EXHIBIT 10.2
EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") entered into as of this first day of
October, 1998, by and between Greater Atlantic Mortgage Corporation ("GAMC") and
T. Xxxx Xxxxx (the "Employee").
WHEREAS, it is the desire of GAMC and its Employee to have an agreement
establishing responsibilities and compensation, including severance
compensation, for voluntary or involuntary termination of service by said
Employee.
WHEREAS, the parties desire by this writing to set forth the continuing
employment relationship of GAMC and the Employee.
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. Employment. The Employee is employed in the capacity of Chief
Executive Officer with the title of President of GAMC and reports directly to
the Chairman of the Board of GAMC. The Employee shall render such administrative
and management services to GAMC as are customarily performed by persons situated
in a similar executive capacity who direct a mortgage banking firm. The
Employee's other duties shall be such as the Chairman of the Board of GAMC may
from time to time reasonably direct. In performance all of duties, the Employee
is expected to conform to the Mortgage Bankers Associations Canons of Ethics and
Standards of Practice as from time to time amended.
2. Compensation.
The Employee shall receive compensation that will be paid out as follows:
A. The Employee's base salary will be, $108,000 per annum, payable in
semi- monthly installments.
B. Production Bonus:
(1) The Employee will receive a Production Bonus equal to 2.0
basis points on each loan that is closed during a month.
(2) The Production Bonus will be paid monthly after preparation
and issuance of monthly financial statements by the
Accounting Department.
C. Net Income Bonus:
(1) The Employee will receive a Net Income Bonus equal to 30% of
GAMC's adjusted Pre Tax Net Income (as hereinafter defined in
this Agreement and in Exhibits A through D to this
Agreement).
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(2) An amount equal to eighty percent (80%) of the Net Income
Bonus will be paid in quarterly installments within 15 days
after preparation and issuance of quarterly financial
statements prepared by the Accounting Department.
(3) An amount equal to 20% of the quarterly Net Income Bonus (the
"Holdback") will be retained by GAMC and be paid and to the
Employee upon completion of the annual audit by the
independent accountants. If the annual year-end audit for
GAMC is not completed by November 15th following the fiscal
year end, and the reason(s) for delay are not envisioned by
the Chairman of GAMC to significantly impact GAMC's income
statement for the year as initially prepared by the
Accounting Department, fifty percent (50%) of the Holdback
will be paid to the President within two working days. The
remaining fifty percent (50%) of the Holdback will be paid
upon completion of the annual audit. The Holdback will earn
interest at Greater Atlantic Bank's Premier Money Fund Rate.
(4) Should there be a loss in any quarterly calculation period,
that loss will be carried back first to eliminate any monies
due from the Holdback, including any earned interest, and
then carried forward to future quarterly calculation periods.
Such carryforward will, if necessary, extend over a fiscal
accounting year.
D. Stock Options:
Within 45 days of the effective date of this agreement, the
employee will be awarded options (the "Stock Options") to
purchase 37,500 shares of the stock of Greater Atlantic
Financial Corporation (the "Corporation") at an exercise
price equal to the book value of the Corporation on a per
share basis at September 30, 1998. The Stock Options will be
issued in accordance with the existing Stock Option Plan of
the Corporation and in a form consistent with the options
that have been issued.
If the net earnings of GAMC for the fiscal year ending
September 30, 1999 is equal to or greater than $1,625,000, on
November 15, 1999, the Employee will be awarded options to
purchase 15,000 shares of the Corporation's stock. The
exercise price for the options issued will be the Market
Price of the Corporation's Stock on the date of issue if the
Corporation is a publicly traded company. If the Corporation
is not publicly traded than the exercise price will be the
book value per share of
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the Corporation on September 30, 1999.
If the net earnings of GAMC for the fiscal year ending
September 30, 2000 is equal to or greater than $1,625,000, on
November 15, 2000, the Employee will be awarded options to
purchase 15,000 shares of the Corporation's stock. The
exercise price for the options issued will be the Market
Price of the Corporation's Stock on the date of issue if the
Corporation is a publicly traded company. If the Corporation
is not publicly traded than the exercise price will be the
book value per share of the Corporation on September 30,
2000.
