EMPLOYMENT AGREEMENT
THIS AGREEMENT( the "Agreement"), made as of this 29th day of March, 2018 by and among Xxxxx Spring Bancorp, Inc., a registered bank holding company (“Bancorp"), Xxxxx Spring Bank, a Maryland corporation and wholly-owned subsidiary of the Bancorp with its main office in Olney, Maryland (the "Bank"), and Xxxxx Xxxxx (the "Officer").
WITNESSETH
WHEREAS, as a result of the skill, knowledge, and experience of the Officer, the boards of directors of Bancorp and the Bank (the '"Board") desire to retain the services of the Officer, and
WHEREAS, the Officer desires to serve as Executive Vice President and Chief Risk Officer of the Bank, and
WHEREAS, the Officer and the Board desire to enter into this Agreement setting forth the terms and conditions of the 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 Executive Vice President and Chief Risk Officer of the Bank. The Officer shall perform all duties and shall have all powers which are commonly incident to the office of Executive Vice President and Chief Risk Officer or which, consistent with that office, are assigned to the Officer. In addition to the Officer’s major job accountabilities set forth in the job description maintained by the Human Resources Division, the Officer’s duties include, but are not limited to:
· Participate actively as a member of the executive management team to develop strategy, policy, and tactics for the Bank.
· Work collaboratively to create, lead and manage an effective enterprise risk management (“ERM”) structure consistent with the growth and regulatory environment that will allow executive management to execute Bancorp’s strategic plan.
· Provide complete, timely and accurate reports regularly to the Board, Board committees, and executive management on the status of the ERM program to keep the Board and management informed on the Bank’s risk position, pertinent new or changing regulations, and new trends as well as the competitive or financial impact of same.
· Model high standards of leadership, integrity, teamwork, and communication as a member of the executive team while embracing the values and culture of the Bank.
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 of this Agreement and as are necessary for the Officer to perform the duties of the position. The location of such facilities and staff shall be at the principal administrative offices of the Bank, or at such other site or sites customary for such offices.
3. Term.
a. The term of this Agreement shall be (i) the initial term, consisting of the period beginning on the
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date of this Agreement (the "Effective Date") and ending on June 30, 2020, plus (ii) any and all extensions of the initial term made pursuant to this Section 3.
b. Commencing as of July 1, 2019, and continuing on each July 1 thereafter, the disinterested members of the Board may extend the term of the Agreement for an additional one-year period beyond the then effective expiration date so that the remaining term of the Agreement extends to a period of twenty-four (24) months unless the Officer shall have given written notice at least sixty (60) days prior to the applicable July 1 anniversary date of his desire that the term not be extended. The Officer's performance and the advisability of extending the term of this Agreement shall be reviewed by the Compensation Committee of the Board, and the Board shall, based on that review, determine whether or not to extend the term of this Agreement at a meeting or meetings at least ninety (90) days prior to each applicable July 1 anniversary date.
4. Base Compensation.
a. The Bank and the Bancorp agree to pay the Officer during the term of this Agreement a salary at the rate of $350,000 per annum, payable in cash not less frequently than monthly, as may be adjusted in accordance with this Section 4.
b. The Compensation Committee of the Board shall perform an annual analysis of the Officer's performance and of the compensation of officers performing similar functions at independent financial institutions of comparable size and performance, and based upon this review, the recommendations of the President and Chief Executive Officer, and on such other factors as it deems pertinent, may maintain, increase or decrease the Officer's salary, provided that no such action shall (i) reduce the rate of salary below the amount set forth in Section 4.a. or (ii) reduce the rate of salary paid to the Officer for any months prior to the month in which notice of the reduction is provided in writing to the Officer.
c. In the absence of action by the Board, the Officer shall continue to receive salary at the amount set forth in Section 4.a. specified herein or, if another rate has been established under the provisions of this Section 4, the rate last properly established by action of the board of directors under the provisions of this Section 4.
5. Bonuses. Unless the Officer agrees otherwise, the Officer shall be entitled to participate in discretionary bonuses that the Board may award from time to time to senior management employees pursuant to bonus plans or otherwise. The Officer also shall participate in any other fringe benefits which are or may become available to senior management employees of the Bank, including for example: any stock option or incentive compensation plans and any other benefits that are commensurate with the responsibilities and functions to be performed by the Officer under this Agreement. No other compensation provided for in this Agreement shall be deemed a substitute for the Officer's right to participate in such discretionary bonuses or fringe benefits.
