<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999 Commission File No. 0-23271
RICHMOND COUNTY FINANCIAL CORP.
(Exact name of Registrant as specified in its charter)
Delaware 06-1498455
(State of Incorporation) (I.R.S. Employer Identification Number)
1214 Castleton Avenue
Staten Island, New York 10310
(Address of principal executive offices) (Zip Code)
718-448-2800
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the Issuer's classes of
common stock, as of the latest practicable date.
As of November 9, 1999, there were 30,701,407 shares of the common stock
outstanding.
<PAGE>
FORM 10-Q
RICHMOND COUNTY FINANCIAL CORP.
INDEX
Page
----
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited)
Consolidated Statements of Financial Condition
at September 30, 1999 and June 30, 1999.............................. 3
Consolidated Statements of Operations
for the three months ended September 30, 1999 and 1998............... 4
Consolidated Statement of Changes in Stockholders' Equity
for the three months ended September 30, 1999 and 1998............... 5
Consolidated Statements of Cash Flows
for the three months ended September 30, 1999 and 1998............... 6
Notes to Unaudited Consolidated Financial Statements................. 7
ITEM 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations..................... 9
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk.. 19
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings........................................... 20
ITEM 2. Changes in Securities and Use of Proceeds.................... 20
ITEM 3. Defaults Upon Senior Securities.............................. 20
ITEM 4. Submission of Matters to a Vote of Security Holders.......... 20
ITEM 5. Other Information............................................ 21
ITEM 6. Exhibits and Reports on Form 8-K............................. 21
Exhibit Index........................................................ 22
Signature Page....................................................... 23
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Statements contained in this Form 10-Q which are not historical facts are
forward-looking statements, as that term is defined in the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are subject to
risks and uncertainties which could cause actual results to differ materially
from those projected. Such risks and uncertainties include potential changes in
interest rates, competitive factors in the financial services industry, general
economic conditions, the effect of new legislation and other risks detailed in
documents filed by the Company with the Securities and Exchange Commission from
time to time.
- --------------------------------------------------------------------------------
2
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RICHMOND COUNTY FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In Thousands, Except Share and Per Share Amounts)
<TABLE>
<CAPTION>
September 30, June 30,
1999 1999
----------------- ---------------
(Unaudited)
Assets
<S> <C> <C>
Cash and due from banks $ 44,577 $ 55,773
Federal funds sold 650 17,775
Securities available for sale:
Investment securities 274,910 297,611
Mortgage-backed and mortgage-related securities 859,369 866,844
Loans receivable:
Real estate loans 1,404,618 1,301,118
Other loans 23,130 26,294
Less allowance for loan losses (14,195) (13,885)
------------- ----------
Total loans receivable, net 1,413,553 1,313,527
Federal Home Loan Bank stock 42,185 38,388
Banking premises and equipment, net 27,453 27,353
Accrued interest receivable 17,519 15,568
Other real estate owned 617 997
Goodwill 42,643 43,382
Other assets 89,959 82,877
------------- ----------
Total assets $ 2,813,435 $2,760,095
============= ==========
Liabilities and Stockholders' Equity
Demand deposits $ 182,693 $ 169,007
Savings, N.O.W. & Money market accounts 867,805 851,993
Certificates of deposit 590,523 598,470
------------- ----------
Total deposits 1,641,021 1,619,470
Securities sold under agreements to repurchase 15,000 94,000
Borrowings 790,732 663,832
Accrued expenses & other liabilities 13,918 12,582
------------- ----------
Total liabilities 2,460,671 2,389,884
Stockholders' Equity
Preferred stock, $.01 par value, 5,000,000 shares authorized; none issued - -
Common stock, $.01 par value, 75,000,000 shares authorized;
30,923,907 and 31,662,839 shares issued and outstanding,
at September 30, 1999 and June 30, 1999, respectively. 327 327
Additional paid-in-capital 330,499 330,122
Retained earnings-substantially restricted 128,644 122,784
Unallocated common stock held by
Employee Stock Ownership Plan ("ESOP") (31,546) (31,978)
Unearned compensation MRP Stock (16,018) (16,885)
Treasury stock, at cost, 1,813,227 and 1,074,295 shares
at September 30, 1999 and June 30, 1999, respectively. (32,284) (17,967)
Accumulated other comprehensive loss:
Unrealized loss on securities available for sale, net of tax (26,858) (16,192)
------------- ----------
Total stockholders' equity 352,764 370,211
------------- ----------
Total liabilities and stockholders' equity $ 2,813,435 $2,760,095
============= ==========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
3
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RICHMOND COUNTY FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Share and Per Share Amounts)
<TABLE>
<CAPTION>
For the
Three Months Ended
September 30,
----------------------------------
(Unaudited)
1999 1998
------------- ---------------
<S> <C> <C>
Interest income:
Loans $26,063 $13,728
Debt and equity securities 6,224 4,329
Mortgage-backed and mortgage-related securities 14,246 9,254
Federal funds sold and interest-earning bank balances 182 351
------------- ---------------
Total interest income 46,715 27,662
------------- ---------------
Interest expense:
Deposits 12,513 7,970
Borrowed funds 10,614 4,629
------------- ---------------
Total interest expense 23,127 12,599
------------- ---------------
Net interest income 23,588 15,063
Provision for loan losses 300 750
------------- ---------------
Net interest income after provision for loan losses 23,288 14,313
------------- ---------------
Non-interest income:
Fee income 2,440 933
Net gain on sale of securities and loans 703 909
Other 774 2
------------- ---------------
Total non-interest income 3,917 1,844
------------- ---------------
Non-interest expense:
Salaries and employee benefits 6,815 4,185
Occupancy costs 1,487 910
Computer service fees 1,394 806
Advertising 491 447
Federal Deposit Insurance Corporation 115 39
Other 1,735 1,167
------------- ---------------
Total general and administrative 12,037 7,554
Amortization of goodwill and other intangibles 817 78
------------- ---------------
Total non-interest expense 12,854 7,632
------------- ---------------
Income before income taxes 14,351 8,525
Provision for income taxes 5,242 3,171
------------- ---------------
Net income $ 9,109 $ 5,354
============= ===============
Earnings per share:
Basic $ 0.32 $ 0.22
Diluted $ 0.32 $ 0.22
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
4
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RICHMOND COUNTY FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(In Thousands)
<TABLE>
<CAPTION>
Retained Accumulated Unallocated Unearned
Additional Earnings Other Common Common
Common Paid-in Substantially Comprehensive Stock Held Stock Held Treasury
Stock Capital Restricted Income/(Loss) by ESOP by MRP Stock Total
------ ---------- ------------- ------------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1999 $327 $330,122 $122,784 $(16,192) $(31,978) $(16,885) $(17,967) $370,211
Comprehensive income/(loss):
Net income - - 9,109 - - - - 9,109
Other comprehensive loss, net
of tax:
Net unrealized loss on
certain securities, net of
tax - - - (10,666) - - - (10,666)
----------
Comprehensive loss (1,557)
----------
Cash dividends paid on common
stock - - (3,249) - - - - (3,249)
Adjustments - 624 - - - - - 624
Allocation of ESOP and MRP
stock - 25 - - 432 867 - 1,324
Common stock repurchased
(760,149 shares) - - - - - - (14,678) (14,678)
Treasury stock issued for
options exercised (21,217
shares) - (272) - - - - 361 89
------ ---------- ------------- ------------- ----------- ---------- --------- ---------
Balance at September 30, 1999 $327 $330,499 $128,644 $(26,858) $(31,546) $(16,018) $(32,284) $352,764
====== ========== ============= ============= =========== ========== ========= =========
Balance at June 30, 1998 $264 $254,307 $103,760 $ 3,970 $(33,706) $ - $ - $328,595
Comprehensive income/(loss):
Net income - - 5,354 - - - - 5,354
Other comprehensive income,
net of tax:
Net unrealized loss on
certain securities, net of
tax - - - (2,951) - - - (2,951)
----------
Comprehensive income 2,403
----------
Cash dividends paid on common
stock - - (1,585) - - - - (1,585)
Allocation of ESOP stock - (19) - - 432 - - 413
------ ---------- ------------- ------------- ----------- ---------- --------- ---------
Balance at September 30, 1998 $264 $254,288 $107,529 $ 1,019 $(33,274) $ - $ - $329,826
====== ========== ============= ============= =========== ========== ========= =========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
5
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RICHMOND COUNTY FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
For The
Three Months Ended
September 30,
-----------------------------------
(Unaudited)
1999 1998
--------- ---------
<S> <C> <C>
Net cash provided by operating activities $ 7,173 $ 3,248
Cash flows from investing activities:
Increase in loans receivable, net (100,663) (144,155)
Loans sold 533 13,715
Investment securities available for sale:
Sales and redemptions 43,246 15,169
Purchases (27,307) (20,310)
Mortgage-backed and mortgage-related securities available for sale:
Sales and redemptions 952 -
Principal collected 39,766 57,049
Purchases (39,585) (45,281)
Purchases of Federal Home Loan Bank of New York stock (3,797) (4,825)
Net addition to banking premises and equipment (629) (715)
Proceeds from sales of other real estate owned 377 72
--------- ---------
Net cash used in investing activities (87,107) (129,281)
Cash flows from financing activities:
Net increase in deposits 21,551 2,698
Decrease in securities sold under repurchase agreements (79,000) -
Increase in borrowings from the Federal Home Loan Bank 126,900 94,000
Cash dividends paid on common stock (3,249) (1,585)
Net proceeds from issuance of common stock upon exercise
of stock options 89 -
Purchase of treasury shares (14,678) -
--------- ---------
Net cash provided by financing activities 51,613 95,113
--------- ---------
Net (decrease) in cash and cash equivalents (28,321) (30,920)
Cash and cash equivalents at beginning of period 73,548 57,884
--------- ---------
Cash and cash equivalents at end of period $ 45,227 $ 26,964
========= =========
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest on deposits and borrowed funds $ 22,692 $12,414
Income taxes 4,970 3,545
Non-cash investing activities:
Additions to other real estate owned, net $ - $ 90
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
6
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RICHMOND COUNTY FINANCIAL CORP. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
---------------------
The accompanying unaudited consolidated financial statements include the
accounts of Richmond County Financial Corp. (the "Company"), its direct wholly-
owned subsidiary, Richmond County Savings Bank (the "Bank"), and the
subsidiaries of the Bank.
The unaudited consolidated financial statements included herein reflect all
normal recurring adjustments which are, in the opinion of management, necessary
for a fair presentation of the results for the interim periods presented. The
results of operations for the three months ended September 30, 1999 are not
necessarily indicative of the results of operations that may be expected for the
entire fiscal year. Certain information and note disclosures normally included
in the financial statements, prepared in accordance with generally accepted
accounting principles, have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission (the "SEC"). The
unaudited consolidated financial statements should be read in conjunction with
the audited consolidated financial statements and notes thereto included in the
Company's 1999 Annual Report and Form 10-K.
2. Earnings Per Share
------------------
Basic earnings per share ("EPS") is calculated by dividing net income by the
weighted average number of common shares outstanding. Diluted EPS is calculated
using the same method as basic EPS, but reflects potential dilution of common
stock equivalents. Shares of common stock held by the ESOP that have not been
allocated to participants' accounts or are not committed to be released for
allocation and non-vested 1998 Management Recognition Plan (the "MRP") shares
are not considered to be outstanding for the calculation of basic EPS, however,
a portion of such shares are considered in the calculation of diluted EPS as
common stock equivalents of basic EPS. Basic and diluted weighted-average common
shares outstanding were 28,081,155 and 28,411,278 shares, for the quarter ended
September 30, 1999, respectively. Basic and diluted weighted-average common
shares outstanding for the quarter ended September 30, 1998 were 24,362,800
shares.
3. Conversion to Stock Form of Ownership
-------------------------------------
On July 31, 1997, the Board of Trustees of the Bank unanimously adopted a Plan
of Conversion whereby the Bank would convert from a New York State chartered
mutual bank to a New York State chartered stock institution with the concurrent
formation of a holding company, Richmond County Financial Corp. (the
"Conversion").
The Conversion was completed on February 18, 1998, with the issuance by the
Company of 24,466,250 shares of common stock, at a price of $10.00 per share,
in an initial public offering. The Company received gross proceeds from the
Conversion of $244.7 million, before the reduction from gross proceeds of $9.8
million for estimated conversion related expenses. The Company used $117.4
million, or 50% of the net proceeds, to purchase all of the outstanding stock of
the Bank.
7
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Concurrent with the completion of the Conversion, an additional 1,957,300 shares
of authorized but unissued shares of common stock were contributed by the
Company to the Richmond County Savings Foundation (the "Foundation"), a private
foundation dedicated to charitable purposes within the Bank's communities that
it serves. The Company recorded a one-time charge of $19.6 million, the full
amount of the contribution made to the Foundation and a corresponding deferred
tax benefit of $8.4 million, in the third quarter ended March 31,1998. The
contribution to the Foundation will be fully tax deductible, subject to an
annual limitation based upon the Company's annual taxable income.
4. Recent Developments
-------------------
On October 21, 1999, the Company announced that its Board of Directors declared
a quarterly cash dividend of twelve cents ($0.12) per common share. The
dividend is payable on November 24, 1999 to shareholders of record as of
November 10, 1999.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
General
Richmond County Financial Corp. is a savings and loan holding company regulated
by the Office of Thrift Supervision. The primary operating subsidiary of
Richmond County Financial Corp. is Richmond County Savings Bank (the "Bank"), a
New York State chartered stock savings bank. While the following discussion of
financial condition and results of operations includes the collective results of
Richmond County Financial Corp. and the Bank (collectively the "Company"), this
discussion reflects the Bank's activities as the Company currently does not
engage in any significant business activities other than the management of the
Bank and the investment of net proceeds from the Bank's mutual to stock
conversion, which occurred on February 18, 1998 (the "Conversion").
Bayonne Bancshares, Inc.
At the close of business on March 22, 1999, the Company completed its
acquisition of Bayonne Bancshares, Inc. ("Bayonne"), the holding company of
First Savings Bank of New Jersey, SLA, a New Jersey State chartered savings and
loan association with four full service banking offices located in Bayonne, New
Jersey in a transaction which was accounted for as a purchase. The cost of the
acquisition was approximately $118.5 million for which the Company issued 1.05
shares of its common stock for each outstanding share of Bayonne common stock
for a total of 8,668,615 common shares, of which 3,938,731 shares were issued
from its treasury shares. Options to purchase 683,577 shares of Bayonne common
stock were also converted into options to purchase 717,755 shares of the
Company's common stock. The goodwill attributable to the transaction was $28.8
million, which is being amortized on a straight line basis over 15 years.
Ironbound Bankcorp, NJ.
At the close of business on March 5, 1999, the Company completed its acquisition
of Ironbound Bankcorp, NJ ("Ironbound"), the holding company of Ironbound Bank,
a New Jersey chartered commercial bank with three full service commercial
banking offices located in the New Jersey counties of Union and Essex, in a
transaction which was accounted for as a purchase. The cost of the acquisition
was approximately $27.7 million. The Company issued 1.463 shares of its common
stock for each outstanding share of Ironbound common stock for a total of
1,458,842 common shares. The goodwill attributable to the transaction was $15.3
million, which is being amortized on a straight line basis over 15 years.
Financial Condition
Total assets increased by $53.3 million, or 1.9%, to $2.8 billion at September
30, 1999. The increase in overall assets was primarily due to an increase in
loans of $100.3 million, or 7.6%, offset in part by a decrease in federal funds
sold of $17.1 million. The overall increase in the level of assets was primarily
the result of an increase in borrowed funds to fund growth in the mortgage loan
portfolio.
Mortgage-backed and mortgage-related securities decreased by $7.5 million, or
0.9%, from $866.8 million at June 30, 1999 to $859.4 million at September 30,
1999. Investment securities
9
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at September 30, 1999 totaled $274.9 million, a decrease of $22.7 million, or
7.6%, compared to $297.6 million at June 30, 1999.
The Bank continues to experience increased loan growth and for the quarter ended
September 30, 1999, gross loans receivable increased by $100.3 million, or 7.6%,
to $1.4 billion, compared to $1.3 billion at June 30, 1999. The substantial
increase in net loans was due primarily to originations of $146.1 million
generated in the first quarter of fiscal 2000, offset by scheduled amortization
and prepayments of $46.5 million and the sale of $533,000 of loans. Loan
originations during the first quarter of fiscal 2000 were primarily comprised of
multifamily and one- to four-family mortgage loans. Multifamily mortgage loan
originations for the first quarter of fiscal 2000 totaled $65.5 million,
bringing the total multifamily loan portfolio to $354.5 million, or 24.8% of
gross loans at quarter end. Total one- to four-family loan production during the
first quarter of fiscal 2000 was $60.4 million.
Total liabilities at September 30, 1999 were $2.5 billion, an increase of $70.8
million, or 3.0%, from $2.4 billion at June 30, 1999. Total deposits increased
by $21.6 million, or 1.3%, to $1.6 billion at September 30, 1999. The Bank's
core deposits increased by $30.0 million, or 2.9%, at September 30, 1999 to $1.1
billion, from $1.0 billion at June 30, 1999. The increase in the Bank's core
deposits was primarily attributable to a $13.7 million increase in total demand
deposits. The Bank experienced a decrease of $7.9 million, or 1.3%, in
certificates of deposit from $598.5 million at June 30, 1999 to $590.5 million
at September 30, 1999.
Additionally, the Bank continues to place a greater level of emphasis on the
utilization of borrowed funds to fund asset growth. In this regard, at
September 30, 1999, the Bank had total borrowings of $805.7 million. The Bank
had $757.8 million in borrowings at June 30, 1999. The Bank may continue to
increase such emphasis, which may result in an increase in the Bank's overall
cost of funds. The Bank's current strategy is to invest such borrowed funds
primarily in mortgage loans and mortgage-backed and mortgage-related securities
with similar estimated maturities. This strategy is intended to incrementally
increase net interest income, although it may have the effect of incrementally
decreasing net interest rate spread.
Total stockholders' equity decreased by $17.4 million to $352.8 million at
September 30, 1999 from $370.2 million at June 30, 1999.
Non-performing Assets
Non-performing loans totaled $6.3 million, or 0.5% of total loans at September
30, 1999, as compared to $5.9 million, or 0.5% of total loans, at June 30, 1999.
At September 30, 1999, the Bank's real estate owned net, consisted of foreclosed
assets totaling $617,000, which at such date was comprised of three one- to
four-family properties and two commercial properties.
At September 30, 1999, the Bank had $1.9 million of assets designated as
"Substandard," consisting of ten loans, no assets classified as "Doubtful," and
nine consumer loans classified as "Loss," respectively. At September 30, 1999,
the Bank had $4.4 million of assets designated as "Special Mention," consisting
of 58 loans due to past loan delinquencies.
Non-accrual loans totaled $6.3 million as of September 30, 1999, which included
50 one- to four-family loans, with an aggregate balance of $4.3 million, and
five non-residential loans totaling $1.4 million of which, one loan is a $1.1
million commercial mortgage on a mixed use property in Staten
10
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Island, New York. The loan is secured by the property, which was last appraised
in December 1996 for $1.4 million.
For the three months ended September 30, 1999, the Company's loan loss provision
was $300,000 as compared to $750,000 for the prior year's period. The Company's
allowance for loan losses totaled $14.2 million at September 30, 1999 and $13.9
million at June 30, 1999, which represents a ratio of allowance for loan losses
to non-performing loans of 225.3% and 237.1%, respectively. The Company
continues to increase its overall loan loss reserves due to the increase in
lending of all loan products. Management believes the allowance for loan losses
at September 30, 1999 is adequate and sufficient reserves are presently
maintained to cover potential losses. For the quarter ended September 30, 1999,
the Company experienced net recoveries of $10,700.
Comparison of Operating Results for the Three Months Ended September 30, 1999
and 1998
General. The Company reported net income for the quarter ended September 30,
1999 of $9.1 million, or diluted earnings per share of $0.32, an increase of
$3.8 million as compared to the $5.4 million, or diluted earnings per share of
$0.22, reported for the quarter ended September 30, 1998. Core earnings for the
quarter ended September 30, 1999 increased 81.1% to a record $8.7 million, or
core diluted earnings per share of $0.31, as compared to $4.8 million, or core
diluted earnings per share of $0.20, reported for the comparable quarter in
1998. Core earnings for the first quarter ended September 30, 1999 and 1998,
excludes net gains on sales of securities and loans of $703,000 and a $909,000,
respectively.
Interest Income. The Company reported total interest income of $46.7 million
for the first quarter ended September 30, 1999, representing an increase of
$19.1 million, or 68.9%, as compared to the same period in 1998. The increase
in interest income was attributable primarily to the growth in average interest-
earning assets of $1.1 billion and a four basis point increase in the average
yield on interest-earning assets. The overall increase in the level of interest-
earning assets was primarily the result of an increase in borrowed fund growth
in the mortgage loan and securities portfolios, assets acquired from Bayonne and
Ironbound, as well as significant deposit inflows.
Interest income on loans increased $12.3 million, or 89.9%, to $26.1 million for
the first quarter ended September 30, 1999, as compared to the $13.7 million
reported for the comparable period in 1998. This increase was the result of
growth in the average balance of loans outstanding of $653.6 million, due
primarily to increased originations of multifamily and one- to four-family real
estate loans and loans acquired through the recently completed acquisitions,
offset in part by a decrease in the average yield on the overall loan portfolio
to 7.6% for the first quarter ended September 30, 1999, as compared to 7.7%
for the same period in fiscal 1998.
Interest income on debt and equity securities increased $1.9 million, or 43.8%,
from $4.3 million for the first quarter ended September 30, 1998, to $6.2
million for the same period in 1999. This increase is mainly attributable to
the growth in the average balance of debt and equity securities, primarily
investments in financial bonds and Federal Home Loan Bank ("FHLB") stock, as
well as a 30 basis point increase in the average yield on the debt and equity
portfolio.
Interest income on mortgage-backed and mortgage-related securities increased
$5.0 million, or
11
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53.9%, from $9.3 million reported for the first quarter ended September 30,
1998, to $14.2 million for the same period in 1999. This increase was due
primarily to an increase in the average balance of mortgage-backed and mortgage-
related securities of $321.1 million as a result of the investment of borrowed
funds and mortgage-backed and mortgage-related securities acquired through the
recently completed acquisitions. The increase was offset in part by a decrease
in the average yield on the mortgage-backed and mortgage-related securities
portfolio to 6.5% for the first quarter ended September 30, 1999, as compared
to 6.6% for the same period in 1998.
Interest Expense. Interest expense increased $10.5 million, or 83.6%, from
$12.6 million for the first quarter ended September 30, 1998, to $23.1 million
for the first quarter ended September 30, 1999. The average cost of the Bank's
interest-bearing liabilities decreased from 4.3% for the first quarter ended
September 30, 1998, to 4.1% for the first quarter September 30, 1999. Interest
expense on deposits increased $4.5 million, or 57.0%, from $8.0 million for the
first quarter ended September 30, 1998, to $12.5 million for the first quarter
ended September 30, 1999. The increase reflects a $610.9 million increase in
the average balance of interest-bearing deposits, primarily attributable to a
$257.4 million increase in the average balance of certificates of deposit and a
$285.4 million increase in the average balance of savings deposit accounts.
This increase can be primarily attributable to the opening of two full-service
banking facilities and one public accommodation office on Staten Island, the
opening of an Ironbound Bank divisional full-service banking facility in Union,
New Jersey and deposits acquired through the recently completed acquisitions.
In addition, the Bank's strategy over the past several years has been to attract
more certificates of deposit through the offering of additional certificate of
deposit products and related marketing of commercial deposit accounts.
Interest expense on borrowed funds for the quarter ended September 30, 1999 was
$10.6 million, an increase of $6.0 million as compared to the $4.6 million
reported in the same period in 1998. The increase in interest expense on
borrowed funds was attributable to the growth in the average balance of borrowed
funds of $460.5 million, offset in part by a 14 basis point decrease in the
average cost on borrowed funds. The Bank continues to place a greater level of
emphasis on the utilization of borrowed funds to fund asset growth and to
leverage the Bank's capital position to improve returns on equity. For the
first quarter ended September 30, 1999, the Bank had $805.7 million of
borrowings outstanding, an increase of $47.9 million, or 6.3%, as compared to
the $757.8 million of borrowings outstanding as of June 30, 1999. The Bank may
continue to increase such emphasis on borrowed funds, which may result in an
increase in the Bank's overall cost of funds. The Bank's current strategy is to
invest such borrowed funds primarily in mortgage-backed and mortgage-related
securities. This strategy is intended to incrementally increase net interest
income, although it may have the effect of incrementally decreasing net interest
rate spread.
Provision for Loan Losses. The Bank's provision for loan losses for the quarter
ended September 30, 1999 was $300,000, as compared to the $750,000 reported for
the same period in the prior year. The provision for the quarter ended
September 30, 1999 was based on management's evaluation of its loan portfolio
and real estate market conditions. In particular, management considered the
continued growth in the portfolio, the introduction of new lending products by
the Bank and the seasoning of such new products, as well as the level of its
non-performing loans. Management believes, based upon information currently
available, that its allowance for loan losses is adequate to cover future loan
losses. To the extent the Bank increases its investment in
12
<PAGE>
multifamily loans, commercial real estate, commercial and other loans, which
entail higher risk than one- to four-family loans, the Bank may decide to
increase its allowance for loan losses through additional loan loss provisions,
which may adversely affect net income. In addition, if general economic
conditions and real estate values within the Bank's primary lending area
decline, the level of non-performing loans may increase, resulting in larger
provisions for loan losses which, in turn, would also adversely affect net
income.
Non-Interest Income. Exclusive of net gains and losses from the sales of
securities and loans, total non-interest income for the quarter ended September
30, 1999 was $3.2 million, as compared to the $935,000 reported for the same
period in 1998. The increased level of non-interest income is primarily due to
an overall increase in deposit fee income, fee income generated from the Bayonne
and Ironbound acquisitions, ATM fee income, fee income generated from the
sale of annuities and mutual funds and advisory fee income from our investment
in Peter B. Cannell & Co. Inc. Additionally, the Bank purchased a Bank Owned
Life Insurance Policy ("BOLI"), which accounted for approximately $734,000 of
other income. Net gains reported for the first quarter ended September 30,
1999, were primarily due to net gains of $703,000 from the sale of equity and
investment securities.
Non-Interest Expense. Non-interest expense totaled $12.9 million for the first
quarter ended September 30, 1999, an increase of $5.2 million, or 68.4%, as
compared to the $7.6 million reported for the same period of the prior year. The
increased level of non-interest expense was mainly attributable to increased
compensation and employee benefit expenses, goodwill amortization and other
expenses associated with the Bayonne and Ironbound acquisitions. Additionally,
the Bank recognized increases in non-interest expenses as a result of the Bank's
opening of a public accommodation office and the opening of two new full service
branches in Staten Island and a full service branch in Union, New Jersey.
Income taxes. The Company's effective consolidated tax rate for the three month
period ended September 30, 1999, was 36.5% as compared to 37.2% reported for the
comparable period in 1998. The reduction of the Company's effective tax rate
is primarily due to the Bank's utilization of various tax-planning strategies.
Liquidity and Capital Resources
The Bank's primary sources of funds are deposits, proceeds from the principal
and interest payments on loans, mortgage-backed and mortgage-related and
investment securities, and to a significantly lesser extent, proceeds from the
sale of fixed-rate mortgage loans to the secondary market. While maturities and
scheduled amortization of loans and securities are predictable sources of funds,
deposit outflows, mortgage prepayments and mortgage loan sales are greatly
influenced by general interest rates, economic conditions and competition.
The primary investing activities of the Bank are the origination of residential
one- to four-family, multifamily and, to a lesser extent, commercial real
estate, construction and development and other loans and the purchase of
mortgage-backed and mortgage-related and investment securities. During the three
month period ended September 30, 1999 and 1998, the Bank's loan originations
totaled $146.1 million and $167.4 million, respectively. Purchases of mortgage-
backed, mortgage-related and investment securities totaled $66.9 million and
$65.6 million for the three month period ended September 30, 1999 and 1998,
respectively. These activities were funded primarily by deposit
13
<PAGE>
growth and principal repayments and prepayments on loans, mortgage-backed and
mortgage-related securities and investment securities, and advances from the
FHLB and the net proceeds received from the Conversion. As of September 30,
1999, the Bank experienced a net increase in total deposits of $21.6 million, or
1.3%, as compared to the $1.6 billion at June 30, 1999. Deposit flows are
affected by the level of interest rates, the interest rates and products offered
by local competitors and other factors.
The Bank closely monitors its liquidity position on a daily basis. Excess
short-term liquidity is invested in overnight federal funds sold. In the event
the Bank should require funds beyond its ability to generate them internally,
additional sources of funds are available through repurchase agreements and
advances from the FHLB. The Bank has recently begun to place a greater level of
emphasis on the utilization of borrowed funds to fund asset growth. In this
regard, at September 30, 1999, the Bank had total borrowings of $805.7 million.
The Bank may continue to increase such emphasis, which may result in an increase
in the Bank's average cost of funds.
Loan commitments totaled $155.1 million at September 30, 1999, were comprised of
$68.5 million in one- to four-family loan commitments, $3.1 million in
commercial real estate loan commitments, $37.9 million in construction loan
commitments, $14.3 million in commercial loan commitments, $20.3 million in home
equity loan commitments, $7.3 million in multifamily loan commitments and $3.7
million in other loan commitments. In addition, management estimates that an
increased level of loan commitments may arise as a result of the Multifamily
Lending Division. Management of the Bank anticipates that it will have
sufficient funds available to meet its current loan commitments. Certificates
of deposit, which are scheduled to mature in less than one year from September
30, 1999, totaled $435.3 million. Based upon past experience and the Bank's
current pricing strategy, management believes that a significant portion of such
deposits will remain with the Bank.
