Exhibit 10(b)
EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement"), made as of this 5th day of August
2004, by and among Xxxxx Spring Bancorp, Inc., a registered bank holding company
("Bancorp"), Xxxxx Spring Bank, a Maryland corporation and wholly owned
subsidiary of Bancorp with its main office in Olney, Maryland (the "Bank"), and
Xxxxxx X. Xxxxxxxx (the "Officer").
W I T N E S S E T H
WHEREAS, the Officer is employed as the Executive Vice President and
Chief Credit Officer of the Bank.
WHEREAS, as a result of the skill, knowledge, and experience of the
Officer, the Board of Directors of the Bank (the "Board") desires to retain the
services of the Officer.
WHEREAS, the Officer desires to continue to serve as the Executive Vice
President and Chief Credit Officer of the Bank.
WHEREAS, the Officer and the Board and the Board of Directors of
Bancorp desire to enter into an Agreement setting forth the terms of conditions
of the continuing employment of the Officer and the related rights and
obligations of each of the parties.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed as follows:
1. Employment. The Officer is employed as the Executive Vice President and
Chief Credit Officer of the Bank. The Officer shall perform all duties and shall
have all powers which are commonly incident to the office of Executive Vice
President or which, consistent with that office, are assigned to the Officer. In
addition to the major job accountabilities set forth in the job description
maintained by the Human Resources Division, the Officer's duties include, but
are not limited to:
a. Making recommendations concerning the strategies, policies,
and tactics of the Bank;
b. Management oversight of the day-to-day activities of the
Commercial and Credit Services Group, including management
oversight of Credit Administration, Portfolio Management,
Commercial Real Estate, Cash Management, Loan Support, Asset
Quality, and the Mortgage Portfolio and supervision of the
officers and employees engaged in these functions;
c. Promoting the Bank and its services;
d. Managing the efforts of the Bank to comply with applicable
laws and regulations related to the activities of the
Commercial and Credit Services Group; and
e. Providing complete, timely, and accurate reports, as required,
regarding the activities of the Commercial and Credit Services
Group.
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2. Location and Facilities. The Officer will be furnished with the working
facilities and staff customary for executive officers with the title and duties
set forth in Section 1 and as are necessary for the Officer to perform the
duties of the position. The location of such facilities and staff shall be at
the principal administrative offices of the Bank, or at such other site or sites
customary for such offices.
3. Term
a. The term of this Agreement shall be (i) the initial term,
consisting of the period commencing on the date of this
Agreement (the "Effective Date") and ending immediately prior
to the second anniversary of the Effective Date, plus (ii) any
and all extensions of the initial term made pursuant to this
Section 3.
b. On each anniversary of the Effective Date prior to a
termination of the Agreement, the term under this Agreement
shall be extended for an additional one-year period beyond the
then effective expiration date without action by any party,
provided that neither the Bank nor the Officer shall have
given written notice at least sixty (60) days prior to such
anniversary date of its or the Officer's desire that the term
not be extended. The Officer's performance and the
advisability of extending the term of this Agreement shall be
reviewed by the Human Resources Committee (the "Committee") of
the Board, and the Board shall, based on such review,
determine whether or not to extend the term of this Agreement
at a meeting or meetings at least ninety (90) days prior to
each anniversary date.
c. At the Effective Date, this Agreement shall supersede any
prior Agreement, which shall be deemed terminated by agreement
of the parties immediately prior to the Effective Date.
4. Base Compensation.
a. Bancorp and the Bank agrees to pay the Officer during the term
of this Agreement a salary at the rate of $210,000.00 per
annum, payable in cash not less frequently than monthly, as
may be adjusted in accordance with this Section 4.
b. The Human Resources Committee shall perform an annual analysis
of the Officer's performance and of the compensation of
officers performing similar functions at independent financial
institutions of comparable assets and performance, and based
upon this review, the recommendations of the Executive Vice
President and Chief Operating Officer and the President and
Chief Executive Officer, and on such other factors as it deems
pertinent, shall recommend to the Board the annual salary rate
to be paid to the Officer following such review. The Board,
based upon this recommendation of the Committee and other
factors they deem relevant, may maintain, increase or decrease
the Officer's salary, provided that no such action shall (i)
reduce the rate of salary below the amount set forth in
Section 4.a. or (ii) reduce the rate of salary paid to the
Officer for any months prior to the month in which notice of
the reduction is provided in writing to the Officer.
c. In the absence of action by the Board, the Officer shall
continue to receive salary at the amount set forth in Section
4.a. specified herein or, if another rate has been established
under the provisions of this Section 4, the rate last properly
established by action of the Board under the provisions of
this Section 4.
