EXHIBIT 10.3
CHANGE-OF-CONTROL SEVERANCE AGREEMENT
_________________________________
As amended and restated effective
October 22, 1997
_________________________________
THIS AGREEMENT (the "Agreement") made this 22/nd/ day of October, 1997 (the
"Effective Date") amends, restates, and supercedes an agreement entered into on
the ___ day of July, 1995 by and between Baltimore County Savings Bank, F.S.B.
(the "Bank"), and Xxxxxxx X. Xxxxx (the "Executive").
WHEREAS, the Executive has heretofore been employed by the Bank as an
executive officer, and desires to continue to be so employed; and the Bank
desires the continuation of such employment by the Executive; and
WHEREAS, the Bank deems it to be in its best interest to provide the
Executive with security in the event of a Change of Control (as defined herein),
and thereby to facilitate his retention and insure an orderly transition
following a Change of Control; and
WHEREAS, the parties desire by the Agreement to set forth their
understanding as to their respective rights and obligations in the event the
Executive's employment terminates or is changed under the circumstances set
forth herein.
NOW, THEREFORE, it is AGREED as follows:
1. Definitions. For purposes of this Agreement, the following terms have
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the meaning set forth below:
(a) "Change in Duties" shall mean any one or more of the following:
(i) a significant adverse change in the status, title, position(s),
responsibilities, or scope of the Executive's authorities or duties from
those applicable to him immediately prior to the date on which a Change of
Control occurs;
(ii) assignment to the Executive of any duties or responsibilities
which are inconsistent with his status, title, or position(s) as in effect
immediately prior to the date on which a Change of Control occurs;
(iii) a material reduction in the Executive's total compensation from
that provided to him immediately prior to the date on which a Change of
Control occurs;
(iv) a diminution in the Executive's eligibility to participate in
bonus, incentive award, and other compensation plans which provide
opportunities to receive compensation from the opportunities under any such
plans in which he was participating immediately prior to the date on which
a Change of Control occurs;
(v) a change in the location of the Executive's principal place of
employment by the Bank or its subsidiaries and affiliates by more than 30
miles from the location where he was principally employed immediately prior
to the date on which a Change of Control occurs; or
(vi) a reasonable determination by the Board of Directors of the Bank
that, as a result of a Change of Control and change in circumstances
thereafter significantly affecting his position, the Executive is unable to
exercise the authorities, powers, functions or duties attached to his
position immediately prior to the date on which a Change of Control occurs.
(b) When the Bank is in the "mutual" form of organization, a "Change of
Control" shall be deemed to have occurred if:
(i) as a result of, or in connection with, any exchange offer, merger
or other business combination, sale of assets or contested election, any
combination of the foregoing transactions, or any similar transaction, the
persons who were non-employee directors of the Bank before such transaction
cease to constitute a majority of the Board of Directors of the Bank or any
successor to the Bank;
(ii) the Bank transfers substantially all of its assets to another
corporation which is not a wholly-owned subsidiary of the Bank;
(iii) the Bank sells substantially all of the assets of a subsidiary
or affiliate which, at the time of such sale, is the principal employer of
the Executive;
(iv) any "person" including a "group", exclusive of the Board of
Directors of the Bank or any committee thereof, is or becomes the
"beneficial owner", directly or indirectly, of proxies of the Bank
representing twenty-five percent (25%) or more of the combined voting power
of the Bank's members; or
(v) the Bank is merged or consolidated with another corporation and,
as a result of the merger or consolidation, less than seventy percent (70%)
of the outstanding proxies relating to the surviving or resulting
corporation are given, in the aggregate, by the former members of the Bank.
Notwithstanding the foregoing, a "Change of Control" shall not be deemed to
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occur solely by reason of a transaction in which the Bank converts to the
stock form of organization.
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(c) If the Bank shall be in the "stock" form of organization, a "Change of
Control" shall be deemed to have occurred if:
(i) the acquisition of ownership, holding or power to vote more than
25% of the Bank's or the Company's voting stock;
(ii) the acquisition of the ability to control the election of a
majority of the Bank's or the Company's directors;
(iii) 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); or
(iv) 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 Bank or the Company (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.
Notwithstanding the foregoing, in the case of (i), (ii) and (iii) hereof,
ownership or control of the Bank by the Company itself shall not constitute a
Change of Control. For purposes of this paragraph 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 or not a Change of Control has
occurred shall be conclusive and binding.
(c.1) "Company" shall mean any holding company that becomes sole owner of
the Bank.
(d) "Covered Period" shall mean a period equal to twelve (12) months before
the occurrence of a Change of Control and eighteen (18) months after the
occurrence of a Change of Control.
(e) "Involuntary Termination" shall mean (i) any involuntary termination,
or (ii) a resignation by the Executive within thirty (30) days following any
Change in Duties; provided, however, that an Involuntary Termination shall not
include either a Termination for Cause, or any termination as a result of death,
disability, or normal retirement on or after attainment of age sixty-five (65)
pursuant to a retirement plan in which the Executive was participating prior to
any Change of Control.
(f) "Termination for Cause" shall include termination because of the
officer or employee's personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, willful violation of any law,
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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 or
any other Agreement between Executive and the Bank.
(g) The term "Bank" refers to the Bank and/or any succession in interest or
any assignees or transferees thereof.
