SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended March 31, 2000
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OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from to .
------------ ------------
Commission File No. 0-25149
Ridgewood Financial, Inc.
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(Exact name of Small Business Issuer as Specified in Its Charter)
New Jersey 22-3616280
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(State or Other Jurisdiction of Incorporation (I.R.S. Employer
or Organization) Identification No.)
1124 East Ridgewood Avenue, Ridgewood, New Jersey 07450
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(Address of Principal Executive Offices)
(201) 445-4000
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Issuer's Telephone Number, Including Area Code
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
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Number of shares of Common Stock outstanding as of May 1, 2000: 3,180,000
Transitional Small Business Disclosure Format (check one)
YES NO X
--- ---
<PAGE>
RIDGEWOOD FINANCIAL, INC.
Contents
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Page(s)
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PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements.........................1-4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation........................5-6
PART II - OTHER INFORMATION
Item 1. Legal Proceedings......................................... 7
Item 2. Changes in Securities and Use of Proceeds................. 7
Item 3. Defaults upon Senior Securities........................... 7
Item 4. Submission of Matters to a Vote of Security Holders....... 7
Item 5. Other Information......................................... 7
Item 6. Exhibits and Reports on Form 8-K.......................... 7
Signatures.......................................................... 8
<PAGE>
Ridgewood Financial, Inc.
Consolidated Statements of Financial Condition
March 31, 2000
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
03/31/2000 12/31/1999
---------- -----------
(Unaudited)
<S> <C> <C>
Assets
Cash and due from banks 4,939 6,553
Federal funds sold 3,800 3,900
-------- --------
Cash and cash equivalents 8,739 10,453
Investment securities:
Held to maturity (fair values approximates $824 and $847 at 826 860
March 31, 2000 and December 31, 1999, respectively)
Available for sale 37,665 39,476
Mortgage-backed securities:
Held to maturity (fair values approximates $16,417 and $17,088 16,735 17,340
at March 31, 2000 and December 31, 1999, respectively)
Available for sale 26,798 28,265
Loans receivable, net of allowance for loan losses of $946 and $924
at March 31, 2000 and December 31, 1999, respectively 173,255 167,468
Accrued interest receivable 1,686 1,733
Premise and equipment, net 8,005 7,099
Federal Home Loan Bank stock, at cost 2,622 2,622
Other assets 1,498 1,530
-------- --------
Total assets 277,829 276,846
======== ========
Liabilities and Shareholders' Equity
Liabilities:
Deposits
Interest bearing 198,377 195,467
Non-interest bearing 5,865 6,470
-------- --------
Total deposits 204,242 201,937
Borrowed funds 46,648 48,678
Advances from borrowers for tax and insurance 1,294 1,247
Accounts payable and other liabilities 773 369
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Total liabilities 252,957 252,231
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Shareholders' equity:
Preferred stock, no par value. Authorized 5,000,000 shares;
none issued and outstanding - -
Common Stock, par value $.10. Authorized 10,000,000 shares;
3,180,000 shares issued and outstanding in 2000 and 1999 318 318
Additional paid-in-capital 9,420 9,428
Retained earnings 17,980 17,802
Unallocated common stock held by employee stock ownership plan (887) (913)
Accumulated other comprehensive loss (1,959) (2,020)
-------- --------
Total shareholders' equity 24,872 24,615
-------- --------
Total liabilities and shareholders' equity 277,829 276,846
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE>
Ridgewood Financial, Inc.
Consolidated Statements of Income
For the three months ended March 31,2000 and 1999
(Unaudited)
(In Thousands, Except Per Share Data)
03/31/2000 03/31/1999
---------- ----------
Interest income:
Loans receivable 3,025 2,107
Investment securities held to maturity 8 15
Investment securities available for sale
Taxable 252 41
Tax-exempt 285 245
Mortgage-backed securities held to maturity 285 177
Mortgage-backed securities available for sale 432 1,172
Interest on federal funds sold and other short-term
investments and dividends on FHLB stock 158 307
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Total interest income 4,445 4,064
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Interest expense:
Deposits 2,292 2,291
Borrowed funds 674 457
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Total interest expense 2,966 2,748
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Net interest income before provision
for loan loss 1,479 1,316
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Provision for loan losses 22 36
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Net interest income 1,457 1,280
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Non-interest income:
Fees and service charges 40 36
Other 4 1
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Total non-interest income 44 37
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Non-interest expenses:
Salaries and benefits 632 609
Occupancy and equipment 307 315
Advertising and promotion 25 27
SAIF deposit insurance premium 10 30
Other expenses 176 155
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Total non-interest expense 1,150 1,136
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Income before income taxes 351 181
Income tax expense 50 -
--------- ---------
Net Income 301 181
========= =========
Earnings per common share:
Basic 0.10 0.06
Diluted 0.10 0.06
========= =========
Weighted average shares outstanding:
Basic 3,073,564 3,138,912
Diluted 3,073,564 3,138,912
See accompanying notes to consolidated financial statements.
2
<PAGE>
Ridgewood Financial, Inc.
Consolidated Statements of Cash Flows
For the three months ended March 31, 2000 and 1999
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
03/31/2000 03/31/1999
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net Income 301 181
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 48 57
Amortization of loan fees (24) (67)
Premiums and discounts on mortgage-backed
and investment securities 83 400
Provision for loan losses 22 36
Increase in deferred taxes 160 235
Decrease (increase) in accrued interest receivable 47 (40)
(Increase) decrease in other assets, net (128) 137
Increase (decrease) in other liabilities 404 (31)
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Net cash provided by operating activities 913 908
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Cash flows from investing activities:
Net increase in first mortgage loans (5,823) (7,472)
Principal collected on mortgage-backed securities 1,909 12,854
Purchases of investment securities available for sale - (15,771)
Proceeds from sales of investment securities available for sale - 127
Maturities and calls of investment securities available for sale 2,000 -
Principal collected on investment securities 23 -
Purchases of premises and equipment (954) (4,034)
Proceeds from collection of loan fees 1 22
Allocation of employee stock ownership shares 22 25
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Net cash used by investing activities (2,822) (14,249)
------- -------
Cash flows from financing activities:
Net increase (decrease) in deposits 2,305 (9,984)
Proceeds from borrowed funds - 4,487
Repayment of borrowed funds (2,030) -
Net increase in advances from borrowers for
taxes and insurance 47 87
Decrease in IPO subscription payable - (17,809)
Dividends Paid (127) -
Net proceeds from initial public offering - 9,751
Purchase of employee stock ownership plan stock - (601)
Captialization of mutual holding company - (200)
------- -------
Net Cash provided (used) by financing activities 195 (14,269)
------- -------
Net decrease in cash and cash equivalents (1,714) (27,610)
Cash and cash equivalents at beginning of year 10,453 43,474
------- -------
Cash and cash equivalents at end of year 8,739 15,864
======= =======
Supplemental disclosures of cash flow information-cash payments for:
Interest on deposits and borrowed funds 2,974 2,782
Income taxes 5 477
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
RIDGEWOOD FINANCIAL, INC.
