SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
WARWICK COMMUNITY BANCORP, INC.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
LOGO
18 OAKLAND AVENUE
WARWICK, NEW YORK 10990-0591
(914) 986-2206
May 21, 1998
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders
("Special Meeting") of Warwick Community Bancorp, Inc. ("Company"), the holding
company for The Warwick Savings Bank ("Bank"), which will be held at the Bank's
main office, located at 18 Oakland Avenue, Warwick, New York 10990-0591, on June
24, 1998 at 8:00 a.m., Eastern time.
The attached Notice of Special Meeting of Shareholders and Proxy
Statement describe the formal business to be transacted at the Special Meeting.
Directors and officers of the Company will be present at the Special Meeting to
respond to appropriate questions from our shareholders.
The Board of Directors of the Company has determined that an
affirmative vote on each matter to be considered at the Special Meeting is in
the best interests of the Company and its shareholders and recommends a vote
"FOR" each of these matters.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, THE BOARD OF DIRECTORS
URGES YOU TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS SOON AS
POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE. THIS WILL NOT PREVENT YOU FROM
VOTING IN PERSON AT THE SPECIAL MEETING, BUT WILL ASSURE THAT YOUR VOTE IS
COUNTED IF YOU ARE UNABLE TO ATTEND. IF YOU ARE A SHAREHOLDER WHOSE SHARES ARE
NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM
YOUR RECORD HOLDER TO ATTEND AND TO VOTE PERSONALLY AT THE SPECIAL MEETING.
EXAMPLES OF SUCH DOCUMENTATION INCLUDE A BROKER'S STATEMENT, LETTER OR OTHER
DOCUMENT CONFIRMING YOUR OWNERSHIP OF SHARES OF THE COMPANY.
On behalf of the Board of Directors and the employees of the Company
and the Bank, thank you for your continued support.
Sincerely yours,
[Facsimile signature]
Timothy A. Dempsey
President and Chief Executive Officer
<PAGE>
LOGO
18 OAKLAND AVENUE
WARWICK, NEW YORK 10990-0591
(914) 986-2206
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 24, 1998
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of
Warwick Community Bancorp, Inc. ("Company") will be held at the main office of
The Warwick Savings Bank ("Bank"), located at 18 Oakland Avenue, Warwick, New
York 10990-0591, on June 24, 1998 at 8:00 a.m., Eastern time, for the following
purposes:
1. To approve the Stock Option Plan of Warwick Community Bancorp,
Inc.;
2. To approve the Recognition and Retention Plan of Warwick Community
Bancorp, Inc.; and
3. To authorize the Board of Directors, in its discretion, to
direct the vote of proxies upon such matters incident to the
conduct of the Special Meeting as may properly come before the
Special Meeting, and any adjournment or postponement thereof,
including, without limitation, a motion to adjourn the Special
Meeting.
In accordance with the Company's By-Laws, no business shall be
transacted and no corporate action shall be taken at the Special Meeting other
than that stated in this Notice of Special Meeting.
The Board of Directors has fixed the close of business on May 12, 1998
as the record date for the determination of shareholders entitled to notice of
and to vote at the Special Meeting and any adjournment or postponement thereof.
A list of shareholders entitled to vote at the Special Meeting will be available
for inspection at 18 Oakland Avenue, Warwick, New York, for a period of ten days
prior to the Special Meeting and will also be available at the Special Meeting.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, THE BOARD OF DIRECTORS
URGES YOU TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS SOON AS
POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE. RETURNING THE PROXY CARD WILL
NOT PREVENT YOU FROM VOTING IN PERSON IF YOU ATTEND THE SPECIAL MEETING.
By Order of the Board of Directors
[Facsimile signature]
Nancy L. Sobotor-Littell
Corporate Secretary
Warwick, New York
May 21, 1998
<PAGE>
LOGO
18 OAKLAND AVENUE
WARWICK, NEW YORK 10990-0591
(914) 986-2206
PROXY STATEMENT FOR THE
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 24, 1998
GENERAL INFORMATION
GENERAL
This Proxy Statement and accompanying Proxy Card are being mailed to
shareholders of Warwick Community Bancorp, Inc. ("Company") on or about May 21,
1998 in connection with the solicitation of proxies by the Board of Directors of
the Company for use at the Special Meeting of Shareholders of the Company to be
held at the main office of The Warwick Savings Bank ("Bank"), located at 18
Oakland Avenue, Warwick, New York 10990-0591, on June 24, 1998 at 8:00 a.m.,
Eastern time, and at any adjournment or postponement thereof ("Special
Meeting").
On December 23, 1997, the Bank completed its conversion from a New York
mutual savings bank to a New York stock savings bank ("Conversion"). The
Company, a Delaware corporation, operates as a bank holding company for the
Bank, its wholly owned subsidiary.
As more fully described in this Proxy Statement, the purpose of the
Special Meeting is (1) to approve the Stock Option Plan of Warwick Community
Bancorp, Inc., (2) to approve the Recognition and Retention Plan of Warwick
Community Bancorp, Inc. and (3) to authorize the Board of Directors, in its
discretion, to direct the vote of proxies upon such matters incident to the
conduct of the Special Meeting as may properly come before the Special Meeting,
including, without limitation, a motion to adjourn the Special Meeting.
RECORD DATE AND VOTING RIGHTS
The Board of Directors of the Company has fixed the close of business
on May 12, 1998 as the record date ("Record Date") for the determination of the
holders of the Company's issued and outstanding common stock, par value $.01 per
share ("Common Stock"), entitled to notice of and to vote at the Special
Meeting. Only holders of record of Common Stock at the close of business on the
Record Date will be entitled to vote at the Special Meeting. At the close of
business on the Record Date, there were 6,606,548 shares of Common Stock
outstanding. The presence, in person or by proxy, of the holders of at least a
majority of the total number of outstanding shares of Common Stock entitled to
vote at the Special Meeting is necessary to constitute a quorum thereat.
Each holder of shares of Common Stock outstanding on the Record Date
will be entitled to one vote for each share held of record (except for Excess
Shares, if any, as defined below) upon each matter to be voted upon at the
Special Meeting. As provided in the Company's Certificate of Incorporation, if
any person beneficially owns, directly or indirectly, shares of Common Stock in
excess of 10% of the then issued and
<PAGE>
outstanding shares of Common Stock, all such shares beneficially owned by such
person in excess of the 10% threshold shall be deemed to be "Excess Shares," and
the holder thereof shall be entitled to cast only one one-hundredth (1/100) of a
vote per share for each Excess Share. A person or entity is deemed to
beneficially own shares owned by an affiliate or associate as well as persons
acting in concert with such person or entity. The Company's Certificate of
Incorporation authorizes the Board of Directors to (i) interpret and apply the
provisions of the Certificate of Incorporation governing Excess Shares and to
determine, on the basis of information known to them after reasonable inquiry,
all facts necessary to ascertain compliance with such provisions and (ii) to
demand that any person who is reasonably believed to beneficially own Excess
Shares supply information to the Company to enable the Board of Directors to
implement and apply such provisions.
If the enclosed Proxy Card is properly executed and received by the
Company in time to be voted at the Special Meeting, the shares represented
thereby will be voted in accordance with the instructions indicated thereon. IF
NO INSTRUCTIONS ARE GIVEN, EXECUTED PROXIES WILL BE VOTED FOR THE PROPOSALS
IDENTIFIED IN THE NOTICE OF SPECIAL MEETING. In accordance with the Company's
By-Laws, no business shall be transacted and no corporate action shall be taken
at the Special Meeting other than that stated in the Notice of Special Meeting.
VOTE REQUIRED
The vote required for each proposal is set forth in the discussion of
such proposal under the caption "-- Vote Required."
REVOCABILITY OF PROXIES
The presence of a shareholder at the Special Meeting will not
automatically revoke such shareholder's proxy. However, a shareholder may revoke
a proxy at any time before it is voted by (1) filing a written notice of
revocation with the Corporate Secretary of the Company prior to the Special
Meeting, (2) delivering to the Corporate Secretary prior to the Special Meeting
a duly executed proxy bearing a later date or (3) attending the Special Meeting,
filing a written notice of revocation with the secretary of the Special Meeting
and voting in person.
IF YOU ARE A SHAREHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN
NAME, YOU WILL NEED APPROPRIATE DOCUMENTATION FROM YOUR RECORD HOLDER IN ORDER
TO BE ADMITTED TO THE SPECIAL MEETING AND TO VOTE AT THE SPECIAL MEETING.
Examples of such documentation include a broker's statement, letter or other
document that will confirm your ownership of shares of the Company.
SOLICITATION OF PROXIES
The Company will bear the costs of soliciting proxies from its
shareholders. In addition to the solicitation of proxies by mail, Kissel-Blake
Inc., a proxy solicitation firm, will assist the Company in soliciting proxies
for the Special Meeting and will be paid a fee estimated to be $3,000, plus
out-of-pocket expenses. Proxies may also be solicited personally, by telephone,
facsimile or other means by directors, officers and employees of the Company or
its subsidiaries, without additional compensation. The Company will also request
persons, firms and corporations holding shares in their names or in the name of
their nominees, which are beneficially owned by others, to forward proxy
materials to and obtain proxies from such beneficial owners, and will reimburse
such holders for reasonable expenses incurred in connection therewith.
2
<PAGE>
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Directors, officers and employees of the Bank and the Company will be
granted stock options under the Stock Option Plan of Warwick Community Bancorp,
Inc. ("Option Plan") being presented for shareholder approval in Proposal 1 if
shareholders approve Proposal 1. See "Proposal 1 -- Stock Option Plan."
Directors, officers and employees of the Bank and the Company will be awarded
restricted stock of the Company under the Recognition and Retention Plan of
Warwick Community Bancorp, Inc. ("RRP") being presented for shareholder approval
in Proposal 2 if shareholders approve Proposal 2. See Proposal 2 -- Recognition
and Retention Plan."
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as to those persons
believed by management to be beneficial owners of more than 5% of the Company's
outstanding shares of Common Stock as of May 1, 1998. Other than those persons
listed below, the Company is not aware of any person who is the beneficial owner
of more than 5% of the Company's outstanding shares of Common Stock as of May 1,
1998. Except as otherwise indicated, the information provided in the following
table was obtained from filings with the Securities and Exchange Commission
("SEC") and with the Company pursuant to the Securities Exchange Act of 1934, as
amended ("Exchange Act"). For purposes of the following table and the table set
forth under "Stock Ownership of Management," in accordance with Rule 13d-3 under
the Exchange Act, a person is deemed to "beneficially own" any shares of Common
Stock (a) over which such person has, directly or indirectly, sole or shared
voting or investment power or (b) of which such person has the right to acquire
beneficial ownership, including the right to acquire beneficial ownership by the
exercise of stock options, at any time within 60 days after May 1, 1998. As used
herein, "voting power" includes the power to vote, or direct the voting of, such
shares, and "investment power" includes the power to dispose, or direct the
disposition of, such shares.
<TABLE>
<CAPTION>
TITLE OF CLASS NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OWNERSHIP OF
OF SECURITY BENEFICIAL OWNER BENEFICIAL OWNERSHIP COMMON STOCK OUTSTANDING
----------- ---------------- -------------------- ------------------------
<S> <C> <C> <C>
Common Stock Warwick Community Bancorp, Inc. 528,523(1) 8.0%
Employee Stock Ownership Plan and
Trust ("ESOP")
18 Oakland Avenue
Warwick, New York 10990-0591
Common Stock Bay Pond Partners, L.P. 364,000(2) 5.5%
75 State Street
Boston, Massachusetts 02109
</TABLE>
- ------------------------
(1) The ESOP is administered by the Bank as Plan Administrator and by a
committee established pursuant to the ESOP ("ESOP Committee"). The
assets of the ESOP are held in a trust ("ESOP Trust") for which Marine
Midland Bank serves as trustee ("ESOP Trustee"). The ESOP Trust
purchased such shares with funds borrowed from the Company, initially
placed these shares in a suspense account for future allocation and
intends to allocate them to participants over a period of years. The
ESOP Committee may instruct the ESOP Trustee regarding investment of
assets held in the ESOP Trust. The ESOP Trustee generally votes all
allocated shares held in the ESOP Trust in accordance with the
instructions of participants. As of the Record Date, 31,016 of the
528,523 shares were allocated to participants. Pursuant to the terms of
the ESOP, unallocated shares will be voted by the ESOP Trustee in a
manner calculated to most accurately reflect the voting instructions
received from participants regarding the allocated shares so long as
such vote is in accordance with the requirements of the Employee
Retirement Income Security Act of 1974, as amended.
(2) Based on information in a Schedule 13G, dated April 7, 1998, filed on
behalf of Bay Pond Partners, L.P. ("Bay Pond"), a Delaware limited
partnership, Wellington Hedge Management LLC ("WHML"), a Massachusetts
limited liability company which is the sole general partner of Bay
Pond, and Wellington Hedge Management, Inc., a Massachusetts
corporation which is the managing member of WHML. Bay Pond has shared
voting and shared dispositive power over all of the shares shown.
3
<PAGE>
STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth information with respect to the shares
of Common Stock beneficially owned by each director of the Company, by each
Named Executive Officer of the Company identified in the Summary Compensation
Table included on page 5 of this Proxy Statement and by all directors and
executive officers of the Company or the Bank as a group as of May 1, 1998.
Except as otherwise indicated, each person and each group shown in the table has
sole voting and investment power with respect to the shares of Common Stock
indicated.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OWNERSHIP OF
BENEFICIAL OWNERSHIP COMMON STOCK
NAME TITLE (1) (2)(3)(4)(5) OUTSTANDING (6)
---- --------- -------------------- ---------------
<S> <C> <C> <C>
Timothy A. Dempsey President, Chief Executive 31,107 *
Officer and Director
Ronald J. Gentile Executive Vice President, 34,124 *
Chief Operating Officer and
Director
Frances M. Gorish Director 6,000 *
R. Michael Kennedy Director 36,000 *
Fred M. Knipp Director 15,000 *
Emil R. Krahulik Director 5,000 *
Thomas F. Lawrence, Jr. Director 2,000 *
Henry L. Nielsen, Jr. Director 19,000 *
John W. Sanford III Director 3,500 *
Robert N. Smith Director 15,500 *
All directors and executive
officers as a group (15 persons) 240,791 3.6%
- ----------------------------------------
</TABLE>
* Less than 1.0% of outstanding Common Stock.
(1) Titles are for both the Company and the Bank.
(2) The figures shown include shares held in trust pursuant to the ESOP that
have been allocated as of December 31, 1997 to individual accounts of ESOP
participants as follows: Mr. Dempsey, 986 shares; Mr. Gentile, 1,041
shares; and all executive officers as a group, 5,357 shares. Such persons
have voting power (subject to the duties of the ESOP Trustee) but no
investment power, except in limited circumstances, as to such shares. The
figures shown for Messrs. Dempsey and Gentile do not include 497,507 shares
held in trust pursuant to the ESOP that have not been allocated to any
individual's account and as to which Messrs. Dempsey and Gentile share
voting power with other ESOP participants. The figure shown for all
directors and executive officers as a group includes such 497,507 shares as
to which the members of the Company's ESOP Committee (consisting of Messrs.
Dempsey, Gentile and Budich, Ms. Sobotor-Littell and Ms. Rudy) may be
deemed to have sole investment power, except in limited circumstances,
thereby causing each such Committee member to be deemed a beneficial owner
of such shares. Each of the members of the ESOP Committee disclaims
beneficial ownership of such shares and, accordingly, such shares are not
attributed to the members of the ESOP Committee individually. See
"Compensation of Directors and Executive Officers -- Benefits -- Employee
Stock Ownership Plan and Trust."
(3) The figures shown include shares held pursuant to The Warwick Savings Bank
401(k) Savings Plan ("401(k) Plan") that have been allocated as of April
30, 1998 to individual accounts as follows: Mr. Dempsey, 121 shares; Mr.
Gentile, 3,083 shares; and all executive officers as a group, 13,134
shares. Such persons have shared voting and investment power as to such
shares. See "Compensation of Directors and Executive Officers -- Benefits
-- 401(k) Plan. (FOOTNOTES CONTINUED ON NEXT PAGE)
4
<PAGE>
(4) The figures shown include shares over which individuals may be deemed to
share voting and investment power (other than as disclosed in notes 2 and
3) as follows: Mr. Dempsey, 15,000 shares; Mr. Gentile, 15,000 shares; Mr.
Kennedy, 17,000 shares; Mr. Knipp, 15,000 shares; Mr. Lawrence, 1,000
shares; Mr. Sanford, 2,500 shares; Mr. Smith, 5,500 shares; and all
directors and executive officers as a group, 83,500 shares.
(5) Percentages with respect to each person or group of persons have been
calculated on the basis of 6,606,548 shares of Common Stock, the number of
shares of Common Stock outstanding as of May 1, 1998. No officer or
director has the right to acquire beneficial ownership of additional shares
of Common Stock within 60 days after May 1, 1998.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS' COMPENSATION
FEE ARRANGEMENTS. Currently, each director of the Bank who is not an
employee of the Bank receives a fee of $400 for each Board meeting attended and
$250 for each committee meeting attended. In addition, the members ofthe
Re-Inspection Committee of the Bank each receive an annual fee of $250. The
aggregate amount of fees paid to such directors by the Bank for the fiscal year
ended May 31, 1997 was approximately $115,475. Directors of the Company are not
separately compensated for their services as such. It is anticipated that
directors will also be covered by the Option Plan and RRP expected to be
implemented by the Company, subject to shareholder approval at the Special
Meeting. See "-- Benefits -- Stock Option Plan" and "-- Benefits -- Recognition
and Retention Plan."
EXECUTIVE COMPENSATION
COMPENSATION DECISIONS. Decisions regarding the Company's executive
compensation are made by the Company's Board of Directors based on
recommendations of the Compensation Committee, the membership of which excludes
those directors employed by the Company. Under this structure, no interlocks
exist between members of the Compensation Committee and employees of the
Company.
SUMMARY COMPENSATION TABLE. The following table sets forth the cash
compensation paid by the Bank for services rendered in all capacities during the
fiscal year ended May 31, 1997 to the Chief Executive Officer and all executive
officers of the Bank who received compensation in excess of $100,000 ("Named
Executive Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION(1) COMPENSATION AWARDS(2)
---------------------- ----------------------
RESTRICTED
STOCK ALL OTHER
AWARDS COMPEN-
OPTIONS SATION(4)
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(3) (#)(3) ($)
- --------------------------- ---- --------- -------- ------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Timothy A. Dempsey
President and Chief Executive
Officer........................ 1997 $189,750 -- -- -- $5,052
Ronald J. Gentile
Executive Vice President and
Chief Operating Officer........ 1997 $123,862 -- -- -- $3,618
</TABLE>
(FOOTNOTES ON NEXT PAGE)
5
<PAGE>
(1) Under Annual Compensation, the column titled "Salary" includes base salary
and payroll deductions for health insurance under the Bank's health
insurance plan and for each individual's contributions under the 401(k)
Plan. In addition, Mr. Gentile's salary amount includes $108.28 per week,
which the Bank has added to his compensation in lieu of providing him with
the use of an automobile.
(2) For the fiscal year ended May 31, 1997, there were no: (a) perquisites with
an aggregate value for any named individual in excess of the lesser of
$50,000 or 10% of the total of the individual's salary and bonus for the
year; (b) payments of above-market preferential earnings on deferred
compensation; (c) payments of earnings with respect to long-term incentive
plans prior to settlement or maturation; or (d) preferential discounts on
stock. For the fiscal year ended May 31, 1997 the Bank had no restricted
stock or stock related plans in existence.
(3) During the fiscal year ended May 31, 1997, the Bank did not maintain any
restricted stock, stock option or other long-term incentive plans.
(4) Reflects matching contributions made by the Bank under the 401(k) Plan. See
" -- Benefits -- 401(k) Plan."
