2006 SEVERANCE AGREEMENT
THIS AGREEMENT entered into this 19th day of March, 2007, by and between
The Patapsco Bank (the "Bank"), and Xxxxxxx X. Xxx (the "Employee"), effective
on the date above (the "Effective Date").
WHEREAS, the Employee has heretofore been employed by the Bank as President
and Chief Executive Officer; and
WHEREAS, the Bank deems it to be in its best interest to enter into this
Agreement as additional incentive to the Employee to continue as an executive
employee of the Bank; and
WHEREAS, the parties desire by this writing to set forth their
understanding as to their respective rights and obligations in the event of
termination of a Change in Control of Patapsco Bancorp, Inc. (the "Company") or
the Bank as set forth in this Agreement.
NOW, THEREFORE, it is AGREED as follows:
1. Change in Control
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(a) Payment in the Event of Change in Control.
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(1) Immediately upon the occurrence of a Change in Control of the Company
or the Bank, the Employee shall be paid $125,000.00. Said sum shall be paid in
one lump sum.
(2) "Change in Control" shall mean any one of the following events: (1) the
acquisition of ownership, holding or power to vote more than 25% of the Bank's
or the Company's voting stock, (2) the acquisition of the ability to control the
election of a majority of the Bank's or the Company's directors, (3) the
acquisition of a controlling influence over the management or policies of the
Bank or the Company by any person or by persons acting as a "group" (within the
meaning of Section 13(d) of the Securities Exchange Act of 1934) (provided that
in the case of (1), (2) and (3) hereof, ownership or control of the Bank by the
Company itself shall not constitute a "Change in Control"), or (4) during any
period of two consecutive years, individuals (the "Continuing Directors") who at
the beginning of such period constitute the Board of Directors of the Company or
the Bank (the "Existing Board") 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 Existing Board was approved by a vote of at
least two-thirds of the Continuing Directors then in office shall be considered
a Continuing Director. For purposes of this subparagraph only, the term "person"
refers to an individual or a corporation, partnership, trust, association, joint
venture, pool, syndicate, sole proprietorship, unincorporated organization or
any other form of entity not specifically listed herein. The decision of the
Bank's non-employee directors as to whether a Change in Control has occurred
shall be conclusive and binding.
(b) Compliance with 12 U.S.C. Section 1828(k).
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Any payments made to the Employee pursuant to this Agreement, or otherwise,
are subject to and conditioned upon their compliance with 12 U.S.C. Section
1828(k) and any regulations promulgated thereunder.
2. Term.
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This Agreement shall remain in effect for the period commencing on the
Effective Date and ending on the earlier of (i) the date thirty-six months after
the Effective Date, or (ii) the date on which the Employee terminates employment
with the Bank; provided that the Employee's rights hereunder shall continue
following the termination of this employment with the Bank under any of the
circumstances described in Section 1(a) hereof. Additionally, on each annual
anniversary date from the Effective Date, the term of this Agreement shall be
extended for an additional one-year period beyond the then effective expiration
date provided the Board of Directors of the Bank determines in a duly adopted
resolution that the performance of the Employee has met the Board's requirements
and standards, and that this Agreement shall be extended.
3. Termination or Suspension Under Federal Law.
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(a) Termination for "Just Cause" shall mean termination because of, in the
good faith determination of the Bank's Board of Directors, the Employee's
personal dishonesty, willful misconduct, breach of fiduciary duty involving
personal profit, intentional failure to perform stated duties, willful violation
of any law, rule or regulation (other than traffic violations or similar
offenses) or final cease-and-desist order, or material breach of any provision
of this Agreement. The Employee shall have no right to receive compensation or
other benefits under this Agreement for any period after termination for Just
Cause. No act, or failure to act, on the Employee's part shall be considered
"willful" unless he has acted, or failed to act, with an absence of good faith
and without a reasonable belief that his action or failure to act was in the
best interest of the Bank.
(b) If the Employee is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued under
Sections 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act ("FDIA") (12
U.S.C. 1818(e)(3) or (g)(1)), all obligations of the Bank under this Agreement
shall terminate, as of the effective date of the order, but the vested rights of
the parties shall not be affected.
(c) If the Bank is in default (as defined in Section 3(x)(1) of FDIA), all
obligations under this Agreement shall terminate as of the date of default;
however, this Paragraph shall not affect the vested rights of the parties.
(d) All obligations under this Agreement shall terminate, except to the
extent that continuation of this Agreement is necessary for the continued
operation of the Company: (i) by the Commissioner of Financial Regulation of the
State of Maryland ("Commissioner") at the time that the Federal Deposit
Insurance Corporation ("FDIC") enters into an agreement to provide assistance to
or on behalf of the Bank under the authority contained in Section 13(c) of FDIA;
or (ii) by the Commissioner at the time that the Commissioner approves a
supervisory merger to resolve problems related to operation of the Bank or when
the Bank is determined by the Commissioner to be in an unsafe or unsound
condition. Such action shall not affect any vested rights of the parties.
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(e) If a notice served under Section 8(e)(3) or (g)(1) of the FDIA (12
U.S.C. 1818(e)(3) and (g)(1)) suspends and/or temporarily prohibits the Employee
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 shall (i) pay the Employee 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.
(f) The terms of this Section 3 shall prevail over any other provisions of
this Agreement.
4. Expense Reimbursement.
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In the event that any dispute arises between the Employee and the Bank as
to the terms or interpretation of this Agreement, whether instituted by formal
legal proceedings or otherwise, including any action that the Employee takes to
enforce the terms of this Agreement or to defend against any action taken by the
Bank or the Company, the Employee shall be reimbursed by the Bank for all costs
and expenses, including reasonable attorneys' fees, arising from such dispute,
proceedings or actions, provided (other than as set forth in Section 1(d)(2)
above) that the Employee shall obtain a final judgment in favor of the Employee
in a court of competent jurisdiction or in binding arbitration under the rules
of the American Arbitration Association. Such reimbursement shall be paid within
ten (10) days of Employee's furnishing to the Bank and the Company written
evidence, which may be in the form, among other things, of a canceled check or
receipt, of any costs or expenses incurred by the Employee.
5. Successors and Assigns.
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(a) This Agreement shall inure to the benefit of and be binding upon any
corporate or other successor of the Bank or Company which shall acquire,
directly or indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Bank or Company.
(b) Since the Bank and the Company are contracting for the unique and
personal skills of the Employee, the Employee shall be precluded from assigning
or delegating his rights or duties hereunder without first obtaining the written
consent of the Bank and the Company.
6. Amendments.
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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.
7. Applicable Law.
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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.
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8. Severability.
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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.
9. Entire Agreement.
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This Agreement, together with any understanding or modifications thereof as
agreed to in writing by the parties, shall constitute the entire agreement
between the parties hereto. Notwithstanding the foregoing, the parties agree
that the existing Amended and Restated Severance Agreement, dated October 30,
2003, by and between the Bank and the Employee shall continue in effect and
shall not be affected by this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first hereinabove written.
ATTEST: THE PATAPSCO BANK
By:
/s/ Xxxxxxx Xxxxxx /s/ Xxxxxx X'Xxxxx
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Secretary It's Chairman of the Board
WITNESS:
/s/ Xxxxxxx Xxxxx /s/ Xxxxxxx X. Xxx
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Xxxxxxx X. Xxx
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