At September 30, 1999, the Bank exceeded all of its regulatory capital
requirements with a leverage capital level of $279.9 million, or 10.0% of
adjusted assets, which is above the required level of $111.7 million, or 4.0% of
adjusted assets, and risk-based capital of $294.1 million, or 15.8% of adjusted
assets, which is above the required level of $148.9 million, or 8.0% of adjusted
assets.
The Company's most liquid assets are cash, due from banks and federal funds
sold. The levels of these assets are dependent on the Bank's operating,
financing, lending and investing activities during any given period. At
September 30, 1999, cash, due from banks and federal funds sold totaled $45.2
million, or 1.6% of total assets.
The Year 2000 Issue
The "Year 2000" Issue, as it is generally referred to, concerns the inability of
certain computer hardware and software systems and associated applications to
correctly recognize and process dates beyond December 31, 1999. Many computer
programs were developed using only six digits to define the date field in their
programs. Computer programs used by the Company, its suppliers or outside
service providers that have date-sensitive software may recognize "00" as the
year 1900, rather than the year 2000. Due to the nature of financial
information, calculations that rely on the integrity of the date field for the
correct processing of information could be significantly misstated, if
corrective action is not timely taken.
14
<PAGE>
State of Readiness
The Company has implemented a detailed Year 2000 Plan, according to the
guidelines of the Federal Financial Institutions Examination Council ("FFIEC"),
to evaluate the Year 2000 compliance of its computer systems and the equipment,
which supports the operation of the Company. The Company initiated formal
communications with all of its service providers, vendors, major fund providers,
major borrowers and companies with which it has material investments, to
determine the extent to which it may be vulnerable to the inability of those
parties to remediate their own Year 2000 issues. The Company has received
formal communication indicating assurance of Year 2000 compliance from 100% of
the service providers, vendors, major fund providers, major borrowers and
companies contracted to provide Year 2000 compliance assurances.
The Company's vendor relationships cover a wide range of services, which may or
may not be subject to a contractual agreement. Where a contractual relationship
exists between the Company and a provider of services, and the Company is
exposed to potential liability due to a failure on the part of the vendor to
provide the service, whether due to Year 2000 or some other issue, the vendor
would necessarily be subject to a breach of contract suit. In order to minimize
the risk of material loss or disruption of the Company's business due to an
issue involving date sensitive processing, the Company has required all of these
vendors to provide written assurances that they are proactively addressing Year
2000 issues within their operations. The Company has received written
assurances from all of the 19 vendors that it has contacted for Year 2000
compliance. A violation of such written assurances may constitute a breach of
contract by such vendor, thereby allowing the Company to institute legal
proceedings against such vendor. The Company can give no assurance as to either
the circumstances under which it would institute such legal proceedings or the
probable degree of success of such action. The Company has participated in
testing all products and services from these vendors. The initial two phases of
testing have been completed and a third testing cycle was completed in May 1999.
A fourth cycle was completed in October 1999 to test additional products and
services.
Like many financial institutions, the Company relies upon computers for the
daily conduct of its business and for data processing generally. The Company
utilizes a combination of in-house and service bureau applications, with the
bulk of customers account processing being handled by a leading national vendor
of data processing services for financial institutions. The Company has
received assurances that this service provider has completed its internal
remediation of programs, and has substantially completed its remediation of
issues related to interdependencies with other parties. However, these
assurances are not guarantees and may not be enforceable. The vendor has
provided the Company with a Year 2000 compliant version of its system. The
Company has participated with the service provider, in the testing of both
direct and indirect services, which commenced in November 1998, which was
successfully completed in the second quarter of 1999.
The Company does not anticipate that there will be any significant or material
condition which will impact this service provider's ability to deliver accurate
data processing services before, during and after the transition to the new
millennium. Further, results of system tests conducted by the Company and by
other users of this service provider will be carefully monitored to ensure that
all issues have been identified and successfully remediated.
The balance of the Company's internal processing is supported by PC based
systems, using
15
<PAGE>
industry standard software to run non-mission critical applications. Any
software program or application which was not supported by the vendor, or which
required an update to achieve Year 2000 capability, has been identified for
replacement or upgrade. Equipment which contains embedded chips or
microprocessors has also been tested and scheduled for upgrade or replacement
where necessary. All such system enhancements were completed by September 30,
1999. The cost to remediate these systems is immaterial, and is being expensed
in the period in which it occurs.
The Company believes it has developed an effective plan to address the Year 2000
problem and based on available information and the steps taken to date, its Year
2000 transition will not have a material effect on its business, operations or
financial results. However, the Company has no control over the progress of
third parties in addressing their own Year 2000 issues. If the necessary
changes are not effected or are not completed in a timely manner, or if
unanticipated problems arise, there may be a material impact on the Company's
financial condition and results of operations.
Cost to Address the Company's Year 2000 Issues
The Company's cost to achieve Year 2000 compliance are not expected to have a
material financial impact on the Company. The Company intends to fund such
costs from its current operations. However, as stated above, there can be no
assurance that all such costs have been identified, or that there may not be
some unforeseen cost which may have a material adverse effect on the Company's
financial condition and results of operations. The Company's 1999 expense
relative to the Year 2000 issue was approximately $120,000 and the Company
anticipates that its future expense will be approximately $120,000.
Risk of Year 2000 Issues
To date, the Company has not identified any system which presents a material
risk of failing to be Year 2000 compliant in a timely manner, or for which a
suitable alternative cannot be implemented. However, as the Company progresses
with its Year 2000 transition, systems or equipment may be identified which
present a material risk of business interruption. Such disruption may include
the inability to process customer accounting transactions, including deposits,
withdrawals, loan payments and disbursements; the inability to reconcile and
record daily activity; the inability to process loan applications or to track
delinquencies; the inability to generate checks or to clear funds. In addition,
if any of the Company's major borrowers should fail to achieve Year 2000
compliance, and should they experience a disruption of their own businesses,
their ability to meet their obligations to the Company may be seriously
impaired.
To mitigate credit risk, the Company has contacted all of its unsecured
commercial borrowers to survey their Year 2000 readiness in order to anticipate
any potential exposure. The Company also surveys all new commercial borrowers
for Year 2000 readiness. The Company has not contacted its largest dollar
deposit customers to determine their readiness for Year 2000 because such
customers comprise a small percentage of the Company's deposit base.
To the extent that the risks posed by the Year 2000 problem are pervasive in
data processing and telecommunication services worldwide, or the extent that
disruption of a power utility prevents the Company from gaining access to its
systems, the Company cannot predict with certainty that
16
<PAGE>
it will remain materially unaffected by issues related to the Year 2000 problem,
which are beyond the Company's control.
Contingency Plans
The Company has a contingency plan that has been in operation since November
1998, which will be updated as necessary. The plan identifies components of
mission critical applications, which are judged, at some point prior to December
31, 1999, to be at risk of failure to achieve complete renovation, validation
and implementation. The Contingency Plan will ensure that the Company has
sufficiently planned for unanticipated system failures at critical production
dates before, on and after January 1, 2000. The Company's internal contingency
committee meets monthly to monitor the plan and service providers. The Company
expects to complete its Year 2000 testing of all mission critical systems prior
to any date of potential disruption.
The plan would be invoked if unanticipated Year 2000 problems occur in
production, similar to Disaster Recovery Plans. Essentially, it requires that
resources be planned for deployment to ensure that such an interruption does not
threaten the viability of the Company. The Company will modify its current
Disaster Recovery Plan to specifically address the special circumstances of a
disruption due to a Year 2000 related component failure.
The discussion above contains certain forward-looking statements. Actual
results may differ materially from the Company's expectations due to the nature
and uncertainty of circumstances surrounding the Year 2000 problem. The Company
may fail to identify systems that are not Year 2000 compliant, or the Company or
other parties may fail to meet the dates and goals set above. If so, the extent
and nature of efforts to then address those contingencies, to repair or replace
the affected systems, the Company's ability to obtain qualified personnel,
consultants or other resources and the success of those efforts cannot be stated
with any degree of certainty.
Pending Legislation
Recent legislation designed to modernize the regulation of the financial
services industry expands the ability of bank holding companies to affiliate
with other types of financial services companies such as insurance companies and
investment banking companies. However, the legislation provides that companies
that acquire control of a single savings association after May 4, 1999 (or that
filed and application for that purpose after that date) are not entitled to the
unrestricted activities formerly allowed for a unitary savings and loan holding
company. Rather, these companies will have authority to engage in the
activities permitted "a financial holding company" under the new legislation,
including insurance and securities-related activities, and the activities
currently permitted for multiple savings and loan holding companies, but
generally not in commercial activities. The authority for unrestricted
activities is grandfathered for unitary savings and loan holding companies, such
as the Company, that existed prior to May 4, 1999. However, the authority for
unrestricted activities would not apply to any company that acquired the
Company. The President is expected to sign the legislation into law in the very
near future.
Private Securities Litigation Reform Act Safe Harbor Statement
In addition to historical information, this Form 10-Q includes certain forward-
looking statements based on current management expectations. The Company's
actual results could differ materially from
17
<PAGE>
those management expectations. Factors that could cause future results to vary
from current management expectations include, but are not limited to, general
economic conditions, legislative and regulatory changes, monetary and fiscal
policies of the federal government, changes in tax policies, rates and
regulations of federal, state and local tax authorities, changes in interest
rates, deposit flows, the cost of funds, demand for loan products, demand for
financial services, competition, changes in the quality or composition of the
Company's loan and investment portfolios, changes in accounting principles,
policies or guidelines, and other economic, competitive, governmental and
technological factors affecting the Company's operations, markets, products,
services and prices.
18
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITIVE DISCLOSURES ABOUT MARKET RISK
Asset and Liability Management and the Management of Interest Rate Risk
Quantitative and qualitative disclosure about market risk is presented at June
30, 1999 in Item 7a. to the Company's Form 10-K, filed with the SEC on September
28, 1999. There have been no material changes in the Company's market risk at
September 30, 1999 as compared to June 30, 1999. The following is an update of
the discussion provided therein:
General. The Company's largest component of market risk continues to be
interest rate risk. Substantially all of this risk continues to reside at the
Bank level. The Bank still is not subject to foreign currency exchange or
commodity price risk. At September 30, 1999, neither the Company nor the Bank
owned any trading assets, nor did they participate in hedging programs, interest
rate swaps or other activities involving the use of off-balance sheet derivative
financial instruments.
Gap Analysis. At September 30, 1999, the Company's estimated one-year "gap"
position, the difference between the amount of interest-earning assets maturing
or repricing within one year and interest-bearing liabilities maturing or
repricing within one year, was a negative $204.5 million, representing a one-
year interest sensitivity gap as a percentage of total assets of (7.3%).
Accordingly, during a period of rising interest rates, the Company, having a
positive gap position, would be in a better position to invest in higher
yielding assets which, consequently, may result in the yield on its assets
increasing at a pace more closely matching the increase in the cost of its
interest-bearing liabilities than if it had a negative gap. During a period of
falling interest rates, an institution with a positive gap would tend to have
its assets repricing at a faster rate than one with a negative gap which,
consequently, may tend to restrain the growth of its net interest income or
result in a decrease in interest income.
Interest Rate Risk Compliance. The Company continues to monitor the impact of
interest rate volatility upon net interest income and net portfolio value in the
same manner as at June 30, 1999. There have been no changes in the Board of
Directors approved limits of acceptable variance in net interest income and net
portfolio value at September 30, 1999, compared to June 30, 1999, and the
projected changes continue to fall within the Board of Directors approved limits
at all levels of potential interest rate volatility.
19
<PAGE>
PART II - OTHER INFORMATION
---------------------------
ITEM 1. LEGAL PROCEEDINGS
- ------- -----------------
The Company is not involved in any pending legal proceedings other than the
routine legal proceedings occurring in the ordinary cause of business. Such
routine legal proceeding in the aggregate, are believed by management to be
immaterial to the Company's financial condition or results of operations.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
- ------- -----------------------------------------
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
- ------- -------------------------------
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- -------- ---------------------------------------------------
On October 28, 1999, the Company held its annual meeting of stockholders for the
purpose of the election of Directors to three year terms, for the approval of
the Richmond County Financial Corp. Stock Compensation Plan (formerly referred
to as the "Bayonne Bancshares, Inc. 1998 Stock-Based Incentive Plan"), as
amended and restated; and for the ratification of Ernst & Young LLP as the
Company's independent auditors. The number of votes cast at the meeting as to
each matter acted upon was as follows:
<TABLE>
<CAPTION>
Number of Number of
Votes Votes
For Withheld
----------------- --------------
<S> <C> <C> <C>
1. Election of Directors
William C. Frederick, M.D. 25,263,688 1,165,037
Maurice K. Shaw 25,266,941 1,161,784
Patrick F. X. Nilan 25,063,480 1,365,245
</TABLE>
The Directors whose terms continued and the years their terms expire are as
follows:
Godfrey H. Carstens, Jr. (2000); Robert S. Farrell (2000); Michael F. Manzulli
(2000); James L. Kelley (2001); T. Ronald Quinlan (2001); and Anthony E. Burke
(2001).
<TABLE>
<CAPTION>
Number of Number of Number of
Votes Votes Votes
For Against Abstaining
-------------- -------------- --------------
<S> <C> <C> <C> <C>
2. Richmond County Financial Corp. Stock
Compensation Plan (formerly referred
to as the "Bayonne Bancshares, Inc.
1998 Stock-Based Incentive Plan"), as
amended and restated. 24,786,601 1,452,549 189,575
3. Ratification of Ernst & Young LLP as
the Company's independent auditors for
the fiscal year ending June 30, 2000. 26,234,582 120,614 73,528
</TABLE>
20
<PAGE>
ITEM 5. OTHER INFORMATION
- -------- -----------------
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- --------- --------------------------------
(a) Exhibits
--------
<TABLE>
<C> <S>
3.1 Certificate of Incorporation of Richmond County Financial Corp.*
3.2 Bylaws of Richmond County Financial Corp.*
10.1 Form of Richmond County Savings Bank Employee Stock Ownership Plan
and Trust.*
10.2 Form of ESOP Loan Commitment Letter and ESOP Loan Documents.*
10.3 Employment Agreement between Richmond County Financial Corp. and
Michael F. Manzulli (As Amended and Restated).
10.4 Employment Agreement between Richmond County Savings Bank and Michael
F. Manzulli (As Amended and Restated).
10.5 Employment Agreement between Richmond County Financial Corp. and
Anthony E. Burke (As Amended and Restated).
10.6 Employment Agreement between Richmond County Savings Bank and Anthony
E. Burke (As Amended and Restated).
10.7 Employment Agreement between Richmond County Financial Corp. and
Thomas R. Cangemi (As Amended and Restated).
10.8 Employment Agreement between Richmond County Savings Bank and Thomas
R. Cangemi (As Amended and Restated).
10.9 Employment Agreement between Richmond County Savings Bank and Michael
J. Gagliardi.**
10.10 Employment Agreement between Richmond County Savings Bank and Thomas
R. Lupo.**
10.11 Employment Agreement between Richmond County Savings Bank and
Michael A. Nilan.**
10.12 Form of Change in Control Agreement between Richmond County Savings
Bank and certain executive officers.*
10.13 Form of Proposed Richmond County Savings Bank Employee Severance
Compensation Plan.*
10.14 Richmond County Financial Corp. Supplemental Executive Retirement
Plan (As Amended and Restated).****
10.15 Richmond County Financial Corp. 1998 Stock-Based Incentive Plan.***
11.0 Statement re: Computation of Per Share Earnings.
27.0 Financial Data Schedule (EDGAR version only).
</TABLE>
* Incorporated by reference from the Form S-1 (Registration No.
333-37009), as amended, filed on October 2,1997.
** Incorporated by reference from the Form 10-Q (File No. 0-23271), filed
with the SEC on May 17,1999.
*** Incorporated by reference from the DEF 14A (File No. 0-23271), filed
with the SEC on August 28,1998.
**** Incorporated by reference from the Form 10-K (File No. 0-23271), filed
with the SEC on September 28, 1999.
(b) Reports on Form 8-K
-------------------
Not applicable.
21
<PAGE>
Exhibit Index
-------------
<TABLE>
<CAPTION>
Exhibit
Number Page
- ------- ----
<C> <S> <C>
11.0 Statement re: Computation of Per Share Earnings................... 24
27.0 Financial Data Schedule
</TABLE>
22
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RICHMOND COUNTY FINANCIAL CORP.
(Registrant)
Date: November 12, 1999 By: /s/ Michael F. Manzulli
----------------------------
Michael F. Manzulli
Chairman of the Board and
Chief Executive Officer
Date: November 12, 1999 By: /s/ Thomas R. Cangemi
----------------------------
Thomas R. Cangemi
Senior Vice President, Chief
Financial Officer and Treasurer
23
<PAGE>
EXHIBIT 10.3
RICHMOND COUNTY FINANCIAL CORP.
EMPLOYMENT AGREEMENT
(As Amended and Restated)
This AGREEMENT ("Agreement"), originally entered into on February 17, 1998,
is amended and restated in its entirety, effective as of September 21, 1999, by
and between Richmond County Financial Corp. (the "Holding Company"), a
corporation organized under the laws of Delaware, with its principal offices at
1214 Castleton Avenue, Staten Island, New York 10310, and Michael F. Manzulli
("Executive"). Any reference to "Institution" herein shall mean Richmond County
Savings Bank or any successor thereto.
WHEREAS, the Holding Company wishes to continue to assure itself of the
services of Executive for the period provided in this Agreement; and
WHEREAS, Executive is willing to continue to serve in the employ of the
Holding Company on a full-time basis for said period.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of Executive's employment hereunder, Executive agrees to
serve as Chairman of the Board and Chief Executive Officer of the Holding
Company. Executive shall render administrative and management services to the
Holding Company such as are customarily performed by persons in a similar
executive capacity. During said period, Executive also agrees to serve, if
appointed or elected, as the case may be, as an officer and director of any
subsidiary of the Holding Company.
2. TERMS.
(a) The period of Executive's employment under this Agreement shall be
deemed to have commenced as of the date first above written and shall continue
for a period of sixty (60) full calendar months from the effective date of this
Agreement, as amended and restated. Commencing on the date of the execution of
this Agreement, the term of this Agreement shall be extended for one day each
day, so that a constant sixty (60) calendar month term shall remain in effect,
until such time as the board of directors of the Holding Company (the "Board")
or Executive elects not to extend the term of the Agreement by giving written
notice to the other party in accordance with Section 8 of this Agreement, in
which case the term of this Agreement shall be fixed and shall end on the fifth
anniversary of the date of such written notice.
(b) During the period of Executive's employment hereunder, except for
periods of absence occasioned by illness, reasonable vacation periods, and other
reasonable leaves of
<PAGE>
absence, Executive shall devote substantially all his business time, attention,
skill, and efforts to the faithful performance of his duties hereunder including
activities and services related to the organization, operation and management of
the Holding Company and its direct or indirect subsidiaries, including the
Institution, ("Subsidiaries") and participation in community and civic
organizations; provided, however, that, with the approval of the Board, as
evidenced by a resolution of the Board, from time to time, Executive may serve,
or continue to serve, on the boards of directors of, and hold any other offices
or positions in, companies or organizations, which, in the Board's judgment,
will not present any conflict of interest with the Holding Company or its
Subsidiaries, or materially affect the performance of Executive's duties
pursuant to this Agreement.
(c) Notwithstanding anything in this Agreement to the contrary, either
Executive or the Holding Company may terminate Executive's employment with the
Holding Company at any time during the term of this Agreement, subject to the
terms and conditions of this Agreement.
(d) Under no circumstance shall Executive perform as part of his duties as
Chairman of the Board and Chief Executive Officer of the Holding Company, in any
respect, directly or indirectly, during the pendency of any temporary or
permanent suspension from the Institution or upon termination of employment with
the Institution, any duties or responsibilities formerly performed at the
Institution.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall constitute
consideration paid by the Holding Company in exchange for the duties described
in Section 1 of this Agreement. The Holding Company shall pay Executive, as
compensation, a salary of not less than $525,000 ("Base Salary"). Base Salary
shall include any amounts of compensation deferred by Executive under any
employee benefit plan or deferred compensation arrangement maintained by the
Holding Company or its Subsidiaries. Base Salary shall be payable bi-weekly.
During the period of this Agreement, Executive's Base Salary shall be reviewed
at least annually; on or about the 30/th/ day of each June. Such review shall
be conducted by the Board or by a committee designated by the Board. The
committee or the Board may increase Executive's Base Salary at any time. Any
increase in Base Salary shall become the new "Base Salary" for purposes of this
Agreement. In addition to the Base Salary provided for in this Section 3(a),
the Holding Company shall also provide Executive, at no premium cost to
Executive, with all such other benefits as provided uniformly to permanent full-
time employees of the Holding Company and its Subsidiaries.
(b) In addition to the Base Salary provided for in paragraph (a) of this
Section 3, the Holding Company will provide Executive with the opportunity to
participate in employee benefit plans, arrangements and perquisites
substantially equivalent to those in which Executive was participating or
otherwise deriving a benefit from immediately prior to the beginning of the term
of this Agreement, as amended and restated, and the Holding Company will not,
without Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect Executive's rights or
benefits thereunder, without separately
2
<PAGE>
providing for an arrangement that ensures Executive receives or will receive the
economic value that Executive would otherwise lose as a result of such adverse
affect. Without limiting the generality of the foregoing provisions of this
Subsection (b), Executive shall be entitled to participate in or receive
benefits under any employee benefit plans, whether tax-qualified or otherwise,
including, but not limited to, retirement plans, supplemental retirement plans,
pension plans, profit-sharing plans, employee stock ownership plans, stock or
option plans, health-and-accident plans, medical coverage or any other employee
benefit plan or arrangement made available by the Holding Company and its
Subsidiaries in the future to its senior executives and key management
employees, subject to and on a basis consistent with the terms, conditions and
overall administration of such plans and arrangements (including designation by
the Board of eligibility to participate, if applicable). Executive shall also be
entitled to incentive compensation and bonuses as provided in any plan or
arrangement of the Holding Company or its Subsidiaries in which Executive is
eligible to participate. Nothing paid to Executive under any such plans or
arrangements will be deemed to be in lieu of other compensation to which
Executive is entitled under this Agreement.
(c) In addition to the Base Salary provided for by paragraph (a) of this
Section 3 and other compensation and benefits provided for by paragraph (b) of
this Section 3, the Holding Company shall pay or reimburse Executive for all
reasonable expenses incurred by Executive in performing his obligations under
this Agreement, as mutually agreed to by the Board and Executive.
(d) Except as otherwise provided in this Section 3(d), the Holding Company
will provide to Executive for each calendar year during the term of this
Agreement and for the remaining term of this Agreement after a termination of
employment following an Event of Termination, as defined in Section 4 of this
Agreement, a "Benefit Equity Payment." The Benefit Equity Payment shall be paid
no later than 90 days after the close of the calendar year to which such payment
pertains ("Benefit Year"), and shall be in addition to any contributions
actually made (or benefits actually accrued) with respect to such Benefit Year
to any tax-qualified or non-tax-qualified compensation or benefit plan,
arrangement, policy or program funded or sponsored by the Holding Company or its
Subsidiaries, including but not limited to those of the following types:
deferred compensation, retirement, defined benefit pension, defined contribution
retirement, supplemental executive retirement, stock option or stock bonus
award, life insurance, health, medical, dental, disability, incentive
compensation or bonus plan, perquisites, or other fringe benefits ("Benefit
Plans"). The Benefit Equity Payment, which shall be calculated by an actuary,
accountant or other licensed professional, shall equal the amount of the
contributions (or other benefits) which would have been made or accrued for
Executive for the Benefit Year pursuant to all Benefit Plans as consideration
for his services described in Section 1 of this Agreement, but which were not
made or accrued because (i) the Benefit Plan(s) were terminated or not funded,
or (ii) Executive was no longer employed or will not be employed by the Holding
Company or its Subsidiaries.
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4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during Executive's term of employment under this Agreement, the provisions of
this Section 4 shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any of the following: (i) the termination
by the Holding Company of Executive's full-time employment hereunder for any
reason other than Retirement (as defined in paragraph (f) of this Section 4),
termination governed by Section 5(a) of this Agreement or Termination for Cause
as defined in Section 7 of this Agreement; or (ii) Executive's resignation from
the Holding Company's employ, upon, any (A) notice to Executive by the Holding
Company of non-renewal of the term of this Agreement, (B) failure to elect or
reelect or to appoint or reappoint Executive as Chairman of the Board and Chief
Executive Officer or failure to renominate Executive as a director of the
Institution or Holding Company to the extent Executive was previously serving as
a director (unless Executive so consents), (C) material change in Executive's
function, duties, or responsibilities with the Holding Company or its
Subsidiaries, which change would cause Executive's position to become one of
lesser responsibility, importance, or scope from the position and attributes
thereof described in Section 1 of this Agreement, (unless Executive so
consents), (D) relocation of Executive's principal place of employment by more
than 25 miles from its location at the effective date of the Agreement (unless
Executive so consents), (E) reduction in the benefits, arrangements and
perquisites being provided to Executive pursuant to Section 3 of this Agreement,
to which Executive does not consent or for which Executive is not or will not be
provided the economic benefit pursuant to Section 3(b) of this Agreement, (F)
liquidation or dissolution of the Holding Company or the Institution, or (G)
breach of this Agreement by the Holding Company. Upon the occurrence of any
event described in clauses (A), (B), (C), (D), (E), (F), or (G), above,
Executive shall have the right to elect to terminate his employment under this
Agreement by resignation upon not less than sixty (60) days prior written notice
given within six full calendar months after the event giving rise to said right
to elect.
(b) Upon the occurrence of an Event of Termination, on the Date of
Termination, as defined in Section 8 of this Agreement, the Holding Company
shall be obligated to pay Executive, or, in the event of Executive's subsequent
death, his beneficiary or beneficiaries, or his estate, as the case may be: (i)
the amount of the remaining payments and benefits that Executive would have
earned if he had continued his employment with the Holding Company during the
remaining unexpired term of this Agreement, based on Executive's Base Salary and
benefits provided at the Date of Termination, as set forth in Sections 3(a), (b)
and (d) of this Agreement, as the case may be, and the amount still due
Executive under any paragraph of Section 3 for service rendered through the Date
of Termination. At the election of Executive, which election is to be made
within thirty (30) days of the Date of Termination, such payments shall be made
in a lump sum (without discount for early payment) or paid monthly during the
remaining term of the Agreement following Executive's termination. In the event
that no election is made, payment to Executive will be made in a lump sum. Such
payments shall not be reduced in the event Executive obtains other employment
following termination of employment.
(c) Upon the occurrence of an Event of Termination, Executive will be
entitled to receive benefits due him under or contributed by the Holding Company
or its Subsidiaries on his behalf pursuant to any retirement, incentive, profit
sharing, employee stock ownership, bonus, performance, disability or other
employee benefit plan maintained by the Holding Company or
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its Subsidiaries to the extent such benefits are not otherwise paid to Executive
under a separate provision of this Agreement.
(d) To the extent that the Holding Company or its Subsidiaries continue to
offer any life, medical, health, disability or dental insurance plan or
arrangement in which Executive participates in on the last day of his employment
(each being a "Welfare Plan"), after an Event of Termination (as herein
defined), Executive and his dependents shall continue participating in such
Welfare Plans, subject to the same premium contributions on the part of
Executive as were required immediately prior to the Event of Termination until
the earlier of (i) his death (ii) his employment by another employer other than
one of which he is the majority owner or (iii) the end of the remaining term of
this Agreement. If the Holding Company or its Subsidiaries does not offer the
Welfare Plans after the Event of Termination, then the Holding Company shall
provide Executive with a payment equal to the actuarial value of the provision
of such benefit for the period which runs until the earlier of (i) his death;
(ii) his employment by another employer other than one of which he is the
majority owner; or (iii) the end of the remaining term of this Agreement.
(e) In the event that Executive is receiving monthly payments pursuant to
Section 4(b) hereof, on an annual basis, thereafter, between the dates of
January 1st and January 31st of each year, Executive shall elect whether, the
balance of the amount payable under the Agreement at that time shall be paid in
a lump sum or on a pro rata basis. Such election shall be irrevocable for the
year for which such election is made.
(f) Termination of Executive based on "Retirement" shall mean termination
in accordance with the Holding Company's or the Institution's retirement policy
or in accordance with any retirement arrangement established with Executive's
consent with respect to him. Upon termination of Executive upon Retirement,
Executive shall be entitled to all benefits under any retirement plan of the
Holding Company or its Subsidiaries and other plans to which Executive is a
party or a participant in accordance with the terms of the plan or arrangement.