All Stock Options granted to Employee shall vest immediately
on the date of grant and shall be evidenced by a Stock Option
Agreement, substantially in the form attached hereto as
Exhibit E, except that such Stock Option Agreement shall
specifically provide that Employee may exercise Stock Options
following termination of employment or service for a period
of 5 years; provided, however, that in no event shall the
period extend beyond the expiration of any Option.
As used herein, Pre-tax Net Income is pre-tax net income determined in
accordance with generally accepted accounting principles ("GAAP") which, in
turn, determines the recognition of revenue and expense for financial reporting
purposes. Net Earnings is also to be determined in accordance with GAAP and will
be after deduction for the Net Income Bonus provided for in this Agreement and
after deduction of income tax expense. The applicable tax rate used to compute
income tax expense will be the rate in effect as if GAMC were a stand-alone
company.
3. Benefits.
(a) Participation in Retirement and Medical Plans. The Employee shall
be entitled to participate in any plan of GAMC relating to pension or other
retirement benefits and such medical coverage or reimbursement plans that GAMC
may adopt for the benefit of its other employees, generally.
(b) Employee Benefits; Expenses. GAMC, in its discretion, shall
authorize an expense account for all reasonable out-of-pocket expenses which
Employee shall incur in connection with his service for GAMC.
(c) Employee Benefits; Transportation. GAMC will provide Employee with
an automobile and pay for the maintenance, repairs, taxes and insurance on the
company automobile. In addition, the Employee will be reimbursed by GAMC for oil
and gasoline expenses.
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4. Term.
The term of this Agreement shall be a period of two years commencing on
the Effective Date of this Agreement (the "Effective Date"), subject to earlier
termination as provided herein. Beginning on the second anniversary of the
Effective Date, and on each second anniversary thereafter, the term of this
Agreement shall automatically be extended for a period of two years, provided
that GAMC has not given notice in writing to the Employee at least 90 days prior
to such anniversary that the term of this Agreement will not be extended further
or the Employee has not given written notice at least 90 days prior to such
anniversary that he does not wish to renew the Agreement. Reference herein to
the term of this Agreement refers to both such initial term and any extended
term.
5. Loyalty; Noncompetition.
(a) The Employee shall devote his full time and attention to the
performance of his duties under this Agreement. During the term of Employee's
employment under this Agreement, the Employee shall not engage in any business
or activity contrary to the business affairs or inconsistent with the best
interests of GAMC or Greater Atlantic Bank.
(b) Nothing contained in this Paragraph 5 shall be deemed to prevent or
limit the right of Employee to invest in the capital stock or other securities
of any business dissimilar from that of GAMC, or, solely as a passive or
minority investor, in any business.
6. Standards.
The Employee shall perform his duties under this Agreement in
accordance with such reasonable standards expected of employees with comparable
positions in comparable organizations and as may be established from time to
time by the Board of Directors of GAMC (the "Board of Directors").
7. Vacation and Sick Leave.
The Employee shall be entitled to annual vacation and sick leave in
accordance with the policies as are periodically established by the Board of
Directors for senior management employees of GAMC.
8. Termination and Termination Pay.
Employment of the Employee under this Agreement shall be terminated
upon any of the following occurrences:
(a) The death of the Employee during the term of this Agreement, in
which event the
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Employee's estate shall be entitled to receive the compensation due the Employee
through the last day of the calendar month in which Employee's death shall have
occurred, plus compensation provided for under this Agreement for two (2)
additional months.
(b) The Board of Directors may terminate the Employee's employment at
any time, but any termination by the Board of Directors, other than termination
for Just Cause, shall not prejudice the employees's right to compensation or
other benefits provided under the Agreement in accordance with this Section 8.
Termination shall be effected by giving the Employee written notice of
termination which shall state the date of termination, the grounds for
termination, including whether such termination is with or without Just Cause.
