Exhibit 10(e)
EMPLOYMENT AGREEMENT
-----------------------------------------------------------------------------
THIS AGREEMENT (the "Agreement"), made this 30th day of January 1997,
by and among Xxxxx Spring Bancorp, Inc., a registered bank holding company
("Bancorp"), Xxxxx Spring National Bank of Maryland, a national banking
association and wholly owned subsidiary of Bancorp with its main office in
Olney, Maryland (the "Bank"), and Hunter X. Xxxxxx (the "Officer").
W I T N E S S E T H
WHEREAS, the Officer is employed as the President and Chief Executive
Officer of the Bank and Bancorp, subject to a certain Employment Agreement made
December 1, 1990 (as amended, the "1990 Agreement").
WHEREAS, as a result of the skill, knowledge, and experience of the
Officer, the Board of Directors ("Board") of the Bank desires to retain the
services of the Officer as the President and Chief Executive Officer of the
Bank, and the Board of Bancorp desires to retain the services of the Officer as
the President and Chief Executive Officer of Bancorp.
WHEREAS, the Officer desires to continue to serve as President and
Chief Executive Officer of Bancorp and the Bank.
WHEREAS, the Officer and the respective Boards of the Bank and Bancorp
desire to enter into a new 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 President and Chief
----------
Executive Officer of Bancorp and of the Bank, reporting directly to their
respective Boards. Subject to Board direction, the Officer shall have
responsibility for the general management and control of the business and
affairs of Bancorp, the Bank, and their respective subsidiaries, and shall
perform all duties and shall have all powers which are commonly incident to the
offices of President and Chief Executive Officer or which, consistent with those
offices, are delegated to him by the respective Board. The Officer's duties
include, but are not limited to:
a. Making recommendations to the Boards concerning the
strategies, capital structure, tactics, and general operations
of Bancorp and the Bank;
b. Managing the day-to-day operations of Bancorp and the Bank;
1
c. Supervising other officers and employees of Bancorp and the
Bank;
d. Promoting Bancorp and the Bank and their services;
e. Managing the efforts of Bancorp and the Bank to comply with
applicable laws and regulations; and
f. Providing complete, timely, and accurate reports to the Boards
of Bancorp and the Bank regarding the material affairs and the
condition of Bancorp and the Bank, respectively.
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 him to perform his duties. The
location of such facilities and staff shall be at the principal administrative
offices of Bancorp and the Bank, or at such other site or sites customary for
such offices.
3. Term; The 1990 Agreement.
------------------------
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 third 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 Bancorp or the Bank, on the one hand,
nor the Officer, on the other, shall have given written notice
at least sixty (60) days prior to such anniversary date of its
or his desire that the term not be extended. The Boards of
Bancorp and the Bank will review the Officer's performance and
the advisability of extending 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 the 1990
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 agree to pay the Officer during the term
of this Agreement a salary at the rate of $190,000 per annum,
payable in cash not less frequently than monthly, as may be
adjusted in accordance with this Section 4.
2
b. The Human Resources Committee of the Bank (the "Committee")
shall perform an annual analysis of the Officer's performance
and of the compensation of chief executive officers of
independent financial institutions of comparable assets and
performance, and based thereon and on such other factors as it
deems pertinent, shall recommend to the Boards of Bancorp and
the Bank the salary rate to be paid beginning on the next
April 1 following such review. The Boards of Bancorp and the
Bank shall review annually the rate of the Officer's salary
based upon this recommendation of the Committee and other
factors they deem relevant, and may maintain, increase or
decrease his salary, provided that no such action shall (i)
reduce the rate of salary below $190,000, 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 of both Bancorp and the
Bank, the Officer shall continue to receive salary at the
$190,000 per annum rate 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 of
Bancorp or the Bank under the provisions of this Section 4.
