EXHIBIT 10(a)
EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement"), made as of this 18th day of January,
2003, by and among ▇▇▇▇▇ Spring Bancorp, Inc., a registered bank holding company
("Bancorp"), ▇▇▇▇▇ Spring Bank, a Maryland corporation and wholly owned
subsidiary of Bancorp with its main office in Olney, Maryland (the "Bank"), and
Hunter ▇. ▇▇▇▇▇▇ (the "Officer").
W I T N E S S E T H
WHEREAS, the Officer is employed as the President and Chief Executive
Officer of the Bank and Bancorp, subject to a certain Employment Agreement made
January 30, 1997 (as amended, the "1997 Agreement").
WHEREAS, as a result of the skill, knowledge, and experience of the
Officer, the Board of Directors of the Bank (the "Board") desires to retain the
services of the Officer.
WHEREAS, the Officer desires to continue to serve as the President and
Chief Executive Officer of the Bank and Bancorp.
WHEREAS, the Officer and the Board and the Board of Directors of
Bancorp desire to enter into an Agreement setting forth the terms of conditions
of the continuing 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:
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1. Employment. The Officer is employed as the President and Chief Executive
Officer of the Bank and Bancorp. The Officer shall perform all duties and shall
have all powers which are commonly incident to the office of President and Chief
Executive Officer or which, consistent with that office, are assigned to the
Officer by the Board of Directors. In addition to the 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:
a. Making recommendations concerning the strategies, policies, and
tactics of Bancorp and the Bank;
b. Management oversight of the day-to-day activities of Bancorp,
the Bank, and its respective subsidiaries including management
oversight of and supervision of the officers and employees
engaged in these functions;
c. Promoting the Bank and its services;
d. Managing the efforts of Bancorp and the Bank to comply with
applicable laws and regulations; and
e. Providing complete, timely, and accurate reports, as required,
regarding the material affairs and activities and the
condition of Bancorp and the Bank, respectively.
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 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 commencing on the date of this
Agreement (the "Effective Date") and ending immediately prior
to the third anniversary of the Effective Date, plus (ii) any
and all extensions of the initial term made pursuant to this
Section 3.
b. On each anniversary of the Effective Date prior to a
termination of the Agreement, the term under this Agreement
shall be extended for an additional one-year period beyond
the then effective expiration date without action by any
party, provided that neither the Bank nor the Officer shall
have given written notice at least sixty (60) days prior to
such anniversary date of its or the Officer's 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 Human Resources Committee (the
"Committee") of the Board, and the Board shall, based on
such 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 anniversary date.
c. At the Effective Date, this Agreement shall supersede any
prior Agreement, which shall be deemed terminated by agreement
of the parties immediately prior to the Effective Date.
4. Base Compensation.
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a. Bancorp and the Bank agrees 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 Human Resources Committee 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 assets and performance,
and based upon this review and on such other factors as it
deems pertinent, shall recommend to the Board the annual
salary rate to be paid to the Officer following such review.
The Board, based upon this recommendation of the Committee
and other factors they deem relevant, 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 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 such life
insurance, medical, dental, pension, profit sharing, and retirement plans and
other programs and arrangements as may be approved from time to time by Bancorp
or the Bank for the benefit of the employees of the Bank. In addition, the
Officer shall be entitled to participate in a nonstatutory supplemental
retirement plan or arrangement ("SERP") established for the Officer, in the
Executive Health Expense Reimbursement and Insurance Plans (together, the
"HERP"), or a successor plan or plans that provide the same or greater level of
benefits as those provided to participants under the HERP as in effect on the
Effective Date, and in the Group Term Replacement Plan ("GTRP") established for
the Officer.
7. Paid Time Off.
a. The Officer shall be entitled to twenty-eight working days of
paid time off, as defined in the Bank's personnel policies,
during each consecutive twelve-month period commencing on
January 1, 2002 and each January 1 thereafter during the
term of this Agreement, to be taken at reasonable times and
in reasonable periods as the Officer and Bancorp 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.
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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 Board of Directors may in their
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
Board of Directors in their discretion may determine.
