Exhibit 10.7

FIDELITY FEDERAL BANK & TRUST

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

Effective October 1, 1989

Restated December 1, 2005

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TABLE OF CONTENTS

 

         PAGE

ARTICLE I—PURPOSE; EFFECTIVE DATE

   1

ARTICLE II—DEFINITIONS

   1

2.1

  Accrued Benefit    1

2.2

  Actuarial Equivalent    1

2.3

  Beneficiary    1

2.4

  Board    1

2.5

  Change in Control shall mean any of the following:    2

2.6

  Committee    2

2.7

  Compensation    2

2.8

  Company    3

2.9

  Deferred Retirement Date    3

2.10

  Disability    3

2.11

  Early Retirement Date    3

2.12

  Employer    3

2.13

  Final Monthly Compensation    3

2.14

  Final Average Compensation    3

2.15

  Normal Retirement Date    4

2.16

  Participant    4

2.17

  Participation Agreement    4

2.18

  Proposed Regulations    4

2.19

  Qualified Retirement Plan    4

2.20

  Retirement    4

2.21

  Separation from Service    5

2.22

  Specified Employee    5

2.23

  Spouse    6

2.24

  Supplemental Retirement Benefit    6

2.25

  Target Retirement Percentage    6

2.26

  Years of Credited Service    6

ARTICLE III—PARTICIPATION AND VESTING

   6

3.1

  Eligibility and Participation    6

3.2

  Change in Employment Status    6

3.3

  Vesting    7

3.4

  Suicide    7

ARTICLE IV—PRERETIREMENT SURVIVOR BENEFIT

   7

4.1

  Preretirement Survivor Benefit    7

4.2

  Payment of Benefits    7

ARTICLE V—SUPPLEMENTAL RETIREMENT BENEFITS

   7

 

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TABLE OF CONTENTS

 

         PAGE

5.1

  Target Retirement Percentage    7

5.2

  Normal Retirement Benefit    8

5.3

  Deferred Retirement Benefit    8

5.4

  Early Retirement Benefit    8

5.5

  Early Termination Retirement Benefit    9

5.6

  Change in Control Benefit    9

5.7

  Disability Retirement Benefit    10

5.8

  Inflation Index    10

5.9

  Payment of Benefits    10

5.10

  Withholding; Payroll Taxes    12

5.11

  Payment to Guardian    12

ARTICLE VI—BENEFICIARY DESIGNATION

   12

6.1

  Beneficiary Designation    12

6.2

  Amendments    12

6.3

  No Participant Beneficiary Designation    13

6.4

  Effect of Payment    13

ARTICLE VII—ADMINISTRATION

   13

7.1

  Committee; Duties    13

7.2

  Agents    13

7.3

  Binding Effect of Decisions    13

7.4

  Indemnity of Committee    14

ARTICLE VIII—CLAIMS PROCEDURE

   14

8.1

  Claim    14

8.2

  Denial of Claim    14

8.3

  Review of Claim    14

8.4

  Final Decision    14

ARTICLE IX—TERMINATION, SUSPENSION OR AMENDMENT

   14

9.1

  Termination, Suspension or Amendment of Plan    14

ARTICLE X—MISCELLANEOUS

   16

10.1

  Unfunded Plan    16

10.2

  Unsecured General Creditor    16

10.3

  Trust Fund    16

10.4

  Nonassignability    16

10.5

  Not a Contract of Employment    16

10.6

  Protective Provisions    17

10.7

  Terms    17

10.8

  Captions    17

 

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TABLE OF CONTENTS

 

         PAGE

10.9

  Governing Law    17

10.10

  Validity    17

10.11

  Notice    17

10.12

  Successors    17

10.13

  Compliance with Section 409A of the Code    18

 

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FIDELITY FEDERAL BANK & TRUST

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

EFFECTIVE OCTOBER 1, 1989

RESTATED DECEMBER 1, 2005

ARTICLE I—PURPOSE; EFFECTIVE DATE

The purpose of this Supplemental Executive Retirement Plan (hereinafter referred
to as the “Plan”) is to provide supplemental retirement and death benefits for
certain key employees of Fidelity Federal Bank & Trust (hereinafter referred to
as “Fidelity Federal”). It is intended that the Plan will aid in retaining and
attracting employees of exceptional ability by providing them with these
benefits. This Plan was initially effective as of October 1, 1989. The Plan was
restated July 1, 2004 and was most recently restated into this document,
effective December 1, 2005 in order to bring the entire Accrued Benefit under
the Plan into compliance with new Section 409A of the Internal Revenue Code.

ARTICLE II—DEFINITIONS

For the purposes of this Plan, the following terms shall have the meanings
indicated, unless the context clearly indicates otherwise:

2.1 Accrued Benefit

“Accrued Benefit” means the present value of the Participant’s benefits under
the Plan.

2.2 Actuarial Equivalent

“Actuarial Equivalent” means equivalence in value between two (2) or more forms
of payment based on a determination by an actuary chosen by Fidelity Federal,
using sound actuarial assumptions at the time of such determination. However, if
a participant elects a lump sum under the Qualified Retirement Plan, for
purposes of Article V of this Plan, the lump sum shall be converted to a
monthly, ten (10) year certain and life annuity using the lowest discount rate
provided in the Qualified Retirement Plan for the determination of actuarial
equivalence.