5. CHANGE IN CONTROL.
(a) For purposes of this Agreement, a "Change in Control" of the Holding
Company or the Institution shall mean an event of a nature that: (i) would be
required to be reported in response to Item 1(a) of the current report on Form
8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"); or (ii) results in a
Change in Control of the Bank or the Holding Company within the meaning of the
Change in Bank Control Act and the Rules and Regulations promulgated by the
Federal Deposit Insurance Corporation ("FDIC") at 12 C.F.R. Section 303.4(a),
with respect to the Institution, and the Rules and Regulations promulgated by
the Office of Thrift Supervision ("OTS") (or its predecessor agency), with
respect to the Holding Company, as in effect on the date of this Agreement; or
(iii) without limitation such a Change in Control shall be deemed to have
occurred at such time as (A) any "person" (as the term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of voting
securities of the Institution or the Holding Company representing
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20% or more of the Institution's or the Holding Company's outstanding voting
securities or right to acquire such securities except for any voting securities
of the Institution purchased by the Holding Company and any voting securities
purchased by any employee benefit plan of the Holding Company or its
Subsidiaries, or (B) individuals who constitute the Board on the date hereof
(the "Incumbent Board") cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent to the date
hereof whose election was approved by a vote of at least three-quarters of the
directors comprising the Incumbent Board, or whose nomination for election by
the Company's stockholders was approved by a Nominating Committee solely
composed of members which are Incumbent Board members, shall be, for purposes of
this clause (B), considered as though he were a member of the Incumbent Board,
or (C) a plan of reorganization, merger, consolidation, sale of all or
substantially all the assets of the Institution or the Holding Company or
similar transaction occurs or is effectuated in which the Institution or Holding
Company is not the resulting entity, or (D) a proxy statement has been
distributed soliciting proxies from stockholders of the Holding Company, by
someone other than the current management of the Holding Company, seeking
stockholder approval of a plan of reorganization, merger or consolidation of the
Holding Company or Institution with one or more corporations as a result of
which the outstanding shares of the class of securities then subject to such
plan or transaction are exchanged for or converted into cash or property or
securities not issued by the Institution or the Holding Company shall be
distributed, or (E) a tender offer is made for 20% or more of the voting
securities of the Institution or Holding Company then outstanding.
(b) If any of the events described in Section 5(a) of this Agreement
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, Executive shall be entitled to the benefits
provided in paragraphs (c), (d), (e), (f), and (g) of this Section 5 upon his
termination of employment on or after the date the Change in Control occurs at
any time during the term of this Agreement due to (i) Executive's dismissal,
(ii) Executive's voluntary resignation for any reason on or within the sixty
(60) day period immediately following the date a Change in Control has occurred,
or (iii) Executive's resignation following any demotion, loss of title, office
or significant authority or responsibility, reduction in the annual compensation
or benefits or relocation of his principal place of employment by more than
twenty-five (25) miles from its location immediately prior to the Change in
Control, unless such termination is because of his death or Termination for
Cause (as defined in Section 7 of this Agreement).
(c) Upon Executive's entitlement to benefits pursuant to Section 5(b), the
Holding Company shall pay Executive, or in the event of his subsequent death,
his beneficiary or beneficiaries, or his estate, as the case may be, as
severance pay or liquidated damages, or both, a sum equal to the greater of:
(i) the payments due for the remaining term of the Agreement; or (ii) five (5)
times Executive's annual compensation for the most recently completed year. In
determining Executive's annual compensation, annual compensation shall include
Base Salary and any other taxable income, including but not limited to amounts
related to the granting, vesting or exercise of restricted stock or stock option
awards, commissions, bonuses, severance payments, retirement benefits, director
or committee fees and fringe benefits paid or to be paid to Executive or paid
for Executive's benefit during any such year, as well as pension, profit sharing
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plan, employee stock ownership and other retirement contributions or benefits
(whether or not taxable) made or accrued on behalf of Executive for such year.
At the election of Executive, which election is to be made prior to or within
thirty (30) days of the Date of Termination on or following a Change in Control,
such payment may be made in a lump sum (without discount for early payment) on
or immediately following the Date of Termination (which may be the date a change
in Control occurs) or paid in equal monthly installments during the sixty (60)
months following Executive's termination. In the event that no election is
made, payment to Executive will be made on a monthly basis during the remaining
sixty (60) month term of the Agreement. Such payments shall not be reduced in
the event Executive obtains other employment following termination of
employment.
(d) Upon the occurrence of a Change in Control followed by Executive's
termination of employment, Executive will be entitled to receive benefits due
him under or contributed by the Holding Company or its Subsidiaries on his
behalf pursuant to any retirement, incentive, profit sharing, employee stock
ownership, bonus, performance, disability or other employee benefit plan
maintained by the Institution or the Holding Company on Executive's behalf to
the extent such benefits are not otherwise paid to Executive under a separate
provision of this Agreement.
(e) Upon the occurrence of a Change in Control and Executive's termination
of employment in connection therewith, the Holding Company will cause to be
continued life, medical and disability coverage substantially identical to the
coverage maintained by the Holding Company or its Subsidiaries for Executive and
any of his dependents covered under such plans prior to the Change in Control.
Such coverage and payments shall cease upon the expiration of sixty (60) full
calendar months following the Date of Termination. In the event Executive's
participation in any such plan or program is barred, the Holding Company shall
arrange to provide Executive and his dependents with benefits substantially
similar as those of which Executive and his dependents would otherwise have been
entitled to receive under such plans and programs from which their continued
participation is barred or provide their economic equivalent.
(f) The use or provision of any membership, license, automobile use, or
other perquisites shall be continued during the remaining term of the Agreement
on the same financial terms and obligations as were in place immediately prior
to the Change in Control. To the extent that any item referred to in this
paragraph will at the end of the term of this Agreement, no longer be available
to Executive, Executive will have the option to purchase all rights then held by
the Holding Company or its Subsidiaries to such item for a price equal to the
then fair market value of the item.
(g) In the event that Executive is receiving monthly payments pursuant to
Section 5(c) hereof, on an annual basis, thereafter, between the dates of
January 1 and January 31 of each year, Executive shall elect whether the balance
of the amount payable under the Agreement at that time shall be paid in a lump
sum or on a pro rata basis pursuant to such section. Such election shall be
irrevocable for the year for which such election is made.
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l6. CHANGE OF CONTROL RELATED PROVISIONS.
(a) Notwithstanding the preceding provisions of Section 5 of this
Agreement, for any taxable year in which Executive shall be liable, as
determined for the payment of an excise tax under Section 4999 of the Code (or
any successor provision thereto), with respect to any payment in the nature of
the compensation made by the Holding Company or its Subsidiaries to (or for the
benefit of) Executive pursuant to this Agreement or otherwise, the Holding
Company shall pay to Executive an amount determined under the following formula:
An amount equal to: (E x P) + X
WHERE:
X = E x P
1 - [(FI x (1 - SLI)) + SLI + E]
E = the rate at which the excise tax is assessed under Section 4999
of the Code;
P = the amount with respect to which such excise tax is assessed,
determined without regard to this Section 6;
FI = the highest marginal rate of federal income, employment, and
other taxes (other than taxes imposed under Section 4999 of the
Code) applicable to Executive for the taxable year in question
(including any effective increase in Executive's tax rate
attributable to the disallowance of any deduction); and
SLI = the sum of the highest marginal rates of income and payroll tax
applicable to Executive under applicable state and local laws for
the taxable year in question (including any effective increase in
Executive's tax rate attributable to the disallowance of any
deduction).
With respect to any payment in the nature of compensation that is made to (or
for the benefit of) Executive under the terms of this Section or otherwise and
on which an excise tax under Section 4999 of the Code will be assessed, the
payment determined under this Section 6 shall be made to Executive on the
earliest of (i) the date the Holding Company is required to withhold such tax,
(ii) the date the tax is required to be paid by Executive, or (iii) at the time
of the Change in Control. It is the intention of the parties that the Holding
Company provide Executive with a full tax gross-up under the provisions of this
Section 6, so that on a net after-tax basis, the result to Executive shall be
the same as if the excise tax under Section 4999 (or any successor provisions)
of the Code had not been imposed. The tax gross-up may be adjusted if
alternative minimum tax rules are applicable to Executive.
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(b) Notwithstanding the foregoing, if it shall subsequently be determined
in a final judicial determination or a final administrative settlement to which
Executive is a party that the excess parachute payment as defined in Section
4999 of the Code, reduced as described above, is more than the amount determined
as "P", above (such greater amount being hereafter referred to as the
"Determinative Excess Parachute Payment"), then the Holding Company's
independent accountants shall determine the amount (the "Adjustment Amount"),
the Holding Company must pay to Executive, in order to put Executive (or the
Holding Company, as the case may be) in the same position as Executive (or the
Holding Company, as the case may be) would have been if the amount determined as
"P" above had been equal to the Determinative Excess Parachute Payment. In
determining the Adjustment Amount, the independent accountants shall take into
account any and all taxes (including any penalties and interest) paid by or for
Executive or refunded to Executive or for Executive's benefit. As soon as
practicable after the Adjustment Amount has been so determined, the Holding
Company shall pay the Adjustment Amount to Executive.
(c) In each calendar year that Executive receives payments or benefits
under this Agreement, Executive shall report on his state and federal income tax
returns such information as is consistent with the determination made by the
independent accountants of the Holding Company as described above. The Holding
Company shall indemnify and hold Executive harmless from any and all losses,
costs and expenses (including without limitation, reasonable attorney's fees,
interest, fines and penalties) which Executive incurs as a result of reporting
such information. Executive shall promptly notify the Holding Company in
writing whenever Executive receives notice of a judicial or administrative
proceeding, formal or informal, in which the federal tax treatment under Section
4999 of the Code of any amount paid or payable under this Agreement is being
reviewed or is in dispute. The Holding Company shall assume control at its
expense over all legal and accounting matters pertaining to such federal tax
treatment (except to the extent necessary or appropriate for Executive to
resolve any such proceeding with respect to any matter unrelated to amounts paid
or payable pursuant to this contract) and Executive shall cooperate fully with
the Holding Company in any such proceeding. Executive shall not enter into any
compromise or settlement or otherwise prejudice any rights the Holding Company
may have in connection therewith without prior consent to the Holding Company.
7. TERMINATION FOR CAUSE.
The term "Termination for Cause" shall mean termination because of: 1)
Executive's personal dishonesty, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties, willful
violation of any law, rule, regulation (other than traffic violations or similar
offenses), final cease and desist order or material breach of any provision of
this Agreement which results in a material loss to the Institution or the
Holding Company, or 2) Executive's conviction of a crime or act involving moral
turpitude or a final judgement rendered against Executive based upon actions of
Executive which involve moral turpitude. For the purposes of this Section, no
act, or the failure to act, on Executive's part shall be "willful" unless done,
or omitted to be done, not in good faith and without reasonable belief that the
action or omission was in the best interests of the Institution or its
affiliates. Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered to
him a Notice of Termination which shall
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include a copy of a resolution duly adopted by the affirmative vote of not less
than three-fourths of the members of the Board at a meeting of the Board called
and held for that purpose (after reasonable notice to Executive and an
opportunity for him, together with counsel, to be heard before the Board),
finding that in the good faith opinion of the Board, Executive was guilty of
conduct justifying Termination for Cause and specifying the particulars thereof
in detail. Executive shall not have the right to receive compensation or other
benefits for any period after Termination for Cause. During the period beginning
on the date of the Notice of Termination for Cause pursuant to Section 8 hereof
through the Date of Termination, stock options and related limited rights (if
any) granted to Executive under any stock option plan shall not be exercisable
nor shall any unvested awards granted to Executive under any stock benefit plan
of the Institution, the Holding Company or any Subsidiary or affiliate thereof,
vest. At the Date of Termination, such stock options and related limited rights
(if any) and any such unvested awards shall become null and void and shall not
be exercisable by or delivered to Executive at any time subsequent to such
Termination for Cause.
8. NOTICE.
(a) Any purported termination by the Holding Company or by Executive shall
be communicated by Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment under the
provision so indicated.
(b) "Date of Termination" shall mean the date specified in the Notice of
Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given);
provided, however, that if a dispute regarding
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Executive's termination exists, the "Date of Termination" shall be determined in
accordance with Section 8(c) of this Agreement.
(c) If, within thirty (30) days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, except upon the occurrence of a
Change in Control and voluntary termination by Executive in which case the Date
of Termination shall be the date specified in the Notice, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding arbitration award, or
by a final judgment, order or decree of a court of competent jurisdiction (the
time for appeal therefrom having expired and no appeal having been perfected)
and; provided, further, that the Date of Termination shall be extended by a
notice of dispute only if such notice is given in good faith and the party
giving such notice pursues the resolution of such dispute with reasonable
diligence. Notwithstanding the pendency of any such dispute, the Holding
Company will continue to pay Executive his full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to, Base
Salary) and continue him as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
9. POST-TERMINATION OBLIGATIONS.
All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with this Section 9 for one (1) full year
after the earlier of the expiration of this Agreement or termination of
Executive's employment with the Holding Company. Executive shall, upon
reasonable notice, furnish such information and assistance to the Holding
Company as may reasonably be required by the Holding Company in connection with
any litigation in which it or any of its subsidiaries or affiliates is, or may
become, a party.
10. NON-COMPETITION AND NON-DISCLOSURE.
(a) Upon any termination of Executive's employment hereunder pursuant to
Section 4 hereof, Executive agrees not to compete with the Holding Company or
its Subsidiaries for a period of one (1) year following such termination in any
city, town or county in which Executive's normal business office is located and
the Holding Company or any of its Subsidiaries has an office or has filed an
application for regulatory approval to establish an office, determined as of the
effective date of such termination, except as agreed to pursuant to a resolution
duly adopted by the Board. Executive agrees that during such period and within
said cities, towns and counties, Executive shall not work for or advise, consult
or otherwise serve with, directly or indirectly, any entity whose business
materially competes with the depository, lending or other business activities of
the Holding Company or its Subsidiaries. The parties hereto, recognizing that
irreparable injury will result to the Holding Company or its Subsidiaries, its
business and property in the event of Executive's breach of this Subsection
10(a) agree that in the event of any such breach by Executive, the Holding
Company or its Subsidiaries, will be entitled, in addition
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to any other remedies and damages available, to an injunction to restrain the
violation hereof by Executive, Executive's partners, agents, servants, employees
and all persons acting for or under the direction of Executive. Executive
represents and admits that in the event of the termination of his employment
pursuant to Section 7 hereof, Executive's experience and capabilities are such
that Executive can obtain employment in a business engaged in other lines and/or
of a different nature than the Holding Company or its Subsidiaries, and that the
enforcement of a remedy by way of injunction will not prevent Executive from
earning a livelihood. Nothing herein will be construed as prohibiting the
Holding Company or its Subsidiaries from pursuing any other remedies available
to the Holding Company or its Subsidiaries for such breach or threatened breach,
including the recovery of damages from Executive.
(b) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Holding Company and
its Subsidiaries as it may exist from time to time, is a valuable, special and
unique asset of the business of the Holding Company and its Subsidiaries.
Executive will not, during or after the term of his employment, disclose any
knowledge of the past, present, planned or considered business activities of the
Holding Company and its Subsidiaries thereof to any person, firm, corporation,
or other entity for any reason or purpose whatsoever unless expressly authorized
by the Board of Directors or required by law. Notwithstanding the foregoing,
Executive may disclose any knowledge of banking, financial and/or economic
principles, concepts or ideas which are not solely and exclusively derived from
the business plans and activities of the Holding Company. Further, Executive
may disclose information regarding the business activities of the Bank or
Holding Company to the Superintendent of Banks of the State of New York, the New
York Banking Department, OTS and the FDIC pursuant to a formal regulatory
request. In the event of a breach or threatened breach by Executive of the
provisions of this Section, the Holding Company will be entitled to an
injunction restraining Executive from disclosing,in whole or in part, the
knowledge of the past, present, planned or considered business activities of the
Holding Company or its Subsidiaries or from rendering any services to any
person, firm, corporation, or other entity to whom such knowledge, in whole or
in part, has been disclosed or is threatened to be disclosed. Nothing herein
will be construed as prohibiting the Holding Company from pursuing any other
remedies available to the Holding Company for such breach or threatened breach,
including the recovery of damages from Executive.
11. SOURCE OF PAYMENTS.
(a) All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Holding Company subject to Section 11(b).
(b) Notwithstanding any provision herein to the contrary, to the extent
that payments and benefits, as provided by this Agreement, are paid to or
received by Executive under an employment agreement in effect between
Executive and the Institution, such compensation payments and benefits paid by
the Institution will be subtracted from any amount due simultaneously to
Executive under similar provisions of this Agreement. Payments pursuant to this
Agreement and the Institution Agreement shall be allocated in proportion to the
level of
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activity and the time expended on such activities by Executive as determined by
the Holding Company and the Institution on a quarterly basis.
12. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior employment agreement between the Holding Company or any
predecessor of the Holding Company and Executive, except that this Agreement
shall not affect or operate to reduce any benefit or compensation inuring to
Executive of a kind elsewhere provided. No provision of this Agreement shall be
interpreted to mean that Executive is subject to receiving fewer benefits than
those available to him without reference to this Agreement.
13. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive and the Holding Company and their respective successors and assigns.
14. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.
15. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
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16. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
17. GOVERNING LAW.
The validity, interpretation, performance and enforcement of this Agreement
shall be governed by the laws of the State of Delaware without regard to
principles of conflict of laws of this state.
18. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by Executive within fifty
(50) miles from the location of the Institution, in accordance with the rules of
the American Arbitration Association then in effect. Judgment may be entered on
the arbitrator's award in any court having jurisdiction; provided, however, that
Executive shall be entitled to seek specific performance of his right to be paid
until the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.
19. PAYMENT OF COSTS AND LEGAL FEES AND REINSTATEMENT OF BENEFITS.
In the event any dispute or controversy arising under or in connection with
Executive's termination is resolved in favor of Executive, whether by judgment,
arbitration or settlement, Executive shall be entitled to the payment of: (1)
all legal fees incurred by Executive in resolving such dispute or controversy,
and (2) any back-pay, including salary, bonuses and any other cash compensation,
fringe benefits and any compensation and benefits due Executive under this
Agreement.
20. INDEMNIFICATION.
The Holding Company shall provide Executive (including his heirs, executors
and administrators) with coverage under a standard directors' and officers'
liability insurance policy at its expense and shall indemnify Executive (and his
heirs, executors and administrators) to the fullest extent permitted under
Delaware law against all expenses and liabilities reasonably incurred by him in
connection with or arising out of any action, suit or proceeding in which he may
be involved by reason of his having been a director or officer of the Holding
Company (whether or not he continues to be a director or officer at the time of
incurring such expenses or liabilities), such expenses and liabilities to
include, but not be limited to, judgments, court costs and attorneys' fees and
the cost of reasonable settlements.
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21. SUCCESSOR TO THE HOLDING COMPANY.
The Holding Company shall require any successor or assignee, whether direct
or indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Institution or the Holding
Company, expressly and unconditionally to assume and agree to perform the
Holding Company's obligations under this Agreement, in the same manner and to
the same extent that the Holding Company would be required to perform if no such
succession or assignment had taken place.
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SIGNATURES
IN WITNESS WHEREOF, Richmond County Financial Corp. has caused this
Agreement, as amended and restated, to be executed and its seal to be affixed
hereunto by its duly authorized officer and its directors, and Executive has
signed this Agreement, on the 21st day of September 1999.
ATTEST: RICHMOND COUNTY FINANCIAL CORP.
/s/ Diane L. DeLillo By: /s/ Anthony E. Burke
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Anthony E. Burke
For the Entire Board of Directors
[SEAL]
WITNESS: EXECUTIVE
/s/ Diane L. DeLillo By: /s/ Michael F. Manzulli
- ----------------------------------- -----------------------------------
Michael F. Manzulli
<PAGE>
EXHIBIT 10.4
RICHMOND COUNTY SAVINGS BANK
EMPLOYMENT AGREEMENT
(as Amended and Restated)
This AGREEMENT ("Agreement"), originally entered into on February 17, 1998,
is amended and restated in its entirety effective as of October 1, 1999, by and
among Richmond County Savings Bank (the "Institution"), a state chartered
savings institution, with its principal administrative office at 1214 Castleton
Avenue, Staten Island, New York, 10310, Richmond County Financial Corp., a
corporation organized under the laws of the State of Delaware, the holding
company for the Institution (the "Holding Company"), and Michael F. Manzulli
("Executive").
WHEREAS, the Institution wishes to continue to assure itself of the
services of Executive for the period provided in this Agreement; and
WHEREAS, Executive is willing to continue to serve in the employ of the
Institution on a full-time basis for said period.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, Executive agrees to serve as
Chairman of the Board and Chief Executive Officer of the Institution. Executive
shall render administrative and management services to the Institution such as
are customarily performed by persons situated in a similar executive capacity.
During said period, Executive also agrees to serve, if appointed or elected, as
the case may be, as an officer and director of the Holding Company or any
subsidiary of the Institution.
2. TERMS AND DUTIES.
(a) The period of Executive's employment under this Agreement shall be
deemed to have commenced as of the date first above written and shall continue
for a period of sixty (60) full calendar months from the effective date of this
Agreement, as amended and restated. Commencing on the date of the execution of
this Agreement, the term of this Agreement shall be extended for one day each
day, so that a constant sixty (60) calendar month term shall remain in effect,
until such time as the disinterested members of the board of directors of the
Institution ("Board") or Executive elects not to extend the term of this
Agreement by giving written notice in accordance with Section 8 of this
Agreement, in which case the term of this Agreement shall be fixed and shall end
on the fifth anniversary of the date of such written notice.
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(b) During the period of Executive's employment hereunder, except for
periods of absence occasioned by illness, reasonable vacation periods, and other
reasonable leaves of absence, Executive shall devote substantially all his
business time, attention, skill, and efforts to the faithful performance of his
duties hereunder including activities and services related to the organization,
operation and management of the Institution and participation in community and
civic organizations; provided, however, that, with the approval of the Board, as
evidenced by a resolution of the Board, from time to time, Executive may serve,
or continue to serve, on the boards of directors of, and hold any other offices
or positions in, companies or organizations, which, in the Board's judgment,
will not present any conflict of interest with the Institution, or materially
affect the performance of Executive's duties pursuant to this Agreement.
(c) Notwithstanding anything in this Agreement to the contrary,
Executive's employment with the Institution may be terminated by the Institution
or the Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall constitute
consideration paid by the Institution in exchange for duties described in
Section 1 of this Agreement. The Institution shall pay Executive, as
compensation, a salary of not less than $525,000 ("Base Salary"). Base Salary
shall include any amounts of compensation deferred by Executive under any
employee benefit plan or deferred compensation arrangement maintained by the
Institution. Base Salary shall be payable bi-weekly. During the period of this
Agreement, Executive's Base Salary shall be reviewed at least annually; on or
about the 30th day of each June. Such review shall be conducted by the Board or
by a committee designated by the Board. The committee or the Board may increase
Executive's Base Salary at any time. Any increase in Base Salary shall become
the "Base Salary" for purposes of this Agreement. In addition to the Base
Salary provided for in this Section 3(a), the Institution shall also provide
Executive, at no premium cost to Executive, with all such other benefits as are
provided uniformly to full-time employees of the Institution.
(b) In addition to the Base Salary provided for in paragraph (a) of this
Section 3, the Institution will provide Executive with the opportunity to
participate in employee benefit plans, arrangements and perquisites
substantially equivalent to those in which Executive was participating or
otherwise deriving a benefit from immediately prior to the beginning of the term
of this Agreement, as amended and restated, and the Institution will not,
without Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect Executive's rights or
benefits thereunder, without separately providing for an arrangement that
ensures Executive receives or will receive the economic value that Executive
would otherwise lose as a result of such adverse effect. Without limiting the
generality of the foregoing provisions of this Subsection (b), Executive shall
be entitled to participate in or receive benefits under any employee benefit
plans, whether tax-qualified or otherwise, including, but not limited to,
retirement plans, supplemental retirement plans, pension plans, profit-sharing
plans, employee stock ownership plans, stock or option plans, health-and-
accident plans, medical coverage or any other employee benefit plan or
arrangement made available by the Institution in
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the future to its senior executives and key management employees, subject to and
on a basis consistent with the terms, conditions and overall administration of
such plans and arrangements (including designation by the Board of eligibility
to participate, if applicable). Executive shall also be entitled to incentive
compensation and bonuses as provided in any plan or arrangement of the
Institution in which Executive is eligible to participate. Nothing paid to the
Executive under any such plans or arrangements will be deemed to be in lieu of
other compensation to which the Executive is entitled under this Agreement.
(c) In addition to the Base Salary provided for by paragraph (a) of this
Section 3 and other compensation and benefits provided for by paragraph (b) of
this Section 3, the Institution shall pay or reimburse Executive for all
reasonable expenses incurred by Executive performing his obligations under this
Agreement, as mutually agreed to by the Board and Executive.
(d) Except as otherwise provided in this Section 3(d), the Institution
will provide to Executive for each calendar year during the term of this
Agreement and for the remaining term of this Agreement after a termination of
employment following an Event of Termination, as defined in Section 4 of this
Agreement, a "Benefit Equity Payment." The Benefit Equity Payment shall be paid
no later than 90 days after the close of the calendar year to which such payment
pertains ("Benefit Year"), and shall be in addition to any contributions
actually made (or benefits actually accrued) with respect to such Benefit Year
to any tax-qualified or non-tax-qualified compensation or benefit plan,
arrangement, policy or program funded or sponsored by the Institution, including
but not limited to those of the following types: deferred compensation,
retirement, defined benefit pension, defined contribution retirement,
supplemental executive retirement, stock option or stock bonus award, life
insurance, health, medical, dental, disability, incentive compensation or bonus
plan, perquisites, or other fringe benefits ("Benefit Plans"). The Benefit
Equity Payment, which shall be calculated by an actuary, accountant or other
licensed professional, shall equal the amount of the contributions (or other
benefits) which would have been made or accrued for Executive for the Benefit
Year pursuant to all Benefit Plans as consideration for his services described
in Section 1 of this Agreement, but which were not made or accrued because (i)
the Benefit Plan(s) were terminated or not funded, or (ii) Executive was no
longer employed or will not be employed by the Institution.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during the Executive's term of employment under this Agreement, the provisions
of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Institution or the Holding Company of Executive's full-time
employment hereunder for any reason other than Retirement (as defined in
paragraph (f) of this Section 4), termination governed by Section 5(a) of this
Agreement, or Termination for Cause, as defined in Section 7 of this Agreement;
or (ii) Executive's resignation from the Institution's employ upon any: (A)
notice to Executive by the Institution of non-renewal of the term of this
Agreement, (B) failure to elect or re-elect or to appoint or re-appoint
Executive as Chairman of the Board and Chief Executive Officer or failure to re-
nominate Executive as a director of the Institution or Holding Company to the
extent Executive was
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serving as a director as of the effective date of this Agreement (unless
Executive so consents), (C) material change in Executive's function, duties, or
responsibilities, which change would cause Executive's position to become one of
lesser responsibility, importance, or scope from the position and attributes
thereof described in Section 1 of this Agreement (unless Executive so consents),
(D) relocation of Executive's principal place of employment by more than 25
miles from its location at the effective date of the Agreement (unless Executive
so consents), (E) reduction in the benefits, arrangements and perquisites
provided to Executive pursuant to Section 3 of this Agreement, to which
Executive does not consent or for which Executive is not or will not be provided
the economic benefit pursuant to Section 3(b) of this Agreement, (F) liquidation
or dissolution of the Institution or Holding Company, or (G) breach of this
Agreement by the Institution. Upon the occurrence of any event described in
clauses (A), (B), (C), (D), (E), (F) or (G), above, Executive shall have the
right to elect to terminate his employment under this Agreement by resignation
upon not less than sixty (60) days prior written notice given within six full
months after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination, on the Date of
Termination, as defined in Section 8 of this Agreement, the Institution shall be
obligated to pay Executive, or, in the event of Executive's subsequent death,
his beneficiary or beneficiaries, or his estate, as the case may be: (i) the
amount of the remaining payments and benefits that Executive would have earned
if he had continued his employment with the Institution during the remaining
unexpired term of this Agreement, based on Executive's Base Salary and benefits
provided at the Date of Termination, as set forth in Sections 3(a), (b) and (d)
of this Agreement, as the case may be, and (ii) the amount still due Executive
under any paragraph of Section 3 for service rendered through the Date of
Termination. At the election of Executive, which election is to be made within
thirty (30) days of the Date of Termination, such payments shall be made in a
lump sum (without discount for early payment) or paid monthly during the
remaining term of the Agreement following Executive's termination. In the event
that no election is made, payment to Executive will be made in a lump sum. Such
payments shall not be reduced in the event Executive obtains other employment
following termination of employment.
(c) Upon the occurrence of an Event of Termination, Executive will be
entitled to receive benefits due him under or contributed by the Institution on
his behalf pursuant to any retirement, incentive, profit sharing, employee stock
ownership, bonus, performance, disability or other employee benefit plan
maintained by the Institution to the extent such benefits are not otherwise paid
to Executive under a separate provision of this Agreement.
(d) To the extent that the Institution continues to offer any life,
medical, health, disability or dental insurance plan or arrangement in which
Executive participates in on the last day of his employment (each being a
"Welfare Plan"), after an Event of Termination (as herein defined), Executive
and his dependents shall continue participating in such Welfare Plans, subject
to the same premium contributions on the part of Executive as were required
immediately prior to the Event of Termination until the earlier of (i) his death
(ii) his employment by another employer other than one of which he is the
majority owner or (iii) the end of the remaining term of this Agreement. If the
Institution does not offer the Welfare Plans after the Event of Termination,
then the Institution shall provide Executive with a payment equal to the
actuarial
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value of the provision of such benefit for the period which runs until the
earlier of (i) his death; (ii) his employment by another employer other than one
of which he is the majority owner; or (iii) the end of the remaining term of
this Agreement.
(e) In the event that Executive is receiving monthly payments pursuant to
Section 4(b) hereof, on an annual basis, thereafter, between the dates of
January 1st and January 31st of each year, Executive shall elect whether, the
balance of the amount payable under the Agreement at that time shall be paid in
a lump sum or on a pro rata basis. Such election shall be irrevocable for the
year for which such election is made.
(f) Termination of Executive based on "Retirement" shall mean termination
in accordance with the Institution's retirement policy or in accordance with any
retirement arrangement established with Executive's consent with respect to him.
