Document:

Exhibit10.1

LOAN AND SECURITY MODIFICATION AGREEMENT

This Loan and Security Modification Agreement is entered into as of May 20, 2013 by and between Quantum Fuel Systems Technologies Worldwide, Inc. (the “Borrower”) and Bridge Bank, National Association (“Bank”).

1.DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to, among other documents, a Loan and Security Agreement, dated as of May 7, 2012 by and between Borrower and Bank, as may be amended from time to time (the “Loan and Security Agreement”).  Capitalized terms used without definition herein shall have the meanings assigned to them in the Loan and Security Agreement.   

Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as the "Indebtedness" and the Loan and Security Agreement and any and all other documents executed by Borrower in favor of Bank shall be referred to as the “Existing Documents.”

2.WAIVER. Borrower acknowledges that there are existing and uncured Events of Default arising from Borrower’s failure to comply with Section 6.9(b) for quarters ended June 30, 2012, September 30, 2012,  December 31, 2012 and March 31, 2013 and with Section 6.9(a) for quarter ended March 31, 2013 (collectively, the “Covenant Defaults”). Subject to the conditions contained herein, Bank waives the Covenant Defaults.  Bank does not waive Borrower’s obligations under such section after the date hereof and as amended hereby, and Bank does not waive any other failure by Borrower to perform its Obligations under the Existing Documents.  

		
	3.
	DESCRIPTION OF CHANGE IN TERMS.

		
	A.
	Modification(s) to Loan and Security Agreement:

1.The following definitions in Section 1.1 are added or amended in their entirety to read as follows:
“Borrowing Base” means an amount equal to (i) eighty percent (80%) of Eligible Accounts, as determined by Bank with reference to the most recent Borrowing Base Certificate delivered by Borrower plus (ii) an amount equal to fifty percent (50%) of Eligible Inventory (which shall not exceed forty percent (40%) of the outstanding Advances at any time), as determined by Bank with reference to the most recent Borrowing Base Certificate delivered by Borrower.
“First Amendment Date” means May 20, 2013.
 “Revolving Line” means a credit extension of up to Five Million Dollars ($5,000,000). 
2.    Clause (j) in the defined term “Eligible Accounts” set forth in Section 1.1 is amended and restated in its entirety to read as follows:
(j)    Accounts with respect to an account debtor, including Subsidiaries and Affiliates, whose total obligations to Borrower exceed forty percent (40%) of all Accounts (the “Concentration Limit”), to the extent such obligations exceed the aforementioned percentage, except as approved in writing by Bank;

3.    Section 2.5(a) is amended and restated in its entirety to read as follows:
(a)    Facility Fee.  On the Closing Date, a facility fee equal to $100,000, on the First Amendment Date a fee equal to $20,000, and on the first anniversary of the Closing Date, an renewal fee equal to $50,000, each of which shall be fully earned and nonrefundable; and
4.    Section 2.3(a) is amended and restated in its entirety to read as follows:
(a)     Interest Rates.  Except as set forth in Section 2.3(b), the Advances shall bear interest, on the outstanding Daily Balance thereof, at a rate equal to two percent (2.0%) above the Prime Rate; provided however that if Borrower’s Asset Coverage Ratio measured as of the end of any particular month is less than 1.35:1.00, then the applicable rate for the subsequent month(s) shall be two and one half percent (2.5%) above the Prime Rate.
5.    Section 6.3(a) is amended and restated in its entirety to read as follows:
(a) within 5 days of the 15th and last day of each month, a Borrowing Base Certificate signed by a Responsible Officer in substantially the form of Exhibit C hereto, together with aged listings of accounts receivable and accounts payable, and an Inventory listing;
6.    Section 6.9 is amended and restated in its entirety to read as follows:
6.9    Asset Coverage Ratio.  Borrower shall maintain at all times a ratio of unrestricted cash and cash equivalents maintained at Bank plus Eligible Accounts to all Obligations owing to Bank (the “Asset Coverage Ratio”) of at least 1.25 to 1.00, measured on a monthly basis.
7.    Exhibits C and D are replaced in their entirety with Exhibits C and D attached hereto.
8.    Notwithstanding anything in the Existing Documents to the contrary, Eligible Accounts shall not include any Accounts with respect to which the account debtor is Fisker Automotive; and Eligible Inventory shall not include any Inventory from Fisker Automotive, until such time as Bank approves such inclusion in its sole discretion.
9.    The address for the Borrower in Section 10 is amended to read 25242 Arctic Ocean Drive, Lake Forest, CA 92630, Attn: Brad Timon, Chief Financial Officer, Fax: (949) 399-4567.

1.    CONSISTENT CHANGES.  The Existing Documents are each hereby amended wherever necessary to reflect the changes described above.
2.    NO DEFENSES OF BORROWER/GENERAL RELEASE.  Borrower agrees that, as of this date, it has no defenses against the obligations to pay any amounts under the Indebtedness.  Each of Borrower and its affiliates (each, a “Releasing Party”) acknowledges that Bank would not enter into this Loan and Security Modification Agreement without Releasing Party’s assurance that it has no claims against Bank or any of Bank’s officers, directors, employees or agents.  Except for the obligations arising hereafter under this Loan and Security Modification Agreement, each Releasing Party releases Bank, and each of Bank’s and entity’s officers, directors and employees from any known or unknown claims that Releasing Party now has against 