2.3 Beneficiary

“Beneficiary” means the person, persons or entity entitled under Article VI to
receive any Plan benefits payable after a Participant’s death.

2.4 Board

“Board” means the Board of Directors of Fidelity Federal.

 

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2.5 Change in Control shall mean any of the following:

(a) “Change in Control” shall mean (i) a change in the ownership of the Company,
(ii) a change in the effective control of the Company, or (iii) a change in the
ownership of a substantial portion of the assets of the Company, as described
below.

(b) A change in the ownership of a corporation occurs on the date that any one
person, or more than one person acting as a group (as defined in Proposed
Treasury Regulations section 1.409A-3(g)(5)(v)(B)), acquires ownership of stock
of the Company that, together with stock held by such person or group,
constitutes more than 50 percent of the total fair market value or total voting
power of the stock of such corporation.

(c) A change in the effective control of the Company occurs on the date that
either (i) any one person, or more than one person acting as a group (as defined
in Proposed Treasury Regulations section 1.409A-3(g)(5)(vi)(B)) acquires (or has
acquired during the 12-month period ending on the date of the most recent
acquisition by such person or persons) ownership of stock of the Company
possessing 35 percent or more of the total voting power of the stock of such
Company, or (ii) a majority of the members of the Company’s board of directors
is replaced during any 12-month period by directors whose appointment or
election is not endorsed by a majority of the members of the Company’s board of
directors prior to the date of the appointment or election, provided that this
subsection “(ii)” is inapplicable where a majority shareholder of the Company is
another corporation.

(d) A change in a substantial portion of the Company’s assets occurs on the date
that any one person or more than one person acting as a group (as defined in
Proposed Treasury Regulations section 1.409A-3(g)(5)(vii)(C)) acquires (or has
acquired during the 12-month period ending on the date of the most recent
acquisition by such person or persons) assets from the Company that have a total
gross fair market value equal to or more than 40 percent of the total gross fair
market value of (i) all of the assets of the Company, or (ii) the value of the
assets being disposed of, either of which is determined without regard to any
liabilities associated with such assets. For all purposes hereunder, the
definition of Change in Control shall be construed to be consistent with the
requirements of Proposed Regulations section 1.409A-3(g)(5), except to the
extent that such Proposed Regulations are superseded by subsequent guidance.

2.6 Committee

“Committee” means the Committee appointed to administer the Plan pursuant to
Article VII.

2.7 Compensation

“Compensation” means the salary and bonuses paid to a Participant before
reduction for amounts deferred under the Fidelity Federal Long-Term Deferred
Compensation Plan, the 2005 Fidelity Federal Long-Term Deferred Compensation
Plan or any salary reduction contributions under IRC Section 401(k) or any other
salary deferral program. Compensation does not include expense reimbursements,
any special bonuses related to disability or life insurance, any form of noncash
compensation or benefits, Employer contributions to the Retirement Plan for
Employees of Fidelity Federal Bank & Trust, Employer discretionary contributions
to the Fidelity Federal

 

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Long-Term Deferred Compensation Plan, the 2005 Fidelity Federal Long-Term
Deferred Compensation Plan, group life insurance premiums, or any other payments
or benefits other than normal compensation.

2.8 Company

“Company” means Fidelity Bankshares, Inc.

2.9 Deferred Retirement Date

“Deferred Retirement Date” means the first day of the month coincident with or
next following the Participant’s Separation from Service (with respect to
amounts accrued after December 31, 2004) if such date occurs after the
Participant’s Normal Retirement Date.

2.10 Disability

“Disability” means a physical or mental condition that, in the opinion of the
Committee, permanently prevents a Participant from satisfactorily performing the
Participant’s usual duties for Employer. The Committee’s decision as to
Disability will be based upon medical reports and/or evidence satisfactory to
the Committee. In no event shall a Disability be deemed to occur or to continue
after a Participant’s Normal Retirement Date.

2.11 Early Retirement Date

“Early Retirement Date” means the date on which the Participant has a Separation
from Service if it occurs after the first day of the month coincidental with or
next following a Participant’s attainment of age fifty-five (55) and completion
of fifteen (15) Years of Credited Service, but prior to his Normal Retirement
Date.

2.12 Employer

“Employer” means Fidelity Federal Bank & Trust, a federally chartered savings
bank, or any successor to the business thereof, and any affiliated or subsidiary
corporations designated by the Board.

2.13 Final Monthly Compensation

“Final Monthly Compensation” means the Participant’s Compensation during the
final twelve (12) consecutive complete calendar months of employment with the
Employer prior to the event that triggers distribution, divided by twelve (12),
provided, however, that if Executive has received 2 or more bonuses in that 12
month period, only the higher bonus shall be taken into consideration.

2.14 Final Average Compensation

“Final Average Compensation” means the sum of the Participant’s Compensation
during the consecutive sixty (60) months of employment with the Employer prior
to the event that triggers distribution, divided by 60. Compensation earned
after the Participant’s Normal Retirement Date shall be included only if it
increases Final Average Compensation. If a Participant has not been employed by
the Employer for sixty (60) full calendar months, “Final

 

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Average Compensation” shall mean the sum of Participant’s compensation during
the full months employed by Employer (annualized to 12 months for any partial
year) and then divided by the number of years (including the annualized year)
Participant was employed by Employer.