EMPLOYMENT AGREEMENTS
Effective upon the Conversion of the Bank, the Company entered into
Employment Agreements with each of Mr. Dempsey, Mr. Gentile, Mr. Budich and Ms.
Sobotor-Littell ("Senior Executives"). These Employment Agreements establish the
respective duties and compensation of the Senior Executives and are intended to
ensure that the Company will be able to maintain a stable and competent
management base after the Conversion. The continued success of the Company
depends to a significant degree on the skills and competence of the Senior
Executives.
The Employment Agreements provide for three-year terms, with automatic
daily extensions such that the remaining terms of the Employment Agreements
shall be three years unless written notice of non-renewal is given by the
Company or the Senior Executive, and, in any event, will terminate on the last
day of the month following the Senior Executive's 68th birthday. The Employment
Agreements provide that the Senior Executive's base salary will be reviewed
annually. It is anticipated that this review will be performed by the Company's
Compensation Committee and approved by non-employee members of the Board, and
the Senior Executive's base salary may be increased on the basis of such
officer's job performance and the overall performance of the Company. The
Employment Agreements also provide for, among other things, entitlement to
participation in stock, retirement and welfare benefit plans and reimbursement
for ordinary and necessary business expenses. Senior Executives would also be
entitled to reimbursement of certain costs incurred in interpreting or enforcing
the Employment Agreements. The Employment Agreements provide for termination by
the Company at any time for "cause" as defined in the Employment Agreements.
In the event the Company chooses to terminate a Senior Executive's
employment for reasons other than for cause, in the event of a Senior
Executive's resignation from the Company for certain reasons specified in the
Employment Agreements or in the event of a "change of control" as defined in the
Employment Agreements, the Senior Executive (or, in the event of the Senior
Executive's death, such Senior Executive's estate) would be entitled to a lump
sum cash payment in an amount generally equal to (a) the Senior Executive's
earned but unpaid salary, (b) the present value of the amount the Senior
Executive would have earned in salary had he or she continued working through
the unexpired term of the Employment Agreement and (c) the present value of the
additional contributions or benefits that such Senior Executive would have
earned under the specified employee benefit plans or programs of the Bank or the
Company during the remaining term of the Employment Agreement and payments that
would have been made under any incentive compensation plan during the remaining
term of the Employment Agreement. The Employment Agreements also provide for the
cashout of any stock options, appreciation rights or restricted stock as if the
Senior Executive was fully vested. The Bank and the Company would also continue
the Senior Executive's life, health and any disability insurance or other
benefit plan coverage for the remaining term of the Employment Agreement.
Reasons specified as grounds for resignation for purposes of the Employment
Agreements are: failure to elect or re-elect the Senior Executive
6
<PAGE>
to such officer's position; failure to vest in the Senior Executive the
functions, duties or authority associated with such position; if the Senior
Executive is a member of the Board of Directors of the Bank or Company, failure
to re-nominate or re-elect such Senior Executive to such Board; any material
breach of contract by the Bank or the Company that is not cured within 30 days
after written notice thereof; or a change in the Senior Executive's principal
place of employment to a location in excess of 50 miles from the Bank's
principal office in Warwick, New York. In general, for purposes of the
Employment Agreements and the plans maintained by the Company or the Bank, a
"Change of Control" will generally be deemed to occur when a person or group of
persons acting in concert acquires beneficial ownership of 25% or more of any
class of equity security of the Company or the Bank, upon shareholder approval
of a merger or consolidation of the Company or the Bank, upon liquidation or
sale of substantially all the assets of the Company or the Bank or upon a
contested election of directors which results in a change in the majority of the
Board of Directors.
Cash and benefits paid to a Senior Executive under the Employment
Agreement, together with payments under other benefit plans, following a Change
of Control of the Bank or the Company may constitute an "excess parachute
payment" under Section 280G of the Internal Revenue Code of 1986, as amended
("Code"), resulting in the imposition of a 20% excise tax on the recipient and
the denial of the deduction for such excess amounts to the Company and the Bank.
In the event that any amounts paid to a Senior Executive following a Change of
Control would constitute excess parachute payments, the Employment Agreements
provide that such Senior Executives will be indemnified for any excise taxes
imposed due to such excess parachute payments, and any additional excise, income
and employment taxes imposed as a result of such tax indemnification.
EMPLOYEE RETENTION AGREEMENTS
Effective upon the Conversion, the Bank entered into Retention Agreements
with the following four employees: Laurence D. Haggerty, Donna M. Lyons, Barbara
A. Rudy and Arthur S. Anderson ("Contract Employees"). The purpose of the
Retention Agreements is to secure the Contract Employees' continued availability
and attention to the Bank's affairs, relieved of distractions arising from the
possibility of a corporate change of control. The Retention Agreements do not
impose an immediate obligation on the Bank to continue the Contract Employees'
employment, but provide for a period of assured employment ("Assurance Period")
in the event of a "Change of Control" as defined in the Retention Agreements,
which definition is similar to the definition of change of control contained in
the Employment Agreements. The Retention Agreements provide for an initial
Assurance Period of one year commencing on the date of a Change of Control. In
general, the applicable Assurance Periods will be automatically extended on a
daily basis under the Retention Agreements until written notice of non-extension
is given by the Bank or the Contract Employee, in which case the Assurance
Period would end on the first anniversary of the date such notice is given, and,
in any event, will end on the last day of the month following the Contract
Employee's 68th birthday.
If a Contract Employee is discharged without "cause" as defined in the
Retention Agreements during the Assurance Period, or prior to the commencement
of the Assurance Period but within 3 months of, and in connection with a Change
of Control, or the Contract Employee voluntarily resigns during the Assurance
Period following a failure to elect or re-elect the Contract Employee to such
officer's position; failure to vest in the Contract Employee the functions,
duties or authority associated with such position; if the Contract Employee is a
member of the Board of Directors of the Bank or Company, failure to re-nominate
or re-elect such Contract Employee to such Board; any material breach of
contract by the Bank or the Company that is not cured within 30 days after
written notice thereof; or a change in the Contract Employee's principal place
of employment to a location in excess of 50 miles from the Bank's principal
office in Warwick, New York, the Contract Employee (or, in the event of the
Contract Employee's death, such Contract Employee's estate) would be entitled to
a lump sum cash payment in an amount generally equal to (a) the Contract
Employee's earned but unpaid salary, (b) the present value of the amount the
Contract Employee would have earned in salary had he or she continued working
during the remaining term of the Assurance Period and (c) the present value of
the additional contributions or benefits that such that Contract Employee would
have earned under the specified employee
7
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benefit plans or programs of the Bank or Company during the remaining term of
the Assurance Period. The Retention Agreements also provide for the cashout of
stock options, appreciation rights or restricted stock as if the Contract
Employee was fully vested. Each Contract Employee's life, health and any
disability coverage would also be continued during the Assurance Period. The
total amount of termination benefits payable to each Contract Employee under the
Retention Agreements is limited to three times the Contract Employee's average
total compensation for the prior five calendar years. Payments to the Contract
Employees under their respective Retention Agreements will be guaranteed by the
Company to the extent that the required payments are not made by the Bank.
BENEFITS
PENSION PLAN. The Bank maintains The Warwick Savings Bank Defined Benefit
Pension Plan, a non-contributory, tax-qualified defined benefit pension plan
("Pension Plan") for eligible employees. All employees, except (i) those paid on
an hourly basis or contract basis, (ii) leased employees or (iii) employees
regularly employed by outside employers for maintenance of properties, are
eligible to participate in the Pension Plan upon the later of (i) the end of the
12-month period in which he or she completes 1,000 hours of service or (ii) the
date he or she attains age 21. The Pension Plan provides an annual benefit for
each participant, including the executive officers named in the Summary
Compensation Table above, equal to 2% of the participant's average annual
compensation, multiplied by the participant's years of credited service, up to a
maximum of 30 years.
Average annual compensation is the average of a participant's compensation
over the three years of employment out of the participant's last 10-year period
of employment during which the participant's compensation is the highest. A
participant is fully vested in his or her pension benefit after five years of
service. The Pension Plan is funded by the Bank on an actuarial basis, and all
assets are held in trust by the Pension Plan trustee.
BENEFIT RESTORATION PLAN. In connection with the Conversion, the Bank
adopted the Benefit Restoration Plan of The Warwick Savings Bank ("BRP") to
provide eligible employees with the benefits that would be due to such employees
under the Pension Plan, the 401(k) Plan and the ESOP if such benefits were not
limited under the Code. The BRP is also intended to make up allocations lost by
participants of the ESOP who retire prior to the complete repayment of the ESOP
loan. BRP benefits to be provided with respect to the Pension Plan are reflected
in the pension table.
PENSION PLAN TABLE. The following table sets forth the estimated annual
benefits payable under the Pension Plan upon a participant's normal retirement
at age 65, expressed in the form of a single life annuity, and any related
amounts payable under the BRP, for the average annual compensation and years of
credited service specified.
<TABLE>
<CAPTION>
PENSION PLAN TABLE(1)
YEARS OF CREDITED SERVICE AT RETIREMENT
AVERAGE ANNUAL ---------------------------------------
COMPENSATION 15 20 25 30 35(2)
------------ ------------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 125,000 $ 37,500 $ 50,000 $ 62,500 $ 75,000 $ 75,000
150,000 45,000 60,000 75,000 90,000 90,000
175,000(3) 52,500 70,000 87,500 105,000 105,000
200,000(3) 60,000 80,000 100,000 120,000 120,000
225,000(3) 67,500 90,000 112,500 135,000(4) 135,000(4)
250,000(3) 75,000 100,000 125,000 150,000(4) 150,000(4)
</TABLE>
(FOOTNOTES ON NEXT PAGE)
8
<PAGE>
- ----------------------------
(1) The annual benefits shown in the table above assume the participant
would receive his or her retirement benefits under the Pension Plan and
the BRP in the form of a straight life annuity at normal retirement
age.
(2) Normal retirement benefits are limited to 60% of average annual earnings.
(3) For the Pension Plan year ending September 30, 1997, the annual
compensation for calculating benefits may not exceed $150,000 (as
adjusted for subsequent years pursuant to Code provisions). The
limitation is $160,000 for the plan year beginning October 1, 1997, and
will be adjusted to reflect cost of living increases after 1997 in
accordance with Section 401(a)(17) of the Code. The table reflects
amounts payable in conjunction with the BRP.
(4) These are hypothetical benefits based upon the Pension Plan's normal
retirement benefit formula. The maximum annual benefit permitted under
Section 415 of the Code in 1997 is $125,000 or, if higher, a member's
current accrued benefit as of December 31, 1982 (but not more than
$136,425). The $125,000 ceiling will be adjusted to reflect cost of
living increases after 1997 in accordance with Section 415 of the Code.
The BRP will provide the difference between the amounts appearing in
this table and the maximum amount allowed by the Code.
The following table sets forth the years of credited service and the
average annual compensation (as defined above), determined as of May 31, 1997,
for each of the individuals named in the Summary Compensation Table.
YEARS OF CREDITED SERVICE
------------------------- AVERAGE ANNUAL
YEARS MONTHS COMPENSATION
----- ------ ------------
Mr. Dempsey.............. 24 3 $178,349
Mr. Gentile.............. 7 0 $112,168
401(K) PLAN. The Bank maintains The Warwick Savings Bank 401(k) Savings
Plan ("401(k) Plan"), a tax-qualified profit-sharing plan under Sections 401(a)
and 401(k) of the Code. Employees who satisfy prescribed eligibility
requirements may make pre-tax salary deferrals under section 401(k) of the Code.
Salary deferrals are made by election, subject to the limits prescribed by the
401(k) Plan and a limit imposed under the Code (which is $10,000 for 1998). The
Bank makes matching contributions equal to a percentage of salary contributions
determined annually by the Bank, up to 3% of salary. Employees are fully vested
in their salary deferrals and become incrementally vested in the Bank's
contribution after one year and fully vested in the Bank's contributions after
seven years.
The Bank amended the 401(k) Plan in connection with the Conversion to
provide that the Bank's matching contributions will be invested in an investment
fund consisting primarily of Common Stock of the Company. In addition,
participating employees may elect to invest all or a portion of their remaining
account balances in such investment fund or the other investment funds provided
under the 401(k) Plan. Common Stock held by the 401(k) Plan may be newly issued
or treasury shares acquired from the Company or outstanding shares purchased in
the open market or in privately negotiated transactions. All Common Stock held
by the 401(k) Plan is held by an independent trustee and allocated to the
accounts of individual participants. Participants will control the exercise of
voting and tender rights relating to the Common Stock held in their accounts.
EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST. The Company established, and the
Bank adopted, for the benefit of eligible employees, an ESOP and related trust,
which became effective upon completion of the Conversion. Substantially all
employees of the Bank or the Company who have completed 1,000 hours of service
during a consecutive 12-month period will be eligible to become participants in
the ESOP.
Generally, shares held in the ESOP trust are allocated among the accounts
of participants who are employees of the Bank or the Company on the last day of
the plan year on the basis of the participants' total taxable compensation for
the year of allocation. Benefits generally become vested at the rate of 20% per
9
<PAGE>
year beginning on a participant's third year of service, with 100% vesting after
seven years of service (including past service). Participants also become
immediately vested upon termination of employment due to death, retirement at
age 65 or older, permanent disability or upon the occurrence of a change of
control. Forfeitures will be reallocated among remaining participating employees
in the same proportion as contributions. Vested benefits may be paid in a single
sum or installment payments and are payable upon death, retirement at age 65 or
older, disability or separation from service.
The ESOP is administered by a committee of the Company's Board of Directors
("ESOP Committee") and by the Bank as the Plan Administrator. Marine Midland
Bank has been appointed as the trustee for the ESOP. The ESOP Committee may
instruct the trustee regarding investment of funds contributed to the ESOP. The
ESOP trustee, subject to its fiduciary duty, must vote all allocated shares held
in the ESOP in accordance with the instructions of the participating employees.
Under the ESOP, unallocated shares will be voted in a manner calculated to most
accurately reflect the instructions received from participants regarding the
allocated stock as long as such vote is in accordance with the provisions of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
STOCK OPTION PLAN. The Board of Directors of the Company has adopted the
Option Plan pursuant to which eligible directors, officers and employees of the
Company and the Bank will be granted options to purchase stock of the Company.
The Option Plan is subject to the approval of the shareholders of the Company at
the Special Meeting. See "Proposal 1 -- Stock Option Plan."
RECOGNITION AND RETENTION PLAN. The Board of Directors of the Company has
adopted the RRP pursuant to which eligible directors, officers and employees of
the Company and the Bank will be awarded restricted stock of the Company. The
RRP is subject to the approval of the shareholders of the Company at the Special
Meeting. See "Proposal 2 -- Recognition and Retention Plan."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended May 31, 1997, the Compensation Committee
consisted of Messrs. Lawrence, Nielsen and Kennedy and Ms. Gorish. There are no
interlocks, as defined under the rules and regulations of the SEC, between
members of the Compensation Committee or executive officers of the Company and
corporations with respect to which such persons are affiliated, or otherwise.
PROPOSAL 1
STOCK OPTION PLAN
GENERAL PLAN INFORMATION
The Company has adopted the Option Plan, subject to approval by
shareholders of the Company. The Option Plan provides for the grant of options
to purchase Common Stock of the Company ("Options") to certain officers,
employees and outside directors of the Company, the Bank or any affiliate
approved by the Board of Directors. The Option Plan is not subject to ERISA and
is not a tax-qualified plan under the Code. The principal provisions of the
Option Plan are summarized below. The full text of the Option Plan is set forth
as Appendix A to this Proxy Statement, to which reference is made, and the
summary provided below is qualified in its entirety by such reference.
10
<PAGE>
VOTE REQUIRED
Pursuant to the regulations of the New York Banking Board ("NYBB") and the
Federal Deposit Insurance Corporation ("FDIC") applicable to management stock
benefit plans established by a savings bank or its holding company sooner than
one year after the savings bank's mutual to stock conversion, the affirmative
vote of a majority of the total votes eligible to be cast at the Special Meeting
is required for approval of the Option Plan. If approved by shareholders
pursuant to such regulations, the Option Plan will take effect and Options may
be granted thereunder on and after the date of the Special Meeting. Under the
Company's By-Laws, the affirmative vote of a majority of the shares present and
entitled to vote at a meeting at which a quorum is present would ordinarily be
required for approval of the Option Plan by shareholders. In the event that less
than a majority of the total votes eligible to be cast at the Special Meeting,
but at least a majority of the votes present and entitled to vote at the Special
Meeting, vote in favor of approval, the Option Plan may be considered approved,
but it will not be established or implemented and no Options will be granted
prior to December 23, 1998, which is the first anniversary of the Conversion.
The effective date of the Option Plan shall be referred to as the "Option Plan
Effective Date."
Shares as to which the "ABSTAIN" box has been selected on the Proxy Card
will be counted as present and entitled to vote and, accordingly, will have the
effect of a vote against Proposal 1. Shares underlying broker non-votes will not
be counted as having been voted in person or by proxy and will have the same
effect as a vote against Proposal 1 for purposes of the NYBB and FDIC approval
requirement, but such shares will not be counted as present and entitled to
vote, and will therefore have no effect on the vote, for any other purposes with
respect to Proposal 1.
PURPOSE OF THE OPTION PLAN
The purpose of the Option Plan is to promote the growth and profitability
of the Company, to provide certain key officers, employees and directors of the
Company and its affiliates with an incentive to achieve corporate objectives, to
attract and retain individuals of outstanding competence and to provide such
individuals with an equity interest in the Company.
DESCRIPTION OF THE OPTION PLAN
ADMINISTRATION. The Board of Directors and the members of the Compensation
Committee who are Disinterested Directors ("Option Committee") will administer
the Option Plan. They will determine, within the limitations of the Option Plan,
the officers and employees to whom Options will be granted, the number of shares
subject to each Option, the terms of such Options (including provisions
regarding exercisability and acceleration of exercisability) and the procedures
by which the Options may be exercised. Initially, the Options granted under the
Option Plan to outside directors who are directors on the Option Plan Effective
Date were determined by the Board of Directors, and the Option Committee has no
discretion over the material terms of such grants. After the Option Plan
Effective Date, Options may be granted to existing outside directors and to new
outside directors as determined by the Board of Directors or the Option
Committee, subject to the terms of the Option Plan and Rule 16b-3 promulgated
under the Exchange Act. Subject to certain specific limitations and restrictions
set forth in the Option Plan and such limitations as may be imposed from time to
time by the Board of Directors, the Option Committee has authority to interpret
the Option Plan, to prescribe, amend and rescind rules and regulations, if any,
relating to the Option Plan and to make all determinations necessary or
advisable for the administration of the Option Plan. The costs and expenses of
administering the Option Plan will be borne by the Company.
11
<PAGE>
STOCK SUBJECT TO THE OPTION PLAN. The Company has reserved 660,654 shares
of Common Stock ("Option Shares") for issuance upon exercise of Options. Such
Option Shares may be authorized and unissued shares or shares previously issued
and reacquired by the Company. Any Option Shares subject to grants under the
Option Plan which expire or are terminated, forfeited or canceled without having
been exercised or vested in full shall again be available for purposes of the
Option Plan. As of the Record Date, the aggregate fair market value of the
Option Shares reserved for issuance was $11,148,536, based on the closing sales
price per share of Common Stock of $16.875, as reported on The Nasdaq Stock
Market on that date.
ELIGIBILITY. Any employee of the Company, the Bank or any affiliate
approved by the Company's Board of Directors who is selected by the Option
Committee is eligible to participate in the Option Plan as an "Eligible
Employee." As of the Record Date, there were 26 Eligible Employees. Any member
of the Board of Directors of the Company or of the Bank or any affiliate
approved by the Company's Board of Directors who is not an employee or officer
of the Company or the Bank or any affiliate is eligible to participate as an
"Eligible Director." As of the Record Date, there were 8 Eligible Directors. A
person who becomes a member of the Board of Directors of the Company or of the
Bank or any affiliate approved by the Company's Board of Directors after the
Option Plan Effective Date and who is not also an employee or an officer of the
Company or the Bank or any affiliate will be eligible to participate as a "New
Eligible Director."