Bank of any nature, including any claims that Releasing Party, its successors, counsel, and advisors may in the future discover they would have now had if they had known facts not now known to them, whether founded in contract, in tort or pursuant to any other theory of liability, including but not limited to any claims arising out of or related to the Agreement or the transactions contemplated thereby.  Releasing Party waives the provisions of California Civil Code section 1542, which states:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER, MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.
The provisions, waivers and releases set forth in this section are binding upon each Releasing Party and its shareholders, agents, employees, assigns and successors in interest.  The provisions, waivers and releases of this section shall inure to the benefit of Bank and its agents, employees, officers, directors, assigns and successors in interest.  The provisions of this section shall survive payment in full of the Obligations, full performance of all the terms of this Loan and Security Modification Agreement and the Loan and Security Agreement, and/or Bank’s actions to exercise any remedy available under the Loan and Security Agreement or otherwise.
3.    CONTINUING VALIDITY.  Borrower understands and agrees that in modifying the existing Indebtedness, Bank is relying upon Borrower's representations, warranties, and agreements, as set forth in the Existing Documents. Borrower represents and warrants that the representations and warranties contained in the Loan and Security Agreement are true and correct as of the date of this Loan and Security Modification Agreement, except for those representations and warranties that were as of a specific date which remain true and correct as of such earlier date, and that no Event of Default has occurred and is continuing, except for the Covenant Defaults. Except as expressly modified pursuant to this Loan and Security Modification Agreement, the terms of the Existing Documents remain unchanged and in full force and effect.  Bank's agreement to modifications to the existing Indebtedness pursuant to this Loan and Security Modification Agreement in no way shall obligate Bank to make any future modifications to the Indebtedness.  Nothing in this Loan and Security Modification Agreement shall constitute a satisfaction of the Indebtedness.  It is the intention of Bank and Borrower to retain as liable parties all makers and endorsers of Existing Documents, unless the party is expressly released by Bank in writing.  No maker, endorser, or guarantor will be released by virtue of this Loan and Security Modification Agreement.  The terms of this paragraph apply not only to this Loan and Security Modification Agreement, but also to any subsequent loan and security modification agreements.
4.    REFERENCE PROVISION.
(a)    In the event the jury trial waiver set forth in Section 11 of the Loan and Security Agreement is not enforceable, the parties elect to proceed under this judicial reference provision.

(b)    With the exception of the items specified in subsection (c) below, any controversy, dispute or claim (each, a “Claim”) between the parties arising out of or relating to this Loan and Security Modification Agreement, the Loan and Security Agreement, or any other document, instrument or agreement existing or hereinafter entered into by the undersigned parties (collectively in this Section, the “Loan Documents”), will be resolved by a reference proceeding in California in accordance with the provisions of Sections 638 et seq. of the California Code of Civil Procedure (“CCP”), or their successor sections, which shall constitute the exclusive remedy for the resolution of any Claim, including whether the Claim is subject to the reference proceeding. Except as otherwise provided in the Loan Documents, venue for the reference proceeding will be in the state or federal court in the county or district where the real property involved in the action, if any, is located or in the state or federal court in the county or district where venue is otherwise appropriate under applicable law (the “Court”).

(c)    The matters that shall not be subject to a reference are the following: (i) nonjudicial foreclosure of any security interests in real or personal property, (ii) exercise of self-help remedies (including, without limitation, set-off), (iii) appointment of a receiver and (iv) temporary, provisional or ancillary remedies (including, without limitation, writs of attachment, writs of possession, temporary restraining orders or preliminary injunctions). This reference provision does not limit the right of any party to exercise or oppose any of the rights and remedies described in clauses (i) and (ii) or to seek or oppose from a court of competent jurisdiction any of the items described in clauses (iii) and (iv). The exercise of, or opposition to, any of those items does not waive the right of any party to a reference pursuant to this reference provision as provided herein.

(d)    The referee shall be a retired judge or justice selected by mutual written agreement of the parties. If the parties do not agree within ten (10) days of a written request to do so by any party, then, upon request of any party, the referee shall be selected by the Presiding Judge of the Court (or his or her representative). A request for appointment of a referee may be heard on an ex parte or expedited basis, and the parties agree that irreparable harm would result if ex parte relief is not granted.  Pursuant to CCP § 170.6, each party shall have one peremptory challenge to the referee selected by the Presiding Judge of the Court (or his or her representative).

(e)    The parties agree that time is of the essence in conducting the reference proceedings. Accordingly, the referee shall be requested, subject to change in the time periods specified herein for good cause shown, to (i) set the matter for a status and trial-setting conference within fifteen (15) days after the date of selection of the referee, (ii) if practicable, try all issues of law or fact within one hundred twenty (120) days after the date of the conference and (iii) report a statement of decision within twenty (20) days after the matter has been submitted for decision.  

(f)    The referee will have power to expand or limit the amount and duration of discovery.  The referee may set or extend discovery deadlines or cutoffs for good cause, including a party’s failure to provide requested discovery for any reason whatsoever.  Unless otherwise ordered based upon good cause shown, no party shall be entitled to “priority” in conducting discovery, depositions may be taken by either party upon seven (7) days written notice, and all other discovery shall be responded to within fifteen (15) days after service.  All disputes relating to discovery which cannot be resolved by the parties shall be submitted to the referee whose decision shall be final and binding.

(g)    Except as expressly set forth herein, the referee shall determine the manner in which the reference proceeding is conducted including the time and place of hearings, the order of presentation of evidence, and all other questions that arise with respect to the course of the reference proceeding.  All proceedings and hearings conducted before the referee, except for trial, shall be conducted without a court reporter, except that when any party so requests, a court reporter will be used at any hearing conducted before the referee, and the referee will be provided a courtesy copy of the transcript.  The party making such a request shall have the obligation to arrange for and pay the court reporter.  Subject to the referee’s power to award costs to the prevailing party, the parties will equally share the cost of the referee and the court reporter at trial.

(h)    The referee shall be required to determine all issues in accordance with existing case law and the statutory laws of the State of California.  The rules of evidence applicable to proceedings at law in the State of California will be applicable to the reference proceeding.  The referee shall be empowered to enter equitable as well as legal relief, enter equitable orders that will be binding on the parties and rule on any motion which would be authorized in a court proceeding, including without limitation motions for summary judgment or summary adjudication. The referee shall issue a decision at the close of the reference proceeding which disposes of all claims of the parties that are the subject of the reference.  Pursuant to CCP § 644, such decision shall be entered by the Court as a judgment or an order in the same manner as if the action had been tried by the Court and any such decision will be final, binding and conclusive.  The parties reserve the right to appeal from the final judgment or order or from any appealable decision or order entered by the referee.  The parties reserve the right to findings of fact, conclusions of laws, a written statement of decision, and the right to move 

for a new trial or a different judgment, which new trial, if granted, is also to be a reference proceeding under this provision.  

(i)    If the enabling legislation which provides for appointment of a referee is repealed (and no successor statute is enacted), any dispute between the parties that would otherwise be determined by reference procedure will be resolved and determined by arbitration.  The arbitration will be conducted by a retired judge or justice, in accordance with the California Arbitration Act §1280 through §1294.2 of the CCP as amended from time to time.  The limitations with respect to discovery set forth above shall apply to any such arbitration proceeding.