2.15 Normal Retirement Date

“Normal Retirement Date” means the first day of the month coincident with or
next following the Participant’s attainment of age sixty-five (65) or age sixty
(60) with thirty (30) Years of Credited Service. In the event of a Change in
Control, Normal Retirement Date means the first day of the month coincident with
or next following either the Participant’s attainment of age sixty-five (65) or
age sixty (60) with thirty (30) Years of Credited Service from the Participant’s
original hire date. If following a Change in Control, the Participant’s
employment terminates prior to the Participant’s Normal Retirement Date, the
Years of Credited Service determination shall be made as if the Participant was
never terminated. Notwithstanding anything herein to the contrary, three
amendments that credit additional Years of Credited Service to certain
Participants or that established a different Normal Retirement Date for certain
Participants, preceded the date of this restated Plan, and are incorporated
herein by reference and attached hereto as Exhibits.

2.16 Participant

“Participant” means any individual who is participating or has participated in
this Plan as provided in Article III.

2.17 Participation Agreement

“Participation Agreement” means the agreement filed by a Participant which
acknowledges assent to the terms of the Plan.

2.18 Proposed Regulations

“Proposed Regulations” means the regulations proposed under Code Section 409A,
IRS Notice 2005-1 and any subsequent guidance.

2.19 Qualified Retirement Plan

“Qualified Retirement Plan” means the Retirement Plan for Employees of Fidelity
Federal Bank & Trust or any successor defined benefit retirement income plan or
plans maintained by the Employer which qualifies under Section 401(a) of the
Internal Revenue Code. For purposes of determining benefits and actuarial
equivalencies under the Qualified Retirement Plan, the actuarial principles and
assumptions which have consistently applied to such plan(s) shall continue to be
applied.

2.20 Retirement

“Retirement” means a Participant’s Separation from Service with the Employer at
the Participant’s Early Retirement Date, Normal Retirement Date, or Deferred
Retirement Date.

 

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2.21 Separation from Service

“Separation from Service” means the Participant’s death, retirement or
termination of employment with the Employer. No Separation from Service shall be
deemed to occur due to military leave, sick leave or other bona fide leave of
absence if the period of such leave does not exceed six months or, if longer, so
long as the Participant’s right to reemployment is provided by law or contract.
If the leave exceeds six months and the Participant’s right to reemployment is
not provided by law or by contract, then the Participant shall be have a
Separation from Service on the first date immediately following such six-month
period.

The Participant shall not be treated as having a Separation from Service if the
Participant provides more than insignificant services for the Employer following
the Participant’s actual or purported termination of employment with the
Employer. Services shall be treated as not being insignificant if such services
are performed at an annual rate that is at least equal to 20% of the services
rendered by the Participant for the Employer, on average, during the immediately
preceding three full calendar years of employment (or if employed less than
three years, such shorter period of employment) and the annual base compensation
for such services is at least equal to 20% of the average base compensation
earned during the final three full calendar years of employment (or if employed
less than three years, such shorter period of employment).

Where the Participant continues to provide services to a previous employer in a
capacity other than as an employee, a Separation from Service will not be deemed
to have occurred if the Participant is providing services at an annual rate that
is 50% or more of the services rendered, on average, during the immediate
preceding three full calendar years of employment (or if employed less than
three years, such lesser period) and the annual base compensation for such
services is 50% or more of the annual base compensation earned during the final
three full calendar years of employment (or if less, such lesser period).

2.22 Specified Employee

“Specified Employee” means a key employee within the meaning of Code
Section 416(i) without regard to paragraph 5 thereof. Where a new corporation or
entity (“new corporation”) is established as part of a corporate division
governed by Code section 335 from a corporation that is publicly traded on an
established securities market or otherwise (“old corporation”), any employee of
the new corporation who was a key employee of the old corporation immediately
prior to the spin off is a key employee of the new corporation until the end of
the 12-month period beginning on the first day of the fourth month following the
old corporation’s last identification date preceding the spinoff transaction.
Where two corporations (pre-merger corporations) are merged or become part of
the same controlled group of corporations so as to be treated as a single
service recipient under Proposed Treasury regulations section 1.409A-1(g), any
employee of the merged corporation who was a key employee of either the
pre-merger corporations immediately before the merger is a key employee of the
merged corporation until the first day of the fourth month after the
identification date of the merged corporation next following the merger.

 

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2.23 Spouse

“Spouse” means a Participant’s wife or husband who is lawfully married to the
Participant at the time of the Participant’s death.

2.24 Supplemental Retirement Benefit

“Supplemental Retirement Benefit” means the benefit determined under Article V
of this Plan.

2.25 Target Retirement Percentage

“Target Retirement Percentage” means the percentage of Final Average
Compensation which will be used as a target from which other forms of retirement
benefits are subtracted, as provided in Article V, to arrive at the amount of
the Supplemental Retirement Benefit actually payable to a Participant.

2.26 Years of Credited Service

“Years of Credited Service” means the number of years of credited vesting
service determined under the provisions of the Employer’s Qualified Retirement
Plan. Notwithstanding anything herein to the contrary, three amendments that
credit additional Years of Credited Service to certain Participants or that
established a different Normal Retirement Date for certain Participants,
preceded the date of this restated Plan, and are incorporated herein by
reference and attached hereto as Exhibits.