6. Benefit Plans. The Officer shall be entitled to participate in any life insurance, medical, dental, pension, profit sharing, and retirement plans and other programs and arrangements as may be approved from time to time by the Board for the benefit of employees the Bank.
7. Paid Time Off.
a. The Officer shall be entitled to thirty (30) working days of paid time off, as defined in the Bank's personnel policies, during each calendar year during the term of this Agreement, to be
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taken at reasonable times and in reasonable periods as the Officer and the Bank shall mutually determine, and provided that no paid time off shall interfere with the duties required to be rendered by the Officer hereunder. Any paid time off not used during a twelve-month period shall carry over and be useable during the succeeding twelve-month period, but not thereafter. The Officer shall not receive any additional compensation from the Bank on account of the Officer's failure to take paid time off.
b. In addition to paid time off, the Officer shall be entitled, without loss of pay, to voluntarily take time off from work for such additional periods of time and for such valid and legitimate reasons as the President and Chief Executive Officer may in his discretion determine. Further, the Officer may request and be granted a leave or leaves of absence, with or without pay, at such time or times and upon such terms and conditions as the President and Chief Executive Officer in his discretion may determine.
8. Expense Payments and Reimbursement. The Officer shall be reimbursed for all reasonable business expenses incurred in connection with the Officer's services under this Agreement upon substantiation of such expenses in accordance with applicable policies of the Bank.
9. Loyalty and Confidentiality.
c. During the term of this Agreement the Officer: (i) shall devote all the Officer's time, attention, skill, and efforts to the faithful performance of the Officer's duties hereunder; provided, however, that from time to time, the Officer may serve on the Board of, and hold any other offices or positions in, companies or organizations which will not present any conflict of interest with the Bank or the Bancorp 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. Nothing contained in this Agreement shall prevent or limit the Officer's right to invest in the capital stock or other securities of any business dissimilar from that of the Bank or the Bancorp, or, solely as a passive, minority investor, in any business.
d. The Officer agrees to maintain the confidentiality of any and all information concerning the operation or financial status of the Bank and the Bancorp; the names or addresses of any of their borrowers, depositors and other customers; any information concerning or obtained from such customers; and any other information concerning Bancorp or the Bank to which the Officer may be exposed during the course of employment. The Officer further agrees that, unless required by law or specifically permitted by Bancorp or the Bank in writing, the Officer will not disclose to any person or entity, either during or subsequent to the officer's employment, any of the above-mentioned information which is not generally known to the public, nor shall the Officer employ such information in any way other than for the benefit of Bancorp and the Bank.
10. Termination and Termination Pay. Subject to Section 11 of this Agreement, the Officer's employment under this Agreement may be terminated in the following circumstances:
a. Death. The Officer's employment under this Agreement shall terminate upon the Officer's death during the term of this Agreement, in which event the Officer's estate shall be entitled to receive the compensation due to the Officer through the last day of the calendar month in which the
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b. Retirement. This Agreement shall be terminated upon the early or normal retirement of the Officer under the benefit plan(s) in which the Officer participates pursuant to Section 6 of this Agreement.
c. Disability. Bancorp or the Bank or the Officer may terminate the Officer's employment after having established the Officer's Disability. For purposes of this Agreement, "Disability" means a physical or mental infirmity that impairs the Officer's ability to substantially perform duties assigned to the Officer under this Agreement and that results in the Officer's becoming eligible for long-term disability benefits under the Bank's long-term disability plan (or, if the Bank has no such plan in effect, that impairs the Officer's ability to substantially perform duties assigned to the Officer under this Agreement for a period of one-hundred-eighty (l80) 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 that the Officer receives under any disability insurance maintained by the Bank with respect to that 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 (12) months prior to the establishment of the Disability under this Section 10.c, reduced by any payments received by the Officer during that same period following termination under a long-term disability plan or policy maintained by the Bank or the Bancorp, and (B) benefits pursuant to Section 6 of this Agreement.