Notes to Consolidated Financial Statements
(Unaudited)
(1) Basis of Presentation
The accompanying unaudited consolidated financial statements were
prepared in accordance with instructions for Form 10-QSB and therefore do not
include all disclosure necessary for a complete presentation of the consolidated
statements of financial condition, statements of income and statements of cash
flows in conformity with generally accepted accounting principles. However, all
adjustments which are, in the opinion of management, necessary for the fair
presentation of the interim financial statements have been included. All such
adjustments are of a normal recurring nature. The consolidated statements of
income are not necessarily indicative of results which may be expected for the
entire year or any other interim period. The condensed financial statements as
of and for the three month period ended March 31, 2000 and 1999, include the
accounts of Ridgewood Savings Bank of New Jersey (the "Bank") which became the
wholly owned subsidiary of Ridgewood Financial, Inc. (The "Company") on January
7, 1999. The Company's business is conducted principally through the Bank.
Certain information and footnote 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. It is suggested that these condensed
unaudited financial statement be read in conjunction with the Form 10-KSB for
the year ended December 31, 1999.
(2) Comprehensive income (loss) for the three months ended
03/31/2000 03/31/1999
--------------- -----------
Net income $ 301 $ 181
Change in unrealized gain on securities
available for sale, net of taxes 61 (200)
----- -----
Comprehensive income (loss) $ 362 $ (19)
===== =====
4
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Ridgewood Financial Inc.'s (the "Company") business is conducted
principally through Ridgewood Savings Bank of New Jersey (the "Bank"). All
references to the Company refer collectively to the Company and the Bank.
The Private Securities Litigation Reform Act of 1995 contains safe
harbor provisions regarding forward-looking statements. When used in this
discussion, the words believes, anticipates, contemplates, expects, and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to certain risks and uncertainties which could cause actual results
to differ materially from those projected. Those risks and uncertainties include
changes in interest rates, the ability to control costs and expenses, risks
associated with the effect of opening a new branch, year 2000 issues and general
economic conditions. Ridgewood Financial Inc. undertakes no obligation to
publicly release the results of any revisions to those forward-looking
statements which may be made to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
OVERVIEW
For the three month period ended March 31, 2000, net income increased
$120,000 to $301,000 or$.10 per diluted share, from $181,000, or $.06 per
diluted share, for the same period in 1999. In general, higher net income for
the current year three month period was primarily the result of management's
efforts to increase net interest income. Total non-interest income and expense
remained relatively unchanged for the current year three month period as
compared to the same period in 1999. Effective January 1, 2000, the FDIC reduced
deposit insurance premiums assessments from an annual rate of approximately
.059% to an annual rate of approximately .021% on total deposits.
CHANGES IN FINANCIAL CONDITION
At March 31, 2000, total assets remained relatively constant at $277.8
million from $276.8 million at December 31, 1999. Though total assets remained
relatively constant at March 31, 2000, premises and equipment was the most
significant increase. At March 31, 2000, premises and equipment increased
approximately $910,000 to $8.01 million from $7.10 million at December 31, 1999,
as the Company continued construction renovations on its new branch office and
corporate headquarters on East Ridgewood Avenue. At March 31, 2000, the Company
estimated that additional costs to complete the renovations of this new location
to be $620,000. The new location was opened for business on May 1, 2000.
Non-interest bearing deposits decreased approximately $600,000 to $5.87 million
at March 31, 2000 from $6.47 million at December 31, 1999 as a result of normal
periodic fluctuations.
RESULTS OF OPERATIONS
Net Interest Income. Net interest income before provision for loan losses
for the three month period ended March 31, 2000 increased approximately
$160,000, or12.1%, to $1.48 million compared to $1.32 million for the same
period in 1999. Net interest income (on a tax equivalent basis) before provision
for loan losses for the three month period March 31, 2000 increased
approximately $190,000, or 13.2 %, to $1.63 million compared to $1.44 million
for the same period in 1999. The interest rate spread (on a tax equivalent
basis), which is the difference between the yield on average interest earning
assets less the cost of interest bearing liabilities, increased to 2.20 % for
the three month period ended March 31, 2000 from 1.86 % for the same period in
1999. The improved net interest rate spread for the
5
<PAGE>
current year period was primarily attributed to the increase in the total
average balance of loans receivable, net and the average costs of funds for
total average interest-bearing liabilities remaining relatively constant.
Competitive pressure and higher interest rates paid on deposits in the future
may reduce the spread between asset yields and the cost of funds.
Interest Income. Total interest income increased to $4.45 million for the
three months ended March 31, 2000 from $4.06 million for the same period in
1999. Interest income on a tax equivalent basis, increased to $4.59 million for
the three months ended March 31, 2000 from $4.19 million for the same period in
1999. The average interest rate yield earned for total interest earning assets
for the current year three month period was 7.01% compared to 6.68% for the same
period in 1999. The increase in total interest income was primarily related to
the increase in the total average balance of loans receivable, net offset by a
decline in the total average balance of the securities available for sale
portfolio.
Interest income on loans receivable, net increased approximately $920,000
to $3.03 million for the current year three month period from $2.11 million for
the same period in 1999. Total average balances of loan receivables, net
increased $58.8 million resulting from new net loan originations including the
purchase of $15.2 million in residential mortgage loans in May 1999. Such
increase in interest income on loans was offset by a decline of 56 basis points
in the average interest rate yield. For the current year three month period, the
average interest rate yield was 7.21% compared to 7.77% for the same period in
1999.
Interest income on securities available for sale declined approximately
$491,000 to $969,000 for the current year three month period from $1.46 million
for the same period in 1999. Interest income on securities available for sale on
a tax equivalent basis declined approximately $460,000 to $1.12 million for the
current year three month period from $1.58 million for the same period in 1999.
Lower interest income was due to a $40.8 million decline in the total average
balance of the securities for sale portfolio. Such decline in the average
balance was related to the sale of mortgage backed securities during July 1999.
The average interest rate yield for the current year three month period was
6.72% compared to 5.98% for the same period in 1999.
Interest expense. Total interest expense for the three month period ended
March 31, 2000 increased approximately $220,000 to $2.97 million from $2.75
million for the same period in 1999. The increase was primarily related to an
increase in the average balance of borrowed funds totaling $14.2 million to
$48.1 million at March 31, 2000 . Average cost of funds for borrowed funds was
5.64% for the current year three month period compared to 5.46% for the same
period in 1999. Average cost of funds for total interest-bearing liabilities for
the current year three month period was 4.81% compared to 4.82% for the same
period in 1999.
Provision for loan losses. For the three months ended March 31, 2000, the
provision for loan loss was $22,000 as compared to $36,000 for the comparable
1999 period. Non-performing loans at March 31, 2000 were $69,000 compared to
$133,000 at December 31, 1999. Management continually evaluates the adequacy of
the allowance for loan losses, which encompasses the overall risk
characteristics of the various portfolio segments, past experience with losses,
the impact of economic conditions on borrowers and other relevant factors which
may come to the attention of management. Although the Company maintains its
allowance for loan losses at a level that it considers to be adequate to provide
for the inherent risk of loss in its loan portfolio, there can be no assurance
that future losses will not exceed estimated amounts or that additional
provisions for loan losses will not be required in future periods.