ARTICLE III—PARTICIPATION AND VESTING

3.1 Eligibility and Participation

(a) Eligibility. Eligibility to participate in the Plan shall be limited to
those employees of the Employer who are designated by the Board.

(b) Participation. An Employee’s participation in the Plan shall be effective
upon notification of the employee of eligibility to participate, completion of a
Participation Agreement by the Participant and acceptance of the Participation
Agreement by the Committee. Participation in the Plan shall continue until such
time as the Participant terminates employment with the Employer, and as long
thereafter as the Participant is eligible to receive benefits under this Plan.

3.2 Change in Employment Status

Discontinued Eligibility. If the Board, prior to a Change in Control, determines
that a Participant’s employment performance is no longer at a level which
deserves reward through participation in this Plan, but does not terminate the
Participant’s employment with the Employer, participation herein and eligibility
to receive benefits hereunder shall be limited to the Participant’s vested
interest in such benefits as of the date designated by the Board.

 

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3.3 Vesting

Each Participant shall be one hundred percent (100%) vested in benefits under
this Plan after completing five (5) Years of Credited Service. The preceding
notwithstanding, each Participant shall be one hundred percent (100%) vested in
benefits under this Plan upon death, Disability, Normal Retirement Date or upon
Change in Control.

3.4 Suicide

The provisions of Article IV notwithstanding, no benefit shall be paid to a
Beneficiary if the Participant’s death occurs as a result of suicide during the
twenty-four (24) successive calendar months beginning with the calendar month
following the commencement of an employee’s participation in this Plan.

ARTICLE IV—PRERETIREMENT SURVIVOR BENEFIT

4.1 Preretirement Survivor Benefit

If a Participant dies while employed by the Employer, the Employer shall pay a
supplemental survivor benefit to the Participant’s Beneficiary(ies). The amount
of this benefit shall be equal to the actuarially equivalent lump sum value of
the accrued Supplemental Retirement Benefit as determined under 5.2, 5.3, 5.4 or
5.5, whichever Section is applicable, at the date of death.

4.2 Payment of Benefits

(a) Form and Commencement of Benefit Payments. The supplemental survivor
benefits payable under this Article shall be paid in the form of one hundred
twenty (120) equal monthly installments, with interest. The interest rate used
in determining the monthly payments shall be the same interest rate used in
determining the lump sum equivalent in 4.1 above. Payments shall commence the
first day of the second month following the death of the Participant and shall
continue the first day of each month thereafter for the duration of the payment
period.

(b) Commutation of Benefits. In accordance with the Proposed Regulations under
Code Section 409A, a Participant may elect no later than December 31, 2006, to
have the supplemental survivor benefit payable to the Participant’s Beneficiary
upon the Participant’s death paid in the form of a lump sum rather than 120
monthly installment payments. In such case, the lump sum payment shall be the
actuarial equivalent of the benefit payable under Section 4.2(a) above.

ARTICLE V—SUPPLEMENTAL RETIREMENT BENEFITS

5.1 Target Retirement Percentage

The Target Retirement Percentage shall equal eighty percent (80%) multiplied by
a fraction, the numerator of which is the Participant’s Years of Credited
Service and the denominator of which is the Years of Credited Service the
Participant will accrue by his Normal

 

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Retirement Date, assuming he remains employed by the Employer until such date.
In the event of a Change in Control, the denominator in the preceding factor
shall be equal to the Participant’s actual years of service at the time of the
event which triggers a distribution. The adjusted Target Retirement Percentage
shall be rounded to four (4) decimal places and may never exceed eighty percent
(80%) unless the Participant retires on a Deferred Retirement Date. For a
Participant retiring on a Deferred Retirement Date, the target shall equal
eighty percent (80%) plus two percent (2%) for each full year by which the
Participant’s retirement is subsequent to the Participant’s Normal Retirement
Date (for these purposes, “full years” shall be determined by rounding up or
down to the nearest full year). In no event shall the Target Retirement
Percentage ever exceed one hundred percent (100%).

5.2 Normal Retirement Benefit

If a Participant retires on the Normal Retirement Date, the Employer shall pay
to the Participant a Supplemental Retirement Benefit equal to the Target
Retirement Percentage multiplied by the Participant’s Final Average
Compensation, less

(a) Fifty percent (50%) of the Participant’s primary Social Security benefit
determined at the Participant’s Normal Retirement Date based on the then current
law, assuming no future compensation and using an additional five percent
(5%) per year reduction (prorated for partial years) if retirement occurs before
age sixty-two (62), and

(b) The monthly ten (10) year certain life annuity which is the actuarial
equivalent on the Normal Retirement Date of all benefits accrued under the
Qualified Retirement Plan, including any benefit previously distributed from the
Qualified Retirement Plan.

5.3 Deferred Retirement Benefit

If a Participant retires at a Deferred Retirement Date, the Employer shall pay
to the Participant a Supplemental Retirement Benefit equal to the Target
Retirement Percentage multiplied by the Participant’s Final Average
Compensation, less

(a) Fifty percent (50%) of the Participant’s primary Social Security benefit
determined at the Deferred Retirement Date, and

(b) The monthly ten (10) year certain life annuity that is the actuarial
equivalent on the Deferred Retirement Date of all benefits accrued under the
Qualified Retirement Plan, including any benefit previously distributed from the
Qualified Retirement Plan.

