<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________________ to ________________________
Commission File Number 1-14154
-----
GA FINANCIAL, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 25-1780835
- --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation or organization) (IRS Employer
Identification
No.)
4750 CLAIRTON BOULEVARD, PITTSBURGH, PENNSYLVANIA 15236
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(412)882-9946
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
---- ----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: 7,594,980 shares of
common stock, par value $.01 per share, were outstanding as of April 15, 1998.
<PAGE>
GA FINANCIAL, INC.
FORM 10-Q
For the Quarter Ended March 31, 1998
INDEX
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Financial Condition -
March 31, 1998 and December 31, 1997....................... 1
Consolidated Statements of Income and Comprehensive Income -
For the Three Months Ended March 31, 1998 and 1997......... 2
Consolidated Statements of Cash Flows - For the Three
Months Ended March 31, 1998 and 1997....................... 3
Notes to Consolidated Financial Statements.......... ...... 4- 7
Report of Independent Accountants.......................... 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................ 9-15
PART II: OTHER INFORMATION............................................... 16
SIGNATURES ............................................................... 17
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements
- ------- --------------------
GA Financial, Inc.
Consolidated Statements of Financial Condition
March 31, 1998 and December 31, 1997
<TABLE>
<CAPTION>
March 31,1998 Dec. 31, 1997
(Unaudited)
- ---------------------------------------------------------------------------------------------------------------------
ASSETS (In thousands)
<S> <C> <C>
Cash (including interest-bearing demand deposits of $13,313
in 1998 and $3,291 in 1997) $ 20,960 $ 10,242
Federal funds sold 5,450 2,500
Available for sale securities, at fair value:
Investment securities 168,503 151,265
Mortgage-related securities 259,543 284,161
Loans receivable, net 310,820 287,674
Education loans held for sale 21,613 18,853
Accrued interest receivable 6,083 5,977
Federal Home Loan Bank stock 11,353 9,833
Office, property and equipment 5,056 5,203
Prepaid expenses and other assets 8,710 8,240
- ---------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $818,091 $783,948
=====================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Noninterest-bearing demand deposits $ 24,862 $ 21,375
Savings accounts 445,000 440,779
Borrowed funds 215,791 198,237
Advances from borrowers for taxes and insurance 1,885 1,602
Accrued interest payable 2,905 1,385
Securities purchased, not settled 8,284 -
Other liabilities 4,774 4,444
- ---------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 703,501 667,822
Shareholders' Equity:
Preferred stock, (.01 par value); 1,000,000 shares authorized; 0 shares issued - -
Common stock, (.01 par value); 23,000,000 shares authorized;
8,900,000 shares issued 89 89
Additional paid in capital 85,989 85,992
Treasury stock, at cost (1,305,020 shares at March 31, 1998 and
1,182,130 shares at December 31, 1997) (21,765) (19,464)
Unearned employee stock ownership plan (ESOP) shares (6,104) (6,104)
Unearned recognition and retention plan (RRP) shares (2,868) (3,107)
Accumulated other comprehensive income 3,170 3,724
Retained earnings 56,079 54,996
- ---------------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 114,590 116,126
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $818,091 $783,948
=====================================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
-1-
<PAGE>
GA Financial, Inc.
Consolidated Statements of Income and Comprehensive Income
For the Quarters Ended March 31, 1998 and 1997
<TABLE>
<CAPTION>
For the Quarters Ended
March 31,
1998 1997
(Unaudited)
- ----------------------------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C>
Interest income:
Loans, including fees $ 6,558 $ 4,722
Mortgage-related securities 4,845 4,645
Investment securities 2,487 2,082
Other 149 166
- ----------------------------------------------------------------------------------------------------------------
Total interest income 14,039 11,615
- ----------------------------------------------------------------------------------------------------------------
Interest expense:
Savings accounts 4,614 4,459
Interest on borrowings 3,114 954
Other 9 13
- ----------------------------------------------------------------------------------------------------------------
Total interest expense 7,737 5,426
- ----------------------------------------------------------------------------------------------------------------
Net interest income before provision for losses on loans 6,302 6,189
Provision for losses on loans 90 75
- ----------------------------------------------------------------------------------------------------------------
Net interest income after provision for losses on loans 6,212 6,114
- ----------------------------------------------------------------------------------------------------------------
Non-interest income:
Service fees 354 226
Net gain on sales of securities 162 -
Net gain on sales of education loans - 74
Data processing service fees 187 137
Other 104 8
- ----------------------------------------------------------------------------------------------------------------
Total non-interest income 807 445
- ----------------------------------------------------------------------------------------------------------------
Non-interest expense:
Compensation and employee benefits 1,999 1,786
Occupancy and equipment 418 446
Deposit insurance premiums 71 67
Data processing service expenses 420 425
Capital stock taxes 199 146
Other 940 753
- ----------------------------------------------------------------------------------------------------------------
Total non-interest expense 4,047 3,623
- ----------------------------------------------------------------------------------------------------------------
Income before provision for income taxes 2,972 2,936
Provision for income taxes 1,042 1,079
- ----------------------------------------------------------------------------------------------------------------
Net income $ 1,930 $ 1,857
- ----------------------------------------------------------------------------------------------------------------
Other comprehensive income:
Unrealized losses on securities, net of tax benefit of $331 and $1,890
for 1998 and 1997, respectively (554) (3,225)
- ----------------------------------------------------------------------------------------------------------------
Comprehensive income (loss) $ 1,376 ($1,368)
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
The accompanying notes are an integral part of the consolidated financial statements.
<S> <C> <C>
Basic earnings per share $ .28 $ .26 (1)
====== ======
Diluted earnings per share $ .27 $ .25 (1)
====== ======
Dividends per share $ .12 $ .08
====== ======
Average shares outstanding - basic 6,790,266 7,141,359
Average shares outstanding - diluted 7,037,366 7,295,501
</TABLE>
(1) Earnings per share were restated to reflect the Company's adoption of SFAS
No. 128, "Earnings per Share".
-2-
<PAGE>
GA Financial, Inc.
Consolidated Statements of Cash Flows
For the Quarters Ended March 31, 1998 and 1997
<TABLE>
<CAPTION>
For the
Quarters Ended
- -----------------------------------------------------------------------------------------------------------------
March 31,
1998 1997
(Unaudited)
- -----------------------------------------------------------------------------------------------------------------
Cash flows from operating activities: (In thousands)
<S> <C> <C>
Net income $ 1,930 $ 1,857
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for losses on loans and real estate owned 90 75
Depreciation and amortization on office, property and equipment 186 191
Net premium amortization (discount accretion) on securities 11 (21)
Amortization of net deferred loan fees (150) (31)
Amortization of intangibles 46 -
Allocation RRP shares 201 205
Allocation ESOP shares 73 53
Net realized (gain) on sales of securities (162) -
Net realized (gain) on sale of education loans - (74)
Net realized (gain) on sale of REO - (2)
(Increase) in accrued interest receivable (106) (411)
(Increase) decrease in prepaid expenses and other assets (516) 41
Increase in accrued interest payable 1,520 1,406
- -----------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 3,123 3,289
- -----------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from sale of available for sale securities 27,207 10,039
Proceeds from sale of student loans - 2,673
Repayments and maturities of available for sale securities 29,162 12,176
Net proceeds from sale of REO - 2
Purchases of available for sale securities (41,438) (74,589)
Net decrease in loans 7,215 6,082
Purchase of loans (33,061) (8,076)
Purchases of office, property and equipment, net (39) (302)
Purchase of Federal Home Loan Bank stock (1,520) (2,025)
- -----------------------------------------------------------------------------------------------------------------
Net cash (used in) investing activities (12,474) (54,020)
- -----------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net increase in demand and savings deposits 7,631 4,531
Net increase (decrease) in certificates of deposit 77 1,251
Net increase in advances from borrowers for taxes and insurance
and other liabilities 983 1,166
Purchase of RRP stock - (4,095)
Purchase of treasury stock (2,282) (799)
Stock options and awards transactions 15 -
Payments made under capital lease obligations (39) (47)
Payments of borrowed funds (202,108) (66,745)
Proceeds from borrowed funds 219,662 107,243
Dividends paid (920) (676)
- -----------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 23,019 41,829
- -----------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents 13,668 (8,902)
Cash and cash equivalents at beginning of period 12,742 24,299
- -----------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 26,410 $ 15,397
=================================================================================================================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
-3-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(Unaudited)
1. Basis of Presentation
The accompanying unaudited consolidated financial statements include the
accounts of GA Financial, Inc. (the "Company") and its subsidiary, Great
American Federal Savings and Loan Association (the "Association").
In the opinion of the management of the Association, the accompanying
consolidated financial statements include all normal recurring adjustments
necessary for a fair presentation of the financial position and results of
operations for the periods presented. All significant intercompany transactions
have been eliminated in consolidation. Certain information and footnote
disclosure normally included in financial statements presented in accordance
with generally accepted accounting principles have been condensed or omitted.
It is suggested that the accompanying consolidated financial statements be read
in conjunction with the Association's 1997 Annual Report on Form 10-K. The
consolidated financial statements as of March 31, 1998 and for the three months
ended March 31, 1998 and March 31, 1997 have been reviewed by Coopers & Lybrand
L.L.P., the Association's independent auditors, whose report is included herein.
Currently, other than investing in various securities, the Company does not
directly transact any material business other than through the Association.
Accordingly, the discussion herein addresses the operations of the Company as
they are conducted through the Association.
2. Capital Requirements and Regulatory Restrictions
As a savings and loan holding company, the Company is not required to maintain
any minimum level of capital; however, the Association is subject to various
regulatory capital requirements administered by the federal banking agencies.
Failure to meet minimum capital requirements can initiate certain mandatory -
and possibly additional discretionary - actions by regulators that, if
undertaken, could have a direct material effect on the Association's financial
statements. Under capital adequacy guidelines and the regulatory framework for
prompt corrective action, the Association must meet specific capital guidelines
that involve quantitative measures of the Association's assets, liabilities, and
certain off-balance-sheet items as calculated under regulatory accounting
practices. The Association's capital amounts and classification are also
subject to qualitative judgments by the regulators about components, risk
weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Association to maintain minimum amounts and ratios (set forth in the
table below) of total and Tier I capital to risk-weighted assets and of Tier I
capital to total assets. It is management's opinion that the Association meets
all capital adequacy requirements to which it is subject.
As of March 31, 1998, the most recent notification from the Office of Thrift
Supervision categorized the Association as well capitalized under the regulatory
framework for prompt corrective action. To be categorized as well capitalized
the Association must maintain minimum total risk-based, Tier I risk-based, and
Tier I leverage ratios as set forth in the table. There are no conditions or
events since that notification that management believes have changed the
Association's category.
-4-
<PAGE>
<TABLE>
<CAPTION>
Tier I Tier I Total
Leverage Risk-Based Risk-based
Capital Capital Capital
-----------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
March 31, 1998:
Equity capital (1) $101,626 $101,626 $101,626
General valuation allowance (2) - - 1,417
Plus unrealized losses on certain
available-for-sale securities (2,719) (2,719) (2,719)
Less core deposit intangible (1,049) (1,049) (1,049)
-----------------------------------------------------------
Total regulatory capital 97,858 97,858 99,275
Minimum regulatory capital 31,976 12,205 24,409
-----------------------------------------------------------
Excess regulatory capital $ 65,882 $ 85,653 $ 74,866
===========================================================
Regulatory capital as a percentage 12.24% 32.07% 32.54%
Minimum regulatory capital as a percentage 4.00% 4.00% 8.00%
-----------------------------------------------------------
Excess regulatory capital as a percentage 8.24% 28.07% 24.54%
===========================================================
Well capitalized requirement under
prompt corrective actions provisions 5.00% 6.00% 10.00%
===========================================================
Adjusted assets as reported to the OTS $799,402 $305,114 $305,114
</TABLE>
<TABLE>
<CAPTION>
Tier I Tier I Total
Leverage Risk-Based Risk-based
Capital Capital Capital
-----------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
December 31, 1997:
Equity capital (1) $100,319 $100,319 $100,319
General valuation allowance (2) - - 1,322
Less unrealized gains on certain
available-for-sale securities (3,329) (3,329) (3,329)
Less core deposit intangible (1,095) (1,095) (1,095)
-----------------------------------------------------------
Total regulatory capital 95,895 95,895 97,217
Minimum regulatory capital 30,458 11,520 23,040
-----------------------------------------------------------
Excess regulatory capital $ 65,437 $ 84,375 $ 74,177
===========================================================
Regulatory capital as a percentage 12.59% 33.30% 33.76%
Minimum regulatory capital as a percentage 4.00% 4.00% 8.00%
-----------------------------------------------------------
Excess regulatory capital as a percentage 8.59% 29.30% 25.76%
===========================================================
Well capitalized requirement under
prompt corrective actions provisions 5.00% 6.00% 10.00%
===========================================================
Adjusted assets as reported to the OTS $761,451 $288,002 $288,002
</TABLE>
(1) Represents equity capital of the Association as reported to the Office of
Thrift Supervision.
(2) Limited to 1.25% of risk-weighted assets.
-5-
<PAGE>
3. Changes in Accounting Principles
Effective January 1, 1998, GA Financial adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income." This statement
requires that all items recognized under accounting standards as components of
comprehensive earnings be reported in a financial statement that is displayed
with the same prominence as other financial statements. This statement also
requires that an entity classify items of other comprehensive earnings by their
nature in a financial statement. For example, other comprehensive earnings may
include foreign currency translation adjustments, minimum pension liability
adjustments, and unrealized gains and losses on marketable securities classified
as available-for-sale. Financial statements for prior periods will be
reclassified.
4. Derivative Financial Instruments with Off-Balance Sheet Risk
A reconciliation of forward and standby commitment activity for the period
follows:
<TABLE>
<CAPTION>
(Dollars in thousands) Forward Commitments Standby Commitments
-------------------------------------------------------
<S> <C> <C>
Balance at December 31, 1997 $ 26,000 $16,000
Purchase commitments 12,000 8,000
Commitments sold (11,000) -
Commitments settled/expired (9,000) (4,000)
-------------------------------------------------------
Balance at March 31, 1998 $ 18,000 $20,000
=======================================================
</TABLE>
The fair value of the $38.0 million in commitments was approximately $38.6
million at March 31, 1998.
5. Earnings per Share:
GA FINANCIAL, INC.
STATEMENT REGARDING COMPUTATION OF
EARNINGS PER SHARE FOR THE THREE MONTHS ENDED
MARCH 31, 1998 AND 1997
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
For the three months ended
March 31, 1998 March 31, 1997
----------------------------------------
<S> <C> <C>
Basic:
Net income $ 1,930 $ 1,857
Net income applicable to common stock 1,930 1,857
Average common shares - outstanding basic 6,790,266 7,141,359
Basic earnings per share $ .28 $ .26
Diluted:
Net income $ 1,930 $ 1,857
Average common shares - outstanding basic 6,790,266 7,141,359
Effect of dilutive securities:
Shares issuable upon exercise of
outstanding stock options and stock awards 247,100 154,142
Average common shares outstanding - diluted 7,037,366 7,295,501
Diluted earnings per share $ .27 $ .25
========================================
</TABLE>
Effective December 31, 1997, the Company adopted Statement of Financial
Accounting Standards No. 128, "Earnings Per Share." This Statement requires the
disclosure of basic and diluted earnings per share and revises the method
required to calculate these amounts under previous standards. Earnings per
share data for the 1997 quarter has been restated to reflect adoption of this
Statement. The adoption of this standard did not materially impact previously
reported earnings per share for the 1997 quarter.
-6-
<PAGE>
6. Consolidated Statements of Shareholders' Equity:
The consolidated statement of shareholders' equity for the three month period
ending March 31, 1998 is as follows:
<TABLE>
<CAPTION>
Additional Unearned Unearned Net Unrealized Total
Common Paid in Treasury ESOP RRP Holding Gains Retained Shareholders'
(Dollars in thousands) Stock Capital Stock Plan Shares Plan Shares (Losses) Earnings Equity
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at 12/31/97 $89 $85,992 $(19,464) $(6,104) $(3,107) $3,724 $54,996 $116,126
Net income - - - - - - 1,930 1,930
Change in compre-
hensive income,
net of tax - - - - - (554) - (554)
Treasury stock
purchased - - (2,282) - - - - (2,282)
RRP shares purchased - - - - - - - -
Cash dividends - - - - - - (847) (847)
Shares allocated
under ESOP - - - - - - - -
Shares allocated
under RRP - - - - 201 - - 201
Stock-based
compensation - (3) (19) - 38 - - 16
-------------------------------------------------------------------------------------------------------
Balance at 3/31/98 $89 $85,989 $(21,765) $(6,104) $(2,868) $3,170 $56,079 $114,590
=======================================================================================================
</TABLE>
-7-
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
The Board of Directors of
GA Financial, Inc.:
We have reviewed the accompanying consolidated statements of financial condition
of GA Financial, Inc. (the Company) as of March 31, 1998, and the related
consolidated statements of income and comprehensive income and cash flows for
the three-month periods ended March 31, 1998 and March 31, 1997. These
consolidated financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the consolidated financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements referred to above
for them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated statement of financial condition as of December 31,
1997 and the related consolidated statements of income, cash flows and
shareholders' equity for the year then ended (not presented herein); and in our
report dated January 22, 1998 except as to the information presented in Note 19,
for which the date is February 3, 1998, we expressed an unqualified opinion on
those consolidated financial statements. In our opinion, the information set
forth in the accompanying consolidated statement of financial condition as of
December 31, 1997, is fairly stated in all material respects in relation to the
consolidated statement of financial condition from which it has been derived.