5. Bonuses. Unless the Officer agrees otherwise, he 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 Bancorp or the Bank, including for
example: any stock option or incentive compensation plans, club memberships, 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 their respective employees. In addition,
the Officer shall be entitled to continued participation in the nonstatutory
supplemental retirement plan or arrangement ("SERP") in effect for the Officer
at the Effective Date or a similar plan or arrangement established for him that
provides benefits of the same character and that are at least as favorable (in
terms of vesting, payments in relation to salary or compensation, and otherwise)
to the Officer as the current SERP. The Officer also shall be entitled to
participate 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.
7. Vacation and Leave.
------------------
3
a. The Officer shall be entitled to five weeks (twenty-five
working days) of vacation with pay during each consecutive
twelve-month period commencing on January 1, 1997 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 or the Bank shall mutually determine, and provided that no
vacation time shall interfere with the duties required to be
rendered by the Officer hereunder. Any vacation time 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 Bancorp or the
Bank on account of his failure to take vacation.
b. In addition to paid vacations, the Officer shall be entitled,
without loss of pay, to absent himself voluntarily from the
performance of his employment for such additional periods of time
and for such valid and legitimate reasons as the Board of Bancorp
and the Bank may in their discretion determine. Further, the Board
of Bancorp or the Bank may grant to the Officer a leave or leaves
of absence, with or without pay, at such time or times and upon
such terms and conditions as such Boards in their discretion may
determine.
8. Expense Payments and Reimbursements. The Officer shall be reimbursed
-----------------------------------
for all reasonable out-of-pocket business expenses which he shall incur in
connection with his services under this Agreement upon substantiation of such
expenses in accordance with applicable policies of Bancorp or the Bank. The
Officer also shall be entitled to the following:
a. Use of an automobile of a make and model consistent with the
Officer's duties under this Agreement and reimbursement for the
Officer's expenses thereof related to the employment of Officer;
and
b. Reimbursement for membership dues at Manor Country Club.
9. Loyalty and Confidentiality.
---------------------------
a. During the term of this Agreement the Officer: (i) shall devote
all his time, attention, skill, and efforts to the faithful
performance of his 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.
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
4
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 he may be exposed during the course of
his employment. The Officer further agrees that, unless required by
law or specifically permitted by Bancorp or the Bank in writing, he
will not disclose to any person or entity, either during or
subsequent to his employment, any of the above-mentioned
information which is not generally known to the public, nor shall
he 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 his 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 his 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 he participates pursuant to Section 6 of
this Agreement.
c. Disability. Bancorp, 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 his duties 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 his duties
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
5
which the Officer receives under any disability insurance
maintained by Bancorp or the Bank with respect to such
period);
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 Boards of Bancorp and the Bank 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 they reasonably believe 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 of Bancorp or the Bank may, by written notice to
the Officer in the form and manner specified in this
paragraph, immediately terminate his employment with
Bancorp or the Bank, respectively, 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 Bancorp's or the Bank's Board, the
Officer's:
(1) Personal dishonesty;
(2) Incompetence;
(3) Willful misconduct;
(4) Breach of fiduciary duty involving personal
profit;
(5) Intentional failure to perform duties
under this Agreement;
(6) Other, continuing material failure to
perform his duties 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 Bancorp or the Bank of such
failure;
(7) Willful violation of any law, rule or regulation
(other than traffic violations or similar
offenses) or final cease-and-desist order; or
(8) 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 by Bancorp
or the Bank unless there shall have been delivered to the
Officer a copy of a resolution duly adopted by
6
the affirmative vote of not less than a majority of the
entire membership of the Board of Bancorp or the Bank at a
meeting of such Board 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 such Board the Officer
was guilty of conduct described above and specifying the
particulars thereof.
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. (S)(S)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. (S)(S)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 of Bancorp or the Bank
in connection with a termination for Just Cause.
f. Voluntary Termination by Officer. In addition to his 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 each of
their Boards, in which case the Officer shall receive only his
compensation, vested rights and employee benefits up to the date of his
termination.
g. Without Just Cause or With Good Reason.
