Exhibit 10.3
AMENDED AND
RESTATED
BAY-VANGUARD FEDERAL SAVINGS
BANK
EMPLOYMENT
AGREEMENT
THIS AGREEMENT,
originally entered into the 12th day
of January, 2005 (the “Agreement”), by and between
BAY-VANGUARD FEDERAL SAVINGS BANK, a federally-chartered
savings bank (the “Bank”), and CAROLYN M. MROZ
(“Executive”), is amended and restated in its entirety
as of December 18, 2008. References to the
“Company” herein shall mean BV FINANCIAL, INC.,
a federally-chartered corporation and the Bank holding
company.
W I T N E S S E T
H
WHEREAS, Executive serves in a position of substantial
responsibility;
WHEREAS, the Bank wants to continue to assure
Executive’s continued employment for the term of this
Agreement;
WHEREAS, Executive desires to continue to remain employed
by the Bank during the term of this Agreement; and
WHEREAS, the parties desire to amend and restate the
Agreement in order to bring it into compliance with
Section 409A of the Internal Revenue Code.
NOW, THEREFORE,
in consideration of the mutual
covenants contained in this Agreement, and upon the other terms and
conditions provided for in this Agreement, the parties hereby agree
as follows:
1. Employment .
The Bank will employ Executive as
President and Chief Executive Officer. Executive will perform all
duties and shall have all powers commonly incident to the offices
of President and Chief Executive Officer or which, consistent with
those offices, the board of directors of the Bank delegates to
Executive. Executive also agrees to serve, if elected, as an
officer and/or director of any subsidiary of the Bank and to carry
out the duties and responsibilities reasonably appropriate to that
position.
2. Location and Facilities
. The Bank will furnish
Executive with the working facilities and staff customary for the
positions of the President and Chief Executive Officer. The Bank
will locate the office and staff of Executive at the principal
administrative offices of the Bank.
3. Term .
(a) The term of this Agreement shall
include (i) the initial term, consisting of the period
commencing on the date of this Agreement (the “Effective
Date”) and ending on January 12, 2011, plus
(ii) any and all extensions of the initial term made pursuant
to this Section 3.
(b) Commencing on July 1, 2009
(the “Renewal Date”), and continuing on each
anniversary thereafter, the disinterested members of the board of
directors of the Bank may extend the term of this Agreement for an
additional year so that the remaining term of the Agreement again
becomes thirty-six (36) months (from the Renewal Date), unless
Executive elects not to extend the term of this Agreement by giving
written notice of her intentions in accordance with Section 20
of this Agreement. Each year, the Board of Directors of the Bank
(the “Board”) will review Executive’s performance
for purposes of determining whether to extend the term of this
Agreement and will include the rationale and results of its review
in the minutes of its
meeting. Executive shall receive notice as soon
as possible after such review as to whether the Agreement will be
extended for an additional year.
4. Base Compensation
.
(a) The Bank agrees to pay the
Executive an annual base salary of $151,980, payable in accordance
with the customary payroll practices of the Bank.
(b) Each year, the Board will review
the level of Executive’s base salary, based upon factors they
deem relevant, in order to determine whether to maintain or
increase Executive’s base salary.
5. Bonuses .
Executive will participate in
discretionary bonuses or other incentive compensation programs the
Bank may sponsor or award from time to time to other senior
management employees.
6. Benefit Plans
. Executive will
participate in life insurance, medical, dental, pension, profit
sharing, other retirement and stock-based compensation plans and
other programs and arrangements that the Bank may sponsor or
maintain for the benefit of its employees. Executive will also be
reimbursed for all out-of-pocket expenses associated with
Executive’s annual medical physical.
7. Vacation and Leave
.
(a) Executive may take vacation and
other leave in accordance with the Bank’s policy for senior
executives or otherwise as approved by the Board.
(b) In addition to paid vacations
and other leave, the Board may grant Executive a leave of absence,
with or without pay, at such time or times and upon such terms and
conditions as the Board may determine in its discretion.
8. Expense Payments and
Reimbursements . The
Bank will reimburse Executive for all reasonable out-of-pocket
business expenses incurred in connection with her services under
this Agreement. Executive must substantiate the payment of all
expenses in accordance with applicable policies of the
Bank.
9. Automobile Allowance,
Cellular Phone and Conference Attendance .
