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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 1-13094
DIME BANCORP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 11-3197414
(STATE OR OTHER JURISDICTION OF INCORPORATION OR (I.R.S. EMPLOYER IDENTIFICATION NO.)
ORGANIZATION)
589 FIFTH AVENUE, NEW YORK, NEW YORK 10017
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
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(212) 326-6170
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
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TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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COMMON STOCK, $0.01 PAR VALUE NEW YORK STOCK EXCHANGE
STOCK PURCHASE RIGHTS NEW YORK STOCK EXCHANGE
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SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the shares of registrant's common stock held
by non-affiliates (assuming, solely for purposes of this Form, that all
directors are affiliates) was $3,383,886,475 as of March 6, 1998 (based on the
closing New York Stock Exchange price on such date).
The number of shares of common stock of the registrant outstanding as of
March 6, 1998 was 114,136,996 shares.
DOCUMENTS INCORPORATED BY REFERENCE
The information required by Part III of Form 10-K is incorporated by
reference to the registrant's definitive Proxy Statement relating to its 1998
Annual Meeting of Stockholders.
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DIME BANCORP, INC.
1997 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
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PART I
Item 1. Business.................................................... 1
Item 2. Properties.................................................. 14
Item 3. Legal Proceedings........................................... 14
Item 4. Submission of Matters to a Vote of Security Holders......... 16
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters......................................... 17
Item 6. Selected Financial Data..................................... 18
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 19
Item 7A. Qualitative and Quantitative Disclosures About Market
Risk........................................................ 44
Item 8. Financial Statements and Supplementary Data................. 44
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................... 45
PART III
Item 10. Directors and Executive Officers of the Registrant.......... 45
Item 11. Executive Compensation...................................... 46
Item 12. Security Ownership of Certain Beneficial Owners and
Management.................................................. 46
Item 13. Certain Relationships and Related Transactions.............. 46
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K......................................................... 46
SIGNATURES............................................................ 47
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PART I
Certain statements contained herein are forward-looking and may be
identified by the use of such words as "believe," "expect," "anticipate,"
"should," "planned," "estimated," and "potential." These forward-looking
statements are based on the current expectations of the Company (as defined
below), and the Company notes that a variety of factors could cause its actual
results and experience to differ materially from the anticipated results or
other expectations expressed in such forward-looking statements. The risks and
uncertainties that may affect the operations, performance, development, and
results of the Company's business include interest rate movements, competition
from both financial and non-financial institutions, changes in applicable laws
and regulations and interpretations thereof, the timing and occurrence (or
non-occurrence) of transactions and events that may be subject to circumstances
beyond the Company's control, and general economic conditions.
ITEM 1. BUSINESS
GENERAL
Dime Bancorp, Inc. (the "Holding Company"), a Delaware corporation
headquartered in New York, New York, is the holding company for The Dime Savings
Bank of New York, FSB, a federally-chartered savings bank (the "Bank" and,
together with the Holding Company and its direct and indirect subsidiaries, the
"Company"). The Bank operates through 91 branches, principally located in the
greater New York City metropolitan area. At December 31, 1997, the Company had
assets of $21.8 billion (including loans receivable of $12.9 billion), deposits
of $13.8 billion, and stockholders' equity of $1.3 billion.
The principal subsidiary of the Bank is North American Mortgage Company
("NAMC"), a mortgage banking company that, at December 31, 1997, operated over
200 offices in 36 states. NAMC was acquired by the Company in October 1997 (the
"NAMC Acquisition"). On April 30, 1997, the Company acquired BFS Bankorp, Inc.
and its wholly-owned subsidiary, Bankers Federal Savings FSB (the "BFS
Acquisition"). In connection with the BFS Acquisition, the Company acquired
loans receivable, net, of $574.5 million and assumed deposits in five New York
City branches of $447.1 million.
The Company's core business activities consist of consumer financial
services, mortgage banking, commercial real estate lending, consumer lending,
and business banking. In addition, to complement its core business activities,
the Company, through its treasury function, invests in various interest-earning
assets and accesses additional funding sources.
CONSUMER FINANCIAL SERVICES
General
The Company's consumer financial services include deposit products and
related services, securities brokerage services and insurance products. These
products and services, most of which are available 24 hours a day and seven days
a week, are delivered through the Company's multi-channel distribution network,
which includes the Company's new telephone banking unit.
Deposits
The Company's total deposits amounted to $13.8 billion at December 31,
1997. At that date, the Company operated 42 branches in New York City, 23
branches in Long Island, a total of 7 branches in Westchester and Rockland
counties in New York, 18 branches in New Jersey, and one branch in Florida. In
addition to its branch system, the Company's deposit gathering network includes
its telephone banking system and over 150 automated teller machines owned by the
Company.
The Company attracts deposits by offering a broad selection of deposit
instruments and programs. These include demand accounts, savings accounts, money
market accounts, time deposit accounts, individual retirement and Keogh
accounts, and automatic payroll and Social Security deposit programs. The
Company's deposit levels are subject to fluctuations resulting from numerous
factors outside the Company's control, including general economic conditions,
market interest rates and competition both from other depository
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institutions and alternative investments. Depositor behavior is affected by a
variety of factors, including risk-related returns on other available
investments, the rates paid by the Company compared to other institutions and
the Company's ability to satisfy customer needs. These factors may affect the
Company's willingness or ability to compete for deposits and, therefore, the
level of its deposits.
The Bank is a member of the Bank Insurance Fund ("BIF") of the Federal
Deposit Insurance Corporation ("FDIC"), with approximately 66% of its deposits
insured by the BIF and the remainder insured by the Savings Association
Insurance Fund ("SAIF") of the FDIC, in each case up to applicable limits.
For further information on the Company's deposits, see Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," and Note 9 of the Notes to Consolidated Financial Statements in
Item 8, "Financial Statements and Supplementary Data."
Securities Brokerage Services and Insurance Activities
Securities brokerage services are provided by the Company through Dime
Securities of New York, Inc. ("Dime Securities"), a wholly-owned subsidiary that
is a registered broker-dealer. The services provided by Dime Securities
primarily consist of the execution of securities transactions, on an agency
basis, solely upon the order and for the accounts of its customers. In addition,
Dime Securities provides standardized and individualized investment and
financial planning advice to individuals and business entities. Products sold by
Dime Securities, which are not BIF- or SAIF-insured, include: mutual funds;
government, corporate and municipal bonds; equity securities and equity options;
annuities; and unit investment trusts.
In connection with the NAMC Acquisition, the Company acquired North
American Mortgage Insurance Services, a subsidiary of NAMC, which expanded the
Company's insurance product line and the number of states in which the products
are sold. The Company's insurance subsidiaries, which also include The Dime
Agency, Inc. and Dime NJ Agency, Inc., currently sell certain tax-deferred
annuities and products issued by various insurance companies, including
individual and group life, disability, and accidental death insurance, as well
as hazard, mortgage, and automobile insurance.
The Company also offers Savings Bank Life Insurance ("SBLI") in New York
through its SBLI Department. Although the activities of this department, which
are segregated from those of the Company, do not directly affect the Company's
earnings, the Company believes that offering SBLI provides an important benefit
to its customers. The SBLI Department pays its own expenses and reimburses the
Company for expenses incurred on its behalf.
MORTGAGE BANKING
General
The Company's mortgage banking activities include the production of
residential real estate loans (consisting of one-to-four family first mortgage
loans and cooperative apartment loans), either for the Company's portfolio or
for sale into the secondary market, and loan servicing. From time to time, the
Company has also purchased, as well as sold, loan servicing rights.
During 1997, the Company continued its strategy of implementing various
initiatives designed to, among other things, further strengthen its mortgage
banking capabilities. These initiatives included increasing the number of the
Company's loan origination offices, expanding its correspondent-purchase
activities, and offering new loan products. This strategy was significantly
accelerated by the NAMC Acquisition. Following the NAMC Acquisition, the Company
reorganized its mortgage banking functions to increase operational efficiencies,
and as a result, its mortgage banking activities are conducted principally
through NAMC.
Residential Real Estate Loan Production
The Company produces fixed-rate and adjustable-rate residential real estate
loans through a multi-channel, multi-regional network. Of the Company's total
residential real estate loan production during 1997 of $8.6 billion, $4.5
billion was originated through approved mortgage brokers (which numbered
approximately
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6,400 at December 31, 1997, as compared with approximately 450 at December 31,
1996), $2.3 billion was originated directly by the Company and $1.8 billion was
purchased through correspondent lenders.
The Company's residential real estate loan production during 1997 was
primarily concentrated in the states of California (17.5%), Illinois (8.7%), New
York (8.6%), Virginia (6.5%), and Georgia (6.1%). During 1996, the Company's
residential real estate loan production amounted to $3.0 billion and was
primarily concentrated in the states of New York (23.7%), Connecticut (13.6%),
Virginia (12.7%), Georgia (10.6%), and New Jersey (9.2%). The Company's
increased residential real estate loan production in California during 1997 was
largely due to the NAMC Acquisition.
The Company's residential real estate loan production includes loans: (i)
that meet the standard underwriting policies and purchase limits (which for
single family homes increased to $214,600 during 1997) established by Federal
National Mortgage Association ("FNMA") and Federal Home Loan Mortgage
Corporation ("FHLMC") guidelines ("conforming conventional loans"); (ii) in
amounts in excess of the purchase limits established by FNMA and FHLMC ("jumbo
loans"); (iii) insured or guaranteed under Federal Housing Administration
("FHA") or Veteran Administration ("VA") programs; (iv) that conform to programs
established by various state and local authorities; and (v) exclusively for sale
to specified secondary market investors that conform to the requirements of such
investors, which may be more or less stringent than those for conforming
conventional loans.
Underwriting policies and guidelines for residential real estate loans
produced for the Company's portfolio (except to finance the sales of its
residential owned real estate) are, at a minimum, in conformance with those of
FNMA and FHLMC. Such policies and guidelines include requiring an appraisal of
the value of the collateral for the purpose of determining the loan-to-value
ratio (i.e., the ratio that the principal amount of the loan bears to the value
of the collateral securing the loan at the time of origination) and the
collateral's adequacy as security. The collateral's value is deemed to be the
lower of the purchase price or the appraised value, except for refinance loans,
where the appraised value is used. With respect to residential first mortgage
loans having a loan-to-value ratio in excess of 80% at the date of origination,
the Company generally requires private mortgage insurance underwritten by FNMA-
and FHLMC-approved insurers on at least the amount of the loan in excess of 80%
of the collateral's value.
Since the NAMC Acquisition, the Company makes residential real estate loans
to borrowers whose creditworthiness does not meet standard FNMA and FHLMC
underwriting policies ("subprime loans"). The Company's subprime loan program is
conducted in conjunction with a subsidiary of a major securitizer of subprime
products, which underwrites and purchases all such loans pursuant to a
contractual agreement that was initially entered into by NAMC in 1996. The
Company receives a fee for the origination of subprime loans, and the loans, as
well as the rights to service such loans, are sold without recourse to the
Company.
The Company administers a formal process for approving and monitoring its
mortgage brokers and correspondents and, in addition, conducts annual reviews
thereof. Mortgage broker performance is assessed primarily by monitoring loan
credit quality. Correspondent-purchased loans are contractually required to be
underwritten by the correspondent lenders in accordance with the Company's
guidelines and, unless a correspondent lender has been delegated underwriting
authority, all loans are re-underwritten by the Company prior to purchase.
Correspondent lenders with delegated underwriting status are generally subject
to more stringent financial and operational requirements than those without such
status and have undergone a comprehensive on-site review conducted by the
Company. Mortgage brokers and correspondent lenders demonstrating unacceptable
performance or insufficient loan activity are removed from the Company's
programs.
Secondary Market Activities
During 1997, the Company continued its strategy of selling into the
secondary market substantially all of its fixed-rate residential real estate
loan production. In total, the Company sold $4.7 billion of residential real
estate loans into the secondary market during 1997.
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Conforming conventional loans produced by the Company for sale in the
secondary market are typically exchanged for securities backed by such loans
(mortgage-backed securities ("MBS")) issued by FNMA or FHLMC, which are sold to
investment banking firms. The Company may also sell conforming conventional
loans directly to FNMA or FHLMC or to private investors. Conventional loans
produced for sale in the secondary market that are not conforming loans are sold
to private investors. FHA-insured and VA-guaranteed loans produced for sale in
the secondary market are pooled to form Government National Mortgage Association
("GNMA") MBS, issued by the Company, which are sold to investment banking firms.
Loan Servicing
At December 31, 1997, the Company serviced approximately 329,000
residential real estate loans with principal balances of $31.9 billion,
including approximately 246,000 loans with principal balances of approximately
$22 billion owned by third-parties. In return for servicing residential real
estate loans owned by others, the Company earns fees, which, on an annual basis,
generally range from 25 to 50 basis points of the outstanding principal balances
of the loans. Minimum servicing fees for substantially all loans serviced under
MBS programs are established by the sponsoring entities.
Loan servicing consists of collecting principal and interest payments from
borrowers, remitting aggregate principal and interest payments to investors,
making cash advances when required, accounting for principal and interest,
collecting funds for payment of loan-related expense such as taxes and
insurance, inspecting the collateral as required, contacting delinquent
borrowers, conducting foreclosures and property dispositions in the event of
unremedied defaults, and generally administering loans.
For a further discussion of the Company's loan servicing activities, see
Item 7, "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and Note 8 of the Notes to Consolidated Financial Statements in
Item 8, "Financial Statements and Supplementary Data."
COMMERCIAL REAL ESTATE LENDING
At December 31, 1997, the Company's commercial real estate loans receivable
amounted to $2.3 billion, of which approximately $1.9 billion were secured by
properties located in the State of New York. At that date, approximately 61% of
the loans in this portfolio were secured by multifamily properties. The
commercial real estate loans receivable portfolio expanded 20.0% during 1997 due
in part to the BFS Acquisition and the opening of loan production offices in
Philadelphia, Pennsylvania in late 1996 and in Fairfax, Virginia in early 1997.
In the aggregate, these two new loan production offices were responsible for
19.3% of the Company's total commercial real estate loan originations of $539.9
million during 1997.
The Company's underwriting policies with respect to commercial real estate
loans are based primarily on the loan-to-value ratio of the property and an
assessment as to the adequacy of the underlying project's cash flow and its
coverage of operating expenses and debt service payments. The Company's
underwriting policies generally also require an appraisal of the underlying
property, an engineer's report, and a "Phase I" environmental assessment.
Loan-to-value ratios at the time of origination are usually not more than 75%.
For a further discussion of the Company's commercial real estate loans
receivable, see Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Note 5 of the Notes to Consolidated
Financial Statements in Item 8, "Financial Statements and Supplementary Data."
CONSUMER LENDING
The Company's consumer loans receivable, which amounted to $773.8 million
at the end of 1997, includes adjustable- and fixed-rate home equity loans,
manufactured home loans, loans secured by deposits, automobile loans, boat
loans, unsecured and secured personal loans, property improvement loans,
government-guaranteed student loans, and unsecured revolving and overdraft
checking loans. During 1997, the Company extended its consumer lending
capabilities to markets outside of the greater New York City metropolitan area,
particularly as a result of the NAMC Acquisition.
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Home equity loans, which represented approximately 82% of the Company's
total consumer loan portfolio at December 31, 1997, are underwritten following
guidelines similar to those for conforming conventional residential real estate
loans. During 1997, the loan-to-value ratio on any home equity loan, together
with any prior lien, generally did not exceed 90% at the time of origination.
Loans made pursuant to home equity lines of credit have adjustable interest
rates that, after an introductory period, are based generally on a fixed margin
over the prime lending rate.
For a further discussion of the Company's consumer loans receivable, see
Item 7, "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and Note 5 of the Notes to Consolidated Financial Statements in
Item 8, "Financial Statements and Supplementary Data."
BUSINESS BANKING
The Company's business banking activities consist of providing loans,
deposit products, and cash management and other services to businesses with
annual revenues generally up to $25 million.
The Company originates business loans principally to finance seasonal
working capital needs, expansion, renovation, and equipment purchases. The
ability of the borrower to generate sufficient cash flows from operations to
liquidate the debt is a critical component of the credit decision. At December
31, 1997, the Company's business loans receivable amounted to $99.1 million, of
which approximately 11% were unsecured.
For a further discussion of the Company's business loans receivable, see
Item 7, "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and Note 5 of the Notes to Consolidated Financial Statements in
Item 8, "Financial Statements and Supplementary Data."
OTHER INVESTING ACTIVITIES
General. In addition to its investments in loans, the Company, pursuant to
established policies and guidelines, invests in certain securities and money
market investments through its treasury function. These investments are made in
conjunction with the Company's overall liquidity, interest rate risk and credit
risk management processes and complement the Company's lending activities, which
are its primary focus. In addition, as a member of the Federal Home Loan Bank of
New York ("FHLBNY"), the Bank is required to maintain a specified investment in
the capital stock of the FHLBNY (see "Regulation and Supervision -- Federal Home
Loan Bank System").
Securities. The Company's investments in securities consist substantially
of adjustable-rate MBS or fixed-rate, medium-term MBS issued by FNMA, FHLMC, and
GNMA, and private issuers that are rated "AA" or better. During December 1997,
the Company, primarily as a result of a reassessment of its asset/liability
management strategy, transferred its entire $3.6 billion portfolio of securities
held to maturity to its portfolio of securities available for sale. In
connection therewith, the Company identified approximately $1.4 billion of the
transferred MBS that it expects to sell during 1998. At year-end 1997, the
Company's securities available for sale portfolio amounted to $5.0 billion.
For a further discussion of the Company's securities investments, see Item
7, "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Note 4 of the Notes to Consolidated Financial Statements in Item
8, "Financial Statements and Supplementary Data."
Money Market Investments. The Company invests in a wide range of money
market instruments, including overnight and term federal funds, time deposits,
and securities purchased under agreements to resell. Money market investments
are used to invest the Company's available funds resulting from deposit-taking
operations and normal cash flow and to help satisfy both internal liquidity
needs and the Bank's regulatory liquidity requirements (see "Regulation and
Supervision -- Liquid Assets").
For a further discussion of the Company's money market investments, see
Note 3 of the Notes to Consolidated Financial Statements in Item 8, "Financial
Statements and Supplementary Data."
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EMPLOYEES
The Company had 6,451 employees at December 31, 1997. Employees of the
Company are not represented by any collective bargaining group. The Company
considers its employee relations to be satisfactory.
COMPETITION
The Company experiences substantial competition both in attracting and
retaining deposits and in making loans. Its most direct competition for deposits
historically has come from other thrift institutions and commercial banks doing
business in the greater New York City metropolitan area. The Company also
competes for funds with money market mutual funds, corporate and governmental
debt securities, and other investment alternatives. The Company's competition
for loans comes principally from other thrift institutions, commercial banks,
mortgage banking companies, consumer finance companies, insurance companies, and
other institutional investors and lenders. A number of institutions with which
the Company competes for deposits and loans have significantly greater assets
and capital than the Company.
REGULATION AND SUPERVISION
General
The Bank is a federal savings bank and a member of the FHLBNY and is
subject to the regulations, examinations, and reporting requirements of the
Office of Thrift Supervision (the "OTS"), as the primary regulator of federal
savings associations, and of the FDIC, as insurer of the Bank's deposits.
Additionally, the Bank is subject to certain limited regulation by the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board"). As a
savings and loan holding company, the Holding Company is also subject to the
regulations, examinations and reporting requirements of the OTS.
The description of statutory provisions and regulations applicable to
savings associations and savings and loan holding companies set forth below does
not purport to be a complete description of the statutes and regulations
described or of all such statutes and regulations and their effects on the Bank
and the Holding Company. The regulatory scheme has been established primarily
for the protection of depositors and the financial system generally and is not
intended for the protection of stockholders or other creditors.
Deposit Insurance
The FDIC administers two separate deposit insurance funds: the BIF, of
which the Bank is a member, and the SAIF. Approximately 66% of the Bank's
deposits are BIF-insured and approximately 34% of its deposits are SAIF-insured.
Pursuant to the Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), the FDIC established a risk-based assessment system for insured
depository institutions that takes into account the risks attributable to
different categories and concentrations of assets and liabilities. Under this
system, both BIF-insured and SAIF-insured depository institutions are placed
into one of nine confidential assessment risk categories using a two-step
process based first on capital ratios and then on other factors. As a result of
the enactment of the Deposit Insurance Funds Act of 1996 (the "Funds Act"),
SAIF-insured deposit assessment rates currently range between $0.00 and $0.27
for each $100 of insured deposits, which is identical to BIF-insured deposit
assessment rates.
Under the Funds Act, beginning January 1, 1997, insured depository
institutions were assessed with respect to BIF-assessable deposits in order to
pay for a portion of the debt service of certain bonds issued by the Federal
Financing Corporation (the "FICO Bonds"). Prior to January 1, 1997, assessments
to pay the debt service on the FICO Bonds were applicable only to SAIF-member
institutions. The Funds Act provides that, between January 1, 1997 and the
earlier of December 31, 1999 or the date as of which the last savings
association ceases to exist, BIF-assessable deposits will be assessed at a rate
equal to 20% of the rate applied to SAIF-assessable deposits for purposes of the
FICO Bonds debt service assessment. Thereafter, all insured deposits will be
assessed on a pro rata basis. The FDIC has established initial assessment rates
of $0.0648 for each $100 of SAIF-assessable deposits and $0.01296 for each $100
of BIF-assessable deposits through the
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earlier of December 31, 1999 or the date as of which the last savings
association ceases to exist. Assessment rates have not yet been established for
the period from January 1, 2000, or such earlier date on which the last savings
association ceases to exist, through the year 2017 (the maturity date of the
FICO Bonds).
The Funds Act further provides for the merger of the SAIF and the BIF on
January 1, 1999 if no insured depository institution is a savings association on
that date. Until the earlier of December 31, 1999 or the date as of which the
last savings association ceases to exist, the Funds Act also provides that the
federal banking agencies are to take "appropriate action" to prevent insured
depository institutions and depository institution holding companies from
facilitating or encouraging the shifting of deposits from SAIF-assessable
deposits to BIF-assessable deposits for the purpose of evading the assessments
imposed on insured depository institutions with respect to SAIF-assessable
deposits for deposit insurance and the FICO Bonds debt service.
Capital Requirements
Under federal law and OTS regulations, savings associations are required to
comply with each of three separate capital adequacy standards: a leverage or
core capital requirement; a tangible capital requirement; and a risk-based
capital requirement. The OTS is also authorized to establish individual minimum
capital requirements for a savings association consistent with these capital
standards. The OTS has not established any such individual minimum capital
requirements for the Bank. There are potentially severe consequences for failing
to meet these regulatory capital requirements.
The leverage capital requirement adopted by the OTS requires savings
associations to maintain core capital in an amount equal to at least 3% of
adjusted total assets. Core capital includes common stockholders' equity
(including common stock, common stock surplus and retained earnings, but
excluding any net unrealized gains or losses, net of related taxes, on certain
securities available for sale), non-cumulative perpetual preferred stock and any
related surplus, and minority interests in the equity accounts of fully
consolidated subsidiaries. Intangible assets, other than mortgage servicing
rights valued in accordance with applicable regulations and purchased credit
card relationships, generally must be deducted from core capital. Mortgage
servicing rights and purchased credit card relationships may comprise only up to
50% of core capital. In addition, certain deferred tax assets and investments in
and loans to non-includable subsidiaries must be deducted from core capital.
Savings associations are required to hold tangible capital in an amount
equal to at least 1.5% of adjusted total assets. Tangible capital means core
capital less any intangible assets (except for mortgage servicing rights
includable in core capital).
Under the risk-based capital requirement, savings associations must
maintain a ratio of total capital to risk-weighted assets equal to at least 8%.
Risk-weighted assets are determined by multiplying certain categories of the
institution's assets, including off-balance sheet equivalents, by an assigned
risk weight of 0% to 100% based on the credit risk associated with those assets
as specified in OTS regulations. For purposes of the risk-based capital
requirement, total capital means core capital plus supplementary capital, so
long as the amount of supplementary capital that is used to satisfy the
requirement does not exceed the amount of core capital. Supplementary capital
includes, among other things, general valuation loan and lease loss allowances
up to a maximum of 1.25% of risk-weighted assets. The OTS adopted a rule,
effective January 1, 1994, incorporating an interest-rate risk component into
its existing risk-based capital requirement. In March 1995, the OTS extended a
waiver of the interest rate risk capital deduction until it issued a Thrift
Bulletin establishing an appeals process and notified thrift institutions of the
effective date. Although the OTS issued the Thrift Bulletin on August 21, 1995,
it also announced that the automatic interest rate risk capital deduction would
not be implemented until the OTS issued a notice otherwise.
Pursuant to FDICIA, the OTS adopted prompt corrective action ("PCA")
regulations that established five capital categories for savings associations
("well capitalized," "adequately capitalized," "undercapitalized,"
"significantly undercapitalized," and "critically undercapitalized") and require
certain mandatory actions and authorize other discretionary actions to be taken
by the OTS with respect to institutions in the three undercapitalized
categories, with the nature and extent of such actions dependent primarily on
the category in which the institution is placed. The OTS has specified by
regulation the relevant capital level for
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each category. Under OTS regulations, an institution is considered well
capitalized if its ratio of total risk-based capital to risk-weighted assets is
10% or more, its ratio of core capital to risk-weighted assets is 6% or more,
its ratio of core capital to adjusted total assets is 5% or greater, and it is
not subject to any order or directive by the OTS to meet a specific capital
level.
In addition, an institution's primary federal bank regulatory agency is
authorized to downgrade the institution's capital category to the next lower
category upon a determination that the institution is in an unsafe or unsound
condition or is engaged in an unsafe or unsound practice. An unsafe or unsound
practice can include receipt by the institution of a less than satisfactory
rating on its most recent examination with respect to its asset quality,
management, earnings or liquidity.
For information concerning the Bank's regulatory capital status, see Note
16 of the Notes to Consolidated Financial Statements in Item 8, "Financial
Statements and Supplementary Data."
The Federal Deposit Insurance Act (the "FDI Act") generally prohibits a
depository institution from making any capital distribution (including payment
of a dividend) or paying any management fee to its holding company if the
depository institution would be "undercapitalized." "Undercapitalized"
depository institutions are subject to limitations on, among other things, asset
growth, acquisitions, branching, new business lines, acceptance of brokered
deposits, and borrowings from the Federal Reserve System and are required to
submit a capital restoration plan. The federal bank regulatory agencies may not
accept a capital plan without determining, among other things, that the plan is
based on realistic assumptions and is likely to succeed in restoring the
depository institution's capital. In addition, for a capital restoration plan to
be acceptable, the depository institution's holding company, if any, must
guarantee that the institution will comply with such capital restoration plan.
The aggregate liability of the holding company under such guarantee is limited
to the lesser of (i) an amount equal to 5% of the depository institution's total
assets at the time it became "undercapitalized," or (ii) the amount that is
necessary (or would have been necessary) to bring the institution into
compliance with all capital standards applicable with respect to such
institution as of the time it fails to comply with the plan. If the depository
institution fails to submit an acceptable plan, it is treated as if it is
"significantly undercapitalized." "Significantly undercapitalized" depository
institutions may be subject to a number of requirements and restrictions,
including orders to sell sufficient voting stock to become "adequately
capitalized," requirements to reduce total assets, and cessation of receipt of
deposits from correspondent banks. "Critically undercapitalized" institutions
are subject to the appointment of a receiver or conservator.
Depositor Preference
The FDI Act provides that, in the event of the "liquidation or other
resolution" of an insured depository institution, the claims of depositors of
such institution (including claims by the FDIC as subrogee of insured
depositors) and certain claims for administrative expenses of the FDIC, as a
receiver, would be afforded a priority over other general unsecured claims
against such an institution. If an insured depository institution fails, insured
and uninsured depositors, along with the FDIC, will be placed ahead of
unsecured, non-deposit creditors, including a holding company for the
institution (such as the Holding Company), in order of priority of payment.
Loans-to-One-Borrower Limitations and Loans to Insiders
Savings associations are subject to loans-to-one-borrower limitations under
federal law and OTS regulations. At December 31, 1997, the Bank's loans-to-one
borrower limitation was approximately $197 million.
Savings associations are also subject to Sections 22(g) and 22(h) of the
Federal Reserve Act. These provisions, among other things, limit a savings
institution's extension of credit to the principal stockholders, directors and
executive officers of the savings institution and its affiliates and to the
related interests of these persons.
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Liquid Assets
The OTS, by regulation, requires savings associations to maintain a certain
level of liquid assets (as defined). Prior to November 24, 1997, savings
associations were required to maintain, during each calendar month, an average
daily balance of liquid assets of not less than 5%, and short-term liquid assets
(as defined) of not less than 1%, of their liquidity base (average daily
balances of net withdrawable accounts plus short-term borrowings during the
preceding calendar month). Effective November 24, 1997, the OTS revised these
regulations by: (i) lengthening the period of time over which the requirement
will be measured from monthly to quarterly; (ii) authorizing savings
associations to calculate the requirement either as a percentage of its
liquidity base at the end of the preceding calendar quarter or as a percentage
of the average daily balance of its liquidity base during the preceding quarter;
(iii) reducing the requirement for liquid assets from 5% to 4% of the liquidity
base and eliminating the requirement regarding short-term liquid assets; and
(iv) adding to the list of liquid assets. Monetary penalties may be imposed for
failure to meet liquidity ratio requirements.
For additional information on the Bank's regulatory liquid assets, see Item
7, "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity."
Restrictions on Dividends and Capital Distributions
The payment of dividends by the Bank to the Holding Company is subject to
certain regulatory restrictions. These restrictions may affect the Holding
Company's liquidity as well as its ability to pay dividends on its capital stock
or principal or interest on its debt. A savings association, such as the Bank,
may not make a capital distribution (or pay management fees to its holding
company) if, following such distribution (or payment), the institution would be
"undercapitalized" as that term is defined for purposes of the PCA provisions
described above. In addition, OTS regulations limit the ability of savings
associations to pay dividends and make other capital distributions according to
the institution's level of capital and income, with the greatest flexibility
afforded to institutions that meet or exceed their OTS capital requirements.
Capital distributions include cash dividends, payments to repurchase, redeem,
retire or otherwise acquire an institution's shares, payments to stockholders of
another institution in a cash-out merger, other distributions charged against
capital and any other transaction that the OTS determines to entail a payout of
capital. To the extent that the OTS regulations described below and the PCA
provisions are inconsistent, the PCA provisions take precedence.
Under current OTS regulations, a savings association that exceeds its fully
phased-in OTS capital requirements both before and after a proposed distribution
(a "Tier 1 Institution") and that has not been advised by the OTS that it is in
need of more than normal supervision may, after prior notice to but without the
approval of the OTS, make capital distributions during a calendar year up to the
higher of (i) 100% of its net income to date during the calendar year plus the
amount that would reduce by one-half its "surplus capital ratio" (the percentage
by which the institution's ratio of total capital to assets exceeds the ratio of
its fully phased-in capital requirement to assets) at the beginning of the
calendar year or (ii) 75% of its net income over the most recent four-quarter
period. In addition, a Tier 1 Institution may make capital distributions in
excess of the foregoing limits if it gives the OTS 30 days' notice of the
proposed distribution and the OTS does not object within that period. A Tier 1
Institution that has been notified by the OTS that it is in need of "more than
normal supervision" must, under the OTS regulations, be treated as a "Tier 2
Institution" or a "Tier 3 Institution," to which progressively more stringent
restrictions on dividends and capital distributions apply. As of December 31,
1997, the Bank was a Tier 1 Institution.
The OTS also may prohibit a proposed capital distribution that would
otherwise be permitted if it determines that the distribution would constitute
an unsafe or unsound practice. Finally, a savings association that has converted
from mutual to stock form, such as the Bank, may not declare or pay a dividend
on or repurchase any of its capital stock if the effect of such action would be
to reduce the regulatory capital of the institution below the amount required
for its "liquidation account."
For a discussion of additional limitations on the Bank's ability to issue
dividends and certain limitations on the ability of the Holding Company to issue
dividends, see Notes 12 and 15 of the Notes to Consolidated Financial Statements
in Item 8, "Financial Statements and Supplementary Data."
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Transactions with Affiliates
Under federal law and regulation, transactions between a savings
association and its "affiliates," which term includes its holding company and
other companies controlled by its holding company, are subject to quantitative
and qualitative restrictions. Savings associations are restricted in their
ability to engage in certain types of transactions with their affiliates. These
"covered transactions" include: (i) purchasing or investing in securities issued
by an affiliate; (ii) lending or extending credit to, or guaranteeing credit of,
an affiliate; (iii) purchasing assets from an affiliate; and (iv) accepting
securities issued by an affiliate as collateral for a loan or extension of
credit. Covered transactions are permitted between a savings association and a
single affiliate up to 10% of the capital stock and surplus of the association,
and between a savings association and all of its affiliates up to 20% of the
capital stock and surplus of the institution. The purchase of low-quality assets
by a savings association from an affiliate is not permitted. Each loan or
extension of credit to an affiliate by a savings association must be secured by
collateral with a market value ranging from 100% to 130% (depending on the type
of collateral) of the amount of credit extended. Notwithstanding the foregoing,
a savings association is not permitted to make a loan or extension of credit to
any affiliate unless the affiliate is engaged only in activities that the
Federal Reserve Board has determined to be permissible for bank holding
companies. Savings associations also are prohibited from purchasing or investing
in securities issued by an affiliate, other than shares of a subsidiary. Covered
transactions between a savings association and an affiliate, and certain other
transactions with or benefiting an affiliate, must be on terms and conditions at
least as favorable to the institution as those prevailing at the time for
comparable transactions with non-affiliated companies. This arms-length
requirement applies to all covered transactions, as well as to: (i) the sale of
securities or other assets to an affiliate; (ii) the payment of money or the
furnishing of services to an affiliate; (iii) any transaction in which an
affiliate acts as agent or broker or receives a fee for its services to the
savings association or to any other person; or (iv) any transaction or series of
transactions with a third party if any affiliate has a financial interest in the
third party or is a participant in the transaction or series of transactions.
Community Reinvestment Act ("CRA")
Under the CRA and the implementing OTS regulations, a savings association
has a continuing and affirmative obligation to help meet the credit needs of its
local communities, including low- and moderate-income neighborhoods, consistent
with the safe and sound operation of the institution.
As part of its CRA activities, the Bank originates loans for affordable
housing (which are generally loans to low- or moderate-income borrowers). In
order to generate these loans, the Bank's specifically designated staff uses a
variety of outreach initiatives, including participation in seminars and housing
fairs, such as those targeted to first-time home buyers, loan application
materials in a variety of foreign languages, and cooperative ventures with
not-for-profit groups. The Bank's CRA lending activities also include loans in
low- or moderate-income neighborhoods, community development financing for new
construction and rehabilitation of affordable multifamily housing, and targeted
commercial projects. Typically, these project loans are made in partnership with
government subsidy programs.
Under new standards effective as of July 1, 1997, the OTS assigns a CRA
rating based upon a Lending Test, Investment Test and Service Test keyed to,
respectively, the number of loans, the number of investments, and the level of
availability of retail banking services in a savings association's assessment
area. The Lending Test is the primary component of the assigned composite
rating. An "outstanding" rating on the Lending Test automatically results in at
least a "satisfactory" rating on the composite, but an institution cannot
receive a "satisfactory" or better rating on the composite if it does not
receive at least a "low satisfactory" rating on the Lending Test. Alternatively,
a savings association may elect to be assessed by complying with a strategic
plan approved by the OTS.
Prior to the effective date of the new standards, the OTS implementing
regulations required the board of directors of each savings association to adopt
a CRA statement for each delineated local community that, among other things,
described its efforts to help meet community credit needs and the specific types
of credit that the institution was willing to extend.
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Following each of the four most recent CRA examinations of the Bank by the
OTS, which were completed in August 1997 (under the new standards), June 1995,
February 1993, and December 1990, the Bank received an "outstanding" CRA rating,
which is the highest rating that an institution may receive.
Savings Association Investment Powers
Federal savings associations are subject to comprehensive regulation
governing their investments and activities. Among other things, a federal
savings association may invest up to 3% of its assets in service corporations,
an unlimited percentage of its assets in operating subsidiaries (which may only
engage in activities permissible for the association itself) and under certain
conditions may invest in finance subsidiaries. Other than investments in service
corporations, operating subsidiaries, finance subsidiaries, stock of
government-sponsored agencies such as FHLMC and FNMA, and certain "pass-through
investments" in entities engaging only in activities that a federal savings
association may conduct directly, federal savings associations generally are not
permitted to make equity investments. A service corporation in which a federal
savings association may invest is permitted to engage in activities reasonably
related to the activities of a federal savings association as the OTS may
approve on a case-by-case basis and certain activities pre-approved by the OTS.
Under federal law, a savings association may not acquire or retain,
directly or through a subsidiary, any corporate debt securities that, when
acquired, were not rated in one of the four highest rating categories by at
least one nationally recognized rating agency, unless such activity is done
through a separately capitalized affiliate (other than a subsidiary or an
insured depository institution).
Until June 1983, the Bank was a New York State-chartered mutual savings
bank. The Bank converted to a federally-chartered mutual savings bank in 1983
and in 1986 converted from mutual to stock form. Federal law and regulations
empower the Bank to exercise any authority to make investments or engage in
activities that the Bank was authorized to exercise or engage in under New York
law in effect at the time it converted to a federal mutual charter, whether or
not the Bank had utilized such authority as a state-chartered mutual savings
bank. These so-called "grandfathered" powers are in addition to the powers the
Bank possesses as a federal savings bank. Among these grandfathered powers is
the authority to make "leeway" investments. Under this authority, the Bank,
subject to certain limitations, may make equity and other investments that do
not qualify under any other provision of the grandfathered powers, so long as no
one such investment exceeds 1% of the Bank's assets and the total of all such
investments does not exceed 5% of its assets. However, certain specific types of
investments are prohibited under this provision, including the acquisition of
common stock in a commercial bank or life insurance company.
The exercise of these grandfathered powers, or any other activity, is
subject to the authority of the FDIC to issue regulations or orders it deems
necessary to prevent actions or practices that pose a serious threat to the BIF
or the SAIF. The FDIC has authority, upon making such determination, to prohibit
a savings association from engaging in that activity.
Acquisition of Control of Savings Associations
The Home Owners Loan Act ("HOLA") prohibits a savings and loan holding
company, directly or indirectly, from: (i) acquiring control of a savings
association or another savings and loan holding company, without prior OTS
approval; (ii) generally acquiring more than 5% of the voting shares of a
savings and loan holding company or a savings association which is not a
controlled subsidiary; or (iii) acquiring control of an "uninsured institution,"
as defined in the HOLA. No director or officer of a savings and loan holding
company or individual owning, controlling or holding power to vote more than 25%
of the holding company's voting shares may: (i) hold, solicit or exercise
proxies in respect of any voting rights in a mutual savings association; or (ii)
except with the prior approval of the OTS, acquire control of any savings
association that is not a subsidiary of such holding company.
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Federal Home Loan Bank ("FHLB") System
The Bank is a member of the FHLB system, which consists of 12 regional
FHLBs. The FHLB system provides a central credit facility primarily for member
institutions. Members are required to hold shares of the capital stock of the
regional FHLB in which they are a member in an amount at least equal to the
greater of 1% of the member's home mortgage loans or 5% of the member's advances
from the FHLB.
Federal Reserve System
Federal Reserve Board regulations require depository institutions,
including the Bank, to maintain non-interest-earning reserves against certain
deposits. The Bank maintained $34.5 million of such reserves for the calculation
period including December 31, 1997. The effect of these reserve requirements is
to reduce the Bank's interest-earning assets. The balances maintained to comply
with the reserve requirements of the Federal Reserve Board may be used to
satisfy the liquidity requirements imposed on the Bank by the OTS.
The Bank is also subject to additional regulations promulgated by the
Federal Reserve Board, including, but not limited to, Regulation B (Equal Credit
Opportunity Act), Regulation E (Electronic Fund Transfers Act), Regulation Z
(Truth in Lending Act), Regulation CC (Expedited Funds Availability Act) and
Regulation DD (Truth in Savings Act).
FHLB system members are authorized to borrow from the Federal Reserve
"discount window," but Federal Reserve Board regulations require institutions to
exhaust all FHLB sources before borrowing from a Federal Reserve Bank.
Legislative and Regulatory Proposals
The operations of a savings association and a savings and loan holding
company are affected by the economic, fiscal and monetary policies of the United
States and its agencies and regulatory authorities, particularly the Federal
Reserve Board. The fiscal and economic policies of various governmental entities
and the monetary policies of the Federal Reserve Board have a direct effect on
the Company's business operations and the availability, growth and distribution
of the Company's investments and deposits.
In addition, proposals to change the laws and regulations governing the
operations and taxation of savings associations and other financial institutions
and companies that control such institutions are frequently raised in Congress
and before the OTS and other bank regulatory authorities. The likelihood of any
major changes in the future and the effect such changes might have on the
Company are impossible to determine.
Federal Securities Laws
The Holding Company is subject to the periodic reporting, proxy
solicitation, tender offer, insider trading and other requirements and
restrictions under the Securities Exchange Act of 1934.
TAXATION
Federal Income Taxation
General. The Holding Company files consolidated federal income tax returns
with its eligible 80%-or-greater-owned subsidiaries on a calendar year basis.
The maximum corporate federal income tax rate applicable to the Holding Company
and its subsidiaries currently is 35%, subject to the 20% alternative minimum
tax applicable to corporations, as discussed below.
Alternative Minimum Tax. The 20% alternative minimum tax applies generally
to taxable income, with certain adjustments, plus items of tax preference
("AMTI") and is imposed to the extent that the alternative minimum tax exceeds
the regular income tax for the taxable year. The amount of AMTI that can be
offset by net operating loss ("NOL") carryforwards is limited to 90% of AMTI.
Therefore, for taxable years in which available NOL carryforwards completely
offset taxable income, the Holding Company (and its subsidiaries) would be
subject to an effective minimum federal tax rate of 2% of AMTI (as determined
before offset by NOL carryforwards). Any alternative minimum tax paid by the
Company would be available as a
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carryforward tax credit, which, subject to certain limitations, could be used to
reduce its otherwise determined regular federal tax liability.
Bad Debt Deductions. Effective for 1996, federal tax legislation modified
the methods by which a thrift computes its bad debt deduction. As a result,
"large thrifts," including the Bank, are required to claim a deduction equal to
their actual loss experience, and the "reserve method" is no longer available.
Any cumulative reserve additions (i.e., bad debt deductions) in excess of actual
loss experience for tax years 1988 through 1995 are subject to recapture over a
six- to eight-year period. Generally, reserve balances as of December 31, 1987
will only be subject to recapture upon distribution of such reserves to
shareholders.
In New York State and New York City, legislation was enacted during 1996
and in early 1997, respectively, that allows thrift institutions to continue to
use the reserve method of tax accounting for bad debts and to determine a
deduction for bad debts in a manner similar to prior law.
State and Local Taxation
New York State and New York City each imposes an annual franchise tax on
banking corporations, based on net income allocable to New York State or New
York City, respectively, at a rate of 9%. If, however, the application of an
alternative minimum tax (based on taxable assets allocated to New York,
"alternative" net income, or a flat minimum fee) results in a greater tax, an
alternative minimum tax will be imposed. In addition, New York State imposes a
tax surcharge equal to 17% of the New York State franchise tax allocable to
business activities carried on in the Metropolitan Commuter Transportation
District. NOLs cannot be carried back or forward for New York State or New York
City tax purposes. These taxes apply to the Holding Company, the Bank and
certain of the Bank's subsidiaries. Certain subsidiaries of a banking
corporation may be subject to a general business corporation tax in lieu of the
tax on banking corporations. The rules regarding the determination of income
allocated to New York and alternative minimum taxes differ for these
subsidiaries.
The Holding Company and certain of its subsidiaries are also subject to
state and local taxation in states other than New York. Most states provide a
statutory apportionment methodology that determines the allocable income subject
to tax in those states. In certain cases, the income and activities of the
affiliated group are used to determine the tax liability of the entity doing
business in that state. Further, the ability to utilize NOL carryovers varies by
state. New Jersey imposes a Savings Institution Tax based on net income
attributed to New Jersey on the basis of separate accounting, at a rate of 3%,
and NOLs cannot be carried back or forward. In addition, the Holding Company is
subject to an annual franchise tax imposed by Delaware, its state of
incorporation. This franchise tax is the higher of an amount determined by
reference to authorized shares or assumed capital (asset size), but cannot
exceed $150,000.
Limitations on Use of Tax Losses
As of December 31, 1997, the Company had certain net deferred tax benefits
(generally, expenses or losses recorded in the financial statements that have
not yet reduced its income tax liability) of approximately $102 million.
The timing of the realization of a substantial portion of the Company's
deferred tax asset is subject to limitation under section 382 ("Section 382") of
the Internal Revenue Code (the "Code") because the Holding Company underwent an
ownership change as defined by Section 382 ("Ownership Change") as a result of
the issuance of its common stock ("Common Stock") in conjunction with the NAMC
Acquisition.
Generally, an Ownership Change occurs with respect to a corporation if any
stockholders who own or have owned, directly or indirectly, 5% or more of the
capital stock of the corporation ("5% stockholders") increase their aggregate
percentage ownership of such stock by more than 50 percentage points over the
lowest percentage of such stock owned by such 5% stockholders at any time during
the testing period (generally the three years preceding). In applying Section
382, under a special rule, at least a portion of newly-issued stock is
considered to be acquired by a new 5% stockholder even if no person acquiring
the stock in fact owns as much as 5% of the issuer's stock. Under this rule, the
Common Stock issued to common stockholders of NAMC in
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connection with the NAMC Acquisition, as well as the Common Stock issued to
common stockholders of Anchor Bancorp, Inc. ("Anchor Bancorp") in connection
with its merger with and into the Holding Company in January 1995 (together with
the merger of Anchor Savings Bank FSB ("Anchor Savings") with and into the Bank,
the "Anchor Merger"), is considered to have been acquired by a new 5%
stockholder.
Section 382 imposes an annual limitation on the timing of the amount of
taxable income a corporation may offset, after the date of an Ownership Change
(the "Change Date"), with NOL and tax credit carryforwards and certain net
unrealized built-in losses existing on the Change Date. The limitation equals
the product of (i) the fair market value of the corporation's equity on the
Change Date (with certain adjustments, including an adjustment excluding certain
capital contributions made in the two years preceding the Change Date) and (ii)
a long-term tax-exempt bond rate as defined by the Code.
The Company believes that the application of Section 382 resulting from the
NAMC Acquisition will only limit the utilization of its federal NOL and tax
credit carryforwards. This represents approximately $83 million of the Company's
deferred tax asset at December 31, 1997. Effectively, the Company would be
limited to realizing no more than approximately $50 million of these benefits
for each calendar year beginning in 1998. The delay in utilizing these tax
carryforwards will not require an adjustment to the Company's financial
statement presentation of its tax position nor will it have a material impact on
its earnings.
Based on the information available to the Company, it does not currently
believe that the issuance of shares of Common Stock in the Anchor Merger
resulted in an Ownership Change. However, because the application of Section 382
is highly complex and uncertain in some respects, the Company cannot provide any
assurances that an Ownership Change did not occur.
Other Tax Information
For additional information regarding income taxes of the Company, see Note
21 of the Notes to Consolidated Financial Statements in Item 8, "Financial
Statements and Supplementary Data."
ITEM 2. PROPERTIES
At December 31, 1997, the Bank operated 91 full-service branches, of which
40 were owned and 51 were leased. At that date, the Company leased its principal
executive offices in New York City, its administrative headquarters in
Uniondale, New York, the executive offices for its mortgage banking operations
located in Tampa, Florida, and 226 residential real estate loan production
facilities located in 36 states. In addition, at December 31, 1997, the Company
owned the building and leased the land for its remote computer operations hub in
Valley Stream, New York, and owned its residential real estate and consumer loan
servicing operations center in Albion, New York and its residential real estate
loan production headquarters located in Santa Rosa, California.
For further information regarding the Company's properties and lease
obligations, see Notes 7 and 24 of the Notes to Consolidated Financial
Statements in Item 8, "Financial Statements and Supplementary Data."
ITEM 3. LEGAL PROCEEDINGS
On January 13, 1995, Anchor Savings filed suit in the United States Court
of Federal Claims against the United States for breach of contract and taking of
property without compensation in contravention of the Fifth Amendment to the
United States Constitution. The action arose because the passage of the
Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA")
and the regulations adopted by the OTS pursuant to FIRREA deprived Anchor
Savings of the ability to include supervisory goodwill and certain other assets
for purposes of computing its regulatory capital as the Federal Savings and Loan
Insurance Corporation ("FSLIC") had agreed it could. The direct effect was to
cause Anchor Savings to go from an institution that substantially exceeded its
regulatory capital requirements to one that was critically undercapitalized upon
the effectiveness of the FIRREA-mandated capital requirements.
From 1982 to 1985, Anchor Savings had acquired eight FSLIC-insured
institutions that were in danger of failing and causing a loss to the FSLIC.
Four institutions were acquired with some financial assistance from
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the FSLIC and four were unassisted "supervisory" cases. In acquiring the
institutions, Anchor Savings assumed liabilities determined to exceed the assets
it acquired by over $650 million at the dates of the respective acquisitions.
The difference between the fair values of the assets acquired and the
liabilities assumed in the transactions were recorded on Anchor Savings' books
as goodwill. At the time of these acquisitions, the FSLIC had agreed that this
supervisory goodwill was to be amortized over periods of up to 40 years. Without
that agreement, Anchor Savings would not have made the acquisitions. When the
capital regulations imposed under FIRREA became effective, Anchor Savings still
had over $518 million of supervisory goodwill on its books and approximately 20
years remaining to amortize it under the agreements with FSLIC. The
FIRREA-mandated capital requirements excluded all but approximately $124 million
of Anchor Savings' supervisory goodwill, over $42 million attributable to the
FSLIC contribution in one acquisition, and, until the formation of Anchor
Bancorp in 1991, $157 million associated with preferred stock issued to the
FSLIC as a result of one of the acquisitions. FIRREA also required the remaining
supervisory goodwill to be eliminated by December 31, 1994 for regulatory
capital purposes. The elimination of the supervisory goodwill resulted in severe
limitations on Anchor Savings' activities and required the disposition of
valuable assets under liquidation-like circumstances, as a result of which
Anchor Savings was damaged. The complaint asks that the government make Anchor
Savings whole for the effects of the loss, which are estimated to exceed
substantially the goodwill remaining at the time FIRREA was enacted.
There are approximately 130 cases involving similar issues pending in the
United States Court of Federal Claims, which has entered summary judgment for
the plaintiffs as to liability, but not damages, in three of the cases. Those
cases, referred to as the Winstar cases, were appealed to the United States
Supreme Court, which, on July 1, 1996, affirmed the decision that the government
was liable for breach of contract.
All of the Winstar-related cases, including Anchor Savings' lawsuit (which
was assumed by the Bank upon consummation of the Anchor Merger), have been
assigned to the Chief Judge of the Court of Federal Claims. The Chief Judge has
issued an Omnibus Case Management Order ("OCMO") that controls the proceedings
in all these cases, which imposes procedures and schedules different from most
cases in the Court of Federal Claims. Under the OCMO, the Bank has moved for
partial summary judgment as to the existence of a contract and the inconsistency
of the government's actions with that contract in each of the related
transactions. The government has disputed the existence of a contract in each
case and cross-moved for summary judgment. The government also submitted a
filing acknowledging that it is not aware of any affirmative defenses. Briefing
on the motions was completed on August 1, 1997, but no timetable has been set
for disposition of the Bank's motions and the government cross-motions. In
August 1997, the Court held a hearing on summary judgment motions in four other
cases. As part of that hearing, the Court heard argument on eleven issues that
the plaintiffs contend are common to many of the pending cases, including the
Bank's case. The Court issued its order on December 22, 1997, ruling in favor of
the plaintiffs on all eleven "common" issues. The Court's order directed the
Government to submit a "show cause" filing by February 20, 1998 asserting why
judgment for the plaintiff should not be entered on each of the common issues
with respect to each pending summary judgment motion. The Court, however, did
not prescribe a clear procedure for implementing its order. The Government
submitted a filing in response to the "show cause" order, but asserted that it
might need further discovery as to certain issues. At a status conference on
March 11, 1998, the Court directed each of the plaintiffs to submit a proposed
form of order for entry of judgment as to liability on the Winstar contract
issues and an accompanying brief by March 31, 1998 and directed the Government
to respond by April 30, 1998 with a filing asserting any basis for not entering
the order proposed by the plaintiff. The Bank intends to submit such a proposed
order. Nonetheless, it is not possible to predict whether the Court will grant
any of the Bank's motions for partial summary judgment or, if so, when the Chief
Judge will schedule a trial on damages and any remaining liability issues.
The Court has ordered that certain common discovery proceed through at
least the first quarter of 1998. The Government is required to produce certain
documents relating to unassisted acquisitions of failing institutions effected
by the Bank and five other plaintiffs. In addition, the Court has directed that
full discovery of facts common to all pending cases be conducted. Such discovery
will include materials concerning the policies and procedures of the Federal
Home Loan Bank Board (the predecessor of the OTS) and the FSLIC during the
thrift crisis of the 1980's, when the transactions that are the subject of the
litigation occurred. In
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addition, the common discovery will include generally applicable information
concerning the operations of the FSLIC that will be relevant under certain
damage theories.
Commencing in April 1998, the oldest 30 of the pending cases (after
excluding certain specific cases) that elect to proceed will be allowed to
commence full discovery as to liability and damages in their cases. The
case-specific discovery will continue for one year, unless extended by the
Court. The second 30 cases will start discovery in 1999, and so on. Discovery of
damage experts will follow the fact discovery in each case. Cases will not be
assigned to trial judges until after the fact discovery is completed. The Bank
is among the 30 plaintiffs that will commence full case-specific discovery on
April 1, 1998.
There have been no decisions determining damages in any of the
Winstar-related cases. The trial in the first of the Winstar-related cases to
proceed to trial on damages is expected to be concluded by early April 1998, and
the second is scheduled to commence in May 1998. It is unlikely that any
decision on damages will be issued before the summer of 1998. It is likely that
any determination of damages by the Court of Federal Claims will be appealed. It
is impossible to predict the measure of damages that will be upheld in cases in
which liability is found. The Company, nevertheless, believes that its claim is
meritorious, that it is one of the more significant cases before the Court, and
that it is entitled to damages, which, as noted, are estimated to exceed
substantially the goodwill remaining on Anchor Savings' books at the time FIRREA
was enacted.
The Bank and/or its wholly-owned subsidiaries, Dime Mortgage of New Jersey,
Inc. and NAMC (and in one instance, Dime Mortgage, Inc., a subsidiary of the
Company that was merged into NAMC in the fourth quarter of 1997), as the case
may be, have been named as defendants in the following purported class actions:
Koslowe v. Dime Mortgage of New Jersey and The Dime Savings Bank of New York,
filed in the United States District Court for the District of New Jersey on
February 25, 1997; Bray v. North American Mortgage Co., filed in the United
States District Court for the Middle District of Alabama on January 31, 1997;
Bailey v. North American Mortgage Co., filed in the United States District Court
for the Middle District of Alabama on October 28, 1997; Brigham v. North
American Mortgage Co., filed in the United States District Court for the Middle
District of Georgia on January 14, 1998; Sisson v. Dime Mortgage, Inc., filed in
the United States District Court for the Northern District of Alabama on January
23, 1998; Levine v. North American Mortgage Co., filed in the United States
District Court for the District of Minnesota on January 29, 1998; and Hamilton
v. North American Mortgage Co., filed in the United States District Court for
the District of Maine on March 4, 1998. In each of these cases, the plaintiff
alleges, among other things, that, in connection with the making of residential
real estate loans, the Bank and/or such subsidiaries made certain payments to
mortgage brokers in violation of specified federal laws, including the Real
Estate Settlement Procedures Act ("RESPA"). Each of the plaintiffs seeks
unspecified compensatory damages plus, as to certain claims, treble damages. The
Company believes that its compensation programs for mortgage brokers comply with
applicable laws and with accepted mortgage banking industry practices and that
it has meritorious defenses to each of the actions. The Company intends to
oppose each of the actions vigorously.
Certain other claims, suits, complaints and investigations involving the
Company, arising in the ordinary course of business have been filed or are
pending. The Company is of the opinion, after discussion with legal counsel
representing the Company in these proceedings, that the aggregate liability or
loss, if any, arising from the ultimate disposition of these matters would not
have a material adverse effect on the Company's consolidated financial position
or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to the Holding Company's stockholders during the
quarter ended December 31, 1997.
16
<PAGE> 19
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Common Stock is traded on the New York Stock Exchange ("NYSE") under
the symbol "DME." On March 6, 1998, there were approximately 22,252 holders of
record of the Common Stock.
The following table sets forth, for the quarters indicated, the high and
low sales prices of the Common Stock based on the NYSE Composite Tape and any
cash dividends declared per share of Common Stock.
<TABLE>
<CAPTION>
SALES PRICE
--------------- DIVIDENDS
HIGH LOW DECLARED
---- --- ---------
<S> <C> <C> <C>
1997:
Fourth quarter............................. $30 3/8 $20 15/16 $0.04
Third quarter.............................. 22 1/16 16 15/16 0.04
Second quarter............................. 19 14 7/8 0.04
First quarter.............................. 18 1/8 14 1/2 --
1996:
Fourth quarter............................. 16 7/8 13 1/2 --
Third quarter.............................. 14 11 1/8 --
Second quarter............................. 13 3/8 11 1/2 --
First quarter.............................. 12 3/8 10 5/8 --
</TABLE>
The Holding Company's Board of Directors (the "Board") periodically
considers the payment of dividends on the Common Stock, taking into account the
Company's financial condition and level of net income, its future prospects,
economic conditions, industry practices, and other factors, including the
dividend restrictions described in Notes 12 and 15 of the Notes to Consolidated
Financial Statements in Item 8, "Financial Statements and Supplementary Data"
and "Regulation and Supervision -- Restrictions on Dividends and Capital
Distributions" under Item 1, "Business."
17
<PAGE> 20
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
FOR THE YEAR
Net interest income.............. $ 483,062 $ 461,295 $ 409,626 $ 429,077 $ 390,172
Provision for loan losses........ 49,000 41,000 39,650 55,799 95,489
Non-interest income.............. 145,291 85,978 74,712 89,900 134,381
Non-interest expense:
General and administrative
expense..................... 337,122 292,795 285,901 294,474 294,755
Amortization of mortgage
servicing assets............ 29,751 19,382 20,652 20,297 31,740
Other real estate owned
expense, net................ 4,341 10,072 12,892 11,013 77,393
SAIF recapitalization
assessment.................. -- 26,280 -- -- --
Restructuring and related
expense..................... 9,931 3,504 15,331 58,258 4,000
----------- ----------- ----------- ----------- -----------
Total non-interest
expense.............. 381,145 352,033 334,776 384,042 407,888
----------- ----------- ----------- ----------- -----------
Minority interest -- preferred
stock dividends of
subsidiary..................... -- -- -- 11,433 1,312
----------- ----------- ----------- ----------- -----------
Income before income tax expense
(benefit), extraordinary item
and cumulative effect of a
change in accounting
principle...................... 198,208 154,240 109,912 67,703 19,864
Income tax expense (benefit)..... 75,034 49,984 47,727 (53,138) (68,959)
----------- ----------- ----------- ----------- -----------
Income before extraordinary item
and cumulative effect of a
change in accounting
principle...................... 123,174 104,256 62,185 120,841 88,823
Extraordinary item -- loss on
early extinguishment of debt,
net of income tax benefit of
$895........................... (1,460) -- -- -- --
Cumulative effect of a change in
accounting principle for
goodwill in 1994 and securities
available for sale, net of
income tax benefit of $842, in
1993........................... -- -- -- (92,887) (1,187)
----------- ----------- ----------- ----------- -----------
Net income....................... $ 121,714 $ 104,256 $ 62,185 $ 27,954 $ 87,636
=========== =========== =========== =========== ===========
PER COMMON SHARE
Basic earnings:
Income before extraordinary
item and cumulative effect
of a change in accounting
principle................... $ 1.15 $ 1.00 $ 0.63 $ 1.23 $ 1.01
Net income..................... 1.14 1.00 0.63 0.28 1.00
Diluted earnings:
Income before extraordinary
item and cumulative effect
of a change in accounting
principle................... 1.13 0.96 0.57 1.12 0.91
Net income..................... 1.12 0.96 0.57 0.26 0.90
Cash dividends declared.......... 0.12 -- -- -- --
Book value at December 31, (1)... 11.30 9.76 9.03 8.43 8.48
Market value at December 31,..... 30.25 14.75 11.63 7.75 8.13
</TABLE>
18
<PAGE> 21
<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
PERFORMANCE RATIOS
Return on average assets......... 0.60% 0.52% 0.30% 0.15% 0.53%
Return on average stockholders'
equity......................... 11.04 10.36 6.56 3.25 11.02
Net interest margin for the
year........................... 2.51 2.40 2.07 2.36 2.47
Non-interest income to total
revenues....................... 23.12 15.71 15.43 17.32 25.62
Efficiency ratio................. 51.98 51.83 57.11 57.28 58.66
AT YEAR END
Total assets..................... $21,848,000 $18,870,108 $20,326,620 $19,647,937 $18,098,984
Securities available for sale.... 4,992,304 2,589,572 4,070,865 530,714 658,204
Securities held to maturity...... -- 4,363,971 5,085,736 8,609,897 8,159,747
Loans held for sale.............. 1,841,862 115,325 139,370 16,621 134,364
Loans receivable................. 12,984,507 10,738,057 9,830,313 9,351,622 7,906,573
Allowance for loan losses........ 104,718 106,495 128,295 170,383 157,515
Deposits......................... 13,847,275 12,856,739 12,572,203 12,811,269 11,091,362
Borrowed funds................... 6,319,312 4,815,191 6,614,552 5,758,734 5,850,575
Stockholders' equity............. 1,314,858 1,022,337 976,530 905,125 904,982
Loans serviced for others........ 21,986,111 11,036,624 9,514,560 8,713,047 8,265,354
Common shares outstanding (in
thousands)..................... 116,358 104,744 99,706 98,601 98,303
ASSET QUALITY
Non-performing assets............ $ 146,749 $ 244,845 $ 315,800 $ 415,866 $ 641,743
Non-performing assets to total
assets......................... 0.67% 1.30% 1.55% 2.12% 3.55%
Non-accrual loans to loans
receivable..................... 0.92 1.78 2.60 3.66 3.68
Allowance for loan losses to:
Loans receivable............... 0.81 0.99 1.31 1.82 1.99
Non-accrual loans.............. 88.01 55.58 50.29 49.84 54.14
CAPITAL RATIOS
Stockholders' equity to total
assets......................... 6.02% 5.42% 4.80% 4.61% 5.00%
Average stockholders' equity to
average total assets........... 5.46 5.05 4.62 4.57 4.82
The Dime Savings Bank of New
York, FSB:
Tangible and leverage.......... 5.64 6.06 5.16 5.41 5.62
Tier 1 risk-based.............. 10.29 11.96 10.76 9.88 8.71
Total risk-based............... 11.17 13.08 12.01 11.14 10.02
</TABLE>
- ---------------
(1) For 1995, 1994 and 1993, the computation assumes that a warrant issued to
the FDIC in July 1993 to acquire 8.4 million shares of the Common Stock at
$0.01 per share (the "Warrant") was exercised. The Warrant was exercised in
May 1996. For a further discussion of the Warrant, see Note 15 of Notes to
Consolidated Financial Statements in Item 8, "Financial Statements and
Supplementary Data."
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The Company's net income was $121.7 million for 1997, as compared with
$104.3 million for 1996 and $62.2 million for 1995. Diluted earnings per common
share were $1.12 for 1997, up 16.7% from $0.96 in 1996, which had increased
68.4% from $0.57 in 1995. The Company's returns on average assets and average
19
<PAGE> 22
stockholders' equity increased to 0.60% and 11.04%, respectively, in 1997, from
0.52% and 10.36%, respectively, in 1996 and from 0.30% and 6.56%, respectively,
in 1995.
Contributing to the $17.5 million improvement in net income for 1997, as
compared with 1996, were increases in net interest income, fee income, and gains
associated with mortgage banking activities, as well as the effect of a $26.3
million charge in 1996 to recapitalize the SAIF (the "SAIF Special Assessment").
These factors were offset, in part, by a higher level of securities-related
losses associated with balance sheet restructuring initiatives and increases in
certain expenses due primarily to business expansion efforts, as well as $12.3
million of income tax benefits recognized during 1996 in connection with the
final resolution of certain tax filing positions taken in prior years.
In December 1997, the Company implemented a balance sheet restructuring
initiative, which included the transfer of its entire $3.6 billion portfolio of
securities held to maturity to securities available for sale. As part of this
initiative, which was undertaken in conjunction with the Company's reassessment
of its asset/liability management strategy, the Company designated $1.4 billion
of the transferred securities for sale. It is anticipated that such securities
will be sold during 1998.
The Company experienced growth in loan production in all lending areas in
1997, as compared with 1996, particularly with respect to residential real
estate loans, which increased largely as a result of the NAMC Acquisition. The
Company's total loan production (which consists of both originations and
purchases) amounted to $9.8 billion for 1997, up $6.0 billion from the prior
year. The NAMC Acquisition also contributed significantly to an almost 100%
increase in the Company's portfolio of loans serviced for others during 1997,
which amounted to $22.0 billion at the end of the year.
In connection with the BFS Acquisition, the Company acquired five New York
City branches with deposits of approximately $447 million at the date of the
acquisition. In addition, the BFS Acquisition added approximately $580 million
to the Company's commercial real estate loan portfolio.
Non-performing assets declined from $244.8 million at December 31, 1996 to
$146.7 million at year-end 1997, principally due to the sales of approximately
$126 million of non-performing residential real estate assets during the second
quarter of 1997 (the "NPA Sales"). In connection with the NPA Sales, the Company
recorded special provisions for loan and other real estate owned ("ORE") losses
totaling $14.6 million.
RESULTS OF OPERATIONS
Net Interest Income
Net interest income amounted to $483.1 million in 1997, up $21.8 million,
or 4.7%, from 1996, primarily due to an increase in the Company's net interest
margin to 2.51% for 1997 from 2.40% for the prior year. This improvement in the
net interest margin principally reflects the Company's operating strategy of
increasing its emphasis on loans, while reducing its reliance on MBS, which, in
general, provide a lower yield than the Company's loans. In 1997, as compared
with 1996, the average balance of loans increased $1.8 billion, or 17.2%, while
the average balance of MBS declined $1.7 billion, or 21.4%. Loans represented
63.0% of total average interest-earning assets during 1997, as compared with
53.9% of total average interest-earning assets during the prior year. Improved
asset quality, principally as a result of the NPA Sales, and growth in deposits
as a percentage of total interest-bearing liabilities, due in part to the BFS
Acquisition, also contributed to the improved net interest margin. These factors
were partially offset by a flattening of the interest rate yield curve during
1997, higher borrowing costs, and a $150.0 million investment during the third
quarter of 1997 in a bank-owned life insurance program (the "BOLI Program"),
associated revenues of which are reflected in non-interest income. The Company
expects that the flat interest rate yield curve, if sustained, will continue to
exert pressure on its net interest income and net interest margin.
During 1996, net interest income amounted to $461.3 million, an increase of
12.6% from $409.6 million during 1995, despite a $548.3 million reduction in
average interest-earning assets. The Company's net interest margin of 2.40% for
1996 increased 33 basis points from the level in 1995. Significant factors
contributing to the increases in net interest income and the net interest margin
in 1996 as compared with 1995 included growth in average loans of $816.1
million, or 8.5%, a more favorable interest rate yield curve, lower overall
20
<PAGE> 23
funding costs, and a balance sheet restructuring plan initiated at the end of
1995. As part of that plan, the Company, during 1996, sold approximately $2.0
billion of securities available for sale, including certain lower-yielding MBS,
the proceeds from which were primarily used to reduce borrowed funds.
The following table sets forth, for the years indicated, the Company's
consolidated average statement of financial condition, net interest income, the
average yield on interest-earning assets, and the average cost of
interest-bearing liabilities. Average balances are computed on a daily basis.
Non-accrual loans are included in average balances in the table below.
<TABLE>
<CAPTION>
1997 1996
---------------------------------- ----------------------------------
AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST COST BALANCE INTEREST COST
----------- ---------- ------- ----------- ---------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-earning assets:
Loans:
Residential real
estate............. $ 9,165,665 $ 660,505 7.21% $ 7,771,197 $ 558,248 7.18%
Commercial real
estate............. 2,193,661 191,111 8.71 1,834,313 159,019 8.67
Consumer............. 730,106 63,222 8.66 723,744 63,679 8.80
Business............. 54,050 5,052 9.35 35,131 3,163 9.00
----------- ---------- ----------- ----------
Total loans........ 12,143,482 919,890 7.58 10,364,385 784,109 7.57
----------- ---------- ----------- ----------
MBS.................... 6,176,259 406,781 6.59 7,856,066 508,342 6.47
Other securities....... 362,538 23,774 6.56 514,888 31,910 6.20
Money market
investments.......... 586,500 32,370 5.52 495,395 26,337 5.32
----------- ---------- ----------- ----------
Total interest-earning
assets................. 19,268,779 1,382,815 7.18 19,230,734 1,350,698 7.02
---------- ----------
Other assets............. 923,409 710,519
----------- -----------
Total assets............. $20,192,188 $19,941,253
=========== ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest-bearing
liabilities:
Deposits:
Demand............... $ 1,267,547 8,012 0.63 $ 1,093,311 8,254 0.75
Savings.............. 2,468,652 60,689 2.46 2,574,273 64,642 2.51
Money market......... 1,953,931 72,723 3.72 2,100,392 80,904 3.85
Time................. 7,556,076 417,935 5.53 6,913,469 377,416 5.46
----------- ---------- ----------- ----------
Total deposits..... 13,246,206 559,359 4.22 12,681,445 531,216 4.19
----------- ---------- ----------- ----------
Borrowed funds:
Securities sold under
agreements to
repurchase......... 3,628,681 206,822 5.70 2,672,859 147,561 5.52
FHLBNY advances...... 1,539,079 91,321 5.93 3,081,743 179,338 5.82
Other................ 483,202 42,251 8.74 364,703 31,288 8.58
----------- ---------- ----------- ----------
Total borrowed
funds............ 5,650,962 340,394 6.02 6,119,305 358,187 5.85
----------- ---------- ----------- ----------
Total interest-bearing
liabilities............ 18,897,168 899,753 4.76 18,800,750 889,403 4.73
---------- ----------
Other liabilities........ 192,941 134,218
Stockholders' equity..... 1,102,079 1,006,285
----------- -----------
Total liabilities and
stockholders' equity... $20,192,188 $19,941,253
=========== ===========
Net interest income...... $ 483,062 $ 461,295
========== ==========
Interest rate spread..... 2.42 2.29
Net interest margin...... 2.51 2.40
<CAPTION>
1995
----------------------------------
AVERAGE
AVERAGE YIELD/
BALANCE INTEREST COST
----------- ---------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Interest-earning assets:
Loans:
Residential real
estate............. $ 6,903,212 $ 485,340 7.03%
Commercial real
estate............. 1,843,131 162,712 8.83
Consumer............. 768,148 71,124 9.26
Business............. 33,750 3,250 9.63
----------- ----------
Total loans........ 9,548,241 722,426 7.57
----------- ----------
MBS.................... 9,187,208 567,885 6.18
Other securities....... 460,049 32,596 7.09
Money market
investments.......... 583,510 34,224 5.87
----------- ----------
Total interest-earning
assets................. 19,779,008 1,357,131 6.86
----------
Other assets............. 721,586
-----------
Total assets............. $20,500,594
===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest-bearing
liabilities:
Deposits:
Demand............... $ 1,052,485 10,849 1.03
Savings.............. 2,981,762 72,721 2.44
Money market......... 2,176,214 85,627 3.93
Time................. 6,410,394 355,255 5.54
----------- ----------
Total deposits..... 12,620,855 524,452 4.16
----------- ----------
Borrowed funds:
Securities sold under
agreements to
repurchase......... 1,398,041 84,323 6.03
FHLBNY advances...... 4,963,392 303,153 6.11
Other................ 416,091 35,577 8.55
----------- ----------
Total borrowed
funds............ 6,777,524 423,053 6.24
----------- ----------
Total interest-bearing
liabilities............ 19,398,379 947,505 4.88
----------
Other liabilities........ 154,102
Stockholders' equity..... 948,113
-----------
Total liabilities and
stockholders' equity... $20,500,594
===========
Net interest income...... $ 409,626
==========
Interest rate spread..... 1.98
Net interest margin...... 2.07
</TABLE>
21
<PAGE> 24
The following table sets forth, for the years indicated, the changes in
interest income and expense for each major component of interest-earning assets
and interest-bearing liabilities and the amounts attributable to changes in
average balances (volume) and average interest rates (rate). The changes in
interest income and interest expense attributable to changes in both volume and
rate have been allocated proportionately to the changes due to volume and the
changes due to rate.
<TABLE>
<CAPTION>
1997 VERSUS 1996 1996 VERSUS 1995
------------------------------- --------------------------------
INCREASE (DECREASE) INCREASE (DECREASE)
------------------------------- --------------------------------
DUE TO DUE TO DUE TO DUE TO
VOLUME RATE TOTAL VOLUME RATE TOTAL
--------- ------- --------- --------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Interest income:
Loans:
Residential real estate..... $ 100,331 $ 1,926 $ 102,257 $ 62,156 $ 10,752 $ 72,908
Commercial real estate...... 31,229 863 32,092 (776) (2,917) (3,693)
Consumer.................... 555 (1,012) (457) (4,002) (3,443) (7,445)
Business.................... 1,736 153 1,889 130 (217) (87)
--------- ------- --------- --------- -------- ---------
Total loans............ 133,851 1,930 135,781 57,508 4,175 61,683
--------- ------- --------- --------- -------- ---------
MBS............................ (109,665) 8,104 (101,561) (85,193) 25,650 (59,543)
Other securities............... (9,716) 1,580 (8,136) 3,648 (4,334) (686)
Money market investments....... 4,936 1,097 6,033 (4,870) (3,017) (7,887)
--------- ------- --------- --------- -------- ---------
Total interest income............ 19,406 12,711 32,117 (28,907) 22,474 (6,433)
--------- ------- --------- --------- -------- ---------
Interest expense:
Deposits:
Demand...................... 1,208 (1,450) (242) 407 (3,002) (2,595)
Savings..................... (2,624) (1,329) (3,953) (10,180) 2,101 (8,079)
Money market................ (5,546) (2,635) (8,181) (2,944) (1,779) (4,723)
Time........................ 35,312 5,207 40,519 27,530 (5,369) 22,161
--------- ------- --------- --------- -------- ---------
Total deposits......... 28,350 (207) 28,143 14,813 (8,049) 6,764
--------- ------- --------- --------- -------- ---------
Borrowed funds:
Securities sold under
agreements to
repurchase................ 53,623 5,638 59,261 70,932 (7,694) 63,238
FHLBNY advances............. (90,654) 2,637 (88,017) (110,101) (13,714) (123,815)
Other....................... 10,264 699 10,963 (4,408) 119 (4,289)
--------- ------- --------- --------- -------- ---------
Total borrowed funds... (26,767) 8,974 (17,793) (43,577) (21,289) (64,866)
--------- ------- --------- --------- -------- ---------
Total interest expense........... 1,583 8,767 10,350 (28,764) (29,338) (58,102)
--------- ------- --------- --------- -------- ---------
Net interest income.............. $ 17,823 $ 3,944 $ 21,767 $ (143) $ 51,812 $ 51,669
========= ======= ========= ========= ======== =========
</TABLE>
Provision for Loan Losses
The Company's provision for loan losses, which is predicated upon the
Company's assessment of the adequacy of its allowance for loan losses (see
"Management of Credit Risk -- Allowance for Loan Losses"), amounted to $49.0
million for 1997, including a $14.0 million special provision for loan losses
recognized during the 1997 second quarter in connection with the NPA Sales. In
comparison, the provision for loan losses was $41.0 million in 1996 and $39.7
million in 1995. Net loan charge-offs for 1997 amounted to $64.0 million,
including charge-offs of $35.8 million associated with the NPA Sales, as
compared with $62.8 million for 1996 and $81.7 million for 1995.
22
<PAGE> 25
Non-Interest Income
General. The Company's non-interest income was $145.3 million for 1997, up
69.0% from 1996 due, in large part, to the NAMC Acquisition. For 1996,
non-interest income was $86.0 million, an increase of 15.1% as compared with the
prior year. This increase was principally fueled by growth in fee income.
Non-interest income represented 23.1% of total revenues in 1997, as compared
with 15.7% and 15.4% in 1996 and 1995, respectively.
Loan Servicing Fees and Charges. Loan servicing fees and charges amounted
to $74.0 million in 1997, an increase of 54.7% from $47.9 million in 1996. This
increase was largely attributable to the NAMC Acquisition, which contributed
substantially to growth of $10.9 billion in the level of loans serviced for
others during 1997. At December 31, 1997, the Company owned the servicing rights
to approximately 246,000 loans owned by others, with principal balances of $22.0
billion. Loan servicing fees and charges rose slightly in 1996, as compared with
1995, as the effect of a $1.5 billion increase in the portfolio of loans
serviced for others during 1996 was largely offset by a reduction in the average
loan servicing fee.
Banking Service Fees. Banking service fees were $31.8 million in 1997, up
from $28.1 million and $22.6 million in 1996 and 1995, respectively. The growth
of 13.3% in 1997 and 24.3% in 1996, as compared with the respective prior years,
was reflective of changes in the Company's fee structure, coupled with volume
increases in certain underlying transactions.
Securities and Insurance Brokerage Activities. Securities and insurance
brokerage fees amounted to $23.7 million in 1997, an increase of $2.7 million
from the prior year. The higher level of such fees reflects growth in securities
brokerage fees of $1.4 million, or 7.4%, coupled with an increase in
insurance-related fees, primarily due to the NAMC Acquisition, of $1.3 million,
or 55.8%. In 1996, securities and insurance brokerage fees increased $5.5
million from the $15.5 million earned during 1995. This growth was largely
attributable to a $4.1 million, or 28.2%, rise in securities brokerage fees,
which resulted principally from new sales initiatives and an expanded sales
force. Insurance-related fees increased $1.4 million in 1996 as compared with
1995, principally due to the introduction of certain life insurance products.
Net Gains (Losses) on Sales Activities. The following table summarizes the
components of net gains (losses) on sales activities for the year ended December
31:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Net gains (losses) on:
Sales, calls and other than temporary impairment
in value of securities........................ $(17,794) $(11,265) $(29,044)
Sales of loans held for sale..................... 23,219 2,630 2,344
Sales of loan servicing rights................... 6,888 -- 738
Sales of branches................................ -- -- 18,637
Other............................................ (277) (4,081) (5,090)
-------- -------- --------
Total net gains (losses) on sales activities....... $ 12,036 $(12,716) $(12,415)
======== ======== ========
</TABLE>
The securities-related net losses of $17.8 million, $11.3 million and $29.0
million in 1997, 1996 and 1995, respectively, were largely attributable to
actions, including the designation for sale, and sale, of certain MBS, taken in
connection with balance sheet restructuring initiatives. During the fourth
quarters of 1997 and 1995, MBS of $1.4 billion and $1.0 billion, respectively,
were designated for sale, and in connection therewith, the Company recognized
losses of $25.2 million and $23.6 million, respectively, representing the
write-down of those securities with unrealized losses to estimated fair market
value. The Company recognized net gains in 1997 of $8.9 million on sales of $1.7
billion of securities, as compared with net losses in 1996 and 1995 of $7.0
million and $0.7 million, respectively, on sales of $2.3 billion and $0.2
billion, respectively, of securities. Securities-related net losses for 1997,
1996 and 1995 also included losses of $1.5 million, $4.7 million and $3.3
million, respectively, as a result of other than temporary impairment in value
of certain MBS (see "Management of Credit Risk -- MBS").
23
<PAGE> 26
Net gains on loan sales in connection with the Company's mortgage banking
activities increased $20.6 million in 1997 and $0.3 million in 1996, as compared
with the respective prior years. During 1997, the Company sold $4.7 billion of
loans into the secondary market (including $3.6 billion during the 1997 fourth
quarter), as compared with $1.1 billion during 1996 and $0.4 billion during
1995. The relatively high level of loan sales in 1997, as well as the net gains
thereon, was substantially attributable to the NAMC Acquisition.
During 1997, the Company recognized net gains of $6.9 million on sales of
loan servicing rights, substantially due to a sale, in December 1997, of
approximately $3 billion in principal amount of loan servicing rights. The sale
of loan servicing rights in December 1997 was associated with the Company's
interest rate risk management program and was intended to reduce the impact of a
declining long-term interest rate environment on the Company's mortgage
servicing assets. During 1995, the Company sold approximately $0.2 billion in
principal amount of loan servicing rights and recognized gains of $0.7 million.
No such sales occurred during 1996. Sales of loan servicing rights are dependent
on a variety of factors, including market conditions and existing operating
strategies; thus, the level of future sales of loan servicing rights, if any,
cannot currently be predicted.
During 1995, the Company sold four Florida branches and one New York branch
with aggregate deposits at the time of sale of approximately $283 million. A net
gain of $18.6 million was recognized on these sales.
Included in "Other" in the above table for 1996 were losses on the
write-down of certain non-interest earning assets and, for 1995, net losses of
$4.6 million incurred in connection with the disposition and consolidation of
certain operating facilities.
Other. Other non-interest income amounted to $3.7 million for 1997, as
compared with $1.7 million and $1.3 million for 1996 and 1995, respectively. The
increase in 1997, as compared with the prior year, primarily resulted from
revenues of $2.5 million earned in connection with the BOLI Program, which was
initiated during the 1997 third quarter. In general, under the BOLI Program, the
Company purchases, owns, and is the beneficiary of insurance policies on the
lives of certain employees who consent to being covered under the program in
order to help defray certain costs associated with the Company's employee
benefit plans. Other non-interest income for 1996 included $1.0 million of
income recognized upon settlement of certain litigation.
Non-Interest Expense
General. Non-interest expense amounted to $381.1 million in 1997, as
compared with $352.0 million and $334.8 million in 1996 and 1995, respectively.