TERMS AND CONDITIONS OF OPTIONS GRANTED TO OFFICERS AND EMPLOYEES. The
Option Plan provides for the grant of options which qualify for favorable
federal income tax treatment as "incentive stock options" ("ISOs") and
non-qualified stock options which do not so qualify ("NQSOs"). ISOs are subject
to certain restrictions under the Code. Unless otherwise designated by the
Option Committee, Options granted under the Option Plan will be NQSOs, will be
exercisable at a price per share equal to the fair market value of a share of
Common Stock on the date of the Option grant and will be exercisable for a
period of ten years after the date of grant (or for a shorter period ending
three months after the option holder's termination of employment for reasons
other than death, disability or retirement or discharge for cause, one year
after termination of employment due to death, disability or retirement, or
immediately upon termination for cause). In no event may an Option be granted
with anexercise price per share that is less than the fair market value of a
share of Common Stock when the Option is granted. Vesting will be subject to the
regulatory restrictions described below. An option holder's right to exercise
Options is suspended during any period when the option holder is the subject of
a pending proceeding to terminate his or her employment for cause. If the Option
expires during such suspension, the Company will, upon the employee's
reinstatement, pay damages equal to the value of the expired Options less the
exercise price.
Upon the exercise of an Option, the exercise price must be paid in full.
Payment may be made in cash or in such other consideration as the Option
Committee deems appropriate, including, but not limited to, Common Stock already
owned by the option holder or Option Shares to be acquired by the option holder
upon exercise of the Option. Options may be transferred prior to exercise only
to certain family members, certain non-profit organizations and on death of the
option holder.
TERMS AND CONDITIONS OF OPTIONS GRANTED TO OUTSIDE DIRECTORS. Effective on
the Option Plan Effective Date, each person who is an Eligible Director on such
date will be granted a NQSO to purchase 19,819 Option Shares. Such Options will
have an exercise price equal to the fair market value of a share of Common Stock
on the date of grant and an exercise period commencing on the date of grant and
expiring on the earliest of (i) the close of business on the last day of the
three-month period commencing on the date he or she ceases to be an Eligible
Director or New Eligible Director, other than on account of such person's death,
disability or removal for cause (in accordance with the by-laws of the Bank or
the Company or other affiliate, as applicable) and such person does not continue
to serve as an active advisory or emeritus director, or in a similar capacity,
(ii) the close of business on the last day of the one-year period commencing on
the date he or she ceases to be an Eligible Director or New Eligible Director
due to death or disability, (iii) the date and time such person ceases to be an
Eligible Director or New Eligible Director due to removal for cause (in
accordance with the by-
12
<PAGE>
laws of the Bank or the Company or other affiliate, as applicable) or (iv) the
last day of the ten-year period commencing on the date the Option was granted.
On the first anniversary of the date the Option Plan is approved by shareholders
and on each anniversary thereof until all Option Shares subject to the grant are
exercisable, an Option granted to an Eligible Director will become exercisable
as to 20% of the Option Shares as to which his or her outstanding Option has
been granted. All Option Shares not previously purchased or available for
purchase will become available for purchase on the date of the option holder's
death or disability, as defined in the Option Plan. A maximum aggregate of
198,196 shares may be issued to Eligible Directors upon exercise of Options.
Options granted to directors under the Option Plan will be NQSOs. Upon the
exercise of an Option, the exercise price must be paid in full. Payment may be
made in cash or in such other consideration as the Option Committee deems
appropriate, including, but not limited to, Common Stock already owned by the
option holder or Option Shares to be acquired by the option holder upon exercise
of the Option.
MERGERS AND REORGANIZATIONS; ADJUSTMENTS FOR EXTRAORDINARY DIVIDENDS. The
number of shares available under the Option Plan and the outstanding Options
will be adjusted to reflect any merger, consolidation or business reorganization
in which the Company is the surviving entity, and to reflect any stock split,
stock dividend or other event generally affecting the number of shares. If a
merger, consolidation or other business reorganization occurs and the Company is
not the surviving entity, outstanding exercisable Options may be canceled upon
30 days' written notice to the option holder so long as the option holder
receives payment determined by the Company's Board of Directors to be the
equivalent value of the canceled Options. The Option Plan provides that the
Company may, in the discretion of the Committee, either make a cash payment to
option holders or adjust the exercise price, or a combination of both, to
equitably reflect any extraordinary non-stock dividend that may be paid which
results in a non-taxable return of capital; PROVIDED, HOWEVER, that no such
action will be taken without the approval of the Superintendent of Banks of the
State of New York until the shareholders of the Company have voted to approve
such provisions of the Option Plan by a majority of the votes cast in a vote
taken after December 23, 1998. No representation is made that any such dividend
will be declared or paid.
REGULATORY RESTRICTIONS
The Option Plan is subject to certain restrictions imposed by the NYBB and
the FDIC with respect to stock option plans or other management or employee
stock benefit plans that are established or implemented by a savings bank or its
holding company within one year after the savings bank's mutual to stock
conversion. The restrictions apply to the Option Plan because the Conversion
occurred within one year prior to the date of this Special Meeting.
To satisfy the NYBB and FDIC requirements, the Option Plan provides that
(i) no Options may be granted prior to the date on which the holders of a
majority of the Company's outstanding shares approve the Option Plan; (ii) no
individual officer or employee may be granted Options to purchase more than
165,163 Option Shares; and (iii) any Options granted will become exercisable at
a rate no more rapid than 20% per year beginning on the first anniversary of the
date the Option Plan is approved by shareholders, with accelerated vesting only
in cases of death or disability; PROVIDED, HOWEVER, that the Committee may
establish a different vesting schedule if not inconsistent with the NYBB or FDIC
regulations.
Management of the Company has been advised by its legal counsel that the
Option Plan complies with all applicable NYBB and FDIC regulations. Neither the
NYBB nor the FDIC has endorsed or approved the Option Plan. No written or oral
representation to the contrary shall be made. The Option Plan provides that it
will be interpreted to comply with NYBB and FDIC regulations and is subject to
amendment, without the solicitation of further shareholder approval, to effect
such compliance.
13
<PAGE>
TERMINATION OR AMENDMENT OF THE OPTION PLAN
Unless sooner terminated, the Option Plan will terminate automatically on
the day preceding the tenth anniversary of the Option Plan Effective Date. The
Board may suspend or terminate the Option Plan in whole or in part at any time
prior to the tenth anniversary of the Option Plan Effective Date by giving
written notice of such suspension or termination to the Option Committee. In the
event of any suspension or termination of the Option Plan, all Options
theretofore granted under the Option Plan that are outstanding on the date of
such suspension or termination of the Option Plan will remain outstanding under
the terms of the agreements granting such Options.
The Board may amend or revise the Option Plan in whole or in part at any
time, but if the amendment or revision amends a material term of the Option
Plan, such amendment or revision will be subject to approval by the shareholders
of the Company to the extent required to comply with Section 162(m) of the Code.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion is intended only as a summary and does not purport
to be a comprehensive description of the federal tax laws, regulations and
policies affecting the Company and recipients of ISOs and NQSOs that may be
granted under the Option Plan. Any change in applicable law or regulation or in
the policies of various taxing authorities may have a material effect on the
discussion contained herein.
There are no federal income tax consequences for the Company or the option
holder at the time an ISO is granted or upon the exercise of an ISO. If there is
no sale or other disposition of the shares acquired upon the exercise of an ISO
within two years after the date the ISO was granted, or within one year after
the exercise of the ISO, then at no time will any amount be deductible by the
Company with respect to the ISO. If the option holder exercises an ISO and sells
or otherwise disposes of the shares so acquired after satisfying the foregoing
holding period requirements, then he or she will realize a capital gain or loss
on the sale or disposition. If the option holder exercises his or her ISO and
sells or disposes of his or her shares prior to satisfying the foregoing holding
period requirements, then an amount equal to the difference between the amount
realized upon the sale or other disposition of such shares and the price paid
for such shares upon the exercise of the ISO will be includible in the ordinary
income of such person, and such amount will ordinarily be deductible by the
Company at the time it is includible in such person's income.
With respect to the grant of NQSOs, there are no federal income tax
consequences for the Company or the option holder at the date of the grant. Upon
the exercise of a NQSO, an amount equal to the difference between the fair
market value of the shares to be purchased on the date of exercise and the
aggregate purchase price of such shares is generally includible in the ordinary
income of the person exercising such NQSO, although such inclusion may be at a
later date in the case of an option holder whose disposition of such shares
could result in liability under Section 16(b) of the Exchange Act. The Company
will ordinarily be entitled to a deduction for federal income tax purposes at
the time the option holder is taxed on the exercise of the NQSO equal to the
amount which the option holder is required to include as ordinary income.
Section 162(m) of the Code limits the Company's deductions of compensation in
excess of $1,000,000 per year for the chief executive officer and the four other
most highly paid executives named in its proxy statement, but provides for
certain exceptions for performance based compensation. The Company intends the
Option Plan to comply with the requirements for an exception to Section 162(m)
applicable to stock option plans so that the Company's deduction for
compensation related to the exercise of stock options would not be subject to
the $1,000,000 limitation. No executive of the Company currently receives
compensation subject to this limitation.
14
<PAGE>
The foregoing statements are intended to summarize the general principles
of current federal income tax law applicable to Options that may be granted
under the Option Plan. State and local tax consequences may also be significant.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" APPROVAL OF THE
STOCK OPTION PLAN OF WARWICK COMMUNITY BANCORP, INC.
PROPOSAL 2
RECOGNITION AND RETENTION PLAN
GENERAL PLAN INFORMATION
The Company has adopted the RRP, subject to approval by shareholders of the
Company. The RRP provides for restricted stock awards ("Awards") to certain
officers, employees, outside directors and directors emeritus of the Company,
the Bank or any affiliate approved by the Company's Board of Directors. The RRP
is not subject to ERISA and is not a tax-qualified plan under the Code. The
principal provisions of the RRP are summarized below. The full text of the RRP
is set forth as Appendix B to this Proxy Statement, to which reference is made,
and the summary provided below is qualified in its entirety by such reference.
VOTE REQUIRED
Pursuant to regulations of the NYBB and FDIC applicable to management stock
benefit plans established by a savings bank or its holding company sooner than
one year after the savings bank's mutual to stock conversion, the affirmative
vote of a majority of the total votes eligible to be cast at the Special Meeting
is required for approval of the RRP. If approved by shareholders, the RRP will
take effect, and Awards granted thereunder may be effective, on and after the
date of the Special Meeting. Under the Company's By-Laws, the affirmative vote
of a majority of the shares present and entitled to vote at a meeting at which a
quorum is present would ordinarily be required for approval of the RRP by
shareholders. In the event that less than a majority of the total votes eligible
to be cast at the Special Meeting, but at least a majority of the votes present
and entitled to vote at the Special Meeting, vote in favor of approval, the RRP
may be considered approved, but it will not be established or implemented, and
no Awards will be granted, prior to December 23, 1998, which is the first
anniversary of the Conversion. The effective date of the RRP shall be referred
to as the "RRP Effective Date."
Shares as to which the "ABSTAIN" box has been selected on the Proxy Card
will be counted as present and entitled to vote and, accordingly, will have the
effect of a vote against Proposal 2. Shares underlying broker non-votes will not
be counted as having been voted in person or by proxy and will have the same
effect as a vote against Proposal 2 for purposes of the NYBB and FDIC approval
requirement, but such shares will not be counted as present and entitled to
vote, and will therefore have no effect on the vote, for any other purposes with
respect to Proposal 2.
15
<PAGE>
PURPOSE OF THE RRP
The purpose of the RRP is to promote the growth and profitability of the
Company, to provide certain key officers, employees, directors and directors
emeritus of the Company and its affiliates with an incentive to achieve
corporate objectives, to attract and retain individuals of outstanding
competence and to provide such individuals with an equity interest in the
Company.
DESCRIPTION OF THE RRP
ADMINISTRATION. The Board of Directors and the members of the Compensation
Committee who are Disinterested Directors ("RRP Committee") will administer the
RRP. They will determine, within the limitations of the RRP, the officers and
employees to whom Awards will be granted, the number of shares subject to each
Award, the terms of such Awards (including provisions regarding exercisability
and acceleration of exercisability) and the procedures by which the Awards shall
be exercised. Initially, the Awards granted under the RRP to outside directors
and directors emeritus were determined by the Board of Directors, and the RRP
Committee has no discretion over the material terms of such grants. Subject to
certain specific limitations and restrictions set forth in the RRP and such
limitations as may be imposed from time to time by the Board of Directors, the
RRP Committee has authority to interpret the RRP, to prescribe, amend and
rescind rules and regulations, if any, relating to the RRP and to make all
determinations necessary or advisable for the administration of the RRP. The
costs and expenses of administering the RRP will be borne by the Company and not
charged to any grant of an Award nor to any participating director, officer or
employee.
STOCK SUBJECT TO THE RRP. The Company will establish a trust ("RRP Trust")
and will contribute, or cause to be contributed, to the RRP Trust, from time to
time, such amounts of money or property as shall be determined by the Board of
Directors, in its discretion. No contributions by participants will be
permitted. A trustee will invest the assets of the RRP Trust in Common Stock and
in such investments, including savings accounts, time or other interest bearing
deposits in or other interest bearing obligations of the Company, in such
proportions as shall be determined by the RRP Committee. In no event shall the
assets of the RRP Trust be used to purchase more than 264,261 shares of Common
Stock. As of May 12, 1998, the aggregate fair market value of such 264,261
shares of Common Stock was $4,459,404, based on the closing sales price per
share of Common Stock of $16.875, as reported on The Nasdaq Stock Market on such
Record Date. It is currently anticipated that the RRP Trust will purchase Common
Stock on the open market, but may also purchase from the Company or in private
transactions.
ELIGIBILITY. Any employee of the Company, the Bank or any affiliate
approved by the Company's Board of Directors who is selected by the RRP
Committee is eligible to participate in the RRP as an "Eligible Employee." As of
the Record Date, there were 8 Eligible Employees. Any member of the Board of
Directors of the Company or of the Bank or any affiliate approved by the
Company's Board of Directors who is not an employee or officer of the Company,
the Bank or such affiliate is eligible to participate as an "Eligible Director."
As of the Record Date, there were 8 Eligible Directors. Any former member of the
Board of Directors of the Company who is considered an active emeritus director
of the Company on the RRP Effective Date and who is continuing to serve the
Company in an advisory capacity to its Board of Directors is eligible to
participate in the RRP as an "Eligible Director Emeritus." As of the Record
Date, there were 3 Eligible Directors Emeritus.
AWARDS TO OUTSIDE DIRECTORS AND EMERITUS DIRECTORS. On the RRP Effective
Date, each Eligible Director will receive an Award of 8,919 shares, and each
Eligible Director Emeritus will be receive an Award of 2,642 shares. A maximum
aggregate of 79,278 shares may be awarded to Eligible Directors and Eligible
Directors Emeritus.
16
<PAGE>
AWARDS TO OFFICERS AND EMPLOYEES. After the RRP Effective Date, the RRP
Committee may, in its discretion, grant Awards of restricted stock to Eligible
Employees, up to a maximum of 66,065 shares for any one individual. The Board of
Directors or the RRP Committee will determine at the time of the grant the
number of shares of Common Stock subject to an Award and the vesting schedule
applicable to the Award and may, in its discretion, establish other terms and
conditions applicable to the Award.
TERMS AND CONDITIONS OF AWARDS. Stock subject to Awards is held in trust
pursuant to the RRP until vested. An individual to whom an Award is granted is
entitled to exercise voting rights and receive dividends with respect to stock
subject to Awards granted to him or her whether or not vested, which will be
distributed at the same time as the related shares. The RRP Committee will
exercise voting rights with respect to shares in the RRP Trust that have not
been allocated to reflect the voting directions with respect to allocated shares
under the RRP. Each individual to whom an Award is granted is entitled to direct
the manner of response to any tender offer, exchange offer or other offer made
to shareholders with respect to stock subject to Awards granted to such person,
whether or not vested. If no direction is given, the shares will not be tendered
or exchanged or the voting rights will not be exercised. For shares that are not
allocated in connection with an Award, the RRP Committee will direct the trustee
to respond to reflect the voting directions given with respect to shares
allocated in connection with Awards.
The shares covered by an Award will become vested in accordance with the
terms of the Award and, as soon as practicable following such vesting, the
trustee will transfer the shares to the recipient. The shares granted to an
Eligible Director or an Eligible Director Emeritus will vest at a rate equal to
20% on each of the first five anniversary dates of the RRP Effective Date
provided that the Eligible Director has remained a director or an active
advisory or emeritus director, or, in the case of an Eligible Director Emeritus,
has remained an active emeritus director, as determined by the Board, during the
period commencing with shareholder approval of the RRP and ending on the
applicable anniversary of the date of shareholder approval; however, any shares
covered by the Award will become 100% vested as of the date of the recipient's
death or disability. The shares granted to an Eligible Employee will vest
according to a schedule established by the RRP Committee, but in no event at a
rate more rapid than 20% per year beginning on the first anniversary of the RRP
Effective Date, with accelerated vesting in the case of death or disability. It
is contemplated that such a schedule will provide that if an individual covered
by an Award terminates employment for reasons other than death or disability,
the individual forfeits all rights to his or her unvested shares remaining in
the RRP Trust. For this purpose, employment will be deemed to continue for so
long as the Eligible Employee is serving as an employee, outside director,
advisory director, emeritus director or consultant to the Company or the Bank or
is subject to and observing the terms of a written agreement restricting his or
her ability to compete or imposing other restrictive covenants. Individuals may
designate a beneficiary to receive distributions on account of death.
MERGERS AND REORGANIZATIONS. The number of shares available under the RRP
and the Awards will be adjusted to reflect any merger, consolidation or business
reorganization in which the Company is the surviving entity and to reflect any
stock split, stock dividend or other event generally affecting the number of
shares. If a merger, consolidation or other business reorganization occurs and
the Company is not the surviving entity, thetrustee will hold in the trust fund
any money, stock, securities or other property received in connection with such
merger, consolidation or other business reorganization, and the trustee will
adjust Awards by allocating such money, stock, securities or other property to
the Eligible Director, Eligible Director Emeritus or Eligible Employee.
REGULATORY RESTRICTIONS
The RRP is subject to certain restrictions imposed by the NYBB and the FDIC
with respect to management or employee stock benefit plans that are established
or implemented by a savings bank or its
17
<PAGE>
holding company within one year after the savings bank's mutual to stock
conversion. The restrictions apply to the RRP because the Conversion occurred
within one year prior to the date of the Special Meeting.
To satisfy the NYBB and FDIC requirements, the RRP provides that (i) no
Awards may be granted prior to the date on which a majority of the Company's
outstanding shares approve the RRP, (ii) no Eligible Employee shall receive
Awards for more than 66,065 shares of Common Stock and (iii) any Awards will
become vested at a rate no more rapid than 20% per year beginning on first
anniversary of the date of shareholder approval, with accelerated vesting in
cases of death or disability.
Management of the Company has been advised by its legal counsel that the
RRP complies with all applicable NYBB and FDIC regulations. Neither the NYBB nor
the FDIC has endorsed or approved the RRP. No written or oral representation to
the contrary shall be made. The RRP provides that it will be interpreted to
comply with applicable NYBB and FDIC regulations and is subject to amendment,
without the solicitation of further shareholder approval, to effect such
compliance.