--------------------------------------
i. In addition to termination pursuant to Section 10.a.
through 10.f.: the Board of Bancorp or the Bank may, by written
notice to the Officer, immediately terminate his employment with
Bancorp or the Bank, respectively, at any time for a reason other
than Just Cause (a termination "Without Just Cause"); and the
7
Officer may, by written notice to the Boards of Bancorp and the
Bank, 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.
iii. "Good Reason" shall exist if, without 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 Officers's
responsibilities or authority, or a requirement
that the Officer report to any person or group
other than the Boards of Bancorp and the Bank (or
any other effective reduction in reporting
responsibilities) in connection with his
employment with Bancorp or the Bank;
(2) Assignment to the Officer of duties of a
nonexecutive nature or duties for which he is not
reasonably equipped by his skills and experience;
(3) Failure of the Officer to be elected or reelected
to the Board of Bancorp or the Bank;
(4) 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
he was entitled prior to the Change in Control;
(5) 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.
(6) A requirement that the Officer relocate his
principal business office or his principal place
of residence outside Xxxxxxxxxx County, Maryland,
or the assignment to the Officer of duties that
would reasonably require such a relocation;
8
(7) A requirement that the Officer spend more than
thirty normal working days away from Xxxxxxxxxx
County, Maryland during any consecutive twelve-
month period; or
(8) 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).
iv. Notwithstanding the foregoing, 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.
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.
11. Termination in Connection with a Change in Control.
--------------------------------------------------
9
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,
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) Bancorp
or the Bank shall terminate the Officer's employment Without
Just Cause, or (ii) the Officer shall voluntarily terminate
his employment With Good Reason, Bancorp or the Bank shall,
within ten calendar days of the termination of Officer's
employment, make a lump-sum cash payment to him equal to 2.99
times the sum of (x) his annual salary at the highest annual
rate in effect for any of the twelve months immediately
preceding
10
the date of such termination, plus (y) the amount of other
compensation received by him 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 his
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 senior 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 his "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"), 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 his 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, he
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.
12. Indemnification and Liability Insurance.
---------------------------------------
11
a. Indemnification. Bancorp and the Bank agree to indemnify the
----------------
Officer (and his heirs, executors, and administrators) to the
fullest extent permitted under applicable law and regulations
against any and all expenses and liabilities reasonably
incurred by him in connection with or arising out of any
action, suit, or proceeding in which he may be involved by
reason of his having been a director or officer of Bancorp or
the Bank or any of their subsidiaries (whether or not he
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, judgements,
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 his 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 his 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 up to a
maximum of $30,000. 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.
-------------------------------------------
a. In the event that payments pursuant to this Agreement
(including, without limitation, any payment under any plan,
program, or arrangement referred to in Section 5 or 6 hereof)
would result in the imposition of a penalty tax pursuant to
Section 280G, such payments shall be reduced to equal the
maximum amount which may be paid under Section 280G without
exceeding such limits. In the event any such reduction in
payments is necessary, the Officer may determine, in
12
his sole discretion, which categories of payments (including,
without limitation, the value of benefits or of acceleration
of vesting or receipt of benefits or amounts) are to be
reduced or eliminated.
b. Payments made to the Officer pursuant to this Agreement or
otherwise, are subject to and conditioned upon their
compliance with Section 18(k) of the FDIA (12 U.S.C. (S) 1828
(k), relating to "golden parachute" and indemnification
payments and certain other benefits.
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.
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 shall be precluded
from assigning or delegating his rights or duties hereunder
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.
13
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 National Bank of Maryland
00000 Xxxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: The Boards of Directors
Copy to: Corporate Secretary
b. If to the Officer:
Hunter X. Xxxxxx
00000 Xxxxxxxxxxx Xxxxx
Xxxxx, 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.
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.
14
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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first set forth above.
XXXXX SPRING NATIONAL BANK OF MARYLAND
By: /s/ W. Xxxx Xxxxxxx
Title: Chairman of the Board
XXXXX SPRING BANCORP, INC.
By: /s/ W. Xxxx Xxxxxxx
Title: Chairman of the Board
OFFICER
/s/ Hunter X. Xxxxxx
Hunter X. Xxxxxx
15