During the term of this Agreement,
the Bank will reimburse Executive for all costs associated with the
business use of any automobile. Executive agrees to comply with
reasonable reporting and expense limitations on the use of any
automobile as may be established by the Bank from time to time, and
the Bank will include any amount of income attributable to
Executive’s personal use of an automobile on
Executive’s Forms W-2. The Bank will also provide Executive
with a cellular phone and will pay (or reimburse Executive) for all
reasonable expenses related to the business use of such phone. In
addition to the foregoing, Executive and his or her spouse, will be
entitled to attend such conferences as may be approved by the Board
of Directors of the Bank from time to time.
10. Loyalty and
Confidentiality .
(a) During the term of this
Agreement, Executive shall: (i) devote all her business time,
attention, skill, and efforts to the faithful performance of her
duties as President and Chief Executive Officer of the Bank;
provided, however, that from time to time, Executive may serve on
the board of directors of, and hold any other offices or positions
in, companies or organizations that will not present any conflict
of interest with the Bank or the Company or any of their
affiliates, and that will not unfavorably affect the performance
of
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Executive’s employment duties, and that
will not violate any applicable statute or regulation. Executive
shall not engage in any business or activity contrary to the
business affairs or interests of the Bank or the
Company.
(b) Nothing contained in this
Agreement prevents or limits Executive’s right to invest in
the capital stock or other securities of any business dissimilar
from that of the Bank or the Company, or, solely as a passive,
minority investor, in any business.
(c) Executive agrees to maintain the
confidentiality of any and all information concerning the operation
or financial status of the Bank and Company; the names or addresses
of any borrowers, depositors and other customers; any information
concerning or obtained from such customers; and any other
information concerning the Bank or the Company which she gains or
of which she becomes aware during the course of her employment with
the Bank. Executive further agrees that, unless required by law or
specifically permitted by the Board in writing, she will not
disclose to any person or entity, either during or subsequent to
her employment, any of the above-mentioned information not
generally known to the public, nor shall she use the information in
any way other than for the benefit of the Bank.
11. Termination and
Termination Pay . Subject to Section 12 of this Agreement,
Executive or the Bank may terminate Executive’s employment
under the following circumstances:
(a) Death . Executive’s
employment under this Agreement shall terminate upon her death
during the term of this Agreement, in which event Executive’s
estate shall receive the compensation due to Executive through the
last day of the calendar month in which her death
occurred.
(b) Retirement . This
Agreement shall terminate upon Executive’s retirement under
the retirement benefit plan or plans in which she participates
pursuant to Section 6 of this Agreement or otherwise.
Notwithstanding the foregoing, in the event the Executive retires
on or after the attainment of age 65, the Bank will provide
the Executive with medical coverage for five (5) years
following her retirement date.
(c) Disability .
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(i)
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The Board or
Executive may terminate Executive’s employment after having
determined Executive has suffered a Disability. For purposes of
this Agreement, “Disability” means a physical or mental
infirmity that impairs Executive’s ability to substantially
perform her duties under this Agreement and results in Executive
becoming eligible for long-term disability benefits under any
long-term disability plans of the Bank (or, if no such benefits
exist, that impairs Executive’s ability to substantially
perform her duties under this Agreement for a period of at least
one hundred eighty (180) consecutive days). The Board, in good
faith, shall determine whether or not Executive becomes and
continues to be permanently disabled for purposes of this
Agreement, based upon competent medical advice and other factors
that the Board reasonably believes to be relevant. As a condition
to any benefits, the Board may require Executive to submit to
physical or mental evaluations and tests as the Board or its
medical experts deem reasonably appropriate.
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(ii)
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In the event of her Disability,
Executive shall no longer be obligated to perform services under
this Agreement. The Bank will pay Executive, as Disability pay, an
amount equal to one hundred percent (100%) of
Executive’s weekly rate of base salary in effect as of the
date of her termination of employment due to Disability. The Bank
will make Disability payments on a monthly basis commencing on the
first day of the month following the effective date of
Executive’s termination of
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employment due to Disability and
ending on the earlier of: (A) the date she returns to
full-time employment at the Bank in the same capacity as she was
employed prior to her termination for Disability; (B) her
death; (C) her attainment of age 65; or (D) the date the
Agreement would have expired had Executive’s employment not
terminated by reason of Disability. The Bank will reduce Disability
pay otherwise due to Executive under this provision by the amount
of any short- or long-term disability benefits payable to Executive
under any other disability programs sponsored by the Bank. In
addition, during any period of Executive’s Disability, the
Bank shall continue to provide Executive and her dependents, to the
greatest extent possible, all benefits (including, without
limitation, benefits under retirement plans and medical, dental and
life insurance plans) provided to Executive and her dependents
prior to her Disability, on the same terms as if Executive remained
actively employed by the Bank.