TERMINATION OR AMENDMENT OF THE RRP
The Board may suspend or terminate the RRP in whole or in part at any time
by giving written notice of such suspension or termination to the RRP Committee,
but the RRP may not be terminated while there are outstanding Awards that may
thereafter become vested. Upon the termination of the RRP, the trustee shall
make distributions from the RRP Trust in such amounts and to such persons as the
RRP Committee may direct and shall return the remaining assets of the RRP Trust,
if any, to the Company.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion is intended only as a summary and does not purport
to be a comprehensive description of the federal tax laws, regulations and
policies affecting the Company and recipients of Awards that may be granted
under the RRP. Any descriptions of the provisions of any law, regulation or
policy contained herein are qualified in their entirety by reference to the
particular law, regulation or policy. Any change in applicable law or regulation
or in the policies of various taxing authorities may have a material effect on
the discussion contained herein. The RRP does not, and is not intended to,
constitute a qualified plan under Section 401(a) of the Code.
Awards of Common Stock under the RRP do not result in federal income tax
consequences to either the Company or the award recipient. Upon the vesting of
an Award and the distribution of the vested shares, the award recipient will
generally be required to include in ordinary income, for the taxable year in
which the vesting date occurs, an amount equal to the fair market value of the
shares on the vesting date, and the Company will generally be allowed to claim a
deduction, for compensation expense, in a like amount. To the extent that
dividends are paid with respect to unvested shares held under the RRP and
distributed to the award recipient, such dividend amounts will likewise be
includible in the ordinary income of the recipient and allowable as a deduction,
for compensation expense, to the Company. Section 162(m) of the Code limits the
Company's deductions of compensation in excess of $1,000,000 per year for the
chief executive officer and the four other most highly paid executives named in
its proxy statement. No executive of the Company currently receives compensation
subject to this limitation. Compensation amounts resulting from the Award and
vesting of shares will be subject to this deduction limitation if such amount,
when added to other includible compensation, exceeds $1,000,000. Dividends
declared and paid with respect to vested shares, as well as any gain or loss
realized upon an award recipient's disposition of the shares, will be treated as
dividend income and capital gain or loss, respectively, in the same manner as
for other shareholders.
18
<PAGE>
The foregoing statements are intended to summarize the general principles
of current federal income tax law applicable to Awards that may be granted under
the RRP. State and local tax consequences may also be significant.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" APPROVAL OF THE
RECOGNITION AND RETENTION PLAN OF WARWICK COMMUNITY BANCORP, INC.
NEW PLAN BENEFITS
WARWICK COMMUNITY BANCORP, INC. STOCK PLANS
-------------------------------------------
The following table discloses the benefits that will be received by
the executive officers, directors and others under the Option Plan and RRP if
such plans are approved by the shareholders at the Special Meeting.
<TABLE>
<CAPTION>
====================================================================================================================
Option Plan(1) RRP(2)
============================================================
Name/Position # $ Value # $ Value(3)
====================================================================================================================
<S> <C> <C> <C> <C>
Timothy A. Dempsey, President and 100,000 -- 52,854 $891,911
Chief Executive Officer
====================================================================================================================
Ronald J. Gentile, Executive Vice President and Chief 65,000 -- 36,998 624,341
Operating Officer
====================================================================================================================
All Executive Officers as a Group (7 persons) 340,000 -- 169,127 2,854,018
====================================================================================================================
All Outside Directors as a Group (8 persons) 158,552 -- 71,352 1,204,065
====================================================================================================================
All Directors Emeritus as a Group (3 persons) N/A N/A 7,926 133,751
====================================================================================================================
All Non-Executive Employees as a Group 66,000 -- 15,855 267,553
(19 persons)
====================================================================================================================
</TABLE>
(1) The Options set forth in the above table for executive officers and
employees were granted by the Board of Directors of the Company on April 7,
1998, subject to shareholder approval of the Option Plan. These grants will
become effective on the Option Plan Effective Date. Pursuant to the terms
of the Option Plan, on the Option Plan Effective Date each Eligible
Director will receive an Option to purchase 19,819 Option Shares. Except as
otherwise provided in the Option Plan, or, in the case of Eligible
Employees, in related agreements, such Options shall be in effect for a
period of 10 years from the date of grant and shall vest in equal
installments, at the rate of 20% per year, commencing effective as the
first anniversary of the Option Plan Effective Date and continuing on each
consecutive anniversary date occurring thereafter. The exercise price of
such Options is equal to the fair market value of a share of Common Stock
on the Option Plan Effective Date.
(2) The Awards set forth in the above table for executive officers and
employees were granted by the Board of Directors of the Company on April 7,
1998, subject to shareholder approval of the RRP. These Awards will become
effective on the RRP Effective Date. Pursuant to the terms of the RRP, on
the RRP Effective Date each Eligible Director will receive an Award of
8,919 shares of Common Stock and each Eligible Director Emeritus will
receive an Award of 2,642 shares of Common Stock. Except as otherwise
provided in the RRP, or, in the case of Eligible Employees, in related
agreements, such Awards shall vest in equalinstallments, at the rate of 20%
per year, commencing effective as the first anniversary of the RRP
Effective Date and continuing on each consecutive anniversary date
occurring thereafter.
(3) The dollar value is based on a price per share of $16.875, the closing
sales price per share of Common Stock as reported on The Nasdaq Stock
Market on the Record Date. The actual value of the benefits under the RRP
will depend on the fair market value of a share of Common Stock on the RRP
Effective Date, which is indeterminable at this time.
19
<PAGE>
PROPOSAL 3
AUTHORIZATION OF THE BOARD OF DIRECTORS, IN ITS DISCRETION, TO DIRECT THE
VOTE OF PROXIES UPON SUCH OTHER MATTERS INCIDENT TO THE CONDUCT OF THE
SPECIAL MEETING AS MAY PROPERLY COME BEFORE THE SPECIAL MEETING, AND
ANY ADJOURNMENT OR POSTPONEMENT THEREOF, INCLUDING, WITHOUT
LIMITATION, A MOTION TO ADJOURN THE SPECIAL MEETING
GENERAL
The By-Laws of the Company require that no business be transacted and
no corporate action be taken at the Special Meeting other than that stated in
the Notice of Special Meeting. The Board of Directors is not aware of any other
business that may properly come before the Special Meeting. The Board seeks the
authorization of the shareholders of the Company, in the event matters incident
to the conduct of the Special Meeting properly come before the meeting,
including, but not limited to, the consideration of whether to adjourn the
Special Meeting once called to order, to direct the manner in which those shares
represented at the Special Meeting by proxies solicited pursuant to this Proxy
Statement shall be voted with respect to such matters. As to all such matters,
the Board intends that it would direct the voting of such shares in the manner
determined by the Board, in its discretion, and in the exercise of its duties
and responsibilities, to be in the best interests of the Company and its
shareholders, taken as a whole.
VOTE REQUIRED
The authorization of the Board of Directors, in its discretion, to
direct the vote of proxies upon such other matters incident to the conduct of
the Special Meeting as may properly come before the Special Meeting requires the
affirmative vote of the holders of a majority of the outstanding shares of
Common Stock of the Company present, in person or by proxy, and entitled to vote
at the Special Meeting. Accordingly, shares as to which the "ABSTAIN" box has
been selected on the Proxy Card will be counted as present and entitled to vote
and will have the effect of a vote against Proposal 3. Shares underlying broker
non-votes will not be counted as having been voted in person or by proxy and
will have no effect on the vote for Proposal 3.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" AUTHORIZATION OF
THE BOARD OF DIRECTORS, IN ITS DISCRETION, TO DIRECT THE VOTE OF PROXIES UPON
SUCH OTHER MATTERS INCIDENT TO THE CONDUCT OF THE SPECIAL MEETING AS MAY
PROPERLY COME BEFORE THE SPECIAL MEETING, AND ANY ADJOURNMENT OR POSTPONEMENT
THEREOF, INCLUDING, WITHOUT LIMITATION, A MOTION TO ADJOURN THE SPECIAL MEETING.
ADDITIONAL INFORMATION
NOTICE OF BUSINESS TO BE CONDUCTED AT ANNUAL MEETING
The By-Laws of the Company provide an advance notice procedure for a
shareholder to properly bring business before an annual meeting or to nominate
any person for election to the Board of Directors. The shareholder must be a
shareholder of record and have given timely notice thereof in writing to the
Corporate Secretary of the Company. To be timely, a shareholder's notice must be
20
<PAGE>
delivered to or received by the Corporate Secretary not later than the following
dates: (i) with respect to an annual meeting of shareholders, 60 days in advance
of the anniversary of the previous year's annual meeting if the current year's
meeting is to be held within 30 days prior to, on the anniversary date of, or
after the anniversary of the previous year's annual meeting; and (ii) with
respect to an annual meeting of shareholders held at a time other than within
the time periods set forth in the immediately preceding clause (i), or with
respect to a special meeting of shareholders for the election of directors, the
close of business on the 10th day following the date on which notice of such
meeting is first given to shareholders. Notice shall be deemed to first be given
to shareholders when disclosure of such date of the meeting of shareholders is
first made in a press release reported to the Dow Jones News Services,
Associated Press or comparable national news service, or in a document publicly
filed by the Company with the SEC pursuant to Section 13, 14 or 15(d) of the
Exchange Act. A shareholder's notice to the Corporate Secretary shall set forth
such information as required by the By-Laws of the Company. Nothing in this
paragraph shall be deemed to require the Company to include in its proxy
statement and proxy card relating to an annual meeting any shareholder proposal
or nomination which does not meet all of the requirements for inclusion
established by the SEC in effect at the time such proposal or nomination is
received. See "-- Date For Submission of Shareholder Proposals."
DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
Pursuant to the proxy soliciting regulations of the SEC, any
shareholder proposal intended for inclusion in the Company's proxy statement and
proxy card relating to the Company's 1998 Annual Meeting of Shareholders must be
received by the Company a reasonable time before the Company makes its proxy
solicitation in connection with such meeting. Nothing in this paragraph shall be
deemed to require the Company to include in its proxy statement and proxy card
for such meeting any shareholder proposal which does not meet the requirements
of the SEC in effect at the time. Any such proposal will be subject to 17 C.F.R.
ss.240.14a-8 of the rules and regulations promulgated by the SEC under the
Exchange Act.
By Order of the Board of Directors,
[Facsimile signature]
Nancy Sobotor-Littell
Corporate Secretary
Warwick, New York
May 21, 1998
TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE SPECIAL MEETING, PLEASE
COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE
POSTAGE-PAID ENVELOPE PROVIDED.
21
<PAGE>
APPENDIX A
----------
STOCK OPTION PLAN
OF
WARWICK COMMUNITY BANCORP, INC.
------------------------------
ADOPTED APRIL 7, 1998
EFFECTIVE AS OF [DATE OF SHAREHOLDER APPROVAL], 1998
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
---------
PURPOSE
-------
SECTION 1.1 GENERAL PURPOSE OF THE PLAN............................A-1
ARTICLE II
----------
DEFINITIONS
-----------
SECTION 2.1 BANK...................................................A-1
SECTION 2.2 BOARD..................................................A-1
SECTION 2.3 CHANGE IN CONTROL......................................A-1
SECTION 2.4 CODE...................................................A-2
SECTION 2.5 COMMITTEE..............................................A-2
SECTION 2.6 COMPANY................................................A-2
SECTION 2.7 DISABILITY.............................................A-2
SECTION 2.8 DISINTERESTED BOARD MEMBER.............................A-2
SECTION 2.9 EFFECTIVE DATE.........................................A-3
SECTION 2.10 ELIGIBLE DIRECTOR......................................A-3
SECTION 2.11 ELIGIBLE EMPLOYEE......................................A-3
SECTION 2.12 EMPLOYER...............................................A-3
SECTION 2.13 EXCHANGE ACT...........................................A-3
SECTION 2.14 EXERCISE PRICE.........................................A-3
SECTION 2.15 FAIR MARKET VALUE......................................A-3
SECTION 2.16 FAMILY MEMBER..........................................A-3
SECTION 2.17 FDIC REGULATIONS.......................................A-3
SECTION 2.18 INCENTIVE STOCK OPTION.................................A-3
SECTION 2.19 NEW ELIGIBLE DIRECTOR..................................A-3
SECTION 2.20 NON-PROFIT ORGANIZATION................................A-3
SECTION 2.21 NON-QUALIFIED STOCK OPTION.............................A-4
SECTION 2.22 NYBB REGULATIONS.......................................A-4
SECTION 2.23 OPTION.................................................A-4
SECTION 2.24 OPTION PERIOD..........................................A-4
SECTION 2.25 PERSON.................................................A-4
SECTION 2.26 PLAN...................................................A-4
SECTION 2.27 RETIREMENT.............................................A-4
SECTION 2.28 SHARE..................................................A-4
SECTION 2.29 TERMINATION FOR CAUSE..................................A-4
ARTICLE III
-----------
AVAILABLE SHARES
----------------
SECTION 3.1 AVAILABLE SHARES.......................................A-4
ARTICLE IV
----------
ADMINISTRATION
--------------
SECTION 4.1 COMMITTEE..............................................A-5
SECTION 4.2 COMMITTEE ACTION.......................................A-5
SECTION 4.3 COMMITTEE RESPONSIBILITIES.............................A-5
(i)
<PAGE>
Page
----
ARTICLE V
---------
STOCK OPTIONS FOR ELIGIBLE DIRECTORS
------------------------------------
SECTION 5.1 IN GENERAL.............................................A-6
SECTION 5.2 EXERCISE PRICE.........................................A-6
SECTION 5.3 OPTION PERIOD..........................................A-6
ARTICLE VI
----------
STOCK OPTIONS FOR ELIGIBLE EMPLOYEES
------------------------------------
SECTION 6.1 SIZE OF OPTION.........................................A-7
SECTION 6.2 GRANT OF OPTIONS.......................................A-7
SECTION 6.3 EXERCISE PRICE.........................................A-8
SECTION 6.4 OPTION PERIOD..........................................A-8
SECTION 6.5 REQUIRED REGULATORY PROVISIONS.........................A-9
SECTION 6.6 ADDITIONAL RESTRICTIONS ON INCENTIVE STOCK OPTIONS.....A-10
ARTICLE VII
-----------
OPTIONS -- IN GENERAL
---------------------
SECTION 7.1 METHOD OF EXERCISE.....................................A-11
SECTION 7.2 LIMITATIONS ON OPTIONS.................................A-12
ARTICLE VIII
-------------
AMENDMENT AND TERMINATION
-------------------------
SECTION 8.1 TERMINATION............................................A-12
SECTION 8.2 AMENDMENT..............................................A-12
SECTION 8.3 ADJUSTMENTS IN THE EVENT OF A BUSINESS REORGANIZATION..A-13
ARTICLE IX
-----------
MISCELLANEOUS
-------------
SECTION 9.1 STATUS AS AN EMPLOYEE BENEFIT PLAN.....................A-14
SECTION 9.2 NO RIGHT TO CONTINUED EMPLOYMENT.......................A-14
SECTION 9.3 CONSTRUCTION OF LANGUAGE...............................A-14
SECTION 9.4 GOVERNING LAW..........................................A-14
SECTION 9.5 HEADINGS...............................................A-14
SECTION 9.6 NON-ALIENATION OF BENEFITS.............................A-14
SECTION 9.7 TAXES..................................................A-14
SECTION 9.8 APPROVAL OF SHAREHOLDERS...............................A-15
SECTION 9.9 NOTICES................................................A-15
(ii)
<PAGE>
STOCK OPTION PLAN
-----------------
OF
--
WARWICK COMMUNITY BANCORP, INC.
-------------------------------
ARTICLE I
----------
PURPOSE
-------
1.1 SECTION GENERAL PURPOSE OF THE PLAN. The purpose of the
Plan is to promote the growth and profitability of Warwick Community Bancorp,
Inc., to provide eligible directors, certain key officers and employees of
Warwick Community Bancorp, Inc. and its affiliates with an incentive to achieve
corporate objectives, to attract and retain individuals of outstanding
competence and to provide such individuals with an equity interest in Warwick
Community Bancorp, Inc.
ARTICLE II
----------
DEFINITIONS
-----------
The following definitions shall apply for the purposes of this
Plan, unless a different meaning is plainly indicated by the context:
SECTION 2.1 BANK means The Warwick Savings Bank, a New York
chartered stock savings bank and any successor thereto.
SECTION 2.2 BOARD means the Board of Directors of the
Company.
SECTION 2.3 CHANGE IN CONTROL means any of the following
events:
(a) the occurrence of any event upon which any "person" (as
such term is used in sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended ("Exchange Act")), other than (A) a
trustee or other fiduciary holding securities under an employee benefit
plan maintained for the benefit of employees of the Company; (B) a
corporation owned, directly or indirectly, by the shareholders of the
Company in substantially the same proportions as their ownership of
stock of the Company; or (C) any group constituting a person in which
employees of the Company are substantial members, becomes the
"beneficial owner" (as defined in Rule 13d-3 promulgated under the
Exchange Act), directly or indirectly, of securities issued by the
Company representing 25% or more of the combined voting power of all of
the Company's then outstanding securities; or
(b) the occurrence of any event upon which the individuals who
on the date the Plan is adopted are members of the Board, together with
individuals whose election by the Board or nomination for election by
the Company's shareholders was approved by the affirmative vote of at
least two-thirds of the members of the Board then in office who were
either members of the Board on the date this Plan is adopted or whose
nomination or election was previously so approved, cease for any reason
to constitute a majority of the members of the Board, but excluding,
for this purpose, any such individual whose initial assumption of
office is in connection with an actual or threatened election contest
relating to the election of
A-1
<PAGE>
directors of the Company (as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act); or
(c) the shareholders of the Company approve either:
(i) a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation
following which both of the following conditions are
satisfied:
(A) either (I) the members of the Board of
the Company immediately prior to such merger or
consolidation constitute at least a majority of the
members of the governing body of the institution
resulting from such merger or consolidation; or (II)
the shareholders of the Company own securities of the
institution resulting from such merger or
consolidation representing 80% or more of the
combined voting power of all such securities of the
resulting institution then outstanding in
substantially the same proportions as their ownership
of voting securities of the Company immediately
before such merger or consolidation; and
(B) the entity which results from such
merger or consolidation expressly agrees in writing
to assume and perform the Company's obligations under
the Plan; or
(ii) a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the
Company of all or substantially all of its assets; and
(d) any event that would be described in section 2.3(a), (b)
or (c) if "the Bank" were substituted for "the Company" therein and
"Board of Directors of the Bank" were substituted for "Board" therein.
SECTION 2.4 CODE means the Internal Revenue Code of 1986, as
amended (including the corresponding provisions of any succeeding law).
SECTION 2.5 COMMITTEE means the Committee described in
section 4.1.
SECTION 2.6 COMPANY means Warwick Community Bancorp, Inc., a
corporation organized and existing under the laws of the State of Delaware, and
any successor thereto.
SECTION 2.7 DISABILITY means a condition of total incapacity,
mental or physical, for further performance of duty with the Company which the
Committee shall have determined, on the basis of competent medical evidence, is
likely to be permanent.
SECTION 2.8 DISINTERESTED BOARD MEMBER means a member of the
Board who (a) is not a current employee of the Company or a direct or indirect
subsidiary of the Company, (b) is not a former employee of the Company who
receives compensation for prior services (other than benefits under a
tax-qualified retirement plan) during the taxable year, (c) has not been an
officer of the Company, (d) does not receive remuneration from the Company or a
direct or indirect subsidiary of the Company, either directly or indirectly, in
any capacity other than as a director and (e) does not possess an interest in
any other transaction, and is not engaged in a business relationship, for which
disclosure would be required pursuant to Item 404(a) or (b) of the proxy
solicitation rules of the Securities and Exchange Commission. The term
Disinterested Board Member shall be interpreted in such manner as shall be
necessary to conform to the requirements of section 162(m) of the Code and Rule
16b-3 promulgated under the Exchange Act.
A-2
<PAGE>
SECTION 2.9 EFFECTIVE DATE means [date of shareholder
approval], 1998.
SECTION 2.10 ELIGIBLE DIRECTOR means a member of the board of
directors of the Employer who is not also an employee or an officer of the
Employer.
SECTION 2.11 ELIGIBLE EMPLOYEE means any employee whom the
Committee may determine to be a key officer or employee of the Employer and
select to receive a grant of an Option pursuant to the Plan.