6
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
Not applicable.
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
---------------------------------------------------
Not applicable.
Item 5. Other Information
-----------------
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) 3(i) Certificate of Incorporation of Ridgewood Financial, Inc.*
3(ii) Bylaws of Ridgewood Financial, Inc.*
10.1 Amended Form of Employment Agreement with Susan E. Naruk
10.2 Amended Form of Employment Agreement with Nelson Fiordalisi
10.5 Supplemental Executive Retirement Plan*
27 Financial Data Schedule (electronic data filing only)
* Incorporated by reference to the identically numbered exhibits
of the Registrant's Form SB-2 (333-62363).
(b) No reports on Form 8-K were filed during the quarter ended
March 31, 2000.
7
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
RIDGEWOOD FINANCIAL, INC.
Date: May 12, 2000 By: /s/Susan E. Naruk
---------------------------------------------
Susan E. Naruk
President and Chief Executive Officer
(Principal Executive Officer)
(Duly Authorized Officer)
Date: May 12, 2000 By: /s/John Scognamiglio
--------------------------------------------
John Scognamiglio
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer and
Chief Accounting Officer)
8
EXHIBIT 10.1
<PAGE>
FORM OF EMPLOYMENT AGREEMENT
THIS AGREEMENT, is entered into this 22nd day of June 1998, ("Effective
Date") by and between Ridgewood Savings Bank of New Jersey, Ridgewood, New
Jersey (the "Savings Bank") and Susan E. Naruk (the "Executive").
WITNESSETH
WHEREAS, the Executive has heretofore been employed by the Savings Bank
as the President and Chief Executive Officer and is experienced in all phases of
the business of the Savings Bank; and
WHEREAS, the Savings Bank desires to be ensured of the Executive's
continued active participation in the business of the Savings Bank; and
WHEREAS, in order to induce the Executive to remain in the employ of
the Savings Bank and in consideration of the Executive's agreeing to remain in
the employ of the Savings Bank, the parties desire to specify the continuing
employment relationship between the Savings Bank and the Executive;
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereby agree as follows:
1. Employment. The Savings Bank hereby employs the Executive in the
----------
capacity of President and Chief Executive Officer. The Executive hereby accepts
said employment and agrees to render such administrative and management services
to the Savings Bank and to any to-be-formed parent holding company ("Parent") as
are currently rendered and as are customarily performed by persons situated in a
similar executive capacity. The Executive shall promote the business of the
Savings Bank and Parent. The Executive's other duties shall be such as the Board
of Directors for the Savings Bank (the "Board of Directors" or "Board") may from
time to time reasonably direct, including normal duties as an officer of the
Savings Bank.
2. Term of Employment. The term of employment of Executive under this
------------------
Agreement shall be for the period commencing on the Effective Date and ending
thirty-six (36) months thereafter ("Term"). Additionally, on, or before, each
annual anniversary date from the Effective Date, the Term of employment under
this Agreement shall be extended for up to an additional period beyond the then
effective expiration date upon a determination and resolution of the Board of
Directors that the performance of the Executive has met the requirements and
standards of the Board, and that the Term of such Agreement shall be extended.
References herein to the Term of this Agreement shall refer both to the initial
term and successive terms.
<PAGE>
3. Compensation, Benefits and Expenses.
-----------------------------------
(a) Base Salary. The Savings Bank shall compensate and pay the
Executive during the Term of this Agreement a minimum base salary at the rate of
$_______ per annum ("Base Salary"), payable in cash not less frequently than
monthly; provided, that the rate of such salary shall be reviewed by the Board
of Directors not less often than annually, and the Executive shall be entitled
to receive increases at such percentages or in such amounts as determined by the
Board of Directors. The base salary may not be decreased without the Executive's
express written consent.
(b) Discretionary Bonus. The Executive shall be entitled to
participate in an equitable manner with all other senior management employees of
the Savings Bank in discretionary bonuses that may be authorized and declared by
the Board of Directors to its senior management executives from time to time. No
other compensation provided for in this Agreement shall be deemed a substitute
for the Executive's right to participate in such discretionary bonuses when and
as declared by the Board.
(c) Participation in Benefit and Retirement Plans. The Executive
shall be entitled to participate in and receive the benefits of any plan of the
Savings Bank which may be or may become applicable to senior management relating
to pension or other retirement benefit plans, profit-sharing, stock options or
incentive plans, or other plans, benefits and privileges given to employees and
executives of the Savings Bank, to the extent commensurate with her then duties
and responsibilities, as fixed by the Board of Directors of the Savings Bank.
(d) Participation in Medical Plans and Insurance Policies. The
Executive shall be entitled to participate in and receive the benefits of any
plan or policy of the Savings Bank which may be or may become applicable to
senior management relating to life insurance, short and long term disability,
medical, dental, eye-care, prescription drugs or medical reimbursement plans.
Additionally, Executive's dependent family shall be eligible to participate in
medical and dental insurance plans sponsored by the Savings Bank or Parent with
the cost of such premiums paid by the Savings Bank.
(e) Vacations and Sick Leave. The Executive shall be entitled to
paid annual vacation leave in accordance with the policies as established from
time to time by the Board of Directors, which shall in no event be less than
four weeks per annum. The Executive shall also be entitled to an annual sick
leave benefit as established by the Board for senior management employees of the
Savings Bank. The Executive shall not be entitled to receive any additional
compensation from the Savings Bank for failure to take a vacation or sick leave,
nor shall she be able to accumulate unused vacation or sick leave from one year
to the next, except to the extent authorized by the Board of Directors.
(f) Expenses. The Savings Bank shall reimburse the Executive or
otherwise provide for or pay for all reasonable expenses incurred by the
Executive in furtherance of, or in
2
<PAGE>
connection with the business of the Savings Bank, including, but not by way of
limitation, automobile and traveling expenses, and all reasonable entertainment
expenses, subject to such reasonable documentation and other limitations as may
be established by the Board of Directors of the Savings Bank. If such expenses
are paid in the first instance by the Executive, the Savings Bank shall
reimburse the Executive therefor.
(g) Changes in Benefits. The Savings Bank shall not make any
changes in such plans, benefits or privileges previously described in Section
3(c), (d) and (e) which would adversely affect the Executive's rights or
benefits thereunder, unless such change occurs pursuant to a program applicable
to all executive officers of the Savings Bank and does not result in a
proportionately greater adverse change in the rights of, or benefits to, the
Executive as compared with any other executive officer of the Savings Bank.
Nothing paid to Executive under any plan or arrangement presently in effect or
made available in the future shall be deemed to be in lieu of the salary payable
to Executive pursuant to Section 3(a) hereof.