The $29.1 million growth in non-interest expense in 1997 as compared with 1996
was principally associated with the NAMC Acquisition. The increase in
non-interest expense of $17.3 million in 1996 as compared with the prior year
was primarily attributable to the SAIF Special Assessment, coupled with certain
non-recurring personnel expenses and business expansion efforts, primarily with
respect to its residential real estate loan origination capabilities. The impact
of these factors was mitigated by a reduction in restructuring and related
expense associated with the Anchor Merger and legislation which reduced the
Bank's federal deposit insurance premiums.
General and Administrative ("G&A") Expense. Compensation and employee
benefits expense, which was $157.9 million for 1997, was up $18.5 million as
compared with 1996, largely due to the NAMC Acquisition. At December 31, 1997,
the Company had 6,000 full-time equivalent employees, up from 2,872 one year
earlier. For 1996, compensation and employee benefits expense was $139.4
million, an increase of $7.6 million as compared with 1995. Contributing
significantly to the higher expense level were charges of $5.6 million
recognized during 1996 in connection with the retirement, on December 31, 1996,
of James M. Large, Jr., the Company's former Chief Executive Officer, and
severance benefits incurred in 1996 as a result of the relocation of the
headquarters of the Company's mortgage banking operations from Uniondale, New
York to Tampa, Florida, the effects of which were partially offset by Anchor
Merger-related staff reductions. The increases in compensation and employee
benefits expense in 1997 and 1996, as compared with the respective prior years,
also reflect, among other factors, higher levels of commissions and incentives,
as well as the impact of normal merit increases.
24
<PAGE> 27
Occupancy and equipment expense, net, was $63.6 million in 1997, an
increase of $10.9 million, or 20.7%, as compared with the prior year. The growth
in such expense was largely the result of business expansion efforts, including
the NAMC Acquisition and the BFS Acquisition, and the enhancement of the
Company's technological capabilities. Occupancy and equipment expense, net,
which amounted to $52.7 million in 1996, had declined $5.6 million, or 9.6%,
from 1995, substantially due to cost savings associated with the Anchor Merger,
including the closing of 13 of the Bank's branches.
Other G&A expense increased to $115.7 million for 1997 from $100.8 million
for 1996, largely due to the acquisitions of NAMC and BFS, which, among other
things, contributed significantly to year-to-year increases of $6.9 million in
data processing and communications expense and $3.3 million in goodwill
amortization. The higher level of other G&A expense in 1997, as compared with
1996, also reflects expenses of $1.3 million incurred during 1997 in connection
with the development and implementation of a plan to prepare the Company's
computer systems for the year 2000 (see "Year 2000 Issue"). Other general and
administrative expense in 1996 rose $4.9 million from $95.9 million in 1995.
This increase was primarily associated with a $5.2 million rise in marketing
expenses, due principally to television advertising costs, the outsourcing of
additional aspects of the Company's data processing operations during the first
quarter of 1996, and the implementation of various other strategic initiatives.
Other general and administrative expense levels in 1997 and 1996, as compared
with the respective prior years, were reduced by $4.7 million and $12.7 million,
respectively, as a result of lower federal deposit insurance premiums due to
certain legislative actions during 1996 and 1995.
Amortization of Mortgage Servicing Assets. Amortization of mortgage
servicing assets amounted to $29.8 million in 1997, an increase of $10.4
million, or 53.5%, from the prior year, substantially due to the NAMC
Acquisition. During 1996, amortization of mortgage servicing assets was $19.4
million, down from $20.7 million in 1995. At December 31, 1997, the carrying
value of the Company's mortgage servicing assets was $341.9 million, up,
primarily due to the NAMC Acquisition, from $127.7 million and $99.1 million at
year-end 1996 and 1995, respectively.
In a declining long-term interest rate environment, actual or expected
prepayments of the loans underlying the Company's mortgage servicing assets
portfolio may increase, which would have an adverse impact on the value of such
assets. In connection therewith, the Company, during 1997, expanded its use of
derivative financial instruments as a hedge against its mortgage servicing
assets (see "Asset/Liability Management -- Derivative Financial Instruments")
and sold approximately $3 billion in principal amount of loan servicing rights
underlying the mortgage servicing assets portfolio, which resulted in a
reduction in the carrying value of that portfolio of approximately $57 million.
Other Real Estate Owned ("ORE") Expense, Net. ORE expense, net, totaled
$4.3 million in 1997, as compared with $10.1 million in 1996 and $12.9 million
in 1995. The year-to-year declines were largely attributable to reductions in
ORE, net. At December 31, 1997, ORE, net, amounted to $27.8 million, down from
$53.3 million and $60.7 million at year-end 1996 and 1995, respectively.
Contributing to the decrease in ORE, net, during 1997 were the sales of
approximately $13 million of residential ORE during the 1997 second quarter in
connection with the NPA Sales.
SAIF Recapitalization Assessment. The FDIC implemented portions of the
Funds Act in a final regulation that became effective in the fourth quarter of
1996. The FDIC regulation mandated the SAIF Special Assessment of $0.657 per
$100 of SAIF-insured deposits as of March 31, 1995 in order to recapitalize the
SAIF and bring it to its statutorily-required level of $1.25 of reserves for
each $100 of insured deposits. However, the Funds Act provided for certain
adjustments for purposes of computing the SAIF Special Assessment, including a
20% reduction for certain BIF-member institutions having SAIF-insured deposits,
such as the Bank. The Bank's SAIF Special Assessment, which was expensed during
the third quarter of 1996, amounted to $26.3 million.
Restructuring and Related Expense. The Company incurred restructuring and
related expense of $9.9 million for 1997, all of which was incurred in
connection with the NAMC Acquisition. The level of any further restructuring and
related expense associated with the NAMC Acquisition is not currently expected
to be
25
<PAGE> 28
material. During 1996 and 1995, restructuring and related expense amounted to
$3.5 million and $15.3 million, respectively, and was associated with the Anchor
Merger.
Income Tax Expense
Income tax expense amounted to $75.0 million for 1997, as compared with
$50.0 million and $47.7 million for 1996 and 1995, respectively. The
year-to-year increases reflect the net impact of growth in pre-tax income, a
$12.3 million tax benefit realized during 1996 as a result of the final
resolution of certain federal, state and local tax filing positions taken in
prior years, and the effects of certain tax management strategies. The Company's
effective income tax rates declined to 37.9% in 1997 from 40.4% in 1996
(excluding the $12.3 million of tax benefits recognized during the year) and
43.4% in 1995, largely due to its tax management strategies.
Extraordinary Item
During the fourth quarter of 1997, the Holding Company purchased $55.6
million of its outstanding 8.9375% senior notes due July 2003. In connection
therewith, an extraordinary loss of $1.5 million, net of an income tax benefit
of $0.9 million, was recognized.
YEAR 2000 ISSUE
The Company acknowledges the challenges posed worldwide due to the current
inability of certain computer systems to properly recognize the date change from
December 31, 1999 to January 1, 2000. Failure to adequately meet these
challenges could have a material adverse effect on the operations of a financial
institution, such as the Company. The Company has completed the process of
assessing the systems issues associated with this year 2000 problem and adopted
a plan to prepare its computer systems, software, and applications to properly
process dates beyond December 31, 1999 (the "Year 2000 Plan"). The Year 2000
Plan requires modifications to be made to certain of the Company's existing
systems and, in other cases, conversions to new systems or software.
In addition, the Company is involved in ongoing communications with its
significant third-party contractors, such as vendors and service providers, for
the purpose of evaluating their readiness to meet the challenges of the year
2000 and the extent to which the Company may be affected by the remediation of
their systems, software, and applications. The Company cannot guarantee that the
computer systems of its third-party contractors will be remediated on a timely
basis or that the failure of any such party to remediate, or a remediation that
is incompatible with the Company's systems, would not have a material adverse
effect on the Company.
The Company anticipates that the primary costs associated with the
development and implementation of the Year 2000 Plan will be in the areas of
remediation and testing of its computer applications, principally consisting of
costs related to outside consultants and applications upgrades. The Company
currently estimates that this plan, including unit testing, will be completed by
the end of 1998, with full integrated testing completed by the second quarter of
1999, and that total related pretax costs will be approximately $20 million, of
which approximately 75% is expected to be incurred during 1998. These estimates
are based on certain assumptions relating to future events, including, but not
limited to, the remediation efforts of third-party contractors, the continued
availability of certain resources, and other factors. There can be no guarantee
that these estimates will be achieved, and actual results could be significantly
different from those estimates, due to, among other factors, the unavailability
and cost of trained personnel and the failure to identify all affected systems.
ASSET/LIABILITY MANAGEMENT
General
The goal of asset/liability management is the prudent control of market
risk, liquidity, and capital. Asset/liability management is governed by policies
that are reviewed and approved annually by the Boards of
26
<PAGE> 29
Directors of the Holding Company and the Bank, which oversee the development and
execution of risk management strategies in furtherance of these polices. The
Asset/Liability Management Committee ("ALMAC"), which is comprised of members of
the Company's senior management, monitors the Company's interest rate risk
position and related strategies.
Market Risk
In general, market risk is the sensitivity of income to variations in
interest rates, foreign currency exchange rates, commodity prices, and other
relevant market rates or prices, such as prices of equities. Market rate
sensitive instruments include: derivative financial instruments, such as
futures, forwards, swaps and options; other financial instruments, such as
investments, loans, MBS, deposits, and other debt obligations; and derivative
commodity instruments, such as commodity futures, forwards, swaps and options
that are permitted to be settled in cash or another financial instrument.
The Company did not enter into any market rate sensitive instruments for
trading purposes during 1997. However, as discussed below, the Company enters
into such instruments in connection with its various business operations,
particularly its mortgage banking activities. Loans originated, and the related
commitments to originate loans that will be sold, represent market risk that is
realized in a short period of time, generally two to three months.
The Company's primary source of market risk exposure arises from changes in
United States interest rates and the effects thereof on mortgage prepayment and
closing behavior, as well as depositors' choices ("interest rate risk"). Changes
in interest rates may result in reduced earnings and erosion of the market value
of assets and liabilities. The Company does not have any material exposure to
foreign exchange rate risk or commodity price risk. Movements in equity prices
may have an indirect, but limited, effect on certain of the Company's business
activities and/or the value of credit sensitive loans and securities.
Interest Rate Risk Management
The Company manages its interest rate risk through strategies designed to
maintain acceptable levels of interest rate exposure throughout a range of
interest rate environments. These strategies are intended not only to protect
the Company from significant long-term declines in net interest income as a
result of certain changes in the interest rate environment, but also to mitigate
the negative effect of certain interest rate changes upon the Company's mortgage
banking operating results. The Company seeks to contain its interest rate risk
within a band that it believes is manageable and prudent given its capital and
income generating capacity. As a component of its interest rate risk management
process, the Company employs various derivative financial instruments.
The Company's sensitivity to interest rates is driven primarily by the
mismatch between the term to maturity or repricing of its interest-earning
assets and that of its interest-bearing liabilities. In general, the Company's
interest-bearing liabilities reprice or mature, on average, sooner than its
interest-earning assets.
The Company is also exposed to interest rate risk arising from the "option
risk" embedded in many of the Company's interest-earning assets. For example,
mortgages and the mortgages underlying MBS may contain prepayment options,
interim and lifetime interest rate caps and other such features driven or
otherwise influenced by changes in interest rates. Prepayment option risk
affects mortgage-related assets in both rising and falling interest rate
environments as the financial incentive to refinance a mortgage loan is directly
related to the level of the existing interest rate on the loan relative to
current market interest rates.
Extension risk on mortgage-related assets is the risk that the duration of
such assets may increase as a result of declining prepayments due to rising
interest rates. Certain mortgage-related assets are more sensitive to changes in
interest rates than others, resulting in a higher risk profile. Because the
Company's interest-bearing liabilities are not similarly affected, the Company's
overall duration gap generally increases as interest rates rise. In addition, in
a rising interest rate environment, adjustable-rate assets may reach interim or
lifetime interest rate caps, thereby limiting the amount of upward adjustment,
which effectively lengthens the duration of such assets.
27
<PAGE> 30
Lower interest rate environments may also present interest rate exposure.
In general, lower interest rate environments tend to accelerate prepayment
rates, which both shorten the duration of mortgage-related assets and accelerate
the amortization of any premiums paid in the acquisition of these assets. The
recognition of premiums over a shorter than expected term causes yields on the
related assets to decline from anticipated levels. In addition, unanticipated
accelerated prepayment rates increase the likelihood of potential losses of net
future servicing revenues associated with the Company's mortgage servicing
assets.
The Company is also exposed to interest rate risk resulting from certain
changes in the shape of the yield curve (particularly a flattening or
inversion -- also called "yield curve twist risk" -- of the yield curve) and to
differing indices upon which the yield on the Company's interest-earning assets
and the cost of its interest-bearing liabilities are based ("basis risk").
As further described below, in evaluating and managing its interest rate
risk, the Company employs simulation models to help assess its interest rate
risk exposure and the impact, and probability of occurrence, of alternate
interest rate scenarios, which consider the effects of adjustable-rate loan
indices, periodic and lifetime interest rate adjustment caps, estimated loan
prepayments, anticipated deposit retention rates, and other dynamics of the
Company's portfolios of interest-earning assets and interest-bearing
liabilities. Moreover, in order to reduce its sensitivity to interest rate risk,
the Company's investment strategy has emphasized adjustable-rate loans and
securities and fixed-rate medium-term securities.
Derivative Financial Instruments
The Company uses a variety of derivative financial instruments to assist in
managing its interest rate risk exposures. Derivative financial instruments
employed by the Company at December 31, 1997 were interest rate swaps, interest
rate swaptions, interest rate floors, interest rate caps, forward contracts to
purchase or sell loans or securities, and options to purchase or sell certain of
these and other instruments at designated prices. While the Company's use of
derivative financial instruments has served to mitigate the unfavorable effects
changes in interest rates may have on its results of operations, the Company
continues to be susceptible to interest rate risk.
Interest Rate Risk Management Instruments. The Company's assets generally
reprice or mature at a longer term than the liabilities used to fund those
assets. Consequently, the Company uses derivative financial instruments in its
efforts to reduce the repricing risk.
The Company uses three major classes of derivative financial instruments to
manage interest rate risk: interest rate swaps, where the Company pays a fixed
rate and receives a floating rate; interest rate caps, where the Company
receives the excess, if any, of the prevailing floating rate (usually London
Interbank Offered Rates ("LIBOR")) over a specified rate (the cap level); and
interest rate swaptions, where, in exchange for the payment of a premium, the
Company has the right to enter into pay-fixed interest rate swaps at a future
date.
The pay-fixed-rate swaps are used to modify specific variable-rate
liabilities and thereby improve the stability of the Company's net interest
margin. Interest rate caps are used to hedge the periodic and lifetime rate caps
embedded in specific adjustable-rate loans and securities and to limit the
effect of increases in the cost of short-term funds above certain specified
maximum levels. Interest rate swaptions are used to hedge the repricing risk on
certain assets with high prepayment risk.
The use of derivative financial instruments for interest rate risk
management purposes resulted in decreases in net interest income during 1997 and
1996 of $17.6 million and $17.2 million, respectively, as compared with an
increase in net interest income of $10.6 million during 1995.
Mortgage Banking Risk Management Instruments. The Company uses two major
classes of derivative financial instruments to protect against the impact of
substantial declines in long-term interest rates and the consequent increase in
mortgage prepayment rates: interest rate swaps, where the Company receives a
fixed rate and pays a floating rate; and interest rate floors, where the Company
receives the difference, if any, between a designated average long-term interest
rate (usually the ten-year constant maturity Treasury index) and a specified
strike rate.
28
<PAGE> 31
The Company uses three major classes of derivative financial instruments to
hedge the risk in its loans held for sale and loan purchase commitment pipeline.
To the extent that the Company is confident that it will have loans to sell, the
Company sells loans into the forward MBS market. Such short sales are similar in
composition as to term and coupon with the loans held in, or expected to be
funded into, the loans held for sale portfolio. In addition, because the amount
of loans that the Company will fund, as compared with the total amount of loans
that it has committed to fund, is uncertain, the Company purchases various
options, including puts and calls on both the forward MBS market and the
interest rate futures market.
The following table sets forth the characteristics of derivative financial
instruments used by the Company at December 31, 1997, segregated by the
activities that they hedge.
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED AVERAGE
ESTIMATED AVERAGE RATE
NOTIONAL FAIR MATURITY ----------------
AMOUNT VALUE (IN YEARS) RECEIVE PAY
---------- --------- ---------- ------- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Interest rate risk management
instruments:
Interest rate swaps (pay fixed/receive
variable) hedging:
Loans receivable and securities..... $1,452,355 $(22,072) 4.9 5.98% 6.55%
Short-term borrowed funds........... 60,000 (590) 1.1 5.86 6.65
Interest rate caps hedging:
Loans receivable and securities..... 648,391 13 2.4 --(1) --(1)
Short-term borrowed funds........... 361,000 1,172 2.6 --(2) --(2)
Interest rate swaptions hedging loans
receivable.......................... 40,000 119 1.3 --(3) --(3)
---------- --------
Total interest rate risk
management instruments....... 2,561,746 (21,358)
---------- --------
Mortgage banking risk management
instruments:
Interest rate swaps (pay
variable/receive fixed) hedging
mortgage servicing assets........... 400,000 2,829 7.4 6.22 5.95
Interest rate floors hedging mortgage
servicing assets.................... 2,384,514 30,377 3.6 --(4) --(4)
Forward contracts hedging loans held
for sale originations............... 1,725,910 (4,760) 0.1 -- --
Put options (vs. United States
Treasury-based futures) hedging
loans held for sale originations.... 40,000 25 0.1 -- --
Call options on MBS forward contracts
hedging loans held for sale
originations........................ 67,000 180 0.3 -- --
---------- --------
Total mortgage banking risk
management instruments....... 4,617,424 28,651
---------- --------
Total derivative financial instruments... $7,179,170 $ 7,293
========== ========
</TABLE>
- ---------------
(1) The weighted average strike rate was 8.00%.
(2) The weighted average strike rate was 7.04%.
(3) The weighted average strike rate was 6.75%.
(4) The weighted average strike rate was 5.64%.
For additional information concerning the Company's derivative financial
instruments, see Notes 1 and 23 of Notes to Consolidated Financial Statements in
Item 8, "Financial Statements and Supplementary Data."
29
<PAGE> 32
Asset/Liability Repricing
The measurement of differences (or "gaps") between the Company's
interest-earning assets and interest-bearing liabilities that mature or reprice
within a period of time is one indication of the Company's sensitivity to
changes in interest rates. A negative gap generally indicates that, in a period
of rising interest rates, deposit and borrowing costs will increase more rapidly
than the yield on loans and securities and, therefore, reduce the Company's net
interest margin and net interest income. The opposite effect will generally
occur in a declining interest rate environment. Although the Company has a large
portfolio of adjustable-rate assets, the protection afforded by such assets in
the event of substantial rises in interest rates for extended time periods is
limited due to interest rate reset delays, periodic and lifetime interest rate
caps, payment caps and the fact that indices used to reprice a portion of the
Company's adjustable-rate assets lag changes in market rates. Moreover, in
declining interest rate environments or certain shifts in the shape of the yield
curve, these assets may prepay at significantly faster rates than otherwise
anticipated. It should also be noted that the Company's gap measurement reflects
broad judgmental assumptions with regard to repricing intervals for certain
assets and liabilities.
The following table reflects the repricing of the Company's
interest-earning assets, interest-bearing liabilities and related derivative
financial instruments at December 31, 1997. The amount of each asset, liability
or derivative financial instrument is included in the table at the earlier of
the next repricing date or maturity. Prepayment assumptions for loans and MBS
used in preparing the table are based upon industry standards as well as the
Company's experience and estimates. Non-accrual loans have been included in the
"Over One Through Three Years" category. Demand deposits, money market deposits
and savings accounts are allocated to the various repricing intervals in the
table based on the Company's experience and estimates.
<TABLE>
<CAPTION>
OVER ONE
THROUGH OVER
ONE YEAR THREE THREE
OR LESS YEARS YEARS TOTAL
-------- -------- ------ -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Interest-earning assets:
Loans...................................... $ 7,186 $4,109 $3,531 $14,826
MBS........................................ 3,797 799 307 4,903
Other...................................... 162 1 387 550
------- ------ ------ -------
Total interest-earning assets...... 11,145 4,909 4,225 20,279
------- ------ ------ -------
Interest-bearing liabilities:
Deposits................................... 7,992 2,701 3,154 13,847
Borrowed funds............................. 6,021 67 231 6,319
------- ------ ------ -------
Total interest-bearing
liabilities...................... 14,013 2,768 3,385 20,166
------- ------ ------ -------
Impact of hedging activities................. 1,115 (492) (623) --
------- ------ ------ -------
Gap (repricing difference)................... $(1,753) $1,649 $ 217 $ 113
======= ====== ====== =======
Cumulative gap............................... $(1,753) $ (104) $ 113
======= ====== ======
Cumulative ratio of gap to total assets...... (8.0)% (0.5)% 0.5%
</TABLE>
The Company also utilizes complex simulation models to perform a
sensitivity analysis by which it estimates the potential change in its net
interest income over selected time periods resulting from hypothetical changes
in interest rates. This analysis evaluates the interest rate sensitivity of all
of the Company's interest-earning assets, interest-bearing liabilities and
derivative financial instruments by measuring the impact of changing rates on
12-month projected interest income and interest expense. The Company estimates
that, over a 12-month period, its net interest income would increase 2% and
decrease 2% in the event of an instantaneous and sustained 100 basis point
increase and decrease in interest rates, respectively.
This analysis requires the Company to make certain assumptions regarding
prepayments of loans and securities, reinvestment of cash flow, deposit
retention, availability of external funding, and the spread between
30
<PAGE> 33
market rates on interest-earning assets and interest-bearing liabilities. The
Company relies upon industry data, as well as its own experience, in developing
the estimates required for this interest rate sensitivity analysis.
The Company has developed policies addressing limits on changes in 12-month
projected net interest income for specific instantaneous and sustained shocks in
interest rates. The Company also utilizes market value of portfolio equity and
duration of equity analyses in the management of its interest rate risk.
MANAGEMENT OF CREDIT RISK
General
The Company's credit risk arises from the possibility that borrowers,
issuers, or counterparties will not perform in accordance with contractual
terms. The Company has a process of credit risk controls and management
procedures by which it monitors and manages its level of credit risk.
Non-Performing Assets
The Company's non-performing assets consist of non-accrual loans and ORE,
net. Non-accrual loans are all loans 90 days or more delinquent, as well as
loans less than 90 days past due for which the full collectability of
contractual principal or interest payments is doubtful. When a loan is placed on
non-accrual status, any accrued but unpaid interest income on the loan is
reversed and future interest income on the loan is recognized only if actually
received by the Company and full collection of principal is not in doubt. Loans
are generally returned to accrual status when principal and interest payments
are current, full collectability of principal and interest is reasonably
assured, and a consistent record of performance has been demonstrated. Loans
modified in a troubled debt restructuring ("TDR") that have demonstrated a
sufficient payment history to warrant return to performing status are not
included within non-accrual loans (see "Loans Modified in a TDR").
31
<PAGE> 34
The following table presents the components of the Company's non-performing
assets at December 31:
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Non-accrual loans:
Residential real estate:
Permanent.......................... $ 90,488 $163,156 $206,230 $214,222 $173,146
Construction....................... 510 635 840 1,130 1,630
-------- -------- -------- -------- --------
Total residential real
estate...................... 90,998 163,791 207,070 215,352 174,776
-------- -------- -------- -------- --------
Commercial real estate:
Permanent.......................... 21,601 17,375 34,618 106,778 92,120
Construction....................... 159 3,672 4,427 3,965 6,301
-------- -------- -------- -------- --------
Total commercial real
estate...................... 21,760 21,047 39,045 110,743 98,421
-------- -------- -------- -------- --------
Consumer.............................. 5,719 6,645 8,263 13,860 16,539
Business.............................. 511 107 741 1,909 1,180
-------- -------- -------- -------- --------
Total non-accrual loans....... 118,988 191,590 255,119 341,864 290,916
-------- -------- -------- -------- --------
ORE, net:
Residential real estate............... 20,228 36,182 38,799 43,881 67,638
Commercial real estate................ 9,255 20,367 24,952 37,368 26,127
Allowance for losses.................. (1,722) (3,294) (3,070) (7,247) (7,538)
-------- -------- -------- -------- --------
Total ORE, net................ 27,761 53,255 60,681 74,002 86,227
-------- -------- -------- -------- --------
Non-performing assets held for bulk
sale(1):
Residential real estate loans......... -- -- -- -- 186,000
Residential ORE....................... -- -- -- -- 78,600
-------- -------- -------- -------- --------
Total non-performing assets
held for bulk sale.......... -- -- -- -- 264,600
-------- -------- -------- -------- --------
Total non-performing assets............. $146,749 $244,845 $315,800 $415,866 $641,743
======== ======== ======== ======== ========
Non-performing assets to total assets... 0.67% 1.30% 1.55% 2.12% 3.55%
Non-accrual loans to loans receivable... 0.92 1.78 2.60 3.66 3.68
</TABLE>
- ---------------
(1) The non-performing assets held for bulk sale were written down in 1993 to
the amount of the proceeds anticipated to be received from the sales.
The Company generally has pursued a loan-by-loan/property-by-property
disposition strategy with respect to its non-performing assets, while also
considering the appropriateness of alternate disposition strategies, including
bulk sales of non-performing assets. During 1997 and 1994, the Company
consummated bulk sales of approximately $126 million (i.e., the NPA Sales) and
$265 million, respectively, of non-performing residential real estate assets.
Since December 31, 1996, the Company expanded its lending activities and
product mix and anticipates that such expansion efforts will continue. The
Company intends to continue to monitor closely the effects of these efforts on
the overall risk profile of its loan portfolio, which the Company expects will
continue to change over time.
32
<PAGE> 35
The level of loans delinquent less than 90 days may, to some degree, be a
leading indicator of future levels of non-performing assets. The following table
sets forth, at December 31, 1997, such delinquent loans of the Company, net of
those already in non-performing status.
<TABLE>
<CAPTION>
DELINQUENCY PERIOD
-----------------------------------
30-59 DAYS 60-89 DAYS TOTAL
---------- ---------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Residential real estate loans....................... $47,413 $17,946 $65,359
Commercial real estate loans........................ 1,836 2,797 4,633
Consumer loans...................................... 5,023 1,334 6,357
Business loans...................................... 1,657 92 1,749
------- ------- -------
Total............................................... $55,929 $22,169 $78,098
======= ======= =======
</TABLE>
Loans Modified in a TDR
When borrowers encounter financial hardship but are able to demonstrate to
the Company's satisfaction an ability and willingness to resume regular monthly
payments, the Company may provide them with an opportunity to restructure the
terms of their loans. These arrangements, which are negotiated individually,
generally provide for interest rates that are lower than those initially
contracted for, but which may be higher or lower than current market interest
rates for loans with comparable risk, and may, in some instances, include a
reduction in the principal amount of the loan. The Company evaluates the costs
associated with any particular restructuring arrangement and may enter into such
an arrangement if it believes it is economically beneficial for the Company to
do so.
The following table sets forth the Company's loans that have been modified
in a TDR, excluding those classified as non-accrual loans, at December 31:
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Residential real estate loans.... $37,532 $ 42,684 $ 43,090 $ 21,409 $ 36,960
Commercial real estate loans..... 46,677 170,323 159,097 167,205 177,868
------- -------- -------- -------- --------
Total loans modified in a TDR.... $84,209 $213,007 $202,187 $188,614 $214,828
======= ======== ======== ======== ========
</TABLE>
Allowance for Loan Losses
The Company's allowance for loan losses is intended to be maintained at a
level sufficient to absorb all estimable and probable losses inherent in the
loans receivable portfolio. In determining the appropriate level of the
allowance for loan losses and, accordingly, the level of the provision for loan
losses, the Company reviews its loans receivable portfolio on at least a
quarterly basis, taking into account its impaired loans, the size, composition
and risk profile of the portfolio, delinquency levels, historical loss
experience, cure rates on delinquent loans, economic conditions and other
pertinent factors, such as assumptions and projections of future conditions.
While the Company believes that the allowance for loan losses is adequate,
additions to the allowance for loan losses may be necessary in the event of
future adverse changes in economic and other conditions that the Company is
unable to predict.
33
<PAGE> 36
The following table sets forth the activity in the Company's allowance for
loan losses for the year ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
-------- -------- -------- -------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Balance at beginning of year........... $106,495 $128,295 $170,383 $157,515 $ 248,429
Anchor Merger adjustment............... -- -- -- (928) --
Acquired in acquisitions............... 13,249 -- -- 32,579 --
Provision charged to operations........ 49,000 41,000 39,650 55,799 95,489
Charge-offs:
Residential real estate loans........ (61,235) (52,191) (46,131) (43,910) (184,478)
Commercial real estate loans......... (5,984) (13,244) (37,759) (35,327) (9,085)
Consumer loans....................... (4,161) (5,371) (8,172) (5,314) (7,464)
Business loans....................... (228) (490) (26) (233) (2,266)
-------- -------- -------- -------- ---------
Total charge-offs............ (71,608) (71,296) (92,088) (84,784) (203,293)
-------- -------- -------- -------- ---------
Recoveries:
Residential real estate loans........ 3,652 5,093 5,220 5,895 11,710
Commercial real estate loans......... 2,006 977 1,552 676 1,433
Consumer loans....................... 1,833 2,292 2,482 3,433 3,572
Business loans....................... 91 134 1,096 198 175
-------- -------- -------- -------- ---------
Total recoveries............. 7,582 8,496 10,350 10,202 16,890
-------- -------- -------- -------- ---------
Net charge-offs............ (64,026) (62,800) (81,738) (74,582) (186,403)
-------- -------- -------- -------- ---------
Balance at end of year................. $104,718 $106,495 $128,295 $170,383 $ 157,515
======== ======== ======== ======== =========
Allowance for loan losses to:
Loans receivable..................... 0.81% 0.99% 1.31% 1.82% 1.99%
Non-accrual loans.................... 88.01 55.58 50.29 49.84 54.14
Net charge-offs during the year to
average loans outstanding during the
year................................. 0.53 0.61 0.86 0.87 2.49
</TABLE>
The following table sets forth, at December 31 for the years indicated, the
Company's allocation of the allowance for loan losses by category of loans
receivable and the percentage of each category of loans receivable to total
loans receivable. Although the Company has allocated a portion of the allowance
for loan losses to specific loans receivable categories, the allowance for loan
losses is available to absorb losses, regardless of the nature of the loan.
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Balance of allowance for loan losses at
year end allocated to:
Residential real estate loans...... $ 49,494 $ 59,228 $ 68,177 $ 73,562 $ 72,976
Commercial real estate loans....... 47,394 39,872 51,138 84,350 55,642
Consumer loans..................... 4,724 5,652 6,881 3,691 4,774
Business loans..................... 1,606 1,743 2,099 2,029 384
Unallocated........................ 1,500 -- -- 6,751 23,739
-------- -------- -------- -------- --------
Total allowance for loan losses......... $104,718 $106,495 $128,295 $170,383 $157,515
======== ======== ======== ======== ========
Percentage of loans to total loans
receivable:
Residential real estate loans......... 75.8% 75.2% 73.0% 71.5% 75.5%
Commercial real estate loans.......... 17.4 17.6 18.9 19.9 15.5
Consumer loans........................ 6.0 6.8 7.7 8.3 8.9
Business loans........................ 0.8 0.4 0.4 0.3 0.1
-------- -------- -------- -------- --------
Total................................... 100.0% 100.0% 100.0% 100.0% 100.0%
======== ======== ======== ======== ========
</TABLE>
34
<PAGE> 37
The Company has developed models and other analytic tools to assist in the
assessment of estimable and probable losses inherent in both the non-performing
and performing residential real estate loan portfolios. The Company periodically
reviews and refines these models, analyzing the continuing validity of the
assumptions used, comparing actual experience to that projected in the models
and modifying those assumptions as may, in the Company's judgment, be
appropriate. The Company also regularly analyzes economic trends and underlying
portfolio trends, such as changes in geographic and property type mix and loan
seasoning. The results of these reviews and analyses, which may yield a range of
values, are evaluated in determining the need during any period for additions to
the allowance for loan losses for residential real estate loans. However, it
should be noted that these various models and analyses depend upon a large
number of estimates and assumptions, especially with respect to future economic
and market conditions and borrower behavior, that are subject to change, and it
is entirely likely that future events will vary in some respects from those
predicted by any particular model or analysis.
The adequacy of the allowance for loan losses for the Company's commercial
real estate loan portfolio is based in part on a loan-by-loan analysis that
includes a risk-rating system. The Company's Asset Quality Review Department
("AQRD") provides an independent review of the analyses performed by management
with respect to commercial real estate loans, including the respective risk
ratings assigned to such loans. Pursuant to the Company's policy, the AQRD
conducts an annual review of all commercial real estate loans that have been
assigned certain risk ratings, with the balance of the portfolio reviewed on a
test basis.
Loans Sold with Recourse
In the past, the Company sold certain residential and commercial real
estate loans with limited recourse. The principal balance of loans sold with
recourse amounted to approximately $648 million at December 31, 1997, down from
$752 million one year earlier. The Company's related maximum potential recourse
exposure was approximately $181 million and $196 million at December 31, 1997
and 1996, respectively. Of the loans sold with recourse at December 31, 1997,
$7.5 million were delinquent 90 days or more. During 1997 and 1996, the Company
repurchased loans sold with recourse totaling $20.1 million and $35.0 million,
respectively.
MBS
In general, the Company's MBS carry a significantly lower credit risk than
its loans receivable. Of the $4.9 billion carrying value of the Company's MBS
portfolio at December 31, 1997, approximately 15% were issued by FHLMC, GNMA and
FNMA. The Company's privately-issued MBS, which have been issued by entities
other than FHLMC, GNMA and FNMA, have generally been underwritten by large
investment banking firms, with the timely payment of principal and interest on
these securities supported ("credit enhanced") in varying degrees by either
insurance issued by a financial guarantee insurer, letters of credit or
subordination techniques. Privately-issued MBS are subject to certain
credit-related risks normally not associated with MBS issued by FHLMC, GNMA and
FNMA, including the limited loss protection generally provided by the various
forms of credit enhancements, as losses in excess of certain levels are not
protected. Furthermore, the credit enhancement itself is subject to the
creditworthiness of the provider. Thus, in the event that a provider of a credit
enhancement does not fulfill its obligations, the MBS holder could be subject to
risk of loss similar to a purchaser of a whole loan pool.
The most common form of credit enhancement for the privately-issued MBS in
the Company's portfolio is a senior/subordinated structure, in which losses are
allocated to a "subordinate class" of the MBS until the principal balance of
that class is reduced to zero, thereby protecting the "senior class" to such
extent. The level of subordination is a primary factor in the determination of
the rating for the senior class of the MBS. Under mortgage pool insurance, which
is another common form of credit enhancement for the Company's privately-issued
MBS, losses of principal and interest to the date of liquidation on a loan are
paid by the insurer up to the specific dollar amount of the pool policy. The
terms of the pool insurance policy specify the eligibility requirements of
losses that are covered. The credit rating of the provider of the mortgage pool
insurance policy is an important factor in the rating of the MBS. A letter of
credit, which is a promise by a bank to reimburse losses up to a specified
amount, is also frequently used either as credit support for an entire
transaction or to cover specified types of risk. In addition, special hazard
policies are usually obtained to
35
<PAGE> 38
protect against damages to the underlying properties that are not covered by
normal home insurance policies, such as the effects of earthquakes, mudslides
and certain other natural disasters in areas susceptible to these types of
risks.
During 1997, 1996 and 1995, the Company recognized losses of $1.5 million,
$4.7 million and $3.3 million, respectively, associated with the other than
temporary impairment in value of certain privately-issued MBS. These losses were
necessitated by the depletion of the underlying credit enhancements as a result
of losses incurred on the loans underlying the securities, coupled with the
Company's projections of estimated future losses on the securities. No assurance
can be given that future losses on these securities, the carrying value of which
amounted to approximately $69 million at December 31, 1997, will not be
incurred. While substantially all of the $4.2 billion portfolio of
privately-issued MBS held by the Company at December 31, 1997 were rated "AA" or
better by one or more of the nationally recognized securities rating agencies,
no assurance can be given that such ratings will be maintained, and the Company
cannot predict whether losses will or will not be recognized on any such
securities.
The following table sets forth, by issuer, the aggregate amortized cost and
estimated fair value of the Company's privately-issued MBS that exceeded 10% of
stockholders' equity at December 31, 1997.
<TABLE>
<CAPTION>
AMORTIZED ESTIMATED
ISSUER COST FAIR VALUE
------ --------- ----------
(IN THOUSANDS)
<S> <C> <C>
Residential Funding Mortgage Securities, Inc. .............. $748,220 $738,931
Prudential Home Mortgage Securities Co., Inc. .............. 435,284 437,456
Resolution Trust Corporation................................ 381,393 377,209
Regal Trust................................................. 232,874 236,590
American Residential Mortgage Corp. ........................ 207,513 205,032
Countrywide Funding Corp. and Countrywide Mortgage Backed
Securities, Inc. ......................................... 207,144 208,841
DLJ Mortgage Acceptance Corporation......................... 197,715 196,493
Housing Securities Inc. .................................... 184,770 186,068
Salomon Brothers Mortgage Securities VII, Inc. ............. 144,031 143,973
PHH Mortgage Services Corporation........................... 140,286 141,850
</TABLE>
Derivative Financial Instruments
The credit risk from the Company's derivative financial instruments arises
from the possible default by a counterparty on its contractual obligations. In
the event of default by a counterparty, the Company would be subject to an
economic loss that corresponds to the cost to replace the agreement. The level
of credit risk associated with derivative financial instruments depends on a
variety of factors, including the estimated fair value of the instrument, the
collateral maintained, the use of master netting arrangements, and the ability
of the counterparty to comply with its contractual obligations. The Company has
established policies and procedures limiting its credit exposure to
counterparties of derivative financial instrument agreements, which include
consideration of credit ratings on a continuous basis, collateral requirements
and exposure to any one counterparty. In addition, as deemed necessary, the
Company may enter into master netting agreements, under which it may offset
payable and receivable positions, to the extent they exist, with the same
counterparty in the event of default. There were no past due amounts related to
the Company's derivative financial instruments at December 31, 1997 or 1996.
FINANCIAL CONDITION
General
The Company's total assets amounted to $21.8 billion at December 31, 1997,
up $3.0 billion, or 15.8%, from the end of 1996. This growth was substantially
attributable to increases in the Company's loans held for sale and loans
receivable portfolios, partially offset by a reduction in securities.
36
<PAGE> 39
Securities
At December 31, 1997, the Company maintained a securities available for
sale portfolio totaling $5.0 billion, or 24.6% of total interest-earning assets.
In December 1997, the Company transferred its entire securities held to maturity
portfolio to its securities available for sale portfolio as part of a balance
sheet restructuring initiative implemented at that time, primarily in connection
with a reassessment by the Company of its asset/liability management strategy.
As a result, the Company did not maintain a portfolio of securities held to
maturity at the end of 1997. In connection with the balance sheet restructuring
initiative, the Company designated $1.4 billion of MBS for sale during 1998. At
December 31, 1996, the aggregate carrying value of the Company's securities
available for sale and securities held to maturity was $7.0 billion, or 38.4% of
total interest-earning assets.
At year-end 1997, approximately 72% of the $4.9 billion portfolio of MBS
available for sale consisted of adjustable-rate securities. The predominant
indices underlying these securities are the one-year United States Treasury
interest rate and the Eleventh District cost of funds index published by the
FHLB of San Francisco.
The following table sets forth the carrying value of the Company's
securities available for sale and securities held to maturity at December 31 for
the years indicated. Securities designated as available for sale are carried at
estimated fair value with unrealized gains and losses recorded in a valuation
allowance that is included, net of related income taxes, as a separate component
of stockholders' equity. Securities classified as held to maturity are carried
at amortized cost.
<TABLE>
<CAPTION>
SECURITIES
--------------------------------------------------------------
AVAILABLE FOR SALE HELD TO MATURITY
------------------------------------ -----------------------
1997 1996 1995 1996 1995
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
MBS:
Pass-through securities:
Privately-issued................ $2,851,007 $1,228,264 $2,715,097 $2,520,013 $3,071,166
FNMA............................ 402,096 919,346 747,189 -- --
FHLMC........................... 181,098 167,073 448,356 44,711 --
GNMA............................ 15,517 187,006 22,525 -- --
Collateralized mortgage obligations
("CMOs"):
Privately-issued.............. 1,336,690 -- -- 1,670,983 1,867,318
FNMA.......................... 91,436 -- -- 94,412 94,636
FHLMC......................... 23,920 -- -- 30,089 49,330
Interest-only...................... 1,129 1,291 1,679 -- --
---------- ---------- ---------- ---------- ----------
Total MBS.................. 4,902,893 2,502,980 3,934,846 4,360,208 5,082,450
---------- ---------- ---------- ---------- ----------
Other debt securities:
U.S. government and federal
agency.......................... 8,638 17,969 28,045 -- --
State and municipal................ 36,291 43,307 78,053 -- --
Domestic corporate................. 35,359 15,328 17,249 -- --
Other.............................. 500 -- -- 3,763 3,286
---------- ---------- ---------- ---------- ----------
Total other debt
securities............... 80,788 76,604 123,347 3,763 3,286
---------- ---------- ---------- ---------- ----------
Equity securities.................... 8,623 9,988 12,672 -- --
---------- ---------- ---------- ---------- ----------
Total................................ $4,992,304 $2,589,572 $4,070,865 $4,363,971 $5,085,736
========== ========== ========== ========== ==========
</TABLE>
At December 31, 1997, the Company's securities available for sale portfolio
had gross unrealized gains of $22.1 million and gross unrealized losses of $37.4
million. These gross unrealized gains and losses reflect normal market
conditions and vary, either positively or negatively, based primarily on changes
in general levels of market interest rates relative to the yields on the
portfolios.
37
<PAGE> 40
The Company's $1.5 billion portfolio of CMOs at December 31, 1997 consisted
primarily of sequential pay tranches (approximately 40%), accretion directed
tranches (approximately 21%) and planned amortization tranches (approximately
11%). None of these securities were considered "high risk," as defined by a
Federal Financial Institutions Examination Council policy statement effective
February 10, 1992, at the time of purchase. At December 31, 1997, one CMO with a
carrying value of $8.0 million was considered to be "high risk" under that
policy statement; however, this security was sold during the first quarter of
1998 for an immaterial gain. The Company cannot provide any assurances that no
other CMOs will be considered "high risk" in the future.
Loans
The Company's loans held for sale amounted to $1.8 billion at December 31,
1997, up from $0.1 billion at year-end 1996. This increase was largely
attributable to the NAMC Acquisition.
At December 31, 1997, the Company's loans receivable (exclusive of the
allowance for loan losses) amounted to $13.0 billion, or 64.0% of total
interest-earning assets. In comparison, loans receivable at the end of 1996
totaled $10.7 billion, or 59.3% of total interest-earning assets. While the
growth in loans receivable during 1997 was largely associated with residential
real estate loans, increases were noted in all major loan categories.
Residential real estate loans receivable, which amounted to $9.8 billion at
year-end 1997, increased $1.8 billion, or 22.0%, from December 31, 1996,
reflective of the Company's expansion of its lending capabilities in this area.
Production for the residential real estate loans receivable portfolio in 1997
totaled $3.3 billion, including $1.4 billion during the fourth quarter of the
year. At December 31, 1997, residential real estate loans receivable comprised
75.8% of the Company's loans receivable portfolio, relatively unchanged from the
end of 1996.
At the end of 1997, approximately $8.0 billion, or 83%, of the Company's
residential real estate loans receivable were adjustable-rate loans. The
interest rate adjustments for these loans are based on a fixed margin over
various indices, including cost-of-funds indices ("COFI") and indices based on
certain United States Treasury interest rates ("Treasury Indices").
Approximately 82% of the Company's adjustable-rate residential real estate loans
receivable at year-end 1997 were based on Treasury Indices, up from
approximately 69% at December 31, 1996. Annual interest rate adjustment caps on
the Company's adjustable-rate residential real estate loans receivable have
generally been two percentage points. Many of these loans have lifetime interest
rate adjustment caps, which have generally been six percentage points over the
initial interest rate.
Commercial real estate loans receivable rose $377.3 million, or 20.0%, in
1997. Contributing significantly to this increase was the impact of the BFS
Acquisition, which, at the date of the acquisition, added approximately $580
million of loans to the Company's commercial real estate loans receivable
portfolio. At the end of 1997, commercial real estate loans receivable primarily
consisted of multifamily properties (61%), shopping centers (17%), office
buildings (10%), and industrial properties (6%). The Company's commercial real
estate loans generally have balloon payments of principal due between five and
ten years after origination. Of the Company's $2.3 billion commercial real
estate loans receivable at the end of 1997, approximately 48% were
adjustable-rate loans.
During 1997, the Company's consumer loans receivable portfolio increased
$39.5 million, or 5.4%, substantially reflecting growth in home equity loans,
its primary focus in this lending area. Home equity loans rose 17.0% during 1997
and, based on outstanding principal balances, represented approximately 82% of
the consumer loans receivable portfolio at December 31, 1997. The increase in
the consumer loans receivable portfolio during 1997 was limited by, among other
factors, the repurchase during the year of the Company's portfolio of third
party-originated automobile loans by the seller and a $16.5 million reduction in
manufactured home loan principal balances, as this product line was discontinued
in the past.
The Company also experienced growth in business loans receivable during
1997. Such loans increased $55.9 million, or 130%, during 1997.
38
<PAGE> 41
A summary of the Company's loans receivable (exclusive of the allowance for
loan losses) is as follows at December 31:
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
----------- ----------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Residential real estate loans:
Principal balances:
Permanent..................... $ 9,779,559 $ 8,016,699 $7,139,862 $6,659,935 $5,952,063
Construction.................. 2,453 3,697 1,948 1,989 3,222
----------- ----------- ---------- ---------- ----------
Total principal
balances............... 9,782,012 8,020,396 7,141,810 6,661,924 5,955,285
Net deferred yield adjustments... 66,581 54,509 45,002 19,774 16,877
----------- ----------- ---------- ---------- ----------
Total residential real
estate loans........... 9,848,593 8,074,905 7,186,812 6,681,698 5,972,162
----------- ----------- ---------- ---------- ----------
Commercial real estate loans:
Principal balances:
Permanent..................... 2,214,620 1,856,563 1,813,344 1,834,114 1,211,551
Construction.................. 57,152 33,046 42,584 40,592 13,076
----------- ----------- ---------- ---------- ----------
Total principal
balances............... 2,271,772 1,889,609 1,855,928 1,874,706 1,224,627
Net deferred yield adjustments... (8,749) (3,876) (5,030) (11,192) (2,219)
----------- ----------- ---------- ---------- ----------
Total commercial real
estate loans........... 2,263,023 1,885,733 1,850,898 1,863,514 1,222,408
----------- ----------- ---------- ---------- ----------
Consumer loans:
Principal balances:
Home equity................... 617,041 527,442 520,589 531,008 465,738
Manufactured home............. 44,432 60,965 78,319 98,354 110,962
Secured by deposit accounts... 40,992 39,684 40,578 40,309 40,191
Automobile.................... 6,298 43,661 53,947 30,104 7,067
Other......................... 46,400 51,923 59,854 73,042 78,147
----------- ----------- ---------- ---------- ----------
Total principal
balances............... 755,163 723,675 753,287 772,817 702,105
Net deferred yield adjustments... 18,654 10,606 4,127 1,792 3,002
----------- ----------- ---------- ---------- ----------
Total consumer loans..... 773,817 734,281 757,414 774,609 705,107
----------- ----------- ---------- ---------- ----------
Business loans:
Principal balances............... 99,110 43,138 35,189 31,817 6,899
Net deferred yield adjustments... (36) -- -- (16) (3)
----------- ----------- ---------- ---------- ----------
Total business loans..... 99,074 43,138 35,189 31,801 6,896
----------- ----------- ---------- ---------- ----------
Total loans receivable............. $12,984,507 $10,738,057 $9,830,313 $9,351,622 $7,906,573
=========== =========== ========== ========== ==========
</TABLE>
39
<PAGE> 42
The following table presents the contractual maturities of the principal
balances of the Company's commercial real estate loans receivable, residential
real estate construction loans receivable and business loans receivable at
December 31, 1997.
<TABLE>
<CAPTION>
REMAINING CONTRACTUAL MATURITY
--------------------------------------------------
OVER ONE
ONE YEAR THROUGH OVER
OR LESS FIVE YEARS FIVE YEARS TOTAL
-------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Commercial real estate loans:
Permanent:
Adjustable-rate......................... $195,379 $256,439 $ 576,758 $1,028,576
Fixed-rate.............................. 105,558 640,745 439,741 1,186,044
-------- -------- ---------- ----------
Total permanent.................... 300,937 897,184 1,016,499 2,214,620
-------- -------- ---------- ----------
Construction:
Adjustable-rate......................... 16,988 39,284 -- 56,272
Fixed-rate.............................. 531 349 -- 880
-------- -------- ---------- ----------
Total construction................. 17,519 39,633 -- 57,152
-------- -------- ---------- ----------
Total commercial real estate loans........... $318,456 $936,817 $1,016,499 $2,271,772
======== ======== ========== ==========
Residential real estate construction loans:
Fixed-rate................................. $ 1,471 $ -- $ 982 $ 2,453
Business loans:
Adjustable-rate............................ $ 70,142 $ 18,762 $ 4,014 $ 92,918
Fixed-rate................................. 2,157 2,048 1,987 6,192
-------- -------- ---------- ----------
Total business loans......................... $ 72,299 $ 20,810 $ 6,001 $ 99,110
======== ======== ========== ==========
</TABLE>
In 1997, as compared with 1996, the Company's total loan production
increased $6.0 billion, or 157%. The following table summarizes the Company's
loan production for the year ended December 31:
<TABLE>
<CAPTION>
1997 1996
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Residential real estate loan production:
Originated................................................ $6,401,406 $2,685,946
Purchased................................................. 2,234,980 311,375
---------- ----------
Total residential real estate loan
production(1)................................... 8,636,386 2,997,321
---------- ----------
Commercial real estate loans originated..................... 539,850 405,741
Consumer loans originated:
Home equity loans......................................... 337,795 216,353
Other consumer loans...................................... 157,253 157,050
---------- ----------
Total consumer loans originated................... 495,048 373,403
---------- ----------
Business loans originated................................... 125,601 30,061
---------- ----------
Total loan production....................................... $9,796,885 $3,806,526
========== ==========
</TABLE>
- ---------------
(1) Includes loan production for sale in the secondary market of $5.3 billion in
1997 and $1.0 billion in 1996.
Approximately 36% of the $8.6 billion of residential real estate loans
produced during 1997 were refinance loans, the proceeds of which were used in
full or in part to prepay loans previously originated by the Company or other
financial institutions. The level of loan refinancing activity is influenced by
various factors,
40
<PAGE> 43
including relative interest rates, refinancing costs, the availability of credit
on terms acceptable to the borrower, and real estate values.
The Company continues to experience significant competition in its loan
production activities. As a result, the Company cannot predict whether it will
be able to achieve continuing growth in any of its lending areas.
Deposits
Total deposits amounted to $13.8 billion at year-end 1997, an increase of
$1.0 billion, or 7.7%, from December 31, 1996. The growth in deposits was
largely attributable to the BFS Acquisition, in connection with which the
Company acquired five New York City branches and $447.1 million of deposits, the
NAMC Acquisition, and a brokered time deposit program implemented during 1997,
in part, to expand the Company's available sources of funds. Total brokered time
deposits amounted to $193.0 million at December 31, 1997. At that date, the Bank
operated 91 branches, comprised of 90 branches in the greater New York City
metropolitan area and one branch in Florida.
The following table sets forth a summary of the Company's deposits at
December 31:
<TABLE>
<CAPTION>
1997 1996
------------------------- -------------------------
PERCENTAGE PERCENTAGE
AMOUNT OF TOTAL AMOUNT OF TOTAL
----------- ---------- ----------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Demand............................. $ 1,572,797 11.4% $ 1,130,863 8.8%
Savings............................ 2,431,812 17.6 2,460,367 19.1
Money market....................... 1,971,081 14.2 2,007,448 15.6
Time............................... 7,871,585 56.8 7,258,061 56.5
----------- ----- ----------- -----
Total deposits..................... $13,847,275 100.0% $12,856,739 100.0%
=========== ===== =========== =====
</TABLE>
Borrowed Funds
Total borrowed funds amounted to $6.3 billion at the end of 1997, up $1.5
billion from the level at the end of 1996. This increase was principally
associated with the funding of growth in interest-earning assets.
The following table sets forth a summary of the Company's borrowed funds at
December 31:
<TABLE>
<CAPTION>
1997 1996
------------------------ ------------------------
PERCENTAGE PERCENTAGE
AMOUNT OF TOTAL AMOUNT OF TOTAL
---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Securities sold under agreements to
repurchase................................. $2,975,774 47.1% $3,550,234 73.7%
FHLBNY advances.............................. 2,786,751 44.1 925,139 19.2
Senior notes(1).............................. 142,475 2.3 197,584 4.1
Guaranteed preferred beneficial interests in
Holding Company's junior subordinated
deferrable interest debentures(2).......... 196,137 3.1 -- --
Other........................................ 218,175 3.4 142,234 3.0
---------- ----- ---------- -----
Total borrowed funds......................... $6,319,312 100.0% $4,815,191 100.0%
========== ===== ========== =====
</TABLE>
- ---------------
(1) In November 1997, the Holding Company purchased $55.6 million in principal
amount of its outstanding 8.9375% senior notes due July 2003.
(2) For a further discussion, see Note 13 of the Notes to Consolidated Financial
Statements in Item 8, "Financial Statements and Supplementary Data."
41
<PAGE> 44
Stockholders' Equity
Stockholders' equity amounted to $1.3 billion at December 31, 1997, as
compared with $1.0 billion at the prior year end, an increase of 28.6%. This
growth was largely attributable to the NAMC Acquisition, which increased
stockholders' equity by $372.5 million at the acquisition date, and the
recognition of net income of $121.7 million. In connection with the NAMC
Acquisition, the Company issued 19.4 million shares of Common Stock, of which
7.5 million were issued from treasury. At year-end 1997, stockholders' equity
represented 6.02% of total assets, up from 5.42% of total assets at year-end
1996. The Holding Company's book value per common share was $11.30 at December
31, 1997, up 15.8% from $9.76 one year earlier.
During 1997, the Holding Company repurchased a total of 9.3 million shares
of Common Stock (including 6.9 million shares in connection with the NAMC
Acquisition) at an average cost per share of $21.57. Since the announcement in
January 1996 of the Holding Company's initial Common Stock repurchase program, a
total of 14.3 million shares of Common Stock have been repurchased at an average
cost per share of $18.92.
At December 31, 1997, the Holding Company had one Common Stock repurchase
program in effect. This program, which was announced in December 1997, provides
for the repurchase of up to 3 million additional shares of Common Stock. No
repurchases were made under this program as of December 31, 1997. During the
first quarter of 1998, the Holding Company repurchased 3 million shares of
Common Stock under this program.
During the second, third and fourth quarters of 1997, the Holding Company
declared and paid cash dividends on the Common Stock of $0.04 per share. The
Holding Company's Common Stock dividend payout ratio for 1997 was 10.5%.
LIQUIDITY
The Company's liquidity management process focuses on ensuring that
sufficient funds exist to meet withdrawals from deposit accounts, loan funding
commitments, the repayment of borrowed funds, and other financial obligations
and expenditures, as well as ensuring the Bank's compliance with regulatory
liquidity requirements. The liquidity position of the Company, which is
monitored on a daily basis, is managed pursuant to established policies and
guidelines.
The Company's sources of liquidity include principal repayments on loans
and MBS, borrowings, deposits, sales of loans in connection with mortgage
banking activities, sales of securities available for sale, and net cash
provided by operations. Additionally, the Company has access to the capital
markets for issuing debt or equity securities, as well as access to the discount
window of the Federal Reserve Bank of New York, if necessary, for the purpose of
borrowing to meet temporary liquidity needs, although it has not utilized this
funding source in the past.
Excluding funds raised through the capital markets, the primary source of
funds of the Holding Company, on an unconsolidated basis, has been dividends
from the Bank, whose ability to pay dividends is subject to regulations of the
OTS (see "Regulation and Supervision -- Restrictions on Dividends and Capital
Distributions" in Item 1, "Business").
Under OTS regulations, which were revised effective in November 1997 (see
"Regulation and Supervision -- Liquid Assets" in Item 1, "Business"), the Bank
must maintain average eligible liquid assets (as defined) for each calendar
quarter of not less than 4.00% of its liquidity base (as defined). For the
fourth quarter of 1997, the Bank's liquidity ratio was 4.51%.
REGULATORY CAPITAL
Pursuant to OTS regulations, the Bank is required to maintain tangible
capital of at least 1.50% of adjusted total assets, leverage capital of at least
3.00% of adjusted total assets, and risk-based capital of at least 8.00% of
risk-weighted assets. The Bank exceeded these capital requirements at December
31, 1997.
42
<PAGE> 45
Under the PCA regulations adopted by the OTS pursuant to FDICIA, an
institution is considered well capitalized, the highest of five categories, if
it has a leverage capital ratio of at least 5.00%, a tier 1 risk-based capital
ratio (leverage capital to risk-weighted assets) of at least 6.00%, and a total
risk-based capital ratio of at least 10.00%, and it is not subject to an order,
written agreement, capital directive, or PCA directive to meet and maintain a
specific capital level for any capital measure. At December 31, 1997, the Bank
met the published standards for a well capitalized designation under these
regulations.
The following table sets forth the regulatory capital position of the Bank
at December 31:
<TABLE>
<CAPTION>
BANK REGULATORY CAPITAL
------------------------------------------
1997 1996
------------------- -------------------
AMOUNT RATIO AMOUNT RATIO
---------- ----- ---------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Tangible capital........................... $1,216,417 5.64% $1,139,443 6.06%
Leverage capital........................... 1,216,417 5.64 1,139,443 6.06
Risk-based capital......................... 1,321,135 11.17 1,245,938 13.08
Tier 1 risk-based capital.................. 1,216,417 10.29 1,139,443 11.96
</TABLE>
The declines in the Bank's regulatory capital ratios during 1997 were
largely due to the growth in the Bank's assets during the year, principally
reflecting the NAMC Acquisition and the BFS Acquisition. At December 31, 1997,
the Bank's adjusted total assets, which are used to compute its tangible and
leverage capital ratios, were $21.6 billion, up from $18.8 billion one year
earlier. The Bank's risk-weighted assets, which are used to compute its
risk-based capital and tier 1 risk-based capital ratios, increased to $11.8
billion at December 31, 1997 from $9.5 billion at the end of 1996.
RECENT ACCOUNTING DEVELOPMENTS
In December 1996, the Financial Accounting Standards Board (the "FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 127, "Deferral
of the Effective Date of Certain Provisions of FASB Statement No. 125," which
deferred, for one year, the effective date of those provisions of SFAS No. 125,
"Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities," relating to collateral, repurchase agreements, dollar-rolls,
securities lending, and similar transactions. The Company's adoption, as of
January 1, 1998, of the deferred portions of SFAS No. 125 did not have, and is
not expected to have, a material impact on its consolidated financial
statements.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income," which establishes standards for reporting and display of comprehensive
income and its components (revenues, expenses, gains and losses) in a full set
of general-purpose financial statements. SFAS No. 130 requires that all items
that are required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. Under the requirements of
SFAS No. 130, an enterprise must classify items of other comprehensive income by
their nature in a financial statement and display the accumulated balance of
other comprehensive income separately from retained earnings and additional
paid-in capital in the stockholders' equity section of a statement of financial
position. SFAS No. 130 is effective for fiscal years beginning after December
15, 1997 and requires reclassification of financial statements for earlier
periods provided for comparative purposes.
The FASB, in June 1997, issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." SFAS No. 131 establishes standards for
the way that public business enterprises report information about operating
segments in annual financial statements, requires that selected information
about operating segments be reported in interim financial statements issued to
stockholders, and establishes standards for related disclosures about an
enterprise's products and services, geographic areas, and major customers. SFAS
No. 131 is effective for financial statements for periods beginning after
December 15, 1997. SFAS No. 131 need not be applied to interim financial
statements in the initial year of its application, but comparative information
for interim periods in the initial year of application is to be reported in
financial statements for interim periods in the second year of application.
43
<PAGE> 46
ITEM 7A. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
Information required by this Item is contained in Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Asset/Liability Management," incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Auditors.............................. F-1
Consolidated Statements of Financial Condition.............. F-2
Consolidated Statements of Income........................... F-3
Consolidated Statements of Changes in Stockholders'
Equity.................................................... F-4
Consolidated Statements of Cash Flows....................... F-5
Notes to Consolidated Financial Statements.................. F-6
</TABLE>
44
<PAGE> 47
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth the name, age, and position of each
executive officer of the Company as of March 1, 1998 and the year in which such
person joined the Company:
<TABLE>
<CAPTION>
WITH THE
COMPANY
NAME AGE POSITIONS AND OFFICES WITH THE COMPANY SINCE
---- --- -------------------------------------- --------
<S> <C> <C> <C>
Lawrence J. Toal............................. 60 Director, Chief Executive Officer, 1991
President, and Chief Operating
Officer
Gene C. Brooks............................... 48 Director of the Office of the 1995
Secretary and Senior Legal Advisor
Anthony R. Burriesci......................... 50 Chief Financial Officer 1997
D. James Daras .............................. 44 Treasurer and Asset/Liability 1990
Executive
James E. Kelly............................... 46 General Counsel 1987
Fred B. Koons................................ 53 Chief Executive Officer, Mortgage 1996
Banking
Carlos R. Munoz.............................. 62 Chief Credit & Risk Management Officer 1995
Peyton R. Patterson.......................... 41 General Manager, Consumer Financial 1996
Services
</TABLE>
Mr. Daras has been employed by the Company in the positions stated above
for more than five years. The principal occupation for at least the last five
years of each other executive officer who is not a member of the Board and who
is not currently a nominee for election to the Board is set forth below:
Mr. Brooks, who joined Anchor Savings in July 1987, served as Vice
President and General Counsel of Anchor Bancorp from its formation until the
Anchor Merger and as Secretary of Anchor Bancorp from March 1993 until the
Anchor Merger. He was General Counsel of the Holding Company and the Bank from
April 1995 to January 1998, at which time he assumed his present position.
Mr. Burriesci joined the Company in July 1997 as Chief Financial Officer.
From 1990 until he joined the Company, he held various finance-related positions
with First Fidelity Bancorporation, the most recent of which was Executive Vice
President and Corporate Controller, until it was acquired by First Union
Corporation in 1996, where he served as Executive Vice President-Finance and
Administration and Chief Financial Officer-Northern Region.
Mr. Kelly has served in various legal and business positions with the
Company since joining the Bank in January 1987, including as assistant to the
President from February 1992 to March 1995 and thereafter as Deputy General
Counsel until he assumed his present position in January 1998.
Mr. Koons joined the Company in December 1996 as Chief Executive Officer,
Mortgage Banking. From July 1996 until he joined the Company, he was a
consultant to the Company regarding its mortgage banking strategy. Previously,
Mr. Koons was Chairman and Chief Executive Officer of Chase Manhattan Mortgage
Corporation, where he was responsible for all aspects of its residential lending
activities in the United States. He had joined Chase in 1980 and served in
various positions, including Regional Executive, Secondary Marketing Executive,
and Production Executive.
Mr. Munoz joined the Company in April 1995 as Chief Credit Officer. Prior
to joining the Company, he served in various positions with Citibank, N.A.,
where he was most recently Senior Vice President and a member of the Credit
Policy Committee. In that position, he had been responsible at various times for
credit management and oversight of part or all of Citibank's worldwide consumer
banking activities, as well as
45
<PAGE> 48
Private Banking and Global Finance in Latin America. He previously served with
Citibank in New York, San Francisco and the Caribbean, including management of
that institution's corporate lending activities in the Western United States and
the workout of exposure to the troubled Real Estate Investment Trust industry in
the mid-1970's.
Ms. Patterson joined the Company in May 1996 as General Manager, Consumer
Lending and assumed her present position in June 1997. From 1989 until she
joined the Company, Ms. Patterson held several positions with Chemical Bank,
including most recently as General Manager of its Consumer Asset Group, until
the merger of that institution with Chase Manhattan Bank in 1996, when she
became the Director of Marketing for its National Consumer Services Division.
Information required by this Item regarding members of the Board is
contained in the Holding Company's definitive Proxy Statement for its 1998
Annual Meeting of Stockholders (the "Proxy Statement"), which is expected to be
filed with the Securities and Exchange Commission (the "Commission") within 120
days from December 31, 1997, incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information required by this Item is contained in the Proxy Statement,
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required by this Item is contained in the Proxy Statement,
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by this Item is contained in the Proxy Statement,
incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) FINANCIAL STATEMENTS
See Item 8, "Financial Statements and Supplementary Data."
(a)(2) FINANCIAL STATEMENT SCHEDULES
All financial statement schedules for the Holding Company and its
subsidiaries have been included in the consolidated financial statements or the
related notes or they are either inapplicable or not required.
(a)(3) EXHIBITS
See Exhibit Index, page 97.
(b) REPORTS ON FORM 8-K
During the three-month period ended December 31, 1997, the Holding Company
filed with the Commission one Current Report on Form 8-K, dated October 30,
1997, which reported that, on October 15, 1997, the Company had consummated the
NAMC Acquisition.
46
<PAGE> 49
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
DIME BANCORP, INC.
By: /s/ LAWRENCE J. TOAL
------------------------------------
Lawrence J. Toal
Chief Executive Officer, President
and Chief Operating Officer
March 31, 1998
--------------------------------------
Date
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on March 31, 1998 by the following persons on
behalf of the registrant and in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<C> <S>
/s/ LAWRENCE J. TOAL Director, Chief Executive Officer, President and
- --------------------------------------------- Chief Operating Officer (Principal Executive
Lawrence J. Toal Officer)
* Chairman of the Board
- ---------------------------------------------
James M. Large, Jr.
* Director
- ---------------------------------------------
Derrick D. Cephas
* Director
- ---------------------------------------------
Frederick C. Chen
* Director
- ---------------------------------------------
J. Barclay Collins II
* Director
- ---------------------------------------------
Richard W. Dalrymple
* Director
- ---------------------------------------------
James F. Fulton
* Director
- ---------------------------------------------
Sally Hernandez-Pinero
</TABLE>
47
<PAGE> 50
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<C> <S>
* Director
- ---------------------------------------------
Virginia M. Kopp
* Director
- ---------------------------------------------
John Morning
* Director
- ---------------------------------------------
Margaret Osmer-McQuade
* Director
- ---------------------------------------------
Dr. Paul A. Qualben
* Director
- ---------------------------------------------
Eugene G. Schulz, Jr.
* Director
- ---------------------------------------------
Howard Smith
* Director
- ---------------------------------------------
Dr. Norman R. Smith
* Director
- ---------------------------------------------
Ira T. Wender
/s/ ANTHONY R. BURRIESCI Chief Financial Officer (Principal Financial
- --------------------------------------------- Officer)
Anthony R. Burriesci
/s/ HAROLD E. REYNOLDS Controller (Principal Accounting Officer)
- ---------------------------------------------
Harold E. Reynolds
*By: /s/ LAWRENCE J. TOAL
----------------------------------------
Lawrence J. Toal
Attorney-in-Fact
</TABLE>
48
<PAGE> 51
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Dime Bancorp, Inc.:
We have audited the accompanying consolidated statements of financial
condition of Dime Bancorp, Inc. and subsidiaries (Dime) as of December 31, 1997
and 1996, and the related consolidated statements of income, changes in
stockholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1997. These consolidated financial statements are the
responsibility of Dime's management. Our responsibility is to express an opinion
on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Dime
Bancorp, Inc. and subsidiaries as of December 31, 1997 and 1996, and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 31, 1997, in conformity with generally accepted accounting
principles.
/s/ KPMG PEAT MARWICK LLP
New York, New York
January 19, 1998
F-1
<PAGE> 52
DIME BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
Cash and due from banks..................................... $ 295,369 $ 158,753
Money market investments.................................... 157,158 25,764
Securities available for sale............................... 4,992,304 2,589,572
Securities held to maturity (estimated fair value of
$4,279,937 in 1996)....................................... -- 4,363,971
Federal Home Loan Bank of New York stock.................... 303,287 266,244
Loans held for sale......................................... 1,841,862 115,325
Loans receivable, net:
Residential real estate loans............................. 9,848,593 8,074,905
Commercial real estate loans.............................. 2,263,023 1,885,733
Consumer loans............................................ 773,817 734,281
Business loans............................................ 99,074 43,138
Allowance for loan losses................................. (104,718) (106,495)
----------- -----------
Total loans receivable, net....................... 12,879,789 10,631,562
----------- -----------
Accrued interest receivable................................. 106,829 106,041
Premises and equipment, net................................. 150,805 103,541
Mortgage servicing assets................................... 341,906 127,745
Other assets................................................ 778,691 381,590
----------- -----------
Total assets................................................ $21,848,000 $18,870,108
=========== ===========
LIABILITIES
Deposits.................................................... $13,847,275 $12,856,739
Securities sold under agreements to repurchase.............. 2,975,774 3,550,234
Federal Home Loan Bank of New York advances................. 2,786,751 925,139
Senior notes................................................ 142,475 197,584
Guaranteed preferred beneficial interests in Holding
Company's junior subordinated deferrable interest
debentures................................................ 196,137 --
Other borrowed funds........................................ 218,175 142,234
Other liabilities........................................... 366,555 175,841
----------- -----------
Total liabilities................................. 20,533,142 17,847,771
----------- -----------
STOCKHOLDERS' EQUITY
Common stock, par value $0.01 per share (200,000,000 shares
authorized; 120,256,459 shares issued in 1997 and
108,262,216 shares issued in 1996)........................ 1,203 1,083
Additional paid-in capital.................................. 1,158,221 914,386
Retained earnings........................................... 261,201 158,956
Treasury stock, at cost (3,898,132 shares in 1997 and
3,518,297 shares in 1996)................................. (95,221) (51,498)
Net unrealized (loss) gain on securities available for sale,
net of taxes.............................................. (9,534) 22
Unearned compensation....................................... (1,012) (612)
----------- -----------
Total stockholders' equity........................ 1,314,858 1,022,337
----------- -----------
Total liabilities and stockholders' equity.................. $21,848,000 $18,870,108
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-2
<PAGE> 53
DIME BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
INTEREST INCOME
Residential real estate loans............................... $ 660,505 $ 558,248 $ 485,340
Commercial real estate loans................................ 191,111 159,019 162,712
Consumer loans.............................................. 63,222 63,679 71,124
Business loans.............................................. 5,052 3,163 3,250
Mortgage-backed securities.................................. 406,781 508,342 567,885
Other securities............................................ 23,774 31,910 32,596
Money market investments.................................... 32,370 26,337 34,224
---------- ---------- ----------
Total interest income.............................. 1,382,815 1,350,698 1,357,131
---------- ---------- ----------
INTEREST EXPENSE
Deposits.................................................... 559,359 531,216 524,452
Borrowed funds.............................................. 340,394 358,187 423,053
---------- ---------- ----------
Total interest expense............................. 899,753 889,403 947,505
---------- ---------- ----------
Net interest income................................ 483,062 461,295 409,626
Provision for loan losses................................... 49,000 41,000 39,650
---------- ---------- ----------
Net interest income after provision for loan
losses........................................... 434,062 420,295 369,976
---------- ---------- ----------
NON-INTEREST INCOME
Loan servicing fees and charges............................. 74,038 47,863 47,773
Banking service fees........................................ 31,796 28,056 22,569
Securities and insurance brokerage fees..................... 23,737 21,064 15,532
Net gains (losses) on sales activities...................... 12,036 (12,716) (12,415)
Other....................................................... 3,684 1,711 1,253
---------- ---------- ----------
Total non-interest income.......................... 145,291 85,978 74,712
---------- ---------- ----------
NON-INTEREST EXPENSE
General and administrative expense:
Compensation and employee benefits...................... 157,851 139,358 131,721
Occupancy and equipment, net............................ 63,582 52,662 58,285
Other................................................... 115,689 100,775 95,895
---------- ---------- ----------
Total general and administrative expense........... 337,122 292,795 285,901
Amortization of mortgage servicing assets................... 29,751 19,382 20,652
Other real estate owned expense, net........................ 4,341 10,072 12,892
Savings Association Insurance Fund recapitalization
assessment................................................ -- 26,280 --
Restructuring and related expense........................... 9,931 3,504 15,331
---------- ---------- ----------
Total non-interest expense......................... 381,145 352,033 334,776
---------- ---------- ----------
Income before income tax expense and extraordinary item..... 198,208 154,240 109,912
Income tax expense.......................................... 75,034 49,984 47,727
---------- ---------- ----------
Income before extraordinary item............................ 123,174 104,256 62,185
Extraordinary item -- loss on early extinguishment of debt,
net of income tax benefit of $895......................... (1,460) -- --
---------- ---------- ----------
Net income.................................................. $ 121,714 $ 104,256 $ 62,185
========== ========== ==========
EARNINGS PER COMMON SHARE
Basic:
Income before extraordinary item ....................... $ 1.15 $ 1.00 $ 0.63
Extraordinary item...................................... (0.01) -- --
---------- ---------- ----------
Net income......................................... $ 1.14 $ 1.00 $ 0.63
========== ========== ==========
Diluted:
Income before extraordinary item........................ $ 1.13 $ 0.96 $ 0.57
Extraordinary item...................................... (0.01) -- --
---------- ---------- ----------
Net income.............................................. $ 1.12 $ 0.96 $ 0.57
========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 54
DIME BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------
1997 1996 1995
---------- ---------- --------
<S> <C> <C> <C>
COMMON STOCK
Balance at beginning of year............................ $ 1,083 $ 997 $ 986
Common stock issued in connection with acquisition...... 120 -- --
Common stock issued upon exercise of stock warrant...... -- 84 --
Common stock issued under employee benefit plans........ -- 2 11
---------- ---------- --------
Balance at end of year............................. 1,203 1,083 997
---------- ---------- --------
ADDITIONAL PAID-IN CAPITAL
Balance at beginning of year............................ 914,386 915,210 910,036
Common stock issued in connection with acquisition...... 215,879 -- --
Common stock issued under employee benefit plans........ 545 1,089 5,174
Treasury stock issued in connection with acquisition.... 4,780 -- --
Treasury stock issued under employee benefit plans...... (4,780) -- --
Fair value adjustment on stock options issued in
connection with acquisition........................... 21,389 -- --
Other................................................... 6,022 (1,913) --
---------- ---------- --------
Balance at end of year............................. 1,158,221 914,386 915,210
---------- ---------- --------
COMMON STOCK DEFERRED INCENTIVE SHARES
Balance at beginning of year............................ -- -- 2,994
Deferred incentive shares granted, net.................. -- -- 33
Deferred incentive shares distributed................... -- -- (3,027)
---------- ---------- --------
Balance at end of year............................. -- -- --
---------- ---------- --------
RETAINED EARNINGS
Balance at beginning of year............................ 158,956 65,981 3,796
Net income.............................................. 121,714 104,256 62,185
Cash dividends declared on common stock ($0.12 per
share)................................................ (12,892) -- --
Treasury stock issued under employee benefit plans...... (6,577) (11,281) --
---------- ---------- --------
Balance at end of year............................. 261,201 158,956 65,981
---------- ---------- --------
TREASURY STOCK, AT COST
Balance at beginning of year............................ (51,498) -- --
Treasury stock purchased................................ (200,354) (70,456) --
Treasury stock issued in connection with acquisition.... 130,326 -- --
Treasury stock issued under employee benefit plans...... 26,305 18,958 --
---------- ---------- --------
Balance at end of year............................. (95,221) (51,498) --
---------- ---------- --------
NET UNREALIZED (LOSS) GAIN ON SECURITIES AVAILABLE FOR
SALE, NET OF TAXES
Balance at beginning of year............................ 22 (5,468) (12,612)
Net change in estimated fair value of securities
available for sale, net of taxes...................... (9,556) 5,490 7,144
---------- ---------- --------
Balance at end of year............................. (9,534) 22 (5,468)
---------- ---------- --------
UNEARNED COMPENSATION
Balance at beginning of year............................ (612) (190) (75)
Restricted stock activity, net.......................... (1,126) (545) (181)
Amortization of unearned compensation, net.............. 726 123 66
---------- ---------- --------
Balance at end of year............................. (1,012) (612) (190)
---------- ---------- --------
Total stockholders' equity.............................. $1,314,858 $1,022,337 $976,530
========== ========== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 55
DIME BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income.................................................. $ 121,714 $ 104,256 $ 62,185
Adjustments to reconcile net income to net cash (used)
provided by operating activities:
Provisions for loan and other real estate owned
losses................................................ 50,514 45,799 46,529
Depreciation and amortization of premises and
equipment............................................. 20,152 16,706 17,899
Other amortization and accretion, net................... 65,815 59,871 69,038
Provision for deferred income tax expense............... 64,270 35,666 43,032
Net securities losses................................... 17,794 11,265 29,044
Gains on sales of mortgage servicing rights............. (6,888) -- (738)
Loss on early extinguishment of debt.................... 2,355 -- --
Net gains on sales of branches.......................... -- -- (18,637)
Net (increase) decrease in loans held for sale.......... (760,523) 24,045 (122,749)
Other, net.............................................. 110,020 6,626 (14,277)
----------- ----------- -----------
Net cash (used) provided by operating activities... (314,777) 304,234 111,326
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities available for sale.................. (1,196,330) (1,722,633) (55,391)
Purchases of securities held to maturity.................... (80,411) (238,674) (2,144,475)
Proceeds from sales of securities available for sale........ 1,720,817 2,290,279 25,279
Proceeds from sales of securities held to maturity.......... -- -- 187,342
Proceeds from maturities of securities available for sale
and held to maturity...................................... 1,505,518 1,842,349 1,920,144
Net (purchases) redemptions of Federal Home Loan Bank of New
York stock................................................ (31,111) 52,446 (53,104)
Loans receivable originated and purchased, net of principal
payments.................................................. (1,827,121) (997,241) (632,133)
Proceeds from sales of loans receivable..................... 9,645 13,510 42,344
Acquisitions, net of cash and cash equivalents acquired..... (41,234) (1,284) (7,914)
Investment in bank-owned life insurance program............. (150,000) -- --
Repurchases of assets sold with recourse.................... (16,675) (36,855) (35,946)
Proceeds from bulk sales of non-performing assets........... 93,434 -- --
Proceeds from sales of other real estate owned.............. 42,383 50,681 66,763
Purchases of mortgage servicing assets...................... (23,049) (15,942) (13,993)
Proceeds from sales of mortgage servicing rights............ 63,427 -- 2,022
Purchases of premises and equipment, net.................... (29,011) (12,775) (22,493)
----------- ----------- -----------
Net cash provided (used) by investing activities... 40,282 1,223,861 (721,555)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits.................................... 292,887 284,536 42,678
Net cash paid upon sale of deposits......................... -- -- (262,512)
Net increase (decrease) in borrowings with original
maturities of three months or less........................ 126,164 (1,382,173) 300,797
Proceeds from issuance of guaranteed preferred beneficial
interests in Holding Company's junior subordinated
deferrable interest debentures............................ 196,122 -- --
Proceeds from other borrowings.............................. 1,296,510 1,111,804 1,365,000
Repayments of other borrowings.............................. (1,174,045) (1,529,043) (809,549)
Proceeds from issuance of common and treasury stock......... 14,332 8,311 2,014
Purchases of treasury stock................................. (200,354) (70,456) --
Cash dividends paid on common stock......................... (12,892) -- --
Other....................................................... 3,781 (1,913) --
----------- ----------- -----------
Net cash provided (used) by financing activities... 542,505 (1,578,934) 638,428
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents........ 268,010 (50,839) 28,199
Cash and cash equivalents at beginning of year.............. 184,517 235,356 207,157
----------- ----------- -----------
Cash and cash equivalents at end of year.................... $ 452,527 $ 184,517 $ 235,356
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 56
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and financial reporting policies applied by Dime Bancorp,
Inc. (the "Holding Company"), a unitary savings and loan holding company, and
its subsidiaries (the "Company") conform with generally accepted accounting
principles and prevailing practices within the financial services industry. The
principal subsidiary of the Holding Company is The Dime Savings Bank of New
York, FSB (the "Bank"), which is engaged in banking operations and, at December
31, 1997, operated through 91 branches, primarily located in the greater New
York City metropolitan area. The Bank has subsidiaries that are engaged in
various businesses, including mortgage banking, securities brokerage services
and insurance brokerage services. At December 31, 1997, the Company operated
over 200 residential real estate loan production offices located in 36 states.
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires the Company to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
statement of financial condition and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
The following is a description of significant accounting and financial
reporting policies of the Company.
Basis of Presentation
The accompanying consolidated financial statements include the accounts of
the Holding Company and its wholly-owned subsidiaries, after the elimination of
all significant intercompany balances and transactions. Certain amounts in the
consolidated financial statements and accompanying notes for prior years have
been reclassified to conform with the current year presentation.
Securities
Securities that the Company has the positive intent and ability to hold to
maturity are classified as held to maturity and are carried at amortized cost.
As further discussed in Note 4, the Company, during the fourth quarter of 1997,
transferred its entire portfolio of securities held to maturity to its portfolio
of securities available for sale. Securities held for sale in the near term in
connection with mortgage banking activities are classified as trading securities
and are carried at estimated fair value with unrealized gains and losses
recognized in operations. The Company did not maintain a trading securities
portfolio at December 31, 1997 or 1996. Securities not otherwise classified as
held to maturity or trading are classified as available for sale and are carried
at estimated fair value with unrealized gains and losses, net of the related
income tax effect, reported as a separate component of stockholders' equity.
The amortization of premiums and accretion of discounts on securities is
recognized in income using the interest method over the lives of the securities,
adjusted, in the case of mortgage-backed securities ("MBS"), for actual
prepayments. Gains and losses on sales of securities are recognized using the
specific identification method.
For debt securities transferred from the held to maturity portfolio to the
available for sale portfolio, unrealized holding gains or losses at the transfer
date, net of the related income tax effect, are recognized as a separate
component of stockholders' equity.
The carrying value of a security is reduced through a write-down charged to
income in the event the Company determines that an other than temporary
impairment in value has occurred.
