Exhibit 10
CHANGE IN CONTROL AGREEMENT
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THIS AGREEMENT (the "Agreement"), made this 10th day of January, 2000
(the "Effective Date"), by and among Xxxxx Spring Bancorp, Inc., a registered
bank holding company ("Bancorp"), Xxxxx Spring National Bank of Maryland, a
national banking association and wholly owned subsidiary of Bancorp with its
main office in Olney, Maryland (the "Bank"), and Xxxxxx X. Xxxxxxxxxx (the
"Officer").
W I T N E S S E T H
WHEREAS, the Officer has accepted employment with Bancorp as its Vice
President and Secretary and with the Bank as its Senior Vice President and
General Counsel.
WHEREAS, Bancorp, the Bank, and the Officer each desire that the
Officer be provided with certain benefits in the event of a Change in Control,
as defined below.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed as follows:
1. Definitions:
a. Change in Control. A "Change in Control" shall be deemed to
occur on the earliest of any of the following events after the date of
this Agreement:
i. The acquisition by any entity, person or group (other
than the acquisition by a tax-qualified retirement plan
sponsored by Bancorp or the Bank) of beneficial ownership, as
that term is defined in Rule 13d-3 under the Securities
Exchange Act of 1934, of more than 25% of the outstanding
capital stock of Bancorp or the Bank entitled to vote
generally for the election of directors ("Voting Stock");
ii. The commencement by any entity, person, or group
(other than Bancorp or the Bank, a subsidiary of Bancorp or
the Bank, or a tax-qualified retirement plan sponsored by
Bancorp or the Bank) of a tender offer or an exchange offer
for more than 20% of the outstanding Voting Stock of Bancorp
or the Bank;
iii. The effective time of (a) a merger or consolidation of
Bancorp or the Bank with one or more other corporations as a
result of which the holders of the outstanding Voting Stock of
Bancorp or the Bank immediately prior to such merger exercise
voting control over less than 80% of the Voting Stock of the
surviving or resulting corporation, or (b) a transfer of
substantially all of the property of Bancorp or the Bank other
than to an entity of which Bancorp or the Bank owns at least
80% of the Voting Stock;
iv. Upon the acquisition by any entity, person, or group of
the control of the election of a majority of the Bank's or
Bancorp's directors;
v. At such time that, during any period of two consecutive
years, individuals who at the beginning of such period
constitute the Board of Directors ("Board") of Bancorp or the
Board of the Bank (the "Continuing Directors") cease for any
reason to constitute at least two-thirds of such Board,
provided that any individual whose election or nomination for
election as a member of the Board was approved by a vote of at
least two-thirds of the Continuing Directors of such Board
then in office shall be considered a Continuing Director.
b. Covered Period. The "Covered Period" shall mean the period
beginning six months before a Change in Control and ending at the end
of the term specified in Section 2 hereof.
c. Good Reason. "Good Reason" shall be deemed to exist at the
time that any of the following events occurs without the Officer's
express written consent:
i. A material reduction in the Officer's responsibilities
or authority in connection with his employment by Bancorp or
the Bank;
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ii. Assignment to the Officer of duties for which he is not
reasonably equipped by his skills and experience;
iii. A reduction in salary or material reduction in
benefits;
iv A requirement that the Officer relocate his principal
business office or his principal place of residence outside
Xxxxxxxxxx County, Maryland, or the assignment to the Officer
of duties that would reasonably require such a relocation; or
v. Failure to provide office facilities, secretarial
services, and other administrative services to Officer that
are substantially equivalent to the facilities and services
provided to the Officer immediately after 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, a reduction or elimination of
the Officer's benefits under one or more benefit plans maintained by
Bancorp or the Bank as part of a good faith, overall reduction or
elimination of such plan or plans or benefits thereunder applicable to
all participants in a manner that does not discriminate against the
Officer (except as such discrimination may be necessary to comply with
law) shall not constitute an event of Good Reason or a material breach
of this Agreement, provided that benefits of the type or to the
general extent as those offered under such plan or plans prior to such
reduction or elimination are not available to other officers of
Bancorp or the Bank or any company that controls either of them under
a plan or plans in or under which the Officer is not entitled to
participate and to receive benefits on a fair and nondiscriminatory
basis.