(j)    THE PARTIES RECOGNIZE AND AGREE THAT ALL CONTROVERSIES, DISPUTES AND CLAIMS RESOLVED UNDER THIS REFERENCE PROVISION WILL BE DECIDED BY A REFEREE AND NOT BY A JURY.  AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS, HIS OR HER OWN CHOICE, EACH PARTY KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES, AGREES THAT THIS REFERENCE PROVISION WILL APPLY TO ANY CONTROVERSY, DISPUTE OR CLAIM BETWEEN OR AMONG THEM ARISING OUT OF OR IN ANY WAY RELATED TO, THIS LOAN AND SECURITY MODIFICATION AGREEMENT OR THE OTHER LOAN DOCUMENTS.

5.    CONDITIONS.  As a condition to the effectiveness of this Loan and Security Modification Agreement, Bank shall have received, in form and substance satisfactory to Bank, the following:
(a)    the fee payable pursuant to Section 2.5, plus an amount equal to all Bank Expenses incurred through the date hereof; 
(b)    a warrant to purchase up to 100,000 shares of the Common Stock of Borrower, Quantum Fuel Systems Technologies Worldwide, Inc. in the form attached hereto as Exhibit 1;
(c)    evidence of Borrower’s receipt of at least $2,500,000 in cash proceeds from the sale and issuance of its equity securities;
(d)    corporate resolutions and incumbency certificate; and
(e)    such other documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate.
[SIGNATURE PAGE FOLLOWS]

6.    COUNTERSIGNATURE.  This Loan and Security Modification Agreement shall become effective only when executed by Bank and Borrower.
BORROWER:                    BANK:

QUANTUM FUEL SYSTEMS TECHNOLOGIES     BRIDGE BANK, NATIONAL ASSOCIATION
WORDLWIDE, INC.            

By:      _/s/ Bradley Timon_______________        By:      /s/ Dan Pistone___________________

Name: _Bradley Timon_________________        Name: _Dan Pistone____________________

Title:   _CFO__________________________        Title:   _Senior Vice President_____________

EXHIBIT C	
																					
	BORROWING BASE CERTIFICATE

	BRIDGE BANK

	55 Almaden Boulevard, San Jose, CA 95113

	 
	 
	 
	 
	 
	 
	 

	COMPANY: QUANTUM FUEL SYSTEMS TECHNOLOGIES WORLDWIDE, INC.

	 
	 
	 
	 
	 
	 
	 

	ACCOUNTS RECEIVABLE BORROWING BASE CALCULATION:
	 
	As of Date:
	 

	 
	 
	 
	 
	 
	 
	 

	1.
	Add: Accounts Receivable Aged Current to 30 Days
	 
	 
	 
	$
	0
	 
	 

	2.
	Add: Accounts Receivable Aged 31 to 60 Days
	 
	 
	 
	$
	0
	 
	 

	3.
	Add: Accounts Receivable Aged 61 to 90 Days
	 
	 
	 
	$
	0
	 
	 

	4.
	Add: Accounts Receivable Aged 91 Days and Over
	 
	 
	 
	$
	0
	 
	 

	 
	 
	 
	 
	 
	 
	 

	5.
	GROSS ACCOUNTS RECEIVABLE
	 
	 
	 
	 
	$
	0
	 

	 
	 
	 
	 
	 
	 
	 

	6.
	Less: Accounts Receivable Aged over
	90
	 
	days
	 
	$
	0
	 
	 

	7.
	Less: Foreign Receivables (Net of > 90s)
	 
	 
	 
	$
	0
	 
	 

	8.
	Less: U.S. Government Receivables (Net of > 90s)
	 
	 
	 
	$
	0
	 
	 

	9.
	Less: Affiliate or Related Accounts Receivables (Net of > 90s)
	 
	 
	 
	$
	0
	 
	 

	10.
	Less: Account concentration in excess of
	40
	%
	$
	0
	 
	 
	$
	0
	 
	 

	11.
	Less: Cross Aging
	35
	%
	 
	 
	$
	0
	 
	 

	12.
	Less: Contra Accounts
	 
	 
	 
	$
	0
	 
	 

	13.
	Less: Over 90 day A/R credits
	 
	 
	 
	$
	0
	 
	 

	14.
	Less: Other Ineligible Accounts (prebillings, progress billings, retention billings, bill & hold, Fisker Automotive, etc.)
	 
	 
	 
	$
	0
	 
	 

	15.
	Add: Lines 6 through 14 - Total Ineligible Accounts
	 
	 
	 
	$
	0
	 
	 

	16.
	NET ELIGIBLE ACCOUNTS RECEIVABLE
	 
	 
	 
	 
	$
	0
	 

	17.
	Account Receivable Advance Rate
	 
	 
	 
	 
	80
	%

	18.
	ELIGIBLE ACCOUNTS RECEIVABLE BORROWING BASE
	 
	 
	 
	 
	$
	0
	 

	19.
	TOTAL INVENTORY
	 
	 
	 
	$
	0
	 
	 

	20.
	Less: Ineligible Inventory (including Fisker Automotive)
	 
	 
	 
	$
	0
	 
	 

	21.
	Net Eligible Inventory
	 
	 
	 
	 
	$
	0
	 

	22.
	Eligible Inventory Advance Rate
	50%
	 
	 
	 
	 

	23.
	The lesser of 50% of Eligible Inventory or 40% of #22
	 
	 
	 
	$
	0
	 
	 

	24.
	MAXIMUM AVAILABLE LINE OF CREDIT
	 
	$
	5,000,000
	 
	 
	 
	 

	25.
	TOTAL FUNDS AVAILABLE (the lesser of #18 + #23 or #24)
	 
	 
	 
	 
	$
	0
	 

	26.
	Less: Outstanding Loan Balance
	 
	 
	 
	 
	$
	0
	 

	27.
	Less: International Sublimit Amounts
	 
	 
	 
	 
	$
	0
	 

	28.
	Less: Cash Management Services Amounts
	 
	 
	 
	 
	$
	0
	 

	29.
	AVAILABLE FOR DRAW/NEED TO PAY
	 
	 
	 
	 
	$
	0
	 

	 
	 
	 
	 
	 
	 
	 

	If line #29 is a negative number, this amount must be remitted to the Bank immediately to bring loan balance into compliance. By signing this form you authorize the bank to deduct any advance amounts directly from the company's checking account at Bridge Bank in the event there is an Overadvance.

