CHANGE IN CONTROL SEVERANCE AGREEMENT
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THIS CHANGE IN CONTROL SEVERANCE AGREEMENT ("Agreement") entered into
this 28th day of September 2002 ("Effective Date"), by and between BUCS Federal
Bank (the "Savings Bank") and Xxxxxxx X. Xxxx (the "Employee").
WHEREAS, the Employee is currently employed by the Savings Bank as Vice
President/Finance and is experienced in certain phases of the business of the
Savings Bank; and
WHEREAS, the parties desire by this writing to set forth the rights and
responsibilities of the Savings Bank and Employee if the Savings Bank should
undergo a change in control (as defined hereinafter in the Agreement) after the
Effective Date.
NOW, THEREFORE, it is AGREED as follows:
1. Employment. The Employee is employed in the capacity as the Vice
President/Finance of the Savings Bank. The Employee shall render such
administrative and management service to the Savings Bank and to BUCS Financial
Corp, the parent savings and loan holding company of the Bank ("Parent") as are
currently rendered and as are customarily performed by persons situated in a
similar executive capacity. The Employee's other duties shall be such as the
Board of Directors for the Savings Bank (the "Board of Directors" or "Board")
may from time to time reasonably direct, including normal duties as an officer
of the Savings Bank and the Parent.
2. Term of Agreement. The term of this Agreement shall be for the
period commencing on the Effective Date and ending thirty-six (36) months
thereafter ("Term"). Additionally, on, or before, each annual anniversary date
from the Effective Date, the Term of this Agreement may be extended for an
additional period beyond the then effective expiration date upon a determination
and resolution of the Board of Directors that the performance of the Employee
has met the requirements and standards of the Board, and that the Term of such
Agreement shall be extended.
3. Termination of Employment in Connection with or Subsequent to a
Change in Control.
(a) Notwithstanding any provision herein to the contrary, in the event
of the involuntary termination of Employee's employment under this Agreement,
absent Just Cause, in connection with, or within 12 months after, any Change in
Control of the Savings Bank or Parent, Employee shall be paid an amount equal to
two (2) times the taxable compensation paid to the Employee by the Bank and the
Parent for the calendar year ending on or before the Employee's date of
termination of employment with the Bank (including sums that may have been
deferred under the Bank's 401(k) plan) (whether said amounts were received or
deferred by the Employee)
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and the costs associated with maintaining coverage under the Savings Bank's
medical and dental insurance reimbursement plans similar to that in effect on
the date of termination of employment for a period of one and one-half years
thereafter. Said sum shall be paid in one (1) lump sum not later than the date
of such termination and such payments shall be in lieu of any other future
payments which the Employee would be otherwise entitled to receive.
Notwithstanding the forgoing, all sums payable hereunder shall be reduced in
such manner and to such extent so that no such payments made hereunder when
aggregated with all other payments to be made to the Employee by the Savings
Bank or the Parent shall be deemed an "excess parachute payment" in accordance
with Section 280G of the Internal Revenue Code of 1986, as amended (the "Code")
and be subject to the excise tax provided at Section 4999(a) of the Code. The
term "Change in Control" shall refer to: (i) the sale of all, or a material
portion, of the assets of the Savings Bank or the Parent; (ii) the merger or
recapitalization of the Savings Bank or the Parent whereby the Savings Bank or
the Parent is not the surviving entity; (iii) a change in control of the Company
or the Savings Bank or the Parent, as otherwise defined or determined by the
Office of Thrift Supervision or regulations promulgated by it; or (iv) the
acquisition, directly or indirectly, of the beneficial ownership (within the
meaning of that term as it is used in Section 13(d) of the Securities Exchange
Act of 1934 and the rules and regulations promulgated thereunder) of twenty-five
percent (25%) or more of the outstanding voting securities of the Savings Bank
or the Parent by any person, trust, entity or group. The term "person" means an
individual other than the Employee, or a corporation, partnership, trust,
association, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization or any other form of entity not specifically listed herein. The
provisions of this Section 3(a) shall survive the expiration of this Agreement
occurring after a Change in Control.
(b) Notwithstanding any other provision of this Agreement to the
contrary except as provided at Sections 4 and 5, Employee may voluntarily
terminate his employment under this Agreement within 12 months following a
Change in Control of the Savings Bank or Parent, and upon the occurrence, or
within 120 days thereafter, of any of the following events, which have not been
consented to in advance by the Employee in writing: (i) if Employee would be
required to move his personal residence or perform his principal executive
functions more than thirty-five (35) miles from the Employee's primary office as
of the signing of this Agreement; (ii) if in the organizational structure of the
Savings Bank or Parent, Employee would be required to report to a person or
persons other than the Board of the Savings Bank or Parent, or the President;
(iii) if the Savings Bank or Parent should fail to maintain the Employee's base
compensation in effect as of the date of the Change in Control and existing
employee benefits plans, including material fringe benefit, stock option and
retirement plans, except to the extent that such reduction in benefit programs
is part of an overall adjustment in benefits for all employees of the Savings
Bank or Parent and does not disproportionately adversely impact the Employee;
(iv) if Employee would be assigned duties and responsibilities other than those
normally associated with his position as referenced at Section 1, herein; or (v)
if Employee's responsibilities or authority have in any way been materially
diminished or reduced. Upon such voluntary termination of employment by the
Executive in accordance with this subsection, Executive shall thereupon be
entitled to receive the
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payments described in Section 3(a) of this Agreement. The provisions of this
Section 3(b) shall survive the expiration of this Agreement occurring after a
Change in Control.
4. Other Changes in Employment Status. Except as provided for at
Section 3, herein, the Board of Directors may terminate the Employee's
employment at any time with or without Just Cause within its sole discretion.