/s/Coopers & Lybrand, L.L.P.
Pittsburgh, Pennsylvania
April 20, 1998
-8-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
- ------- -----------------------------------------------------------------------
of Operations
-------------
General
- -------
The Company's and the Association's consolidated results of operations are
dependent primarily on net interest income, which is the difference between the
interest income earned on interest-earning assets, such as loans and
investments, and the interest expense incurred on interest-bearing liabilities,
such as deposits and other borrowings. The Company and the Association are
referred herein collectively as the "Association". The Association also
generates non-interest income such as service fees and also generates data-
processing fees from its data-processing division. The Association's operating
expense consists primarily of employee compensation, occupancy expenses, data
processing expenses, and other general and administrative expenses. The
Association's results of operations are also significantly affected by general
economic and competitive conditions, particularly changes in market interest
rates, government policies and actions of regulatory agencies.
Comparison of Financial Condition at March 31, 1998 and December 31, 1997
- -------------------------------------------------------------------------
The Association's total assets of $818.1 million at March 31, 1998 increased
$34.1 million or 4.4% from December 31, 1997. This increase was primarily
attributed to the Association's increased borrowings of $17.6 million in the
first quarter of 1998. These funds were invested in mortgage-related and
investment securities.
Cash and cash equivalents of $26.4 million at March 31, 1998 increased $13.7
million from December 31, 1997. This was primarily due to increased principal
payments on mortgage-related securities.
Investment securities classified as available for sale increased $17.2 million
or 11.4% to $168.5 million at March 31, 1998. This was primarily due to
purchases of securities funded by FHLB advances.
Mortgage-related securities classified as available for sale decreased $24.6
million or 8.7% to $259.5 million at March 31, 1998. This was primarily due to
increased principal payments on mortgage-related securities.
There were no securities held by the Association which were classified as "held
to maturity" or "held for trading" for either of the respective periods.
The following table presents details of the Association's investment securities
and mortgage-backed securities as of
March 31, 1998 (Dollars in thousands):
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized
Available for sale securities: Cost Gains Losses Fair Value
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mortgage-backed certificates $201,655 $3,324 $ (250) $204,729
Collateralized mortgage obligations 55,353 223 (762) 54,814
Marketable equity securities 31,695 2,584 (29) 34,250
US government agency debt 90,030 106 (512) 89,624
Corporate obligations 24,858 93 (9) 24,942
Municipal obligations 19,426 304 (43) 19,687
- ----------------------------------------------------------------------------------------------------------------------------
Total $423,017 $6,634 $(1,605) $428,046
============================================================================================================================
</TABLE>
-9-
<PAGE>
The following table presents details of the Association's investment securities
and mortgage-backed securities as of December 31, 1997 (Dollars in thousands):
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized
Available for sale securities: Cost Gains Losses Fair Value
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mortgage-backed certificates $208,995 $3,862 $ (161) $212,696
Collateralized mortgage obligations 71,980 285 (800) 71,465
Marketable equity securities 34,360 2,317 (17) 36,660
US government agency debt 77,060 150 (73) 77,137
Corporate obligations 24,125 92 (9) 24,208
Municipal obligations 12,992 270 (2) 13,260
- ----------------------------------------------------------------------------------------------------------------------------
Total $429,512 $6,976 $(1,062) $435,426
============================================================================================================================
</TABLE>
Loans receivable of $310.8 million increased $23.1 million or 8.0% from December
31, 1997. This was primarily due to purchases of $33.1 million of residential
mortgage loans.
Education loans held for sale increased $2.8 million or14.6% to $21.6 million at
March 31, 1998.
The following table presents details of the Association's loan portfolio:
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997
--------------------------------------------------
(Dollars in thousands)
<S> <C> <C>
Mortgages:
One to four family residential $239,832 $215,024
Multifamily 5,727 5,778
Commercial 4,339 4,360
Construction and development 2,625 2,966
Consumer loans:
Home equity 56,971 59,111
Education loans 21,613 18,853
Other:
Loans on savings accounts 2,218 2,168
Unsecured personal loans and other 2,176 1,719
- --------------------------------------------------------------------------------------------------
Total 335,501 309,979
Less:
Undisbursed mortgage loans 380 688
Deferred loan fees 1,271 1,442
Allowance for losses 1,417 1,322
- --------------------------------------------------------------------------------------------------
Net loans $332,433 $306,527
==================================================================================================
</TABLE>
Accrued interest receivable was substantially the same at March 31, 1998 and
December 31, 1997.
Federal Home Loan Bank stock increased $1.5 million or 15.5% to $11.4 million at
March 31, 1998. This was a result of an increase in borrowings at the Federal
Home Loan Bank (FHLB) of $17.5 million. The Association is required to purchase
FHLB stock based upon levels of borrowings from the FHLB and levels of mortgage
loans.
Prepaid expenses and other assets increased $470 thousand or 5.7% to $8.7
million at March 31, 1998. This was primarily a result of an additional
purchase of split-dollar life insurance on certain management employees.
Property, plant, and equipment was substantially the same at March 31, 1998 and
December 31, 1997.
Total deposits increased $7.7 million or 1.7% to $469.9 million at March 31,
1998.
Borrowed funds increased $17.6 million or 8.9% to $215.8 million at March 31,
1998. This was the result of increased borrowings from the FHLB. This increase
is a result of management's determination to place increased emphasis on the
-10-
<PAGE>
utilization of FHLB borrowings to fund asset growth. FHLB borrowings can be
invested at yields higher than the cost of the borrowed funds thereby increasing
net interest income.
There were $8.3 million securities purchased, not settled at March 31, 1998.
These were investment securities that settled in April, 1998.
Accrued interest payable increased $1.5 million to $2.9 million at March 31,
1998. This was a result of the timing of accrued interest payable being
credited to certificate of deposit accounts.
Other liabilities increased $330,000 or 7.4% to $4.8 million at March 31, 1998.
This was primarily a result of an increase in accrued current income taxes.
Total shareholders' equity decreased $1.5 million or 1.3% to $114.6 million at
March 31, 1998. The Company repurchased $2.3 million of GA Financial stock,
paid dividends of $847,000 which was charged to equity, recorded a $554,000
reduction in unrealized gains on available for sale securities, recorded net
income of $1.9 million, and recorded $217,000 in stock option and award
transactions.
Comparison of the Consolidated Results of Operation for the Period of Three
- ---------------------------------------------------------------------------
Months Ended March 31, 1998 and 1997.
- -------------------------------------
Net Income. Net income was $1.9 million for the period of three months ended
March 31, 1998, an increase of $73,000 or 3.9% for the same period in 1997.
Interest Income. Interest income totaled $14.0 million for the period of three
months ended March 31, 1998, an increase of $2.4 million or 20.9 % compared to
the $11.6 million recorded for the period of three months ended March 31, 1997.
The average balances of interest-earning assets for the period of three months
ended March 31, 1998 increased to $775.4 million, an increase of $148.0 million
or 23.6%, compared to the average balance of interest-earning assets of $627.4
million for the same period in 1997. Weighted average yield on interest-earning
assets for the three month period ended March 31, 1998 was 7.24% compared to
7.41% for the comparable period in 1997. This was primarily due to reinvesting
funds in lower yielding long-term securities due to general decreases in
interest rates. Interest on loans for the three month period ended March 31,
1998 was $6.6 million at a weighted average yield of 7.83%, an increase of $1.8
million or 38.9%, compared to interest income on loans of $4.7 million at a
weighted average yield of 8.05% for the three month period ended March 31, 1997.
This increase was due to an increase in the average balance of loans. The
Association purchased $33.1 million of residential mortgage loans, which are
outside of its normal lending area, during the first quarter of 1998. For the
three month period ended March 31, 1998 interest income on mortgage-backed
securities was $4.8 million at a weighted average yield of 7.36%, an increase of
$200 thousand or 4.3%, compared to interest income of $4.6 million at a weighted
average yield of 7.38% for the same period in 1997. Average balances in
mortgage-backed securities increased between the two periods. For the three
month period ended March 31, 1998 interest income on investment securities was
$2.3 million at a weighted average yield of 6.00%, an increase of $313,000 or
15.6%, compared to income of $2.0 million at a weighted average yield of 6.51%
for the same period in 1997. The increase in interest income was due to the
purchase of investment securities. Interest income on interest-earning deposits
and short-term investments was $149,000 at a weighted average yield of 5.17% for
the period of three months ended March 31, 1998, a decrease of $17,000 or 10.2%,
compared to income of $166,000 at a weighted average yield of 5.31% for the
comparable period in 1997. The decrease was due to a substantial decrease in
investments in federal funds sold and in interest-bearing demand deposits.
Also, dividends on FHLB stock rose $92,000 due to additional purchases of FHLB
stock due to increased levels of FHLB borrowings.
Interest Expense. Interest expense for deposit accounts for the three month
period ended March 31, 1998 was $4.6 million, an increase of $155,000 or 3.5%,
compared to $4.5 million for the same period in 1997. Average balances of
interest-bearing liabilities was $443.2 million for the period of three months
ended March 31, 1998 at a weighted average cost of 4.16% compared to average
balance of $430.6 million at a weighted average cost of 4.14% for the period of
three months ended March 31, 1997. The increase in savings accounts interest
expense is due to the increase in average balances. Interest expense on
borrowings increased $2.2 million to $3.1 million for the three month period
ending March 31, 1998. This is due to an increase of $149.4 million in the
average balance of FHLB borrowings from $67.8 million for the three months
ending March 31, 1997 to $217.2 million for the three months ending March 31,
1998. This increase is a result of management's decision to place increased
emphasis on the utilization of FHLB borrowing to fund asset growth, primarily
mortgage-related and investment securities. FHLB borrowings can be invested at
yields higher than the cost of the borrowed funds thereby increasing net
interest income.
-11-
<PAGE>
Average Balance Sheets and Analysis of Net Interest Income
- ----------------------------------------------------------
Net interest income represents the difference between income on interest-earning
assets and expense on interest-bearing liabilities. Net interest income depends
on the volume of interest-earning assets and interest-bearing liabilities and
the rates earned or paid on them. The following table presents certain
information relating to the Association's average consolidated statements of
financial condition and consolidated statements of income for the period of
three months ended March 31, 1998 and 1997. The yield and costs are derived by
dividing income or expense by the average balance of assets or liabilities,
respectively. Average balances are derived from daily average balances. The
average balance of loans receivable includes loans on which the Association has
discontinued accruing interest. The yields and costs include fees which are
considered adjustments to yield.
The following table presents average balance yields on interest-earning assets
and average balances and costs of interest-bearing liabilities at March 31, 1998
and March 31, 1997.
<TABLE>
<CAPTION>
Three Months Ended March 31, 1998 Three Months Ended March 31, 1997
Average Average
Balance Interest Yield/Cost Balance Interest Yield/Cost
---------------------------------------------------------------------------
Assets: (Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Interest-earning deposits and
short-term Investment $ 11,531 $ 149 5.17% $ 12,501 $ 166 5.31%
Investment securities, net (1) 154,259 2,315 6.00% 122,953 2,002 6.51%
Loans receivable, net (1) (2) 335,153 6,558 7.83% 234,602 4,722 8.05%
Mortgage-backed securities, net (1) 263,402 4,845 7.36% 251,880 4,645 7.38%
FHLB stock & other equity investments 11,023 172 6.24% 5,427 80 5.90%
---------------------------------------------------------------------------
Total interest-earning assets 775,368 $14,039 7.24% 627,363 $11,615 7.41%
Non-interest earning assets 34,634 18,334
------------ --------------
Total assets $810,002 $645,697
============ ==============
Liabilities and equity:
Interest-earning liabilities:
Money market savings accounts $ 14,979 $ 91 2.43% $ 16,760 $ 103 2.46%
Passbook accounts 161,067 1,099 2.73% 159,456 1,180 2.96%
NOW accounts 30,592 144 1.88% 27,429 135 1.97%
Certificate accounts 236,604 3,280 5.55% 226,938 3,041 5.36%
---------------------------------------------------------------------------
Total 443,242 4,614 4.16% 430,583 4,459 4.14%
FHLB advances & other borrowings 217,179 3,114 5.74% 67,816 954 5.63%
Other 1,898 9 1.90% 2,016 13 2.58%
---------------------------------------------------------------------------
Total interest-bearing liabilities 662,319 $ 7,737 4.67% 500,415 $ 5,426 4.34%
Non-interest bearing liabilities 34,255 24,689
Shareholders' equity 113,428 120,593
------------ --------------
Total liabilities and shareholders'
equity $810,002 $645,697
============ ==============
Net interest rate spread (3) $ 6,302 2.57% $ 6,189 3.07%
Net interest margin (4) 3.25% 3.95%
Ratio of interest-earning assets to
interest-bearing liabilities 117.07% 125.37%
</TABLE>
(1) Includes related assets available for sale and unamortized discounts and
premiums.
(2) Amount is net of deferred loan fees, undisbursed loan funds, discounts and
premiums and estimated loan loss allowances and includes loans held for
sale and non-performing loans.
(3) Net interest rate spread represents the difference between the yield on
interest-earning assets and the cost of interest-bearing liabilities.
(4) Net interest margin represents net interest income divided by interest
earning assets.
-12-
<PAGE>
Net Interest Income: Net interest income for the period of three months ended
March 31, 1998 was $6.3 million, an increase of $113,000 or 1.83%, compared to
$6.2 million recorded for the same period in 1997.
Provision for Loan Losses: During the first quarter of 1998, the Association's
provision for loan losses was $90,000 which reflects management's consideration
of the increase of the Association's residential loan portfolio. The
Association made a $75,000 provision for loan losses during the period of three
months ended March 31, 1997. The Association continued purchasing residential
mortgage loans in 1998 originated in areas outside the local lending area of the
Association. Although the Association performs the same underwriting criteria
for purchased loans as it does for originated loans, due to the nature of such
purchases the Association does not have much loss experience data for such
loans. During 1997 and 1998 the Association initially increased its purchases of
single family residential mortgage loans secured by properties located in areas
outside the lending area of the Association. The allowance for loan losses is
maintained at an amount management considers adequate to cover estimated losses
on loans receivable which are deemed probable and estimable based on information
currently known to management. While management believes the Association's
allowance for loan losses is sufficient to cover losses inherent in its loan
portfolio at this time, no assurances can be given that the Association's level
of allowance for loan losses will be sufficient to cover future loan losses
incurred by the Association, or that future adjustments to the allowance for
loan losses will not be necessary if economic and other conditions differ
substantially from the economic and other conditions analyzed by management to
determine the current level of the allowance for loan losses.
Allowance for Loan Losses
- -------------------------
The following table sets forth the changes in the allowance for loan losses for
the three months ended March 31, 1998 (Dollars in thousands):
<TABLE>
<S> <C>
Balance, December 31, 1997 $1,322
Provision for loan losses 90
Net recoveries 5
------
Balance, March 31, 1998 $1,417
======
</TABLE>
Non-Performing Assets
- ---------------------
The following table presents information regarding the Association's non-
performing assets at the dates indicated:
<TABLE>
<CAPTION>
March 31, 1998 Dec. 31, 1997
-------------------------------
(in thousands)
<S> <C> <C>
Non-performing loans:
Non-accrual loans $1,749 $1,733
Accruing loans which are contractually
past due 90 days or more - -
Restructured loans - -
- ----------------------------------------------------------------------------------------------------
Total non-performing loans $1,749 $1,733
Real estate owned - -
- ----------------------------------------------------------------------------------------------------
Total non-performing assets $1,749 $1,733
====================================================================================================
Non-performing loans as a % of gross loans receivable .52% .56%
Non-performing loans to total assets .21% .22%
Allowance for loan loss as a % of gross loans receivable .42% .43%
Allowance for loan loss to non-performing loans 81.02% 76.28%
</TABLE>
-13-
<PAGE>
Non-interest Income: Non-interest income consists of service fees, gains
(losses) on the sale of loans and securities, fees from data processing services
sold and other miscellaneous items. For the period of three months ended March
31, 1998 non-interest income was $807,000, an increase of $362,000 or 81.3%,
compared to $445,000 recorded for the same period in 1997. Service fees totaled
$354,000 for the period of three months ended March 31, 1998, an increase of
$128,000 or 56.6%, compared to $226,000 recorded for the same period in 1997.
This increase resulted from the Association increasing service fees,
particularly on checking accounts. Net gains on the sale of securities and
educational loans were $162,000 for the three months ended March 31, 1998,
compared to $74,000 for the three months ended March 31, 1997. These charges
resulted primarily from the timing of sales. Education loans are sold as they
enter repayment status. Fees from the sale of data processing services were
$187,000, an increase of $50,000 or 36.5%, compared to $137,000 recorded for the
same period in 1997. Other non-interest income for the period of three months
ended March 31, 1998 was $104,000, an increase of $96,000 compared to the $8,000
recorded for the comparable period in 1997. This increase is due to earnings on
the split-dollar life insurance policies purchased for certain employees.