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5. Bonuses. Unless the Officer agrees otherwise, the Officer shall be
entitled to participate in discretionary bonuses that the Board may award from
time to time to senior management employees pursuant to bonus plans or
otherwise. The Officer also shall participate in any other fringe benefits which
are or may become available to senior management employees of the Bank,
including for example: any stock option or incentive compensation plans and any
other benefits that are commensurate with the responsibilities and functions to
be performed by the Officer under this Agreement. No other compensation provided
for in this Agreement shall be deemed a substitute for the Officer's right to
participate in such discretionary bonuses or fringe benefits.
6. Benefit Plans. The Officer shall be entitled to participate in such
life insurance, medical, dental, pension, profit sharing, and retirement plans
and other programs and arrangements as may be approved from time to time by
Bancorp or the Bank for the benefit of the employees of the Bank. In addition,
the Officer shall be entitled to participate in a nonstatutory supplemental
retirement plan or arrangement ("SERP") established for the Officer, in the
Executive Health Expense Reimbursement and Insurance Plans (together, the
"HERP"), or a successor plan or plans that provide the same or greater level of
benefits as those provided to participants under the HERP as in effect on the
Effective Date, and in the Group Term Replacement Plan ("GTRP") established for
the Officer.
7. Paid Time Off.
a. The Officer shall be entitled to twenty-eight working days of
paid time off, as defined in the Bank's personnel policies,
during each consecutive twelve-month period commencing on
January 1, 2004 and each January 1 thereafter during the term
of this Agreement, to be taken at reasonable times and in
reasonable periods as the Officer and Bancorp and the Bank
shall mutually determine, and provided that no paid time off
shall interfere with the duties required to be rendered by the
Officer hereunder. Any paid time off not used during a
twelve-month period shall carry over and be useable during the
succeeding twelve-month period, but not thereafter. The
Officer shall not receive any additional compensation from the
Bank on account of the Officer's failure to take paid time
off.
b. In addition to paid time off, the Officer shall be entitled,
without loss of pay, to voluntarily take time off from work
for such additional periods of time and for such valid and
legitimate reasons as the Executive Vice President and Chief
Operating Officer may in his discretion determine. Further,
the Officer may request and be granted a leave or leaves of
absence, with or without pay, at such time or times and upon
such terms and conditions as the Executive Vice President and
Chief Operating Officer in his discretion may determine.
8. Expense Payments and Reimbursements. The Officer shall be reimbursed
for all reasonable out-of-pocket business expenses incurred in connection with
the Officer's services under this Agreement upon substantiation of such expenses
in accordance with applicable policies of Bancorp and the Bank.
9. Loyalty and Confidentiality.
a. During the term of this Agreement the Officer: (i) shall
devote all the Officer's time, attention, skill, and efforts
to the faithful performance of the Officer's duties hereunder;
provided, however, that from time to time, the Officer may
serve on the boards of directors of, and hold any other
offices or positions in, companies or organizations which will
not present any conflict of interest with Bancorp or the Bank
or any of their subsidiaries or affiliates, unfavorably affect
the performance of Officer's duties pursuant to this
Agreement, or violate any applicable statute or regulation;
and (ii) shall not engage in any business or activity contrary
to the business affairs or interests of Bancorp or the Bank.
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b. Nothing contained in this Agreement shall prevent or limit the
Officer's right to invest in the capital stock or other
securities of any business dissimilar from that of Bancorp and
the Bank, or, solely as a passive, minority investor, in any
business.
c. The Officer agrees to maintain the confidentiality of any and
all information concerning the operation or financial status
of Bancorp and the Bank; the names or addresses of any of
their borrowers, depositors and other customers; any
information concerning or obtained from such customers; and
any other information concerning Bancorp or the Bank to which
the Officer may be exposed during the course of employment.