F-6
<PAGE> 57
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Loans
Loans held for sale are carried at the lower of cost or market value, as
determined on an aggregate basis. Net unrealized losses are recognized in a
valuation allowance by charges to income. Premiums, discounts and certain
origination fees and costs on loans held for sale are deferred and recognized as
a component of the gain or loss on sale. Gains and losses on sales of loans held
for sale are recognized at the settlement dates and are determined by the
difference between the sales proceeds and the carrying value of the loans.
Loans receivable are generally carried at unpaid principal balances
adjusted for unamortized premiums, unearned discounts and deferred loan
origination fees and costs, which are recognized as yield adjustments over the
lives of the loans using the interest method.
Loans are placed on non-accrual status upon becoming 90 days contractually
past due as to principal or interest, or at an earlier date if the full
collectability of principal or interest is doubtful. Interest income previously
accrued but not collected at the date a loan is placed on non-accrual status is
reversed against interest income. Cash receipts on a non-accrual loan are
applied to principal and interest in accordance with its contractual terms
unless full payment of principal is not expected, in which case cash receipts,
whether designated as principal or interest, are applied as a reduction of the
carrying value of the loan. A non-accrual loan is generally returned to accrual
status when principal and interest payments are current, full collectability of
principal and interest is reasonably assured and a consistent record of
performance has been demonstrated.
A loan is deemed a troubled debt restructuring ("TDR") by the Company when
modifications of a concessionary nature are made to the loan's original
contractual terms due to a deterioration in the borrower's financial condition.
In accordance with Statement of Financial Accounting Standards ("SFAS") No.
114, "Accounting by Creditors for Impairment of a Loan," as amended, the Company
considers a loan falling within its scope impaired when, based upon current
information and events, it is probable that it will be unable to collect all
amounts due, both principal and interest, according to the contractual terms of
the loan agreement. SFAS No. 114 does not apply to loans held for sale or those
large groups of smaller-balance homogeneous loans that are collectively
evaluated for impairment, which, for the Company, include residential real
estate loans receivable that have not been modified in a TDR and consumer loans
receivable. Loans reviewed by the Company for impairment are limited to
residential real estate loans receivable modified in a TDR, business loans
receivable, and commercial real estate loans receivable. Specific factors used
in the impaired loan identification process include, but are not limited to,
delinquency status, loan-to-value ratio, the condition of the underlying
collateral, credit history, and debt coverage. At a minimum, loans reviewed for
impairment by the Company are classified as impaired when delinquent more than
six months. Impaired loans are principally measured using the present value of
expected future cash flows discounted at the loan's effective interest rate or
the fair value of the collateral for collateral dependent loans. For impaired
loans on non-accrual status, cash receipts are applied, and interest income
recognized, pursuant to the discussion above for non-accrual loans. For all
other impaired loans, cash receipts are applied to principal and interest in
accordance with the contractual terms of the loan and interest income is
recognized on the accrual basis.
Allowance for Loan Losses
An allowance for losses is maintained for losses inherent in the Company's
loans receivable portfolio. The allowance is increased by loss provisions
charged to operations and decreased by charge-offs (net of recoveries). In
determining the appropriate level of the allowance for loan losses, the Company
reviews its loans receivable portfolio on at least a quarterly basis, taking
into account its impaired loans, the size, composition and risk profile of the
portfolio, delinquency levels, historical loss experience, cure rates on
delinquent loans, economic conditions and other pertinent factors, such as
assumptions and projections of future conditions.
F-7
<PAGE> 58
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
While the Company considers its allowance for loan losses to be adequate
based on information currently available, additions to the allowance may be
necessary due to future events, including changes in economic conditions in the
Company's lending areas. In addition, the Federal Deposit Insurance Corporation
("FDIC") and the Office of Thrift Supervision ("OTS"), as an integral part of
their examination process, periodically review the Bank's allowance for loan
losses. Such agencies may require the Bank to recognize additions to the
allowance based on their judgments about information available to them at the
time of their examinations.
Premises and Equipment
Premises and equipment are carried at cost less accumulated depreciation
and amortization. Depreciation is computed using the straight-line method over
the estimated useful lives of the assets. Leasehold improvements are amortized
using the straight-line method over the lesser of the terms of their respective
leases or estimated useful lives. Maintenance, repairs, and minor improvements
are charged to operations in the period incurred, while major improvements are
capitalized.
Mortgage Servicing Assets
The Company recognizes, as separate assets, the rights to service mortgage
loans, whether those rights are acquired through loan purchase or loan
origination activities. Mortgage servicing assets are amortized in proportion to
and over the period of estimated net servicing income. On a quarterly basis,
mortgage servicing assets are assessed for impairment based upon their estimated
fair value. For purposes of such assessments, the Company stratifies its
mortgage servicing assets by underlying loan type (i.e., adjustable-rate,
fixed-rate and balloon) and interest rate. Impairment of mortgage servicing
assets is recognized through a valuation allowance for each impaired stratum
with the individual allowances adjusted in subsequent periods to reflect changes
in the measurement of impairment. The estimated fair value of each strata is
determined through a discounted cash flow analysis of future cash flows
incorporating numerous assumptions including servicing income, servicing costs,
market discount rates, prepayment speeds, and default rates.
Other Real Estate Owned ("ORE")
ORE, which consists of real estate acquired in satisfaction of loans, is
carried at the lower of cost or estimated fair value less estimated selling
costs. Write-downs required at time of acquisition are charged to the allowance
for loan losses. Subsequent to acquisition, the Company maintains an allowance
for actual and potential future declines in value. ORE is included in the
accompanying Consolidated Statements of Financial Condition under the caption
"Other Assets."
Goodwill
Goodwill is generally amortized using the straight-line method over periods
ranging from 15 to 25 years. Goodwill is reviewed for possible impairment when
events or changes in circumstances indicate that the carrying amount may not be
recoverable.
Income Taxes
Deferred tax assets and liabilities are recognized for the estimated future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date. If necessary, deferred tax assets are
reduced to the amount that, based on available evidence, will more than likely
be realized.
F-8
<PAGE> 59
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Treasury Stock
Common stock of the Holding Company ("Common Stock") repurchased for
treasury is recorded at cost. Upon reissuance, the treasury stock account is
reduced by the cost of such stock on the first-in, first-out basis.
Stock-Based Compensation
The Company, effective as of January 1, 1996, adopted SFAS No. 123,
"Accounting for Stock-Based Compensation." SFAS No. 123 defines a fair
value-based method of accounting for stock-based compensation arrangements with
employees, but permits an entity to continue utilizing the intrinsic value-based
method prescribed by Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees," in accounting for such arrangements.
In implementing SFAS No. 123, the Company elected to continue using the
intrinsic value-based method. Under this method, compensation cost is measured
by the excess, if any, of the quoted market price of the Common Stock at date of
grant, or other measurement date, over the amount an employee is required to pay
to acquire the Common Stock.
Earnings Per Common Share
The Company, during the fourth quarter of 1997, adopted SFAS No. 128,
"Earnings per Share," which supercedes APB Opinion No. 15, "Earnings per Share."
SFAS No. 128 replaces the primary and fully diluted earnings per common share
presentations previously required by APB Opinion No. 15 with basic and diluted
earnings per common share presentations. As required by SFAS No. 128, all prior
period earnings per common share have been restated. Basic earnings per common
share have been computed by dividing net income by the weighted average number
of shares of Common Stock outstanding during the period. Diluted earnings per
common share have been computed by dividing net income by the sum of the
weighted average number of shares of Common Stock and dilutive Common Stock
equivalents outstanding (using the treasury stock method) during the period.
Consolidated Statements of Cash Flows
For purposes of the Consolidated Statements of Cash Flows, cash and cash
equivalents are defined as those amounts included in the Consolidated Statements
of Financial Condition under the captions "Cash and due from banks" and "Money
market investments." Money market investments consist of highly-liquid
investments with original maturities of three months or less.
Cash flows associated with derivative financial instruments used by the
Company are classified in the accompanying Consolidated Statements of Cash Flows
in the same category as the cash flows from the asset or liability being hedged.
Derivative Financial Instruments
The Company uses a variety of derivative financial instruments as part of
its interest rate risk-management strategy and to manage certain risks
associated with its mortgage banking activities. Derivative financial
instruments used for these purposes must be designated as a hedge at their
inception and must remain effective as a hedge throughout their contractual
terms. Derivative financial instruments used by the Company principally include
interest rate swaps, interest rate caps, interest rate floors, forward
contracts, and options.
For those derivative financial instruments used to modify the interest rate
characteristics of designated interest-earning assets or interest-bearing
liabilities, net amounts payable or receivable on the instruments are accrued as
an adjustment to interest income or interest expense of the designated assets or
liabilities. The estimated fair values of such derivative financial instruments
are not reflected in the Company's consolidated
F-9
<PAGE> 60
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
financial statements unless designated to securities available for sale, in
which case the derivative financial instruments are carried at estimated fair
value with unrealized gains and losses, net of related income taxes, reflected
as a component of stockholders' equity.
For forward contracts and options used in connection with the Company's
mortgage banking activities, realized gains and losses are recognized in net
gains (losses) on sales activities in the period settlement occurs. Unrealized
gains and losses on such derivative financial instruments are included in the
computation of the lower of cost or market valuation of loans held for sale.
Unrealized gains and losses on interest rate swaps and interest rate floors
used to hedge mortgage servicing assets are considered in the determination of
the estimated fair value of such assets.
Premiums paid on derivative financial instruments are deferred as a
component of the carrying value of the designated assets or liabilities and
amortized against income over the terms of the contracts.
In the event of the early termination of a derivative financial instrument
contract, any resulting gain or loss is deferred, as an adjustment of the
carrying value of the designated assets or liabilities, and recognized in
operations over the shorter of the remaining life of the designated assets or
liabilities or the derivative financial instrument agreement. If the designated
assets or liabilities are subsequently sold or otherwise disposed of, any
remaining deferred gains or losses are recognized in operations.
If the balance of a hedged asset or liability declines below the notional
value of the related derivative financial instrument, the Company may
redesignate, at fair value, the derivative financial instrument to other assets
or liabilities or discontinue hedge accounting with respect to the portion of
the notional amount that exceeds the balance. When hedge accounting is
discontinued, derivative financial instruments are marked-to-market with the
resulting gains or losses recognized in operations.
NOTE 2 -- MERGER AND ACQUISITION ACTIVITIES
On October 15, 1997, prior to its opening for business, North American
Mortgage Company ("NAMC"), a mortgage banking company headquartered in Santa
Rosa, California, was acquired by the Company (the "NAMC Acquisition"). At the
date of acquisition, NAMC serviced approximately $12 billion of loans for others
and operated in 30 states. NAMC, subsequent to the acquisition, is operating
under that name as a subsidiary of the Bank. In connection with the NAMC
Acquisition, each share of NAMC's common stock outstanding immediately prior to
the closing of the NAMC Acquisition was converted into 1.37 shares of Common
Stock (the "NAMC Exchange Ratio"), and each outstanding option issued by NAMC to
acquire NAMC's common stock was converted, after giving effect to the NAMC
Exchange Ratio, into an option to purchase Common Stock. As a result, the
Holding Company issued 19,437,741 shares of Common Stock (of which 7,479,664
were issued from treasury) and options to purchase 1,862,087 shares of Common
Stock at an average exercise price of $14.18 per share. The purchase price of
NAMC was approximately $351 million based on the average price per share of the
Common Stock for the three business days prior to and subsequent to June 22,
1997, the date of the related merger agreement. The NAMC Acquisition was
accounted for under the purchase method of accounting. Accordingly, its impact
is only reflected in the Company's consolidated financial statements beginning
on October 15, 1997. Goodwill arising from the NAMC Acquisition amounted to
$185.9 million and is being amortized on a straight-line basis over 25 years.
The amount of goodwill may change as certain estimates are finalized, although
any such adjustments are not currently expected to be material.
The allocation of the purchase price of NAMC included a restructuring
liability of $9.8 million for personnel-related costs, primarily severance
benefits. Personnel-related costs paid and charged to the restructuring
liability during 1997 amounted to $5.3 million. In addition, the allocation of
the purchase price of NAMC included a restructuring liability in the amount of
$7.1 million for transaction fees and other costs, the balance of which amounted
to $2.6 million at December 31, 1997. It is expected that the cash payments
F-10
<PAGE> 61
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
associated with the restructuring liabilities will be substantially completed by
the end of the second quarter of 1998. In connection with the NAMC Acquisition,
the Company incurred expenses during 1997 of $9.9 million associated with its
employees and operations. Such expenses are reflected in the accompanying
Consolidated Statements of Income under the caption "Restructuring and related
expense."
After the close of business on April 30, 1997, the Company acquired BFS
Bankorp, Inc. ("BFS Bankorp") and its wholly-owned subsidiary, Bankers Federal
Savings FSB ("Bankers Federal" and, together with BFS Bankorp, "BFS"), for $93.3
million in cash (the "BFS Acquisition"). At that time, BFS Bankorp was
liquidated and Bankers Federal was merged with and into the Bank. The purchase
price was funded from the normal cash flows of the Company. Goodwill arising
from the BFS Acquisition amounted to $41.6 million and is being amortized over
15 years using the straight-line method. In connection with the BFS Acquisition,
the Company acquired loans receivable, net, of $574.5 million and assumed
deposits in five New York City branches of $447.1 million. Because this
acquisition was accounted for under the purchase method of accounting, its
impact is only reflected in the Company's consolidated financial statements
beginning on May 1, 1997.
The following table sets forth certain unaudited pro forma combined
financial information of the Company, NAMC and BFS for the years shown. This
information was prepared as if the NAMC Acquisition and the BFS Acquisition had
occurred as of the beginning of the first year presented and is based on the
historical financial statements of the Company, NAMC and BFS after giving effect
to the NAMC Acquisition and the BFS Acquisition under the purchase method of
accounting.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
----------------------
1997 1996
--------- ---------
(IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C>
Total revenues.............................................. $901,856 $872,623
Income before extraordinary item............................ 126,397 133,766
Net income.................................................. 124,937 133,766
Earnings per common share:
Basic:
Income before extraordinary item....................... 1.00 1.09
Net income............................................. 0.99 1.09
Diluted:
Income before extraordinary item....................... 0.98 1.04
Net income............................................. 0.97 1.04
</TABLE>
Excluding the after-tax impact of the $9.9 million of restructuring and
related expense incurred by the Company during 1997 in connection with the NAMC
Acquisition, the Company's unaudited pro forma income before extraordinary item
for 1997 would have been $132.6 million, or basic and diluted earnings per share
of $1.05 and $1.03, respectively, and its unaudited pro forma net income for
1997 would have been $131.1 million, or basic and diluted earnings per share of
$1.04 and $1.02, respectively.
The unaudited pro forma combined financial information set forth above is
intended for informational purposes only and is not necessarily indicative of
future results of operations of the combined companies, or of the results of the
combined companies that would have actually occurred had the acquisitions been
consummated as of the beginning of the first year presented.
In the fourth quarter of 1995, the Bank, in transactions accounted for as
purchases, acquired the assets and assumed the liabilities relating to the
residential real estate loan origination businesses of National Mortgage
Investments Co., Inc., which was headquartered in Griffin, Georgia, and James
Madison Mortgage
F-11
<PAGE> 62
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Co., which was headquartered in Fairfax, Virginia (the "National Mortgage
Acquisition" and the "Madison Mortgage Acquisition," respectively). The assets
acquired and the liabilities assumed in connection with these acquisitions were
not material. The Bank paid $4.8 million in cash in connection with the National
Mortgage Acquisition (including, as discussed below, certain contingent
payments) and $5.3 million in cash in connection with the Madison Mortgage
Acquisition. Goodwill arising from the National Mortgage Acquisition and the
Madison Mortgage Acquisition amounted to $4.5 million and $4.6 million,
respectively, and is being amortized on a straight-line basis over 15 years.
Pursuant to the terms of the asset purchase agreement associated with the
National Mortgage Acquisition, the Bank was contingently liable for certain
additional payments on specified dates through the third quarter of 1997 based
on the attainment of certain loan origination targets related to the purchased
assets. Such contingent payments amounted to $2.2 million and were charged to
goodwill.
For additional information concerning the above acquisitions, see Note 26.
On January 13, 1995, Anchor Bancorp, Inc. ("Anchor Bancorp") and its
wholly-owned savings bank subsidiary, Anchor Savings Bank FSB ("Anchor Savings"
and, together with Anchor Bancorp, "Anchor"), were merged with and into the
Holding Company and the Bank, respectively, which were the surviving entities.
(These mergers are collectively referred to as the "Anchor Merger.") The Anchor
Merger was accounted for as a pooling-of-interests. Accordingly, the financial
information of the Company for periods prior to the Anchor Merger was restated
to include Anchor. Upon consummation of the Anchor Merger, 41,760,503
newly-issued shares of Common Stock were exchanged for all of the shares of
common stock of Anchor Bancorp outstanding at the time of the Anchor Merger,
based on an exchange ratio of 1.77 shares of Common Stock for each share of
Anchor Bancorp common stock (the "Anchor Exchange Ratio"). In addition,
56,842,168 newly-issued shares of Common Stock were exchanged on a one-for-one
basis for all the shares of Common Stock outstanding at the time of the Anchor
Merger.
In connection with the Anchor Merger, the Company established restructuring
liabilities aggregating $65.5 million, of which $24.6 million was for personnel
costs, $21.8 million for facilities, equipment and systems costs, and $19.1
million for transaction fees and other costs. Of the total restructuring
liabilities, $0.8 million, $6.4 million and $58.3 million were charged to income
during 1996, 1995 and 1994, respectively. The remaining restructuring
liabilities at December 31, 1997 amounted to $3.2 million and represented the
net present value of future lease obligations associated with facilities no
longer being utilized in the Company's operations. Cash payments associated with
the personnel-related restructuring liability were substantially completed by
the end of 1996. Cash payments for transaction fees and other costs were
completed by the end of 1995. The Company also incurred expenses of $2.7 million
in 1996 and $8.9 million in 1995 associated with the Anchor Merger that were not
charged to the restructuring liability. Such expenses, as well as the provisions
for the restructuring liabilities, are reflected in the accompanying
Consolidated Statements of Income under the caption "Restructuring and related
expense."
NOTE 3 -- MONEY MARKET INVESTMENTS
Money market investments were comprised of the following at December 31:
<TABLE>
<CAPTION>
1997 1996
-------- -------
(IN THOUSANDS)
<S> <C> <C>
Federal funds........................................... $150,000 $10,000
Interest-earning deposits in banks...................... 5,095 5,627
Securities purchased under agreements to resell......... 2,063 9,550
Other................................................... -- 587
-------- -------
Total money market investments.......................... $157,158 $25,764
======== =======
</TABLE>
F-12
<PAGE> 63
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
It is the Company's policy to take possession of securities purchased under
agreements to resell. The average balance of securities purchased under
agreements to resell during 1997 and 1996 was $34.5 million and $8.2 million,
respectively. The maximum month-end balance of securities purchased under
agreements to resell was $284.3 million during 1997 and $28.7 million during
1996.
NOTE 4 -- SECURITIES
The amortized cost and estimated fair value of securities available for
sale and securities held to maturity, as well as related gross unrealized gains
and losses, are summarized as follows at December 31:
<TABLE>
<CAPTION>
1997 1996
------------------------------------------- -------------------------------------------
GROSS UNREALIZED GROSS UNREALIZED
AMORTIZED ----------------- ESTIMATED AMORTIZED ----------------- ESTIMATED
COST GAINS LOSSES FAIR VALUE COST GAINS LOSSES FAIR VALUE
---------- ------- ------- ---------- ---------- ------- ------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SECURITIES AVAILABLE FOR SALE
MBS:
Pass-through securities:
Privately-issued................. $2,875,982 $ 8,617 $33,592 $2,851,007 $1,232,276 $13,399 $17,411 $1,228,264
Federal National Mortgage
Association ("FNMA")........... 395,756 6,750 410 402,096 916,452 2,936 42 919,346
Federal Home Loan Mortgage
Corporation ("FHLMC").......... 178,538 2,809 249 181,098 165,540 1,974 441 167,073
Government National Mortgage
Association.................... 15,277 252 12 15,517 185,166 1,841 1 187,006
Collateralized mortgage
obligations:
Privately-issued................. 1,335,225 2,581 1,116 1,336,690 -- -- -- --
FNMA............................. 91,349 87 -- 91,436 -- -- -- --
FHLMC............................ 23,863 57 -- 23,920 -- -- -- --
Interest-only...................... 1,555 -- 426 1,129 1,850 -- 559 1,291
---------- ------- ------- ---------- ---------- ------- ------- ----------
Total MBS.................... 4,917,545 21,153 35,805 4,902,893 2,501,284 20,150 18,454 2,502,980
---------- ------- ------- ---------- ---------- ------- ------- ----------
Other debt securities:
U. S. government and federal
agency........................... 8,552 86 -- 8,638 18,117 -- 148 17,969
State and municipal................ 36,997 112 818 36,291 44,322 86 1,101 43,307
Domestic corporate................. 34,844 575 60 35,359 15,467 2 141 15,328
Other.............................. 500 -- -- 500 -- -- -- --
---------- ------- ------- ---------- ---------- ------- ------- ----------
Total other debt
securities................. 80,893 773 878 80,788 77,906 88 1,390 76,604
---------- ------- ------- ---------- ---------- ------- ------- ----------
Equity securities.................... 9,243 133 753 8,623 10,343 107 462 9,988
---------- ------- ------- ---------- ---------- ------- ------- ----------
Total securities available for
sale............................... $5,007,681 $22,059 $37,436 $4,992,304 $2,589,533 $20,345 $20,306 $2,589,572
========== ======= ======= ========== ========== ======= ======= ==========
SECURITIES HELD TO MATURITY
MBS:
Pass-through securities:
Privately-issued................. $ -- $ -- $ -- $ -- $2,520,013 $ 2,033 $57,206 $2,464,840
FHLMC............................ -- -- -- -- 44,711 231 -- 44,942
Collateralized mortgage
obligations:
Privately-issued................. -- -- -- -- 1,670,983 -- 26,863 1,644,120
FNMA............................. -- -- -- -- 94,412 -- 763 93,649
FHLMC............................ -- -- -- -- 30,089 -- 441 29,648
---------- ------- ------- ---------- ---------- ------- ------- ----------
Total MBS.................... -- -- -- -- 4,360,208 2,264 85,273 4,277,199
---------- ------- ------- ---------- ---------- ------- ------- ----------
Other debt securities................ -- -- -- -- 3,763 -- 1,025 2,738
---------- ------- ------- ---------- ---------- ------- ------- ----------
Total securities held to maturity.... $ -- $ -- $ -- $ -- $4,363,971 $ 2,264 $86,298 $4,279,937
========== ======= ======= ========== ========== ======= ======= ==========
</TABLE>
F-13
<PAGE> 64
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
At December 31, 1997, $3.8 billion of securities available for sale were
pledged as collateral for borrowed funds and other purposes.
The following table sets forth, at December 31, 1997, the amortized cost,
estimated fair value and weighted average yield of debt securities available for
sale by period to contractual maturity.
<TABLE>
<CAPTION>
WEIGHTED
AMORTIZED ESTIMATED AVERAGE
COST FAIR VALUE YIELD
---------- ---------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
MBS:
Due in one year or less................................ $ 2,185 $ 2,180 6.41%
Due after one through five years....................... 19,941 19,996 6.88
Due after five through ten years....................... 242,898 242,850 6.44
Due after ten years.................................... 4,652,521 4,637,867 7.08
---------- ----------
Total MBS...................................... 4,917,545 4,902,893 7.05
---------- ----------
Other debt securities:
Due in one year or less................................ 5,886 5,890 6.46
Due after one through five years....................... 10,183 10,273 6.64
Due after five through ten years....................... 13,281 13,283 6.49
Due after ten years.................................... 51,543 51,342 7.52
---------- ----------
Total other debt securities.................... 80,893 80,788 7.16
---------- ----------
Total debt securities available for sale................. $4,998,438 $4,983,681 7.05
========== ==========
</TABLE>
Information concerning sales of securities available for sale and
securities held to maturity is summarized below for the year ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Securities available for sale:
Proceeds from sales................... $1,720,817 $2,290,279 $ 25,279
Gross realized gains.................. 20,800 8,589 6
Gross realized losses................. 11,890 15,554 13
Securities held to maturity:
Proceeds from sales................... -- -- 187,342
Gross realized losses................. -- -- 717
</TABLE>
During December 1997, the Company, primarily as a result of a reassessment
of its asset/liability management strategy, transferred its entire portfolio of
securities held to maturity to its portfolio of securities available for sale.
At the date of transfer, the securities held to maturity portfolio had an
amortized cost of $3.6 billion and net unrealized pretax losses of approximately
$51 million. In connection with this transfer, the Company identified certain of
the transferred MBS that it expects will be sold during 1998. At December 31,
1997, these MBS had an amortized cost of $1.4 billion and unrealized pretax
gains of $2.2 million. During December 1997, the Company had recognized a pretax
loss of $25.2 million associated with the write-down to estimated fair value of
those transferred MBS with unrealized losses expected to be sold in 1998.
As permitted under guidelines issued in a special report by the Financial
Accounting Standards Board in November 1995, the Company, in December 1995,
transferred securities with an amortized cost of $3.6 billion from the held to
maturity portfolio to the available for sale portfolio. Net unrealized pretax
losses at the date of transfer of the securities amounted to $29.4 million. In
connection with a decision made at the time of transfer to sell approximately $1
billion of the transferred securities, the Company, during December 1995, wrote-
down those securities with unrealized losses to estimated fair value and
recognized a pretax loss of $23.6 million. The sales of the securities
designated for sale were consummated during the first quarter of
F-14
<PAGE> 65
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1996. In addition, during 1995, the Company, for interest rate risk-management
purposes following the Anchor Merger, transferred securities with an amortized
cost of $12.9 million and an estimated fair value of $12.5 million from the held
to maturity portfolio to the available for sale portfolio and sold securities
held to maturity with an amortized cost of $188.1 million and realized a loss of
$0.7 million.
During 1997, 1996 and 1995, the Company recognized other than temporary
impairment in value losses on certain privately-issued MBS of $1.5 million, $4.7
million and $3.3 million, respectively. These losses were necessitated by the
depletion of the underlying credit enhancements as a result of losses incurred
on the loans underlying the securities, coupled with the Company's projections
of estimated future losses on the securities.
NOTE 5 -- LOANS RECEIVABLE, NET
A summary of loans receivable, net, is as follows at December 31:
<TABLE>
<CAPTION>
1997 1996
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
Residential real estate loans:
Principal balances:
Permanent.............................................. $ 9,779,559 $ 8,016,699
Construction (net of loans in process of $725 in 1997
and $2,428 in 1996)................................... 2,453 3,697
----------- -----------
Total principal balances.......................... 9,782,012 8,020,396
Net deferred yield adjustments............................ 66,581 54,509
----------- -----------
Total residential real estate loans............... 9,848,593 8,074,905
----------- -----------
Commercial real estate loans:
Principal balances:
Permanent (net of loans in process of $2,000 in
1997)................................................. 2,214,620 1,856,563
Construction (net of loans in process of $65,087 in
1997 and $31,224 in 1996)............................. 57,152 33,046
----------- -----------
Total principal balances.......................... 2,271,772 1,889,609
Net deferred yield adjustments............................ (8,749) (3,876)
----------- -----------
Total commercial real estate loans................ 2,263,023 1,885,733
----------- -----------
Consumer loans:
Principal balances:
Home equity............................................ 617,041 527,442
Manufactured home...................................... 44,432 60,965
Secured by deposit accounts............................ 40,992 39,684
Automobile............................................. 6,298 43,661
Other.................................................. 46,400 51,923
----------- -----------
Total principal balances.......................... 755,163 723,675
Net deferred yield adjustments............................ 18,654 10,606
----------- -----------
Total consumer loans.............................. 773,817 734,281
----------- -----------
Business loans:
Principal balances........................................ 99,110 43,138
Net deferred yield adjustments............................ (36) --
----------- -----------
Total business loans.............................. 99,074 43,138
----------- -----------
Allowance for loan losses................................... (104,718) (106,495)
----------- -----------
Total loans receivable, net................................. $12,879,789 $10,631,562
=========== ===========
</TABLE>
F-15
<PAGE> 66
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Loans receivable in the amount of $4.1 billion were pledged as collateral
for borrowed funds at December 31, 1997.
At December 31, 1997, the Company's residential real estate loans
receivable were principally concentrated in the states of New York (34.2%),
Connecticut (9.4%), New Jersey (8.7%), and California (8.0%). At that date, the
Company's commercial real estate loans receivable were principally concentrated
in the states of New York (84.5%) and New Jersey (6.1%).
Activity in the allowance for loan losses is summarized as follows for the
year ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance at beginning of year............... $106,495 $128,295 $170,383
Allowance acquired in the BFS
Acquisition.............................. 13,249 -- --
Provision charged to operations(1)......... 49,000 41,000 39,650
Charge-offs(1)............................. (71,608) (71,296) (92,088)
Recoveries................................. 7,582 8,496 10,350
-------- -------- --------
Net charge-offs....................... (64,026) (62,800) (81,738)
-------- -------- --------
Balance at end of year..................... $104,718 $106,495 $128,295
======== ======== ========
</TABLE>
- ---------------
(1) For 1997, the provision charged to operations and charge-offs included $14.0
million and $35.8 million, respectively, associated with bulk sales of
approximately $113 million of non-accrual residential real estate loans
receivable in May 1997.
NOTE 6 -- NON-PERFORMING ASSETS, LOANS MODIFIED IN A TDR, AND IMPAIRED LOANS
Non-performing assets were comprised of the following at December 31:
<TABLE>
<CAPTION>
1997 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Non-accrual loans:
Residential real estate.............................. $ 90,998 $163,791
Commercial real estate............................... 21,760 21,047
Consumer............................................. 5,719 6,645
Business............................................. 511 107
-------- --------
Total non-accrual loans...................... 118,988 191,590
-------- --------
ORE, net:
Residential real estate.............................. 20,228 36,182
Commercial real estate............................... 9,255 20,367
Allowance for losses................................. (1,722) (3,294)
-------- --------
Total ORE, net............................... 27,761 53,255
-------- --------
Total non-performing assets............................ $146,749 $244,845
======== ========
</TABLE>
F-16
<PAGE> 67
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Activity in the allowance for losses on ORE is summarized as follows for
the year ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance at beginning of year................. $ 3,294 $ 3,070 $ 7,247
Provision charged to operations.............. 1,514 4,799 6,879
Charge-offs.................................. (4,272) (5,572) (12,270)
Recoveries................................... 1,186 997 1,214
------- ------- --------
Balance at end of year....................... $ 1,722 $ 3,294 $ 3,070
======= ======= ========
</TABLE>
The following table sets forth loans that have been modified in a TDR,
excluding those classified as non-accrual loans, at December 31:
<TABLE>
<CAPTION>
1997 1996
------- --------
(IN THOUSANDS)
<S> <C> <C>
Residential real estate loans........................... $37,532 $ 42,684
Commercial real estate loans............................ 46,677 170,323
------- --------
Total loans modified in a TDR........................... $84,209 $213,007
======= ========
</TABLE>
The amount of interest income that would have been recorded on non-accrual
loans and loans modified in a TDR, if such loans had been current in accordance
with their original terms, was $18.7 million, $34.1 million and $40.2 million
for 1997, 1996 and 1995, respectively. The amount of interest income that was
recorded on these loans was $11.5 million, $18.9 million and $20.2 million for
1997, 1996 and 1995, respectively.
The following table sets forth information regarding the Company's impaired
loans at December 31:
<TABLE>
<CAPTION>
1997 1996
----------------------------------- -----------------------------------
RELATED RELATED
ALLOWANCE ALLOWANCE
RECORDED FOR LOAN NET RECORDED FOR LOAN NET
INVESTMENT LOSSES INVESTMENT INVESTMENT LOSSES INVESTMENT
---------- --------- ---------- ---------- --------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Residential real estate loans:
With a related allowance..... $ 2,403 $ (150) $ 2,253 $ 3,290 $ (206) $ 3,084
Without a related
allowance................. 4,835 -- 4,835 11,322 -- 11,322
------- ------- ------- ------- ------- -------
Total residential
real estate
loans.............. 7,238 (150) 7,088 14,612 (206) 14,406
------- ------- ------- ------- ------- -------
Commercial real estate loans:
With a related allowance..... 26,275 (2,739) 23,536 39,388 (3,919) 35,469
Without a related
allowance................. 1,585 -- 1,585 8,752 -- 8,752
------- ------- ------- ------- ------- -------
Total commercial real
estate loans....... 27,860 (2,739) 25,121 48,140 (3,919) 44,221
------- ------- ------- ------- ------- -------
Business loans:
With a related allowance..... 511 (220) 291 107 (53) 54
------- ------- ------- ------- ------- -------
Total impaired loans........... $35,609 $(3,109) $32,500 $62,859 $(4,178) $58,681
======= ======= ======= ======= ======= =======
</TABLE>
The Company's average recorded investment in impaired loans for 1997, 1996
and 1995 was approximately $46.7 million, $76.8 million and $83.6 million,
respectively. Interest income recognized on such loans for 1997, 1996 and 1995
amounted to approximately $4.2 million, $3.9 million and $4.6 million,
respectively.
F-17
<PAGE> 68
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 7 -- PREMISES AND EQUIPMENT, NET
Premises and equipment, net, consisted of the following at December 31:
<TABLE>
<CAPTION>
1997 1996
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Land................................................. $ 12,368 $ 7,594
Buildings............................................ 84,950 64,941
Leasehold improvements............................... 54,250 46,683
Furniture, fixtures and equipment.................... 126,489 95,043
--------- ---------
Total cost................................. 278,057 214,261
Accumulated depreciation and amortization............ (127,252) (110,720)
--------- ---------
Total premises and equipment, net.................... $ 150,805 $ 103,541
========= =========
</TABLE>
Depreciation and amortization of premises and equipment charged to expense
amounted to $20.2 million, $16.7 million and $17.9 million for 1997, 1996 and
1995, respectively.
NOTE 8 -- LOAN SERVICING
At December 31, 1997, 1996 and 1995, the Company owned the servicing rights
to loans owned by others with principal balances of $22.0 billion, $11.0 billion
and $9.5 billion, respectively. Such loans are not included in the Company's
Consolidated Statements of Financial Condition.
During December 1997, the Company sold the servicing rights to loans owned
by others with principal balances of approximately $3 billion. The Company is
subservicing these loans for a fee pending the transfer of the servicing
responsibility to the purchaser, which is expected to be consummated by no later
than August 1998. The carrying value of the related mortgage servicing assets at
the date of sale was $56.5 million.
The estimated fair value of the Company's mortgage servicing assets was
approximately $396 million at December 31, 1997, as compared with a carrying
value at that date of $341.9 million. Mortgage servicing assets capitalized
during 1997 amounted to $278.5 million, including $180.9 million acquired in
connection with the NAMC Acquisition. During 1996 and 1995, mortgage servicing
assets of $48.0 million and $17.4 million, respectively, were capitalized.
At December 31, 1997, the Company was not required to maintain a valuation
allowance for impairment of its mortgage servicing assets. The balance in the
valuation allowance for impairment of mortgage servicing assets at December 31,
1996, and the activity in this allowance during 1997 and 1996, was not material.
The Company was not required to maintain a valuation allowance for impairment of
mortgage servicing assets during 1995.
NOTE 9 -- DEPOSITS
The following table sets forth the composition of deposits at December 31:
<TABLE>
<CAPTION>
1997 1996
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
Demand............................................ $ 1,572,797 $ 1,130,863
Savings........................................... 2,431,812 2,460,367
Money market...................................... 1,971,081 2,007,448
Time.............................................. 7,871,585 7,258,061
----------- -----------
Total deposits.................................... $13,847,275 $12,856,739
=========== ===========
</TABLE>
F-18
<PAGE> 69
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Scheduled maturities of time deposits at December 31, 1997 were as follows:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
INTEREST
AMOUNT RATE
---------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Year ending December 31:
1998................................................ $6,783,767 5.45%
1999................................................ 722,424 5.65
2000................................................ 198,548 5.78
2001................................................ 101,380 5.58
2002................................................ 52,234 5.29
Thereafter.......................................... 13,232 5.77
----------
Total time deposits................................... $7,871,585 5.48
==========
</TABLE>
The following table sets forth the scheduled maturities of time deposits
with balances of $100,000 or more at December 31, 1997.
<TABLE>
<CAPTION>
AMOUNT
--------------
(IN THOUSANDS)
<S> <C>
Maturing in:
Three months or less...................................... $ 249,039
Over three through six months............................. 249,854
Over six months through one year.......................... 376,363
Over one year............................................. 162,256
----------
Total....................................................... $1,037,512
==========
</TABLE>
At December 31, 1996, time deposits with balances of $100,000 or more
amounted to $663.9 million.
NOTE 10 -- SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
Information concerning securities sold under agreements to repurchase is
summarized in the table below at or for the year ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Balance at year end:
Repurchase liability......................... $2,980,781 $3,557,145 $1,632,453
Unamortized premiums on interest rate caps... (5,007) (6,911) --
---------- ---------- ----------
Balance at year end............................ $2,975,774 $3,550,234 $1,632,453
========== ========== ==========
Average balance during the year................ $3,628,681 $2,672,859 $1,398,041
Maximum month-end balance during the year...... 4,265,905 3,629,357 1,824,363
Accrued interest payable at year end(1)........ 21,049 15,153 5,343
Weighted average interest rate at year end..... 5.85% 5.64% 5.82%
Weighted average interest rate during the
year......................................... 5.70 5.52 6.03
MBS pledged as collateral at year end:
Carrying value............................... $3,119,359 $3,797,628 $1,682,301
Estimated fair value......................... 3,119,359 3,744,227 1,670,958
</TABLE>
- ---------------
(1) Included under the caption "Other liabilities" in the Consolidated
Statements of Financial Condition.
All securities sold under agreements to repurchase at December 31, 1997
matured during January 1998.
F-19
<PAGE> 70
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The MBS pledged as collateral for securities sold under agreements to
repurchase were delivered to the broker-dealers who arranged the transactions.
The broker-dealers may have loaned the securities to other parties in the normal
course of their operations and agreed to resell to the Company the identical MBS
sold.
NOTE 11 -- FEDERAL HOME LOAN BANK OF NEW YORK ("FHLBNY") ADVANCES
Information concerning FHLBNY advances is summarized in the table below at
or for the year ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Balance at year end............................ $2,786,751 $ 925,139 $4,602,983
Average balance during the year................ 1,539,079 3,081,743 4,963,392
Maximum month-end balance during the year...... 2,837,646 4,652,965 5,921,644
Weighted average interest rate at year end..... 6.05% 5.76% 6.07%
Weighted average interest rate during the
year......................................... 5.93 5.82 6.11
</TABLE>
At December 31, 1997, FHLBNY advances were collateralized by the Bank's
investment in FHLBNY stock and by certain MBS and residential real estate loans
receivable.
The scheduled maturities of FHLBNY advances for the five years subsequent
to December 31, 1997 were $2.6 billion in 1998, $125.0 million in 1999, $10.0
million in 2000, $10.1 million in 2001, and $20.0 million in 2002.
NOTE 12 -- SENIOR NOTES
Senior notes, which are unsecured general obligations of the Holding
Company, were comprised of the following at December 31:
<TABLE>
<CAPTION>
1997 1996
-------------------- --------------------
PAR CARRYING PAR CARRYING
VALUE VALUE VALUE VALUE
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Due July 2003; 8.9375% stated
interest rate................. $ 44,370 $ 43,594 $100,000 $ 98,789
Due November 2005; 10.50% stated
interest rate................. 100,000 98,881 100,000 98,795
-------- -------- -------- --------
Total senior notes.............. $144,370 $142,475 $200,000 $197,584
======== ======== ======== ========
</TABLE>
The 8.9375% senior notes due July 2003 (the "8.9375% Senior Notes"),
interest on which is payable semi-annually, were issued in 1993 and are
redeemable at the option of the Holding Company, in whole or in part, at any
time on or after July 9, 1998 at specified redemption prices. During November
1997, the Holding Company purchased $55.6 million in principal amount of the
8.9375% Senior Notes. In connection therewith, an extraordinary loss of $1.5
million, net of an income tax benefit of $0.9 million, was recognized.
The 10.50% senior notes due November 2005 (the "10.50% Senior Notes"),
interest on which is payable quarterly, were issued in 1994. The 10.50% Senior
Notes are redeemable at the option of the Holding Company, in whole or in part,
at any time on or after November 15, 1998 at specified redemption prices.
The 8.9375% Senior Notes and the 10.50% Senior Notes were each issued
pursuant to an indenture which includes covenants with respect to limitations
on, among other things: (i) dividends and other distributions; (ii) funded
indebtedness, as defined; and (iii) mergers, consolidations and sales of assets
and subsidiary stock.
F-20
<PAGE> 71
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Under the terms of the indenture governing the 8.9375% Senior Notes, the
Holding Company is prohibited from declaring or paying any dividends on, or
purchasing, redeeming or otherwise acquiring or retiring for value any of its
capital stock, or returning any capital to holders of its capital stock (each a
"Distribution"), except that the Holding Company may declare and pay dividends
in capital stock of the Holding Company and make a Distribution in cash or
property (other than the Holding Company's capital stock) if the amount of such
Distribution, together with the amount of all previous Distributions, does not
exceed in the aggregate the sum of (i) $10 million, plus (ii) 75% of the
Company's consolidated net income for each fiscal quarter after June 30, 1993
(but reduced by 100% of the net losses incurred in any quarter), plus (iii) 100%
of the net proceeds received by the Holding Company upon issuance of its capital
stock subsequent to September 1, 1993.
Pursuant to the terms of the indenture governing the 10.50% Senior Notes,
the Holding Company is subject to a limitation on the payment of dividends or
other distributions on the Common Stock, as well as purchases, redemptions and
acquisitions of such stock and payments in respect of subordinated debt of the
Holding Company ("Restricted Distributions") until such time as the 10.50%
Senior Notes have been rated "investment grade" for a period of three calendar
months. In general, the Holding Company is not permitted to make Restricted
Distributions if, or to the extent that, at such time or after giving effect
thereto, (a) the Holding Company is in default with respect to the 10.50% Senior
Notes, (b) the Bank fails to meet any of its OTS capital requirements or (c) the
aggregate amount of dividends or other distributions on the Common Stock
subsequent to December 17, 1994 exceeds the sum of (i) $5 million, plus (ii) 50%
of the Holding Company's consolidated net income from that date (but reduced by
100% of the losses incurred during that period), plus (iii) an amount equal to
the net proceeds received by the Holding Company from any sales of its capital
stock from that date.
NOTE 13 -- GUARANTEED PREFERRED BENEFICIAL INTERESTS IN HOLDING COMPANY'S JUNIOR
SUBORDINATED DEFERRABLE INTEREST DEBENTURES
On May 6, 1997, Dime Capital Trust I ("Dime Capital"), a Delaware statutory
business trust that was formed by the Holding Company, issued $200.0 million
aggregate liquidation amount of 9.33% Capital Securities, Series A (the "Series
A Capital Securities"), representing preferred beneficial interests in Dime
Capital, in an underwritten public offering and $6.2 million aggregate
liquidation amount of common beneficial interests represented by its common
securities to the Holding Company (the "Common Securities," and together with
the Series A Capital Securities, the "Dime Capital Securities"). In connection
therewith, Dime Capital purchased $206.2 million aggregate principal amount of
9.33% Junior Subordinated Deferrable Interest Debentures, Series A, due May 6,
2027 (the "Series A Subordinated Debentures") issued by the Holding Company,
which amount is equal to the aggregate liquidation amount of the Dime Capital
Securities. Dime Capital is wholly-owned by the Holding Company and exists for
the sole purpose of issuing the Dime Capital Securities and investing the
proceeds thereof in the Series A Subordinated Debentures. The Series A
Subordinated Debentures, which are, and will be, the sole assets of Dime
Capital, are subordinate and junior in right of payment to all present and
future senior indebtedness of the Holding Company. The Holding Company, through:
(i) a guarantee agreement, between the Holding Company and The Chase Manhattan
Bank ("Chase"), as trustee; (ii) a trust agreement, among the Holding Company,
as depositor, Chase, as property trustee, Chase Manhattan Bank Delaware, as
Delaware trustee, certain employees or officers of the Holding Company, as
administrative trustees, and the holders from time to time of the Dime Capital
Securities; (iii) an expense agreement, between the Holding Company and Dime
Capital; (iv) the Series A Subordinated Debentures; and (v) an indenture
regarding the Series A Subordinated Debentures, between the Holding Company and
Chase, as trustee, when taken in the aggregate, has fully and unconditionally
guaranteed all of Dime Capital's obligations under the Series A Capital
Securities. The Series A Capital Securities are subject to mandatory redemption,
in whole or in part, upon the repayment of the Series A Subordinated Debentures
at their stated maturity or earlier redemption. Distributions on the Series A
Capital
F-21
<PAGE> 72
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Securities are payable semi-annually and are reflected in the Company's
Consolidated Statements of Income under the caption "Interest expense on
borrowed funds."
NOTE 14 -- OTHER BORROWED FUNDS
Other borrowed funds consisted of the following at December 31:
<TABLE>
<CAPTION>
1997 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Collateralized Real Yield Securities ("Reals") due 2008;
stated interest rates of 5.17% (1997) and 5.96% (1996);
unamortized discounts of $561 (1997) and $614 (1996)...... $ 77,439 $ 77,386
Medium term notes:
Due 1998; stated interest rates of 5.78% to 5.84%;
unamortized discounts of $18........................... 24,982 --
Due 2000; stated interest rates of 6.27% to 6.53%;
unamortized premiums of $47............................ 25,047 --
Due 2003; stated interest rates of 7.29% to 7.34%;
unamortized premiums of $1,123......................... 27,123 --
-------- --------
Total medium term notes........................... 77,152 --
-------- --------
Bonds, loans and preferred stocks transferred in put
transactions due 1998 through 2016; stated interest rates
of 4.08% to 8.40%......................................... 44,159 55,110
Other due 1998 through 2020; stated interest rates of 5.50%
to 8.25% (1997) and 5.37% to 6.83% (1996)................. 19,425 9,738
-------- --------
Total other borrowed funds.................................. $218,175 $142,234
======== ========
</TABLE>
The scheduled maturities of borrowed funds included in the above table for
the five years subsequent to December 31, 1997 were $31.3 million in 1998, $2.8
million in 1999, $29.1 million in 2000, $5.3 million in 2001, and $2.2 million
in 2002.
The Reals, which were issued in August 1988, are not redeemable prior to
their maturity; however, the holders of the Reals have the option of electing
early repayment, at par value, in August 1998 or 2003. Interest on the Reals is
payable quarterly at a rate reset quarterly based on the sum of 3.00% plus the
percentage change, if any, in the Consumer Price Index for all Urban Consumers
during the preceding twelve-month period. At December 31, 1997, the Reals were
secured by certain MBS.
The medium term notes, all of which were assumed in connection with the
NAMC Acquisition, are unsecured. The terms of the medium term notes provide for
semi-annual interest payments and a single principal payment at maturity.
From 1983 to 1985, the Bank had entered into various borrowing agreements
under which it transferred certain tax-exempt bonds, tax-exempt loans and
preferred stocks to certain unit investment trusts and others, accompanied by
put options. During the terms of the agreements, the holders are entitled to
return the assets to the Bank under various circumstances at specified prices.
The underlying bonds, loans and preferred stocks transferred in the put
transactions had aggregate carrying values of approximately $30.0 million, $8.9
million and $5.3 million, respectively, at December 31, 1997. At that date, the
borrowing agreements were further collateralized by designated MBS.
F-22
<PAGE> 73
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 15 -- STOCKHOLDERS' EQUITY
Common and Treasury Stock
The Holding Company is authorized to issue 200 million shares of Common
Stock, par value $0.01 per share. At December 31, 1997, 9.7 million shares of
Common Stock were reserved for future issuance under the Company's stock-based
employee benefit plans.
The following table sets forth the number of shares of Common Stock newly
issued, purchased for treasury and issued from treasury during the years
indicated.
<TABLE>
<CAPTION>
COMMON SHARES
----------------------------------------
HELD IN
ISSUED TREASURY OUTSTANDING
----------- ---------- -----------
<S> <C> <C> <C>
Balance at December 31, 1994......................... 98,601,115 -- 98,601,115
Issued under employee benefit plans.................. 1,104,616 -- 1,104,616
----------- ---------- -----------
Balance at December 31, 1995.................... 99,705,731 -- 99,705,731
Purchased for treasury............................... -- (5,025,900) (5,025,900)
Issued upon exercise of stock warrant................ 8,407,500 -- 8,407,500
Issued under employee benefit plans.................. 148,985 1,507,603 1,656,588
----------- ---------- -----------
Balance at December 31, 1996.................... 108,262,216 (3,518,297) 104,743,919
Purchased for treasury............................... -- (9,287,100) (9,287,100)
Issued in connection with the NAMC Acquisition....... 11,958,077 7,479,664 19,437,741
Issued under employee benefit plans.................. 36,166 1,427,601 1,463,767
----------- ---------- -----------
Balance at December 31, 1997......................... 120,256,459 (3,898,132) 116,358,327
=========== ========== ===========
</TABLE>
In May 1996, the FDIC exercised its warrant to acquire 8,407,500 shares of
Common Stock at $0.01 per share (the "FDIC Warrant") and sold the underlying
shares in a secondary public offering. This warrant had been issued originally
in July 1993 in accordance with the terms of an agreement between Anchor Bancorp
and the FDIC. Pursuant to this agreement, Anchor Bancorp exchanged $157.0
million of its Class A cumulative preferred stock for $71.0 million of its
newly-issued 8.9375% Senior Notes and a warrant to acquire, at an exercise price
of $0.01 per share, 4,750,000 shares of Anchor Bancorp's common stock (which was
converted to a warrant to acquire 8,407,500 shares of Common Stock at $0.01 per
share upon consummation of the Anchor Merger). In this exchange, the FDIC also
relinquished its claim to $47.2 million of accumulated but undeclared and unpaid
dividends with respect to the Class A cumulative preferred stock.
The Holding Company repurchased 14.3 million shares of Common Stock for
treasury during 1996 and 1997 in connection with repurchase programs announced
in January 1996, December 1996 and June 1997, all of which have been completed.
During the first quarter of 1998, the Holding Company repurchased an additional
3.0 million shares of Common Stock, completing a program announced in December
1997. No repurchases of Common Stock were made under this program during 1997.
Dividend Restrictions
The Holding Company's ability to pay dividends on the Common Stock is
limited by restrictions imposed by Delaware law and, as discussed in Note 12,
the indentures associated with the 8.9375% Senior Notes and the 10.50% Senior
Notes. In general, dividends may be paid out of the Holding Company's surplus,
as defined by Delaware law, or in the absence of such surplus, out of its net
profits for the current and/or immediately preceding fiscal year.
F-23
<PAGE> 74
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The funding of any future dividend payments on the Common Stock by the
Holding Company may be dependent on dividends it receives from the Bank. The
ability of the Bank to pay dividends to the Holding Company is subject to
federal regulations and income tax consequences.
Generally, the Bank may not make a capital distribution, which includes
cash dividends, at any time when, after such distribution, its regulatory
capital would be below the regulatory capital requirements of the OTS or below
the standards established by the prompt corrective action ("PCA") provisions of
the Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA") for
an institution to be deemed adequately capitalized.
Under OTS regulations, a savings institution that exceeds its fully
phased-in capital requirements, both before and after a proposed distribution,
and that has not been advised by the OTS that it is in need of more than normal
supervision, may, after prior notice to, but without the approval of the OTS,
make capital distributions during a calendar year up to the higher of (i) 100%
of its net income to date during the calendar year plus the amount that would
reduce by one-half its surplus capital ratio (the percentage by which an
institution's ratio of total capital to assets exceeds the ratio of its fully
phased-in capital to assets) at the beginning of the calendar year or (ii) 75%
of its net income over the most recent four-quarter period.
Upon its conversion from mutual to stock form, the Bank was required to
establish a liquidation account for the benefit of certain account holders who
continued to maintain their savings accounts with the Bank after the conversion,
in an amount equal to its retained income prior to conversion. The liquidation
account is reduced annually in proportion to the reduction of eligible savings
account balances. Anchor Savings was similarly required to establish a
liquidation account upon its conversion from mutual to stock form. The
liquidation accounts were not changed in any respect by the Anchor Merger or the
formation of the Holding Company or Anchor Bancorp. The Bank may not declare or
pay a cash dividend on, or repurchase any of, its capital stock if the effect
thereof would be to cause its regulatory capital to be reduced below the minimum
amount required for the liquidation account.
In addition, to the extent that distributions by the Bank to the Holding
Company exceed the Bank's accumulated earnings and profits and current earnings
and profits (as computed for federal income tax purposes), such amounts may be
treated for tax purposes as distributions of previously accumulated preferential
bad debt deductions.
Stockholder Protection Rights Plan
On October 20, 1995, the board of directors of the Holding Company (the
"Board") adopted a Stockholder Protection Rights Plan (the "Rights Plan"). Under
the Rights Plan, which expires in November 2005, the Board declared a dividend
of one right on each outstanding share of Common Stock, which was paid on
November 6, 1995 to stockholders of record on that date (the "Rights"). Until it
is announced that a person or group has acquired 20% or more of the outstanding
Common Stock (an "Acquiring Person") or has commenced a tender offer that could
result in their owning 20% or more of Common Stock, the Rights will be evidenced
solely by the Holding Company's common stock certificates, will automatically
trade with the Common Stock and will not be exercisable. Following any such
announcement, separate Rights would be distributed, with each Right entitling
its owner to purchase participating preferred stock of the Holding Company
having economic and voting terms similar to those of one share of Common Stock
for an exercise price of $50.
Upon announcement that any person or group has become an Acquiring Person
and unless the Board acts to redeem the Rights, then ten business days
thereafter (or such earlier or later date, not beyond 30 days, as the Board may
decide) (the "Flip-in Date"), each Right (other than Rights beneficially owned
by any Acquiring Person or transferee thereof, which become void) will entitle
the holder to purchase, for the $50 exercise price, a number of shares of Common
Stock having a market value of $100. In addition, if, after an
F-24
<PAGE> 75
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Acquiring Person gains control of the Board, the Holding Company is involved in
a merger or sells more than 50% of its assets or assets generating more than 50%
of its operating income or cash flow, or has entered into an agreement to do any
of the foregoing (or an Acquiring Person is to receive different treatment than
all other stockholders), each Right will entitle its holder to purchase, for the
$50 exercise price, a number of shares of common stock of the Acquiring Person
having a market value of $100. If any person or group acquires between 20% and
50% of the outstanding Common Stock the Board may, at its option, exchange one
share of such Common Stock for each Right. The Rights may also be redeemed by
the Board for $0.01 per Right prior to the Flip-in Date.
NOTE 16 -- REGULATORY CAPITAL
The Bank is subject to various regulatory capital requirements administered
by the federal banking agencies. Failure to meet minimum capital requirements
can initiate certain mandatory -- and possibly additional
discretionary -- actions by regulators that, if undertaken, could have a direct
material effect on the Bank's and the Company's consolidated financial
statements. Under capital adequacy guidelines and the regulatory framework for
PCA, the Bank must meet specific capital guidelines that involve quantitative
measures of the Bank's assets, liabilities and certain off-balance sheet items
as calculated under regulatory accounting practices. The Bank's regulatory
capital amounts and classification are also subject to qualitative judgments by
regulators about components, risk weightings and other factors.
Quantitative measures established by regulation by the OTS to ensure
capital adequacy (the "Capital Adequacy Regulations") require the Bank to
maintain, as set forth in the table below, specified minimum amounts and ratios
of leverage ("tier 1") and tangible capital to adjusted total assets and of
risk-based capital to risk-weighted assets. Management believes that, as of
December 31, 1997, the Bank was in compliance with the Capital Adequacy
Regulations.
Pursuant to FDICIA, the OTS adopted PCA regulations ("PCA Regulations")
which established five capital categories: "well capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized," and
"critically undercapitalized." To be categorized as well capitalized, the Bank
must maintain the minimum risk-based, tier 1 risk-based and leverage capital
ratios set forth in the table below. As of December 31, 1997, the most recent
notification from the OTS categorized the Bank as well capitalized under the
regulatory framework for PCA. There are no conditions or events since that
notification that the Bank believes have changed its category.
F-25
<PAGE> 76
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table summarizes, at December 31 for the years shown, the
Bank's actual regulatory capital amounts and ratios, as well as its minimum
requirements under the Capital Adequacy Regulations and under the PCA
Regulations for it to be deemed well capitalized.
<TABLE>
<CAPTION>
MINIMUM CAPITAL REQUIREMENTS PURSUANT TO
-----------------------------------------
PCA REGULATIONS
ACTUAL BANK CAPITAL ADEQUACY TO BE DEEMED
REGULATORY CAPITAL REGULATIONS WELL CAPITALIZED
------------------ ------------------ --------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
---------- ----- --------- ------ ----------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
1997:
Leverage capital.................. $1,216,417 5.64% $646,893 3.00% $1,078,155 5.00%
Tangible capital.................. 1,216,417 5.64 323,447 1.50
Risk-based capital................ 1,321,135 11.17 946,114 8.00 1,182,642 10.00
Tier 1 risk-based capital......... 1,216,417 10.29 709,585 6.00
1996:
Leverage capital.................. 1,139,443 6.06 563,671 3.00 939,452 5.00
Tangible capital.................. 1,139,443 6.06 281,836 1.50
Risk-based capital................ 1,245,938 13.08 762,076 8.00 952,594 10.00
Tier 1 risk-based capital......... 1,139,443 11.96 571,557 6.00
</TABLE>
NOTE 17 -- NET GAINS (LOSSES) ON SALES ACTIVITIES
Details of net gains (losses) on sales activities were as follows for the
year ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Net gains (losses) on:
Sales, calls and other than temporary impairment in value
of securities......................................... $(17,794) $(11,265) $(29,044)
Sales of loans held for sale............................. 23,219 2,630 2,344
Sales of loan servicing rights........................... 6,888 -- 738
Sales of branches........................................ -- -- 18,637
Other.................................................... (277) (4,081) (5,090)
-------- -------- --------
Total net gains (losses) on sales activities............... $ 12,036 $(12,716) $(12,415)
======== ======== ========
</TABLE>
NOTE 18 -- EMPLOYEE BENEFIT PLANS
Pension Plans
The Company currently maintains a non-contributory, qualified, defined
benefit pension plan (the "Qualified Pension Plan") covering, except as noted,
substantially all salaried employees of the Company who meet certain age and
length of service requirements. NAMC personnel are generally covered by a plan
maintained by NAMC (see "Other Plans"). Benefits under the Qualified Pension
Plan are based on years of credited service and average base salary for the
final three years of service. Contributions are made to the Qualified Pension
Plan to the extent required and deductible under federal income tax regulations.
The Qualified Pension Plan assets primarily consist of equity and debt
securities. The Company also maintains various non-qualified, defined benefit
pension plans (the "Non-Qualified Pension Plans"). Benefits under these plans
have not been prefunded by the Company.
F-26
<PAGE> 77
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table sets forth the funded status of the Qualified Pension
Plan and the Non-Qualified Pension Plans and amounts recognized in the
Consolidated Statements of Financial Condition at December 31:
<TABLE>
<CAPTION>
1997 1996
-------------------------- --------------------------
QUALIFIED NON-QUALIFIED QUALIFIED NON-QUALIFIED
PENSION PENSION PENSION PENSION
PLAN PLANS PLAN PLANS
--------- ------------- --------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Actuarial present value of benefit
obligation:
Accumulated benefit obligation -- vested
benefits............................. $ 133,962 $ 15,853 $ 115,266 $ 13,404
Accumulated benefit
obligation -- non-vested benefits.... 3,791 2,049 8,710 1,525
--------- -------- --------- --------
Accumulated benefit obligation............ $ 137,753 $ 17,902 $ 123,976 $ 14,929
========= ======== ========= ========
Projected benefit obligation for service
rendered to date........................ $(152,421) $(18,300) $(140,556) $(15,155)
Plan assets at fair value................. 154,117 -- 142,841 --
--------- -------- --------- --------
Plan assets in excess of (less than)
projected benefit obligation............ 1,696 (18,300) 2,285 (15,155)
Unrecognized net transition (asset)
obligation.............................. (3,457) 392 (4,382) 472
Unrecognized net loss (gain).............. 10,923 109 10,869 (1,190)
Unrecognized prior service cost........... 992 4,285 1,164 3,367
Minimum liability adjustment.............. -- (4,388) -- (2,423)
--------- -------- --------- --------
Prepaid (accrued) pension cost............ $ 10,154 $(17,902) $ 9,936 $(14,929)
========= ======== ========= ========
</TABLE>
Net pension (income) expense associated with the Qualified Pension Plan and
the Non-Qualified Pension Plans included the following components for the year
ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995
------------------------- ------------------------- -------------------------
QUALIFIED NON-QUALIFIED QUALIFIED NON-QUALIFIED QUALIFIED NON-QUALIFIED
PENSION PENSION PENSION PENSION PENSION PENSION
PLAN PLANS PLAN PLANS PLAN PLANS
--------- ------------- --------- ------------- --------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Service cost -- benefits
earned....................... $ 4,129 $ 656 $ 4,859 $1,046 $ 3,809 $ 730
Interest cost on projected
benefit obligation........... 10,091 1,180 10,055 961 9,568 869
Actual return on plan assets... (20,078) -- (15,010) -- (28,659) --
Net amortization and
deferral..................... 5,356 91 533 2,072 16,238 809
Other.......................... -- -- -- -- -- 1,101
-------- ------ -------- ------ -------- ------
Net pension (income) expense... $ (502) $1,927 $ 437 $4,079 $ 956 $3,509
======== ====== ======== ====== ======== ======
</TABLE>
In determining the projected benefit obligation for the Qualified Pension
Plan and the Non-Qualified Pension Plans, the weighted average discount rate
utilized was 7.00% in 1997 and 7.75% in 1996 and the rate of increase in future
compensation levels was 4.00% in 1997 and 5.00% in 1996. The expected long-term
rate on plan assets used in computing net pension (income) expense for the
Qualified Pension Plan was 10.00% in each of 1997, 1996 and 1995.
Postretirement Health Care and Life Insurance Plans
The Company currently sponsors unfunded postretirement health care and life
insurance plans covering, except as noted, substantially all salaried employees
of the Company who meet certain age and length of
F-27
<PAGE> 78
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
service requirements. Employees of NAMC, with certain exceptions, are not
covered under these plans. In general, the Company's postretirement health care
plan requires contributions from participants. Benefits under the Company's
postretirement life insurance plan are provided to participants on a
non-contributory basis. The estimated cost of providing postretirement health
care and life insurance benefits to an employee and the employee's beneficiaries
and covered dependents is accrued during the years that the employee renders the
necessary service.
The following table sets forth the composition of the accrued
postretirement health care and life insurance benefits recognized in the
Company's Consolidated Statements of Financial Condition at December 31:
<TABLE>
<CAPTION>
1997 196
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Accumulated benefit obligation:
Retirees.................................................. $ 47,924 $ 36,958
Fully eligible active plan participants................... 870 6,944
Other active plan participants............................ 3,852 3,958
-------- --------
Accumulated benefit obligation.............................. 52,646 47,860
Unrecognized net gain....................................... 687 3,178
Unrecognized transition obligation being amortized over 20
years..................................................... (28,771) (30,681)
-------- --------
Accrued postretirement health care and life insurance
benefits.................................................. $ 24,562 $ 20,357
======== ========
</TABLE>
In determining the accumulated benefit obligation for the postretirement
health care and life insurance plans, the weighted average discount rate
utilized was 7.00% in 1997 and 7.75% in 1996 and the rate of increase in future
compensation levels was 4.00% in 1997 and 5.00% in 1996.
Postretirement health care and life insurance benefits expense included the
following components for the year ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost -- benefits earned............................. $ 462 $1,340 $ 770
Interest cost on accumulated benefit obligation............. 3,630 3,415 3,888
Amortization of transition obligation....................... 1,910 1,910 1,952
Amortization of unrecognized prior service cost............. -- -- 50
------ ------ ------
Postretirement health care and life insurance benefits
expense................................................... $6,002 $6,665 $6,660
====== ====== ======
</TABLE>
As of December 31, 1997, the average annual rate of increase in the per
capita cost of covered health care benefits for 1998 was assumed to be 10.00%
for participants less than 65 years old and 7.00% for all other participants
and, in each case, was assumed to decline 1.00% per year until a floor of 5.00%
was reached. Increasing the assumed health care cost trend rates by 1.00% in
each year would increase the accumulated benefit obligation at December 31, 1997
by $2.2 million and the aggregate of the service and interest cost components of
postretirement health care benefits expense for 1997 by $0.2 million.
Other Plans
The Company maintains a savings plan, the Retirement 401(k) Investment
Plan, which covers substantially all employees of the Company, other than those
eligible to participate in a defined contribution benefit plan assumed by the
Company in connection with the NAMC Acquisition. Under the Retirement 401(k)
Investment Plan, participants may contribute up to 15% of their base pay on a
before- or after-tax basis, up to legal limits. The Company currently makes
matching contributions equal to 100% of the first 6% of participant
contributions. Participants vest immediately in their own contributions and over
a period of
F-28
<PAGE> 79
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
five years for the Company's contributions. Each member's contributions and
matching contributions are invested, in accordance with the member's directions,
in one or any combination of available investment options, including in a fund
that purchases Common Stock.
In connection with the NAMC Acquisition, the Company assumed NAMC's 401(k)
Savings and Retirement Plan. This plan covers substantially all NAMC personnel,
except those employees of NAMC covered under the Qualified Pension Plan or the
Retirement 401(k) Investment Plan. The provisions of the 401(k) savings
component of this plan provide for contributions by participants of up to 15% of
their total pay on a before-tax basis, up to legal limits, and matching
contributions by the Company of up to 1.5% of a participant's eligible
compensation. Participants vest immediately in their own contributions and over
a period of four years for the Company's contributions. Under the provisions of
the retirement benefit component of the 401(k) Savings and Retirement Plan,
contributions are made by the Company equal to 4% of the participant's eligible
pay. Participants vest in such contributions over a period of seven years.
Contributions to the 401(k) Savings and Retirement Plan are invested, in
accordance with the participant's direction, in one or any combination of
available investment options.
The Company also maintains non-qualified arrangements under which
supplemental amounts in excess of those allocated under the Retirement 401(k)
Investment Plan are allocated with respect to certain employees and upon which
earnings are credited. These amounts include supplemental allocations based upon
the amounts that would otherwise be contributed as matching contributions under
the Retirement 401(k) Investment Plan on base pay that exceeds the amount for
which matching contributions are permitted to be made under the Retirement
401(k) Investment Plan.
The aggregate expense recognized by the Company in connection with the
above plans was $4.9 million, $4.3 million and $3.4 million for 1997, 1996 and
1995, respectively.
NOTE 19 -- STOCK PLANS
Stock Incentive and Option Plans
The Company, during 1997, adopted its Pride Shares Program, a broad-based
stock option plan under which there was a grant in May 1997 of an option to each
eligible full-time employee and each eligible part-time employee to purchase 150
shares and 75 shares, respectively, of Common Stock. Options awarded under this
plan have an exercise price equal to the grant date market price of the Common
Stock and expire 11 years from the grant date. Vesting of options awarded under
the Pride Shares Program generally occurs at the earlier of five years after the
date of grant or the date the Common Stock price reaches a specified target
price (as established at the date of grant) and its closing price stays at, or
rises above, that target price for five consecutive trading days. The options
granted during 1997 under the Pride Shares Program, all of which vested during
the year, had a target price of $20.00. Under the Pride Shares Program, the
Company expects to grant, during 1998 and 1999, an option to each eligible
full-time employee to purchase 150 shares and 200 shares, respectively, of
Common Stock and an option to each eligible part-time employee to purchase 75
shares and 100 shares, respectively, of Common Stock. Shares of Common Stock
initially reserved for issuance under the Pride Shares Program amounted to
2,000,000. At December 31, 1997, options to purchase 1,587,425 shares of Common
Stock were available for future grants under the Pride Shares Program.
Also in 1997, the Company adopted a broad-based stock incentive plan (the
"1997 Stock Incentive Plan"), under which all employees, excluding certain
officers, are eligible to receive options to purchase Common Stock. The number
of shares of Common Stock initially reserved for issuance under this plan
amounted to 300,000. At December 31, 1997, options to purchase 8,825 shares of
Common Stock were available for future grants under the 1997 Stock Incentive
Plan. The 1997 Stock Incentive Plan does not have an established termination
date, but may be terminated at any time by the Board. The options to purchase
Common Stock awarded during 1997 under the 1997 Stock Incentive Plan have an
exercise price equal to the
F-29
<PAGE> 80
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
market price of the Common Stock at the date of grant, vest over three years and
may be exercised over a period not in excess of eleven years.
A new stock incentive plan for outside directors ("the 1997 Stock Incentive
Plan for Outside Directors") was approved by the Holding Company's stockholders
during 1997, replacing a predecessor plan that had been adopted in 1987 (the
"1987 Stock Incentive Plan for Outside Directors") and which terminated by its
terms during 1996. Under the 1997 Stock Incentive Plan for Outside Directors,
which terminates in May 2007, 350,000 shares of Common Stock were initially
reserved for future issuance. The 1997 Stock Incentive Plan for Outside
Directors currently provides for: (i) an automatic one-time grant to each
individual who first becomes an outside director of the Holding Company on or
after January 1, 1997 of an option to purchase 3,000 shares of Common Stock and
the right to purchase 1,000 shares of restricted Common Stock at $1.00 per
share; (ii) automatic annual awards, during its term, to each outside director
of the Holding Company of an option to purchase 1,500 shares of Common Stock;
and (iii) similar discretionary awards of options to purchase Common Stock and
restricted Common Stock to outside directors of eligible direct and indirect
subsidiaries of the Holding Company. Options awarded under the 1997 Stock
Incentive Plan for Outside Directors have a term of 11 years, generally vest
over a three-year period and have an exercise price equal to the market price of
the Common Stock on the date granted. Restrictions on restricted Common Stock
sold under the 1997 Stock Incentive Plan for Outside Directors generally lapse
one-third each year on each of the third, fourth and fifth anniversaries of the
grant. At December 31, 1997, 323,500 shares of Common Stock remained available
to be awarded under the 1997 Stock Incentive Plan for Outside Directors.
The 1987 Stock Incentive Plan for Outside Directors, prior to its
termination, provided for a one-time only grant to each outside director of the
Holding Company of an option to purchase 3,000 shares of Common Stock, a tandem
stock appreciation right ("SAR"), which may only be exercised upon change in
control of the Company, and the right to purchase 1,000 shares of restricted
Common Stock at $1.00 per share. This plan also provided for similar
discretionary stock-based compensation awards to directors of eligible direct
and indirect subsidiaries of the Holding Company. Awards granted under this plan
prior to its termination remain in effect in accordance with its terms. Stock
options and SARs granted under the 1987 Stock Incentive Plan for Outside
Directors have an exercise price equal to the market price of the Common Stock
at the date of grant, generally vested over three years and may be exercised
over a period not in excess of eleven years. Restrictions on restricted Common
Stock sold to outside directors under the 1987 Stock Incentive Plan for Outside
Directors generally lapse after a five-year vesting period. At the date of the
Anchor Merger, all restrictions on restricted Common Stock previously sold under
the 1987 Stock Incentive Plan for Outside Directors lapsed.
The Company also adopted stock incentive plans in 1986 and 1991 (the "1986
Stock Incentive Plan" and the "1991 Stock Incentive Plan," respectively). The
1986 Stock Incentive Plan, which terminated by its terms during 1996, provided
for grants to key employees of Common Stock-based awards, including stock
options, SARs, and restricted Common Stock. Awards granted under this plan prior
to its termination remain in effect in accordance with its terms. The 1991 Stock
Incentive Plan, which terminates in February 2004, provides for grants to all
employees of Common Stock-based awards including stock options, SARs, restricted
Common Stock, deferred Common Stock, certain loans, and tax offset payments.
Under the 1991 Stock Incentive Plan, participants may be granted one or more
types of awards, which may be granted independently or in tandem. All SARs
granted under these plans have been awarded in tandem with stock options and may
only be exercised upon a change in control of the Company. Stock options and
SARs that have been granted under the 1986 and 1991 Stock Incentive Plans have
an exercise price equal to the market price of the Common Stock at the date of
grant, generally vest over three years and may be exercised over a period not in
excess of eleven years. In general, the per share price of restricted Common
Stock sold in connection with these plans has been $1.00 and related
restrictions lapse at the rate of one-third per year after each of the third,
fourth and fifth years from date of grant. At the date of the Anchor Merger, all
unvested options outstanding under the 1991 Stock Incentive Plan became
exercisable and all restrictions on restricted Common Stock sold
F-30
<PAGE> 81
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
under this plan lapsed. At December 31, 1997, 1,079,527 shares of Common Stock
remained available to be awarded under the 1991 Stock Incentive Plan.
In connection with the Anchor Merger, the Holding Company assumed stock
option plans that had previously been adopted by Anchor Bancorp in 1990 and 1992
(the "1990 Stock Option Plan" and the "1992 Stock Option Plan," respectively).
Upon consummation of the Anchor Merger, the number of outstanding options under
these plans was multiplied by, and the per share exercise price divided by, the
Anchor Exchange Ratio.
The 1990 Stock Option Plan, which terminated by its terms during 1996,
provided for options to key employees, while the 1992 Stock Option Plan provides
for options to all employees to purchase shares of Common Stock over a period
not in excess of ten years, or in certain circumstances, ten years and one day.
Awards granted under the 1990 Stock Option Plan prior to its termination remain
in effect in accordance with its terms. All options granted under the 1990 and
1992 Stock Options Plans have, as applicable, an exercise price equal to the
market price of the Common Stock at the date of grant or the market price of
Anchor Bancorp's common stock at the date of grant as adjusted for the Anchor
Exchange Ratio. The vesting period of options granted under the 1990 and 1992
Stock Option Plans is generally three years. Upon consummation of the Anchor
Merger, all unvested options outstanding under the 1990 Stock Option Plan and
substantially all of the unvested options outstanding under the 1992 Stock
Option Plan became exercisable. The 1992 Stock Option Plan does not have an
established termination date, but may be terminated at any time by the Board. At
December 31, 1997, options to purchase 429,823 shares of Common Stock were
available for future grant under the 1992 Stock Option Plan.
A summary of the status of the Company's stock incentive and stock option
plans at December 31, 1997, 1996 and 1995, and changes during the years ended on
those dates, is presented in the table below.
<TABLE>
<CAPTION>
1997 1996 1995
------------------ ------------------ ------------------
WEIGHTED WEIGHTED WEIGHTED
NUMBER AVERAGE NUMBER AVERAGE NUMBER AVERAGE
OF EXERCISE OF EXERCISE OF EXERCISE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year............ 3,934 $ 8.96 4,698 $ 6.86 4,836 $ 5.93
Exchanged in connection with the NAMC
Acquisition............................... 1,862 14.18 -- -- -- --
Granted(1).................................. 1,257 18.92 950 12.76 728 9.40
Exercised................................... (1,331) 10.16 (1,614) 5.04 (727) 2.68
Forfeited................................... (168) 13.64 (100) 9.64 (139) 9.49
------ ------ ------
Outstanding at end of year.................. 5,554 12.53 3,934 8.96 4,698 6.86
====== ====== ======
Exercisable at end of year.................. 4,335 11.27 2,754 7.74 3,719 6.29
</TABLE>
- ---------------
(1) The weighted average grant-date fair value was $7.09 in 1997, $6.02 in 1996
and $5.28 in 1995.
F-31
<PAGE> 82
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table summarizes information about stock options outstanding
at December 31, 1997.
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
--------------------------------------- -------------------------
WEIGHTED
AVERAGE
WEIGHTED REMAINING WEIGHTED
AVERAGE CONTRACTUAL AVERAGE
NUMBER EXERCISE LIFE NUMBER EXERCISE
RANGE OF EXERCISE PRICES (IN THOUSANDS) PRICE (IN YEARS) (IN THOUSANDS) PRICE
------------------------ -------------- -------- ----------- -------------- --------
<S> <C> <C> <C> <C> <C>
$ 1.13 - $ 4.91..................... 563 $ 2.54 4.4 563 $ 2.54
5.61 - 9.75..................... 1,479 8.15 6.3 1,410 8.12
10.09 - 14.75..................... 1,457 12.38 7.0 1,111 12.52
15.00 - 18.89..................... 1,686 17.18 8.3 1,224 17.58
20.00 - 28.00..................... 369 24.70 10.5 27 20.73
----- -----
1.13 - 28.00..................... 5,554 12.53 7.2 4,335 11.27
===== =====
</TABLE>
During 1997, 1996 and 1995, shares of restricted Common Stock purchased
amounted to 95,640, 40,000 and 28,000, respectively. The weighted average
grant-date fair value of these shares was $15.76 in 1997, $11.66 in 1996 and
$8.74 in 1995.
Compensation expense recognized in operations in connection with the
Company's stock incentive and stock option plans was $0.7 million in 1997, $0.2
million in 1996 and $0.1 million in 1995.
Employee Stock Purchase Plan
In 1993, the Company adopted an employee stock purchase plan (the "Employee
Stock Purchase Plan"), effective in the first quarter of 1994, reserving
1,000,000 shares of Common Stock for purchase by eligible employees of the
Company. As amended, this plan permits a per share purchase price of between 85%
and 100%, as established by the Compensation Committee of the Board (the
"Compensation Committee"), of the market price of the Common Stock on the first
date of the relevant purchase period. The Compensation Committee also
establishes the purchase period and number of shares made available to each
eligible participant during a specified purchase period. During 1997, 60,602
shares of Common Stock were purchased by employees under the Employee Stock
Purchase Plan at a per share price of $12.13, which was equal to the Common
Stock market price on the first date of the purchase period. No shares of Common
Stock were purchased during 1996 or 1995 under the Employee Stock Purchase Plan.
In addition, during 1997, shares of Common Stock were made available for
purchase in March 1998 under the Employee Stock Purchase Plan at a per share
price of $15.38, which was equal to the Common Stock market price on the first
date of the purchase period. The number of such shares subscribed to amounted to
81,108 at December 31, 1997. Shares of Common Stock available for future
purchase under the Employee Stock Purchase Plan amounted to 715,253 at December
31, 1997. The grant-date fair value of each purchase right granted in 1997 and
1996 under the Employee Stock Purchase Plan was $2.16 and $1.51, respectively.
F-32
<PAGE> 83
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Pro Forma Data
Had compensation expense for the Company's stock-based compensation plans
been recognized consistent with the fair value-based method of SFAS No. 123, the
Company's net income and earnings per share would have been reduced to the pro
forma amounts indicated below for the year ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ---------
(IN THOUSANDS, EXPECT PER SHARE DATA)
<S> <C> <C> <C>
Net income:
As reported.................................... $121,714 $104,256 $62,185
Pro forma...................................... 117,914 102,510 61,782
Basic earnings per share:
Net income:
As reported.................................... $ 1.14 $ 1.00 $ 0.63
Pro forma...................................... 1.11 0.99 0.62
Diluted earnings per share:
Net income:
As reported.................................... $ 1.12 $ 0.96 $ 0.57
Pro forma...................................... 1.09 0.94 0.56
</TABLE>
In preparing the pro forma information, the grant-date fair value of each
stock option granted under the Company's stock option and stock incentive plans
and each purchase right granted under the Employee Stock Purchase Plan was
estimated on the date of grant using the Black-Scholes option-pricing model. For
stock options, the following weighted-average assumptions were used for the
years ended December 31, 1997, 1996 and 1995, respectively: risk-free interest
rates of 6.30%, 5.97% and 6.63%; expected life of 5.4 years, 6.0 years and 6.0
years; volatility of 32%, 45% and 50%; and dividend yields of 0.83%, 0.00% and
0.00%. For rights under the Employee Stock Purchase Plan, the following
assumptions were used for the years ended December 31, 1997 and 1996,
respectively: risk-free interest rates of 6.12% and 5.44%; expected life of one
year and one year; volatility of 30% and 25%; and dividend yields of 1.04% and
0.00%.
NOTE 20 -- OTHER GENERAL AND ADMINISTRATIVE EXPENSE
Details of other general and administrative expense were as follows for the
year ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Data processing and communications.......................... $ 27,292 $ 20,344 $15,910
Marketing and promotional................................... 15,831 14,202 8,964
Professional services....................................... 13,179 14,770 14,254
Postage and messenger services.............................. 8,781 7,013 7,266
Stationery, printing and supplies........................... 7,881 6,927 5,691
Amortization of goodwill.................................... 4,501 1,177 844
FDIC deposit insurance premiums............................. 3,943 8,625 21,373
Other....................................................... 34,281 27,717 21,593
-------- -------- -------
Total other general and administrative expense.............. $115,689 $100,775 $95,895
======== ======== =======
</TABLE>
F-33
<PAGE> 84
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 21 -- INCOME TAXES
Income tax expense attributable to income before extraordinary item
consisted of the following for the year ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Current income tax expense:
Federal................................................... $ 4,432 $ 3,286 $ 1,851
State and local........................................... 6,332 11,032 2,844
------- ------- -------
Total current income tax expense.................. 10,764 14,318 4,695
------- ------- -------
Deferred income tax expense:
Federal................................................... 62,494 27,605 31,426
State and local........................................... 1,776 8,061 11,606
------- ------- -------
Total deferred income tax expense................. 64,270 35,666 43,032
------- ------- -------
Total income tax expense attributable to income before
extraordinary item........................................ $75,034 $49,984 $47,727
======= ======= =======
</TABLE>
The following is a reconciliation of expected income tax expense
attributable to income before extraordinary item, computed at the statutory
federal income tax rate of 35.0%, to the actual income tax expense attributable
to income before extraordinary item for the year ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995
------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Expected federal income tax expense at statutory rate....... $69,373 $ 53,984 $38,469
State and local income taxes, net of federal income tax
benefit................................................... 5,270 12,410 9,392
Non-deductible amortization of goodwill..................... 1,334 178 196
Adjustment of federal deferred taxes upon resolution of tax
filing positions.......................................... -- (17,602) --
Other, net.................................................. (943) 1,014 (330)
------- -------- -------
Total income tax expense attributable to income before
extraordinary item........................................ $75,034 $ 49,984 $47,727
======= ======== =======
</TABLE>
In connection with an extraordinary loss during 1997 on the early
extinguishment of debt, the Company recognized an income tax benefit of $0.9
million. The aggregate income tax (expense) benefit reflected in stockholders'
equity in connection with securities available for sale and stock-based
compensation plans amounted to $8.1 million, $(4.1) million and $(5.2) million
in 1997, 1996 and 1995, respectively.