Non-interest Expense. Total non-interest expense was $4.0 million for the three
month period ended March 31, 1998, an increase of $424,000 or 11.7%, compared to
$3.6 million for the same period in 1997. Salaries and employee benefits were
$2.0 million for the three month period ended March 31, 1998, an increase of
$213,000 or 11.9%, compared to the $1.8 million recorded for the same three
month period in 1997. The Association increased salaries approximately 3% for
1998 and incurred slight increases in benefit costs. The Association also
experienced a $51,000 increase in the Employee Stock Ownership Plan ("ESOP") due
to a higher market value on GA Financial stock. In connection with the
formation of the ESOP, the Association adopted Statement of Position 93-6. As
shares in the ESOP are earned and committed to be released, compensation expense
will be recorded based on the market value during each reporting period.
Occupancy and equipment expenses, deposit insurance expenses, and data
processing service expenses were approximately the same for both periods.
Capital stock taxes increased $53,000, or 36.3%, to $199,000 for the three
months ended March 31, 1998 due to a lower than expected amount of taxes for
1996 which resulted in a reduction in capital stock taxes in 1997. The Company
will incur approximately $800,000 in capital stock taxes in 1998. Other
expenses increased $187,000 or 24.8%, to $940,000 for the three months ended
March 31, 1998 from the same period in 1997. This increase was primarily due to
an increase of $40,000 in marketing expenses, $28,000 in ATM charges, $53,000 in
professional fees, and $66,000 in other miscellaneous expenses.
Income Tax Expense. Income tax expense of $1.0 million for the three months
ended March 31, 1998 resulted in an effective tax rate of 35.1%. The income tax
expense recorded for the period of three months ended March 31, 1997 of $1.1
million is an effective tax rate of 36.8%. There was no material change in the
components of the Association's effective income tax rate.
Liquidity and Capital Resources
- -------------------------------
The Association's primary sources of funds are deposits, principal and interest
payments on loans, mortgage-backed securities and mortgage-related securities,
proceeds from maturing investment securities, advances from the Federal Home
Loan Bank, and other borrowed funds. While scheduled maturities of investments
and amortizations of loans are predictable sources of funds, deposit flows and
prepayments on mortgage loans and mortgage-backed and related securities are
greatly influenced by general interest rates, economic conditions and
competition.
The Association is required to maintain an average daily balance of liquid
assets and short-term liquid assets as a percentage of net withdrawable deposit
accounts plus short-term borrowings as defined by the Office of Thrift
Supervision regulations. The minimum required liquidity is currently 4%. The
Association's liquidity for the month of March, 1998 was 27.89%. The high
levels of liquidity were due to management's maintenance of higher than required
levels of liquidity in order to better manage interest rate risk by investing in
investments that are eligible to be included in liquidity calculations.
At March 31, 1998 the Company had commitments to originate and purchase loans of
$1.8 million and to purchase mortgage-backed securities of $38.0 million. The
Association anticipates that it will have sufficient funds available to meet
these commitments.
At March 31, 1998 the Association's equity capital exceeded each of the OTS
capital requirements. OTS requires Tier I capital to adjusted assets of 4.00%
and the Association had 12.24%. Tier I capital to risk-based assets requirement
is 4.00% and the Association had 32.07%. The total capital to risk-based assets
requirement is 8.00% and the Association had 32.54%.
-14-
<PAGE>
Year 2000 Compliance
- --------------------
As the millennium (year 2000) approaches, the Company is increasingly aware of
the potential impact of the century date change on the Company's information
systems and the ability to conduct business in an uninterrupted and orderly
manner. The year 2000 presents a significant exposure to any company with date
sensitive data in its computer and environmental systems.
As the year 2000 approaches, an important business issue has emerged regarding
how existing application software programs and operating systems can accommodate
this date value. Many existing application software products, including the
Company's, were designed to accommodate a two digit year. For example, "96" is
stored on the system and represents 1996.
In 1996, the Company's data processing division, DataOne Financial Systems
(DataOne), began to address the risks associated with the coming millennium.
DataOne's approach to the year 2000 project includes five phases: Awareness,
Assessment, Renovation, Validation and Implementation. DataOne is currently in
the Renovation phase of the project and expects full conversion of all data
files and programs by October, 1998. This will allow adequate time to validate
and test all systems.
Additionally, the Company is utilizing internal resources to examine all
personal computer hardware and software and all environmental systems that are
dependent on embedded microchips to ensure year 2000 compliance. The
Association is conducting a Year 2000 compliance review of its third-party
vendors and service bureaus for its ancillary computer operations. In addition,
if significant vendors fail to certify their Year 2000 compliance, the Company
intends to engage alternative vendors and suppliers. While the Company cannot
estimate the expenses associated with hiring new vendors and suppliers,
management believes that such expenses would not have a material impact on the
Company's earnings. The Company estimates it will incur costs of $200,000 to
remediate its year 2000 issues.
Other Developments
- ------------------
On April 21, 1998 the Board of Directors declared a dividend of $.14 per share
to stockholders of record on May 8, 1998, payable on May 20, 1998, representing
a 17% increase over the previous dividend of $.12 per share.
Item 3. Quantitative and Qualitative Business Analysis
- ------- ----------------------------------------------
There was no significant change in the Company's interest rate risk and market
risk for the periods presented.
-15-
<PAGE>
PART II - OTHER INFORMATION
- ----------------------------
Item 1. Legal Proceedings
- ------- -----------------
None
Item 2. Changes in Securities
- ------- ---------------------
None
Item 3. Defaults upon Senior Securities
- ------- -------------------------------
None
Item 4. Submission of Matters to a Vote of Security Holders
- ------- ---------------------------------------------------
The annual meeting of shareholders of GA Financial, Inc. was held on
April 29, 1998. Of 7,608,883 shares eligible to vote, 91.8%, or
6,988,664, were voted by proxy.
The shareholders elected the three nominees for directors, as
described in the proxy statement for the annual meeting. William G.
Boyer retired as director on April 29, 1998. The results for the re-
election of John G. Micenko as director were 6,961,725 shares, or
91.5%, in favor and 26,939 shares, or 0.3% withheld. The results for
the re-election of Thomas M. Stanton as a director were 6,943,183
shares, or 91.3%, in favor and 45,481 shares, or 0.5 % withheld. The
results for Robert J. Ventura were 6,946,862 shares, or 91.3%, in
favor and 41,802 shares, or 0.5% withheld. The other continuing
directors are Thomas E. Bugel, David R. Wasik, John M. Kish, and
Darrell J. Hess.
The recommendation by the Board of Directors to ratify the
appointment of Coopers & Lybrand, L.L.P. as the corporation's
independent auditors, as described in the proxy statement for the
annual meeting, was approved with 6,925,722 shares, or 91.0%, in
favor, 31,928 shares, or 0.4%, against, and 31,014 shares, or 0.4%
abstaining.
Item 5. Other Information
- ------- -----------------
None
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
Exhibit 10.1 - Revised Employment Agreement between GA Financial,
Inc. and John M. Kish
Exhibit 10.2 - Revised Employment Agreement between Great American
Federal Savings and Loan Association and John M. Kish
Exhibit 10.3 - Revised Employment Agreement between GA Financial,
Inc. and John G. Micenko
Exhibit 10.4 - Revised Employment Agreement between Great American
Federal Savings and Loan Association and John G. Micenko
Exhibit 15 - Independent Accountant's Letter regarding unaudited
financial information
Exhibit 27 - Financial Data Schedule
-16-
<PAGE>
GA FINANCIAL, INC. AND SUBSIDIARIES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GA FINANCIAL, INC.
---------------------------------------------
(Registrant)
Date May 12, 1998 By /s/ John M. Kish
------------ ---------------------------------------------
John M. Kish
Chairman of the Board and Chief Executive Officer
(Principal Executive Officer)
Date May 12, 1998 By /s/ Raymond G. Suchta
------------ ---------------------------------------------
Raymond G. Suchta
Chief Financial Officer and Treasurer
(Principal Accounting and Financial Officer)
-17-
<PAGE>
Exhibit 10.1
GA FINANCIAL, INC.
EMPLOYMENT AGREEMENT
(As amended and restated on March 23, 1998)
This AGREEMENT ("Agreement") is made effective as of July 30,1996, and
amended and restated as of March 23, 1998, by and between GA Financial, Inc.
(the "Holding Company"), a corporation organized under the laws of Delaware,
with its principal offices at 4750 Clairton Boulevard, Pittsburgh, Pennsylvania,
and John M. Kish ("Executive"). Any reference to "Institution" herein shall
mean Great American Federal Savings and Loan Association or any successor
thereto.
WHEREAS, the Holding Company wishes to assure itself of the services of
Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of the Holding
Company on a full-time basis for said period.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of Executive's employment hereunder, Executive agrees to
serve as Chairman of the Board and Chief Executive Officer of the Holding
Company. The Executive shall render administrative and management services to
the Holding Company such as are customarily performed by persons in a similar
executive capacity. During said period, Executive also agrees to serve, if
elected, as an officer and director of any subsidiary of the Holding Company.
2. TERMS.
(a) The period of Executive's employment under this Agreement, as amended
and restated, shall be deemed to have commenced as of March 23, 1998, and shall
continue for a period of thirty-six (36) full calendar months thereafter.
Commencing on July 30, 1998, and continuing on each and every July 30th
thereafter, the disinterested members of the board of directors of the Holding
Company (the "Board") may extend the Agreement for a period of time such that
the remaining term of the Agreement shall be three (3) years unless Executive
elects not to extend the term of the Agreement by giving written notice to the
other party in accordance with Section 8 of this Agreement. The Board will
review the Agreement and Executive's performance annually for purposes of
determining whether to extend the Agreement and the rationale and results
thereof shall be included in the minutes of the Board's meeting. The Board
shall give notice to the Executive as soon as possible after such review as to
whether the Agreement is to be extended.
<PAGE>
(b) During the period of Executive's employment hereunder, except for
periods of absence occasioned by illness, reasonable vacation periods, and
reasonable leaves of absence, Executive shall devote substantially all his
business time, attention, skill, and efforts to the faithful performance of his
duties hereunder including activities and services related to the organization,
operation and management of the Holding Company and its direct or indirect
subsidiaries ("Subsidiaries") and participation in community and civic
organizations; provided, however, that, with the approval of the Board, as
evidenced by a resolution of such Board, from time to time, Executive may serve,
or continue to serve, on the boards of directors of, and hold any other offices
or positions in, companies or organizations, which, in such Board's judgment,
will not present any conflict of interest with the Holding Company or its
Subsidiaries, or materially affect the performance of Executive's duties
pursuant to this Agreement.
(c) Notwithstanding anything herein contained to the contrary, Executive's
employment with the Holding Company may be terminated by the Holding Company or
Executive during the term of this Agreement, subject to the terms and conditions
of this Agreement. However, Executive shall not perform, in any respect,
directly or indirectly, during the pendency of his temporary or permanent
suspension or termination from the Institution, duties and responsibilities
formerly performed at the Institution as part of his duties and responsibilities
as Chairman of the Board and Chief Executive Officer of the Holding Company.
3. COMPENSATION AND REIMBURSEMENT.
(a) The Executive shall be entitled to a salary from the Holding Company or
its Subsidiaries of $190,962 per year ("Base Salary"). Base Salary shall
include any amounts of compensation deferred by Executive under any qualified or
nonqualified plan maintained by the Holding Company and its Subsidiaries. Such
Base Salary shall be payable bi-weekly. During the period of this Agreement,
Executive's Base Salary shall be reviewed at least annually; the first such
review will be made no later than one year from the date of this Agreement.
Such review shall be conducted by the Board or by a Committee of the Board
delegated such responsibility by the Board. The Committee or the Board may
increase Executive's Base Salary. Any increase in Base Salary shall become the
"Base Salary" for purposes of this Agreement. In addition to the Base Salary
provided in this Section 3(a), the Holding Company shall also provide Executive,
at no premium cost to Executive, with all such other benefits as provided
uniformly to permanent full-time employees of the Holding Company and its
Subsidiaries.
(b) The Executive shall be entitled to participate in any employee benefit
plans, arrangements and perquisites substantially equivalent to those in which
Executive was participating or otherwise deriving benefit from immediately prior
to the beginning of the term of this Agreement, and the Holding Company and its
Subsidiaries will not, without Executive's prior written consent, make any
changes in such plans, arrangements or perquisites which would materially
adversely affect Executive's rights or benefits thereunder, except to the extent
that such changes are made applicable to all Holding Company and Institution
employees eligible to participate in such plans, arrangements and perquisites on
a non-discriminatory basis. Without limiting the generality of the foregoing
provisions of this Subsection (b), Executive shall be
2
<PAGE>
entitled to participate in or receive benefits under any employee benefit plans
including, but not limited to, retirement plans, supplemental retirement plans,
pension plans, profit-sharing plans, health-and-accident plans, medical coverage
or any other employee benefit plan or arrangement made available by the Holding
Company and its Subsidiaries in the future to its senior executives and key
management employees, subject to and on a basis consistent with the terms,
conditions and overall administration of such plans and arrangements. Executive
shall be entitled to incentive compensation and bonuses as provided in any plan
of the Holding Company and its Subsidiaries in which Executive is eligible to
participate. Nothing paid to the Executive under any such plan or arrangement
will be deemed to be in lieu of other compensation to which the Executive is
entitled under this Agreement.
(c) In addition to the Base Salary provided for by paragraph (a) of this
Section 3 and other compensation provided for by paragraph (b) of this Section
3, the Holding Company shall pay or reimburse Executive for all reasonable
travel and other reasonable expenses incurred in the performance of Executive's
obligations under this Agreement and may provide such additional compensation in
such form and such amounts as the Board may from time to time determine.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during the Executive's term of employment under this Agreement, the provisions
of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Holding Company of Executive's full-time employment hereunder
for any reason other than termination governed by Section 5(a) hereof, or for
Cause, as defined in Section 7 hereof; (ii) Executive's resignation from the
Holding Company's employ, upon, any (A) failure to elect or reelect or to
appoint or reappoint Executive as Chairman of the Board and Chief Executive
Officer, unless consented to by the Executive, (B) a material change in
Executive's function, duties, or responsibilities with the Holding Company or
its Subsidiaries, which change would cause Executive's position to become one of
lesser responsibility, importance, or scope from the position and attributes
thereof described in Section 1, above, unless consented to by the Executive, (C)
a relocation of Executive's principal place of employment by more than 25 miles
from its location at the effective date of this Agreement, unless consented to
by the Executive, (D) a material reduction in the benefits and perquisites to
the Executive from those being provided as of the effective date of this
Agreement, unless consented to by the Executive, (E) a liquidation or
dissolution of the Holding Company or the Institution, or (F) breach of this
Agreement by the Holding Company. Upon the occurrence of any event described in
clauses (A), (B), (C), (D), (E) or (F), above, Executive shall have the right to
elect to terminate his employment under this Agreement by resignation upon not
less than sixty (60) days prior written notice given within six full calendar
months after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination, on the Date of
Termination, as defined in Section 8, the Holding Company shall be obligated to
pay Executive, or, in the event
3
<PAGE>
of his subsequent death, his beneficiary or beneficiaries, or his estate, as the
case may be, a sum equal to the sum of: (i) the amount of the remaining payments
that the Executive would have earned if he had continued his employment with the
Institution during the remaining term of this Agreement at the Executive's Base
Salary at the Date of Termination; and (ii) the amount equal to the annual
contributions that would have been made on Executive's behalf to any employee
benefit plans of the Institution or the Holding Company during the remaining
term of this Agreement based on contributions made (on an annualized basis) at
the Date of Termination. At the election of the Executive, which election is to
be made prior to an Event of Termination, such payments shall be made in a lump
sum. In the event that no election is made, payment to the Executive will be
made on a monthly basis in approximately equal installments during the remaining
term of the Agreement. Such payments shall not be reduced in the event the
Executive obtains other employment following termination of employment.
(c) Upon the occurrence of an Event of Termination, the Holding Company
will cause to be continued life, medical, dental and disability coverage
substantially equivalent to the coverage maintained by the Holding Company or
its Subsidiaries for Executive prior to his termination at no premium cost to
the Executive. Such coverage shall cease upon the expiration of the remaining
term of this Agreement.