SECTION 2.12 EMPLOYER means the Company, the Bank and any
successor thereto and, with the prior approval of the Board, and subject to such
terms and conditions as may be imposed by the Board, any other savings bank,
savings and loan association, bank, corporation, financial institution or other
business organization or institution. With respect to any Eligible Employee or
Eligible Director, the Employer shall mean the entity which employs such person
or upon whose board of directors such person serves.
SECTION 2.13 EXCHANGE ACT means the Securities Exchange Act
of 1934, as amended.
SECTION 2.14 EXERCISE PRICE means the price per Share at
which Shares subject to an Option may be purchased upon exercise of the Option,
determined in accordance with sections 5.2 and 6.3.
SECTION 2.15 FAIR MARKET VALUE means, with respect to a Share
on a specified date:
(a) the final reported sales price on the date in question (or
if there is no reported sale on such date, on the last preceding date
on which any reported sale occurred) as reported in the principal
consolidated reporting system with respect to securities listed or
admitted to trading on the principal United States securities exchange
on which the Shares are listed or admitted to trading; or
(b) if the Shares are not listed or admitted to trading on any
such exchange, the closing bid quotation with respect to a Share on
such date on the Nasdaq Stock Market, or, if no such quotation is
provided, on another similar system, selected by the Committee, then in
use; or
(c) if sections 2.15(a) and (b) are not applicable, the fair
market value of a Share as the Committee may determine.
SECTION 2.16 FAMILY MEMBER means the spouse, parent, child or
sibling of an Eligible Director or Eligible Employee.
SECTION 2.17 FDIC REGULATIOINS means the regulations issued
by the Federal Deposit Insurance Corporation and applicable to the Plan, the
Bank or the Company.
SECTION 2.18 INCENTIVE STOCK OPTION means a right to purchase
Shares that is granted to Eligible Employees pursuant to section 6.1, that is
designated by the Committee to be an Incentive Stock Option and that is intended
to satisfy the requirements of section 422 of the Code.
SECTION 2.19 NEW ELIGIBLE DIRECTOR means a person who becomes
a member of the board of directors of the Employer after the Effective Date and
who is not also an employee or an officer of the Employer.
SECTION 2.20 NON-PROFIT ORGANIZATION means any organization
which is exempt from federal income tax under section 501(c)(3), (4), (5), (6),
(7), (8) or (10) of the Code.
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SECTION 2.21 NON-QUALIFIED STOCK OPTION means a right to
purchase Shares that is granted pursuant to section 5.1 or 6.1. For Eligible
Employees, an Option will be a Non-Qualified Stock Option if (a) it is not
designated by the Committee to be an Incentive Stock Option or (b) it does not
satisfy the requirements of section 422 of the Code.
SECTION 2.22 NYBB REGULATIONS means the regulations issued by
the New York Banking Board and applicable to the Plan, the Bank or the Company.
SECTION 2.23 OPTION means either an Incentive Stock Option
or a Non-Qualified Stock Option.
SECTION 2.24 OPTION PERIOD means the period during which an
Option may be exercised, determined in accordance with section 5.3 and 6.4.
SECTION 2.25 PERSON means an individual, a corporation, a
bank, a savings bank, a savings and loan association, a financial institution, a
partnership, an association, a joint-stock company, a trust, an estate, an
unincorporated organization and any other business organization or institution.
SECTION 2.26 PLAN means the Stock Option Plan of Warwick
Community Bancorp, Inc., as amended from time to time. The Plan may be referred
to as the "Stock Option Plan of Warwick Community Bancorp, Inc."
SECTION 2.27 RETIREMENT means retirement at or after the
normal or early retirement date set forth in any tax-qualified retirement plan
of the Bank.
SECTION 2.28 SHARE means a share of common stock, par value
$.01 per share, of Warwick Community Bancorp, Inc.
SECTION 2.29 TERMINATION FOR CAUSE means termination of
employment with the Employer upon the occurrence of any of the following: (i)
the employee intentionally engages in dishonest conduct in connection with his
performance of services for the Employer resulting in his conviction of a
felony; (ii) the employee is convicted of, or pleads guilty or NOLO CONTENDERE
to, a felony or any crime involving moral turpitude; (iii) the employee
willfully fails or refuses to perform his duties under any employment or
retention agreement and fails to cure such breach within 60 days following
written notice thereof from the Employer; (iv) the employee breaches his
fiduciary duties to the Employer for personal profit; or (v) the employee's
willful breach or violation of any law, rule or regulation (other than traffic
violations or similar offenses), or final cease and desist order in connection
with his performance of services for the Employer.
ARTICLE III
-----------
AVAILABLE SHARES
----------------
SECTION 3.1 AVAILABLE SHARES
Subject to section 8.3, the maximum aggregate number of Shares
with respect to which Options may be granted at any time shall be equal to the
excess of:
(a) 660,654 Shares; over
(b) the sum of:
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(i) the number of Shares with respect to which
previously granted Options may then or may in the future be
exercised; plus
(ii) the number of Shares with respect to which
previously granted Options have been exercised.
Options to purchase a maximum aggregate number of 198,196 Shares may be granted
to Eligible Directors. For purposes of this section 3.1, an Option shall not be
considered as having been exercised to the extent that such Option terminates by
reason other than the purchase of related Shares; PROVIDED, HOWEVER, that for
purposes of meeting the requirements of section 162(m) of the Code, no Eligible
Employee who is a covered employee under section 162(m) of the Code shall
receive a grant of Options in excess of the amount specified under this section
3.1, computed as if any Option which is canceled reduced the maximum number of
Shares.
ARTICLE IV
----------
ADMINISTRATION
--------------
SECTION 4.1 COMMITTEE
The Plan shall be administered by the members of the
Compensation Committee of the Company who are Disinterested Board Members. If
the Committee consists of fewer than two Disinterested Board Members, then the
Board shall appoint to the Committee such additional Disinterested Board Members
as shall be necessary to provide for a Committee consisting of at least two
Disinterested Board Members.
SECTION 4.2 COMMITTEE ACTION
The Committee shall hold such meetings, and may make such
administrative rules and regulations, as it may deem proper. A majority of the
members of the Committee shall constitute a quorum, and the action of a majority
of the members of the Committee present at a meeting at which a quorum is
present, as well as actions taken pursuant to the unanimous written consent of
all of the members of the Committee without holding a meeting, shall be deemed
to be actions of the Committee. All actions of the Committee shall be final and
conclusive and shall be binding upon the Company and all other interested
parties. Any Person dealing with the Committee shall be fully protected in
relying upon any written notice, instruction, direction or other communication
signed by the secretary of the Committee and one member of the Committee, by two
members of the Committee or by a representative of the Committee authorized to
sign the same in its behalf.
SECTION 4.3 COMMITTEE RESPONSIBILITIES
Subject to the terms and conditions of the Plan and such
limitations as may be imposed from time to time by the Board, the Committee
shall be responsible for the overall management and administration of the Plan
and shall have such authority as shall be necessary or appropriate in order to
carry out its responsibilities, including, without limitation, the authority:
(a) to interpret and construe the Plan and to determine all
questions that may arise under the Plan as to eligibility for
participation in the Plan, the number of Shares subject to the Options,
if any, to be granted, and the terms and conditions thereof;
(b) to adopt rules and regulations and to prescribe forms for
the operation and administration of the Plan; and
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(c) to take any other action not inconsistent with the
provisions of the Plan that it may deem necessary or appropriate.
ARTICLE V
---------
STOCK OPTIONS FOR ELIGIBLE DIRECTORS
------------------------------------
SECTION 5.1 IN GENERAL
(a) Each Person who is an Eligible Director on the Effective
Date shall be granted an Option to purchase 19,819 Shares. After the Effective
Date, each New Eligible Director and each Eligible Director may be granted an
Option to purchase such number of Shares as shall be determined by the Board or
the Committee, in its discretion, subject to Rule 16b-3 promulgated under the
Exchange Act; PROVIDED, HOWEVER, that the maximum aggregate number of Options
granted to Eligible Directors and New Eligible Directors shall not exceed
198,196 Shares.
(b) Any Option granted under this section 5.1 shall be
evidenced by a written Option agreement which shall specify the number of Shares
covered by the Option, the Exercise Price for the Shares subject to the Option
and the Option Period, all as determined pursuant to this Article V. The Option
agreement shall also set forth specifically or incorporate by reference the
applicable provisions of the Plan.
SECTION 5.2 EXERCISE PRICE
The price per Share at which an Option granted to an Eligible
Director or New Eligible Director under section 5.1 may be exercised shall be
the Fair Market Value of a Share on the date on which the Option is granted.
SECTION 5.3 OPTION PERIOD
(a) Subject to section 5.3(b), the Option Period during which
an Option granted to an Eligible Director or New Eligible Director under section
5.1 may be exercised shall commence on the date the Option is granted and shall
expire on the earliest of:
(i) the close of business on the last day of the three-month
period commencing on the date the Eligible Director or New Eligible
Director ceases to be a member of the board of directors of the
Employer, other than on account of death, Disability or removal for
cause in accordance with the Employer's by-laws, and such person does
not continue to serve as an active advisory or emeritus director of the
Employer, or in a similar capacity, as determined by the board of
directors of the Employer;
(ii) the close of business on the last day of the one-year
period commencing on the date the Eligible Director or New Eligible
Director ceases to be a member of the board of directors of the
Employer due to death or Disability;
(iii) the date and time when the Eligible Director or New
Eligible Director ceases to be a member of the board of directors of
the Employer due to removal for cause in accordance with the Employer's
by-laws; or
(iv) the last day of the ten-year period commencing on the
date on which the Option was granted.
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(b) During the Option Period, the maximum number Shares as to
which an outstanding Option may be exercised shall be as follows:
(i) prior to the first anniversary of the date on which the
Plan is approved by shareholders pursuant to section 9.8, the Option
shall not be exercisable;
(ii) on and after the first anniversary, but prior to the
second anniversary, of the date on which the Plan is approved by
shareholders pursuant to section 9.8, the Option may be exercised as to
a maximum of 20% of the Shares subject to the Option;
(iii) on and after the second anniversary, but prior to the
third anniversary, of the date on which the Plan is approved by
shareholders pursuant to section 9.8, the Option may be exercised as to
a maximum of 40% of the Shares subject to the Option when granted,
including in such number any optioned Shares purchased prior to such
second anniversary;
(iv) on and after the third anniversary, but prior to the
fourth anniversary, of the date on which the Plan is approved by
shareholders pursuant to section 9.8, the Option may be exercised as to
a maximum of 60% of the Shares subject to the Option when granted,
including in such number any optioned Shares purchased prior to such
third anniversary;
(v) on and after the fourth anniversary, but prior to the
fifth anniversary, of the date on which the Plan is approved by
shareholders pursuant to section 9.8, the Option may be exercised as to
a maximum of 80% of the Shares subject to the Option when granted,
including in such number any optioned Shares purchased prior to such
fourth anniversary; and
(vi) on and after the fifth anniversary of the date on which
the Plan is approved by shareholders pursuant to section 9.8 and for
the remainder of the Option Period, the Option may be exercised as to
the entire number of optioned Shares not theretofore purchased;
PROVIDED, HOWEVER, that such an Option shall become fully exercisable, and all
optioned Shares not previously purchased shall become available for purchase, on
the date of the Option holder's death or Disability.
ARTICLE VI
----------
STOCK OPTIONS FOR ELIGIBLE EMPLOYEES
------------------------------------
SECTION 6.1 SIZE OF OPTION.
Subject to sections 6.2 and 6.5 and such limitations as the
Board may from time to time impose, the number of Shares as to which an Eligible
Employee may be granted Options shall be determined by the Board or the
Committee, in its discretion. Except as provided in section 6.5, the maximum
number of Shares that may be optioned to any one individual under this Plan
during its entire duration shall be the entire number of Shares available under
section 3.1 of the Plan.
SECTION 6.2 GRANT OF OPTION.
(a) The grant of Options pursuant to this Plan as of the
Effective Date will be made by the Board. Subject to the limitations of this
Plan and such limitations as the Board may from time to time impose, future
grants may be made by the Board or the Committee, in its discretion. An Option
granted to an Eligible Employee must be designated as either an Incentive Stock
Option or a Non-Qualified Stock Option and, if not designated as either, shall
be a Non-Qualified Stock Option.
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(b) Any Option granted under this section 6.2 shall be
evidenced by a written Option agreement which shall:
(i) specify the number of Shares covered by the Option;
(ii) specify the Exercise Price, determined in accordance with
section 6.3, for the Shares subject to the Option;
(iii) specify the Option Period determined in accordance with
section 6.4;
(iv) set forth specifically or incorporate by reference the
applicable provisions of the Plan; and
(v) contain such other terms and conditions not inconsistent
with the Plan as the Committee may, in its discretion, prescribe with
respect to an Option granted to an Eligible Employee.
SECTION 6.3 EXERCISE PRICE.
The Exercise Price per Share at which an Option granted to an
Eligible Employee shall be determined by the Committee, in its discretion;
PROVIDED, HOWEVER, that the Exercise Price shall not be less than the Fair
Market Value of a Share on the date on which the Option is granted.
SECTION 6.4 OPTION PERIOD.
(a) Subject to section 6.5, the Option Period during which an
Option granted to an Eligible Employee may be exercised shall commence on the
date specified by the Committee in the Option agreement and shall expire on the
date specified in the Option agreement or, if no date is specified, on the
earliest of:
(i) the close of business on the last day of the three-month
period commencing on the date of the Eligible Employee's termination of
employment with the Employer, other than on account of death or
Disability, Retirement or a Termination for Cause;
(ii) the close of business on the last day of the one-year
period commencing on the date of the Eligible Employee's termination of
employment with the Employer due to death, Disability or Retirement;
(iii) the date and time when the Eligible Employee ceases to
be an employee of the Employer due to a Termination for Cause; and
(iv) the last day of the ten-year period commencing on the
date on which the Option was granted.
(b) Upon termination of the Eligible Employee's employment
with the Company, any Option granted pursuant to the Plan that is not yet
exercisable shall be forfeited. For purposes of the Plan, employment shall be
deemed to continue for so long as the Eligible Employee is serving as an
officer, employee, outside director, advisory director, emeritus director or
consultant to the Company or is subject to and is observing the terms of a
written agreement restricting his or her ability to compete or imposing other
restrictive covenants.
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SECTION 6.5 REQUIRED REGULATORY PROVISIONS.
Notwithstanding anything contained herein to the contrary:
(a) no Option shall be granted to an Eligible Employee under
the Plan prior to shareholder approval under section 9.8;
(b) no Eligible Employee may be granted Options to purchase
more than 165,163 Shares.
(c) each Option granted to an Eligible Employee shall become
exercisable as follows:
(i) prior to the first anniversary of the date on
which the Plan is approved by shareholders pursuant to section
9.8, the Option shall not be exercisable;
(ii) on and after the first anniversary, but prior to
the second anniversary, of the date on which the Plan is
approved by shareholders pursuant to section 9.8, the Option
may be exercised as to a maximum of 20% of the Shares subject
to the Option when granted;
(iii) on and after the second anniversary, but prior
to the third anniversary, of the date on which the Plan is
approved by shareholders pursuant to section 9.8, the Option
may be exercised as to a maximum of 40% of the Shares subject
to the Option when granted, including in such 40% any optioned
Shares purchased prior to such second anniversary;
(iv) on and after the third anniversary, but prior to
the fourth anniversary, of the date on which the Plan is
approved by shareholders pursuant to section 9.8, the Option
may be exercised as to a maximum of 60% of the Shares subject
to the Option when granted, including in such number any
optioned Shares purchased prior to such third anniversary;
(v) on and after the fourth anniversary, but prior to
the fifth anniversary, of the date on which the Plan is
approved by shareholders pursuant to section 9.8, the Option
may be exercised as to a maximum of 80% of the Shares subject
to the Option when granted, including in such number any
optioned Shares purchased prior to such fourth anniversary;
and
(vi) on and after the fifth anniversary of the date
on which the Plan is approved by shareholders pursuant to
section 9.8 and for the remainder of the Option Period, the
Option may be exercised as to the entire number of optioned
Shares not theretofore purchased;
PROVIDED, HOWEVER, that such an Option shall become fully exercisable,
and all optioned Shares not previously purchased shall become available
for purchase, on the date of the Option holder's death or Disability;
and PROVIDED, FURTHER, that the Committee may establish a different
vesting schedule for any Option if not inconsistent with the NYBB
Regulations or the FDIC Regulations.
(d) The Option Period of any Option granted to an Eligible
Employee hereunder, whether or not previously vested, shall be
suspended as of the time and date at which the Option holder has
received notice from the Board that his or her employment is subject to
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a possible Termination for Cause. Such suspension shall remain in
effect until the Option holder receives official notice from the Board
that he or she has been cleared of any possible Termination for Cause,
at which time, the original Exercise Period shall be reinstated without
any adjustment for the intervening suspended period. In the event that
the Option Period under section 6.4 expires during such suspension, the
Company shall pay to the Eligible Employee, within 30 days after his
reinstatement as an employee of the Employer, damages equal to the
value of the expired Options less the Exercise Price of such Options.
(e) No Option granted to an Eligible Employee hereunder,
whether or not previously vested, shall be exercised after the time and
date at which the Option holder's employment with the Employer is
terminated in a Termination for Cause.
SECTION 6.6 ADDITIONAL RESTRICTIONS ON INCENTIVE STOCK
OPTIONS.
In addition to the limitations of section 7.2, an Option
granted to an Eligible Employee designated by the Committee to be an Incentive
Stock Option shall be subject to the following limitations:
(a) If, for any calendar year, the sum of (i) plus (ii)
exceeds $100,000, where (i) equals the Fair Market Value (determined as
of the date of the grant) of Shares subject to an Option intended to be
an Incentive Stock Option which first become available for purchase
during such calendar year, and (ii) equals the Fair Market Value
(determined as of the date of the grant) of Shares subject to any other
options intended to be Incentive Stock Options and previously granted
to the same Eligible Employee which first become exercisable in such
calendar year, then that number of Shares optioned which causes the sum
of (i) and (ii) to exceed $100,000 shall be deemed to be Shares
optioned pursuant to a Non-Qualified Stock Option or Non-Qualified
Stock Options, with the same terms as the Option or Options intended to
be an Incentive Stock Option;
(b) The Exercise Price of an Incentive Stock Option granted to
an Eligible Employee who, at the time the Option is granted, owns
Shares comprising more than 10% of the total combined voting power of
all classes of stock of the Company shall not be less than 110% of the
Fair Market Value of a Share, and if an Option designated as an
Incentive Stock Option shall be granted at an Exercise Price that does
not satisfy this requirement, the designated Exercise Price shall be
observed and the Option shall be treated as a Non-Qualified Stock
Option;
(c) The Option Period of an Incentive Stock Option granted to
an Eligible Employee who, at the time the Option is granted, owns
Shares comprising more than 10% of the total combined voting power of
all classes of stock of the Company, shall expire no later than the
fifth anniversary of the date on which the Option was granted, and if
an Option designated as an Incentive Stock Option shall be granted for
an Option Period that does not satisfy this requirement, the designated
Option Period shall be observed and the Option shall be treated as a
Non-Qualified Stock Option;
(d) An Incentive Stock Option that is exercised during its
designated Option Period but more than:
(i) three months after the termination of employment
with the Company, a parent or a subsidiary (other than on
account of disability within the meaning of section 22(e)(3)
of the Code or death) of the Eligible Employee to whom it was
granted; and
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(ii) one year after such individual's termination of
employment with the Company, a parent or a subsidiary due to
disability (within the meaning of section 22(e)(3) of the
Code);
may be exercised in accordance with the terms but shall at the time of
exercise be treated as a Non-Qualified Stock Option; and
(e) Except with the prior written approval of the Committee,
no individual shall dispose of Shares acquired pursuant to the exercise
of an Incentive Stock Option until after the later of (i) the second
anniversary of the date on which the Incentive Stock Option was granted
or (ii) the first anniversary of the date on which the Shares were
acquired.