5.4 Early Retirement Benefit

If a Participant retires at an Early Retirement Date, the Employer shall pay to
the Participant a Supplemental Retirement Benefit equal to the Target Retirement
Percentage multiplied by the Participant’s Final Average Compensation, less

(a) Fifty percent (50%) of the Participant’s primary Social Security benefit
determined at the Participant’s Normal Retirement Date based on the then current
law, assuming no future compensation and using an additional five percent
(5%) per year reduction (prorated for partial years) if the Normal Retirement
Date is before age sixty-two (62), and

 

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(b) The monthly ten (10) year certain life annuity at age sixty-five (65) that
is the actuarial equivalent on the Normal Retirement Date of all benefits
accrued under the Qualified Retirement Plan, including any benefit previously
distributed from the Qualified Retirement Plan.

The above benefit shall be reduced by five percent (5%) for each full calendar
year by which the commencement of payment under this section precedes the
Participant’s Normal Retirement Date. The percentages shall be prorated for
partial years.

5.5 Early Termination Retirement Benefit

If a vested Participant terminates employment prior to Retirement, the Employer
shall pay to the Participant a Supplemental Retirement Benefit equal to the
Target Retirement Percentage multiplied by the Participant’s Final Average
Compensation, less

(a) Fifty percent (50%) of the Participant’s primary Social Security benefit
projected to be paid at age sixty-five (65) based on the then current law and
assuming no future increases in compensation, and

(b) The monthly ten (10) year certain life annuity that is the actuarial
equivalent at age sixty-five (65) of all benefits accrued under the Qualified
Retirement Plan, including any benefit previously distributed from the Qualified
Retirement Plan.

5.6 Change in Control Benefit

(a) If a a Change in Control occurs, the Participant’s benefit shall be based on
Final Monthly Compensation instead of Final Average Compensation and shall be
calculated as follows:

(1) If the Participant is eligible for Normal Retirement, the Participant’s
benefit shall be calculated pursuant to Section 5.2, except that Final Monthly
Compensation shall be used instead of Final Average Compensation. Such
Participant’s benefit shall commence within ninety (90) days after the Change in
Control, irrespective of whether the Participant’s employment is terminated.

(2) If the Participant is eligible for Early Retirement at the time of the
Change in Control, the Participant’s benefit shall be calculated pursuant to
Section 5.4, with the adjustments to the Target Retirement Percentage and Normal
Retirement Date, as required. Such benefit shall commence within ninety
(90) days after the Change in Control unless the Participant has elected prior
to December 31, 2005, to have the Participant’s benefit commence upon
Retirement.

(3) If the Participant is not eligible for Early Retirement at the time of the
Change in Control, whether or not such Participant’s employment is terminated
following the Change in Control, such Participant’s benefit shall be calculated
pursuant to Section 5.2 at the Participant’s Normal Retirement Date, based on
the adjustments to the Target Retirement Percentage required as a result of a
Change of Control. Such benefit shall commence within thirty (30) days of the
Participant’s Normal Retirement Date, unless the Participant is a Specified
Employee at the Participant’s Normal Retirement Date, and then such benefit
shall commence on the first day of the seventh month following Separation form
Service.

 

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5.7 Disability Retirement Benefit

If a person terminates employment prior to Retirement as a result of Disability,
the Employer shall pay to the Participant a Supplemental Retirement Benefit
commencing at age sixty-five (65). The benefits shall be equal to the amount the
Participant would have received at such time under the Normal Retirement
provisions of this Article assuming the Participant would not be eligible for
Normal Retirement until age sixty-five (65). For purposes of this calculation,
Years of Credited Service shall continue to accrue during the period of
Disability and the Participant’s Final Average Compensation shall be based only
on the amounts earned during the twelve (12) months prior to Disability if this
provides the Participant with a greater benefit.

5.8 Inflation Index

The Supplemental Executive Retirement Benefit shall be increased for inflation
on the January 1 coinciding with or following the anniversary of the
commencement of benefits, and each January 1 thereafter. This increase shall be
the lesser of:

(a) The percentage change in the national consumer price index (CPI-U) for the
twelve (12) month period preceding October of the prior year (determined by
comparing the prior two (2) years’ September indexes). This percentage change
shall be calculated and rounded to four (4) decimal places (XX.XX%) and shall
never be less than zero (0), or

(b) Six percent (6%).

5.9 Payment of Benefits

(a) Form of Benefit Payments. The Supplemental Retirement Benefit shall be paid
in the basic form provided below, unless the Participant requests an alternative
form at the time of initial enrollment or prior to December 31, 2006. Any
alternative form shall be the Actuarial Equivalent of the basic form of benefit
payments. The basic and alternative forms of payment are as follows:

(1) Basic Form of Benefit Payments. Monthly single life annuity with a ten (10)
year certain for the Participant’s life.

(2) Alternative Forms of Benefit Payment.

(i) A joint and survivor annuity with payment continued to the survivor in the
same amount as the amount paid to the Participant.

(ii) A joint and survivor annuity with payment continued to the survivor at
one-half (1/2) of the amount paid to the Participant.

(iii) Any other form that is the Actuarial Equivalent of the basic form of
benefit payments. Notwithstanding anything herein to the contrary, a Participant
may change the form of annuity payment from one type of life

 

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annuity to another type of life annuity before any annuity payment has been
made. Such a change is not considered a change in the time and form of a
payment, provided that the annuities are actuarially equivalent applying
reasonable actuarial assumptions in accordance with Section 1.409A-2(b)(2)(ii)
of the Proposed Regulations.