d. Just Cause. Termination for "Just Cause" shall mean termination
of employment by reason of the Officer's:
i. Personal dishonesty;
ii. Incompetence;
iii. Willful misconduct;
iv. Breach of fiduciary duty involving personal profit;
v. Intentional failure to perform duties; or
vi. Willful violation of any law, rule, or regulation
(other than traffic violations or similar offenses) or final
cease-and-desist order.
Bancorp or the Bank shall determine if Just Cause exists with respect
to its employment of the Officer in the exercise of its good faith
discretion.
e. Total Annual Compensation. For purposes of this Agreement,
Total Annual Compensation shall mean:
i. One-year's base salary at the highest rate in effect
in the period beginning six months before the last Change in
Control to occur before termination of the Officer's
employment; plus
ii. Other compensation, including, without limitation,
bonus payments, at the rate paid for (i) the calendar year
preceding such Change in Control or (ii) the calendar year
preceding termination of the Officer's employment, whichever
is greater, but shall not include the value of benefits that
are not subject to current federal income taxation to the
Officer. Such other compensation for a calendar year shall be
annualized on a monthly basis based upon the number of months
in the calendar year in which the Officer was employed.
2. Term. The term of this Agreement shall be the period commencing on the
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Effective Date and ending on the last moment of the second anniversary of the
Effective Date.
3. Termination in Connection with a Change in Control.
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a. If, within the Covered Period, Bancorp or the Bank shall
terminate the Officer's employment without Just Cause or the Officer
shall terminate his employment with Good Reason, the Bank shall, within
ten calendar days of the termination of Officer's employment, make a
lump-sum cash payment to him equal to two (2) times his Total Annual
Compensation.
b. Also in the event of such a termination, the Officer shall, for a
period of 365 days following his termination of employment, continue to
participate in any benefit plans of Bancorp or the Bank that provide
health (including medical and dental), life, or disability insurance or
similar coverage in which he participated immediately prior to
termination of his employment, upon terms no less favorable than the
most favorable terms provided to senior officers of the Bank during
such period.
4. Adjustment of Certain Payments and Benefits.
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a. In the event that payments pursuant to this Agreement (including,
without limitation, any payment under any plan, program, or arrangement
referred to in Section 3 hereof) would result in the imposition of a
penalty tax pursuant to Section 280G of the Internal Revenue Code, such
payments shall be reduced to equal the maximum amount that may be paid
under such Section 280G without exceeding such limits. In the event any
such reduction in payments is necessary, the Officer may determine, in
his sole discretion, which categories of payments (including, without
limitation, the value of benefits, acceleration of vesting, or receipt
of benefits or amounts) are to be reduced or eliminated.
b. Payments made to the Officer pursuant to this Agreement or
otherwise, are subject to and conditioned upon their compliance with
Section 18(k) of the Federal Deposit Insurance Act ("FDIA"), relating
to "golden parachute" and indemnification payments and certain other
benefits.
5. Moving Allowance. The Officer agrees to repay, on a pro-rata basis, the
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$20,000 moving allowance he has received in connection with his hiring within
one day of his voluntary termination or his termination by Bancorp or the Bank
for Just Cause if any such termination occurs before the end of the term
specified in Section 2 hereof. The percentage of such moving allowance that the
Officer must repay is equal to the percentage of 730 days represented by the
unexpired term of this Agreement, in days, at the date of such termination.
6. Confidentiality. The Officer agrees to maintain the confidentiality of
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any and all information concerning the operation or financial status of Bancorp,
the Bank, and any of their subsidiaries; the names or addresses of any of the
borrowers, depositors, and other customers of any such companies; any
information concerning or obtained from such customers; and any other
information concerning Bancorp or the Bank or any of their subsidiaries to which
he may be exposed during the course of his employment. The Officer further
agrees that, unless required by law or specifically permitted by Bancorp or the
Bank in writing, he will not disclose to any person or entity, either during or
subsequent to his employment, any of the above-mentioned information which is
not generally known to the public, nor shall he employ such information in any
way other than for the benefit of Bancorp and the Bank.