2. Term. This Agreement shall remain in effect for the period commencing
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on the Effective Date and ending on the earlier of (i) the date thirty-six (36)
months after the Effective Date, and (ii) the date on which the Executive
voluntarily terminates employment with the Bank. Additionally, on each annual
anniversary date from the Effective Date, the term of this Agreement may be
extended for an additional one (1) 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 Executive has met the Board's
requirements and standards, that it is in the Bank's best interests to extend
this Agreement, and that this Agreement shall be extended.
3. Severance Payment on Change of Control. If there is a Change of
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Control and if within the Covered Period as defined herein (i) a Change in
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Duties as defined herein occurs, or (ii) an Involuntary Termination as defined
herein occurs, or (iii) the Executive voluntarily terminates employment for any
reason within the 30-day period beginning on the date of a Change of Control,
then in that event the Executive shall--
(a) be paid an amount equal to 2.99 times the annualized base salary being
paid to the Executive in the immediately preceding twelve (12) month period
(excluding board fees and bonuses), and
(b) receive at the Executive's sole and exclusive election either (i) cash
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in an amount equal to the cost to the Executive of obtaining all health, life,
disability and other benefits which the Executive would have been eligible to
participate in through the second annual anniversary date of his termination of
employment, based upon the benefit levels substantially equal to those that the
Bank provided for the Executive at the date of the Change of Control, or (ii)
--
continued participation in such Bank benefit plans through the second annual
anniversary date of his termination of employment, but only to the extent the
Executive continues to qualify for participation therein.
4. Funding of Grantor Trust upon Change of Control. Not later than ten
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business days after a Change of Control, the Bank shall (i) deposit in the
Bank's Grantor Trust (the "Trust") an amount equal to the amount payable under
paragraph 3(a), unless the Executive has previously provided a written release
of any claims under this Agreement, and (ii) provide the trustee of the Trust
with a written direction to hold said amount and any investment return thereon
in a segregated account for the benefit of the Executive, and to follow the
procedures set forth in the next paragraph as to the payment of such amounts
from the Trust. Upon the earlier of the Trust's final payment of all amounts
due under the following paragraph or the date 21 months after the
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Change of Control, the trustee of the Trust shall pay to the Bank the entire
balance remaining in the segregated account maintained for the benefit of the
Executive. The Executive shall thereafter have no further interest in the Trust.
During the 21-consecutive month period after a Change of Control, the
Executive may provide the trustee of the Trust with a written notice requesting
that the trustee pay to the Executive an amount designated in the notice as
being payable pursuant to this Agreement. Within three business days after
receiving said notice, the trustee of the Trust shall send a copy of the notice
to the Bank via overnight and registered mail return receipt requested. On the
tenth (10th) business day after mailing said notice to the Bank, the trustee of
the Trust shall pay the Executive the amount designated therein in immediately
available funds, unless prior thereto the Bank provides the trustee with a
written notice directing the trustee to withhold such payment. In the latter
event, the trustee shall submit the dispute to non-appealable binding
arbitration for a determination of the amount payable to the Executive pursuant
to this Agreement, and the costs of such arbitration shall be paid by the Bank.
The trustee shall choose the arbitrator to settle the dispute, and such
arbitrator shall be bound by the rules of the American Arbitration Association
in making his determination. The parties and the trustee shall be bound by the
results of the arbitration and, within three days of the determination by the
arbitrator, the trustee shall pay from the Trust the amounts required to be paid
to the Executive and/or the Bank, and in no event shall the trustee be liable to
either party for making the payments as determined by the arbitrator.
5. Amendment and Termination.
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(a) Before a Change of Control. The Bank's Board of Directors may, in its
sole discretion, amend this Agreement without the consent of the Executive at
any time prior to a Change of Control; provided, however, no amendment may be
made by the Bank if it operates to reduce the Executive's rights hereunder.
(b) After a Change of Control. This Agreement may not be terminated or
amended by the Bank or its successor following a Change of Control, unless the
Executive consents in writing to be bound thereby.
(c) Termination or Suspension Under Federal Law. Notwithstanding any other
provision of this Agreement to the contrary --
(i) Notwithstanding the foregoing, but only to the extent required
under federal banking law, the benefits payable hereunder to the Executive
shall be reduced to the extent that either (A) the present value of such
benefits exceeds the limitations set forth in Regulatory Bulletin 27a of
the Office of Thrift Supervision ("OTS"), as in effect on the Effective
Date, or (B) such reduction is necessary to avoid subjecting the Bank to
loss of any deductions pursuant to Section 280G of the Internal Revenue
Code of 1986, as amended.
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(ii) The Executive shall have no right to receive compensation or
other benefits for any period after Termination for Cause.
(iii) If the Executive 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. 1818(e)(4) or (g)(1)), all obligations of the Bank under this
Agreement shall terminate, as of the effective date of the order, but any
vested rights of the parties shall not be affected.
(iv) 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 any vested rights of
the parties.
(v) All obligations under this Agreement shall terminate, except to
the extent that continuation of this Agreement is necessary for the
continued operation of the Bank: (i) by the Director of OTS, or his or her
designee, at the time that the Federal Deposit Insurance Corporation or the
Resolution Trust Corporation 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 Director of OTS, or his or her designee, at the
time that the Director of OTS, or his or her designee, approves a
supervisory merger to resolve problems related to operation of the Bank or
when the Bank is determined by the Director of OTS to be in an unsafe or
unsound condition. Such action shall not affect any vested rights of the
parties.
