EXHIBIT 10.7b
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
THIS SECOND AMENDMENT, effective April 30, 2002 between COLUMBIA BANCORP, a
Maryland corporation (the "Corporation"), THE COLUMBIA BANK, a Maryland trust
company and a principal subsidiary of the Corporation (the "Bank"), and XXXX X.
XXXX, XX. (the "Executive"), amends the Employment Agreement between the
Corporation, the Bank and the Executive, dated February 26, 1996, as amended
December 18, 1997 (the "Employment Agreement").
W I T N E S S E T H:
The Corporation and the Bank (each, a "Company" and collectively, the
"Companies") recognized the Executive's contribution to the organization, growth
and success of the Companies and entered into the Employment Agreement with the
Executive to secure his services. The Companies and the Executive desire to
amend the Employment Agreement as set forth below in this Second Amendment to
provide for the extension of health benefits for a period of ten years upon a
change in control.
Accordingly, in consideration of the mutual covenants and representations
contained herein and the mutual benefits derived herefrom, the Companies and the
Executive agree to amend the Employment Agreement as follows:
1. Paragraph 5.2 shall be amended to read as follows:
"5.2. Amount of Payments. Except as provided in paragraph 5.2(e),
and in lieu of amounts payable under paragraph 4, the Companies will pay
the Executive the following amounts in the following circumstances:
(a) (i) If the Executive is terminated by either of the Companies in
the circumstances described under paragraph 4.3(a)(i), or if the
Executive resigns during a Change in Control Period in the circumstances
described under paragraph 4.3(a)(ii), or if during a Change in Control
Period the Executive resigns in circumstances other than those described
under paragraph 4.3(a)(ii) without having been offered an employment
agreement the terms of which are comparable to those of this Agreement,
the Companies will pay, or cause to be paid, to the Executive: (a) if
the Executive's termination or resignation occurs before the Executive
has attained the age of 62 years, an amount equal to three times the sum
of (i) the Executive's annual base salary immediately before the Change
in Control and (ii) the average of the bonuses paid to the Executive
over the past three years (including years in which no bonus was
awarded); or (b) if the Executive's termination or resignation occurs on
or after the Executive has attained the age of 62 years, an amount equal
to the amount set forth in paragraph 5.2(a)(i)(a) multiplied by a
fraction, the numerator of which
shall be 1,095 minus the number of days which have passed since the
Executive's 62nd birthday, and the denominator of which shall be 1,095.
(ii) Such payment shall be made in one lump sum within 15
business days after the Executive's termination or resignation.
(b) (i) If the Executive resigns during a Change in Control Period
in circumstances other than those described under paragraph 4.3(a)(ii)
after having been offered an employment agreement the terms of which are
comparable to those of this Agreement, the Companies will pay, or cause
to be paid, to the Executive: (a) if the Executive's resignation occurs
before the Executive has attained the age of 64 years, an amount equal
to the sum of (i) the Executive's annual base salary immediately before
the Change in Control and (ii) the average of the bonuses paid to the
Executive over the past three years (including years in which no bonus
was awarded); or (b) if the Executive's resignation occurs on or after
the Executive has attained the age of 64 years, an amount equal to the
amount set forth in paragraph 5.2(b)(i)(a) multiplied by a fraction, the
numerator of which shall be 365 minus the number of days which have
passed since the Executive's 64th birthday, and the denominator of which
shall be 365.
(ii) Such payment shall be made in one lump sum within 15
business days after the Executive's resignation.
(c) Except as provided in paragraph 5.2(e), if the Executive is
terminated by the Companies or resigns as described in paragraph 5.2(a),
or resigns as described in paragraph 5.2(b), the Executive shall
continue to receive all health, life, and disability insurance benefits
available to him pursuant to paragraph 1.2(b) of this Agreement that he
was receiving immediately before such termination or resignation. The
Executive shall pay the same percentage of the total cost of such
coverage as he was paying when his employment terminated. The total cost
of the Executive's continued coverage shall be determined using the same
rates for health, life and/or disability coverage that apply from time
to time to similarly situated active employees. The Executive shall
continue to receive such benefits until the earliest of (i) such time as
the Executive shall have been receiving substantially similar insurance
benefits for six months under subsequent employment, (ii) in the case of
life and disability benefits, 36 months after the date of a termination
or resignation described in paragraph 5.2(a) or 12 months after the date
of a resignation described in paragraph 5.2(b), (iii) in the case of
health benefits, 10 years after the
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date of termination or resignation described in paragraph 5.2(a) or 12
months after the date of resignation described in paragraph 5.2(b), or
(iv) such date as the Executive shall have attained the age of 65 years.