Upon termination of Executive upon Retirement, Executive shall be entitled to
all benefits under any retirement plan of the Institution and other plans to
which Executive is a party or a participant in accordance with the terms of the
plan or arrangement.
5. CHANGE IN CONTROL.
(a) For purposes of this Agreement, a "Change in Control" of the
Institution or Holding Company shall mean an event of a nature that: (i) would
be required to be reported in response to Item 1 of the current report on Form
8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"); or (ii)
results in a Change in Control of the Institution or the Holding Company within
the meaning of the Change in Bank Control Act and the Rules and Regulations
promulgated by the Federal Deposit Insurance Corporation ("FDIC") at 12 C.F.R.
Section 303.4(a), with respect to the Institution, and the Rules and Regulations
promulgated by the Office of Thrift Supervision ("OTS") (or its predecessor
agency), with respect to the Holding Company, as in effect on the date of this
Agreement; or (iii) without limitation such a Change in Control shall be deemed
to have occurred at such time as (A) any "person" (as the term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of voting securities of the Institution or the Holding Company
representing 20% or more of the Institution's or the Holding Company's
outstanding voting securities or right to acquire such securities except for any
voting securities of the Institution purchased by the Holding Company and any
voting securities purchased by any employee benefit plan of the Institution or
the Holding Company, or (B) individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director subsequent to the
date hereof whose election was approved by a vote of at least three-quarters of
the directors comprising the Incumbent Board, or whose nomination for election
by the Holding Company's stockholders was approved by the same Nominating
Committee serving under an Incumbent Board, shall be, for purposes of this
clause (B), considered as though he were a member of the Incumbent Board, or (C)
a plan of reorganization, merger, consolidation, sale of all or substantially
all the assets of the Institution or the Holding Company or similar transaction
occurs in which the Institution or Holding Company is not the resulting entity,
or (D) a proxy
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statement has been distributed soliciting proxies from stockholders of the
Holding Company, by someone other than the current management of the Holding
Company, seeking stockholder approval of a plan of reorganization, merger or
consolidation of the Holding Company or Institution or similar transaction with
one or more corporations as a result of which the outstanding shares of the
class of securities then subject to such plan or transaction are exchanged for
or converted into cash or property or securities not issued by the Institution
or the Holding Company, or (E) a tender offer is made for 20% or more of the
voting securities of the Stock Institution or Holding Company then outstanding.
(b) If any of the events described in Section 5(a) of this Agreement
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, Executive shall be entitled to the benefits
provided in paragraphs (c), (d), (e), (f) and (g) of this Section 5 upon his
termination of employment on or after the date the Change in Control occurs at
any time during the term of this Agreement due to: (i) Executive's dismissal,
(ii) Executive's voluntary resignation for any reason on or within the sixty
(60) day period immediately following the date a Change in Control has occurred,
or (iii) Executive's resignation following any demotion, loss of title, office
or significant authority or responsibility, reduction in annual compensation or
benefits or relocation of his principal place of employment by more than 25
miles from its location immediately prior to the Change in Control, unless such
termination is because of his death, disability, retirement or Termination for
Cause (as defined in Section 7 of this Agreement).
(c) Upon Executive's entitlement to benefits pursuant to Section 5(b),
the Institution shall pay Executive, or in the event of his subsequent death,
his beneficiary or beneficiaries, or his estate, as the case may be, a sum equal
to the greater of: (i) the payments due for the remaining term of the Agreement;
or (ii) five (5) times Executive's annual compensation for the most recently
completed year. In determining Executive's annual compensation, annual
compensation shall include Base Salary and any other taxable income, including
but not limited to amounts related to the granting, vesting or exercise of
restricted stock or stock option awards, commissions, bonuses, severance
payments, retirement benefits, director or committee fees and fringe benefits
paid or to be paid to Executive or paid for Executive's benefit during any such
year, as well as pension, profit sharing plan, employee stock ownership and
other retirement contributions or benefits (whether or not taxable) made or
accrued on behalf of Executive for such year. At the election of Executive,
which election is to be made prior to or within thirty (30) days of the Date of
Termination on or following a Change in Control, such payment may be made in a
lump sum (without discount for early payment) on or immediately following the
Date of Termination (which may be the date a change in Control occurs) or paid
in equal monthly installments during the sixty (60) months following Executive's
termination. In the event that no election is made, payment to Executive will be
made on a monthly basis during the remaining sixty (60) month term of the
Agreement. Such payments shall not be reduced in the event Executive obtains
other employment following termination of employment.
(d) Upon the occurrence of a Change in Control followed by Executive's
termination of employment, Executive will be entitled to receive benefits due
him under or contributed by the Institution on his behalf pursuant to any
retirement, incentive, profit sharing, employee stock
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ownership, bonus, performance, disability or other employee benefit plan
maintained by the Institution on Executive's behalf to the extent such benefits
are not otherwise paid to Executive under a separate provision of this
Agreement.
(e) Upon the occurrence of a Change in Control and Executive's
termination of employment in connection therewith, the Institution will cause to
be continued life, medical and disability coverage substantially identical to
the coverage maintained by the Institution for Executive and any of his
dependents covered under such plans prior to the Change in Control. Such
coverage and payments shall cease upon the expiration of sixty (60) full
calendar months following the Date of Termination. In the event Executive's
participation in any such plan or program is barred, the Institution shall
arrange to provide Executive and his dependents with benefits substantially
similar as those of which Executive and his dependents would otherwise have been
entitled to receive under such plans and programs from which their continued
participation is barred or provide their economic equivalent.
(f) The use or provision of any membership, license, automobile use, or
other perquisites shall be continued during the remaining term of the Agreement
on the same financial terms and obligations as were in place immediately prior
to the Change in Control. To the extent that any item referred to in this
paragraph will at the end of the term of this Agreement, no longer be available
to Executive, Executive will have the option to purchase all rights then held by
the Institution to such item for a price equal to the then fair market value of
the item.
(g) In the event that Executive is receiving monthly payments pursuant to
Section 5(c) hereof, on an annual basis, thereafter, between the dates of
January 1st and January 31st of each year, Executive shall elect whether the
balance of the amount payable under the Agreement at that time shall be paid in
a lump sum or on a pro rata basis pursuant to such section. Such election shall
be irrevocable for the year for which such election is made.
6. CHANGE OF CONTROL RELATED PROVISIONS
(a) Notwithstanding the preceding provisions of Section 5 of this
Agreement, for any taxable year in which Executive shall be liable, as
determined for the payment of an excise tax under Section 4999 of the Code (or
any successor provision thereto), with respect to any payment in the nature of
the compensation made by the Institution to (or for the benefit of) Executive
pursuant to this Agreement or otherwise, the Institution shall pay to Executive
an amount determined under the following formula:
An amount equal to: (E x P) + X
WHERE:
X = E x P
1 - [(FI x (1 - SLI)) + SLI + E]
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E = the rate at which the excise tax is assessed under Section 4999
of the Code;
P = the amount with respect to which such excise tax is assessed,
determined without regard to this Section 6;
FI = the highest marginal rate of federal income, employment, and
other taxes (other than taxes imposed under Section 4999 of the
Code) applicable to Executive for the taxable year in question
(including any effective increase in Executive's tax rate
attributable to the disallowance of any deduction); and
SLI = the sum of the highest marginal rates of income and payroll tax
applicable to Executive under applicable state and local laws for
the taxable year in question (including any effective increase in
Executive's tax rate attributable to the disallowance of any
deduction).
With respect to any payment in the nature of compensation that is made to (or
for the benefit of) Executive under the terms of this Section or otherwise and
on which an excise tax under Section 4999 of the Code will be assessed, the
payment determined under this Section 6 shall be made to Executive on the
earliest of (i) the date the Institution is required to withhold such tax, (ii)
the date the tax is required to be paid by Executive, or (iii) at the time of
the Change in Control. It is the intention of the parties that the Institution
provide Executive with a full tax gross-up under the provisions of this Section
6, so that on a net after-tax basis, the result to Executive shall be the same
as if the excise tax under Section 4999 (or any successor provisions) of the
Code had not been imposed. The tax gross-up may be adjusted if alternative
minimum tax rules are applicable to Executive.
(b) Notwithstanding the foregoing, if it shall subsequently be determined
in a final judicial determination or a final administrative settlement to which
Executive is a party that the excess parachute payment as defined in Section
4999 of the Code, reduced as described above, is more than the amount determined
as "P", above (such greater amount being hereafter referred to as the
"Determinative Excess Parachute Payment"), then the Institution's independent
accountants shall determine the amount (the "Adjustment Amount"), the
Institution must pay to Executive, in order to put Executive (or the
Institution, as the case may be) in the same position as Executive (or the
Institution, as the case may be) would have been if the amount determined as "P"
above had been equal to the Determinative Excess Parachute Payment. In
determining the Adjustment Amount, the independent accountants shall take into
account any and all taxes (including any penalties and interest) paid by or for
Executive or refunded to Executive or for Executive's benefit. As soon as
practicable after the Adjustment Amount has been so determined, the Institution
shall pay the Adjustment Amount to Executive.
(c) In each calendar year that Executive receives payments or benefits
under this Agreement, Executive shall report on his state and federal income tax
returns such information as is consistent with the determination made by the
independent accountants of the Institution as
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described above. The Institution shall indemnify and hold Executive harmless
from any and all losses, costs and expenses (including without limitation,
reasonable attorney's fees, interest, fines and penalties) which Executive
incurs as a result of reporting such information. Executive shall promptly
notify the Institution in writing whenever Executive receives notice of a
judicial or administrative proceeding, formal or informal, in which the federal
tax treatment under Section 4999 of the Code of any amount paid or payable under
this Agreement is being reviewed or is in dispute. The Institution shall assume
control at its expense over all legal and accounting matters pertaining to such
federal tax treatment (except to the extent necessary or appropriate for
Executive to resolve any such proceeding with respect to any matter unrelated to
amounts paid or payable pursuant to this contract) and Executive shall cooperate
fully with the Institution in any such proceeding. Executive shall not enter
into any compromise or settlement or otherwise prejudice any rights the
Institution may have in connection therewith without prior consent to the
Institution.
7. TERMINATION FOR CAUSE.
The term "Termination for Cause" shall mean termination because of: a)
Executive's personal dishonesty, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties, willful
violation of any law, rule, regulation (other than traffic violations or similar
offenses), final cease and desist order or material breach of any provision of
this Agreement which results in a material loss to the Institution or the
Holding Company, or b) Executive's conviction of a crime or act involving moral
turpitude or a final judgement rendered against Executive based upon actions of
Executive which involve moral turpitude. For the purposes of this Section 7, no
act, or the failure to act, on Executive's part shall be "willful" unless done,
or omitted to be done, not in good faith and without reasonable belief that the
action or omission was in the best interests of the Institution or its
affiliates. Notwithstanding the foregoing, Executive shall not be deemed to have
been Terminated for Cause unless and until there shall have been delivered to
him a Notice of Termination which shall include a copy of a resolution duly
adopted by the affirmative vote of not less than a majority of the members of
the Board at a meeting of the Board called and held for that purpose (after
reasonable notice to Executive and an opportunity for him, together with
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board, Executive was guilty of conduct justifying Termination for Cause
and specifying the particulars thereof in detail. Executive shall not have the
right to receive compensation or other benefits for any period after the Date of
Termination for Cause. During the period beginning on the date of the Notice of
Termination for Cause pursuant to Section 8 hereof through the Date of
Termination for Cause, stock options and related limited rights granted to
Executive under any stock option plan shall not be exercisable nor shall any
unvested awards granted to Executive under any stock benefit plan of the
Institution, the Holding Company or any subsidiary or affiliate thereof, vest.
At the Date of Termination for Cause, such stock options and related limited
rights and any unvested awards shall become null and void and shall not be
exercisable by or delivered to Executive at any time subsequent to such
Termination for Cause.
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8. NOTICE.
(a) Any purported termination by the Institution or by Executive shall be
communicated by Notice of Termination to the other party hereto. For purposes
of this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.
(b) "Date of Termination" shall mean the date specified in the Notice of
Termination (which, in the case of a Termination for Cause, shall not be less
than thirty days from the date such Notice of Termination is given); provided,
however, that if a dispute regarding the Executive's termination exists, the
"Date of Termination" shall be determined in accordance with Section 8(c) of
this Agreement.
(c) If, within thirty (30) days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, the Date of Termination shall be the
date on which the dispute is finally determined, either by mutual written
agreement of the parties, by a binding arbitration award, or by a final
judgment, order or decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been perfected) and,
provided further, that the Date of Termination shall be extended by a notice of
dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, in the event the Executive is
terminated for reasons other than Termination for Cause, the Institution will
continue to pay Executive his Base Salary in effect when the notice giving rise
to the dispute was given until the earlier of: i) the resolution of the dispute
in accordance with this Agreement or ii) the expiration of the remaining term of
this Agreement as determined as of the Date of Termination. Amounts paid under
this Section are in addition to all other amounts due under this Agreement and
shall not be offset against or reduce any other amounts due under this
Agreement.
9. POST-TERMINATION OBLIGATIONS.
All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with this Section 9 for one (1) full year
after the earlier of the expiration of this Agreement or termination of
Executive's employment with the Institution. Executive shall, upon reasonable
notice, furnish such information and assistance to the Institution as may
reasonably be required by the Institution in connection with any litigation in
which it or any of its subsidiaries or affiliates is, or may become, a party.
10. NON-COMPETITION AND NON-DISCLOSURE.
(a) Upon any termination of Executive's employment hereunder pursuant to
Section 4 hereof, Executive agrees not to compete with the Holding Company or
its Subsidiaries for a period of one (1) year following such termination in any
city, town or county in which the Executive's normal business office is located
and the Holding Company or any of its Subsidiaries has an office or has filed an
application for regulatory approval to establish an office, determined
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as of the effective date of such termination, except as agreed to pursuant to a
resolution duly adopted by the Board. Executive agrees that during such period
and within said cities, towns and counties, Executive shall not work for or
advise, consult or otherwise serve with, directly or indirectly, any entity
whose business materially competes with the depository, lending or other
business activities of the Holding Company or its Subsidiaries. The parties
hereto, recognizing that irreparable injury will result to the Holding Company
or its Subsidiaries, its business and property in the event of Executive's
breach of this Subsection 10(a) agree that in the event of any such breach by
Executive, the Holding Company or its Subsidiaries, will be entitled, in
addition to any other remedies and damages available, to an injunction to
restrain the violation hereof by Executive, Executive's partners, agents,
servants, employees and all persons acting for or under the direction of
Executive. Executive represents and admits that in the event of the termination
of his employment pursuant to Section 7 hereof, Executive's experience and
capabilities are such that Executive can obtain employment in a business engaged
in other lines and/or of a different nature than the Holding Company or its
Subsidiaries, and that the enforcement of a remedy by way of injunction will not
prevent Executive from earning a livelihood. Nothing herein will be construed as
prohibiting the Holding Company or its Subsidiaries from pursuing any other
remedies available to the Holding Company or its Subsidiaries for such breach or
threatened breach, including the recovery of damages from Executive.
(b) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Holding Company and
its Subsidiaries as it may exist from time to time, is a valuable, special and
unique asset of the business of the Holding Company and its Subsidiaries.
Executive will not, during or after the term of his employment, disclose any
knowledge of the past, present, planned or considered business activities of the
Holding Company and its Subsidiaries thereof to any person, firm, corporation,
or other entity for any reason or purpose whatsoever unless expressly authorized
by the Board of Directors or required by law. Notwithstanding the foregoing,
Executive may disclose any knowledge of banking, financial and/or economic
principles, concepts or ideas which are not solely and exclusively derived from
the business plans and activities of the Holding Company. Further, Executive
may disclose information regarding the business activities of the Bank or
Holding Company to the Superintendent of Banks of the State of New York, the New
York State Banking Department, OTS and the FDIC pursuant to a formal regulatory
request. In the event of a breach or threatened breach by the Executive of the
provisions of this Section, the Holding Company will be entitled to an
injunction restraining Executive from disclosing, in whole or in part, the
knowledge of the past, present, planned or considered business activities of the
Holding Company or its Subsidiaries or from rendering any services to any
person, firm, corporation, other entity to whom such knowledge, in whole or in
part, has been disclosed or is threatened to be disclosed. Nothing herein will
be construed as prohibiting the Holding Company from pursuing any other remedies
available to the Holding Company for such breach or threatened breach, including
the recovery of damages from Executive.
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11. SOURCE OF PAYMENTS.
(a) All payments provided in this Agreement shall be timely paid in cash
or check from the general funds of the Institution. The Holding Company,
however, unconditionally guarantees payment and provision of all amounts and
benefits due hereunder to Executive and, if such amounts and benefits due from
the Institution are not timely paid or provided by the Institution, such amounts
and benefits shall be paid or provided by the Holding Company.
(b) Notwithstanding any provision herein to the contrary, to the extent
that payments and benefits, as provided by this Agreement, are paid to or
received by Executive under an employment agreement in effect between Executive
and the Holding Company, such compensation payments and benefits paid by the
Holding Company will be subtracted from any amounts due simultaneously to
Executive under similar provisions of this Agreement. Payments pursuant to this
Agreement and the Holding Company Agreement shall be allocated in proportion to
the services rendered and time expended on such activities by Executive as
determined by the Holding Company and the Institution on a quarterly basis.
12. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior employment agreement between the Institution or any
predecessor of the Institution and Executive, except that this Agreement shall
not affect or operate to reduce any benefit or compensation inuring to Executive
of a kind elsewhere provided. No provision of this Agreement shall be
interpreted to mean that Executive is subject to receiving fewer benefits than
those available to him without reference to this Agreement.
13. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive and the Institution and their respective successors and assigns.
14. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver
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shall be deemed a continuing waiver unless specifically stated therein, and each
such waiver shall operate only as to the specific term or condition waived and
shall not constitute a waiver of such term or condition for the future as to any
act other than that specifically waived.
15. REQUIRED PROVISIONS.
(a) Any payments made to Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon compliance with 12 U.S.C. Section
1828(k) and any rules and regulations promulgated thereunder, including 12
C.F.R. Part 359.
16. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
17. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
18. GOVERNING LAW.
The validity, interpretation, performance and enforcement of this Agreement
shall be governed by the laws of the State of Delaware without regard to
principles of conflict of laws of this state.
19. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by Executive within fifty
(50) miles from the location of the Institution, in accordance with the rules of
the American Arbitration Institution then in effect. Judgment may be entered on
the arbitrator's award in any court having jurisdiction; provided, however, that
Executive shall be entitled to seek specific performance of his right to be paid
until the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.
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20. PAYMENT OF COSTS AND LEGAL FEES.
In the event any dispute or controversy arising under or in connection with
Executive's termination is resolved in favor of the Executive, whether by
judgment, arbitration or settlement, Executive shall be entitled to the payment
of: (a) all legal fees incurred by Executive in resolving such dispute or
controversy, and (b) any back-pay, including salary, bonuses and any other cash
compensation, fringe benefits and any compensation and benefits due Executive
under this Agreement.
21. INDEMNIFICATION.
(a) The Institution shall provide Executive (including his heirs,
executors and administrators) with coverage under a standard directors' and
officers' liability insurance policy at its expense and shall indemnify
Executive (and his heirs, executors and administrators) to the fullest extent
permitted under Delaware law against all expenses and liabilities reasonably
incurred by him in connection with or arising out of any action, suit or
proceeding in which he may be involved by reason of his having been a director
or officer of the Institution (whether or not he continues to be a director or
officer at the time of incurring such expenses or liabilities), such expenses
and liabilities to include, but not be limited to, judgments, court costs and
attorneys' fees and the cost of reasonable settlements.
22. SUCCESSOR TO THE INSTITUTION.
The Institution shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Institution or the Holding
Company, expressly and unconditionally to assume and agree to perform the
Institution's obligations under this Agreement, in the same manner and to the
same extent that the Institution would be required to perform if no such
succession or assignment had taken place.
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SIGNATURES
IN WITNESS WHEREOF, Richmond County Savings Bank and Richmond County
Financial Corp. have caused this Agreement, as amended and restated, to be
executed and their seals to be affixed hereunto by their duly authorized
officers and directors, and Executive has signed this Agreement, on
the 1st day of October 1999.
ATTEST: RICHMOND COUNTY SAVINGS BANK
/s/ Diane L. DeLillo By: /s/ Anthony E. Burke
- ----------------------------------- -----------------------------------
Diane L. DeLillo Anthony E. Burke
For The Entire Board of Directors
[SEAL]
ATTEST: RICHMOND COUNTY FINANCIAL CORP.
(Guarantor)
/s/ Diane L. DeLillo By: /s/ Anthony E. Burke
- ----------------------------------- -----------------------------------
Diane L. DeLillo Anthony E. Burke
For The Entire Board of Directors
[SEAL]
WITNESS: EXECUTIVE
/s/ Diane L. DeLillo /s/ Michael F. Manzulli
- ----------------------------------- -----------------------------------
Michael F. Manzulli
<PAGE>
EXHIBIT 10.5
RICHMOND COUNTY FINANCIAL CORP.
EMPLOYMENT AGREEMENT
(As Amended and Restated)
This AGREEMENT ("Agreement"), originally entered into on February 17, 1998,
is amended and restated in its entirety, effective as of September 21, 1999, by
and between Richmond County Financial Corp. (the "Holding Company"), a
corporation organized under the laws of Delaware, with its principal offices at
1214 Castleton Avenue, Staten Island, New York 10310, and Anthony E. Burke
("Executive"). Any reference to "Institution" herein shall mean Richmond County
Savings Bank or any successor thereto.
WHEREAS, the Holding Company wishes to continue to assure itself of the
services of Executive for the period provided in this Agreement; and
WHEREAS, Executive is willing to continue to serve in the employ of the
Holding Company on a full-time basis for said period.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of Executive's employment hereunder, Executive agrees to
serve as President and Chief Operating Officer of the Holding Company.
Executive shall render administrative and management services to the Holding
Company such as are customarily performed by persons in a similar executive
capacity. During said period, Executive also agrees to serve, if appointed or
elected, as the case may be, as an officer and director of any subsidiary of the
Holding Company.
2. TERMS.
(a) The period of Executive's employment under this Agreement shall be
deemed to have commenced as of the date first above written and shall continue
for a period of sixty (60) full calendar months from the effective date of this
Agreement, as amended and restated. Commencing on the date of the execution of
this Agreement, the term of this Agreement shall be extended for one day each
day, so that a constant sixty (60) calendar month term shall remain in effect,
until such time as the board of directors of the Holding Company (the "Board")
or Executive elects not to extend the term of the Agreement by giving written
notice to the other party in accordance with Section 8 of this Agreement, in
which case the term of this Agreement shall be fixed and shall end on the fifth
anniversary of the date of such written notice.
(b) During the period of Executive's employment hereunder, except for
periods of absence occasioned by illness, reasonable vacation periods, and other
reasonable leaves of
<PAGE>
absence, Executive shall devote substantially all his business time, attention,
skill, and efforts to the faithful performance of his duties hereunder including
activities and services related to the organization, operation and management of
the Holding Company and its direct or indirect subsidiaries, including the
Institution, ("Subsidiaries") and participation in community and civic
organizations; provided, however, that, with the approval of the Board, as
evidenced by a resolution of the Board, from time to time, Executive may serve,
or continue to serve, on the boards of directors of, and hold any other offices
or positions in, companies or organizations, which, in the Board's judgment,
will not present any conflict of interest with the Holding Company or its
Subsidiaries, or materially affect the performance of Executive's duties
pursuant to this Agreement.
(c) Notwithstanding anything in this Agreement to the contrary, either
Executive or the Holding Company may terminate Executive's employment with the
Holding Company at any time during the term of this Agreement, subject to the
terms and conditions of this Agreement.
(d) Under no circumstance shall Executive perform as part of his duties as
President and Chief Operating Officer of the Holding Company, in any respect,
directly or indirectly, during the pendency of any temporary or permanent
suspension from the Institution or upon termination of employment with the
Institution, any duties or responsibilities formerly performed at the
Institution.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall constitute
consideration paid by the Holding Company in exchange for the duties described
in Section 1 of this Agreement. The Holding Company shall pay Executive, as
compensation, a salary of not less than $375,000 ("Base Salary"). Base Salary
shall include any amounts of compensation deferred by Executive under any
employee benefit plan or deferred compensation arrangement maintained by the
Holding Company or its Subsidiaries. Base Salary shall be payable bi-weekly.
During the period of this Agreement, Executive's Base Salary shall be reviewed
at least annually; on or about the 30/th/ day of each June. Such review shall
be conducted by the Board or by a committee designated by the Board. The
committee or the Board may increase Executive's Base Salary at any time. Any
increase in Base Salary shall become the new "Base Salary" for purposes of this
Agreement. In addition to the Base Salary provided for in this Section 3(a),
the Holding Company shall also provide Executive, at no premium cost to
Executive, with all such other benefits as provided uniformly to permanent full-
time employees of the Holding Company and its Subsidiaries.
(b) In addition to the Base Salary provided for in paragraph (a) of this
Section 3, the Holding Company will provide Executive with the opportunity to
participate in employee benefit plans, arrangements and perquisites
substantially equivalent to those in which Executive was participating or
otherwise deriving a benefit from immediately prior to the beginning of the term
of this Agreement, as amended and restated, and the Holding Company will not,
without Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect Executive's rights or
benefits thereunder, without separately
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providing for an arrangement that ensures Executive receives or will receive the
economic value that Executive would otherwise lose as a result of such adverse
affect except in the case of any change to the tax-qualified defined benefit
pension plan sponsored by the Institution. Without limiting the generality of
the foregoing provisions of this Subsection (b), Executive shall be entitled to
participate in or receive benefits under any employee benefit plans, whether
tax-qualified or otherwise, including, but not limited to, retirement plans,
supplemental retirement plans, pension plans, profit-sharing plans, employee
stock ownership plans, stock or option plans, health-and-accident plans, medical
coverage or any other employee benefit plan or arrangement made available by the
Holding Company and its Subsidiaries in the future to its senior executives and
key management employees, subject to and on a basis consistent with the terms,
conditions and overall administration of such plans and arrangements (including
designation by the Board of eligibility to participate, if applicable).
Executive shall also be entitled to incentive compensation and bonuses as
provided in any plan or arrangement of the Holding Company or its Subsidiaries
in which Executive is eligible to participate. Nothing paid to Executive under
any such plans or arrangements will be deemed to be in lieu of other
compensation to which Executive is entitled under this Agreement.
(c) In addition to the Base Salary provided for by paragraph (a) of this
Section 3 and other compensation and benefits provided for by paragraph (b) of
this Section 3, the Holding Company shall pay or reimburse Executive for all
reasonable expenses incurred by Executive in performing his obligations under
this Agreement, as mutually agreed to by the Board and Executive.
(d) Except as otherwise provided in this Section 3(d), the Holding Company
will provide to Executive for each calendar year during the term of this
Agreement and for the remaining term of this Agreement after a termination of
employment following an Event of Termination, as defined in Section 4 of this
Agreement, a "Benefit Equity Payment." The Benefit Equity Payment shall be paid
no later than 90 days after the close of the calendar year to which such payment
pertains ("Benefit Year"), and shall be in addition to any contributions
actually made (or benefits actually accrued) with respect to such Benefit Year
to any tax-qualified or non-tax-qualified compensation or benefit plan,
arrangement, policy or program funded or sponsored by the Holding Company or its
Subsidiaries, including but not limited to those of the following types:
deferred compensation, retirement, defined contribution retirement, supplemental
executive retirement, stock option or stock bonus award, life insurance, health,
medical, dental, disability, incentive compensation or bonus plan, perquisites,
or other fringe benefits ("Benefit Plans"). The Benefit Equity Payment, which
shall be calculated by an actuary, accountant or other licensed professional,
shall equal the amount of the contributions (or other benefits) which would have
been made or accrued for Executive for the Benefit Year pursuant to all Benefit
Plans as consideration for his services described in Section 1 of this
Agreement, but which were not made or accrued because (i) the Benefit Plan(s)
were terminated or not funded, or (ii) Executive was no longer employed or will
not be employed by the Holding Company or its Subsidiaries. Notwithstanding
the foregoing, no Benefit Equity Payment shall be made for Executive with
respect to the tax-qualified defined benefit pension plan sponsored by the
Institution.
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4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during Executive's term of employment under this Agreement, the provisions of
this Section 4 shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any of the following: (i) the termination
by the Holding Company of Executive's full-time employment hereunder for any
reason other than Retirement (as defined in paragraph (f) of this Section 4),
termination governed by Section 5(a) of this Agreement or Termination for Cause,
as defined in Section 7 of this Agreement; or (ii) Executive's resignation from
the Holding Company's employ, upon, any (A) notice to Executive by the Holding
Company of non-renewal of the term of this Agreement, (B) failure to elect or
reelect or to appoint or reappoint Executive as President and Chief Operating
Officer or failure to renominate Executive as a director of the Institution or
Holding Company to the extent Executive was previously serving as a director
(unless Executive so consents), (C) material change in Executive's function,
duties, or responsibilities with the Holding Company or its Subsidiaries, which
change would cause Executive's position to become one of lesser responsibility,
importance, or scope from the position and attributes thereof described in
Section 1 of this Agreement, (unless Executive so consents), (D) relocation of
Executive's principal place of employment by more than 25 miles from its
location at the effective date of the Agreement (unless Executive so consents),
(E) reduction in the benefits, arrangements and perquisites being provided to
Executive pursuant to Section 3 of this Agreement, to which Executive does not
consent or for which Executive is not or will not be provided the economic
benefit pursuant to Section 3(b) of this Agreement, (F) liquidation or
dissolution of the Holding Company or the Institution, or (G) breach of this
Agreement by the Holding Company. Upon the occurrence of any event described in
clauses (A), (B), (C), (D), (E), (F) or (G), above, Executive shall have the
right to elect to terminate his employment under this Agreement by resignation
upon not less than sixty (60) days prior written notice given within six full
calendar months after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination, on the Date of
Termination, as defined in Section 8 of this Agreement, the Holding Company
shall be obligated to pay Executive, or, in the event of Executive's subsequent
death, his beneficiary or beneficiaries, or his estate, as the case may be: (i)
the amount of the remaining payments and benefits that Executive would have
earned if he had continued his employment with the Holding Company during the
remaining unexpired term of this Agreement, based on Executive's Base Salary and
benefits provided at the Date of Termination, as set forth in Sections 3(a), (b)
and (d) of this Agreement, as the case may be, and the amount still due
Executive under any paragraph of Section 3 for service rendered through the Date
of Termination. At the election of Executive, which election is to be made
within thirty (30) days of the Date of Termination, such payments shall be made
in a lump sum (without discount for early payment) or paid monthly during the
remaining term of the agreement following Executive's termination. In the event
that no election is made, payment to Executive will be made in a lump sum. Such
payments shall not be reduced in the event Executive obtains other employment
following termination of employment.