(vi) 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
Executive 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: (a) pay the Executive any
compensation which was withheld while its contract obligations were
suspended; and (b) reinstate any of its remaining obligations, which were
suspended and which are still due to the Executive from the Bank even after
the Bank makes the payment to the Executive set forth in subparagraph (a)
of this paragraph (c)(vi).
(vii) Any payments made to the Executive 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.
6. Administration. Full power and discretionary authority to construe,
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interpret and administer this Agreement shall be vested in the Board of
Directors of the Bank. Decisions of the Board of Directors of the Bank shall be
presumptively final, conclusive and binding on all parties, but shall be subject
to paragraph 6 of this Agreement.
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7. Attorney Fees. In the event that any dispute arises between the
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Executive and the Bank as to the terms or interpretation of this Agreement,
whether instituted by formal legal proceed ings or otherwise, including any
action that the Executive takes to enforce the terms of this Agreement or to
defend against any action taken by the Bank, the Executive shall be reimbursed
for all costs and expenses, including reasonable attorneys' fees, arising from
such dispute, proceedings or actions, provided that the Executive shall obtain a
final judgement or settlement substantially in his favor in a court of competent
jurisdiction or in binding arbitration under the rules of the American
Arbitration Board. Such reimbursement shall be paid within ten (10) days of the
Executive's furnishing to the Bank 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 Executive.
8. No Assignment. The Executive's right to receive payments or benefits
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under this Agreement shall not be assignable or transferable whether by pledge,
creation of a security interest or otherwise, other than a transfer by will or
by the laws of descent or distribution as to compensation due hereunder to the
Executive by the Bank prior to the Executive's death. In the event of any
attempted assignment or transfer contrary to this paragraph 8, the Bank shall
have no liability to pay any amount so attempted to be assigned or transferred.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees, if, and only if,
compensation is due hereunder to the Executive by the Bank prior to the
Executive's death.
9. Successors. This Agreement shall be binding upon and inure to the
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benefit of the Bank, its successor and assigns (including, without limitation,
any company into or with which the Bank may merge or consolidate).
10. Miscellaneous.
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(a) Applicable Law. This contract is entered into under, and shall be
governed for all purposes by, the laws of the State of Maryland, except to the
extent that federal law controls the matter, and, in that event, this Agreement
shall be governed by federal law applicable to any provisions of this Agreement.
(b) Severability of Provisions. If a court of competent jurisdiction
determines that any provision of this Agreement is invalid or unenforceable,
then the invalidity or unenforceability of that provision shall not affect the
validity or enforceability of any other provision of this Agreement and all
other provisions shall remain in full force and effect.
(c) Withholding of Taxes. The Bank may withhold from any benefits payable
under this Agreement all federal, state, city or other taxes as may be required
pursuant to any law, governmental regulation or ruling.
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(d) Entire Agreement. This Agreement contains the entire agreement and
understanding of the parties with respect to the subject matter hereof and shall
not be altered or amended except by a writing executed in the same manner as the
Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered as of the day and year specified in the first paragraph hereof.
ATTEST: BALTIMORE COUNTY SAVINGS BANK, F.S.B.
By
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Secretary Its Chairman of the Board
WITNESS:
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Xxxxxxx X. Xxxxx
8
CHANGE-OF-CONTROL SEVERANCE AGREEMENT
_________________________________
As amended and restated effective
October 22, 1997
_________________________________
THIS AGREEMENT (the "Agreement") made this 22/nd/ day of October, 1997 (the
"Effective Date") amends, restates, and supercedes an agreement entered into on
the ___ day of July, 1995 by and between Baltimore County Savings Bank, F.S.B.
(the "Bank"), and Xxxx X. Xxxxxxxxx, CPA, Esquire (the "Executive").
WHEREAS, the Executive has heretofore been employed by the Bank as an
executive officer, and desires to continue to be so employed; and the Bank
desires the continuation of such employment by the Executive; and
WHEREAS, the Bank deems it to be in its best interest to provide the
Executive with security in the event of a Change of Control (as defined herein),
and thereby to facilitate his retention and insure an orderly transition
following a Change of Control; and
WHEREAS, the parties desire by the Agreement to set forth their
understanding as to their respective rights and obligations in the event the
Executive's employment terminates or is changed under the circumstances set
forth herein.
NOW, THEREFORE, it is AGREED as follows:
1. Definitions. For purposes of this Agreement, the following terms have
-----------
the meaning set forth below:
(a) "Change in Duties" shall mean any one or more of the following:
(i) a significant adverse change in the status, title, position(s),
responsibilities, or scope of the Executive's authorities or duties from
those applicable to him immediately prior to the date on which a Change of
Control occurs;
(ii) assignment to the Executive of any duties or responsibilities
which are inconsistent with his status, title, or position(s) as in effect
immediately prior to the date on which a Change of Control occurs;
(iii) a material reduction in the Executive's total compensation from
that provided to him immediately prior to the date on which a Change of
Control occurs;
1
(iv) a diminution in the Executive's eligibility to participate in
bonus, incentive award, and other compensation plans which provide
opportunities to receive compensation from the opportunities under any such
plans in which he was participating immediately prior to the date on which
a Change of Control occurs;
(v) a change in the location of the Executive's principal place of
employment by the Bank or its subsidiaries and affiliates by more than 30
miles from the location where he was principally employed immediately prior
to the date on which a Change of Control occurs; or
(vi) a reasonable determination by the Board of Directors of the Bank
that, as a result of a Change of Control and change in circumstances
thereafter significantly affecting his position, the Executive is unable to
exercise the authorities, powers, functions or duties attached to his
position immediately prior to the date on which a Change of Control occurs.