7. Successors and Assigns.
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a. This Agreement shall inure to the benefit of and be binding upon
any corporate or other successor of Bancorp or the Bank that 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, respectively.
b. Since Bancorp and the Bank each is contracting for the unique and
personal skills of the Officer, the Officer shall be precluded from
assigning or delegating his rights or duties hereunder without first
obtaining the written consent of Bancorp and the Bank.
8. No Mitigation. The Officer shall not be required to mitigate the
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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.
9. No Plan Created. The Officer, Bancorp, and the Bank expressly declare
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and agree that this Agreement was negotiated among them and that no provision or
provisions of this Agreement are intended to, or shall be deemed to, create any
plan for purposes of the Employee Retirement Income Security Act or any other
law or regulation, and Bancorp, the Bank, and the Officer each expressly waives
any right to assert the contrary. Any assertion in any judicial
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or administrative filing, hearing, or process by or on behalf of the Officer,
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.
10. No Additional Rights. This Agreement does not confer any right to
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employment or any other right not specifically stated herein. Any assertion in
any judicial or administrative filing, hearing, or process by or on behalf of
the Officer, Bancorp, or the Bank that it does so shall be deemed a material
breach of this Agreement by the party making such an assertion.
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11. Certain Regulatory Events.
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a. If the Officer is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order issued
under Sections 8(e)(4) or 8(g)(1) of the FDIA, 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.
b. If the Bank is in default (as defined in Section 3(x)(1) of
FDIA), all obligations of the Bank under this Agreement shall terminate
as of the date of default, but vested rights of the parties shall not
be affected.
c. If a notice served under Sections 8(e)(3) or 8(g)(1) of the FDIA
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 that were suspended.
The occurrence of any of the events described in paragraphs a,
b, and c above may be considered by Bancorp or the Bank in connection
with a termination for Just Cause.
12. Notices. All notices, requests, demands and other communications in
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connection with this Agreement shall be made in writing and shall be deemed to
have been given when delivered by hand or 48 hours after mailing at any general
or branch United States Post Office, by registered or certified mail, postage
prepaid, addressed as follows, or to such other address as shall have been
designated in writing by the addressee:
a. If to the Bank:
Xxxxx Spring National Bank of Maryland
00000 Xxxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: President and Chief Executive Officer
Copy to: Executive Vice President and Chief Financial Officer
b. If to the Officer:
Xxxxxx X. Xxxxxxxxxx
13. Joint and Severally Liability; Payments by Bancorp and the Bank. To the
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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, provided that Bancorp shall not be required by this
Agreement to make any payment to the Officer unless and to the extent that the
Bank does not fulfill the obligations to the Officer hereunder for such
payments.
14. Amendments. No amendments or additions to this Agreement shall be
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binding unless made in writing and signed by all of the parties.
15. Applicable Law. Except to the extent preempted by Federal law, the laws
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of the State of Maryland, without regard to its conflict of laws principles,
shall govern this Agreement in all respects, whether as to its validity,
construction, capacity, performance or otherwise.
16. Severability. The provisions of this Agreement shall be deemed
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severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
17. Headings. Headings contained herein are for convenience of reference
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only.
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18. Entire Agreement. This Agreement, together with any understanding or
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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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first set forth above.
XXXXX SPRING BANCORP, INC.
By: /s/Xxxxx X. Xxxxxxxx
Title: Vice President and Treasurer
XXXXX SPRING NATIONAL BANK OF MARYLAND
By: /s/Xxxxx X. Xxxxxxxx
Title: Executive Vice President and Chief
Financial Officer
OFFICER
/s/Xxxxxx X. Xxxxxxxxxx
Xxxxxx X. Xxxxxxxxxx
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