8. Expense Payments and Reimbursements. The Officer shall be reimbursed for all
reasonable out-of-pocket business expenses incurred in connection with the
Officer's services under this Agreement upon substantiation of such expenses in
accordance with applicable policies of Bancorp and the Bank. The Officer shall
also be entitled to the following:
a. Use of an automobile of a make and model consistent with the
Officer's duties under this Agreement and reimbursement for
the Officer's expenses thereof related to the employment of
Officer; and
b. Reimbursement for membership dues at a Country Club or other
similar type organization as mutually agreed upon between the
Boards of Bancorp or the Bank and the Officer.
9. Loyalty and Confidentiality.
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a. 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 boards of directors of, and hold
any other offices or positions in, companies or
organizations which will not present any conflict of
interest with Bancorp or the Bank 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.
b. 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 Bancorp and
the Bank, or, solely as a passive, minority investor, in any
business.
c. The Officer agrees to maintain the confidentiality of any and
all information concerning the operation or financial status
of Bancorp and the Bank; 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:
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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
Officer's death occurred.
b. Retirement. This Agreement shall be terminated upon the normal
or early retirement of the Officer under the retirement
benefit plan or plans in which the Officer participates
pursuant to Section 6 of this Agreement.
c. Disability. 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 Bancorp's or the Bank's long-term disability
plan (or, if Bancorp or 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 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 which the Officer
receives under any disability insurance maintained by
Bancorp or the Bank with respect to such 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 months prior to the
establishment of such disability under this Section
10.c., reduced by any payments received by the
Officer during such period following termination
under a long term disability plan or policy
maintained by Bancorp or the Bank, 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
it reasonably believes to be relevant. As a condition to any benefits,
such Board may require the Officer to submit to such physical or mental
evaluations and tests as it deems reasonably appropriate.
d. Just Cause.
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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
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;
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(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 Agreement after reasonable
notification (which shall be stated in writing
and given at least fifteen 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), 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 agreements to be
performed 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
non-performance, comply with the requirements of such
notice, and further if Officer shall not comply with
such notice to the satisfaction of the Bank within
forty-eight (48) hours after delivery thereof,
(except if such compliance cannot be reasonably
completed within forty-eight (48) hours, if Officer
shall not commence to comply within such period and
thereafter proceed to completion with due diligence)
the Bank shall have the right to proceed with the
Board meeting specified in the preceding paragraph.
e. Certain Regulatory Events.
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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)(1) of the Federal
Deposit Insurance Act ("FDIA") (12 U.S.C. ▇▇.▇▇. 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)(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.
iii. If a notice served under Sections 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 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.
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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.
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 the Bank and Bancorp during the term of this
Agreement upon at least sixty days' prior written notice to 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.
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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
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 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 months immediately preceding the date of
such termination, plus annual cash bonuses for each year
(prorated in the event of partial years) remaining under such
term 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 calendar days
of such termination.
iii. "Good Reason" shall exist if, without the Officer's
express written consent, Bancorp or the Bank materially breach
any of its respective obligations under this Agreement.
Without limitation, such a material breach shall be deemed to
occur upon any of the following:
(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
nonexecutive 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 contrary
to the terms of this Agreement, or,
following a Change in Control as defined in
Section 11 of this Agreement, any reduction
in salary or material reduction in benefits
below the amounts to which the Officer was
entitled prior to the Change in Control;
(4) Termination of incentive and benefit plans,
programs, or arrangements, or 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 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 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).
(8) In the event of a Change in Control as
defined in Section 11 of this Agreement,
Officer shall have the right to resign for
any reason during the first sixty (60) days
immediately following the first six months
after the closing date of a definitive
purchase and assumption agreement (as
defined in such agreement), the execution of
which brought about a Change in Control.
Notwithstanding the foregoing, it is
expected that the Bank will perform all agreements on its part to be performed
herein, and the Bank 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, comply with the requirement of
such notice, and further if Bank 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 the Bank shall not commence to comply within such
period and thereafter proceed to completion with due diligence) the Officer
shall have the right to proceed with notice of a "with 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 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 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 receive benefits, on a fair and
nondiscriminatory basis.