(b) When the Bank is in the "mutual" form of organization, a "Change of
Control" shall be deemed to have occurred if:
(i) as a result of, or in connection with, any exchange offer, merger
or other business combination, sale of assets or contested election, any
combination of the foregoing transactions, or any similar transaction, the
persons who were non-employee directors of the Bank before such transaction
cease to constitute a majority of the Board of Directors of the Bank or any
successor to the Bank;
(ii) the Bank transfers substantially all of its assets to another
corporation which is not a wholly-owned subsidiary of the Bank;
(iii) the Bank sells substantially all of the assets of a subsidiary
or affiliate which, at the time of such sale, is the principal employer of
the Executive;
(iv) any "person" including a "group", exclusive of the Board of
Directors of the Bank or any committee thereof, is or becomes the
"beneficial owner", directly or indirectly, of proxies of the Bank
representing twenty-five percent (25%) or more of the combined voting power
of the Bank's members; or
(v) the Bank is merged or consolidated with another corporation and,
as a result of the merger or consolidation, less than seventy percent (70%)
of the outstanding proxies relating to the surviving or resulting
corporation are given, in the aggregate, by the former members of the Bank.
Notwithstanding the foregoing, a "Change of Control" shall not be deemed to
---
occur solely by reason of a transaction in which the Bank converts to the
stock form of organization.
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(c) If the Bank shall be in the "stock" form of organization, a "Change of
Control" shall be deemed to have occurred if:
(i) the acquisition of ownership, holding or power to vote more than
25% of the Bank's or the Company's voting stock;
(ii) the acquisition of the ability to control the election of a
majority of the Bank's or the Company's directors;
(iii) 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); or
(iv) 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 Bank or the Company (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.
Notwithstanding the foregoing, in the case of (i), (ii) and (iii) hereof,
ownership or control of the Bank by the Company itself shall not constitute a
Change of Control. For purposes of this paragraph 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 or not a Change of Control has
occurred shall be conclusive and binding.
(c.1) "Company" shall mean any holding company that becomes sole owner of
the Bank.
(d) "Covered Period" shall mean a period equal to twelve (12) months before
the occurrence of a Change of Control and eighteen (18) months after the
occurrence of a Change of Control.
(e) "Involuntary Termination" shall mean (i) any involuntary termination,
or (ii) a resignation by the Executive within thirty (30) days following any
Change in Duties; provided, however, that an Involuntary Termination shall not
include either a Termination for Cause, or any termination as a result of death,
disability, or normal retirement on or after attainment of age sixty-five (65)
pursuant to a retirement plan in which the Executive was participating prior to
any Change of Control.
(f) "Termination for Cause" shall include termination because of the
officer or employee's personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, willful violation of any law,
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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 or
any other Agreement between Executive and the Bank.
(g) The term "Bank" refers to the Bank and/or any succession in interest or
any assignees or transferees thereof.
2. Term. This Agreement shall remain in effect for the period commencing
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on the Effective Date and ending on the earlier of (i) the date thirty-six (36)
months after the Effective Date, and (ii) the date on which the Executive
voluntarily terminates employment with the Bank. Additionally, on each annual
anniversary date from the Effective Date, the term of this Agreement may be
extended for an additional one (1) 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 Executive has met the Board's
requirements and standards, that it is in the Bank's best interests to extend
this Agreement, and that this Agreement shall be extended.
3. Severance Payment on Change of Control. If there is a Change of
--------------------------------------
Control and if within the Covered Period as defined herein (i) a Change in
---
Duties as defined herein occurs, or (ii) an Involuntary Termination as defined
herein occurs, or (iii) the Executive voluntarily terminates employment for any
reason within the 30-day period beginning on the date of a Change of Control,
then in that event the Executive shall--
(a) be paid an amount equal to 2.99 times the annualized base salary being
paid to the Executive in the immediately preceding twelve (12) month period
(excluding board fees and bonuses), and
(b) receive at the Executive's sole and exclusive election either (i) cash
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in an amount equal to the cost to the Executive of obtaining all health, life,
disability and other benefits which the Executive would have been eligible to
participate in through the second annual anniversary date of his termination of
employment, based upon the benefit levels substantially equal to those that the
Bank provided for the Executive at the date of the Change of Control, or (ii)
--
continued participation in such Bank benefit plans through the second annual
anniversary date of his termination of employment, but only to the extent the
Executive continues to qualify for participation therein.