The Board shall determine whether or not the Officer is and continues to be permanently disabled for purposes of this Agreement in good faith, based upon competent medical advice and other factors that the Board reasonably believes to be relevant. As a condition to any benefits, the Board may require the Officer to submit to a physical or mental evaluations and tests as deemed reasonably appropriate.
d. Just Cause.
i. The Board may, by written notice to the Officer in the form and manner specified in this paragraph, immediately terminate the Officer's employment with Bancorp or the Bank at any time for Just Cause. The Officer shall have no right to receive compensation or other benefits for any period after termination for Just Cause. Termination for "Just Cause" shall mean termination because of, in the good faith determination of the Board, the Officer's:
(1) Personal dishonesty;
(2) Willful misconduct;
(3) Breach of fiduciary duty involving personal profit;
(4) Intentional failure to perform duties under this Agreement;
(5) Other, continuing material failure to perform duties assigned to the Officer under this
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Agreement after reasonable notification (which shall be stated in writing and given at least fifteen (I5) days prior to termination) by the Board of such failure;
(6) Willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order; or
(7) Material breach by the Officer of any provision of this Agreement.
ii. Notwithstanding the foregoing, the Officer shall not be deemed to have been terminated for Just Cause unless there shall have been delivered to the Officer a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board at a meeting called and held for the purpose (after reasonable notice to the Officer and an opportunity for the Officer to be heard before the Board), of finding that in the good faith opinion of the Board the Officer was guilty of conduct described above and specifying the particulars thereof.
iii. Notwithstanding the foregoing, it is expected that Officer will perform all duties and responsibilities described herein, and Officer shall have the right to cure non performance, to the extent such performance is reasonably capable of being cured and shall promptly upon receipt of written notice of nonperformance, comply with the requirements of such notice, and further if Officer shall not comply with such notice to the satisfaction of Bancorp or the Bank within forty-eight (48) hours after delivery thereof, (except if such compliance cannot be reasonably completed within forty-eight (48) hours, if the Officer shall not commence to comply within such period and thereafter proceed to completion with due diligence) Bancorp or the Bank shall have the right to proceed with the Board meeting specified in the preceding paragraph.
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)(l) of the Federal Deposit Insurance Act ("FDIA") (12 USC. §§ 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)( I) 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)( l ) of the FDIA (12 U.S.C. §§18l 8(e)(3) and (g)( l)) suspends and/or temporarily prohibits the Officer from participating in the conduct of the Bank's affairs, the Bank's obligations under this Agreement shall be suspended as of the date of such service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Bank may, in its discretion, (i) pay the Officer all or part of the compensation withheld while its contract obligations were suspended, and (ii) reinstate (in whole or in part) any of its obligations which were suspended.
The occurrence of any of the events described in paragraphs i, ii, and iii above may be considered by the Board in connection with a termination for Just Cause.
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f. Voluntary Termination by Officer. In addition to the Officer's other rights to terminate under this Agreement, the Officer may voluntarily terminate employment with Bancorp and the Bank during the term of this Agreement upon at least sixty (60) days' prior written notice to Bancorp or the Bank, in which case the Officer shall receive only compensation, vested rights and employee benefits up to the date of termination.
g. Without Just Cause or With Good Reason.
i. In addition to termination pursuant to Section 10.a. through 10.f., the Board may, by written notice to the Officer, immediately terminate the Officer's employment with Bancorp or the Bank at any time for a reason other than Just Cause (a termination "Without Just Cause"); and the Officer may, by written notice to the Board, immediately terminate this Agreement at any time within ninety (90) 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 (12) months immediately preceding the date of such termination, plus annual cash bonuses for each year (prorated in the event of partial years) remaining under the term of the Agreement 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 (10) calendar days of the Officer's termination of employment, or as soon as permitted by law or regulation (see Section 26), pursuant to this Section 10.g.