The Officer further agrees that, unless required by law or
specifically permitted by Bancorp or the Bank in writing, the
Officer will not disclose to any person or entity, either
during or subsequent to the officer's employment, any of the
above-mentioned information which is not generally known to
the public, nor shall the Officer employ such information in
any way other than for the benefit of Bancorp and the Bank.
10. Termination and Termination Pay. Subject to Section 11 of this
Agreement, the Officer's employment under this Agreement may be terminated in
the following circumstances:
a. Death. The Officer's employment under this Agreement shall
terminate upon the Officer's death during the term of this
Agreement, in which event the Officer's estate shall be
entitled to receive the compensation due to the Officer
through the last day of the calendar month in which the
Officer's death occurred.
b. Retirement. This Agreement shall be terminated upon the normal
or early retirement of the Officer under the retirement
benefit plan or plans in which the Officer participates
pursuant to Section 6 of this Agreement.
c. Disability. The Bank or the Officer may terminate the
Officer's employment after having established the Officer's
Disability. For purposes of this Agreement, "Disability" means
a physical or mental infirmity that impairs the Officer's
ability to substantially perform duties assigned to the
Officer under this Agreement and that results in the Officer's
becoming eligible for long-term disability benefits under
Bancorp's or the Bank's long-term disability plan (or, if
Bancorp or the Bank has no such plan in effect, that impairs
the Officer's ability to substantially perform duties assigned
to the Officer under this Agreement for a period of
one-hundred-eighty consecutive days). In the event of such
Disability, the Officer's obligation to perform services under
this Agreement will terminate. In the event of such
termination, the Officer shall be entitled to receive the
following:
i. The compensation and benefits provided for under this
Agreement for any period during the term of this
Agreement and prior to the date of termination
pursuant to this Section 10.c. during which the
Officer is unable to work due to physical or mental
infirmity (less any amounts which the Officer
receives under any disability insurance maintained by
Bancorp or the Bank with respect to such period);
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ii. For the period beginning upon the date of termination
pursuant to this Section 10.c. and continuing for the
remaining term of this Agreement, (A) salary at the
highest rate paid pursuant to Section 4 of this
Agreement during the twelve months prior to the
establishment of such disability under this Section
10.c., reduced by any payments received by the
Officer during such period following termination
under a long term disability plan or policy
maintained by Bancorp or the Bank, and (B) benefits
pursuant to Section 6 of this Agreement.
The Board shall determine whether or not the Officer is and
continues to be permanently disabled for purposes of this Agreement in
good faith, based upon competent medical advice and other factors that
it reasonably believes to be relevant. As a condition to any benefits,
such Board may require the Officer to submit to such physical or mental
evaluations and tests as it deems reasonably appropriate.
d. Just Cause.
i. The Board may, by written notice to the Officer in
the form and manner specified in this paragraph,
immediately terminate the Officer's employment with
the Bank at any time for Just Cause. The Officer
shall have no right to receive compensation or other
benefits for any period after termination for Just
Cause. Termination for "Just Cause" shall mean
termination because of, in the good faith
determination of the Board, the Officer's:
(1) Personal dishonesty;
(2) Willful misconduct;
(3) Breach of fiduciary duty involving personal
profit;
(4) Intentional failure to perform duties under
this Agreement;
(5) Other, continuing material failure to
perform duties assigned to the Officer under
this Agreement after reasonable notification
(which shall be stated in writing and given
at least fifteen days prior to termination)
by the Board of such failure;
(6) Willful violation of any law, rule or
regulation (other than traffic violations or
similar offenses) or final cease-and-desist
order; or
(7) Material breach by the Officer of any
provision of this Agreement.
ii. Notwithstanding the foregoing, the Officer shall not
be deemed to have been terminated for Just Cause
unless there shall have been delivered to the Officer
a copy of a resolution duly adopted by the
affirmative vote of not less than a majority of the
entire membership of the Board at a meeting called
and held for the purpose (after reasonable notice to
the Officer and an opportunity for the Officer to be
heard before the Board), finding that in the good
faith opinion of the Board the Officer was guilty of
conduct described above and specifying the
particulars thereof.