4. Loyalty; Noncompetition.
-----------------------
(a) The Executive shall devote her full time and attention to the
performance of her employment under this Agreement. During the term of the
Executive's employment under this Agreement, the Executive shall not engage in
any business or activity contrary to the business affairs or interests of the
Savings Bank or Parent.
(b) Nothing contained in this Section 4 shall be deemed to
prevent or limit the right of Executive to invest in the capital stock or other
securities of any business dissimilar from that of the Savings Bank or Parent,
or, solely as a passive or minority investor, in any business.
(c) Executive hereby agrees that for a period of one year
following Executive's voluntary termination of employment, absent a Change in
Control of the Bank, Employee shall not engage in providing professional
services or enter into employment as an employee, director, consultant,
representative, or similar relationship to any financial services enterprise
(including but not limited to a savings and loan association, bank, credit
union, or insurance company) whereby the Executive will have a work location
within seven miles of any office of the Bank existing as of the date of
termination of employment of the Executive. This limitation on future activities
shall not affect the payment of previously vested benefits under the
compensation and benefit plans of the Bank or for compensation payable in
accordance with Section 9 of the Agreement.
5. Standards. During the term of this Agreement, the Executive shall
---------
perform her duties in accordance with such reasonable standards expected of
executives with comparable positions in comparable organizations and as may be
established from time to time by the Board of Directors.
3
<PAGE>
6. Termination and Termination Pay. The Executive's employment under
-------------------------------
this Agreement shall be terminated upon any of the following occurrences:
(a) The death of the Executive during the term of this Agreement,
in which event the Executive's estate shall be entitled to receive the
compensation due the Executive through the last day of the third calendar month
following the date of the Executive's death.
(b) The Board of Directors may terminate the Executive's
employment at any time, but any termination by the Board of Directors other than
termination for Just Cause, shall not prejudice the Executive's right to
compensation or other benefits under the Agreement. The Executive shall have no
right to receive compensation or other benefits for any period after termination
for Just Cause. The Board may within its sole discretion, acting in good faith,
terminate the Executive for Just Cause and shall notify such Executive
accordingly. Termination for "Just Cause" shall include termination because of
the Executive's personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order, or material
breach of any provision of the Agreement.
(c) Except as provided pursuant to Section 9 hereof, in the event
Executive's employment under this Agreement is terminated by the Board of
Directors without Just Cause, the Savings Bank shall be obligated to continue to
pay the Executive the salary provided pursuant to Section 3(a) herein, up to the
date of termination of the remaining Term of this Agreement, but in no event for
a period of less than twelve months, and the cost of Executive obtaining all
health, life, disability, and other benefits which the Executive would be
eligible to participate in through such date based upon the benefit levels
substantially equal to those being provided Executive at the date of termination
of employment.
(d) The voluntary termination by the Executive during the term of
this Agreement with the delivery of no less than 60 days written notice to the
Board of Directors, other than pursuant to Section 9(b), in which case the
Executive shall be entitled to receive only the compensation, vested rights, and
all employee benefits up to the date of such termination.
7. Regulatory Exclusions. Notwithstanding anything herein to the
----------------------
contrary, any payments made to the Executive pursuant to the Agreement, or
otherwise, shall be subject to and conditioned upon compliance with 12
USCss.1828(k) and any regulations promulgated thereunder.
8. Disability. If the Executive shall become disabled or incapacitated
----------
to the extent that she is unable to perform her duties hereunder, by reason of
medically determinable physical or mental impairment, as determined by a doctor
engaged by the Board of Directors, Executive shall nevertheless continue to
receive the compensation and benefits provided under the terms of this Agreement
as follows: 100% of such compensation and benefits for a period of 6 months, but
not exceeding the remaining term of the Agreement, and 50% thereafter for an
additional six month
4
<PAGE>
period, not exceeding the remaing Term. Such benefits noted herein shall be
reduced by any benefits otherwise provided to the Executive during such period
under the provisions of disability insurance coverage in effect for Savings Bank
employees. Thereafter, Executive shall be eligible to receive benefits provided
by the Savings Bank under the provisions of disability insurance coverage in
effect for Savings Bank employees. Upon returning to active full-time
employment, the Executive's full compensation as set forth in this Agreement
shall be reinstated as of the date of commencement of such activities. In the
event that the Executive returns to active employment on other than a full-time
basis, then her compensation (as set forth in Section 3(a) of this Agreement)
shall be reduced in proportion to the time spent in said employment, or as shall
otherwise be agreed to by the parties.
9. Change in Control.
-----------------
(a) Notwithstanding any provision herein to the contrary, in the
event of the involuntary termination of Executive's employment during the term
of this Agreement following any Change in Control of the Savings Bank or Parent,
or within 24 months thereafter of such Change in Control, absent Just Cause,
Executive shall be paid an amount equal to the product of 2.999 times the
Executive's "base amount" as defined in Section 280G(b)(3) of the Internal
Revenue Code of 1986, as amended (the "Code") and regulations promulgated
thereunder. Said sum shall be paid, at the option of Executive, either in one
(1) lump sum within thirty (30) days of such termination of service or in
periodic payments over the next 36 months or the remaining term of this
Agreement, whichever is less, as if Executive's employment had not been
terminated, and such payments shall be in lieu of any other future payments
which the Executive would be otherwise entitled to receive under Section 6 of
this Agreement. Further, such Employee and dependents shall continue to be
eligible to participate in the life insurance and medical/dental insurance
reimbursement program maintained by the Savings Bank or its successor entity for
a period of not less than 36 months following termination of employment and
continue to have such costs for enrollment and benefits coverages paid by the
Savings Bank or Parent. Notwithstanding the forgoing, all sums payable hereunder
shall be reduced in such manner and to such extent so that no such payments made
hereunder when aggregated with all other payments to be made to the Executive by
the Savings Bank or the Parent shall be deemed an "excess parachute payment" in
accordance with Section 280G of the Code and be subject to the excise tax
provided at Section 4999(a) of the Code. The term "Change in Control" shall
refer to (i) the control of voting proxies whether related to stockholders or
mutual members by any person, other than the Board of Directors of the Savings
Bank, to direct more than 25% of the outstanding votes of the Savings Bank, the
control of the election of a majority of the Savings Bank's directors, or the
exercise of a controlling influence over the management or policies of the
Savings Bank by any person or by persons acting as a group within the meaning of
Section 13(d) of the Exchange Act, (ii) an event whereby the FDIC, the New
Jersey Department of Banking ("Department") or any other department, agency or
quasi-agency of the federal government cause or bring about, without the consent
of the Savings Bank, a change in the corporate structure or organization of the
Savings Bank; (iii) an event whereby the FDIC, the Department or any other
agency or quasi-agency of the federal government cause or bring about, without
the consent of the Savings Bank, a taxation or involuntary distribution of
retained earnings or proceeds from the sale of securities to
5
<PAGE>
depositors, borrowers, any government agency or organization or civic or
charitable organization; or (iv) a merger or other business combination between
the Savings Bank and another corporate entity whereby the Savings Bank is not
the surviving entity. In the event that the Savings Bank shall convert in the
future from mutual-to-stock form, the term "Change in Control" shall also refer
to: (i) the sale of all, or a material portion, of the assets of the Savings
Bank or the Parent; (ii) the merger or recapitalization of the Savings Bank or
the Parent whereby the Savings Bank or the Parent is not the surviving entity;
(iii) a change in control of the Savings Bank or the Parent, as otherwise
defined or determined by the Department, the FDIC, the Federal Reserve Board or
regulations promulgated by such agencies; or (iv) the acquisition, directly or
indirectly, of the beneficial ownership (within the meaning of that term as it
is used in Section 13(d) of the Securities Exchange Act of 1934 and the rules
and regulations promulgated thereunder) of twenty-five percent (25%) or more of
the outstanding voting securities of the Savings Bank or the Parent by any
person, trust, entity or group. The term "person" means an individual other than
the Executive, or a corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated organization or any other
form of entity not specifically listed herein.
