SEVERANCE AGREEMENT
-------------------
THIS AGREEMENT entered into this 7 day of March, 2000, by and between The
Patapsco Bank (the "Bank"), and Xxxxxxx X. Xxx (the "Employee"), effective on
the date above (the "Effective Date").
WHEREAS, the Employee has heretofore been employed by the Bank as a Chief
Financial Officer and Controller; and
WHEREAS, the Bank deems it to be in its best interest to enter into this
Agreement as additional incentive to the Employee to continue as an executive
employee of the Bank; and
WHEREAS, the parties desire by this writing to set forth their
understanding as to their respective rights and obligations in the event of
termination of Employee's employment under the circumstances set forth in this
Agreement.
NOW, THEREFORE, it is AGREED as follows:
1. Change in Control
-----------------
(a) Payment in the Event of Change in Control.
-----------------------------------------
(1) Involuntary Termination If the Employee's employment is terminated
-----------------------
by the Bank, without the Employee's prior written consent and for a reason other
than Just Cause (as defined in Section 3(a) hereof), in connection with or
within twenty-four (24) months after any change in control of the Bank or the
Company, the Employee shall, subject to paragraph (2) of this Section 1(a), be
paid an amount equal to one times his base salary then in effect, but in no
event greater than the difference between (i) the product of 2.99 times his
"base amount" as defined in Section 280G(b)(3) of the Internal Revenue Code of
1986, as amended (the "Code") and regulations promulgated thereunder (the
"Maximum Amount"), and (ii) the sum of any other parachute payments (as defined
under Section 280G(b)(2) of the Code) that the Employee receives on account of
the change in control. Said sum shall be paid in one lump sum within ten (10)
days of such termination.
(2) In the event that the Employee and the Bank jointly determine and
agree that the total parachute payments receivable under clauses (i) and (ii) of
Section 1(a)(1) hereof exceed the Maximum Amount, notwithstanding the payment
procedure set forth in Section 1(a)(1) hereof, the Employee shall determine
which and how much, if any, of the parachute payments to which he is entitled
shall be eliminated or reduced so that the total parachute payments to be
received by the Employee do not exceed the Maximum Amount. If the Employee does
not make his determination within ten business days after receiving a written
request from the Bank, the Bank may make such determination, and shall notify
the Employee promptly thereof. Within five business days of the earlier of the
Bank's receipt of the Employee's determination pursuant to this paragraph or the
Bank's determination in lieu of a determination by the Employee, the Bank shall
pay to or distribute to or for the benefit of the Employee such amounts as are
then due the Employee under this Agreement.
(3) As a result of uncertainty in application of Section 280G of the
Code at the time of payment hereunder, it is possible that such payments will
have been made by the Bank which should not have been made ("Overpayment") or
that additional payments will not have been made by the Bank which should have
been made ("Underpayment"), in each case, consistent with the calculations
required to be made under Section 1(a)(1) hereof. In the event that the
Employee, based upon the assertion by the Internal Revenue Service against the
Employee of a deficiency which the Employee believes has a high probability of
success, determines that an Overpayment has been made, any such Overpayment paid
or distributed by the Bank to or for the benefit of Employee shall be treated
for all purposes as a loan ab initio which the Employee shall repay to the Bank
together with interest at the applicable federal rate provided for in Section
7872(f)(2)(B) of the Code; provided, however, that no such loan shall be deemed
to have been made and no amount shall be payable by the Employee to the Bank if
and to the extent such deemed loan and payment would not either reduce the
amount on which the Employee is subject to tax under Section 1 and Section 4999
of the Code
or generate a refund of such taxes. In the event that the Employee and the Bank
determine, based upon controlling precedent or other substantial authority, that
an Underpayment has occurred, any such Underpayment shall be promptly paid by
the Bank to or for the benefit of the Employee together with interest at the
applicable federal rate provided for in Section 7872(f)(2)(B) of the Code.