iv. Notwithstanding the foregoing, it is expected that
Officer will perform all duties and agreements to be
performed herein, and Officer shall have the right to
cure non-performance, to the extent such performance
is reasonably capable of being cured, and shall
promptly upon receipt of written notice of
non-performance, comply with the requirements of such
notice, and further if Officer shall not comply with
such notice to the satisfaction of the Bank within
forty-eight (48) hours after delivery thereof,
(except if such compliance cannot be reasonably
completed within forty-eight (48) hours, if Officer
shall not commence to comply within such period and
thereafter proceed to completion with due diligence)
the Bank shall have the right to proceed with the
Board meeting specified in the preceding paragraph.
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e. Certain Regulatory Events.
i. If the Officer is removed and/or permanently
prohibited from participating in the conduct of the Bank's
affairs by an order issued under Sections 8(e)(4) or 8(g)(1)
of the Federal Deposit Insurance Act ("FDIA") (12 U.S.C.
xx.xx. 1818(e)(4) and (g)(1)), all obligations of the Bank
under this Agreement shall terminate as of the effective date
of the order, but vested rights of the parties shall not be
affected.
ii. If the Bank is in default (as defined in Section
3(x)(1) of FDIA), all obligations of the Bank under this
Agreement shall terminate as of the date of default, but
vested rights of the parties shall not be affected.
iii. If a notice served under Sections 8(e)(3) or (g)(1)
of the FDIA (12 U.S.C. xx.xx. 1818(e)(3) and (g)(1)) suspends
and/or temporarily prohibits the Officer from participating in
the conduct of the Bank's affairs, the Bank's obligations
under this Agreement shall be suspended as of the date of such
service, unless stayed by appropriate proceedings. If the
charges in the notice are dismissed, the Bank may, in its
discretion, (i) pay the Officer all or part of the
compensation withheld while its contract obligations were
suspended, and (ii) reinstate (in whole or in part) any of its
obligations which were suspended.
The occurrence of any of the events described in paragraphs i,
ii, and iii above may be considered by the Board in connection with a
termination for Just Cause.
f. Voluntary Termination by Officer. In addition to the Officer's
other rights to terminate under this Agreement, the Officer
may voluntarily terminate employment with the Bank and Bancorp
during the term of this Agreement upon at least sixty days'
prior written notice to the Bank, in which case the Officer
shall receive only compensation, vested rights and employee
benefits up to the date of termination.
g. Without Just Cause or With Good Reason.
i. In addition to termination pursuant to Section 10.a.
through 10.f.: the Board may, by written notice to the
Officer, immediately terminate the Officer's employment with
the Bank at any time for a reason other than Just Cause (a
termination "Without Just Cause"); and the Officer may, by
written notice to the Board, immediately terminate this
Agreement at any time within ninety days following an event of
"Good Reason" as defined below (a termination "With Good
Reason").
ii. Subject to Section 11 hereof, in the event of
termination under this Section 10.g., the Officer shall be
entitled to receive the salary for the remaining term of the
Agreement, including any renewals or extensions thereof, at
the highest annual rate in effect pursuant to Section 4 of
this Agreement for any of the twelve months immediately
preceding the date of such termination, plus annual cash
bonuses for each year (prorated in the event of partial years)
remaining under such term at the amount received by the
Officer in the calendar year preceding the termination. The
sum due under this Section 10.g. shall be paid in one lump sum
within ten calendar days of such termination.
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iii. "Good Reason" shall exist if, without the Officer's
express written consent, Bancorp or the Bank materially breach
any of its respective obligations under this Agreement.