This Agreement shall not be deemed to give Employee any right to be retained in
the employment or service of the Savings Bank, or to interfere with the right of
the Savings Bank to terminate the employment of the Employee at any time. The
Employee shall have no right to receive compensation or other benefits for any
period after termination with or without Just Cause. Termination for "Just
Cause" shall include termination because of the Employee's personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful violation of any
law, rule or regulation (other than traffic violations or similar offenses) or
final cease-and-desist order, or material breach of any provision of the
Agreement.
5. Regulatory Exclusions.
(a) If the Employee is removed and/or permanently prohibited from
participating in the conduct of the Savings Bank's affairs by an order issued
under Sections 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act ("FDIA")
(12 U.S.C. 1818(e)(4) and (g)(1)), all obligations of the Savings Bank under
this Agreement shall terminate, as of the effective date of the order, but the
vested rights of the contracting parties shall not be affected.
(b) If the Savings Bank is in default (as defined in Section 3(x)(1) of
FDIA) all obligations under this Agreement shall terminate as of the date of
default, but this paragraph shall not affect any vested rights of the
contracting parties.
(c) 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 the Savings Bank: (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 the Savings 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 the Savings Bank or when the Savings 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.
(d) If the Employee is suspended and/or temporarily prohibited from
participating in the conduct of the Savings Bank's affairs by a notice served
under Section 8(e)(3) or (g)(1) of the FDIA (12 U.S.C. 1818(e)(3) and (g)(1)),
the Savings Bank's obligations under the Agreement
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shall be suspended as of the date of service, unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the Savings Bank may
within 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.
(e) Notwithstanding anything herein to the contrary, any payments made
to the Employee pursuant to the Agreement, or otherwise, shall be subject to and
conditioned upon compliance with 12 USC ss.1828(k) and any regulations
promulgated thereunder.
(f) Notwithstanding anything herein to the contrary, in no event shall
payments to the Executive resulting from termination of employment for any
reason in accordance with the Agreement exceed the product of three (3) times
the Executives average annual compensation paid by the Savings Bank to the
Executive during the five most recent taxable years.
6. Successors and Assigns.
(a) This Agreement shall inure to the benefit of and be binding upon
any corporate or other successor of the Savings Bank which shall acquire,
directly or indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Savings Bank or Parent.
(b) The Employee shall be precluded from assigning or delegating his
rights or duties hereunder without first obtaining the written consent of the
Savings Bank.
7. Amendments. No amendments or additions to this Agreement shall be
binding upon the parties hereto unless made in writing and signed by both
parties, except as herein otherwise specifically provided.
8. Applicable Law. This agreement shall be governed by all respects
whether as to validity, construction, capacity, performance or otherwise, by the
laws of the State of Maryland, except to the extent that Federal law shall be
deemed to apply.
9. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
10. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled exclusively by
arbitration in accordance with the rules then in effect of the district office
of the American Arbitration Association ("AAA") nearest to the home office of
the Savings Bank, and judgment upon the award rendered may be entered in any
court having jurisdiction thereof, except to the extent that the parties may
otherwise reach a mutual settlement of such issue. Further, the settlement of
the dispute to be approved by the Board of the Savings Bank may include a
provision for the reimbursement by the Savings Bank to the Employee
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for all reasonable costs and expenses, including reasonable attorneys' fees,
arising from such dispute, proceedings or actions, or the Board of the Savings
Bank or the Parent may authorize such reimbursement of such reasonable costs and
expenses by separate action upon a written action and determination of the Board
following settlement of the dispute. Such reimbursement shall be paid within ten
(10) days of Employee furnishing to the Savings Bank or Parent evidence, which
may be in the form, among other things, of a canceled check or receipt, of any
costs or expenses incurred by Employee. The provisions of this Section 10 shall
survive the expiration of this Agreement.
11. Confidential Information. The Employee acknowledges that during his
employment he will learn and have access to confidential information regarding
the Savings Bank and the Parent and its customers and businesses ("Confidential
Information"). The Employee agrees and covenants not to disclose or use for his
own benefit, or the benefit of any other person or entity, any such Confidential
Information, unless or until the Savings Bank or the Parent consents to such
disclosure or use or such information becomes common knowledge in the industry
or is otherwise legally in the public domain. The Employee shall not knowingly
disclose or reveal to any unauthorized person any Confidential Information
relating to the Savings Bank, the Parent, or any subsidiaries or affiliates, or
to any of the businesses operated by them, and the Employee confirms that such
information constitutes the exclusive property of the Savings Bank and the
Parent. The Employee shall not otherwise knowingly act or conduct himself (a) to
the material detriment of the Savings Bank or the Parent, or its subsidiaries,
or affiliates, or (b) in a manner which is inimical or contrary to the interests
of the Savings Bank or the Parent. Employee acknowledges and agrees that the
existence of this Agreement and its terms and conditions constitutes
Confidential Information of the Savings Bank, and the Employee agrees not to
disclose the Agreement or its contents without the prior written consent of the
Savings Bank. Notwithstanding the foregoing, the Savings Bank reserves the right
in its sole discretion to make disclosure of this Agreement as it deems
necessary or appropriate in compliance with its regulatory reporting
requirements. Notwithstanding anything herein to the contrary, failure by the
Employee to comply with the provisions of this Section may result in the
immediate termination of the Agreement within the sole discretion of the Savings
Bank, disciplinary action against the Employee taken by the Savings Bank,
including but not limited to the termination of employment of the Employee for
breach of the Agreement and the provisions of this Section 11, and other
remedies that may be available in law or in equity.
12. 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.
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