	 
	 
	 
	 
	 
	 
	 

	The undersigned represents and warrants that the foregoing is true, complete and correct, and that the information reflected in this Borrowing Base Certificate complies with the representations and warranties set forth in the Loan and Security Agreement between the undersigned and Bridge Bank, National Association.
	 

	 
	 

	 
	 
	 
	Date:
	 
	 
	 
	 

	 
	Prepared By:
	 
	 
	 
	 
	 
	 

	 
	 
	 
	Date:
	 
	 
	 
	 

	 
	Bank Reviewed:
	 
	 
	 
	 
	 
	 

EXHIBIT D
COMPLIANCE CERTIFICATE
		
	TO:
	BRIDGE BANK, NATIONAL ASSOCIATION

		
	FROM:
	QUANTUM FUEL SYSTEMS TECHNOLOGIES WORLDWIDE, INC.

The undersigned authorized officer of Quantum Fuel Systems Technologies Worldwide, Inc. hereby certifies that in accordance with the terms and conditions of the Loan and Security Agreement between Borrower and Bank (the “Agreement”), (i) Borrower is in complete compliance for the period ending _______________ with all required covenants except as noted below and (ii) all representations and warranties of Borrower stated in the Agreement are true and correct as of the date hereof. Attached herewith are the required documents supporting the above certification. The Officer further certifies that these are prepared in accordance with Generally Accepted Accounting Principles (GAAP) and are consistently applied from one period to the next except as explained in an accompanying letter or footnotes.
Please indicate compliance status by circling Yes/No under “Complies” column.

	
							
	Reporting Covenant
	Required
	Complies

	 
	 
	 
	 

	Annual financial statements (CPA Audited)
	FYE within 95 days
	Yes
	No

	Monthly financial statements and Compliance Certificate
	Monthly within 30 days of first 2 months of each quarter
	Yes
	No

	Monthly financial statements and Compliance Certificate
	Monthly within 45 days of the third month of each quarter
	Yes
	No

	Federal Tax Returns (CPA prepared)
	Within 30 days of filing
	 
	 

	Annual operating budget, sales projections and operating plans approved by board of directors
	Annually no later than 30 days prior to the beginning of each fiscal year
	Yes
	No

	A/R & A/P Agings, Inventory Listing, and Borrowing Base Certificate
	Within 5 days of the 15th and last day of each month
	Yes
	No

	A/R Audit
	Initial and Semi-Annual
	Yes
	No

	10K and 10Q
	(as applicable)
	Yes
	No

	 
	 
	 
	 

	Deposit balances with Bank
	$ ___________________
	 
	 

	Deposit balance outside Bank (including all petty cash accounts)
	$ ___________________
	 
	 

	 
	 
	 
	 

	Financial Covenant
	Required
	Actual
	Complies

	 
	 
	 
	 
	 

	Minimum Asset Coverage Ratio
	1.25 : 1.00
	_____:1.00
	Yes
	No

	 
	 
	 
	 
	 

	Comments Regarding Exceptions: See Attached.
	BANK USE ONLY

	 
	 

	 
	Received by:    

	Sincerely,
	AUTHORIZED SIGNER

	 
	 

	 
	Date:    

	 
	 

	 
	 

	___________________________________________
	Verified:    

	SIGNATURE
	AUTHORIZED SIGNER

	 
	 

	___________________________________________
	Date:    

	TITLE
	 

	 
	Compliance Status
	Yes          No

	___________________________________________
	 

	DATE
	 

EXHIBIT 1

FORM OF WARRANTexh_101.htm

Exhibit 10.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of May 22, 2013 by and between Edward Schneider, a resident of the State of Maryland (“Employee”), and Bay Bank, FSB, a federally chartered savings bank (“Employer”).

 

WITNESSETH:

 

WHEREAS, Employer and Employee each deem it necessary and desirable, for their mutual protection, to execute a written document setting forth the terms and conditions of their employment relationship.

 

NOW, THEREFORE, in consideration of the employment of Employee by Employer, of the premises and the mutual promises and covenants contained herein, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

 

1. Employment and Duties. Employer hereby employs Employee to serve as a Chief Financial Officer (“CFO”)/Executive Vice President of Employer and to perform such duties and responsibilities as are customarily performed by persons acting in such capacity.  Employee acknowledges and agrees that as the CFO of Employer, Employee’s duties shall include, but shall not be limited to, being responsible for the maintaining all of the Employer’s fiscal operating results utilizing generally accepted accounting principles, such as cost accounting, budgets, regulatory agency and government reports; ensuring the safeguard of Employer’s assets, counseling senior management on fiscal control and profitability; preparing, presenting and interpreting financial reports to senior management; adhering to tax laws and regulatory compliance to properly reflect the financial position of the Employer; directing accounting department activities; providing 

 

  

  

  

leadership, training and supervision within the department; assisting in attaining established Bank and department financial goals, which, shall hereafter be referred to collectively as the “Duties”. During the term of this Agreement, Employee will devote Employee’s full time and effort to performing the Duties. Employee shall perform the Duties at one of the following locations, as specified by the Employer from time to time, or such other office in the Greater Baltimore region as the Employer may establish from time to time: 2328 West Joppa Road, Lutherville, Maryland 20193 (the “Headquarters Office”) or 7151 Columbia Gateway Drive, Columbia, Maryland 21046 (the “Operations Center”). Employee shall report to the Chief Executive Officer of Employer.

 

2. Term. Subject to termination pursuant to the provisions of Section 12 of this Agreement, Employee’s employment under this Agreement shall be deemed to commence on May 13, 2013 (the “Commencement Date”) and shall continue until the first anniversary thereof. The period of employment shall be automatically extended for additional one-year terms on each anniversary, commencing on the first anniversary of the Commencement Date and each one-year anniversary thereafter; provided, that each such extension is reviewed and approved by the Board of Directors of the Employer prior to the commencement of each applicable extension period. Notwithstanding the foregoing, in no case shall any extension occur if either party, no later than 90 days prior to any said anniversary, delivers written notice to the other of its intention that this Agreement shall not be so extended.