(c) Upon the occurrence of an Event of Termination, Executive will be
entitled to receive benefits due him under or contributed by the Holding Company
or its Subsidiaries on his
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behalf pursuant to any retirement, incentive, profit sharing, employee stock
ownership, bonus, performance, disability or other employee benefit plan
maintained by the Holding Company or its Subsidiaries to the extent such
benefits are not otherwise paid to Executive under a separate provision of this
Agreement.
(d) To the extent that the Holding Company or its Subsidiaries continue to
offer any life, medical, health, disability or dental insurance plan or
arrangement in which Executive participates in on the last day of his employment
(each being a "Welfare Plan"), after an Event of Termination (as herein
defined), Executive and his dependents shall continue participating in such
Welfare Plans, subject to the same premium contributions on the part of
Executive as were required immediately prior to the Event of Termination until
the earlier of (i) his death (ii) his employment by another employer other than
one of which he is the majority owner or (iii) the end of the remaining term of
this Agreement. If the Holding Company or its Subsidiaries does not offer the
Welfare Plans after the Event of Termination, then the Holding Company shall
provide Executive with a payment equal to the actuarial value of the provision
of such benefit for the period which runs until the earlier of (i) his death;
(ii) his employment by another employer other than one of which he is the
majority owner; or (iii) the end of the remaining term of this Agreement.
(e) In the event that Executive is receiving monthly payments pursuant to
Section 4(b) hereof, on an annual basis, thereafter, between the dates of
January 1st and January 31st of each year, Executive shall elect whether, the
balance of the amount payable under the Agreement at that time shall be paid in
a lump sum or on a pro rata basis. Such election shall be irrevocable for the
year for which such election is made.
(f) Termination of Executive based on "Retirement" shall mean termination
in accordance with the Holding Company's or the Institution's retirement policy
or in accordance with any retirement arrangement established with Executive's
consent with respect to him. Upon termination of Executive upon Retirement,
Executive shall be entitled to all benefits under any retirement plan of the
Holding Company or its Subsidiaries and other plans to which Executive is a
party or a participant in accordance with the terms of the plan or arrangement.
5. CHANGE IN CONTROL.
(a) For purposes of this Agreement, a "Change in Control" of the Holding
Company or the Institution shall mean an event of a nature that: (i) would be
required to be reported in response to Item 1(a) of the current report on Form
8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"); or (ii) results in a
Change in Control of the Bank or the Holding Company within the meaning of the
Change in Bank Control Act and the Rules and Regulations promulgated by the
Federal Deposit Insurance Corporation ("FDIC") at 12 C.F.R. Section 303.4(a),
with respect to the Institution, and the Rules and Regulations promulgated by
the Office of Thrift Supervision ("OTS") (or its predecessor agency), with
respect to the Holding Company, as in effect on the date of this Agreement; or
(iii) without limitation such a Change in Control shall be deemed to have
occurred at such time as (A) any "person" (as the term is used in Sections 13(d)
and 14(d) of the Exchange
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Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of voting securities of the Institution
or the Holding Company representing 20% or more of the Institution's or the
Holding Company's outstanding voting securities or right to acquire such
securities except for any voting securities of the Institution purchased by the
Holding Company and any voting securities purchased by any employee benefit plan
of the Holding Company or its Subsidiaries, or (B) individuals who constitute
the Board on the date hereof (the "Incumbent Board") cease for any reason to
constitute at least a majority thereof, provided that any person becoming a
director subsequent to the date hereof whose election was approved by a vote of
at least three-quarters of the directors comprising the Incumbent Board, or
whose nomination for election by the Company's stockholders was approved by a
Nominating Committee solely composed of members which are Incumbent Board
members, shall be, for purposes of this clause (B), considered as though he were
a member of the Incumbent Board, or (C) a plan of reorganization, merger,
consolidation, sale of all or substantially all the assets of the Institution or
the Holding Company or similar transaction occurs or is effectuated in which the
Institution or Holding Company is not the resulting entity, or (D) a proxy
statement has been distributed soliciting proxies from stockholders of the
Holding Company, by someone other than the current management of the Holding
Company, seeking stockholder approval of a plan of reorganization, merger or
consolidation of the Holding Company or Institution with one or more
corporations as a result of which the outstanding shares of the class of
securities then subject to such plan or transaction are exchanged for or
converted into cash or property or securities not issued by the Institution or
the Holding Company shall be distributed, or (E) a tender offer is made for 20%
or more of the voting securities of the Institution or Holding Company then
outstanding.
(b) If any of the events described in Section 5(a) of this Agreement
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, Executive shall be entitled to the benefits
provided in paragraphs (c), (d), (e), (f), and (g) of this Section 5 upon his
termination of employment on or after the date the Change in Control occurs at
any time during the term of this Agreement due to (i) Executive's dismissal,
(ii) Executive's voluntary resignation for any reason on or within the sixty
(60) day period immediately following the date a Change in Control has occurred,
or (iii) Executive's resignation following any demotion, loss of title, office
or significant authority or responsibility, reduction in the annual compensation
or benefits or relocation of his principal place of employment by more than
twenty-five (25) miles from its location immediately prior to the Change in
Control, unless such termination is because of his death or Termination for
Cause (as defined in Section 7 of this Agreement).
(c) Upon Executive's entitlement to benefits pursuant to Section 5(b), the
Holding Company shall pay Executive, or in the event of his subsequent death,
his beneficiary or beneficiaries, or his estate, as the case may be, as
severance pay or liquidated damages, or both, a sum equal to the greater of:
(i) the payments due for the remaining term of the Agreement; or (ii) five (5)
times Executive's annual compensation for the most recently completed year. In
determining Executive's annual compensation, annual compensation shall include
Base Salary and any other taxable income, including but not limited to amounts
related to the granting, vesting or exercise of restricted stock or stock option
awards, commissions, bonuses, severance
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payments, retirement benefits, director or committee fees and fringe benefits
paid or to be paid to Executive or paid for Executive's benefit during any such
year, as well as pension, profit sharing plan, employee stock ownership and
other retirement contributions or benefits (whether or not taxable) made or
accrued on behalf of Executive for such year. At the election of Executive,
which election is to be made prior to or within thirty (30) days of the Date of
Termination on or following a Change in Control, such payment may be made in a
lump sum (without discount for early payment) on or immediately following the
Date of Termination (which may be the date a change in Control occurs) or paid
in equal monthly installments during the sixty (60) months following Executive's
termination. In the event that no election is made, payment to Executive will be
made on a monthly basis during the remaining sixty (60) month term of the
Agreement. Such payments shall not be reduced in the event Executive obtains
other employment following termination of employment.
(d) Upon the occurrence of a Change in Control followed by Executive's
termination of employment, Executive will be entitled to receive benefits due
him under or contributed by the Holding Company or its Subsidiaries on his
behalf pursuant to any retirement, incentive, profit sharing, employee stock
ownership, bonus, performance, disability or other employee benefit plan
maintained by the Institution or the Holding Company on Executive's behalf to
the extent such benefits are not otherwise paid to Executive under a separate
provision of this Agreement.
(e) Upon the occurrence of a Change in Control and Executive's termination
of employment in connection therewith, the Holding Company will cause to be
continued life, medical and disability coverage substantially identical to the
coverage maintained by the Holding Company or its Subsidiaries for Executive and
any of his dependents covered under such plans prior to the Change in Control.
Such coverage and payments shall cease upon the expiration of sixty (60) full
calendar months following the Date of Termination. In the event Executive's
participation in any such plan or program is barred, the Holding Company shall
arrange to provide Executive and his dependents with benefits substantially
similar as those of which Executive and his dependents would otherwise have been
entitled to receive under such plans and programs from which their continued
participation is barred or provide their economic equivalent.
(f) The use or provision of any membership, license, automobile use, or
other perquisites shall be continued during the remaining term of the Agreement
on the same financial terms and obligations as were in place immediately prior
to the Change in Control. To the extent that any item referred to in this
paragraph will at the end of the term of this Agreement, no longer be available
to Executive, Executive will have the option to purchase all rights then held by
the Holding Company or its Subsidiaries to such item for a price equal to the
then fair market value of the item.
(g) In the event that Executive is receiving monthly payments pursuant to
Section 5(c) hereof, on an annual basis, thereafter, between the dates of
January 1st and January 31st of each year, Executive shall elect whether the
balance of the amount payable under the Agreement at that time shall be paid in
a lump sum or on a pro rata basis pursuant to such section. Such election shall
be irrevocable for the year for which such election is made.
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6. CHANGE OF CONTROL RELATED PROVISIONS.
(a) Notwithstanding the preceding provisions of Section 5 of this
Agreement, for any taxable year in which Executive shall be liable, as
determined for the payment of an excise tax under Section 4999 of the Code (or
any successor provision thereto), with respect to any payment in the nature of
the compensation made by the Holding Company or its Subsidiaries to (or for the
benefit of) Executive pursuant to this Agreement or otherwise, the Holding
Company shall pay to Executive an amount determined under the following formula:
An amount equal to: (E x P) + X
WHERE:
X = E x P
1 - [(FI x (1 - SLI)) + SLI + E]
E = the rate at which the excise tax is assessed under Section 4999
of the Code;
P = the amount with respect to which such excise tax is assessed,
determined without regard to this Section 6;
FI = the highest marginal rate of federal income, employment, and
other taxes (other than taxes imposed under Section 4999 of the
Code) applicable to Executive for the taxable year in question
(including any effective increase in Executive's tax rate
attributable to the disallowance of any deduction); and
SLI = the sum of the highest marginal rates of income and payroll tax
applicable to Executive under applicable state and local laws
for the taxable year in question (including any effective
increase in Executive's tax rate attributable to the
disallowance of any deduction).
With respect to any payment in the nature of compensation that is made to (or
for the benefit of) Executive under the terms of this Section or otherwise and
on which an excise tax under Section 4999 of the Code will be assessed, the
payment determined under this Section 6 shall be made to Executive on the
earliest of (i) the date the Holding Company is required to withhold such tax,
(ii) the date the tax is required to be paid by Executive, or (iii) at the time
of the Change in Control. It is the intention of the parties that the Holding
Company provide Executive with a full tax gross-up under the provisions of this
Section 6, so that on a net after-tax basis, the result to Executive shall be
the same as if the excise tax under Section 4999 (or any successor provisions)
of the Code had not been imposed. The tax gross-up may be adjusted if
alternative minimum tax rules are applicable to Executive.
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(b) Notwithstanding the foregoing, if it shall subsequently be determined
in a final judicial determination or a final administrative settlement to which
Executive is a party that the excess parachute payment as defined in Section
4999 of the Code, reduced as described above, is more than the amount determined
as "P," above (such greater amount being hereafter referred to as the
"Determinative Excess Parachute Payment"), then the Holding Company's
independent accountants shall determine the amount (the "Adjustment Amount"),
the Holding Company must pay to Executive, in order to put Executive (or the
Holding Company, as the case may be) in the same position as Executive (or the
Holding Company, as the case may be) would have been if the amount determined as
"P" above had been equal to the Determinative Excess Parachute Payment. In
determining the Adjustment Amount, the independent accountants shall take into
account any and all taxes (including any penalties and interest) paid by or for
Executive or refunded to Executive or for Executive's benefit. As soon as
practicable after the Adjustment Amount has been so determined, the Holding
Company shall pay the Adjustment Amount to Executive.
(c) In each calendar year that Executive receives payments or benefits
under this Agreement, Executive shall report on his state and federal income tax
returns such information as is consistent with the determination made by the
independent accountants of the Holding Company as described above. The Holding
Company shall indemnify and hold Executive harmless from any and all losses,
costs and expenses (including without limitation, reasonable attorney's fees,
interest, fines and penalties) which Executive incurs as a result of reporting
such information. Executive shall promptly notify the Holding Company in
writing whenever Executive receives notice of the Bank of a judicial or
administrative proceeding, formal or informal, in which the federal tax
treatment under Section 4999 of the Code of any amount paid or payable under
this Agreement is being reviewed or is in dispute. The Holding Company shall
assume control at its expense over all legal and accounting matters pertaining
to such federal tax treatment (except to the extent necessary or appropriate for
Executive to resolve any such proceeding with respect to any matter unrelated to
amounts paid or payable pursuant to this contract) and Executive shall cooperate
fully with the Holding Company in any such proceeding. Executive shall not enter
into any compromise or settlement or otherwise prejudice any rights the Holding
Company may have in connection therewith without prior consent to the Holding
Company.
7. TERMINATION FOR CAUSE.
The term "Termination for Cause" shall mean termination because of: 1)
Executive's personal dishonesty, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties, willful
violation of any law, rule, regulation (other than traffic violations or similar
offenses), final cease and desist order or material breach of any provision of
this Agreement which results in a material loss to the Institution or the
Holding Company, or 2) Executive's conviction of a crime or act involving moral
turpitude or a final judgement rendered against Executive based upon actions of
Executive which involve moral turpitude. For the purposes of this Section, no
act, or the failure to act, on Executive's part shall be "willful" unless done,
or omitted to be done, not in good faith and without reasonable belief that the
action or omission was in the best interests of the Institution or its
affiliates. Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated for Cause
9
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unless and until there shall have been delivered to him a Notice of Termination
which shall include a copy of a resolution duly adopted by the affirmative vote
of not less than three-fourths of the members of the Board at a meeting of the
Board called and held for that purpose (after reasonable notice to Executive and
an opportunity for him, together with counsel, to be heard before the Board),
finding that in the good faith opinion of the Board, Executive was guilty of
conduct justifying Termination for Cause and specifying the particulars thereof
in detail. Executive shall not have the right to receive compensation or other
benefits for any period after Termination for Cause. During the period beginning
on the date of the Notice of Termination for Cause pursuant to Section 8 hereof
through the Date of Termination, stock options and related limited rights (if
any) granted to Executive under any stock option plan shall not be exercisable
nor shall any unvested awards granted to Executive under any stock benefit plan
of the Institution, the Holding Company or any Subsidiary or affiliate thereof,
vest. At the Date of Termination, such stock options and related limited rights
(if any) and any such unvested awards shall become null and void and shall not
be exercisable by or delivered to Executive at any time subsequent to such
Termination for Cause.
8. NOTICE.
(a) Any purported termination by the Holding Company or by Executive shall
be communicated by Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment under the
provision so indicated.
(b) "Date of Termination" shall mean the date specified in the Notice of
Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given);
provided, however, that if a dispute regarding Executive's termination exists,
the "Date of Termination" shall be determined in accordance with Section 8(c) of
this Agreement.
(c) If, within thirty (30) days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, except upon the occurrence of a
Change in Control and voluntary termination by Executive in which case the Date
of Termination shall be the date specified in the Notice, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding arbitration award, or
by a final judgment, order or decree of a court of competent jurisdiction (the
time for appeal therefrom having expired and no appeal having been perfected)
and; provided, further, that the Date of Termination shall be extended by a
notice of dispute only if such notice is given in good faith and the party
giving such notice pursues the resolution of such dispute with reasonable
diligence. Notwithstanding the pendency of any such dispute, the Holding
Company will continue to pay Executive his full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to, Base
Salary) and continue him as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice of dispute was
given, until the
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dispute is finally resolved in accordance with this Agreement. Amounts paid
under this Section are in addition to all other amounts due under this Agreement
and shall not be offset against or reduce any other amounts due under this
Agreement.
9. POST-TERMINATION OBLIGATIONS.
All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with this Section 9 for one (1) full year
after the earlier of the expiration of this Agreement or termination of
Executive's employment with the Holding Company. Executive shall, upon
reasonable notice, furnish such information and assistance to the Holding
Company as may reasonably be required by the Holding Company in connection with
any litigation in which it or any of its subsidiaries or affiliates is, or may
become, a party.
10. NON-COMPETITION AND NON-DISCLOSURE.
(a) Upon any termination of Executive's employment hereunder pursuant to
Section 4 hereof, Executive agrees not to compete with the Holding Company or
its Subsidiaries for a period of one (1) year following such termination in any
city, town or county in which Executive's normal business office is located and
the Holding Company or any of its Subsidiaries has an office or has filed an
application for regulatory approval to establish an office, determined as of the
effective date of such termination, except as agreed to pursuant to a resolution
duly adopted by the Board. Executive agrees that during such period and within
said cities, towns and counties, Executive shall not work for or advise, consult
or otherwise serve with, directly or indirectly, any entity whose business
materially competes with the depository, lending or other business activities of
the Holding Company or its Subsidiaries. The parties hereto, recognizing that
irreparable injury will result to the Holding Company or its Subsidiaries, its
business and property in the event of Executive's breach of this Subsection
10(a) agree that in the event of any such breach by Executive, the Holding
Company or its Subsidiaries, will be entitled, in addition to any other remedies
and damages available, to an injunction to restrain the violation hereof by
Executive, Executive's partners, agents, servants, employees and all persons
acting for or under the direction of Executive. Executive represents and admits
that in the event of the termination of his employment pursuant to Section 7
hereof, Executive's experience and capabilities are such that Executive can
obtain employment in a business engaged in other lines and/or of a different
nature than the Holding Company or its Subsidiaries, and that the enforcement of
a remedy by way of injunction will not prevent Executive from earning a
livelihood. Nothing herein will be construed as prohibiting the Holding Company
or its Subsidiaries from pursuing any other remedies available to the Holding
Company or its Subsidiaries for such breach or threatened breach, including the
recovery of damages from Executive.
(b) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Holding Company and
its Subsidiaries as it may exist from time to time, is a valuable, special and
unique asset of the business of the Holding Company and its Subsidiaries.
Executive will not, during or after the term of his employment, disclose any
knowledge of the past, present, planned or considered business activities of the
Holding Company and its Subsidiaries thereof to any person, firm, corporation,
or other entity
11
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for any reason or purpose whatsoever unless expressly authorized by the Board of
Directors or required by law. Notwithstanding the foregoing, Executive may
disclose any knowledge of banking, financial and/or economic principles,
concepts or ideas which are not solely and exclusively derived from the business
plans and activities of the Holding Company. Further, Executive may disclose
information regarding the business activities of the Bank or Holding Company to
the Superintendent of Banks of the State of New York, the New York Banking
Department, OTS and the FDIC pursuant to a formal regulatory request. In the
event of a breach or threatened breach by Executive of the provisions of this
Section, the Holding Company will be entitled to an injunction restraining
Executive from disclosing, in whole or in part, the knowledge of the past,
present, planned or considered business activities of the Holding Company or its
Subsidiaries or from rendering any services to any person, firm, corporation, or
other entity to whom such knowledge, in whole or in part, has been disclosed or
is threatened to be disclosed. Nothing herein will be construed as prohibiting
the Holding Company from pursuing any other remedies available to the Holding
Company for such breach or threatened breach, including the recovery of damages
from Executive.
11. SOURCE OF PAYMENTS.
(a) All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Holding Company subject to Section 11(b).
(b) Notwithstanding any provision herein to the contrary, to the extent
that payments and benefits, as provided by this Agreement, are paid to or
received by Executive under an employment agreement in effect between
Executive and the Institution, such compensation payments and benefits paid by
the Institution will be subtracted from any amount due simultaneously to
Executive under similar provisions of this Agreement. Payments pursuant to this
Agreement and the Institution Agreement shall be allocated in proportion to the
level of activity and the time expended on such activities by Executive as
determined by the Holding Company and the Institution on a quarterly basis.
12. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior employment agreement between the Holding Company or any
predecessor of the Holding Company and Executive, except that this Agreement
shall not affect or operate to reduce any benefit or compensation inuring to
Executive of a kind elsewhere provided. No provision of this Agreement shall be
interpreted to mean that Executive is subject to receiving fewer benefits than
those available to him without reference to this Agreement.
13. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by
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operation of law, and any attempt, voluntary or involuntary, to affect any such
action shall be null, void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive and the Holding Company and their respective successors and assigns.
14. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.
15. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
16. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
17. GOVERNING LAW.
The validity, interpretation, performance and enforcement of this Agreement
shall be governed by the laws of the State of Delaware without regard to
principles of conflict of laws of this state.
18. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by Executive within fifty
(50) miles from the location of the Institution, in accordance with the rules of
the American Arbitration Association then in effect. Judgment may be entered on
the arbitrator's award in any court having jurisdiction; provided, however, that
Executive shall be entitled to seek specific performance of his right to be paid
until the Date of
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Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement.
19. PAYMENT OF COSTS AND LEGAL FEES AND REINSTATEMENT OF BENEFITS.
In the event any dispute or controversy arising under or in connection with
Executive's termination is resolved in favor of Executive, whether by judgment,
arbitration or settlement, Executive shall be entitled to the payment of: (1)
all legal fees incurred by Executive in resolving such dispute or controversy,
and (2) any back-pay, including salary, bonuses and any other cash compensation,
fringe benefits and any compensation and benefits due Executive under this
Agreement.
20. INDEMNIFICATION.
The Holding Company shall provide Executive (including his heirs, executors
and administrators) with coverage under a standard directors' and officers'
liability insurance policy at its expense and shall indemnify Executive (and his
heirs, executors and administrators) to the fullest extent permitted under
Delaware law against all expenses and liabilities reasonably incurred by him in
connection with or arising out of any action, suit or proceeding in which he may
be involved by reason of his having been a director or officer of the Holding
Company (whether or not he continues to be a director or officer at the time of
incurring such expenses or liabilities), such expenses and liabilities to
include, but not be limited to, judgments, court costs and attorneys' fees and
the cost of reasonable settlements.
21. SUCCESSOR TO THE HOLDING COMPANY.
The Holding Company shall require any successor or assignee, whether direct
or indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Institution or the Holding
Company, expressly and unconditionally to assume and agree to perform the
Holding Company's obligations under this Agreement, in the same manner and to
the same extent that the Holding Company would be required to perform if no such
succession or assignment had taken place.
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SIGNATURES
IN WITNESS WHEREOF, Richmond County Financial Corp. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer and its directors, and Executive has signed this Agreement,
on the 21st day of September 1999.
ATTEST: RICHMOND COUNTY FINANCIAL CORP.
/s/ Diane L. DeLillo By: /s/ Michael F. Manzulli
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Michael F. Manzulli
For the Entire Board of Directors
[SEAL]
WITNESS: EXECUTIVE
/s/ Diane L. DeLillo By: /s/ Anthony E. Burke
- ----------------------------------- ---------------------------------------
Anthony E. Burke
<PAGE>
EXHIBIT 10.6
RICHMOND COUNTY SAVINGS BANK
EMPLOYMENT AGREEMENT
(as Amended and Restated)
This AGREEMENT ("Agreement") originally entered into as of September
21, 1999, is amended and restated in its entirety effective October 1, 1999, by
and among Richmond County Savings Bank (the "Institution"), a state chartered
savings institution, with its principal administrative office at 1214 Castleton
Avenue, Staten Island, New York, 10310, Richmond County Financial Corp., a
corporation organized under the laws of the State of Delaware, the holding
company for the Institution (the "Holding Company"), and Anthony E. Burke
("Executive").
WHEREAS, the Institution wishes to continue to assure itself of the
services of Executive for the period provided in this Agreement; and
WHEREAS, Executive is willing to continue to serve in the employ of the
Institution on a full-time basis for said period.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, Executive agrees to
serve as President and Chief Operating Officer of the Institution. Executive
shall render administrative and management services to the Institution such as
are customarily performed by persons situated in a similar executive capacity.
During said period, Executive also agrees to serve, if appointed or elected, as
the case may be as an officer and director of the Holding Company or any
subsidiary of the Institution.
2. TERMS AND DUTIES.
(a) The period of Executive's employment under this Agreement shall
be deemed to have commenced as of the date first above written and shall
continue for a period of sixty (60) full calendar months from the effective date
of this Agreement, as amended and restated. Commencing on the date of the
execution, so that a constant sixty (60) calendar month term shall remain in
effect, of this Agreement, the term of this Agreement shall be extended for one
day each day until such time as the disinterested members of the board of
directors of the Institution ("Board") or Executive elects not to extend the
term of this Agreement by giving written notice in accordance with Section 8 of
this Agreement, in which case the term of this Agreement shall be fixed and
shall end on the fifth anniversary of the date of such written notice.
(b) During the period of Executive's employment hereunder, except for
periods of absence occasioned by illness, reasonable vacation periods, and other
reasonable leaves of
<PAGE>
absence, Executive shall devote substantially all his business time, attention,
skill, and efforts to the faithful performance of his duties hereunder including
activities and services related to the organization, operation and management of
the Institution and participation in community and civic organizations;
provided, however, that, with the approval of the Board, as evidenced by a
resolution of the Board, from time to time, Executive may serve, or continue to
serve, on the boards of directors of, and hold any other offices or positions
in, companies or organizations, which, in the Board's judgment, will not present
any conflict of interest with the Institution, or materially affect the
performance of Executive's duties pursuant to this Agreement.
(c) Notwithstanding anything in this Agreement to the contrary,
Executive's employment with the Institution may be terminated by the Institution
or the Executive during the term of this Agreement, subject to the terms and
conditions of this Agreement.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall constitute
consideration paid by the Institution in exchange for the duties described in
Section 1 of this Agreement. The Institution shall pay Executive, as
compensation, a salary of not less than $375,000 ("Base Salary"). Base Salary
shall include any amounts of compensation deferred by Executive under any
employee benefit plan or deferred compensation arrangement maintained by the
Institution. Such Base Salary shall be payable bi-weekly. During the period of
this Agreement, Executive's Base Salary shall be reviewed at least annually; on
or about the 30th day of each June. Such review shall be conducted by the Board
or by a committee designated by the Board . The committee or the Board may
increase Executive's Base Salary at any time. Any increase in Base Salary shall
become the "Base Salary" for purposes of this Agreement. In addition to the Base
Salary provided in this Section 3(a), the Institution shall also provide
Executive, at no premium cost to Executive, with all such other benefits as are
provided uniformly to full-time employees of the Institution.
(b) In addition to the Base Salary provided for in paragraph (a) of
this Section 3, the Institution will provide Executive with the opportunity to
participate in employee benefit plans, arrangements and perquisites
substantially equivalent to those in which Executive was participating or
otherwise deriving a benefit from immediately prior to the beginning of the term
of this Agreement, as amended and restated, and the Institution will not,
without Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect Executive's rights or
benefits thereunder, without separately providing for an arrangement that
ensures Executive receives or will receive the economic value that Executive
would otherwise lose as a result of such adverse affect except in the case of
any change to the tax-qualified defined benefit pension plan sponsored by the
Institution. Without limiting the generality of the foregoing provisions of this
Subsection (b), Executive shall be entitled to participate in or receive
benefits under any employee benefit plans, whether tax-qualified or
otherwise, including, but not limited to, retirement plans, supplemental
retirement plans, pension plans, profit-sharing plans, employee stock ownership
plans, stock or option plans, health-and-accident plans, medical coverage or any
other employee benefit plan or arrangement made available by the Institution in
the future to its senior executives and key management
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employees, subject to and on a basis consistent with the terms, conditions and
overall administration of such plans and arrangements (including designation by
the Board of eligibility to participate, if applicable). Executive shall also be
entitled to incentive compensation and bonuses as provided in any plan or
arrangement of the Institution in which Executive is eligible to participate.
Nothing paid to Executive under any such plans or arrangements will be deemed to
be in lieu of other compensation to which Executive is entitled under this
Agreement.
(c) In addition to the Base Salary provided for by paragraph (a) of
this Section 3 and other compensation and benefits provided for by paragraph (b)
of this Section 3, the Institution shall pay or reimburse Executive for all
reasonable expenses incurred by Executive in performing his obligations under
this Agreement, as mutually agreed to by the Board and Executive.