4. Funding of Grantor Trust upon Change of Control. Not later than ten
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business days after a Change of Control, the Bank shall (i) deposit in the
Bank's Grantor Trust (the "Trust") an amount equal to the amount payable under
paragraph 3(a), unless the Executive has previously provided a written release
of any claims under this Agreement, and (ii) provide the trustee of the Trust
with a written direction to hold said amount and any investment return thereon
in a segregated account for the benefit of the Executive, and to follow the
procedures set forth in the next paragraph as to the payment of such amounts
from the Trust. Upon the earlier of the Trust's final payment of all amounts
due under the following paragraph or the date 21 months after the
4
Change of Control, the trustee of the Trust shall pay to the Bank the entire
balance remaining in the segregated account maintained for the benefit of the
Executive. The Executive shall thereafter have no further interest in the Trust.
During the 21-consecutive month period after a Change of Control, the
Executive may provide the trustee of the Trust with a written notice requesting
that the trustee pay to the Executive an amount designated in the notice as
being payable pursuant to this Agreement. Within three business days after
receiving said notice, the trustee of the Trust shall send a copy of the notice
to the Bank via overnight and registered mail return receipt requested. On the
tenth (10th) business day after mailing said notice to the Bank, the trustee of
the Trust shall pay the Executive the amount designated therein in immediately
available funds, unless prior thereto the Bank provides the trustee with a
written notice directing the trustee to withhold such payment. In the latter
event, the trustee shall submit the dispute to non-appealable binding
arbitration for a determination of the amount payable to the Executive pursuant
to this Agreement, and the costs of such arbitration shall be paid by the Bank.
The trustee shall choose the arbitrator to settle the dispute, and such
arbitrator shall be bound by the rules of the American Arbitration Association
in making his determination. The parties and the trustee shall be bound by the
results of the arbitration and, within three days of the determination by the
arbitrator, the trustee shall pay from the Trust the amounts required to be paid
to the Executive and/or the Bank, and in no event shall the trustee be liable to
either party for making the payments as determined by the arbitrator.
5. Amendment and Termination.
-------------------------
(a) Before a Change of Control. The Bank's Board of Directors may, in its
sole discretion, amend this Agreement without the consent of the Executive at
any time prior to a Change of Control; provided, however, no amendment may be
made by the Bank if it operates to reduce the Executive's rights hereunder.
(b) After a Change of Control. This Agreement may not be terminated or
amended by the Bank or its successor following a Change of Control, unless the
Executive consents in writing to be bound thereby.
(c) Termination or Suspension Under Federal Law. Notwithstanding any other
provision of this Agreement to the contrary --
(i) Notwithstanding the foregoing, but only to the extent required
under federal banking law, the benefits payable hereunder to the Executive
shall be reduced to the extent that either (A) the present value of such
benefits exceeds the limitations set forth in Regulatory Bulletin 27a of
the Office of Thrift Supervision ("OTS"), as in effect on the Effective
Date, or (B) such reduction is necessary to avoid subjecting the Bank to
loss of any deductions pursuant to Section 280G of the Internal Revenue
Code of 1986, as amended.
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(ii) The Executive shall have no right to receive compensation or
other benefits for any period after Termination for Cause.
(iii) If the Executive 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. 1818(e)(4) or (g)(1)), all obligations of the Bank under this
Agreement shall terminate, as of the effective date of the order, but any
vested rights of the parties shall not be affected.
(iv) 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 any vested rights of
the parties.
(v) All obligations under this Agreement shall terminate, except to
the extent that continuation of this Agreement is necessary for the
continued operation of the Bank: (i) by the Director of OTS, or his or her
designee, at the time that the Federal Deposit Insurance Corporation or the
Resolution Trust Corporation 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 Director of OTS, or his or her designee, at the
time that the Director of OTS, or his or her designee, approves a
supervisory merger to resolve problems related to operation of the Bank or
when the Bank is determined by the Director of OTS to be in an unsafe or
unsound condition. Such action shall not affect any vested rights of the
parties.
(vi) 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
Executive 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: (a) pay the Executive any
compensation which was withheld while its contract obligations were
suspended; and (b) reinstate any of its remaining obligations, which were
suspended and which are still due to the Executive from the Bank even after
the Bank makes the payment to the Executive set forth in subparagraph (a)
of this paragraph (c)(vi).
(vii) Any payments made to the Executive 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.
6. Administration. Full power and discretionary authority to construe,
--------------
interpret and administer this Agreement shall be vested in the Board of
Directors of the Bank. Decisions of the Board of Directors of the Bank shall be
presumptively final, conclusive and binding on all parties, but shall be subject
to paragraph 6 of this Agreement.
6
7. Attorney Fees. In the event that any dispute arises between the
-------------
Executive and the Bank as to the terms or interpretation of this Agreement,
whether instituted by formal legal proceed ings or otherwise, including any
action that the Executive takes to enforce the terms of this Agreement or to
defend against any action taken by the Bank, the Executive shall be reimbursed
for all costs and expenses, including reasonable attorneys' fees, arising from
such dispute, proceedings or actions, provided that the Executive shall obtain a
final judgement or settlement substantially in his favor in a court of competent
jurisdiction or in binding arbitration under the rules of the American
Arbitration Board. Such reimbursement shall be paid within ten (10) days of the
Executive's furnishing to the Bank 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 Executive.