 

3. Compensation. For all services to be rendered by Employee during the term of this Agreement, Employer shall pay Employee in accordance with the terms set forth in Exhibit A, net of applicable withholdings, payable in semi-monthly installments or such other compensation payment schedule as may be adopted by Employer for its full time Employees. Subject to conformance with regulatory guidance and in addition to Employee’s base salary, 

 

  

  

  

Employer also may pay Employee an annual performance-based bonus in an amount and with relevant qualifying criteria to be determined by Employer’s Board of Directors in its sole discretion.

 

4. Expenses. As long as Employee is employed hereunder, Employee is entitled to receive reimbursement for, or seek payment directly by Employer of, all reasonable expenses which are consistent with the normal policy of Employer in the performance of Employee’s duties hereunder, provided that Employee accounts for such expenses in writing.

 

5. Employee Benefits. As long as Employee is employed hereunder, Employee shall be entitled to participate in the various employee benefit programs adopted by Employer from time to time that are available generally to executive officers of the Employer.

 

6. Vacation. Employee shall be entitled to vacation/leave as outlined in Exhibit A.

 

7. Confidentiality. In Employee’s position as an employee of Employer, Employee has had and will have access to Confidential Information (as hereinafter defined), Trade Secrets (as hereinafter defined) and other proprietary information of vital importance to Employer and has and will also develop relationships with customers, employees and others who deal with Employer which are of value to Employer. Employer requires, as a condition to Employee’s employment with Employer, that Employee agree to certain restrictions on Employee’s use of the Confidential Information, Trade Secrets, and the proprietary information and valuable relationships developed during Employee’s employment with Employer. In consideration of the terms and conditions contained herein, the parties hereby agree as follows:

 

7.1           Employer and Employee mutually agree and acknowledge that Employer may entrust Employee with highly sensitive, confidential, restricted and proprietary information concerning various Business Opportunities (as hereinafter defined), customer lists, and personnel matters. Employee acknowledges that Employee shall bear a fiduciary responsibility to Employer to 

 

  

  

  

protect such information from use or disclosure that is not necessary for the performance of the Duties hereunder, as an essential incident of Employee’s employment with Employer.

 

7.2           For the purposes of this Section 7, the following definitions shall apply:

 

7.2.1 “Trade Secret” shall mean the identity and addresses of customers of Employer and any other information, without regard to form, including, but not limited to, any technical or nontechnical data, any formula, pattern, compilation, program, device, method, technique, drawing, process, financial data, financial plans, and product plans, that (1) is valuable and secret (in the sense that it is not generally known by or available to competitors of Employer) and (ii) otherwise qualifies as a “trade secret” under Maryland law pursuant to the Maryland Trade Secrets Act of 1990, as amended.

 

7.2.2 “Confidential Information” shall mean all “non-public Personal Information,” as defined in Title V of The Gramm-Leach-Bliley Act (15 U.S.C. Section 680, et seq.) and its implementing regulations (collectively, the “GLB Act”) that concerns any of the Employer’s “customers and/or consumers”, as defined by the GLB Act, and any data or information, other than Trade Secrets, which is material to Employer and not generally known by or available to the public. Confidential Information shall include, but not be limited to, Business Opportunities (as hereinafter defined) of Employer, the details of this Agreement, Employer’s business plans and financial statements and projections, information as to the capabilities of Employer’s employees, their respective salaries and benefits and any other terms of their employment and the costs of the services Employer may offer or provide to the customers it serves, and any list of actual or potential customers, to the extent such information is material to Employer and not generally known by or available to the public.

 

7.2.3  “Business Opportunities” shall mean any specialized information or plans of Employer not disclosed or available to the public concerning the provision of financial services to the public, together with all related information concerning the specifics of any contemplated 

 

  

  

  

financial services regardless of whether Employer has contacted or communicated with such target person or business.

 

7.2.4 Notwithstanding the definitions of Trade Secrets, Confidential Information, and Business Opportunities set forth above, Trade Secrets, Confidential Information, and Business Opportunities shall not include any information:

 

(i) that is or becomes generally known by or available to the public, not in violation of this Agreement;

 

(ii) that is already known by Employee or is developed by Employee after termination of employment through entirely independent efforts;

 

(iii) that Employee obtains from an independent source having a bona fide right to use and disclose such information;

 

(iv) that is required to be disclosed by law, except to the extent eligible for special treatment under an appropriate protective order; or

 

(v) that Employer’s Board of Directors approves for release.

 

7.3          Employee shall not, without the prior approval of Employer’s Board of Directors, during Employee’s employment with Employer and for so long thereafter as the information or data remains Trade Secrets, use or disclose, or permit any unauthorized person who is not an employee of Employer to use, disclose, or gain access to, any Trade Secrets.

 

7.4          Employee shall not, without the prior written consent of Employer, during his employment with Employer and for a period of two years thereafter or as long as the information or data remains competitively sensitive, whichever is longer, use or disclose, or permit any unauthorized person who is not employed by Employer to use, disclose, or gain access to, any Confidential Information, except as provided in Section 7.2 of this Agreement.

 

  

  

  

8. Observance of Security Measures. During Employee’s employment with Employer, Employee is required to observe all security measures adopted to protect Trade Secrets, Confidential Information and Business Opportunities.

 

9. Return of Materials. Upon the request of Employer and, in any event, upon the termination of his employment with Employer, Employee shall deliver to Employer all memoranda, notes, records, manuals or other documents, including all copies of such materials containing Trade Secrets or Confidential Information, whether made or compiled by Employee or furnished to him from any source by virtue of his employment with Employer.

 

10. Severability. Employee acknowledges and agrees that the covenants contained in Sections 7 through 9 and Section 14 of this Agreement shall be construed as covenants independent of one another and distinct from the remaining terms and conditions of this Agreement, and severable from every other contract and course of business by and between Employer and Employee, and that the existence of any claim, suit or action by Employee against Employer, whether predicated upon this Agreement or any other agreement, shall not constitute a defense to Employer’s enforcement of any covenant contained in Sections 7 through 9 and Section 14 of this Agreement.