F-34
<PAGE> 85
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The combined federal, state and local income tax effects of temporary
differences that gave rise to significant portions of the Company's deferred tax
assets and deferred tax liabilities were as follows at December 31:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Deferred tax assets:
Net operating loss carryforward.......................... $ 73,093 $109,611 $116,200
Excess tax basis and potential bad debt deductions
relating to non-performing assets..................... 54,029 54,138 74,186
Securities............................................... 18,192 -- 12,350
Financial statement reserves not yet realized for tax
purposes.............................................. 12,311 9,968 11,602
Postretirement benefits other than pensions.............. 10,336 9,536 7,575
Federal alternative minimum tax and general business tax
credit carryforwards.................................. 9,855 5,976 2,787
Premises and equipment................................... 2,706 5,395 3,389
Other, net............................................... 12,478 7,871 6,340
-------- -------- --------
Gross deferred tax assets........................ 193,000 202,495 234,429
-------- -------- --------
Deferred tax liabilities:
Mortgage servicing assets................................ (67,079) (9,104) (8,638)
Loans receivable......................................... (23,790) (9,491) (2,328)
Securities............................................... -- (228) --
-------- -------- --------
Gross deferred tax liabilities................... (90,869) (18,823) (10,966)
-------- -------- --------
Net deferred tax assets.................................... $102,131 $183,672 $223,463
======== ======== ========
</TABLE>
At December 31, 1997, the Company had net operating loss carryforwards for
federal income tax purposes of approximately $209 million, substantially all of
which are available to reduce future federal income taxes through the year 2009.
In addition, at that date, the Company had general business tax credit
carryforwards of $5.9 million which are available to reduce future federal
income taxes, of which $1.0 million expire in 2009, $1.5 million expire in 2010,
$1.6 million expire in 2011, and $1.8 million expire in 2012. The Company also
had federal alternative minimum tax credit carryforwards of $4.0 million at
December 31, 1997 which are available to reduce future federal income taxes
without expiration. As a result of the issuance of Common Stock in connection
with the NAMC Acquisition, the Holding Company underwent an "ownership change,"
as defined in section 382 of the Internal Revenue Code of 1986, as amended.
Accordingly, the Company's utilization of its net operating loss carryforwards
and equivalent tax credit carryforwards is limited to no more than $143 million
per calendar year.
During 1996, federal legislation was enacted that generally eliminates the
potential recapture of federal income tax deductions arising from commonly used
methods of calculating bad debt reserves for periods prior to 1988 if an
institution with a thrift charter (such as the Bank) were to change to a
commercial bank charter. In addition, this legislation repealed the reserve
method of tax accounting for bad debts used by the Bank and other "large" thrift
institutions, effective for taxable years beginning after 1995. The legislation
also contains provisions that require the recapture in future periods of tax
reserves for periods after 1987, but such provisions are not expected to have a
material impact on the Company's consolidated financial statements. Further, New
York State legislation was enacted during 1996, and New York City legislation
was enacted in March 1997, allowing thrift institutions to continue to use the
reserve method of tax accounting for bad debts and to determine a deduction for
bad debts in a manner similar to prior law.
F-35
<PAGE> 86
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
At December 31, 1997, the Bank had approximately $209 million of bad debt
reserves for New York income tax purposes for which no provision for income tax
has been made, of which approximately $80 million are subject to recapture upon
distribution to the Holding Company of these tax reserves. Any charge to a bad
debt reserve for other than bad debts on loans would create income for tax
purposes only, which would be subject to the then current corporate tax rate.
For federal tax purposes, approximately $176 million of the Bank's previously
accumulated bad debt deductions are subject to recapture upon its distribution
to the Holding Company. It is not the Bank's intention to make any distributions
to the Holding Company, or use the reserve in any manner, which would create
income tax liabilities for the Bank.
In order for the Bank to be permitted to maintain a New York tax bad debt
reserve for thrifts, certain thrift definitional tests must be met, including
maintaining at least 60% of its assets in qualifying assets, as defined for tax
purposes, and maintaining a thrift charter. If the Bank failed to meet these
definitional tests, the transition to the reserve method permitted commercial
banks would result in an increase in the New York tax provision as a deferred
tax liability would be established to reflect the eventual recapture of some or
all of the New York bad debt reserve. The Bank's percentage of qualifying assets
at December 31, 1997 was significantly in excess of the minimum threshold. The
Bank does not anticipate failing the thrift definitional tests for New York tax
purposes.
NOTE 22 -- EARNINGS PER COMMON SHARE
The following table sets forth the computations of basic and diluted
earnings per common share for the year ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Numerators:
Income before extraordinary item......................... $123,174 $104,256 $ 62,185
Extraordinary item....................................... (1,460) -- --
-------- -------- --------
Net income............................................... $121,714 $104,256 $ 62,185
======== ======== ========
Denominators:
Denominator for basic earnings per common
share -- weighted average number of common shares
outstanding........................................... 106,585 103,742 99,356
Common equivalent shares due to:
Stock options......................................... 2,012 2,074 1,987
Employee stock purchase rights........................ 16 4 --
FDIC Warrant.......................................... -- 3,277 8,399
-------- -------- --------
Denominator for diluted earnings per common
share.......................................... 108,613 109,097 109,742
======== ======== ========
Earnings per common share:
Basic:
Income before extraordinary item...................... $ 1.15 $ 1.00 $ 0.63
Extraordinary item.................................... (0.01) -- --
-------- -------- --------
Net income............................................ $ 1.14 $ 1.00 $ 0.63
======== ======== ========
Diluted earnings per common share:
Income before extraordinary item...................... $ 1.13 $ 0.96 $ 0.57
Extraordinary item.................................... (0.01) -- --
-------- -------- --------
Net income............................................ $ 1.12 $ 0.96 $ 0.57
======== ======== ========
</TABLE>
F-36
<PAGE> 87
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 23 -- DERIVATIVE FINANCIAL INSTRUMENTS
The Company uses various derivative financial instruments as part of its
overall interest rate risk-management strategy and to manage certain risks
associated with its mortgage banking activities. Derivative financial
instruments have not been used by the Company for trading activity purposes.
The following table summarizes, by category of item being hedged, the
notional amounts and estimated fair values of the Company's outstanding
derivative financial instruments at December 31:
<TABLE>
<CAPTION>
1997 1996
----------------------- -----------------------
ESTIMATED ESTIMATED
NOTIONAL FAIR NOTIONAL FAIR
AMOUNT VALUE AMOUNT VALUE
---------- --------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Interest rate risk-management instruments:
Interest rate swaps hedging:
Residential real estate loans
receivable............................ $ 924,549 $ (9,391) $ 438,432 $ 414
Commercial real estate loans
receivable............................ 475,323 (12,434) 221,784 (3,408)
MBS available for sale.................. 52,483 (247) -- --
Securities sold under agreements
to repurchase......................... 60,000 (590) 420,000 1,241
FHLBNY advances......................... -- -- 30,000 (690)
---------- -------- ---------- -------
Total interest rate swaps.......... 1,512,355 (22,662) 1,110,216 (2,443)
---------- -------- ---------- -------
Interest rate caps hedging:
Residential real estate loans
receivable............................ 315,118 6 424,484 527
MBS available for sale.................. 333,273 7 192,153 239
MBS held to maturity.................... -- -- 256,787 319
Securities sold under agreements
to repurchase......................... 361,000 1,172 361,000 4,647
---------- -------- ---------- -------
Total interest rate caps........... 1,009,391 1,185 1,234,424 5,732
---------- -------- ---------- -------
Options hedging residential real estate
loans receivable........................ 40,000 119 -- --
---------- -------- ---------- -------
Total interest rate risk-management
instruments...................... 2,561,746 (21,358) 2,344,640 3,289
---------- -------- ---------- -------
Mortgage banking risk-management instruments:
Interest rate floors hedging mortgage
servicing assets........................ 2,384,514 30,377 996,498 77
Interest rate swaps hedging mortgage
servicing assets........................ 400,000 2,829 -- --
Forward contracts hedging loans held for
sale originations....................... 1,725,910 (4,760) 136,770 575
Options hedging loans held for sale
originations............................ 107,000 205 40,000 64
---------- -------- ---------- -------
Total mortgage banking
risk-management instruments...... 4,617,424 28,651 1,173,268 716
---------- -------- ---------- -------
Total derivative financial instruments....... $7,179,170 $ 7,293 $3,517,908 $ 4,005
========== ======== ========== =======
</TABLE>
The $1.5 billion of interest rate swap agreements used by the Company at
December 31, 1997 for purposes of interest rate risk-management are in the form
where, based on an agreed-upon notional amount, the Company agrees to make
periodic fixed-rate payments, while the counterparty agrees to make periodic
variable-rate payments that are tied substantially to the one-month London
Interbank Offered Rate ("LIBOR"). The use of these derivative financial
instruments allows the Company to achieve interest income
F-37
<PAGE> 88
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
or expense similar to that which would exist if it had changed the interest rate
of designated assets from a fixed-rate to a variable-rate and had changed the
interest rate of designated liabilities from a variable-rate to a fixed-rate.
The following table summarizes the Company's interest rate risk
management-related interest rate swap activity (notional amounts) for the year
ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance at beginning of year........... $1,110,216 $1,290,747 $1,703,280
New agreements......................... 904,837 584,722 415,210
Matured agreements..................... (385,515) (700,469) (800,000)
Terminated agreements.................. -- (7,908) --
Amortization........................... (117,183) (56,876) (27,743)
---------- ---------- ----------
Balance at end of year................. $1,512,355 $1,110,216 $1,290,747
========== ========== ==========
</TABLE>
The following table sets forth, at December 31, 1997, the contractual
maturities of interest rate swap agreements used for interest rate
risk-management purposes, as well as the related weighted average interest rates
receivable and payable at that date. Variable-rates in the table are assumed to
remain constant at their December 31, 1997 levels; however, actual repricings of
these interest rate swaps will be based on the applicable interest rates in
effect at the actual repricing dates.
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
---------------------------
NOTIONAL VARIABLE-RATE FIXED-RATE
AMOUNT RECEIVABLE PAYABLE
---------- ------------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Year ending December 31:
1998................................. $ 396,928 5.98% 6.42%
1999................................. 344,977 5.96 6.57
2000................................. 147,437 5.98 6.65
2001................................. 278,123 5.98 6.58
2002................................. 136,158 5.99 6.72
Thereafter........................... 208,732 5.98 6.59
----------
Total.................................. $1,512,355 5.98 6.56
==========
</TABLE>
Under each of its outstanding interest rate cap agreements at December 31,
1997, the Company, in return for a premium paid to the counterparty at
inception, receives cash payments from the counterparty at specified dates in
the amount by which a specified market interest rate is higher than a designated
cap interest rate, as applied to the notional amount of the agreement. The
Company, at December 31, 1997, had outstanding interest rate cap agreements with
a notional amount of $648.4 million that were entered into in order to hedge the
periodic and lifetime interest rate caps embedded in certain of its
adjustable-rate residential real estate loans receivable and MBS. Each such
agreement provides for the Company to receive cash payments from the
counterparty when the weekly average yield of the one-year constant maturity
Treasury index ("CMT") rises above a designated cap interest rate. At December
31, 1997, the weighted average designated cap interest rate on these agreements
was 8.00%. In addition, at the end of 1997, the Company had interest rate cap
agreements outstanding with a notional amount of $361.0 million that were
entered into for the purpose of locking-in maximum interest costs on certain of
its securities sold under agreements to repurchase. These interest rate cap
agreements provide for the Company to receive cash payments when the one-month
LIBOR rises above a designated cap interest rate. At December 31, 1997, the
weighted average designated cap interest rate on these agreements was 7.04%. The
expected maturities of the notional amounts of the Company's
F-38
<PAGE> 89
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
outstanding interest rate cap agreements at year-end 1997 were $439.4 million in
1998, $374.0 million in 1999 and $196.0 million in 2001.
The following table summarizes the Company's interest rate cap activity
(notional amounts) for the year ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance at beginning of year........... $1,234,424 $1,243,179 $ --
New agreements......................... -- 361,000 1,300,000
Amortization........................... (225,033) (369,755) (56,821)
---------- ---------- ----------
Balance at end of year................. $1,009,391 $1,234,424 $1,243,179
========== ========== ==========
</TABLE>
At December 31, 1997, the Company used both interest rate swaps and
interest rate floors in order to minimize the impact of the potential loss of
net future servicing revenues associated with certain of the Company's mortgage
servicing assets as a result of an increase in loan prepayments, which is
generally triggered by declining interest rates.
Interest rate swaps used by the Company at year-end 1997 to hedge mortgage
servicing assets had a notional amount of $400.0 million. Under these
agreements, all of which were entered into during 1997, the Company, based on
the notional amount, agrees to make periodic variable-rate payments that are
tied to the one-month LIBOR, while the counterparty agrees to make periodic
fixed-rate payments. The weighted average fixed rate on these interest rate swap
agreements is 6.22%. The scheduled maturities of the notional amounts of these
interest rate swap agreements were $200.0 million in 2002 and $200.0 million in
2007.
Under each of its interest rate floor agreements used to hedge mortgage
servicing assets, the Company, in return for a premium paid to the counterparty
at inception, receives cash payments from the counterparty when either the five-
or ten-year CMT declines below a designated floor interest rate. Of the $2.4
billion notional amount of interest rate floor agreements outstanding at the end
of 1997, $143.6 million were indexed to the five-year CMT and had a weighted
average designated floor interest rate of 5.30%. The remaining interest rate
floor agreements outstanding at December 31, 1997 were indexed to the ten-year
CMT and had a weighted average designated floor interest rate of 5.66%. The
expected maturities of the notional amounts of the Company's outstanding
interest rate floor agreements at December 31, 1997 were $0.4 billion in 1998,
$0.4 billion in 1999 and $1.6 billion in 2002.
The following table summarizes the Company's interest rate floor activity
(notional amounts) for the year ended December 31:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance at beginning of year........... $ 996,498 $1,219,776 $1,366,685
New agreements......................... 1,585,000 -- --
Amortization........................... (196,984) (223,278) (146,909)
---------- ---------- ----------
Balance at end of year................. $2,384,514 $ 996,498 $1,219,776
========== ========== ==========
</TABLE>
The forward contracts used by the Company at December 31, 1997 hedge its
exposure to interest rate risk associated with loans held for sale origination
activities. These contracts represent firm commitments to deliver MBS or loans
at a specified price at a specified future date. The Company must deliver the
MBS or loans in accordance with the requirements of the contracts or, if it
cannot fulfill its contractual obligations, pair-off the commitments and
recognize the gain or loss based on the change in the price of the underlying
contract (i.e., the specified price minus the repurchase price multiplied by the
notional amount).
F-39
<PAGE> 90
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Options give the holder the right, but not the obligation, to purchase from
or to sell to the counterparty a designated financial instrument at a specified
price during an agreed upon period of time or on a specific date. The buyer of
an option pays a premium for this right. A put option gives the buyer the right
to sell the underlying financial instrument, while a call option gives the buyer
the right to purchase the underlying financial instrument, at a specified price
during a specified period of time or on a specified date. The buyer of a put
option generally benefits if the price of the underlying financial instrument
declines. The buyer of a call option generally benefits if the price of the
underlying financial instrument rises. At December 31, 1997, the Company had
options to enter into $40.0 million notional amount of interest rate swap
agreements for interest rate risk-management purposes. In addition, at the end
of 1997, the Company had $67.0 million notional amount of put options to sell
MBS and $40.0 million notional amount of put options to sell interest rate
futures for mortgage banking risk-management purposes.
Certain of the Companies outstanding derivative financial instruments
require that the Company or its counterparty, to the extent that the market
value of the position for that party is negative, must maintain collateral,
subject to a minimum call, with the other party. If the Company is subject to an
initial collateral requirement, the amount of the initial collateral modifies
the collateral maintenance level.
For a discussion of the credit risk associated with the Company's
derivative financial instruments, reference is made to Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Management of Credit Risk -- Derivative Financial Instruments."
NOTE 24 -- COMMITMENTS AND CONTINGENT LIABILITIES
The Company has entered into non-cancelable lease agreements with respect
to Company premises and equipment that expire at various dates through the year
2013. Certain leases contain escalation clauses, which correspond with increased
real estate taxes and other operating expenses, and renewal options calling for
increased rents. There are no restrictions imposed by any lease agreement
regarding the payment of dividends, additional debt financing or entering into
further lease agreements. Net rent expense was $23.7 million, $17.7 million, and
$20.0 million for 1997, 1996 and 1995, respectively.
At December 31, 1997, the projected minimum future rental payments required
under the terms of non-cancelable leases with terms of one year or more were
$24.8 million in 1998, $22.1 million in 1999, $19.5 million in 2000, $17.5
million in 2001, $15.3 million in 2002, and $68.3 million in years thereafter.
The projected minimum future rental payments have not been reduced by projected
sublease rentals of $12.2 million.
The Company had the following commitments to extend credit and purchase
loans at December 31:
<TABLE>
<CAPTION>
1997 1996
---------- --------
(IN THOUSANDS)
<S> <C> <C>
Commitments to extend credit:
Residential real estate loans............................. $ 632,098 $267,150
Commercial real estate loans.............................. 115,560 61,854
Consumer loans............................................ 481,871 427,234
Business loans............................................ 73,247 47,912
---------- --------
Total commitments to extend credit................ 1,302,776 804,150
Commitments to purchase residential real estate loans....... 708,131 24,508
---------- --------
Total commitments to extend credit and purchase loans....... $2,010,907 $828,658
========== ========
</TABLE>
Commitments to extend credit are agreements to lend to a customer provided
there is no violation of any condition established in the contract. Such
commitments generally have fixed expiration dates or termination
F-40
<PAGE> 91
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
clauses and may require payment of a fee. Since certain of the commitments are
expected to expire without being drawn upon, the total commitment amounts may
not represent future cash requirements. The Company evaluates the
creditworthiness of these transactions through its lending policies. The amount
of collateral obtained, if deemed necessary by the Company upon extension of
credit, is based on the Company's credit evaluation of the borrower. The
Company's maximum exposure to credit loss for commitments to extend credit as a
result of non-performance by the counterparty is the contractual notional
amount.
The Company had letters of credit outstanding at December 31, 1997 and 1996
of $23.7 million and $22.4 million, respectively. Letters of credit represent
agreements whereby the Company guarantees the performance of a customer to a
third party. The Company requires collateral to support such agreements based on
the Company's evaluation of the creditworthiness of the customer. The credit
risk associated with letters of credit is similar to that incurred by the
Company in its lending activities.
At December 31, 1997 and 1996, the Company did not have any commitments
outstanding to purchase securities. The Company did not have any commitments to
sell securities available for sale at December 31, 1997. At year-end 1996, the
Company had commitments to sell $165.7 million of securities available for sale.
The Company is obligated under various limited recourse provisions
associated with certain residential and commercial real estate loans sold in
past years. The principal balance of loans sold with limited recourse and
related maximum potential recourse exposure amounted to approximately $648
million and $181 million, respectively, at December 31, 1997 and approximately
$752 million and $196 million, respectively, at December 31, 1996. The Company's
exposure to credit loss on loans sold with recourse is similar to the credit
risk associated with the Company's on-balance sheet loans receivable.
The Bank and/or its wholly-owned subsidiaries, Dime Mortgage of New Jersey,
Inc. and NAMC (and in one instance, Dime Mortgage, Inc., a subsidiary of the
Company that was merged into NAMC in the fourth quarter of 1997), as the case
may be, have been named as defendants in the following purported class actions:
Koslowe v. Dime Mortgage of New Jersey and The Dime Savings Bank of New York,
filed in the United States District Court for the District of New Jersey on
February 25, 1997; Bray v. North American Mortgage Co., filed in the United
States District Court for the Middle District of Alabama on January 31, 1997;
Bailey v. North American Mortgage Co., filed in the United States District Court
for the Middle District of Alabama on October 28, 1997; Brigham v. North
American Mortgage Co., filed in the United States District Court for the Middle
District of Georgia on January 14, 1998; Sisson v. Dime Mortgage, Inc., filed in
the United States District Court for the Northern District of Alabama on January
23, 1998; Levine v. North American Mortgage Co., filed in the United States
District Court for the District of Minnesota on January 29, 1998; and Hamilton
v. North American Mortgage Co., filed in the United States District Court for
the District of Maine on March 4, 1998. In each of these cases, the plaintiff
alleges, among other things, that, in connection with the making of residential
real estate loans, the Bank and/or such subsidiaries made certain payments to
mortgage brokers in violation of specified federal laws, including the Real
Estate Settlement Procedures Act ("RESPA"). Each of the plaintiffs seeks
unspecified compensatory damages plus, as to certain claims, treble damages. The
Company believes that its compensation programs for mortgage brokers comply with
applicable laws and with accepted mortgage banking industry practices and that
it has meritorious defenses to each of the actions. The Company intends to
oppose each of the actions vigorously.
Certain other claims, suits, complaints and investigations involving the
Company, arising in the ordinary course of business, have been filed or are
pending. The Company is of the opinion, after discussion with legal counsel
representing the Company in these proceedings, that the aggregate liability or
loss, if any, arising from the ultimate disposition of these matters would not
have a material adverse effect on the Company's consolidated financial position
or results of operations.
F-41
<PAGE> 92
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 25 -- FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of a financial instrument is the amount at which the
instrument could be exchanged in a current transaction between willing parties,
other than in a forced or liquidation sale. Fair value estimates are made at a
specific point in time, based on relevant market information and information
about the financial instrument. These estimates do not reflect any possible tax
ramifications, estimated transaction costs, or any premium or discount that
could result from offering for sale at any one time the Company's entire
holdings of a particular financial instrument. Because no active market exists
for a certain portion of the Company's financial instruments, the fair value
estimates for such financial instruments are based on judgments regarding, among
other factors, future cash flows, future loss experience, current economic
conditions and risk characteristics. These estimates are subjective in nature
and involve uncertainties and matters of significant judgment and, therefore,
cannot be determined with precision. Changes in assumptions could significantly
affect these estimates. The Company has not included certain material items in
its disclosure as such items, which the Company believes have significant value,
are not considered financial instruments.
The following table summarizes the carrying values and estimated fair
values of the Company's financial instruments at December 31:
<TABLE>
<CAPTION>
1997 1996
-------------------------- --------------------------
CARRYING ESTIMATED CARRYING ESTIMATED
VALUE FAIR VALUE VALUE FAIR VALUE
----------- ----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
On-balance sheet financial assets:
Cash and cash equivalents........... $ 452,527 $ 452,527 $ 184,517 $ 184,517
Securities available for sale....... 4,992,304 4,992,304 2,589,572 2,589,572
Securities held to maturity......... -- -- 4,363,971 4,279,937
FHLBNY stock........................ 303,287 303,287 266,244 266,244
Loans held for sale................. 1,841,862 1,851,657 115,325 115,325
Loans receivable, net............... 12,879,789 12,981,229 10,631,562 10,641,164
Accrued interest receivable......... 106,829 106,829 106,041 106,041
On-balance sheet financial
liabilities:
Deposits............................ 13,847,275 13,866,022 12,856,739 12,875,158
Securities sold under agreements to
repurchase....................... 2,975,774 2,980,199 3,550,234 3,551,972
FHLBNY advances..................... 2,786,751 2,789,042 925,139 925,833
Senior notes........................ 142,475 153,410 197,584 210,500
Guaranteed preferred beneficial
interests in Holding Company's
junior subordinated deferrable
interest debentures.............. 196,137 230,937 -- --
Other borrowed funds................ 218,175 213,017 142,234 145,018
Accrued interest payable............ 50,981 50,981 32,700 32,700
Off-balance sheet financial
instruments:
Derivative financial instruments
used for:
Interest rate risk management.... 3,173 (21,358) 10,493 3,289
Mortgage banking risk
management..................... 22,043 28,651 866 716
</TABLE>
The following methodologies and assumptions were used by the Company in
estimating the fair values of its financial instruments at December 31, 1997 and
1996.
F-42
<PAGE> 93
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Cash and Cash Equivalents. The carrying value of cash and cash equivalents
was deemed to be a reasonable estimate of their fair value due to the short-term
nature of these items and because they do not present significant credit
concerns.
Loans Held for Sale. The estimated fair value of loans held for sale was
estimated using the quoted market prices for securities backed by similar types
of loans and current dealer commitments to purchase loans.
Securities Available for Sale and Held to Maturity. The estimated fair
values of securities available for sale and held to maturity were determined by
use of quoted market prices or dealer quotes.
FHLBNY Stock. The fair value of FHLBNY stock was estimated to be its
carrying value, which is indicative of its redemption price.
Loans Receivable. For purposes of computing the fair value of its loans
receivable, the Company grouped performing loans with similar characteristics
and applied prices available in the secondary market as a reference and adjusted
for differences in servicing and credit quality. When a secondary market rate
was not available, and for non-performing loans, fair value was estimated using
a discounted cash flow analysis that utilized a discount rate commensurate with
the credit and interest rate risk inherent in the loans.
Accrued Interest Receivable and Payable. The estimated fair values of
accrued interest receivable and payable have been determined to equal their
carrying amounts as these amounts are generally due or payable within 90 days.
Deposits. The estimated fair value of deposits without a specified
maturity, which includes demand, savings and money market deposits, was the
amount payable on the valuation date. For fixed-maturity time deposits, fair
value was estimated based on the discounted value of contractual cash flows
using current market interest rates offered for deposits with similar remaining
maturities.
Borrowed Funds. The estimated fair values of borrowed funds maturing or
repricing within 90 days were deemed to be equal to their carrying values. The
estimated fair values of all other borrowed funds were based on quoted market
prices or on the discounted value of contractual cash flows using current market
interest rates for borrowings with similar terms and remaining maturities.
Derivative and Off-Balance Sheet Financial Instruments. The fair values of
the Company's derivative financial instruments were based upon quoted market
prices, dealer quotes or pricing models.
With regard to its loans sold with recourse, the fair value of such
recourse guarantees would be based on fees currently charged to terminate them
or otherwise settle the obligations with the counterparties. The Company has
determined that it is not practicable to determine the fair value of such
recourse arrangements.
The Company has reviewed its outstanding commitments to extend credit,
commitments to purchase loans and letters of credit at December 31, 1997 and
1996 and has determined that their estimated fair values are not material.
F-43
<PAGE> 94
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 26 -- SUPPLEMENTAL DISCLOSURES FOR CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------
1997 1996 1995
---------- -------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Supplemental cash flow information:
Interest payments on deposits and borrowed funds...... $ 883,423 $891,102 $ 941,483
Income tax refunds, net............................... 381 847 11,758
Supplemental non-cash investing and financing
information:
Securities held to maturity transferred to securities
available for sale................................. 3,587,063 -- 3,616,445
Loans receivable transferred to other real estate
owned.............................................. 17,996 39,216 49,768
In connection with the:
NAMC Acquisition:
Issuance of Common Stock......................... 215,999 -- --
Issuance of treasury stock....................... 135,106 -- --
Fair value of stock options issued............... 21,389 -- --
Fair value of assets acquired, excluding cash and
cash equivalents received..................... 1,499,076 -- --
Cash and cash equivalents received............... 45,231 -- --
Cash paid........................................ 11 -- --
Fair value of liabilities assumed................ 1,357,727 -- --
Goodwill......................................... 185,925 -- --
BFS Acquisition:
Fair value of assets acquired, excluding cash and
cash equivalents received..................... 625,543 -- --
Cash and cash equivalents received............... 7,796 -- --
Cash paid........................................ 93,325 -- --
Fair value of liabilities assumed................ 581,595 -- --
Goodwill......................................... 41,581 -- --
National Mortgage Acquisition:
Fair value of assets acquired.................... -- -- 757
Cash paid........................................ 925 1,284 2,634
Fair value of liabilities assumed................ -- -- 365
Goodwill......................................... 925 1,284 2,242
Madison Mortgage Acquisition:
Fair value of assets acquired.................... -- -- 1,678
Cash paid........................................ -- -- 5,280
Fair value of liabilities assumed................ -- -- 1,032
Goodwill......................................... -- -- 4,634
</TABLE>
F-44
<PAGE> 95
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 27 -- PARENT COMPANY FINANCIAL INFORMATION
Condensed financial statements of the Holding Company (parent company only)
are set forth below.
CONDENSED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1997 1996
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Assets:
Cash and cash equivalents:
Cash and due from banks................................ $ 2,701 $ 4,449
Interest-earning deposits in the Bank.................. 54,330 --
---------- ----------
Total cash and cash equivalents................... 57,031 4,449
Securities available for sale............................. 29,317 --
Securities held to maturity............................... -- 1,006
Receivables from the Bank................................. 102,475 2,594
Investment in the Bank.................................... 1,445,766 1,202,026
Investment in Dime Capital................................ 6,274 --
Other assets.............................................. 24,954 15,429
---------- ----------
Total assets................................................ $1,665,817 $1,225,504
========== ==========
Liabilities and stockholders' equity:
Liabilities:
Senior notes........................................... $ 142,475 $ 197,584
Series A Subordinated Debentures....................... 202,323 --
Other liabilities...................................... 6,161 5,583
---------- ----------
Total liabilities................................. 350,959 203,167
---------- ----------
Stockholders' equity...................................... 1,314,858 1,022,337
---------- ----------
Total liabilities and stockholders' equity.................. $1,665,817 $1,225,504
========== ==========
</TABLE>
F-45
<PAGE> 96
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------
1997 1996 1995
-------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Income:
Dividends from the Bank................................... $159,000 $ 88,000 $30,000
Dividends from Dime Capital............................... 289 -- --
Interest on deposits in the Bank.......................... 6,584 -- --
Interest on securities.................................... 403 87 213
Gains on sales of securities.............................. 23 -- --
-------- -------- -------
Total income...................................... 166,299 88,087 30,213
-------- -------- -------
Expense:
Interest on borrowed funds................................ 31,758 19,638 19,621
Other..................................................... 3,348 3,071 5,536
-------- -------- -------
Total expense..................................... 35,106 22,709 25,157
-------- -------- -------
Income before income tax benefit, equity in
(overdistributed) undistributed net income of subsidiaries
and extraordinary item.................................... 131,193 65,378 5,056
Income tax benefit.......................................... 10,736 10,283 10,762
-------- -------- -------
Income before equity in (overdistributed) undistributed net
income of subsidiaries and extraordinary item............. 141,929 75,661 15,818
Equity in (overdistributed) undistributed net income of
subsidiaries.............................................. (18,755) 28,595 46,367
-------- -------- -------
Income before extraordinary item............................ 123,174 104,256 62,185
Extraordinary item -- loss on early extinguishment of debt,
net of income tax benefit of $895......................... (1,460) -- --
-------- -------- -------
Net income.................................................. $121,714 $104,256 $62,185
======== ======== =======
</TABLE>
F-46
<PAGE> 97
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------
1997 1996 1995
--------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income.............................................. $ 121,714 $104,256 $ 62,185
Adjustments to reconcile net income to net cash provided
(used) by operating activities:
Equity in overdistributed (undistributed) net
income of subsidiaries.......................... 18,755 (28,595) (46,367)
Gains on sales of securities....................... (23) -- --
Loss on early extinguishment of debt............... 2,355 -- --
Other, net......................................... (5,808) (9,700) (19,902)
--------- -------- --------
Net cash provided (used) by operating
activities.................................... 136,993 65,961 (4,084)
--------- -------- --------
Cash flows from investing activities:
Investments in subsidiaries............................. (6,186) -- --
Purchases of securities available for sale.............. (29,497) -- --
Proceeds from sales of securities available for sale.... 1,597 -- --
Proceeds from maturities of securities available for
sale and held to maturity............................ 181 1,630 764
--------- -------- --------
Net cash (used) provided by investing
activities.................................... (33,905) 1,630 764
--------- -------- --------
Cash flows from financing activities:
Repayment of senior notes............................... (57,681) -- --
Proceeds from issuance of the Series A Subordinated
Debentures........................................... 202,308 -- --
Proceeds from issuance of Common Stock and treasury
stock................................................ 14,332 8,311 2,014
Purchases of treasury stock............................. (200,354) (70,456) --
Cash dividends paid on Common Stock..................... (12,892) -- --
Other................................................... 3,781 (1,913) --
--------- -------- --------
Net cash (used) provided by financing
activities.................................... (50,506) (64,058) 2,014
--------- -------- --------
Net increase (decrease) in cash and cash equivalents...... 52,582 3,533 (1,306)
Cash and cash equivalents at beginning of year............ 4,449 916 2,222
--------- -------- --------
Cash and cash equivalents at end of year.................. $ 57,031 $ 4,449 $ 916
========= ======== ========
Supplemental non-cash flow information:
Contribution of preferred stock of the Bank to the
capital of
the Bank............................................. $ -- $ -- $100,000
Securities held to maturity transferred to securities
available
for sale............................................. 840 -- --
</TABLE>
F-47
<PAGE> 98
DIME BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 28 -- CONDENSED QUARTERLY CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
----------------------------------------- -----------------------------------------
FOURTH THIRD SECOND FIRST FOURTH THIRD SECOND FIRST
QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest income................ $368,106 $350,870 $338,968 $324,871 $338,804 $335,551 $332,815 $343,528
Interest expense............... 241,581 230,703 219,871 207,598 220,641 220,832 218,737 229,193
-------- -------- -------- -------- -------- -------- -------- --------
Net interest income.......... 126,525 120,167 119,097 117,273 118,163 114,719 114,078 114,335
Provision for loan losses...... 8,000 8,000 23,000 10,000 10,000 10,250 10,250 10,500
-------- -------- -------- -------- -------- -------- -------- --------
Net interest income after
provision for loan
losses..................... 118,525 112,167 96,097 107,273 108,163 104,469 103,828 103,835
Non-interest income:
Loan servicing fees and
charges.................... 36,321 12,856 12,978 11,883 13,099 11,709 11,401 11,654
Banking service fees......... 8,635 8,695 7,543 6,923 7,181 7,309 6,840 6,726
Securities and insurance
brokerage fees............. 6,777 5,142 5,767 6,051 4,712 6,045 5,633 4,674
Net gains (losses) on sales
activities................. 4,309 2,845 2,799 2,083 (723) (10,548) (1,906) 461
Other........................ 2,128 742 149 665 90 48 1,520 53
-------- -------- -------- -------- -------- -------- -------- --------
Total non-interest
income................. 58,170 30,280 29,236 27,605 24,359 14,563 23,488 23,568
-------- -------- -------- -------- -------- -------- -------- --------
Non-interest expense:
General and administrative
expense.................... 117,471 73,580 73,690 72,381 75,603 76,165 70,833 70,194
Amortization of mortgage
servicing assets........... 14,034 5,248 5,267 5,202 4,861 4,300 4,796 5,425
ORE (income) expense, net.... (643) 351 1,581 3,052 3,016 2,404 2,159 2,493
Savings Association Insurance
Fund recapitalization
assessment................. -- -- -- -- -- 26,280 -- --
Restructuring and related
expense.................... 9,931 -- -- -- -- -- -- 3,504
-------- -------- -------- -------- -------- -------- -------- --------
Total non-interest
expense................ 140,793 79,179 80,538 80,635 83,480 109,149 77,788 81,616
-------- -------- -------- -------- -------- -------- -------- --------
Income before income tax
expense (benefit) and
extraordinary item........... 35,902 63,268 44,795 54,243 49,042 9,883 49,528 45,787
Income tax expense (benefit)... 12,943 23,741 17,023 21,327 17,724 (7,011) 20,539 18,732
-------- -------- -------- -------- -------- -------- -------- --------
Income before extraordinary
item......................... 22,959 39,527 27,772 32,916 31,318 16,894 28,989 27,055
Extraordinary item -- loss on
early extinguishment of debt,
net of income tax benefit of
$895......................... (1,460) -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- --------
Net income..................... $ 21,499 $ 39,527 $ 27,772 $ 32,916 $ 31,318 $ 16,894 $ 28,989 $ 27,055
======== ======== ======== ======== ======== ======== ======== ========
Earnings per common share:
Basic:
Income before extraordinary
item..................... $ 0.20 $ 0.39 $ 0.27 $ 0.31 $ 0.29 $ 0.16 $ 0.28 $ 0.27
Net income................. 0.19 0.39 0.27 0.31 0.29 0.16 0.28 0.27
Diluted:
Income before extraordinary
item..................... $ 0.19 $ 0.38 $ 0.26 $ 0.31 $ 0.29 $ 0.16 $ 0.27 $ 0.25
Net income................. 0.18 0.38 0.26 0.31 0.29 0.16 0.27 0.25
</TABLE>
F-48
<PAGE> 99
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER IDENTIFICATION OF EXHIBIT
- ------- -------------------------
<S> <C>
2.1 Agreement and Plan of Merger, dated as December 3, 1996,
between the Holding Company, Fifth Avenue Property Corp. and
BFS Bankorp (incorporated by reference to Appendix 2 to the
Current Report filed by the Holding Company on Form 8-K with
the Commission on December 3, 1996).
2.2 Agreement and Plan of Combination, dated as of June 22,
1997, by and among NAMC, the Holding Company, the Bank and
47th Street Property Corporation, as amended and restated as
of July 31, 1997 (incorporated by reference to Appendix A to
the Proxy Statement-Prospectus included in the Holding
Company's Registration Statement on Form S-4, filed with the
Commission on September 12, 1997 (No. 333-35565)).
3(i) Amended and Restated Certificate of Incorporation of the
Holding Company (incorporated by reference to Appendix A to
the Joint Proxy Statement-Prospectus included in the Holding
Company's Registration Statement on Form S-4, filed with the
Commission on November 4, 1994 (No. 33-86002)).
3(ii) Amendment to the Amended and Restated Certificate of
Incorporation, dated June 14, 1995 (incorporated by
reference to Exhibit 3(ii) to the Holding Company's Annual
Report on Form 10-K for the fiscal year ended December 31,
1995, filed with the Commission on April 1, 1996, as amended
on Form 10-K/A, filed with the Commission on May 15, 1996
(collectively, the "1995 10-K") (Commission file No.
1-13094)).
3(iii) By-laws of the Holding Company (incorporated by reference to
Exhibit 3 to the Holding Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1997, filed with the
Commission on August 14, 1997 (Commission file No.
1-13094)).
4.1 Stockholder Protection Rights Agreement, dated as of October
20, 1995, between the Holding Company and the First National
Bank of Boston, as Rights Agent (incorporated by reference
to Exhibit (1) of the Registration Statement on Form 8-A of
the Holding Company filed with the Commission on November 3,
1995).
4.2 None of the outstanding instruments defining the rights of
holders of long-term debt of the Holding Company represent
long-term debt in excess of 10% of the total assets of the
Holding Company. The Holding Company hereby agrees to
furnish to the Commission, upon request, a copy of any such
instrument.
10.1* Employment Agreement, dated as of January 30, 1998, between
the Bank and Lawrence J. Toal.
10.2* Agreement providing for joint and several liability of the
Holding Company, dated as of January 30, 1998, between the
Holding Company and Lawrence J. Toal.
10.3* Employment Agreement, dated as of January 30, 1998, between
the Bank and Anthony R. Burriesci.
10.4* Agreement providing for joint and several liability of the
Holding Company, dated as of January 30, 1998, between the
Holding Company and Anthony R. Burriesci.
10.5* Letter Agreement regarding initial employment terms, dated
as of July 1, 1997 (the "Burriesci Letter Agreement"),
between the Bank and Anthony R. Burriesci.
10.6* Amendment of the Burriesci Letter Agreement, effective as of
July 24, 1997, between the Bank and Anthony R. Burriesci.
10.7* Employment Agreement, dated as of January 30, 1998, between
the Bank and Fred B. Koons.
</TABLE>
97
<PAGE> 100
<TABLE>
<CAPTION>
EXHIBIT
NUMBER IDENTIFICATION OF EXHIBIT
- ------- -------------------------
<S> <C>
10.8* Letter Agreement regarding initial employment terms, dated
as of December 6, 1996 (the "Koons Letter Agreement"),
between the Bank and Fred B. Koons (incorporated by
reference to Exhibit 10.31 to the Holding Company's Annual
Report on Form 10-K for the fiscal year ended December 31,
1996, filed with the Commission on March 31, 1997 (the "1996
10-K") (Commission file No. 1-13094)).
10.9* Amendment of the Koons Letter Agreement, effective as of May
12, 1997, between the Bank and Fred B. Koons.
10.10* Amendment of the Koons Letter Agreement, effective as of
July 24, 1997, between the Bank and Fred B. Koons.
10.11* Employment Agreement, dated as of January 30, 1998, between
the Bank and D. James Daras.
10.12* Employment Agreement, dated as of January 30, 1998, between
the Bank and Carlos R. Munoz.
10.13* Dime Bancorp, Inc. Stock Incentive Plan, as amended by an
amendment effective April 27, 1994 (the "Stock Incentive
Plan") (incorporated by reference to Exhibit 4.1 to the
Holding Company's Registration Statement on Form S-8, filed
with the Commission on January 18, 1995 (No. 33-88552)).
10.14* Amendment, effective September 19, 1997, to the Stock
Incentive Plan.
10.15* Dime Bancorp, Inc. 1991 Stock Incentive Plan, as amended and
restated effective February 29, 1996 (the "1991 Stock
Incentive Plan") (incorporated by reference to Exhibit 4.1
to the Holding Company's Registration Statement on Form S-8,
filed with the Commission on May 24, 1996 (No. 333-04477)).
10.16* Amendment, effective as of October 1, 1996, to the 1991
Stock Incentive Plan (incorporated by reference to Exhibit
10.9 to the 1996 10-K).
10.17* Amendment, effective September 19, 1997, to the 1991 Stock
Incentive Plan.
10.18* Dime Bancorp, Inc. Stock Incentive Plan for Outside
Directors (the "Outside Directors Plan"), as amended
effective April 27, 1994 (incorporated by reference to
Exhibit 4.1 to the Holding Company's Registration Statement
on Form S-8, filed with the Commission on January 18, 1995
(No. 33-88560)).
10.19* Amendment, effective September 19, 1997, to the Outside
Directors Plan.
10.20* The Dime Savings Bank of New York, FSB Deferred Compensation
Plan, as amended by the First Amendment through the Fourth
Amendment thereof (incorporated by reference to Exhibit
10.14 to the Holding Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1994, filed with the
Commission on March 31, 1995 (the "1994 10-K") (Commission
file No. 1-13094)).
10.21* Deferred Compensation Plan for Board Members of The Dime
Savings Bank of New York, FSB, as amended and restated
effective as of July 24, 1997.
10.22* Benefit Restoration Plan of The Dime Savings Bank of New
York, FSB, amended and restated effective as of October 1,
1996 (incorporated by reference to Exhibit 10.14 to the 1996
10-K).
10.23* Retainer Continuation Plan for Independent Directors of The
Dime Savings Bank of New York, FSB (the "Retainer
Continuation Plan") (incorporated by reference to Exhibit
10.24 to the Bank's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993, filed with the
Commission on September 16, 1994 as Exhibit A to the Holding
Company's Report on Form 8-K dated that date (Commission
file No. 1-13094)).
10.24* Amendment, effective as of January 13, 1995, to the Retainer
Continuation Plan (incorporated by reference to Exhibit
10.13 to the 1995 10-K).
</TABLE>
98
<PAGE> 101
<TABLE>
<CAPTION>
EXHIBIT
NUMBER IDENTIFICATION OF EXHIBIT
- ------- -------------------------
<S> <C>
10.25* Amendment, effective as of December 31, 1996, to the
Retainer Continuation Plan (incorporated by reference to
Exhibit 10.17 to the 1996 10-K).
10.26* Amendment, effective March 1, 1997, to the Retainer
Continuation Plan (incorporated by reference to Exhibit
10.18 to the 1996 10-K).
10.27* Amendment, effective September 19, 1997, to the Retainer
Continuation Plan.
10.28* Key Executive Life Insurance/Death Benefit Plan of The Dime
Savings Bank of New York, FSB, amended and restated
effective as of July 24, 1997 (the "Key Life Plan").
10.29* Amendment, effective November 20, 1997, to the Key Life
Plan.
10.30* Dime Bancorp, Inc. 1990 Stock Option Plan (formerly Anchor
Bancorp, Inc. 1990 Stock Option Plan), as amended effective
as of January 13, 1995 (incorporated by reference to Exhibit
4.1 to the Holding Company's Registration Statement on Form
S-8, filed with the Commission on January 18, 1995 (No.
33-88554)).
10.31* Dime Bancorp, Inc. 1992 Stock Option Plan (formerly Anchor
Bancorp, Inc. 1992 Stock Option Plan), as amended effective
as of January 13, 1995 (the "1992 Stock Option Plan")
(incorporated by reference to Exhibit 4.1 to the Holding
Company's Registration Statement on Form S-8, filed with the
Commission on January 18, 1995 (No. 33-88556)).
10.32* Amendment, effective June 1, 1996, to the 1992 Stock Option
Plan (incorporated by reference to Exhibit 10.23 to the 1996
10-K).
10.33* Amendment, effective September 19, 1997, to the 1992 Stock
Option Plan.
10.34* Dime Bancorp, Inc. Supplemental Executive Retirement Plan
(the "SERP"), amended and restated effective as of December
2, 1997.
10.35* Amendment, effective January 29, 1998, to the SERP.
10.36* Dime Bancorp, Inc. Voluntary Deferred Compensation Plan, as
amended and restated effective as of July 24, 1997.
10.37* Dime Bancorp, Inc. Voluntary Deferred Compensation Plan for
Directors, as amended and restated effective as of July 24,
1997.
10.38* Dime Bancorp, Inc. Officer Incentive Plan, as amended and
restated effective as of July 24, 1997.
10.39* Anchor Savings Bank FSB Supplemental Executive Retirement
Plan, assumed by the Bank (incorporated by reference to
Exhibit 10.11 to the Anchor Bancorp Annual Report on Form
10-K for the fiscal year ended June 30, 1992 (Commission
file No. 33-37720)).
10.40* Dime Bancorp, Inc. 1997 Stock Incentive Plan for Outside
Directors, effective January 1, 1997 (the "1997 Outside
Director Plan").
10.41* Amendment, effective June 27, 1997, to the 1997 Outside
Director Plan.
10.42* Amendment, effective September 19, 1997, to the 1997 Outside
Director Plan.
</TABLE>
99
<PAGE> 1
Exhibit 10.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of January 30, 1998 between THE DIME SAVINGS
BANK OF NEW YORK, FSB (the "Bank"), a federal stock savings bank having its
principal executive offices at 589 Fifth Avenue, New York, New York 10017, and
LAWRENCE J. TOAL (the "Officer").
-----------
A. The Bank is desirous of employing the Officer upon the terms and
conditions set forth in this Agreement.
B. The Officer is desirous of being employed by the Bank upon the terms
and conditions set forth in this Agreement.
------------
Therefore, the Bank and the Officer, intending to be legally bound, agree
as follows:
1. Employment. Subject to the terms and conditions of this
Agreement, the Bank hereby employs the Officer, and the Officer hereby accepts
such employment.
2. Term of Employment. (a) The initial term of the Officer's
employment under this Agreement shall be deemed to have commenced on the date of
this Agreement and shall continue until March 1, 2001. This Agreement shall be
renewed automatically for one additional year on and on March 1, 1999 and shall
be further renewed on March 1, 2000 to continue until the date of the Officer's
65th birthday, unless (i) the Officer or the Bank gives contrary written notice
to the other, at least 20 days prior to any such renewal date, or (ii) this
Agreement has been otherwise terminated in accordance with its provisions. The
Board of Directors of the Bank shall,
<PAGE> 2
no later than the last day in each such year on which the Bank may give the
Officer notice of non-renewal pursuant to the immediately preceding sentence,
review and determine whether the Bank shall give the Officer notice of such
non-renewal with respect to the March 1 renewal date in such year; provided,
however, that nothing in this sentence shall be construed as limiting the Bank's
ability to give notice of non-renewal pursuant to the immediately preceding
sentence at any other time. A determination by the Board of Directors of the
Bank in any year that the Bank shall not give notice of non-renewal with respect
to the March 1 renewal date in such year shall be deemed to be the Board's
approval of the renewal of this Agreement on such renewal date. Except as
otherwise provided in Section 12(c)(ii) of this Agreement, neither the giving of
notice of non-renewal pursuant to clause (i) of the second sentence of this
Section 2(a), nor the subsequent expiration of the Term of this Agreement as a
result of the giving of such notice, shall be deemed to be a termination of the
Officer's employment under this Agreement. (As used in this Agreement, (i)
"Term" shall mean the initial term and any renewal term of this Agreement and
(ii) "remaining Term" shall mean the balance of the Term remaining at a
specified time without regard to potential future renewals under the renewal
provisions of this Section 2(a)).
(b) The Officer's employment may be terminated during the Term of
this Agreement by the Bank or the Officer in the manner specified in this
Agreement. Any such termination of employment shall result in a termination of
this Agreement on the Effective Date of Termination (as defined in Section 14);
provided that, notwithstanding anything to the contrary in the foregoing, any
right of the Officer to any payments or benefits as a result of a termination of
the Officer's employment (as provided in this Agreement) shall survive the
termination of this Agreement.
2
<PAGE> 3
3. Offices. During the Term, the Officer shall serve as President,
Chief Executive Officer and Chief Operating Officer of Dime Bancorp, Inc. (the
"Company"), and as Chairman of the Board, President, Chief Executive Officer and
Chief Operating Officer of the Bank, and as a director of each of the Company
and the Bank. In addition, during the Term the Officer shall serve, for the
period for which he may from time to time be elected, as an officer or director
of any subsidiary or affiliate of the Company.
4. Duties. As Chairman of the Board of the Bank, and as President,
Chief Executive Officer and Chief Operating Officer of the Company and the Bank,
the Officer shall perform such duties as are reasonable and customary for a
chief executive officer and such other duties as are set forth in the Bylaws of
the Company and the Bank or as may be agreed to from time to time by the
Officer. During the Term (except for periods of illness and vacation),
substantially all of the Officer's business time, attention, skill and efforts
shall be devoted to the performance of the Officer's duties under this
Agreement. Notwithstanding the foregoing, the Officer may (a) continue to serve
on the boards of directors of, and hold any other offices or positions in,
companies or organizations previously approved by the Board of Directors of the
Company or the Bank and (b) with the approval of the Board of Directors of the
Company, from time to time to serve on the board of directors of, and hold any
other offices or positions in, companies or organizations engaged in activities
that present no conflict of interest with the Company or the Bank and that will
not materially and adversely affect the performance of his obligations under
this Agreement.
3
<PAGE> 4
5. Compensation; Certain Benefits; Reimbursement. (a) The annual
salary of the Officer during the Term shall be $750,000 which shall, subject to
the provisions of Section 5(e), be payable in installments in accordance with
the prevailing general payroll practice of the Bank as it may exist from time to
time. The Board of Directors of the Bank (or a duly authorized committee of the
Board) may increase the Officer's annual salary from time to time. In no event
shall the Officer's annual salary be decreased below his annual salary specified
in the first sentence of this Section 5(a) plus all subsequent increases in his
annual salary. As used in this Agreement, "annual salary" shall mean, at any
time, the annual rate of salary then payable to the Officer pursuant to this
Section 5(a) (before deduction of any amounts deferred under any deferred
compensation plan of the Bank, any voluntary contributions to a 401(k) plan of
the Bank, or any other deductions from income) and shall be exclusive of
bonuses, incentive compensation or other compensation or benefits paid to or
accrued for the Officer other than pursuant to this Section 5(a).
(b) During the Term, the Bank shall (i) at the Bank's expense,
provide the Officer with the exclusive use of a Bank-owned or Bank-leased
automobile (at any time not to be more than three years old), (ii) employ for
the exclusive use of the Officer a full-time driver for such automobile, (iii)
reimburse the Officer for the annual (or less frequent) membership fees for two
country, social, business, luncheon or fitness clubs and (iv) reimburse the
Officer for tax planning and financial consulting services with a provider
selected by the Officer in an amount not to exceed $15,000 per annum.
4
<PAGE> 5
(c) The Officer shall not have or acquire by virtue of this
Agreement any rights to participate in, or receive benefits with respect to, any
compensation or benefit plan or program of the Bank, except (i) that while
employed by the Bank, the Officer shall be eligible to participate in an annual
cash bonus program (with a target bonus (the "Target Bonus") of at least 50% of
the Officer's annual salary or such higher target bonus amount as the Board of
Directors of the Bank or the Company may establish from time to time) and a
long-term incentive program on such terms and conditions, and subject to such
performance goals, as may from time to time be adopted by the Company or the
Bank, (ii) that while employed by the Bank, the Officer may participate in such
plans or programs to the extent provided in such plans and programs and on the
same basis as if the Officer's employment were not subject to the terms and
conditions of this Agreement, or (iii) as otherwise specifically provided in
this Agreement.
(d) The Officer is authorized to incur reasonable expenses for
promoting the business of the Company and the Bank and their subsidiaries and
affiliates, including expenses for travel, entertainment and similar items. The
Bank shall pay, or reimburse the Officer for, all such expenses upon
presentation by the Officer from time to time of an itemized account (in
reasonable detail) of such expenditures.
(e) Notwithstanding anything to the contrary in the foregoing
provisions, the payment of any amounts that would otherwise be payable to the
Officer but which would be in excess of the amount which the Company or the Bank
could deduct for federal income tax purposes if then paid on account of the
operation of Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), shall be deferred to the extent such deferral is required pursuant
to a policy adopted by the Compensation Committee of the Company or the Bank
and,
5
<PAGE> 6
to the extent so deferred, shall be payable pursuant to the relevant terms of
the Dime Bancorp, Inc. Voluntary Deferred Compensation Plan; provided, however,
that, if a Change in Control (as defined in Section 12(a)) has occurred,
deferral of amounts payable hereunder to the Officer on or after the date of
such Change in Control will only be required if and to the extent such policy in
effect immediately prior to the Change in Control (without taking into
consideration any changes therein made in contemplation of the occurrence of the
Change in Control) requires or would have required such deferral.
6. Disability. (a) The Bank may terminate the Officer's employment
under this Agreement for "permanent disability" if (i) the Officer shall become
physically or mentally disabled or incapacitated to the extent that the Officer
has been absent from the Officer's duties with the Bank on account of such
disabilities or incapacitation, as determined in a manner consistent with the
policy which applies generally to employees of the Bank, on a full-time basis
for a period of six consecutive months, and (ii) within 30 days after written
notice of proposed termination for permanent disability is given by the Bank to
the Officer, the Officer shall not have returned to full-time performance of the
Officer's duties.
(b) In the event of termination for "permanent disability," the Bank
shall provide the Officer with a benefit equal to (i) his annual salary (as in
effect immediately prior to the occurrence of such disability) for a period
commencing on the Effective Date of Termination and ending on the day
immediately prior to the first anniversary thereof and (ii) 75% of his annual
salary (as in effect immediately prior to the occurrence of such disability)
from the date of the first anniversary of the Effective Date of Termination and
continuing through the duration of his disability (but in no event beyond the
Officer's attainment of age 65). Notwithstanding the first
6
<PAGE> 7
sentence of this Section 6(b), any such payment shall terminate upon the
earliest to occur of (A) the date the Officer returns to full-time employment
with the Bank, (B) the date of the Officer's full-time employment by another
employer (including full-time service as a sole proprietor or owner of an
unincorporated business), or (C) the date of the Officer's death. In the event
of termination for "permanent disability," the Bank also shall continue to
provide until the Officer's death or, if earlier, the first to occur of (aa) the
date the Officer returns to full-time employment with the Bank, (bb) the date of
the Officer's full-time employment by another employer, or (cc) the date of the
Officer's attainment of age 65, all life, medical and dental insurance coverage
as is maintained by the Bank for full-time employees, provided that the Officer
shall continue to pay all amounts in respect of such coverage that other
employees receiving the same level of coverage are required to pay. In the event
of a termination of the Officer's employment for "permanent disability" at any
time during the remaining Term in effect at the time of a Change in Control (as
defined in Section 12(a)), the provisions of Section 12 shall apply in lieu of
the provisions of this Section 6(b).
(c) There shall be no reduction in the compensation payable to the
Officer or the Officer's other rights under this Agreement during any period
when the Officer is incapable of performing some or all of the Officer's duties
by reason of temporary or partial disability.
(d) The obligations of the Bank to provide the benefits described in
Section 6(b) may be satisfied, in whole or in part, by payments under disability
insurance policies covering the Officer and obtained and maintained in force
(with respect to the benefit described in the first sentence of Section 6(b)
solely at the Company's expense) by the Company. In connection therewith, the
Bank may require the Officer to elect the maximum disability insurance coverage
7
<PAGE> 8
available under the Bank's or the Company's group disability policy, provided
that the Bank shall pay on the Officer's behalf all amounts required to be paid
by the Officer as a result of such election. The Officer shall cooperate with
the Bank in all reasonable ways to obtain any such disability or key person
insurance coverage.
7. Supplemental Executive Retirement Benefits. The Officer shall
participate in the Supplemental Executive Retirement Plan of the Company (the
"SERP") and shall have a "Pension Goal" under such plan of not less than 50%.
The Officer's benefits under the SERP shall vest no less quickly than in
accordance with the following formula:
<TABLE>
<CAPTION>
Years of Service with
the Company, the Bank
or any subsidiary or
affiliate of either such
entity (or any predecessor
of any such entities) Vesting Percentage
-------------------------- ------------------
<S> <C>
5 50%
6 60%
7 70%
8 80%
9 90%
10 100%
</TABLE>
Any benefits provided under the SERP shall be in lieu of any supplemental
pension benefits provided pursuant to any previous employment agreement between
the Officer and the Bank. Notwithstanding the vesting schedule set forth above,
the Officer shall be fully vested in his benefit under the SERP in the event
that the Officer's employment is terminated at such time and upon such events as
would trigger a right to benefits pursuant to Sections 12(c)(i) or (c)(ii) in
connection with a Change in Control (as defined in Section 12(a)), unless such
termination is for "cause" (as defined in Section 9(b))). In the event of any
other involuntary termination of the
8
<PAGE> 9
Officer's employment by the Bank during the Term other than a termination for
"cause" (as defined in Section 9(b)), the Officer shall receive service credit
for purposes of vesting in the SERP benefit as if he had remained employed
through the end of the Term. On and after any Change in Control, to the extent
not otherwise limited pursuant to Section 9(c)(i), the Officer shall be eligible
to be paid, under the SERP, a SERP benefit, to the extent vested, that is in no
event less than a benefit calculated based upon the amount of the Officer's
"Pension Goal" and "Average Compensation" and the otherwise applicable terms of
the SERP and this Agreement, each as determined immediately prior to the Change
in Control. In addition, in the event of any termination of employment from the
Bank during the Term that would trigger a right to benefits pursuant to Section
12(c)(i) or (c)(ii), or in the event of any other involuntary termination of the
Officer's employment by the Bank during the Term other than a termination for
cause (as defined in Section 9(b)), if it results in a greater benefit the SERP
benefit payable to the Officer shall be based upon a definition of "Average
Compensation" whereby, in applying the otherwise applicable provisions of the
Average Compensation definition under the SERP, the compensation of the Officer
is determined as if the Officer had continued service throughout the Term, and,
at the end of the Term, the Average Compensation under the SERP is then
determined. For these purposes, where such a modified Average Compensation
definition is to be utilized, the Officer shall be deemed to have continued to
earn base pay at the rate that applied as of the Effective Date of Termination
through the end of the Term. In addition, where such a modified Average
Compensation definition is to be utilized, the average of the bonuses paid with
respect to the two-year period prior to the Effective Date of Termination shall
be deemed to be earned with respect to each annual period from the Effective
Date of Termination through the end of the Term;
9
<PAGE> 10
provided, however, that if the Effective Date of Termination occurs in 1998, the
actual bonus amount paid with respect to 1997 shall be deemed to be earned with
respect to each year through the end of the Term instead of such average bonus
amount. Any enhanced benefits payable pursuant to the provisions of this Section
7 shall be payable to the Officer (or, as appropriate, his beneficiaries) at the
same time, and in the same manner, as other benefits payable with respect to the
Officer pursuant to the terms of the SERP.
8. Death. In the event of the Officer's death during the Term, this
Agreement and all of the Bank's obligations under this Agreement shall terminate
(except as otherwise provided in this Section 8, Section 12(f) or with respect
to the obligations of the Bank under Section 7). In the event of the Officer's
death during the Term, the Bank shall, during the remainder of the life of the
Officer's surviving spouse, continue to provide such spouse the same level of
medical and dental insurance as is maintained from time to time by the Company
or the Bank for spouses of full-time employees (or, as appropriate, retirees) of
the Bank (or, in lieu of providing any such coverage, the Bank may pay such
spouse the cash equivalent of the cost of such coverage), provided that such
surviving spouse shall continue to pay any amounts in respect of such coverage
that is otherwise required to be paid by employees (or, as appropriate,
retirees) for such coverage and provided, further, that any such medical
coverage may be modified so that Medicare (or other governmental) coverage is
primary, with coverage provided by the Bank supplementary, to the extent
permitted by law.
9. Termination by the Bank. (a) The Bank may terminate the Officer's
employment under this Agreement at any time by giving the Officer written notice
of such termination, provided that, except where termination is for "cause" (as
defined in Section 9(b)),
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such notice shall be provided at least 30 days prior to the Effective Date of
Termination. In the event of a termination by the Bank of the Officer's
employment, other than a termination for "cause" (as defined in Section 9(b)),
the Bank shall (subject to the provisions of Section 9(c)) (1) pay to the
Officer, as a severance payment for services previously rendered to the Company
and the Bank, a lump sum equal to two times the Officer's annual salary (as
defined in Section 5(a)) and (2) maintain, until the later to occur of (A) the
18-month anniversary of the Effective Date of Termination and (B) the end of the
remaining Term at the Effective Date of Termination, all life, medical and
dental insurance coverage as is maintained by the Bank for full-time employees
(or, in lieu of providing any such coverage, the Bank may pay the Officer the
cash equivalent of the cost of such coverage), provided that the Officer shall
continue to pay all amounts in respect of such coverage that other employees
receiving the same level of coverage are required to pay. If the Effective Date
of Termination by the Bank of the Officer's employment occurs at any time during
the remaining Term in effect at the time of a Change in Control, the provisions
of Section 12 shall apply in lieu of the provisions of the immediately preceding
sentence of this Section 9(a).
(b) The Officer shall have no right to receive compensation or other
benefits under this Agreement for any period after the Effective Date of
Termination if the Officer's employment is terminated for "cause." As used in
this Agreement, "cause" shall mean the Officer's personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform assigned duties (which failure continues
after written demand is delivered by the Bank to the Officer that specifically
identifies the manner in which the Bank believes the Officer is intentionally
failing to perform his assigned duties), willful violation of any
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law, rule or regulation (other than traffic violations or similar offenses) or
final cease and desist order or material breach of any provision of this
Agreement.
(c)(i) Notwithstanding any other provision of this Section 9 or of
Section 12, if at the Effective Date of Termination any statute, regulation,
order, agreement, or regulatory interpretation thereof that is valid and binding
upon the Bank (a "Regulatory Restriction") shall restrict, prohibit or limit the
amount of any payment or the provision of any benefit that the Bank would
otherwise be liable for under this Section 9 or under Section 12, then the
amount that the Bank shall pay to the Officer hereunder shall not exceed the
maximum amount permissible under such Regulatory Restriction; provided that, if
such Regulatory Restriction shall subsequently be rescinded, superseded, amended
or otherwise determined not to restrict, limit or prohibit payment by the Bank
of amounts otherwise due the Officer hereunder, then the Bank shall promptly
thereafter pay to such Officer any amounts (or the value of any benefit)
previously withheld from such Officer as a result of such Regulatory
Restriction.
(ii) Notwithstanding any other provision of this Section 9 or
Section 12, in the event that any amount that is otherwise payable hereunder
other than on account of events described in Sections 12(c)(i) or 12(c)(ii)
following a Change in Control (as hereinafter defined) would be deemed to
constitute a parachute payment (a "Parachute Payment") within the meaning of
Section 280G of the Code, and if such Parachute Payment, when added to the other
payments which are deemed to constitute Parachute Payments, would otherwise
result in the imposition of an excise tax under Section 4999 of the Code, the
amounts payable hereunder (other than amounts payable pursuant to Section 7 or
otherwise payable on account of events described in Sections 12(c)(i) or
12(c)(ii) following a Change in Control) shall be reduced by the smallest
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amount necessary to avoid the imposition of such excise tax. Any such limitation
shall be applied to such compensation and benefit amounts, and in such order, as
the Bank shall determine in its sole discretion. References to the Code in this
Agreement shall be to the Code as presently in effect or to the corresponding
provisions of any succeeding law.
(d) If the Officer's employment is proposed to be terminated by the
Bank (whether or not for "cause" (as defined in Section 9(b)), the Bank shall
deliver to the Officer a Notice of Termination (as defined in Section 14)
accompanied by a copy of a resolution duly adopted by the affirmative vote of
not less than a majority of the entire Board of Directors of the Bank at a
meeting called and held for that purpose (after reasonable notice to the Officer
and an opportunity for him, together with counsel, to be heard before the Board
of Directors), and if such termination is for cause it shall include a finding
that in the good faith opinion of the Board of Directors the Officer's conduct
constituted cause for termination and specifying the particulars thereof in
reasonable detail.
(e) Upon the expiration of the Term on the Officer's 65th birthday
or the earlier expiration of the Term in accordance with the provisions of this
Agreement, the employment of the Officer hereunder shall terminate and the
Officer shall not be entitled to any additional compensation or benefits as a
result of such expiration pursuant to this Section 9 or Section 12 except as
otherwise expressly provided by Section 12(c)(ii).
10. Voluntary Termination by the Officer. The Officer shall have the
right to terminate the Officer's employment under this Agreement at any time
upon at least 60 but not more than 90 days' prior written notice to the Bank (an
"Officer's Termination Notice"). If this Agreement is terminated pursuant to the
immediately preceding sentence, all of the Bank's
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<PAGE> 14
obligations under this Agreement shall terminate and the Officer shall not be
entitled to any compensation or benefits after the Effective Date of
Termination, except to the extent provided in Section 7 and, as applicable,
Section 12.
11. Additional Termination and Suspension Provisions. (a) If the
Officer is removed and/or permanently prohibited from participating in the
conduct of the Bank's affairs by an order issued under Section 8(e)(3) or (g)(1)
of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(3) or (g)(1)), all
obligations of the Bank under this Agreement shall terminate as of the effective
date of the order, but vested rights of the parties shall not be affected.
(b) If the Bank is in default (as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act), all obligations under this Agreement shall
terminate as of the date of default, but this paragraph shall not affect any
vested rights of the parties.
(c) All obligations under this Agreement shall be terminated, except
to the extent determined that continuation of this Agreement is necessary for
the continued operation of the Bank, (i) by the Director of Thrift Supervision
or his or her designee (the "Director"), at the time the Federal Deposit
Insurance Corporation enters into an agreement to provide assistance to or on
behalf of the Bank under the authority contained in Section 13(c) of the Federal
Deposit Insurance Act; or (ii) by the Director, at the time the Director
approves a supervisory merger to resolve problems related to operation of the
Bank or when the Bank is determined by the Director to be in an unsafe or
unsound condition. Any rights of the parties that have already vested, however,
shall not be affected by such action.
(d) If the Officer is suspended and/or temporarily prohibited from
participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) or (g)(1) of the Federal
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Deposit Insurance Act (12 U.S.C. 1818(e)(3) and (g)(1)), the Bank's obligations
under this Agreement shall be suspended as of the date of service unless stayed
by appropriate proceedings. If the charges in the notice are dismissed, the Bank
may in its discretion (a) pay the Officer all or part of the compensation
withheld while its contract obligations were suspended and (b) reinstate (in
whole or in part) any of its obligations which were suspended.
(e) The provisions of paragraphs (a) through (d) of this Section 11
are required to be set forth in this Agreement by regulations applicable to the
Bank on the date of this Agreement. If any such regulation shall hereafter be
amended or modified, or if any new regulation applicable to the Bank and
effective after the date of this Agreement shall require the inclusion in this
Agreement of a provision not presently included in this Agreement, then the
foregoing provisions of paragraphs (a) through (d) of this Section 11 shall be
deemed amended to the extent necessary to give effect in this Agreement to any
such amended, modified or new regulation.
12. Change in Control. (a) As used in this Agreement, a "Change in
Control" shall be deemed to have occurred if the event set forth in any one of
the following paragraphs shall have occurred:
(I) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from
the Company or its Affiliates) representing 35% or more of the combined
voting power of the Company's then outstanding securities; or
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<PAGE> 16
(II) the following individuals cease for any reason to constitute a
majority of the number of directors then serving as directors of the
Company: individuals who, on July 24, 1997, constitute the Board of
Directors of the Company and any new director (other than a director whose
initial assumption of office is in connection with the settlement of an
actual or threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of the
Company) whose appointment or election by the Board of Directors of the
Company or nomination for election by the Company's stockholders was
approved or recommended by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors on July 24, 1997
or whose appointment, election or nomination for election was previously
so approved or recommended; or
(III) there is consummated a merger or consolidation of the Company
or any direct or indirect subsidiary of the Company with any other
corporation or entity, other than (i) a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity or any Parent thereof), in combination
with the ownership of any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any subsidiary of the
Company, at least 65% of the combined voting power of the securities of
the Company, such surviving entity or any Parent thereof outstanding
immediately after such merger or consolidation or (ii) a merger or
consolidation effected solely to implement a recapitalization of the
Company or the Bank (or similar transaction)
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<PAGE> 17
in which no Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company or the Bank (not including in the
securities beneficially owned by such Person any securities acquired
directly from the Company or its Affiliates) representing 35% or more of
the combined voting power of the Company's or the Bank's then outstanding
securities; or
(IV) the stockholders of the Company or the Bank approve a plan of
complete liquidation or dissolution of the Company or the Bank,
respectively, or there is consummated a sale or disposition by the Company
or any of its subsidiaries of any assets which individually or as part of
a series of related transactions constitute all or substantially all of
the Company's consolidated assets (provided that, for these purposes, a
sale of all or substantially all of the voting securities of the Bank or a
Parent of the Bank shall be deemed to constitute a sale of substantially
all of the Company's consolidated assets), other than any such sale or
disposition to an entity at least 65% of the combined voting power of the
voting securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the voting
securities of the Company immediately prior to such sale or disposition;
or
(V) the execution of a binding agreement that if consummated would
result in a Change in Control of a type specified in clause (I) or (III)
of this Section 12(a) (an "Acquisition Agreement") or of a binding
agreement for the sale or disposition of assets that, if consummated,
would result in a Change in Control of a type specified in clause (IV) of
this Section 12(a) (an "Asset Sale Agreement") or the adoption by the
Board of Directors of the Company or the Bank of a plan of complete
liquidation or dissolution of
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the Company or the Bank that, if consummated, would result in a Change in
Control of a type specified in clause (IV) of this Section 12(a) (a "Plan
of Liquidation"), provided however, that a Change in Control of the type
specified in this clause (V) shall not be deemed to exist or have occurred
as a result of the execution of such Acquisition Agreement or Asset Sale
Agreement, or the adoption of such a Plan of Liquidation, from and after
the Abandonment Date if the Effective Date of Termination of the Officer's
employment has not occurred on or prior to the Abandonment Date. As used
in this Section, the term "Abandonment Date" shall mean the date on which
(A) an Acquisition Agreement, Asset Sale Agreement or Plan of Liquidation
is terminated (pursuant to its terms or otherwise) without having been
consummated, (B) the parties to an Acquisition Agreement or Asset Sale
Agreement abandon the transactions contemplated thereby, (C) the Bank or
the Company abandons a Plan of Liquidation or (D) a court or regulatory
body having competent jurisdiction enjoins or issues a cease and desist or
stop order with respect to or otherwise prevents the consummation of, or a
regulatory body notifies the Bank or the Company that it will not approve,
an Acquisition Agreement, Asset Sale Agreement or Plan of Liquidation or
the transactions contemplated thereby and such injunction, order or notice
has become final and not subject to appeal.
As used in connection with the foregoing definition of Change in
Control, "Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated
under Section 12 of the Exchange Act; "Beneficial Owner" shall have the meaning
set forth in Rule 13d-3 under the Exchange Act; "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended from time to time; "Parent" shall
mean any entity that becomes the Beneficial Owner of at least
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80% of the voting power of the outstanding voting securities of the Company or
of an entity that survives any merger or consolidation of the Company or any
direct or indirect subsidiary of the Company; and "Person" shall have the
meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in
Sections 13(d) and 14(d) thereof, except that such term shall not include (i)
the Company or any of its subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any of its
Affiliates, (iii) an underwriter temporarily holding securities pursuant to an
offering of such securities, or (iv) a corporation or entity owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
(b) If the Bank or the Company shall relocate its principal
executive offices after a Change in Control, and if the Officer is required to,
as a result, change the Officer's principal residence, the Bank shall (i)
promptly pay (or reimburse the Officer for) all reasonable moving expenses
incurred by the Officer as a result of such change in the Officer's principal
residence, and (ii) indemnify the Officer against, and reimburse the Officer
for, any loss incurred as the result of the sale of the Officer's principal
residence (which loss shall be computed for the purpose of this Agreement as the
difference between the actual sales price (net of closing costs and brokerage
fees) of such residence and the fair market value of such residence (computed as
of the time the Bank or the Company relocates its principal executive offices)
as determined by an independent real estate appraiser designated and paid by the
Bank or the Company and acceptable to the Officer), provided that such sale of
the Officer's principal residence occurs within six months after the Bank or the
Company relocates its principal executive offices.
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(c)(i) If a Change in Control shall occur, the Officer shall be
entitled to the compensation and benefits provided in paragraphs (d), (e), (f)
and (g) of this Section 12 upon the subsequent termination by the Bank of the
Officer's employment at any time during the remaining Term in effect at the time
of the Change in Control (including, without limitation, a termination for
permanent disability), other than a termination for cause (as defined in Section
9(b)), provided that the rights to any such compensation and benefits shall be
subject to the limitations and provisions set forth in Section 9(c).
(ii) If a Change in Control shall occur, and thereafter the Board of
Directors of the Company or the Bank or, if the Company or the Bank is not the
surviving entity in the transaction giving rise to such Change in Control, the
Board of Directors of the ultimate parent entity surviving such Change in
Control, either (A) fails to elect or re-elect or appoint or reappoint the
Officer to the offices or positions specified in Section 3 with the Company and
the Bank or, if the Company or the Bank is not the surviving ultimate parent
entity in the transaction giving rise to such Change in Control, as Chief
Executive Officer of the ultimate parent entity surviving such Change in
Control, (B) gives the Officer notice of non-renewal of this Agreement as
provided in Section 2(a) other than for "cause" (as defined in Section 9(b)), or
(C) makes a material change in the Officer's functions, duties or
responsibilities, which change would cause the Officer's position with the
Company or the Bank or, if the Company or the Bank is not the surviving entity
in the transaction giving rise to such Change in Control, with the entity
surviving such Change in Control to become one of lesser responsibility,
importance or scope from that in effect immediately prior to the time of the
Change in Control (an event specified in clause (A), (B) or (C) is hereafter
referred to as a "Material Change"), the Officer shall be entitled to the
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compensation and benefits provided in paragraphs (d), (e), (f) and (g) of this
Section 12 (subject to the limitations and provisions set forth in Section 9(c))
upon the subsequent termination of the Officer's employment, at any time during
the remaining Term in effect at the time of the Change in Control, by the
Officer.
(iii) If the Officer's employment is terminated by the Bank or by
reason of the Officer's permanent disability during the Term but after the
expiration of the remaining Term in effect at the time of the Change in Control,
then the provisions of Section 6 or 9 (as the case may be) shall apply in lieu
of the provisions of paragraphs (d), (e) and (f) of this Section 12. If the
Officer's employment is terminated by the Officer during the Term but after the
expiration of the remaining Term in effect at the time of the Change in Control
(or if the Officer's employment is terminated by the Officer during the
remaining Term in effect at the time of the Change in Control and no Material
Change shall have occurred), then the provisions of Section 10 shall apply in
lieu of the provisions of paragraphs (d), (e) and (f) of this Section 12.
(iv) Only for purposes of determining whether there has been a
termination of the Officer's employment during the remaining Term in effect at
the time of a Change in Control (as specified in paragraphs (c)(i) or (c)(ii) of
this Section 12) so as to entitle the Officer to the compensation and benefits
provided in paragraphs (d), (e), (f) and (g) of this Section 12, a termination
of the Officer's employment following a Change in Control shall be deemed to
have occurred on such date during the remaining Term that (A) Notice of
Termination (as defined in Section 14(b)) is given by the Bank to the Officer
(regardless of the Effective Date of Termination specified therein), (B) an
Officer's Termination Notice (as defined in Section 10) is given by the Officer
to the Bank (regardless of the Effective Date of Termination specified therein)
or (C)
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notice of non-renewal pursuant to Section 2(a) is given by the Bank to the
Officer (regardless of the date on which the Term expires, but provided that,
but for such notice of non-renewal, a renewal would otherwise occur).
Notwithstanding the immediately preceding sentence, the Officer shall continue
to be employed by the Bank pursuant to this Agreement until (1) the Effective
Date of Termination specified in the Notice of Termination or Officer's
Termination Notice, as the case may be, or (2) the end of the remaining Term in
effect when notice of non-renewal is given pursuant to Section 2(a).
(d)(i) Upon the occurrence of a Change in Control followed by any
termination of the Officer's employment pursuant to Section 12(c)(i) or (c)(ii),
the Bank shall pay to the Officer, as a severance payment for services
previously rendered to the Bank, a lump sum equal to three times the Officer's
Deemed Annual Compensation, as in effect immediately prior to the Effective Date
of Termination (without regard to any decrease in the Officer's Deemed Annual
Compensation made after the Change in Control). As used in this Section
12(d)(i), the term "Deemed Annual Compensation" shall mean, at any time, an
amount equal to the sum of (A) the Officer's annual salary (as defined in
Section 5(a)) at such time, plus (B) the higher of (y) the amount of the target
bonus which the Officer is eligible to earn for the year which includes the day
immediately prior to the Change in Control, or (z) the amount of the average
bonus or other cash incentive earned by the Officer with respect to the two most
recently completed fiscal years, provided, however, that for purposes of this
clause (z), if the Effective Date of Termination occurs during 1998, 100% of the
bonus or other cash incentive actually earned by the Officer with respect to
1997 pursuant to each plan or program (whether or not such plan or program has
been
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formalized or is in written form) of the Bank in effect for such year that
provides for bonuses or other cash incentives shall be utilized in lieu of such
two-year average.
(ii) Upon the occurrence of a Change in Control followed by any
termination of the Officer's employment pursuant to Section 12(c)(i) or (c)(ii),
to the extent not otherwise limited pursuant to Section 9(c), each Vested Stock
Option held by the Officer shall (to the extent permitted by the plan under
which such Vested Stock Option was granted), notwithstanding anything to the
contrary in the grant letter related to such Vested Stock Option and regardless
of the actual Effective Date of Termination, remain exercisable for the term
specified in such grant letter as if there had been no termination of the
Officer's employment and the Officer remained in the employment of the Bank for
the entire term of such Vested Stock Option. As used in this Section 12(d)(ii),
the term "Vested Stock Option" shall mean any stock option (including any tandem
stock appreciation right) previously or hereafter granted to the Officer under a
stock incentive or stock option plan of the Company that vests and becomes
exercisable prior to the Effective Date of Termination or that vests upon the
retirement of the Officer.
(e) Any payment pursuant to Section 12(d)(i) shall be made to the
Officer within 30 days after the Effective Date of Termination.
(f) Upon the occurrence of a Change in Control followed by any
termination of the Officer's employment pursuant to Section 12(c)(i) or (c)(ii),
to the extent not otherwise limited pursuant to Section 9(c), the Bank shall,
for the remainder of the Officer's life, and for the remainder of the life of
the Officer's spouse (to whom the Officer was married as of the Effective Date
of Termination), continue to provide to the Officer and such spouse the same
level of disability, medical and dental insurance coverage as is maintained from
time to time by the
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Company or the Bank for full-time employees and their spouses, provided that (x)
the Officer (and, after the Officer's death, the Officer's surviving spouse)
shall continue to pay all amounts in respect of such coverage that the other
employees, retirees, or surviving spouses, as applicable, receiving the same
levels of coverage are required to pay, (y) any medical coverage may be modified
so that Medicare (or other governmental coverage) is primary, with coverage
provided by the Bank supplementary, to the extent permitted by law, and (z) in
lieu of providing any benefit hereunder, the Bank may pay the Officer (and after
the Officer's death, the Officer's surviving spouse) the cash equivalent of the
cost of such coverage.
(g)(i) If, on account of events described in Sections 12(c)(i) or
12(c)(ii) following a Change in Control, any payment or other benefit paid or to
be paid or any property transferred or to be transferred (collectively, a
"Severance Payment") with respect to one or more calendar years by or on behalf
of the Company (or any affiliate of the Company) to the Officer pursuant to this
Agreement shall constitute an "excess parachute payment" within the meaning of
Section 280G(b) of the Code subject to the tax imposed by Section 4999 of the
Code (the "Excise Tax"), then the Bank shall pay to the Officer an additional
amount (the "Gross Up Payment") such that the amount paid or transferred to the
Officer, after deduction of any Excise Tax on the Severance Payment, and any
federal, state and local income tax, employment tax and Excise Tax upon the
Gross Up Payment, shall be equal to the Severance Payment. In addition, if,
absent a Change in Control or in other circumstances following a Change in
Control, notwithstanding the reductions mandated by Section 9(c), the SERP
benefits described in Section 7 shall constitute an "excess parachute payment"
within the meaning of Section 280G(b) of the Code subject to the Excise Tax,
then the Bank shall pay to the Officer one or more Gross Up Payments such that
the amount
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of such Gross Up Payments, when combined with such SERP benefits, after
deduction of any Excise Tax on the SERP benefits, and any federal, state and
local income tax, employment tax and Excise Tax upon the Gross Up Payments,
shall be equal to such SERP benefits.