5. CHANGE IN CONTROL.
(a) For purposes of this Agreement, a "Change in Control" of the Holding
Company or the Institution shall mean an event of a nature that: (i) would be
required to be reported in response to Item 1(a) of the current report on Form
8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"); or (ii) results in a
Change in Control of the Institution or the Holding Company within the meaning
of the Home Owners' Loan Act of 1933, as amended, the Federal Deposit Insurance
Act, and the Rules and Regulations promulgated by the Office of Thrift
Supervision (or its predecessor agency), as in effect on the date hereof
(provided, that in applying the definition of change in control as set forth
under the rules and regulations of the OTS, the Board shall substitute its
judgment for that of the OTS); or (iii) without limitation such a Change in
Control shall be deemed to have occurred at such time as (A) any "person" (as
the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of voting securities of the Institution or the Holding
Company representing 20% or more of the Institution's or the Holding Company's
outstanding voting securities or right to acquire such securities except for any
voting securities of the Institution purchased by the Holding Company and any
voting securities purchased by any employee benefit plan of the Holding Company
or its Subsidiaries, or (B) individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director subsequent to the
date hereof whose election was approved by a vote of at least three-quarters of
the directors comprising the Incumbent Board, or whose nomination for election
by the Company's stockholders was approved by a Nominating Committee solely
composed of members which are Incumbent Board members, shall be, for purposes of
this clause (B), considered as though he
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were a member of the Incumbent Board, or (C) a plan of reorganization, merger,
consolidation, sale of all or substantially all the assets of the Institution or
the Holding Company or similar transaction occurs or is effectuated in which the
Institution or Holding Company is not the resulting entity; provided, however,
that such an event listed above will be deemed to have occurred or to have been
effectuated upon the receipt of all required federal regulatory approvals not
including the lapse of any statutory waiting periods, or (D) a proxy statement
has been distributed soliciting proxies from stockholders of the Holding
Company, by someone other than the current management of the Holding Company,
seeking stockholder approval of a plan of reorganization, merger or
consolidation of the Holding Company or Institution with one or more
corporations as a result of which the outstanding shares of the class of
securities then subject to such plan or transaction are exchanged for or
converted into cash or property or securities not issued by the Institution or
the Holding Company shall be distributed, or (E) a tender offer is made for 20%
or more of the voting securities of the Institution or Holding Company then
outstanding.
(b) If a Change in Control has occurred pursuant to Section 5(a) or the
Board has determined that a Change in Control has occurred, Executive shall be
entitled to the benefits provided in paragraphs (c) and (d), of this Section 5
upon his subsequent termination of employment at any time during the term of
this Agreement due to (i) Executive's dismissal, or (ii) Executive's voluntary
resignation following any demotion, loss of title, office or significant
authority or responsibility, reduction in the annual compensation or material
reduction in benefits or relocation of his principal place of employment by more
than 25 miles from its location immediately prior to the change in control,
unless such termination is because of his death or termination for Cause.
(c) Upon the Executive's entitlement to benefits pursuant to Section 5(b),
the Holding Company shall pay Executive, 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, a sum equal to the greater of:
(i) the payments due for the remaining term of the Agreement; or (ii) three (3)
times Executive's average annual compensation for the five (5) preceding taxable
years. Such annual compensation shall include Base Salary, commissions,
bonuses, contributions on behalf of Executive to any pension and profit sharing
plan, severance payments, directors or committee fees and fringe benefits paid
or to be paid to the Executive during such years. At the election of the
Executive, which election is to be made prior to a Change in Control, such
payment shall be made in a lump sum. In the event that no election is made,
payment to the Executive will be made on a monthly basis in approximately equal
installments during the remaining term of the Agreement. Such payments shall
not be reduced in the event Executive obtains other employment following
termination of employment.
(d) Upon the Executive's entitlement to benefits pursuant to Section 5(b),
the Company will cause to be continued life, medical, dental and disability
coverage substantially equivalent to the coverage maintained by the Institution
for Executive at no premium cost to Executive prior to his severance. Such
coverage and payments shall cease upon the expiration of thirty-six (36) months
following the Change in Control.
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6. CHANGE OF CONTROL RELATED PROVISIONS.
(a) Notwithstanding the provisions of Section 5, in the event that:
(i) the aggregate payments or benefits to be made or afforded to
Executive, which are deemed to be parachute payments as defined
in Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code") or any successor thereof, (the "Termination
Benefits") would be deemed to include an "excess parachute
payment" under Section 280G of the Code; and
(ii) if such Termination Benefits were reduced to an amount (the "Non-
Triggering Amount"), the value of which is one dollar ($1.00)
less than an amount equal to three (3) times Executive's "base
amount," as determined in accordance with said Section 280G and
the Non-Triggering Amount less the product of the marginal rate
of any applicable state and federal income tax and the Non
Triggering Amount would be greater than the aggregate value of
the Termination Benefits (without such reduction) minus (i) the
amount of tax required to be paid by the Executive thereon by
Section 4999 of the Code and further minus (ii) the product of
the Termination Benefits and the marginal rate of any applicable
state and federal income tax,
then the Termination Benefits shall be reduced to the Non-Triggering Amount.
The allocation of the reduction required hereby among the Termination Benefits
shall be determined by the Executive.
7. TERMINATION FOR CAUSE.
The term "Termination for Cause" shall mean termination because of
Executive's personal dishonesty, willful misconduct, any breach of fiduciary
duty involving personal profit, intentional failure to perform stated duties,
willful violation of any law, rule, regulation (other than traffic violations or
similar offenses), final cease and desist order or material breach of any
provision of this Agreement. Notwithstanding the foregoing, Executive shall not
be deemed to have been terminated for Cause unless and until there shall have
been delivered to him a Notice of Termination which shall include a copy of a
resolution duly adopted by the affirmative vote of not less than three-fourths
of the members of the Board at a meeting of the Board called and held for that
purpose (after reasonable notice to Executive and an opportunity for him,
together with counsel, to be heard before the Board), finding that in the good
faith opinion of the Board, Executive was guilty of conduct justifying
Termination for Cause and specifying the particulars thereof in detail. The
Executive shall not have the right to receive compensation or other benefits for
any period after Termination for Cause. During the period beginning on the
date of the Notice of Termination for Cause pursuant to Section 8 hereof through
the Date of Termination, stock options and related limited rights granted to
Executive under any stock option
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plan shall not be exercisable nor shall any unvested awards granted to Executive
under any stock benefit plan of the Institution, the Holding Company or any
subsidiary or affiliate thereof, vest. At the Date of Termination, such stock
options and related limited rights and any such unvested awards shall become
null and void and shall not be exercisable by or delivered to Executive at any
time subsequent to such Termination for Cause.
8. NOTICE.
(a) Any purported termination by the Holding Company or by Executive shall
be communicated by Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment under the
provision so indicated.
(b) "Date of Termination" shall mean the date specified in the Notice of
Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given).
(c) If, within thirty (30) days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, except upon the occurrence of a
Change in Control and voluntary termination by the Executive in which case the
Date of Termination shall be the date specified in the Notice, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding arbitration award, or
by a final judgment, order or decree of a court of competent jurisdiction (the
time for appeal therefrom having expired and no appeal having been perfected)
and provided further that the Date of Termination shall be extended by a notice
of dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, the Holding Company will
continue to pay Executive his full compensation in effect when the notice giving
rise to the dispute was given (including, but not limited to, Base Salary) and
continue him as a participant in all compensation, benefit and insurance plans
in which he was participating when the notice of dispute was given, until the
dispute is finally resolved in accordance with this Agreement. Amounts paid
under this Section are in addition to all other amounts due under this Agreement
and shall not be offset against or reduce any other amounts due under this
Agreement.
9. POST-TERMINATION OBLIGATIONS.
All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with this Section 9 for one (1) full year
after the earlier of the expiration of this Agreement or termination of
Executive's employment with the Holding Company. Executive shall, upon
reasonable notice, furnish such information and assistance to the Holding
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Company as may reasonably be required by the Holding Company in connection with
any litigation in which it or any of its subsidiaries or affiliates is, or may
become, a party.
10. NON-COMPETITION AND NON-DISCLOSURE.
(a) Upon any termination of Executive's employment hereunder pursuant to
Section 4 hereof, Executive agrees not to compete with the Holding Company or
its Subsidiaries for a period of one (1) year following such termination in any
city, town or county in which the Executive's normal business office is located
and the Holding Company or any of its Subsidiaries has an office or has filed an
application for regulatory approval to establish an office, determined as of the
effective date of such termination, except as agreed to pursuant to a resolution
duly adopted by the Board. Executive agrees that during such period and within
said cities, towns and counties, Executive shall not work for or advise, consult
or otherwise serve with, directly or indirectly, any entity whose business
materially competes with the depository, lending or other business activities of
the Holding Company or its Subsidiaries. The parties hereto, recognizing that
irreparable injury will result to the Holding Company or its Subsidiaries, its
business and property in the event of Executive's breach of this Subsection
10(a) agree that in the event of any such breach by Executive, the Holding
Company or its Subsidiaries, will be entitled, in addition to any other remedies
and damages available, to an injunction to restrain the violation hereof by
Executive, Executive's partners, agents, servants, employees and all persons
acting for or under the direction of Executive. Executive represents and admits
that in the event of the termination of his employment pursuant to Section 7
hereof, Executive's experience and capabilities are such that Executive can
obtain employment in a business engaged in other lines and/or of a different
nature than the Holding Company or its Subsidiaries, and that the enforcement of
a remedy by way of injunction will not prevent Executive from earning a
livelihood. Nothing herein will be construed as prohibiting the Holding Company
or its Subsidiaries from pursuing any other remedies available to the Holding
Company or its Subsidiaries for such breach or threatened breach, including the
recovery of damages from Executive.
(b) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Holding Company and
its Subsidiaries as it may exist from time to time, is a valuable, special and
unique asset of the business of the Holding Company and its Subsidiaries.
Executive will not, during or after the term of his employment, disclose any
knowledge of the past, present, planned or considered business activities of the
Holding Company and its Subsidiaries thereof to any person, firm, corporation,
or other entity for any reason or purpose whatsoever unless expressly authorized
by the Board of Directors or required by law. Notwithstanding the foregoing,
Executive may disclose any knowledge of banking, financial and/or economic
principles, concepts or ideas which are not solely and exclusively derived from
the business plans and activities of the Holding Company. In the event of a
breach or threatened breach by the Executive of the provisions of this Section,
the Holding Company will be entitled to an injunction restraining Executive from
disclosing, in whole or in part, the knowledge of the past, present, planned or
considered business activities of the Holding Company or its Subsidiaries or
from rendering any services to any person, firm, corporation, other entity to
whom such knowledge, in whole or in part, has been disclosed or is threatened to
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be disclosed. Nothing herein will be construed as prohibiting the Holding
Company from pursuing any other remedies available to the Holding Company for
such breach or threatened breach, including the recovery of damages from
Executive.
11. SOURCE OF PAYMENTS.
(a) All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Holding Company subject to Section 11(b).
(b) Notwithstanding any provision herein to the contrary, to the extent
that payments and benefits, as provided by this Agreement, are paid to or
received by Executive under the Employment Agreement dated March 23, 1998,
between Executive and the Institution, such compensation payments and benefits
paid by the Institution will be subtracted from any amount due simultaneously to
Executive under similar provisions of this Agreement. Payments pursuant to this
Agreement and the Institution Agreement shall be allocated in proportion to the
level of activity and the time expended on such activities by the Executive as
determined by the Holding Company and the Institution on a quarterly basis.
12. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior employment agreement between the Holding Company or any
predecessor of the Holding Company and Executive, except that this Agreement
shall not affect or operate to reduce any benefit or compensation inuring to the
Executive of a kind elsewhere provided. No provision of this Agreement shall be
interpreted to mean that Executive is subject to receiving fewer benefits than
those available to him without reference to this Agreement.
13. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive and the Holding Company and their respective successors and assigns.
14. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
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(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.
15. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
16. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
17. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Delaware,
unless otherwise specified herein.
18. 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 Executive within
fifty (50) miles from the location of the Institution, 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 Executive 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
Executive's termination is resolved in favor of the Executive, whether by
judgment, arbitration or settlement, Executive 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 Executive under this
Agreement.
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19. PAYMENT OF LEGAL FEES.
All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Holding Company, if Executive is successful pursuant to a
legal judgment, arbitration or settlement.
20. INDEMNIFICATION.
The Holding Company shall provide Executive (including his heirs, executors
and administrators) with coverage under a standard directors' and officers'
liability insurance policy at its expense, or in lieu thereof, shall indemnify
Executive (and his heirs, executors and administrators) to the fullest extent
permitted under Delaware law against all expenses and liabilities reasonably
incurred by him in connection with or arising out of any action, suit or
proceeding in which he may be involved by reason of his having been a director
or officer of the Holding Company (whether or not he continues to be a director
or officer at the time of incurring such expenses or liabilities), such expenses
and liabilities to include, but not be limited to, judgments, court costs and
attorneys' fees and the cost of reasonable settlements.
21. SUCCESSOR TO THE HOLDING COMPANY.
The Holding Company shall require any successor or assignee, whether direct
or indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Institution or the Holding
Company, expressly and unconditionally to assume and agree to perform the
Holding Company's obligations under this Agreement, in the same manner and to
the same extent that the Holding Company would be required to perform if no such
succession or assignment had taken place.
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SIGNATURES
IN WITNESS WHEREOF, GA Financial, Inc. has caused this amended and restated
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer and its directors, and Executive has signed this Agreement,
on the 23rd day of March, 1998.
ATTEST: GA Financial, Inc.
/s/ Lawrence A. Michael By: /s/ John G. Micenko
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Lawrence A. Michael John G. Micenko
Secretary President
For the Entire Board of Directors
[SEAL]
WITNESS:
By: /s/ John M. Kish
- -------------------------------- -----------------------------------
John M. Kish
Executive
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Exhibit 10.2
GREAT AMERICAN FEDERAL SAVINGS AND LOAN ASSOCIATION
EMPLOYMENT AGREEMENT
This AGREEMENT ("Agreement") is made effective as of March 23, 1998, by and
among Great American Federal Savings and Loan Association (the "Association"), a
federally chartered savings institution, with its principal administrative
office at 4750 Clairton Boulevard, Pittsburgh, Pennsylvania, 15236, GA
Financial, Inc., a corporation organized under the laws of the State of
Delaware, the holding company for the Association (the "Holding Company"), and
John M. Kish ("Executive").
WHEREAS, the Association wishes to assure itself of the services of
Executive for the period provided in this Agreement; and
WHEREAS, Executive is willing to serve in the employ of the Association on
a full-time basis for said period.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, Executive agrees to serve as
Chief Executive Officer of the Association. Executive shall render
administrative and management services to the Association such as are
customarily performed by persons situated in a similar executive capacity.
During said period, Executive also agrees to serve, if elected, as an officer
and director of the Holding Company or any subsidiary of the Association.
2. TERMS AND DUTIES.
(a) The period of Executive's employment under this Agreement shall be
deemed to have commenced as of March 23, 1998, and shall continue for a period
of thirty-six (36) full calendar months thereafter. Commencing on July 30,
1998, and continuing on each July 30th thereafter, the disinterested members of
the board of directors of the Association ("Board") may extend the Agreement for
a period of time such that the remaining term of the Agreement shall be three
(3) years unless the Executive elects not to extend the term of this Agreement
by giving written notice in accordance with Section 8 of this Agreement. The
Board will review the Agreement and Executive's performance annually for
purposes of determining whether to extend the Agreement and the rationale and
results thereof shall be included in the minutes of the Board's meeting. The
Board shall give notice to the Executive as soon as possible after such review
as to whether the Agreement is to be extended.
<PAGE>
(b) During the period of Executive's employment hereunder, except for
periods of absence occasioned by illness, reasonable vacation periods, and
reasonable leaves of absence, Executive shall devote substantially all his
business time, attention, skill, and efforts to the faithful performance of his
duties hereunder including activities and services related to the organization,
operation and management of the Association and participation in community and
civic organizations; provided, however, that, with the approval of the Board, as
evidenced by a resolution of such Board, from time to time, Executive may serve,
or continue to serve, on the boards of directors of, and hold any other offices
or positions in, companies or organizations, which, in such Board's judgment,
will not present any conflict of interest with the Association, or materially
affect the performance of Executive's duties pursuant to this Agreement.
(c) Notwithstanding anything herein to the contrary, Executive's employment
with the Association may be terminated by the Association or the Executive
during the term of this Agreement, subject to the terms and conditions of this
Agreement.
3. COMPENSATION AND REIMBURSEMENT.
(a) The Association shall pay Executive as compensation a salary of
$190,962 per year ("Base Salary"). Base Salary shall include any amounts of
compensation deferred by Executive under any qualified or nonqualified plan
maintained by the Association. Such Base Salary shall be payable bi-weekly.
During the period of this Agreement, Executive's Base Salary shall be reviewed
at least annually; the first such review will be made no later than one year
from the date of this Agreement. Such review shall be conducted by the Board or
by a Committee of the Board, delegated such responsibility by the Board. The
Committee or the Board may increase Executive's Base Salary. Any increase in
Base Salary shall become the "Base Salary" for purposes of this Agreement. In
addition to the Base Salary provided in this Section 3(a), the Association shall
also provide Executive, at no premium cost to Executive, with all such other
benefits as are provided uniformly to permanent full-time employees of the
Association.
(b) The Executive shall be entitled to participate in any employee benefit
plans, arrangements and perquisites substantially equivalent to those in which
Executive was participating or otherwise deriving benefit from immediately prior
to the beginning of the term of this Agreement, and the Association will not,
without Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would materially adversely affect Executive's
rights or benefits thereunder; except to the extent such changes are made
applicable to all Association employees on a non-discriminatory basis. Without
limiting the generality of the foregoing provisions of this Subsection (b),
Executive shall be entitled to participate in or receive benefits under any
employee benefit plans including but not limited to, retirement plans,
supplemental retirement plans, pension plans, profit-sharing plans, health-and-
accident plans, medical coverage or any other employee benefit plan or
arrangement made available by the Association in the future to its senior
executives and key management employees, subject to and on a basis consistent
with the terms, conditions and overall administration of such plans and
arrangements. Executive shall be entitled to incentive compensation and bonuses
as provided in any plan of the Association in which Executive is eligible to
participate. Nothing paid to the
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Executive under any such plan or arrangement will be deemed to be in lieu of
other compensation to which the Executive is entitled under this Agreement.