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 such termination), 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
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Bancorp or 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
branch, and shall not interfere with the relationship
of Bancorp or the Bank 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.
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a. For purposes of this Agreement, a "Change in Control" shall be
deemed to occur on the earliest of:
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 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 Bancorp or the
Bank (the "Continuing Directors") 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 Board was
approved by a vote of at least two-thirds of the
Continuing Directors then in office shall be
considered a Continuing Director.
b. Termination. If within the period beginning six months prior
to and ending two years after a Change in Control, (i) the
Bank shall terminate the Officer's employment Without Just
Cause, or (ii) the Officer shall voluntarily terminate
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 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 months immediately
preceding the date of such termination, plus (y) the amount of
other compensation received
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by the Officer during the calendar year preceding the Change
in Control. 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. are not otherwise
affected by this Section 11. Also, in such event, the Officer
shall, for three calendar years following the Officer's
termination of employment, continue to participate in any
benefit plans of Bancorp and 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 that may become payable by
Bancorp or the Bank pursuant to this Section, 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 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
280G(b)(3) of the Code and regulations promulgated thereunder
(Section 280G and related regulations hereinafter referred to
as Section 280G") plus such amounts deemed adequate to cover
Bancorp and the Bank's obligations under Section 14 of this
Agreement, 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. Upon the earlier of the final
payment of all amounts demanded by the Officer under this
Section 11 or the date thirty-six months after the Change in
Control, the trustee of the trust shall pay to Bancorp or the
Bank, 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
subsidiaries (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
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settlements, such settlements to be approved by the Board of
Bancorp or the Bank, if such action is brought against the
Officer in the Officer's capacity as an officer or director of
Bancorp or the Bank or any of their subsidiaries.
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, 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 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 therefor from the Officer stating the reason that such money or action
was due under this Agreement at or prior to the time of such demand.
14. Adjustment of Certain Payments and Benefits.
--------------------------------------------
Bancorp and the Bank shall indemnify and hold the Officer harmless from
any and all loss, expense, or liability that the Officer may ever incur under
Code ss. 4999, or any successor provision, as the result of payments or benefits
that the Officer receives from Bancorp or the Bank or any successor to any of
its interests. Bancorp and the Bank shall have this obligation with respect to
any excise taxes (and any federal, state, and local income taxes on those excise
taxes) for which the Officer is liable under Code ss. 4999, or any successor
provision, pursuant to a tax return on which the Officer reports such excise tax
liability based on a reasonable analysis (that the Officer need not file with
the return) prepared by the Officer's legal counsel. This paragraph shall
survive termination or expiration of this Agreement for any reason.
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 and 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 or 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.
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b. Since the Bank and Bancorp 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 the Bank and
Bancorp.
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 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 Bancorp or the Bank: ▇▇▇▇▇ Spring Bancorp, Inc. ▇▇▇▇▇
Spring Bank ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: R. E. ▇▇▇▇▇▇▇▇▇▇, General Counsel
b. If to the Officer: Hunter ▇. ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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 hereby agrees that it shall be jointly and
severally liable with the Bank for the payment of all amounts due under this
Agreement and shall guarantee the performance of the Bank's obligations
thereunder, provided that Bancorp shall not be required by this Agreement to pay
to the Officer a salary or any bonuses or any other cash payments, except in the
event that the Bank does not fulfill the obligations to the Officer hereunder
for such payments. Bancorp may, however, pay salary and bonuses as deemed
appropriate by its Board in the exercise of its discretion.
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, Bancorp the Bank 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.
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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, and supersedes all prior
agreements other than with respect to such specific plans, programs, or
arrangements.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first set forth above.
▇▇▇▇▇ SPRING BANK
By: /s/ W. ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Title: Chairman
------------------------------------
▇▇▇▇▇ SPRING BANCORP, INC.
By: /s/ W. ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Title: Chairman
------------------------------------
OFFICER
/s/ Hunter ▇. ▇▇▇▇▇▇
-------------------------------------
Hunter ▇. ▇▇▇▇▇▇
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