 

11. Specific Performance. Employee acknowledges and agrees that the covenants contained in Sections 7 through 9 and Section 14 of this Agreement shall survive any termination of employment, as applicable, with or without Cause (as hereinafter defined in section 12.2), at the instigation or upon the initiative of any party. Employee further acknowledges and agrees that the ascertainment of damages in the event of Employee’s breach of any covenant contained in Sections 7 through 9 and Section 14 of this Agreement would be difficult, if at all possible. Employee, therefore, acknowledges and agrees that Employer shall be entitled, in addition to and not in limitation of any other rights, remedies, or damages available to Employer in arbitration, at law or in equity, upon 

 

  

  

  

submitting whatever affidavit the law may require, and posting any necessary bond, to have a court of competent jurisdiction enjoin Employee from committing any such breach.

 

12. Termination.

 

12.1. During the term of this Agreement, Employee’s employment, including without limitation, all compensation, salary, expense reimbursement, and employee benefits, may be terminated (i) at the election of Employer for Cause (as defined in Section 12.2 hereof) or without Cause, upon Employer’s delivery of notice of either to Employee; (ii) at the election of Employee for Good Reason, as defined in Section 12.7 hereof, or without Good Reason, upon Employee’s delivery of notice of either to Employer; (iii) upon Employee’s death; or (iv) at the election of either party, upon Employee’s disability resulting in an inability to perform the Duties described in Section 1 of this Agreement for a period of 180 consecutive days, upon either party’s delivery of notice of such election thereafter to the other party.

 

12.2. As used in this Agreement, “Cause” shall mean (i) conduct by Employee that amounts to fraud, personal dishonesty, incompetence, breach of fiduciary duty involving personal profit, gross negligence or willful misconduct in the performance of or intentional failure to perform his stated Duties; (ii) the conviction (from which no appeal may be, or is, timely taken) of Employee of a felony or willful violation of any law, rule or regulation (other than traffic violations or similar offenses); (iii) any federal or state regulatory authorities acting under lawful authority pursuant to provisions of federal or state law or regulation which may be in effect from time to time exercises any power granted to it by law or regulation to remove, prohibit or suspend Employee from participating in the conduct of Employer’s affairs; (iv) willful violation of any final cease-and-desist order; (v) knowing violation of federal or state banking laws or regulations which are likely to have a material adverse effect on Employer, as determined by the Board of Directors or CEO; (vi) refusal to perform timely a reasonable and 

 

  

  

  

duly authorized directive of Employer’s Board of Directors or CEO clearly communicated to Employee by the Board of Directors or CEO that is consistent with the scope of Employee’s duties under this Agreement unless Employee in good faith believes that such act would cause Employee to breach his fiduciary duties to Employer or that such act would be in violation of any federal or state law or regulation; (vii) or material breach of any provision of this Agreement.

 

12.3. Employer, with the approval of a majority Employer’s Board of Directors, may terminate the Employee’s employment at any time.

 

12.4 If this Agreement is terminated by Employer for Cause, Employee shall receive no further compensation or benefits other than all accrued but unpaid compensation and benefits through the effective date of such termination. Employer shall pay the foregoing amount in a lump-sum payment within five (5) business days after the effective date of such termination.  For the avoidance of doubt, the term “benefits” as used in this Section 12 shall not include accrued but unused vacation.

 

12.5 If this Agreement is terminated either pursuant to Employee’s death or Employee’s disability, Employee shall receive no further compensation or benefits other than: (a) all accrued but unpaid compensation and benefits through the effective date of such termination, and (b) any accrued but unused vacation computed on a daily basis. Employer shall pay the amounts described in items (a) and (b) to Employee or Employee’s estate, in the event of death, in a lump-sum payment within ten (10) business days of the date of such termination or notice of such termination, whichever is later.

 

12.6 If Employee is terminated by Employer without Cause pursuant to Section 12.1(i), other than upon Employee’s death or disability, or if Employee’s employment is terminated by Employee for Good Reason (as defined in Section 12.7), Employee shall be 

 

  

  

  

entitled to payment of severance (“Severance”) from Employer of any accrued but unpaid compensation and accrued but unused vacation time, which shall be payable in a in lump sum cash payment, and, subject to Section 12.12, an amount equal to six (6) months of Employee’s then current base salary, payable in six (6) equal monthly payments commencing two (2) weeks after the date that the Release described in Section 12.8 hereof becomes effective and irrevocable, in accordance with Employer’s regular payroll procedures.

 

12.7 As used in this Agreement, “Good Reason” shall mean the satisfaction of all the requirements of subsections 12.7.1 and 12.7.2, below.

 

12.7.1 Subject to the satisfaction of subsection 12.7.2, below, the facts and circumstances that shall constitute Good Reason are as follows: (i) without Employee’s consent, Employer reduces or fails to pay Employee’s then current Base Salary, (ii) without Employee’s consent, Employer reduces or fails to pay Employee’s then current Board approved, earned performance-based compensation in accordance herewith, (iii) Employer reduces or diminishes or fails to provide or pay (excluding premium adjustments and changes generally applicable to employees of Employer) Employee’s then current benefits (which are in addition to Employee’s Base Salary and performance-based compensation) (including those described on Exhibit A, other than as part of a reduction in benefits applicable to all executive officers or employees of Employer), (iv) without Employee’s consent, Employer materially diminishes Employee’s then current title and authorities, (v) without Employee’s consent, Employer materially changes Employee’s then current primary Duties, (vi) without Employee’s consent, Employer requires Employee to report to anyone other than Employer’s Chief Executive Officer, another Executive Officer, or the Employer’s Board of Directors, or that of an affiliate of Employer, (vii) changes Employee’s primary place of work by more than forty-five (45) miles from the Employee’s most 

 

  

  

  

recent primary place of work under this Agreement,  or (viii) Employer breaches any material provision of this Agreement.

 

12.7.2. The Employee shall have given the Employer written notice within 30 days of his knowledge or reason to know of the existence of any fact or circumstance constituting Good Reason as described in subsection 12.7.1 above, and the Employer shall failed to cure or eliminate such fact(s) or circumstance(s) within 30 days of its receipt of such notice.