(b) Commencement of Benefit Payments. The Supplemental Retirement Benefits
payable to a Participant under the Normal, Deferred, or Early Retirement
provisions of this Article shall commence within ninety (90) days of the
Participant’s termination of employment, provided, however, if the Participant
is a Specified Employee at the time of termination of employment, commencement
shall occur no earlier than the first day of the seventh month following
Separation from Service. The Supplemental Retirement Benefits payable to a
Participant under the Early Termination or Disability provisions of this Article
shall commence within thirty (30) days of the Participant attaining age
sixty-five (65).

(c) Transition Period Changes.

 

  a. Notwithstanding the above, Participants may change their payment elections
hereunder through December 31, 2006, in accordance with Section XI(C) of the
Preamble to the 2005 Proposed Regulations issued under Code section 409A;
provided, however, that in 2006 a Participant cannot change payment elections
with respect to payments that the Participant would otherwise receive in 2006 or
cause payments to be made in 2006. Any transition period changes shall be made
on such forms as are provided by the Committee and shall be filed by the
Committee during the applicable transition period.

 

  b. Commutation of Benefits. In accordance with the Proposed Regulations under
Code Section 409A, a Participant may elect no later than December 31, 2006, (or
by December 31, 2005, with respect to benefits to be paid commencing in 2006) to
change the Participant’s election with respect to the form of payment, or to
have a partial payment in one form and the remainder in another form (e,g., 40%
in a lump sum and 60% paid in a single life annuity). In such case, the
aggregate of the two forms of payment shall be the actuarial equivalent of the
basic form of benefit payable under Section 5.9(a)(1) above.

(d) Distribution of De Minimus Benefits. Notwithstanding anything herein to the
cotrary, if the value of the Participant’s Accrued Benefit (when added together
with all of his benefits under all nonqualified deferred compensation plans
maintained by the Employer) is $10,000 or less at the time of the distribution
event, payment shall be made in a lump sum, even if the Participant had
specified a different form of payment, and such payment shall be made before the
later of (i) December 31 of the year in which the Participant terminates service
with the Employer or (ii) the 15th day of the third month following the
Participant’s termination of service with the Employer.

(e) Other Changes in Benefit Elections. In the event a Participant desires to
modify the time or form (e.g., from annuity to lump sum or vice versa) of
distribution of the Participant’s

 

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Supplemental Retirement Benefit, the Participant may do so by filing a written
election with the Committee, provided that:

 

  (1) the subsequent election shall not be effective for at least 12 months
after the date on which the subsequent election is made;

 

  (2) except for payments upon the Executive’s death, Disability or upon an
Unforeseeable Emergency, the first of a stream of payments for which the
subsequent election is made shall be deferred for a period of not less than five
(5) years from the date on which such payment would otherwise have been made;

 

  (3) for payments scheduled to be made on a specified date, the subsequent
election must be made at least 12 months before the date of the first scheduled
payment.

5.10 Withholding; Payroll Taxes

The Employer shall withhold from payments made hereunder any taxes required to
be withheld from a Participant’s wages for the federal or any state or local
government. However, a Beneficiary may elect not to have withholding for federal
income tax purposes pursuant to Section 3405(a)(2) of the Internal Revenue Code,
or any successor provision.

5.11 Payment to Guardian

If a Plan benefit is payable to a minor or a person declared incompetent or to a
person incapable of handling the disposition of his property, the Committee may
direct payment of such Plan benefit to the guardian, legal representative or
person having the care and custody of such minor, incompetent or person. The
Committee may require proof of incompetency, minority, incapacity or
guardianship as it may deem appropriate prior to distribution of the Plan
benefit. Such distribution shall completely discharge the Committee and the
Employer from all liability with respect to such benefit.

ARTICLE VI—BENEFICIARY DESIGNATION

6.1 Beneficiary Designation

Each Participant shall have the right, at any time, to designate any person or
persons as his Beneficiary or Beneficiaries (both primary as well as secondary)
to whom benefits under this Plan shall be paid in the event of his death prior
to complete distribution to Participant of the benefits due under the Plan. Each
Beneficiary designation shall be in a written form prescribed by the Committee,
and will be effective only when filed with the Committee during the
Participant’s lifetime.

6.2 Amendments

Any Beneficiary designation may be changed by a Participant without the consent
of any designated Beneficiary by the filing of a new Beneficiary designation
with the Committee. The filing of a new Beneficiary designation form will cancel
all Beneficiary designations previously filed. If a Participant’s Compensation
is community property, any Beneficiary Designation shall be valid or effective
only as permitted under applicable law.

 

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6.3 No Participant Beneficiary Designation

In the absence of an effective Beneficiary Designation, or if all designated
Beneficiaries predecease the Participant or die prior to complete distribution
of the Participant’s benefits, then the Participant’s designated Beneficiary
shall be deemed to be the person or persons surviving him in the first of the
following classes in which there is a survivor, share and share alike;

(a) The Particpant’ surviving Spouse;

(b) The Participant’s children, except that if any of the children predecease
the Participant but leave issue surviving, then such issue shall take by right
of representation the share their parent would have taken if living;

(c) The Participant’s estate.