(c) In addition to the Base Salary provided for by paragraph (a) of this
Section 3 and other compensation provided for by paragraph (b) of this Section
3, the Association shall pay or reimburse Executive for all reasonable travel
and other reasonable expenses incurred by Executive performing his obligations
under this Agreement and may provide such additional compensation in such form
and such amounts as the Board may from time to time determine.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during the Executive's term of employment under this Agreement, the provisions
of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Association or the Holding Company of Executive's full-time
employment hereunder for any reason other than a termination governed by Section
5(a) hereof, or Termination for Cause, as defined in Section 7 hereof; (ii)
Executive's resignation from the Association's employ upon any (A) failure to
elect or reelect or to appoint or reappoint Executive as Chief Executive
Officer, unless consented to by the Executive, (B) a material change in
Executive's function, duties, or responsibilities, which change would cause
Executive's position to become one of lesser responsibility, importance, or
scope from the position and attributes thereof described in Section 1, above,
unless consented to by Executive, (C) a relocation of Executive's principal
place of employment by more than 25 miles from its location at the effective
date of this Agreement, unless consented to by the Executive, (D) a material
reduction in the benefits and perquisites to the Executive from those being
provided as of the effective date of this Agreement, unless consented to by the
Executive, or (E) a liquidation or dissolution of the Association or Holding
Company, or (F) breach of this Agreement by the Association. Upon the
occurrence of any event described in clauses (A), (B), (C), (D), (E) or (F),
above, Executive shall have the right to elect to terminate his employment under
this Agreement by resignation upon not less than sixty (60) days prior written
notice given within six full months after the event giving rise to said right to
elect.
(b) Upon the occurrence of an Event of Termination, on the Date of
Termination, as defined in Section 8, the Association shall be obligated to pay
Executive, or, in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be a sum equal to the sum of:
(i) the amount of the remaining payments that the Executive would have earned if
he had continued his employment with the Association during the remaining term
of this Agreement at the Executive's Base Salary at the Date of Termination; and
(ii) the amount equal to the annual contributions that would have been made on
Executive's behalf to any employee benefit plans of the Association or the
Holding Company during the remaining term of this Agreement based on
contributions made (on an annualized basis) at the Date of Termination;
provided, however, that any payments pursuant to this subsection and subsection
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4(c) below shall not, in the aggregate, exceed three times Executive's average
annual compensation for the five most recent taxable years that Executive has
been employed by the Association or such lesser
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number of years in the event that Executive shall have been employed by the
Association for less than five years. In the event the Association is not in
compliance with its minimum capital requirements or if such payments pursuant to
this subsection (b) would cause the Association's capital to be reduced below
its minimum regulatory capital requirements, such payments shall be deferred
until such time as the Association or successor thereto is in capital
compliance. At the election of the Executive, which election is to be made prior
to an Event of Termination, such payments shall be made in a lump sum as of the
Executive's Date of Termination. In the event that no election is made, payment
to Executive will be made on a monthly basis in approximately equal installments
during the remaining term of the Agreement. Such payments shall not be reduced
in the event the Executive obtains other employment following termination of
employment.
(c) Upon the occurrence of an Event of Termination, the Association will
cause to be continued life, medical, dental and disability coverage
substantially identical to the coverage maintained by the Association or the
Holding Company for Executive prior to his termination at no premium cost to the
Executive, except to the extent such coverage may be changed in its application
to all Association or Holding Company employees. Such coverage shall cease upon
the expiration of the remaining term of this Agreement.
5. CHANGE IN CONTROL.
(a) For purposes of this Agreement, a "Change in Control" of the
Association or Holding Company shall mean an event of a nature that: (i) would
be required to be reported in response to Item 1 of the current report on Form
8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"); or (ii)
results in a Change in Control of the Association or the Holding Company within
the meaning of the Home Owners' Loan Act of 1933, as amended, the Federal
Deposit Insurance Act and the Rules and Regulations promulgated by the Office of
Thrift Supervision ("OTS") (or its predecessor agency), as in effect on the date
hereof (provided, that in applying the definition of change in control as set
forth under the rules and regulations of the OTS, the Board shall substitute its
judgment for that of the OTS); or (iii) without limitation such a Change in
Control shall be deemed to have occurred at such time as (A) any "person" (as
the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of voting securities of the Association or the Holding
Company representing 25% or more of the Association's or the Holding Company's
outstanding voting securities or right to acquire such securities except for any
voting securities of the Association purchased by the Holding Company and any
voting securities purchased by any employee benefit plan of the Association or
the Holding Company, or (B) individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director subsequent to the
date hereof whose election was approved by a vote of at least three-quarters of
the directors comprising the Incumbent Board, or whose nomination for election
by the Holding Company's stockholders was approved by the same Nominating
Committee serving under an Incumbent Board, shall be, for purposes of this
clause (B), considered as though he were a
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<PAGE>
member of the Incumbent Board, or (C) a plan of reorganization, merger,
consolidation, sale of all or substantially all the assets of the Association or
the Holding Company or similar transaction occurs in which the Association or
Holding Company is not the resulting entity; provided, however, that such an
event listed above will be deemed to have occurred or to have been effectuated
upon the receipt of all required regulatory approvals not including the lapse of
any statutory waiting periods.
(b) If a Change in Control has occurred pursuant to Section 5(a) or the
Board has determined that a Change in Control has occurred, Executive shall be
entitled to the benefits provided in paragraphs (c), and (d) of this Section 5
upon his subsequent termination of employment at any time during the term of
this Agreement due to: (1) Executive's dismissal or (2) Executive's voluntary
resignation following any demotion, loss of title, office or significant
authority or responsibility, material reduction in annual compensation or
benefits or relocation of his principal place of employment by more than 25
miles from its location immediately prior to the Change in Control, unless such
termination is because of his death, disability, retirement or termination for
Cause.
(c) Upon Executive's entitlement to benefits pursuant to Section 5(b), the
Association shall pay Executive, or in the event of his subsequent death, his
beneficiary or beneficiaries, or his estate, as the case may be, a sum equal to
the greater of: (1) the payments due for the remaining term of the Agreement;
or 2) three (3) times Executive's average annual compensation for the five (5)
most recent taxable years that Executive has been employed by the Association or
such lesser number of years in the event that Executive shall have been employed
by the Association for less than five (5) years. Such average annual
compensation shall include Base Salary, commissions, bonuses, contributions on
Executive's behalf to any pension and/or profit sharing plan, severance
payments, retirement payments, directors or committee fees and fringe benefits
paid or to be paid to the Executive in any such year and payment of any expense
items without accountability or business purpose or that do not meet the
Internal Revenue Service requirements for deductibility by the Association;
provided however, that any payment under this provision and subsection 5(d)
- -------- -------
below shall not exceed three (3) times the Executive's average annual
compensation. In the event the Association is not in compliance with its
minimum capital requirements or if such payments would cause the Association's
capital to be reduced below its minimum regulatory capital requirements, such
payments shall be deferred until such time as the Association or successor
thereto is in capital compliance. At the election of the Executive, which
election is to be made prior to a Change in Control, such payment shall be made
in a lump sum as of the Executive's Date of Termination. In the event that no
election is made, payment to the Executive will be made in approximately equal
installments on a monthly basis over a period of thirty-six (36) months
following the Executive's termination. Such payments shall not be reduced in
the event Executive obtains other employment following termination of
employment.
(d) Upon the Executive's entitlement to benefits pursuant to Section 5(b),
the Association will cause to be continued life, medical, dental and disability
coverage substantially identical to the coverage maintained by the Association
for Executive prior to his severance at no premium cost to the Executive, except
to the extent that such coverage may be changed in its
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application for all Association employees on a non-discriminatory basis. Such
coverage and payments shall cease upon the expiration of thirty-six (36) months
following the Date of Termination.
6. CHANGE OF CONTROL RELATED PROVISIONS
Notwithstanding the provisions of Section 5, in no event shall the
aggregate payments or benefits to be made or afforded to Executive under said
paragraphs (the "Termination Benefits") constitute an "excess parachute payment"
under Section 280G of the Internal Revenue Code of 1986, as amended, or any
successor thereto, and in order to avoid such a result, Termination Benefits
will be reduced, if necessary, to an amount (the "Non-Triggering Amount"), the
value of which is one dollar ($1.00) less than an amount equal to three (3)
times Executive's "base amount", as determined in accordance with said Section
280G. The allocation of the reduction required hereby among the Termination
Benefits provided by Section 5 shall be determined by Executive.
7. TERMINATION FOR CAUSE.
The term "Termination for Cause" shall mean termination because of
Executive's personal dishonesty, incompetence, willful misconduct, any 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 this Agreement. Notwithstanding the foregoing,
Executive shall not be deemed to have been Terminated for Cause unless and until
there shall have been delivered to him a Notice of Termination which shall
include a copy of a resolution duly adopted by the affirmative vote of not less
than a majority of the members of the Board at a meeting of the Board called and
held for that purpose (after reasonable notice to Executive and an opportunity
for him, together with counsel, to be heard before the Board), finding that in
the good faith opinion of the Board, Executive was guilty of conduct justifying
Termination for Cause and specifying the particulars thereof in detail.
Executive shall not have the right to receive compensation or other benefits for
any period after the Date of Termination for Cause. During the period beginning
on the date of the Notice of Termination for Cause pursuant to Section 8 hereof
through the Date of Termination for Cause, stock options and related limited
rights granted to Executive under any stock option plan shall not be exercisable
nor shall any unvested awards granted to Executive under any stock benefit plan
of the Association, the Holding Company or any subsidiary or affiliate thereof,
vest. At the Date of Termination for Cause, such stock options and related
limited rights and any unvested awards shall become null and void and shall not
be exercisable by or delivered to Executive at any time subsequent to such
Termination for Cause.
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8. NOTICE.
(a) Any purported termination by the Association or by Executive shall be
communicated by Notice of Termination to the other party hereto. For purposes
of this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.
(b) "Date of Termination" shall mean the date specified in the Notice of
Termination (which, in the case of a Termination for Cause, shall not be less
than thirty days from the date such Notice of Termination is given.).
(c) If, within thirty (30) days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, the Date of Termination shall be the
date on which the dispute is finally determined, either by mutual written
agreement of the parties, by a binding arbitration award, or by a final
judgment, order or decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been perfected) and,
provided further, that the Date of Termination shall be extended by a notice of
dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, in the event the Executive is
terminated for reasons other than Termination for Cause, the Association will
continue to pay Executive his Base Salary in effect when the notice giving rise
to the dispute was given until the earlier of: 1) the resolution of the dispute
in accordance with this Agreement or 2) the expiration of the remaining term of
this Agreement as determined as of the Date of Termination. Amounts paid under
this Section are in addition to all other amounts due under this Agreement and
shall not be offset against or reduce any other amounts due under this
Agreement.
9. POST-TERMINATION OBLIGATIONS.
All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with this Section 9 for one (1) full year
after the earlier of the expiration of this Agreement or termination of
Executive's employment with the Association. Executive shall, upon reasonable
notice, furnish such information and assistance to the Association as may
reasonably be required by the Association in connection with any litigation in
which it or any of its subsidiaries or affiliates is, or may become, a party.
10. NON-COMPETITION AND NON-DISCLOSURE OF ASSOCIATION BUSINESS.
(a) Upon any termination of Executive's employment hereunder pursuant to
Section 4 hereof, Executive agrees not to compete with the Association for a
period of one (1) year following such termination in any city, town or county in
which the Executive's normal business office is located and the Association has
an office or has filed an application for regulatory
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approval to establish an office, determined as of the effective date of such
termination, except as agreed to pursuant to a resolution duly adopted by the
Board. Executive agrees that during such period and within said cities, towns
and counties, Executive shall not work for or advise, consult or otherwise serve
with, directly or indirectly, any entity whose business materially competes with
the depository, lending or other business activities of the Association. The
parties hereto, recognizing that irreparable injury will result to the
Association, its business and property in the event of Executive's breach of
this Subsection 10(a) agree that in the event of any such breach by Executive,
the Association, will be entitled, in addition to any other remedies and damages
available, to an injunction to restrain the violation hereof by Executive,
Executive's partners, agents, servants, employees and all persons acting for or
under the direction of Executive. Nothing herein will be construed as
prohibiting the Association from pursuing any other remedies available to the
Association for such breach or threatened breach, including the recovery of
damages from Executive.
(b) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Association and
affiliates thereof, as it may exist from time to time, is a valuable, special
and unique asset of the business of the Association. Executive will not, during
or after the term of his employment, disclose any knowledge of the past,
present, planned or considered business activities of the Association or
affiliates thereof to any person, firm, corporation, or other entity for any
reason or purpose whatsoever. Notwithstanding the foregoing, Executive may
disclose any knowledge of banking, financial and/or economic principles,
concepts or ideas which are not solely and exclusively derived from the business
plans and activities of the Association. Further, Executive may disclose
information regarding the business activities of the Association to the OTS and
the Federal Deposit Insurance Corporation ("FDIC") pursuant to a formal
regulatory request. In the event of a breach or threatened breach by Executive
of the provisions of this Section, the Association will be entitled to an
injunction restraining Executive from disclosing, in whole or in part, the
knowledge of the past, present, planned or considered business activities of the
Association or affiliates thereof, or from rendering any services to any person,
firm, corporation, other entity to whom such knowledge, in whole or in part, has
been disclosed or is threatened to be disclosed. Nothing herein will be
construed as prohibiting the Association from pursuing any other remedies
available to the Association for such breach or threatened breach, including the
recovery of damages from Executive.
11. SOURCE OF PAYMENTS.
(a) All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Association. The Holding Company, however,
unconditionally guarantees payment and provision of all amounts and benefits due
hereunder to Executive and, if such amounts and benefits due from the
Association are not timely paid or provided by the Association, such amounts and
benefits shall be paid or provided by the Holding Company.
(b) Notwithstanding any provision herein to the contrary, to the extent
that payments and benefits, as provided by this Agreement, are paid to or
received by Executive under the
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Employment Agreement dated July 30, 1996, and amended and restated on February
17, 1998, between Executive and the Holding Company, such compensation payments
and benefits paid by the Holding Company will be subtracted from any amounts due
simultaneously to Executive under similar provisions of this Agreement. Payments
pursuant to this Agreement and the Holding Company Agreement shall be allocated
in proportion to the services rendered and time expended on such activities by
Executive as determined by the Holding Company and the Association on a
quarterly basis.
12. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior employment agreement between the Association or any
predecessor of the Association and Executive, except that this Agreement shall
not affect or operate to reduce any benefit or compensation inuring to Executive
of a kind elsewhere provided. No provision of this Agreement shall be
interpreted to mean that Executive is subject to receiving fewer benefits than
those available to him without reference to this Agreement.
13. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive and the Association and their respective successors and assigns.
14. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.
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<PAGE>
15. REQUIRED PROVISIONS.
(a) The Association may terminate Executive's employment at any time, but
any termination by the Association, other than Termination for Cause, shall not
prejudice Executive's right to compensation or other benefits under this
Agreement. Executive shall not have the right to receive compensation or other
benefits for any period after Termination for Cause as defined in Section 7
hereinabove.
(b) If Executive is suspended from office and/or temporarily prohibited
from participating in the conduct of the Association'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. (S)1818(e)(3) or (g)(1); the Association's obligations under this
contract shall be suspended as of the date of service, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the
Association may in its discretion: (i) pay Executive 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.
(c) If Executive is removed and/or permanently prohibited from
participating in the conduct of the Association'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.
(S)1818(e)(4) or (g)(1), all obligations of the Association under this contract
shall terminate as of the effective date of the order, but vested rights of the
contracting parties shall not be affected.
(d) If the Association is in default as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act, 12 U.S.C. (S)1813(x)(1) all obligations of the
Association under this contract shall terminate as of the date of default, but
this paragraph shall not affect any vested rights of the contracting parties.
(e) All obligations of the Association under this contract shall be
terminated, except to the extent determined that continuation of the contract is
necessary for the continued operation of the institution: (i) by the Director
of the OTS (or his designee), the FDIC or the Resolution Trust Corporation, at
the time the FDIC enters into an agreement to provide assistance to or on behalf
of the Association under the authority contained in Section 13(c) of the Federal
Deposit Insurance Act, 12 U.S.C. (S)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
Association or when the Association 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.
(f) Any payments made to Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon compliance with 12 U.S.C.
(S)1828(k) and 12 C.F.R. (S)545.121 and any rules and regulations promulgated
thereunder.
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16. REINSTATEMENT OF BENEFITS UNDER SECTION 15(b).
In the event Executive is suspended and/or temporarily prohibited from
participating in the conduct of the Association's affairs by a notice described
in Section 15(b) hereof (the "Notice") during the term of this Agreement and a
Change in Control, as defined herein, occurs, the Association will assume its
obligation to pay and Executive will be entitled to receive all of the
termination benefits provided for under Section 5 of this Agreement upon the
Association's receipt of a dismissal of charges in the Notice.
17. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
18. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
19. GOVERNING LAW.
The validity, interpretation, performance and enforcement of this Agreement
shall be governed by the laws of the State of Delaware, but only to the extent
not superseded by federal law.
20. 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 Executive within fifty
(50) miles from the location of the Association, 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
Executive 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
Executive's termination is resolved in favor of Executive, whether by judgment,
arbitration or settlement, Executive 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 Executive under this Agreement.
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21. PAYMENT OF COSTS AND LEGAL FEES.
All reasonable costs and legal fees paid or incurred by Executive pursuant
to any dispute or question of interpretation relating to this Agreement shall be
paid or reimbursed by the Association if Executive is successful on the merits
pursuant to a legal judgment, arbitration or settlement.
22. INDEMNIFICATION.
(a) The Association shall provide Executive (including his heirs, executors
and administrators) with coverage under a standard directors' and officers'
liability insurance policy at its expense, or in lieu thereof, shall indemnify
Executive (and his heirs, executors and administrators) as permitted under
federal law against all expenses and liabilities reasonably incurred by him in
connection with or arising out of any action, suit or proceeding in which he may
be involved by reason of his having been a director or officer of the
Association (whether or not he continues to be a director or officer at the time
of incurring such expenses or liabilities), such expenses and liabilities to
include, but not be limited to, judgments, court costs and attorneys' fees and
the cost of reasonable settlements.
(b) Any payments made to Executive pursuant to this Section are subject to
and conditioned upon compliance with 12 C.F.R.(S) 545.121 and any rules or
regulations promulgated thereunder.
23. SUCCESSOR TO THE ASSOCIATION.
The Association shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Association or the Holding
Company, expressly and unconditionally to assume and agree to perform the
Association's obligations under this Agreement, in the same manner and to the
same extent that the Association would be required to perform if no such
succession or assignment had taken place.
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<PAGE>
SIGNATURES
IN WITNESS WHEREOF, Great American Federal Savings and Loan Association and
GA Financial, Inc. have caused this Agreement to be executed and their seals to
be affixed hereunto by their duly authorized officers and directors, and
Executive has signed this Agreement, on the 23rd day of March, 1998.
ATTEST: GREAT AMERICAN FEDERAL SAVINGS
AND LOAN ASSOCIATION
/s/ Lawrence A. Michael By: /s/ John G. Micenko
- -------------------------- --------------------------
Lawrence A. Michael John G. Micenko
Secretary For The Entire Board of Directors
[SEAL]
ATTEST: GA FINANCIAL, INC.
(Guarantor)
/s/ Lawrence A. Michael By: /s/ John G. Micenko
- -------------------------- --------------------------
Lawrence A. Michael John G. Micenko
Secretary For The Entire Board of Directors
[SEAL]
WITNESS:
/s/John M. Kish
- -------------------------- --------------------------
John M. Kish
Executive
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<PAGE>
Exhibit 10.3
GA FINANCIAL, INC.
EMPLOYMENT AGREEMENT
(As amended and restated March 23, 1998)
This AGREEMENT ("Agreement") is made effective as of July 30,1996, and
amended and restated as of March 23, 1998, by and between GA Financial, Inc.
(the "Holding Company"), a corporation organized under the laws of Delaware,
with its principal offices at 4750 Clairton Boulevard, Pittsburgh, Pennsylvania,
and John G. Micenko ("Executive"). Any reference to "Institution" herein shall
mean Great American Federal Savings and Loan Association or any successor
thereto.
WHEREAS, the Holding Company wishes to assure itself of the services of
Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of the Holding
Company on a full-time basis for said period.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of Executive's employment hereunder, Executive agrees to
serve as President of the Holding Company. The Executive shall render
administrative and management services to the Holding Company such as are
customarily performed by persons in a similar executive capacity. During said
period, Executive also agrees to serve, if elected, as an officer and director
of any subsidiary of the Holding Company.
2. TERMS.
(a) The period of Executive's employment under this Agreement, as amended
and restated, shall be deemed to have commenced as of March 23, 1998, and shall
continue for a period of thirty-six (36) full calendar months thereafter.
Commencing on July 30, 1998, and continuing on each and every July 30th
thereafter, the disinterested members of the board of directors of the Holding
Company (the "Board") may extend the Agreement for a period of time such that
the remaining term of the Agreement shall be three (3) years unless Executive
elects not to extend the term of the Agreement by giving written notice to the
other party in accordance with Section 8 of this Agreement. The Board will
review the Agreement and Executive's performance annually for purposes of
determining whether to extend the Agreement and the rationale and results
thereof shall be included in the minutes of the Board's meeting. The Board
shall give notice to the Executive as soon as possible after such review as to
whether the Agreement is to be extended.
<PAGE>
(b) During the period of Executive's employment hereunder, except for
periods of absence occasioned by illness, reasonable vacation periods, and
reasonable leaves of absence, Executive shall devote substantially all his
business time, attention, skill, and efforts to the faithful performance of his
duties hereunder including activities and services related to the organization,
operation and management of the Holding Company and its direct or indirect
subsidiaries ("Subsidiaries") and participation in community and civic
organizations; provided, however, that, with the approval of the Board, as
evidenced by a resolution of such Board, from time to time, Executive may serve,
or continue to serve, on the boards of directors of, and hold any other offices
or positions in, companies or organizations, which, in such Board's judgment,
will not present any conflict of interest with the Holding Company or its
Subsidiaries, or materially affect the performance of Executive's duties
pursuant to this Agreement.
(c) Notwithstanding anything herein contained to the contrary, Executive's
employment with the Holding Company may be terminated by the Holding Company or
Executive during the term of this Agreement, subject to the terms and conditions
of this Agreement. However, Executive shall not perform, in any respect,
directly or indirectly, during the pendency of his temporary or permanent
suspension or termination from the Institution, duties and responsibilities
formerly performed at the Institution as part of his duties and responsibilities
as President of the Holding Company.
3. COMPENSATION AND REIMBURSEMENT.
(a) The Executive shall be entitled to a salary from the Holding Company or
its Subsidiaries of $218,195 per year ("Base Salary"). Base Salary shall
include any amounts of compensation deferred by Executive under any qualified or
non-qualified plan maintained by the Holding Company and its Subsidiaries. Such
Base Salary shall be payable bi-weekly. During the period of this Agreement,
Executive's Base Salary shall be reviewed at least annually; the first such
review will be made no later than one year from the date of this Agreement.
Such review shall be conducted by the Board or by a Committee of the Board
delegated such responsibility by the Board. The Committee or the Board may
increase Executive's Base Salary. Any increase in Base Salary shall become the
"Base Salary" for purposes of this Agreement. In addition to the Base Salary
provided in this Section 3(a), the Holding Company shall also provide Executive,
at no premium cost to Executive, with all such other benefits as provided
uniformly to permanent full-time employees of the Holding Company and its
Subsidiaries.
(b) The Executive shall be entitled to participate in any employee benefit
plans, arrangements and perquisites substantially equivalent to those in which
Executive was participating or otherwise deriving benefit from immediately prior
to the beginning of the term of this Agreement, and the Holding Company and its
Subsidiaries will not, without Executive's prior written consent, make any
changes in such plans, arrangements or perquisites which would materially
adversely affect Executive's rights or benefits thereunder, except to the extent
that such changes are made applicable to all Holding Company and Institution
employees eligible to participate in such plans, arrangements and perquisites on
a non-discriminatory basis. Without
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limiting the generality of the foregoing provisions of this Subsection (b),
Executive shall be entitled to participate in or receive benefits under any
employee benefit plans including, but not limited to, retirement plans,
supplemental retirement plans, pension plans, profit-sharing plans, health-and-
accident plans, medical coverage or any other employee benefit plan or
arrangement made available by the Holding Company and its Subsidiaries in the
future to its senior executives and key management employees, subject to and on
a basis consistent with the terms, conditions and overall administration of such
plans and arrangements. Executive shall be entitled to incentive compensation
and bonuses as provided in any plan of the Holding Company and its Subsidiaries
in which Executive is eligible to participate. Nothing paid to the Executive
under any such plan or arrangement will be deemed to be in lieu of other
compensation to which the Executive is entitled under this Agreement.
(c) In addition to the Base Salary provided for by paragraph (a) of this
Section 3 and other compensation provided for by paragraph (b) of this Section
3, the Holding Company shall pay or reimburse Executive for all reasonable
travel and other reasonable expenses incurred in the performance of Executive's
obligations under this Agreement and may provide such additional compensation in
such form and such amounts as the Board may from time to time determine.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during the Executive's term of employment under this Agreement, the provisions
of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Holding Company of Executive's full-time employment hereunder
for any reason other than termination governed by Section 5(a) hereof, or for
Cause, as defined in Section 7 hereof; (ii) Executive's resignation from the
Holding Company's employ, upon, any (A) failure to elect or reelect or to
appoint or reappoint Executive as President, unless consented to by the
Executive, (B) a material change in Executive's function, duties, or
responsibilities with the Holding Company or its Subsidiaries, which change
would cause Executive's position to become one of lesser responsibility,
importance, or scope from the position and attributes thereof described in
Section 1, above, unless consented to by the Executive, (C) a relocation of
Executive's principal place of employment by more than 25 miles from its
location at the effective date of this Agreement, unless consented to by the
Executive, (D) a material reduction in the benefits and perquisites to the
Executive from those being provided as of the effective date of this Agreement,
unless consented to by the Executive, (E) a liquidation or dissolution of the
Holding Company or the Institution, or (F) breach of this Agreement by the
Holding Company. Upon the occurrence of any event described in clauses (A),
(B), (C), (D), (E) or (F), above, Executive shall have the right to elect to
terminate his employment under this Agreement by resignation upon not less than
sixty (60) days prior written notice given within six full calendar months after
the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination, on the Date of
Termination, as defined in Section 8, the Holding Company shall be obligated to
pay Executive, or, in the event
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of his subsequent death, his beneficiary or beneficiaries, or his estate, as the
case may be, a sum equal to the sum of: (i) the amount of the remaining payments
that the Executive would have earned if he had continued his employment with the
Institution during the remaining term of this Agreement at the Executive's Base
Salary at the Date of Termination; and (ii) the amount equal to the annual
contributions that would have been made on Executive's behalf to any employee
benefit plans of the Institution or the Holding Company during the remaining
term of this Agreement based on contributions made (on an annualized basis) at
the Date of Termination. At the election of the Executive, which election is to
be made prior to an Event of Termination, such payments shall be made in a lump
sum. In the event that no election is made, payment to the Executive will be
made on a monthly basis in approximately equal installments during the remaining
term of the Agreement. Such payments shall not be reduced in the event the
Executive obtains other employment following termination of employment.
(c) Upon the occurrence of an Event of Termination, the Holding Company
will cause to be continued life, medical, dental and disability coverage
substantially equivalent to the coverage maintained by the Holding Company or
its Subsidiaries for Executive prior to his termination at no premium cost to
the Executive. Such coverage shall cease upon the expiration of the remaining
term of this Agreement.
5. CHANGE IN CONTROL.
(a) For purposes of this Agreement, a "Change in Control" of the Holding
Company or the Institution shall mean an event of a nature that: (i) would be
required to be reported in response to Item 1(a) of the current report on Form
8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"); or (ii) results in a
Change in Control of the Institution or the Holding Company within the meaning
of the Home Owners' Loan Act of 1933, as amended, the Federal Deposit Insurance
Act, and the Rules and Regulations promulgated by the Office of Thrift
Supervision (or its predecessor agency), as in effect on the date hereof
(provided, that in applying the definition of change in control as set forth
under the rules and regulations of the OTS, the Board shall substitute its
judgment for that of the OTS); or (iii) without limitation such a Change in
Control shall be deemed to have occurred at such time as (A) any "person" (as
the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of voting securities of the Institution or the Holding
Company representing 20% or more of the Institution's or the Holding Company's
outstanding voting securities or right to acquire such securities except for any
voting securities of the Institution purchased by the Holding Company and any
voting securities purchased by any employee benefit plan of the Holding Company
or its Subsidiaries, or (B) individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director subsequent to the
date hereof whose election was approved by a vote of at least three-quarters of
the directors comprising the Incumbent Board, or whose nomination for election
by the Company's stockholders was approved by a Nominating Committee solely
composed of members which are Incumbent Board members, shall be, for purposes of
this clause (B), considered as though he
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were a member of the Incumbent Board, or (C) a plan of reorganization, merger,
consolidation, sale of all or substantially all the assets of the Institution or
the Holding Company or similar transaction occurs or is effectuated in which the
Institution or Holding Company is not the resulting entity; provided, however,
that such an event listed above will be deemed to have occurred or to have been
effectuated upon the receipt of all required federal regulatory approvals not
including the lapse of any statutory waiting periods, or (D) a proxy statement
has been distributed soliciting proxies from stockholders of the Holding
Company, by someone other than the current management of the Holding Company,
seeking stockholder approval of a plan of reorganization, merger or
consolidation of the Holding Company or Institution with one or more
corporations as a result of which the outstanding shares of the class of
securities then subject to such plan or transaction are exchanged for or
converted into cash or property or securities not issued by the Institution or
the Holding Company shall be distributed, or (E) a tender offer is made for 20%
or more of the voting securities of the Institution or Holding Company then
outstanding.
(b) If a Change in Control has occurred pursuant to Section 5(a) or the
Board has determined that a Change in Control has occurred, Executive shall be
entitled to the benefits provided in paragraphs (c) and (d), of this Section 5
upon his subsequent termination of employment at any time during the term of
this Agreement due to (i) Executive's dismissal, or (ii) Executive's voluntary
resignation following any demotion, loss of title, office or significant
authority or responsibility, reduction in the annual compensation or material
reduction in benefits or relocation of his principal place of employment by more
than 25 miles from its location immediately prior to the change in control,
unless such termination is because of his death or termination for Cause.
(c) Upon the Executive's entitlement to benefits pursuant to Section 5(b),
the Holding Company shall pay Executive, 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, a sum equal to the greater of:
(i) the payments due for the remaining term of the Agreement; or (ii) three (3)
times Executive's average annual compensation for the five (5) preceding taxable
years. Such annual compensation shall include Base Salary, commissions,
bonuses, contributions on behalf of Executive to any pension and profit sharing
plan, severance payments, directors or committee fees and fringe benefits paid
or to be paid to the Executive during such years. At the election of the
Executive, which election is to be made prior to a Change in Control, such
payment shall be made in a lump sum. In the event that no election is made,
payment to the Executive will be made on a monthly basis in approximately equal
installments during the remaining term of the Agreement. Such payments shall
not be reduced in the event Executive obtains other employment following
termination of employment.
(d) Upon the Executive's entitlement to benefits pursuant to Section 5(b),
the Company will cause to be continued life, medical, dental and disability
coverage substantially equivalent to the coverage maintained by the Institution
for Executive at no premium cost to Executive prior to his severance. Such
coverage and payments shall cease upon the expiration of thirty-six (36) months
following the Change in Control.
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6. CHANGE OF CONTROL RELATED PROVISIONS.
(a) Notwithstanding the provisions of Section 5, in the event that:
(i) the aggregate payments or benefits to be made or afforded to
Executive, which are deemed to be parachute payments as defined
in Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code") or any successor thereof, (the "Termination
Benefits") would be deemed to include an "excess parachute
payment" under Section 280G of the Code; and
(ii) if such Termination Benefits were reduced to an amount (the "Non-
Triggering Amount"), the value of which is one dollar ($1.00)
less than an amount equal to three (3) times Executive's "base
amount," as determined in accordance with said Section 280G and
the Non-Triggering Amount less the product of the marginal rate
of any applicable state and federal income tax and the Non
Triggering Amount would be greater than the aggregate value of
the Termination Benefits (without such reduction) minus (i) the
amount of tax required to be paid by the Executive thereon by
Section 4999 of the Code and further minus (ii) the product of
the Termination Benefits and the marginal rate of any applicable
state and federal income tax,
then the Termination Benefits shall be reduced to the Non-Triggering Amount.
The allocation of the reduction required hereby among the Termination Benefits
shall be determined by the Executive.
7. TERMINATION FOR CAUSE.
The term "Termination for Cause" shall mean termination because of
Executive's personal dishonesty, willful misconduct, any breach of fiduciary
duty involving personal profit, intentional failure to perform stated duties,
willful violation of any law, rule, regulation (other than traffic violations or
similar offenses), final cease and desist order or material breach of any
provision of this Agreement. Notwithstanding the foregoing, Executive shall not
be deemed to have been terminated for Cause unless and until there shall have
been delivered to him a Notice of Termination which shall include a copy of a
resolution duly adopted by the affirmative vote of not less than three-fourths
of the members of the Board at a meeting of the Board called and held for that
purpose (after reasonable notice to Executive and an opportunity for him,
together with counsel, to be heard before the Board), finding that in the good
faith opinion of the Board, Executive was guilty of conduct justifying
Termination for Cause and specifying the particulars thereof in detail. The
Executive shall not have the right to receive compensation or other benefits for
any period after Termination for Cause. During the period beginning on the
date of the Notice of Termination for Cause pursuant to Section 8 hereof through
the Date of Termination, stock options and related limited rights granted to
Executive under any stock option
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plan shall not be exercisable nor shall any unvested awards granted to Executive
under any stock benefit plan of the Institution, the Holding Company or any
subsidiary or affiliate thereof, vest. At the Date of Termination, such stock
options and related limited rights and any such unvested awards shall become
null and void and shall not be exercisable by or delivered to Executive at any
time subsequent to such Termination for Cause.
