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Exhibit
10.2
SEVERANCE
AGREEMENT
THIS AMENDED AND RESTATED
AGREEMENT entered into this May 13, 2008 (the
“Effective Date”) by and between The Patapsco
Bank (the “Bank”), and William C. Wiedel, Jr. (the
“Employee”).
WHEREAS, the Employee
has been hired by the Bank as an executive officer; and
WHEREAS, the Bank
deems it to be in its best interest to enter into this Agreement as
incentive to the Employee to continue as an executive employee of
the Bank and to provide the Employee with a level of financial
protection in the event of a Change in Control; 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) 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 2(a) hereof), in connection with or within
twenty-four (24) months after any Change in Control of the
Bank or Patapsco Bancorp, Inc. (the “Company”), the
Employee shall, subject to paragraph (2) of this
Section 1(a), be paid an amount equal to two (2) times the sum
of her base salary and bonus paid in the prior calendar year, but
in no event greater than the difference between (i) the
product of 2.99 times her “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. Subject to Sections 1(a)(2) and
1(a)(3) of this Agreement, 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 l(a)(1) hereof exceed the Maximum Amount,
notwithstanding the payment procedure set forth in Section l(a)(1)
hereof, the Employee shall determine which and how much, if any, of
the parachute payments to which she 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 her determination within ten (10) 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 (5) 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 Patapsco Bancorp, Inc.’s
(the “Company”) 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, Bank, 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 her employment under this Agreement within twenty-four
(24) months following a Change in Control, as defined in
paragraph (a)(4) of this Section 1, and the Employee shall
thereupon be entitled to receive the payment described in
Section 1(a)(1) of this Agreement as a result of 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 her personal residence, or
perform her principal executive functions, more than fifteen
(15) linear miles from her 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
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