GREATER ATLANTIC BANK
EMPLOYEE SEVERANCE COMPENSATION PLAN
A. PURPOSE.
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The primary purpose of the Greater Atlantic Bank Employee Severance
Compensation Plan (the "Plan") is to ensure the successful continuation of the
business of Greater Atlantic Bank (the "Bank") and the fair and equitable
treatment of the Bank's employees following a Change in Control (as defined
below).
B. COVERED EMPLOYEES.
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Subject to paragraph C below, any employee of the Bank with at least
one (1) year of service as of his or her termination date shall be eligible to
receive a Change in Control Severance Benefit (as defined below) if, within the
period beginning on the effective date of a Change in Control and ending on the
first anniversary of such date, (i) the employee's employment with the Bank is
involuntarily terminated or (ii) the employee terminates employment with the
Bank voluntarily after being offered continued employment in a position that is
not a Comparable Position (as defined below).
C. LIMITATIONS ON ELIGIBILITY FOR CHANGE IN CONTROL SEVERANCE BENEFITS OR
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MANAGEMENT RESTRUCTURING BENEFITS.
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1. No employee shall be eligible for a Change in Control
Severance Benefit if (a) his or her employment is terminated
for "Cause", (b) he or she is offered a Comparable Position
within the Bank or the Bank's successor and declines to accept
such position, or (c) the employee is, at the time of
termination of employment, a party to an individual employment
agreement or severance agreement with the Bank and Greater
Atlantic Financial Corporation (the "Company").
2. For purposes of this Plan, a termination of employment for
"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 violation of any final cease-and desist
order, or material breach of any provision of the Plan.
3. For purposes of this Plan, a "Comparable Position" shall
mean a position that would (i) provide the employee with base
compensation and benefits that are comparable in the aggregate
to those provided to the employee prior to the Change in
Control, (ii) provide the employee with an opportunity for
variable bonus compensation that is comparable to the
opportunity provided to the employee prior to the Change in
Control, (iii) be in a location that would not require the
employee to increase his or her daily one way commuting
distance by more than twenty-five (25) miles as compared to
the employee's commuting distance immediately prior to the
Change in Control and (iv) have job skill requirements and
duties that are comparable to the requirements and duties of
the position held by the employee prior to the Change in
Control.
D. DEFINITIONS OF CHANGE IN CONTROL.
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For purposes of this Plan, a "Change in Control" means the occurrence
of any one of the following events following the adoption of this Plan:
(i) Merger: The Company or the Bank merges into or consolidates
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with another corporation, or merges another corporation into
the Company or the Bank, and as a result less than a majority
of the combined voting power of the resulting corporation
immediately after the merger or consolidation is held by
persons who were stockholders of the Company or the Bank
immediately before the merger or consolidation;
(ii) Acquisition of Significant Share Ownership: A person files,
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or is required to file, a report on Schedule 13D or another
form or schedule (other than Schedule 13G) required under
Sections 13(d) or 14(d) of the Securities Exchange Act of 1934
with respect to the Company, if the schedule discloses that
the filing person or persons acting in concert has or has
become the beneficial owner of 25% or more of a class of the
Company's voting securities, but this clause (b) shall not
apply to beneficial ownership of Company voting shares held in
a fiduciary capacity by an entity of which the Company
directly or indirectly beneficially owns 50% or more of its
outstanding voting securities;
(iii) Change in Board Composition: During any period of two
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consecutive years, individuals who constitute the Bank's or
the Company's Board of Directors at the beginning of the
two-year period cease for any reason to constitute at least a
majority of the Bank's or the Company's Board of Directors;
provided, however, that for purposes of this clause (iii),
each director who is first elected by the board (or first
nominated by the board for election by the stockholders) by a
vote of at least two-thirds (2/3) of the directors who were
directors at the beginning of the two-year period shall be
deemed to have also been a director at the beginning of such
period; or
(iv) Sale of Assets: The Company or the Bank sells to a third party
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all or substantially all of its assets.
E. DETERMINATION OF THE CHANGE IN CONTROL SEVERANCE BENEFIT.
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The Change in Control Severance Benefit payable to an eligible employee
under this Plan shall be determined as follows:
(1) Vice Presidents and the Controller of the Bank: If an eligible
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employee is a Vice President or the Controller of the Bank and
he or she becomes entitled to receive a Change in Control
Severance Benefit under the Plan, the benefit shall be
determined under the following schedule:
(a) The basic benefit under the Plan shall be determined
as the product of (i) the employee's years of service
from his or her hire date (including partial years)
through the termination date and (ii) two (2) weeks
of the employee's Base Compensation (as defined
below). A "year of service" shall mean each 12-month
period of service following an employee's hire date
determined without regard the number of hours worked
during such period(s).
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(b) Notwithstanding anything in this Plan to the
contrary, the minimum payment to an eligible employee
under this Plan shall be two (2) weeks of Base
Compensation and the maximum payment to an eligible
employee shall not exceed 50% of the employee's Base
Compensation.
(c) The Change in Control Severance Benefit shall be paid
in a lump sum not later than five (5) business days
after the employee's termination date.