(b) Notwithstanding any other provision of this Agreement to the
contrary, Executive may voluntarily terminate her employment during the term of
this Agreement following a Change in Control of the Savings Bank or Parent, or
within twenty-four months following such Change in Control, and Executive (or
the Executive's estate in the event of death after a Change in Control but prior
to payment) shall thereupon be entitled to receive the payment described in
Section 9(a) of this Agreement, upon the occurrence, or within 120 days
thereafter, of any of the following events, which have not been consented to in
advance by the Executive in writing: (i) if Executive would be required to move
her personal residence or perform her principal executive functions more than
thirty-five (35) miles from the Executive's primary office as of the signing of
this Agreement; (ii) if in the organizational structure of the Savings Bank,
Executive would be required to report to a person or persons other than the
Board of Directors of the Savings Bank; (iii) if the Savings Bank should fail to
maintain Executive's base compensation in effect as of the date of the Change in
Control and the existing employee benefits plans, including material fringe
benefit, stock option and retirement plans; (iv) if Executive would be assigned
duties and responsibilities other than those normally associated with her
position as referenced at Section 1, herein; (v) if Executive's responsibilities
or authority have in any way been materially diminished or reduced; or (vi) if
Executive would not be reelected to the Board of Directors of the Savings Bank.
10. Withholding. All payments required to be made by the Savings Bank
-----------
hereunder to the Executive shall be subject to the withholding of such amounts,
if any, relating to tax and other payroll deductions as the Savings Bank may
reasonably determine should be withheld pursuant to any applicable law or
regulation.
6
<PAGE>
11. Successors and Assigns.
----------------------
(a) This Agreement shall inure to the benefit of and be binding
upon any corporate or other successor of the Savings Bank or Parent which shall
acquire, directly or indirectly, by merger, consolidation, purchase or
otherwise, all or substantially all of the assets or stock of the Savings Bank
or Parent.
(b) Since the Savings Bank is contracting for the unique and
personal skills of the Executive, the Executive shall be precluded from
assigning or delegating her rights or duties hereunder without first obtaining
the written consent of the Savings Bank.
12. Amendment; Waiver. No provisions of this Agreement may be modified,
------------------
waived or discharged unless such waiver, modification or discharge is agreed to
in writing, signed by the Executive and such officer or officers as may be
specifically designated by the Board of Directors of the Savings Bank to sign on
its behalf. No waiver by any party hereto at any time of any breach by any other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
13. Governing Law. The validity, interpretation, construction and
--------------
performance of this Agreement shall be governed by the laws of the United States
where applicable and otherwise by the substantive laws of the State of New
Jersey.
14. Nature of Obligations. Nothing contained herein shall create or
----------------------
require the Savings Bank to create a trust of any kind to fund any benefits
which may be payable hereunder, and to the extent that the Executive acquires a
right to receive benefits from the Savings Bank hereunder, such right shall be
no greater than the right of any unsecured general creditor of the Savings Bank.
15. Headings. The section headings contained in this Agreement are
--------
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
16. Severability. The provisions of this Agreement shall be deemed
------------
severable and the invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of the other
provisions of this Agreement, which shall remain in full force and effect.
17. Arbitration. Any controversy or claim arising out of or relating to
-----------
this Agreement, or the breach thereof, shall be settled by arbitration in
accordance with the rules then in effect of the district office of the American
Arbitration Association ("AAA") nearest to the home office of the Savings Bank,
and judgment upon the award rendered may be entered in any court having
jurisdiction thereof, except to the extent that the parties may otherwise reach
a mutual settlement of such issue. Further, the settlement of the dispute to be
approved by the Board of the Savings Bank may include a provision for the
reimbursement by the Savings Bank to the Executive for all reasonable costs and
expenses, including reasonable attorneys' fees, arising from such dispute,
7
<PAGE>
proceedings or actions, or the Board of the Savings Bank or the Parent may
authorize such reimbursement of such reasonable costs and expenses by separate
action upon a written action and determination of the Board following settlement
of the dispute. Such reimbursement shall be paid within ten (10) days of
Executive furnishing to the Savings Bank or Parent evidence, which may be in the
form, among other things, of a canceled check or receipt, of any costs or
expenses incurred by Executive.
18. Confidential Information. The Executive acknowledges that during her
------------------------
employment she will learn and have access to confidential information regarding
the Savings Bank and the Parent and its customers and businesses ("Confidential
Information"). The Executive agrees and covenants not to disclose or use for her
own benefit, or the benefit of any other person or entity, any such Confidential
Information, unless or until the Savings Bank or the Parent consents to such
disclosure or use or such information becomes common knowledge in the industry
or is otherwise legally in the public domain. The Executive shall not knowingly
disclose or reveal to any unauthorized person any Confidential Information
relating to the Savings Bank, the Parent, or any subsidiaries or affiliates, or
to any of the businesses operated by them, and the Executive confirms that such
information constitutes the exclusive property of the Savings Bank and the
Parent. The Executive shall not otherwise knowingly act or conduct herself (a)
to the material detriment of the Savings Bank or the Parent, or its
subsidiaries, or affiliates, or (b) in a manner which is inimical or contrary to
the interests of the Savings Bank or the Parent. Executive acknowledges and
agrees that the existence of this Agreement and its terms and conditions
constitutes Confidential Information of the Savings Bank, and the Executive
agrees not to disclose the Agreement or its contents without the prior written
consent of the Savings Bank. Notwithstanding the foregoing, the Savings Bank
reserves the right in its sole discretion to make disclosure of this Agreement
as it deems necessary or appropriate in compliance with its regulatory reporting
requirements. Notwithstanding anything herein to the contrary, failure by the
Executive to comply with the provisions of this Section may result in the
immediate termination of the Agreement within the sole discretion of the Savings
Bank, disciplinary action against the Executive taken by the Savings Bank,
including but not limited to the termination of employment of the Executive for
breach of the Agreement and the provisions of this Section, and other remedies
that may be available in law or in equity.
19. Entire Agreement. This Agreement together with any understanding or
----------------
modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement between the parties hereto.