(d) Except as otherwise provided in this Section 3(d), the
Institution will provide to Executive for each calendar year during the term of
this Agreement and for the remaining term of this Agreement after a termination
of employment following an Event of Termination, as defined in Section 4 of this
Agreement, a "Benefit Equity Payment." The Benefit Equity Payment shall be paid
no later than 90 days after the close of the calendar year to which such payment
pertains ("Benefit Year"), and shall be in addition to any contributions
actually made (or benefits actually accrued) with respect to such Benefit Year
to any tax-qualified or non-tax-qualified compensation or benefit plan,
arrangement, policy or program funded or sponsored by the Institution, including
but not limited to those of the following types: deferred compensation,
retirement, defined benefit pension, defined contribution retirement,
supplemental executive retirement, stock option or stock bonus award, life
insurance, health, medical, dental, disability, incentive compensation or bonus
plan, perquisites, or other fringe benefits ("Benefit Plans"). The Benefit
Equity Payment, which shall be calculated by an actuary, accountant or other
licensed professional, shall equal the amount of the contributions (or other
benefits) which would have been made or accrued for Executive for the Benefit
Year pursuant to all Benefit Plans as consideration for his services described
in Section 1 of this Agreement, but which were not made or accrued because (i)
the Benefit Plan(s) were terminated or not funded, or (ii) Executive was no
longer employed or will not be employed by the Institution. Not withstanding the
foregoing, no Benefit Equity Payment shall be made for Execution with respect to
the tax-qualified defined benefit pension plan sponsored by the Institution.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as herein
defined) during the Executive's term of employment under this Agreement, the
provisions of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Institution or the Holding Company of Executive's full-time
employment hereunder for any reason other than Retirement (as defined in
paragraph (f) of this Section 4); termination governed by Section 5(a) of this
Agreement or Termination for Cause, as defined in Section 7 of this Agreement;
or (ii) Executive's resignation from the Institution's employ upon any : (A)
notice to Executive by the Institution of non-renewal of the term of this
Agreement, (B) failure to elect or reelect or to appoint or reappoint Executive
as President and Chief Operating Officer or failure to re-nominate Executive as
a director of the
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Institution or Holding Company to the extent Executive was serving as a director
as of the effective date of this Agreement (unless Executive so consents), (C)
material change in Executive's function, duties, or responsibilities, which
change would cause Executive's position to become one of lesser responsibility,
importance, or scope from the position and attributes thereof described in
Section 1 of this Agreement (unless Executive so consents) , (D) relocation of
Executive's principal place of employment by more than 25 miles from its
location at the effective date of the Agreement (unless Executive so consents),
(E) reduction in the benefits, arrangements and perquisites to the Executive
from those being provided to Executive pursuant to Section 3 of this Agreement
to which Executive does not consent or for which Executive is not or will not be
provided the economic benefit pursuant to Section 3(b) of this Agreement, (F)
liquidation or dissolution of the Institution or Holding Company, or (G) breach
of this Agreement by the Institution. Upon the occurrence of any event described
in clauses (A), (B), (C), (D), (E), (F) or (G) above, Executive shall have the
right to elect to terminate his employment under this Agreement by resignation
upon not less than sixty (60) days prior written notice given within six full
months after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination, on the Date of
Termination, as defined in Section 8 of this Agreement, the Institution shall be
obligated to pay Executive, or, in the event of Executive's subsequent death,
his beneficiary or beneficiaries, or his estate, as the case may be: (i) the
amount of the remaining payments and benefits that Executive would have earned
if he had continued his employment with the Institution during the remaining
unexpired term of this Agreement, based on Executive's Base Salary and benefits
provided at the Date of Termination, as set forth in Sections 3(a), (b) and (d)
of this Agreement, as the case may be, and (ii) the amount still due Executive
under any paragraph of Section 3 for service rendered through the Date of
Termination. At the election of Executive, which election is to be made within
thirty (30) days of the Date of Termination, such payments shall be made in a
lump sum (without discount for early payment) or paid monthly during the
remaining term of the agreement following Executive's termination. In the event
that no election is made, payment to Executive will be made in a lump sum. Such
payments shall not be reduced in the event Executive obtains other employment
following termination of employment.
(c) Upon the occurrence of an Event of Termination, Executive will be
entitled to receive benefits due him under or contributed by the Institution on
his behalf pursuant to any retirement, incentive, profit sharing, employee stock
ownership, bonus, performance, disability or other employee benefit plan
maintained by the Institution to the extent such benefits are not otherwise paid
to Executive under a separate provision of this Agreement.
(d) To the extent that the Institution continues to offer any life,
medical, health, disability or dental insurance plan or arrangement in which
Executive participates in on the last day of his employment (each being a
"Welfare Plan"), after an Event of Termination (as herein defined), Executive
and his dependents shall continue participating in such Welfare Plans, subject
to the same premium contributions on the part of Executive as were required
immediately prior to the Event of Termination until the earlier of (i) his death
(ii) his employment by another employer other than one of which he is the
majority owner or (iii) the end of the remaining term of this Agreement. If the
Institution does not offer the Welfare Plans after the Event of
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Termination, then the Institution shall provide Executive with a payment equal
to the actuarial value of the provision of such benefit for the period which
runs until the earlier of (i) his death; (ii) his employment by another employer
other than one of which he is the majority owner; or (iii) the end of the
remaining term of this Agreement.
(e) In the event that Executive is receiving monthly payments
pursuant to Section 4(b) hereof, on an annual basis, thereafter, between the
dates of January 1st and January 31st of each year, Executive shall elect
whether, the balance of the amount payable under the Agreement at that time
shall be paid in a lump sum or on a pro rata basis. Such election shall be
irrevocable for the year for which such election is made.
(f) Termination of Executive based on "Retirement" shall mean
termination in accordance with the Institution's retirement policy or in
accordance with any retirement arrangement established with Executive's consent
with respect to him. Upon termination of Executive upon Retirement, Executive
shall be entitled to all benefits under any retirement plan of the Institution
and other plans to which Executive is a party or a participant in accordance
with the terms of the plan or arrangement.
5. CHANGE IN CONTROL.
(a) For purposes of this Agreement, a "Change in Control" of the
Institution or Holding Company shall mean an event of a nature that: (i) would
be required to be reported in response to Item 1 of the current report on Form
8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"); or (ii)
results in a Change in Control of the Institution or the Holding Company within
the meaning of the Change in Bank Control Act and the Rules and Regulations
promulgated by the Federal Deposit Insurance Corporation ("FDIC") at 12 C.F.R.
Section 303.4(a), with respect to the Institution, and the Rules and Regulations
promulgated by the Office of Thrift Supervision ("OTS") (or its predecessor
agency), with respect to the Holding Company, as in effect on the date of this
Agreement; or (iii) without limitation such a Change in Control shall be deemed
to have occurred at such time as (A) any "person" (as the term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of voting securities of the Institution or the Holding Company
representing 20% or more of the Institution's or the Holding Company's
outstanding voting securities or right to acquire such securities except for any
voting securities of the Institution purchased by the Holding Company and any
voting securities purchased by any employee benefit plan of the Institution or
the Holding Company, or (B) individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director subsequent to the
date hereof whose election was approved by a vote of at least three-quarters of
the directors comprising the Incumbent Board, or whose nomination for election
by the Holding Company's stockholders was approved by the same Nominating
Committee serving under an Incumbent Board, shall be, for purposes of this
clause (B), considered as though he were a member of the Incumbent Board, or (C)
a plan of reorganization, merger, consolidation, sale of all or
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substantially all the assets of the Institution or the Holding Company or
similar transaction occurs in which the Institution or Holding Company is not
the resulting entity, or (D) a proxy statement has been distributed soliciting
proxies from stockholders of the Holding Company, by someone other than the
current management of the Holding Company, seeking stockholder approval of a
plan of reorganization, merger or consolidation of the Holding Company or
Institution or similar transaction with one or more corporations as a result of
which the outstanding shares of the class of securities then subject to such
plan or transaction are exchanged for or converted into cash or property or
securities not issued by the Institution or the Holding Company, or (E) a tender
offer is made for 20% or more of the voting securities of the Stock Institution
or Holding Company then outstanding.
(b) If any of the events described in Section 5(a) of this Agreement
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, Executive shall be entitled to the benefits
provided in paragraphs (c) (d), (e), (f) and (g) of this Section 5 upon his
termination of employment on or after the date the Change in Control occurs at
any time during the term of this Agreement due to: (1) Executive's dismissal,
(ii) Executive's voluntary resignation for any reason on or within the sixty
(60) day period immediately following the date a Change in Control has occurred,
or (iii) Executive's resignation following any demotion, loss of title, office
or significant authority or responsibility, reduction in annual compensation or
benefits or relocation of his principal place of employment by more than 25
miles from its location immediately prior to the Change in Control, unless such
termination is because of his death, disability, retirement or Termination for
Cause (as defined in Section 7 of this Agreement).
(c) Upon Executive's entitlement to benefits pursuant to Section
5(b), the Institution shall pay Executive, or in the event of his subsequent
death, his beneficiary or beneficiaries, or his estate, as the case may be, a
sum equal to the greater of: (i) the payments due for the remaining term of the
Agreement; or (ii) five (5) times Executive's annual compensation for the most
recently completed year. In determining Executive's annual compensation, annual
compensation shall include Base Salary and any other taxable income, including
but not limited to amounts related to the granting, vesting or exercise of
restricted stock or stock option awards, commissions, bonuses, severance
payments, retirement benefits, director or committee fees and fringe benefits
paid or to be paid to Executive or paid for Executive's benefit during any such
year, as well as pension, profit sharing plan, employee stock ownership and
other retirement contributions or benefits (whether or not taxable) made or
accrued on behalf of Executive for such year. At the election of Executive,
which election is to be made prior to or within thirty (30) days of the Date of
Termination on or following a Change in Control, such payment may be made in a
lump sum (without discount for early payment) on or immediately following the
Date of Termination (which may be the date a change in Control occurs) or paid
in equal monthly installments during the sixty (60) months following Executive's
termination. In the event that no election is made, payment to Executive will be
made on a monthly basis during the remaining sixty (60) month term of the
Agreement. Such payments shall not be reduced in the event Executive obtains
other employment following termination of employment.
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(d) Upon the occurrence of a Change in Control followed by
Executive's termination of employment, Executive will be entitled to receive
benefits due him under or contributed by the Institution on his behalf pursuant
to any retirement, incentive, profit sharing, employee stock ownership, bonus,
performance, disability or other employee benefit plan maintained by the
Institution on Executive's behalf to the extent such benefits are not otherwise
paid to Executive under a separate provision of this Agreement.
(e) Upon the occurrence of a Change in Control and Executive's
termination of employment in connection therewith, the Institution will cause to
be continued life, medical and disability coverage substantially identical to
the coverage maintained by the Institution for Executive and any of his
dependents covered under such plans prior to the Change in Control. Such
coverage and payments shall cease upon the expiration of sixty (60) full
calendar months following the Date of Termination. In the event Executive's
participation in any such plan or program is barred, the Institution shall
arrange to provide Executive and his dependents with benefits substantially
similar as those of which Executive and his dependents would otherwise have been
entitled to receive under such plans and programs from which their continued
participation is barred or provide their economic equivalent.
(f) The use or provision of any membership, license, automobile use,
or other perquisites shall be continued during the remaining term of the
Agreement on the same financial terms and obligations as were in place
immediately prior to the Change in Control. To the extent that any item referred
to in this paragraph will at the end of the term of this Agreement, no longer be
available to Executive, Executive will have the option to purchase all rights
then held by the Institution to such item for a price equal to the then fair
market value of the item.
(g) In the event that Executive is receiving monthly payments
pursuant to Section 5(c) hereof, on an annual basis, thereafter, between the
dates of January 1st and January 31st of each year, Executive shall elect
whether the balance of the amount payable under the Agreement at that time shall
be paid in a lump sum or on a pro rata basis pursuant to such section. Such
election shall be irrevocable for the year for which such election is made.
6. CHANGE OF CONTROL RELATED PROVISIONS
(a) Notwithstanding the preceding provisions of Section 5 of this
Agreement, for any taxable year in which Executive shall be liable, as
determined for the payment of an excise tax under Section 4999 of the Code (or
any successor provision thereto), with respect to any payment in the nature of
the compensation made by the Institution to (or for the benefit of) Executive
pursuant to this Agreement or otherwise, the Institution shall pay to Executive
an amount determined under the following formula:
An amount equal to: (E x P) + X
WHERE:
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X = E x P
1 - [(FI x (1 - SLI)) + SLI + E]
E = the rate at which the excise tax is assessed under Section
4999 of the Code;
P = the amount with respect to which such excise tax is
assessed, determined without regard to this Section 6;
FI = the highest marginal rate of federal income, employment, and
other taxes (other than taxes imposed under Section 4999 of
the Code) applicable to Executive for the taxable year in
question (including any effective increase in Executive's
tax rate attributable to the disallowance of any deduction);
and
SLI = the sum of the highest marginal rates of income and payroll
tax applicable to Executive under applicable state and local
laws for the taxable year in question (including any
effective increase in Executive's tax rate attributable to
the disallowance of any deduction).
With respect to any payment in the nature of compensation that is made to (or
for the benefit of) Executive under the terms of this Section or otherwise and
on which an excise tax under Section 4999 of the Code will be assessed, the
payment determined under this Section 6 shall be made to Executive on the
earliest of (i) the date the Institution is required to withhold such tax, (ii)
the date the tax is required to be paid by Executive, or (iii) at the time of
the Change in Control. It is the intention of the parties that the Institution
provide Executive with a full tax gross-up under the provisions of this Section
6, so that on a net after-tax basis, the result to Executive shall be the same
as if the excise tax under Section 4999 (or any successor provisions) of the
Code had not been imposed. The tax gross-up may be adjusted if alternative
minimum tax rules are applicable to Executive.
(b) Notwithstanding the foregoing, if it shall subsequently be
determined in a final judicial determination or a final administrative
settlement to which Executive is a party that the excess parachute payment as
defined in Section 4999 of the Code, reduced as described above, is more than
the amount determined as "P," above (such greater amount being hereafter
referred to as the "Determinative Excess Parachute Payment"), then the
Institution's independent accountants shall determine the amount (the
"Adjustment Amount"), the Institution must pay to Executive, in order to put
Executive (or the Institution, as the case may be) in the same position as
Executive (or the Institution, as the case may be) would have been if the amount
determined as "P" above had been equal to the Determinative Excess Parachute
Payment. In determining the Adjustment Amount, the independent accountants shall
take into account any and all taxes (including any penalties and interest) paid
by or for Executive or refunded to Executive or for Executive's benefit. As soon
as practicable after the Adjustment Amount has been so determined, the
Institution shall pay the Adjustment Amount to Executive.
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(c) In each calendar year that Executive receives payments or
benefits under this Agreement, Executive shall report on his state and federal
income tax returns such information as is consistent with the determination made
by the independent accountants of the Institution as described above. The
Institution shall indemnify and hold Executive harmless from any and all losses,
costs and expenses (including without limitation, reasonable attorney's fees,
interest, fines and penalties) which Executive incurs as a result of reporting
such information. Executive shall promptly notify the Institution in writing
whenever Executive receives notice of a judicial or administrative proceeding,
formal or informal, in which the federal tax treatment under Section 4999 of the
Code of any amount paid or payable under this Agreement is being reviewed or is
in dispute. The Institution shall assume control at its expense over all legal
and accounting matters pertaining to such federal tax treatment (except to the
extent necessary or appropriate for Executive to resolve any such proceeding
with respect to any matter unrelated to amounts paid or payable pursuant to this
contract) and Executive shall cooperate fully with the Institution in any such
proceeding. Executive shall not enter into any compromise or settlement or
otherwise prejudice any rights the Institution may have in connection therewith
without prior consent to the Institution.
7. TERMINATION FOR CAUSE.
The term "Termination for Cause" shall mean termination because of: a)
Executive's personal dishonesty, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties, willful
violation of any law, rule, regulation (other than traffic violations or similar
offenses), final cease and desist order or material breach of any provision of
this Agreement which results in a material loss to the Institution or the
Holding Company, or b) Executive's conviction of a crime or act involving moral
turpitude or a final judgement rendered against Executive based upon actions of
Executive which involve moral turpitude. For the purposes of this Section 7, no
act, or the failure to act, on Executive's part shall be "willful" unless done,
or omitted to be done, not in good faith and without reasonable belief that the
action or omission was in the best interests of the Institution or its
affiliates. Notwithstanding the foregoing, Executive shall not be deemed to have
been Terminated for Cause unless and until there shall have been delivered to
him a Notice of Termination which shall include a copy of a resolution duly
adopted by the affirmative vote of not less than a majority of the members of
the Board at a meeting of the Board called and held for that purpose (after
reasonable notice to Executive and an opportunity for him, together with
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board, Executive was guilty of conduct justifying Termination for Cause
and specifying the particulars thereof in detail. Executive shall not have the
right to receive compensation or other benefits for any period after the Date of
Termination for Cause. During the period beginning on the date of the Notice of
Termination for Cause pursuant to Section 8 hereof through the Date of
Termination for Cause, stock options and related limited rights (if any) granted
to Executive under any stock option plan shall not be exercisable nor shall any
unvested awards granted to Executive under any stock benefit plan of the
Institution, the Holding Company or any subsidiary or affiliate thereof, vest.
At the Date of Termination for Cause, such stock options and related limited
rights (if any) and
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any unvested awards shall become null and void and shall not be exercisable by
or delivered to Executive at any time subsequent to such Termination for Cause.
8. NOTICE.
(a) Any purported termination by the Institution or by Executive
shall be communicated by Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment under the
provision so indicated.
(b) "Date of Termination" shall mean the date specified in the Notice
of Termination (which, in the case of a Termination for Cause, shall not be less
than thirty days from the date such Notice of Termination is given); provided,
however, that if a dispute regarding the Executive's termination exists, the
"Date of Termination" shall be determined in accordance with Section 8(c) of
this Agreement.
(c) If, within thirty (30) days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, the Date of Termination shall
be the date on which the dispute is finally determined, either by mutual written
agreement of the parties, by a binding arbitration award, or by a final
judgment, order or decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been perfected) and,
provided further, that the Date of Termination shall be extended by a notice of
dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, in the event the Executive is
terminated for reasons other than Termination for Cause, the Institution will
continue to pay Executive his Base Salary in effect when the notice giving rise
to the dispute was given until the earlier of: i) the resolution of the dispute
in accordance with this Agreement or ii) the expiration of the remaining term of
this Agreement as determined as of the Date of Termination. Amounts paid under
this Section are in addition to all other amounts due under this Agreement and
shall not be offset against or reduce any other amounts due under this
Agreement.
9. POST-TERMINATION OBLIGATIONS.
All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with this Section 9 for one (1) full year
after the earlier of the expiration of this Agreement or termination of
Executive's employment with the Institution. Executive shall, upon reasonable
notice, furnish such information and assistance to the Institution as may
reasonably be required by the Institution in connection with any litigation in
which it or any of its subsidiaries or affiliates is, or may become, a party.
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10. NON-COMPETITION AND NON-DISCLOSURE.
(a) Upon any termination of Executive's employment hereunder pursuant
to Section 4 hereof, Executive agrees not to compete with the Holding Company or
its Subsidiaries for a period of one (1) year following such termination in any
city, town or county in which the Executive's normal business office is located
and the Holding Company or any of its Subsidiaries has an office or has filed an
application for regulatory approval to establish an office, determined as of the
effective date of such termination, except as agreed to pursuant to a resolution
duly adopted by the Board. Executive agrees that during such period and within
said cities, towns and counties, Executive shall not work for or advise, consult
or otherwise serve with, directly or indirectly, any entity whose business
materially competes with the depository, lending or other business activities of
the Holding Company or its Subsidiaries. The parties hereto, recognizing that
irreparable injury will result to the Holding Company or its Subsidiaries, its
business and property in the event of Executive's breach of this Subsection
10(a) agree that in the event of any such breach by Executive, the Holding
Company or its Subsidiaries, will be entitled, in addition to any other remedies
and damages available, to an injunction to restrain the violation hereof by
Executive, Executive's partners, agents, servants, employees and all persons
acting for or under the direction of Executive. Executive represents and admits
that in the event of the termination of his employment pursuant to Section 7
hereof, Executive's experience and capabilities are such that Executive can
obtain employment in a business engaged in other lines and/or of a different
nature than the Holding Company or its Subsidiaries, and that the enforcement of
a remedy by way of injunction will not prevent Executive from earning a
livelihood. Nothing herein will be construed as prohibiting the Holding Company
or its Subsidiaries from pursuing any other remedies available to the Holding
Company or its Subsidiaries for such breach or threatened breach, including the
recovery of damages from Executive.
(b) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Holding Company and
its Subsidiaries as it may exist from time to time, is a valuable, special and
unique asset of the business of the Holding Company and its Subsidiaries.
Executive will not, during or after the term of his employment, disclose any
knowledge of the past, present, planned or considered business activities of the
Holding Company and its Subsidiaries thereof to any person, firm, corporation,
or other entity for any reason or purpose whatsoever unless expressly authorized
by the Board of Directors or required by law. Notwithstanding the foregoing,
Executive may disclose any knowledge of banking, financial and/or economic
principles, concepts or ideas which are not solely and exclusively derived from
the business plans and activities of the Holding Company. Further, Executive may
disclose information regarding the business activities of the Bank or Holding
Company to the Superintendent of Banks of the State of New York, the New York
State Banking Department, OTS and the FDIC pursuant to a formal regulatory
request. In the event of a breach or threatened breach by the Executive of the
provisions of this Section, the Holding Company will be entitled to an
injunction restraining Executive from disclosing, in whole or in part, the
knowledge of the past, present, planned or considered business activities of the
Holding Company or its Subsidiaries or from rendering any services to any
person, firm, corporation, other entity to whom such knowledge, in whole or in
part, has been disclosed or is threatened to be disclosed. Nothing herein will
be construed as prohibiting the Holding Company from
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pursuing any other remedies available to the Holding Company for such breach or
threatened breach, including the recovery of damages from Executive.
11. SOURCE OF PAYMENTS.
(a) All payments provided in this Agreement shall be timely paid in
cash or check from the general funds of the Institution. The Holding Company,
however, unconditionally guarantees payment and provision of all amounts and
benefits due hereunder to Executive and, if such amounts and benefits due from
the Institution are not timely paid or provided by the Institution, such amounts
and benefits shall be paid or provided by the Holding Company.
(b) Notwithstanding any provision herein to the contrary, to the
extent that payments and benefits, as provided by this Agreement, are paid to or
received by Executive under an employment agreement in effect between Executive
and the Holding Company, such compensation payments and benefits paid by the
Holding Company will be subtracted from any amounts due simultaneously to
Executive under similar provisions of this Agreement. Payments pursuant to this
Agreement and the Holding Company Agreement shall be allocated in proportion to
the services rendered and time expended on such activities by Executive as
determined by the Holding Company and the Institution on a quarterly basis.
12. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties
hereto and supersedes any prior employment agreement between the Institution or
any predecessor of the Institution and Executive, except that this Agreement
shall not affect or operate to reduce any benefit or compensation inuring to
Executive of a kind elsewhere provided. No provision of this Agreement shall be
interpreted to mean that Executive is subject to receiving fewer benefits than
those available to him without reference to this Agreement.
13. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit
of, Executive and the Institution and their respective successors and assigns.
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14. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have
been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
15. REQUIRED PROVISIONS.
(a) Any payments made to Executive pursuant to this
Agreement, or otherwise, are subject to and conditioned upon compliance with 12
U.S.C. Section 1828(k) and any rules and regulations promulgated thereunder,
including 12 C.F.R. Part 359.
16. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
17. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
18. GOVERNING LAW.
The validity, interpretation, performance and enforcement of this
Agreement shall be governed by the laws of the State of Delaware without regard
to principles of conflict of laws of this state.
19. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by Executive within fifty
(50) miles from the location of the Institution, in accordance with the rules of
the American Arbitration Institution then in effect. Judgment may be entered on
the arbitrator's award in any court having jurisdiction; provided, however, that
Executive shall be entitled to seek specific performance of his right to be paid
until the Date of
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Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement.
20. PAYMENT OF COSTS AND LEGAL FEES.
In the event any dispute or controversy arising under or in connection
with Executive's termination is resolved in favor of the Executive, whether by
judgment, arbitration or settlement, Executive shall be entitled to the payment
of: (a) all legal fees incurred by Executive in resolving such dispute or
controversy, and (b) any back-pay, including salary, bonuses and any other cash
compensation, fringe benefits and any compensation and benefits due Executive
under this Agreement.
21. INDEMNIFICATION.
(a) The Institution shall provide Executive (including his heirs,
executors and administrators) with coverage under a standard directors' and
officers' liability insurance policy at its expense and shall indemnify
Executive (and his heirs, executors and administrators) to the fullest extent
permitted under Delaware law against all expenses and liabilities reasonably
incurred by him in connection with or arising out of any action, suit or
proceeding in which he may be involved by reason of his having been a director
or officer of the Institution (whether or not he continues to be a director or
officer at the time of incurring such expenses or liabilities), such expenses
and liabilities to include, but not be limited to, judgments, court costs and
attorneys' fees and the cost of reasonable settlements.
22. SUCCESSOR TO THE INSTITUTION.
The Institution shall require any successor or assignee, whether direct
or indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Institution or the Holding
Company, expressly and unconditionally to assume and agree to perform the
Institution's obligations under this Agreement, in the same manner and to the
same extent that the Institution would be required to perform if no such
succession or assignment had taken place.
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SIGNATURES
IN WITNESS WHEREOF, Richmond County Savings Bank and Richmond County
Financial Corp. have caused this Agreement, as amended and restated, to be
executed and their seals to be affixed hereunto by their duly authorized
officers and directors, and Executive has signed this Agreement, on the 1st
day of October 1999.
ATTEST: RICHMOND COUNTY SAVINGS BANK
/s/ Diane L. DeLillo By: /s/ Michael F. Manzulli
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Michael F. Manzulli
For The Entire Board of Directors
[SEAL]
ATTEST: RICHMOND COUNTY FINANCIAL CORP.
(Guarantor)
/s/ Diane L. DeLillo By: /s/ Michael F. Manzulli
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Michael F. Manzulli
For The Entire Board of Directors
[SEAL]
WITNESS: EXECUTIVE
/s/ Diane L. DeLillo /s/ Anthony E. Burke
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Anthony E. Burke
<PAGE>
EXHIBIT 10.7
RICHMOND COUNTY FINANCIAL CORP.
EMPLOYMENT AGREEMENT
(As Amended and Restated)
This AGREEMENT ("Agreement"), originally entered into on February 17, 1998,
is amended and restated in its entirety, effective as of September 21, 1999, by
and between Richmond County Financial Corp. (the "Holding Company"), a
corporation organized under the laws of Delaware, with its principal offices at
1214 Castleton Avenue, Staten Island, New York 10310, and Thomas R. Cangemi
("Executive"). Any reference to "Institution" herein shall mean Richmond County
Savings Bank or any successor thereto.
WHEREAS, the Holding Company wishes to continue to assure itself of the
services of Executive for the period provided in this Agreement; and
WHEREAS, Executive is willing to continue to serve in the employ of the
Holding Company on a full-time basis for said period.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of Executive's employment hereunder, Executive agrees to
serve as Senior Vice President and Chief Financial Officer of the Holding
Company. Executive shall render administrative and management services to the
Holding Company such as are customarily performed by persons in a similar
executive capacity. During said period, Executive also agrees to serve, if
appointed or elected, as the case may be, as an officer and director of any
subsidiary of the Holding Company.
2. TERMS.
(a) The period of Executive's employment under this Agreement shall be
deemed to have commenced as of the date first above written and shall continue
for a period of sixty (60) full calendar months from the effective date of this
Agreement, as amended and restated. Commencing on the date of the execution of
this Agreement, the term of this Agreement shall be extended for one day each
day, so that a constant sixty (60) calendar month term shall remain in effect,
until such time as the board of directors of the Holding Company (the "Board")
or Executive elects not to extend the term of the Agreement by giving written
notice to the other party in accordance with Section 8 of this Agreement, in
which case the term of this Agreement shall be fixed and shall end on the fifth
anniversary of the date of such written notice.
(b) During the period of Executive's employment hereunder, except for
periods of absence occasioned by illness, reasonable vacation periods, and other
reasonable leaves of
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absence, Executive shall devote substantially all his business time, attention,
skill, and efforts to the faithful performance of his duties hereunder including
activities and services related to the organization, operation and management of
the Holding Company and its direct or indirect subsidiaries, including the
Institution, ("Subsidiaries") and participation in community and civic
organizations; provided, however, that, with the approval of the Board, as
evidenced by a resolution of the Board, from time to time, Executive may serve,
or continue to serve, on the boards of directors of, and hold any other offices
or positions in, companies or organizations, which, in the Board's judgment,
will not present any conflict of interest with the Holding Company or its
Subsidiaries, or materially affect the performance of Executive's duties
pursuant to this Agreement.
(c) Notwithstanding anything in this Agreement to the contrary, either
Executive or the Holding Company may terminate Executive's employment with the
Holding Company at any time during the term of this Agreement, subject to the
terms and conditions of this Agreement.
(d) Under no circumstance shall Executive perform as part of his duties as
Senior Vice President and Chief Financial Officer of the Holding Company, in any
respect, directly or indirectly, during the pendency of any temporary or
permanent suspension from the Institution or upon termination of employment with
the Institution, any duties or responsibilities formerly performed at the
Institution.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall constitute
consideration paid by the Holding Company in exchange for the duties described
in Section 1 of this Agreement. The Holding Company shall pay Executive, as
compensation, a salary of not less than $200,000 ("Base Salary"). Base Salary
shall include any amounts of compensation deferred by Executive under any
employee benefit plan or deferred compensation arrangement maintained by the
Holding Company or its Subsidiaries. Base Salary shall be payable bi-weekly.
During the period of this Agreement, Executive's Base Salary shall be reviewed
at least annually; on or about the 30/th/ day of each June. Such review shall
be conducted by the Board or by a committee designated by the Board. The
committee or the Board may increase Executive's Base Salary at any time. Any
increase in Base Salary shall become the new "Base Salary" for purposes of this
Agreement. In addition to the Base Salary provided for in this Section 3(a),
the Holding Company shall also provide Executive, at no premium cost to
Executive, with all such other benefits as provided uniformly to permanent full-
time employees of the Holding Company and its Subsidiaries.
