EXHIBIT 10.2
<PAGE>
FORM OF
CHANGE IN CONTROL SEVERANCE AGREEMENT
-------------------------------------
AMENDED AND RESTATED
THIS CHANGE IN CONTROL SEVERANCE AGREEMENT ("Agreement") entered into
this the 17 th day of April, 2000 ("Effective Date"), by and between Heritage
Savings Bank, F.S.B. (the "Bank") and ___________________ (the "Employee").
WHEREAS, the Employee is currently employed by the Bank as _________
______________ and is experienced in all phases of the business of the Bank; and
WHEREAS, the parties have previously entered into an Agreement with the
Bank; and
WHEREAS, the parties desire by this writing to set forth the rights and
responsibilities of the Bank and Employee if the Bank should undergo a change in
control (as defined hereinafter) after the Effective Date (as defined
hereinafter).
NOW, THEREFORE, it is AGREED as follows:
1. Employment. The Employee is employed in the capacity as the
-----------
____________________________ of the Bank. The Employee shall render such
administrative and management services to the Bank and its parent savings and
loan holding company ("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 Bank (the "Board of
Directors" or "Board") may from time to time reasonably direct, including normal
duties as an officer of the 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 twenty-four (24) months
thereafter. Additionally, on or before each annual anniversary date from the
Effective Date, the term of this Agreement may be extended for an additional one
year 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 twenty-four (24) months after,
any Change in Control of the
1
<PAGE>
Bank or Parent, Employee shall be paid an amount equal to 2.00 times the
Employee's cash compensation paid by the Bank during the one year period prior
to the date of termination of employment (whether said amounts were received or
deferred by the Employee) and the costs associated with maintaining coverage
under the 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 year
thereafter. Said sum shall be paid, at the option of Employee, either in one (1)
lump sum within thirty (30) days of such termination of employment, or in
periodic payments over the next 24 months, 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 Bank or the Parent shall be deemed an "excess parachute payment" in
accordance with Section 280G of the Internal Revenue Codes 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 mean: (i) the sale of all, or a
material portion, of the assets of the Bank or Parent; (ii) the merger or
recapitalization of the Parent whereby the Parent is not the surviving entity;
(iii) a change in control of the Bank or 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 Parent by any person, trust, entity or group. This limitation
shall not apply to the purchase of shares by underwriters in connection with a
public offering of Parent stock, or the purchase of shares of up to 25% of any
class of securities of the Parent by a tax-qualified employee stock benefit plan
which is exempt from the approval requirements, set forth under 12 C.F.R.
ss.574.3(c)(1)(vi) as now in effect or as may hereafter be amended. 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.
(b) Notwithstanding any other provision of this Agreement to the
contrary except as provided at Sections 4(b), 4(c), 4(d), 4(e) and 5, Employee
may voluntarily terminate his employment under this Agreement within twelve (12)
months following a Change in Control of the Bank or Parent, and Employee shall
thereupon be entitled to receive the payment and benefits described in Section
3(a) of this Agreement, upon the occurrence, or within one year 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
2
<PAGE>
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 Bank or Parent, Employee would be required to report to a
person or persons other than the President of the Bank or Parent; (iii) if the
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 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, for a period of more than six
months; or (v) if Employee's responsibilities or authority have in any way been
materially diminished or reduced for a period of more than six months.
4. Other Changes in Employment Status.
----------------------------------
(a) 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 Bank, or to
interfere with the right of the 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 for 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.
(b) If the Employee is removed and/or permanently prohibited from
participating in the conduct of the 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 Bank under this Agreement
shall terminate, as of the effective date of the order, but the vested rights of
the parties shall not be affected.
(c) If the 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.
(d) 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 Bank: (i) by the
3
<PAGE>
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 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 Bank or when the 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.
(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 U.S.C.ss.1828(k) and any regulations
promulgated thereunder.
5. Suspension of Employment. If the Employee is suspended and/or
---------------------------
temporarily prohibited from participating in the conduct of the 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 Bank'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, the 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 any of its obligations which were
suspended.
6. Successors and Assigns.
----------------------
(a) This Agreement shall inure to the benefit of and be binding upon
any corporate or other successor of the Bank which shall acquire, directly or
indirectly, by merger, consolidation, purchase or otherwise, all or
substantially all of the assets or stock of the Bank.
(b) The Employee shall be precluded from assigning or delegating his
rights or duties hereunder without first obtaining the written consent of the
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. Notwithstanding anything herein to the contrary, all provisions
of the Agreement shall be subject to and conditioned upon compliance with 12 CFR
563.39(b).
4
<PAGE>
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 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 Bank, and
judgment upon the award rendered may be entered in any court having jurisdiction
thereof, except to the extend that the parties may otherwise reach a mutual
settlement of such issue. The Bank shall incur the cost of all fees and expenses
associated with filing a request for arbitration with the AAA, whether such
filing is made on behalf of the Bank or the Employee, and the costs and
administrative fees associated with employing the arbitrator and related
administrative expenses assessed by the AAA. The Bank shall reimburse Employee
for all reasonable costs and expenses, including reasonable attorneys' fees,
arising from such dispute, proceedings or actions, following the delivery of the
decision of the arbitrator. Further, the settlement of the dispute to be
approved by the Board of the Bank or the Parent may include a provision for the
reimbursement by the Bank or Parent to the Employee for all reasonable costs and
expenses, including reasonable attorneys' fees, arising from such dispute,
proceedings or actions, or the Board of the 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 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.
11. 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.
5