If the notice fails to state clearly and explicitly that the termination is for
Just Cause and fails to specify the grounds for the Just Cause termination, then
termination shall be conclusively established as without Just Cause. The
Employee shall have no right to receive compensation or other benefits for any
period after termination for Just Cause, but shall be entitled to all
compensation or other benefits accrued up until the date of termination.
Termination for "Just Cause" is defined as any of the following acts: (i)
material personal dishonesty or breach of fiduciary duty detrimental to the
business and affairs of GAMC and which involves personal profit; (ii) willful
continuing intentional failure to perform legitimate duties as directed by GAMC
policies and procedures, Chairman of the Board or the GAMC Board of Directors;
(iii) willful violation of any law, rule or regulation (other than minor traffic
violations or similar violations) or final cease-and-desist order, which
violation is materially detrimental to the business and affairs of GAMC or its
parent company GAB; (iv) bankruptcy or insolvency; (v) willful conduct or
behavior which materially violates applicable governmental rules or regulations
relating to the mortgage banking business (including but not limited to rules or
regulations of HUD or VA); (vi) any of the specific acts or infractions as set
forth in GAMC's Employee Handbook, or GAB's Handbook until one is prepared for
GAMC, specified as grounds for termination for cause, and as set forth in any
reasonable revisions thereto; or (vii) willful conduct or behavior which is
detrimental to the business affairs of GAMC which violates product loan
origination practices or Canons of Ethics or Standards of Practice of the
Mortgage Bankers Association.
(c) Except for termination pursuant to Section 9 herein, in the event
Employee's employment under this Agreement is terminated by the Board of
Directors without Just Cause, GAMC will be obligated to continue to pay the
Employee the lesser of the amount of the compensation provided for under this
Agreement for the remaining term of the Agreement or the amount of compensation
provided for under the Agreement for a period of six months after notice of
termination (but in no event for a period less than three months). GAMC will
also be obligated to provide the Employee with a continuation of health, life,
disability, and other benefits which the Employee would be eligible to
participate in for a period not less than three months nor greater than six
months based upon the benefit levels substantially equal to those being provided
Employee at the date of the notice of termination of employment. The monthly
compensation to be paid to the Employee pursuant to this subparagraph (c) shall
be determined by obtaining a monthly average of the compensation for the most
recent three months prior to the date of any notice of termination without Just
Cause.
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In addition to all other compensation to which Employee is
entitled, upon termination without Just Cause, Employee will be entitled to the
37,500 Stock Options provided for in the first paragraph of Section 2(D).
Employee will be entitled to additional Stock Options in accordance with Section
2(D), depending on the date of termination (as specified in the notice of
termination) and the financial performance of GAMC up until the date of
termination. If the date of Employee's termination is on or before September 30,
1999, then Employee will be entitled to a pro rata portion of the 15,000 Stock
Options referred to in the second paragraph of Section 2(D) in accordance with
the following formula:
If Net Earnings from October 1, 1998 through the date
of termination multiplied by 365 and divided by the
number of days from October 1, 1998, through the date
of termination is at least $1,625,000, then Employee
will be immediately granted Stock Options in the
amount of 15,000 multiplied by the number of days
from October 1, 1998 through date of termination and
divided by 365.
If the date of Employee's termination is after September 30, 1999,
then Employee will be entitled to Stock Options under the second paragraph of
Section 2(D), in accordance with its terms, and will be entitled to a pro rata
portion of the 15,000 Stock Options referred to in the third paragraph of
Section 2(D), in accordance with the same pro rata methodology for annualizing
Net Earnings for the fiscal year, as set forth above in calculating Stock
Options where the date of termination is on or before September 30, 1999.
(d) It is expressly understood and agreed that the Employee's ability
to direct the Mortgage Banking Activities of GAMC is an essential term of his
employment and this Agreement. Accordingly, if the Employee's responsibility or
authority are materially diminished without cause during the term of his
employment by GAMC, such action shall be deemed to be termination of Employee's
employment without Just Cause withing the meaning of this Section 8.
(e) If the contract is not renewed, employee will be entitled to two
(2) months pay after the end date of the contract in accordance with 8c.