iii. "Good Reason" shall be deemed to exist at the time that any of the following events occurs without the Officer's express written consent:
(1) A material reduction in the Officer's responsibilities or authority in connection with the Officer's employment with Bancorp or the Bank;
(2) Assignment to the Officer of duties of a non-executive nature or duties for which the Officer is not reasonably equipped by the Officer's skills and experience;
(3) A reduction in salary or benefits, or, following a Change in Control, (x) any reduction in salary or a material reduction in benefits below the amounts to which the Officer was entitled prior to the Change in Control or (y) the Officer is not offered a comparable executive level position, which for purposes of this provision shall mean an executive officer position with respect to which the total authorities, responsibilities, compensation and benefits are comparable with the authorities, responsibilities, compensation and benefits associated with the Officer's position immediately preceding the Change in Control;
(4) Termination of incentive and benefit plans, programs, or arrangements, or a reduction of the Officer's participation to such an extent as to materially reduce their aggregate value below their aggregate value as of the Effective Date;
(5) A requirement that the Officer's principal business office or principal place of residence be relocated outside any county in which the Bank has its main office, its branches, or its deposit taking Automatic Teller Machines; or the assignment to the Officer of duties that would reasonably require such a relocation;
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(6) A requirement that the Officer spend more than thirty (30) normal working days away from any county in which the Bank has its main office, its branches, or its deposit taking Automatic Teller Machines during any consecutive twelve-month period; or
(7) Failure to provide office facilities, secretarial services, and other administrative services to the 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).
Notwithstanding the foregoing, it is expected that Bancorp and the Bank will perform all duties and agreements to be performed herein, and they shall have the right to cure non-performance, to the extent such performance is reasonably capable of being cured, and shall promptly upon receipt of written notice of non- performance that the Officer describes and alleges to be Good Reason, comply with the requirements of such notice, and further if they shall not comply with such notice to the satisfaction of the Officer within forty-eight (48) hours after delivery thereof, (except if such compliance cannot be reasonably completed within forty-eight (48) hours, if Bank shall not commence to comply with such period and thereafter proceed to completion with due diligence) the Officer shall have the right to proceed with notice of a "Good Reason" termination as specified above.
iv. Notwithstanding the foregoing: (A) a reduction or elimination of the Officer's benefits under one or more benefit plans maintained by 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 the Bank or any company that controls either of them under a plan or plans in or under which the Officer is not entitled to participate, and receive benefits, on a fair and nondiscriminatory basis; and (B) a requirement that the Officer report to and be subject to the direction or supervision of a senior officer of the Bank other than the President and Chief Executive Officer shall not constitute an event of Good Reason or a material breach of this Agreement.
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 the termination of employment), 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 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
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branch, and shall not interfere with the relationship of the Bank or the Bancorp and any of its employees, agents, or representatives; provided, however, that the provisions of this noncompetition clause shall only apply to termination of the Officer "before" a Change in Control as defined in Section 11. (It being the intent of the parties that the noncompetition clause shall not apply to terminations resulting from or due to a Change in Control.)
11. Termination in Connection with a Change in Control.
a. For purposes of this Agreement, a "Change in Control" means a change in control as defined in Internal Revenue Section 409A of the Code and rules, regulations, and guidance of general application thereunder issued by the Department of the Treasury, including:
i. Change in Ownership: a change in ownership of Bancorp occurs on the date any one person or group accumulates ownership of Bancorp stock constituting more than 50% of the total fair market value or total voting power of Bancorp stock,
ii. Change in E ffective Control: (x) any one person or more than one person acting as a group acquires within a 12-month period ownership of the Bancorp stock possessing 30% or more of the total voting power of Bancorp stock, or (y) a majority of the Bancorp's board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed in advance by a majority of Bancorp' s board of directors, or
iii. Change in Ownership ☐ f a Substantial Portion of Assets: a change in ownership of a substantial portion of the Bancorp's assets occurs if in a 12-month period any one person or more than one person acting as a group acquires from the Bancorp assets having a total gross fair market value equal to or exceeding 40% of the total gross fair market value of all of the Bancorp's assets immediately before the acquisition or acquisitions. For this purpose, gross fair market value means the value of Bancorp' s assets, or the value of the assets being disposed of, determined without regard to any liabilities associated with the assets.