(ii) For purposes of determining under Section 12(g)(i) whether any
portion of a Severance Payment or SERP benefit will be subject to the Excise Tax
and the amount of such Excise Tax, (A) the Severance Payment or SERP benefit and
payments provided for in Section 12(g)(i) shall be treated as "parachute
payments" within the meaning of Section 280G(b)(2) of the Code, and all "excess
parachute payments" within the meaning of Section 280(G)(b)(1) of the Code shall
be treated as subject to the Excise Tax, unless and to the extent that tax
counsel selected by the Bank's independent auditors and acceptable to the
Officer is of the opinion that the Severance Payment or SERP benefit (in whole
or in part) does not constitute a "parachute payment" or such "excess parachute
payment" (in whole or in part) represents reasonable compensation for services
actually rendered within the meaning of Section 280G(b)(4) of the Code in excess
of the allocable base amount within the meaning of Section 280G(b)(3) of the
Code, or the Severance Payment or SERP benefit is otherwise not subject to the
Excise Tax, (B) the amount of the Severance Payment or SERP benefit that is
treated as subject to the Excise Tax shall be equal to the lesser of (X) the
total amount of the Severance Payment or SERP benefit, as applicable, and (Y)
the amount of "excess parachute payments" within the meaning of Section
280G(b)(1) of the Code (after applying clause (A) above), (C) any Gross Up
Payment pursuant to Section 12(g)(i) shall be treated as subject to the Excise
Tax in its entirety and (D) the value of any non-cash benefits or any deferred
payment or benefit shall be determined by the Company's
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independent auditors in accordance with the principles of Sections 280G(d)(3)
and (4) of the Code.
(iii) If in circumstances described in Section 12(g)(i), by reason
of the filing by the Officer of an amended tax return, an audit by the Internal
Revenue Service or other taxing authority, or a final determination by a court
of competent jurisdiction, it is determined that "excess parachute payments"
exceeding those previously reported in his tax returns were received by the
Officer and as a result an additional Excise Tax (the "Additional Excise Tax")
shall become due, the Bank shall pay the Officer an additional amount (the
"Subsequent Gross Up Payment") such that the amount paid or transferred to the
Officer, after deduction of (A) any Additional Excise Tax and (B) on an after
tax basis, any interest, additions and penalties with respect to the Additional
Excise Tax and (C) any federal, state and local income tax, employment tax and
Excise Tax upon the Subsequent Gross up Payment and (D) the payments provided
for in Section 12(g)(i), shall be equal to the Severance Payment or SERP
benefits, as appropriate.
(iv) Any Gross Up Payment required hereunder shall be made at least
ten days prior to the due date (without regard to extensions) of the Officers's
federal income tax return for the year with respect to which the "excess
parachute payment" is deemed made under the Code. Any Subsequent Gross Up
Payment required hereunder shall be made to the Officer within 30 days after the
amount thereof is determined. Notwithstanding the two immediately preceding
sentences, the Bank shall pay any federal, state and local tax or taxes and
employment taxes required to be withheld from the Officer's wages (within the
meaning of Section 3121 and 3402 of the Code) with respect to the "excess
parachute payment" and any such tax or taxes paid by
26
<PAGE> 27
the Company or the Bank to the Internal Revenue Service or state or local taxing
authority shall constitute payment to the Officer.
(v) If the Excise Tax is finally determined (whether by the filing
of an amended tax return by the Officer, by audit of the Internal Revenue
Service or other taxing authority, or by a final determination of a court of
competent jurisdiction) to be less than the amount paid to or on behalf of the
Officer under the provisions of Sections 12(g)(i)-(iv) and the overpayment is
refunded to the Officer, the Officer shall repay to the Bank, promptly following
the receipt of the refund, the portion of the Gross Up Payment (and/or
Subsequent Gross Up Payment) attributable to such reduction of the Excise Tax
(plus the portion attributable to federal, state and local income tax and
employment taxes imposed on the portion being repaid by the Officer but only to
the extent that the repayment may result in a tax benefit to the Officer under
Section 1341 of the Code and similar provisions of applicable state and local
law).
(vi) The provisions of this Section 12(g) shall inure to the benefit
of the Officer during the Term of this Agreement regardless of whether or not
his employment is terminated, and if the Officer's employment is terminated, the
rights and obligations of the Officer and the Bank under this Section 12(g)
shall survive the termination of this Agreement.
13. Post-Termination Obligations of the Officer. (a) In addition to
any related requirements that may apply pursuant to the terms of the Consulting
Agreement, upon any termination of the Officer's employment during the Term of
this Agreement or upon termination of the Officer's employment after the
expiration of the Term of this Agreement or upon retirement, the Officer agrees
(i) not to make any disclosure in violation of Section 13(b), (ii) to return to
the Bank all material documents relating to the business of the Bank that are in
the
27
<PAGE> 28
Officer's possession or under the Officer's control, and (iii) except if the
termination or retirement occurs after a Change in Control, not to solicit
(directly or indirectly), for one year following the Effective Date of
Termination (or date of termination after the expiration of the Term) or
retirement, the employment of any person who is an employee of the Bank on the
Effective Date of Termination (or date of termination after the expiration of
the Term) or retirement or who, within six months prior to the Effective Date of
Termination (or date of termination after the expiration of the Term) or
retirement, was an employee of the Bank, unless the Officer receives written
permission from the Bank to engage in the activities proscribed by this Section
13(a) or by Section 13(b) or to be relieved of any obligation under Section
13(a)(ii).
(b) The Officer recognizes and acknowledges that the confidential
business activities and plans for business activities of the Bank and its
subsidiaries and affiliates, as they may exist from time to time, are valuable,
special and unique assets of the Bank. The Officer shall not, during or at any
time after the Officer's employment, disclose any knowledge of the past, present
or planned business activities of the Bank or its subsidiaries or affiliates
that are of a confidential nature (collectively, the "Bank's Confidential
Activities") to any person, firm, corporation, bank, thrift institution or other
entity for any reason or purposes whatsoever. Notwithstanding anything in this
Section 13(b) to the contrary, the Officer (i) may disclose any knowledge of
banking, financial and/or economic principles, concepts or ideas that are not
derived from the Bank's Confidential Activities, and (ii) shall not be precluded
from disclosures respecting the Bank's Confidential Activities that are (A) made
pursuant to compulsory legal process or when required by an appropriate
governmental agency; (B) public knowledge or become public
28
<PAGE> 29
without the Officer's breach of this Section 13(b); (C) already known to the
party to whom the Officer makes such disclosures; or (D) approved by the Bank
for disclosure.
(c) The parties, recognizing that irreparable injury will result to
the Bank, its business and property in the event of the Officer's breach or
threatened breach of Section 13(a) or (b), agree that in the event of such
breach or threatened breach by the Officer, the Bank will be entitled, in
addition to any other remedies and damages that may be available, to seek and
obtain an injunction to restrain the violation of Section 13(a) or (b) by the
Officer.
14. Notices. (a) All notices under this Agreement shall be in
writing and shall be delivered personally, sent by registered or certified mail,
return receipt requested or sent by recognized next-day courier service, (a) to
the Bank, at its address set forth above (to the attention of its General
Counsel), and (b) to the Officer, at the Officer's residence address as
appearing in the records of the Bank, or to such other address as either party
may hereafter designate in writing in the manner provided in this Section 14.
All notices under this Agreement shall be deemed given (i) upon receipt if
delivered personally, (ii) on the third business day after deposit in a facility
of the U.S. Postal Service with postage prepaid, if delivered by registered or
certified mail, or (iii) on the first business day following the date of
dispatch if delivered by a recognized next-day courier service.
(b) Any purported termination of the Officer's employment with the
Bank pursuant to Sections 6 or 9 shall be communicated to the Officer by means
of a written notice (a "Notice of Termination"). The Notice of Termination shall
(i) indicate a specific termination provision relied upon, (ii) set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Officer's employment under the provision so indicated, and
29
<PAGE> 30
(iii) specify the Effective Date of Termination; provided, however, that no such
Notice of Termination shall specify an Effective Date of Termination that is
prior to the date on which any such Notice of Termination is given.
(c) As used in this Agreement, the term "Effective Date of
Termination" shall mean (i) the date on which the Officer's employment with the
Bank is to terminate, as specified in a Notice of Termination given by the Bank,
(ii) the date on which the Officer's employment with the Bank is to terminate,
as specified in an Officer's Termination Notice given by the Officer, or (iii)
for purposes of Section 12 only, the date on which the Term is to expire as a
result of a notice of non-renewal given by the Bank to the Officer pursuant to
Section 2(a).
15. No Duty to Mitigate. Except as otherwise expressly provided
herein, if the Officer shall continue to receive compensation or benefits or
severance pay pursuant to this Agreement after its termination, (a) the Officer
shall have no duty to mitigate such payments by seeking or obtaining other
employment or otherwise, and (b) in the event the Officer does obtain other
employment, such payments from the Bank shall not be reduced by compensation
received from such other employment.
16. Complete Understanding. This Agreement constitutes the complete
understanding between the parties with respect to its subject matter and merges
and supersedes all prior oral and written agreements and understandings and all
contemporaneous oral agreements and understandings, including, without
limitation, any other employment agreement heretofore executed by the Officer
and the Bank or any of its subsidiaries or affiliates. This Agreement may not be
amended, terminated or rescinded except in a writing signed by the party to be
charged.
30
<PAGE> 31
17. No Waiver. The failure of either party at any time to require
performance by the other party of a provision of this Agreement or to resort to
a remedy at law or in equity or otherwise shall in no way affect the right of
such party to require full performance or to resort to such remedy at any time
thereafter nor shall a waiver by either party of the breach of any provision of
this Agreement be taken or held to be a waiver of any subsequent breach of such
provision unless expressly so stated in writing. No waiver of any of the
provisions of this Agreement shall be effective unless in writing and signed by
the party to be charged.
18. Governing Law. This Agreement shall be governed by the laws of
the State of New York, without regard to conflict of laws principles applied in
the State of New York.
19. Headings. The headings to the Sections of this Agreement are for
convenience of reference only and shall not be given any effect in the
construction or interpretation of this Agreement.
20. Severability. If any provision of this Agreement is held by a
court or other authority having competent jurisdiction to be invalid, void or
otherwise unenforceable, in whole or in part, by reason of any applicable law,
statute or regulation or any interpretation thereof, then (a) the remainder of
the provisions of this Agreement shall remain in full force and effect and in no
way affected, impaired or invalidated and (b) the provision so held to be
invalid, void or otherwise unenforceable shall be deemed modified in amount,
duration, scope or otherwise to the minimum extent necessary so that such
provision shall not be invalid, void or otherwise unenforceable by reason of
such law, statute, regulation or interpretation and such provision, as so
modified, shall remain in full force and effect.
31
<PAGE> 32
21. Payment of Legal Fees. If any legal action or proceeding is
commenced to enforce or interpret the provisions of this Agreement, or to
recover damages for its breach, including without limitation any proceeding
commenced under Section 22 hereof, all reasonable legal fees, disbursements and
court or arbitration costs paid or incurred by the Officer arising out of or
resulting from such action or proceeding shall be paid or reimbursed to the
Officer by the Bank, provided that the action or proceeding is not dismissed or
summarily decided against the Officer.
22. Dispute Resolution. Any dispute or controversy arising under, in
connection with or relating to this Agreement or the transactions contemplated
hereby shall be subject to compulsory mediation in New York City in accordance
with the National Rules for the Resolution of Employment Disputes of the
American Arbitration Association then in effect. In the event that such
compulsory mediation does not result in a resolution of such dispute or
controversy which is acceptable to both the Bank and the Officer, such dispute
or controversy shall be resolved exclusively by arbitration in New York City in
accordance with the National Rules for the Resolution of Employment Disputes of
the American Arbitration Association then in effect. The parties hereto agree
that the decision of such arbitration shall be final and binding upon the
parties and upon confirmation of the decision resulting from such arbitration,
judgment may be entered on the arbitrators' award in any court having
jurisdiction.
23. Assumption by Company. This Agreement shall be assumable by the
Company at its election. Following any such election, the obligations of the
Bank under this Agreement shall become the obligations of the Company.
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<PAGE> 33
24. Taxes. Any payments due to the Officer pursuant to this
Agreement shall be reduced by all applicable federal, state, city or other taxes
required by law to be withheld with respect to such payments.
25. Limitation on Payments. Any payments made to the Officer
pursuant to this Agreement, or otherwise, are subject to and conditioned upon
their compliance with 12 USC ss. 1828(k) and any regulations promulgated
thereunder.
THE DIME SAVINGS BANK
OF NEW YORK, FSB
By:/s/IRA T. WENDER
---------------------------------
Name:
Title:
Dated: February 23, 1998 /s/LAWRENCE J. TOAL
------------------- ------------------------------------
LAWRENCE J. TOAL
33
<PAGE> 1
Exhibit 10.2
AGREEMENT
AGREEMENT, dated as of January 30, 1998 between Dime Bancorp, Inc.,
a Delaware corporation having its principal executive offices at 589 Fifth
Avenue, New York, New York 10017 (the "Company"), and LAWRENCE J. TOAL (the
"Officer").
--------------------
A. The Dime Savings Bank of New York, FSB (the "Bank"), a
wholly-owned subsidiary of the Company, has entered into an employment agreement
of even date herewith with the Officer (the "Employment Agreement").
B. The Company is desirous of having the Bank employ the Officer
upon the terms and conditions set forth in the Employment Agreement.
--------------------
Therefore, the Company and the Officer, intending to be legally
bound, agree that the Company shall be jointly and severally liable with the
Bank with respect to any benefits or payments due under the Employment Agreement
to the Officer, and the Company agrees to honor any such obligations that are
not fulfilled by the Bank.
DIME BANCORP, INC.
By:/s/IRA T. WENDER
---------------------------
Name:
Title:
/s/LAWRENCE J. TOAL
------------------------------
LAWRENCE J. TOAL
<PAGE> 1
Exhibit 10.3
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of January 30, 1998 between THE DIME SAVINGS
BANK OF NEW YORK, FSB (the "Bank"), a federal stock savings bank having its
principal executive offices at 589 Fifth Avenue, New York, New York 10017, and
ANTHONY BURRIESCI (the "Officer").
-----------
A. The Bank is desirous of employing the Officer upon the terms and
conditions set forth in this Agreement.
B. The Officer is desirous of being employed by the Bank upon the terms
and conditions set forth in this Agreement.
------------
Therefore, the Bank and the Officer, intending to be legally bound, agree
as follows:
1. Employment. Subject to the terms and conditions of this Agreement, the
Bank hereby employs the Officer, and the Officer hereby accepts such employment.
2. Term of Employment. (a) The initial term of the Officer's employment
under this Agreement shall be deemed to have commenced on the date of this
Agreement and shall continue until March 1, 2001. This Agreement shall be
renewed automatically for one additional year on March 1, 1999, and on each
March 1 thereafter, unless (x) the Officer or the Bank gives contrary written
notice to the other, at least 10 days prior to any such renewal date, or (y)
this Agreement has been otherwise terminated in accordance with its provisions.
During each calendar year of the term of this Agreement beginning with 1999
(unless notice of non-renewal of this Agreement shall have previously been given
by the Bank or the Officer pursuant to the immediately
<PAGE> 2
preceding sentence), the Board of Directors of the Bank (or a duly authorized
committee of the Board or subcommittee of such committee) shall, no later than
the last day in each such year on which the Bank may give the Officer notice of
non-renewal pursuant to the immediately preceding sentence, review and determine
whether the Bank shall give the Officer such notice of non-renewal with respect
to the March 1 renewal date in such year; provided, however, that nothing in
this sentence shall be construed as limiting the Bank's ability to give notice
of non-renewal pursuant to the immediately preceding sentence at any other time.
A determination by the Board of Directors of the Bank (or a duly authorized
committee of the Board or subcommittee of such committee) in any year that the
Bank shall not give notice of non-renewal with respect to the March 1 renewal
date in such year shall be deemed to be the Board's approval of the renewal of
this Agreement on such renewal date. Except as otherwise provided in Section
11(c)(iv) of this Agreement, neither the giving of notice of non-renewal
pursuant to clause (x) of the second sentence of this Section 2(a), nor the
subsequent expiration of the Term of this Agreement as a result of the giving of
such notice, shall be deemed to be a termination of the Officer's employment
under this Agreement. (As used in this Agreement, (i) "Term" shall mean the
initial term and any renewal term of this Agreement and (ii) "remaining Term"
shall mean the balance of the Term in effect at a specified time without regard
to potential future renewals under the renewal provision of this Section 2(a).)
(b) The Officer's employment may be terminated during the Term of
this Agreement by the Bank or the Officer in the manner specified in this
Agreement. Any such termination of employment shall result in a termination of
this Agreement on the Effective Date of Termination (as defined in Section 13);
provided that, notwithstanding anything to the contrary in
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<PAGE> 3
the foregoing, any right of the Officer to any payments or benefits as a result
of a termination of the Officer's employment (as provided in this Agreement)
shall survive the termination of this Agreement.
3. Office. During the Term, the Officer shall serve as an officer of the
Bank and of Dime Bancorp, Inc. (the "Company"). In addition, during the Term,
the Officer shall serve, for the period for which the Officer may from time to
time be elected, as an officer or director of any subsidiary or affiliate of the
Bank or the Company.
4. Duties. The Officer shall serve as Chief Financial Officer of the Bank
and of the Company, reporting directly to the Chief Executive Officer of the
Bank and the Company, respectively; provided, that the Officer shall hold
comparable or additional positions, and perform comparable or additional duties,
as may from time to time be assigned to the Officer. During the Term (except for
periods of illness and vacation), substantially all of the Officer's business
time, attention, skill and efforts shall be devoted to the performance of the
Officer's duties under this Agreement.
5. Compensation. (a) The annualized salary of the Officer during the
period of the Term ending July 1, 2000 shall be at the rate of $375,000. Such
annual salary shall, subject to the provisions of Section 5(d), be payable in
installments in accordance with the prevailing general payroll practice of the
Bank as it may exist from time to time. Thereafter, the Board of Directors of
the Bank (or a duly authorized committee of the Board or subcommittee of such
committee) may increase or decrease (but not below the relevant level described
above) the Officer's annual salary from time to time; provided that, except for
otherwise permitted decreases that are applied generally to officers of
comparable rank, such annual salary shall not be decreased by more than
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<PAGE> 4
25% in any one calendar year. As used in this Agreement, "annual salary" shall
mean, at any time, the annual rate of salary then payable to the Officer
pursuant to this Section 5(a) (before deduction of any amounts deferred under
any deferred compensation plan of the Bank, any voluntary contributions to the
Retirement 401(k) Investment Plan of Dime Bancorp, Inc., or any other similar
qualified plan or any other deductions from income) and shall be exclusive of
bonuses, incentive compensation, benefits pursuant to Section 5(c) hereunder, or
other compensation or benefits paid to or accrued for the Officer other than
pursuant to this Section 5(a).
(b) The Officer shall not have or acquire by virtue of this
Agreement any rights to participate in, or receive benefits with respect to, any
compensation or benefit plan or program of the Bank, except (i) that while
employed by the Bank the Officer may participate in such plans or programs to
the extent provided in such plans and programs and on the same basis as if the
Officer's employment were not subject to the terms and conditions of this
Agreement, or (ii) as otherwise specifically provided in this Agreement.
(c) To the extent vested, the Bank shall provide the Officer with a
supplemental retirement benefit in respect of the period beginning on July 1,
1997 and ending on July 1, 2007 equal in value to two times the sum of the
Officer's accruals under the Retirement Plan of Dime Bancorp, Inc. (the
"Retirement Plan") and the provisions of the Bank's Benefit Restoration Plan
(solely to the extent the Bank's Benefit Restoration Plan supplements benefits
under the Retirement Plan) during such period; provided that such benefit
(stated in the form of a single life annuity or such other normal form of
benefit as may be provided on an unreduced basis under the Retirement Plan)
shall be offset by the benefit, if any, payable to the Officer and the
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<PAGE> 5
Officer's beneficiaries (stated in the form of a single life annuity or such
other normal form of benefit as may be provided on an unreduced basis) and
accrued in respect of the same period under each of the Retirement Plan (without
regard to benefit reductions in that plan on account of benefits payable under
qualified defined contribution plans, if any), and the Bank's Benefit
Restoration Plan (solely to the extent the Benefit Restoration Plan supplements
benefits under the Retirement Plan). The Officer shall become vested in the
supplemental retirement benefit described in the immediately preceding sentence
after completion of a Period of Service (as determined under the Retirement
Plan) of three full years. The supplemental retirement benefit described in this
Section 5(c), to the extent vested, shall be payable at the same time and in the
same form (and valued in the same manner) as benefits are payable to the Officer
and the Officer's beneficiaries under provisions of the Bank's Benefit
Restoration Plan supplementing benefits under the Retirement Plan, except that,
in the event no benefits are then payable under the Bank's Benefit Restoration
Plan, the supplemental retirement benefit described in this Section 5(c) shall
be payable in the form of a single lump sum as soon as practicable after the
termination of the Officer's employment with the Bank, with the amount of such
lump sum payment determined in the same manner, and reflecting the same level of
reduction for early commencement as would apply based on the Officer's attained
age and Period of Service under the Retirement Plan, that lump sum equivalent
benefits are determined with respect to a benefit of the same amount under the
Retirement Plan. The Officer shall participate in the Company's Supplemental
Executive Retirement Plan (the "SERP") with a "Pension Goal" under such plan of
not less than 50% of "Average Compensation" (with each such term as defined in
the SERP), but subject to the vesting provisions under such plan or, solely as
applicable, Section 11(g)(i). The benefits otherwise
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<PAGE> 6
provided pursuant to this Section 5(c) shall offset and reduce the benefits to
be provided, if any, under the SERP (with the offset of the other Section 5(c)
benefits based upon such benefits as if they were payable in the form of a
single life annuity, or as otherwise provided under the SERP).
(d) Notwithstanding anything to the contrary in the foregoing
provisions, the payment of any amounts that would otherwise be payable to the
Officer but which would be in excess of the amount which the Company or the Bank
could deduct for federal income tax purposes if then paid, on account of the
operation of Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), shall be deferred to the extent such deferral is required pursuant
to a policy adopted by the Compensation Committee or the Board of Directors of
the Company or the Bank and, to the extent so deferred, shall be payable
pursuant to the relevant terms of the Dime Bancorp, Inc. Voluntary Deferred
Compensation Plan; provided, however, that, if a Change in Control (as defined
in Section 11(a)) has occurred, deferral of amounts payable hereunder to the
Officer on or after the date of such Change in Control will only be required if
and to the extent such policy in effect immediately prior to the Change in
Control (without taking into consideration any changes therein made in
contemplation of the occurrence of the Change in Control) requires or would have
required such deferral.
6. Disability. (a) The Bank may terminate the Officer's employment under
this Agreement for "permanent disability" if (i) the Officer shall become
physically or mentally disabled or incapacitated to the extent that the Officer
has been absent from the Officer's duties with the Bank on account of such
disabilities or incapacitation as determined in a manner consistent with the
policy which applies generally to employees of the Bank on a full-time basis for
a period of six consecutive months, and (ii) within 30 days after written notice
of proposed termination for
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<PAGE> 7
permanent disability is given by the Bank to the Officer, the Officer shall not
have returned to full-time performance of the Officer's duties.
(b) In the event of termination for "permanent disability," the Bank
shall continue to pay the Officer an amount equal to the Officer's then annual
salary described in Section 5(a) (less any benefits that would have been payable
to the Officer had the Officer elected the maximum available amount of
disability insurance coverage available from the Bank) for a period commencing
on the Effective Date of Termination and ending on the first anniversary thereof
(or the end of the remaining Term in effect immediately prior to the Effective
Date of Termination, if earlier). Notwithstanding the first sentence of this
Section 6(b), any such payment shall terminate upon the earliest to occur of (A)
the date the Officer returns to full-time employment with the Bank; (B) the
Officer's full-time employment by another employer; or (C) the Officer's death.
In the event of termination for "permanent disability," the Bank also shall
continue to provide until the end of the remaining Term in effect immediately
prior to the Effective Date of Termination (or the Officer's earlier death) all
life, medical and dental insurance coverage as is otherwise maintained by the
Bank for full-time employees, provided that the Officer shall continue to pay
all amounts in respect of such coverage that an employee receiving the same
level of coverage is or would be required to pay. In the event of a termination
of the Officer's employment for "permanent disability" at any time during the
remaining Term in effect at the time of a Change in Control (as defined in
Section 11(a)), the provisions of Section 11 shall apply in lieu of the
provisions of this Section 6(b).
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<PAGE> 8
(c) There shall be no reduction in the compensation payable to the
Officer or the Officer's other rights under this Agreement during any period
when the Officer is incapable of performing some or all of the Officer's duties
by reason of temporary or partial disability.
7. Death. In the event of the Officer's death during the Term, this
Agreement and all of the Bank's obligations under this Agreement shall
terminate.
8. Termination by the Bank. (a) The Bank may terminate the Officer's
employment under this Agreement at any time by giving the Officer written notice
of such termination, provided that, except where termination is for "cause" (as
defined in Section 8(b)), such notice shall be provided at least 30 days prior
to the Effective Date of Termination. In the event of a termination of the
Officer's employment by the Bank, other than a termination for "cause" (as
defined in Section 8(b)), the Bank shall (subject to the provisions of Section
8(c)) continue, from the Effective Date of Termination through the period, if
any, remaining until March 1, 1999, to pay the Officer the portion of his annual
salary that would otherwise be payable through such date (had his employment
continued), plus any guaranteed minimum incentive awards otherwise payable
through such date. In addition, in such event, for a period of eighteen months
from the Officers's Effective Date of Termination, the Bank shall (subject to
the provisions of Section 8(c)) (1) pay the Officer's annual salary at the rate
in effect immediately prior to the Effective Date of Termination to the Officer,
and (2) maintain (for the Officer, and, during such period but prior to the
Officer's death, for the Officer's spouse and dependents, as applicable) all
life, medical and dental insurance coverage as is otherwise maintained by the
Bank for full-time employees, provided that the Officer shall continue to pay
any amounts in respect of such coverage that an employee receiving the same
level of coverage is or would be required to pay. In the event of a
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<PAGE> 9
termination of the Officer's employment by the Bank at any time during the
remaining Term in effect at the time of a Change in Control, the provisions of
Section 11 shall apply in lieu of the provisions of the two immediately
preceding sentences of this Section 8(a).
(b) The Officer shall have no right to receive compensation or other
benefits under this Agreement for any period after the Effective Date of
Termination if the Officer's employment is terminated for cause. As used in this
Agreement, "cause" shall mean the Officer's personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform assigned duties (which failure continues after
written demand is delivered by the Bank to the Officer that specifically
identifies the manner in which the Bank believes the Officer is intentionally
failing to perform his assigned duties), willful violation of any law, rule or
regulation (other than traffic violations or similar offenses) or final cease
and desist order or material breach of any provision of this Agreement.
(c)(i)Notwithstanding any other provision of this Section 8 or of
Section 11, if at the Effective Date of Termination any statute, regulation,
order, agreement, or regulatory interpretation thereof that is valid and binding
upon the Bank (a "Regulatory Restriction") shall restrict, prohibit or limit the
amount of any payment or the provision of any benefit that the Bank would
otherwise be liable for under this Section 8 or under Section 11, then the
amount that the Bank shall pay to the Officer hereunder shall not exceed the
maximum amount permissible under such Regulatory Restriction; provided, that if
such Regulatory Restriction shall subsequently be rescinded, superseded, amended
or otherwise determined not to restrict, limit or prohibit payment by the Bank
of amounts otherwise due the Officer hereunder, then the Bank shall promptly
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<PAGE> 10
thereafter pay to such Officer any amounts (or the value of any benefit)
previously withheld from such Officer as a result of such Regulatory
Restriction.
(ii) Notwithstanding any other provision of this Section 8 or of
Section 11, in the event that any amount otherwise payable hereunder, other than
on account of events described in Sections 11(c)(i) or 11(c)(ii) following a
Change in Control (as hereinafter defined), would be deemed to constitute a
parachute payment (a "Parachute Payment") within the meaning of Section 280G of
the Code, and if any such Parachute Payment, when added to any other payments
which are deemed to constitute Parachute Payments, would otherwise result in the
imposition of an excise tax under Section 4999 of the Code, the amounts payable
hereunder (other than amounts payable under the SERP or otherwise payable on
account of events described in Sections 11(c)(i) or 11(c)(ii) following a Change
in Control) shall be reduced by the smallest amount necessary to avoid the
imposition of such excise tax. Any such limitation shall be applied to such
compensation and benefit amounts, and in such order, as the Bank shall determine
in its sole discretion. References to the Code in this Agreement shall be to the
Code as presently in effect or to the corresponding provisions of any succeeding
law.
9. Voluntary Termination by the Officer. The Officer shall have the right
to terminate the Officer's employment under this Agreement at any time upon at
least 30 but not more than 60 days' prior written notice to the Bank. If this
Agreement is terminated pursuant to the immediately preceding sentence, all of
the Bank's obligations under this Agreement shall terminate and the Officer
shall not be entitled to any compensation or benefits after the Effective Date
of Termination, except to the extent provided in Section 5(c) (to the extent
vested) or provided in Section 11, and except to the extent that certain other
benefits have vested.
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<PAGE> 11
10. Additional Termination and Suspension Provisions. (a) If the Officer
is removed and/or permanently prohibited from participating in the conduct of
the Bank's affairs by an order issued under Section 8(e)(3) or (g)(1) of the
Federal Deposit Insurance Act (12 U.S.C. 1818(e)(3) or (g)(1)), all obligations
of the Bank under this Agreement shall terminate as of the effective date of the
order, but vested rights of the parties shall not be affected.
(b) If the Bank is in default (as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act), all obligations under this Agreement shall
terminate as of the date of default, but this paragraph shall not affect any
vested rights of the parties.
(c) All obligations under this Agreement shall be terminated, except
to the extent determined that continuation of this Agreement is necessary for
the continued operation of the Bank, (i) by the Director of Thrift Supervision
or his or her designee (the "Director"), at the time the Federal Deposit
Insurance Corporation enters into an agreement to provide assistance to or on
behalf of the Bank under the authority contained in Section 13(c) of the Federal
Deposit Insurance Act; or (ii) by the Director, at the time the Director
approves a supervisory merger to resolve problems related to operation of the
Bank or when the Bank is determined by the Director to be in an unsafe or
unsound condition. Any rights of the parties that have already vested, however,
shall not be affected by such action.
(d) If the Officer is suspended and/or temporarily prohibited from
participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C.
1818(e)(3) and (g)(1)), the Bank's obligations under this Agreement shall be
suspended as of the date of service unless stayed by appropriate proceedings. If
the charges in the notice are dismissed, the Bank may in its discretion (a) pay
the Officer all or
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part of the compensation withheld while its contract obligations were suspended
and (b) reinstate (in whole or in part) any of its obligations which were
suspended.
(e) The provisions of paragraphs (a) through (d) of this Section 10
are required to be set forth in this Agreement by regulations applicable to the
Bank on the date of this Agreement. If any such regulation shall hereafter be
amended or modified, or if any new regulation applicable to the Bank and
effective after the date of this Agreement shall require the inclusion in this
Agreement of a provision not presently included in this Agreement, then the
foregoing provisions of paragraphs (a) through (d) of this Section 10 shall be
deemed amended to the extent necessary to give effect in this Agreement to any
such amended, modified or new regulation.
11. Change in Control. (a) As used in this Agreement, a "Change in
Control" shall be deemed to have occurred if the event set forth in any one of
the following paragraphs shall have occurred:
(I) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from
the Company or its Affiliates) representing 35% or more of the combined
voting power of the Company's then outstanding securities; or
(II) the following individuals cease for any reason to constitute a
majority of the number of directors then serving as directors of the
Company: individuals who, on July 24, 1997, constitute the Board of
Directors of the Company and any new director (other than a director whose
initial assumption of office is in connection with the
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settlement of an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of directors
of the Company) whose appointment or election by the Board of Directors of
the Company or nomination for election by the Company's stockholders was
approved or recommended by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors on July 24, 1997
or whose appointment, election or nomination for election was previously
so approved or recommended; or
(III) there is consummated a merger or consolidation of the Company
or any direct or indirect subsidiary of the Company with any other
corporation or entity, other than (i) a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity or any Parent thereof), in combination
with the ownership of any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any subsidiary of the
Company, at least 65% of the combined voting power of the securities of
the Company, such surviving entity or any Parent thereof outstanding
immediately after such merger or consolidation or (ii) a merger or
consolidation effected solely to implement a recapitalization of the
Company or the Bank (or similar transaction) in which no Person is or
becomes the Beneficial Owner, directly or indirectly, of securities of the
Company or the Bank (not including in the securities beneficially owned by
such Person any securities acquired directly from the Company or its
Affiliates)
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<PAGE> 14
representing 35% or more of the combined voting power of the Company's or
the Bank's then outstanding securities; or
(IV) the stockholders of the Company or the Bank approve a plan of
complete liquidation or dissolution of the Company or the Bank,
respectively, or there is consummated a sale or disposition by the Company
or any of its subsidiaries of any assets which individually or as part of
a series of related transactions constitute all or substantially all of
the Company's consolidated assets (provided that, for these purposes, a
sale of all or substantially all of the voting securities of the Bank or a
Parent of the Bank shall be deemed to constitute a sale of substantially
all of the Company's consolidated assets), other than any such sale or
disposition to an entity at least 65% of the combined voting power of the
voting securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the voting
securities of the Company immediately prior to such sale or disposition;
or
(V) the execution of a binding agreement that if consummated would
result in a Change in Control of a type specified in clause (I) or (III)
of this Section 11(a) (an "Acquisition Agreement") or of a binding
agreement for the sale or disposition of assets that, if consummated,
would result in a Change in Control of a type specified in clause (IV) of
this Section 11(a) (an "Asset Sale Agreement") or the adoption by the
Board of Directors of the Company or the Bank of a plan of complete
liquidation or dissolution of the Company or the Bank that, if
consummated, would result in a Change in Control of a type specified in
clause (IV) of this Section 11(a) (a "Plan of Liquidation"), provided
however, that a Change in Control of the type specified in this clause (V)
shall not be deemed to exist or have
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<PAGE> 15
occurred as a result of the execution of such Acquisition Agreement or Asset
Sale Agreement, or the adoption of such a Plan of Liquidation, from and after
the Abandonment Date if the Effective Date of Termination of the Officer's
employment has not occurred on or prior to the Abandonment Date. As used in this
Section, the term "Abandonment Date" shall mean the date on which (A) an
Acquisition Agreement, Asset Sale Agreement or Plan of Liquidation is terminated
(pursuant to its terms or otherwise) without having been consummated, (B) the
parties to an Acquisition Agreement or Asset Sale Agreement abandon the
transactions contemplated thereby, (C) the Bank or the Company abandons a Plan
of Liquidation or (D) a court or regulatory body having competent jurisdiction
enjoins or issues a cease and desist or stop order with respect to or otherwise
prevents the consummation of, or a regulatory body notifies the Bank or the
Company that it will not approve, an Acquisition Agreement, Asset Sale Agreement
or Plan of Liquidation or the transactions contemplated thereby and such
injunction, order or notice has become final and not subject to appeal.
As used in connection with the foregoing definition of Change in
Control, "Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated
under Section 12 of the Exchange Act; "Beneficial Owner" shall have the meaning
set forth in Rule 13d-3 under the Exchange Act; "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended from time to time; "Parent" shall
mean any entity that becomes the Beneficial Owner of at least 80% of the voting
power of the outstanding voting securities of the Company or of an entity that
survives any merger or consolidation of the Company or any direct or indirect
subsidiary of the Company; and "Person" shall have the meaning given in Section
3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d)
thereof, except that such term shall not include (i)
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<PAGE> 16
the Company or any of its subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any of its
Affiliates, (iii) an underwriter temporarily holding securities pursuant to an
offering of such securities, or (iv) a corporation or entity owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
(b) If the Bank or the Company shall relocate its principal
executive offices after a Change in Control, and if the Officer shall, as a
result, change the Officer's principal residence, the Bank shall (i) promptly
pay (or reimburse the Officer for) all reasonable moving expenses incurred by
the Officer as a result of such change in the Officer's principal residence, and
(ii) indemnify the Officer against, and reimburse the Officer for, any loss
incurred as the result of the sale of the Officer's principal residence (which
loss shall be computed for the purpose of this Agreement as the difference
between the actual sales price (net of closing costs and brokerage fees) of such
residence and the fair market value of such residence (computed as of the time
the Bank or the Company relocates its principal executive offices) as determined
by an independent real estate appraiser designated and paid by the Bank or the
Company and acceptable to the Officer), provided that such sale of the Officer's
principal residence occurs within six months after the Bank or the Company
relocates its principal executive offices.
(c)(i) If a Change in Control shall occur, the Officer shall be
entitled to the compensation and benefits provided in paragraphs (d), (e), (f)
and (g) of this Section 11 upon the
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subsequent termination of the Officer's employment, at any time during the
remaining Term in effect at the time of the Change in Control, by the Bank
(including, without limitation, a termination for permanent disability), other
than a termination for cause, provided that the rights to any such compensation
and benefits shall be subject to the limitations and provisions set forth in
Section 8(c).
(ii) If (A) a Change in Control shall occur, and thereafter the Bank
(notwithstanding its right to do so under Section 4 or Section 5) either (B)
makes a material change in the Officer's functions, duties or responsibilities,
which change would cause the Officer's position with the Bank to become one of
lesser responsibility, importance or scope from that in effect immediately prior
to the time of the Change in Control, or (C) reduces the Officer's annual salary
to a level below that in effect immediately prior to the Change in Control (an
event specified in clause (B) or (C) is hereafter referred to as a "Material
Change"), the Officer shall be entitled to the compensation and benefits
provided in paragraphs (d), (e), (f) and (g) of this Section 11 (subject to the
limitations and provisions set forth in Section 8(c)) upon the subsequent
termination of the Officer's employment, at any time during the remaining Term
in effect at the time of the Change in Control, by the Officer.
(iii) If the Officer's employment is terminated by the Bank or by
reason of the Officer's permanent disability during the Term but after the
expiration of the remaining Term in effect at the time of the Change in Control,
then the provisions of Section 6 or 8 (as the case may
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<PAGE> 18
be) shall apply in lieu of the provisions of paragraphs (d), (e), (f) and (g) of
this Section 11. If the Officer's employment is terminated by the Officer during
the Term but after the expiration of the remaining Term in effect at the time of
the Change in Control (or if the Officer's employment is terminated by the
Officer during the remaining Term in effect at the time of the Change in Control
and no Material Change shall have occurred), then the provisions of Section 9
shall apply in lieu of the provisions of paragraphs (d), (e), (f) and (g) of
this Section 11.
(iv) Only for purposes of determining whether there has been a
termination of the Officer's employment during the remaining Term in effect at
the time of a Change in Control (as specified in paragraphs (c)(i) and (c)(ii)
of this Section 11, as the case may be) so as to entitle the Officer to the
compensation and benefits provided in paragraphs (d), (e), (f) and (g) of this
Section 11, a termination of the Officer's employment following such a Change in
Control shall be deemed to have occurred on such date during the remaining Term
that (A) notice of termination is given by the Bank or the Officer to the other
(regardless of the Effective Date of Termination specified in such notice) or
(B) notice of non-renewal pursuant to Section 2(a) is given by the Bank to the
Officer (regardless of the date on which the Term expires). In the event that
notice of non-renewal pursuant to Section 2(a) is given by the Bank to the
Officer during the remaining Term in effect at the time of a Change in Control,
the termination of employment in connection with such notice of non-renewal
shall, for purposes of Sections 8(c) and 11(h), be treated as a termination of
employment described by paragraph (c)(i) of this Section 11. Notwithstanding the
immediately preceding sentences, the Officer shall continue to be employed by
the Bank pursuant to this Agreement until (1) the Effective Date of Termination
specified in the notice of termination
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<PAGE> 19
or (2) the end of the remaining Term in effect when notice of non-renewal is
given pursuant to Section 2 of this Agreement.
(d)(i) Upon the occurrence of a Change in Control followed by any
termination of the Officer's employment pursuant to Section 11(c)(i) or (c)(ii),
to the extent not otherwise limited pursuant to Section 8(c), the Bank shall pay
the Officer, as a severance payment for services previously rendered to the
Bank, a lump sum equal to three times the Officer's Annual Compensation, as in
effect immediately prior to the Effective Date of Termination (without regard to
any decrease in the Officer's Annual Compensation made after the Change in
Control). As used in this Section 11(d)(i), the term "Annual Compensation" shall
mean, at any time, an amount equal to the sum of (A) the Officer's annual salary
(as defined in Section 5(a)) at such time, plus (B) 100% of the target bonus or
other cash incentive that the Officer is eligible to earn in such year pursuant
to each plan or program (whether or not such plan or program has been formalized
or is in written form) of the Bank in effect for such year that provides for
bonuses or other cash incentives, or if no such plan or program has been adopted
with respect to such year, 100% of the target bonus or other cash incentive that
the Officer was eligible to earn in the most recent year in which such a plan or
program was in effect.
(ii) Upon the occurrence of a Change in Control followed by any
termination of the Officer's employment pursuant to Section 11(c)(i) or (c)(ii),
to the extent not otherwise limited pursuant to Section 8(c): (A) each
Non-Accelerated Stock Option held by the Officer shall
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<PAGE> 20
(to the extent permitted by the plan under which such Non-Accelerated Stock
Option was granted), notwithstanding anything to the contrary in the grant
letter or option agreement related to such Non-Accelerated Stock Option and
regardless of the actual Effective Date of Termination, vest and become
exercisable in accordance with the provisions of, and remain exercisable for the
term specified in, such grant letter or option agreement as if there had been no
termination of the Officer's employment and the Officer remained in the
employment of the Bank for the entire term of such Non-Accelerated Stock Option
and (B) each Vested Stock Option held by the Officer shall (to the extent
permitted by the plan under which such Vested Stock Option was granted),
notwithstanding anything to the contrary in the grant letter or option agreement
related to such Vested Stock Option and regardless of the actual Effective Date
of Termination, remain exercisable for the term specified in such grant letter
or option agreement as if there had been no termination of the Officer's
employment and the Officer remained in the employment of the Bank for the entire
term of such Vested Stock Option. As used in this Section 11(d)(ii), the term
(I) "Non-Accelerated Stock Option" shall mean any stock option (including any
tandem stock appreciation right) previously or hereafter granted to the Officer
under a stock incentive or stock option plan of the Company that has not,
pursuant to the provisions of such stock incentive or stock option plan or the
grant letter or option agreement pursuant to which such stock option was granted
to the Officer, vested and become exercisable prior to the Effective Date of
Termination and (II) "Vested Stock Option" shall mean any stock option
(including any tandem stock appreciation right) previously or hereafter granted
to the Officer under a stock incentive or stock option plan of the Company that
vests and becomes exercisable prior to the Effective Date of Termination.
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<PAGE> 21
(e) Any payment pursuant to Section 11(d)(i) or 11(g)(ii) shall be
made to the Officer within 30 days after the Effective Date of Termination.
(f) Upon the occurrence of a Change in Control followed by any
termination of the Officer's employment pursuant to Section 11(c)(i) or (c)(ii),
to the extent not otherwise limited pursuant to Section 8(c), the Bank shall
cause to be continued until the end of the remaining Term in effect immediately
prior to the giving of notice of termination or non-renewal (or the Officer's
earlier death) life, disability, medical and dental insurance coverage as is
otherwise maintained by the Bank for full-time employees, provided that the
Officer shall continue to pay all amounts in respect of such coverage that an
employee receiving the same level of coverage is or would be required to pay.
(g)(i)(A) On and after any Change in Control, to the extent not
otherwise limited pursuant to Section 8(c)(i), the Officer shall be eligible to
be paid, under the SERP, a SERP benefit, to the extent vested (and subject to
additional vesting in accordance with the terms of the SERP as such plan
provided immediately prior to the Change in Control, or if it results in a
greater vested percentage, with vesting determined otherwise pursuant to this
Section 11(g)(i)), that is not less than a benefit calculated based upon the
amount of the Officer's "Pension Goal" and "Average Compensation" and the
otherwise applicable terms of the SERP, each as determined immediately prior to
the Change in Control. The rights of the Officer and the obligations of the Bank
with respect to the benefits described under this Section 11(g)(i)(A) shall
survive the termination of this Agreement.
(B) In the event of termination of the Officer's employment pursuant
to Section 11(c)(i) or (c)(ii), to the extent not otherwise limited pursuant to
Section 8(c), notwithstanding
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any vesting provisions that would in other circumstances require further service
under the SERP, the Officer shall be fully vested in the Officer's SERP benefit,
which shall otherwise be payable in accordance with the terms of the SERP and,
as applicable, Section 11(g)(i)(A).
(ii) In the event of termination of the Officer's employment
pursuant to Section 11(c)(i) or (c)(ii), to the extent not otherwise limited
pursuant to Section 8(c), the Officer shall be entitled to receive in a lump sum
payment an amount equal to any amounts forfeited by the Officer under the
Company's qualified defined contribution plan(s) and under the Bank's Benefit
Restoration Plan (solely to the extent such Benefit Restoration Plan supplements
benefits under a defined contribution plan) as in effect immediately prior to
the Change in Control (or, if more favorable to the Officer, as in effect
immediately prior to the Effective Date of Termination).
(h)(i) If, on account of events described in Sections 11(c)(i) or
11(c)(ii) following a Change in Control, any payment or other benefit paid or to
be paid or any property transferred or to be transferred (collectively, a
"Severance Payment") with respect to one or more calendar years by or on behalf
of the Bank (or any affiliate of the Bank) to the Officer pursuant to this
Agreement in connection with such Change in Control shall constitute an "excess
parachute payment" within the meaning of Section 280G(b) of the Code subject to
the tax imposed by Section 4999 of the Code (the "Excise Tax"), then the Bank
shall pay to the Officer an additional amount (the "Gross Up Payment") such that
the amount paid or transferred to the Officer, after deduction of any Excise Tax
on the Severance Payment, and any federal, state and local income tax,
employment tax and Excise Tax upon the Gross Up Payment, shall be equal to the
Severance Payment. In addition, if, absent a Change in Control or in other
circumstances following a Change in Control, notwithstanding the reductions
mandated by Section 8(c), the SERP benefits
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otherwise payable to the Officer shall constitute an "excess parachute payment"
within the meaning of Section 280G(b) of the Code subject to the Excise Tax,
then the Bank shall pay to the Officer one or more Gross Up Payments such that
the amount of such Gross Up Payments, when combined with such SERP benefits,
after deduction of any Excise Tax on the SERP benefits, and any federal, state
and local income tax, employment tax and Excise Tax upon the Gross Up Payments,
shall be equal to such SERP benefits.
(ii) For purposes of determining under Section 11(h)(i) whether any
portion of a Severance Payment or SERP benefit will be subject to the Excise Tax
and the amount of such Excise Tax, (A) the Severance Payment or SERP benefit and
payment provided for in Section 11(h)(i) shall be treated as "parachute
payments" within the meaning of Section 280G(b)(2) of the Code, and all "excess
parachute payments" within the meaning of Section 280(G)(b)(1) of the Code shall
be treated as subject to the Excise Tax, unless and to the extent that tax
counsel selected by the Bank's independent auditors and acceptable to the
Officer is of the opinion that the Severance Payment or SERP benefit (in whole
or in part) does not constitute a "parachute payment" or such "excess parachute
payment" (in whole or in part) represents reasonable compensation for services
actually rendered within the meaning of Section 280G(b)(4) of the Code in excess
of the allocable base amount within the meaning of Section 280G(b)(3) of the
Code, or the Severance Payment or SERP benefit is otherwise not subject to the
Excise Tax, (B) the amount of the Severance Payment or SERP benefit that is
treated as subject to the Excise Tax shall be equal to the lesser of (X) the
total amount of the Severance Payment or SERP benefit, as applicable, and (Y)
the amount of "excess parachute payments" within the meaning of Section
280G(b)(1) of the Code (after applying clause (A) above), (C) any Gross Up
Payment pursuant to
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<PAGE> 24
Section 11(h)(i) shall be treated as subject to the Excise Tax in its entirety
and (D) the value of any non-cash benefits or any deferred payment or benefit
shall be determined by the Bank's independent auditors in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code.
(iii) If in circumstances described in Section 11(h)(i), by reason
of the filing by the Officer of an amended tax return, an audit by the Internal
Revenue Service or other taxing authority, or a final determination by a court
of competent jurisdiction, it is determined that "excess parachute payments"
exceeding those previously reported in the Officer's tax returns were received
by the Officer and as a result an additional Excise Tax (the "Additional Excise
Tax") shall become due, the Bank shall pay the Officer an additional amount (the
"Subsequent Gross Up Payment") such that the amount paid or transferred to the
Officer, after deduction of (A) any Additional Excise Tax and (B) on an after
tax basis, any interest, additions and penalties with respect to the Additional
Excise Tax and (C) any federal, state and local income tax, employment tax and
Excise Tax upon the Subsequent Gross up Payment and (D) the payments provided
for in Section 11(h)(i), shall be equal to the Severance Payment or SERP
benefits, as appropriate.
(iv) Any Gross Up Payment required hereunder shall be made at least
ten days prior to the due date (without regard to extensions) of the Officer's
federal income tax return for the year with respect to which the "excess
parachute payment" is deemed made under the Code. Any Subsequent Gross Up
Payment required hereunder shall be made to the Officer within 30 days after the
amount thereof is determined. Notwithstanding the two immediately preceding
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sentences, the Bank shall pay any federal, state and local tax or taxes and
employment taxes required to be withheld from the Officer's wages (within the
meaning of Section 3121 and 3402 of the Code) with respect to the "excess
parachute payment" and any such tax or taxes paid by the Company or the Bank to
the Internal Revenue Service or state or local taxing authority shall constitute
payment to the Officer.
(v) If the Excise Tax is finally determined (whether by the filing
of an amended tax return by the Officer by audit of the Internal Revenue Service
or other taxing authority, or by a final determination of a court of competent
jurisdiction) to be less than the amount paid to or on behalf of the Officer
under the provisions of Sections 11(h)(i)-(iv) and the overpayment is refunded
to the Officer, the Officer shall repay to the Bank, promptly following the
receipt of the refund, the portion of the Gross Up Payment (and/or Subsequent
Gross Up Payment) attributable to such reduction of the Excise Tax (plus the
portion attributable to federal, state and local income tax and employment taxes
imposed on the portion being repaid by the Officer but only to the extent that
the repayment may result in a tax benefit to the Officer under Section 1341 of
the Code and similar provisions of applicable state and local law).
(vi) The provisions of this Section 11(h) shall inure to the benefit
of the Officer during the Term of this Agreement regardless of whether or not
the Officer's employment is terminated, and if the Officer's employment is
terminated, the rights and obligations of the Officer and the Bank under this
Section 11(h) shall survive the termination of this Agreement.
12. Post-Termination Obligations of the Officer. (a) Upon any termination
of the Officer's employment during the Term of this Agreement or upon
termination of the Officer's
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employment after the expiration of the Term of this Agreement or upon
retirement, the Officer agrees (i) not to make any disclosure in violation of
Section 12(b), (ii) to return to the Bank all material documents relating to the
business of the Bank that are in the Officer's possession or under the Officer's
control, and (iii) except if the termination or retirement occurs after a Change
in Control, not to solicit (directly or indirectly), for one year following the
Effective Date of Termination (or date of termination after the expiration of
the Term) or retirement, the employment of any person who is an employee of the
Bank on the Effective Date of Termination (or date of termination after the
expiration of the Term) or retirement or who, within six months prior to the
Effective Date of Termination (or date of termination after the expiration of
the Term) or retirement, was an employee of the Bank, unless the Officer
receives written permission from the Bank to engage in the activities proscribed
by this Section 12(a) or by Section 12(b) or to be relieved of any obligation
under Section 12(a)(ii).
(b) The Officer recognizes and acknowledges that the confidential
business activities and plans for business activities of the Bank and its
subsidiaries and affiliates, as they may exist from time to time, are valuable,
special and unique assets of the Bank. The Officer shall not, during or at any
time after the Officer's employment, disclose any knowledge of the past, present
or planned business activities of the Bank or its subsidiaries or affiliates
that are of a confidential nature (collectively, the "Bank's Confidential
Activities") to any person, firm, corporation, bank, thrift institution or other
entity for any reason or purposes whatsoever. Notwithstanding anything in this
Section 12(b) to the contrary, the Officer (i) may disclose any knowledge of
banking, financial and/or economic principles, concepts or ideas that are not
derived from the Bank's Confidential Activities, and (ii) shall not be precluded
from disclosures respecting
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the Bank's Confidential Activities that are (A) made pursuant to compulsory
legal process or when required by an appropriate governmental agency; (B) public
knowledge or become public without the Officer's breach of this Section 12(b);
(C) already known to the party to whom the Officer makes such disclosures; or
(D) approved by the Bank for disclosure.
(c) The parties, recognizing that irreparable injury will result to
the Bank, its business and property in the event of the Officer's breach or
threatened breach of Section 12(a) or (b), agree that in the event of such
breach or threatened breach by the Officer, the Bank will be entitled, in
addition to any other remedies and damages that may be available, to seek and
obtain an injunction to restrain the violation of Section 12(a) or (b) by the
Officer.
13. Notices. All notices under this Agreement shall be in writing and
shall be delivered personally or sent by registered or certified mail, return
receipt requested, (a) to the Bank, at its address set forth above (to the
attention of its Chief Executive Officer), and (b) to the Officer, at the
Officer's residence address as appearing in the records of the Bank, or to such
other address as either party may hereafter designate in writing in the manner
provided in this Section 13. All notices under this Agreement shall be deemed
given (i) upon receipt if delivered personally or (ii) two days after deposit in
a facility of the U.S. Postal Service with postage prepaid. As used in this
Agreement, the term "Effective Date of Termination" shall mean (A) the date
specified in a notice hereunder on which such Officer's employment is to
terminate, provided, however, that no such notice shall specify an Effective
Date of Termination that is prior to the date on which any such notice is given
or (B) for purposes of Section 11 only, the date on which the Term is to expire
as a result of a notice of non-renewal given by the Bank to the Officer pursuant
to Section 2 of this Agreement.
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14. Complete Understanding. This Agreement, together with the Agreement
Regarding Initial Employment Terms attached hereto as Exhibit A, constitute the
complete understanding between the parties with respect to the subject matter
hereof and thereof and merge and supersede all prior oral and written agreements
and understandings and all contemporaneous oral agreements and understandings
with respect to the subject matter hereof and thereof, including without
limitation any other employment agreement heretofore executed by the Officer and
the Bank or any of its subsidiaries or affiliates. In the event of any conflict
between the express provisions of this Agreement and such Agreement Regarding
Initial Employment Terms, the express provisions of this Agreement shall be
controlling. This Agreement may not be amended, terminated or rescinded except
in a writing signed by the party to be charged.
15. No Duty to Mitigate. Except as otherwise expressly provided herein, if
the Officer shall continue to receive compensation or benefits or severance pay
pursuant to this Agreement after its termination, (a) the Officer shall have no
duty to mitigate such payments by seeking or obtaining other employment or
otherwise, and (b) in the event the Officer does obtain other employment, such
payments from the Bank shall not be reduced by compensation received from such
other employment.
16. No Waiver. The failure of either party at any time to require
performance by the other party of a provision of this Agreement or to resort to
a remedy at law or in equity or otherwise shall in no way affect the right of
such party to require full performance or to resort to such remedy at any time
thereafter nor shall a waiver by either party of the breach of any provision of
this Agreement be taken or held to be a waiver of any subsequent breach of such
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provision unless expressly so stated in writing. No waiver of any of the
provisions of this Agreement shall be effective unless in writing and signed by
the party to be charged.
17. Governing Law. This Agreement shall be governed by the laws of the
State of New York, without regard to conflict of laws principles applied in the
State of New York.
18. Headings. The headings to the Sections of this Agreement are for
convenience of reference only and shall not be given any effect in the
construction or interpretation of this Agreement.
19. Severability. If any provision of this Agreement is held by a court or
other authority having competent jurisdiction to be invalid, void or otherwise
unenforceable, in whole or in part, by reason of any applicable law, statute or
regulation or any interpretation thereof, then (a) the remainder of the
provisions of this Agreement shall remain in full force and effect and in no way
be affected, impaired or invalidated and (b) the provision so held to be
invalid, void or otherwise unenforceable shall be deemed modified in amount,
duration, scope or otherwise to the minimum extent necessary so that such
provision shall not be invalid, void or otherwise unenforceable by reason of
such law, statute, regulation or interpretation and such provision, as so
modified, shall remain in full force and effect.
20. Payment of Legal Fees. If, following a Change in Control, any legal
action or proceeding is commenced to enforce or interpret the provisions of this
Agreement, or to recover damages for its breach, all reasonable legal fees,
disbursements and court costs paid or incurred by the Officer arising out of or
resulting from such action or proceeding shall be paid or reimbursed to the
Officer by the Bank, provided the Officer shall be the prevailing party in such
action or proceeding.
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21. Assumption by Company. This Agreement shall be assumable by the
Company at its election. Following any such election, the obligations of the
Bank under this Agreement shall become the obligations of the Company.
22. Taxes. Any payments due to the Officer pursuant to this Agreement
shall be reduced by all applicable federal, state, city or other taxes required
by law to be withheld with respect to such payments.
23. Limitation on Payments. Any payments made to the Officer pursuant to
this Agreement, or otherwise, are subject to and conditioned upon their
compliance with 12 USC ss. 1828(k) and any regulations promulgated thereunder.
THE DIME SAVINGS BANK OF NEW YORK, FSB
By: /s/LAWRENCE J. TOAL
------------------------------
Lawrence J. Toal
Chief Executive Officer
Dated: February 5, 1998 /s/ANTHONY BURRIESCI
------------------ ------------------------------
ANTHONY BURRIESCI
-30-
<PAGE> 1
Exhibit 10.4
AGREEMENT
AGREEMENT, dated as of January 30, 1998 between Dime Bancorp, Inc.,
a Delaware corporation having its principal executive offices at 589 Fifth
Avenue, New York, New York 10017 (the "Company"), and ANTHONY BURRIESCI (the
"Officer").
--------------------
A. The Dime Savings Bank of New York, FSB (the "Bank"), a
wholly-owned subsidiary of the Company, has entered into an employment agreement
of even date herewith with the Officer (the "Employment Agreement"), and on July
1, 1997, an Agreement Regarding Initial Employment Terms with the Officer, with
an amendment thereto effective as of July 24, 1997 (together with such
amendment, the "Initial Terms Letter").
B. The Company is desirous of having the Bank employ the Officer
upon the terms and conditions set forth in the Employment Agreement and the
Initial Terms Letter.
--------------------
Therefore, the Company and the Officer, intending to be legally
bound, agree that the Company shall be jointly and severally liable with the
Bank with respect to any benefits or payments due under the Employment Agreement
and the Initial Terms Letter to the Officer, and the Company agrees to honor any
such obligations that are not fulfilled by the Bank.
DIME BANCORP, INC.
By:/s/LAWRENCE J. TOAL
--------------------------
Name:
Title:
/s/ANTHONY BURRIESCI
-----------------------------
ANTHONY BURRIESCI
<PAGE> 1
Exhibit 10.5
[Dime Letterhead]
as of July 1, 1997
Mr. Anthony Burriesci
961 Lily Pond Lane
Franklin Lakes, New Jersey 07417
Re: Agreement Regarding Initial Employment Terms
Dear Tony:
As we discussed, this Letter Agreement is intended to detail several
elements of your initial compensation arrangements with The Dime Savings Bank of
New York, FSB (the "Bank") to apply upon your commencement of employment. To the
extent, however, that it describes benefits requiring the approval of the
Compensation Committee or the Board of Directors of the Bank or of Dime Bancorp,
Inc. (the "Company"), it is subject to that approval, and to changes that may be
determined by such Committee(s) or such Board(s) from time to time, and
participation in the various plans described will be pursuant to the terms of
those plans, as they may be revised (and subject to their termination) from time
to time by the Bank or the Company. The benefits described herein are also
subject to other limitations described in further detail below.
1. Restricted Stock Award. As soon as possible following the
commencement of your employment, you will be awarded the right to purchase
35,000 shares of restricted stock pursuant to the Dime Bancorp, Inc. 1991 Stock
Incentive Plan (the "Plan"), with such restricted stock vesting on a pro-rata
basis on January 24, 1998, January 24, 1999 and January 24, 2000 (assuming that
you remain in the employment of the Bank), subject to earlier vesting under the
circumstances described in section 15.1 of the Plan. In the event that your
employment is involuntarily terminated other than for cause, you will also vest
(at the date of your termination of employment) in those shares of restricted
stock (from this award) for which vesting would have otherwise occurred during
the 12-month period following your termination of employment had you otherwise
remained in employment during that period. The purchase price for each share of
restricted stock, described in the preceding sentences, shall be equal to $1.00
per share. The Company agrees to pay to you on the date of such award $52,500
for the purpose of providing you with the aggregate purchase price for the
restricted stock awarded hereunder and the Federal, state and local income tax
liability arising from such payment.
<PAGE> 2
2
2. Annual Incentive Opportunity. You will be eligible to participate
in the Bank's Officer Incentive Plan during 1997 with a target incentive
opportunity equal to 50% of your annualized base salary, and for 1998 and 1999
with a target incentive opportunity equal to 50% of your base annual salary as
in effect on December 31 of each such year; provided that you will receive
minimum incentive awards of $175,000 for each of calendar years 1997 and 1998.
Later levels of target incentive opportunity will be set by the Bank's Board of
Directors or Compensation Committee. You will have an opportunity to earn up to
150% of your target incentive payment based on extraordinary performance, with
the final determination of the incentive paid to you in the discretion of the
Bank's Board of Directors.
3. Sign-on-Bonus. You shall receive, within 30 days of the later of
the execution and delivery of the Employment Agreement, dated as of July 1,
1997, between the Bank and you (the "Employment Agreement"), and your
commencement of employment, an initial cash bonus of $150,000. Such bonus will
not be subject to recovery upon termination of your employment other than for
cause (as defined in the Employment Agreement). You will also receive, as soon
as possible following the commencement of your employment, a grant of 90,000
non-qualified stock options. Such options shall vest, pro rata January 24, 1998,
January 24, 1999 and January 24, 2000 (assuming that you remain in the
employment of the Bank) and will be subject to the terms and conditions of the
underlying plan document and grant letter. In the event that your employment is
involuntarily terminated other than for cause, you will also vest (at the date
of your termination of employment) in those options (from this grant) for which
vesting would have otherwise occurred during the 12-month period following your
termination of employment had you otherwise remained in employment during that
period.
4. Long-Term Incentive Opportunity. To the extent approved, as
appropriate, from time to time by the Compensation Committee or the Board of
Directors of the Bank or the Company, for the years 1998, 1999 and 2000 you will
be eligible to receive long-term incentive awards equal in value (as determined
by the Bank) to 75% of your base annual salary as in effect on January 1 of such
years. To the extent appropriate, such long-term incentive awards will be
subject to the terms and conditions (including vesting) of any underlying stock
incentive plan document and grant letter.
5. Key Executive Life Insurance. You will be eligible to participate
in the Bank's Key Executive Life Insurance/Death Benefit Plan.
6. Deferred Compensation Plan. You will be eligible to participate
in the Dime Bancorp, Inc. Voluntary Deferred Compensation Plan.
7. Automobile Allowance. For purposes of enabling you to travel to
and from the Bank's offices and elsewhere for business purposes, the Bank will
provide you during the term of your Employment Agreement with the use of a
Bank-owned or Bank-leased
<PAGE> 3
3
automobile of a make and model commensurate with that being provided under the
Bank's policies as in effect on the date hereof to officers of the Bank of
comparable rank and responsibility, and will reimburse you for all costs,
including tolls, gasoline, insurance coverage and repairs, incurred by you
during such period in connection with the business operation of the vehicle,
subject to the Bank's policies, as in effect from time to time, concerning
personal use of the automobile.
8. Other Expenses. The Bank will reimburse you for your reasonable
fees and expenses incurred in the negotiation of the Employment Agreement and
this Letter Agreement, including reasonable legal fees and expenses and
reasonable financial advisor fees and expenses.
Notwithstanding the foregoing, if any statute, regulation, order,
agreement or regulatory interpretation thereof that is valid and binding upon
the Bank, including, without limitation, 12 USC ss.1828(k) and regulations
thereunder (each a "Regulatory Restriction") restricts, prohibits or limits the
amount of any payment or the provision of any benefit that the Bank would
otherwise be liable for pursuant to this Letter Agreement, then the amount that
the Bank will pay to you will not exceed the maximum amount permissible under
such Regulatory Restriction; provided, that if such Regulatory Restriction shall
subsequently be rescinded, superseded, amended or otherwise determined not to
restrict, limit or prohibit payment by the Bank of amounts otherwise due you
hereunder, the Bank shall promptly thereafter pay to you any amounts (or the
value of any benefit) previously withheld from you as a result of such
Regulatory Restriction. The provisions and limitations set forth in Sections
8(b), 8(c) and 10 of your Employment Agreement, to the extent required by law,
as well as the provisions of Section 5(d) of your Employment Agreement, are
hereby incorporated by reference herein. Further, if any amount otherwise
payable hereunder other than upon events following a Transfer of Control (as
defined in the Employment Agreement) would be deemed to constitute a parachute
payment (a "Parachute Payment") within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), and if any such
Parachute Payment, when added to any other payments other than upon events
following a Transfer of Control which are deemed to constitute Parachute
Payments, would otherwise result in the imposition of an excise tax under
Section 4999 of the Code, the amounts payable hereunder shall be reduced by the
smallest amount necessary to avoid the imposition of such excise tax. Any such
limitation shall be applied in a manner that considers the benefits that are to
be paid pursuant to the Employment Agreement or otherwise, and such limitation
shall be applied to such compensation and benefit amounts, and in such order, as
the Bank shall determine in its sole discretion. References to the Code
hereunder shall be to the Code as presently in effect or to the corresponding
provisions of any succeeding law.
This Letter Agreement is intended solely to detail certain of your
initial compensation arrangements with the Bank. Nothing in this Letter
Agreement (a) confers upon you the right to continue in the employment of the
Bank or the right to hold any particular office
<PAGE> 4
4
or position with the Bank, (b) requires the Bank to pay you, or entitles you to
receive, any specified annual salary or interferes with or restricts in any way
the right of the Bank to decrease your annual salary at any time, (c) requires
the Bank to continue to provide any of the benefit plans or arrangements
described above, or (d) interferes with or restricts in any way the right of the
Bank to terminate your employment at any time, with or without cause. In the
event of any conflict between the express provisions of this Letter Agreement
and the Employment Agreement, the express provisions of the Employment Agreement
shall be controlling.
Any payments due you hereunder shall be reduced by all applicable
withholding and other taxes.
This Letter Agreement shall be governed by the laws of the State of
New York, without regard to conflict of laws principles applied in the State of
New York. If any provision of this Letter Agreement is held by a court or other
authority having competent jurisdiction to be invalid, void or otherwise
unenforceable, in whole or in part, by reason of any applicable law, statute or
regulation or any interpretation thereof, then the remainder of the provision of
this Letter Agreement shall remain in full force and effect and in no way
affected, impaired or invalidated. This Letter Agreement may be assumed by the
Company at its election. Following any such election, the obligations of the
Bank under this Letter Agreement shall become the obligations of the Company.
Except as otherwise provided above, this Letter Agreement may only be amended in
writing signed by both parties hereto.
Please indicate your acceptance to the terms of this Letter
Agreement by signing below.
Very truly yours,
THE DIME SAVINGS BANK OF NEW YORK, FSB
By:/s/LAWRENCE J.TOAL
-----------------------------------
AGREED AND ACCEPTED
/s/ANTHONY BURRIESCI
- -----------------------------
Anthony Burriesci
Date: July 8, 1997
<PAGE> 1
Exhibit 10.6
AMENDMENT OF AGREEMENT
The Agreement Regarding Initial Employment Terms, dated as of July 1,
1997, between The Dime Savings Bank of New York, FSB and Anthony Burriesci, is
hereby amended, effective as of July 24, 1997, to replace the clause "Transfer
of Control" where it appears therein with the clause "Change in Control."
AGREED AND ACCEPTED
THE DIME SAVINGS BANK OF
NEW YORK, FSB
By: /s/LAWRENCE J. TOAL
------------------------------
/s/ANTHONY BURRIESCI
----------------------------------
ANTHONY BURRIESCI
<PAGE> 1
Exhibit 10.7
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of January 30, 1998 between THE DIME SAVINGS
BANK OF NEW YORK, FSB (the "Bank"), a federal stock savings bank having its
principal executive offices at 589 Fifth Avenue, New York, New York 10017, and
FRED B. KOONS (the "Executive").
-----------
A. The Bank is desirous of employing the Executive upon the terms and
conditions set forth in this Agreement.
B. The Executive is desirous of being employed by the Bank upon the terms
and conditions set forth in this Agreement.
------------
Therefore, the Bank and the Executive, intending to be legally bound,
agree as follows:
1. Employment. Subject to the terms and conditions of this
Agreement, the Bank hereby employs the Executive, and the Executive hereby
accepts such employment.
2. Term of Employment. (a) The term of the Executive's employment
under this Agreement shall be deemed to have commenced on the date of this
Agreement and shall continue until December 2, 2001 unless this Agreement has
been terminated prior thereto in accordance with its provisions. (As used in
this Agreement, (i) "Term" shall mean the full term of this Agreement and (ii)
"remaining Term" shall mean the balance of the Term remaining at a specified
time.)
<PAGE> 2
(b) The Executive's employment may be terminated during the Term of
this Agreement by the Bank or the Executive in the manner specified in this
Agreement. Any such termination of employment shall result in a termination of
this Agreement on the Effective Date of Termination (as defined in Section 13);
provided that, notwithstanding anything to the contrary in the foregoing, any
right of the Executive to any payments or benefits as a result of a termination
of the Executive's employment (as provided in this Agreement) shall survive the
termination of this Agreement.
3. Offices. During the period during the Term ending December 1,
1999, the Executive shall continue to serve as an officer of the Bank and its
parent corporation, Dime Bancorp, Inc. (the "Company"). In addition, during the
period during the Term ending December 1, 1999, the Executive shall serve as an
officer of the Bank's mortgage banking subsidiary, North American Mortgage
Company or its successor (the "Subsidiary"). During the period during the Term
commencing December 2, 1999, the Executive shall serve as an executive employee
of the Bank. During the Term, the Executive shall also serve, for any period for
which the Executive may from time to time be elected, as an officer or director
of subsidiaries or affiliates of the Bank.
4. Duties. (a) During the period during the Term ending December 1,
1998, the Executive shall serve as an Executive Vice President of the Bank and
the Company and as the Chief Executive Officer of the Subsidiary and shall
perform such duties in connection therewith as may be assigned to him from time
to time by the Chief Executive Officer of the Bank or the Company, as the case
may be.
(b) During the period during the Term from December 2, 1998 through
December
2
<PAGE> 3
1, 1999, the Executive shall continue to serve as an Executive Vice President of
the Bank and the Company and perform the duties in connection therewith set
forth in Section 4(a). In addition, during such period the Executive shall serve
as transitional Chief Executive Officer of the Subsidiary and perform the duties
in connection therewith set forth in Section 4(a) until a successor Chief
Executive Officer of the Subsidiary is appointed during such period.
(c) During the period during the Term commencing December 2, 1999,
the Executive shall serve as an executive employee of the Bank and shall perform
such duties in connection therewith as may be assigned to him from time to time
by the Chief Executive Officer of the Bank.
(d) During the period during the Term ending December 1, 1998
(except for periods of illness and vacation), substantially all of the
Executive's business time, attention, skill and efforts shall be devoted to the
performance of the Executive's duties under this Agreement. During the period
during the Term from December 2, 1998 through December 1, 1999 (except for
periods of illness and vacation), not less than the equivalent of 144 full-time
days of the Executive's business time, attention, skill and efforts shall be
devoted to the performance of the Executive's duties under this Agreement.
During each of the periods during the Term from December 2, 1999 through
December 1, 2000, and from December 2, 2000 through December 2, 2001 (except for
periods of illness and vacation), not less than the equivalent of 84 full-time
days of the Executive's business time, attention, skill and efforts shall be
devoted to the performance of the Executive's duties under this Agreement.
During each period during the Term commencing on or after December 2, 1998, the
Bank shall have the right, in its discretion,
3
<PAGE> 4
to designate the days or portions thereof on which the Executive shall be
required to perform his duties under this Agreement. To the extent that the
Executive engages in business activities during any period during the Term
commencing on or after December 2, 1998 in addition to his duties to the Bank
set forth herein, it is understood and agreed that the Executive shall not
engage in any activities which would materially interfere with his ability to
perform his duties hereunder as requested from time to time by the Bank and
shall not engage, directly or indirectly, as an officer, director, principal,
employee, stockholder or consultant of any corporation or other business entity
which competes in any material respect with the businesses carried on by the
Bank and its subsidiaries; provided, however, that the Executive will be
permitted to own as a passive investor less than 5% of any class of
publicly-traded securities of any entity which competes with the Bank and its
subsidiaries without being deemed to have violated this Section 4(d). Subject to
the foregoing restrictions and to the prior fulfillment of his obligations to
the Bank hereunder, the Executive shall be entitled to perform consulting
services for third parties during any period during the Term commencing on or
after December 2, 1998 with the prior written approval of the Bank, such
approval not to be unreasonably withheld or delayed.
5. Compensation. (a) The annualized salary of the Executive during
the period during the Term ending December 1, 1998 shall be at the rate of
$375,000, which shall, subject to the provisions of Section 5(g), be payable in
installments in accordance with the prevailing general payroll practice of the
Bank as it may exist from time to time.
(b) The annual salary of the Executive during the period during the
Term from
4
<PAGE> 5
December 2, 1998 through December 1, 1999 shall be at the rate of $250,000 for
the equivalent of 144 full-time days plus $2,500 per day for each full-time
equivalent day during such period in excess of 144 days during which the
Executive performs his duties hereunder, which shall, subject to the provisions
of Section 5(g), be payable in installments in accordance with the prevailing
general payroll practice of the Bank as it may exist from time to time.
(c) The annual salary of the Executive during each of the periods
during the Term from December 2, 1999 through December 1, 2000, and from
December 2, 2000 through December 2, 2001 shall be at the rate of $175,000 for
the equivalent of 84 full-time days plus $2,500 per day for each full-time
equivalent day during such periods in excess of 84 days during which the
Executive performs his duties hereunder, which shall, subject to the provisions
of Section 5(g), be payable in installments in accordance with the prevailing
general payroll practice of the Bank as it may exist from time to time.
(d) As used in this Agreement, "annual salary" shall mean, at any
time, the annual rate of salary then payable to the Executive pursuant to this
Section 5 (before deduction of any amounts deferred under any deferred
compensation plan of the Bank, any voluntary contributions to the Retirement
401(k) Investment Plan of the Company or other similar qualified plan under
Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code")
(collectively, the "401(k) Plan"), or any other deductions from income) and
shall be exclusive of bonuses, incentive compensation or other compensation or
benefits paid to or accrued for the Executive other than pursuant to this
Section 5.
(e) Solely to the extent that the Executive does not accrue benefits
pursuant to the qualified retirement plans of the Bank or the Benefit
Restoration Plan of The Dime Savings Bank
5
<PAGE> 6
of New York, FSB (the "Benefit Restoration Plan") with respect to any period
during his employment by the Bank following December 2, 1998, and to the extent
not otherwise provided pursuant to Section 11(g)(ii) or 11(g)(iii) or otherwise
limited pursuant to Section 8(c), unless the Executive terminates his employment
prior thereto other than as contemplated by Section 11(c)(ii) in connection with
a Change in Control (as defined in Section 11(a)), the Executive shall be paid,
within 120 days of the earlier to occur of (A) the Effective Date of Termination
of the Executive's employment by the Bank (unless such termination is for
"cause," as defined in Section 8(b)), or (B) December 2, 2001, a lump sum amount
equal to the sum of the following: (i) the excess of the Present Value (as
defined below) of the benefits the Executive would have accrued and would have a
vested interest in under the Retirement Plan of Dime Bancorp, Inc. (the
"Retirement Plan") and the related provisions of the Benefit Restoration Plan if
the Executive had been otherwise employed as a full-time salaried employee
through the remaining Term at the time of such termination (commencing with the
date of this Agreement) earning the same amount of base pay as the annual salary
(as described in this Section 5) which would have been paid to the Executive
over such remaining Term in accordance with the provisions of this Agreement,
over the Present Value of the benefits the Executive actually accrued under the
Retirement Plan and the related provisions of the Benefit Restoration Plan in
which the Executive has a vested interest, plus (ii) the excess, if any, of the
amount of Bank matching contributions that would have been made and in which the
Executive would have a vested interest under the 401(k) Plan and the related
provisions of the Benefit Restoration Plan, in each instance if the Executive
had been otherwise employed as a full-time salaried employee of the
6
<PAGE> 7
Bank through the remaining Term at the time of such termination (commencing with
the date of this Agreement) earning the same amount of base pay as the annual
salary (as described in this Section 5) which would have been paid to the
Executive over such remaining Term in accordance with the provisions of this
Agreement, and assuming solely for these purposes that the Executive had made
the maximum contributions permitted under the terms of the 401(k) Plan, over the
amount actually accrued by the Executive with respect to Bank matching
contributions under such 401(k) Plan and the related provisions of the Benefit
Restoration Plan in which the Executive has a vested interest. For these
purposes, the "Present Value" of benefits shall be determined as of the date of
the termination of the Executive's employment with the Bank and shall be
calculated in the same manner as then applies for purposes of determining lump
sum benefits under the Retirement Plan. Further, in determining the value of
benefits described in clause (ii) above, such benefits shall be credited with
the same deemed rate of earnings (or losses) as apply to the Executive's deemed
investments of his 401(k) Plan Restoration Account under the Benefit Restoration
Plan. The Executive shall participate in the Supplemental Executive Retirement
Plan of the Company (the "SERP") with a "Pension Goal" under such plan of not
less than 50% (with such Pension Goal, "Compensation" and "Average Compensation"
as described in the grant letter related to the SERP of even date herewith (the
"SERP Grant Letter")), but subject to the vesting provisions under such plan or,
as applicable, Section 11(g)(ii). The benefits otherwise provided pursuant to
this Section 5(e) that relate to benefits under the Retirement Plan and the
related provisions of the Benefit Restoration Plan shall offset the benefits, if
any, to be provided under the SERP (with the offset of the other Section
7
<PAGE> 8
5(e) benefits based upon such benefits as if they were payable in the form of a
single life annuity or otherwise as provided under the SERP).
(f) The Executive shall not have or acquire by virtue of this
Agreement any rights to participate in, or receive benefits with respect to, any
compensation or benefit plan or program of the Bank, except (i) that while
employed by the Bank the Executive may participate in such plans or programs to
the extent provided in such plans and programs and on the same basis as if the
Executive's employment were not subject to the terms and conditions of this
Agreement, or (ii) as otherwise specifically provided in this Agreement.
(g) Notwithstanding anything to the contrary in the foregoing
provisions, the payment of any amounts that would otherwise be payable to the
Executive but which would be in excess of the amount which the Company, the Bank
or the Subsidiary could deduct for federal income tax purposes if then paid, on
account of the operation of Section 162(m) of the Code, shall be deferred to the
extent that such deferral is required pursuant to a policy adopted by the
Compensation Committee of the Company or the Bank and, to the extent so
deferred, shall be payable pursuant to the relevant terms of the Dime Bancorp,
Inc. Voluntary Deferred Compensation Plan; provided, however, that, if a Change
in Control (as defined in Section 11(a)) has occurred, deferral of amounts
payable hereunder to the Executive on or after the date of such Change in
Control will only be required if and to the extent such policy in effect
immediately prior to the Change in Control (without taking into consideration
any changes therein made in contemplation of the occurrence of the Change in
Control) requires or would have required such deferral.
8
<PAGE> 9
6. Disability. (a) The Bank may terminate the Executive's employment
under this Agreement for "permanent disability" if (i) the Executive shall
become physically or mentally disabled or incapacitated to the extent that the
Executive has been absent from the Executive's duties with the Bank on account
of such disabilities or incapacitation as determined in a manner consistent with
the policy which applies generally to employees of the Bank on a full-time basis
for a period of six consecutive months, and (ii) within 30 days after written
notice of proposed termination for permanent disability is given by the Bank to
the Executive, the Executive shall not have returned to full-time performance of
the Executive's duties.
(b) In the event of termination for "permanent disability," the Bank
shall continue to pay the Executive an amount equal to the Executive's then
annual salary pursuant to Section 5 (less any benefits that would have been
payable to the Executive had the Executive elected the maximum available amount
of disability insurance coverage available from the Bank) for a period
commencing on the Effective Date of Termination and ending on the first
anniversary thereof (or the end of the remaining Term, if earlier).
Notwithstanding the first sentence of this Section 6(b), any such payment shall
terminate upon the earliest to occur of (A) the date the Executive returns to
the level of employment with the Bank otherwise contemplated by this Agreement;
(B) the Executive's full-time employment by another employer; or (C) the
Executive's death. In the event of termination for "permanent disability," the
Bank also shall continue to provide until the end of the remaining Term (or the
Executive's earlier death) the same level of life, medical and dental insurance
coverage as is maintained by the Bank for full-time employees of the Bank,
provided that the Executive shall continue to pay all amounts in respect of such
9
<PAGE> 10
coverage that other employees receiving the same level of coverage are required
to pay. In the event of a termination of the Executive's employment for
"permanent disability" during the Term at any time following a Change in Control
(as defined in Section 11(a)), the provisions of Section 11 shall apply in lieu
of the provisions of this Section 6(b).
(c) There shall be no reduction in the compensation payable to the
Executive or the Executive's other rights under this Agreement during any period
when the Executive is incapable of performing some or all of the Executive's
duties by reason of temporary or partial disability.
7. Death. In the event of the Executive's death during the Term,
this Agreement and all of the Bank's obligations under this Agreement shall
terminate.
8. Termination by the Bank. (a) The Bank may terminate the
Executive's employment under this Agreement at any time by giving the Executive
written notice of such termination, provided that, except where termination is
for "cause" (as defined in Section 8(b)), such notice shall be provided at least
30 days prior to the Effective Date of Termination. In the event of a
termination of the Executive's employment by the Bank, other than a termination
for "cause" (as defined in Section 8(b)), the Bank shall (subject to the
provisions of Section 8(c)) (i) pay to the Executive, as a severance payment for
services previously rendered to the Company and the Bank, a lump sum equal to
the aggregate annual salary (as defined in Section 5(d)) payable to the
Executive with respect to the remainder of the Term as of the Effective Date of
Termination (assuming for this purpose that the Executive performed services
hereunder for no more than the minimum number of full-time equivalent days
required in each of the periods of the
10
<PAGE> 11
Term commencing on or after December 2, 1998) and (ii) maintain the same level
of life, medical and dental insurance coverage as is maintained by the Bank for
full-time employees of the Bank, provided that the Executive shall continue to
pay all amounts in respect of such coverage that other employees receiving the
same level of coverage are required to pay, for the remainder of the Term as of
the Effective Date of Termination (or the Executive's earlier death). In the
event of a termination of the Executive's employment by the Bank during the Term
following a Change in Control, the provisions of Section 11 shall apply in lieu
of the provisions of the immediately preceding sentence of this Section 8(a).