(f) If the Employee is removed and/or permanently prohibited from
participating in the conduct of GAMC's affairs pursuant to the Federal Deposit
Insurance Act ("FDIA") (12 U.S.C. 1811 et seq.), all obligations of GAMC under
this Agreement shall terminate, as of the effective date of the order, but the
vested rights of the parties shall not be affected.
(h) All obligations under this Agreement shall be terminated, except to
the extent determined that continuation of this Agreement is necessary for the
continued operation of Greater Atlantic Bank or GAMC: (i) by the Director of the
Office of Thrift Supervision ("Director of OTS"), or his or her designee, at the
time that the Federal Deposit Insurance Corporation ("FDIC") enters into an
agreement to provide assistance to or on behalf of Greater
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Atlantic Bank under the authority contained in Section 13 (c) of FDIA; or (ii)
by the Director of the OTS, or his or her designee, at the time that the
Director of the OTS, or his or her designee, approves a supervisory merger to
resolve problems related to operation of Greater Atlantic Bank or when Greater
Atlantic Bank is determined by the Director of the OTS to be in an unsafe or
unsound condition. Any rights of the parties that have already vested, however,
shall not be affected by such action.
9. Change in Control.
(a) No benefit shall be payable under this Section 9 unless there shall
have been a Change in Control of Greater Atlantic Bank (the "Bank"), as set
forth below. For purposes of this Agreement, a "Change in Control" of the Bank
shall mean an event of a nature that results in a Change in Control of the Bank
within the meaning of the Home Owners' Loan Act, as amended, and the rules and
regulations promulgated by the Office of Thrift Supervision, as in effect on the
date hereof.
(b) If, during the term of this Agreement, any event described in
Section 9(a) hereof constituting a Change in Control has occurred or the Board
has determined that a Change in Control has occurred, Employee shall be entitled
to the benefits provided in paragraph (c) of this Section 9 upon his subsequent
termination of employment, regardless of whether such termination results from
his dismissal or his resignation unless such termination is because of his
death, retirement or termination for Just Cause.
(c) Upon the occurrence of a Change in Control followed by the
Employee's termination of employment, GAMC shall pay Employee, or in the event
of his subsequent death, his beneficiary or beneficiaries, or his estate, as the
case may be, as severance pay or liquidated damages, or both, the amount due
Employee under this Agreement for the month in which such termination occurs,
plus a sum equal to the greater of the compensation due under section 8(c) of
the Agreement or three (3) times the average of the Base Salary, excluding
bonuses and all other forms of compensation, paid or to be paid to the Employee
during the preceding three (3) years. At the election of the Employee, which
election is to be made within thirty (30) days of the date of termination, such
payment may be made in a lump sum or paid in equal monthly installments during
the thirty-six (36) months following the Employee's termination. In the event
that no election is made, payment to the Employee will be made on a monthly
basis during the remaining term of the Agreement.
10. Suspension of Employment.
If the Employee is suspended and/or temporarily prohibited from
participating in the conduct of GAMC's affairs by a notice served under the
FDIA, GAMC's obligations under the Agreement shall be suspended as of the date
of service, unless stayed by appropriate proceedings. If the charges in the
notice are dismissed, GAMC shall, (i) pay the Employee all or part of the
compensation withheld while its contract obligations were suspended and (ii)
reinstate any of its obligations which were suspended.
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11. Disability.
If the Employee shall become disabled or incapacitated to the extend
that he is unable to perform his duties hereunder, by reason of a medically
determinable physical or mental impairment, as determined by a doctor engaged by
the Board of Directors, Employee shall nevertheless continue to receive
compensation and benefits which may be payable to Employee under the provisions
of disability insurance coverage in effect for GAMC employees. Upon returning to
active full-time employment, the Employee's full compensation as set forth in
this Agreement shall be reinstated as of the date of commencement of such
activities. In the event that the Employee returns to active employment on other
than a full-time basis, then his compensation (as set forth in Paragraph 2 of
this Agreement) shall be reduced in proportion to the time spent in said
employment, or as shall otherwise be agreed to by the parties.
12. Arbitration.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by the Employee within fifty
(50) miles from the location of the GAMC, in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however, that
Employee shall be entitled to seek specific performance of his right to be paid
until the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.