8. NOTICE.
(a) Any purported termination by the Holding Company or by Executive shall
be communicated by Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment under the
provision so indicated.
(b) "Date of Termination" shall mean the date specified in the Notice of
Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given).
(c) If, within thirty (30) days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, except upon the occurrence of a
Change in Control and voluntary termination by the Executive in which case the
Date of Termination shall be the date specified in the Notice, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding arbitration award, or
by a final judgment, order or decree of a court of competent jurisdiction (the
time for appeal therefrom having expired and no appeal having been perfected)
and provided further that the Date of Termination shall be extended by a notice
of dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, the Holding Company will
continue to pay Executive his full compensation in effect when the notice giving
rise to the dispute was given (including, but not limited to, Base Salary) and
continue him as a participant in all compensation, benefit and insurance plans
in which he was participating when the notice of dispute was given, until the
dispute is finally resolved in accordance with this Agreement. Amounts paid
under this Section are in addition to all other amounts due under this Agreement
and shall not be offset against or reduce any other amounts due under this
Agreement.
9. POST-TERMINATION OBLIGATIONS.
All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with this Section 9 for one (1) full year
after the earlier of the expiration of this Agreement or termination of
Executive's employment with the Holding Company. Executive shall, upon
reasonable notice, furnish such information and assistance to the Holding
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Company as may reasonably be required by the Holding Company in connection with
any litigation in which it or any of its subsidiaries or affiliates is, or may
become, a party.
10. NON-COMPETITION AND NON-DISCLOSURE.
(a) Upon any termination of Executive's employment hereunder pursuant to
Section 4 hereof, Executive agrees not to compete with the Holding Company or
its Subsidiaries for a period of one (1) year following such termination in any
city, town or county in which the Executive's normal business office is located
and the Holding Company or any of its Subsidiaries has an office or has filed an
application for regulatory approval to establish an office, determined as of the
effective date of such termination, except as agreed to pursuant to a resolution
duly adopted by the Board. Executive agrees that during such period and within
said cities, towns and counties, Executive shall not work for or advise, consult
or otherwise serve with, directly or indirectly, any entity whose business
materially competes with the depository, lending or other business activities of
the Holding Company or its Subsidiaries. The parties hereto, recognizing that
irreparable injury will result to the Holding Company or its Subsidiaries, its
business and property in the event of Executive's breach of this Subsection
10(a) agree that in the event of any such breach by Executive, the Holding
Company or its Subsidiaries, will be entitled, in addition to any other remedies
and damages available, to an injunction to restrain the violation hereof by
Executive, Executive's partners, agents, servants, employees and all persons
acting for or under the direction of Executive. Executive represents and admits
that in the event of the termination of his employment pursuant to Section 7
hereof, Executive's experience and capabilities are such that Executive can
obtain employment in a business engaged in other lines and/or of a different
nature than the Holding Company or its Subsidiaries, and that the enforcement of
a remedy by way of injunction will not prevent Executive from earning a
livelihood. Nothing herein will be construed as prohibiting the Holding Company
or its Subsidiaries from pursuing any other remedies available to the Holding
Company or its Subsidiaries for such breach or threatened breach, including the
recovery of damages from Executive.
(b) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Holding Company and
its Subsidiaries as it may exist from time to time, is a valuable, special and
unique asset of the business of the Holding Company and its Subsidiaries.
Executive will not, during or after the term of his employment, disclose any
knowledge of the past, present, planned or considered business activities of the
Holding Company and its Subsidiaries thereof to any person, firm, corporation,
or other entity for any reason or purpose whatsoever unless expressly authorized
by the Board of Directors or required by law. Notwithstanding the foregoing,
Executive may disclose any knowledge of banking, financial and/or economic
principles, concepts or ideas which are not solely and exclusively derived from
the business plans and activities of the Holding Company. In the event of a
breach or threatened breach by the Executive of the provisions of this Section,
the Holding Company will be entitled to an injunction restraining Executive from
disclosing, in whole or in part, the knowledge of the past, present, planned or
considered business activities of the Holding Company or its Subsidiaries or
from rendering any services to any person, firm, corporation, other entity to
whom such knowledge, in whole or in part, has been disclosed or is threatened to
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be disclosed. Nothing herein will be construed as prohibiting the Holding
Company from pursuing any other remedies available to the Holding Company for
such breach or threatened breach, including the recovery of damages from
Executive.
11. SOURCE OF PAYMENTS.
(a) All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Holding Company subject to Section 11(b).
(b) Notwithstanding any provision herein to the contrary, to the extent
that payments and benefits, as provided by this Agreement, are paid to or
received by Executive under the Employment Agreement dated July 30, 1996 and
amended and restated as of March 23, 1998, between Executive and the
Institution, such compensation payments and benefits paid by the Institution
will be subtracted from any amount due simultaneously to Executive under similar
provisions of this Agreement. Payments pursuant to this Agreement and the
Institution Agreement shall be allocated in proportion to the level of activity
and the time expended on such activities by the Executive as determined by the
Holding Company and the Institution on a quarterly basis.
12. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior employment agreement between the Holding Company or any
predecessor of the Holding Company and Executive, except that this Agreement
shall not affect or operate to reduce any benefit or compensation inuring to the
Executive of a kind elsewhere provided. No provision of this Agreement shall be
interpreted to mean that Executive is subject to receiving fewer benefits than
those available to him without reference to this Agreement.
13. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive and the Holding Company and their respective successors and assigns.
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14. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.
15. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
16. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
17. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Delaware,
unless otherwise specified herein.
18. 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 Executive within
fifty (50) miles from the location of the Institution, 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 Executive 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
Executive's termination is resolved in favor of the Executive, whether by
judgment, arbitration or settlement, Executive shall be entitled to the payment
of all back-pay, including salary, bonuses and any
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other cash compensation, fringe benefits and any compensation and benefits due
Executive under this Agreement.
19. PAYMENT OF LEGAL FEES.
All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Holding Company, if Executive is successful pursuant to a
legal judgment, arbitration or settlement.
20. INDEMNIFICATION.
The Holding Company shall provide Executive (including his heirs, executors
and administrators) with coverage under a standard directors' and officers'
liability insurance policy at its expense, or in lieu thereof, shall indemnify
Executive (and his heirs, executors and administrators) to the fullest extent
permitted under Delaware law against all expenses and liabilities reasonably
incurred by him in connection with or arising out of any action, suit or
proceeding in which he may be involved by reason of his having been a director
or officer of the Holding Company (whether or not he continues to be a director
or officer at the time of incurring such expenses or liabilities), such expenses
and liabilities to include, but not be limited to, judgments, court costs and
attorneys' fees and the cost of reasonable settlements.
21. SUCCESSOR TO THE HOLDING COMPANY.
The Holding Company shall require any successor or assignee, whether direct
or indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Institution or the Holding
Company, expressly and unconditionally to assume and agree to perform the
Holding Company's obligations under this Agreement, in the same manner and to
the same extent that the Holding Company would be required to perform if no such
succession or assignment had taken place.
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SIGNATURES
IN WITNESS WHEREOF, GA Financial, Inc. has caused this amended and restated
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer and its directors, and Executive has signed this Agreement,
on the March 23, 1998.
ATTEST: GA Financial, Inc.
/s/ Lawrence A. Michael By: /s/ John M. Kish
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Secretary Chairman of the Board and
Chief Executive Officer
For the Entire Board of Directors
[SEAL]
WITNESS:
By: /s/ John G. Micenko
- ------------------------------- --------------------------------
John G. Micenko
Executive
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Exhibit 10.4
GREAT AMERICAN FEDERAL SAVINGS AND LOAN ASSOCIATION
EMPLOYMENT AGREEMENT
(As amended and restated on March 23, 1998)
This AGREEMENT ("Agreement") is made effective as of July 30, 1996 , and
amended and restated as of March 23, 1998 by and among Great American Federal
Savings and Loan Association (the "Association"), a federally chartered savings
institution, with its principal administrative office at 4750 Clairton
Boulevard, Pittsburgh, Pennsylvania, 15236, GA Financial, Inc., a corporation
organized under the laws of the State of Delaware, the holding company for the
Association (the "Holding Company"), and John G. Micenko ("Executive").
WHEREAS, the Association wishes to assure itself of the services of
Executive for the period provided in this Agreement; and
WHEREAS, Executive is willing to serve in the employ of the Association on
a full-time basis for said period.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:
1. POSITION AND RESPONSIBILITIES.
Effective as of March 23, 1998, and the subsequent period of his employment
hereunder, Executive agrees to serve as President of the Association.
Executive shall render administrative and management services to the Association
such as are customarily performed by persons situated in a similar executive
capacity. During said period, Executive also agrees to serve, if elected, as an
officer and director of the Holding Company or any subsidiary of the
Association.
2. TERMS AND DUTIES.
(a) The period of Executive's employment under this Agreement, as amended
and restated, shall continue until July 30, 2000. Commencing on July 30, 1998,
and continuing on each and every July 30th thereafter, the disinterested members
of the board of directors of the Association ("Board") may extend the Agreement
for a period of time such that the remaining term of the Agreement shall be
three (3) years unless the Executive elects not to extend the term of this
Agreement by giving written notice in accordance with Section 8 of this
Agreement. The Board will review the Agreement and Executive's performance
annually for purposes of determining whether to extend the Agreement and the
rationale and results thereof shall be included in the minutes of the Board's
meeting. The Board shall give notice to the Executive as soon as possible after
such review as to whether the Agreement is to be extended.
<PAGE>
(b) During the period of Executive's employment hereunder, except for
periods of absence occasioned by illness, reasonable vacation periods, and
reasonable leaves of absence, Executive shall devote substantially all his
business time, attention, skill, and efforts to the faithful performance of his
duties hereunder including activities and services related to the organization,
operation and management of the Association and participation in community and
civic organizations; provided, however, that, with the approval of the Board, as
evidenced by a resolution of such Board, from time to time, Executive may serve,
or continue to serve, on the boards of directors of, and hold any other offices
or positions in, companies or organizations, which, in such Board's judgment,
will not present any conflict of interest with the Association, or materially
affect the performance of Executive's duties pursuant to this Agreement.
(c) Notwithstanding anything herein to the contrary, Executive's employment
with the Association may be terminated by the Association or the Executive
during the term of this Agreement, subject to the terms and conditions of this
Agreement.
3. COMPENSATION AND REIMBURSEMENT.
(a) The Association shall pay Executive as compensation a salary of
$218,195 per year ("Base Salary"). Base Salary shall include any amounts of
compensation deferred by Executive under any qualified or non-qualified plan
maintained by the Association. Such Base Salary shall be payable bi-weekly.
During the period of this Agreement, Executive's Base Salary shall be reviewed
at least annually; the first such review will be made no later than one year
from the date of this Agreement. Such review shall be conducted by the Board or
by a committee of the Board, delegated such responsibility by the Board. The
committee or the Board may increase Executive's Base Salary. Any increase in
Base Salary shall become the "Base Salary" for purposes of this Agreement. In
addition to the Base Salary provided in this Section 3(a), the Association shall
also provide Executive, at no premium cost to Executive, with all such other
benefits as are provided uniformly to permanent full-time employees of the
Association.
(b) The Executive shall be entitled to participate in any employee benefit
plans, arrangements and perquisites substantially equivalent to those in which
Executive was participating or otherwise deriving benefit from immediately prior
to the beginning of the term of this Agreement, and the Association will not,
without Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would materially adversely affect Executive's
rights or benefits thereunder; except to the extent such changes are made
applicable to all Association employees on a non-discriminatory basis. Without
limiting the generality of the foregoing provisions of this Subsection (b),
Executive shall be entitled to participate in or receive benefits under any
employee benefit plans including but not limited to, retirement plans,
supplemental retirement plans, pension plans, profit-sharing plans, health-and-
accident plans, medical coverage or any other employee benefit plan or
arrangement made available by the Association in the future to its senior
executives and key management employees, subject to and on a basis consistent
with the terms, conditions and overall administration of such plans and
arrangements. Executive shall be entitled to incentive compensation and bonuses
as provided in any plan of the Association in which Executive is eligible to
participate. Nothing paid to the
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Executive under any such plan or arrangement will be deemed to be in lieu of
other compensation to which the Executive is entitled under this Agreement.
(c) In addition to the Base Salary provided for by paragraph (a) of this
Section 3 and other compensation provided for by paragraph (b) of this Section
3, the Association shall pay or reimburse Executive for all reasonable travel
and other reasonable expenses incurred by Executive performing his obligations
under this Agreement and may provide such additional compensation in such form
and such amounts as the Board may from time to time determine.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during the Executive's term of employment under this Agreement, the provisions
of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Association or the Holding Company of Executive's full-time
employment hereunder for any reason other than a termination governed by Section
5(a) hereof, or Termination for Cause, as defined in Section 7 hereof; (ii)
Executive's resignation from the Association's employ upon any (A) failure to
elect or reelect or to appoint or reappoint Executive as President , unless
consented to by the Executive, (B) a material change in Executive's function,
duties, or responsibilities, which change would cause Executive's position to
become one of lesser responsibility, importance, or scope from the position and
attributes thereof described in Section 1, above, unless consented to by
Executive, (C) a relocation of Executive's principal place of employment by more
than 25 miles from its location at the effective date of this Agreement, unless
consented to by the Executive, (D) a material reduction in the benefits and
perquisites to the Executive from those being provided as of the effective date
of this Agreement, unless consented to by the Executive, or (E) a liquidation or
dissolution of the Association or Holding Company, or (F) breach of this
Agreement by the Association. Upon the occurrence of any event described in
clauses (A), (B), (C), (D), (E) or (F), above, Executive shall have the right to
elect to terminate his employment under this Agreement by resignation upon not
less than sixty (60) days prior written notice given within six full months
after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination, on the Date of
Termination, as defined in Section 8, the Association shall be obligated to pay
Executive, or, in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be a sum equal to the sum of:
(i) the amount of the remaining payments that the Executive would have earned if
he had continued his employment with the Association during the remaining term
of this Agreement at the Executive's Base Salary at the Date of Termination; and
(ii) the amount equal to the annual contributions that would have been made on
Executive's behalf to any employee benefit plans of the Association or the
Holding Company during the remaining term of this Agreement based on
contributions made (on an annualized basis) at the Date of Termination;
provided, however, that any payments pursuant to this subsection and subsection
- -------- -------
4(c) below shall not, in the aggregate, exceed three times Executive's average
annual compensation for the five most recent taxable years that Executive has
been employed by the Association or such lesser
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number of years in the event that Executive shall have been employed by the
Association for less than five years. In the event the Association is not in
compliance with its minimum capital requirements or if such payments pursuant to
this subsection (b) would cause the Association's capital to be reduced below
its minimum regulatory capital requirements, such payments shall be deferred
until such time as the Association or successor thereto is in capital
compliance. At the election of the Executive, which election is to be made prior
to an Event of Termination, such payments shall be made in a lump sum as of the
Executive's Date of Termination. In the event that no election is made, payment
to Executive will be made on a monthly basis in approximately equal installments
during the remaining term of the Agreement. Such payments shall not be reduced
in the event the Executive obtains other employment following termination of
employment.
(c) Upon the occurrence of an Event of Termination, the Association will
cause to be continued life, medical, dental and disability coverage
substantially identical to the coverage maintained by the Association or the
Holding Company for Executive prior to his termination at no premium cost to the
Executive, except to the extent such coverage may be changed in its application
to all Association or Holding Company employees. Such coverage shall cease upon
the expiration of the remaining term of this Agreement.
5. CHANGE IN CONTROL.
(a) For purposes of this Agreement, a "Change in Control" of the
Association or Holding Company shall mean an event of a nature that: (i) would
be required to be reported in response to Item 1 of the current report on Form
8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"); or (ii)
results in a Change in Control of the Association or the Holding Company within
the meaning of the Home Owners' Loan Act of 1933, as amended, the Federal
Deposit Insurance Act and the Rules and Regulations promulgated by the Office of
Thrift Supervision ("OTS") (or its predecessor agency), as in effect on the date
hereof (provided, that in applying the definition of change in control as set
forth under the rules and regulations of the OTS, the Board shall substitute its
judgment for that of the OTS); or (iii) without limitation such a Change in
Control shall be deemed to have occurred at such time as (A) any "person" (as
the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of voting securities of the Association or the Holding
Company representing 25% or more of the Association's or the Holding Company's
outstanding voting securities or right to acquire such securities except for any
voting securities of the Association purchased by the Holding Company and any
voting securities purchased by any employee benefit plan of the Association or
the Holding Company, or (B) individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director subsequent to the
date hereof whose election was approved by a vote of at least three-quarters of
the directors comprising the Incumbent Board, or whose nomination for election
by the Holding Company's stockholders was approved by the same Nominating
Committee serving under an Incumbent Board, shall be, for purposes of this
clause (B), considered as though he were a
-4-
<PAGE>
member of the Incumbent Board, or (C) a plan of reorganization, merger,
consolidation, sale of all or substantially all the assets of the Association or
the Holding Company or similar transaction occurs in which the Association or
Holding Company is not the resulting entity; provided, however, that such an
event listed above will be deemed to have occurred or to have been effectuated
upon the receipt of all required regulatory approvals not including the lapse of
any statutory waiting periods.