(4) "Change in Control" shall mean any one of the following events: (1)
the acquisition of ownership, holding or power to vote more than 25% of the
Bank's or the Company's voting stock, (2) the acquisition of the ability to
control the election of a majority of the Bank's or the Company's directors, (3)
the acquisition of a controlling influence over the management or policies of
the Bank or the Company by any person or by persons acting as a "group" (within
the meaning of Section 13(d) of the Securities Exchange Act of 1934) (provided
that in the case of (1), (2) and (3) hereof, ownership or control of the Bank by
the Company itself shall not constitute a "Change in Control"), or (4) during
any period of two consecutive years, individuals (the "Continuing Directors")
who at the beginning of such period constitute the Board of Directors of the
Company or the Bank (the "Existing Board") cease for any reason to constitute at
least two-thirds thereof, provided that any individual whose election or
nomination for election as a member of the Existing Board was approved by a vote
of at least two-thirds of the Continuing Directors then in office shall be
considered a Continuing Director. For purposes of this subparagraph only, the
term "person" refers to an individual or a corporation, partnership, trust,
association, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization or any other form of entity not specifically listed herein. The
decision of the Bank's non-employee directors as to whether a Change in Control
has occurred shall be conclusive and binding.
(b) Change in Control; Voluntary Termination.
----------------------------------------------------
Notwithstanding any other provision of this Agreement to the contrary, the
Employee may voluntarily terminate his employment under this Agreement, and be
entitled to the payment described in Section 1(a) of this Agreement within
twenty-four (24) months following a Change in Control of the Bank or the Company
and within ninety (90) days following the occurrence of any of the following
events, which has not been consented to in advance by the Employee in writing:
(i) the requirement that the Employee move his personal residence, or perform
his principal executive functions, more than thirty (30) miles from his primary
office as of the date of the change in control; (ii) a material reduction in the
Employee's base compensation as in effect on the date of the change in control
or as the same may be increased from time to time; (iii) the failure by the Bank
to continue to provide the Employee with compensation and benefits provided for
under this Agreement, as the same may be increased from time to time, or with
benefits substantially similar to those provided to him under any of the
employee benefit plans in which the Employee now or hereafter becomes a
participant, or the taking of any action by the Bank which would directly or
indirectly reduce any of such benefits or deprive the Employee of any material
fringe benefit enjoyed by him at the time of the change in control; (iv) the
assignment to the Employee of duties and responsibilities materially different
from those normally associated with his position; (v) a failure to elect or
reelect the Employee to the Board of Directors of the Bank, if the Employee is
serving on the Board on the date of the change in control; or (vi) a material
diminution or reduction in the Employee's responsibilities or authority
(including reporting responsibilities) in connection with his employment with
the Bank.
(c) Compliance with 12 U.S.C. Section 1828(k). Any payments
------------------------------------------
made to the Employee pursuant to this Agreement, or otherwise, are subject to
and conditioned upon their compliance with 12 U.S.C. Section 1828(k) and any
regulations promulgated thereunder.
(d) Trust. (1) Within five business days before or after a
-----
change in control as defined in Section 1(a) of this Agreement, the Bank shall
(i) deposit, or cause to be deposited, in a grantor trust (the "Trust)
substantially in the form of the trust that the Bank's Board of Directors
approved on September 28, 1995 for the Bank's Retirement Plan for Non-Employee
Directors, an amount equal to the maximum amount payable pursuant to section
1(a) hereof, 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 Employee, and to follow the procedures set forth in the
next paragraph as to the payment of such amounts from the Trust.
-2-
(2) During the thirty-six (36) consecutive month period following the
date on which the Bank makes the deposit referred to in the preceding paragraph,
the Employee may provide the trustee of the Trust with a written notice
requesting that the trustee pay to the Employee an amount designated in the
notice as being payable pursuant to Section 1(a) or (b). 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 Employee 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 Employee pursuant to Section 1(a) or (b) hereof, and the costs of such
arbitration (including any legal fees and expenses incurred by the Employee)
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 3 days of the
determination by the arbitrator, the trustee shall pay from the Trust the
amounts required to be paid to the Employee 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.