Without limitation, such a material breach shall be deemed to
occur upon any of the following:
(1) A material reduction in the Officer's
responsibilities or authority in connection
with the Officer's employment with Bancorp
or the Bank;
(2) Assignment to the Officer of duties of a
nonexecutive nature or duties for which the
Officer is not reasonably equipped by the
Officer's skills and experience;
(3) A reduction in salary or benefits contrary
to the terms of this Agreement, or,
following a Change in Control as defined in
Section 11 of this Agreement, any reduction
in salary or material reduction in benefits
below the amounts to which the Officer was
entitled prior to the Change in Control;
(4) Termination of incentive and benefit plans,
programs, or arrangements, or reduction of
the Officer's participation to such an
extent as to materially reduce their
aggregate value below their aggregate value
as of the Effective Date;
(5) A requirement that the Officer's principal
business office or principal place of
residence be relocated outside any county in
which the Bank has its main office, its
branches, or its deposit taking Automatic
Teller Machines; or the assignment to the
Officer of duties that would reasonably
require such a relocation;
(6) A requirement that the Officer spend more
than thirty normal working days away from
any county in which the Bank has its main
office, its branches, or its deposit taking
Automatic Teller Machines during any
consecutive twelve-month period; or
(7) Failure to provide office facilities,
secretarial services, and other
administrative services to Officer which are
substantially equivalent to the facilities
and services provided to the Officer on the
Effective Date (excluding brief periods
during which office facilities may be
temporarily unavailable due to fire, natural
disaster, or other calamity).
(8) In the event of a Change in Control as
defined in Section 11 of this Agreement,
Officer shall have the right to resign for
any reason during the first sixty (60) days
immediately following the first six months
after the closing date of a definitive
purchase and assumption agreement (as
defined in such agreement), the execution of
which brought about a Change in Control.
Notwithstanding the foregoing, it is
expected that the Bank will perform all agreements on its part to be performed
herein, and the Bank shall have the right to cure non-performance, to the extent
such performance is reasonably capable of being cured, and shall promptly upon
receipt of written notice of non-performance, comply with the requirement of
such notice, and further if Bank shall not comply with such notice to the
satisfaction of the Officer within forty-eight (48) hours after delivery
thereof, (except if such compliance cannot be reasonably completed within
forty-eight (48) hours, if the Bank shall not commence to comply within such
period and thereafter proceed to completion with due diligence) the Officer
shall have the right to proceed with notice of a "with Good Reason" termination
as specified above.
iv. Notwithstanding the foregoing: (A) a reduction or
elimination of the Officer's benefits under one or
more benefit plans maintained by Bancorp or the Bank
as part of a good faith, overall reduction or
elimination of such plan or plans or benefits
thereunder applicable to all participants in a manner
that does not discriminate against the Officer
(except as such discrimination may be necessary to
comply with law) shall not constitute an event of
Good Reason or a material breach of this Agreement,
provided that benefits of the type or to the general
extent as those offered under such plans prior to
such reduction or elimination are not available to
other officers of Bancorp or the Bank or any company
that controls either of them under a plan or plans in
or under which the Officer is not entitled to
participate, and receive benefits, on a fair and
nondiscriminatory basis; and (B) a requirement that
the Officer report to and be subject to the direction
or supervision of a senior officer of Bancorp or the
Bank other than the Executive Vice President and
Chief Operating Officer shall not constitute an event
of Good Reason or a material breach of this
Agreement.
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h. Continuing Covenant not to Compete or Interfere with
Relationships. Regardless of anything herein to the contrary,
following a termination (i) upon retirement pursuant to
Section 10.b., (ii) due to Disability pursuant to Section
10.c., (iii) for Just Cause pursuant to Section 10.d., or (iv)
by the Officer pursuant to Section 10.f.:
i. The Officer's obligations under Section 9.c. of this
Agreement will continue in effect; and
ii. During the remaining term of this Agreement
(determined immediately before such termination), the
Officer shall not serve as an officer or director or
employee of any bank holding company, bank, savings
association, savings and loan holding company, or
mortgage company (any of which, a "Financial
Institution"), which Financial Institution offers
products or services competing with those offered by
Bancorp or the Bank from offices in any county in the
State of Maryland or of any other State in which the
Bank, Bancorp or any of their subsidiaries has a
branch, and shall not interfere with the relationship
of Bancorp or the Bank and any of its employees,
agents, or representatives; provided, however, that
the provisions of this noncompetition clause shall
only apply to termination of the Officer "before" a
Change in Control as defined in Section 11. (It being
the intent of the parties that the noncompetition
clause shall not apply to terminations resulting from
or due to a Change in Control.)