b. Termination. If within the period beginning six (6) months prior to and ending two (2) 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 employment With Good Reason, Bancorp or the Bank shall, within ten (10) calendar days of the termination of Officer's employment, or as soon as permitted by law or regulation (see Section 26), make a lump-sum cash payment to the Officer equal to 2.99 times the sum of (x) the Officer's annual salary at the highest annual rate in effect for any of the twelve (12) months immediately preceding the date of the termination, plus (y) the amount of any cash bonus paid during the twelve (12) months immediately preceding the date of the termination. 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. of this Agreement are not otherwise affected by this Section 11. Also, in such event, the Officer shall, for three (3) calendar years following the Officer's termination of employment, continue to participate in any benefit plans of the Bank that provide health (including medical and dental), life or disability insurance, or similar coverage upon terms no less favorable than the most favorable terms provided to executive officers of the Bank during such period.
c. Funding of Trust upon Change in Control. In order to assure payment to the Officer of amounts
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that may become payable by the Bank or the Bancorp pursuant to this Section 11, 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 (10) business days after a Change in Control, Bancorp or the Bank shall (i) establish a valid trust under the law of the State of Maryland with an independent trustee that has or may be granted corporate trust powers under Maryland law, (ii) deposit in such trust an amount equal to 2.99 times the Officer's "base amount" as defined in Section 2800(b)(3) of the Code and regulations promulgated thereunder (Section 2800 and related regulations hereinafter referred to as Section 2800), at the time of the Change of Control, and (iii) provide the trustee of the trust with a written direction to hold said amount and any investment return thereon in a segregated account, and to pay such amounts as demanded by the Officer from the trust upon written demand from the Officer stating the amount of the payment demanded from the trust and the basis for the Officer's rights to such payment under Section 11 of this Agreement and in accordance with the required time of the payment pursuant to 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 (36) months after the Change in Control, the trustee of the trust shall pay to the Bank or the Bancorp, as applicable, the entire balance remaining in the trust. Payments from the trust to the Officer shall be considered payments made by Bancorp or the Bank for purposes of this Agreement. Payment of such amounts to the Officer from the trust, however, shall not relieve Bancorp or the Bank from any obligation to pay amounts in excess of those paid from the trust, or from any obligation to take actions or refrain from taking actions otherwise required by this Agreement. Unless and until a termination of or by the Officer as described in Section 11.b.(i) or (ii), the Officer's rights under this Agreement shall be those of a general, unsecured creditor, the Officer shall have no claim against the assets of the trust, and the assets of the trust shall remain subject to the claims of creditors of Bancorp or the Bank. Upon the termination of the trust as specified herein, the Officer shall have no further interest in the trust.
12. Indemnification and Liability Insurance.
a. Indemnification. Bancorp and the Bank agree to indemnify the Officer (and the Officer's heirs, executors, and administrators) to the fullest extent permitted under applicable law and regulations against any and all expenses and liabilities reasonably incurred by the Officer in connection with or arising out of any action, suit, or proceeding in which the Officer may be involved by reason of having been a director or officer of the Bank or any of their affiliates (whether or not the Officer continues to be a director or officer at the time of incurring any such expenses or liabilities) such expenses and liabilities to include, but not be limited to, judgments, court costs and attorney's fees and the cost of reasonable settlements, such settlements to be approved by the Board, if such action is brought against the Officer in the Officer's capacity as an officer or director of the Bank or any of their affiliates. 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 12, Bancorp or the Bank shall provide the Officer (and the Officer's heirs, executors, and administrators) with coverage under a directors' and officers' liability policy at the expense of Bancorp or the Bank, at least equivalent to such coverage provided to directors and senior officers of Bancorp or the Bank, whichever is more favorable to the Officer.
13. Reimbursement of Officer' s Expenses to Enforce this Agreement. Bancorp or the Bank shall
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reimburse the Officer for all out-of-pocket expenses, including, without limitation, reasonable attorney's fees, incurred by the Officer in connection with successful enforcement by the Officer of the obligations of Bancorp or the Bank to the Officer under this Agreement. Successful enforcement shall mean the grant of an award of money or the requirement that Bancorp or the Bank take some action specified by this Agreement (i) as a result of court order; or (ii) otherwise by Bancorp or the Bank following an initial failure of Bancorp or the Bank to pay such money or take such action promptly after written demand therefore from the Officer stating the reason that such money or action was due under this Agreement at or prior to the time of the demand.