(b) The Executive shall have no right to receive compensation or
other benefits under this Agreement for any period after the Effective Date of
Termination if the Executive's employment is terminated for cause. As used in
this Agreement, "cause" shall mean the Executive's personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform assigned duties, willful violation of any
law, rule or regulation (other than traffic violations or similar offenses) or
final cease and desist order or material breach of any provision of this
Agreement.
(c) (i) Notwithstanding any other provision of this Section 8 or of
Section 11, if at the Effective Date of Termination any statute, regulation,
order, agreement, or regulatory interpretation thereof that is valid and binding
upon the Bank (a "Regulatory Restriction") shall restrict, prohibit or limit the
amount of any payment or the provision of any benefit that the Bank would
otherwise be liable for under this Section 8 or under Section 11, then the
amount that the
11
<PAGE> 12
Bank shall pay to the Executive hereunder shall not exceed the maximum amount
permissible under such Regulatory Restriction; provided, that if such Regulatory
Restriction shall subsequently be rescinded, superseded, amended or otherwise
determined not to restrict, limit or prohibit payment by the Bank of amounts
otherwise due the Executive hereunder, then the Bank shall promptly thereafter
pay to such Executive any amounts (or the value of any benefit) previously
withheld from such Executive as a result of such Regulatory Restriction.
(ii) Notwithstanding any other provision of this Section 8 or of
Section 11, in the event that any amount otherwise payable hereunder other than
on account of events described in Sections 11(c)(i) or 11(c)(ii) following a
Change in Control (as hereinafter defined) would be deemed to constitute a
parachute payment (a "Parachute Payment") within the meaning of Section 280G of
the Code, and if any such Parachute Payment, when added to any other payments
which are deemed to constitute Parachute Payments, would otherwise result in the
imposition of an excise tax under Section 4999 of the Code, the amounts payable
(other than amounts payable under the SERP or otherwise payable on account of
events described in Sections 11(c)(i) or 11(c)(ii) following a Change in
Control) shall be reduced by the smallest amount necessary to avoid the
imposition of such excise tax. Any such limitation shall be applied to such
compensation and benefit amounts, and in such order, as the Bank shall determine
in its sole discretion. References to the Code in this Agreement shall be to the
Code as presently in effect or to the corresponding provisions of any succeeding
law.
(d) As of the date hereof, the principal place of business at which
the Executive shall be based for the performance of his duties pursuant to this
Agreement is located in Tampa,
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Florida. If the Bank shall relocate such principal place of business at which
the Executive shall be based to a location which is more than 75 miles from
Tampa, Florida, the Executive shall have the right, for a period of 30 days
following such relocation, to elect to treat such relocation as a termination of
the Executive's employment by the Bank without cause (as defined in Section
8(b)) by giving the Bank written notice of such election. In the event that the
Executive fails to give notice within such 30-day period, he shall be deemed to
have waived his right to make such an election with respect to such relocation.
(e) Upon the termination of the Executive's employment by the Bank
pursuant to the provisions of this Section 8, to the extent not otherwise
limited by Section 8(c) and except where termination is for "cause" (as defined
in Section 8(b)), each outstanding Non-Accelerated Stock Option (as defined in
Section 11(d)(ii)) and each share of restricted stock which has not previously
vested that is held by the Executive shall (to the extent permitted by the plan
under which such Non-Accelerated Stock Option or restricted stock was granted),
notwithstanding anything to the contrary in the grant letter related to such
Non-Accelerated Stock Option or restricted stock and regardless of the actual
Effective Date of Termination, immediately vest and become exercisable, in the
case of a Non-Accelerated Stock Option, and immediately vest, in the case of
restricted stock.
(f) If the Executive's employment is proposed to be terminated by
the Bank for "cause" (as defined in Section 8(b)), the Bank shall, prior to
delivering to the Executive a notice of termination, afford the Executive
reasonable prior notice of such proposed termination and an opportunity for him,
together with counsel, to be heard.
9. Voluntary Termination by the Executive. The Executive shall have
the right to
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terminate the Executive's employment under this Agreement at any time upon at
least 30 but not more than 60 days' prior written notice to the Bank. If this
Agreement is terminated pursuant to the immediately preceding sentence, all of
the Bank's obligations under this Agreement shall terminate and the Executive
shall not be entitled to any compensation or benefits after the Effective Date
of Termination, except to the extent provided in Section 11.
10. Additional Termination and Suspension Provisions. (a) If the
Executive is removed and/or permanently prohibited from participating in the
conduct of the Bank's affairs by an order issued under Section 8(e)(4) or (g)(1)
of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(4) or (g)(1)), all
obligations of the Bank under this Agreement shall terminate as of the effective
date of the order, but vested rights of the parties shall not be affected.
(b) If the Bank is in default (as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act), all obligations under this Agreement shall
terminate as of the date of default, but this paragraph shall not affect any
vested rights of the parties.
(c) All obligations under this Agreement shall be terminated, except
to the extent determined that continuation of this Agreement is necessary for
the continued operation of the Bank, (i) by the Director of Thrift Supervision
or his or her designee (the "Director"), at the time the Federal Deposit
Insurance Corporation enters into an agreement to provide assistance to or on
behalf of the Bank under the authority contained in Section 13(c) of the Federal
Deposit Insurance Act; or (ii) by the Director, at the time the Director
approves a supervisory merger to resolve problems related to operation of the
Bank or when the Bank is determined by the Director to be in an unsafe or
unsound condition. Any rights of the parties that have already vested, however,
shall not be affected by such action.
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(d) If the Executive is suspended and/or temporarily prohibited from
participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C.
1818(e)(3) and (g)(1)), the Bank's obligations under this Agreement shall be
suspended as of the date of service unless stayed by appropriate proceedings. If
the charges in the notice are dismissed, the Bank may in its discretion (a) pay
the Executive all or part of the compensation withheld while its contract
obligations were suspended and (b) reinstate (in whole or in part) any of its
obligations which were suspended.
(e) The provisions of paragraphs (a) through (d) of this Section 10
are required to be set forth in this Agreement by regulations applicable to the
Bank on the date of this Agreement. If any such regulation shall hereafter be
amended or modified, or if any new regulation applicable to the Bank and
effective after the date of this Agreement shall require the inclusion in this
Agreement of a provision not presently included in this Agreement, then the
foregoing provisions of paragraphs (a) through (d) of this Section 10 shall be
deemed amended to the extent necessary to give effect in this Agreement to any
such amended, modified or new regulation.
11. Change in Control. (a) As used in this Agreement, a "Change in
Control" shall be deemed to have occurred if the event set forth in any one of
the following paragraphs shall have occurred:
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(I) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from
the Company or its Affiliates) representing 35% or more of the combined
voting power of the Company's then outstanding securities; or
(II) the following individuals cease for any reason to constitute a
majority of the number of directors then serving as directors of the
Company: individuals who, on July 24, 1997, constitute the Board of
Directors of the Company and any new director (other than a director whose
initial assumption of office is in connection with the settlement of an
actual or threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of the
Company) whose appointment or election by the Board of Directors of the
Company or nomination for election by the Company's stockholders was
approved or recommended by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors on July 24, 1997
or whose appointment, election or nomination for election was previously
so approved or recommended; or
(III) there is consummated a merger or consolidation of the Company
or any direct or indirect subsidiary of the Company with any other
corporation or entity, other than (i) a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity or any Parent thereof), in combination
with the ownership of any
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trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any subsidiary of the Company, at least 65% of the
combined voting power of the securities of the Company, such surviving
entity or any Parent thereof outstanding immediately after such merger or
consolidation or (ii) a merger or consolidation effected solely to
implement a recapitalization of the Company or the Bank (or similar
transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company or the Bank (not
including in the securities beneficially owned by such Person any
securities acquired directly from the Company or its Affiliates)
representing 35% or more of the combined voting power of the Company's or
the Bank's then outstanding securities; or
(IV) the stockholders of the Company or the Bank approve a plan of
complete liquidation or dissolution of the Company or the Bank,
respectively, or there is consummated a sale or disposition by the Company
or any of its subsidiaries of any assets which individually or as part of
a series of related transactions constitute all or substantially all of
the Company's consolidated assets (provided that, for these purposes, a
sale of all or substantially all of the voting securities of the Bank or a
Parent of the Bank shall be deemed to constitute a sale of substantially
all of the Company's consolidated assets), other than any such sale or
disposition to an entity at least 65% of the combined voting power of the
voting securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the voting
securities of the Company immediately prior to such sale or disposition;
or
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(V) the execution of a binding agreement that if consummated would
result in a Change in Control of a type specified in clause (I) or (III)
of this Section 11(a) (an "Acquisition Agreement") or of a binding
agreement for the sale or disposition of assets that, if consummated,
would result in a Change in Control of a type specified in clause (IV) of
this Section 11(a) (an "Asset Sale Agreement") or the adoption by the
Board of Directors of the Company or the Bank of a plan of complete
liquidation or dissolution of the Company or the Bank that, if
consummated, would result in a Change in Control of a type specified in
clause (IV) of this Section 11(a) (a "Plan of Liquidation"), provided
however, that a Change in Control of the type specified in this clause (V)
shall not be deemed to exist or have occurred as a result of the execution
of such Acquisition Agreement or Asset Sale Agreement, or the adoption of
such a Plan of Liquidation, from and after the Abandonment Date if the
Effective Date of Termination of the Executive's employment has not
occurred on or prior to the Abandonment Date. As used in this Section, the
term "Abandonment Date" shall mean the date on which (A) an Acquisition
Agreement, Asset Sale Agreement or Plan of Liquidation is terminated
(pursuant to its terms or otherwise) without having been consummated, (B)
the parties to an Acquisition Agreement or Asset Sale Agreement abandon
the transactions contemplated thereby, (C) the Bank or the Company
abandons a Plan of Liquidation or (D) a court or regulatory body having
competent jurisdiction enjoins or issues a cease and desist or stop order
with respect to or otherwise prevents the consummation of, or a regulatory
body notifies the Bank or the Company that it will not approve, an
Acquisition Agreement, Asset Sale
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Agreement or Plan of Liquidation or the transactions contemplated thereby
and such injunction, order or notice has become final and not subject to
appeal.
As used in connection with the foregoing definition of Change in
Control, "Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated
under Section 12 of the Exchange Act; "Beneficial Owner" shall have the meaning
set forth in Rule 13d-3 under the Exchange Act; "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended from time to time; "Parent" shall
mean any entity that becomes the Beneficial Owner of at least 80% of the voting
power of the outstanding voting securities of the Company or of an entity that
survives any merger or consolidation of the Company or any direct or indirect
subsidiary of the Company; and "Person" shall have the meaning given in Section
3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d)
thereof, except that such term shall not include (i) the Company or any of its
subsidiaries, a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any of its Affiliates, an underwriter temporarily
holding securities pursuant to an offering of such securities, or a corporation
or entity owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company.
(b) If the Bank, the Company or the Subsidiary shall relocate the
principal place of business at which the Executive shall be based for the
performance of his duties pursuant to this Agreement to a location which is more
than 75 miles from Tampa, Florida after a Change in Control, and if the
Executive shall, as a result, be required to change the Executive's principal
residence, the Bank shall (i) promptly pay (or reimburse the Executive for) all
reasonable moving
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expenses incurred by the Executive as a result of such change in the Executive's
principal residence, and (ii) indemnify the Executive against, and reimburse the
Executive for, any loss incurred as a result of the sale of the Executive's
principal residence (which loss shall be computed for the purpose of this
Agreement as the difference between the actual sales price (net of closing costs
and brokerage fees) of such residence and the fair market value of such
residence (computed as of the time such principal place of business is
relocated) as determined by an independent real estate appraiser designated and
paid by the Bank or the Company and acceptable to the Executive), provided that
such sale of the Executive's principal residence occurs within six months after
the Bank, the Company or the Subsidiary relocates the principal place of
business at which the Executive shall be based.
(c) (i) If a Change in Control shall occur, the Executive shall be
entitled to the compensation and benefits provided in paragraphs (d), (e), (f)
and (g) of this Section 11 upon the subsequent termination of the Executive's
employment, at any time during the remaining Term in effect at the time of the
Change in Control, by the Bank (including, without limitation, a termination for
permanent disability), other than a termination for cause, provided that the
rights to any such compensation and benefits shall be subject to the limitations
and provisions set forth in Section 8(c).
(ii) If (A) a Change in Control shall occur, and thereafter the Bank
(notwithstanding its right to do so under Section 4 or Section 5) either (B)
makes a material change in the Executive's functions, duties or
responsibilities, which change would cause the Executive's position with the
Bank to become one of lesser responsibility, importance or scope from that
otherwise contemplated by this Agreement, or (C) reduces the Executive's annual
salary
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below that otherwise contemplated by this Agreement (an event specified in
clause (B) or (C) is hereafter referred to as a "Material Change"), the
Executive shall be entitled to the compensation and benefits provided in
paragraphs (d), (e), (f) and (g) of this Section 11 (subject to the limitations
and provisions set forth in Section 8(c)) upon the subsequent termination of the
Executive's employment, at any time during the remaining Term in effect at the
time of the Change in Control, by the Executive.
(iii) Only for purposes of determining whether there has been a
termination of the Executive's employment during the remaining Term in effect at
the time of a Change in Control (as specified in paragraphs (c)(i) and (c)(ii)
of this Section 11, as the case may be) so as to entitle the Executive to the
compensation and benefits provided in paragraphs (d), (e), (f) and (g) of this
Section 11, a termination of the Executive's employment following a Change in
Control shall be deemed to have occurred on such date during the remaining Term
that notice of termination is given by the Bank or the Executive to the other
(regardless of the Effective Date of Termination specified in such notice).
Notwithstanding the immediately preceding sentence, the Executive shall continue
to be employed by the Bank pursuant to this Agreement until the Effective Date
of Termination specified in the notice of termination.
(d)(i) Upon the occurrence of a Change in Control followed by any
termination of the Executive's employment pursuant to Section 11(c)(i) or
(c)(ii), to the extent not otherwise limited pursuant to Section 8(c), the Bank
shall pay the Executive, as a severance payment for services previously rendered
to the Bank, a lump sum equal to three times the Executive's annual salary (as
defined in Section 5(d)) (assuming for this purpose that the Executive performed
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services hereunder for no more than the minimum number of full-time equivalent
days required in each of the periods of the Term commencing on or after December
2, 1998).
(ii) Upon the occurrence of (a) the termination of the Executive's
employment by the Bank (unless such termination is for "cause" as defined in
Section 8(b)) other than any termination of the Executive's employment pursuant
to Section 11(c)(i) or (c)(ii) following a Change in Control, to the extent not
otherwise limited pursuant to Section 8(c): (A) each Non- Accelerated Stock
Option held by the Executive shall (to the extent permitted by the plan under
which such Non-Accelerated Stock Option was granted), notwithstanding anything
to the contrary in the grant letter related to such Non-Accelerated Stock Option
and regardless of the actual Effective Date of Termination, vest and become
exercisable in accordance with the provisions of, and remain exercisable for the
term specified in, such grant letter as if there had been no termination of the
Executive's employment and the Executive remained in the employment of the Bank
for the entire term of such Non-Accelerated Stock Option and (B) each Vested
Stock Option held by the Executive shall (to the extent permitted by the plan
under which such Vested Stock Option was granted), notwithstanding anything to
the contrary in the grant letter related to such Vested Stock Option and
regardless of the actual Effective Date of Termination, remain exercisable for
the term specified in such grant letter as if there had been no termination of
the Executive's employment and the Executive remained in the employment of the
Bank for the entire term of such Vested Stock Option. As used in this Section
11(d)(ii) and Section 11(d)(iii), the term (I) "Non-Accelerated Stock Option"
shall mean any stock option (including any tandem stock appreciation right)
previously or hereafter granted to the Executive under a stock incentive or
stock option plan of the Company that has not, pursuant to the
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provisions of such stock incentive or stock option plan or the grant letter
pursuant to which such stock option was granted to the Executive, vested and
become exercisable prior to the Effective Date of Termination and (II) "Vested
Stock Option" shall mean any stock option (including any tandem stock
appreciation right) previously or hereafter granted to the Executive under a
stock incentive or stock option plan of the Company that vests and becomes
exercisable prior to the Effective Date of Termination.
(iii) Upon the occurrence of a Change in Control followed by any
termination of the Executive's employment pursuant to Section 11(c)(i) or
(c)(ii), to the extent not otherwise limited pursuant to Section 8(c)(i): (A)
each Non-Accelerated Stock Option held by the Executive shall (to the extent
permitted by the plan under which such Non-Accelerated Stock Option was
granted), notwithstanding anything to the contrary in the grant letter related
to such Non-Accelerated Stock Option and regardless of the actual Effective Date
of Termination, immediately vest and become exercisable in accordance with the
provisions of, and remain exercisable for the term specified in, such grant
letter as if there had been no termination of the Executive's employment and the
Executive remained in the employment of the Bank for the entire term of such
Non-Accelerated Stock Option and (B) each Vested Stock Option held by the
Executive shall (to the extent permitted by the plan under which such Vested
Stock Option was granted), notwithstanding anything to the contrary in the grant
letter relating to such Vested Stock Option and regardless of the actual
Effective Date of Termination, remain exercisable for the term specified in such
grant letter as if there had been no termination of the Executive's employment
and the Executive had remained in the employment of the Bank for the entire term
of such Vested Stock Option.
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(iv) Upon the occurrence of (a) the termination of the Executive's
employment by the Bank (unless such termination is for "cause" as defined in
Section 8(b)) or (b) a Change in Control followed by any termination of the
Executive's employment pursuant to Section 11(c)(i) or (c)(ii), to the extent
not otherwise limited pursuant to Section 8(c), each grant of restricted stock
to the Executive shall (to the extent permitted by the plan under which such
restricted stock was granted), notwithstanding anything to the contrary in the
grant letter related to such restricted stock, vest and become non-forfeitable
by the Executive as if there had been no termination of the Executive's
employment and the Executive remained in the employment of the Bank for the
entire term of the vesting period applicable to such grant of restricted stock.
(e) Any payment pursuant to Section 11(d)(i) or 11(g)(iii) shall be
made to the Executive within 30 days after the Effective Date of Termination.
(f) Upon the occurrence of a Change in Control followed by any
termination of the Executive's employment pursuant to Section 11(c)(i) or
(c)(ii), to the extent not otherwise limited pursuant to Section 8(c), the Bank
shall cause to be continued until the end of the remaining Term (or the
Executive's earlier death) the same level of life, disability, medical and
dental insurance coverage as is maintained by the Bank for full-time employees
of the Bank, provided that the Executive shall continue to pay all amounts in
respect of such coverage that other employees receiving the same levels of
coverage are required to pay.
(g)(i) In the event of termination of the Executive's employment
pursuant to Section 11(c)(i) or (c)(ii), to the extent not otherwise limited
pursuant to Section 8(c), the Executive shall vest in the benefits under Section
5(e) hereof (but which shall then be calculated
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assuming that the benefits payable under the Retirement Plan, the 401(k) Plan
and the Benefit Restoration Plan are fully vested).
(g)(ii)(A) On and after any Change in Control, to the extent not
otherwise limited pursuant to Section 8(c)(i), the Executive shall be eligible
to be paid, under the SERP, a SERP benefit, to the extent vested (and subject to
additional vesting in accordance with the terms of the SERP as such plan
provided immediately prior to the Change in Control, or if it results in a
greater vested percentage, with vesting determined otherwise pursuant to this
Section 11(g)(ii)), that is not less than a benefit calculated based upon the
amount of the Executive's "Pension Goal" and "Average Compensation" and the
otherwise applicable terms of the SERP, each as determined immediately prior to
the Change in Control (but with offsets provided for therein related to benefits
otherwise to be provided after the Change in Control). The rights of the
Executive and the obligations of the Bank with respect to the benefits described
under this Section 11(g)(ii)(A) shall survive the termination of this Agreement.
(g)(ii)(B) In the event of termination of the Executive's employment
pursuant to Section 11(c)(i) or (c)(ii), to the extent not otherwise limited
pursuant to Section 8(c), notwithstanding any vesting provisions that would in
other circumstances require further service under the SERP, the Executive shall
be fully vested in the Executive's SERP benefit, which SERP benefit shall
otherwise be payable in accordance with the terms of the SERP, but offset by the
benefits provided pursuant to Section 5(e) hereunder as set forth therein and in
accordance with Section 11(g)(i).
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(iii) In the event of termination of the Executive's employment
pursuant to Section 11(c)(i) or (c)(ii), to the extent not otherwise limited
pursuant to Section 8(c), the Executive shall be entitled to receive in a lump
sum payment an amount equal to any amounts forfeited by the Executive under the
401(k) Plan and under the Benefit Restoration Plan (solely to the extent such
Benefit Restoration Plan supplements benefits under the 401(k) Plan) as in
effect immediately prior to the Change in Control (or, if more favorable to the
Executive, as in effect immediately prior to the Effective Date of Termination).
(h)(i) If, on account of events described in Sections 11(c)(i) or
11(c)(ii) following a Change in Control, any payment or other benefit paid or to
be paid or any property transferred or to be transferred (collectively, a
"Severance Payment") with respect to one or more calendar years by or on behalf
of the Bank (or any affiliate of the Bank) to the Executive pursuant to this
Agreement shall constitute an "excess parachute payment" within the meaning of
Section 280G(b) of the Code subject to the tax imposed by Section 4999 of the
Code (the "Excise Tax"), then the Bank shall pay to the Executive an additional
amount (the "Gross Up Payment") such that the amount paid or transferred to the
Executive, after deduction of any Excise Tax on the Severance Payment, and any
federal, state and local income tax, employment tax and Excise Tax upon the
Gross Up Payment, shall be equal to the Severance Payment. In addition, if,
absent a Change in Control or in other circumstances following a Change in
Control, notwithstanding the reductions mandated by Section 8(c), the SERP
benefits (if any) otherwise payable to the Executive shall constitute an "excess
parachute payment" within the meaning of Section 280G(b) of the Code subject to
the Excise Tax, then the Bank shall pay to the Executive one or more Gross Up
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<PAGE> 27
Payments such that the amount of such Gross Up Payments, when combined with such
SERP benefits, after deduction of any Excise Tax on the SERP benefits, and any
federal, state and local income tax, employment tax and Excise Tax upon the
Gross Up Payments, shall be equal to such SERP benefits.
(ii) For purposes of determining under Section 11(h)(i) whether any
portion of a Severance Payment or SERP benefit will be subject to the Excise Tax
and the amount of such Excise Tax, (A) the Severance Payment or SERP benefit and
payment provided for in Section 11(h)(i) shall be treated as "parachute
payments" within the meaning of Section 280G(b)(2) of the Code, and all "excess
parachute payments" within the meaning of Section 280(G)(b)(1) of the Code shall
be treated as subject to the Excise Tax, unless and to the extent that tax
counsel selected by the Bank's independent auditors and acceptable to the
Executive is of the opinion that the Severance Payment or SERP benefit (in whole
or in part) does not constitute a "parachute payment" or such "excess parachute
payment" (in whole or in part) represents reasonable compensation for services
actually rendered within the meaning of Section 280G(b)(4) of the Code in excess
of the allocable base amount within the meaning of Section 280G(b)(3) of the
Code, or the Severance Payment or SERP benefit is otherwise not subject to the
Excise Tax, (B) the amount of the Severance Payment or SERP benefit that is
treated as subject to the Excise Tax shall be equal to the lesser of (X) the
total amount of the Severance Payment or SERP benefit, as applicable, and (Y)
the amount of "excess parachute payments" within the meaning of Section
280G(b)(1) of the Code (after applying clause (A) above), (C) any Gross Up
Payment pursuant to Section 11(h)(i) shall be treated as subject to the Excise
Tax in its entirety and (D) the value of any non-cash benefits or any deferred
payment or benefit shall be determined by the Company's
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independent auditors in accordance with the principles of Sections 280G(d)(3)
and (4) of the Code.
(iii) If in circumstances described in Section 11(h)(i), by reason
of the filing by the Executive of an amended tax return, an audit by the
Internal Revenue Service or other taxing authority, or a final determination by
a court of competent jurisdiction, it is determined that "excess parachute
payments" exceeding those previously reported in his tax returns were received
by the Executive and as a result an additional Excise Tax (the "Additional
Excise Tax") shall become due, the Bank shall pay the Executive an additional
amount (the "Subsequent Gross Up Payment") such that the amount paid or
transferred to the Executive after deduction of (A) any Additional Excise Tax
and (B) on an after tax basis, any interest, additions and penalties with
respect to the Additional Excise Tax and (C) any federal, state and local income
tax, employment tax and Excise Tax upon the Subsequent Gross up Payment and (D)
the payments provided for in Section 11(h)(i), shall be equal to the Severance
Payment or SERP benefits, as appropriate.
(iv) Any Gross Up Payment required hereunder shall be made at least
ten days prior to the due date (without regard to extensions) of the Executive's
federal income tax return for the year with respect to which the "excess
parachute payment" is deemed made under the Code. Any Subsequent Gross Up
Payment required hereunder shall be made to the Executive within 30 days after
the amount thereof is determined. Notwithstanding the two immediately preceding
sentences, the Bank shall pay any federal, state and local tax or taxes and
employment taxes required to be withheld from the Executive's wages (within the
meaning of Section 3121
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and 3402 of the Code) with respect to the "excess parachute payment" and any
such tax or taxes paid by the Company, the Bank or the Subsidiary to the
Internal Revenue Service or state or local taxing authority shall constitute
payment to the Executive.
(v) If the Excise Tax is finally determined (whether by the filing
of an amended tax return by the Executive, by audit of the Internal Revenue
Service or other taxing authority, or by a final determination of a court of
competent jurisdiction) to be less than the amount paid to or on behalf of the
Executive under the provisions of Sections 11(h)(i)-(iv) and the overpayment is
refunded to the Executive, the Executive shall repay to the Bank, promptly
following the receipt of the refund, the portion of the Gross Up Payment (and/or
Subsequent Gross Up Payment) attributable to such reduction of the Excise Tax
(plus the portion attributable to federal, state and local income tax and
employment taxes imposed on the portion being repaid by the Executive but only
to the extent that the repayment may result in a tax benefit to the Executive
under Section 1341 of the Code and similar provisions of applicable state and
local law).
(vi) The provisions of this Section 11(h) shall inure to the benefit
of the Executive during the Term of this Agreement regardless of whether or not
his employment is terminated, and if the Executive's employment is terminated,
the rights and obligations of the Executive and the Bank under this Section
11(h) shall survive the termination of this Agreement.
12. Post-Termination Obligations of the Executive. (a) Upon any
termination of the Executive's employment during the Term of this Agreement or
upon termination of the Executive's employment after the expiration of the Term
of this Agreement or upon retirement, the Executive agrees (i) not to make any
disclosure in violation of Section 12(b), (ii) to return to
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the Bank all material documents relating to the business of the Company, the
Bank, the Subsidiary and their affiliates that are in the Executive's possession
or under the Executive's control, and (iii) except if the termination or
retirement occurs after a Change in Control, not to solicit (directly or
indirectly), for one year following the Effective Date of Termination (or date
of termination after the expiration of the Term) or retirement, the employment
of any person who is an employee of the Company, the Bank, the Subsidiary or
their affiliates on the Effective Date of Termination (or date of termination
after the expiration of the Term) or retirement or who, within six months prior
to the Effective Date of Termination (or date of termination after the
expiration of the Term) or retirement, was an employee of the Company, the Bank,
or Subsidiary or their affiliates, unless the Executive receives written
permission from the Bank to engage in the activities proscribed by this Section
12(a) or by Section 12(b) or to be relieved of any obligation under Section
12(a)(ii).
(b) The Executive recognizes and acknowledges that the confidential
business activities and plans for business activities of the Bank and its
subsidiaries and affiliates, as they may exist from time to time, are valuable,
special and unique assets of the Bank. The Executive shall not, during or at any
time after the Executive's employment, disclose any knowledge of the past,
present or planned business activities of the Bank or its subsidiaries or
affiliates that are of a confidential nature (collectively, the "Bank's
Confidential Activities") to any person, firm, corporation, bank, thrift
institution or other entity for any reason or purposes whatsoever.
Notwithstanding anything in this Section 12(b) to the contrary, the Executive
(i) may disclose any knowledge of banking, financial and/or economic principles,
concepts or ideas that are not derived from the Bank's Confidential Activities,
and (ii) shall not be precluded from disclosures
30
<PAGE> 31
respecting the Bank's Confidential Activities that are (A) made pursuant to
compulsory legal process or when required by an appropriate governmental agency;
(B) public knowledge or become public without the Executive's breach of this
Section 12(b); (C) already known to the party to whom the Executive makes such
disclosures; or (D) approved by the Bank for disclosure.
(c) The parties, recognizing that irreparable injury will result to
the Bank, its business and property in the event of the Executive's breach or
threatened breach of Section 12(a) or (b), agree that in the event of such
breach or threatened breach by the Executive, the Bank will be entitled, in
addition to any other remedies and damages that may be available, to seek and
obtain an injunction to restrain the violation of Section 12(a) or (b) by the
Executive.
13. Notices. All notices under this Agreement shall be in writing
and shall be delivered personally or sent by registered or certified mail,
return receipt requested, (a) to the Bank, at its address set forth above (to
the attention of its Chief Executive Officer) and (b) to the Executive, at the
Executive's residence address as appearing in the records of the Bank, or to
such other address as either party may hereafter designate in writing in the
manner provided in this Section 13. All notices under this Agreement shall be
deemed given (i) upon receipt if delivered personally or (ii) two days after
deposit in a facility of the U.S. Postal Service with postage prepaid. As used
in this Agreement, the term "Effective Date of Termination" shall mean the date
specified in a notice hereunder on which such Executive's employment is to
terminate, provided, however, that no such notice shall specify an Effective
Date of Termination that is prior to the date on which any such notice is given.
31
<PAGE> 32
14. Complete Understanding. This Agreement, together with the
Agreement Regarding Initial Employment Terms attached hereto as Exhibit A, and
the SERP Grant Letter, constitute the complete understanding between the parties
with respect to the subject matter hereof and thereof and merge and supersede
all prior oral and written agreements and understandings and all contemporaneous
oral agreements and understandings with respect to the subject matter hereof and
thereof, including, without limitation, any other employment agreement
heretofore executed by the Executive and the Bank or any of its subsidiaries or
affiliates; provided, however, that where references in the Agreement Regarding
Initial Employment Terms relate to periods during the term of the employment
agreement described therein, they relate to such periods as contemplated in a
previous employment agreement entered into between the Bank and the Executive
dated as of December 2, 1996. In the event of any conflict between the express
provisions of this Agreement and either of such Agreement Regarding Initial
Employment Terms or such SERP Grant Letter, the express provisions of this
Agreement shall be controlling. This Agreement may not be amended, terminated or
rescinded except in a writing signed by the party to be charged.
15. No Waiver. The failure of either party at any time to require
performance by the other party of a provision of this Agreement or to resort to
a remedy at law or in equity or otherwise shall in no way affect the right of
such party to require full performance or to resort to such remedy at any time
thereafter nor shall a waiver by either party of the breach of any provision of
this Agreement be taken or held to be a waiver of any subsequent breach of such
provision unless expressly so stated in writing. No waiver of any of the
provisions of this Agreement shall be effective unless in writing and signed by
the party to be charged.
32
<PAGE> 33
16. Governing Law. This Agreement shall be governed by the laws of
the State of New York, without regard to conflict of laws principles applied in
the State of New York.
17. Headings. The headings to the Sections of this Agreement are for
convenience of reference only and shall not be given any effect in the
construction or interpretation of this Agreement.
18. Severability. If any provision of this Agreement is held by a
court or other authority having competent jurisdiction to be invalid, void or
otherwise unenforceable, in whole or in part, by reason of any applicable law,
statute or regulation or any interpretation thereof, then (a) the remainder of
the provisions of this Agreement shall remain in full force and effect and in no
way be affected, impaired or invalidated and (b) the provision so held to be
invalid, void or otherwise unenforceable shall be deemed modified in amount,
duration, scope or otherwise to the minimum extent necessary so that such
provision shall not be invalid, void or otherwise unenforceable by reason of
such law, statute, regulation or interpretation and such provision, as so
modified, shall remain in full force and effect.
19. Payment of Legal Fees. If any legal action or proceeding is
commenced to enforce or interpret the provisions of this Agreement, or to
recover damages for its breach, all reasonable legal fees, disbursements and
court costs paid or incurred by the Executive arising out of or resulting from
such action or proceeding shall be paid or reimbursed to the Executive by the
Bank, provided the Executive shall be the prevailing party in such action or
proceeding.
20. Assumption by Company. This Agreement shall be assumable by the
Company at its election. Following any such election, the obligations of the
Bank under this Agreement shall become the obligations of the Company.
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<PAGE> 34
21. Taxes. Any payments due to the Executive pursuant to this
Agreement shall be reduced by all applicable federal, state, city or other taxes
required by law to be withheld with respect to such payments.
22. Limitation on Payments. Any payments made to the Executive
pursuant to this Agreement, or otherwise, are subject to and conditioned upon
their compliance with 12 USC ss. 1828(k) and any regulations promulgated
thereunder.
THE DIME SAVINGS BANK
OF NEW YORK, FSB
By: /s/LAWRENCE J. TOAL
----------------------------------
Name:
Title:
Dated: February 11, 1998 /s/FRED B. KOONS
-------------------- ----------------------------------
FRED B. KOONS
34
<PAGE> 1
Exhibit 10.9
AMENDMENT OF AGREEMENT
The Agreement Regarding Initial Employment Terms, dated as of December 2,
1996, between The Dime Savings Bank of New York, FSB and Fred B. Koons, is
hereby amended, effective as of May 12, 1997, to replace the clause "Hostile
Change in Control" where it appears therein with the clause "Transfer of
Control."
AGREED AND ACCEPTED
THE DIME SAVINGS BANK OF
NEW YORK, FSB
By: /S/LAWRENCE J. TOAL
-------------------------
/s/FRED B. KOONS
--------------------------
FRED B. KOONS
<PAGE> 1
Exhibit 10.10
AMENDMENT OF AGREEMENT
The Agreement Regarding Initial Employment Terms, dated as of December 2,
1996, between The Dime Savings Bank of New York, FSB and Fred B. Koons, as
previously amended, is hereby amended, effective as of July 24, 1997, to replace
the clause "Transfer of Control" where it appears therein with the clause
"Change in Control."
AGREED AND ACCEPTED
THE DIME SAVINGS BANK OF
NEW YORK, FSB
By: /s/ LAWRENCE J. TOAL
------------------------------
/s/ FRED B. KOONS
----------------------------------
FRED B. KOONS
<PAGE> 1
Exhibit 10.11
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of January 30, 1998 between THE DIME SAVINGS
BANK OF NEW YORK, FSB (the "Bank"), a federal stock savings bank having its
principal executive offices at 589 Fifth Avenue, New York, New York 10017, and
D. James Daras (the "Officer").
-----------
A. The Bank is desirous of employing the Officer upon the terms and
conditions set forth in this Agreement.
B. The Officer is desirous of being employed by the Bank upon the terms
and conditions set forth in this Agreement.
------------
Therefore, the Bank and the Officer, intending to be legally bound, agree
as follows:
1. Employment. Subject to the terms and conditions of this
Agreement, the Bank hereby employs the Officer, and the Officer hereby accepts
such employment.
2. Term of Employment. (a) The initial term of the Officer's
employment under this Agreement shall be deemed to have commenced on the date of
this Agreement and shall continue until March 1, 2001. This Agreement shall be
renewed automatically for one additional year on March 1, 1999, and on each
March 1 thereafter, unless (x) the Officer or the Bank gives contrary written
notice to the other, at least 10 days prior to any such renewal date, or (y)
this Agreement has been otherwise terminated in accordance with its provisions.
During each calendar year of the term of this Agreement beginning with 1999
(unless notice of non-renewal of
<PAGE> 2
this Agreement shall have previously been given by the Bank or the Officer
pursuant to the immediately preceding sentence), the Board of Directors of the
Bank (or a duly authorized committee of the Board or subcommittee of such
committee) shall, no later than the last day in each such year on which the Bank
may give the Officer notice of non-renewal pursuant to the immediately preceding
sentence, review and determine whether the Bank shall give the Officer such
notice of non-renewal with respect to the March 1 renewal date in such year;
provided, however, that nothing in this sentence shall be construed as limiting
the Bank's ability to give notice of non-renewal pursuant to the immediately
preceding sentence at any other time. A determination by the Board of Directors
of the Bank (or a duly authorized committee of the Board or subcommittee of such
committee) in any year that the Bank shall not give notice of non-renewal with
respect to the March 1 renewal date in such year shall be deemed to be the
Board's approval of the renewal of this Agreement on such renewal date. Except
as otherwise provided in Section 11(c)(iv) of this Agreement, neither the giving
of notice of non-renewal pursuant to clause (x) of the second sentence of this
Section 2(a), nor the subsequent expiration of the Term of this Agreement as a
result of the giving of such notice, shall be deemed to be a termination of the
Officer's employment under this Agreement. (As used in this Agreement, (i)
"Term" shall mean the initial term and any renewal term of this Agreement and
(ii) "remaining Term" shall mean the balance of the Term in effect at a
specified time without regard to potential future renewals under the renewal
provision of this Section 2(a).)
2
<PAGE> 3
(b) The Officer's employment may be terminated during the Term of
this Agreement by the Bank or the Officer in the manner specified in this
Agreement. Any such termination of employment shall result in a termination of
this Agreement on the Effective Date of Termination (as defined in Section 13);
provided that, notwithstanding anything to the contrary in the foregoing, any
right of the Officer to any payments or benefits as a result of a termination of
the Officer's employment (as provided in this Agreement) shall survive the
termination of this Agreement.
3. Office. During the Term, the Officer shall serve as an officer of
the Bank. In addition, during the Term, the Officer shall serve, for the period
for which the Officer may from time to time be elected, as an officer or
director of any subsidiary or affiliate of the Bank.
4. Duties. The Officer initially shall serve as Treasurer &
Asset/Liability Executive of the Bank; provided, that the Officer shall hold
comparable or additional positions, and perform comparable or additional duties,
as may from time to time be assigned to the Officer. During the Term (except for
periods of illness and vacation), substantially all of the Officer's business
time, attention, skill and efforts shall be devoted to the performance of the
Officer's duties under this Agreement.
5. Compensation. (a) The annual salary of the Officer during the
Term shall be fixed by the Board of Directors of the Bank (or a duly authorized
committee of the Board or subcommittee of such committee) and shall be payable
in installments in accordance with the prevailing general payroll practice of
the Bank as it may exist from time to time. The initial annual salary of the
Officer during the Term shall be the Officer's annual salary on the date of this
Agreement. The Board of Directors of the Bank (or a duly authorized committee of
the Board or
3
<PAGE> 4
subcommittee of such committee) may increase or decrease the Officer's annual
salary from time to time; provided that, except for decreases that are applied
generally to officers of comparable rank, such annual salary shall not be
decreased by more than 25% in any one calendar year. As used in this Agreement,
"annual salary" shall mean, at any time, the annual rate of salary then payable
to the Officer pursuant to this Section 5(a) (before deduction of any amounts
deferred under any deferred compensation plan of the Bank, any voluntary
contributions to the Retirement 401(k) Investment Plan of Dime Bancorp, Inc.
(the "Company"), or any other similar qualified plan or any other deductions
from income) and shall be exclusive of bonuses, incentive compensation or other
compensation or benefits paid to or accrued for the Officer other than pursuant
to this Section 5(a).
(b) The Officer shall not have or acquire by virtue of this
Agreement any rights to participate in, or receive benefits with respect to, any
compensation or benefit plan or program of the Bank, except (i) that while
employed by the Bank the Officer may participate in such plans or programs to
the extent provided in such plans and programs and on the same basis as if the
Officer's employment were not subject to the terms and conditions of this
Agreement, or (ii) as otherwise specifically provided in this Agreement. The
Officer shall participate in the Company's Supplemental Executive Retirement
Plan (the "SERP") with a "Pension Goal" under such plan of not less that 50% of
"Average Compensation" (with each such term as defined in the SERP), subject to
the vesting provisions under the SERP, or, solely as applicable, Section
11(g)(i).
4
<PAGE> 5
(c) Notwithstanding anything to the contrary in the foregoing
provisions, the payment of any amounts that would otherwise be payable to the
Officer but which would be in excess of the amount which the Company or the Bank
could deduct for federal income tax purposes if then paid, on account of the
operation of Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), shall be deferred to the extent such deferral is required pursuant
to a policy adopted by the Compensation Committee or the Board of Directors of
the Company or the Bank and, to the extent so deferred, shall be payable
pursuant to the relevant terms of the Dime Bancorp, Inc. Voluntary Deferred
Compensation Plan; provided, however, that, if a Change in Control (as defined
in Section 11(a)) has occurred, deferral of amounts payable hereunder to the
Officer on or after the date of such Change in Control will only be required if
and to the extent such policy in effect immediately prior to the Change in
Control (without taking into consideration any changes therein made in
contemplation of the occurrence of the Change in Control) requires or would have
required such deferral.
6. Disability. (a) The Bank may terminate the Officer's employment
under this Agreement for "permanent disability" if (i) the Officer shall become
physically or mentally disabled or incapacitated to the extent that the Officer
has been absent from the Officer's duties with the Bank on account of such
disabilities or incapacitation as determined in a manner consistent with the
policy which applies generally to employees of the Bank on a full-time basis for
a period of six consecutive months, and (ii) within 30 days after written notice
of proposed termination for permanent disability is given by the Bank to the
Officer, the Officer shall not have returned to full-time performance of the
Officer's duties.
5
<PAGE> 6
(b) In the event of termination for "permanent disability," the Bank
shall continue to pay the Officer an amount equal to the Officer's then annual
salary pursuant to Section 5(a) (less any benefits that would have been payable
to the Officer had the Officer elected the maximum available amount of
disability insurance coverage available from the Bank) for a period commencing
on the Effective Date of Termination and ending on the first anniversary thereof
(or the end of the remaining Term in effect immediately prior to the Effective
Date of Termination, if earlier). Notwithstanding the first sentence of this
Section 6(b), any such payment shall terminate upon the earliest to occur of (A)
the date the Officer returns to full-time employment with the Bank; (B) the
Officer's full-time employment by another employer; or (C) the Officer's death.
In the event of termination for "permanent disability," the Bank also shall
continue to provide until the end of the remaining Term in effect immediately
prior to the Effective Date of Termination (or the Officer's earlier death) all
life, medical and dental insurance coverage as is otherwise maintained by the
Bank for full-time employees, provided that the Officer shall continue to pay
all amounts in respect of such coverage that an employee receiving the same
level of coverage is or would be required to pay. In the event of a termination
of the Officer's employment for "permanent disability" at any time during the
remaining Term in effect at the time of a Change in Control (as defined in
Section 11(a)), the provisions of Section 11 shall apply in lieu of the
provisions of this Section 6(b).
(c) There shall be no reduction in the compensation payable to the
Officer or the Officer's other rights under this Agreement during any period
when the Officer is incapable of performing some or all of the Officer's duties
by reason of temporary or partial disability.
6
<PAGE> 7
7. Death. In the event of the Officer's death during the Term, this
Agreement and all of the Bank's obligations under this Agreement shall
terminate.
8. Termination by the Bank. (a) The Bank may terminate the Officer's
employment under this Agreement at any time by giving the Officer written notice
of such termination, provided that, except where termination is for "cause" (as
defined in Section 8(b)(ii)), such notice shall be provided at least 30 days
prior to the Effective Date of Termination. In the event of a termination of the
Officer's employment by the Bank, other than a termination for "cause" (as
defined in Section 8(b)(ii)), the Bank shall (subject to the provisions of
Section 8(c)) continue from the Effective Date of Termination through the end of
the Severance Period (as defined in Section 8(b)(i)) to (1) pay the Officer's
annual salary in effect immediately prior to the Effective Date of Termination
to the Officer and (2) maintain (for the Officer and, during such period but
prior to the Officer's death, for the Officer's spouse and dependents, as
applicable) all life, medical and dental insurance coverage as is otherwise
maintained by the Bank for full-time employees, provided that the Officer shall
continue to pay any amounts in respect of such coverage that an employee
receiving the same level of coverage is or would be required to pay. In the
event of a termination of the Officer's employment by the Bank at any time
during the remaining Term in effect at the time of a Change in Control, the
provisions of Section 11 shall apply in lieu of the provisions of the
immediately preceding sentence of this Section 8(a).
(b)(i) As used in Section 8(a) above, the term "Severance Period"
shall mean the period of time equal to the Length of Service Factor multiplied
by the Age Multiplier. The Length of Service Factor shall be (i) six months if
the Officer has been employed by the Bank for a
7
<PAGE> 8
total of two years or less or (ii) 12 months if the Officer has been employed by
the Bank for a total of over two years. The Age Multiplier shall be (A) 1.0 if
the Officer is under age 50, (B) 1.25 if the Officer is age 50 or over but below
age 55, (C) 1.375 if the Officer is age 55 or over but below age 60 and (D) 1.5
if the Officer is age 60 or over. In calculating the Length of Service Factor
and the Age Multiplier, the length of the Officer's employment by the Bank and
the Officer's age shall be the Officer's length of employment and age (as the
case may be) at the time notice of termination of the Officer's employment is
given by the Bank.
(ii) The Officer shall have no right to receive compensation or
other benefits under this Agreement for any period after the Effective Date of
Termination if the Officer's employment is terminated for cause. As used in this
Agreement, "cause" shall mean the Officer's personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform assigned duties, willful violation of any law,
rule or regulation (other than traffic violations or similar offenses) or final
cease and desist order or material breach of any provision of this Agreement.
(c)(i) Notwithstanding any other provision of this Section 8 or of
Section 11, if at the Effective Date of Termination any statute, regulation,
order, agreement, or regulatory interpretation thereof that is valid and binding
upon the Bank (a "Regulatory Restriction") shall restrict, prohibit or limit the
amount of any payment or the provision of any benefit that the Bank would
otherwise be liable for under this Section 8 or under Section 11, then the
amount that the Bank shall pay to the Officer hereunder shall not exceed the
maximum amount permissible under such Regulatory Restriction; provided, that if
such Regulatory Restriction shall subsequently be rescinded, superseded, amended
or otherwise determined not to restrict, limit or prohibit payment by the Bank
of amounts otherwise due the Officer hereunder, then the Bank shall promptly
8
<PAGE> 9
thereafter pay to such Officer any amounts (or the value of any benefit)
previously withheld from such Officer as a result of such Regulatory
Restriction.
(ii) Notwithstanding any other provision of this Section 8 or of
Section 11, in the event that any amount otherwise payable hereunder, other than
on account of events described in Sections 11(c)(i) or 11(c)(ii) following a
Change in Control (as hereinafter defined), would be deemed to constitute a
parachute payment (a "Parachute Payment") within the meaning of Section 280G of
the Code, and if any such Parachute Payment, when added to any other payments
which are deemed to constitute Parachute Payments, would otherwise result in the
imposition of an excise tax under Section 4999 of the Code, the amounts payable
hereunder (other than amounts payable under the SERP or otherwise payable on
account of events described in Sections 11(c)(i) or 11(c)(ii) following a Change
in Control) shall be reduced by the smallest amount necessary to avoid the
imposition of such excise tax. Any such limitation shall be applied to such
compensation and benefit amounts, and in such order, as the Bank shall determine
in its sole discretion. References to the Code in this Agreement shall be to the
Code as presently in effect or to the corresponding provisions of any succeeding
law.
9. Voluntary Termination by the Officer. The Officer shall have the
right to terminate the Officer's employment under this Agreement at any time
upon at least 30 but not more than 60 days' prior written notice to the Bank. If
this Agreement is terminated pursuant to the immediately preceding sentence, all
of the Bank's obligations under this Agreement shall terminate and the Officer
shall not be entitled to any compensation or benefits after the Effective Date
of Termination, except to the extent provided in Section 11.
9
<PAGE> 10
10. Additional Termination and Suspension Provisions. (a) If the
Officer is removed and/or permanently prohibited from participating in the
conduct of the Bank's affairs by an order issued under Section 8(e)(3) or (g)(1)
of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(3) or (g)(1)), all
obligations of the Bank under this Agreement shall terminate as of the effective
date of the order, but vested rights of the parties shall not be affected.
(b) If the Bank is in default (as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act), all obligations under this Agreement shall
terminate as of the date of default, but this paragraph shall not affect any
vested rights of the parties.
(c) All obligations under this Agreement shall be terminated, except
to the extent determined that continuation of this Agreement is necessary for
the continued operation of the Bank, (i) by the Director of Thrift Supervision
or his or her designee (the "Director"), at the time the Federal Deposit
Insurance Corporation enters into an agreement to provide assistance to or on
behalf of the Bank under the authority contained in Section 13(c) of the Federal
Deposit Insurance Act; or (ii) by the Director, at the time the Director
approves a supervisory merger to resolve problems related to operation of the
Bank or when the Bank is determined by the Director to be in an unsafe or
unsound condition. Any rights of the parties that have already vested, however,
shall not be affected by such action.
(d) If the Officer is suspended and/or temporarily prohibited from
participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C.
1818(e)(3) and (g)(1)), the Bank's obligations under this Agreement shall be
suspended as of the date of service unless stayed by appropriate proceedings.
10
<PAGE> 11
If the charges in the notice are dismissed, the Bank may in its discretion (a)
pay the Officer all or part of the compensation withheld while its contract
obligations were suspended and (b) reinstate (in whole or in part) any of its
obligations which were suspended.
(e) The provisions of paragraphs (a) through (d) of this Section 10
are required to be set forth in this Agreement by regulations applicable to the
Bank on the date of this Agreement. If any such regulation shall hereafter be
amended or modified, or if any new regulation applicable to the Bank and
effective after the date of this Agreement shall require the inclusion in this
Agreement of a provision not presently included in this Agreement, then the
foregoing provisions of paragraphs (a) through (d) of this Section 10 shall be
deemed amended to the extent necessary to give effect in this Agreement to any
such amended, modified or new regulation.
11. Change in Control. (a) As used in this Agreement, a "Change in
Control" shall be deemed to have occurred if the event set forth in any one of
the following paragraphs shall have occurred:
(I) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from
the Company or its Affiliates) representing 35% or more of the combined
voting power of the Company's then outstanding securities; or
(II) the following individuals cease for any reason to constitute a
majority of the number of directors then serving as directors of the
Company: individuals who, on July 24, 1997, constitute the Board of
Directors of the Company and any new director
11
<PAGE> 12
(other than a director whose initial assumption of office is in connection
with the settlement of an actual or threatened election contest, including
but not limited to a consent solicitation, relating to the election of
directors of the Company) whose appointment or election by the Board of
Directors of the Company or nomination for election by the Company's
stockholders was approved or recommended by a vote of at least two-thirds
(2/3) of the directors then still in office who either were directors on
July 24, 1997 or whose appointment, election or nomination for election
was previously so approved or recommended; or
(III) there is consummated a merger or consolidation of the Company
or any direct or indirect subsidiary of the Company with any other
corporation or entity, other than (i) a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity or any Parent thereof), in combination
with the ownership of any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any subsidiary of the
Company, at least 65% of the combined voting power of the securities of
the Company, such surviving entity or any Parent thereof outstanding
immediately after such merger or consolidation or (ii) a merger or
consolidation effected solely to implement a recapitalization of the
Company or the Bank (or similar transaction) in which no Person is or
becomes the Beneficial Owner, directly or indirectly, of securities of the
Company or the Bank (not including in the securities beneficially owned by
such Person any securities acquired directly from the Company or its
Affiliates) representing
12
<PAGE> 13
35% or more of the combined voting power of the Company's or the Bank's
then outstanding securities; or
(IV) the stockholders of the Company or the Bank approve a plan of
complete liquidation or dissolution of the Company or the Bank,
respectively, or there is consummated a sale or disposition by the Company
or any of its subsidiaries of any assets which individually or as part of
a series of related transactions constitute all or substantially all of
the Company's consolidated assets (provided that, for these purposes, a
sale of all or substantially all of the voting securities of the Bank or a
Parent of the Bank shall be deemed to constitute a sale of substantially
all of the Company's consolidated assets), other than any such sale or
disposition to an entity at least 65% of the combined voting power of the
voting securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the voting
securities of the Company immediately prior to such sale or disposition;
or
(V) the execution of a binding agreement that if consummated would
result in a Change in Control of a type specified in clause (I) or (III)
of this Section 11(a) (an "Acquisition Agreement") or of a binding
agreement for the sale or disposition of assets that, if consummated,
would result in a Change in Control of a type specified in clause (IV) of
this Section 11(a) (an "Asset Sale Agreement") or the adoption by the
Board of Directors of the Company or the Bank of a plan of complete
liquidation or dissolution of the Company or the Bank that, if
consummated, would result in a Change in Control of a type specified in
clause (IV) of this Section 11(a) (a "Plan of Liquidation"), provided
however, that a Change in Control of the type specified in this clause (V)
shall not be
13
<PAGE> 14
deemed to exist or have occurred as a result of the execution of such
Acquisition Agreement or Asset Sale Agreement, or the adoption of such a
Plan of Liquidation, from and after the Abandonment Date if the Effective
Date of Termination of the Officer's employment has not occurred on or
prior to the Abandonment Date. As used in this Section, the term
"Abandonment Date" shall mean the date on which (A) an Acquisition
Agreement, Asset Sale Agreement or Plan of Liquidation is terminated
(pursuant to its terms or otherwise) without having been consummated, (B)
the parties to an Acquisition Agreement or Asset Sale Agreement abandon
the transactions contemplated thereby, (C) the Bank or the Company
abandons a Plan of Liquidation or (D) a court or regulatory body having
competent jurisdiction enjoins or issues a cease and desist or stop order
with respect to or otherwise prevents the consummation of, or a regulatory
body notifies the Bank or the Company that it will not approve, an
Acquisition Agreement, Asset Sale Agreement or Plan of Liquidation or the
transactions contemplated thereby and such injunction, order or notice has
become final and not subject to appeal.
As used in connection with the foregoing definition of Change in
Control, "Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated
under Section 12 of the Exchange Act; "Beneficial Owner" shall have the meaning
set forth in Rule 13d-3 under the Exchange Act; "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended from time to time; "Parent" shall
mean any entity that becomes the Beneficial Owner of at least 80% of the voting
power of the outstanding voting securities of the Company or of an entity that
survives any merger or consolidation of the Company or any direct or indirect
subsidiary of the Company; and "Person" shall have the meaning given in Section
3(a)(9) of the Exchange Act, as
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<PAGE> 15
modified and used in Sections 13(d) and 14(d) thereof, except that such term
shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or
other fiduciary holding securities under an employee benefit plan of the Company
or any of its Affiliates, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities, or (iv) a corporation or entity
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company.
(b) If the Bank or the Company shall relocate its principal
executive offices after a Change in Control, and if the Officer shall, as a
result, change the Officer's principal residence, the Bank shall (i) promptly
pay (or reimburse the Officer for) all reasonable moving expenses incurred by
the Officer as a result of such change in the Officer's principal residence, and
(ii) indemnify the Officer against, and reimburse the Officer for, any loss
incurred as the result of the sale of the Officer's principal residence (which
loss shall be computed for the purpose of this Agreement as the difference
between the actual sales price (net of closing costs and brokerage fees) of such
residence and the fair market value of such residence (computed as of the time
the Bank or the Company relocates its principal executive offices) as determined
by an independent real estate appraiser designated and paid by the Bank or the
Company and acceptable to the Officer), provided that such sale of the Officer's
principal residence occurs within six months after the Bank or the Company
relocates its principal executive offices.
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<PAGE> 16
(c)(i) If a Change in Control shall occur, the Officer shall be
entitled to the compensation and benefits provided in paragraphs (d), (e), (f)
and (g) of this Section 11 upon the subsequent termination of the Officer's
employment, at any time during the remaining Term in effect at the time of the
Change in Control, by the Bank (including, without limitation, a termination for
permanent disability), other than a termination for cause, provided that the
rights to any such compensation and benefits shall be subject to the limitations
and provisions set forth in Section 8(c).
(ii) If (A) a Change in Control shall occur, and thereafter the Bank
(notwithstanding its right to do so under Section 4 or Section 5) either (B)
makes a material change in the Officer's functions, duties or responsibilities,
which change would cause the Officer's position with the Bank to become one of
lesser responsibility, importance or scope from that in effect immediately prior
to the time of the Change in Control, or (C) reduces the Officer's annual salary
to a level below that in effect immediately prior to the Change in Control (an
event specified in clause (B) or (C) is hereafter referred to as a "Material
Change"), the Officer shall be entitled to the compensation and benefits
provided in paragraphs (d), (e), (f) and (g) of this Section 11 (subject to the
limitations and provisions set forth in Section 8(c)) upon the subsequent
termination of the Officer's employment, at any time during the remaining Term
in effect at the time of the Change in Control, by the Officer.
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<PAGE> 17
(iii) If the Officer's employment is terminated by the Bank or by
reason of the Officer's permanent disability during the Term but after the
expiration of the remaining Term in effect at the time of the Change in Control,
then the provisions of Section 6 or 8 (as the case may be) shall apply in lieu
of the provisions of paragraphs (d), (e), (f) and (g) of this Section 11. If the
Officer's employment is terminated by the Officer during the Term but after the
expiration of the remaining Term in effect at the time of the Change in Control
(or if the Officer's employment is terminated by the Officer during the
remaining Term in effect at the time of the Change in Control and no Material
Change shall have occurred), then the provisions of Section 9 shall apply in
lieu of the provisions of paragraphs (d), (e), (f) and (g) of this Section 11.
(iv) Only for purposes of determining whether there has been a
termination of the Officer's employment during the remaining Term in effect at
the time of a Change in Control (as specified in paragraphs (c)(i) and (c)(ii)
of this Section 11, as the case may be) so as to entitle the Officer to the
compensation and benefits provided in paragraphs (d), (e), (f) and (g) of this
Section 11, a termination of the Officer's employment following such a Change in
Control shall be deemed to have occurred on such date during the remaining Term
that (A) notice of termination is given by the Bank or the Officer to the other
(regardless of the Effective Date of Termination specified in such notice) or
(B) notice of non-renewal pursuant to Section 2(a) is given by the Bank to the
Officer (regardless of the date on which the Term expires). In the event that
notice of non-renewal pursuant to Section 2(a) is given by the Bank to the
Officer during the remaining Term in effect at the time of a Change in Control,
the termination of employment in connection with such notice of non-renewal
shall, for purposes of Sections 8(c) and 11(h), be treated as a termination of
employment described by paragraph (c)(i) of this Section 11.
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<PAGE> 18
Notwithstanding the immediately preceding sentences, the Officer shall continue
to be employed by the Bank pursuant to this Agreement until (1) the Effective
Date of Termination specified in the notice of termination or (2) the end of the
remaining Term in effect when notice of non-renewal is given pursuant to Section
2 of this Agreement.
(d)(i) Upon the occurrence of a Change in Control followed by any
termination of the Officer's employment pursuant to Section 11(c)(i) or (c)(ii),
to the extent not otherwise limited pursuant to Section 8(c), the Bank shall pay
the Officer, as a severance payment for services previously rendered to the
Bank, a lump sum equal to three times the Officer's Annual Compensation, as in
effect immediately prior to the Effective Date of Termination (without regard to
any decrease in the Officer's Annual Compensation made after the Change in
Control). As used in this Section 11(d)(i), the term "Annual Compensation" shall
mean, at any time, an amount equal to the sum of (A) the Officer's annual salary
(as defined in Section 5(a)) at such time, plus (B) 100% of the target bonus or
other cash incentive that the Officer is eligible to earn in such year pursuant
to each plan or program (whether or not such plan or program has been formalized
or is in written form) of the Bank in effect for such year that provides for
bonuses or other cash incentives, or if no such plan or program has been adopted
with respect to such year, 100% of the target bonus or other cash incentive that
the Officer was eligible to earn in the most recent year in which such a plan or
program was in effect.
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<PAGE> 19
(ii) Upon the occurrence of a Change in Control followed by any
termination of the Officer's employment pursuant to Section 11(c)(i) or (c)(ii),
to the extent not otherwise limited pursuant to Section 8(c): (A) each
Non-Accelerated Stock Option held by the Officer shall (to the extent permitted
by the plan under which such Non-Accelerated Stock Option was granted),
notwithstanding anything to the contrary in the grant letter or option agreement
related to such Non-Accelerated Stock Option and regardless of the actual
Effective Date of Termination, vest and become exercisable in accordance with
the provisions of, and remain exercisable for the term specified in, such grant
letter or option agreement as if there had been no termination of the Officer's
employment and the Officer remained in the employment of the Bank for the entire
term of such Non-Accelerated Stock Option and (B) each Vested Stock Option held
by the Officer shall (to the extent permitted by the plan under which such
Vested Stock Option was granted), notwithstanding anything to the contrary in
the grant letter or option agreement related to such Vested Stock Option and
regardless of the actual Effective Date of Termination, remain exercisable for
the term specified in such grant letter or option agreement as if there had been
no termination of the Officer's employment and the Officer remained in the
employment of the Bank for the entire term of such Vested Stock Option. As used
in this Section 11(d)(ii), the term (I) "Non-Accelerated Stock Option" shall
mean any stock option (including any tandem stock appreciation right) previously
or hereafter granted to the Officer under a stock incentive or stock option plan
of the Company that has not, pursuant to the provisions of such stock incentive
or stock option plan or the grant letter or option agreement pursuant to which
such stock option was granted to the Officer, vested and become exercisable
prior to the Effective Date of Termination and (II) "Vested Stock Option" shall
mean any stock option (including any tandem
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<PAGE> 20
stock appreciation right) previously or hereafter granted to the Officer under a
stock incentive or stock option plan of the Company that vests and becomes
exercisable prior to the Effective Date of Termination.
(e) Any payment pursuant to Section 11(d)(i) or 11(g)(ii) shall be
made to the Officer within 30 days after the Effective Date of Termination.
(f) Upon the occurrence of a Change in Control followed by any
termination of the Officer's employment pursuant to Section 11(c)(i) or (c)(ii),
to the extent not otherwise limited pursuant to Section 8(c), the Bank shall
cause to be continued until the end of the remaining Term in effect immediately
prior to the giving of notice of termination or non-renewal (or the Officer's
earlier death) life, disability, medical and dental insurance coverage as is
otherwise maintained by the Bank for full-time employees, provided that the
Officer shall continue to pay all amounts in respect of such coverage that an
employee receiving the same level of coverage is or would be required to pay.
(g)(i)(A) On and after any Change in Control, to the extent not
otherwise limited pursuant to Section 8(c)(i), the Officer shall be eligible to
be paid, under the SERP, a SERP benefit, to the extent vested (and subject to
additional vesting in accordance with the terms of the SERP as such plan
provided immediately prior to the Change in Control, or if it results in a
greater vested percentage, with vesting determined otherwise pursuant to this
Section 11(g)(i)), that is not less than a benefit calculated based upon the
amount of the Officer's "Pension Goal" and "Average Compensation" and the
otherwise applicable terms of the SERP, each as determined immediately prior to
the Change in Control. The rights of the Officer and the
20
<PAGE> 21
obligations of the Bank with respect to the benefits described under this
Section 11(g)(i)(A) shall survive the termination of this Agreement.
(B) In the event of termination of the Officer's employment
pursuant to Section 11(c)(i) or (c)(ii), to the extent not otherwise limited
pursuant to Section 8(c), notwithstanding any vesting provisions that would in
other circumstances require further service under the SERP, the Officer shall be
fully vested in the Officer's SERP benefit, which shall otherwise be payable in
accordance with the terms of the SERP and, as applicable, Section 11(g)(i)(A).
(ii) In the event of termination of the Officer's employment
pursuant to Section 11(c)(i) or (c)(ii), to the extent not otherwise limited
pursuant to Section 8(c), the Officer shall be entitled to receive in a lump sum
payment an amount equal to any amounts forfeited by the Officer under the
Company's qualified defined contribution plan(s) and under the Bank's Benefit
Restoration Plan (solely to the extent such Benefit Restoration Plan supplements
benefits under a defined contribution plan) as in effect immediately prior to
the Change in Control (or, if more favorable to the Officer, as in effect
immediately prior to the Effective Date of Termination).
(h)(i) If, on account of events described in Sections 11(c)(i) or
11(c)(ii) following a Change in Control, any payment or other benefit paid or to
be paid or any property transferred or to be transferred (collectively, a
"Severance Payment") with respect to one or more calendar years by or on behalf
of the Bank (or any affiliate of the Bank) to the Officer pursuant to this
Agreement in connection with such Change in Control shall constitute an "excess
parachute payment" within the meaning of Section 280G(b) of the Code subject to
the tax imposed by Section 4999 of the Code (the "Excise Tax"), then the Bank
shall pay to the Officer an additional
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<PAGE> 22
amount (the "Gross Up Payment") such that the amount paid or transferred to the
Officer, after deduction of any Excise Tax on the Severance Payment, and any
federal, state and local income tax, employment tax and Excise Tax upon the
Gross Up Payment, shall be equal to the Severance Payment. In addition, if,
absent a Change in Control or in other circumstances following a Change in
Control, notwithstanding the reductions mandated by Section 8(c), the SERP
benefits otherwise payable to the Officer shall constitute an "excess parachute
payment" within the meaning of Section 280G(b) of the Code subject to the Excise
Tax, then the Bank shall pay to the Officer one or more Gross Up Payments such
that the amount of such Gross Up Payments, when combined with such SERP
benefits, after deduction of any Excise Tax on the SERP benefits, and any
federal, state and local income tax, employment tax and Excise Tax upon the
Gross Up Payments, shall be equal to such SERP benefits.
(ii) For purposes of determining under Section 11(h)(i) whether any
portion of a Severance Payment or SERP benefit will be subject to the Excise Tax
and the amount of such Excise Tax, (A) the Severance Payment or SERP benefit and
payment provided for in Section 11(h)(i) shall be treated as "parachute
payments" within the meaning of Section 280G(b)(2) of the Code, and all "excess
parachute payments" within the meaning of Section 280(G)(b)(1) of the Code shall
be treated as subject to the Excise Tax, unless and to the extent that tax
counsel selected by the Bank's independent auditors and acceptable to the
Officer is of the opinion that the Severance Payment or SERP benefit (in whole
or in part) does not constitute a "parachute payment" or such "excess parachute
payment" (in whole or in part) represents reasonable compensation for services
actually rendered within the meaning of Section 280G(b)(4) of the Code in excess
of the allocable base amount within the meaning of Section 280G(b)(3) of the
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<PAGE> 23
Code, or the Severance Payment or SERP benefit is otherwise not subject to the
Excise Tax, (B) the amount of the Severance Payment or SERP benefit that is
treated as subject to the Excise Tax shall be equal to the lesser of (X) the
total amount of the Severance Payment or SERP benefit, as applicable, and (Y)
the amount of "excess parachute payments" within the meaning of Section
280G(b)(1) of the Code (after applying clause (A) above), (C) any Gross Up
Payment pursuant to Section 11(h)(i) shall be treated as subject to the Excise
Tax in its entirety and (D) the value of any non-cash benefits or any deferred
payment or benefit shall be determined by the Bank's independent auditors in
accordance with the principles of Sections 280G(d)(3) and (4) of the Code.
(iii) If in circumstances described in Section 11(h)(i), by reason
of the filing by the Officer of an amended tax return, an audit by the Internal
Revenue Service or other taxing authority, or a final determination by a court
of competent jurisdiction, it is determined that "excess parachute payments"
exceeding those previously reported in the Officer's tax returns were received
by the Officer and as a result an additional Excise Tax (the "Additional Excise
Tax") shall become due, the Bank shall pay the Officer an additional amount (the
"Subsequent Gross Up Payment") such that the amount paid or transferred to the
Officer, after deduction of (A) any Additional Excise Tax and (B) on an after
tax basis, any interest, additions and penalties with respect to the Additional
Excise Tax and (C) any federal, state and local income tax, employment tax and
Excise Tax upon the Subsequent Gross up Payment and (D) the payments provided
for in Section 11(h)(i), shall be equal to the Severance Payment or SERP
benefits, as appropriate.
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<PAGE> 24
(iv) Any Gross Up Payment required hereunder shall be made at least
ten days prior to the due date (without regard to extensions) of the Officer's
federal income tax return for the year with respect to which the "excess
parachute payment" is deemed made under the Code. Any Subsequent Gross Up
Payment required hereunder shall be made to the Officer within 30 days after the
amount thereof is determined. Notwithstanding the two immediately preceding
sentences, the Bank shall pay any federal, state and local tax or taxes and
employment taxes required to be withheld from the Officer's wages (within the
meaning of Section 3121 and 3402 of the Code) with respect to the "excess
parachute payment" and any such tax or taxes paid by the Company or the Bank to
the Internal Revenue Service or state or local taxing authority shall constitute
payment to the Officer.
(v) If the Excise Tax is finally determined (whether by the filing
of an amended tax return by the Officer by audit of the Internal Revenue Service
or other taxing authority, or by a final determination of a court of competent
jurisdiction) to be less than the amount paid to or on behalf of the Officer
under the provisions of Sections 11(h)(i)-(iv) and the overpayment is refunded
to the Officer, the Officer shall repay to the Bank, promptly following the
receipt of the refund, the portion of the Gross Up Payment (and/or Subsequent
Gross Up Payment) attributable to such reduction of the Excise Tax (plus the
portion attributable to federal, state and local income tax and employment taxes
imposed on the portion being repaid by the Officer but only to the extent that
the repayment may result in a tax benefit to the Officer under Section 1341 of
the Code and similar provisions of applicable state and local law).
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(vi) The provisions of this Section 11(h) shall inure to the benefit
of the Officer during the Term of this Agreement regardless of whether or not
the Officer's employment is terminated, and if the Officer's employment is
terminated, the rights and obligations of the Officer and the Bank under this
Section 11(h) shall survive the termination of this Agreement.
12. Post-Termination Obligations of the Officer. (a) Upon any
termination of the Officer's employment during the Term of this Agreement or
upon termination of the Officer's employment after the expiration of the Term of
this Agreement or upon retirement, the Officer agrees (i) not to make any
disclosure in violation of Section 12(b), (ii) to return to the Bank all
material documents relating to the business of the Bank that are in the
Officer's possession or under the Officer's control, and (iii) except if the
termination or retirement occurs after a Change in Control, not to solicit
(directly or indirectly), for one year following the Effective Date of
Termination (or date of termination after the expiration of the Term) or
retirement, the employment of any person who is an employee of the Bank on the
Effective Date of Termination (or date of termination after the expiration of
the Term) or retirement or who, within six months prior to the Effective Date of
Termination (or date of termination after the expiration of the Term) or
retirement, was an employee of the Bank, unless the Officer receives written
permission from the Bank to engage in the activities proscribed by this Section
12(a) or by Section 12(b) or to be relieved of any obligation under Section
12(a)(ii).
(b) The Officer recognizes and acknowledges that the confidential
business activities and plans for business activities of the Bank and its
subsidiaries and affiliates, as they may exist from time to time, are valuable,
special and unique assets of the Bank. The Officer shall not, during or at any
time after the Officer's employment, disclose any knowledge of the past,
25
<PAGE> 26
present or planned business activities of the Bank or its subsidiaries or
affiliates that are of a confidential nature (collectively, the "Bank's
Confidential Activities") to any person, firm, corporation, bank, thrift
institution or other entity for any reason or purposes whatsoever.
Notwithstanding anything in this Section 12(b) to the contrary, the Officer (i)
may disclose any knowledge of banking, financial and/or economic principles,
concepts or ideas that are not derived from the Bank's Confidential Activities,
and (ii) shall not be precluded from disclosures respecting the Bank's
Confidential Activities that are (A) made pursuant to compulsory legal process
or when required by an appropriate governmental agency; (B) public knowledge or
become public without the Officer's breach of this Section 12(b); (C) already
known to the party to whom the Officer makes such disclosures; or (D) approved
by the Bank for disclosure.
(c) The parties, recognizing that irreparable injury will result to
the Bank, its business and property in the event of the Officer's breach or
threatened breach of Section 12(a) or (b), agree that in the event of such
breach or threatened breach by the Officer, the Bank will be entitled, in
addition to any other remedies and damages that may be available, to seek and
obtain an injunction to restrain the violation of Section 12(a) or (b) by the
Officer.
13. Notices. All notices under this Agreement shall be in writing
and shall be delivered personally or sent by registered or certified mail,
return receipt requested, (a) to the Bank, at its address set forth above (to
the attention of its Chief Executive Officer), and (b) to the Officer, at the
Officer's residence address as appearing in the records of the Bank, or to such
other address as either party may hereafter designate in writing in the manner
provided in this Section 13. All notices under this Agreement shall be deemed
given (i) upon receipt if delivered personally or (ii) two days after deposit in
a facility of the U.S. Postal Service with postage
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prepaid. As used in this Agreement, the term "Effective Date of Termination"
shall mean (A) the date specified in a notice hereunder on which such Officer's
employment is to terminate, provided, however, that no such notice shall specify
an Effective Date of Termination that is prior to the date on which any such
notice is given or (B) for purposes of Section 11 only, the date on which the
Term is to expire as a result of a notice of non-renewal given by the Bank to
the Officer pursuant to Section 2 of this Agreement.
14. Complete Understanding. On and after the date as of which this
Agreement is effective, this Agreement constitutes the complete understanding
between the parties with respect to the subject matter hereof and merges and
supersedes all prior oral and written agreements and understandings (including,
but not limited to, the Agreement between the parties that was initially signed
by the Officer on June 16, 1997 and was dated as of March 1, 1998) and all
contemporaneous oral agreements and understandings with respect to the subject
matter hereof, including without limitation any other employment agreement
heretofore executed by the Officer and the Bank or any of its subsidiaries or
affiliates. This Agreement may not be amended, terminated or rescinded except in
a writing signed by the party to be charged.
15. No Duty to Mitigate. Except as otherwise expressly provided
herein, if the Officer shall continue to receive compensation or benefits or
severance pay pursuant to this Agreement after its termination, (a) the Officer
shall have no duty to mitigate such payments by seeking or obtaining other
employment or otherwise, and (b) in the event the Officer does obtain other
employment, such payments from the Bank shall not be reduced by compensation
received from such other employment.
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<PAGE> 28
16. No Waiver. The failure of either party at any time to require
performance by the other party of a provision of this Agreement or to resort to
a remedy at law or in equity or otherwise shall in no way affect the right of
such party to require full performance or to resort to such remedy at any time
thereafter nor shall a waiver by either party of the breach of any provision of
this Agreement be taken or held to be a waiver of any subsequent breach of such
provision unless expressly so stated in writing. No waiver of any of the
provisions of this Agreement shall be effective unless in writing and signed by
the party to be charged.
17. Governing Law. This Agreement shall be governed by the laws of
the State of New York, without regard to conflict of laws principles applied in
the State of New York.
18. Headings. The headings to the Sections of this Agreement are for
convenience of reference only and shall not be given any effect in the
construction or interpretation of this Agreement.
19. Severability. If any provision of this Agreement is held by a
court or other authority having competent jurisdiction to be invalid, void or
otherwise unenforceable, in whole or in part, by reason of any applicable law,
statute or regulation or any interpretation thereof, then (a) the remainder of
the provisions of this Agreement shall remain in full force and effect and in no
way be affected, impaired or invalidated and (b) the provision so held to be
invalid, void or otherwise unenforceable shall be deemed modified in amount,
duration, scope or otherwise to the minimum extent necessary so that such
provision shall not be invalid, void or otherwise unenforceable by reason of
such law, statute, regulation or interpretation and such provision, as so
modified, shall remain in full force and effect.
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20. Payment of Legal Fees. If, following a Change in Control, any
legal action or proceeding is commenced to enforce or interpret the provisions
of this Agreement, or to recover damages for its breach, all reasonable legal
fees, disbursements and court costs paid or incurred by the Officer arising out
of or resulting from such action or proceeding shall be paid or reimbursed to
the Officer by the Bank, provided the Officer shall be the prevailing party in
such action or proceeding.
21. Assumption by Company. This Agreement shall be assumable by the
Company at its election. Following any such election, the obligations of the
Bank under this Agreement shall become the obligations of the Company.
22. Taxes. Any payments due to the Officer pursuant to this
Agreement shall be reduced by all applicable federal, state, city or other taxes
required by law to be withheld with respect to such payments.
23. Limitation on Payments. Any payments made to the Officer
pursuant to this Agreement, or otherwise, are subject to and conditioned upon
their compliance with 12 USC ss. 1828(k) and any regulations promulgated
thereunder.
THE DIME SAVINGS BANK OF NEW YORK, FSB
By: /s/LAWRENCE J. TOAL
----------------------------
Lawrence J. Toal
Chief Executive Officer
Dated: February 11, 1998 /s/D. JAMES DARAS
------------------- ----------------------------
D. James Daras
29
<PAGE> 1
Exhibit 10.12
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of January 30, 1998 between THE DIME SAVINGS
BANK OF NEW YORK, FSB (the "Bank"), a federal stock savings bank having its
principal executive offices at 589 Fifth Avenue, New York, New York 10017, and
Carlos R. Munoz (the "Officer").
-----------
A. The Bank is desirous of employing the Officer upon the terms and
conditions set forth in this Agreement.
B. The Officer is desirous of being employed by the Bank upon the terms
and conditions set forth in this Agreement.
------------
Therefore, the Bank and the Officer, intending to be legally bound, agree
as follows:
1. Employment. Subject to the terms and conditions of this
Agreement, the Bank hereby employs the Officer, and the Officer hereby accepts
such employment.
2. Term of Employment. (a) The initial term of the Officer's
employment under this Agreement shall be deemed to have commenced on the date of
this Agreement and shall continue until March 1, 2001. This Agreement shall be
renewed automatically for one additional year on March 1, 1999, and on each
March 1 thereafter, unless (x) the Officer or the Bank gives contrary written
notice to the other, at least 10 days prior to any such renewal date, or (y)
this Agreement has been otherwise terminated in accordance with its provisions.
During each
<PAGE> 2
calendar year of the term of this Agreement beginning with 1999 (unless notice
of non-renewal of this Agreement shall have previously been given by the Bank or
the Officer pursuant to the immediately preceding sentence), the Board of
Directors of the Bank (or a duly authorized committee of the Board or
subcommittee of such committee) shall, no later than the last day in each such
year on which the Bank may give the Officer notice of non-renewal pursuant to
the immediately preceding sentence, review and determine whether the Bank shall
give the Officer such notice of non-renewal with respect to the March 1 renewal
date in such year; provided, however, that nothing in this sentence shall be
construed as limiting the Bank's ability to give notice of non-renewal pursuant
to the immediately preceding sentence at any other time. A determination by the
Board of Directors of the Bank (or a duly authorized committee of the Board or
subcommittee of such committee) in any year that the Bank shall not give notice
of non-renewal with respect to the March 1 renewal date in such year shall be
deemed to be the Board's approval of the renewal of this Agreement on such
renewal date. Except as otherwise provided in Section 11(c)(iv) of this
Agreement, neither the giving of notice of non-renewal pursuant to clause (x) of
the second sentence of this Section 2(a), nor the subsequent expiration of the
Term of this Agreement as a result of the giving of such notice, shall be deemed
to be a termination of the Officer's employment under this Agreement. (As used
in this Agreement, (i) "Term" shall mean the initial term and any renewal term
of this Agreement and (ii) "remaining Term" shall mean the balance of the Term
in effect at a specified time without regard to potential future renewals under
the renewal provision of this Section 2(a).)
(b) The Officer's employment may be terminated during the Term of
this Agreement by the Bank or the Officer in the manner specified in this
Agreement. Any such
2
<PAGE> 3
termination of employment shall result in a termination of this Agreement on the
Effective Date of Termination (as defined in Section 13); provided that,
notwithstanding anything to the contrary in the foregoing, any right of the
Officer to any payments or benefits as a result of a termination of the
Officer's employment (as provided in this Agreement) shall survive the
termination of this Agreement.
3. Office. During the Term, the Officer shall serve as an officer of
the Bank. In addition, during the Term, the Officer shall serve, for the period
for which the Officer may from time to time be elected, as an officer or
director of any subsidiary or affiliate of the Bank.
4. Duties. The Officer initially shall serve as Chief Credit & Risk
Management Officer of the Bank; provided, that the Officer shall hold comparable
or additional positions, and perform comparable or additional duties, as may
from time to time be assigned to the Officer. During the Term (except for
periods of illness and vacation), substantially all of the Officer's business
time, attention, skill and efforts shall be devoted to the performance of the
Officer's duties under this Agreement.
5. Compensation. (a) The annual salary of the Officer during the
Term shall be fixed by the Board of Directors of the Bank (or a duly authorized
committee of the Board or subcommittee of such committee) and shall be payable
in installments in accordance with the prevailing general payroll practice of
the Bank as it may exist from time to time. The initial annual salary of the
Officer during the Term shall be the Officer's annual salary on the date of this
Agreement. The Board of Directors of the Bank (or a duly authorized committee of
the Board or subcommittee of such committee) may increase or decrease the
Officer's annual salary from time to time; provided that, except for decreases
that are applied generally to officers of comparable
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<PAGE> 4
rank, such annual salary shall not be decreased by more than 25% in any one
calendar year. As used in this Agreement, "annual salary" shall mean, at any
time, the annual rate of salary then payable to the Officer pursuant to this
Section 5(a) (before deduction of any amounts deferred under any deferred
compensation plan of the Bank, any voluntary contributions to the Retirement
401(k) Investment Plan of Dime Bancorp, Inc. (the "Company"), or any other
similar qualified plan or any other deductions from income) and shall be
exclusive of bonuses, incentive compensation or other compensation or benefits
paid to or accrued for the Officer other than pursuant to this Section 5(a).
(b) The Officer shall not have or acquire by virtue of this
Agreement any rights to participate in, or receive benefits with respect to, any
compensation or benefit plan or program of the Bank, except (i) that while
employed by the Bank the Officer may participate in such plans or programs to
the extent provided in such plans and programs and on the same basis as if the
Officer's employment were not subject to the terms and conditions of this
Agreement, or (ii) as otherwise specifically provided in this Agreement. The
Officer shall participate in the Company's Supplemental Executive Retirement
Plan (the "SERP") with a "Pension Goal" under such plan of not less that 50% of
"Average Compensation" (with each such term as defined in the SERP), subject to
the vesting provisions under the SERP, or, solely as applicable, Section
11(g)(i).