ARTICLE VII
------------
OPTIONS -- IN GENERAL
---------------------
SECTION 7.1 METHOD OF EXERCISE
(a) Subject to the limitations of the Plan and the Option
agreement, an Option holder may, at any time during the Option Period, exercise
his or her right to purchase all or any part of the Shares to which the Option
relates; PROVIDED, HOWEVER, that the minimum number of Shares which may be
purchased at any time shall be 100, or, if less, the total number of Shares
relating to the Option which remain unpurchased. An Option holder shall exercise
an Option to purchase Shares by:
(i) giving written notice to the Committee, in such form and
manner as the Committee may prescribe, of his or her intent to
exercise the Option;
(ii) delivering to the Committee full payment, consistent with
section 7.1(b), for the Shares as to which the Option is to be
exercised; and
(iii) satisfying such other conditions as may be prescribed in
the Option agreement.
(b) The Exercise Price of Shares to be purchased upon exercise
of any Option shall be paid in full in cash (by certified or bank check or such
other instrument as the Company may accept) or, if and to the extent permitted
by the Committee, by one or more of the following: (i) in the form of Shares
already owned by the Option holder having an aggregate Fair Market Value on the
date the Option is exercised equal to the aggregate Exercise Price to be paid;
(ii) by requesting the Company to cancel without payment Options outstanding to
such Person for that number of Shares whose aggregate Fair Market Value on the
date of exercise, when reduced by their aggregate Exercise Price, equals the
aggregate Exercise Price of the Options being exercised; or (iii) by a
combination thereof. Payment for any Shares to be purchased upon exercise of an
Option may also be made by delivering a properly executed exercise notice to the
Company, together with a copy of irrevocable instructions to a broker to deliver
promptly to the Company the amount of sale or loan proceeds to pay the purchase
price. To facilitate the foregoing, the Company may enter into agreements for
coordinated procedures with one or more brokerage firms.
(c) When the requirements of section 7.1(a) and (b) have been
satisfied, the Committee shall take such action as is necessary to cause the
issuance of a stock certificate evidencing the Option holder's ownership of such
Shares. The Person exercising the Option shall have no right to vote or to
receive dividends, nor have any other rights with respect to the Shares, prior
to the date as of which such Shares are transferred to such Person on the stock
transfer records of the Company, and no adjustments shall be made for any
dividends or other rights for which the record date is prior to the date as of
which such transfer is effected, except as may be required under section 8.3.
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SECTION 7.2 LIMITATIONS ON OPTIONS
(a) An Option by its terms shall not be transferable by the
Option holder other than to Family Members or Non-Profit Organizations or by
will or by the laws of descent and distribution and shall be exercisable, during
the lifetime of the Option holder, only by the Option holder, a Family Member or
a Non-Profit Organization. Any such transfer shall be effected by written notice
to the Company given in such form and manner as the Committee may prescribe and
shall be recognized only if such notice is received by the Company prior to the
death of the person giving it. Thereafter, the transferee shall have, with
respect to such Option, all of the rights, privileges and obligations which
would attach thereunder to the transferor if the Option were issued to such
transferor. If a privilege of the Option depends on the life, employment or
other status of the transferor, such privilege of the Option for the transferee
shall continue to depend on the life, employment or other status of the
transferor. The Committee shall have full and exclusive authority to interpret
and apply the provisions of this Plan to transferees to the extent not
specifically described herein. Notwithstanding the foregoing, an Incentive Stock
Option is not transferable by an Eligible Employee other than by will or the
laws of descent and distribution, and is exercisable, during the lifetime of the
Eligible Employee, solely by the Eligible Employee.
(b) The Company's obligation to deliver Shares with respect to
an Option shall, if the Committee so requests, be conditioned upon the receipt
of a representation as to the investment intention of the Option holder to whom
such Shares are to be delivered, in such form as the Committee shall determine
to be necessary or advisable to comply with the provisions of applicable
federal, state or local law. It may be provided that any such representation
shall become inoperative upon a registration of the Shares or upon the
occurrence of any other event eliminating the necessity of such representation.
The Company shall not be required to deliver any Shares under the Plan prior to
(i) the admission of such Shares to listing on any stock exchange on which
Shares may then be listed or (ii) the completion of such registration or other
qualification under any state or federal law, rule or regulation as the
Committee shall determine to be necessary or advisable.
VIII ARTICLE
------------
AMENDMENT AND TERMINATION
-------------------------
SECTION 8.1 TERMINATION
The Board may suspend or terminate the Plan in whole or in
part at any time prior to the tenth anniversary of the Effective Date by giving
written notice of such suspension or termination to the Committee. Unless sooner
terminated, the Plan shall terminate automatically on the day preceding the
tenth anniversary of the Effective Date. In the event of any suspension or
termination of the Plan, all Options theretofore granted under the Plan that are
outstanding on the date of such suspension or termination of the Plan shall
remain outstanding and exercisable for the period and on the terms and
conditions set forth in the Option agreements evidencing such Options.
SECTION 8.2 AMENDMENT
The Board may amend or revise the Plan in whole or in part at
any time; PROVIDED, HOWEVER, that, to the extent required to comply with section
162(m) of the Code, no such amendment or revision shall be effective if it
amends a material term of the Plan unless approved by the holders of a majority
of the voting Shares of the Company.
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SECTION 8.3 ADJUSTMENTS IN THE EVENTS OF A BUSINESS
REORGANIZATION.
(a) In the event of any merger, consolidation or other
business reorganization (including but not limited to a Change in Control) in
which the Company is the surviving entity, and in the event of any stock split,
stock dividend or other event generally affecting the number of Shares held by
each Person who is then a holder of record of Shares, the number of Shares
covered by each outstanding Option and the number of Shares available pursuant
to section 3.1 shall be adjusted to account for such event. Such adjustment
shall be effected by multiplying such number of Shares by a number equal to the
number of Shares that would be owned after such event by a Person who,
immediately prior to such event, was the holder of record of one Share, and the
Exercise Price of the Options shall be adjusted by dividing the Exercise Price
by such number of Shares; PROVIDED, HOWEVER, that the Committee may, in its
discretion, establish another appropriate method of adjustment.
(b) In the event of any merger, consolidation or other
business reorganization (including but not limited to a Change in Control) in
which the Company is not the surviving entity, any exercisable Options granted
under the Plan which remain outstanding may be canceled as of the effective date
of such merger, consolidation, business reorganization, liquidation or sale by
the Board upon 30 days' written notice to the Option holder; PROVIDED, HOWEVER,
that on or as soon as practicable following the date of cancellation, each
Option holder shall receive a monetary payment in such amount, or other property
of such kind and value, as the Board determines in good faith to be equivalent
in value to the Options that have been canceled.
(c) In the event that the Company shall declare and pay any
dividend with respect to Shares (other than a dividend payable in Shares) which
results in a nontaxable return of capital to the holders of Shares for federal
income tax purposes or otherwise than by dividend makes distribution of property
to the holders of its Shares, the Company shall, in the discretion of the
Committee, either:
(i) make an equivalent payment to each Person holding an
outstanding Option as of the record date for such dividend. Such
payment shall be made at substantially the same time, in substantially
the same form and in substantially the same amount per optioned Share
as the dividend or other distribution paid with respect to outstanding
Shares; PROVIDED, HOWEVER, that if any dividend or distribution on
outstanding Shares is paid in property other than cash, the Company, in
the Committee's discretion, may make such payment in a cash amount per
optioned Share equal in fair market value to the fair market value of
the non-cash dividend or distribution; or
(ii) adjust the Exercise Price of each outstanding Option in
such manner as the Committee may determine to be appropriate to
equitably reflect the payment of the dividend; or
(iii) take the action described in section 8.3(c)(i) with
respect to certain outstanding Options and the action described in
section 8.3(c)(ii) with respect to the remaining outstanding Options;
PROVIDED, HOWEVER, that no such action shall be taken without the approval of
the Superintendent of Banks of the State of New York ("Superintendent") until
the shareholders of the Company have voted to approve the provisions of this
section 8.3(c) by a majority of the votes cast in a vote taken after December
23, 1998.
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ARTICLE IX
----------
MISCELLANEOUS
-------------
SECTION 9.1 STATUS AS AN EMPLOYEE BENEFIT PLAN.
This Plan is not intended to satisfy the requirements for
qualification under section 401(a) of the Code or to satisfy the definitional
requirements for an "employee benefit plan" under section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). It is intended to
be a non-qualified incentive compensation program that is exempt from the
regulatory requirements of ERISA. The Plan shall be construed and administered
so as to effectuate this intent.
SECTION 9.2 NO RIGHT TO CONTINUED EMPLOYMENT.
Neither the establishment of the Plan nor any provisions of
the Plan nor any action of the Board or the Committee with respect to the Plan
shall be held or construed to confer upon any Eligible Director or Eligible
Employee any right to a continuation of his or her position as a director or
employee of the Company. The Employers reserve the right to remove any Eligible
Director or dismiss any Eligible Employee or otherwise deal with any Eligible
Director or Eligible Employee to the same extent as though the Plan had not been
adopted.
SECTION 9.3 CONSTRUCTION OF LANGUAGE.
Whenever appropriate in the Plan, words used in the singular
may be read in the plural, words used in the plural may be read in the singular,
and words importing the masculine gender may be read as referring equally to the
feminine or the neuter. Any reference to an Article or section number shall
refer to an Article or section of this Plan unless otherwise indicated.
SECTION 9.4 GOVERNING LAW.
The Plan shall be construed, administered and enforced
according to the laws of the State of New York without giving effect to the
conflict of laws principles thereof, except to the extent that such laws are
preempted by federal law. The Plan shall be construed to comply with applicable
NYBB Regulations and FDIC Regulations.
SECTION 9.5 HEADINGS.
The headings of Articles and sections are included solely for
convenience of reference. If there is any conflict between such headings and the
text of the Plan, the text shall control.
SECTION 9.6 NON-ALIENTATION OF BENEFITS.
The right to receive a benefit under the Plan shall not be
subject in any manner to anticipation, alienation or assignment, nor shall such
right be liable for or subject to debts, contracts, liabilities, engagements or
torts, except to the extent provided in a qualified domestic relations order as
defined in section 414(p) of the Code.
SECTION 9.7 TAXES.
The Company shall have the right to deduct from all amounts
paid by the Company in cash with respect to an Option under the Plan any taxes
required by law to be withheld with respect to such Option. Where any Person is
entitled to receive Shares pursuant to the exercise of an Option, the Company
shall have the right to require such Person to pay the Company the amount of any
tax which the Company is required to
A-14
<PAGE>
withhold with respect to such Shares, or, in lieu thereof, to retain, or to sell
without notice, a sufficient number of Shares to cover the amount required to be
withheld.
SECTION 9.8 APPROVAL OF SHAREHOLDERS.
The Plan shall not be effective or implemented prior to the
one year anniversary of the conversion of the Bank to stock form unless approved
by the holders of a majority of the total votes eligible to be cast at any duly
called annual or special meeting of the Company to be held no earlier than six
months following such conversion, in which case the Plan shall be effective as
of the date of such approval or such later date as is specified by the Board.
SECTION 9.9 NOTICES.
Any communication required or permitted to be given under the
Plan, including any notice, direction, designation, comment, instruction,
objection or waiver, shall be in writing and shall be deemed to have been given
at such time as it is delivered personally or five days after mailing if mailed,
postage prepaid, by registered or certified mail, return receipt requested,
addressed to such party at the address listed below, or at such other address as
one such party may by written notice specify to the other party:
(a) If to the Committee:
Warwick Community Bancorp, Inc.
c/o The Warwick Savings Bank
18 Oakland Avenue
Warwick, New York 10990-0591
Attention: CORPORATE SECRETARY
(b) If to an Option holder, to the Option holder's
address as shown in the Employer's records.
A-15
<PAGE>
APPENDIX B
RECOGNITION AND RETENTION PLAN
OF
WARWICK COMMUNITY BANCORP, INC.
------------------------------
ADOPTED ON APRIL 7, 1998
EFFECTIVE AS OF [DATE OF SHAREHOLDER APPROVAL], 1998
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
ARTICLE I
---------
PURPOSE
-------
SECTION 1.1 GENERAL PURPOSE OF THE PLAN...................................B-1
ARTICLE II
----------
DEFINITIONS
-----------
SECTION 2.1 AWARD.........................................................B-1
SECTION 2.2 AWARD DATE....................................................B-1
SECTION 2.3 BANK..........................................................B-1
SECTION 2.4 BENEFICIARY...................................................B-1
SECTION 2.5 BOARD.........................................................B-1
SECTION 2.6 CHANGE IN CONTROL.............................................B-1
SECTION 2.7 CODE..........................................................B-2
SECTION 2.8 COMMITTEE.....................................................B-2
SECTION 2.9 COMPANY.......................................................B-2
SECTION 2.10 DISABILITY....................................................B-3
SECTION 2.11 DISINTERESTED BOARD MEMBER....................................B-3
SECTION 2.12 EFFECTIVE DATE................................................B-3
SECTION 2.13 ELIGIBLE DIRECTOR.............................................B-3
SECTION 2.14 ELIGIBLE DIRECTOR EMERITUS....................................B-3
SECTION 2.15 ELIGIBLE EMPLOYEE.............................................B-3
SECTION 2.16 EMPLOYER......................................................B-3
SECTION 2.17 EXCHANGE ACT..................................................B-3
SECTION 2.18 FDIC REGULATIONS..............................................B-3
SECTION 2.19 NYBB REGULATIONS..............................................B-3
SECTION 2.20 PERSON........................................................B-3
SECTION 2.21 PLAN..........................................................B-3
SECTION 2.22 SHARE.........................................................B-3
SECTION 2.23 TRUST.........................................................B-4
SECTION 2.24 TRUST AGREEMENT...............................................B-4
SECTION 2.25 TRUST FUND....................................................B-4
SECTION 2.26 TRUSTEE.......................................................B-4
ARTICLE III
-----------
SHARES AVAILABLE UNDER PLAN
---------------------------
SECTION 3.1 SHARES AVAILABLE UNDER PLAN...................................B-4
ARTICLE IV
----------
ADMINISTRATION
--------------
SECTION 4.1 COMMITTEE.....................................................B-4
SECTION 4.2 COMMITTEE ACTION..............................................B-4
SECTION 4.3 COMMITTEE RESPONSIBILITIES....................................B-5
<PAGE>
PAGE
ARTICLE V
---------
THE TRUST FUND
--------------
SECTION 5.1 CONTRIBUTIONS.................................................B-5
SECTION 5.2 THE TRUST FUND................................................B-5
SECTION 5.3 INVESTMENTS...................................................B-5
ARTICLE VI
-----------
AWARDS
------
SECTION 6.1 AWARDS TO ELIGIBLE DIRECTORS AND ELIGIBLE DIRECTORS EMERITUS..B-6
SECTION 6.2 AWARDS TO ELIGIBLE EMPLOYEES..................................B-6
SECTION 6.3 AWARDS IN GENERAL.............................................B-6
SECTION 6.4 SHARE ALLOCATIONS.............................................B-6
SECTION 6.5 DIVIDEND RIGHTS...............................................B-6
SECTION 6.6 VOTING RIGHTS.................................................B-7
SECTION 6.7 TENDER OFFERS.................................................B-7
SECTION 6.8 LIMITATIONS ON AWARDS.........................................B-8
ARTICLE VII
-----------
VESTING AND DISTRIBUTION OF SHARES
----------------------------------
SECTION 7.1 VESTING FOR ELIGIBLE DIRECTORS AND ELIGIBLE DIRECTORS
EMERITUS.....................................................B-9
SECTION 7.2 VESTING FOR ELIGIBLE EMPLOYEES...............................B-9
SECTION 7.3 DESIGNATION OF BENEFICIARY...................................B-9
SECTION 7.4 MANNER OF DISTRIBUTION.......................................B-9
SECTION 7.5 TAXES........................................................B-10
ARTICLE VIII
------------
AMENDMENT AND TERMINATION
-------------------------
SECTION 8.1 TERMINATION..................................................B-10
SECTION 8.2 AMENDMENT....................................................B-10
SECTION 8.3 ADJUSTMENTS IN THE EVENT OF A BUSINESS REORGANIZATION........B-10
ARTICLE IX
----------
MISCELLANEOUS
-------------
SECTION 9.1 STATUS AS AN EMPLOYEE BENEFIT PLAN...........................B-11
SECTION 9.2 NO RIGHT TO CONTINUED EMPLOYMENT.............................B-11
SECTION 9.3 CONSTRUCTION OF LANGUAGE.....................................B-11
SECTION 9.4 GOVERNING LAW................................................B-11
SECTION 9.5 HEADINGS.....................................................B-11
SECTION 9.6 NON-ALIENATION OF BENEFITS...................................B-11
SECTION 9.7 NOTICES......................................................B-12
SECTION 9.8 APPROVAL OF SHAREHOLDERS.....................................B-12
<PAGE>
RECOGNITION AND RETENTION PLAN
------------------------------
OF
--
WARWICK COMMUNITY BANCORP, INC.
-------------------------------
ARTICLE I
PURPOSE
-------
SECTION 1.1 GENERAL PURPOSE OF THE PLAN
The purpose of the Plan is to promote the growth and profitability of
Warwick Community Bancorp, Inc. and to provide eligible directors, eligible
directors emeritus, certain key officers and employees of Warwick Community
Bancorp, Inc. with an incentive to achieve corporate objectives, to attract and
retain directors, directors emeritus, key officers and employees of outstanding
competence and to provide such directors, directors emeritus, officers and
employees with an equity interest in Warwick Community Bancorp, Inc.
ARTICLE II
----------
DEFINITIONS
-----------
The following definitions shall apply for the purposes of this
plan, unless a different meaning is plainly indicated by the context:
SECTION 2.1 AWARD means a grant of Shares to an Eligible
Director, Eligible Director Emeritus or Eligible Employee pursuant to section
6.1 or 6.2.
SECTION 2.2 AWARD DATE means, with respect to a particular
Award, the date specified by the Committee in the notice of the Award issued to
the Eligible Director, Eligible Director Emeritus or Eligible Employee by the
Committee, pursuant to section 6.1 or 6.2.
SECTION 2.3 BANK means The Warwick Savings Bank, a New York
chartered stock savings bank, and any successor thereto.
SECTION 2.4 BENEFICIARY means the Person designated by an
Eligible Director, Eligible Director Emeritus or Eligible Employee, pursuant to
section 7.3, to receive distribution of any Shares available for distribution to
such Eligible Director, Eligible Director Emeritus or Eligible Employee, in the
event such Eligible Director, Eligible Director Emeritus or Eligible Employee
dies prior to receiving distribution of such Shares.
SECTION 2.5 BOARD means the Board of Directors of the
Company.
SECTION 2.6 CHANGE IN CONTROL means any of the following
events:
(a) the occurrence of any event upon which any "person" (as
such term is used in sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended ("Exchange Act")), other than (A) a
trustee or other fiduciary holding securities under an employee benefit
plan maintained for the benefit of employees of the Company; (B) a
corporation owned,
B-1
<PAGE>
directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the
Company; or (C) any group constituting a person in which employees of
the Company are substantial members, becomes the "beneficial owner"
(as defined in Rule 13d-3 promulgated under the Exchange Act),
directly or indirectly, of securities issued by the Company
representing 25% or more of the combined voting power of all of the
Company's then outstanding securities; or
(b) the occurrence of any event upon which the individuals who
on the date the Plan is adopted are members of the Board, together with
individuals whose election by the Board or nomination for election by
the Company's shareholders was approved by the affirmative vote of at
least two-thirds of the members of the Board then in office who were
either members of the Board on the date this Plan is adopted or whose
nomination or election was previously so approved, cease for any reason
to constitute a majority of the members of the Board, but excluding,
for this purpose, any such individual whose initial assumption of
office is in connection with an actual or threatened election contest
relating to the election of directors of the Company (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act); or
(c) the shareholders of the Company approve either:
(i) a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation
following which both of the following conditions are
satisfied:
(A) either (I) the members of the Board of
the Company immediately prior to such merger or
consolidation constitute at least a majority of the
members of the governing body of the institution
resulting from such merger or consolidation; or (II)
the shareholders of the Company own securities of the
institution resulting from such merger or
consolidation representing 80% or more of the
combined voting power of all such securities of the
resulting institution then outstanding in
substantially the same proportions as their ownership
of voting securities of the Company immediately
before such merger or consolidation; and
(B) the entity which results from such
merger or consolidation expressly agrees in writing
to assume and perform the Company's obligations under
the Plan; or
(ii) a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of
all or substantially all of its assets; and
(d) any event that would be described in section 2.6(a), (b)
or (c) if "the Bank" were substituted for "the Company" therein, and
"Board of Directors of the Bank" were substituted for "Board" therein.