(b) In addition to the Base Salary provided for in paragraph (a) of this
Section 3, the Holding Company will provide Executive with the opportunity to
participate in employee benefit plans, arrangements and perquisites
substantially equivalent to those in which Executive was participating or
otherwise deriving a benefit from immediately prior to the beginning of the term
of this Agreement, as amended and restated, and the Holding Company will not,
without Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect Executive's rights or
benefits thereunder, without separately
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providing for an arrangement that ensures Executive receives or will receive the
economic value that Executive would otherwise lose as a result of such adverse
affect except in the case of any change to the tax-qualified defined benefit
pension plan sponsored by the Institution. Without limiting the generality of
the foregoing provisions of this Subsection (b), Executive shall be entitled to
participate in or receive benefits under any employee benefit plans, whether
tax-qualified or otherwise, including, but not limited to, retirement plans,
supplemental retirement plans, pension plans, profit-sharing plans, employee
stock ownership plans, stock or option plans, health-and-accident plans, medical
coverage or any other employee benefit plan or arrangement made available by the
Holding Company and its Subsidiaries in the future to its senior executives and
key management employees, subject to and on a basis consistent with the terms,
conditions and overall administration of such plans and arrangements (including
designation by the Board of eligibility to participate, if applicable).
Executive shall also be entitled to incentive compensation and bonuses as
provided in any plan or arrangement of the Holding Company or its Subsidiaries
in which Executive is eligible to participate. Nothing paid to Executive under
any such plans or arrangements will be deemed to be in lieu of other
compensation to which Executive is entitled under this Agreement.
(c) In addition to the Base Salary provided for by paragraph (a) of this
Section 3 and other compensation and benefits provided for by paragraph (b) of
this Section 3, the Holding Company shall pay or reimburse Executive for all
reasonable expenses incurred by Executive in performing his obligations under
this Agreement, as mutually agreed to by the Board and Executive.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during Executive's term of employment under this Agreement, the provisions of
this Section 4 shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any of the following: (i) the termination
by the Holding Company of Executive's full-time employment hereunder for any
reason other than Retirement (as defined in paragraph (f) of this Section 4),
termination governed by Section 5(a) of this Agreement, or Termination for Cause
as defined in Section 7 of this Agreement; or (ii) Executive's resignation from
the Holding Company's employ, upon, any (A) notice to Executive by the Holding
Company of non-renewal of the term of this Agreement, (B) failure to elect or
reelect or to appoint or reappoint Executive as Senior Vice President and Chief
Financial Officer or failure to renominate Executive as a director of the
Institution or Holding Company to the extent Executive was previously serving as
a director (unless Executive so consents), (C) material change in Executive's
function, duties, or responsibilities with the Holding Company or its
Subsidiaries, which change would cause Executive's position to become one of
lesser responsibility, importance, or scope from the position and attributes
thereof described in Section 1 of this Agreement, (unless Executive so
consents), (D) relocation of Executive's principal place of employment by more
than 25 miles from its location at the effective date of the Agreement (unless
Executive so consents), (E) reduction in the benefits, arrangements and
perquisites being provided to Executive pursuant to Section 3 of this Agreement,
to which Executive does not consent or for which Executive is not or will not be
provided the economic benefit pursuant to Section 3(b) of this Agreement, (F)
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liquidation or dissolution of the Holding Company or the Institution, or (G)
breach of this Agreement by the Holding Company. Upon the occurrence of any
event described in clauses (A), (B), (C), (D), (E), (F) or (G), above, Executive
shall have the right to elect to terminate his employment under this Agreement
by resignation upon not less than sixty (60) days prior written notice given
within six full calendar months after the event giving rise to said right to
elect.
(b) Upon the occurrence of an Event of Termination, on the Date of
Termination, as defined in Section 8 of this Agreement, the Holding Company
shall be obligated to pay Executive, or, in the event of Executive's subsequent
death, his beneficiary or beneficiaries, or his estate, as the case may be: (i)
the amount of the remaining payments and benefits that Executive would have
earned if he had continued his employment with the Holding Company during the
remaining unexpired term of this Agreement, based on Executive's Base Salary and
benefits provided at the Date of Termination, as set forth in Sections 3(a), (b)
and (d) of this Agreement, as the case may be, and the amount still due
Executive under any paragraph of Section 3 for service rendered through the Date
of Termination. At the election of Executive, which election is to be made
within thirty (30) days of the Date of Termination, such payments shall be made
in a lump sum (without discount for early payment) or paid monthly during the
remaining term of the Agreement following Executive's termination. In the event
that no election is made, payment to Executive will be made in a lump sum. Such
payments shall not be reduced in the event Executive obtains other employment
following termination of employment.
(c) Upon the occurrence of an Event of Termination, Executive will be
entitled to receive benefits due him under or contributed by the Holding Company
or its Subsidiaries on his behalf pursuant to any retirement, incentive, profit
sharing, employee stock ownership, bonus, performance, disability or other
employee benefit plan maintained by the Holding Company or its Subsidiaries to
the extent such benefits are not otherwise paid to Executive under a separate
provision of this Agreement.
(d) To the extent that the Holding Company or its Subsidiaries continue to
offer any life, medical, health, disability or dental insurance plan or
arrangement in which Executive participates in on the last day of his employment
(each being a "Welfare Plan"), after an Event of Termination (as herein
defined), Executive and his dependents shall continue participating in such
Welfare Plans, subject to the same premium contributions on the part of
Executive as were required immediately prior to the Event of Termination until
the earlier of (i) his death (ii) his employment by another employer other than
one of which he is the majority owner or (iii) the end of the remaining term of
this Agreement. If the Holding Company or its Subsidiaries does not offer the
Welfare Plans after the Event of Termination, then the Holding Company shall
provide Executive with a payment equal to the actuarial value of the provision
of such benefit for the period which runs until the earlier of (i) his death;
(ii) his employment by another employer other than one of which he is the
majority owner; or (iii) the end of the remaining term of this Agreement.
(e) In the event that Executive is receiving monthly payments pursuant to
Section 4(b) hereof, on an annual basis, thereafter, between the dates of
January 1st and January 31st of each year, Executive shall elect whether, the
balance of the amount payable under the Agreement at
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that time shall be paid in a lump sum or on a pro rata basis. Such election
shall be irrevocable for the year for which such election is made.
(f) Termination of Executive based on "Retirement" shall mean termination
in accordance with the Holding Company's or the Institution's retirement policy
or in accordance with any retirement arrangement established with Executive's
consent with respect to him. Upon termination of Executive upon Retirement,
Executive shall be entitled to all benefits under any retirement plan of the
Holding Company or its Subsidiaries and other plans to which Executive is a
party or a participant in accordance with the terms of the plan or arrangement.
5. CHANGE IN CONTROL.
(a) For purposes of this Agreement, a "Change in Control" of the Holding
Company or the Institution shall mean an event of a nature that: (i) would be
required to be reported in response to Item 1(a) of the current report on Form
8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"); or (ii) results in a
Change in Control of the Bank or the Holding Company within the meaning of the
Change in Bank Control Act and the Rules and Regulations promulgated by the
Federal Deposit Insurance Corporation ("FDIC") at 12 C.F.R. Section 303.4(a),
with respect to the Institution, and the Rules and Regulations promulgated by
the Office of Thrift Supervision ("OTS") (or its predecessor agency), with
respect to the Holding Company, as in effect on the date of this Agreement; or
(iii) without limitation such a Change in Control shall be deemed to have
occurred at such time as (A) any "person" (as the term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of voting
securities of the Institution or the Holding Company representing 20% or more of
the Institution's or the Holding Company's outstanding voting securities or
right to acquire such securities except for any voting securities of the
Institution purchased by the Holding Company and any voting securities purchased
by any employee benefit plan of the Holding Company or its Subsidiaries, or (B)
individuals who constitute the Board on the date hereof (the "Incumbent Board")
cease for any reason to constitute at least a majority thereof, provided that
any person becoming a director subsequent to the date hereof whose election was
approved by a vote of at least three-quarters of the directors comprising the
Incumbent Board, or whose nomination for election by the Company's stockholders
was approved by a Nominating Committee solely composed of members which are
Incumbent Board members, shall be, for purposes of this clause (B), considered
as though he were a member of the Incumbent Board, or (C) a plan of
reorganization, merger, consolidation, sale of all or substantially all the
assets of the Institution or the Holding Company or similar transaction occurs
or is effectuated in which the Institution or Holding Company is not the
resulting entity, or (D) a proxy statement has been distributed soliciting
proxies from stockholders of the Holding Company, by someone other than the
current management of the Holding Company, seeking stockholder approval of a
plan of reorganization, merger or consolidation of the Holding Company or
Institution with one or more corporations as a result of which the outstanding
shares of the class of securities then subject to such plan or transaction are
exchanged for or converted into cash or property or securities not issued by the
Institution or the Holding Company shall be distributed, or (E) a tender offer
is
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made for 20% or more of the voting securities of the Institution or Holding
Company then outstanding.
(b) If any of the events described in Section 5(a) of this Agreement
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, Executive shall be entitled to the benefits
provided in paragraphs (c), (d), (e), (f), and (g) of this Section 5 upon his
termination of employment on or after the date the Change in Control occurs at
any time during the term of this Agreement due to (i) Executive's dismissal,
(ii) Executive's voluntary resignation for any reason on or within the sixty
(60) day period immediately following the date a Change in Control has occurred,
or (iii) Executive's resignation following any demotion, loss of title, office
or significant authority or responsibility, reduction in the annual compensation
or benefits or relocation of his principal place of employment by more than
twenty-five (25) miles from its location immediately prior to the Change in
Control, unless such termination is because of his death or Termination for
Cause (as defined in Section 7 of this Agreement).
(c) Upon Executive's entitlement to benefits pursuant to Section 5(b), the
Holding Company shall pay Executive, or in the event of his subsequent death,
his beneficiary or beneficiaries, or his estate, as the case may be, as
severance pay or liquidated damages, or both, a sum equal to the greater of:
(i) the payments due for the remaining term of the Agreement; or (ii) five (5)
times Executive's annual compensation for the most recently completed year. In
determining Executive's annual compensation, annual compensation shall include
Base Salary and any other taxable income, including but not limited to amounts
related to the granting, vesting or exercise of restricted stock or stock option
awards, commissions, bonuses, severance payments, retirement benefits, director
or committee fees and fringe benefits paid or to be paid to Executive or paid
for Executive's benefit during any such year, as well as pension, profit sharing
plan, employee stock ownership and other retirement contributions or benefits
(whether or not taxable) made or accrued on behalf of Executive for such year.
At the election of Executive, which election is to be made prior to or within
thirty (30) days of the Date of Termination on or following a Change in Control,
such payment may be made in a lump sum (without discount for early payment) on
or immediately following the Date of Termination (which may be the date a change
in Control occurs) or paid in equal monthly installments during the sixty (60)
months following Executive's termination. In the event that no election is
made, payment to Executive will be made on a monthly basis during the remaining
sixty (60) month term of the Agreement. Such payments shall not be reduced in
the event Executive obtains other employment following termination of
employment.
(d) Upon the occurrence of a Change in Control followed by Executive's
termination of employment, Executive will be entitled to receive benefits due
him under or contributed by the Holding Company or its Subsidiaries on his
behalf pursuant to any retirement, incentive, profit sharing, employee stock
ownership, bonus, performance, disability or other employee benefit plan
maintained by the Institution or the Holding Company on Executive's behalf to
the extent such benefits are not otherwise paid to Executive under a separate
provision of this Agreement.
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(e) Upon the occurrence of a Change in Control and Executive's termination
of employment in connection therewith, the Holding Company will cause to be
continued life, medical and disability coverage substantially identical to the
coverage maintained by the Holding Company or its Subsidiaries for Executive and
any of his dependents covered under such plans prior to the Change in Control.
Such coverage and payments shall cease upon the expiration of sixty (60) full
calendar months following the Date of Termination. In the event Executive's
participation in any such plan or program is barred, the Holding Company shall
arrange to provide Executive and his dependents with benefits substantially
similar as those of which Executive and his dependents would otherwise have been
entitled to receive under such plans and programs from which their continued
participation is barred or provide their economic equivalent.
(f) The use or provision of any membership, license, automobile use, or
other perquisites shall be continued during the remaining term of the Agreement
on the same financial terms and obligations as were in place immediately prior
to the Change in Control. To the extent that any item referred to in this
paragraph will at the end of the term of this Agreement, no longer be available
to Executive, Executive will have the option to purchase all rights then held by
the Holding Company or its Subsidiaries to such item for a price equal to the
then fair market value of the item.
(g) In the event that Executive is receiving monthly payments pursuant to
Section 5(c) hereof, on an annual basis, thereafter, between the dates of
January 1st and January 31st of each year, Executive shall elect whether the
balance of the amount payable under the Agreement at that time shall be paid in
a lump sum or on a pro rata basis pursuant to such section. Such election shall
be irrevocable for the year for which such election is made.
6. CHANGE OF CONTROL RELATED PROVISIONS.
(a) Notwithstanding the preceding provisions of Section 5 of this
Agreement, for any taxable year in which Executive shall be liable, as
determined for the payment of an excise tax under Section 4999 of the Code (or
any successor provision thereto), with respect to any payment in the nature of
the compensation made by the Holding Company or its Subsidiaries to (or for the
benefit of) Executive pursuant to this Agreement or otherwise, the Holding
Company shall pay to Executive an amount determined under the following formula:
An amount equal to: (E x P) + X
WHERE:
X = E x P
1 - [(FI x (1 - SLI)) + SLI + E]
E = the rate at which the excise tax is assessed under Section 4999
of the Code;
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P = the amount with respect to which such excise tax is assessed,
determined without regard to this Section 6;
FI = the highest marginal rate of federal income, employment, and
other taxes (other than taxes imposed under Section 4999 of the
Code) applicable to Executive for the taxable year in question
(including any effective increase in Executive's tax rate
attributable to the disallowance of any deduction); and
SLI = the sum of the highest marginal rates of income and payroll tax
applicable to Executive under applicable state and local laws for
the taxable year in question (including any effective increase in
Executive's tax rate attributable to the disallowance of any
deduction).
With respect to any payment in the nature of compensation that is made to (or
for the benefit of) Executive under the terms of this Section or otherwise and
on which an excise tax under Section 4999 of the Code will be assessed, the
payment determined under this Section 6 shall be made to Executive on the
earliest of (i) the date the Holding Company is required to withhold such tax,
(ii) the date the tax is required to be paid by Executive, or (iii) at the time
of the Change in Control. It is the intention of the parties that the Holding
Company provide Executive with a full tax gross-up under the provisions of this
Section 6, so that on a net after-tax basis, the result to Executive shall be
the same as if the excise tax under Section 4999 (or any successor provisions)
of the Code had not been imposed. The tax gross-up may be adjusted if
alternative minimum tax rules are applicable to Executive.
(b) Notwithstanding the foregoing, if it shall subsequently be determined
in a final judicial determination or a final administrative settlement to which
Executive is a party that the excess parachute payment as defined in Section
4999 of the Code, reduced as described above, is more than the amount determined
as "P," above (such greater amount being hereafter referred to as the
"Determinative Excess Parachute Payment"), then the Holding Company's
independent accountants shall determine the amount (the "Adjustment Amount"),
the Holding Company must pay to Executive, in order to put Executive (or the
Holding Company, as the case may be) in the same position as Executive (or the
Holding Company, as the case may be) would have been if the amount determined as
"P" above had been equal to the Determinative Excess Parachute Payment. In
determining the Adjustment Amount, the independent accountants shall take into
account any and all taxes (including any penalties and interest) paid by or for
Executive or refunded to Executive or for Executive's benefit. As soon as
practicable after the Adjustment Amount has been so determined, the Holding
Company shall pay the Adjustment Amount to Executive.
(c) In each calendar year that Executive receives payments or benefits
under this Agreement, Executive shall report on his state and federal income tax
returns such information as is consistent with the determination made by the
independent accountants of the Holding Company as described above. The Holding
Company shall indemnify and hold Executive harmless from any and all losses,
costs and expenses (including without limitation, reasonable attorney's fees,
interest, fines and penalties) which Executive incurs as a result of reporting
such
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information. Executive shall promptly notify the Holding Company in writing
whenever Executive receives notice of the Bank of a judicial or administrative
proceeding, formal or informal, in which the federal tax treatment under Section
4999 of the Code of any amount paid or payable under this Agreement is being
reviewed or is in dispute. The Holding Company shall assume control at its
expense over all legal and accounting matters pertaining to such federal tax
treatment (except to the extent necessary or appropriate for Executive to
resolve any such proceeding with respect to any matter unrelated to amounts paid
or payable pursuant to this contract) and Executive shall cooperate fully with
the Holding Company in any such proceeding. Executive shall not enter into any
compromise or settlement or otherwise prejudice any rights the Holding Company
may have in connection therewith without prior consent to the Holding Company.
7. TERMINATION FOR CAUSE.
The term "Termination for Cause" shall mean termination because of: 1)
Executive's personal dishonesty, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties, willful
violation of any law, rule, regulation (other than traffic violations or similar
offenses), final cease and desist order or material breach of any provision of
this Agreement which results in a material loss to the Institution or the
Holding Company, or 2) Executive's conviction of a crime or act involving moral
turpitude or a final judgement rendered against Executive based upon actions of
Executive which involve moral turpitude. For the purposes of this Section, no
act, or the failure to act, on Executive's part shall be "willful" unless done,
or omitted to be done, not in good faith and without reasonable belief that the
action or omission was in the best interests of the Institution or its
affiliates. Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered to
him a Notice of Termination which shall include a copy of a resolution duly
adopted by the affirmative vote of not less than three-fourths of the members of
the Board at a meeting of the Board called and held for that purpose (after
reasonable notice to Executive and an opportunity for him, together with
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board, Executive was guilty of conduct justifying Termination for Cause
and specifying the particulars thereof in detail. Executive shall not have
the right to receive compensation or other benefits for any period after
Termination for Cause. During the period beginning on the date of the Notice of
Termination for Cause pursuant to Section 8 hereof through the Date of
Termination, stock options and related limited rights (if any) granted to
Executive under any stock option plan shall not be exercisable nor shall any
unvested awards granted to Executive under any stock benefit plan of the
Institution, the Holding Company or any Subsidiary or affiliate thereof, vest.
At the Date of Termination, such stock options and related limited rights (if
any) and any such unvested awards shall become null and void and shall not be
exercisable by or delivered to Executive at any time subsequent to such
Termination for Cause.
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8. NOTICE.
(a) Any purported termination by the Holding Company or by Executive shall
be communicated by Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Executive's employment under the
provision so indicated.
(b) "Date of Termination" shall mean the date specified in the Notice of
Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given);
provided, however, that if a dispute regarding Executive's termination exists,
the "Date of Termination" shall be determined in accordance with Section 8(c) of
this Agreement.
(c) If, within thirty (30) days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, except upon the occurrence of a
Change in Control and voluntary termination by Executive in which case the Date
of Termination shall be the date specified in the Notice, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding arbitration award, or
by a final judgment, order or decree of a court of competent jurisdiction (the
time for appeal therefrom having expired and no appeal having been perfected)
and; provided, further, that the Date of Termination shall be extended by a
notice of dispute only if such notice is given in good faith and the party
giving such notice pursues the resolution of such dispute with reasonable
diligence. Notwithstanding the pendency of any such dispute, the Holding
Company will continue to pay Executive his full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to, Base
Salary) and continue him as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice of dispute was
given, until the dispute is finally resolved in accordance with this Agreement.
Amounts paid under this Section are in addition to all other amounts due under
this Agreement and shall not be offset against or reduce any other amounts due
under this Agreement.
9. POST-TERMINATION OBLIGATIONS.
All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with this Section 9 for one (1) full year
after the earlier of the expiration of this Agreement or termination of
Executive's employment with the Holding Company. Executive shall, upon
reasonable notice, furnish such information and assistance to the Holding
Company as may reasonably be required by the Holding Company in connection with
any litigation in which it or any of its subsidiaries or affiliates is, or may
become, a party.
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10. NON-COMPETITION AND NON-DISCLOSURE.
(a) Upon any termination of Executive's employment hereunder pursuant to
Section 4 hereof, Executive agrees not to compete with the Holding Company or
its Subsidiaries for a period of one (1) year following such termination in any
city, town or county in which Executive's normal business office is located and
the Holding Company or any of its Subsidiaries has an office or has filed an
application for regulatory approval to establish an office, determined as of the
effective date of such termination, except as agreed to pursuant to a resolution
duly adopted by the Board. Executive agrees that during such period and within
said cities, towns and counties, Executive shall not work for or advise, consult
or otherwise serve with, directly or indirectly, any entity whose business
materially competes with the depository, lending or other business activities of
the Holding Company or its Subsidiaries. The parties hereto, recognizing that
irreparable injury will result to the Holding Company or its Subsidiaries, its
business and property in the event of Executive's breach of this Subsection
10(a) agree that in the event of any such breach by Executive, the Holding
Company or its Subsidiaries, will be entitled, in addition to any other remedies
and damages available, to an injunction to restrain the violation hereof by
Executive, Executive's partners, agents, servants, employees and all persons
acting for or under the direction of Executive. Executive represents and admits
that in the event of the termination of his employment pursuant to Section 7
hereof, Executive's experience and capabilities are such that Executive can
obtain employment in a business engaged in other lines and/or of a different
nature than the Holding Company or its Subsidiaries, and that the enforcement of
a remedy by way of injunction will not prevent Executive from earning a
livelihood. Nothing herein will be construed as prohibiting the Holding Company
or its Subsidiaries from pursuing any other remedies available to the Holding
Company or its Subsidiaries for such breach or threatened breach, including the
recovery of damages from Executive.
(b) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Holding Company and
its Subsidiaries as it may exist from time to time, is a valuable, special and
unique asset of the business of the Holding Company and its Subsidiaries.
Executive will not, during or after the term of his employment, disclose any
knowledge of the past, present, planned or considered business activities of the
Holding Company and its Subsidiaries thereof to any person, firm, corporation,
or other entity for any reason or purpose whatsoever unless expressly authorized
by the Board of Directors or required by law. Notwithstanding the foregoing,
Executive may disclose any knowledge of banking, financial and/or economic
principles, concepts or ideas which are not solely and exclusively derived from
the business plans and activities of the Holding Company. Further, Executive
may disclose information regarding the business activities of the Bank or
Holding Company to the Superintendent of Banks of the State of New York, the New
York Banking Department, OTS and the FDIC pursuant to a formal regulatory
request. In the event of a breach or threatened breach by Executive of the
provisions of this Section, the Holding Company will be entitled to an
injunction restraining Executive from disclosing, in whole or in part, the
knowledge of the past, present, planned or considered business activities of the
Holding Company or its Subsidiaries or from rendering any services to any
person, firm, corporation, or other entity to whom such knowledge, in whole or
in part, has been disclosed or is threatened to be disclosed. Nothing herein
will be construed as prohibiting
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the Holding Company from pursuing any other remedies available to the Holding
Company for such breach or threatened breach, including the recovery of damages
from Executive.
11. SOURCE OF PAYMENTS.
(a) All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Holding Company subject to Section 11(b).
(b) Notwithstanding any provision herein to the contrary, to the extent
that payments and benefits, as provided by this Agreement, are paid to or
received by Executive under an employment agreement in effect between
Executive and the Institution, such compensation payments and benefits paid by
the Institution will be subtracted from any amount due simultaneously to
Executive under similar provisions of this Agreement. Payments pursuant to this
Agreement and the Institution Agreement shall be allocated in proportion to the
level of activity and the time expended on such activities by Executive as
determined by the Holding Company and the Institution on a quarterly basis.
12. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior employment agreement between the Holding Company or any
predecessor of the Holding Company and Executive, except that this Agreement
shall not affect or operate to reduce any benefit or compensation inuring to
Executive of a kind elsewhere provided. No provision of this Agreement shall be
interpreted to mean that Executive is subject to receiving fewer benefits than
those available to him without reference to this Agreement.
13. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive and the Holding Company and their respective successors and assigns.
14. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver
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shall be deemed a continuing waiver unless specifically stated therein, and each
such waiver shall operate only as to the specific term or condition waived and
shall not constitute a waiver of such term or condition for the future as to any
act other than that specifically waived.
15. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
16. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
17. GOVERNING LAW.
The validity, interpretation, performance and enforcement of this Agreement
shall be governed by the laws of the State of Delaware without regard to
principles of conflict of laws of this state.
18. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by Executive within fifty
(50) miles from the location of the Institution, in accordance with the rules of
the American Arbitration Association then in effect. Judgment may be entered on
the arbitrator's award in any court having jurisdiction; provided, however, that
Executive shall be entitled to seek specific performance of his right to be paid
until the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.
19. PAYMENT OF COSTS AND LEGAL FEES AND REINSTATEMENT OF BENEFITS.
In the event any dispute or controversy arising under or in connection with
Executive's termination is resolved in favor of Executive, whether by judgment,
arbitration or settlement, Executive shall be entitled to the payment of: (1)
all legal fees incurred by Executive in resolving such dispute or controversy,
and (2) any back-pay, including salary, bonuses and any other cash compensation,
fringe benefits and any compensation and benefits due Executive under this
Agreement.
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20. INDEMNIFICATION.
The Holding Company shall provide Executive (including his heirs, executors
and administrators) with coverage under a standard directors' and officers'
liability insurance policy at its expense and shall indemnify Executive (and his
heirs, executors and administrators) to the fullest extent permitted under
Delaware law against all expenses and liabilities reasonably incurred by him in
connection with or arising out of any action, suit or proceeding in which he may
be involved by reason of his having been a director or officer of the Holding
Company (whether or not he continues to be a director or officer at the time of
incurring such expenses or liabilities), such expenses and liabilities to
include, but not be limited to, judgments, court costs and attorneys' fees and
the cost of reasonable settlements.
21. SUCCESSOR TO THE HOLDING COMPANY.
The Holding Company shall require any successor or assignee, whether direct
or indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Institution or the Holding
Company, expressly and unconditionally to assume and agree to perform the
Holding Company's obligations under this Agreement, in the same manner and to
the same extent that the Holding Company would be required to perform if no such
succession or assignment had taken place.
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SIGNATURES
IN WITNESS WHEREOF, Richmond County Financial Corp. has caused this
Agreement to be executed and its seal to be affixed hereunto by its duly
authorized officer and its directors, and Executive has signed this Agreement,
on the 21st day of September 1999.
ATTEST: RICHMOND COUNTY FINANCIAL CORP.
/s/ Diane L. DeLillo By: /s/ Michael F. Manzulli
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Michael F. Manzulli
For the Entire Board of Directors
[SEAL]
WITNESS: EXECUTIVE
/s/ Diane L. DeLillo By: /s/ Thomas R. Cangemi
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Thomas R. Cangemi
<PAGE>
EXHIBIT 10.8
RICHMOND COUNTY SAVINGS BANK
EMPLOYMENT AGREEMENT
(AS AMENDED AND RESTATED)
This AGREEMENT ("Agreement") originally entered into as of September 21,
1999, is amended and restated in its entirety effective October 1, 1999, by and
among Richmond County Savings Bank (the "Institution"), a state chartered
savings institution, with its principal administrative office at 1214 Castleton
Avenue, Staten Island, New York, 10310, Richmond County Financial Corp., a
corporation organized under the laws of the State of Delaware, the holding
company for the Institution (the "Holding Company"), and Thomas R. Cangemi
("Executive").
WHEREAS, the Institution wishes to continue to assure itself of the
services of Executive for the period provided in this Agreement; and
WHEREAS, Executive is willing to continue to serve in the employ of the
Institution on a full-time basis for said period.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, Executive agrees to serve as
Senior Vice President and Chief Financial Officer of the Institution. Executive
shall render administrative and management services to the Institution such as
are customarily performed by persons situated in a similar executive capacity.
During said period, Executive also agrees to serve, if elected, as an officer
and director of the Holding Company or any subsidiary of the Institution.
2. TERMS AND DUTIES.
(a) The period of Executive's employment under this Agreement shall be
deemed to have commenced as of the date first above written and shall continue
for a period of sixty (60) full calendar months from the effective date of this
Agreement, as amended and restated. Commencing on the date of execution of this
Agreement, the term of this Agreement shall be extended for one day each day, so
that a constant sixty (60) calendar month term shall remain in effect, until
such time as the disinterested members of the board of directors of the
Institution ("Board") or Executive elects not to extend the term of this
Agreement by giving written notice in accordance with Section 8 of this
Agreement, in which case the term of this Agreement shall be fixed and shall end
on the fifth anniversary date of such written notice.
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(b) During the period of Executive's employment hereunder, except for
periods of absence occasioned by illness, reasonable vacation periods, and other
reasonable leaves of absence, Executive shall devote substantially all his
business time, attention, skill, and efforts to the faithful performance of his
duties hereunder including activities and services related to the organization,
operation and management of the Institution and participation in community and
civic organizations; provided, however, that, with the approval of the Board, as
evidenced by a resolution of the Board, from time to time, Executive may serve,
or continue to serve, on the boards of directors of, and hold any other offices
or positions in, companies or organizations, which, in the Board's judgment,
will not present any conflict of interest with the Institution, or materially
affect the performance of Executive's duties pursuant to this Agreement.
(c) Notwithstanding anything in this Agreement to the contrary, Executive's
employment with the Institution may be terminated by the Institution or the
Executive during the term of this Agreement, subject to the terms and conditions
of this Agreement.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall constitute
consideration paid by the Institution in exchange for duties described in
Section 1 of this Agreement. The Institution shall pay Executive, as
compensation, a salary of not less than $200,000 ("Base Salary"). Base Salary
shall include any amounts of compensation deferred by Executive under any
employee benefit plan or deferred compensation arrangement maintained by the
Institution. Such Base Salary shall be payable bi-weekly. During the period of
this Agreement, Executive's Base Salary shall be reviewed at least annually; on
or about the 30th day of each June. Such review shall be conducted by the Board
or by a committee designated by the Board. The committee or the Board may
increase Executive's Base Salary at any time. Any increase in Base Salary shall
become the "Base Salary" for purposes of this Agreement. In addition to the
Base Salary provided in this Section 3(a), the Institution shall also provide
Executive, at no premium cost to Executive, with all such other benefits as are
provided uniformly to full-time employees of the Institution.