11. Termination in Connection with a Change in Control.
a. For purposes of this Agreement, a "Change in Control" shall be
deemed to occur on the earliest of:
i. The acquisition by any entity, person or group (other
than the acquisition by a tax-qualified retirement
plan sponsored by Bancorp or the Bank) of beneficial
ownership, as that term is defined in Rule 13d-3
under the Securities Exchange Act of 1934, of more
than 25% of the outstanding capital stock of Bancorp
or the Bank entitled to vote for the election of
directors ("Voting Stock");
ii. The commencement by any entity, person, or group
(other than Bancorp or the Bank, a subsidiary of
Bancorp or the Bank or a tax-qualified retirement
plan sponsored by Bancorp or the Bank) of a tender
offer or an exchange offer for more than 20% of the
outstanding Voting Stock of Bancorp or the Bank;
iii. The effective time of (a) a merger or consolidation
of Bancorp or the Bank with one or more other
corporations as a result of which the holders of the
outstanding Voting Stock of Bancorp or the Bank
immediately prior to such merger exercise voting
control over less than 80% of the Voting Stock of the
surviving or resulting corporation, or (b) a transfer
of substantially all of the property of Bancorp or
the Bank other than to an entity of which Bancorp or
the Bank owns at least 80% of the Voting Stock;
iv. Upon the acquisition by any entity, person, or group
of the control of the election of a majority of the
Bank's or Bancorp's directors,
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v. At such time that, during any period of two
consecutive years, individuals who at the beginning
of such period constitute the Board of Bancorp or the
Bank (the "Continuing Directors") cease for any
reason to constitute at least two-thirds thereof,
provided that any individual whose election or
nomination for election as a member of the Board was
approved by a vote of at least two-thirds of the
Continuing Directors then in office shall be
considered a Continuing Director.
b. Termination. If within the period beginning six months prior
to and ending two years after a Change in Control, (i) the
Bank shall terminate the Officer's employment Without Just
Cause, or (ii) the Officer shall voluntarily terminate
employment With Good Reason, the Bank shall, within ten
calendar days of the termination of Officer's employment, make
a lump-sum cash payment to the Officer equal to 2.99 times the
sum of (x) the Officer's annual salary at the highest annual
rate in effect for any of the twelve months immediately
preceding the date of such termination, plus (y) the amount of
other compensation received by the Officer during the calendar
year preceding the Change in Control. This cash payment is
subject to adjustment pursuant to Section 14 of this
Agreement, and shall be made in lieu of any payment also
required under section 10.g. of this Agreement because of a
termination in such period. The Officer's rights under Section
10.g. are not otherwise affected by this Section 11. Also, in
such event, the Officer shall, for three calendar years
following the Officer's termination of employment, continue to
participate in any benefit plans of Bancorp and the Bank that
provide health (including medical and dental), life or
disability insurance, or similar coverage upon terms no less
favorable than the most favorable terms provided to executive
officers of the Bank during such period.