6.4 Effect of Payment

The payment to the deemed Beneficiary shall completely discharge Employer’s
obligations under this Plan.

ARTICLE VII—ADMINISTRATION

7.1 Committee; Duties

This plan shall be administered by the Committee which shall consist of not less
than three (3) persons appointed by the Board. The Committee shall have the
authority to make, amend, interpret, and enforce all appropriate rules and
regulations for the administration of this Plan and decide or resolve any and
all questions including interpretations of this Plan, as may arise in connection
with the Plan. A majority vote of the Committee members shall control any
decision. Members of the Committee may be Participants under this Plan.

7.2 Agents

The Committee may, from time to time, employ other agents and delegate to them
such administrative duties as it sees fit, and may from time to time consult
with counsel who may be counsel to the Employer.

7.3 Binding Effect of Decisions

The decision or action of the Committee in respect of any question arising out
of or in connection with the administration, interpretation and application of
the Plan and the rules and regulations promulgated hereunder shall be final and
conclusive and binding upon all persons having any interest in the Plan.

 

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7.4 Indemnity of Committee

The Employer shall indemnify and hold harmless the members of the Committee
against any and all claims, loss, damage, expense or liability arising from any
action or failure to act with respect to this Plan, except in the case of gross
negligence or willful misconduct.

ARTICLE VIII—CLAIMS PROCEDURE

8.1 Claim

Any person claiming a benefit, requesting an interpretation or ruling under the
Plan, or requesting information under the Plan shall present the request in
writing to the Committee which shall respond in writing within thirty (30) days.

8.2 Denial of Claim

If the claim or request is denied, the written notice of denial shall state:

(a) The reason for denial, with specific reference to the Plan provisions on
which the denial is based.

(b) A description of any additional material or information required and an
explanation of why it is necessary.

(c) An explanation of the Plan’s claim review procedure.

8.3 Review of Claim

Any person whose claim or request is denied or who has not received a response
within thirty (30) days may request review by notice given in writing to the
Committee. The claim or request shall be reviewed by the Committee who may, but
shall not be required to, grant the claimant a hearing. On review, the claimant
may have representation, examine pertinent documents, and submit issues and
comments in writing.

8.4 Final Decision

The decision on review shall normally be made within sixty (60) days. If an
extension of time is required for a hearing or other special circumstances, the
claimant shall be notified and the time limit shall be one hundred twenty
(120) days. The decision shall be in writing and shall state the reason and the
relevant plan provisions. All decisions on review shall be final and bind all
parties concerned.

ARTICLE IX—TERMINATION, SUSPENSION OR AMENDMENT

9.1 Termination, Suspension or Amendment of Plan

(a) The Board may, in its sole discretion, terminate or suspend this Plan at any
time or from time to time, in whole or in part. The Board may amend this Plan at
any time or from time to time. However, no such termination suspension or
amendment shall adversely affect the benefits of Participants which have accrued
prior to such action or the benefits of any Beneficiary of a Participant who has
previously died.

 

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(b) The Board may completely terminate the Plan. Subject to the requirements of
Code Section 409A, in the event of complete termination, the Plan shall cease to
operate and the Employer shall pay out to each Participant his or her Accrued
Benefit as if that Participant had terminated service as of the effective date
of the complete termination. Such complete termination of the Plan shall occur
only under the following circumstances and conditions.

(1) The Board may terminate the Plan within 12 months of a corporate dissolution
taxed under Code section 331, or with approval of a bankruptcy court pursuant to
11 U.S.C. §503(b)(1)(A), provided that the amounts deferred under the Plan are
included in each Participant’s gross income in the latest of (i) the calendar
year in which the Plan terminates; (ii) the calendar year in which the amount is
no longer subject to a substantial risk of forfeiture; or (iii) the first
calendar year in which the payment is administratively practicable.

(2) The Board may terminate the Plan within the 30 days preceding a Change in
Control (but not following a Change in Control), provided that the Plan shall
only be treated as terminated if all substantially similar arrangements
sponsored by the Employer are terminated so that the Participants and all
participants under substantially similar arrangements are required to receive
all amounts of compensation deferred under the terminated arrangements within 12
months of the date of the termination of the arrangements, provided, however
that any termination prior to a Change in Control under this sub-paragraph will
be deemed to be a termination coincident or following a Change in Control for
purposes of the calculation and payment of benefits under Section 5.6 hereof.

(3) The Board may terminate the Plan provided that (i) all arrangements
sponsored by the Employer that would be aggregated with this Plan under Proposed
Treasury regulations section 1.409A-1(c) if any Participant covered by this Plan
was also covered by any of those other arrangements are also terminated; (ii) no
payments other than payments that would be payable under the terms of the
arrangement if the termination had not occurred are made within 12 months of the
termination of the arrangement; (iii) all payments are made within 24 months of
the termination of the arrangements; and (iv) the Employer does not adopt a new
arrangement that would be aggregated with any terminated arrangement under
Proposed Treasury regulations section 1.409A-1(c) if the same Participant
participated in both arrangements, at any time within five years following the
date of termination of the arrangement.

(4) The Board may terminate the Plan pursuant to such other terms and conditions
as the Internal Revenue Service may permit from time to time.

 

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ARTICLE X—MISCELLANEOUS

10.1 Unfunded Plan

This Plan is intended to be an unfunded plan maintained primarily to provide
deferred compensation benefits for a select group of management or highly
compensated employees.