8. No Assignment. The Executive's right to receive payments or benefits
-------------
under this Agreement shall not be assignable or transferable whether by pledge,
creation of a security interest or otherwise, other than a transfer by will or
by the laws of descent or distribution as to compensation due hereunder to the
Executive by the Bank prior to the Executive's death. In the event of any
attempted assignment or transfer contrary to this paragraph 8, the Bank shall
have no liability to pay any amount so attempted to be assigned or transferred.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees, if, and only if,
compensation is due hereunder to the Executive by the Bank prior to the
Executive's death.
9. Successors. This Agreement shall be binding upon and inure to the
----------
benefit of the Bank, its successor and assigns (including, without limitation,
any company into or with which the Bank may merge or consolidate).
10. Miscellaneous.
-------------
(a) Applicable Law. This contract is entered into under, and shall be
governed for all purposes by, the laws of the State of Maryland, except to the
extent that federal law controls the matter, and, in that event, this Agreement
shall be governed by federal law applicable to any provisions of this Agreement.
(b) Severability of Provisions. If a court of competent jurisdiction
determines that any provision of this Agreement is invalid or unenforceable,
then the invalidity or unenforceability of that provision shall not affect the
validity or enforceability of any other provision of this Agreement and all
other provisions shall remain in full force and effect.
(c) Withholding of Taxes. The Bank may withhold from any benefits payable
under this Agreement all federal, state, city or other taxes as may be required
pursuant to any law, governmental regulation or ruling.
7
(d) Entire Agreement. This Agreement contains the entire agreement and
understanding of the parties with respect to the subject matter hereof and shall
not be altered or amended except by a writing executed in the same manner as the
Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered as of the day and year specified in the first paragraph hereof.
ATTEST: BALTIMORE COUNTY SAVINGS BANK, F.S.B.
By
---------------------------- -------------------------------------
Secretary Its Chairman of the Board
WITNESS:
---------------------------- -------------------------------------
Xxxx X. Xxxxxxxxx
8
CHANGE-OF-CONTROL SEVERANCE AGREEMENT
_________________________________
As amended and restated effective
October 22, 1997
_________________________________
THIS AGREEMENT (the "Agreement") made this 22/nd/ day of October, 1997 (the
"Effective Date") amends, restates, and supercedes an agreement entered into on
the ___ day of July, 1995 by and between Baltimore County Savings Bank, F.S.B.
(the "Bank"), and Xxxxxxx X. Xxxxxxxx (the "Executive").
WHEREAS, the Executive has heretofore been employed by the Bank as an
executive officer, and desires to continue to be so employed; and the Bank
desires the continuation of such employment by the Executive; and
WHEREAS, the Bank deems it to be in its best interest to provide the
Executive with security in the event of a Change of Control (as defined herein),
and thereby to facilitate his retention and insure an orderly transition
following a Change of Control; and
WHEREAS, the parties desire by the Agreement to set forth their
understanding as to their respective rights and obligations in the event the
Executive's employment terminates or is changed under the circumstances set
forth herein.
NOW, THEREFORE, it is AGREED as follows:
1. Definitions. For purposes of this Agreement, the following terms have
-----------
the meaning set forth below:
(a) "Change in Duties" shall mean any one or more of the following:
(i) a significant adverse change in the status, title, position(s),
responsibilities, or scope of the Executive's authorities or duties from
those applicable to him immediately prior to the date on which a Change of
Control occurs;
(ii) assignment to the Executive of any duties or responsibilities
which are inconsistent with his status, title, or position(s) as in effect
immediately prior to the date on which a Change of Control occurs;
(iii) a material reduction in the Executive's total compensation from
that provided to him immediately prior to the date on which a Change of
Control occurs;
1
(iv) a diminution in the Executive's eligibility to participate in
bonus, incentive award, and other compensation plans which provide
opportunities to receive compensation from the opportunities under any such
plans in which he was participating immediately prior to the date on which
a Change of Control occurs;
(v) a change in the location of the Executive's principal place of
employment by the Bank or its subsidiaries and affiliates by more than 30
miles from the location where he was principally employed immediately prior
to the date on which a Change of Control occurs; or
(vi) a reasonable determination by the Board of Directors of the Bank
that, as a result of a Change of Control and change in circumstances
thereafter significantly affecting his position, the Executive is unable to
exercise the authorities, powers, functions or duties attached to his
position immediately prior to the date on which a Change of Control occurs.
(b) When the Bank is in the "mutual" form of organization, a "Change of
Control" shall be deemed to have occurred if:
(i) as a result of, or in connection with, any exchange offer, merger
or other business combination, sale of assets or contested election, any
combination of the foregoing transactions, or any similar transaction, the
persons who were non-employee directors of the Bank before such transaction
cease to constitute a majority of the Board of Directors of the Bank or any
successor to the Bank;
(ii) the Bank transfers substantially all of its assets to another
corporation which is not a wholly-owned subsidiary of the Bank;
(iii) the Bank sells substantially all of the assets of a subsidiary
or affiliate which, at the time of such sale, is the principal employer of
the Executive;
(iv) any "person" including a "group", exclusive of the Board of
Directors of the Bank or any committee thereof, is or becomes the
"beneficial owner", directly or indirectly, of proxies of the Bank
representing twenty-five percent (25%) or more of the combined voting power
of the Bank's members; or
(v) the Bank is merged or consolidated with another corporation and,
as a result of the merger or consolidation, less than seventy percent (70%)
of the outstanding proxies relating to the surviving or resulting
corporation are given, in the aggregate, by the former members of the Bank.