c. Funding of Trust upon Change in Control. In order to assure
payment to the Officer of amounts that may become payable by
Bancorp or the Bank pursuant to this Section, unless and to
the extent the Officer has previously provided a written
release of any claims under Section 11 of this Agreement, not
later than ten business days after a Change in Control,
Bancorp or the Bank shall (i) establish a valid trust under
the law of the State of Maryland with an independent trustee
that has or may be granted corporate trust powers under
Maryland law, (ii) deposit in such trust an amount equal to
2.99 times the Officer's "base amount" as defined in Section
280G(b)(3) of the Code and regulations promulgated thereunder
(Section 280G and related regulations hereinafter referred to
as Section 280G") plus such amounts deemed adequate to cover
Bancorp and the Bank's obligations under Section 14 of this
Agreement, at the time of the Change of Control, and (iii)
provide the trustee of the trust with a written direction to
hold said amount and any investment return thereon in a
segregated account, and to pay such amounts as demanded by the
Officer from the trust upon written demand from the Officer
stating the amount of the payment demanded from the trust and
the basis for the Officer's rights to such payment under
Section 11 of this Agreement. Upon the earlier of the final
payment of all amounts demanded by the Officer under this
Section 11 or the date thirty-six months after the Change in
Control, the trustee of the trust shall pay to Bancorp or the
Bank, as applicable, the entire balance remaining in the
trust. Payments from the trust to the Officer shall be
considered payments made by Bancorp or the Bank for purposes
of this Agreement. Payment of such amounts to the Officer from
the trust, however, shall not relieve Bancorp or the Bank from
any obligation to pay amounts in excess of those paid from the
trust, or from any obligation to take actions or refrain from
taking actions otherwise required by this Agreement. Unless
and until a termination of or by the Officer as described in
Section 11.b.(i) or (ii), the Officer's rights under this
Agreement shall be those of a general, unsecured creditor, the
Officer shall have no claim against the assets of the trust,
and the assets of the trust shall remain subject to the claims
of creditors of Bancorp or the Bank. Upon the termination of
the trust as specified herein, the Officer shall have no
further interest in the trust.
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12. Indemnification and Liability Insurance.
a. Indemnification. Bancorp and the Bank agree to indemnify the
Officer (and the Officer's heirs, executors, and
administrators) to the fullest extent permitted under
applicable law and regulations against any and all expenses
and liabilities reasonably incurred by the Officer in
connection with or arising out of any action, suit, or
proceeding in which the Officer may be involved by reason of
having been a director or officer of the Bank or any of their
subsidiaries (whether or not the Officer continues to be a
director or officer at the time of incurring any such expenses
or liabilities) such expenses and liabilities to include, but
not be limited to, judgments, court costs and attorney's fees
and the cost of reasonable settlements, such settlements to be
approved by the Board of Bancorp or the Bank, if such action
is brought against the Officer in the Officer's capacity as an
officer or director of Bancorp or the Bank or any of their
subsidiaries. Indemnification for expense shall not extend to
matters for which the Officer has been terminated for Just
Cause. Nothing contained herein shall be deemed to provide
indemnification prohibited by applicable law or regulation.
Notwithstanding anything herein to the contrary, the
obligations of this Section 12 shall survive the term of this
Agreement by a period of seven years.
b. Insurance. During the period in which indemnification of the
Officer is required under this Section, Bancorp or the Bank
shall provide the Officer (and the Officer's heirs, executors,
and administrators) with coverage under a directors' and
officers' liability policy at the expense of Bancorp or the
Bank, at least equivalent to such coverage provided to
directors and senior officers of Bancorp or the Bank,
whichever is more favorable to the Officer.
13. Reimbursement of Officer's Expenses to Enforce this Agreement. Bancorp
or the Bank shall reimburse the Officer for all out-of-pocket expenses,
including, without limitation, reasonable attorney's fees, incurred by the
Officer in connection with successful enforcement by the Officer of the
obligations of Bancorp or the Bank to the Officer under this Agreement.
Successful enforcement shall mean the grant of an award of money or the
requirement that Bancorp or the Bank take some action specified by this
Agreement (i) as a result of court order; or (ii) otherwise by Bancorp or the
Bank following an initial failure of Bancorp or the Bank to pay such money or
take such action promptly after written demand therefor from the Officer stating
the reason that such money or action was due under this Agreement at or prior to
the time of such demand.
14. Adjustment of Certain Payments and Benefits.
Bancorp and the Bank shall indemnify and hold the Officer harmless from
any and all loss, expense, or liability that the Officer may ever incur under
Code ss. 4999, or any successor provision, as the result of payments or benefits
that the Officer receives from Bancorp or the Bank or any successor to any of
its interests. Bancorp and the Bank shall have this obligation with respect to
any excise taxes (and any federal, state, and local income taxes on those excise
taxes) for which the Officer is liable under Code ss. 4999, or any successor
provision, pursuant to a tax return on which the Officer reports such excise tax
liability based on a reasonable analysis (that the Officer need not file with
the return) prepared by the Officer's legal counsel. This paragraph shall
survive termination or expiration of this Agreement for any reason.