 

12.8. Employer’s obligation to pay any Severance as provided in this Section 12 will not apply unless Employee (i) has been terminated as, or resigns as, an officer of Employer and Employer’s affiliates, if any, to the extent each is applicable, (ii) has returned all Employer property and (iii) signs and does not revoke a general release of claims (in a form prescribed by Employer) of all known and unknown claims that Employee may then have against Employer or persons affiliated with Employer (the “Release”) and provided that such Release becomes effective and irrevocable no later than sixty (60) days following the termination date (such deadline, the “Release Deadline”). If the Release does not become effective and irrevocable by the Release Deadline and clauses (i) and (ii) above are not satisfied, Employee will forfeit any rights to severance under this Section 12. In no event will severance payments be paid or provided until the Release becomes effective and irrevocable. The Release shall cover all claims, known or unknown, relating to Employee’s employment, including without limitation any claims for discrimination or the Employer’s breach of this Agreement. The Release shall exclude any claims with respect to any issued capital stock of Employer and any vested stock options (to the extent that such stock options by their terms expressly survive the termination of employment), and any Severance, benefits and other post-employment obligations of the Employer as contemplated by this Section 12. Severance payments shall be subject to withholding, as applicable.

 

  

  

  

12.9. In the event Employee is terminated pursuant to Section 15.8 of this Agreement, Employee shall be entitled to receive only the compensation and benefits set forth in Section 15.8.

 

12.10. Notwithstanding any provisions hereof to the contrary, if there occurs a Change in Control (as defined herein) of the Employer and, within one hundred eighty (180) days after the date of the closing of the transaction effecting such Change in Control, Employer terminates Employee’s employment without Cause and not upon Employee’s death or disability, or Employee terminates Employee’s employment for Good Reason, Employer shall pay Employee a lump sum cash payment (the “Change in Control Payment”) in an amount equal to one hundred percent (100%) of the Employee’s then current base salary. This payment shall be paid to Employee by the Employer after the delivery of such notice of termination and within two (2) weeks after the date the Release described in Section 12.8 hereof becomes effective and irrevocable.  As used in this Section, “Change in Control” shall mean:

 

12.10.1. any transaction, whether by merger, consolidation, asset sale, tender offer, reverse stock split, or otherwise, which results in the acquisition or beneficial ownership (as such term is defined under rules and regulations promulgated under the Securities Exchange Act of 1934, as amended) by any person or entity or any group of persons or entities acting in concert, of 50% or more of the outstanding shares of common stock of Employer;

 

12.10.2. the sale of all or substantially all of the assets of the Employer; or

 

12.10.3. the liquidation of the Employer.

 

In addition to the Change in Control Payment under the circumstances described in this Section, Employee may be entitled to accelerated vesting of unvested stock options in accordance with any stock option plan of Employer then in effect, with any such accelerated vesting to be governed by the terms of any such stock option plan.

 

  

  

  

12.11. Notwithstanding anything contained herein to the contrary, (a) Employer’s decision not to renew this Agreement at the end of its then-current term shall not be deemed a termination of employment by Employer other than for Cause and (b) Employee’s decision not to renew this Agreement at the end of its then-current term shall not be deemed a termination of employment by Employee for Good Reason, and, in either such case, Employee shall be entitled only to payment from Employer of all accrued but unpaid compensation and accrued but unused vacation time in lump sum within two (2) weeks after the date of termination, in accordance with Employer’s regular payroll procedures.

 

12.12. 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. § 1828(k) and Federal Deposit Insurance Corporation (FDIC) regulations 12 C.F.R. Part 359, Golden Parachute and Indemnification Payments.  In addition, if a payment obligation under this Agreement arises on account of the termination of Employee’s employment while Employee is a “specified employee” (as defined under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and determined in good faith by Employer), any payment of “deferred compensation” (as defined in Treasury Regulation Section 1.409A-1(b)(1), after giving effect to the exemptions in Treasury Regulation Sections 1.409A-1(b)(3) through (b)(12)) that is scheduled to be paid within six (6) months after such termination of employment shall be paid in a lump sum within 15 days after the later of:  (a) the end of the six-month period beginning on the date of such termination of employment; or (b) the date that is 18 months after the Effective Date.  If the Employee dies prior to the date payments are required to commence in accordance with the previous sentence, then payment shall be made in a lump sum within 15 days after the appointment of the personal representative or executor of Employee’s estate following his death.

 

  

  

  

12.13. Notwithstanding anything in this Agreement to the contrary, this Agreement, and the rights and obligations of the parties hereto, shall be subject to the following:

 

12.13.1. If the Employee is suspended and/or temporarily prohibited from participating in the conduct of the Employer’s affairs by a notice served under section 8(e)(3) or (g)(1) of Federal Deposit Insurance Act (12 U.S.C. 1818 (e)(3) and (g)(1)) the Employer’s obligations under this Agreement shall be suspended as of the date of service unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Employer may in its discretion (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.

 

12.13.2. If the Employee is removed and/or permanently prohibited from participating in the conduct of the Employer’s affairs by an order issued under section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818 (e)(4) or (g)(1)), all obligations of the Employer under this Agreement shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected.

 

12.13.3. If the Employer is in default (as defined in section 3(x)(1) of the Federal Deposit Insurance Act), all obligations under this Agreement shall terminate as of the date of default, but this paragraph (c) shall not affect any vested rights of the contracting parties:

 

12.13.4. All obligations under this Agreement shall be terminated, except to the extent determined that continuation of the Agreement is necessary for the continued operation of the Employer:

 

(a)           By the Director or his or her designee, at the time the Federal Deposit Insurance Corporation enters into an agreement to provide assistance to or on behalf of the association under the authority contained in 13(c) of the Federal Deposit Insurance Act; or

 

  

  

  

(b)           By the Director or his or her designee, at the time the Director or his or her designee approves a supervisory merger to resolve problems related to operation of the association or when the association is determined by the Director to be in an unsafe or unsound condition.

 

Provided, however, that any rights of the parties that have already vested shall not be affected by such action.