EXHIBIT 10.2
<PAGE>
FORM OF EMPLOYMENT AGREEMENT
THIS AGREEMENT, is entered into this 22nd day of June 1998, ("Effective
Date") by and between Ridgewood Savings Bank of New Jersey, Ridgewood, New
Jersey (the "Savings Bank") and Nelson Fiordalisi (the "Executive").
WITNESSETH
WHEREAS, the Executive has heretofore been employed by the Savings Bank
as the Executive Vice President and Chief Operating Officer and is experienced
in all phases of the business of the Savings Bank; and
WHEREAS, the Savings Bank desires to be ensured of the Executive's
continued active participation in the business of the Savings Bank; and
WHEREAS, in order to induce the Executive to remain in the employ of
the Savings Bank and in consideration of the Executive's agreeing to remain in
the employ of the Savings Bank, the parties desire to specify the continuing
employment relationship between the Savings Bank and the Executive;
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereby agree as follows:
1. Employment. The Savings Bank hereby employs the Executive in the
----------
capacity of Executive Vice President and Chief Operating Officer. The Executive
hereby accepts said employment and agrees to render such administrative and
management services to the Savings Bank and to any to-be-formed parent holding
company ("Parent") as are currently rendered and as are customarily performed by
persons situated in a similar executive capacity. The Executive shall promote
the business of the Savings Bank and Parent. The Executive's other duties shall
be such as the Board of Directors for the Savings Bank (the "Board of Directors"
or "Board") may from time to time reasonably direct, including normal duties as
an officer of the Savings Bank.
2. Term of Employment. The term of employment of Executive under this
------------------
Agreement shall be for the period commencing on the Effective Date and ending
twenty-four (24) months thereafter ("Term"). Additionally, on, or before, each
annual anniversary date from the Effective Date, the Term of employment under
this Agreement shall be extended for up to an additional period beyond the then
effective expiration date upon a determination and resolution of the Board of
Directors that the performance of the Executive has met the requirements and
standards of the Board, and that the Term of such Agreement shall be extended.
References herein to the Term of this Agreement shall refer both to the initial
term and successive terms.
<PAGE>
3. Compensation, Benefits and Expenses.
-----------------------------------
(a) Base Salary. The Savings Bank shall compensate and pay the
Executive during the Term of this Agreement a minimum base salary at the rate of
$_______ per annum ("Base Salary"), payable in cash not less frequently than
monthly; provided, that the rate of such salary shall be reviewed by the Board
of Directors not less often than annually, and the Executive shall be entitled
to receive increases at such percentages or in such amounts as determined by the
Board of Directors. The base salary may not be decreased without the Executive's
express written consent.
(b) Discretionary Bonus. The Executive shall be entitled to
participate in an equitable manner with all other senior management employees of
the Savings Bank in discretionary bonuses that may be authorized and declared by
the Board of Directors to its senior management executives from time to time. No
other compensation provided for in this Agreement shall be deemed a substitute
for the Executive's right to participate in such discretionary bonuses when and
as declared by the Board.
(c) Participation in Benefit and Retirement Plans. The Executive
shall be entitled to participate in and receive the benefits of any plan of the
Savings Bank which may be or may become applicable to senior management relating
to pension or other retirement benefit plans, profit-sharing, stock options or
incentive plans, or other plans, benefits and privileges given to employees and
executives of the Savings Bank, to the extent commensurate with his then duties
and responsibilities, as fixed by the Board of Directors of the Savings Bank.
(d) Participation in Medical Plans and Insurance Policies. The
Executive shall be entitled to participate in and receive the benefits of any
plan or policy of the Savings Bank which may be or may become applicable to
senior management relating to life insurance, short and long term disability,
medical, dental, eye-care, prescription drugs or medical reimbursement plans.
Additionally, Executive's dependent family shall be eligible to participate in
medical and dental insurance plans sponsored by the Savings Bank or Parent with
the cost of such premiums paid by the Savings Bank.
(e) Vacations and Sick Leave. The Executive shall be entitled to
paid annual vacation leave in accordance with the policies as established from
time to time by the Board of Directors, which shall in no event be less than
four weeks per annum. The Executive shall also be entitled to an annual sick
leave benefit as established by the Board for senior management employees of the
Savings Bank. The Executive shall not be entitled to receive any additional
compensation from the Savings Bank for failure to take a vacation or sick leave,
nor shall he be able to accumulate unused vacation or sick leave from one year
to the next, except to the extent authorized by the Board of Directors.
(f) Expenses. The Savings Bank shall reimburse the Executive or
otherwise provide for or pay for all reasonable expenses incurred by the
Executive in furtherance of, or in
2
<PAGE>
connection with the business of the Savings Bank, including, but not by way of
limitation, automobile and traveling expenses, and all reasonable entertainment
expenses, subject to such reasonable documentation and other limitations as may
be established by the Board of Directors of the Savings Bank. If such expenses
are paid in the first instance by the Executive, the Savings Bank shall
reimburse the Executive therefor.
(g) Changes in Benefits. The Savings Bank shall not make any
changes in such plans, benefits or privileges previously described in Section
3(c), (d) and (e) which would adversely affect the Executive's rights or
benefits thereunder, unless such change occurs pursuant to a program applicable
to all executive officers of the Savings Bank and does not result in a
proportionately greater adverse change in the rights of, or benefits to, the
Executive as compared with any other executive officer of the Savings Bank.
Nothing paid to Executive under any plan or arrangement presently in effect or
made available in the future shall be deemed to be in lieu of the salary payable
to Executive pursuant to Section 3(a) hereof.
4. Loyalty; Noncompetition.
-----------------------
(a) The Executive shall devote his full time and attention to the
performance of his employment under this Agreement. During the term of the
Executive's employment under this Agreement, the Executive shall not engage in
any business or activity contrary to the business affairs or interests of the
Savings Bank or Parent.
(b) Nothing contained in this Section 4 shall be deemed to
prevent or limit the right of Executive to invest in the capital stock or other
securities of any business dissimilar from that of the Savings Bank or Parent,
or, solely as a passive or minority investor, in any business.
(c) Executive hereby agrees that for a period of one year
following Executive's voluntary termination of employment, absent a Change in
Control of the Bank, Employee shall not engage in providing professional
services or enter into employment as an employee, director, consultant,
representative, or similar relationship to any financial services enterprise
(including but not limited to a savings and loan association, bank, credit
union, or insurance company) whereby the Executive will have a work location
within seven miles of any office of the Bank existing as of the date of
termination of employment of the Executive. This limitation on future activities
shall not affect the payment of previously vested benefits under the
compensation and benefit plans of the Bank or for compensation payable in
accordance with Section 9 of the Agreement.
5. Standards. During the term of this Agreement, the Executive shall
---------
perform his duties in accordance with such reasonable standards expected of
executives with comparable positions in comparable organizations and as may be
established from time to time by the Board of Directors.
3
<PAGE>
6. Termination and Termination Pay. The Executive's employment under
-------------------------------
this Agreement shall be terminated upon any of the following occurrences:
(a) The death of the Executive during the term of this Agreement,
in which event the Executive's estate shall be entitled to receive the
compensation due the Executive through the last day of the third calendar month
following the date of the Executive's death.