14. Adjustment of Certain Payments and Benefits. Notwithstanding any other provision of this Agreement, in the event that the aggregate payments or benefits to be made or afforded to the Officer under this Agreement or otherwise, which are deemed to be parachute payments as defined in Section 280G of the Code or any successor thereof, (the "Covered Benefits") would be deemed to include an "excess parachute payment" under Section 280G of the Code, then the Covered Benefits shall be reduced to an amount, the value of which is one dollar ($1.00) less than an amount equal to three (3) times the Officer's "base amount," as determined in accordance with Section 280G of the Code. The allocation of the reduction required hereby among the Covered Benefits shall be determined by the Officer. The Bank's independent public accountants will determine the value of any reduction in the payments and benefits; Bancorp or the Bank will pay for the accountants' opinion.
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 or 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 and 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 Bancorp and the Bank are contracting for the unique and personal skills of the Officer, the Officer's rights or duties hereunder shall be precluded from assignment or delegation without first obtaining the written consent of Bancorp and the Bank.
17. No Mitigation. The Officer shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise and no such payment shall be offset or reduced by the amount of any compensation or benefits provided to the Officer in any subsequent employment.
18. Notices. All notices, requests, demands and other communications in connection with this Agreement shall be made in writing and shall be deemed to have been given when delivered by hand, or by the use of a nationally recognized overnight delivery service, or 48 hours after mailing at any general or branch United States Post Office, by 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 the Bank or the Bancorp:
Xxxxx Spring Bancorp, Inc.
Xxxxx Spring Bank
1700 X Xxxxxxx Xxxxxx Xxxxx, Xxxxxxxx 00000
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Attention: X. X. Xxxxxxxxxx, General Counsel
b. If to the Officer, to the Officer’s home address on file with the Bank’s Human Resources Department
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 and the Bank hereby agree that they shall be jointly and severally liable for the payment of all amounts due under this Agreement.
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, the Bank, the Bancorp 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.
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 of this Agreement, and supersedes all prior agreements other than with respect to such specific plans, programs, or arrangements.
26. Section 409A.
i. The Officer will be deemed to have a termination of employment for purposes of determining the timing of any payments that are classified as deferred compensation only upon a "separation from service" within the meaning of Section 409A.
ii. If at the time of the Executive's separation from service, (a) the Officer is a "specified employee" (within the meaning of Section 409A and using the methodology selected by the Bank and the Bancorp) and (b) Bancorp and the Bank make a good faith determination that an amount payable or the benefits to be provided hereunder constitutes deferred compensation (within the meaning of Section 409A), the payment of which is required to be delayed pursuant to the six-month delay rule of Section 409A in order to avoid taxes or penalties under Section 409A, then Bancorp and the Bank will not pay the entire amount on the otherwise scheduled payment date but will instead pay on the scheduled payment date the maximum amount permissible in order to comply with Section 409A (i.e., any amount that
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satisfies an exception under the Section 409A rules from being categorized as deferred compensation) and will pay the remaining amount (if any) in a lump sum on the first business day after such six month period.
iii. To the extent the Officer would be subject to an additional 20% tax (and any penalties) imposed on certain deferred compensation arrangements pursuant to Section 409A as a result of any provision of this Agreement, such provision shall be deemed amended to the minimum extent necessary to avoid application of such tax and the parties shall promptly execute any amendment reasonably necessary to implement this Section 26. The Officer and the Bank and the Bancorp agree to cooperate to make such amendment to the terms of this Agreement as may be necessary to avoid the imposition of penalties and taxes under Section 409A; provided, however, that the Officer agrees that any such amendment shall provide the Officer with economically equivalent payments and benefits, and the Officer agrees that any such amendment will not materially increase the cost to, or liability of, the Bank and the Bancorp with respect to any payment.
iv. For purposes of this Agreement, Section 409A shall refer to Section 409A of the Internal Revenue Code of 1986, as amended, and the Treasury regulations and any other.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first set forth above.
XXXXX SPRING BANK
By: /s/ Xxxxxx X. Xxxxxxxx
Title: President and CEO
XXXXX SPRING BANCORP, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
Title: President and CEO
OFFICER:
By: /s/ Xxxxx Xxxxx
Name: Xxxxx Xxxxx