Notwithstanding the foregoing, a "Change of Control" shall not be deemed to
---
occur solely by reason of a transaction in which the Bank converts to the
stock form of organization.
2
(c) If the Bank shall be in the "stock" form of organization, a "Change of
Control" shall be deemed to have occurred if:
(i) the acquisition of ownership, holding or power to vote more than
25% of the Bank's or the Company's voting stock;
(ii) the acquisition of the ability to control the election of a
majority of the Bank's or the Company's directors;
(iii) 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); or
(iv) 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 Bank or the Company (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.
Notwithstanding the foregoing, in the case of (i), (ii) and (iii) hereof,
ownership or control of the Bank by the Company itself shall not constitute a
Change of Control. For purposes of this paragraph 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 or not a Change of Control has
occurred shall be conclusive and binding.
(c.1) "Company" shall mean any holding company that becomes sole owner of
the Bank.
(d) "Covered Period" shall mean a period equal to twelve (12) months before
the occurrence of a Change of Control and eighteen (18) months after the
occurrence of a Change of Control.
(e) "Involuntary Termination" shall mean (i) any involuntary termination,
or (ii) a resignation by the Executive within thirty (30) days following any
Change in Duties; provided, however, that an Involuntary Termination shall not
include either a Termination for Cause, or any termination as a result of death,
disability, or normal retirement on or after attainment of age sixty-five (65)
pursuant to a retirement plan in which the Executive was participating prior to
any Change of Control.
(f) "Termination for Cause" shall include termination because of the
officer or employee's personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, willful violation of any law,
3
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 or
any other Agreement between Executive and the Bank.
(g) The term "Bank" refers to the Bank and/or any succession in interest or
any assignees or transferees thereof.
2. Term. 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 (36)
months after the Effective Date, and (ii) the date on which the Executive
voluntarily terminates employment with the Bank. Additionally, on each annual
anniversary date from the Effective Date, the term of this Agreement may be
extended for an additional one (1) 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 Executive has met the Board's
requirements and standards, that it is in the Bank's best interests to extend
this Agreement, and that this Agreement shall be extended.
3. Severance Payment on Change of Control. If there is a Change of
--------------------------------------
Control and if within the Covered Period as defined herein (i) a Change in
---
Duties as defined herein occurs, or (ii) an Involuntary Termination as defined
herein occurs, or (iii) the Executive voluntarily terminates employment for any
reason within the 30-day period beginning on the date of a Change of Control,
then in that event the Executive shall--
(a) be paid an amount equal to 2.99 times the annualized base salary being
paid to the Executive in the immediately preceding twelve (12) month period
(excluding board fees and bonuses), and
(b) receive at the Executive's sole and exclusive election either (i) cash
------
in an amount equal to the cost to the Executive of obtaining all health, life,
disability and other benefits which the Executive would have been eligible to
participate in through the second annual anniversary date of his termination of
employment, based upon the benefit levels substantially equal to those that the
Bank provided for the Executive at the date of the Change of Control, or (ii)
--
continued participation in such Bank benefit plans through the second annual
anniversary date of his termination of employment, but only to the extent the
Executive continues to qualify for participation therein.
4. Funding of Grantor Trust upon Change of Control. Not later than ten
-----------------------------------------------
business days after a Change of Control, the Bank shall (i) deposit in the
Bank's Grantor Trust (the "Trust") an amount equal to the amount payable under
paragraph 3(a), unless the Executive has previously provided a written release
of any claims under this Agreement, and (ii) provide the trustee of the Trust
with a written direction to hold said amount and any investment return thereon
in a segregated account for the benefit of the Executive, and to follow the
procedures set forth in the next paragraph as to the payment of such amounts
from the Trust. Upon the earlier of the Trust's final payment of all amounts
due under the following paragraph or the date 21 months after the
4
Change of Control, the trustee of the Trust shall pay to the Bank the entire
balance remaining in the segregated account maintained for the benefit of the
Executive. The Executive shall thereafter have no further interest in the Trust.
During the 21-consecutive month period after a Change of Control, the
Executive may provide the trustee of the Trust with a written notice requesting
that the trustee pay to the Executive an amount designated in the notice as
being payable pursuant to this Agreement. Within three business days after
receiving said notice, the trustee of the Trust shall send a copy of the notice
to the Bank via overnight and registered mail return receipt requested. On the
tenth (10th) business day after mailing said notice to the Bank, the trustee of
the Trust shall pay the Executive the amount designated therein in immediately
available funds, unless prior thereto the Bank provides the trustee with a
written notice directing the trustee to withhold such payment. In the latter
event, the trustee shall submit the dispute to non-appealable binding
arbitration for a determination of the amount payable to the Executive pursuant
to this Agreement, and the costs of such arbitration shall be paid by the Bank.
The trustee shall choose the arbitrator to settle the dispute, and such
arbitrator shall be bound by the rules of the American Arbitration Association
in making his determination. The parties and the trustee shall be bound by the
results of the arbitration and, within three days of the determination by the
arbitrator, the trustee shall pay from the Trust the amounts required to be paid
to the Executive and/or the Bank, and in no event shall the trustee be liable to
either party for making the payments as determined by the arbitrator.