(b) The Board of Directors may terminate the Executive's
employment at any time, but any termination by the Board of Directors other than
termination for Just Cause, shall not prejudice the Executive's right to
compensation or other benefits under the Agreement. The Executive shall have no
right to receive compensation or other benefits for any period after termination
for Just Cause. The Board may within its sole discretion, acting in good faith,
terminate the Executive for Just Cause and shall notify such Executive
accordingly. Termination for "Just Cause" shall include termination because of
the Executive's personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order, or material
breach of any provision of the Agreement.
(c) Except as provided pursuant to Section 9 hereof, in the event
Executive's employment under this Agreement is terminated by the Board of
Directors without Just Cause, the Savings Bank shall be obligated to continue to
pay the Executive the salary provided pursuant to Section 3(a) herein, up to the
date of termination of the remaining Term of this Agreement, but in no event for
a period of less than twelve months, and the cost of Executive obtaining all
health, life, disability, and other benefits which the Executive would be
eligible to participate in through such date based upon the benefit levels
substantially equal to those being provided Executive at the date of termination
of employment.
(d) The voluntary termination by the Executive during the term of
this Agreement with the delivery of no less than 60 days written notice to the
Board of Directors, other than pursuant to Section 9(b), in which case the
Executive shall be entitled to receive only the compensation, vested rights, and
all employee benefits up to the date of such termination.
7. Regulatory Exclusions. Notwithstanding anything herein to the
----------------------
contrary, any payments made to the Executive pursuant to the Agreement, or
otherwise, shall be subject to and conditioned upon compliance with 12
USCss.1828(k) and any regulations promulgated thereunder.
8. Disability. If the Executive shall become disabled or incapacitated
----------
to the extent that he is unable to perform his duties hereunder, by reason of
medically determinable physical or mental impairment, as determined by a doctor
engaged by the Board of Directors, Executive shall nevertheless continue to
receive the compensation and benefits provided under the terms of this Agreement
as follows: 100% of such compensation and benefits for a period of 6 months, but
not exceeding the remaining term of the Agreement, and 50% thereafter for an
additional six month
4
<PAGE>
period, not exceeding the remaining Term. Such benefits noted herein shall be
reduced by any benefits otherwise provided to the Executive during such period
under the provisions of disability insurance coverage in effect for Savings Bank
employees. Thereafter, Executive shall be eligible to receive benefits provided
by the Savings Bank under the provisions of disability insurance coverage in
effect for Savings Bank employees. Upon returning to active full-time
employment, the Executive's full compensation as set forth in this Agreement
shall be reinstated as of the date of commencement of such activities. In the
event that the Executive returns to active employment on other than a full-time
basis, then his compensation (as set forth in Section 3(a) of this Agreement)
shall be reduced in proportion to the time spent in said employment, or as shall
otherwise be agreed to by the parties.
9. Change in Control.
-----------------
(a) Notwithstanding any provision herein to the contrary, in the
event of the involuntary termination of Executive's employment during the term
of this Agreement following any Change in Control of the Savings Bank or Parent,
or within 24 months thereafter of such Change in Control, absent Just Cause,
Executive shall be paid an amount equal to the product of 200% of the average
annual taxable compensation paid by the Savings Bank or the Parent to the
Executive (whether paid or deferred by the Executive) for the prior thirty-six
months, but in no event in an amount greater than 2.999 times the Executive's
"base amount" as defined in Section 280G(b)(3) of the Internal Revenue Code of
1986, as amended (the "Code") and regulations promulgated thereunder. Said sum
shall be paid, at the option of Executive, either in one (1) lump sum within
thirty (30) days of such termination of service or in periodic payments over the
next 24 months or the remaining term of this Agreement, whichever is less, as if
Executive's employment had not been terminated, and such payments shall be in
lieu of any other future payments which the Executive would be otherwise
entitled to receive under Section 6 of this Agreement. Further, such Employee
and dependents shall continue to be eligible to participate in the life
insurance and medical/dental insurance reimbursement program maintained by the
Savings Bank or its successor entity for a period of not less than 24 months
following termination of employment and continue to have such costs for
enrollment and benefits coverages paid by the Savings Bank or Parent.
Notwithstanding the forgoing, all sums payable hereunder shall be reduced in
such manner and to such extent so that no such payments made hereunder when
aggregated with all other payments to be made to the Executive by the Savings
Bank or the Parent shall be deemed an "excess parachute payment" in accordance
with Section 280G of the Code and be subject to the excise tax provided at
Section 4999(a) of the Code. The term "Change in Control" shall refer to (i) the
control of voting proxies whether related to stockholders or mutual members by
any person, other than the Board of Directors of the Savings Bank, to direct
more than 25% of the outstanding votes of the Savings Bank, the control of the
election of a majority of the Savings Bank's directors, or the exercise of a
controlling influence over the management or policies of the Savings Bank by any
person or by persons acting as a group within the meaning of Section 13(d) of
the Exchange Act, (ii) an event whereby the FDIC, the New Jersey Department of
Banking ("Department") or any other department, agency or quasi-agency of the
federal government cause or bring about, without the consent of the Savings
Bank, a change in the corporate structure or organization of the Savings Bank;
(iii) an event whereby the FDIC, the
5
<PAGE>
Department or any other agency or quasi-agency of the federal government cause
or bring about, without the consent of the Savings Bank, a taxation or
involuntary distribution of retained earnings or proceeds from the sale of
securities to depositors, borrowers, any government agency or organization or
civic or charitable organization; or (iv) a merger or other business combination
between the Savings Bank and another corporate entity whereby the Savings Bank
is not the surviving entity. In the event that the Savings Bank shall convert in
the future from mutual-to-stock form, the term "Change in Control" shall also
refer to: (i) the sale of all, or a material portion, of the assets of the
Savings Bank or the Parent; (ii) the merger or recapitalization of the Savings
Bank or the Parent whereby the Savings Bank or the Parent is not the surviving
entity; (iii) a change in control of the Savings Bank or the Parent, as
otherwise defined or determined by the Department, the FDIC, the Federal Reserve
Board or regulations promulgated by such agencies; or (iv) the acquisition,
directly or indirectly, of the beneficial ownership (within the meaning of that
term as it is used in Section 13(d) of the Securities Exchange Act of 1934 and
the rules and regulations promulgated thereunder) of twenty-five percent (25%)
or more of the outstanding voting securities of the Savings Bank or the Parent
by any person, trust, entity or group. The term "person" means an individual
other than the Executive, or a corporation, partnership, trust, association,
joint venture, pool, syndicate, sole proprietorship, unincorporated organization
or any other form of entity not specifically listed herein.