(3) Upon the earlier of (i) any payment from the Trust to the Employee,
or (ii) the date thirty-six (36) months after the date on which the Bank makes
the deposit referred to in the first paragraph of this subsection (d), the
trustee of the Trust shall pay to the Bank the entire balance remaining in the
segregated account maintained for the benefit of the Employee. The Employee
shall thereafter have no further rights under this Section 1, no further
interest in the Trust pursuant to this Agreement, and no further rights or
claims against the Bank pursuant to this Agreement.
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 months after the Effective Date, and (ii) the date on which the
Employee terminates employment with the Bank; provided that the Employee's
rights hereunder shall continue following the termination of this employment
with the Bank under any of the circumstances described in Section 1(a) or (b)
hereof. Additionally, on each annual anniversary date from the Effective Date,
the term of this Agreement shall be extended for an additional one-year period
beyond the then effective expiration date provided the Board of Directors of the
Bank determines in a duly adopted resolution that the performance of the
Employee has met the Board's requirements and standards, and that this Agreement
shall be extended.
3. Termination or Suspension Under Federal Law.
-------------------------------------------
(a) Termination for "Just Cause" shall mean termination
because of, in the good faith determination of the Bank's Board of Directors,
the Employee's personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order, or material
breach of any provision of this Agreement. The Employee shall have no right to
receive compensation or other benefits for any period after termination for Just
Cause. No act, or failure to act, on the Employee's part shall be considered
"willful" unless he has acted, or failed to act, with an absence of good faith
and without a reasonable belief that his action or failure to act was in the
best interest of the Bank.
(b) If the Employee is removed and/or permanently prohibited
from participating in the conduct of the Bank's affairs by an order issued under
Sections 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act ("FDIA") (12
U.S.C. 1818(e)(3) or (g)(1)), all obligations of the Bank under this Agreement
shall terminate, as of the effective date of the order, but the vested rights of
the parties shall not be affected.
(c) If the Bank is in default (as defined in Section 3(x)(1)
of FDIA), all obligations under this Agreement shall terminate as of the date of
default; however, this Paragraph shall not affect the vested rights of the
parties.
-3-
(d) All obligations under this Agreement shall terminate,
except to the extent that continuation of this Agreement is necessary for the
continued operation of the Company: (i) by the Commissioner of Financial
Regulation of the State of Maryland ("Commissioner") at the time that the
Federal Deposit Insurance Corporation ("FDIC") enters into an agreement to
provide assistance to or on behalf of the Bank under the authority contained in
Section 13(c) of FDIA; or (ii) by the Commissioner at the time that the
Commissioner approves a supervisory merger to resolve problems related to
operation of the Bank or when the Bank is determined by the Commissioner to be
in an unsafe or unsound condition. Such action shall not affect any vested
rights of the parties.
(e) If a notice served under Section 8(e)(3) or (g)(1) of
the FDIA (12 U.S.C. 1818(e)(3) and (g)(1)) suspends and/or temporarily prohibits
the Employee from participating in the conduct of the Bank's affairs, the Bank's
obligations under this Agreement shall be suspended as of the date of such
service, unless stayed by appropriate proceedings. If the charges in the notice
are dismissed, the Bank shall (i) pay the Employee all or part of the
compensation withheld while its contract obligations were suspended, and (ii)
reinstate (in whole or in part) any of its obligations which were suspended.
(f) The terms of this Section 3 shall prevail over any other
provisions of this Agreement.