15. Injunctive Relief. If there is a breach or threatened breach of Section
10.h. of this Agreement or the prohibitions upon disclosure contained in Section
9.c. of this Agreement, Bancorp or the Bank and the Officer agree that there is
no adequate remedy at law for such breach, and that Bancorp and the Bank each
shall be entitled to injunctive relief restraining the Officer from such breach
or threatened breach, but such relief shall not be the exclusive remedy
hereunder for such breach. The parties hereto likewise agree that the Officer
shall be entitled to injunctive relief to enforce the obligations of Bancorp and
the Bank under Section 11 of this Agreement.
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16. Successors and Assigns.
a. This Agreement shall inure to the benefit of and be binding
upon any corporate or other successor of Bancorp or the Bank
which shall acquire, directly or indirectly, by merger,
consolidation, purchase or otherwise, all or substantially all
of the assets or stock of Bancorp or the Bank.
b. Since the Bank and Bancorp are contracting for the unique and
personal skills of the Officer, the Officer's rights or duties
hereunder shall be precluded from assignment or delegation
without first obtaining the written consent of the Bank and
Bancorp.
17. No Mitigation. The Officer shall not be required to mitigate the amount
of any payment provided for in this Agreement by seeking other employment or
otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Officer in any subsequent employment.
18. Notices. All notices, requests, demands and other communications in
connection with this Agreement shall be made in writing and shall be deemed to
have been given when delivered by hand or 48 hours after mailing at any general
or branch United States Post Office, by registered or certified mail, postage
prepaid, addressed as follows, or to such other address as shall have been
designated in writing by the addressee:
a. If to Bancorp or the Bank:
Xxxxx Spring Bancorp, Inc.
Xxxxx Spring Bank
00000 Xxxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: R.E. Xxxxxxxxxx, General Counsel
b. If to the Officer:
Xxxxxx X. Xxxxxxxx
0000 Xxxxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
19. Joint and Severally Liability; Payments by Bancorp and the Bank. To the
extent permitted by law, except as otherwise provided herein, Bancorp and the
Bank shall be jointly and severally liable for the payment of all amounts due
under this Agreement. Bancorp hereby agrees that it shall be jointly and
severally liable with the Bank for the payment of all amounts due under this
Agreement and shall guarantee the performance of the Bank's obligations
thereunder, provided that Bancorp shall not be required by this Agreement to pay
to the Officer a salary or any bonuses or any other cash payments, except in the
event that the Bank does not fulfill the obligations to the Officer hereunder
for such payments. Bancorp may, however, pay salary and bonuses as deemed
appropriate by its Board in the exercise of its discretion.
20. No Plan Created by this Agreement. The Officer, Bancorp and the Bank
expressly declare and agree that this Agreement was negotiated among them and
that no provision or provisions of this Agreement are intended to, or shall be
deemed to, create any plan for purposes of the Employee Retirement Income
Security Act or any other law or regulation, and, Bancorp the Bank and the
Officer each expressly waives any right to assert the contrary. Any assertion in
any judicial or administrative filing, hearing, or process by or on behalf of
the Officer or Bancorp or the Bank that such a plan was so created by this
Agreement shall be deemed a material breach of this Agreement by the party
making such an assertion.
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21. Amendments. No amendments or additions to this Agreement shall be
binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.
22. Applicable Law. Except to the extent preempted by Federal law, the laws
of the State of Maryland shall govern this Agreement in all respects, whether as
to its validity, construction, capacity, performance or otherwise.
23. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
24. Headings. Headings contained herein are for convenience of reference
only.
25. Entire Agreement. This Agreement, together with any understanding or
modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement among the parties hereto with respect to the subject matter
hereof, other than written agreements with respect to specific plans, programs,
or arrangements described in Sections 5 and 6, and supersedes all prior
agreements other than with respect to such specific plans, programs, or
arrangements.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first set forth above.
XXXXX SPRING BANK
By:
-----------------------------------
Title:
--------------------------------
XXXXX SPRING BANCORP, INC.
By:
-----------------------------------
Title:
--------------------------------
OFFICER
--------------------------------------
Xxxxxx X. Xxxxxxxx
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