SECTION 2.7 CODE means the Internal Revenue Code of 1986, as
amended (including the corresponding provisions of any succeeding law).
SECTION 2.8 COMMITTEE means the Committee described in
section 4.1.
SECTION 2.9 COMPANY means Warwick Community Bancorp, Inc., a
corporation organized and existing under the laws of the State of Delaware, and
any successor thereto.
B-2
<PAGE>
SECTION 2.10 DISABILITY means a condition of total
incapacity, mental or physical, for further performance of duty with the Company
which the Committee shall have determined, on the basis of competent medical
evidence, is likely to be permanent.
SECTION 2.11 DISINTERESTED BOARD MEMBER means a member of the
Board who (a) is not a current employee of the Company or a direct or indirect
subsidiary of the Company, (b) does not receive remuneration from the Company or
a direct or indirect subsidiary of the Company, either directly or indirectly,
in any capacity other than as a director and (c) does not possess an interest in
any other transaction, and is not engaged in a business relationship, for which
disclosure would be required pursuant to Item 404(a) or (b) of the proxy
solicitation rules of the Securities and Exchange Commission. The term
Disinterested Board Member shall be interpreted in such manner as shall be
necessary to conform to the requirements of Rule 16b-3 promulgated under the
Exchange Act.
SECTION 2.12 EFFECTIVE DATE means [date of shareholder
approval], 1998.
SECTION 2.13 ELIGIBLE DIRECTOR means a member of the board of
directors of the Employer who is not also an employee of the Employer.
SECTION 2.14 ELIGIBLE DIRECTOR EMERITUS means a former member
of the board of directors of the Company, who is considered an active emeritus
director of the Company on the Effective Date, who has not received an Award
under section 6.1 and who is continuing to serve the Company in an advisory
capacity to its board of directors.
SECTION 2.15 ELIGIBLE EMPLOYEE means any employee whom the
Committee may determine to be a key officer or employee of the Employer and
select to receive an Award pursuant to the Plan.
SECTION 2.16 EMPLOYER means the Company, the Bank and any
successor thereto and, with the prior approval of the Board, and subject to such
terms and conditions as may be imposed by the Board, any other savings bank,
savings and loan association, bank, corporation, financial institution or other
business organization or institution. With respect to any Eligible Employee or
Eligible Director, the Employer shall mean the entity which employs such person
or upon whose board of directors such person serves.
SECTION 2.17 EXCHANGE ACT means the Securities Exchange Act
of 1934, as amended.
SECTION 2.18 FDIC REGULATIONS means the regulations issued by
the Federal Deposit Insurance Corporation and applicable to the Plan, the Bank
or the Company.
SECTION 2.19 NYBB REGULATIONS means the regulations issued by
the New York Banking Board and applicable to the Plan, the Bank or the Company.
SECTION 2.20 PERSON means an individual, a corporation, a
bank, a savings bank, a savings and loan association, a financial institution, a
partnership, an association, a joint-stock company, a trust, an estate, an
unincorporated organization and any other business organization or institution.
SECTION 2.21 PLAN means the Recognition and Retention Plan of
Warwick Community Bancorp, Inc. as amended from time to time. The Plan may be
referred to as the "Recognition and Retention Plan of Warwick Community Bancorp,
Inc."
SECTION 2.22 SHARE means a share of common stock of Warwick
Community Bancorp, Inc., par value $.01 per share.
B-3
<PAGE>
SECTION 2.23 TRUST means the legal relationship created by
the Trust Agreement pursuant to which the Trustee holds the Trust Fund in trust.
The Trust may be referred to as the "Recognition and Retention Plan Trust of
Warwick Community Bancorp, Inc."
SECTION 2.24 TRUST AGREEEMENT means the agreement between the
Company and the Trustee therein named or its successor pursuant to which the
Trust Fund shall be held in trust.
SECTION 2.25 TRUST FUND means the corpus (consisting of
contributions paid over to the Trustee, and investments thereof), and all
earnings, appreciations or additions thereof and thereto, held by the Trustee
under the Trust Agreement in accordance with the Plan, less any depreciation
thereof and any payments made therefrom pursuant to the Plan.
SECTION 2.26 TRUSTEE means the Trustee of the Trust Fund from
time to time in office. The Trustee shall serve as Trustee until it is removed
or resigns from office and is replaced by a successor Trustee or Trustees
appointed by the Company.
ARTICLE III
-----------
SHARES AVAILABLE UNDER PLAN
---------------------------
SECTION 3.1 SHARES AVAILABLE UNDER PLAN.
The maximum aggregate number of Shares that may be awarded
under the Plan shall be 264,261. An aggregate maximum of 79,278 Shares may be
granted to Eligible Directors and Eligible Directors Emeritus, with a maximum of
13,213 Shares granted to any one Eligible Director or Eligible Director
Emeritus.
ARTICLE IV
----------
ADMINISTRATION
--------------
SECTION 4.1 COMMITTEE.
The Plan shall be administered by the members of the
Compensation Committee of the Company who are Disinterested Board Members. If
the Committee consists of fewer than two Disinterested Board Members, then the
Board shall appoint to the Committee such additional Disinterested Board Members
as shall be necessary to provide for a Committee consisting of at least two
Disinterested Board Members.
SECTION 4.2 COMMITTEE ACTION.
The Committee shall hold such meetings, and may make such
administrative rules and regulations, as it may deem proper. A majority of the
members of the Committee shall constitute a quorum, and the action of a majority
of the members of the Committee present at a meeting at which a quorum is
present, as well as actions taken pursuant to the unanimous written consent of
all of the members of the Committee without holding a meeting, shall be deemed
to be actions of the Committee. All actions of the Committee shall be final and
conclusive and shall be binding upon the Company and all other interested
parties. Any Person dealing with the Committee shall be fully protected in
relying upon any written notice, instruction, direction or other communication
signed by the Secretary of the Committee and one member of the Committee, by two
members of the Committee or by a representative of the Committee authorized to
sign the same in its behalf.
B-4
<PAGE>
SECTION 4.3 COMMITTEE RESPONSIBILITIES.
Subject to the terms and conditions of the Plan and such
limitations as may be imposed by the Board, the Committee shall be responsible
for the overall management and administration of the Plan and shall have such
authority as shall be necessary or appropriate in order to carry out its
responsibilities, including, without limitation, the authority:
(a) to interpret and construe the Plan and to determine all
questions that may arise under the Plan as to eligibility for Awards
under the Plan, the amount of Shares, if any, to be granted pursuant to
an Award, and the terms and conditions of such Award;
(b) to adopt rules and regulations and to prescribe forms for
the operation and administration of the Plan; and
(c) to take any other action not inconsistent with the
provisions of the Plan that it may deem necessary or appropriate.
ARTICLE V
---------
THE TRUST FUND
--------------
SECTION 5.1 CONTRIBUTIONS.
The Company shall contribute, or cause to be contributed, to
the Trust, from time to time, such amounts of money or property as shall be
determined by the Board, in its discretion. No contributions by Eligible
Directors, Eligible Directors Emeritus or Eligible Employees shall be permitted.
SECTION 5.2 THE TRUST FUND.
The Trust Fund shall be held and invested under the Trust
Agreement with the Trustee. The provisions of the Trust Agreement shall include
provisions conferring powers on the Trustee as to investment, control and
disbursement of the Trust Fund, and such other provisions not inconsistent with
the Plan as may be prescribed by or under the authority of the Board. No bond or
security shall be required of any Trustee at any time in office.
SECTION 5.3 INVESTMENTS.
The Trustee shall invest the Trust Fund in Shares and in such
other investments as may be permitted under the Trust Agreement, including
savings accounts, time or other interest bearing deposits in or other interest
bearing obligations of the Bank, in such proportions as shall be determined by
the Committee; PROVIDED, HOWEVER, that in no event shall the Trust Fund be used
to purchase more than 264,261 Shares. Notwithstanding the immediately preceding
sentence, the Trustee may temporarily invest the Trust Fund in short-term
obligations of, or guaranteed by, the U.S. Government or an agency thereof, or
the Trustee may retain the Trust Fund uninvested or may sell assets of the Trust
Fund to provide amounts required for purposes of the Plan.
B-5
<PAGE>
ARTICLE VI
----------
AWARDS
------
SECTION 6.1 AWARDS TO ELIGIBLE DIRECTORS AND ELIGIBLE
DIRECTORS EMERITUS.
On the Effective Date, each Person who is then an Eligible
Director (other than an Eligible Director Emeritus) shall be granted an Award of
8,919 Shares, and each Person who is then an Eligible Director Emeritus shall be
granted an Award of 2,642 Shares.
SECTION 6.2 AWARDS TO ELIGIBLE EMPLOYEES.
Subject to section 6.8 and such limitations as the Board may
from time to time impose, the number of Shares as to which an Eligible Employee
may be granted an Award shall be determined by the Board or the Committee in its
discretion; PROVIDED HOWEVER, that in no event shall the number of Shares
allocated to an Eligible Employee in an Award exceed the number of Shares then
held in the Trust and not allocated in connection with other Awards.
SECTION 6.3 AWARDS IN GENERAL.
Any Award shall be evidenced by a written notice issued by the
Committee to the Eligible Director, Eligible Director Emeritus or Eligible
Employee, which Award notice shall:
(a) specify the number of Shares covered by the Award;
(b) specify the Award Date;
(c) specify the dates on which such Shares shall become
available for distribution to the Eligible Director, Eligible Director
Emeritus or Eligible Employee, in accordance with sections 7.1 and 7.2;
and
(d) contain such other terms and conditions not inconsistent
with the Plan as the Board may, in its discretion, prescribe.
SECTION 6.4 SHARE ALLOCATIONS.
Upon the grant of an Award to an Eligible Director, Eligible
Director Emeritus or Eligible Employee, the Committee shall notify the Trustee
of the Award and of the number of Shares subject to the Award. Thereafter, until
such time as the Shares subject to such Award become vested or are forfeited,
the books and records of the Trustee shall reflect that such number of Shares
are being held for the benefit of the Award recipient.
SECTION 6.5 DIVIDEND RIGHTS.
(a) Any cash dividends or distributions declared and paid with
respect to Shares in the Trust Fund that are, as of the record date for such
dividend or distribution, allocated to an Eligible Director, Eligible Director
Emeritus or Eligible Employee in connection with an Award shall be held in the
Trust Fund and distributed to such Eligible Director, Eligible Director Emeritus
or Eligible Employee (with any earnings attributable thereto) at the same time
as the related Shares. Any cash dividends or distributions declared and paid
with respect to Shares that are not, as of the record date for such dividend or
distribution, allocated to any Eligible Director, Eligible Director Emeritus or
Eligible Employee in connection with any Award shall, at the direction of the
Committee, be held in the Trust or used to pay the administrative expenses of
the Plan, including any compensation due to the Trustee.
B-6
<PAGE>
(b) Any dividends or distributions declared and paid with
respect to Shares in property other than cash shall be held in the Trust Fund.
If, as of the record date for such dividend or distribution, the Shares with
respect to which it is paid are allocated to an Eligible Director, Eligible
Director Emeritus or Eligible Employee in connection with an Award, the property
so distributed shall be similarly allocated to such Eligible Director, Eligible
Director Emeritus or Eligible Employee in connection with such Award and shall
be held for distribution or forfeiture in accordance with the terms and
conditions of the Award.
SECTION 6.6 VOTING RIGHTS.
(a) Each Eligible Director, Eligible Director Emeritus and
Eligible Employee to whom an Award has been made that is not fully vested shall
have the right to direct the manner in which all voting rights appurtenant to
the Shares related to such Award will be exercised while such Shares are held in
the Trust Fund. Such a direction shall be given by completing and filing, with
the inspector of elections, the Trustee or such other person who shall be
independent of the Company as the Committee shall designate in the direction, a
written direction in the form and manner prescribed by the Committee. If no such
direction is given by an Eligible Director, Eligible Director Emeritus or
Eligible Employee, then the voting rights appurtenant to the Shares allocated to
him shall not be exercised.
(b) To the extent that the Trust Fund contains Shares that are
not allocated in connection with an Award, all voting rights appurtenant to such
Shares shall be exercised by the Trustee in such manner as the Committee shall
direct to reflect the voting directions given by Eligible Director, Eligible
Director Emeritus and Eligible Employees with respect to Shares allocated in
connection with their Awards.
(c) The Committee shall furnish, or cause to be furnished, to
each Eligible Director, Eligible Director Emeritus and Eligible Employee, all
annual reports, proxy materials and other information furnished by the Company,
or by any proxy solicitor, to the holders of Shares.
SECTION 6.7 TENDER OFFERS.
(a) Each Eligible Director, Eligible Director Emeritus and
Eligible Employee to whom an Award has been made that is not fully vested shall
have the right to direct, with respect to the Shares related to such Award, the
manner of response to any tender offer, exchange offer or other offer made to
the holders of Shares. Such a direction shall be given by completing and filing,
with the inspector of elections, the Trustee or such other person who shall be
independent of the Company as the Committee shall designate in the direction, a
written direction in the form and manner prescribed by the Committee. If no such
direction is given by an Eligible Director, Eligible Director Emeritus or
Eligible Employee, then the Shares shall not be tendered or exchanged.
(b) To the extent that the Trust Fund contains Shares that are
not allocated in connection with an Award, all responses to tender, exchange and
other offers appurtenant to such Shares shall be given by the Trustee in such
manner as the Committee shall direct to reflect the responses given by Eligible
Director, Eligible Director Emeritus and Eligible Employees with respect to
Shares allocated in connection with their Awards.
(c) The Committee shall furnish, or cause to be furnished, to
each Eligible Director, Eligible Director Emeritus and Eligible Employee, all
information furnished by the offeror to the holders of Shares.
B-7
<PAGE>
SECTION 6.8 LIMITATION ON AWARDS.
(a) Notwithstanding anything in the Plan to the contrary:
(i) No Award shall be granted under the Plan prior to the
earlier of the date on which the Plan is approved by shareholders
pursuant to section 9.8 or December 23, 1998;
(ii) No Eligible Employee may be granted Awards covering
in excess of 66,065 Shares;
(iii) Each Award to an Eligible Employee shall become
vested and distributable as follows:
(A) prior to the first anniversary of the date on
which the Plan is approved by shareholders pursuant to section
9.8, the Award shall not be vested;
(B) on the first anniversary of the date on which the
Plan is approved by shareholders pursuant to section 9.8, the
Award will be vested as to 20% of the Shares subject to the
Award when granted;
(C) on the second anniversary of the date on which
the Plan is approved by shareholders pursuant to section 9.8,
the Award will be vested as to an additional 20% of the Shares
subject to the Award when granted;
(D) on the third anniversary of the date on which the
Plan is approved by shareholders pursuant to section 9.8, the
Award will be vested as to an additional 20% of the Shares
subject to the Award when granted;
(E) on the fourth anniversary of the date on which
the Plan is approved by shareholders pursuant to section 9.8,
the Award will be vested as to an additional 20% of the Shares
subject to the Award when granted; and
(F) on the fifth anniversary of the date on which the
Plan is approved by shareholders pursuant to section 9.8, the
Award will be vested as to an additional 20% of the Shares
subject to the Award when granted;
PROVIDED, HOWEVER, that such an Award shall become fully vested on the
date of the Award holder's death or Disability; and PROVIDED, FURTHER,
that the Committee may establish a different vesting schedule for any
Awards if not inconsistent with the NYBB Regulations or the FDIC
Regulations.
(b) An Award by its terms shall not be transferable by the
Eligible Director, Eligible Director Emeritus or Eligible Employee other than by
will or by the laws of descent and distribution, and the Shares granted pursuant
to such Award shall be distributable, during the lifetime of the Award holder
only to the Award holder.
B-8
<PAGE>
ARTICLE VII
-----------
VESTING AND DISTRIBUTION OF SHARES
----------------------------------
SECTION 7.1 VESTING FOR ELIGIBLE DIRECTORS AND ELIGIBLE
DIRECTORS EMERITUS.
The Shares subject to each Award granted to Eligible Directors
and Eligible Directors Emeritus under the Plan shall become vested as follows:
(i) 20% of such Shares shall become vested upon the first anniversary of the
date the Plan is approved by shareholders pursuant to section 9.8; (ii) 20% of
such Shares shall become vested upon the second anniversary of the date the Plan
is approved by shareholders pursuant to section 9.8; (iii) 20% of such Shares
shall become vested upon the third anniversary of the date the Plan is approved
by shareholders pursuant to section 9.8; (iv) 20% of such Shares shall become
vested upon the fourth anniversary of the date the Plan is approved by
shareholders pursuant to section 9.8; and (v) 20% of such Shares shall become
vested upon the fifth anniversary of the date the Plan is approved by
shareholders pursuant to section 9.8; PROVIDED, HOWEVER, that (1) the Eligible
Director has remained a director of the Employer, or an active advisory or
emeritus director of the Employer, as determined by the board of directors of
the Employer, and (2) the Eligible Director Emeritus has remained an active
emeritus director of the Company, as determined by the Board, during the entire
period commencing with the date the Plan is approved by shareholders pursuant to
section 9.8 and ending on the applicable anniversary of the date of shareholder
approval; AND PROVIDED, FURTHER, that such an Award shall become 100% vested on
the date of the Award holder's death or Disability.
SECTION 7.2 VESTING FOR ELIGIBLE EMPLOYEES.
Subject to section 6.8 and the terms and conditions of the
Plan, each Award to an Eligible Employee made under the Plan shall become vested
at the times and upon the conditions specified by the Committee in the Award
notice; PROVIDED, HOWEVER, that such an Award shall become fully vested on the
date of the Award holder's death or Disability; and PROVIDED, FURTHER, that the
Committee may establish a different vesting schedule for any Awards if not
inconsistent with the NYBB Regulations or the FDIC Regulations.
SECTION 7.3 DESIGNATION OF BENEFICIARY.
An Eligible Director, Eligible Director Emeritus or Eligible
Employee who has received an Award may designate a Beneficiary to receive any
undistributed Shares that are, or become, available for distribution on, or
after, the date of the Eligible Director's, Eligible Director Emeritus' or
Eligible Employee's death. Such designation (and any change or revocation of
such designation) shall be made in writing in the form and manner prescribed by
the Committee. In the event that the Beneficiary designated by an Eligible
Director, Eligible Director Emeritus or Eligible Employee dies prior to the
Eligible Director, Eligible Director Emeritus or Eligible Employee, or in the
event that no Beneficiary has been designated, any undistributed Shares that
are, or become, available for distribution on, or after, the Eligible Director's
or Eligible Employee's death shall be paid to the executor or administrator of
the Eligible Director's, Eligible Director Emeritus' or Eligible Employee's
estate, or if no such executor or administrator is appointed within such time as
the Committee, in its sole discretion, shall deem reasonable, to such one or
more of the spouse and descendants and blood relatives of such deceased person
as the Committee may select.
SECTION 7.4 MANNER OF DISTRIBUTION.
(a) As soon as practicable following the date any Shares
granted pursuant to an Award become vested pursuant to sections 7.1 and 7.2, the
Committee shall take such actions as are necessary to cause the transfer of
record ownership of the Shares that have become vested from the Trustee to the
Award holder and shall cause the Trustee to distribute to the Award holder all
property other than Shares then being held in connection with the Shares being
distributed.