4. Expense Reimbursement.
---------------------
In the event that any dispute arises between the Employee
and the Bank as to the terms or interpretation of this Agreement, whether
instituted by formal legal proceedings or otherwise, including any action that
the Employee takes to enforce the terms of this Agreement or to defend against
any action taken by the Bank or the Company, the Employee shall be reimbursed by
the Bank for all costs and expenses, including reasonable attorneys' fees,
arising from such dispute, proceedings or actions, provided (other than as set
forth in Section 1(d)(2) above) that the Employee shall obtain a final judgement
in favor of the Employee in a court of competent jurisdiction or in binding
arbitration under the rules of the American Arbitration Association. Such
reimbursement shall be paid within ten (10) days of Employee's furnishing to the
Bank and the Company written evidence, which may be in the form, among other
things, of a canceled check or receipt, of any costs or expenses incurred by the
Employee. The Bank shall also reimburse the Employee in an amount equal to 150%
of any excise taxes payable by the Employee under Code Section 4999 due to the
inadvertent violation of the payment limit described in Section 1(a) of this
Agreement.
5. Successors and Assigns.
----------------------
(a) This Agreement shall inure to the benefit of and be
binding upon any corporate or other successor of the Bank or Company which shall
acquire, directly or indirectly, by merger, consolidation, purchase or
otherwise, all or substantially all of the assets or stock of the Bank or
Company.
(b) Since the Bank and the Company are contracting for the
unique and personal skills of the Employee, the Employee shall be precluded from
assigning or delegating his rights or duties hereunder without first obtaining
the written consent of the Bank and the Company.
6. Amendments. No amendments or additions to this Agreement shall
----------
be binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.
7. Applicable Law. 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.
8. 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.
-4-
9. Entire Agreement. This Agreement, together with any
------------------
understanding or modifications thereof as agreed to in writing by the parties,
shall constitute the entire agreement between the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first hereinabove written.
ATTEST: THE PATAPSCO BANK
/s/ Xxxxxxxx X. Xxxxxxxxx By:/s/ Xxxxxx X. Xxxxxxxx
------------------------- ----------------------------------
Secretary Its President
WITNESS:
/s/ Xxxxx Donning /s/ Xxxxxxx X. Xxx
------------------------- ----------------------------------
Xxxxxxx X. Xxx
-5-
SEVERANCE AGREEMENT
THIS AGREEMENT entered into this 7th day of March, 2000, by and between The
Patapsco Bank (the "Bank"), and Xxxxx X. Xxxxxxxx (the "Employee"), effective on
the date above (the "Effective Date").
WHEREAS, the Employee has heretofore been employed by the Bank as Senior
Vice President; and
WHEREAS, the Bank deems it to be in its best interest to enter into this
Agreement as additional incentive to the Employee to continue as an executive
employee of the Bank; and
WHEREAS, the parties desire by this writing to set forth their
understanding as to their respective rights and obligations in the event of
termination of Employee's employment under the circumstances set forth in this
Agreement.
NOW, THEREFORE, it is AGREED as follows:
1. Change in Control
-----------------
(a) Payment in the Event of Change in Control.
-----------------------------------------
(1) Involuntary Termination If the Employee's employment is terminated
------------------------
by the Bank, without the Employee's prior written consent and for a reason other
than Just Cause (as defined in Section 3(a) hereof), in connection with or
within twenty-four (24) months after any change in control of the Bank or the
Company, the Employee shall, subject to paragraph (2) of this Section 1(a), be
paid an amount equal to one times his base salary then in effect, but in no
event greater than the difference between (i) the product of 2.99 times his
"base amount" as defined in Section 280G(b)(3) of the Internal Revenue Code of
1986, as amended (the "Code") and regulations promulgated thereunder (the
"Maximum Amount"), and (ii) the sum of any other parachute payments (as defined
under Section 280G(b)(2) of the Code) that the Employee receives on account of
the change in control. Said sum shall be paid in one lump sum within ten (10)
days of such termination.