In the event any dispute or controversy arising under or in connection
with Employee's termination is resolved in favor of the Employee, whether by
judgment, arbitration or settlement, Employee shall be entitled to the payment
of all back-pay, including salary, bonuses and any other cash compensation,
fringe benefits and any compensation and benefits due Employee under this
Agreement.
13. Successors and Assigns.
(a) Except as otherwise provided herein, this Agreement shall inure to
the benefit of and be binding upon any corporate or other successor of GAMC
which shall acquire, directly or indirectly, by merger, consolidation, purchase
or otherwise, all or substantially all of the assets or stock of GAMC. GAMC may,
at its option, assign this Agreement to a subsidiary or affiliate of GAMC.
(b) Since GAMC is contracting for the unique personal skills of the
Employee, the Employee is precluded from assigning or delegating his rights or
duties hereunder without first obtaining the written consent of GAMC.
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14. Applicable Law.
This agreement shall be governed by all respects whether as to
validity, construction, capacity, performance or otherwise by the laws of the
Commonwealth of Virginia, except to the extent that Federal law shall be deemed
to apply.
15. Severability.
The provisions of the 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.
16. Entire Agreement.
This Agreement together with any understanding or modifications thereof
as agreed to in writing by the parties, shall constitute the entire agreement
between the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and first herein above written.
GREATER ATLANTIC MORTGAGE
CORPORATION
ATTEST: BY: /s/ Xxxxxxx X. Xxxx
-----------------------
/s/ Xxxxxx La Chance Chairman of the Board
--------------------------
Secretary
WITNESS:
/s/ Xxxxxxx X. Xxxx /s/ T. Xxxx Xxxxx
--------------------------- -----------------------
T. Xxxx Xxxxx
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GREATER ATLANTIC MORTGAGE CORPORATION
EXHIBIT A
QUARTERLY
CALCULATION ADJUSTED NET INCOME AND
NET INCOME BONUS
YEAR TO DATE
------------
Net income before taxes and bonus $
Add:
Depreciation of GAMC automobile (Current transaction only)
------------
Sub-total
Less:
Charge for recourse loan sales (1):
-----------------------------------
Required Capital to be held for recourse
Loan Sales (Exhibit D) $
Cost of Capital (GAB Average cost of
Funds for the most recent quarter + 2.00%)
------------ ------------
ADJUSTED NET INCOME BEFORE
BONUS AND TAXES $
Bonus Percent 30.00%
------------
Net Income Bonus $
------------
------------------
(1) This calculation will change quarterly. The required capital as
computed in accordance with Exhibit D at the end of a quarter (i.e., 9/30/98)
will be used in the net income bonus calculation for the subsequent quarter
(i.e., 10/1/98 to 12/31/98).
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GREATER ATLANTIC MORTGAGE CORPORATION
EXHIBIT B
ACCOUNTING FOR THE SALE OF LOANS
AND LOAN SERVICING RIGHTS
TO GREATER ATLANTIC BANK
During the ordinary course of business, Greater Atlantic Mortgage Corporation
("GAMC") will sell loans and servicing rights to Greater Atlantic Bank ("GAB").
Generally accepted accounting principles ("GAAP") are used in preparing the
financial statements for GAMC. Since GAMC is a subsidiary of Greater Atlantic
Bank and not an independent mortgage banking company, certain revenues cannot be
recognized by GAMC. In order for GAMC earnings to properly reflect direct income
and expense, the sale of loans and servicing rights to Greater Atlantic Bank
need to be accounted for differently.
Following is the accounting for the sale of loans and servicing rights to
Greater Atlantic Bank:
SALE OF LOAN SERVICING RIGHTS: Any servicing released premium
received by GAMC that is in excess of what GAB can recognize
on its books as a premium for the acquisition of servicing is
to be deferred on the books of GAMC and amortized over the
estimated life of the servicing. Should the premium carried on
the books of the Bank require a write down due to a decrease
in value, such write down in valuation will have no impact of
the financial statements of GAMC.