(c) Notwithstanding anything to the contrary in the foregoing
provisions, the payment of any amounts that would otherwise be payable to the
Officer but which would be in excess of the amount which the Company or the Bank
could deduct for federal income tax purposes if then paid, on account of the
operation of Section 162(m) of the Internal Revenue
4
<PAGE> 5
Code of 1986, as amended (the "Code"), shall be deferred to the extent such
deferral is required pursuant to a policy adopted by the Compensation Committee
or the Board of Directors of the Company or the Bank and, to the extent so
deferred, shall be payable pursuant to the relevant terms of the Dime Bancorp,
Inc. Voluntary Deferred Compensation Plan; provided, however, that, if a Change
in Control (as defined in Section 11(a)) has occurred, deferral of amounts
payable hereunder to the Officer on or after the date of such Change in Control
will only be required if and to the extent such policy in effect immediately
prior to the Change in Control (without taking into consideration any changes
therein made in contemplation of the occurrence of the Change in Control)
requires or would have required such deferral.
6. Disability. (a) The Bank may terminate the Officer's employment
under this Agreement for "permanent disability" if (i) the Officer shall become
physically or mentally disabled or incapacitated to the extent that the Officer
has been absent from the Officer's duties with the Bank on account of such
disabilities or incapacitation as determined in a manner consistent with the
policy which applies generally to employees of the Bank on a full-time basis for
a period of six consecutive months, and (ii) within 30 days after written notice
of proposed termination for permanent disability is given by the Bank to the
Officer, the Officer shall not have returned to full-time performance of the
Officer's duties.
(b) In the event of termination for "permanent disability," the Bank
shall continue to pay the Officer an amount equal to the Officer's then annual
salary pursuant to Section 5(a) (less any benefits that would have been payable
to the Officer had the Officer elected the maximum available amount of
disability insurance coverage available from the Bank) for a period commencing
on the Effective Date of Termination and ending on the first anniversary
thereof (or
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<PAGE> 6
the end of the remaining Term in effect immediately prior to the Effective Date
of Termination, if earlier). Notwithstanding the first sentence of this Section
6(b), any such payment shall terminate upon the earliest to occur of (A) the
date the Officer returns to full-time employment with the Bank; (B) the
Officer's full-time employment by another employer; or (C) the Officer's death.
In the event of termination for "permanent disability," the Bank also shall
continue to provide until the end of the remaining Term in effect immediately
prior to the Effective Date of Termination (or the Officer's earlier death) all
life, medical and dental insurance coverage as is otherwise maintained by the
Bank for full-time employees, provided that the Officer shall continue to pay
all amounts in respect of such coverage that an employee receiving the same
level of coverage is or would be required to pay. In the event of a termination
of the Officer's employment for "permanent disability" at any time during the
remaining Term in effect at the time of a Change in Control (as defined in
Section 11(a)), the provisions of Section 11 shall apply in lieu of the
provisions of this Section 6(b).
(c) There shall be no reduction in the compensation payable to the
Officer or the Officer's other rights under this Agreement during any period
when the Officer is incapable of performing some or all of the Officer's duties
by reason of temporary or partial disability.
7. Death. In the event of the Officer's death during the Term, this
Agreement and all of the Bank's obligations under this Agreement shall
terminate.
8. Termination by the Bank. (a) The Bank may terminate the Officer's
employment under this Agreement at any time by giving the Officer written notice
of such termination, provided that, except where termination is for "cause" (as
defined in Section 8(b)(ii)), such notice shall be provided at least 30 days
prior to the Effective Date of Termination. In the
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<PAGE> 7
event of a termination of the Officer's employment by the Bank, other than a
termination for "cause" (as defined in Section 8(b)(ii)), the Bank shall
(subject to the provisions of Section 8(c)) continue from the Effective Date of
Termination through the end of the Severance Period (as defined in Section
8(b)(i)) to (1) pay the Officer's annual salary in effect immediately prior to
the Effective Date of Termination to the Officer and (2) maintain (for the
Officer and, during such period but prior to the Officer's death, for the
Officer's spouse and dependents, as applicable) all life, medical and dental
insurance coverage as is otherwise maintained by the Bank for full-time
employees, provided that the Officer shall continue to pay any amounts in
respect of such coverage that an employee receiving the same level of coverage
is or would be required to pay. In the event of a termination of the Officer's
employment by the Bank at any time during the remaining Term in effect at the
time of a Change in Control, the provisions of Section 11 shall apply in lieu of
the provisions of the immediately preceding sentence of this Section 8(a).
(b)(i) As used in Section 8(a) above, the term "Severance Period"
shall mean the period of time equal to the Length of Service Factor multiplied
by the Age Multiplier. The Length of Service Factor shall be (i) six months if
the Officer has been employed by the Bank for a total of two years or less or
(ii) 12 months if the Officer has been employed by the Bank for a total of over
two years. The Age Multiplier shall be (A) 1.0 if the Officer is under age 50,
(B) 1.25 if the Officer is age 50 or over but below age 55, (C) 1.375 if the
Officer is age 55 or over but below age 60 and (D) 1.5 if the Officer is age 60
or over. In calculating the Length of Service Factor and the Age Multiplier, the
length of the Officer's employment by the Bank and the Officer's age shall be
the Officer's length of employment and age (as the case may be) at the time
notice of termination of the Officer's employment is given by the Bank.
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<PAGE> 8
(ii) The Officer shall have no right to receive compensation or
other benefits under this Agreement for any period after the Effective Date of
Termination if the Officer's employment is terminated for cause. As used in this
Agreement, "cause" shall mean the Officer's personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform assigned duties, willful violation of any law,
rule or regulation (other than traffic violations or similar offenses) or final
cease and desist order or material breach of any provision of this Agreement.
(c)(i) Notwithstanding any other provision of this Section 8 or of
Section 11, if at the Effective Date of Termination any statute, regulation,
order, agreement, or regulatory interpretation thereof that is valid and binding
upon the Bank (a "Regulatory Restriction") shall restrict, prohibit or limit the
amount of any payment or the provision of any benefit that the Bank would
otherwise be liable for under this Section 8 or under Section 11, then the
amount that the Bank shall pay to the Officer hereunder shall not exceed the
maximum amount permissible under such Regulatory Restriction; provided, that if
such Regulatory Restriction shall subsequently be rescinded, superseded, amended
or otherwise determined not to restrict, limit or prohibit payment by the Bank
of amounts otherwise due the Officer hereunder, then the Bank shall promptly
thereafter pay to such Officer any amounts (or the value of any benefit)
previously withheld from such Officer as a result of such Regulatory
Restriction.
(ii) Notwithstanding any other provision of this Section 8 or of
Section 11, in the event that any amount otherwise payable hereunder, other than
on account of events described in Sections 11(c)(i) or 11(c)(ii) following a
Change in Control (as hereinafter defined), would be deemed to constitute a
parachute payment (a "Parachute Payment") within the meaning of Section
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<PAGE> 9
280G of the Code, and if any such Parachute Payment, when added to any other
payments which are deemed to constitute Parachute Payments, would otherwise
result in the imposition of an excise tax under Section 4999 of the Code, the
amounts payable hereunder (other than amounts payable under the SERP or
otherwise payable on account of events described in Sections 11(c)(i) or
11(c)(ii) following a Change in Control) shall be reduced by the smallest amount
necessary to avoid the imposition of such excise tax. Any such limitation shall
be applied to such compensation and benefit amounts, and in such order, as the
Bank shall determine in its sole discretion. References to the Code in this
Agreement shall be to the Code as presently in effect or to the corresponding
provisions of any succeeding law.
9. Voluntary Termination by the Officer. The Officer shall have the
right to terminate the Officer's employment under this Agreement at any time
upon at least 30 but not more than 60 days' prior written notice to the Bank. If
this Agreement is terminated pursuant to the immediately preceding sentence, all
of the Bank's obligations under this Agreement shall terminate and the Officer
shall not be entitled to any compensation or benefits after the Effective Date
of Termination, except to the extent provided in Section 11.
10. Additional Termination and Suspension Provisions. (a) If the
Officer is removed and/or permanently prohibited from participating in the
conduct of the Bank's affairs by an order issued under Section 8(e)(3) or (g)(1)
of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(3) or (g)(1)), all
obligations of the Bank under this Agreement shall terminate as of the effective
date of the order, but vested rights of the parties shall not be affected.
9
<PAGE> 10
(b) If the Bank is in default (as defined in Section 3(x)(1) of the
Federal Deposit Insurance Act), all obligations under this Agreement shall
terminate as of the date of default, but this paragraph shall not affect any
vested rights of the parties.
(c) All obligations under this Agreement shall be terminated, except
to the extent determined that continuation of this Agreement is necessary for
the continued operation of the Bank, (i) by the Director of Thrift Supervision
or his or her designee (the "Director"), at the time the Federal Deposit
Insurance Corporation enters into an agreement to provide assistance to or on
behalf of the Bank under the authority contained in Section 13(c) of the Federal
Deposit Insurance Act; or (ii) by the Director, at the time the Director
approves a supervisory merger to resolve problems related to operation of the
Bank or when the Bank is determined by the Director to be in an unsafe or
unsound condition. Any rights of the parties that have already vested, however,
shall not be affected by such action.
(d) If the Officer is suspended and/or temporarily prohibited from
participating in the conduct of the Bank's affairs by a notice served under
Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C.
1818(e)(3) and (g)(1)), the Bank's obligations under this Agreement shall be
suspended as of the date of service unless stayed by appropriate proceedings. If
the charges in the notice are dismissed, the Bank may in its discretion (a) pay
the Officer all or part of the compensation withheld while its contract
obligations were suspended and (b) reinstate (in whole or in part) any of its
obligations which were suspended.
(e) The provisions of paragraphs (a) through (d) of this Section 10
are required to be set forth in this Agreement by regulations applicable to the
Bank on the date of this Agreement. If any such regulation shall hereafter be
amended or modified, or if any new
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<PAGE> 11
regulation applicable to the Bank and effective after the date of this Agreement
shall require the inclusion in this Agreement of a provision not presently
included in this Agreement, then the foregoing provisions of paragraphs (a)
through (d) of this Section 10 shall be deemed amended to the extent necessary
to give effect in this Agreement to any such amended, modified or new
regulation.
11. Change in Control. (a) As used in this Agreement, a "Change in
Control" shall be deemed to have occurred if the event set forth in any one of
the following paragraphs shall have occurred:
(I) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from
the Company or its Affiliates) representing 35% or more of the combined
voting power of the Company's then outstanding securities; or
(II) the following individuals cease for any reason to constitute a
majority of the number of directors then serving as directors of the
Company: individuals who, on July 24, 1997, constitute the Board of
Directors of the Company and any new director (other than a director whose
initial assumption of office is in connection with the settlement of an
actual or threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of the
Company) whose appointment or election by the Board of Directors of the
Company or nomination for election by the Company's stockholders was
approved or recommended by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors on July
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<PAGE> 12
24, 1997 or whose appointment, election or nomination for election was
previously so approved or recommended; or
(III) there is consummated a merger or consolidation of the Company
or any direct or indirect subsidiary of the Company with any other
corporation or entity, other than (i) a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity or any Parent thereof), in combination
with the ownership of any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any subsidiary of the
Company, at least 65% of the combined voting power of the securities of
the Company, such surviving entity or any Parent thereof outstanding
immediately after such merger or consolidation or (ii) a merger or
consolidation effected solely to implement a recapitalization of the
Company or the Bank (or similar transaction) in which no Person is or
becomes the Beneficial Owner, directly or indirectly, of securities of the
Company or the Bank (not including in the securities beneficially owned by
such Person any securities acquired directly from the Company or its
Affiliates) representing 35% or more of the combined voting power of the
Company's or the Bank's then outstanding securities; or
(IV) the stockholders of the Company or the Bank approve a plan of
complete liquidation or dissolution of the Company or the Bank,
respectively, or there is consummated a sale or disposition by the Company
or any of its subsidiaries of any assets which individually or as part of
a series of related transactions constitute all or
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<PAGE> 13
substantially all of the Company's consolidated assets (provided that, for
these purposes, a sale of all or substantially all of the voting
securities of the Bank or a Parent of the Bank shall be deemed to
constitute a sale of substantially all of the Company's consolidated
assets), other than any such sale or disposition to an entity at least 65%
of the combined voting power of the voting securities of which are owned
by stockholders of the Company in substantially the same proportions as
their ownership of the voting securities of the Company immediately prior
to such sale or disposition; or
(V) the execution of a binding agreement that if consummated would
result in a Change in Control of a type specified in clause (I) or (III)
of this Section 11(a) (an "Acquisition Agreement") or of a binding
agreement for the sale or disposition of assets that, if consummated,
would result in a Change in Control of a type specified in clause (IV) of
this Section 11(a) (an "Asset Sale Agreement") or the adoption by the
Board of Directors of the Company or the Bank of a plan of complete
liquidation or dissolution of the Company or the Bank that, if
consummated, would result in a Change in Control of a type specified in
clause (IV) of this Section 11(a) (a "Plan of Liquidation"), provided
however, that a Change in Control of the type specified in this clause (V)
shall not be deemed to exist or have occurred as a result of the execution
of such Acquisition Agreement or Asset Sale Agreement, or the adoption of
such a Plan of Liquidation, from and after the Abandonment Date if the
Effective Date of Termination of the Officer's employment has not occurred
on or prior to the Abandonment Date. As used in this Section, the term
"Abandonment Date" shall mean the date on which (A) an Acquisition
Agreement, Asset Sale Agreement or Plan of Liquidation is terminated
(pursuant to its
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<PAGE> 14
terms or otherwise) without having been consummated, (B) the parties to an
Acquisition Agreement or Asset Sale Agreement abandon the transactions
contemplated thereby, (C) the Bank or the Company abandons a Plan of
Liquidation or (D) a court or regulatory body having competent
jurisdiction enjoins or issues a cease and desist or stop order with
respect to or otherwise prevents the consummation of, or a regulatory body
notifies the Bank or the Company that it will not approve, an Acquisition
Agreement, Asset Sale Agreement or Plan of Liquidation or the transactions
contemplated thereby and such injunction, order or notice has become final
and not subject to appeal.
As used in connection with the foregoing definition of Change in
Control, "Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated
under Section 12 of the Exchange Act; "Beneficial Owner" shall have the meaning
set forth in Rule 13d-3 under the Exchange Act; "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended from time to time; "Parent" shall
mean any entity that becomes the Beneficial Owner of at least 80% of the voting
power of the outstanding voting securities of the Company or of an entity that
survives any merger or consolidation of the Company or any direct or indirect
subsidiary of the Company; and "Person" shall have the meaning given in Section
3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d)
thereof, except that such term shall not include (i) the Company or any of its
subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its Affiliates, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation or entity owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company.
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(b) If the Bank or the Company shall relocate its principal
executive offices after a Change in Control, and if the Officer shall, as a
result, change the Officer's principal residence, the Bank shall (i) promptly
pay (or reimburse the Officer for) all reasonable moving expenses incurred by
the Officer as a result of such change in the Officer's principal residence, and
(ii) indemnify the Officer against, and reimburse the Officer for, any loss
incurred as the result of the sale of the Officer's principal residence (which
loss shall be computed for the purpose of this Agreement as the difference
between the actual sales price (net of closing costs and brokerage fees) of such
residence and the fair market value of such residence (computed as of the time
the Bank or the Company relocates its principal executive offices) as determined
by an independent real estate appraiser designated and paid by the Bank or the
Company and acceptable to the Officer), provided that such sale of the Officer's
principal residence occurs within six months after the Bank or the Company
relocates its principal executive offices.
(c) (i) If a Change in Control shall occur, the Officer shall be
entitled to the compensation and benefits provided in paragraphs (d), (e), (f)
and (g) of this Section 11 upon the subsequent termination of the Officer's
employment, at any time during the remaining Term in effect at the time of the
Change in Control, by the Bank (including, without limitation, a termination for
permanent disability), other than a termination for cause, provided that the
rights to any such compensation and benefits shall be subject to the limitations
and provisions set forth in Section 8(c).
(ii) If (A) a Change in Control shall occur, and thereafter the Bank
(notwithstanding its right to do so under Section 4 or Section 5) either (B)
makes a material change in the Officer's functions, duties or responsibilities,
which change would cause the Officer's
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<PAGE> 16
position with the Bank to become one of lesser responsibility, importance or
scope from that in effect immediately prior to the time of the Change in
Control, or (C) reduces the Officer's annual salary to a level below that in
effect immediately prior to the Change in Control (an event specified in clause
(B) or (C) is hereafter referred to as a "Material Change"), the Officer shall
be entitled to the compensation and benefits provided in paragraphs (d), (e),
(f) and (g) of this Section 11 (subject to the limitations and provisions set
forth in Section 8(c)) upon the subsequent termination of the Officer's
employment, at any time during the remaining Term in effect at the time of the
Change in Control, by the Officer.
(iii) If the Officer's employment is terminated by the Bank or by
reason of the Officer's permanent disability during the Term but after the
expiration of the remaining Term in effect at the time of the Change in Control,
then the provisions of Section 6 or 8 (as the case may be) shall apply in lieu
of the provisions of paragraphs (d), (e), (f) and (g) of this Section 11. If the
Officer's employment is terminated by the Officer during the Term but after the
expiration of the remaining Term in effect at the time of the Change in Control
(or if the Officer's employment is terminated by the Officer during the
remaining Term in effect at the time of the Change in Control and no Material
Change shall have occurred), then the provisions of Section 9 shall apply in
lieu of the provisions of paragraphs (d), (e), (f) and (g) of this Section 11.
(iv) Only for purposes of determining whether there has been a
termination of the Officer's employment during the remaining Term in effect at
the time of a Change in Control (as specified in paragraphs (c)(i) and (c)(ii)
of this Section 11, as the case may be) so as to entitle the Officer to the
compensation and benefits provided in paragraphs (d), (e), (f) and (g) of this
Section 11, a termination of the Officer's employment following such a Change in
Control shall
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<PAGE> 17
be deemed to have occurred on such date during the remaining Term that (A)
notice of termination is given by the Bank or the Officer to the other
(regardless of the Effective Date of Termination specified in such notice) or
(B) notice of non-renewal pursuant to Section 2(a) is given by the Bank to the
Officer (regardless of the date on which the Term expires). In the event that
notice of non-renewal pursuant to Section 2(a) is given by the Bank to the
Officer during the remaining Term in effect at the time of a Change in Control,
the termination of employment in connection with such notice of non-renewal
shall, for purposes of Sections 8(c) and 11(h), be treated as a termination of
employment described by paragraph (c)(i) of this Section 11. Notwithstanding the
immediately preceding sentences, the Officer shall continue to be employed by
the Bank pursuant to this Agreement until (1) the Effective Date of Termination
specified in the notice of termination or (2) the end of the remaining Term in
effect when notice of non-renewal is given pursuant to Section 2 of this
Agreement.
(d)(i) Upon the occurrence of a Change in Control followed by any
termination of the Officer's employment pursuant to Section 11(c)(i) or (c)(ii),
to the extent not otherwise limited pursuant to Section 8(c), the Bank shall pay
the Officer, as a severance payment for services previously rendered to the
Bank, a lump sum equal to three times the Officer's Annual Compensation, as in
effect immediately prior to the Effective Date of Termination (without regard to
any decrease in the Officer's Annual Compensation made after the Change in
Control). As used in this Section 11(d)(i), the term "Annual Compensation" shall
mean, at any time, an amount equal to the sum of (A) the Officer's annual salary
(as defined in Section 5(a)) at such time, plus (B) 100% of the target bonus or
other cash incentive that the Officer is eligible to earn in such year pursuant
to each plan or program (whether or not such plan or program has been
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<PAGE> 18
formalized or is in written form) of the Bank in effect for such year that
provides for bonuses or other cash incentives, or if no such plan or program has
been adopted with respect to such year, 100% of the target bonus or other cash
incentive that the Officer was eligible to earn in the most recent year in which
such a plan or program was in effect.
(ii) Upon the occurrence of a Change in Control followed by any
termination of the Officer's employment pursuant to Section 11(c)(i) or (c)(ii),
to the extent not otherwise limited pursuant to Section 8(c): (A) each
Non-Accelerated Stock Option held by the Officer shall (to the extent permitted
by the plan under which such Non-Accelerated Stock Option was granted),
notwithstanding anything to the contrary in the grant letter or option agreement
related to such Non-Accelerated Stock Option and regardless of the actual
Effective Date of Termination, vest and become exercisable in accordance with
the provisions of, and remain exercisable for the term specified in, such grant
letter or option agreement as if there had been no termination of the Officer's
employment and the Officer remained in the employment of the Bank for the entire
term of such Non-Accelerated Stock Option and (B) each Vested Stock Option held
by the Officer shall (to the extent permitted by the plan under which such
Vested Stock Option was granted), notwithstanding anything to the contrary in
the grant letter or option agreement related to such Vested Stock Option and
regardless of the actual Effective Date of Termination, remain exercisable for
the term specified in such grant letter or option agreement as if there had been
no termination of the Officer's employment and the Officer remained in the
employment of the Bank for the entire term of such Vested Stock Option. As used
in this Section 11(d)(ii), the term (I) "Non-Accelerated Stock Option" shall
mean any stock option (including any tandem stock appreciation right) previously
or hereafter granted to the Officer under a stock incentive or
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stock option plan of the Company that has not, pursuant to the provisions of
such stock incentive or stock option plan or the grant letter or option
agreement pursuant to which such stock option was granted to the Officer, vested
and become exercisable prior to the Effective Date of Termination and (II)
"Vested Stock Option" shall mean any stock option (including any tandem stock
appreciation right) previously or hereafter granted to the Officer under a stock
incentive or stock option plan of the Company that vests and becomes exercisable
prior to the Effective Date of Termination.
(e) Any payment pursuant to Section 11(d)(i) or 11(g)(ii) shall be
made to the Officer within 30 days after the Effective Date of Termination.
(f) Upon the occurrence of a Change in Control followed by any
termination of the Officer's employment pursuant to Section 11(c)(i) or (c)(ii),
to the extent not otherwise limited pursuant to Section 8(c), the Bank shall
cause to be continued until the end of the remaining Term in effect immediately
prior to the giving of notice of termination or non-renewal (or the Officer's
earlier death) life, disability, medical and dental insurance coverage as is
otherwise maintained by the Bank for full-time employees, provided that the
Officer shall continue to pay all amounts in respect of such coverage that an
employee receiving the same level of coverage is or would be required to pay.
(g)(i)(A) On and after any Change in Control, to the extent not
otherwise limited pursuant to Section 8(c)(i), the Officer shall be eligible to
be paid, under the SERP, a SERP benefit, to the extent vested (and subject to
additional vesting in accordance with the terms of the SERP as such plan
provided immediately prior to the Change in Control, or if it results in a
greater vested percentage, with vesting determined otherwise pursuant to this
Section 11(g)(i)),
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<PAGE> 20
that is not less than a benefit calculated based upon the amount of the
Officer's "Pension Goal" and "Average Compensation" and the otherwise applicable
terms of the SERP, each as determined immediately prior to the Change in
Control. The rights of the Officer and the obligations of the Bank with respect
to the benefits described under this Section 11(g)(i)(A) shall survive the
termination of this Agreement.
(B) In the event of termination of the Officer's employment
pursuant to Section 11(c)(i) or (c)(ii), to the extent not otherwise limited
pursuant to Section 8(c), notwithstanding any vesting provisions that would in
other circumstances require further service under the SERP, the Officer shall be
fully vested in the Officer's SERP benefit, which shall otherwise be payable in
accordance with the terms of the SERP and, as applicable, Section 11(g)(i)(A).
(ii) In the event of termination of the Officer's employment
pursuant to Section 11(c)(i) or (c)(ii), to the extent not otherwise limited
pursuant to Section 8(c), the Officer shall be entitled to receive in a lump sum
payment an amount equal to any amounts forfeited by the Officer under the
Company's qualified defined contribution plan(s) and under the Bank's Benefit
Restoration Plan (solely to the extent such Benefit Restoration Plan supplements
benefits under a defined contribution plan) as in effect immediately prior to
the Change in Control (or, if more favorable to the Officer, as in effect
immediately prior to the Effective Date of Termination).
(h)(i) If, on account of events described in Sections 11(c)(i) or
11(c)(ii) following a Change in Control, any payment or other benefit paid or to
be paid or any property transferred or to be transferred (collectively, a
"Severance Payment") with respect to one or more calendar years by or on behalf
of the Bank (or any affiliate of the Bank) to the Officer pursuant to this
20
<PAGE> 21
Agreement in connection with such Change in Control shall constitute an "excess
parachute payment" within the meaning of Section 280G(b) of the Code subject to
the tax imposed by Section 4999 of the Code (the "Excise Tax"), then the Bank
shall pay to the Officer an additional amount (the "Gross Up Payment") such that
the amount paid or transferred to the Officer, after deduction of any Excise Tax
on the Severance Payment, and any federal, state and local income tax,
employment tax and Excise Tax upon the Gross Up Payment, shall be equal to the
Severance Payment. In addition, if, absent a Change in Control or in other
circumstances following a Change in Control, notwithstanding the reductions
mandated by Section 8(c), the SERP benefits otherwise payable to the Officer
shall constitute an "excess parachute payment" within the meaning of Section
280G(b) of the Code subject to the Excise Tax, then the Bank shall pay to the
Officer one or more Gross Up Payments such that the amount of such Gross Up
Payments, when combined with such SERP benefits, after deduction of any Excise
Tax on the SERP benefits, and any federal, state and local income tax,
employment tax and Excise Tax upon the Gross Up Payments, shall be equal to such
SERP benefits.
(ii) For purposes of determining under Section 11(h)(i) whether any
portion of a Severance Payment or SERP benefit will be subject to the Excise Tax
and the amount of such Excise Tax, (A) the Severance Payment or SERP benefit and
payment provided for in Section 11(h)(i) shall be treated as "parachute
payments" within the meaning of Section 280G(b)(2) of the Code, and all "excess
parachute payments" within the meaning of Section 280(G)(b)(1) of the Code shall
be treated as subject to the Excise Tax, unless and to the extent that tax
counsel selected by the Bank's independent auditors and acceptable to the
Officer is of the opinion that the Severance Payment or SERP benefit (in whole
or in part) does not constitute a "parachute
21
<PAGE> 22
payment" or such "excess parachute payment" (in whole or in part) represents
reasonable compensation for services actually rendered within the meaning of
Section 280G(b)(4) of the Code in excess of the allocable base amount within the
meaning of Section 280G(b)(3) of the Code, or the Severance Payment or SERP
benefit is otherwise not subject to the Excise Tax, (B) the amount of the
Severance Payment or SERP benefit that is treated as subject to the Excise Tax
shall be equal to the lesser of (X) the total amount of the Severance Payment or
SERP benefit, as applicable, and (Y) the amount of "excess parachute payments"
within the meaning of Section 280G(b)(1) of the Code (after applying clause (A)
above), (C) any Gross Up Payment pursuant to Section 11(h)(i) shall be treated
as subject to the Excise Tax in its entirety and (D) the value of any non-cash
benefits or any deferred payment or benefit shall be determined by the Bank's
independent auditors in accordance with the principles of Sections 280G(d)(3)
and (4) of the Code.
(iii) If in circumstances described in Section 11(h)(i), by reason
of the filing by the Officer of an amended tax return, an audit by the Internal
Revenue Service or other taxing authority, or a final determination by a court
of competent jurisdiction, it is determined that "excess parachute payments"
exceeding those previously reported in the Officer's tax returns were received
by the Officer and as a result an additional Excise Tax (the "Additional Excise
Tax") shall become due, the Bank shall pay the Officer an additional amount (the
"Subsequent Gross Up Payment") such that the amount paid or transferred to the
Officer, after deduction of (A) any Additional Excise Tax and (B) on an after
tax basis, any interest, additions and penalties with respect to the Additional
Excise Tax and (C) any federal, state and local income tax, employment tax and
Excise Tax upon the Subsequent Gross up Payment and (D) the payments
22
<PAGE> 23
provided for in Section 11(h)(i), shall be equal to the Severance Payment or
SERP benefits, as appropriate.
(iv) Any Gross Up Payment required hereunder shall be made at least
ten days prior to the due date (without regard to extensions) of the Officer's
federal income tax return for the year with respect to which the "excess
parachute payment" is deemed made under the Code. Any Subsequent Gross Up
Payment required hereunder shall be made to the Officer within 30 days after the
amount thereof is determined. Notwithstanding the two immediately preceding
sentences, the Bank shall pay any federal, state and local tax or taxes and
employment taxes required to be withheld from the Officer's wages (within the
meaning of Section 3121 and 3402 of the Code) with respect to the "excess
parachute payment" and any such tax or taxes paid by the Company or the Bank to
the Internal Revenue Service or state or local taxing authority shall constitute
payment to the Officer.
(v) If the Excise Tax is finally determined (whether by the filing
of an amended tax return by the Officer by audit of the Internal Revenue Service
or other taxing authority, or by a final determination of a court of competent
jurisdiction) to be less than the amount paid to or on behalf of the Officer
under the provisions of Sections 11(h)(i)-(iv) and the overpayment is refunded
to the Officer, the Officer shall repay to the Bank, promptly following the
receipt of the refund, the portion of the Gross Up Payment (and/or Subsequent
Gross Up Payment) attributable to such reduction of the Excise Tax (plus the
portion attributable to federal, state and local income tax and employment taxes
imposed on the portion being repaid by the Officer but only to the extent that
the repayment may result in a tax benefit to the Officer under Section 1341 of
the Code and similar provisions of applicable state and local law).
23
<PAGE> 24
(vi) The provisions of this Section 11(h) shall inure to the benefit
of the Officer during the Term of this Agreement regardless of whether or not
the Officer's employment is terminated, and if the Officer's employment is
terminated, the rights and obligations of the Officer and the Bank under this
Section 11(h) shall survive the termination of this Agreement.
12. Post-Termination Obligations of the Officer. (a) Upon any
termination of the Officer's employment during the Term of this Agreement or
upon termination of the Officer's employment after the expiration of the Term of
this Agreement or upon retirement, the Officer agrees (i) not to make any
disclosure in violation of Section 12(b), (ii) to return to the Bank all
material documents relating to the business of the Bank that are in the
Officer's possession or under the Officer's control, and (iii) except if the
termination or retirement occurs after a Change in Control, not to solicit
(directly or indirectly), for one year following the Effective Date of
Termination (or date of termination after the expiration of the Term) or
retirement, the employment of any person who is an employee of the Bank on the
Effective Date of Termination (or date of termination after the expiration of
the Term) or retirement or who, within six months prior to the Effective Date of
Termination (or date of termination after the expiration of the Term) or
retirement, was an employee of the Bank, unless the Officer receives written
permission from the Bank to engage in the activities proscribed by this Section
12(a) or by Section 12(b) or to be relieved of any obligation under Section
12(a)(ii).
(b) The Officer recognizes and acknowledges that the confidential
business activities and plans for business activities of the Bank and its
subsidiaries and affiliates, as they may exist from time to time, are valuable,
special and unique assets of the Bank. The Officer shall not, during or at any
time after the Officer's employment, disclose any knowledge of the past,
24
<PAGE> 25
present or planned business activities of the Bank or its subsidiaries or
affiliates that are of a confidential nature (collectively, the "Bank's
Confidential Activities") to any person, firm, corporation, bank, thrift
institution or other entity for any reason or purposes whatsoever.
Notwithstanding anything in this Section 12(b) to the contrary, the Officer (i)
may disclose any knowledge of banking, financial and/or economic principles,
concepts or ideas that are not derived from the Bank's Confidential Activities,
and (ii) shall not be precluded from disclosures respecting the Bank's
Confidential Activities that are (A) made pursuant to compulsory legal process
or when required by an appropriate governmental agency; (B) public knowledge or
become public without the Officer's breach of this Section 12(b); (C) already
known to the party to whom the Officer makes such disclosures; or (D) approved
by the Bank for disclosure.
(c) The parties, recognizing that irreparable injury will result to
the Bank, its business and property in the event of the Officer's breach or
threatened breach of Section 12(a) or (b), agree that in the event of such
breach or threatened breach by the Officer, the Bank will be entitled, in
addition to any other remedies and damages that may be available, to seek and
obtain an injunction to restrain the violation of Section 12(a) or (b) by the
Officer.
13. Notices. All notices under this Agreement shall be in writing
and shall be delivered personally or sent by registered or certified mail,
return receipt requested, (a) to the Bank, at its address set forth above (to
the attention of its Chief Executive Officer), and (b) to the Officer, at the
Officer's residence address as appearing in the records of the Bank, or to such
other address as either party may hereafter designate in writing in the manner
provided in this Section 13. All notices under this Agreement shall be deemed
given (i) upon receipt if delivered
25
<PAGE> 26
personally or (ii) two days after deposit in a facility of the U.S. Postal
Service with postage prepaid. As used in this Agreement, the term "Effective
Date of Termination" shall mean (A) the date specified in a notice hereunder on
which such Officer's employment is to terminate, provided, however, that no such
notice shall specify an Effective Date of Termination that is prior to the date
on which any such notice is given or (B) for purposes of Section 11 only, the
date on which the Term is to expire as a result of a notice of non-renewal given
by the Bank to the Officer pursuant to Section 2 of this Agreement.
14. Complete Understanding. On and after the date as of which this
Agreement is effective, this Agreement constitutes the complete understanding
between the parties with respect to the subject matter hereof and merges and
supersedes all prior oral and written agreements and understandings (including,
but not limited to, the Agreement between the parties that was initially signed
by the Officer on May 19, 1997 and was dated as of March 1, 1998) and all
contemporaneous oral agreements and understandings with respect to the subject
matter hereof, including without limitation any other employment agreement
heretofore executed by the Officer and the Bank or any of its subsidiaries or
affiliates. This Agreement may not be amended, terminated or rescinded except in
a writing signed by the party to be charged.
15. No Duty to Mitigate. Except as otherwise expressly provided
herein, if the Officer shall continue to receive compensation or benefits or
severance pay pursuant to this Agreement after its termination, (a) the Officer
shall have no duty to mitigate such payments by seeking or obtaining other
employment or otherwise, and (b) in the event the Officer does obtain other
employment, such payments from the Bank shall not be reduced by compensation
received from such other employment.
26
<PAGE> 27
16. No Waiver. The failure of either party at any time to require
performance by the other party of a provision of this Agreement or to resort to
a remedy at law or in equity or otherwise shall in no way affect the right of
such party to require full performance or to resort to such remedy at any time
thereafter nor shall a waiver by either party of the breach of any provision of
this Agreement be taken or held to be a waiver of any subsequent breach of such
provision unless expressly so stated in writing. No waiver of any of the
provisions of this Agreement shall be effective unless in writing and signed by
the party to be charged.
17. Governing Law. This Agreement shall be governed by the laws of
the State of New York, without regard to conflict of laws principles applied in
the State of New York.
18. Headings. The headings to the Sections of this Agreement are for
convenience of reference only and shall not be given any effect in the
construction or interpretation of this Agreement.
19. Severability. If any provision of this Agreement is held by a
court or other authority having competent jurisdiction to be invalid, void or
otherwise unenforceable, in whole or in part, by reason of any applicable law,
statute or regulation or any interpretation thereof, then (a) the remainder of
the provisions of this Agreement shall remain in full force and effect and in no
way be affected, impaired or invalidated and (b) the provision so held to be
invalid, void or otherwise unenforceable shall be deemed modified in amount,
duration, scope or otherwise to the minimum extent necessary so that such
provision shall not be invalid, void or otherwise unenforceable by reason of
such law, statute, regulation or interpretation and such provision, as so
modified, shall remain in full force and effect.
27
<PAGE> 28
20. Payment of Legal Fees. If, following a Change in Control, any
legal action or proceeding is commenced to enforce or interpret the provisions
of this Agreement, or to recover damages for its breach, all reasonable legal
fees, disbursements and court costs paid or incurred by the Officer arising out
of or resulting from such action or proceeding shall be paid or reimbursed to
the Officer by the Bank, provided the Officer shall be the prevailing party in
such action or proceeding.
21. Assumption by Company. This Agreement shall be assumable by the
Company at its election. Following any such election, the obligations of the
Bank under this Agreement shall become the obligations of the Company.
22. Taxes. Any payments due to the Officer pursuant to this
Agreement shall be reduced by all applicable federal, state, city or other taxes
required by law to be withheld with respect to such payments.
[Remainder of Page Intentionally Left Blank]
28
<PAGE> 29
23. Limitation on Payments. Any payments made to the Officer
pursuant to this Agreement, or otherwise, are subject to and conditioned upon
their compliance with 12 USC ss. 1828(k) and any regulations promulgated
thereunder.
THE DIME SAVINGS BANK OF NEW YORK, FSB
By: /s/LAWRENCE J. TOAL
----------------------------
Lawrence J. Toal
Chief Executive Officer
Dated: February 6, 1998 /s/CARLOS R. MUNOZ
------------------- ----------------------------
Carlos R. Munoz
29
<PAGE> 1
Exhibit 10.14
Amendment to the
Dime Bancorp, Inc. Stock Incentive Plan
Effective September 19, 1997
1. Section 11 of the Plan is amended to add a new sentence at the
end thereof to read as follows:
"Notwithstanding anything in the Plan to the contrary, following the
occurrence of a Change in Control (as defined in Section 16), a
tandem Stock Appreciation Right shall be exercisable during the same
period and shall be subject to the same terms and conditions that
otherwise would apply to the tandem Stock Appreciation Right had an
event described in clause (1), (3) or (4) of Section 16 occurred at
the same time as the Change in Control."
2. Section 12 of the Plan is amended to add a new sentence at the
end thereof to read as follows:
"Notwithstanding anything in the Plan to the contrary, following the
occurrence of a Change in Control (as defined in Section 16), a
free-standing Stock Appreciation Right shall be exercisable during
the same period and shall be subject to the same terms and
conditions that otherwise would apply to the free-standing Stock
Appreciation Right had an event described in clause (1), (3) or (4)
of Section 16 occurred at the same time as the Change in Control."
3. The language of the first textual sentence of Section 16 preceding
clause (1) thereof is amended to read as follows:
"Subject to such limitations as may be specified by the Committee in
individual option, Stock Appreciation Right or Restricted Stock
agreements or grant letters, all options, Stock Appreciation Rights
and rights to purchase Restricted Stock theretofore granted under
the Plan that are held by an individual who is in service with Dime
Bancorp, Inc. or any Subsidiary thereof at the time of the
occurrence of any of the events described in clauses (1) through (4)
of this sentence shall immediately become fully exercisable upon the
earliest of"
4. Clauses (2) and (3) of the first textual sentence of Section 16
of the Plan are renumbered as clauses (3) and (4), respectively, and a new
clause (2) is added immediately after clause (1) of such sentence to read as
follows:
"(2) the occurrence of a Change in Control, or"
<PAGE> 2
2
5. The third textual sentence of the first paragraph of Section 16
is amended to read as follows:
"All restrictions imposed upon Restricted Stock theretofore
purchased under the Plan or with respect to which rights to purchase
are then outstanding shall terminate upon the occurrence of a
Terminating Event or a Change in Control."
6. Section 16 of the Plan is amended to add at the end thereof the
following new paragraph to read as follows:
"As used herein, a "Change in Control" shall mean the
occurrence of any of the following events:
(I) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of Dime Bancorp, Inc. (the
"Company") (not including in the securities beneficially owned
by such Person any securities acquired directly from the
Company or its Affiliates) representing 35% or more of the
combined voting power of the Company's then outstanding
securities;
(II) the following individuals cease for any reason to
constitute a majority of the number of directors then serving
as directors of the Company: individuals who, on July 24,
1997, constitute the Board of Directors of the Company and any
new director (other than a director whose initial assumption
of office is in connection with the settlement of an actual or
threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of
the Company) whose appointment or election by the Board of
Directors of the Company or nomination for election by the
Company's stockholders was approved or recommended by a vote
of at least two-thirds (2/3) of the directors then still in
office who either were directors on July 24, 1997 or whose
appointment, election or nomination for election was
previously so approved or recommended;
(III) there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company
with any other corporation or entity, other than (A) a merger
or consolidation which would result in the
<PAGE> 3
3
voting securities of the Company outstanding immediately prior
to such merger or consolidation continuing to represent
(either by remaining outstanding or by being converted into
voting securities of the surviving entity or any Parent
thereof), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit
plan of the Company or any subsidiary of the Company, at least
65% of the combined voting power of the securities of the
Company, such surviving entity or any Parent thereof
outstanding immediately after such merger or consolidation or
(B) a merger or consolidation effected solely to implement a
recapitalization of the Company or The Dime Savings Bank of
New York, FSB (the "Bank") (or similar transaction) in which
no Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company or the Bank (not
including in the securities beneficially owned by such Person
any securities acquired directly from the Company or its
Affiliates) representing 35% or more of the combined voting
power of the Company's or the Bank's then outstanding
securities; or
(IV) the stockholders of the Company or the Bank approve a
plan of complete liquidation or dissolution of the Company or
the Bank, respectively, or there is consummated a sale or
disposition by the Company or any of its subsidiaries of any
assets which individually or as part of a series of related
transactions constitute all or substantially all of the
Company's consolidated assets (provided that, for these
purposes, a sale of all or substantially all of the voting
securities of the Bank or a Parent of the Bank shall be deemed
to constitute a sale of substantially all of the Company's
consolidated assets), other than any such sale or disposition
to an entity at least 65% of the combined voting power of the
voting securities of which are owned by stockholders of the
Company in substantially the same proportions as their
ownership of the voting securities of the Company immediately
prior to such sale or disposition.
As used in connection with the foregoing definition of Change
in Control, "Affiliate" shall have the meaning set forth in Rule
12b-2 promulgated under Section 12 of the Exchange Act;
<PAGE> 4
4
"Beneficial Owner" shall have the meaning set forth in Rule 13d-3
under the Exchange Act; "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended from time to time; "Parent" shall
mean any entity that becomes the Beneficial Owner of at least 80% of
the voting power of the outstanding voting securities of the Company
or of an entity that survives any merger or consolidation of the
Company or any direct or indirect subsidiary of the Company; and
"Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d)
thereof, except that such term shall not include (i) the Company or
any of its subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any of
its Affiliates, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities, or (iv) a corporation or
entity owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of
stock of the Company."
<PAGE> 1
Exhibit 10.17
Amendment
to the
Dime Bancorp, Inc.
1991 Stock Incentive Plan
Effective September 19, 1997
1. Section 7.2 of the Plan is amended to add a new sentence at the
end thereof to read as follows:
"Notwithstanding anything in the Plan to the contrary, following a
Change in Control (as defined in Section 15.4), a Stock Appreciation
Right shall be exercisable during the same period and shall be
subject to the same terms and conditions (including the use of the
Terminating Event Price (as defined in Section 15.3) in determining
the amount to be paid upon the exercise of the Stock Appreciation
Right following the Change in Control) that would otherwise apply to
the Stock Appreciation Right had a Terminating Event (as defined in
Section 15.2) occurred at the same time as the Change in Control."
2. The heading of Section 15 of the Plan is amended to read as
follows:
"15. Terminating Event and Change in Control."
3. Clauses (ii) and (iii) of Section 15.1 of the Plan are
redesignated as clauses (iii) and (iv), respectively, and a new clause (ii)
immediately after clause (i) of such Section is added to read as follows:
"(ii) the occurrence of a Change in Control (as defined in Section
15.4), or"
4. Section 15.1 of the Plan is amended to add at the end of clause
(iv) (as redesignated) and prior to the colon the following:
", and solely with respect to awards held by an individual in
service with Bancorp or a Related Company at the time of any such
event described in (i) through (iv) above"
5. Section 15.3 of the Plan is amended to read as follows:
"15.3 "Terminating Event Price" means the highest price per share
paid for the Stock in any transaction reported on the New York Stock
Exchange Composite Index, or paid or offered for the Stock in any
transaction related to a Terminating Event or, as applicable, a
Change in Control (as defined in Section 15.4), at any
<PAGE> 2
2
time during the 90-day period ending with the day on which the
Terminating Event or Change in Control occurs, or, if a shorter
period, at any time during the period commencing with the date of
grant and ending with the day on which the Terminating Event or
Change in Control occurs. Notwithstanding the foregoing sentence, in
the case of Stock Appreciation Rights granted in tandem with
Incentive Stock Options, the Terminating Event Price shall be the
highest price paid for the Stock on the date on which the Stock
Appreciation Right is exercised."
6. Section 15 of the Plan is amended to add a new Section 15.4 to
read as follows:
"15.4 As used herein, a "Change in Control" shall mean any of
the following events:
(a) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of Bancorp (not including in the
securities beneficially owned by such Person any securities acquired
directly from Bancorp or its Affiliates) representing 35% or more of
the combined voting power of Bancorp's then outstanding securities;
(b) the following individuals cease for any reason to constitute a
majority of the number of directors then serving as directors of
Bancorp: individuals who, on July 24, 1997, constitute the Board of
Directors of Bancorp and any new director (other than a director
whose initial assumption of office is in connection with the
settlement of an actual or threatened election contest, including
but not limited to a consent solicitation, relating to the election
of directors of Bancorp) whose appointment or election by the Board
of Directors of Bancorp or nomination for election by Bancorp's
stockholders was approved or recommended by a vote of at least
two-thirds (2/3) of the directors then still in office who either
were directors on July 24, 1997 or whose appointment, election or
nomination for election was previously so approved or recommended;
(c) there is consummated a merger or consolidation of Bancorp or any
direct or indirect subsidiary of Bancorp with any other corporation
or entity, other than (i) a merger or consolidation which would
result in the voting securities of Bancorp outstanding immediately
prior to such merger or consolidation continuing to represent
(either by remaining outstanding or by being converted
<PAGE> 3
3
into voting securities of the surviving entity or any Parent
thereof), in combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan of
Bancorp or any subsidiary of Bancorp, at least 65% of the combined
voting power of the securities of Bancorp, such surviving entity or
any Parent thereof outstanding immediately after such merger or
consolidation or (ii) a merger or consolidation effected solely to
implement a recapitalization of Bancorp or The Dime Savings Bank of
New York, FSB (the "Bank") (or similar transaction) in which no
Person is or becomes the Beneficial Owner, directly or indirectly,
of securities of Bancorp or the Bank (not including in the
securities beneficially owned by such Person any securities acquired
directly from Bancorp or its Affiliates) representing 35% or more of
the combined voting power of Bancorp's or the Bank's then
outstanding securities; or
(d) the stockholders of Bancorp or the Bank approve a plan of
complete liquidation or dissolution of Bancorp or the Bank,
respectively, or there is consummated a sale or disposition by
Bancorp or any of its subsidiaries of any assets which individually
or as part of a series of related transactions constitute all or
substantially all of Bancorp's consolidated assets (provided that,
for these purposes, a sale of all or substantially all of the voting
securities of the Bank or a Parent of the Bank shall be deemed to
constitute a sale of substantially all of Bancorp's consolidated
assets), other than any such sale or disposition to an entity at
least 65% of the combined voting power of the voting securities of
which are owned by stockholders of Bancorp in substantially the same
proportions as their ownership of the voting securities of Bancorp
immediately prior to such sale or disposition.
As used in connection with the foregoing definition of Change
in Control, "Affiliate" shall have the meaning set forth in Rule
12b-2 promulgated under Section 12 of the Exchange Act; "Beneficial
Owner" shall have the meaning set forth in Rule 13d-3 under the
Exchange Act; "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended from time to time; "Parent" shall mean any
entity that becomes the Beneficial Owner of at least 80% of the
voting power of the outstanding voting securities of Bancorp or of
an entity that survives any merger or consolidation of Bancorp or
any direct or indirect subsidiary of Bancorp; and "Person" shall
have the meaning given in Section 3(a)(9) of the
<PAGE> 4
4
Exchange Act, as modified and used in Sections 13(d) and 14(d)
thereof, except that such term shall not include (i) Bancorp or any
of its subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of Bancorp or any of its
Affiliates, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities, or (iv) a corporation or
entity owned, directly or indirectly, by the stockholders of Bancorp
in substantially the same proportions as their ownership of stock of
Bancorp."
<PAGE> 1
Exhibit 10.19
Amendment to the Dime Bancorp, Inc.
Stock Incentive Plan for Outside Directors
Effective September 19, 1997
1. Section 11(d) of the Plan is amended to read as follows:
"(d) The restrictions applicable to shares of Restricted Stock shall
expire on the fifth anniversary date on which the holder of
Restricted Stock renders service as an Outside Director following
the date on which the right to purchase such shares of Restricted
Stock was granted; provided, however, that such restrictions shall
immediately expire upon the earlier of (1) the holder's death,
disability, retirement at or after the later of (A) attaining age 65
or (B) rendering service as an Outside Director for at least one
year following the date on which the Restricted Stock was purchased,
or (2) the occurrence of a Terminating Event or Change in Control
described in Section 14."
2. The heading of Section 14 of the Plan is amended to read as
follows:
"14. Acceleration Upon Terminating Events or Change in Control."
3. The language of the first textual sentence of Section 14 of the
Plan prior to clause (1) thereof is amended to read as follows:
"All Non-Qualified Options, tandem Stock Appreciation Rights and
rights to purchase Restricted Stock granted under the Plan, but only
with respect to an individual who is in service as a director of
Dime Bancorp, Inc., The Dime Savings Bank of New York, FSB or any
subsidiary thereof upon the occurrence of an event described in any
of clauses (1) through (4), shall immediately become fully
exercisable upon the earliest of"
4. Clauses (2) and (3) of the first textual sentence of Section 14
of the Plan are renumbered as clauses (3) and (4), respectively, and a new
clause (2) is added immediately after clause (1) of such sentence to read as
follows:
"(2) the occurrence of a Change in Control (as defined below), or"
5. The second textual sentence of the first paragraph of Section 14
is amended to read as follows:
"Moreover, all restrictions imposed upon Restricted Stock
theretofore purchased under the Plan or with respect to which rights
to purchase are then outstanding shall terminate upon the
<PAGE> 2
2
occurrence of a Terminating Event or a Change in Control (as defined
below), but only with respect to an individual who is in service as
a director of Dime Bancorp, Inc., The Dime Savings Bank of New York,
FSB or any subsidiary thereof upon the occurrence of the Terminating
Event or Change in Control."
6. Section 14 of the Plan is amended to add at the end thereof the
following new paragraph to read as follows:
"As used herein, a "Change in Control" shall mean any of the
following events:
(I) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of Dime Bancorp, Inc. (the "Company") (not
including in the securities beneficially owned by such Person any
securities acquired directly from the Company or its Affiliates)
representing 35% or more of the combined voting power of the
Company's then outstanding securities;
(II) the following individuals cease for any reason to constitute a
majority of the number of directors then serving as directors of the
Company: individuals who, on July 24, 1997, constitute the Board of
Directors of the Company and any new director (other than a director
whose initial assumption of office is in connection with the
settlement of an actual or threatened election contest, including
but not limited to a consent solicitation, relating to the election
of directors of the Company) whose appointment or election by the
Board of Directors of the Company or nomination for election by the
Company's stockholders was approved or recommended by a vote of at
least two-thirds (2/3) of the directors then still in office who
either were directors on July 24, 1997 or whose appointment,
election or nomination for election was previously so approved or
recommended;
(III) there is consummated a merger or consolidation of the Company
or any direct or indirect subsidiary of the Company with any other
corporation or entity, other than (A) a merger or consolidation
which would result in the voting securities of the Company
outstanding immediately prior to such merger or consolidation
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or any
Parent thereof), in combination with the
<PAGE> 3
3
ownership of any trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any subsidiary of the
Company, at least 65% of the combined voting power of the securities
of the Company, such surviving entity or any Parent thereof
outstanding immediately after such merger or consolidation or (B) a
merger or consolidation effected solely to implement a
recapitalization of the Company or The Dime Savings Bank of New
York, FSB (the "Bank") (or similar transaction) in which no Person
is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company or the Bank (not including in the
securities beneficially owned by such Person any securities acquired
directly from the Company or its Affiliates) representing 35% or
more of the combined voting power of the Company's or the Bank's
then outstanding securities; or
(IV) the stockholders of the Company or the Bank approve a plan of
complete liquidation or dissolution of the Company or the Bank,
respectively, or there is consummated a sale or disposition by the
Company or any of its subsidiaries of any assets which individually
or as part of a series of related transactions constitute all or
substantially all of the Company's consolidated assets (provided
that, for these purposes, a sale of all or substantially all of the
voting securities of the Bank or a Parent of the Bank shall be
deemed to constitute a sale of substantially all of the Company's
consolidated assets), other than any such sale or disposition to an
entity at least 65% of the combined voting power of the voting
securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the voting
securities of the Company immediately prior to such sale or
disposition.
As used in connection with the foregoing definition of Change
in Control, "Affiliate" shall have the meaning set forth in Rule
12b-2 promulgated under Section 12 of the Exchange Act; "Beneficial
Owner" shall have the meaning set forth in Rule 13d-3 under the
Exchange Act; "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended from time to time; "Parent" shall mean any
entity that becomes the Beneficial Owner of at least 80% of the
voting power of the outstanding voting securities of the Company or
of an entity that survives any merger or consolidation of the
Company or any direct or indirect subsidiary of the Company; and
"Person" shall have the meaning given in Section
<PAGE> 4
4
3(a)(9) of the Exchange Act, as modified and used in Sections 13(d)
and 14(d) thereof, except that such term shall not include (i) the
Company or any of its subsidiaries, (ii) a trustee or other
fiduciary holding securities under an employee benefit plan of the
Company or any of its Affiliates, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities, or
(iv) a corporation or entity owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company."
<PAGE> 1
Exhibit 10.21
DEFERRED COMPENSATION PLAN FOR BOARD MEMBERS
OF
THE DIME SAVINGS BANK OF NEW YORK, FSB
-----------------------------------------------
Adopted As of August 28, 1981
As Amended and Restated Effective as of July 24, 1997
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I
Definitions
Section 1.1 Administrative Committee.........................................1
Section 1.2 Bank.............................................................1
Section 1.3 Board............................................................1
Section 1.4 Board Member.....................................................1
Section 1.5 Discretionary Account(s).........................................1
Section 1.6 Dividend Equivalent..............................................1
Section 1.7 Fair Market Value................................................1
Section 1.8 Fees.............................................................2
Section 1.9 Foregone Fees....................................................2
Section 1.10 Interest Bearing
Memorandum Account...............................................2
Section 1.11 OTS Restriction..................................................2
Section 1.12 Participant......................................................2
Section 1.13 Phantom Right....................................................2
Section 1.14 Phantom Share....................................................2
Section 1.15 Phantom II Account...............................................3
Section 1.16 Plan.............................................................3
Section 1.17 Share............................................................3
Section 1.18 Stock Memorandum Account.........................................3
Section 1.19 Trading Day......................................................3
Section 1.20 Trust Account....................................................3
Section 1.21 Trust Agreement..................................................3
Section 1.22 Trustee..........................................................4
ARTICLE II
Participation
Section 2.1 Election to Participate..........................................4
Section 2.2 Changes in Participation.........................................4
Section 2.3 Mandatory Participation
with Respect to Foregone Fees ...................................4
Section 2.4 Continued Crediting
of Earnings......................................................4
-i-
<PAGE> 3
ARTICLE III
Deferred Amounts
Section 3.1 In General...................................................... 5
Section 3.2 Amounts Credited to the
Interest Bearing Memorandum
Account......................................................... 6
Section 3.3 Amounts Credited to the
Trust Account................................................... 6
Section 3.4 Amounts Credited to the
Stock Memorandum Account........................................ 7
Section 3.5 Amounts Credited to
the Phantom II Account...........................................8
Section 3.6 Amounts Credited Pursuant
to Phantom Rights................................................9
Section 3.7 Amounts Credited to the
Discretionary Accounts...........................................9
Section 3.8 Transfers Between Accounts......................................10
Section 3.9 Special Phantom Stock Valuation.................................12
Section 3.10 Change in Control...............................................12
ARTICLE IV
Distributions
Section 4.1 Distributions to Participants...................................14
Section 4.2 Distributions to Beneficiaries..................................16
Section 4.3 Hardship Distributions..........................................16
Section 4.4 Additional Payment Elections....................................17
Section 4.5 Change in Control Distributions.................................17
ARTICLE V
Administration
Section 5.1 Administrative Committee........................................18
Section 5.2 Committee Action................................................18
Section 5.3 Committee Responsibilities......................................18
-ii-
<PAGE> 4
ARTICLE VI
Miscellaneous Provisions
Section 6.1 Notice and Election.............................................19
Section 6.2 Unfunded Arrangements...........................................19
Section 6.3 Construction of Language........................................19
Section 6.4 Non-Alienation of Benefits......................................20
Section 6.5 Indemnification.................................................20
Section 6.6 Severability....................................................20
Section 6.7 Waiver..........................................................20
Section 6.8 Notices.........................................................20
Section 6.9 Governing Law...................................................21
-iii-
<PAGE> 5
DEFERRED COMPENSATION PLAN FOR BOARD MEMBERS
OF
THE DIME SAVINGS BANK OF NEW YORK, FSB
ARTICLE I
Definitions
The following definitions shall apply for the purposes of this Plan
unless a different meaning is clearly indicated by the context:
Section 1.1 Administrative Committee means the Administrative
Committee referred to in section 5.1.
Section 1.2 Bank means The Dime Savings Bank of New York, FSB, and
any successor thereto.
Section 1.3 Board means (a) for the period during which the Bank is
a mutual institution, the Board of Trustees of the Bank, and (b) for any period
during which the Bank is a stock institution, the Board of Directors of the
Bank.
Section 1.4 Board Member means any member of the Bank's Board,
Divisional Boards or Committees thereof.
Section 1.5 Discretionary Account(s) means, with respect to a
Participant, one or more accounts maintained by the Bank to which is credited
such amount of the Participant's deferred Fees as the Participant shall
designate, together with amounts attributable to dividends with respect to
Phantom Shares directed to such account pursuant to section 3.1(b), and any
earnings or appreciation thereon, and against which are charged any
distributions of amounts credited to such account(s) and any losses or
depreciation thereon.
Section 1.6 Dividend Equivalent means an amount credited with
respect to a Phantom Share which is equal in amount to the dividend declared
with respect to a Share.
Section 1.7 Fair Market Value means, with respect to a Share on a
specified date:
(a) at the commencement of the Public Offering, as such term is
defined in the Bank's Plan of Conversion, the Actual Purchase
Price, as such term is defined in the Bank's Plan of
Conversion; or
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<PAGE> 6
(b) the closing sales price of a Share on the date in question
(or, if there is no reported sale on such date, on the last
preceding date on which any reported sale occurred) on the
principal United States securities exchange on which the
Shares are listed or admitted to trading; or
(c) if the Shares are not listed or admitted to trading on any
such exchange, the closing bid quotation with respect to a
Share on such date on the National Association of Securities
Dealers, Inc. Automated Quotation System, or, if no such
quotation is provided, on another similar system, selected by
the Administrative Committee, then in use; or
(d) if Section 1.7(a), (b) and (c) are not applicable, the fair
market value of a Share on such date, determined in such
manner as the Administrative Committee may, in its discretion,
prescribe.
Section 1.8 Fees means the compensation paid to Board Members for
service on the Bank's Board, Divisional Boards and Committees thereof.
Section 1.9 Foregone Fees means any Fees payable to Board Members
for 1991, 1992, and 1993 which are foregone pursuant to an OTS Restriction.
Section 1.10 Interest Bearing Memorandum Account means, with respect
to a Participant, an account maintained by the Bank to which is credited (i)
such amount of the Participant's deferred Fees as the Participant shall
designate, (ii) amounts transferred from the Participant's Stock Memorandum
Account and Phantom II Account, (iii) Dividend Equivalents directed to be
credited to such account, and (iv) interest thereon, and against which are
charged any distributions of amounts credited to such account and any transfers
from such account to the Participant's Discretionary Account(s) (or, prior to
July 1, 1994, to the Participant's Stock Memorandum Account or Trust Account).
Section 1.11 OTS Restriction means a restriction on the payment of
Fees as a result of an agreement with or directive from the Office of Thrift
Supervision.
Section 1.12 Participant means a Board Member or former Board Member
who has an Interest Bearing Memorandum Account, a Stock Memorandum Account, a
Phantom II Account, a Trust Account or a Discretionary Account under the Plan.
Section 1.13 Phantom Right means a unit of interest credited to a
Stock Memorandum Account representing the equivalent value of a transferable
subscription right issued pursuant to the Bank's Rights Offering to shareholders
of record on April 15, 1993.
Section 1.14 Phantom Share means a unit of interest credited to a
Stock Memorandum Account or a Phantom II Account representing the equivalent
value of a Share.
-2-
<PAGE> 7
Section 1.15 Phantom II Account means, with respect to a
Participant, an account maintained by the Bank to which is credited (i) Phantom
Shares attributable to Foregone Fees, (ii) Phantom Shares attributable to the
exercise of Phantom Rights, (iii) Dividend Equivalents with respect to Phantom
Shares credited to such account, and (iv) any earnings or appreciation thereon,
and against which are charged any distributions of amounts credited to such
account, any losses or depreciation attributable thereto, and any transfers from
such account to the Participant's Interest Bearing Memorandum Account or
Discretionary Accounts.
Section 1.16 Plan means this Deferred Compensation Plan for Board
Members of The Dime Savings Bank of New York, FSB, as in effect from time to
time.
Section 1.17 Share means a share of the Bank's common stock or,
effective upon the reorganization whereupon the common stock of the Bank was
converted into the common stock of Dime Bancorp., Inc., a share of the common
stock of Dime Bancorp, Inc.
Section 1.18 Stock Memorandum Account means, with respect to a
Participant, an account maintained by the Bank to which is credited (i) Phantom
Shares attributable to such amount of his deferred Fees as the Participant shall
have designated, (ii) Dividend Equivalents directed to be credited to such
account, (iii) any earnings or appreciation thereon, (iv) Phantom Rights with
respect to Phantom Shares credited to such account, and (v) Phantom Shares
attributable to unexercised Phantom Rights, and against which are charged any
distributions of amounts credited to such account, any losses or depreciation
attributable thereto, and any transfers from such account to the Participant's
Interest Bearing Memorandum Account or Discretionary Account(s) (or, prior to
July 1, 1994, to the Participant's Trust Account).
Section 1.19 Trading Day means a day on which the exchange or other
market referred to in the applicable section of the definition of Fair Market
Value is open for trading (whether or not any sales or Shares occur on such
day).
Section 1.20 Trust Account means, with respect to a Participant, an
account maintained by the Bank to which is credited the amount of the
Participant's deferred Fees prior to July 1, 1994 that are contributed by the
Bank to the Trustee pursuant to the Trust Agreement, together with amounts
attributable to dividends with respect to Phantom Shares directed to such
account pursuant to section 3.1(b), and any earnings or appreciation thereon,
and against which are charged any distributions of amounts credited to the Trust
Account and any losses, depreciation or expenses attributable thereto and any
transfers from such account to the Participant's Interest Bearing Memorandum
Account or Discretionary Account(s) (or, prior to July 1, 1994, to the
Participant's Stock Memorandum Account).
Section 1.21 Trust Agreement means the revocable trust agreement
established for each Board Member, as applicable, between the Bank and the
Trustee or its successor pursuant to which the Trust Account is held in trust.
-3-
<PAGE> 8
Section 1.22 Trustee means the trustee designated pursuant to the
Trust Agreement. The Trustee shall be Nationar, until it is removed or resigns
from office and is replaced by a successor Trustee.
ARTICLE II
Participation
Section 2.1 Election to Participate.
Any Board Member may elect to become a Participant in the Plan by
submitting to the Administrative Committee a written election to defer receipt
of all or a specified part of his Fees. Such election shall be made on or before
the last day of any calendar year, shall be effective for the calendar year
following the year in which such election is made, and shall continue in effect
for all succeeding calendar years until the Board Member ceases to be a Board
Member or such earlier time as the election is changed or revoked pursuant to
section 2.2. Notwithstanding the foregoing, or any other provision of this Plan,
no deferrals shall be permitted hereunder with respect to any Fees earned after
December 31, 1994.
Section 2.2 Changes in Participation.
A Board Member may, by written direction filed with the
Administrative Committee prior to the end of any calendar year, increase or
decrease, or eliminate altogether, the portion of his Fees to be deferred. Such
change will be effective with respect to Fees earned after the calendar year in
which the direction for such change is filed with the Administrative Committee.
A Board Member who has filed a written direction to cease deferring receipt of
his Fees may thereafter again file an election to defer receipt of all or any
portion of his Fees pursuant to section 2.1, effective for the calendar year
subsequent to the calendar year in which he files a new election.
Section 2.3 Mandatory Participation with Respect to Foregone Fees.
Notwithstanding any election to participate or failure to so elect,
all Board Members shall be Participants with respect to amounts credited in lieu
of payment of Foregone Fees.
Section 2.4 Continued Crediting of Earnings.
In the event that a Participant ceases to be a Board Member or
ceases to defer receipt of his Fees, the amounts already accumulated in his
Interest Bearing Memorandum Account, Stock Memorandum Account, Trust Account,
Phantom II Account and Discretionary
-4-
<PAGE> 9
Account(s) shall continue to be credited with interest, Dividend Equivalents,
earnings and appreciation in accordance with the applicable provisions of
Article III until such time as they are paid out in accordance with Article IV.
ARTICLE III
Deferred Amounts
Section 3.1 In General.
(a) Except as provided in section 3.1(c), a Participant shall direct
that the amount of a Participant's Fees deferred pursuant to section 2.1 shall
be credited to his Interest Bearing Memorandum Account or, to the extent offered
by the Administrative Committee, one or more Discretionary Accounts, in such
proportions as he shall designate in writing. If a Participant does not give
such a direction, the entire amount of his deferred Fees shall be credited to
his Interest Bearing Memorandum Account. The amount of a participant's Foregone
Fees credited pursuant to section 2.3 shall be credited to his Phantom II
Account. Amounts credited with respect to Phantom Rights shall be credited as
provided in section 3.5.
(b) At the time a dividend is paid on Shares, the Bank shall credit
Dividend Equivalents to a Participant's accounts under the Plan as follows:
(i) a Participant who maintains a Stock Memorandum Account may
direct that Dividend Equivalents credited with respect to Phantom Shares
attributed to his Stock Memorandum Account be credited to his Interest Bearing
Memorandum Account, one or more Discretionary Accounts, his Stock Memorandum
Account (or, prior to July 1, 1994, his Trust Account), as he shall designate in
writing to the Administrative Committee on or before the payment date of the
respective dividend. Such direction shall be effective for any dividend paid on
or after the day it is made and shall continue in effect for dividends
subsequently paid unless changed or revoked in writing. If a Participant does
not give such direction, Dividend Equivalents with respect to Phantom Shares
attributed to his Stock Memorandum Account shall be credited to his Interest
Bearing Memorandum Account.
(ii) Dividend Equivalents with respect to Phantom Shares
attributed to a Participant's Phantom II Account shall be credited to such
account.
(c) Prior to the commencement of the Public Offering, as such term
is defined in the Bank's Plan of Conversion, a Participant who was a member of
the Bank's Board had the right to direct that Fees deferred pursuant to section
2.1 be credited to his Interest Bearing Memorandum Account, Trust Account and
Stock Memorandum Account in such proportions as he designated in writing. In the
absence of such a designation, deferred Fees were credited to the Participant's
Interest Bearing Memorandum Account.
-5-
<PAGE> 10
Section 3.2 Amounts Credited to the Interest Bearing Memorandum
Account.
(a) The Bank shall maintain a separate Interest Bearing Memorandum
Account for each Participant who has directed that all or part of his deferred
Fees be credited to or transferred to such account. A Participant's Interest
Bearing Memorandum Account shall be credited with such portion of his deferred
Fees as he shall direct in accordance with sections 3.1(a) and (c), as of the
date on which such Fees would have been paid if an election to defer were not in
effect.
(b) If a Participant directs that Dividend Equivalents be credited
to his Interest Bearing Memorandum Account (or fails to give a direction) in
accordance with section 3.1(b)(i), his Interest Bearing Memorandum Account shall
be credited, as of the date such dividends are paid, in an amount equal to the
product of (i) the number of Phantom Shares (and fraction thereof) credited to
such Participant's Stock Memorandum Account on the record date specified for
purposes of determining the identity of persons entitled to receive such
dividends, multiplied by (ii) the amount of the dividend per Share.
(c) A Participant's Interest Bearing Memorandum Account shall be
credited as of December 31st of each year with interest at an effective annual
rate or rates to be established by the Board; provided, however, that amounts
first credited to a Participant's Interest Bearing Memorandum Account after
January 1st of a year shall only be credited with interest for the portion of
that year during which such amounts are actually credited to the Interest
Bearing Memorandum Account; and provided, further, that when a distribution or a
transfer from an Interest Bearing Memorandum Account is made other than on the
first day of a calendar year, the Participant's Interest Bearing Memorandum
Account shall be credited with interest under this section 3.2(c) as of the last
day of the month prior to the month in which such distribution or transfer is
made for the portion of that year during which such amounts were actually
credited to the Interest Bearing Memorandum Account.
Section 3.3 Amounts Credited to the Trust Account.
(a) The Bank shall maintain a separate Trust Account for each
Participant who has directed, prior to July 1, 1994, that all or a portion of
his deferred Fees be credited to a Trust Account. A Participant's Trust Account
shall be credited with such portion of his deferred Fees as he shall direct in
accordance with section 3.1(a) or (c), as of the date on which such Fees would
have been paid if an election to defer were not in effect. If a Participant
directs that Dividend Equivalents be credited to his Trust Account in accordance
with section 3.1(b)(i), his Trust Account shall be credited, as of the date such
dividends are paid, in an amount equal to the product of (i) the number of
Phantom Shares (and fraction thereof) credited to such Participant's Stock
Memorandum Account on the record date specified for purposes of determining the
identity of persons entitled to receive such dividends, multiplied by (ii) the
amount of the dividend
-6-
<PAGE> 11
per share. In addition, a Participant's Trust Account shall be adjusted to
reflect any deemed appreciation or depreciation in the value of the trust fund
established pursuant to the Trust Agreement, at the same time or times as the
Trustee performs valuations of such trust fund.
(b) The Bank shall contribute to the Trustee under the Trust
Agreement an amount equal to (i) the amount of Fees deferred by a Participant
and credited to his Trust account, as of the date on which such Fees would have
been paid if an election to defer were not in effect plus (ii) the amount of
dividends on Phantom Shares that a Participant diverted to be credited to his
Trust Account, as of the date such dividends are paid. The Administrative
Committee shall direct the Trustee to invest all amounts contributed to the
Trustee pursuant to the Trust Agreement in such deposit accounts of the Bank as
the Administrative Committee shall specify.
Section 3.4 Amounts Credited to the Stock Memorandum Account.
(a) The Bank shall maintain a separate Stock Memorandum Account for
each Participant who has directed that all or part of his deferred Fees be
credited to his Stock Memorandum Account. As of the date on which such deferred
Fees would have been paid if an election to defer were not in effect, a
Participant's Stock Memorandum Account shall be credited with a number of
Phantom Shares (and fraction thereof) equal in number to the quotient of (i)
such portion of his deferred Fees as he shall direct in accordance with section
3.1(c), divided by (ii) the Fair Market Value of a Share on such date.
(b) If a Participant directs that Dividend Equivalents be credited
to his Stock Memorandum Account in accordance with section 3.1(b)(i), his Stock
Memorandum Account shall be credited, as of the date such dividends are paid,
with a number of Phantom Shares (and fraction thereof) equal to the result
obtained by multiplying (i) the number of Phantom Shares (and fraction thereof)
credited to such Participant's Stock Memorandum Account on the record date
specified for purposes of determining the identity of persons entitled to
receive such dividends by (ii) the amount of the dividend per Share, and
dividing such product by (iii) the Fair Market Value of a Share on the date the
dividend is paid.
(c) Phantom Rights and Phantom Shares attributable to unexercised
Phantom Rights shall be credited to a Participant's Stock Memorandum Account as
provided in section 3.6.
(d) If any amount represented by Phantom Shares credited to a
Participant's Stock Memorandum Account is transferred to his Interest Bearing
Memorandum Account or Discretionary Accounts (or, prior to July 1, 1994, a
Participant's Trust Account) or distributed in accordance with Article IV, the
number of Phantom Shares (and fraction thereof) credited to such Stock
Memorandum Account shall be reduced by a number equal to the quotient of (i) the
dollar amount transferred or distributed, divided by (ii) the Fair Market Value
of a Share on the date as of which the transfer or distribution is effected.
-7-
<PAGE> 12
(e) The amount credited to a Participant's Stock Memorandum Account
as of any date shall be equal to the product of (i) the number of Phantom Shares
(and fraction thereof) credited to his Stock Memorandum Account as of such date,
multiplied by (ii) the Fair Market Value of a Share on such date.
Section 3.5 Amounts Credited to the Phantom II Account.
(a) The Bank shall maintain a separate Phantom II Account for each
Board Member or former Board Member who is or was entitled to Foregone Fees
and/or each Participant who has exercised Phantom Rights. A Participant's
Phantom II Account shall be credited with all Phantom Shares (and fraction
thereof) attributable to the exercise of his Phantom Rights, as described in
section 3.6. In addition, a Participant's Phantom II Account shall be credited,
with respect to each date on which his Foregone Fees would have been paid but
for the OTS Restriction (i.e., the first business day of each calendar quarter
in advance, with respect to the annual retainer; and the last business day of
each month in which meetings were attended, with respect to meeting fees), with
a number of Phantom Shares (and fraction thereof) equal to the result obtained
by dividing the amount of the Participant's Foregone Fees that would have been
paid on such date by the greater of $6 or the Fair Market Value of a Share on
the date the Foregone Fees would have been paid. Such Phantom Shares shall be
credited on the later of October 1, 1993 or the date on which the Foregone Fees
would have been paid but for the OTS Restriction.
(b) Before any amounts are credited to a Participant's Phantom II
Account, the Participant shall elect, pursuant to written election forms
provided by the Bank, a fixed date or series of dates on which the Phantom
Shares credited to his Phantom II Account shall be converted to his Interest
Bearing Memorandum Account, or that such conversion shall occur at termination
of service as a Board Member. With respect to Phantom Shares credited on account
of the OTS Restriction (and related Dividend Equivalents), such conversion shall
occur on a single date, which shall be no earlier than the first Trading Day of
1995. The conversion date or schedule elected with respect to Phantom Shares
credited on account of the exercise of Phantom Rights may be different from the
conversion date elected with respect to Phantom Shares credited on account of
Foregone Fees; however, in each case the conversion date or schedule elected
shall apply to all Phantom Shares credited for the same purpose and related
Dividend Equivalents. If a Participant fails to specify a conversion date before
the date on which Phantom Shares on account of Foregone Fees are credited, such
Phantom Shares shall be deemed to have a conversion date of the first Trading
Day of 1995. Notwithstanding the foregoing, at or prior to such date prior to
each conversion date for a Participant that is designated by the Administrative
Committee, a Participant may direct that Phantom Shares be converted to one or
more Discretionary Accounts rather than his Interest Bearing Memorandum Account.
(c) In the event dividends are declared by the Bank with respect to
Shares, the Participant's Phantom II Account shall be credited, as of the date
such dividends are paid, with a
-8-
<PAGE> 13
number of Phantom Shares (and fraction thereof) equal to the result obtained by
multiplying (i) the number of Phantom Shares (and fraction thereof) credited to
such Participant's Phantom II Account on the record date specified by the Bank
for purposes of determining the identity of persons entitled to receive such
dividends by (ii) the dollar amount of the dividend per Share, and dividing such
product by (iii) the Fair Market Value of a Share on the date the dividend is
paid.
(d) If any amount represented by Phantom Shares credited to a
Participant's Phantom II Account is converted to his Interest Bearing Memorandum
Account or his Discretionary Account(s) or distributed in accordance with
Article IV, the number of Phantom Shares (and fraction thereof) credited to such
Phantom II Account shall be reduced by a number equal to the quotient of (i) the
dollar amount converted or distributed, divided by (ii) the Fair Market Value of
a Share on the date as of which the conversion or distribution is effected.
(e) The amount credited to a Participant's Phantom II Account as of
any date shall be equal to the product of (i) the number of Phantom Shares (and
fraction thereof) credited to his Phantom II Account as of such date, multiplied
by (ii) the Fair Market Value of a Share on such date.
Section 3.6 Amounts Credited Pursuant to Phantom Rights.
(a) Notwithstanding a Participant's direction (or failure to give a
direction) in accordance with section 3.1(b)(i), a Participant's Stock
Memorandum Account shall be credited with 1.1 Phantom Rights for each Phantom
Share credited to such Account as of April 15, 1993. A Participant may
constructively exercise such Phantom Rights, pursuant to written election forms
provided by the Bank, by transferring the exercise price therefor from his
Interest Bearing Memorandum Account. Phantom Shares acquired upon such exercise
shall be credited to the Participant's Phantom II Account.
(b) Any Phantom Rights which have not been exercised as of the
expiration date of the actual subscription rights to which they relate shall be
deemed sold and invested in additional Phantom Shares in the Participant's Stock
Memorandum Account at the respective closing market prices of the rights and the
Shares on the first day on which the rights and the Shares traded separately.
Section 3.7 Amounts Credited to the Discretionary Accounts.
(a) The Administrative Committee may, from time to time, authorize
the establishment of one or more Discretionary Accounts that are designed to
provide one or more of the same deemed investment options as are offered under
the Dime Bancorp, Inc. Voluntary Deferred Compensation Plan for Directors. If
and to the extent any Discretionary Accounts are offered hereunder, the Bank
shall maintain one or more separate Discretionary Accounts for each
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<PAGE> 14
Participant who has directed that all or part of his deferred Fees be credited
to such account(s). A Participant's Discretionary Accounts shall be credited
with such portion of his deferred Fees as he shall direct in accordance with
section 3.1(a), as of the date on which such Fees would have been paid if an
election to defer were not in effect.
(b) If a Participant directs that Dividend Equivalents be credited
to his Discretionary Accounts in accordance with section 3.1(b)(i), his
Discretionary Accounts (in the proportion so designated), shall be credited, as
of the date such dividends are paid, in an amount equal to the product of (i)
the number of Phantom Shares (and fraction thereof) credited to such
Participant's Stock Memorandum Account on the record date specified for purposes
of determining the identity of persons entitled to receive such dividends
multiplied by (ii) the amount of the dividend per Share. In addition, a
Participant's Discretionary Accounts shall be adjusted to reflect any deemed
appreciation or depreciation in the value of such Accounts, in the same manner
that such appreciation or depreciation is credited under the Dime Bancorp, Inc.
Voluntary Deferred Compensation Plan for Directors.
Section 3.8 Transfers Between Accounts.
(a) Effective July 1, 1994, and subject to Sections 3.8(d) and
3.8(e), only the following transfers between accounts are permitted under the
Plan:
(i) Transfers from a Participant's Stock Memorandum Account,
his Trust Account or his Interest Bearing Memorandum Account to his
Discretionary Accounts or Interest Bearing Memorandum Account;
(ii) Transfers from any of a Participant's Discretionary
Accounts to another of the Participant's Discretionary Accounts;
(iii) Transfers related to the exercise of Phantom Rights, as
provided in section 3.6; and
(iv) Transfers from a Participant's Phantom II Account to his
Discretionary Accounts or his Interest Bearing Memorandum Account on the
conversion date or dates elected by the Participant pursuant to section 3.5(b).
(b) Prior to July 1, 1994, transfers between accounts were subject
to different limitations.
(c) In the event of any transfer permitted under the Plan, the
Account to which the transfer is made shall be credited with the amount
transferred.
(d) In accordance with the provisions of this section 3.8, a
Participant may, by filing a notice in the form and manner prescribed by the
Administrative Committee, elect to
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<PAGE> 15
change his or her investment direction with respect to all or a portion of the
amounts then held in such Participant's accounts, with such election and the new
investment direction becoming effective as of the first day of any calendar
quarter (i.e., January 1, April 1, July 1 or October 1), provided such
investment direction election is made, and not revoked, prior to 10:00 a.m. on
the first day of such calendar quarter. Such direction shall relate solely to
amounts already allocated to the Participant's accounts, in which event it shall
constitute a direction to transfer amounts in the Participant's accounts among
the various available deemed investments. Any investment direction election made
by a Participant shall remain in effect until changed, to the extent such change
is permitted under the Plan.
(e) Securities Law Limitations. Notwithstanding anything in the Plan
to the contrary, if at any time a Participant who is an Insider (as defined
below) is prohibited by the Section 16 Rules (as defined below) from directing
that his or her accounts be (i) deemed invested in an investment fund that
invests in common stock of Dime Bancorp, Inc. (the "Company"), (ii) deemed
transferred to a deemed investment in common stock of the Company, or (iii) to
the extent of any deemed investment in common stock of the Company, deemed
redeemed for whatever reason, any such direction shall be disregarded and not
given effect. For purposes of this subsection (e), an Insider shall mean, with
respect to the Company or any of its subsidiaries, (i) any Participant who is
subject to the Section 16 Rules, determined in accordance with Rule 16a-2
thereof, and (ii) solely with respect to certain trading restrictions with
respect to common stock of the Company imposed from time to time by the Company
or any of its subsidiaries, any Participant who is subject to such trading
restrictions. For purposes of this subsection (e), the Section 16 Rules mean
those rules (as from time to time amended) promulgated by the Securities and
Exchange Commission ("SEC") under Section 16 of the Securities Exchange Act of
1934, as amended (the "Act"). For purposes of the Plan, an action shall be
deemed to be prohibited by the Section 16 Rules, if it could, if permitted or
occurring, result in a transaction not being exempt from the provisions of
Section 16(b) of the Act. An action in violation of certain trading restrictions
with respect to common stock of the Company imposed from time to time by the
Company or any of its subsidiaries shall be deemed to be prohibited by the
Section 16 Rules solely for purposes of the Plan.