5. Amendment and Termination.
-------------------------
(a) Before a Change of Control. The Bank's Board of Directors may, in its
sole discretion, amend this Agreement without the consent of the Executive at
any time prior to a Change of Control; provided, however, no amendment may be
made by the Bank if it operates to reduce the Executive's rights hereunder.
(b) After a Change of Control. This Agreement may not be terminated or
amended by the Bank or its successor following a Change of Control, unless the
Executive consents in writing to be bound thereby.
(c) Termination or Suspension Under Federal Law. Notwithstanding any other
provision of this Agreement to the contrary --
(i) Notwithstanding the foregoing, but only to the extent required
under federal banking law, the benefits payable hereunder to the Executive
shall be reduced to the extent that either (A) the present value of such
benefits exceeds the limitations set forth in Regulatory Bulletin 27a of
the Office of Thrift Supervision ("OTS"), as in effect on the Effective
Date, or (B) such reduction is necessary to avoid subjecting the Bank to
loss of any deductions pursuant to Section 280G of the Internal Revenue
Code of 1986, as amended.
5
(ii) The Executive shall have no right to receive compensation or
other benefits for any period after Termination for Cause.
(iii) If the Executive 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. 1818(e)(4) or (g)(1)), all obligations of the Bank under this
Agreement shall terminate, as of the effective date of the order, but any
vested rights of the parties shall not be affected.
(iv) 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 any vested rights of
the parties.
(v) All obligations under this Agreement shall terminate, except to
the extent that continuation of this Agreement is necessary for the
continued operation of the Bank: (i) by the Director of OTS, or his or her
designee, at the time that the Federal Deposit Insurance Corporation or the
Resolution Trust Corporation 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 Director of OTS, or his or her designee, at the
time that the Director of OTS, or his or her designee, approves a
supervisory merger to resolve problems related to operation of the Bank or
when the Bank is determined by the Director of OTS to be in an unsafe or
unsound condition. Such action shall not affect any vested rights of the
parties.
(vi) 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
Executive 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: (a) pay the Executive any
compensation which was withheld while its contract obligations were
suspended; and (b) reinstate any of its remaining obligations, which were
suspended and which are still due to the Executive from the Bank even after
the Bank makes the payment to the Executive set forth in subparagraph (a)
of this paragraph (c)(vi).
(vii) Any payments made to the Executive 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.
6. Administration. Full power and discretionary authority to construe,
--------------
interpret and administer this Agreement shall be vested in the Board of
Directors of the Bank. Decisions of the Board of Directors of the Bank shall be
presumptively final, conclusive and binding on all parties, but shall be subject
to paragraph 6 of this Agreement.
6
7. Attorney Fees. In the event that any dispute arises between the
-------------
Executive and the Bank as to the terms or interpretation of this Agreement,
whether instituted by formal legal proceed ings or otherwise, including any
action that the Executive takes to enforce the terms of this Agreement or to
defend against any action taken by the Bank, the Executive shall be reimbursed
for all costs and expenses, including reasonable attorneys' fees, arising from
such dispute, proceedings or actions, provided that the Executive shall obtain a
final judgement or settlement substantially in his favor in a court of competent
jurisdiction or in binding arbitration under the rules of the American
Arbitration Board. Such reimbursement shall be paid within ten (10) days of the
Executive's furnishing to the Bank 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 Executive.
8. No Assignment. The Executive's right to receive payments or benefits
-------------
under this Agreement shall not be assignable or transferable whether by pledge,
creation of a security interest or otherwise, other than a transfer by will or
by the laws of descent or distribution as to compensation due hereunder to the
Executive by the Bank prior to the Executive's death. In the event of any
attempted assignment or transfer contrary to this paragraph 8, the Bank shall
have no liability to pay any amount so attempted to be assigned or transferred.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees, if, and only if,
compensation is due hereunder to the Executive by the Bank prior to the
Executive's death.
9. Successors. This Agreement shall be binding upon and inure to the
----------
benefit of the Bank, its successor and assigns (including, without limitation,
any company into or with which the Bank may merge or consolidate).
10. Miscellaneous.
-------------
(a) Applicable Law. This contract is entered into under, and shall be
governed for all purposes by, the laws of the State of Maryland, except to the
extent that federal law controls the matter, and, in that event, this Agreement
shall be governed by federal law applicable to any provisions of this Agreement.
(b) Severability of Provisions. If a court of competent jurisdiction
determines that any provision of this Agreement is invalid or unenforceable,
then the invalidity or unenforceability of that provision shall not affect the
validity or enforceability of any other provision of this Agreement and all
other provisions shall remain in full force and effect.
(c) Withholding of Taxes. The Bank may withhold from any benefits payable
under this Agreement all federal, state, city or other taxes as may be required
pursuant to any law, governmental regulation or ruling.
7
(d) Entire Agreement. This Agreement contains the entire agreement and
understanding of the parties with respect to the subject matter hereof and shall
not be altered or amended except by a writing executed in the same manner as the
Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered as of the day and year specified in the first paragraph hereof.
ATTEST: BALTIMORE COUNTY SAVINGS BANK, F.S.B.
By
---------------------------- -------------------------------------
Secretary Its Chairman of the Board
WITNESS:
---------------------------- -------------------------------------
Xxxxxxx X. Xxxxxxxx
8