(2) In the event that the Employee and the Bank jointly determine and
agree that the total parachute payments receivable under clauses (i) and (ii) of
Section 1(a)(1) hereof exceed the Maximum Amount, notwithstanding the payment
procedure set forth in Section 1(a)(1) hereof, the Employee shall determine
which and how much, if any, of the parachute payments to which he is entitled
shall be eliminated or reduced so that the total parachute payments to be
received by the Employee do not exceed the Maximum Amount. If the Employee does
not make his determination within ten business days after receiving a written
request from the Bank, the Bank may make such determination, and shall notify
the Employee promptly thereof. Within five business days of the earlier of the
Bank's receipt of the Employee's determination pursuant to this paragraph or the
Bank's determination in lieu of a determination by the Employee, the Bank shall
pay to or distribute to or for the benefit of the Employee such amounts as are
then due the Employee under this Agreement.
(3) As a result of uncertainty in application of Section 280G of the
Code at the time of payment hereunder, it is possible that such payments will
have been made by the Bank which should not have been made ("Overpayment") or
that additional payments will not have been made by the Bank which should have
been made ("Underpayment"), in each case, consistent with the calculations
required to be made under Section 1(a)(1) hereof. In the event that the
Employee, based upon the assertion by the Internal Revenue Service against the
Employee of a deficiency which the Employee believes has a high probability of
success, determines that an Overpayment has been made, any such Overpayment paid
or distributed by the Bank to or for the benefit of Employee shall be treated
for all purposes as a loan ab initio which the Employee shall repay to the Bank
together with interest at the applicable federal rate provided for in Section
7872(f)(2)(B) of the Code; provided, however, that no such loan shall be deemed
to have been made and no amount shall be payable by the Employee to the Bank if
and to the extent such deemed loan and payment would not either reduce the
amount on which the Employee is subject to tax under Section 1 and Section 4999
of the Code
or generate a refund of such taxes. In the event that the Employee and the Bank
determine, based upon controlling precedent or other substantial authority, that
an Underpayment has occurred, any such Underpayment shall be promptly paid by
the Bank to or for the benefit of the Employee together with interest at the
applicable federal rate provided for in Section 7872(f)(2)(B) of the Code.
(4) "Change in Control" shall mean any one of the following events: (1)
the acquisition of ownership, holding or power to vote more than 25% of the
Bank's or the Company's voting stock, (2) the acquisition of the ability to
control the election of a majority of the Bank's or the Company's directors, (3)
the acquisition of a controlling influence over the management or policies of
the Bank or the Company by any person or by persons acting as a "group" (within
the meaning of Section 13(d) of the Securities Exchange Act of 1934) (provided
that in the case of (1), (2) and (3) hereof, ownership or control of the Bank by
the Company itself shall not constitute a "Change in Control"), or (4) during
any period of two consecutive years, individuals (the "Continuing Directors")
who at the beginning of such period constitute the Board of Directors of the
Company or the Bank (the "Existing Board") cease for any reason to constitute at
least two-thirds thereof, provided that any individual whose election or
nomination for election as a member of the Existing Board was approved by a vote
of at least two-thirds of the Continuing Directors then in office shall be
considered a Continuing Director. For purposes of this subparagraph only, the
term "person" refers to an individual or a corporation, partnership, trust,
association, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization or any other form of entity not specifically listed herein. The
decision of the Bank's non-employee directors as to whether a Change in Control
has occurred shall be conclusive and binding.
(b) Change in Control; Voluntary Termination.