SALE OF LOANS: Any gain on sale of loans arising from the sale
of loans to Greater Atlantic Bank that is in excess of the
origination cost of that loan will be deferred and amortized
into the income of GAMC over the life of the loan in
accordance with GAAP.
Should the employee be terminated, any net income bonus due for any deferred
fees or servicing release premiums will be paid to the employee on the date of
termination at the net income bonus rate applicable when the loan or servicing
was sold to Greater Atlantic Bank.
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GREATER ATLANTIC MORTGAGE CORPORATION
EXHIBIT C
EXPENSE REIMBURSEMENT DUE
GREATER ATLANTIC BANK
While net income of GAMC reflects all income and expenses directly generated by
GAMC there are certain expenses incurred by Greater Atlantic Bank (the "Bank")
that are reimbursable by GAMC because the combined payment for such expenses
would be less than if paid individually.
Following are those expenses directly related to GAMC that are reimbursable to
the Bank:
o Monthly charge of $2,200 for Bank accounting personnel used in the
review and preparation of GAMC's financial statements or such other
amount as agreed to between the parties.
o Twenty percent (20%) of the annual audit fee and tax return
preparation charges.
o All required insurance policies whether directly identified (such
as hospitalization, life insurance, etc.,) or allocated based on a
reasonable allocation percentage obtained from the carrier (such as
fidelity bonds, errors and omissions, etc.)
o Other cost or expenses that can be directly related to operating
GAMC. The primary guiding principle will be "...did GAMC benefit
from the cost or expense incurred?"
All reimbursements will be based on cost (no profit factor added) and, in the
case of reimbursement for personnel cost, an 18% benefit factor will be applied.
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GREATER ATLANTIC MORTGAGE CORP.
EXHIBIT D
RECOURSE AGREEMENTS
INVESTOR BRIEF DESCRIPTION PRACTICAL AMOUNT TFR
OF RECOURSE APPLICATION LINE
NUMBER
Chase Manhattan The greater of $700,000 or $1,400,000 or 10%
10% of loans sold in any whichever is greater. $1,400,000 CCR 450
calendar quarter. $0 CCR 480
Countrywide If 1st payment is greater Loans closed in the prior
than 30 days late and loan two months plus any loans
becomes greater than 90 that are 1st payment
days delinquent in the first delinquent, until 90 day $7,798,590 CCR 450
year. delinquency clock runs out. $866,510 CCR 480
First Plus If 1st payment is greater Loans closed in the prior
than 30 days late. two months plus any loans
that are 1st payment
delinquent, until 90 day
delinquency clock runs out. $487,500 CCR 480
Norwest The greater of $700,000 or $1,400,000 of 10%
10% of loans sold in any whichever is greater.
calendar quarter. $1,281,000 CCR 450
$119,000 CCR 480
----------------
$10,967,090 CCR 450
$985,510 CCR 480
$10,552,600 CCR 460
10,967,090 x 20% x 10% = $219,342
985,510 x 50% x 10% = $49,275
Required Capital for
Recourse Loan Sales $268,617
================
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GREATER ATLANTIC FINANCIAL CORP.
1997 STOCK OPTION AND WARRANT PLAN
NON-STATUTORY STOCK OPTION AGREEMENT
NAME OF RECIPIENT: T. Xxxx Xxxxx
NUMBER OF SHARES
SUBJECT TO THIS OPTION: 37,5000 shares
EXERCISE PRICE: $5.58
TERM OF OPTION: This Non-statutory Stock Option expires on October
29, 2008. (The term of this Non-statutory Stock
Option shall not exceed 10 years commencing on the
Date of Grant).
PAYMENT OF EXERCISE PRICE: The Exercise Price may be paid in cash or Greater
Atlantic Financial Corp. common stock ("Common
Stock") having a Fair Market Value on the exercise
date equal to the total Exercise Price or any
combination of cash or Common Stock, including a
cashless exercise with a qualifying broker-dealer.
DATE OF GRANT: October 29, 1998
VESTING SCHEDULE: This Non-statutory Stock Option vests immediately
on the date of grant.