 

13. Notices. Any notice or other communication required or permitted to be given shall be in writing and addressed to the respective party as set forth below. Notices shall be effective when actually delivered by any commercially reasonable means, provided that if such delivery occurs on any day other than a business day or after the close of business on any business day, the same shall be effective on the next business day. Further, notices sent by certified or registered mail, return receipt requested, or by nationally recognized express courier service, shall be effective on the earlier of (i) actual delivery or (ii) refusal to accept delivery or on failure of delivery because the recipient address is not open to receive deliveries between 9:00 am and 5:00 pm on any business day. Notices sent by telecopy or other electronic means shall be effective only if also sent by nationally recognized express courier service for delivery on the next business day. Notices shall be addressed as follows:

	 	
Employer: 

	
Kevin B. Cashen

Bay Bank, FSB

2328 West Joppa Road, Suite 325

Lutherville, Md. 21093

	 	
Employee: 

	
Edward Schneider

9 Scottsdale Court

Lutherville, Md. 21093

14. Covenant Not to Solicit and Not to Hire.

 

  

  

  

14.1. During the term of this Agreement and for a period of one (1) year after termination of Employee’s employment, whether such termination is initiated by Employer or Employee, Employee will not, directly or indirectly, on Employee’s behalf or on behalf of any other person or entity, solicit for the purpose of providing any product or service to any existing customer of the Employer. For purposes of this paragraph, Employee shall not be deemed to be soliciting a customer of the Employer if the activities are limited to generic marketing activities to be directed to a broad segment of the general public, even though such marketing activities could result in solicitations being received by a customer of the Employer.

 

14.2. During the term of this Agreement and for a period of one (1) year after termination of Employee’s employment, whether such terminated is initiated by Employer or Employee, Employee will not enter into, and will not participate in, any plan or arrangement to cause any employee of Employer to terminate his or her employment with Employer nor will Employee solicit any employee who has terminated their employment with the Employer after such termination date in connection with any business initiated by Employee or any other person, or entity. Employee further agrees that information as to the capabilities of Employer’s employees, their salaries and benefits, and any other terms of their employment are Confidential Information and proprietary to Employer.

 

15. Miscellaneous.

 

15.1. This Agreement, together with Exhibit A, constitutes and expresses the whole agreement of the parties in reference to the employment of Employee by Employer, and there are no representations, inducements, promises, agreements, arrangements, or undertakings oral or written, between the parties other than those set forth herein.

 

15.2. This Agreement shall be governed by the laws of the State of Maryland.

 

  

  

  

15.3. Should any clause or any other provision of this Agreement be determined to be void or unenforceable for any reason, such determination shall not affect the validity or enforceability of any clause or provision of this Agreement, all of which shall remain in full force and effect.

 

15.4. Time is of the essence in this Agreement.

 

15.5. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors and assigns. This Agreement shall not be assignable by Employee.

 

15.6. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which taken together shall constitute but a single instrument.

 

15.7. Employee represents and warrants that no restrictions or covenants exist which would restrict or prohibit his performance hereunder.

 

15.8. Upon acceptance by all parties, this Agreement shall be contingent upon a work history, criminal and academic background check of Employee by Employer and appropriate banking regulatory agencies, if applicable. In the event that in the reasonable determination of Employer or a banking regulatory agency, Employee has been less than forthright in his disclosure of such information to Employer or the appropriate banking regulatory agency objects to Employee’s service as Executive Vice President, without conditions, then this Agreement shall be null and void other than Employer shall pay to Employee an amount equal to all accrued and unpaid compensation and benefits through the effective date of any such notice.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above.

 

 

  

  

  

 

	 	 
“EMPLOYEE”

	 	 	 
	 	 
/s/ Edward Schneider

	 	 
Edward Schneider

	 	 	 
	 	 	 
	 	 
“EMPLOYER”

BAY BANK, FSB

	 	 	 
	 	By:	/s/ Kevin B. Cashen
	 	Name:	Kevin B. Cashen
	 	Title:	President /CEO

 

  

  

  

Exhibit A

 

to Employment Agreement by and between

 

Edward Schneider

 

and

 

Bay Bank, FSB

 

Employee Compensation

 

Capitalized terms used herein and not defined shall have the meanings set forth in the Employment Agreement.

Base Salary:

For services rendered under this Agreement, Employee shall be entitled to receive a base salary at the rate of $190,000 per year. The Chief Executive Officer and Board of Directors shall consider, among other considerations, a review of market data annually for the average compensation package for a CFO with comparable duties of institutions of comparable size when considering any adjustment to the base salary.

Performance Incentive Bonus:

In addition to the Employee’s Base Salary, the Employee is eligible to receive a Performance Incentive Compensation (“Incentive”) of up to twenty-five percent (25%) of Base Salary following the end the fiscal year of the Employer’s operations. The award will be pro-rated for 2013 with a minimum payment of $15,000.   Employee shall be eligible to receive the Incentive amount based upon the Employee meeting certain performance criteria (including but not limited to performance of the Employer) established by the Board of Directors, in consultation with Employee and the CEO of Employer, in the sole discretion of the Board of Directors. Payment of any performance bonus will not be made until the Board of Directors has determined, according to reasonable safety and soundness standards and subject to any regulatory requirements or limitations, that the overall financial condition of Employer, including asset quality, will not be adversely affected by the payment of the performance bonus.

Leave/Vacation

The Employee shall be entitled to four (4) weeks annual paid leave/vacation per year.  Vacation must be approved by the Chief Executive Officer.  The Employee shall not use more that two (2) weeks vacation at any one time.  The Employee may carry over a maximum of five (5) days into the subsequent year.

Stock/Equity Participation:

The Employee will be granted 50,000 stock options in Carrollton Bancorp.  The strike price for the options will be set on the day of the grant.  The options will have a 10 year life and will vest 20% at the time of the grant and 20% on each anniversary thereafter until such time as they are 100% vested.

Group Insurance:

Employee shall be entitled to participate in such health, hospitalization, dental, life insurance, and any other insurance plans as may be adopted by Employer’s Board of Directors for its employees 

  

  

  

and their dependents. The Employee will provide a minimum of $300,000 in group life insurance to the Employee.

 

Trade and Civic Associations:

Employer will pay Employee’s membership dues in such trade and civic associations as determined by Employer’s Board of Directors in its sole discretion.

It is the responsibility of the Chief Executive Officer and Board of Directors to treat all Executive incentive compensation in accordance with the guidance provided by the Office of the Comptroller of the Currency.  Executive incentive compensation must conform to reasonable safety and soundness standards and all regulatory requirements or limitations on the institution.

This is to confirm my understanding and agreement that the Employment Agreement to which this addendum is attached is subject to ratification by Employer’s Board of Directors at its next scheduled meeting.

 

The only restrictions or covenants which would restrict or prohibit my performance under the Employment Agreement are listed below:

 

None

 

 

	 	 
“EMPLOYEE”

	 	 	 
	 	 	 
	 	 	 
	 	/s/Edward Schneider	 
	 	Signature

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