----------------------------------------------------
Notwithstanding any other provision of this Agreement to the contrary, the
Employee may voluntarily terminate his employment under this Agreement, and be
entitled to the payment described in Section 1(a) of this Agreement within
twenty-four (24) months following a Change in Control of the Bank or the Company
and within ninety (90) days following the occurrence of any of the following
events, which has not been consented to in advance by the Employee in writing:
(i) the requirement that the Employee move his personal residence, or perform
his principal executive functions, more than thirty (30) miles from his primary
office as of the date of the change in control; (ii) a material reduction in the
Employee's base compensation as in effect on the date of the change in control
or as the same may be increased from time to time; (iii) the failure by the Bank
to continue to provide the Employee with compensation and benefits provided for
under this Agreement, as the same may be increased from time to time, or with
benefits substantially similar to those provided to him under any of the
employee benefit plans in which the Employee now or hereafter becomes a
participant, or the taking of any action by the Bank which would directly or
indirectly reduce any of such benefits or deprive the Employee of any material
fringe benefit enjoyed by him at the time of the change in control; (iv) the
assignment to the Employee of duties and responsibilities materially different
from those normally associated with his position; (v) a failure to elect or
reelect the Employee to the Board of Directors of the Bank, if the Employee is
serving on the Board on the date of the change in control; or (vi) a material
diminution or reduction in the Employee's responsibilities or authority
(including reporting responsibilities) in connection with his employment with
the Bank.
(c) Compliance with 12 U.S.C. Section 1828(k). Any payments
-----------------------------------------
made to the Employee pursuant to this Agreement, or otherwise, are subject to
and conditioned upon their compliance with 12 U.S.C. Section 1828(k) and any
regulations promulgated thereunder.
(d) Trust. (1) Within five business days before or after a
change in control as defined in Section 1(a) of this Agreement, the Bank shall
(i) deposit, or cause to be deposited, in a grantor trust (the "Trust)
substantially in the form of the trust that the Bank's Board of Directors
approved on September 28, 1995 for the Bank's Retirement Plan for Non-Employee
Directors, an amount equal to the maximum amount payable pursuant to section
1(a) hereof, 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 Employee, and to follow the procedures set forth in the
next paragraph as to the payment of such amounts from the Trust.
-2-
(2) During the thirty-six (36) consecutive month period following the
date on which the Bank makes the deposit referred to in the preceding paragraph,
the Employee may provide the trustee of the Trust with a written notice
requesting that the trustee pay to the Employee an amount designated in the
notice as being payable pursuant to Section 1(a) or (b). 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 Employee 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 Employee pursuant to Section 1(a) or (b) hereof, and the costs of such
arbitration (including any legal fees and expenses incurred by the Employee)
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 3 days of the
determination by the arbitrator, the trustee shall pay from the Trust the
amounts required to be paid to the Employee 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.
(3) Upon the earlier of (i) any payment from the Trust to the Employee,
or (ii) the date thirty-six (36) months after the date on which the Bank makes
the deposit referred to in the first paragraph of this subsection (d), the
trustee of the Trust shall pay to the Bank the entire balance remaining in the
segregated account maintained for the benefit of the Employee. The Employee
shall thereafter have no further rights under this Section 1, no further
interest in the Trust pursuant to this Agreement, and no further rights or
claims against the Bank pursuant to this Agreement.
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 months after the Effective Date, and (ii) the date on which the
Employee terminates employment with the Bank; provided that the Employee's
rights hereunder shall continue following the termination of this employment
with the Bank under any of the circumstances described in Section 1(a) or (b)
hereof. Additionally, on each annual anniversary date from the Effective Date,
the term of this Agreement shall be extended for an additional one-year period
beyond the then effective expiration date provided the Board of Directors of the
Bank determines in a duly adopted resolution that the performance of the
Employee has met the Board's requirements and standards, and that this Agreement
shall be extended.
3. Termination or Suspension Under Federal Law.
-------------------------------------------
(a) Termination for "Just Cause" shall mean termination
because of, in the good faith determination of the Bank's Board of Directors,
the Employee's personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order, or material
breach of any provision of this Agreement. The Employee shall have no right to
receive compensation or other benefits for any period after termination for Just
Cause. No act, or failure to act, on the Employee's part shall be considered
"willful" unless he has acted, or failed to act, with an absence of good faith
and without a reasonable belief that his action or failure to act was in the
best interest of the Bank.
(b) If the Employee is removed and/or permanently prohibited
from participating in the conduct of the Bank's affairs by an order issued under
Sections 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act ("FDIA") (12
U.S.C. 1818(e)(3) or (g)(1)), all obligations of the Bank under this Agreement
shall terminate, as of the effective date of the order, but the vested rights of
the parties shall not be affected.