VOTING: The Recipient shall have no rights as a shareholder
with respect to any shares of Common Stock covered
by this Non-statutory Stock Option until the date
of issuance of a stock certificate for the Common
Stock acquired by this Non-statutory Stock Option.
DISTRIBUTION: Shares of Common Stock subject to this
Non-statutory Stock Option will be distributed as
soon as practicable upon exercise. Distributions
pursuant to associated rights will be made under
the terms of the Plan.
DESIGNATION OF
BENEFICIARY: A Beneficiary may be designated in writing to
receive, in the event of death, any Common Stock
the Recipient is entitled to under this
Non-statutory Stock Option Agreement.
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EFFECT OF TERMINATION OF
EMPLOYMENT OR SERVICE
BECAUSE OF:
(A) DEATH OR DISABILITY: All Non-statutory Stock Options become
immediately exercisable and remain
exercisable for a period of one (1) year
following termination of employment or
service.
(B) CAUSE: All rights under Non-statutory Stock
Options shall expire immediately upon the
effective date of Termination for Cause.
(C) RETIREMENT: Non-statutory Stock Options that are
immediately exercisable by the Recipient
at the date of Retirement may be exercised
and such Options shall remain exercisable
for a period of one (1) year following
Retirement; provided, however, that, if
the Recipient is immediately engaged by
Greater Atlantic Financial Corp. or an
Affiliate as a consultant or advisor, any
unexercisable Non-statutory Stock Options
shall become exercisable in accordance
with this Agreement during the period the
Recipient is engaged by Greater Atlantic
Financial Corp. or an Affiliate as a
consultant. Notwithstanding the foregoing
provision, in no event shall any Option
extend beyond its original term.
(E) OTHER REASONS: All Non-statutory Stock Options that are
immediately exercisable by the Recipient
at the date of termination may be
exercised and such Options shall remain
exercisable only for a period of five (5)
years following termination of employment
or service; provided, however, that in no
event shall the period extend beyond the
expiration of any Option.
NON-TRANSFERABILITY: Non-statutory Stock Options shall not be
transferred, assigned, hypothecated, or
disposed of in any manner by the Recipient
other than by will or the laws of
intestate succession. However, the
Recipient may petition the Committee to
permit transfer or assignment of this
Non-statutory Stock Option if such
transfer or assignment is, in the
Committee's sole determination, for valid
estate planning purposes and permitted
under the Internal Revenue Code of 1986,
as amended and the Securities Exchange Act
of 1934, as amended.
TAX WITHHOLDING: This Non-statutory Stock Option Award is
subject to tax withholding to the extent
required by any governmental
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authority. The Recipient is responsible,
for any required withholding applicable to
any Non-statutory Stock Option which has
been transferred pursuant to the terms of
the Plan, unless otherwise inconsistent
with current law.
MODIFICATION AND WAIVER: This Non-statutory Stock Option Agreement
may be amended or modified, prospectively
or retroactively; provided, however, that
no such amendment or modification will
adversely affect the rights of the
Recipient under this agreement without his
or her written consent. This Non-statutory
Stock Option Agreement is subject to the
terms and conditions of the Greater
Atlantic Financial Corp. 1998 Stock Option
and Warrant Plan (the "Plan"). Neither the
Plan nor this Agreement create any right
on the part of any employee to continue in
the employ or service of Greater Atlantic
Financial Corp. or any Affiliates thereof.
All capitalized terms herein shall have
the same meaning as those contained in the
Plan.
The Recipient hereby acknowledges that all decisions, determinations
and interpretations of the Board of Directors, or the Committee thereof, in
response of the Plan and this Non-statutory Stock Option Agreement are final and
conclusive.
IN WITNESS WHEREOF, Greater Atlantic Financial Corp. has caused this
Non-statutory Stock Option Agreement to be executed, and said Recipient has
hereunto set his hand, as of the 29th day of October, 1998.
GREATER ATLANTIC FINANCIAL CORP.
Board of Directors
By:
-----------------------------------
Xxxxxxx Xxxxxxxxx, Chairman
RECIPIENT
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T. Xxxx Xxxxx
16
