Employment Year
as of the effective date of the termination to the total number of days in such
period. Bonus compensation for the current Employment Year shall be paid within
sixty (60) days after the end of such Employment Year.
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(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.
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.
ARTICLE X
NON-COMPETITION
Section 10.01. Non-Competition. During the Employment Term and for a
period of two (2) years immediately following any termination of the Employment
Term pursuant to subsection (b) or (e) of Section 8.01 of this Agreement (or a
period of one (1) year immediately following any termination of the Employment
Term pursuant to subsection (d) of Section 8.01 of this Agreement), 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,
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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 a
period of two (2) year immediately following any termination of the Employment
Term pursuant to subsection (b) or (e) of Section 8.01 of this Agreement (or a
period of one (1) year immediately following any termination of the Employment
Term pursuant to subsection (d) of Section 8.01 of this Agreement), 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.
ARTICLE XI
GENERAL
Section 11.01. 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.
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Section 11.02. 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 11.03. 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 11.04. 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 11.05. 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 11.06. 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 11.06. 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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REMAINDER OF PAGE DELIBERATELY LEFT BLANK
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.
TOWER FINANCIAL CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxxxx
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Xxxxx X. Xxxxxxxxxxx,
Chief Financial Officer
/s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
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