B-9
<PAGE>
(b) The Company's obligation to deliver Shares with respect to
an Award shall, if the Committee so requests, be conditioned upon the receipt of
a representation as to the investment intention of the Eligible Director,
Eligible Director Emeritus or Eligible Employee or Beneficiary to whom such
Shares are to be delivered, in such form as the Committee shall determine to be
necessary or advisable to comply with the provisions of applicable federal,
state or local law. It may be provided that any such representation shall become
inoperative upon a registration of the Shares or upon the occurrence of any
other event eliminating the necessity of such representation. The Company shall
not be required to deliver any Shares under the Plan prior to (i) the admission
of such Shares to listing on any stock exchange on which Shares may then be
listed or (ii) the completion of such registration or other qualification under
any state or federal law, rule or regulation as the Committee shall determine to
be necessary or advisable.
SECTION 7.5 TAXES.
The Company, the Committee or the Trustee shall have the right
to require any person entitled to receive Shares pursuant to an Award to pay the
amount of any tax which is required to be withheld with respect to such Shares,
or, in lieu thereof, to retain, or to sell without notice, a sufficient number
of Shares to cover the amount required to be withheld.
ARTICLE VIII
------------
AMENDMENT AND TERMINATION
-------------------------
SECTION 8.1 TERMINATION.
The Board may suspend or terminate the Plan in whole or in
part at any time by giving written notice of such suspension or termination to
the Committee; PROVIDED, HOWEVER, that the Plan may not be terminated while
there are outstanding Awards that may thereafter become vested. Upon the
termination of the Plan, the Trustee shall make distributions from the Trust
Fund in such amounts and to such persons as the Committee may direct and shall
return the remaining assets of the Trust Fund, if any, to the Company.
SECTION 8.2 AMENDMENT.
The Board may amend or revise the Plan in whole or in part at
any time.
SECTION 8.3 ADJUSTMENTS IN THE EVENT OF A BUSINESS
REORGANIZATIION.
(a) In the event of any merger, consolidation, or other
business reorganization (including but not limited to a Change in Control) in
which the Company is the surviving entity, and in the event of any stock split,
stock dividend or other event generally affecting the number of Shares held by
each person who is then a holder of record of Shares, the number of Shares held
in the Trust Fund, including Shares covered by Awards, shall be adjusted to
account for such event. Such adjustment shall be effected by multiplying such
number of Shares by a number equal to the number of Shares that would be owned
after such event by a person who, immediately prior to such event, was the
holder of record of one Share; PROVIDED, HOWEVER, that the Committee may, in its
discretion, establish another appropriate method of adjustment.
(b) In the event of any merger, consolidation, or other
business reorganization (including but not limited to a Change in Control) in
which the Company is not the surviving entity, the Trustee shall hold in the
Trust Fund any money, stock, securities or other property received by the
holders of record of Shares in connection with such merger, consolidation or
other business reorganization. Any Award with respect to which Shares had been
allocated to an Eligible Director, Eligible Director Emeritus or Eligible
Employee shall be adjusted by allocating to the Eligible Director, Eligible
Director Emeritus or Eligible Employee receiving
B-10
<PAGE>
such Award the amount of money, stock, securities or other property received by
the Trustee for the Shares allocated to such Eligible Director, Eligible
Director Emeritus or Eligible Employee.
ARTICLE IX
----------
MISCELLANEOUS
-------------
SECTION 9.1 STATUS AS AN EMPLOYEE BENEFIT PLAN.
This Plan is not intended to satisfy the requirements for
qualification under section 401(a) of the Code or to satisfy the definitional
requirements for an "employee benefit plan" under section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). It is intended to
be a non-qualified incentive compensation program that is exempt from the
regulatory requirements of ERISA. The Plan shall be construed and administered
so as to effectuate this intent.
SECTION 9.2 NO RIGHT TO CONTINUED EMPLOYMENT.
Neither the establishment of the Plan nor any provisions of
the Plan nor any action of the Board or the Committee with respect to the Plan
shall be held or construed to confer upon any Eligible Director or Eligible
Employee any right to a continuation of employment by the Company. The Employers
reserve the right to dismiss any Eligible Director or Eligible Employee or
otherwise deal with any Eligible Director or Eligible Employee to the same
extent as though the Plan had not been adopted.
SECTION 9.3 CONSTRUCTION OF LANGUAGE.
Whenever appropriate in the Plan, words used in the singular
may be read in the plural, words used in the plural may be read in the singular,
and words importing the masculine gender may be read as referring equally to the
feminine or the neuter. Any reference to an Article or section number shall
refer to an Article or section of this Plan unless otherwise indicated.
SECTION 9.4 GOVERNING LAW.
The Plan shall be construed and enforced in accordance with
the laws of the State of New York without giving effect to the conflict of laws
principles thereof, except to the extent that such laws are preempted by federal
law. The Plan shall be construed to comply with applicable NYBB Regulations and
FDIC Regulations.
SECTION 9.5 HEADINGS.
The headings of Articles and sections are included solely for
convenience of reference. If there is any conflict between such headings and the
text of the Plan, the text shall control.
SECTION 9.6 NON-ALIENATION OF BENEFITS.
The right to receive a benefit under the Plan shall not be
subject in any manner to anticipation, alienation or assignment, nor shall such
right be liable for or subject to debts, contracts, liabilities, engagements or
torts, except to the extent provided in a qualified domestic relations order as
defined in section 414(p) of the Code.
B-11
<PAGE>
SECTION 9.7 NOTICES.
Any communication required or permitted to be given under the
Plan, including any notice, direction, designation, comment, instruction,
objection or waiver, shall be in writing and shall be deemed to have been given
at such time as it is personally delivered or five days after mailing if mailed,
postage prepaid, by registered or certified mail, return receipt requested,
addressed to such party at the address listed below, or at such other address as
one such party may by written notice specify to the other:
(a) If to the Committee:
Warwick Community Bancorp, Inc.
c/o The Warwick Savings Bank
18 Oakland Avenue
Warwick, New York 10990-0591
Attention: CORPORATE SECRETARY
(b) If to an Eligible Director, Eligible Director
Emeritus or Eligible Employee, to the Eligible
Director's, Eligible Director Emeritus' or Eligible
Employee's address as shown in the Employer's
records.
SECTION 9.8 APPROVAL OF SHAREHOLDERS.
The Plan shall not be effective or implemented prior to the
one year anniversary of the conversion of the Bank to stock form unless approved
by the holders of a majority of the total votes eligible to be cast at any duly
called annual or special meeting of the Company to be held no earlier than six
months following such conversion, in which case the Plan shall be effective as
of the date of such approval or on such later date as is specified by the Board.
B-12
&&&
<PAGE>
REVOCABLE PROXY
WARWICK COMMUNITY BANCORP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
WARWICK COMMUNITY BANCORP, INC.
FOR THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON WEDNESDAY, JUNE 24, 1998
The undersigned shareholder of Warwick Community Bancorp, Inc.
("Company") hereby appoints Frances M. Gorish, Henry L. Nielsen, Jr. and Douglas
J. McClintock, or any of them, with full powers of substitution, to attend and
act as proxy for the undersigned and to vote all shares of common stock of the
Company which the undersigned may be entitled to vote at the Special Meeting of
Shareholders ("Special Meeting") to be held at the main office of The Warwick
Savings Bank, located at 18 Oakland Avenue, Warwick, New York 10990-0591, on
Wednesday, June 24, 1998, at 8:00 a.m., Eastern time, and at any adjournment or
postponement thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN,
THIS PROXY WILL BE VOTED FOR THE PROPOSALS IN ITEMS 1, 2 AND 3.
(CONTINUED ON REVERSE SIDE)
PLEASE COMPLETE, SIGN AND DATE THIS PROXY CARD ON THE REVERSE SIDE
AND RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
<PAGE>
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "FOR"
EACH OF THE PROPOSALS IN
ITEMS 1, 2 AND 3. Please mark your vote as
indicated in this example. /X/
I will attend the Special
Meeting. /_/
(Please mark box if you plan to attend
the Special Meeting.) (IMPORTANT: If
your shares are not registered in your
name, you will need additional
documentation to attend the Special
Meeting.)
1. Approval of the Stock Option FOR AGAINST ABSTAIN
Plan of Warwick Community /_/ /_/ /_/
Bancorp, Inc.
2. Approval of the Recognition and FOR AGAINST ABSTAIN
Retention Plan of Warwick /_/ /_/ /_/
Community Bancorp, Inc.
3. AUTHORIZATION OF THE BOARD OF FOR AGAINST ABSTAIN
DIRECTORS, IN ITS DISCRETION, TO /_/ /_/ /_/
DIRECT THE VOTE OF PROXIES UPON
SUCH MATTERS INCIDENT TO THE
CONDUCT OF THE SPECIAL MEETING AS
MAY PROPERLY COME BEFORE THE
SPECIAL MEETING, AND ANY
ADJOURNMENT OR POSTPONEMENT
THEREOF, INCLUDING, WITHOUT
LIMITATION, A MOTION TO ADJOURN
THE SPECIAL MEETING
The undersigned hereby acknowledges receipt of the Notice of Special Meeting of
Shareholders and the Proxy Statement for the Special Meeting.
________________________________________________________________________________
________________________________________________________________________________
(Signature(s)
Dated:____________________________________________________________________, 1998
Please sign exactly as your name appears on this proxy. Joint owners should each
sign personally. If signing as attorney, executor, administrator, trustee or
guardian, please include your full title. Corporate or partnership proxies
should be signed by an authorized officer.
<PAGE>
FOR OFFICE USE ONLY
Name:
No. of Shares:
WARWICK COMMUNITY BANCORP, INC.
CONFIDENTIAL VOTING INSTRUCTION
FOR
THE WARWICK COMMUNITY BANCORP, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
I acknowledge that Marine Midland Bank is the trustee (the "Trustee") and holder
of record of shares of Warwick Community Bancorp, Inc. (the "Company") common
stock under the Warwick Community Bancorp, Inc. Employee Stock Ownership Plan
(the "ESOP"). I understand that the above-stated number of shares allocated to
my account under the ESOP, as of May 12, 1998, will be voted as indicated below
all as described in the accompanying letter from the Committee dated May 21,
1998. The unallocated shares and any allocated shares held in the ESOP for which
no instructions are received will be voted proportionately to the participants'
voting instructions. Further, I understand that my voting instructions are
solicited by the Committee of the ESOP for the Special Meeting of Stockholders
to be held on June 24, 1998 or any adjournment or postponement thereof. I
understand that the proposals to be voted on are more particularly described in
the Proxy Statement dated May 21, 1998, a copy of which I have received.
<TABLE>
<CAPTION>
Please mark your votes like this
I hereby direct the Trustee to vote my shares as follows: /X/ in blue or black ink.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Approval of the Stock Option Plan of Warwick FOR AGAINST ABSTAIN
Community Bancorp, Inc. /_/ /_/ /_/
- ------------------------------------------------------------------------------------------------------------------------------------
2. Approval of the Recognition and Retention Plan of FOR AGAINST ABSTAIN
Warwick Community Bancorp, Inc. /_/ /_/ /_/
- ------------------------------------------------------------------------------------------------------------------------------------
3. Authorization of the Board of Directors, in FOR AGAINST ABSTAIN
its discretion, to direct the vote of proxies /_/ /_/ /_/
upon such matters incident to the conduct of
the Special Meeting as may properly come
before the Special Meeting, and any
adjournment or postponement thereof,
including, without limitation, a motion to
adjourn the Special Meeting.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE
"FOR" THE PROPOSALS IN ITEMS 1, 2 AND 3.
The Trustee of the ESOP, Marine Midland Bank, is hereby authorized to vote my
shares as indicated above. I understand that if I sign this form without
indicating specific instructions, or if I fail to return this form, my shares
will be voted in proportion to the voting instructions of the other
participants, subject to the Trustee's determination that such a vote is for the
exclusive benefit of plan participants and beneficiaries. I understand that my
voting instructions will be confidential.
________________________ ___________________________________
Date Signature
PLEASE COMPLETE, SIGN, DATE AND SUBMIT THIS FORM IN THE ENCLOSED POSTAGE-PAID
ENVELOPE AS SOON AS POSSIBLE. YOUR VOTE AUTHORIZATION FORM MUST BE RECEIVED BY
THE TRUSTEE NO LATER THAN [JUNE 14, 1998].
<PAGE>
FOR OFFICE USE ONLY
Name:
No. of Shares:
WARWICK COMMUNITY BANCORP, INC.
CONFIDENTIAL VOTING INSTRUCTION
FOR
THE WARWICK SAVINGS BANK
401(K) SAVINGS PLAN
I acknowledge that Marine Midland Bank is the trustee (the "Trustee") and holder
of record of shares of Warwick Community Bancorp, Inc. (the "Company") common
stock under The Warwick Savings Bank 401(k) Savings Plan (the "401(k) Plan"). I
understand that the above-stated number of shares allocated to my account under
the 401(k) Plan, as of May 12, 1998, will be voted as indicated below all as
described in the accompanying letter from the Committee dated May 21, 1998. Any
allocated shares held in the 401(k) Plan for which no instructions are received
will be voted proportionately to the participants' voting instructions. Further,
I understand that my voting instructions are solicited by the Committee of the
401(k) Plan for the Special Meeting of Stockholders to be held on June 24, 1998
or any adjournment or postponement thereof. I understand that the proposals to
be voted on are more particularly described in the Proxy Statement dated May 21,
1998, a copy of which I have received.
<TABLE>
<CAPTION>
Please mark your votes like this
I hereby direct the Trustee to vote my shares as follows: /X/ in blue or black ink.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Approval of the Stock Option Plan of Warwick FOR AGAINST ABSTAIN
Community Bancorp, Inc. /_/ /_/ /_/
- ------------------------------------------------------------------------------------------------------------------------------------
2. Approval of the Recognition and Retention Plan of FOR AGAINST ABSTAIN
Warwick Community Bancorp, Inc. /_/ /_/ /_/
- ------------------------------------------------------------------------------------------------------------------------------------
3. Authorization of the Board of Directors, in FOR AGAINST ABSTAIN
its discretion, to direct the vote of proxies /_/ /_/ /_/
upon such matters incident to the conduct of
the Special Meeting as may properly come
before the Special Meeting, and any
adjournment or postponement thereof,
including, without limitation, a motion to
adjourn the Special Meeting.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE
"FOR" THE PROPOSALS IN ITEMS 1, 2 AND 3.
The Trustee of the 401(k) Plan, Marine Midland Bank, is hereby authorized to
vote my shares as indicated above. I understand that if I sign this form without
indicating specific instructions, or if I fail to return this form, my shares
will be voted in proportion to the voting instructions of the other
participants, subject to the Trustee's determination that such a vote is for the
exclusive benefit of plan participants and beneficiaries. I understand that my
voting instructions will be confidential.
________________________ ___________________________________
Date Signature
PLEASE COMPLETE, SIGN, DATE AND SUBMIT THIS FORM IN THE ENCLOSED POSTAGE-PAID
ENVELOPE AS SOON AS POSSIBLE. YOUR VOTE AUTHORIZATION FORM MUST BE RECEIVED BY
THE TRUSTEE NO LATER THAN [JUNE 14, 1998].
<PAGE>
[Letterhead of Warwick Community Bancorp, Inc.]
May 21, 1998
TO: ALL EMPLOYEE STOCK OWNERSHIP PLAN ("ESOP")
AND 401(K) SAVINGS PLAN ("401(K) PLAN") PARTICIPANTS
Re: SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 24, 1998
Dear Participants:
As you know, The Warwick Savings Bank 401(k) Savings Plan ("401(k)
Plan") includes an investment alternative to purchase common stock of The
Warwick Savings Bank's parent company, Warwick Community Bancorp, Inc.
("Company") using funds from the 401(k) Plan account ("401(k) Stock Fund") of
eligible employees and the Company maintains the Warwick Community Bancorp, Inc.
Employee Stock Ownership Plan ("ESOP") for eligible employees of the Company.
The 401(k) Stock Fund and the ESOP each hold shares of the Company for the
benefit of participants in those plans. These shares are held by Marine Midland
Bank as trustee ("Trustee") for each of the ESOP and the 401(k) Plan.
As a participant in the ESOP and/or the 401(k) Plan, you have the right
to direct the Trustee how to vote the shares held by the ESOP and/or shares in
the 401(k) Stock Fund on the proposals to be voted on by the Company's
shareholders at the Special Meeting of Shareholders of the Company to be held on
June 24, 1998 ("Special Meeting"). In connection therewith, enclosed are the
following documents:
1. ESOP Confidential Voting Instruction Form;
2. 401(k) Plan Confidential Voting Instruction Form; and
3. Proxy Statement for the Special Meeting dated May 21, 1998.
ESOP PARTICIPANTS.
ESOP participants may direct how the Trustee, as Trustee for the ESOP,
should vote the shares allocated to his or her ESOP account as of May 12, 1998.
The Trustee will vote shares of Company Common Stock allocated to your account
in accordance with the instructions given on the enclosed Confidential Voting
Instruction Form. The number of shares allocated to your ESOP account are shown
on the enclosed ESOP Confidential Voting Instruction Form.
The Trustee's fiduciary duties require it to vote any shares for which
it receives no voting instructions, as well as any shares not yet allocated to
ESOP participants, in a manner determined to be prudent and solely in the
interest of the participants and beneficiaries. If you do not direct the Trustee
how to vote the shares in your ESOP account, the Trustee will, to the extent
consistent with its fiduciary duties, vote your shares in a manner calculated to
most accurately reflect the instructions received from other participants in the
ESOP. The same is true of shares not yet allocated to anyone's ESOP account.
If you do not have any shares of Company Common Stock allocated to your
account in the ESOP as of May 12, 1998, there will be no ESOP Confidential
Voting Instruction Form enclosed with this letter.
401(K) PLAN PARTICIPANTS.
401(k) Plan participants may direct how the Trustee, as Trustee for the
401(k) Plan, should vote the shares allocated to that participant's 401(k) stock
account. In general, the Trustee will vote shares of Company Common Stock held
in the 401(k) Plan in accordance with the instructions given on the enclosed
401(k) Plan Confidential Voting Instruction Form. The instructions given by each
401(k) Plan participant will be weighted according to value of his or her
respective interest in the 401(k) Stock Fund as of May 12, 1998. If you do not
direct the Trustee how to vote the shares in your ESOP account, the Trustee
will, to the extent consistent with its fiduciary duties, vote your shares in a
manner calculated to most accurately reflect the instructions received from
other participants in the 401(k) Plan.
If you do not have any shares of Company Common Stock allocated to your
401(k) Stock Fund as of May 12, 1998, there will be no 401(k) Plan Confidential
Voting Instruction Form enclosed with this letter.
* * * * *
Your instruction is very important. You are encouraged to review the
enclosed material carefully and to complete, sign and date the enclosed ESOP
Confidential Voting Instruction Form and 401(k) Confidential Voting Instruction
Form, as applicable. RETURN IT DIRECTLY TO THE TRUSTEE USING THE POSTAGE-PAID
RETURN ENVELOPE PROVIDED. The Confidential Voting Instruction Forms must be
received by the Trustee no later than [June 14], 1998. Your vote will not be
revealed to the Company or The Warwick Savings Bank.
IF YOU HAVE ANY QUESTIONS REGARDING YOUR VOTING RIGHTS OR THE TERMS OF
THE ESOP OR 401(K) PLAN, PLEASE CALL MS. NANCY SOBOTOR-LITTELL AT (914)
986-2206, EXTENSION 247.
Very truly yours,
THE COMMITTEE OF WARWICK COMMUNITY
BANCORP, INC. FOR THE WARWICK SAVINGS
BANK 401(K) SAVINGS PLAN AND THE WARWICK
COMMUNITY BANCORP, INC. EMPLOYEE STOCK
OWNERSHIP PLAN
Enclosures