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(d) Termination for Cause
.
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(i)
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The board of
directors of the Bank may, by written notice to Executive in the
form and manner specified in this paragraph, immediately terminate
Executive’s employment at any time, for “Cause”.
Executive shall have no rights to receive compensation or other
benefits for any period after termination for Cause, except for
already vested benefits. Termination for “Cause” shall
mean termination because of, in the good faith determination of the
Board, Executive’s:
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(4)
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Breach of
fiduciary duty involving personal profit;
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(5)
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Intentional
failure to perform duties under this Agreement;
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(6)
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Willful
violation of any law, rule or regulation (other than traffic
violations or similar offenses) that reflects adversely on the
reputation of the Bank, any felony conviction, any violation of law
involving moral turpitude, or any violation of a final
cease-and-desist order; or
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(7)
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Material breach
by Executive of any provision of this Agreement.
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(ii)
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Notwithstanding
the foregoing, Executive’s termination for Cause will not
become effective unless the Bank has delivered to Executive a copy
of a resolution duly adopted by the affirmative vote of a majority
of the entire membership of the board, at a meeting of the board
called and held for the purpose of finding that, in the good faith
opinion of the Board (after reasonable notice to Executive and an
opportunity for Executive to be heard before the board with
counsel), Executive was guilty of the conduct described above and
specifying the particulars of her conduct.
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(e) Voluntary Termination by
Executive . In addition to her other rights to terminate
employment under this Agreement, Executive may voluntarily
terminate employment during the term of this
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Agreement upon at least sixty (60) days
prior written notice to the board. Upon Executive’s voluntary
termination, Executive will receive only her compensation, vested
rights and employee benefits up to the date of her
termination.
(f) Without Cause or With Good
Reason .
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(i)
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In addition to
termination pursuant to Sections 11(a) through 11(e), the Board,
may, upon providing written notice to Executive, immediately
terminate her employment at any time for a reason other than Cause
(a termination “Without Cause”) and Executive may, upon
providing written notice to the Board, terminate her employment
under this Agreement for “Good Reason” as defined below
(a termination “With Good Reason”).
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(ii)
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Subject to
Section 12 of this Agreement, in the event of her termination
of employment under this Section 11(f), Executive shall
receive her base salary for the remaining term of the Agreement
paid in one lump sum within ten (10) calendar days of her
termination. Executive shall also receive, for the remaining term
of the Agreement, the benefits she would have received under any
retirement programs (whether tax-qualified or non-qualified) in
which she participated prior to her termination (with the amount of
benefits determined by reference to the benefits Executive received
or which the Bank accrued on her behalf during the twelve
(12) months preceding her termination). Executive shall also
continue to participate in any health (including medical and
dental), life, disability or similar insurance coverage or benefit
plans for the remaining term of the Agreement, upon terms no less
favorable than the most favorable terms provided to senior
executives of the Bank during such period.
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(iii)
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For the
purposes of this Agreement “Good Reason” shall mean the
occurrence of any of the following events without the
Executive’s consent:
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(1)
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The assignment
to Executive of duties that constitute a material diminution of her
authority, duties, or responsibilities (including reporting
requirements);
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(2)
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A material
diminution in Executive’s Base Salary;
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(3)
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Relocation of
Executive to a location outside a radius of 25 miles of the
Bank’s Baltimore, Maryland office; or
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(4)
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Any other
action or inaction by the Bank that constitutes a material breach
of this Agreement;
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provided, that within ninety
(90) days after the initial existence of such event, the Bank
shall be given notice and an opportunity, not less than thirty
(30) days, to effectuate a cure for such asserted “Good
Reason” by Executive. Executive’s resignation hereunder
for Good Reason shall not occur later than one hundred fifty
(150) days following the initial date on which the event
Executive claims constitutes Good Reason occurred.
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(g) Continuing Covenant Not to
Compete or Interfere with Relationships . Regardless of
anything in this Agreement to the contrary, following
Executive’s termination of employment pursuant to
Section 11(f):
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(1)
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Executive’s obligations under
Section 10(c) of this Agreement will continue in effect;
and
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(2)
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During the
period ending on the first anniversary of Executive’s
termination, Executive shall not serve as an officer, director or
employee of any bank holding company, bank, savings bank, savings
and loan holding company, mortgage company or other financial
institution that offers products or services competing with those
offered by the Bank from any office within thirty-five
(35) miles from the main office or any branch of
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