(2) Assistant Vice Presidents. If an eligible employee is an
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Assistant Vice President of the Bank and he or she becomes
entitled to receive a Change in Control Severance Benefit
under the Plan, the benefit shall be determined under the
following schedule.
(a) The basic benefit under the Plan shall be determined
as the product of (i) the employee's years of service
from his or her hire date (including partial years)
through the termination date and (ii) one and
one-half (1 1/2) weeks of the employee's Base
Compensation (as defined below). A "year of service"
shall mean each 12-month period of service following
an employee's hire date determined without regard the
number of hours worked during such period(s).
(b) Notwithstanding anything in this Plan to the
contrary, the minimum payment to an eligible employee
under this Plan shall be one and one-half (1 1/2)
weeks of Base Compensation and the maximum payment to
an eligible employee shall not exceed 50% of the
employee's Base Compensation.
(c) The Change in Control Severance Benefit shall be paid
in a lump sum not later than five (5) business days
after the employee's termination date.
(3) All Other Employees. If an eligible employee (other than a
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vice president, assistant vice president or the Controller of
the Bank) becomes entitled to receive a Change in Control
Severance Benefit under the Plan, the benefit shall be
determined under the following schedule.
(a) The basic benefit under the Plan shall be determined
as the product of (i) the employee's years of service
from his or her hire date (including partial years)
through the termination date and (ii) one (1) week of
the employee's Base Compensation (as defined below).
A "year of service" shall mean each 12-month period
of service following an employee's hire date
determined without regard the number of hours worked
during such period(s).
(b) Notwithstanding anything in this Plan to the
contrary, the minimum payment to an eligible employee
under this Plan shall be one (1) week of Base
Compensation and the maximum payment to an eligible
employee shall not exceed 50% of the employee's Base
Compensation.
(c) The Change in Control Severance Benefit shall be paid
in a lump sum not later than five (5) business days
after employee's termination date.
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(4) For purpose of determinations under this paragraph E, "Base
Compensation" shall mean:
(a) for salaried employees, the employee's annual base
salary at the rate in effect on his or her
termination date or, if greater, the rate in effect
on the date immediately preceding the Change in
Control;
(b) for employees whose compensation is determined in
whole or in part on the basis of commission income,
the employee's base salary at termination (or, if
greater, the base salary on date immediately
preceding the effective date of the Change in
Control), if any, plus the commissions earned by the
employee in the twelve (12) full calendar months
preceding his or her termination date (or, if
greater, the commissions earned in the twelve (12)
full calendar months immediately preceding the
effective date of the Change in Control); and
(c) for hourly employees, the employee's total hourly
wages for the twelve (12) full calendar months
preceding his or her termination date or, if greater,
the twelve (12) full calendar months preceding the
effective date of the Change in Control.
F. WITHHOLDING.
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All payments made under this Plan will be subject to customary
withholding for federal, state and local tax purposes.
G. PARACHUTE PAYMENT.
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Notwithstanding anything in this Plan to the contrary, if a benefit to
a employee who is a "Disqualified Individual" shall be in an amount which
includes an "Excess Parachute Payment" taking into account payments under this
Plan and otherwise, the benefit under this Plan to that employee shall be
reduced to the maximum amount which does not include an Excess Parachute
Payment. The terms "Disqualified Individual" and "Excess Parachute Payment"
shall have the same meanings as under Section 280G of the Internal Revenue Code
of 1986, as amended, or any successor provision thereto.
H. ADOPTION BY AFFILIATES.
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Upon approval by the Board of Directors of the Bank, this Plan may be
adopted by any "Subsidiary" or "Parent" of the Bank. Upon such adoption, the
Subsidiary or Parent shall become an Employer hereunder and the provisions of
the Plan shall be fully applicable to the employees of that Subsidiary or
Parent. The term "Subsidiary" means any corporation in which the Bank, directly
or indirectly, holds a majority of the voting power of its outstanding shares of
capital stock. The term "Parent" means any corporation which holds a majority of
the voting power of the Bank's outstanding shares of capital stock.
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I. ADMINISTRATION.
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The Plan is administered by the Board of Directors of the Bank, which
shall have the discretion to interpret the terms of the Plan and to make all
determinations about eligibility and payment of benefits. All decisions of the
Board, any action taken by the Board with respect to the Plan and within the
powers granted to the Board under the Plan, and any interpretation by the Board
of any term or condition of the Plan, are conclusive and binding on all persons,
and will be given the maximum possible deference allowed by law. The Board may
delegate and reallocate any authority and responsibility with respect to the
Plan.
J. SOURCE OF PAYMENTS.
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Unless otherwise determined by the Board of Directors of the Company,
all payments and benefits provided in this Plan shall be paid or provided solely
by the Bank. Notwithstanding anything in this Plan to the contrary, no provision
of this Plan shall be construed so as to result in the duplication of any
payment or benefit. Unless otherwise determined by the Board of Directors of the
Company, the Company's sole obligation under this Plan shall be to
unconditionally guarantee the payment and provision of all amounts and benefits
due hereunder to Plan participants and, if such amounts and benefits due from
the Bank are not timely paid or provided by the Bank, such amounts and benefits
shall be paid or provided by the Company.