10.2 Unsecured General Creditor

Participants and their Beneficiaries, heirs, successors and assigns shall have
no legal or equitable rights, interest or claims in any property or assets of
Employer, nor shall they be beneficiaries of, or have any rights, claims or
interests in any life insurance policies, annuity contracts or the proceeds
therefrom owned or which may be acquired by Employer. Such policies or other
assets of Employer shall not be held under any trust for the benefit of
Participants, their Beneficiaries, heirs, successors or assigns, or held in any
way as collateral security for the fulfilling of the obligations of Employer
under this Plan. Any and all of Employer’s assets shall be, and remain, the
general, unpledged, unrestricted assets of Employer. Employer’s obligation under
the Plan shall be that of an unfunded and unsecured promise of Employer to pay
money in the future.

10.3 Trust Fund

The Employer shall be responsible for the payment of all benefits provided under
the Plan. At its discretion, the Employer may establish one (1) or more trusts,
with such trustees as the Board may approve, for the purpose of providing for
the payment of such benefits. Such trust or trusts may be irrevocable, but the
assets thereof shall be subject to the claims of the Employer’s creditors. To
the extent any benefits provided under the Plan are actually paid from any such
trust, the Employer shall have no further obligation with respect thereto, but
to the extent not so paid, such benefits shall remain the obligation of, and
shall be paid by, the Employer.

10.4 Nonassignability

Neither a Participant nor any other person shall have any right to commute,
sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber,
transfer, hypothecate or convey in advance of actual receipt the amounts, if
any, payable hereunder, or any part thereof, which are, and all rights to which
are, expressly declared to be unassignable and nontransferable. No part of the
amounts payable shall, prior to actual payment, be subject to seizure or
sequestration for the payment of any debts, judgments, alimony or separate
maintenance owed by a Participant or any other person, nor be transferable by
operation of law in the event of a Participant’s or any other person’s
bankruptcy or insolvency.

10.5 Not a Contract of Employment

The terms and conditions of this Plan shall not be deemed to constitute a
contract of employment between the Employer and the Participant (or his
Beneficiary) shall have no rights against the Employer except as may otherwise
by specifically provided herein. Moreover, nothing in this Plan shall be deemed
to give a Participant the right to be retained in the service of the Employer or
to interfere with the right of the Employer to discipline or discharge him at
any time.

 

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10.6 Protective Provisions

A Participant will cooperate with the Employer by furnishing any and all
information requested by the Employer, in order to facilitate the payment of
benefits hereunder, and by taking such physical examinations as the Employer may
deem necessary and taking such other action as may be requested by the Employer.

10.7 Terms

Whenever any words are used herein in the masculine, they shall be construed as
though they were used in the feminine in all cases where they would so apply;
and wherever any words are used herein in the singular or in the plural, they
shall be construed as though they were used in the plural or the singular, as
the case may be, in all cases where they would so apply.

10.8 Captions

The captions of the articles, sections and paragraphs of this Plan are for
convenience only and shall not control or affect the meaning or construction of
any of its provisions.

10.9 Governing Law

The provisions of this Plan shall be construed and interpreted according to the
laws of the State of Florida.

10.10 Validity

In case any provision of this Plan shall be held illegal or invalid for any
reason, said illegality or invalidity shall not affect the remaining parts
hereof, but this Plan shall be construed and enforced as if such illegal and
invalid provision had never been inserted herein.

10.11 Notice

Any notice or filing required or permitted to be given to the Committee under
the Plan shall be sufficient if in writing and hand delivered, or sent by
registered or certified mail to any member of the Committee or the Secretary of
the Employer. Such notice shall be deemed given as of the date of delivery or,
if delivery is made by mail, as of the date shown on the postmark on the receipt
for registration or certification.

10.12 Successors

The provisions of this Plan shall bind and inure to the benefit of Fidelity
Federal and its successors and assigns. The term successors as used herein shall
include any corporate or other business entity which shall, whether by merger,
consolidation, purchase or otherwise acquire all or substantially all of the
business and assets of Fidelity Federal, and successors of any such corporation
or other business entity.

 

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10.13 Compliance with Section 409A of the Code

The Plan is intended to be a non-qualified deferred compensation plan described
in Section 409A of the Code. The Plan shall be operated, administered and
construed to give effect to such intent. To the extent that a provision of the
Plan fails to comply with Code Section 409A and a construction consistent with
Code Section 409A is not possible, such provision shall be void ab initio. In
addition, the Plan shall be subject to amendment, with or without advance notice
to Participants and other interested parties, and on a prospective or
retroactive basis, including but not limited to amendment in a manner that
adversely affects the rights of Participants and other interested parties, to
the extent necessary to effect such compliance.

IN WITNESS WHEREOF, and pursuant to resolution of the Board of Directors of
Fidelity Federal, as adopted and approved on September 17, 1989 and as amended
and restated on July 1, 2004 and December 1, 2005 such corporation has caused
this instrument to be executed by its duly authorized officers effective as of
December 1, 2005.

 

FIDELITY FEDERAL BANK & TRUST By:  

/s/ Vince A. Elhilow

  Vince A. Elhilow   President and Chief Executive Officer By:  

/s/ Elizabeth Cook

  Elizabeth Cook, Secretary Dated:  

 

 

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