(b) Notwithstanding any other provision of this Agreement to the
contrary, Executive may voluntarily terminate his employment during the term of
this Agreement following a Change in Control of the Savings Bank or Parent, or
within twenty-four months following such Change in Control, and Executive (or
the Executive's estate in the event of death after a Change in Control but prior
to payment) shall thereupon be entitled to receive the payment described in
Section 9(a) of this Agreement, upon the occurrence, or within 120 days
thereafter, of any of the following events, which have not been consented to in
advance by the Executive in writing: (i) if Executive would be required to move
his personal residence or perform his principal executive functions more than
thirty-five (35) miles from the Executive's primary office as of the signing of
this Agreement; (ii) if in the organizational structure of the Savings Bank,
Executive would be required to report to a person or persons other than the
President or the Board of Directors of the Savings Bank; (iii) if the Savings
Bank should fail to maintain Executive's base compensation in effect as of the
date of the Change in Control and the existing employee benefits plans,
including material fringe benefit, stock option and retirement plans; (iv) if
Executive would be assigned duties and responsibilities other than those
normally associated with his position as referenced at Section 1, herein; or (v)
if Executive's responsibilities or authority have in any way been materially
diminished or reduced.
10. Withholding. All payments required to be made by the Savings Bank
-----------
hereunder to the Executive shall be subject to the withholding of such amounts,
if any, relating to tax and other payroll deductions as the Savings Bank may
reasonably determine should be withheld pursuant to any applicable law or
regulation.
6
<PAGE>
11. Successors and Assigns.
----------------------
(a) This Agreement shall inure to the benefit of and be binding
upon any corporate or other successor of the Savings Bank or Parent which shall
acquire, directly or indirectly, by merger, consolidation, purchase or
otherwise, all or substantially all of the assets or stock of the Savings Bank
or Parent.
(b) Since the Savings Bank is contracting for the unique and
personal skills of the Executive, the Executive shall be precluded from
assigning or delegating his rights or duties hereunder without first obtaining
the written consent of the Savings Bank.
12. Amendment; Waiver. No provisions of this Agreement may be modified,
-----------------
waived or discharged unless such waiver, modification or discharge is agreed to
in writing, signed by the Executive and such officer or officers as may be
specifically designated by the Board of Directors of the Savings Bank to sign on
its behalf. No waiver by any party hereto at any time of any breach by any other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
13. Governing Law. The validity, interpretation, construction and
--------------
performance of this Agreement shall be governed by the laws of the United States
where applicable and otherwise by the substantive laws of the State of New
Jersey.
14. Nature of Obligations. Nothing contained herein shall create or
----------------------
require the Savings Bank to create a trust of any kind to fund any benefits
which may be payable hereunder, and to the extent that the Executive acquires a
right to receive benefits from the Savings Bank hereunder, such right shall be
no greater than the right of any unsecured general creditor of the Savings Bank.
15. Headings. The section headings contained in this Agreement are for
--------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
16. Severability. The provisions of this Agreement shall be deemed
------------
severable and the invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of the other
provisions of this Agreement, which shall remain in full force and effect.
17. Arbitration. Any controversy or claim arising out of or relating to
-----------
this Agreement, or the breach thereof, shall be settled by arbitration in
accordance with the rules then in effect of the district office of the American
Arbitration Association ("AAA") nearest to the home office of the Savings Bank,
and judgment upon the award rendered may be entered in any court having
jurisdiction thereof, except to the extent that the parties may otherwise reach
a mutual settlement of such issue. Further, the settlement of the dispute to be
approved by the Board of the Savings Bank may include a provision for the
reimbursement by the Savings Bank to the Executive for all reasonable costs and
expenses, including reasonable attorneys' fees, arising from such dispute,
7
<PAGE>
proceedings or actions, or the Board of the Savings Bank or the Parent may
authorize such reimbursement of such reasonable costs and expenses by separate
action upon a written action and determination of the Board following settlement
of the dispute. Such reimbursement shall be paid within ten (10) days of
Executive furnishing to the Savings Bank or Parent evidence, which may be in the
form, among other things, of a canceled check or receipt, of any costs or
expenses incurred by Executive.
18. Confidential Information. The Executive acknowledges that during his
------------------------
or her employment he or she will learn and have access to confidential
information regarding the Savings Bank and the Parent and its customers and
businesses ("Confidential Information"). The Executive agrees and covenants not
to disclose or use for his or her own benefit, or the benefit of any other
person or entity, any such Confidential Information, unless or until the Savings
Bank or the Parent consents to such disclosure or use or such information
becomes common knowledge in the industry or is otherwise legally in the public
domain. The Executive shall not knowingly disclose or reveal to any unauthorized
person any Confidential Information relating to the Savings Bank, the Parent, or
any subsidiaries or affiliates, or to any of the businesses operated by them,
and the Executive confirms that such information constitutes the exclusive
property of the Savings Bank and the Parent. The Executive shall not otherwise
knowingly act or conduct himself (a) to the material detriment of the Savings
Bank or the Parent, or its subsidiaries, or affiliates, or (b) in a manner which
is inimical or contrary to the interests of the Savings Bank or the Parent.
Executive acknowledges and agrees that the existence of this Agreement and its
terms and conditions constitutes Confidential Information of the Savings Bank,
and the Executive agrees not to disclose the Agreement or its contents without
the prior written consent of the Savings Bank. Notwithstanding the foregoing,
the Savings Bank reserves the right in its sole discretion to make disclosure of
this Agreement as it deems necessary or appropriate in compliance with its
regulatory reporting requirements. Notwithstanding anything herein to the
contrary, failure by the Executive to comply with the provisions of this Section
may result in the immediate termination of the Agreement within the sole
discretion of the Savings Bank, disciplinary action against the Executive taken
by the Savings Bank, including but not limited to the termination of employment
of the Executive for breach of the Agreement and the provisions of this Section,
and other remedies that may be available in law or in equity.
19. Entire Agreement. This Agreement together with any understanding or
----------------
modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement between the parties hereto.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
ANNUAL REPORT ON FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL INFORMATION.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 4,939
<INT-BEARING-DEPOSITS> 2,345
<FED-FUNDS-SOLD> 3,800
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 64,463
<INVESTMENTS-CARRYING> 82,024
<INVESTMENTS-MARKET> 81,704
<LOANS> 174,201
<ALLOWANCE> 946
<TOTAL-ASSETS> 277,829
<DEPOSITS> 204,242
<SHORT-TERM> 5,150
<LIABILITIES-OTHER> 2,067
<LONG-TERM> 41,498
0
0
<COMMON> 318
<OTHER-SE> 24,554
<TOTAL-LIABILITIES-AND-EQUITY> 277,829
<INTEREST-LOAN> 3,025
<INTEREST-INVEST> 1,262
<INTEREST-OTHER> 158
<INTEREST-TOTAL> 4,445
<INTEREST-DEPOSIT> 2,292
<INTEREST-EXPENSE> 2,966
<INTEREST-INCOME-NET> 1,479
<LOAN-LOSSES> 22
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,150
<INCOME-PRETAX> 351
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 301
<EPS-BASIC> 0.10
<EPS-DILUTED> 0.10
<YIELD-ACTUAL> 2.48
<LOANS-NON> 69
<LOANS-PAST> 0
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<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 946
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