K. INALIENABILITY.
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In no event may any employee sell, transfer, anticipate, assign or
otherwise dispose of any right or interest under the Plan. At no time will any
such right or interest be subject to the claims of creditors, nor liable to
attachment, execution or other legal process.
L. GOVERNING LAW.
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The provisions of the Plan will be construed, administered and enforced
in accordance with the laws of the Commonwealth of Virginia, except to the
extent that federal law applies.
M. SEVERABILITY.
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If any provision of the Plan is held invalid or unenforceable, its
invalidity or unenforceability will not affect any other provision of the Plan,
and the Plan will be construed and enforced as if such provision had not been
included.
N. NO EMPLOYMENT RIGHTS.
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Neither the establishment nor the terms of this Plan shall be held or
construed to confer upon any employee the right to a continuation of employment
by the Bank, nor constitute a contract of employment, express or implied. The
Bank reserves the right to dismiss or otherwise deal with any employee to the
same extent and on the same basis as though this Plan had not been adopted.
Nothing in this Plan is intended to alter the at-will status of the Bank's
employees, it being understood that, except to the extent otherwise expressly
set forth to the contrary in an individual employment-related agreement, the
employment of any employee may be terminated at any time by either the Bank or
the employee with or without cause.
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O. AMENDMENT AND TERMINATION.
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The Plan may be terminated or amended in any respect by resolution
adopted by a majority of the Board of Directors of the Bank, unless a Change in
Control has previously occurred. If a Change in Control occurs, the Plan no
longer shall be subject to amendment, change, substitution, deletion, revocation
or termination in any respect whatsoever. The form of any proper amendment or
termination of the Plan shall be a written instrument signed by a duly
authorized officer or officers of the Bank, certifying that the amendment or
termination has been approved by the Board of Directors. A proper amendment of
the Plan automatically shall effect a corresponding amendment to each
Participant's rights hereunder. A proper termination of the Plan automatically
shall effect a termination of all employees' rights and benefits hereunder.
P. REQUIRED PROVISIONS.
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a. In the event any of the provisions of this Section P are in
conflict with the terms of this Plan, this Section P shall
prevail.
b. The Bank's Board of Directors may terminate an employee's
employment at any time, but any termination by the Bank, other
than termination for Cause, shall not prejudice the employee's
right to compensation or other benefits under this policy. An
employee shall not have the right to receive compensation or
other benefits for any period after termination for Cause.
c. If an employee is suspended from office and/or temporarily
prohibited from participating in the conduct of the Bank's
affairs by a notice served under Section 8(e)(3) or 8(g)(1) of
the Federal Deposit Insurance Act, 12 U.S.C. ss.1818(e)(3) or
(g)(1); the Bank's obligations under this policy shall be
suspended as of the date of service, unless stayed by
appropriate proceedings. If the charges in the notice are
dismissed, the Bank may in its discretion: (i) pay the
employee all or part of the compensation withheld while their
contract obligations were suspended; and (ii) reinstate (in
whole or in part) any of the obligations which were suspended.
d. If an employee is removed and/or permanently prohibited from
participating in the conduct of the Bank's affairs by an order
issued under Section 8(e)(4) or 8(g)(1) of the Federal Deposit
Insurance Act, 12 U.S.C. ss.1818(e)(4) or (g)(1), all
obligations of the Bank under this policy shall terminate as
of the effective date of the order, but vested rights of the
contracting parties shall not be affected.
e. If the Bank is in default as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act, 12 U.S.C. ss.1813(x)(1), all
obligations of the Bank under this policy shall terminate as
of the date of default, but this paragraph shall not affect
any vested rights of the contracting parties.
f. All obligations under this Plan shall be terminated, except to
the extent determined that continuation of the Plan is
necessary for the continued operation of the Bank: (i) by the
Director of the OTS (or his designee), at the time the FDIC
enters into an agreement to provide assistance to or on behalf
of the Bank under the authority contained in Section 13(c) of
the Federal Deposit Insurance Act, 12 U.S.C. ss.1823(c); or
(ii) by the Director of the OTS (or his designee) at the time
the Director (or his designee) approves a supervisory merger
to resolve problems related to the operations of the Bank or
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when the Bank is determined by the Director 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.
g. Any payments made to Employees pursuant to this Plan, or
otherwise, are subject to and conditioned upon their
compliance with 12 U.S.C. ss.1828(k) and FDIC regulation 12
C.F.R. Part 359, Golden Parachute and Indemnification
Payments.
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This Plan has been approved and adopted by the Board of Directors of
the Bank and is effective as of October 2, 2006.
GREATER ATLANTIC BANK
Attest: /s/ Edward C. Allen By: /s/ Carroll E. Amos
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For the Entire Board of Directors
GREATER ATLANTIC FINANCIAL CORPORATION
(as guarantor)
Attest: /s/ Edward C. Allen By: /s/ Carroll E. Amos
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For the Entire Board of Directors
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