(d) All options granted to the Executive under the Corporation's stock
option award arrangements providing for the granting of options to
acquire common stock to founders, directors and key employees shall
immediately become fully vested in the event of a Change in Control.
(e) The Executive is to receive no payments under paragraph 5.2(a) or
(b) and no benefits under paragraph 5.2(c) if the Executive is
terminated during a Change in Control Period after having already
attained the age of 65 years, or if the Executive is terminated by
either of the Companies during a Change in Control Period upon the death
or total disability of the Executive or for cause. In an instance of
death or total disability of the Executive, however, the Executive and
his dependents, beneficiaries and estate shall receive any benefits
payable to them under paragraphs 4.2 (c) and 4.2 (d).
(f) (i) The Executive shall bear all expense of, and be solely
responsible for, all federal, state, or local taxes due with respect to
any payment received hereunder, including, without limitation, any
excise tax imposed by Section 4999 of the Internal Revenue Code of 1986,
as amended (the "Code"); provided, however, that any payment or benefit
received or to be received by the Executive in connection with a Change
in Control or the termination of the Executive's employment (whether
payable pursuant to the terms of this Agreement ("Contract Payments") or
any other plan, arrangements or agreement with the Companies or any
affiliate (collectively with the Contract Payments, the "Total
Payments") shall be reduced to the extent necessary so that no portion
thereof shall be subject to the excise tax imposed by Section 4999 of
the Code but only if, by reason of such reduction, the net after-tax
benefit received by the Executive shall exceed the net after-tax benefit
received by the Executive if no such reduction was made.
(ii) For purposes of this paragraph 5.2(f), "net after-tax
benefit" shall mean (i) the total of all payments and the value of all
benefits which the Executive receives or is then entitled to receive
from the Companies that would constitute "parachute payments" within the
meaning of Section 280G of the Code, less (ii) the amount of all
federal, state and local income taxes payable with respect to the
foregoing calculated at the maximum marginal income tax rate for each
year in which the foregoing shall be paid to the Executive (based
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on the rate in effect for such year as set forth in the Code as in
effect at the time of the first payment of the foregoing), less (iii)
the amount of excise taxes imposed with respect to the payments and
benefits described in (i) above by Section 4999 of the Code.
(iii) The foregoing determination shall be made by a nationally
recognized accounting firm (the "Accounting Firm") selected by the
Companies and reasonably acceptable to the Executive (which may be, but
will not be required to be, the Companies' independent auditors). The
Accounting Firm shall submit its determination and detailed supporting
calculations to both the Executive and the Companies within fifteen (15)
days after receipt of a notice from either of the Companies or from the
Executive that the Executive may receive payments which may be
"parachute payments." If the Accounting Firm determines that such
reduction is required by this paragraph 5.2(f), the Executive, in the
Executive's sole and absolute discretion, may determine which Total
Payments shall be reduced or forfeited to the extent necessary so that
no portion thereof shall be subject to the excise tax imposed by Section
4999 of the Code, and the Companies shall pay such reduced amount to the
Executive. If the Accounting Firm determines that no reduction or
forfeiture is necessary under this paragraph 5.2(f), it will, at the
same time as it makes such determination, furnish the Executive and the
Companies an opinion that Executive shall not be liable for any excise
tax under Section 4999 of the Code. The Executive and the Companies
shall each provide the Accounting Firm access to and copies of any
books, records, and documents in the possession of the Executive or the
Companies, as the case may be, reasonably requested by the Accounting
Firm, and otherwise cooperate with the Accounting Firm in connection
with the preparation and issuance of the determinations and calculations
contemplated by this paragraph 5.2(f). The fees and expenses of the
Accounting Firm for its services in connection with the determinations
and calculations contemplated by this paragraph 5.2(f) shall be borne by
the Companies.
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IN WITNESS WHEREOF, the parties have executed and delivered this Second
Amendment to the Employment Agreement on this 30 day of April, 2002.
ATTEST: COLUMBIA BANCORP
/s/ Xxxx X. Xxxxxxxx, Xx.
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Xxxx X. Xxxxxxxx, Xx.
Executive Vice President and
Chief Financial Officer
ATTEST: THE COLUMBIA BANK
/s/ Xxxx X. Xxxxxxxx, Xx.
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Xxxx X. Xxxxxxxx, Xx.
Executive Vice President and
Chief Financial Officer
WITNESS:
/s/ Xxxx X. Xxxx, Xx.
----------------------------- ----------------------------
Xxxx X. Xxxx, Xx.
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