(b) If a Change in Control has occurred pursuant to Section 5(a) or the
Board has determined that a Change in Control has occurred, Executive shall be
entitled to the benefits provided in paragraphs (c), and (d) of this Section 5
upon his subsequent termination of employment at any time during the term of
this Agreement due to: (1) Executive's dismissal or (2) Executive's voluntary
resignation following any demotion, loss of title, office or significant
authority or responsibility, material reduction in annual compensation or
benefits or relocation of his principal place of employment by more than 25
miles from its location immediately prior to the Change in Control, unless such
termination is because of his death, disability, retirement or termination for
Cause.
(c) Upon Executive's entitlement to benefits pursuant to Section 5(b), the
Association shall pay Executive, or in the event of his subsequent death, his
beneficiary or beneficiaries, or his estate, as the case may be, a sum equal to
the greater of: (1) the payments due for the remaining term of the Agreement;
or 2) three (3) times Executive's average annual compensation for the five (5)
most recent taxable years that Executive has been employed by the Association or
such lesser number of years in the event that Executive shall have been employed
by the Association for less than five (5) years. Such average annual
compensation shall include Base Salary, commissions, bonuses, contributions on
Executive's behalf to any pension and/or profit sharing plan, severance
payments, retirement payments, directors or committee fees and fringe benefits
paid or to be paid to the Executive in any such year and payment of any expense
items without accountability or business purpose or that do not meet the
Internal Revenue Service requirements for deductibility by the Association;
provided however, that any payment under this provision and subsection 5(d)
- -------- -------
below shall not exceed three (3) times the Executive's average annual
compensation. In the event the Association is not in compliance with its
minimum capital requirements or if such payments would cause the Association's
capital to be reduced below its minimum regulatory capital requirements, such
payments shall be deferred until such time as the Association or successor
thereto is in capital compliance. At the election of the Executive, which
election is to be made prior to a Change in Control, such payment shall be made
in a lump sum as of the Executive's Date of Termination. In the event that no
election is made, payment to the Executive will be made in approximately equal
installments on a monthly basis over a period of thirty-six (36) months
following the Executive's termination. Such payments shall not be reduced in
the event Executive obtains other employment following termination of
employment.
(d) Upon the Executive's entitlement to benefits pursuant to Section 5(b),
the Association will cause to be continued life, medical, dental and disability
coverage substantially identical to the coverage maintained by the Association
for Executive prior to his severance at no premium cost to the Executive, except
to the extent that such coverage may be changed in its
-5-
<PAGE>
application for all Association employees on a non-discriminatory basis. Such
coverage and payments shall cease upon the expiration of thirty-six (36) months
following the Date of Termination.
6. CHANGE OF CONTROL RELATED PROVISIONS
Notwithstanding the provisions of Section 5, in no event shall the
aggregate payments or benefits to be made or afforded to Executive under said
paragraphs (the "Termination Benefits") constitute an "excess parachute payment"
under Section 280G of the Internal Revenue Code of 1986, as amended, or any
successor thereto, and in order to avoid such a result, Termination Benefits
will be reduced, if necessary, to an amount (the "Non-Triggering Amount"), the
value of which is one dollar ($1.00) less than an amount equal to three (3)
times Executive's "base amount", as determined in accordance with said Section
280G. The allocation of the reduction required hereby among the Termination
Benefits provided by Section 5 shall be determined by Executive.
7. TERMINATION FOR CAUSE.
The term "Termination for Cause" shall mean termination because of
Executive's personal dishonesty, incompetence, willful misconduct, any 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 this Agreement. Notwithstanding the foregoing,
Executive shall not be deemed to have been Terminated for Cause unless and until
there shall have been delivered to him a Notice of Termination which shall
include a copy of a resolution duly adopted by the affirmative vote of not less
than a majority of the members of the Board at a meeting of the Board called and
held for that purpose (after reasonable notice to Executive and an opportunity
for him, together with counsel, to be heard before the Board), finding that in
the good faith opinion of the Board, Executive was guilty of conduct justifying
Termination for Cause and specifying the particulars thereof in detail.
Executive shall not have the right to receive compensation or other benefits for
any period after the Date of Termination for Cause. During the period beginning
on the date of the Notice of Termination for Cause pursuant to Section 8 hereof
through the Date of Termination for Cause, stock options and related limited
rights granted to Executive under any stock option plan shall not be exercisable
nor shall any unvested awards granted to Executive under any stock benefit plan
of the Association, the Holding Company or any subsidiary or affiliate thereof,
vest. At the Date of Termination for Cause, such stock options and related
limited rights and any unvested awards shall become null and void and shall not
be exercisable by or delivered to Executive at any time subsequent to such
Termination for Cause.
-6-
<PAGE>
8. NOTICE.
(a) Any purported termination by the Association or by Executive shall be
communicated by Notice of Termination to the other party hereto. For purposes
of this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.
(b) "Date of Termination" shall mean the date specified in the Notice of
Termination (which, in the case of a Termination for Cause, shall not be less
than thirty days from the date such Notice of Termination is given.).
(c) If, within thirty (30) days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, the Date of Termination shall be the
date on which the dispute is finally determined, either by mutual written
agreement of the parties, by a binding arbitration award, or by a final
judgment, order or decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been perfected) and,
provided further, that the Date of Termination shall be extended by a notice of
dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, in the event the Executive is
terminated for reasons other than Termination for Cause, the Association will
continue to pay Executive his Base Salary in effect when the notice giving rise
to the dispute was given until the earlier of: 1) the resolution of the dispute
in accordance with this Agreement or 2) the expiration of the remaining term of
this Agreement as determined as of the Date of Termination. Amounts paid under
this Section are in addition to all other amounts due under this Agreement and
shall not be offset against or reduce any other amounts due under this
Agreement.
9. POST-TERMINATION OBLIGATIONS.
All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with this Section 9 for one (1) full year
after the earlier of the expiration of this Agreement or termination of
Executive's employment with the Association. Executive shall, upon reasonable
notice, furnish such information and assistance to the Association as may
reasonably be required by the Association in connection with any litigation in
which it or any of its subsidiaries or affiliates is, or may become, a party.
10. NON-COMPETITION AND NON-DISCLOSURE OF ASSOCIATION BUSINESS.
(a) Upon any termination of Executive's employment hereunder pursuant to
Section 4 hereof, Executive agrees not to compete with the Association for a
period of one (1) year following such termination in any city, town or county in
which the Executive's normal business office is located and the Association has
an office or has filed an application for regulatory
-7-
<PAGE>
approval to establish an office, determined as of the effective date of such
termination, except as agreed to pursuant to a resolution duly adopted by the
Board. Executive agrees that during such period and within said cities, towns
and counties, Executive shall not work for or advise, consult or otherwise serve
with, directly or indirectly, any entity whose business materially competes with
the depository, lending or other business activities of the Association. The
parties hereto, recognizing that irreparable injury will result to the
Association, its business and property in the event of Executive's breach of
this Subsection 10(a) agree that in the event of any such breach by Executive,
the Association, will be entitled, in addition to any other remedies and damages
available, to an injunction to restrain the violation hereof by Executive,
Executive's partners, agents, servants, employees and all persons acting for or
under the direction of Executive. Nothing herein will be construed as
prohibiting the Association from pursuing any other remedies available to the
Association for such breach or threatened breach, including the recovery of
damages from Executive.
(b) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Association and
affiliates thereof, as it may exist from time to time, is a valuable, special
and unique asset of the business of the Association. Executive will not, during
or after the term of his employment, disclose any knowledge of the past,
present, planned or considered business activities of the Association or
affiliates thereof to any person, firm, corporation, or other entity for any
reason or purpose whatsoever. Notwithstanding the foregoing, Executive may
disclose any knowledge of banking, financial and/or economic principles,
concepts or ideas which are not solely and exclusively derived from the business
plans and activities of the Association. Further, Executive may disclose
information regarding the business activities of the Association to the OTS and
the Federal Deposit Insurance Corporation ("FDIC") pursuant to a formal
regulatory request. In the event of a breach or threatened breach by Executive
of the provisions of this Section, the Association will be entitled to an
injunction restraining Executive from disclosing, in whole or in part, the
knowledge of the past, present, planned or considered business activities of the
Association or affiliates thereof, or from rendering any services to any person,
firm, corporation, other entity to whom such knowledge, in whole or in part, has
been disclosed or is threatened to be disclosed. Nothing herein will be
construed as prohibiting the Association from pursuing any other remedies
available to the Association for such breach or threatened breach, including the
recovery of damages from Executive.
11. SOURCE OF PAYMENTS.
(a) All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Association. The Holding Company, however,
unconditionally guarantees payment and provision of all amounts and benefits due
hereunder to Executive and, if such amounts and benefits due from the
Association are not timely paid or provided by the Association, such amounts and
benefits shall be paid or provided by the Holding Company.
(b) Notwithstanding any provision herein to the contrary, to the extent
that payments and benefits, as provided by this Agreement, are paid to or
received by Executive under the
-8-
<PAGE>
Employment Agreement dated July 30, 1996, and amended and restated on February
17, 1998, between Executive and the Holding Company, such compensation payments
and benefits paid by the Holding Company will be subtracted from any amounts due
simultaneously to Executive under similar provisions of this Agreement. Payments
pursuant to this Agreement and the Holding Company Agreement shall be allocated
in proportion to the services rendered and time expended on such activities by
Executive as determined by the Holding Company and the Association on a
quarterly basis.
12. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior employment agreement between the Association or any
predecessor of the Association and Executive, except that this Agreement shall
not affect or operate to reduce any benefit or compensation inuring to Executive
of a kind elsewhere provided. No provision of this Agreement shall be
interpreted to mean that Executive is subject to receiving fewer benefits than
those available to him without reference to this Agreement.
13. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive and the Association and their respective successors and assigns.
14. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.
-9-
<PAGE>
15. REQUIRED PROVISIONS.
(a) The Association may terminate Executive's employment at any time, but
any termination by the Association, other than Termination for Cause, shall not
prejudice Executive's right to compensation or other benefits under this
Agreement. Executive shall not have the right to receive compensation or other
benefits for any period after Termination for Cause as defined in Section 7
hereinabove.
(b) If Executive is suspended from office and/or temporarily prohibited
from participating in the conduct of the Association'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. (S)1818(e)(3) or (g)(1); the Association 's obligations under this
contract shall be suspended as of the date of service, unless stayed by
appropriate proceedings. If the charges in the notice are dismissed, the
Association may in its discretion: (i) pay Executive 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.
(c) If Executive is removed and/or permanently prohibited from
participating in the conduct of the Association'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.
(S)1818(e)(4) or (g)(1), all obligations of the Association under this contract
shall terminate as of the effective date of the order, but vested rights of the
contracting parties shall not be affected.
(d) If the Association is in default as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act, 12 U.S.C. (S)1813(x)(1) all obligations of the
Association under this contract shall terminate as of the date of default, but
this paragraph shall not affect any vested rights of the contracting parties.
(e) All obligations of the Association under this contract shall be
terminated, except to the extent determined that continuation of the contract is
necessary for the continued operation of the institution: (i) by the Director
of the OTS (or his designee), the FDIC or the Resolution Trust Corporation, at
the time the FDIC enters into an agreement to provide assistance to or on behalf
of the Association under the authority contained in Section 13(c) of the Federal
Deposit Insurance Act, 12 U.S.C. (S)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
Association or when the Association 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.
(f) Any payments made to Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon compliance with 12 U.S.C.
(S)1828(k) and 12 C.F.R. (S)545.121 and any rules and regulations promulgated
thereunder.
-10-
<PAGE>
16. REINSTATEMENT OF BENEFITS UNDER SECTION 15(b).
In the event Executive is suspended and/or temporarily prohibited from
participating in the conduct of the Association's affairs by a notice described
in Section 15(b) hereof (the "Notice") during the term of this Agreement and a
Change in Control, as defined herein, occurs, the Association will assume its
obligation to pay and Executive will be entitled to receive all of the
termination benefits provided for under Section 5 of this Agreement upon the
Association's receipt of a dismissal of charges in the Notice.
17. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
18. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
19. GOVERNING LAW.
The validity, interpretation, performance and enforcement of this Agreement
shall be governed by the laws of the State of Delaware, but only to the extent
not superseded by federal law.
20. 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 Executive within fifty
(50) miles from the location of the Association, 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
Executive 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
Executive's termination is resolved in favor of Executive, whether by judgment,
arbitration or settlement, Executive 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 Executive under this Agreement.
-11-
<PAGE>
21. PAYMENT OF COSTS AND LEGAL FEES.
All reasonable costs and legal fees paid or incurred by Executive pursuant
to any dispute or question of interpretation relating to this Agreement shall be
paid or reimbursed by the Association if Executive is successful on the merits
pursuant to a legal judgment, arbitration or settlement.
22. INDEMNIFICATION.
(a) The Association shall provide Executive (including his heirs, executors
and administrators) with coverage under a standard directors' and officers'
liability insurance policy at its expense, or in lieu thereof, shall indemnify
Executive (and his heirs, executors and administrators) as permitted under
federal law against all expenses and liabilities reasonably incurred by him in
connection with or arising out of any action, suit or proceeding in which he may
be involved by reason of his having been a director or officer of the
Association (whether or not he continues to be a director or officer at the time
of incurring such expenses or liabilities), such expenses and liabilities to
include, but not be limited to, judgments, court costs and attorneys' fees and
the cost of reasonable settlements.
(b) Any payments made to Executive pursuant to this Section are subject to
and conditioned upon compliance with 12 C.F.R.(S) 545.121 and any rules or
regulations promulgated thereunder.
23. SUCCESSOR TO THE ASSOCIATION.
The Association shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Association or the Holding
Company, expressly and unconditionally to assume and agree to perform the
Association's obligations under this Agreement, in the same manner and to the
same extent that the Association would be required to perform if no such
succession or assignment had taken place.
-12-
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, Great American Federal Savings and Loan Association and
GA Financial, Inc. have caused this amended and restated Agreement to be
executed and their seals to be affixed hereunto by their duly authorized
officers and directors, and Executive has signed this Agreement, on the 23rd day
of March, 1998.
ATTEST: GREAT AMERICAN FEDERAL SAVINGS
AND LOAN ASSOCIATION
/s/ Lawrence A. Michael By: /s/ John M. Kish
- ------------------------------- --------------------------------
Lawrence A. Michael John M. Kish
Secretary Chairman of the Board
For The Entire Board of Directors
[SEAL]
ATTEST: GA FINANCIAL, INC.
(Guarantor)
/s/ Lawrence A. Michael By: /s/ John M. Kish
- ------------------------------- --------------------------------
Lawrence A. Michael John M. Kish
Secretary Chairman of the Board and
Chief Executive Officer
For The Entire Board of Directors
[SEAL]
WITNESS:
/s/ John G. Micenko
- ------------------------------- --------------------------------
John G. Micenko
Executive
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<PAGE>
EXHIBIT 15
April 20, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D. C. 20549
Re: GA Financial, Inc.
1. Form S-8 (Registration No. 333-37837)
Ladies and Gentlemen:
We are aware that our report dated April 20, 1998 on our review of interim
financial information of GA Financial, Inc. for the three month period ended
March 31, 1998 and included in GA Financial, Inc.'s quarterly report on Form 10-
Q for the period then ended is incorporated by reference in the registration
statement referred to above. Pursuant to Rule 436(c) under the Securities Act
of 1933, this report should not be considered a part of the registration
statement prepared or certified by us within the meaning of Sections 7 and 11 of
that Act.
Very truly yours,
/s/Coopers and Lybrand
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1998
FIRST QUARTER 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 7,647
<INT-BEARING-DEPOSITS> 13,313
<FED-FUNDS-SOLD> 5,450
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 428,046
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 333,850
<ALLOWANCE> 1,417
<TOTAL-ASSETS> 818,091
<DEPOSITS> 469,862
<SHORT-TERM> 120,031
<LIABILITIES-OTHER> 17,848
<LONG-TERM> 95,760
0
0
<COMMON> 89
<OTHER-SE> 114,501
<TOTAL-LIABILITIES-AND-EQUITY> 818,091
<INTEREST-LOAN> 6,558
<INTEREST-INVEST> 7,481
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 7,737
<INTEREST-DEPOSIT> 4,614
<INTEREST-EXPENSE> 3,123
<INTEREST-INCOME-NET> 6,302
<LOAN-LOSSES> 90
<SECURITIES-GAINS> 162
<EXPENSE-OTHER> 4,047
<INCOME-PRETAX> 2,972
<INCOME-PRE-EXTRAORDINARY> 2,972
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,930
<EPS-PRIMARY> .28
<EPS-DILUTED> .27
<YIELD-ACTUAL> 7.24
<LOANS-NON> 1,749
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,322
<CHARGE-OFFS> 28
<RECOVERIES> 33
<ALLOWANCE-CLOSE> 1,417
<ALLOWANCE-DOMESTIC> 1,417
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