(b) In addition to the Base Salary provided for in paragraph (a) of this
Section 3, the Institution will provide Executive with the opportunity to
participate in employee benefit plans, arrangements and perquisites
substantially equivalent to those in which Executive was participating or
otherwise deriving a benefit from immediately prior to the beginning of the term
of this Agreement, as amended and restated, and the Institution will not,
without Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect Executive's rights or
benefits thereunder, without separately providing for an arrangement that
ensures Executive receives or will receive the economic value that Executive
would otherwise lose as a result of such adverse affect except in the case of
any change to the tax-qualified defined benefit pension plan sponsored by the
Institution. Without limiting the generality of the foregoing provisions of
this Subsection (b), Executive shall be entitled to participate in or receive
benefits under any employee benefit plans, whether tax-qualified or otherwise,
including, but not limited to, retirement plans, supplemental retirement plans,
pension plans, profit-sharing plans, employee stock ownership plans, stock or
option plans,
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health-and-accident plans, medical coverage or any other employee benefit plan
or arrangement made available by the Institution in the future to its senior
executives and key management employees, subject to and on a basis consistent
with the terms, conditions and overall administration of such plans and
arrangements (including designation by the Board of eligibility to participate,
if applicable). Executive shall also be entitled to incentive compensation and
bonuses as provided in any plan or arrangement of the Institution in which
Executive is eligible to participate. Nothing paid to Executive under any such
plans or arrangements will be deemed to be in lieu of other compensation to
which Executive is entitled under this Agreement.
(c) In addition to the Base Salary provided for by paragraph (a) of this
Section 3 and other compensation and benefits provided for by paragraph (b) of
this Section 3, the Holding Company shall pay or reimburse Executive for all
reasonable expenses incurred by Executive in performing his obligations under
this Agreement, as mutually agreed to by the Board and Executive.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during the Executive's term of employment under this Agreement, the provisions
of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any one or more of the following: (i) the
termination by the Institution or the Holding Company of Executive's full-time
employment hereunder for any reason other than Retirement (as defined in
paragraph (f) of this Section 4), termination governed by Section 5(a) of this
Agreement or Termination for Cause, as defined in Section 7 of this Agreement;
or (ii) Executive's resignation from the Institution's employ upon, any, (A)
notice to Executive by the Institution of non-renewal of the term of this
Agreement, (B) failure to elect or reelect or to appoint or reappoint Executive
as Senior Vice President and Chief Financial Officer or failure to re-nominate
Executive as a director of the Institution or Holding Company to the extent
Executive was serving as a director as of the effective date of this Agreement
(unless Executive so consents), (C) material change in Executive's function,
duties, or responsibilities, which change would cause Executive's position to
become one of lesser responsibility, importance, or scope from the position and
attributes thereof described in Section 1, of this Agreement (unless Executive
so consents), (D) relocation of Executive's principal place of employment by
more than 25 miles from its location at the effective date of the Agreement
(unless Executive so consents), (E) reduction in the benefits and perquisites to
the Executive from those being provided (F) liquidation or dissolution of the
Institution or Holding Company, or (G) breach of this Agreement by the
Institution. Upon the occurrence of any event described in clauses (A), (B),
(C), (D), (E), (F) or (G) above, Executive shall have the right to elect to
terminate his employment under this Agreement by resignation upon not less than
sixty (60) days prior written notice given within six full months after the
event giving rise to said right to elect.
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(b) Upon the occurrence of an Event of Termination, on the Date of
Termination, as defined in Section 8 of this Agreement, the Institution shall be
obligated to pay Executive, or, in the event of Executive's subsequent death,
his beneficiary or beneficiaries, or his estate, as the case may be: (i) the
amount of the remaining payments and benefits that Executive would have earned
if he had continued his employment with the Institution during the remaining
unexpired term of this Agreement, based on Executive's Base Salary and benefits
provided at the Date of Termination, as set forth in Sections 3(a), (b) and (d)
of this Agreement, as the case may be, and (ii) the amount still due Executive
under any paragraph of Section 3 for service rendered through the Date of
Termination. At the election of Executive, which election is to be made within
thirty (30) days of the Date of Termination, such payments shall be made in a
lump sum (without discount for early payment) or paid monthly during the
remaining term of the agreement following Executive's termination. In the event
that no election is made, payment to Executive will be made in a lump sum. Such
payments shall not be reduced in the event Executive obtains other employment
following termination of employment.
(c) Upon the occurrence of an Event of Termination, Executive will be
entitled to receive benefits due him under or contributed by the Institution on
his behalf pursuant to any retirement, incentive, profit sharing, employee stock
ownership, bonus, performance, disability or other employee benefit plan
maintained by the Institution to the extent such benefits are not otherwise paid
to Executive under a separate provision of this Agreement.
(d) To the extent that the Institution continues to offer any life,
medical, health, disability or dental insurance plan or arrangement in which
Executive participates in on the last day of his employment (each being a
"Welfare Plan"), after an Event of Termination (as herein defined), Executive
and his dependents shall continue participating in such Welfare Plans, subject
to the same premium contributions on the part of Executive as were required
immediately prior to the Event of Termination until the earlier of (i) his death
(ii) his employment by another employer other than one of which he is the
majority owner or (iii) the end of the remaining term of this Agreement. If the
Institution does not offer the Welfare Plans after the Event of Termination,
then the Institution shall provide Executive with a payment equal to the
actuarial value of the provision of such benefit for the period which runs until
the earlier of (i) his death; (ii) his employment by another employer other than
one of which he is the majority owner; or (iii) the end of the remaining term of
this Agreement.
(e) In the event that Executive is receiving monthly payments pursuant to
Section 4(b) hereof, on an annual basis, thereafter, between the dates of
January 1st and January 31st of each year, Executive shall elect whether, the
balance of the amount payable under the Agreement at that time shall be paid in
a lump sum or on a pro rata basis. Such election shall be irrevocable for the
year for which such election is made.
(f) Termination of Executive based on "Retirement" shall mean termination
in accordance with the Institution's retirement policy or in accordance with any
retirement arrangement established with Executive's consent with respect to him.
Upon termination of Executive upon Retirement, Executive shall be entitled to
all benefits under any retirement plan
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of the Institution and other plans to which Executive is a party or a
participant in accordance with the terms of the plan or arrangement.
5. CHANGE IN CONTROL.
(a) For purposes of this Agreement, a "Change in Control" of the
Institution or Holding Company shall mean an event of a nature that: (i) would
be required to be reported in response to Item 1 of the current report on Form
8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"); or (ii)
results in a Change in Control of the Institution or the Holding Company within
the meaning of the Change in Bank Control Act and the Rules and Regulations
promulgated by the Federal Deposit Insurance Corporation ("FDIC") at 12 C.F.R.
Section 303.4(a), with respect to the Institution, and the Rules and Regulations
promulgated by the Office of Thrift Supervision ("OTS") (or its predecessor
agency), with respect to the Holding Company, as in effect on the date of this
Agreement; or (iii) without limitation such a Change in Control shall be deemed
to have occurred at such time as (A) any "person" (as the term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of voting securities of the Institution or the Holding Company
representing 20% or more of the Institution's or the Holding Company's
outstanding voting securities or right to acquire such securities except for any
voting securities of the Institution purchased by the Holding Company and any
voting securities purchased by any employee benefit plan of the Institution or
the Holding Company, or (B) individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director subsequent to the
date hereof whose election was approved by a vote of at least three-quarters of
the directors comprising the Incumbent Board, or whose nomination for election
by the Holding Company's stockholders was approved by the same Nominating
Committee serving under an Incumbent Board, shall be, for purposes of this
clause (B), considered as though he were a member of the Incumbent Board, or (C)
a plan of reorganization, merger, consolidation, sale of all or substantially
all the assets of the Institution or the Holding Company or similar transaction
occurs in which the Institution or Holding Company is not the resulting entity,
or (D) a proxy statement has been distributed soliciting proxies from
stockholders of the Holding Company, by someone other than the current
management of the Holding Company, seeking stockholder approval of a plan of
reorganization, merger or consolidation of the Holding Company or Institution or
similar transaction with one or more corporations as a result of which the
outstanding shares of the class of securities then subject to such plan or
transaction are exchanged for or converted into cash or property or securities
not issued by the Institution or the Holding Company, or (E) a tender offer is
made for 20% or more of the voting securities of the Stock Institution or
Holding Company then outstanding.
(b) If any of the events described in Section 5(a) of this Agreement
constituting a Change in Control have occurred or the Board has determined that
a Change in Control has occurred, Executive shall be entitled to the benefits
provided in paragraphs (c), (d), (e), (f) and (g) of this Section 5 upon his
termination of employment on or after the date the Change in Control occurs at
any time during the term of this Agreement due to (i) Executive's dismissal,
(ii)
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Executive's voluntary resignation for any reason on or within the sixty (60) day
period immediately following the date a Change in Control has occurred, or (iii)
Executive's resignation following any demotion, loss of title, office or
significant authority or responsibility, material reduction in annual
compensation or benefits or relocation of his principal place of employment by
more than 25 miles from its location immediately prior to the Change in Control,
unless such termination is because of his death, disability, retirement or
Termination for Cause (as defined in Section 7 of this Agreement).
(c) Upon Executive's entitlement to benefits pursuant to Section 5(b), the
Institution shall pay Executive, or in the event of his subsequent death, his
beneficiary or beneficiaries, or his estate, as the case may be, a sum equal to
the greater of: (i) the payments due for the remaining term of the Agreement;
or (ii) five (5) times Executive's annual compensation for the most recently
completed year. In determining Executive's annual compensation, annual
compensation shall include Base Salary and any other taxable income, including
but not limited to amounts related to the granting, vesting or exercise of
restricted stock or stock option awards, commissions, bonuses, severance
payments, retirement benefits, director or committee fees and fringe benefits
paid or to be paid to Executive or paid for Executive's benefit during any such
year, as well as pension, profit sharing plan, employee stock ownership and
other retirement contributions or benefits (whether or not taxable) made or
accrued on behalf of Executive for such year. At the election of Executive,
which election is to be made prior to or within thirty (30) days of the Date of
Termination on or following a Change in Control, such payment may be made in a
lump sum (without discount for early payment) on or immediately following the
Date of Termination (which may be the date a change in Control occurs) or paid
in equal monthly installments during the sixty (60) months following Executive's
termination. In the event that no election is made, payment to Executive will
be made on a monthly basis during the remaining sixty (60) month term of the
Agreement. Such payments shall not be reduced in the event Executive obtains
other employment following termination of employment.
(d) Upon the occurrence of a Change in Control followed by Executive's
termination of employment, Executive will be entitled to receive benefits due
him under or contributed by the Institution on his behalf pursuant to any
retirement, incentive, profit sharing, employee stock ownership, bonus,
performance, disability or other employee benefit plan maintained by the
Institution on Executive's behalf to the extent such benefits are not otherwise
paid to Executive under a separate provision of this Agreement.
(e) Upon the occurrence of a Change in Control and Executive's termination
of employment in connection therewith, the Institution will cause to be
continued life, medical and disability coverage substantially identical to the
coverage maintained by the Institution for Executive and any of his dependents
covered under such plans prior to the Change in Control. Such coverage and
payments shall cease upon the expiration of sixty (60) full calendar months
following the Date of Termination. In the event Executive's participation in
any such plan or program is barred, the Institution shall arrange to provide
Executive and his dependents with benefits substantially similar as those of
which Executive and his dependents would otherwise have been entitled to receive
under such plans and programs from which their continued participation is barred
or provide their economic equivalent.
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(f) The use or provision of any membership, license, automobile use, or
other perquisites shall be continued during the remaining term of the Agreement
on the same financial terms and obligations as were in place immediately prior
to the Change in Control. To the extent that any item referred to in this
paragraph will at the end of the term of this Agreement, no longer be available
to Executive, Executive will have the option to purchase all rights then held by
the Institution to such item for a price equal to the then fair market value of
the item.
(g) In the event that Executive is receiving monthly payments pursuant to
Section 5(c) hereof, on an annual basis, thereafter, between the dates of
January 1st and January 31st of each year, Executive shall elect whether the
balance of the amount payable under the Agreement at that time shall be paid in
a lump sum or on a pro rata basis pursuant to such section. Such election shall
be irrevocable for the year for which such election is made.
6. CHANGE OF CONTROL RELATED PROVISIONS
(a) Notwithstanding the preceding provisions of Section 5 of this Agreement,
for any taxable year in which Executive shall be liable, as determined for
the payment of an excise tax under Section 4999 of the Code (or any
successor provision thereto), with respect to any payment in the nature of
the compensation made by the Institution to (or for the benefit of)
Executive pursuant to this Agreement or otherwise, the Institution shall
pay to Executive an amount determined under the following formula:
An amount equal to: (E x P) + X
WHERE:
X = E x P
1 - [(FI x (1 - SLI)) + SLI + E]
E = the rate at which the excise tax is assessed under Section 4999
of the Code;
P = the amount with respect to which such excise tax is assessed,
determined without regard to this Section 6;
FI = the highest marginal rate of federal income, employment, and
other taxes (other than taxes imposed under Section 4999 of the
Code) applicable to Executive for the taxable year in question
(including any effective increase in Executive's tax rate
attributable to the disallowance of any deduction); and
SLI = the sum of the highest marginal rates of income and payroll tax
applicable to Executive under applicable state and local laws for
the taxable year in
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question (including any effective increase in Executive's tax
rate attributable to the disallowance of any deduction).
With respect to any payment in the nature of compensation that is made to (or
for the benefit of) Executive under the terms of this Section or otherwise and
on which an excise tax under Section 4999 of the Code will be assessed, the
payment determined under this Section 6 shall be made to Executive on the
earliest of (i) the date the Institution is required to withhold such tax, (ii)
the date the tax is required to be paid by Executive, or (iii) at the time of
the Change in Control. It is the intention of the parties that the Institution
provide Executive with a full tax gross-up under the provisions of this Section
6, so that on a net after-tax basis, the result to Executive shall be the same
as if the excise tax under Section 4999 (or any successor provisions) of the
Code had not been imposed. The tax gross-up may be adjusted if alternative
minimum tax rules are applicable to Executive.
(b) Notwithstanding the foregoing, if it shall subsequently be determined
in a final judicial determination or a final administrative settlement to which
Executive is a party that the excess parachute payment as defined in Section
4999 of the Code, reduced as described above, is more than the amount determined
as "P", above (such greater amount being hereafter referred to as the
"Determinative Excess Parachute Payment"), then the Institution's independent
accountants shall determine the amount (the "Adjustment Amount"), the
Institution must pay to Executive, in order to put Executive (or the
Institution, as the case may be) in the same position as Executive (or the
Institution, as the case may be) would have been if the amount determined as "P"
above had been equal to the Determinative Excess Parachute Payment. In
determining the Adjustment Amount, the independent accountants shall take into
account any and all taxes (including any penalties and interest) paid by or for
Executive or refunded to Executive or for Executive's benefit. As soon as
practicable after the Adjustment Amount has been so determined, the Institution
shall pay the Adjustment Amount to Executive.
(c) In each calendar year that Executive receives payments or benefits
under this Agreement, Executive shall report on his state and federal income tax
returns such information as is consistent with the determination made by the
independent accountants of the Institution as described above. The Institution
shall indemnify and hold Executive harmless from any and all losses, costs and
expenses (including without limitation, reasonable attorney's fees, interest,
fines and penalties) which Executive incurs as a result of reporting such
information. Executive shall promptly notify the Institution in writing
whenever Executive receives notice of a judicial or administrative proceeding,
formal or informal, in which the federal tax treatment under Section 4999 of the
Code of any amount paid or payable under this Agreement is being reviewed or is
in dispute. The Institution shall assume control at its expense over all legal
and accounting matters pertaining to such federal tax treatment (except to the
extent necessary or appropriate for Executive to resolve any such proceeding
with respect to any matter unrelated to amounts paid or payable pursuant to this
contract) and Executive shall cooperate fully with the Institution in any such
proceeding. Executive shall not enter into any compromise or settlement or
otherwise prejudice any rights the Institution may have in connection therewith
without prior consent to the Institution.
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7. TERMINATION FOR CAUSE.
The term "Termination for Cause" shall mean termination because of: a)
Executive's personal dishonesty, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties, willful
violation of any law, rule, regulation (other than traffic violations or similar
offenses), final cease and desist order or material breach of any provision of
this Agreement which results in a material loss to the Institution or the
Holding Company, or b) Executive's conviction of a crime or act involving moral
turpitude or a final judgement rendered against Executive based upon actions of
Executive which involve moral turpitude. For the purposes of this Section 7, no
act, or the failure to act, on Executive's part shall be "willful" unless done,
or omitted to be done, not in good faith and without reasonable belief that the
action or omission was in the best interests of the Institution or its
affiliates. Notwithstanding the foregoing, Executive shall not be deemed to have
been Terminated for Cause unless and until there shall have been delivered to
him a Notice of Termination which shall include a copy of a resolution duly
adopted by the affirmative vote of not less than a majority of the members of
the Board at a meeting of the Board called and held for that purpose (after
reasonable notice to Executive and an opportunity for him, together with
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board, Executive was guilty of conduct justifying Termination for Cause
and specifying the particulars thereof in detail. Executive shall not have the
right to receive compensation or other benefits for any period after the Date of
Termination for Cause. During the period beginning on the date of the Notice of
Termination for Cause pursuant to Section 8 hereof through the Date of
Termination for Cause, stock options and related limited rights (if any) granted
to Executive under any stock option plan shall not be exercisable nor shall any
unvested awards granted to Executive under any stock benefit plan of the
Institution, the Holding Company or any subsidiary or affiliate thereof, vest.
At the Date of Termination for Cause, such stock options and related limited
rights (if any) and any unvested awards shall become null and void and shall not
be exercisable by or delivered to Executive at any time subsequent to such
Termination for Cause.
8. NOTICE.
(a) Any purported termination by the Institution or by Executive shall be
communicated by Notice of Termination to the other party hereto. For purposes
of this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.
(b) "Date of Termination" shall mean the date specified in the Notice of
Termination (which, in the case of a Termination for Cause, shall not be less
than thirty days from the date such Notice of Termination is given); provided,
however, that if a dispute regarding the Executive's termination exists, the
"Date of Termination" shall be determined in accordance with Section 8(c) of
this Agreement.
-9-
<PAGE>
(c) If, within thirty (30) days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, the Date of Termination shall be the
date on which the dispute is finally determined, either by mutual written
agreement of the parties, by a binding arbitration award, or by a final
judgment, order or decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been perfected) and,
provided further, that the Date of Termination shall be extended by a notice of
dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, in the event the Executive is
terminated for reasons other than Termination for Cause, the Institution will
continue to pay Executive his Base Salary in effect when the notice giving rise
to the dispute was given until the earlier of: i) the resolution of the dispute
in accordance with this Agreement or ii) the expiration of the remaining term of
this Agreement as determined as of the Date of Termination. Amounts paid under
this Section are in addition to all other amounts due under this Agreement and
shall not be offset against or reduce any other amounts due under this
Agreement.
9. POST-TERMINATION OBLIGATIONS.
All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with this Section 9 for one (1) full year
after the earlier of the expiration of this Agreement or termination of
Executive's employment with the Institution. Executive shall, upon reasonable
notice, furnish such information and assistance to the Institution as may
reasonably be required by the Institution in connection with any litigation in
which it or any of its subsidiaries or affiliates is, or may become, a party.
10. NON-COMPETITION AND NON-DISCLOSURE.
(a) Upon any termination of Executive's employment hereunder pursuant to
Section 4 hereof, Executive agrees not to compete with the Holding Company or
its Subsidiaries for a period of one (1) year following such termination in any
city, town or county in which the Executive's normal business office is located
and the Holding Company or any of its Subsidiaries has an office or has filed an
application for regulatory approval to establish an office, determined as of the
effective date of such termination, except as agreed to pursuant to a resolution
duly adopted by the Board. Executive agrees that during such period and within
said cities, towns and counties, Executive shall not work for or advise, consult
or otherwise serve with, directly or indirectly, any entity whose business
materially competes with the depository, lending or other business activities of
the Holding Company or its Subsidiaries. The parties hereto, recognizing that
irreparable injury will result to the Holding Company or its Subsidiaries, its
business and property in the event of Executive's breach of this Subsection
10(a) agree that in the event of any such breach by Executive, the Holding
Company or its Subsidiaries, will be entitled, in addition to any other remedies
and damages available, to an injunction to restrain the violation hereof by
Executive, Executive's partners, agents, servants, employees and all persons
acting for or under the direction of Executive. Executive represents and admits
that in the event of the termination of his employment pursuant to Section 7
hereof, Executive's experience and capabilities are such that Executive can
obtain employment in a business engaged in other lines and/or of a different
-10-
<PAGE>
nature than the Holding Company or its Subsidiaries, and that the enforcement of
a remedy by way of injunction will not prevent Executive from earning a
livelihood. Nothing herein will be construed as prohibiting the Holding Company
or its Subsidiaries from pursuing any other remedies available to the Holding
Company or its Subsidiaries for such breach or threatened breach, including the
recovery of damages from Executive.
(b) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Holding Company and
its Subsidiaries as it may exist from time to time, is a valuable, special and
unique asset of the business of the Holding Company and its Subsidiaries.
Executive will not, during or after the term of his employment, disclose any
knowledge of the past, present, planned or considered business activities of the
Holding Company and its Subsidiaries thereof to any person, firm, corporation,
or other entity for any reason or purpose whatsoever unless expressly authorized
by the Board of Directors or required by law. Notwithstanding the foregoing,
Executive may disclose any knowledge of banking, financial and/or economic
principles, concepts or ideas which are not solely and exclusively derived from
the business plans and activities of the Holding Company. Further, Executive
may disclose information regarding the business activities of the Bank or
Holding Company to the Superintendent of Banks of the State of New York, the New
York State Banking Department, OTS and the FDIC pursuant to a formal regulatory
request. In the event of a breach or threatened breach by the Executive of the
provisions of this Section, the Holding Company will be entitled to an
injunction restraining Executive from disclosing, in whole or in part, the
knowledge of the past, present, planned or considered business activities of the
Holding Company or its Subsidiaries or from rendering any services to any
person, firm, corporation, other entity to whom such knowledge, in whole or in
part, has been disclosed or is threatened to be disclosed. Nothing herein will
be construed as prohibiting the Holding Company from pursuing any other remedies
available to the Holding Company for such breach or threatened breach, including
the recovery of damages from Executive.
11. SOURCE OF PAYMENTS.
(a) All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Institution. The Holding Company, however,
unconditionally guarantees payment and provision of all amounts and benefits due
hereunder to Executive and, if such amounts and benefits due from the
Institution are not timely paid or provided by the Institution, such amounts and
benefits shall be paid or provided by the Holding Company.
(b) Notwithstanding any provision herein to the contrary, to the extent
that payments and benefits, as provided by this Agreement, are paid to or
received by Executive under an employment agreement in effect, between Executive
and the Holding Company, such compensation payments and benefits paid by the
Holding Company will be subtracted from any amounts due simultaneously to
Executive under similar provisions of this Agreement. Payments pursuant to this
Agreement and the Holding Company Agreement shall be allocated in proportion to
the services rendered and time expended on such activities by Executive as
determined by the Holding Company and the Institution on a quarterly basis.
-11-
<PAGE>
12. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior employment agreement between the Institution or any
predecessor of the Institution and Executive, except that this Agreement shall
not affect or operate to reduce any benefit or compensation inuring to Executive
of a kind elsewhere provided. No provision of this Agreement shall be
interpreted to mean that Executive is subject to receiving fewer benefits than
those available to him without reference to this Agreement.
13. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive and the Institution and their respective successors and assigns.
14. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.
15. REQUIRED PROVISIONS.
(a) Any payments made to Executive pursuant to this Agreement, or
otherwise, are subject to and conditioned upon compliance with 12 U.S.C. Section
1828(k) and any rules and regulations promulgated thereunder, including 12
C.F.R. Part 359.
16. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
-12-
<PAGE>
17. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
18. GOVERNING LAW.
The validity, interpretation, performance and enforcement of this Agreement
shall be governed by the laws of the State of Delaware without regard to
principles of conflict of laws of this state.
19. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by Executive within fifty
(50) miles from the location of the Institution, in accordance with the rules of
the American Arbitration Institution then in effect. Judgment may be entered on
the arbitrator's award in any court having jurisdiction; provided, however, that
Executive shall be entitled to seek specific performance of his right to be paid
until the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.
20. PAYMENT OF COSTS AND LEGAL FEES.
In the event any dispute or controversy arising under or in connection with
Executive's termination is resolved in favor of the Executive, whether by
judgment, arbitration or settlement, Executive shall be entitled to the payment
of: (a) all legal fees incurred by Executive in resolving such dispute or
controversy, and (b2) any back-pay, including salary, bonuses and any other cash
compensation, fringe benefits and any compensation and benefits due Executive
under this Agreement.
21. INDEMNIFICATION.
(a) The Institution shall provide Executive (including his heirs, executors
and administrators) with coverage under a standard directors' and officers'
liability insurance policy at its expense and shall indemnify Executive (and his
heirs, executors and administrators) to the fullest extent permitted under
Delaware law against all expenses and liabilities reasonably incurred by him in
connection with or arising out of any action, suit or proceeding in which he may
be involved by reason of his having been a director or officer of the
Institution (whether or not he continues to be a director or officer at the time
of incurring such expenses or liabilities), such expenses and liabilities to
include, but not be limited to, judgments, court costs and attorneys' fees and
the cost of reasonable settlements.
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<PAGE>
22. SUCCESSOR TO THE INSTITUTION.
The Institution shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Institution or the Holding
Company, expressly and unconditionally to assume and agree to perform the
Institution's obligations under this Agreement, in the same manner and to the
same extent that the Institution would be required to perform if no such
succession or assignment had taken place.
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<PAGE>
SIGNATURES
IN WITNESS WHEREOF, Richmond County Savings Bank and Richmond County
Financial Corp. have caused this Agreement as amended and restated to be
executed and their seals to be affixed hereunto by their duly authorized
officers and directors, and Executive has signed this Agreement, on the
1st day of October 1999.
ATTEST: RICHMOND COUNTY SAVINGS BANK
/s/ Diane L. DeLillo By: /s/ Michael F. Manzulli
- --------------------------------- ------------------------------------
Michael F. Manzulli
For The Entire Board of Directors
[SEAL]
ATTEST: RICHMOND COUNTY FINANCIAL CORP.
(Guarantor)
/s/ Diane L. DeLillo By: /s/ Michael F. Manzulli
- --------------------------------- ------------------------------------
Michael F. Manzulli
For The Entire Board of Directors
[SEAL]
WITNESS: EXECUTIVE
/s/ Diane L. DeLillo /s/ Thomas R. Cangemi
- --------------------------------- ------------------------------------
Thomas R. Cangemi
<PAGE>
EXHIBIT 11
RICHMOND COUNTY FINANCIAL CORP.
STATEMENTS RE: COMPUTATION OF PER SHARE EARNINGS
(In Thousands, Except Share and Per Share Amounts)
<TABLE>
<CAPTION>
For the
Three Months Ended
September 30,
-----------------------------------------
1999 1998
----------------- --------------------
<S> <C> <C>
Net income (loss) $ 9,109 $ 5,354
=========== ===========
Weighted average common shares outstanding 28,081,155 24,362,800
Common stock equivalents due to dilutive effect of stock options - -
---------- ----------
Total weighted average common shares and equivalents 28,081,155 24,362,800
========== ==========
Basic earnings per common and common share equivalents $ 0.32 $ 0.22
=========== ===========
Total weighted average common shares and equivalents outstanding 28,081,155 24,362,800
Additional dilutive shares using ending period market value versus
average market value for the period when utilizing the treasury
stock method regarding stock options 330,123 -
---------- ----------
Total shares for dilutive earnings per share 28,411,278 24,362,800
========== ==========
Diluted earnings per common share equivalents $ 0.32 $ 0.22
=========== ===========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the Form
10-Q and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 37,745
<INT-BEARING-DEPOSITS> 6,832
<FED-FUNDS-SOLD> 650
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,134,279
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 1,427,748
<ALLOWANCE> 14,195
<TOTAL-ASSETS> 2,813,435
<DEPOSITS> 1,641,021
<SHORT-TERM> 176,900
<LIABILITIES-OTHER> 13,918
<LONG-TERM> 628,832
0
0
<COMMON> 327
<OTHER-SE> 352,437
<TOTAL-LIABILITIES-AND-EQUITY> 2,813,435
<INTEREST-LOAN> 26,063
<INTEREST-INVEST> 20,470
<INTEREST-OTHER> 182
<INTEREST-TOTAL> 46,715
<INTEREST-DEPOSIT> 12,513
<INTEREST-EXPENSE> 23,127
<INTEREST-INCOME-NET> 23,588
<LOAN-LOSSES> 300
<SECURITIES-GAINS> 703
<EXPENSE-OTHER> 12,854
<INCOME-PRETAX> 14,351
<INCOME-PRE-EXTRAORDINARY> 14,351
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,109
<EPS-BASIC> 0.32
<EPS-DILUTED> 0.32
<YIELD-ACTUAL> 7.14
<LOANS-NON> 6,301
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 13,885
<CHARGE-OFFS> 25
<RECOVERIES> 36
<ALLOWANCE-CLOSE> 14,195
<ALLOWANCE-DOMESTIC> 7,866
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 6,329
</TABLE>