(c) If the Bank is in default (as defined in Section 3(x)(1)
of FDIA), all obligations under this Agreement shall terminate as of the date of
default; however, this Paragraph shall not affect the vested rights of the
parties.
-3-
(d) All obligations under this Agreement shall terminate,
except to the extent that continuation of this Agreement is necessary for the
continued operation of the Company: (i) by the Commissioner of Financial
Regulation of the State of Maryland ("Commissioner") at the time that the
Federal Deposit Insurance Corporation ("FDIC") enters into an agreement to
provide assistance to or on behalf of the Bank under the authority contained in
Section 13(c) of FDIA; or (ii) by the Commissioner at the time that the
Commissioner approves a supervisory merger to resolve problems related to
operation of the Bank or when the Bank is determined by the Commissioner to be
in an unsafe or unsound condition. Such action shall not affect any vested
rights of the parties.
(e) If a notice served under Section 8(e)(3) or (g)(1) of
the FDIA (12 U.S.C. 1818(e)(3) and (g)(1)) suspends and/or temporarily prohibits
the Employee from participating in the conduct of the Bank's affairs, the Bank's
obligations under this Agreement shall be suspended as of the date of such
service, unless stayed by appropriate proceedings. If the charges in the notice
are dismissed, the Bank shall (i) pay the Employee all or part of the
compensation withheld while its contract obligations were suspended, and (ii)
reinstate (in whole or in part) any of its obligations which were suspended.
(f) The terms of this Section 3 shall prevail over any other
provisions of this Agreement.
4. Expense Reimbursement.
---------------------
In the event that any dispute arises between the Employee
and the Bank as to the terms or interpretation of this Agreement, whether
instituted by formal legal proceedings or otherwise, including any action that
the Employee takes to enforce the terms of this Agreement or to defend against
any action taken by the Bank or the Company, the Employee shall be reimbursed by
the Bank for all costs and expenses, including reasonable attorneys' fees,
arising from such dispute, proceedings or actions, provided (other than as set
forth in Section 1(d)(2) above) that the Employee shall obtain a final judgement
in favor of the Employee in a court of competent jurisdiction or in binding
arbitration under the rules of the American Arbitration Association. Such
reimbursement shall be paid within ten (10) days of Employee's furnishing to the
Bank and the Company written evidence, which may be in the form, among other
things, of a canceled check or receipt, of any costs or expenses incurred by the
Employee. The Bank shall also reimburse the Employee in an amount equal to 150%
of any excise taxes payable by the Employee under Code Section 4999 due to the
inadvertent violation of the payment limit described in Section 1(a) of this
Agreement.
5. Successors and Assigns.
----------------------
(a) This Agreement shall inure to the benefit of and be
binding upon any corporate or other successor of the Bank or Company which shall
acquire, directly or indirectly, by merger, consolidation, purchase or
otherwise, all or substantially all of the assets or stock of the Bank or
Company.
(b) Since the Bank and the Company are contracting for the
unique and personal skills of the Employee, the Employee shall be precluded from
assigning or delegating his rights or duties hereunder without first obtaining
the written consent of the Bank and the Company.
6. Amendments. No amendments or additions to this Agreement shall
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be binding unless made in writing and signed by all of the parties, except as
herein otherwise specifically provided.
7. 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.
8. 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.
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9. Entire Agreement. This Agreement, together with any
------------------
understanding or modifications thereof as agreed to in writing by the parties,
shall constitute the entire agreement between the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first hereinabove written.
ATTEST: THE PATAPSCO BANK
/s/ Xxxxxxxx X. Xxxxxxxxx By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------- -----------------------------------
Secretary Its President
WITNESS:
/s/ Xxxxx Donning /s/ Xxxxx X. Xxxxxxxx
--------------------------- -----------------------------------
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