(f) Notwithstanding anything herein to the contrary, if, following a
Change in Control (as defined in Section 3.10) or a Corporate Event (as defined
below), one or more of the investment options under the Plan are eliminated, the
Administrative Committee shall make available an investment option or have all
accounts credited with earnings based on a single deemed investment (or, if the
Administrative Committee fails to so act, an investment option or single deemed
investment, as described in this sentence, shall automatically be made available
under the Plan) providing for a monthly investment return equal to no less than
the published fixed rate return for 30-year U.S. Treasury securities as in
effect on the last business day of each month (or, in the event such a return on
30-year U.S. Treasury securities is not then available, there shall be provided
an investment return as shall be determined by the "Committee" under the
Umbrella Trust Agreement among the Company, the Bank and Marine Midland Bank
with respect to the Covered Arrangements for Outside Directors of the Bank and
Related Entities). For
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<PAGE> 16
purposes of this subsection (f), a "Corporate Event" shall mean the execution of
a binding agreement that, if consummated, would result in a Change in Control of
a type specified in clause (i) or (iii) of Section 3.10 (an "Acquisition
Agreement") or of a binding agreement for the sale or disposition of assets
that, if consummated, would result in a Change in Control of a type specified in
clause (iv) of Section 3.10 (an "Asset Sale Agreement") or the adoption by the
Board of Directors of the Company or the Bank of a plan of complete liquidation
or dissolution of the Company or the Bank that, if consummated, would result in
a Change in Control of a type specified in clause (iv) of Section 3.10 (a "Plan
of Liquidation"); provided, however, that a Corporate Event shall not be deemed
to exist after the Abandonment Date. As used in this subsection (f), the term
"Abandonment Date" shall mean the date on which (A) an Acquisition Agreement,
Asset Sale Agreement or Plan of Liquidation is terminated (pursuant to its terms
or otherwise) without having been consummated, (B) the parties to an Acquisition
Agreement or Asset Sale Agreement abandon the transactions contemplated thereby,
(C) the Bank or the Company abandons a Plan of Liquidation or (D) a court or
regulatory body having competent jurisdiction enjoins or issues a cease and
desist or stop order with respect to or otherwise prevents the consummation of,
or a regulatory body notifies the Bank or the Company that it will not approve,
an Acquisition Agreement, Asset Sale Agreement or Plan of Liquidation or the
transactions contemplated thereby and such injunction, order or notice has
become final and not subject to appeal.
Section 3.9 Special Phantom Stock Valuation. If amounts credited to
a Participant's accounts, and deemed invested in phantom stock of the Company on
the date of a Change in Control (as defined in Section 3.10) are, in accordance
with the election of the Participant, deemed redeemed and deemed reinvested in
any one or more of the deemed investment funds then made available under the
Plan and the deemed redemption occurs after the occurrence of a Change in
Control, but on or before the first day of the third calendar quarter following
the occurrence of the Change in Control, the deemed redemption of such phantom
stock shall be valued based on the greater of (A) the closing price of a Share,
as reported on the New York Stock Exchange, on the date on which the deemed
redemption occurs or (B) the highest closing price of a Share, as reported on
the New York Stock Exchange, during the 90-day period ending on, and including,
the date of the Change in Control. If amounts credited to a Participant's
accounts, and deemed invested in phantom stock of the Company, are deemed
redeemed after the occurrence of a Change in Control (as defined in Section
3.10), but on or before the first day of the third calendar quarter following
the occurrence of the Change in Control, and, in accordance with Section 4, are
paid to the Participant (or his or her Beneficiary) as a distribution under the
Plan, the deemed redemption of such phantom stock shall be valued based on the
greater of (A) the closing price of a Share, as reported on the New York Stock
Exchange, on the date on which the deemed redemption occurs or (B) the highest
closing price of a Share, as reported on the New York Stock Exchange, during the
90-day period ending on, and including, the date of the Change in Control.
"Section 3.10 Change in Control. For purposes of the Plan, a "Change
in Control" shall mean the occurrence of any of the following events:
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<PAGE> 17
(i) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from the
Company or its Affiliates) representing 35% or more of the combined voting power
of the Company's then outstanding securities;
(ii) the following individuals cease for any reason to constitute a
majority of the number of directors then serving as directors of the Company:
individuals who, on July 24, 1997, constitute the Board of Directors of the
Company and any new director (other than a director whose initial assumption of
office is in connection with the settlement of an actual or threatened election
contest, including but not limited to a consent solicitation, relating to the
election of directors of the Company) whose appointment or election by the Board
of Directors of the Company or nomination for election by the Company's
stockholders was approved or recommended by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors on July 24, 1997
or whose appointment, election or nomination for election was previously so
approved or recommended;
(iii) there is consummated a merger or consolidation of the Company
or any direct or indirect subsidiary of the Company with any other corporation
or entity, other than (i) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or any Parent
thereof), in combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
subsidiary of the Company, at least 65% of the combined voting power of the
securities of the Company, such surviving entity or any Parent thereof
outstanding immediately after such merger or consolidation or (ii) a merger or
consolidation effected solely to implement a recapitalization of the Company or
the Bank (or similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company or the
Bank (not including in the securities beneficially owned by such Person any
securities acquired directly from the Company or its Affiliates) representing
35% or more of the combined voting power of the Company's or the Bank's then
outstanding securities; or
(iv) the stockholders of the Company or the Bank approve a plan of
complete liquidation or dissolution of the Company or the Bank, respectively, or
there is consummated a sale or disposition by the Company or any of its
subsidiaries of any assets which individually or as part of a series of related
transactions constitute all or substantially all of the Company's consolidated
assets (provided that, for these purposes, a sale of all or substantially all of
the voting securities of the Bank or a Parent of the Bank shall be deemed to
constitute a sale of substantially all of the Company's consolidated assets),
other than any such sale or disposition to an entity at least 65% of the
combined
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<PAGE> 18
voting power of the voting securities of which are owned by stockholders of the
Company in substantially the same proportions as their ownership of the voting
securities of the Company immediately prior to such sale or disposition.
As used in connection with the foregoing definition of Change in
Control, "Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated
under Section 12 of the Act; "Beneficial Owner" shall have the meaning set forth
in Rule 13d-3 under the Act; "Parent" shall mean any entity that becomes the
Beneficial Owner of at least 80% of the voting power of the outstanding voting
securities of the Company or of an entity that survives any merger or
consolidation of the Company or any direct or indirect subsidiary of the
Company; and "Person" shall have the meaning given in Section 3(a)(9) of the
Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such
term shall not include (i) the Company or any of its subsidiaries, (ii) a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or any of its Affiliates, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv) a corporation or
entity owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company.
ARTICLE IV
Distributions
Section 4.1 Distributions to Participants.
(a) Except as otherwise provided in Section 4.4, the amounts
credited to a participant's Interest Bearing Memorandum Account, Stock
Memorandum Account, Phantom II Account, Trust Account and Discretionary Accounts
shall be paid to the Participant commencing on one of the following dates, as
elected by the Participant prior to the crediting of the respective amounts to
his accounts:
(i) on the first Trading Day of the calendar year following
the year in which the Participant ceases to be a Board Member of the
Bank for any reason, including death;
(ii) on the first Trading Day of the calendar year following
the later of the year in which the Participant ceases to be a Board
Member or attains age 70; or
(iii) on the fixed date or dates elected by the Participant.
If a Participant fails to make an election with respect to the distribution of
any amount before it is credited to his account, such amount shall be
distributed in accordance with
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<PAGE> 19
clause (i) of this section 4.1(a). Any distribution election made by a
Participant shall remain in effect for all amounts subsequently credited to his
account until he makes a new election; such new election shall apply only to
Fees deferred subsequent to the calendar year in which he files the new
election. A payment date elected with respect to any amount credited to a
Participant's Phantom II Account shall be on or after the conversion date
elected by the Participant with respect to such amount. In the event the
Participant has elected a distribution date which precedes the applicable
conversion date for any amount credited to his Phantom II Account, the
applicable conversion date shall be treated as the distribution date for such
amount.
(b) Except as otherwise provided in Section 4.4, payments made
pursuant to section 4.1(a) shall be made in (i) fifteen annual installments, or
(ii) if elected by the Participant prior to the earlier of his election to defer
or crediting of such amounts to his account, in such lesser number of
installments as shall be specified by the Participant in such election, or in a
lump sum. If installment payments are to be made, the amount of the first annual
installment shall be equal to the sum of the amounts credited to the
Participant's Interest Bearing Memorandum Account, Stock Memorandum Account,
Phantom II Account, Trust Account and Discretionary Accounts with respect to
which the particular installment schedule applies at the start of the year
divided by the total number of installments to be made. For each subsequent
year, the annual installment shall be equal to the sum of the amounts credited
to the Participant's accounts with respect to which the particular installment
schedule applies at the start of the year divided by the number of installments
that have not been paid, including the installment for which the calculation is
being made.
(c) Notwithstanding any other provisions of Article IV, a special
election shall be made with respect to the conversion date and payment date of
Phantom Shares credited to a Participant's Phantom II Account with respect to
Foregone Fees and related Dividend Equivalents. The payment of such amounts
shall be made on a single date, which shall be on or after the conversion date
elected for such Phantom Shares and no earlier than the date payment is
permitted by the Office of Thrift Supervision. In the event a Participant has
failed to elect a payment date with respect to such Phantom Shares, the payment
date shall be the later of (i) the first Trading Day of 1995, (ii) the first
date payment is permitted by the Office of Thrift Supervision, and (iii) the
conversion date elected (or deemed elected) by the Participant with respect to
such Phantom Shares.
(d) Notwithstanding anything in the Plan to the contrary, no amount
shall be distributed from a Participant's Stock Memorandum Account on or before
the first anniversary of the commencement of the Public Offering, as such term
is defined in the Bank's Plan of Conversion.
(e) To the extent otherwise necessary to enable the transactions
relating to a distribution under this Section 4 to qualify for exemption under
Section 16(b)
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of the Act, the distribution of a Participant's accounts under this Section 4
shall occur on the earliest date such distribution may be made whereby the
transactions relating to the distribution qualify for exemption under Section
16(b) of the Act, provided that, with the consent of the Participant, the
Administrative Committee may direct that any such distribution be made on any
earlier date.
Section 4.2 Distribution to Beneficiaries.
(a) In the event that a Participant dies prior to the receipt of all
amounts payable to him pursuant to the Plan, all remaining amounts credited to
his Interest Bearing Memorandum Account, Stock Memorandum Account, Phantom II
Account, Trust Account and Discretionary Accounts shall be paid to such one or
more beneficiaries and in such proportions as the Participant may designate on
such form and in such manner as the Administrative Committee may require. A
beneficiary designation pursuant to this section 4.2 shall not be effective
unless it is in writing and is received by the Administrative Committee prior to
the death of the Participant making the designation.
(b) If, at the time of the Participant's death, payments have
commenced to be made in accordance with section 4.1, payments to his beneficiary
shall be made at the same times and in the same manner as such payments would
have been made to the Participant if he had lived. If, at the time of the
Participant's death, payments to the Participant have not commenced to be made
in accordance with section 4.1, payments from the Interest Bearing Memorandum
Account, Stock Memorandum Account, Phantom II Account, Trust Account and
Discretionary Accounts to the Participant's beneficiary shall commence as of the
first Trading Day of the calendar year following the year in which the
Participant's death occurs and shall be made in the number of installments
specified by the Participant in accordance with section 4.1.
(c) If no beneficiary shall have been designated, or to the extent
that any such designation shall be ineffective, all amounts credited to the
Participant's Interest Bearing Memorandum Account, Stock Memorandum Account,
Phantom II Account, Trust Account and Discretionary Accounts upon his death
shall be paid to his personal representatives in a lump sum as of the first
Trading Day of the month following the month in which the 6-month anniversary of
his death occurs, and the amount of such lump sum payment shall be equal to the
sum of the amounts credited to the Participant's Interest Bearing Memorandum
Account, Stock Memorandum Account, Phantom II Account, Trust Account and
Discretionary Accounts as of the date of payment.
Section 4.3 Hardship Distributions.
In the event of Hardship (as defined below), a Participant or
beneficiary may request the Administrative Committee to pay the amount credited
to the Participant's Interest Bearing Memorandum Account, Stock Memorandum
Account, Trust Account
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<PAGE> 21
and Discretionary Accounts (and a beneficiary may request the Administrative
Committee to pay the amounts credited to such accounts as well as the
Participant's Phantom II Account) prior to the time provided for payment in
sections 4.1 and 4.2. For these purposes, Hardship shall mean substantial
financial hardship caused by an unanticipated emergency or unanticipated
necessity outside the control of the Participant or beneficiary, affecting his
personal or family affairs. The Participant or beneficiary shall provide written
evidence demonstrating the existence and extent of the Hardship. The
Administrative Committee, in its sole discretion, shall determine the date and
amount of any distribution on account of Hardship, but in no event shall the
amount of any such distribution exceed the amount necessary to alleviate the
Hardship. Any amounts credited to the Participant's Interest Bearing Memorandum
Account, Stock Memorandum Account, Phantom II Account, Trust Account and
Discretionary Accounts which are not distributed on account of Hardship shall
continue to be governed by the provisions of sections 4.1 and 4.2.
Section 4.4 Additional Payment Elections.
Notwithstanding the preceding provisions of this Article IV to the
contrary, a Participant may subsequently elect, in such form and manner as may
be prescribed by the Administrative Committee, that the amounts credited to his
or her accounts be distributed commencing on one of the dates described in
section 4.1(a)(i), (ii) or (iii) above in lieu of the date(s) initially
selected, provided that any such election is made at least twenty-four (24)
months prior to the earlier of the date payments would otherwise commence (other
than on account of Hardship or a Change in Control (as defined in Section 3.10))
or the Participant's termination of service for any reason as a member of the
Board and, as applicable, as a member of the boards of directors of all
subsidiaries of Dime Bancorp, Inc. Further, notwithstanding the preceding
provisions of this Article IV to the contrary, a Participant may also
subsequently elect, in such form and manner as may be prescribed by the
Administrative Committee, that the amounts credited to his or her accounts be
paid in any one of the forms of benefit payment provided under this section
4.1(b) in lieu of the form of payment initially selected, provided that any such
election is made at least twenty-four (24) months prior to the earlier of the
date payments would otherwise commence (other than on account of Hardship or a
Change in Control) or the Participant's termination of service for any reason as
a member of the Board and, as applicable, as a member of the boards of directors
of all subsidiaries of Dime Bancorp, Inc.
Section 4.5 Change in Control Distributions.
In the event of a Change in Control (as defined in Section 3.10), a
Participant may, solely to the extent permitted by the Committee, direct that
all of the amounts then credited to the Participant's accounts (subject to any
distribution restrictions applicable to amounts held in the Participant's
Phantom II Account, if any) be distributable to the Participant upon a Change in
Control, in which event the amount of any further
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<PAGE> 22
scheduled distribution shall be reduced by the amount previously distributed on
account of such Change in Control.
ARTICLE V
Administration
Section 5.1 Administrative Committee.
The Plan shall be administered by an Administrative Committee
appointed by the Board. The Administrative Committee shall appoint a Chairman
and may appoint a secretary who may, but need not, be a member of the Committee.
Section 5.2 Committee Action.
The Administrative Committee shall hold meetings at such times and
may make such administrative rules and regulations as it may deem proper. A
majority of the members of the Administrative Committee shall constitute a
quorum, and the action of a majority of the members of the Administrative
Committee present at a meeting at which a quorum is present, as well as actions
taken pursuant to the written consent of a majority of the members of the
Administrative Committee without holding a meeting, shall be deemed to be
actions of the Administrative Committee. All actions of the Administrative
Committee shall be final and conclusive and shall be binding upon the Bank and
all other interested parties. Any person dealing with the Administrative
Committee shall be fully protected in relying upon any written notice,
instruction, direction or other communication signed by the secretary of the
Administrative Committee, by two members of the Administrative Committee or by a
representative of the Administrative Committee authorized to sign the same in
its behalf.
Section 5.3 Committee Responsibilities.
Subject to the terms and conditions of the Plan, the Administrative
Committee shall be responsible for the overall management and administration of
the Plan and shall have such authority as shall be necessary or appropriate in
order to carry out its responsibilities, including, without limitation, the
authority:
(a) to interpret and construe the Plan, and to determine all
questions that may arise under the Plan as to eligibility for participation in
the Plan and the amount of Fees and Foregone Fees which may be deferred under
the Plan;
(b) to adopt rules and regulations and to prescribe forms for the
operation and administration of the Plan;
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<PAGE> 23
(c) to determine the time, form and manner of any payment of
benefits made pursuant to Article IV in accordance with the Plan; and
(d) to take any other action not inconsistent with the provisions of
the Plan as it may deem necessary or appropriate.
ARTICLE VI
Miscellaneous Provisions
Section 6.1 Notice and Election.
The Secretary to the Board shall provide a copy of this Plan to each
Board Member, together with a form of letter which the Board Member may use to
make an election to defer all or part of his Fees and related elections required
or permitted by the Plan.
Section 6.2 Unfunded Arrangements.
The Interest Bearing Memorandum Accounts, Stock Memorandum Accounts,
Phantom II Accounts, Trust Accounts and Discretionary Accounts and all amounts
credited thereto shall constitute an unfunded obligation of the Bank and shall
not relate to any specific funds of the Bank. Payments due with respect to
balances in such accounts shall be made from the general assets of the Bank. The
Bank may, in its sole and absolute discretion, establish one or more accounts,
funds, or trusts to reflect its obligations under the Plan, and may make such
investments (including the purchase of insurance) as it may deem desirable to
assist it in meeting such obligations. Any assets held in such accounts, funds
or trusts and any such investments shall be subject to the claims of the Bank's
creditors, and no person eligible for a benefit under the Plan shall have any
right, title or interest in any such assets. This Plan shall constitute solely
an unsecured promise by the Bank to pay Plan benefits to Participants and their
beneficiaries to the extent provided herein.
Section 6.3 Construction of Language.
Wherever appropriate in the Plan, words used in the singular may be
read in the plural, words in the plural may be read in the singular, and words
importing the masculine gender shall be deemed equally to refer to the feminine
or the neuter. Any reference to an Article or section shall be to an Article or
section of the Plan, unless otherwise indicated.
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<PAGE> 24
Section 6.4 Non-Alienation of Benefits.
The right to receive a benefit under the Plan shall not be subject
in any manner to anticipation, alienation or assignment, nor shall such rights
be liable for or subject to debts, contracts, liabilities or torts.
Section 6.5 Indemnification.
The Bank shall indemnify, hold harmless and defend each Board Member
and Participant, and the beneficiaries of each, as well as each member of the
Administrative Committee against their reasonable costs, including legal fees,
incurred by them, or arising out of any action, suit or proceeding in which they
may be involved, as a result of their efforts, in good faith, to defend or
enforce the terms of the Plan.
Section 6.6 Severability.
A determination that any provision of the Plan is invalid or
unenforceable shall not affect the validity or enforceability of any other
provision hereof.
Section 6.7 Waiver.
Failure to insist upon strict compliance with any of the terms,
covenants or conditions of the Plan shall not be deemed a waiver of such term,
covenant or condition. A waiver of any provision of the Plan must be made in
writing, designated as a waiver, and signed by the party against whom its
enforcement is sought. Any waiver or relinquishment of any right or power
hereunder at any one or more times shall not be deemed a waiver or
relinquishment of such right or power at any other time or times.
Section 6.8 Notices.
Any notice or other communication required or permitted to be given
to a party under the Plan shall be deemed given if delivered personally or by
overnight delivery service, sent by facsimile transmission, or mailed (postage
pre-paid, by certified mail, return receipt requested) to the party at the
address listed below, or at such other address as one such party may by written
notice specify to the other:
(a) if to the Administrative Committee:
The Dime Savings Bank of New York, FSB
589 Fifth Avenue
New York, New York 10017
Fax: (212) 326-6194
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<PAGE> 25
Attention: Secretary to the Board
(b) if to any party other than the Administrative Committee, to
such party at the address last furnished by such party by
written notice to the Administrative Committee.
Section 6.9 Governing Law.
The Plan shall be construed, administered and enforced according to
the laws of the State of New York, except to the extent that such laws are
preempted by federal law.
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<PAGE> 1
Exhibit 10.27
Amendment to the
Retainer Continuation Plan
for Independent Directors of
The Dime Savings Bank of New York, FSB
Effective as of July 24, 1997
1. The first sentence of Section 4.6(b) of the Plan is amended to read as
follows:
"For purposes of this Section 4.6, the Present Value of a Participant's
Plan Benefit shall be based on the Plan Benefit accrued as of January 1, 1997
(or, in the event the transfer of the Present Value occurs after January 1,
1997, the Present Value of a Participant's Plan Benefit shall be based on the
Plan Benefit accrued as of the date of such transfer) reflecting service as an
Independent Director through December 31, 1996 or, if later, to the fifth
anniversary of the commencement of service as an Independent Director."
<PAGE> 1
Exhibit 10.28
KEY EXECUTIVE LIFE INSURANCE/DEATH BENEFIT
PLAN OF THE DIME SAVINGS BANK OF NEW YORK, FSB As
Amended and Restated Effective as of July 24, 1997
ARTICLE I
Definitions
The following terms whenever used in the Plan shall have the meanings set
forth in this Article I.
1.1 "Annual Compensation" means the Participant's base salary plus target
incentive compensation.
1.2 "Bank" means The Dime Savings Bank of New York, FSB, and any successor
corporation. In the case of any reference to a person's employment with or
status as an executive of the Bank, the term "Bank" shall include Dime Bancorp,
Inc., The Dime Savings Bank of New York, FSB and wholly-owned subsidiaries of
either of them.
1.3 "Beneficiary" means the Participant's beneficiary under the Plan, as
designated in writing to the Committee by the Participant. A Participant may
change his/her designated Beneficiary from time to time by written notice to the
Committee. If a Participant fails to designate a beneficiary in writing to the
Committee, "Beneficiary" shall mean (i) the beneficiary designated by the
Participant under the Retirement Plan, or (ii) if no beneficiary has been
designated under the Retirement Plan, the Participant's estate.
1.4 "Carrier" means the insurance company or companies selected by the
Bank to provide the life insurance policies under this Plan.
<PAGE> 2
1.5 "Committee" means the committee consisting of at least three persons,
who need not be members of the Board of Directors of the Bank, appointed by such
Board of Directors to administer the Plan.
1.6 "Compensation Committee" means the Compensation Committee of the Board
of Directors of the Bank.
1.7 "Flex Plan" means the Flexible Benefits Program of the Bank as in
effect from time to time.
1.8 "Participant" means an eligible executive who has elected to
participate in this Plan and whose participation has not been terminated.
1.9 "Participant Premium" means the portion of the insurance premium for
the life insurance benefit payable by the Participant or his/her surviving
spouse as a condition of participation in the Plan.
1.10 "Plan" means the Key Executive Life Insurance/Death Benefit Plan of
The Dime Savings Bank of New York, FSB, as initially effective as of January 1,
1988, and as amended from time to time.
1.11 "Retirement" means (i) for Participants who retire from the Bank, the
date of the Participant's retirement (including early retirement) under the
Retirement Plan and (ii) for Participants who terminate employment with the Bank
before being eligible for retirement under the Retirement Plan, age 65.
2
<PAGE> 3
1.12 "Retirement Plan" means the qualified defined benefit plan of the
Bank as in effect from time to time.
1.13 "Single Life Coverage" means a life insurance or death benefit
payable upon the death of the Participant.
1.14 "Survivor Joint Life Coverage" means a life insurance or death
benefit payable upon the death of the last survivor of the Participant and
his/her spouse.
1.15 "Tier" means Tier 0, Tier I, Tier II, Tier III or Tier IV, to which
an executive is classified based on the Bank's system of classifying executives.
ARTICLE II
Purpose
The purpose of the Plan is to enable the Bank to provide life
insurance and death benefits to its key executives in a cost effective manner.
ARTICLE III
Participation
3.1 Eligibility. Subject to Section 3.2, any person who is an executive of
the Bank in Tiers I, II, III, or IV, as of December 1, 1987 may become a
Participant in the Plan by making the election to participate described in
Section 3.3(a). In addition, subject to Section 3.2, any person who becomes an
executive of the Bank after December 1, 1987 who is otherwise designated by the
Compensation Committee may become a Participant in the Plan by making the
election to participate described in Section 3.3(a).
3
<PAGE> 4
3.2 Insurability
(a) If the Carrier determines that an executive is not insurable,
the executive shall not be eligible to participate in the Plan. If the Carrier
determines that the executive and his/her spouse are not insurable, the
executive shall not be entitled to elect Survivor Joint Life Coverage.
(b) If the Carrier determines that an executive or his/her spouse is
insurable but is subject to a substandard rating, the Bank, in its sole
discretion, may (i) prohibit the executive from participating in the Plan (if
the executive is subject to the substandard rating) or from electing Survivor
Joint Life Coverage (if the executive's spouse is subject to the substandard
rating); (ii) require the executive (and/or his/her surviving spouse, in the
case of Survivor Joint Life Coverage) to pay, in addition to the Participant
Premiums required by Section 4.2, all or part of the Bank's increased cost of
providing the coverage as a result of the substandard rating; (iii) reduce the
benefits otherwise payable to the Beneficiary to reflect the substandard rating;
or (iv) some combination of the foregoing.
3.3 Election to Participate.
(a) An executive's election to participate in the Plan shall be
effective only if the election (i) is made in writing on or prior to January 15,
1988 if the executive was eligible to participate as of that date, or within
such period, if any, as determined by the Committee, of initial eligibility if
the executive was first chosen by the Committee to be eligible to participate in
the Plan after January 15, 1988, (ii) specifies the amount of Single Life
Coverage (expressed as a percentage of Annual Compensation), which the executive
elects to receive (within the limits permitted by Section 3.4) based on the
executive's Tier as of October 1, 1987 if the executive was
4
<PAGE> 5
first eligible to participate in the Plan on or before January 15, 1988, or as
of the date of initial eligibility if first chosen by the Committee to be
eligible to participate after January 15, 1988, and, (iii) contains such
additional information and agreements as the Committee may request. An election
to participate in the Plan shall be deemed an authorization by the executive of
payroll deductions to pay the Participant Premiums described in Section 4.2.
(b) Any executive who has elected to participate in the Plan
pursuant to Section 3.3(a) may, at any time prior to December 31, 1988 if the
executive was first eligible to participate in the Plan on or before January 15,
1988, or at any time prior to the first anniversary of his/her eligibility to
participate in the Plan if first chosen by the Committee to be eligible to
participate after January 15, 1988, and subject to Section 3.2, direct that a
portion of his/her Single Life Coverage elected pursuant to Section 3.3(a)
(expressed as a percentage of Annual Compensation) be converted to an equivalent
amount of Survivor Joint Life Coverage (determined pursuant to Section 3.4(b)).
3.4 Amount of Coverage.
(a) Single Life. A Participant may elect to receive Single Life
Coverage in an amount not to exceed the following:
<TABLE>
<CAPTION>
Maximum
Participant's Tier Participant's Tier Single Life
1/1/88 - 12/31/89 1/1/90 and after Coverage
- ------------------ ------------------ ----------------
<S> <C> <C>
I and II 0 and I 6 times Annual
Compensation
III II and III 3 times Annual
Compensation
IV IV 1.5 times Annual
Compensation
</TABLE>
5
<PAGE> 6
The first $50,000 of Single Life Coverage elected by a Participant shall be
provided by the Bank under the Flex Plan rather than under this Plan prior to
the Participant's Retirement, but shall be provided as a death benefit under
this Plan after the Participant's Retirement.
(b) Survivor Joint Life. A Participant who so elects shall receive
$1.67 of Survivor Joint Life Coverage in lieu of each $1.00 of Single Life
Coverage for which the Participant is eligible; provided, however, that if the
Participant's spouse is more than five years older than the Participant, the
amount of Survivor Joint Life Coverage per $1.00 of Single Life Coverage shall
be reduced to an amount whose cost to the Bank (as determined by the Bank) is
equal to the cost of $1.67 of Survivor Joint Life Coverage for a Participant
whose spouse is five years older than the Participant.
3.5 Automatic Increases in Coverage.
(a) Increases in Annual Compensation. Each January 1 after the
effective date of the Plan, the amount of coverage to which a Participant is
entitled shall be (subject to Section 3.5(c)) automatically increased by
applying the percentage of Annual Compensation initially elected by the
Participant to his/her Annual Compensation (on an annualized basis) in effect
the preceding October 1.
(b) Change of Tier. A Participant who has elected the maximum
coverage for which he/she is eligible and who is promoted to a higher Tier as of
any October 1 shall (subject to Section 3.5(c)) have such coverage automatically
increased as of the following January 1 to the maximum coverage available for
such higher Tier. A Participant who elected less than the maximum coverage
available for his/her Tier shall not have his/her coverage automatically
6
<PAGE> 7
adjusted for a change in Tier, but shall (subject to Section 3.5(c)) have the
right to elect, by written notice to the Committee prior to the first December
31 that is at least 31 days after such Tier change, that his/her coverage be
increased as of the January 1 following such December 31, based on his/her Tier
the preceding October 1. The coverage of a Participant described in the
preceding sentence (expressed as a percentage of the maximum available coverage
for his/her new Tier) shall in no event exceed the percentage of the maximum
available coverage (for the Participant's prior Tier) in effect for the
Participant immediately prior to his/her promotion.
(c) Any increase in the amount of a Participant's coverage upon a
change of Annual Compensation or Tier shall be subject to insurability of the
Participant and his/her spouse as provided in Section 3.2 unless the insurance
coverage being maintained for the Participant by the Bank is sufficient to
provide such increased coverage.
(d) A Participant's insurance coverage shall not change upon a
reduction of the Participant's Annual Compensation or Tier classification unless
the Participant elects such reduction.
3.6 Amendment of Election to Participate.
(a) A Participant may not amend, cancel or otherwise modify his/her
election to participate except in the following circumstances:
(i) A Participant may at any time reduce his/her aggregate amount
of coverage, or refuse any automatic increase in such
coverage. Such reduction shall take effect as soon as
practicable following receipt by the Committee of a written
request for such reduction.
7
<PAGE> 8
(ii) Upon a change in the marital status of a Participant, the
Participant may, subject to Section 3.2, reallocate his/her
total coverage then in effect (expressed as a percentage of
Annual Compensation) between Single Life Coverage and Survivor
Joint Life Coverage.
3.7 Election by Surviving Spouse. Upon the death, prior to his/her
Retirement, of a Participant who has elected Survivor Joint Life Coverage, the
Participant's surviving spouse shall have the right to elect (within such time
period as the Committee may provide) one of the following options:
(a) Option A: To continue the Survivor Joint Life Coverage as a life
insurance benefit until the spouse attains age 65, at which time it shall
convert to a death benefit. A spouse choosing this option shall be required to
pay Participant Premiums as provided in Section 4.2(b) until he/she attains age
65; or
(b) Option B: To have the Survivor Joint Life Coverage convert to a
death benefit pursuant to Section 5.3 immediately upon the death of the
Participant, in which case the spouse shall not be required to pay Participant
Premiums.
3.8 Failure to Participate. No compensation or benefits in lieu of this
Plan shall be paid to an executive who elects not to participate in the Plan.
8
<PAGE> 9
ARTICLE IV
Contributions
4.1 Bank Payments.
(a) Prior to the Retirement of a Participant who has elected Single
Life Coverage, the Bank shall pay to the Carrier each year the amount necessary
to maintain in effect a life insurance policy on the life of the Participant in
an amount not less than the amount sufficient to provide the insurance coverage
elected by the Participant.
(b) Subsequent to the Retirement of a Participant who has elected
Single Life Coverage, the Bank, in its sole discretion, may (but is not required
to) maintain in effect the life insurance policy referred to in Section 4.1(a).
(c) In the case of a Participant who has elected Survivor Joint Life
Coverage, the Bank shall pay to the Carrier each year the amount necessary to
maintain in effect a life insurance policy on the Participant and his/her spouse
in an amount not less than the amount sufficient to provide the insurance
coverage elected by the Participant. Such policy shall be maintained until
whichever of the following applies:
(i) If the spouse pre-deceases the Participant, the policy shall
be maintained until the Participant's Retirement.
(ii) If the Participant's pre-deceases the spouse and the spouse
has elected Option A pursuant to Section 3.7, the policy shall
be maintained until the spouse attains age 65.
9
<PAGE> 10
(iii) If the Participant pre-deceases the spouse and the spouse has
elected Option B pursuant to Section 3.7, the policy shall be
maintained until the Participant's death.
Following the occurrence of whichever of the foregoing events applies, the Bank,
in its sole discretion, may (but is not required to) maintain in effect the life
insurance policies described in this Section 4.1(c).
(d) The Bank's obligation to provide the death benefits referred to
in Section 5.3 shall continue regardless of whether any life insurance policy is
maintained on a Participant or spouse.
(e) Notwithstanding the foregoing provisions of this Section 4.1,
the Bank shall not be required to maintain any insurance policy with respect to
a Participant whose participation in the Plan has terminated.
4.2 Participant Premiums.
(a) Prior to the Participant's Retirement, each Participant shall
reimburse the Bank for Participant Premiums paid by the Bank on his/her behalf,
in an amount equal to the "P.S. 58 alternative rates," as determined by the
Carrier from time to time, for the amount and form of insurance coverage elected
by the Participant (in excess of the first $50,000 of Single Life Coverage);
provided, however, that following the death of his/her spouse, a Participant who
has elected Survivor Joint Life Coverage shall reimburse the Bank based on the
"P.S. 58 alternative rates" for Single Life Coverage as determined by the
Carrier from time to time. If the Participant is an employee of the Bank, such
payment shall be made by payroll deductions pro rata over the portion of the
calendar year in which the Participant participates in the Plan, as determined
by the
10
<PAGE> 11
Committee. Upon a Participant's termination of employment with the Bank, the
Participant shall pay the balance of the Participant Premium for that calendar
year within 60 days of termination of employment. Thereafter, the Participant
shall pay to the Bank the annual Participant Premium for each year in advance,
not later than January 31 of that year. A Participant's (or spouse's) failure to
pay Participant Premiums as provided in this Section 4.2(a) or Section 4.2(b)
shall result in a termination of his/her participation in the Plan.
(b) Upon the death of a Participant who has elected Survivor Joint
Life Coverage, if the Participant's surviving spouse has elected Option A
pursuant to Section 3.7, such spouse shall reimburse the Bank for Participant
Premiums in an amount equal to the "P.S. 58 alternative rates" for Single Life
Coverage, as determined by the Carrier from time to time until such spouse
attains age 65. Such payment shall be made at the times set forth in Section
4.2(a) with respect to a Participant who has terminated employment with the
Bank.
(c) Upon the death of a Participant who has elected Survivor Joint
Life Coverage, if the Participant's surviving spouse has elected Option B
pursuant to Section 3.7, such spouse shall not be required to pay any
Participant Premiums, and shall maintain coverage under the Plan pursuant to
Section 5.3(b).
ARTICLE V
Benefits
5.1 Prior to Death. No benefits shall be payable to a Participant or
Beneficiary under this Plan prior to the death of the Participant.
11
<PAGE> 12
5.2 Life Insurance Benefits.
(a) With respect to a Participant who has elected Single Life
Coverage, upon the Participant's death prior to his/her Retirement, the
Participant's Beneficiary shall receive life insurance proceeds in an amount
equal to the amount of Single Life Coverage elected by the Participant.
(b) With respect to a Participant who has elected Survivor Joint
Life Coverage, upon (i) the death of the Participant prior to his/her Retirement
but after the death of his/her spouse, or (ii) the death of a Participant's
surviving spouse who has elected Option A pursuant to Section 3.7, the
Participant's Beneficiary shall receive life insurance proceeds in an amount
equal to the amount of Survivor Joint Life Coverage elected by the Participant.
5.3 Death Benefits.
(a) Upon the death, after his/her Retirement, of a Participant who
has elected Single Life Coverage, the Participant's Beneficiary shall receive a
death benefit payable by the Bank in an amount equal to (i) the amount of Single
Life Coverage in effect for the Participant at the time of his/her Retirement,
if the Participant was in Tier 0 or I (Tiers I or II prior to January 1, 1990)
on the October 1 before his/her Retirement (or if the Participant, while
participating, had been in such Tier, but had not elected to reduce the level of
his/her life insurance coverage pursuant to Section 3.2(d) upon any prior Tier
reduction), or (ii) 67% of the amount of such coverage if the Participant was in
Tier II, III or IV (Tier III or IV prior to January 1, 1990) on the October 1
before his/her Retirement (except as otherwise provided in clause (i) above), in
each case to the extent such benefit has vested pursuant to Article VI.
12
<PAGE> 13
(b) With respect to a Participant who has elected Survivor Joint
Life Coverage, upon (i) the death of the Participant after his/her Retirement
and after the death of his/her spouse, (ii) the death of a Participant's
surviving spouse who has elected Option A pursuant to Section 3.7 after such
spouse has attained age 65, or (iii) the death (at any age) of a Participant's
surviving spouse who has elected Option B pursuant to Section 3.7, the
Participant's Beneficiary shall receive a death benefit payable by the Bank in
an amount equal to (i) the amount of Survivor Joint Life Coverage in effect for
the Participant at the earlier of the time of his/her Retirement or death, if
the Participant was in Tier 0 or I (Tiers I or II prior to January 1, 1990) on
the October 1 before such Retirement or death (or if the Participant, while
participating, had been in such Tier, but had not elected to reduce the level of
his/her life insurance coverage pursuant to Section 3.2(d) upon any prior Tier
reduction), or (ii) 67% of the amount of such coverage if the Participant was in
Tier II, III or IV (Tiers III or IV prior to January 1, 1990) on the October 1
before such Retirement or death (except as otherwise provided in clause (i)
above), in each case to the extent such benefit has vested pursuant to Article
VI.
(c) Notwithstanding Sections 5.3(a) and (b):
(i) The net death benefit paid with respect to a
Participant, after payment of federal and state income
tax at the maximum rates in effect for 1988, shall in no
event be less than the post-retirement life insurance
benefit which would have been paid with respect to the
Participant under the Flex Plan (as in effect on
December 31, 1987) on the date of his/her death based on
his/her Annual Compensation and elected Flex Plan
coverage as of December 31, 1987; and
13
<PAGE> 14
(ii) No death benefit shall be payable with respect to a
Participant unless all Participant Premiums required by
Section 4.2 with respect to such Participant have been
paid.
5.4 Limitation on Benefits. Notwithstanding the provisions of Sections 5.2
and 5.3, no benefits (other than the first $50,000 of Single Life Coverage to
the extent such coverage is provided as a life insurance benefit) shall be
payable under this Plan with respect to a Participant (i) if the Participant
dies by suicide within the first two years that a life insurance policy is in
effect with respect to such Participant, or (ii) if the carrier properly denies
a claim with respect to the Participant during the two-year "contestable period"
of a policy.
ARTICLE VI
Vesting
6.1 A Participant shall be 100% vested in his or her death benefits
(pursuant to Section 5.3) upon the Participant's retirement (including early
retirement) under the Retirement Plan. In addition, a Participant in Tier 0, I
or II at the time of a Change in Control (as defined in Section 9.8) shall be
100% vested in his or her death benefits (pursuant to Section 5.3) upon the
occurrence of such Change in Control, provided that in the case of a Change in
Control of the type described in clause (v) of Section 9.8, such Change in
Control shall result in full vesting only if (A) the Participant's employment is
terminated by his or her employer (other than for "cause" (as defined below)) or
(B) the Participant terminates his or her employment with Dime Bancorp, Inc.
(the "Company") and its subsidiaries after the Participant's employer either (I)
makes a material change in the Participant's functions, duties or
responsibilities, which change would cause
14
<PAGE> 15
the Participant's position with his or her employer to become one of lesser
responsibility, importance or scope from that in effect immediately prior to the
occurrence of such Change in Control or (II) reduces the Participant's annual
salary to a level below that in effect immediately prior to the Change in
Control, provided, further, that in case of subclauses (A) and (B), such
termination of employment occurs after the occurrence of the Change in Control
described in clause (v) of Section 9.8, but during the remaining term of the
applicable employment or change in control agreement between the Participant and
the Company or any of its subsidiaries in effect at the time of the occurrence
of such Change in Control (or, if greater, or if there is no such agreement,
within one year after the occurrence of such Change in Control), and otherwise
on or before the earlier of the Abandonment Date (as defined below) or the date
the transaction contemplated by any event described in clause (v) of Section 9.8
is consummated. As used in this Section 6.1, the term "Abandonment Date" shall
mean the date on which (A) an Acquisition Agreement, Asset Sale Agreement or
Plan of Liquidation (as such terms are defined in Section 9.8) is terminated
(pursuant to its terms or otherwise) without having been consummated, (B) the
parties to an Acquisition Agreement or Asset Sale Agreement abandon the
transactions contemplated thereby, (C) the Bank or the Company abandons a Plan
of Liquidation or (D) a court or regulatory body having competent jurisdiction
enjoins or issues a cease and desist or stop order with respect to or otherwise
prevents the consummation of, or a regulatory body notifies the Bank or the
Company that it will not approve, an Acquisition Agreement, Asset Sale Agreement
or Plan of Liquidation or the transactions contemplated thereby and such
injunction, order or notice has become final and not subject to appeal.
Notwithstanding anything in the Plan to the contrary, a Participant may, in his
or her discretion, waive all or part of the additional
15
<PAGE> 16
vesting in his or her death benefits that results following the occurrence of a
Change in Control, as provided in this Section 6.1. For purposes of the Plan,
"cause" shall mean (except as otherwise provided in a Participant's employment
or change in control agreement with the Company or any of its subsidiaries,
which definition of "cause" shall then apply), the Participant's personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving
personal profit, intentional failure to perform assigned duties, willful
violation of any law, rule or regulation (other than traffic violations or
similar offenses) or final cease and desist order. If the Participant terminates
employment with the Bank before he is eligible for retirement under the
Retirement Plan, except as otherwise provided in the second sentence of this
Section 6.1, the Participant's death benefit shall vest in accordance with the
following vesting schedule:
<TABLE>
<CAPTION>
Years of Participation in the Vesting
Plan While Employed by the Bank Percentage
- ------------------------------- ----------
<S> <C>
0-5 years 0%
at least 5 but less than 6 years 50%
at least 6 but less than 7 years 60%
at least 7 but less than 8 years 70%
at least 8 but less than 9 years 80%
at least 9 but less than 10 years 90%
10 or more years 100%
</TABLE>
Notwithstanding anything in this Plan to the contrary, on and after a Change in
Control (as defined in Section 9.8), a Participant's vested percentage in the
death benefits that he or she has elected as of the date of the Change in
Control shall be determined based on vesting provisions
16
<PAGE> 17
that are no more restrictive than the vesting provisions in effect under the
Plan immediately prior to the Change in Control.
ARTICLE VII
Amendment and Termination
7.1 Termination by Participant. A Participant's participation in the Plan
shall terminate if the Participant (or his/her surviving spouse in the case of
Survivor Joint Life Coverage) elects to reduce coverage to zero or fails to pay
the required amount of Participant Premiums when due. No benefits under the Plan
shall be paid with respect to any Participant or surviving spouse whose
participation in the Plan is terminated.
7.2 Amendment or Termination by the Bank.
(a) The Board of Directors of the Bank shall have the right to amend
the Plan from time to time and to terminate the Plan at any time; provided,
however, that no such act shall decrease the dollar amount of benefits payable
with respect to a Participant from the amount which would have been payable had
the Participant died immediately prior to such amendment or termination (without
regard to the tax treatment of such benefit). Without limiting the generality of
the foregoing and subject to the proviso in the preceding sentence, the Bank
shall have the right to change insurance carriers or to change the form of
benefit from life insurance to an equal amount of death benefit and vice versa;
provided that Participants and their spouses shall not be required to pay
Participant Premiums for benefits not provided as a life insurance benefit. In
the event of termination of the Plan, benefits shall be paid at the time or
times they would have been paid had the Plan not been terminated.
17
<PAGE> 18
(b) Notwithstanding the provisions of Section 7.2(a), in the event
the Board of Directors of the Bank determines that one or more of the following
has occurred: (i) there has been a significant change in the tax treatment of
corporate owned life insurance or in the tax treatment to the Bank or
Participants of the benefits provided under the Plan from the situation in
effect on January 1, 1988, (ii) the effective marginal rate of federal income
tax payable by the Bank shall be significantly less than 34%, (iii) the Bank is
required by law to extend the benefits of the Plan to a broader category of
employees than those in Tiers 0, I, II, III and IV, and (iv) there has been any
other material change in circumstance, as determined by the Board of Directors
from time to time, that affects the cost or benefit to the Bank of providing
benefits under the Plan, the Bank in its sole and absolute discretion, shall
have the right to amend or terminate the Plan or to require the Participants to
pay all or a portion of the added costs of maintaining the Plan.
(c) Subject to the limitations of Section 7.2(a), the Committee
shall have the right to amend the Plan from time to time, provided that no such
amendment shall materially increase the cost to the Bank of maintaining the
Plan.
ARTICLE VIII
Administration of the Plan
8.1 The Committee. The Committee shall administer the Plan and for
purposes of ERISA shall be the "named fiduciary" of the Plan. In connection
therewith, the Committee shall have full power and authority, in its discretion,
to determine a Beneficiary's entitlement to benefits in accordance with the
terms of the Plan (except that entitlement to life insurance benefits shall be
determined by the Carrier), to construe and interpret the Plan, to establish
rules and regulations,
18
<PAGE> 19
to delegate responsibilities to others to assist it in administering the Plan,
to appoint a Plan Administrator who shall have responsibility for the day to day
administration of the Plan, and to perform all other acts it believes reasonable
and proper in connection with the administration of the Plan. The Committee
shall act by vote of a majority of its members and may also effect such action
without a meeting, by written consent of a majority of its members. No member of
the Committee may act with respect to any action relating to or affecting that
member's own benefit under the Plan.
8.2 Indemnification. To the extent permitted by law, the Bank shall
indemnify the members of the Committee and the Plan Administrator from all
claims for liability, loss, or damage (including payment of expenses in
connection with defense against such claims) arising from any act or failure to
act in connection with the Plan.
8.3 Claims Procedure.
(a) Life Insurance Benefits. Any claim relating to life insurance
benefits under the Plan shall be filed with the Plan Administrator designated by
the Committee, who within 30 days of receipt shall forward the claim to the
Carrier for processing in accordance with the Carrier's claims procedure. The
Carrier shall be a "fiduciary" under ERISA for purposes of processing and
reviewing any such claims.
(b) Death Benefits. Any claim relating to death benefits shall be
filed with the Plan Administrator designated by the Committee. If a claim is
denied in whole or in part, the claimant shall be given written notice of such
denial, which notice shall specifically set forth (i) the specific reasons for
the denial (ii) the pertinent Plan provisions on which the denial was based
(iii) any additional material or information necessary for the claimant to
perfect his claim and an
19
<PAGE> 20
explanation of why such material or information is needed and (iv) an
explanation of the Plan's procedure for review of the denial of the claim. In
the event that the claim is not granted and notice of denial of a claim is not
furnished by the 90th day after such claim was filed, the claim shall be deemed
to have been denied on that day for the purpose of permitting the claimant to
request review of the claim. Any person whose claim for benefits has been denied
in whole or in part by the Plan Administrator may request review of the claim by
the Committee. The claimant shall file such request for review (including a
statement of issues raised and comments made by the claimant) with the Committee
no later than 90 days after the mailing or delivery of the written notice of
denial of the claim or, if such notice is not provided, within 90 days after
such claim is deemed denied. The claimant shall be permitted to review pertinent
documents. A decision shall be rendered by the Committee and communicated to the
claimant not later than 60 days after receipt of the claimant's written request
for review. However, if the Committee finds it necessary due to special
circumstances to extend this period and so notifies the claimant in writing, the
decision shall be rendered as soon as practicable, but in no event later than
120 days after the claimant's request for review. The Committee's decision shall
be in writing and shall specifically set forth (i) the reasons for the decision
and (ii) the pertinent Plan provisions on which the decision is based. Any such
decision of the Committee shall be binding upon the claimant and the Bank.
ARTICLE IX
Miscellaneous
9.1 Life Insurance Obligations.
20
<PAGE> 21
(a) Subject to subsection (c) of this Section 9.1, the Bank shall
purchase from the Carrier insurance policies sufficient to provide the life
insurance benefits under the Plan. Subject to subsection (c) of this Section
9.1, the Bank shall be the owner of the insurance policies, and shall have all
rights of a policy owner including the right to borrow from the policies and to
receive dividends, if any; however, each policy shall contain an endorsement
indicating that upon the death of the Participant prior to Retirement (in the
case of Single Life Coverage) or upon (i) the death of the Participant prior to
Retirement and after the death of his/her spouse or (ii) the death of a
Participant's surviving spouse who has elected Option A pursuant to Section 3.7
prior to attaining age 65 (in the case of Survivor Joint Life Coverage) proceeds
of the policy in an amount equal to the amount of coverage elected by the
Participant shall be paid to the Beneficiary by the Carrier. Any proceeds of the
policy in excess of the amount of coverage elected by the Participant shall be
paid to the Bank upon the occurrence of any of the events described in the
preceding sentence. All proceeds of any such policy which may be maintained by
the Bank shall be paid to the Bank (i) upon the Participant's death after
his/her Retirement (in the case of Single Life Coverage) or, (ii) upon (A) the
death, after his/her Retirement, of a Participant who survives his/her spouse,
or (B) the death of a Participant's surviving spouse who has elected Option B
pursuant to Section 3.7 (in the case of Survivor Joint Life Coverage).
(b) The life insurance benefits shall be paid in accordance with the
terms and conditions of the life insurance policy on the Participant's life (or,
in the case of Survivor Joint Life Coverage, the lives of the Participant and
his/her spouse). No Participant or Beneficiary shall have any rights against the
Bank in the event of a failure of the Carrier to pay a life insurance benefit.
21
<PAGE> 22
(c) Notwithstanding anything in the Plan to the contrary, the Bank
may permit or authorize, but is not required or otherwise obligated to permit or
authorize, the holding of any insurance policy purchased to provide the life
insurance benefits under the Plan by a trust, subject to such terms and
conditions as the Bank may deem appropriate.
9.2 Unfunded Death Benefit Obligation. All death benefits payable under
this Plan shall constitute an unfunded obligation of the Bank. Payments shall be
made, as due, from the general assets of the Bank. The Bank may, in its sole and
absolute discretion, establish one or more accounts, funds, or trusts, to
reflect its obligations to pay death benefits under the Plan, and may make such
investments as it may deem desirable (including the purchase of insurance) to
assist it in meeting such obligations. Any assets held in such accounts, funds,
or trusts shall be subject to claims of the Bank's creditors, and no person
eligible for a death benefit under this Plan shall have any right, title or
interest in any such assets. This Plan shall constitute solely an unsecured
promise by the Bank to pay death benefits to the extent provided herein.
9.3 Nonalienation of Benefits.
(a) Except as permitted by the life insurance policy with respect to
a Participant's life insurance benefits, no Participant, Beneficiary or other
person entitled to benefits under this Plan shall have the power to transfer,
assign, anticipate, mortgage or otherwise encumber any rights or any amounts
payable under this Plan; nor shall any such rights or amounts payable under this
Plan be subject to seizure, attachment, execution, garnishment or other legal or
equitable process, or for the payment of any debts, judgments, alimony, or
separate maintenance, or be transferable by operation of law in the event of
bankruptcy, insolvency, or otherwise of any Participant or Beneficiary. In the
event a person who is receiving or is entitled to receive benefits
22
<PAGE> 23
under the Plan attempts to assign, transfer or dispose of such right (except as
contemplated by the preceding sentence), or if an attempt is made to subject
said right to such process, such assignment, transfer or disposition shall be
null and void.
(b) Notwithstanding the provisions of Section 9.3(a), a Participant
shall have the right to assign his/her right to name the Beneficiary with
respect to such Participant's life insurance and death benefits under the Plan.
Such assignment shall be made either during the Participant's lifetime, by
written notice to the Committee, or by will. An assignee shall have the right to
further assign such right during his/her lifetime or by will, whether before or
after the death of the Participant.
9.4 No Guarantee of Status. Nothing in this Plan or any action taken
hereunder shall be deemed or construed to confer upon any Participant the right
to continued employment by the Bank.
9.5 Payments to Minors and Incompetents. If a Beneficiary entitled to
receive any benefits hereunder is a minor or is deemed by the Committee or is
adjudged to be legally incapable of giving valid receipt and discharge for such
benefits, the Committee may direct payment of benefits be made to the duly
appointed guardian or legal representative of such minor or incompetent or to
such other person as the Committee may designate. Such payment shall, to the
extent made, be deemed a complete discharge of any liability for such payment
under the Plan.
9.6 Withholding. The Bank shall have the right to deduct from any payments
made under this Plan any taxes required to be withheld with respect to such
payments.
9.7 Protective Provisions. Each Participant (and, in the case of Survivor
Joint Life Coverage, his/her spouse) shall cooperate with the Bank by furnishing
any and all information
23
<PAGE> 24
requested by the Bank in order to facilitate the payment of benefits hereunder,
taking such physical examinations as the Bank may deem necessary and taking such
other relevant action as may be requested by the Bank. If a Participant (or
spouse) refuses to so cooperate, the Bank shall have no further obligation to
the Participant (or spouse) under the Plan.
9.8 Change in Control.
A Change in Control shall mean the occurrence of any of the
following events:
(i) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired
directly from the Company or its Affiliates) representing 35% or
more of the combined voting power of the Company's then outstanding
securities;
(ii) the following individuals cease for any reason to
constitute a majority of the number of directors then serving as
directors of the Company: individuals who, on July 24, 1997,
constitute the Board of Directors of the Company and any new
director (other than a director whose initial assumption of office
is in connection with the settlement of an actual or threatened
election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company)
whose appointment or election by the Board of Directors of the
Company or nomination for election by the Company's stockholders was
approved or recommended by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors on July
24, 1997 or
24
<PAGE> 25
whose appointment, election or nomination for election was
previously so approved or recommended;
(iii) there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with any
other corporation or entity, other than (A) a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity or any Parent thereof), in combination with the
ownership of any trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any subsidiary of the
Company, at least 65% of the combined voting power of the securities
of the Company, such surviving entity or any Parent thereof
outstanding immediately after such merger or consolidation or (B) a
merger or consolidation effected solely to implement a
recapitalization of the Company or the Bank (or similar transaction)
in which no Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company or the Bank (not including
in the securities beneficially owned by such Person any securities
acquired directly from the Company or its Affiliates) representing
35% or more of the combined voting power of the Company's or the
Bank's then outstanding securities;
(iv) the stockholders of the Company or the Bank approve a
plan of complete liquidation or dissolution of the Company or the
Bank, respectively, or there is consummated a sale or disposition by
the Company or any of its
25
<PAGE> 26
subsidiaries of any assets which individually or as part of a series
of related transactions constitute all or substantially all of the
Company's consolidated assets (provided that, for these purposes, a
sale of all or substantially all of the voting securities of the
Bank or a Parent of the Bank shall be deemed to constitute a sale of
substantially all of the Company's consolidated assets), other than
any such sale or disposition to an entity at least 65% of the
combined voting power of the voting securities of which are owned by
stockholders of the Company in substantially the same proportions as
their ownership of the voting securities of the Company immediately
prior to such sale or disposition; or
(v) the execution of a binding agreement that, if consummated,
would result in a Change in Control of a type specified in clause
(i) or (iii) of this Section 9.8 (an "Acquisition Agreement") or of
a binding agreement for the sale or disposition of assets that, if
consummated, would result in a Change in Control of a type specified
in clause (iv) of this Section 9.8 (an "Asset Sale Agreement") or
the adoption by the Board of Directors of the Company or the Bank of
a plan of complete liquidation or dissolution of the Company or the
Bank that, if consummated, would result in a Change in Control of a
type specified in clause (iv) of this Section 9.8 (a "Plan of
Liquidation").
As used in connection with the foregoing definition of Change in
Control, "Affiliate" shall have the meaning set forth in Rule 12b-2
promulgated under Section 12 of the Exchange Act; "Beneficial Owner" shall
have the meaning set forth in Rule 13d-3 under the Exchange Act; "Exchange
Act" shall mean the Securities Exchange Act of
26
<PAGE> 27
1934, as amended from time to time; "Parent" shall mean any entity that
becomes the Beneficial Owner of at least 80% of the voting power of the
outstanding voting securities of the Company or of an entity that survives
any merger or consolidation of the Company or any direct or indirect
subsidiary of the Company; and "Person" shall have the meaning given in
Section 3(a)(9) of the Exchange Act, as modified and used in Sections
13(d) and 14(d) thereof, except that such term shall not include (i) the
Company or any of its subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any of
its Affiliates, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities, or (iv) a corporation or
entity owned, directly or indirectly, by the stockholders of the Company
in substantially the same proportions as their ownership of stock of the
Company.
9.9 Validity. In the event any provision of this Plan is held
invalid, void, or unenforceable, the same shall not affect, in any respect
whatsoever, the validity of any other provision of this Plan.
9.10 Governing Law. Except to the extent preempted by federal law,
the provisions of the Plan will be construed according to the laws of the State
of New York.
27
<PAGE> 1
Exhibit 10.29
Amendment to the
Key Executive Life Insurance/Death Benefit
Plan of The Dime Savings Bank of New York, FSB
Effective November 20, 1997
The Key Executive Life Insurance/Death Benefit Plan of The Dime Savings
Bank of New York, FSB (the "Plan") is hereby amended, as of the date set forth
above, as follows:
1. Section 1.11 of the Plan is amended to provide as follows:
"1.11 'Retirement' means (i) the date of the Participant's
termination of service with the Bank after his or her Early Retirement Age
(as defined in the Retirement Plan) or otherwise on or after both
attaining age 55 and after completing a Period of Service (as defined in
the Retirement Plan) of at least 5 years, whether or not otherwise
eligible for early or normal retirement under the Retirement Plan, and
(ii) for Participants whose termination of service is not described in
clause (i) above, the later of the date of the Participant's termination
of service with the Bank or the attaining of age 65."
2. The first sentence of Section 6.1 of the Plan is amended to provide as
follows:
"A Participant shall be 100% vested in his or her death benefits (pursuant
to Section 5.3) upon the Participant's termination of service described in
clause (i) of the definition of Retirement."
3. The language of the sixth sentence of Section 6.1 of the Plan preceding
the colon therein is amended to provide as follows:
"If the Participant terminates employment with the Bank where his
termination of employment does not satisfy the provisions of clause (i) of
the definition of Retirement, and except as otherwise provided in the
second sentence of this Section 6.1, the Participant's death benefit shall
vest in accordance with the following vesting schedule:"
<PAGE> 1
Exhibit 10.33
Amendment to the
Dime Bancorp, Inc. 1992 Stock Option Plan
Effective September 19, 1997
1. Sections 9 through 17 of the Plan shall be renumbered as Sections
10 through 18, respectively, and a new Section 9 is added to read as follows:
"9. CHANGE IN CONTROL
(a) Unless otherwise determined by the Committee at the time
of grant or by amendment (with the holder's consent) of such grant,
in the event of a Change in Control, as defined in Section 9(b)
below, and solely with respect to awards held by an individual in
service with Dime Bancorp, Inc., The Dime Savings Bank of New York,
FSB or any subsidiary thereof at the time of the Change in Control,
all outstanding stock options awarded under the Plan shall become
fully exercisable and vested.
(b) A "Change in Control" shall mean the occurrence of any of
the following events:
(I) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of Dime Bancorp, Inc. (the
"Company") (not including in the securities beneficially owned
by such Person any securities acquired directly from the
Company or its Affiliates) representing 35% or more of the
combined voting power of the Company's then outstanding
securities;
(II) the following individuals cease for any reason to
constitute a majority of the number of directors then serving
as directors of the Company: individuals who, on July 24,
1997, constitute the Board of Directors of the Company and any
new director (other than a director whose initial assumption
of office is in connection with the settlement of an actual or
threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of
the Company) whose appointment or election by the Board of
Directors of the Company or nomination for election by the
Company's stockholders was approved or recommended by a vote
of at least two-thirds (2/3) of the directors then still in
office who either were directors on
<PAGE> 2
2
July 24, 1997 or whose appointment, election or nomination for
election was previously so approved or recommended;
(III) there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company
with any other corporation or entity, other than (A) a merger
or consolidation which would result in the voting securities
of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity or any Parent thereof), in combination
with the ownership of any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or
any subsidiary of the Company, at least 65% of the combined
voting power of the securities of the Company, such surviving
entity or any Parent thereof outstanding immediately after
such merger or consolidation or (B) a merger or consolidation
effected solely to implement a recapitalization of the Company
or The Dime Savings Bank of New York, FSB (the "Bank") (or
similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the
Company or the Bank (not including in the securities
beneficially owned by such Person any securities acquired
directly from the Company or its Affiliates) representing 35%
or more of the combined voting power of the Company's or the
Bank's then outstanding securities; or
(IV) the stockholders of the Company or the Bank approve a
plan of complete liquidation or dissolution of the Company or
the Bank, respectively, or there is consummated a sale or
disposition by the Company or any of its subsidiaries of any
assets which individually or as part of a series of related
transactions constitute all or substantially all of the
Company's consolidated assets (provided that, for these
purposes, a sale of all or substantially all of the voting
securities of the Bank or a Parent of the Bank shall be deemed
to constitute a sale of substantially all of the Company's
consolidated assets), other than any such sale or disposition
to an entity at least 65% of the combined voting power of the
voting securities of which are owned by stockholders of the
Company in substantially
<PAGE> 3
3
the same proportions as their ownership of the voting
securities of the Company immediately prior to such sale or
disposition.
As used in connection with the foregoing definition of Change
in Control, "Affiliate" shall have the meaning set forth in Rule
12b-2 promulgated under Section 12 of the Exchange Act; "Beneficial
Owner" shall have the meaning set forth in Rule 13d-3 under the
Exchange Act; "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended from time to time; "Parent" shall mean any
entity that becomes the Beneficial Owner of at least 80% of the
voting power of the outstanding voting securities of the Company or
of an entity that survives any merger or consolidation of the
Company or any direct or indirect subsidiary of the Company; and
"Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d)
thereof, except that such term shall not include (i) the Company or
any of its subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any of
its Affiliates, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities, or (iv) a corporation or
entity owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of
stock of the Company."
<PAGE> 1
Exhibit 10.34
Dime Bancorp, Inc.
Supplemental Executive Retirement Plan
As Amended and Restated Effective as of December 2, 1997
1. Establishment and Purpose of the Plan. This Supplemental
Executive Retirement Plan (the "Plan") is established to enable Dime Bancorp,
Inc. (the "Company") and its subsidiaries to secure and retain the services of
key employees and to motivate such employees to exert their best efforts, by
assuring such employees a reasonable level of retirement income.
2. Administration. The Plan shall be administered by the
Compensation Committee of the Board of Directors of the Company, or such other
committee appointed by the Board of Directors of the Company (the "Committee").
The Committee shall be authorized to interpret the Plan and make decisions
regarding any questions arising thereunder, and any such interpretation or
decision of the Committee shall, unless overruled or modified by the Board of
Directors of the Company (the "Board"), be final, conclusive and binding upon
all participants in the Plan and upon any person claiming benefits or rights
under the Plan. No member of the Committee shall be entitled to act on or decide
any matter relating solely to himself or herself or any of his or her rights or
benefits under the Plan. The Committee may, in its discretion, designate a
person or persons to carry out such duties or functions as the Committee so
determines. Notwithstanding any provision of the Plan to the contrary, any duty
or function which may be performed by the Committee or its designee under the
Plan may instead be performed by the Board if the Board so determines in its
sole discretion. Unless otherwise provided by the by-laws of the Company, a
majority of the Committee shall constitute a quorum, and the acts of a majority
of the members physically present at a meeting or participating in a telephonic
meeting, or acts unanimously approved in writing by the Committee without a
meeting, shall be the acts of the Committee.
3. Eligibility. Officers and full-time salaried employees of the
Company and any Parent or Subsidiary (including members of the Board or members
of the boards of directors of any Parent or Subsidiary who are otherwise
employees of the Company or any Parent or Subsidiary) shall be permitted to
participate if and to the extent that they are designated, by name or
classification, as Participants by the Committee in its sole discretion. For
these purposes, a "Parent" is any entity that directly or indirectly owns 80% of
the combined voting power of all classes of stock of the Company, and a
"Subsidiary" is any entity of which the Company or any Parent of the Company
directly or indirectly owns 50% or more of the total combined voting power of
all classes of stock or, if not a corporation, at least 50% of the profits or
capital interest in such entity. In all events, it is intended that this program
be limited to a select group of management or highly compensated employees,
within the meaning of the Employee Retirement Income
<PAGE> 2
2
Security Act of 1974, as amended. No employee shall at any time have the right
to be selected as a Participant hereunder, and neither the Plan nor any action
taken under the Plan shall be construed as giving any employee any right to be
retained in the employ of the Company or any of its subsidiaries.
4. Pension Goals. At such time as any employee is designated a
Participant under the Plan, the Committee shall determine and communicate to the
Participant a "Pension Goal," which goal shall be based upon his or her position
with the Company or any Parent or Subsidiary, and any other factors as the
Committee deems appropriate; provided, however, that the Pension Goal for any of
the officers of the Company and any Parent or Subsidiary whose compensation is,
by resolution of the board of directors of the employing entity, reviewed and
fixed from time to time by such board (a "Senior Officer"), shall be subject to
the approval of the Board. A Participant's Pension Goal shall be a percentage
(not less than 30% nor more than 60%) of the Participant's Average Compensation,
as defined in Paragraph 5 below. Notwithstanding the foregoing, after a
Participant becomes fully vested in his or her Pension Goal (as determined
pursuant to the provisions of Section 6 below), the Committee may, in its sole
discretion but with, in the case of Senior Officers, the approval of the Board,
on a year-by-year basis, add up to two percentage points to the Pension Goal
then established for the Participant for each year of additional service by the
Participant.
5. Average Compensation. For purposes of the Plan, a Participant's
"Average Compensation" means a Participant's average annual rate of Compensation
(as defined below) from the Company and, as applicable and as designated by the
Committee, from any Parent or Subsidiary, for (x) the 36 consecutive months of
the last 120 months of the Participant's employment by the Company and, to the
extent determined by the Committee, by a Parent or Subsidiary, when the
Compensation of the Participant is the highest, or (y) for such other period as
designated by the Committee, or (z) during the Participant's total period of
employment by the Company and, as applicable, any Parent or Subsidiary, if such
period of employment is for a period of less than the period over which the
Compensation would otherwise be measured.
For these purposes, a Participant's Compensation means the
sum of (i) and (ii) below, where
(i) is base salary, including amounts deferred by the Participant under
the Dime Bancorp, Inc. Voluntary Deferred Compensation Plan or any
other deferred compensation plan hereafter adopted by the Company or
any Parent or Subsidiary or pursuant to the terms of the
Participant's employment contract, if any, and including amounts
which, pursuant to the election of the Participant, the Company or
any Parent or Subsidiary has contributed to any cash or deferred
arrangement qualified under Section 401(k) of the Internal Revenue
Code of 1986, as amended (the "Code");
<PAGE> 3
3
and as a pre-tax employee contribution, and any other amounts
contributed by the Participant on a pre-tax basis towards benefits
under a plan described in Section 125 of the Code; and
(ii) is the Participant's other taxable cash-based compensation payable
under the Dime Bancorp, Inc. Officer Incentive Plan or other
cash-based incentive plan or program or individual arrangement
providing for cash-based incentive compensation, in each case with
respect to the period for which the determination is made, but
excluding any amounts paid to the Participant as a sign-on bonus in
connection with the initial commencement of employment of the
Participant with the Company or any Parent or Subsidiary;
provided, however, that such other compensation described in (ii) above shall be
allocated, and deemed for these purposes as taxable compensation, equally over
the period in which it is earned. Notwithstanding the foregoing, to the extent
determined by the Committee, a Participant's Compensation (a) shall also
consider and include amounts paid to the Participant by Anchor Bancorp, Inc. and
any of its Parents or Subsidiaries (determined as if Anchor Bancorp, Inc. were
the Company), or (b) shall include deemed compensation amounts, whether or not
actually paid, in lieu of amounts otherwise described in (ii) above; provided,
however, that, with respect to a Participant in the Plan prior to a Change in
Control, no deemed compensation amounts may be utilized (to the extent not
utilized or otherwise provided for in a governing grant letter or agreement
prior to the Change in Control) without the consent of the Participant.
6. Vesting. Except as otherwise determined by the Committee and
communicated by the Committee or its designee to a Participant, each Participant
shall vest in his or her Pension Goal in accordance with the following schedule:
<TABLE>
<CAPTION>
Years of Service with
the Company or any Parent
or Subsidiary (or any
predecessor of any Percent Vested in
such entities) Pension Goal
------------------------- -----------------
<S> <C>
5 50%
6 60%
7 70%
8 80%
9 90%
10 100%
</TABLE>
<PAGE> 4
4
To the extent determined by the Committee, in the event of and upon the merger
of Anchor Bancorp, Inc. with the Company, Years of Service shall also consider
service previously completed with Anchor Bancorp, Inc. or any of its Parents or
Subsidiaries (determined as if Anchor Bancorp, Inc. were the Company). In the
event of any termination of a Participant's service with the Company, a Parent
or a Subsidiary, the Participant shall continue to be credited with service for
these purposes during any period of salary continuation from such entity. A Year
of Service will otherwise be determined in accordance with the terms of the
Retirement Plan of The Dime Savings Bank of New York, FSB (as a 12-month long
Period of Service), or a successor thereto. In addition, except as otherwise
provided in this Section 6, a Participant will be fully vested in his or her
Plan benefit in the event that there has been a Change in Control (as defined in
Section 12), and if within one year after any such Change in Control (or, in the
event the Participant has an employment or change in control agreement with the
Company or any Parent or Subsidiary, within the remaining term of such agreement
determined at the date of the Change in Control, if later), (x) the
Participant's employment is terminated by his or her employer (other than for
"cause" (as defined below)) or (y) the Participant terminates his or her
employment with the Company and its Parent and Subsidiaries after the
Participant's employer has either (A) made a material change in the
Participant's functions, duties or responsibilities, which change would cause
the Participant's position with his or her employer to become one of lesser
responsibility, importance or scope from that in effect immediately prior to the
Change in Control, or (B) reduced the Participant's annual salary to a level
below that in effect immediately prior to the Change in Control, provided that
in the case of the Change in Control event described in clause (v) of Section
12, the termination of employment referred to in clauses (x) and (y) above
occurs on or before the Abandonment Date. As used in this Section 6, the term
"Abandonment Date" shall mean the date on which (A) an Acquisition Agreement,
Asset Sale Agreement or Plan of Liquidation (as such terms are defined in
Section 12) is terminated (pursuant to its terms or otherwise) without having
been consummated, (B) the parties to an Acquisition Agreement or Asset Sale
Agreement abandon the transactions contemplated thereby, (C) The Dime Savings
Bank of New York, FSB (the "Bank") or the Company abandons a Plan of Liquidation
or (D) a court or regulatory body having competent jurisdiction enjoins or
issues a cease and desist or stop order with respect to or otherwise prevents
the consummation of, or a regulatory body notifies the Bank or the Company that
it will not approve, an Acquisition Agreement, Asset Sale Agreement or Plan of
Liquidation or the transactions contemplated thereby and such injunction, order
or notice has become final and not subject to appeal. For purposes of this
Section 6, a termination of employment shall be deemed to occur on the date that
a notice of termination is given by the Company, or any Parent or Subsidiary or
the Participant to the other party, or the Company, or a Parent or Subsidiary
gives notice to the Participant that it intends not to renew the Participant's
employment contract, if any, at the end of its term. For purposes of the Plan,
"cause" shall mean (except as otherwise provided in a Participant's employment
or change in control agreement with the Company or any of its subsidiaries,
which definition of "cause" shall then apply), the Participant's personal
dishonesty, incompetence, willful
<PAGE> 5
5
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform assigned duties, willful violation of any law, rule or
regulation (other than traffic violations or similar offenses) or final cease
and desist order. Notwithstanding anything in this Plan to the contrary, on and
after a Change in Control (as defined in Section 12), a Participant shall be
eligible to be paid a benefit under the Plan, to the extent vested (and subject
to any additional vesting under the Plan as in effect immediately prior to the
Change in Control, or if it results in a greater vested percentage, pursuant to
the terms of any applicable employment or change in control agreement between
the Participant and the Company or any Parent or Subsidiary), that is not less
than a benefit calculated based upon the amount of the Participant's Pension
Goal and Average Compensation and the otherwise applicable terms of the Plan and
any related grant letter or agreement regarding Plan participation, each as
determined immediately prior to the Change in Control.
7. Normal Retirement Benefit. A Participant who remains in service
with the Company, a Parent or any Subsidiary at least until his or her 65th
birthday shall be paid, if applicable vesting requirements have been met, a
normal retirement benefit from the Company (or if the Participant was employed
by any Parent or Subsidiary, to the extent such obligation relates to
compensation paid by such entity, either from such entity or from the Company).
The amount of a Participant's annual normal retirement benefit shall commence to
be payable as of the last day of the month following the month in which the
Participant attains age 65, or, in the event the Participant has remained in
service with the Company, any Parent or Subsidiary after such date, as of the
last day of the month following the month in which the Participant terminates
such service. The annual amount of the normal retirement benefit hereunder shall
equal the amount of the Participant's Pension Goal in which the Participant is
then vested, less (i) the annual amount of any benefits which the Participant is
then entitled to receive under any defined benefit plan qualified under Section
401(a) of the Code sponsored by the Company, any Parent or Subsidiary (the
"Retirement Plan(s)") determined without regard to any benefit reduction under
any such plan with respect to any benefits provided under a defined contribution
plan, if any, and further reduced by (ii) the annual amount of any benefits
which the Participant is then entitled to receive under the Benefit Restoration
Plan of The Dime Savings Bank of New York, FSB (and, if and to the extent so
adopted, of the Company), and under any other plan maintained by the Company,
any Parent or Subsidiary that determines benefit amounts with relation to the
Retirement Plan(s), and under any employment contract with the Company, any
Parent or Subsidiary to the extent the benefits under any such plan or
employment contract are related to benefits provided under the Retirement
Plan(s). In the event the benefits described in clauses (i) and (ii) of the
preceding sentence are not payable in the form of a single life annuity or do
not commence at the same time as the benefits payable under the Plan, the
benefits so described in clauses (i) and (ii) shall, solely for purposes of the
offset provided for in the preceding sentence, be converted, on an actuarial
equivalent basis, to a single life annuity form of payment commencing at the
same time as the benefits under the Plan. For purposes of this Section 7,
actuarial equivalence shall be determined based on the factors used to determine
actuarial
<PAGE> 6
6
equivalence (including the factors applicable to the early commencement of
benefits) under the Retirement Plan of Dime Bancorp, Inc., provided that, if the
form of benefit otherwise applicable to a benefit or benefit offset hereunder is
not a form of benefit payable under the Retirement Plan of Dime Bancorp, Inc.,
then the factors otherwise applicable under the Retirement Plan of Dime Bancorp,
Inc. to a benefit payable thereunder in a form other than a lump sum shall
apply. Notwithstanding anything in this Plan to the contrary, the Bank shall be
jointly and severally liable for the payment of all normal retirement benefits
payable under the Plan.
8. Early Retirement Benefit. A Participant shall be paid an early
retirement benefit from the Company (or if the Participant was employed by any
Parent or Subsidiary, to the extent such obligation relates to compensation paid
by such entity, either from such entity or from the Company) in the event the
Participant's termination of service with the Company and any Parent and
Subsidiaries occurs prior to the Participant attaining age 65, provided,
however, that no such benefit shall commence prior to the Participant attaining
age 55, and provided, further, that unless the Committee determines otherwise,
if the Participant elects no later than 24 months prior to such termination of
service, the commencement of the Participant's early retirement benefit shall be
delayed to the last day of the month designated by the Participant, but not
later than the last day of the month following the month the Participant attains
age 65. Notwithstanding the foregoing, the Committee may provide for a different
automatic early retirement benefit commencement date for a Participant, to apply
absent the Participant's effective election of another commencement date. The
amount of a Participant's annual early retirement benefit shall be determined in
the same manner as the Participant's annual normal retirement benefit hereunder;
provided, however, that such early retirement benefit shall be adjusted by
reducing the Pension Goal in which the Participant is vested by 5% of such
Pension Goal for each of the first five years by which the Participant's
commencement date hereunder precedes the date the benefit would commence as a
normal retirement benefit, and by an additional 3% reduction of such Pension
Goal for each of the next five years (in excess of the initial five years) by
which the Participant's commencement date hereunder precedes the date the
benefit would commence as a normal retirement benefit, with a pro-rata reduction
for portions of such years. In the event the Committee provides for an automatic
early retirement benefit commencement date prior to the last day of the month
following the month in which the Participant attains age 55, the Participant's
benefit hereunder, after being adjusted as described in the preceding sentence,
shall be further reduced so that it is the actuarial equivalent of the benefit
that would be payable to the Participant at the last day of the month following
the month in which the Participant attains age 55, with such actuarial
equivalence determined based on the factors used to determine actuarial
equivalence (for other than lump sum benefits) under the Retirement Plan of The
Dime Savings Bank of New York, FSB (the "Retirement Plan"). Once payment of any
early retirement benefit commences, it shall not be further adjusted on account
of the attaining of any stated age (except to the extent that an offset
described under Section 7 later becomes applicable). Notwithstanding anything in
this Plan to the
<PAGE> 7
7
contrary, the Bank shall be jointly and severally liable for the payment of all
early retirement benefits payable under the Plan.
9. Form of Benefit Payments. Payments under the Plan shall be made
monthly to a Participant from their commencement date for the remaining life of
the Participant (the "single life annuity" form), in an amount equal to 1/12 of
the annual amount of the Participant's normal or early retirement benefit
hereunder, as applicable, in which the Participant is vested. To the extent
provided in Sections 7 and 8, the amount of such payments shall be adjusted in
the event the offsetting amounts described in Section 7 hereunder change during
the term of such payments. A Participant may elect to receive, in lieu of the
form of benefit described above, a benefit in any of the following forms:
(i) a reduced monthly benefit providing for monthly payments to the
Participant during his or her life, and continued monthly payments
after the death of the Participant to the Participant's surviving
designated beneficiary (subject to such conditions as the Committee
may designate), in an amount equal to either 50% or 100% of the
amount of the Participant's monthly payments (a 50% or 100% "joint
and survivor annuity"); or
(ii) a reduced monthly benefit providing for monthly payments to the
Participant during the Participant's life, with payments in the same
amount to the Participant's designated beneficiary continuing after
the Participant's death, if applicable, so that payments are made
for no less than a total of one of 5, 10 or 15 years (a life annuity
with 5, 10 or 15 years certain);
provided however, that any payment in any such alternative form shall be the
actuarial equivalent of the payments that would be made under the single life
annuity form, and provided further that any such election (and any designation
of a beneficiary to receive a benefit under a joint and survivor annuity form)
must be made by a Participant no later than 24 months prior to the termination
of the Participant's service with the Company or any Parent or Subsidiary. For
these purposes, actuarial equivalence shall be determined in the same manner
that applies for the same purposes under the Retirement Plan, as interpreted by
the Committee in its sole discretion. If any such alternative benefit form is
elected, the Participant shall, at or prior to the time of such election, name
in writing a designated beneficiary on a form to be provided by the Committee or
its designee. Notwithstanding the foregoing, the Committee may provide that the
automatic form of benefit for a Participant (absent his or her election to
receive a benefit in another form) shall be either an actuarially reduced 50% or
100% joint and survivor annuity, as described above, with the Participant's
surviving spouse as beneficiary. The Committee may also, in its discretion, make
available any other optional forms of benefit to any Participant as it
determines, provided that any payment in any such optional forms shall be of the
equivalent actuarial value of the payments that would be made under the single
life annuity form, with such equivalence determined based upon the actuarial
equivalence standards
<PAGE> 8
8
utilized under the Retirement Plan, interpreted by the Committee in its sole
discretion, and provided, further, that the Participant make an irrevocable
election of any such optional form no later than 24 months prior to the
termination of the Participant's service with the Company or any Parent or
Subsidiary. Notwithstanding anything in this Section 9 to the contrary, and in
addition to any elections otherwise available to a Participant under this
Section 9, a Participant may elect, at such time and in such manner as may be
prescribed by the Committee or its designee (but no later than 30 days after
notice is provided to the Participant), that his or her benefit under the Plan
be paid in any form of payment described in clause (i) or (ii) of this Section 9
in lieu of the single life annuity form of benefit described in the first
sentence of this Section 9.
10. Lump Sum Benefits. Notwithstanding the provisions of Sections 7,
8 and 9, (i) the Committee may provide, in its sole discretion, that in lieu of
any payment under such sections a Participant shall receive, within 60 days of
the Participant's termination of service with the Company, any Parent and any
Subsidiaries, a lump sum benefit equal to the actuarial equivalent of the
benefit that would otherwise be payable in accordance with such sections, and
(ii) a Participant may, at such time and in such manner as may be prescribed by
the Committee or its designee (but no later than 30 days after notice is
provided to the Participant), elect that, following a Change in Control, such
portion of the benefit payable under the Plan, determined on an actuarial
equivalent basis, as is equal to the amounts that would have been payable with
respect to the Participant pursuant to the terms of his or her employment or
change in control agreement with the Company or any Parent or Subsidiary or
otherwise on account of the Change in Control, but which amounts are not
payable, as provided under any such agreement or otherwise, because of a cutback
to avoid the imposition of excise taxes under Section 4999 of the Code, be paid,
in whole or in part, in a lump sum with the balance of any benefit payable under
the Plan paid in such form of payment as is otherwise applicable under the Plan.
11. Preretirement Survivor Benefit. If a Participant dies before the
payments to the Participant hereunder have commenced (regardless of the
Participant's age), to the extent the Participant was vested in a benefit
hereunder the Participant's Surviving Spouse (to whom the Participant must have
been married for the one-year period preceding the Participant's death), shall
be entitled to monthly payments from the Company (or if the Participant was
employed by any Parent or Subsidiary, to the extent such obligation relates to
compensation paid by such entity, either from such entity or from the Company)
equal to the amount of the monthly benefits such surviving spouse would have
received had the Participant commenced receiving benefits hereunder in
accordance with Section 7 or 8 as of the date of his or her death (presuming for
these purposes that the Participant had attained age 55), having validly elected
that benefits be paid in the form of a 50% joint and survivor annuity with the
Surviving Spouse as beneficiary as described in Section 9, and died immediately
thereafter. Such monthly payments shall commence at the end of the month
following the date of the Participant's death or, if later, the end of the month
following the date the Participant would have
<PAGE> 9
9
attained age 55, had he or she lived. Except as provided below, no payment shall
be made with respect to the benefits that would otherwise be paid to a
Participant if the Participant dies before his or her payments commence under
this Plan, and the Participant is not survived by a Surviving Spouse (as
described above). In the event benefits have been paid to a surviving spouse
pursuant to this Section 11 and such spouse dies, and there are, at that time,
any surviving children of the Participant who have not attained age 21, payment
of the same monthly amount that had been paid to the surviving spouse shall
continue in equal shares to and among such children while they are each under
age 21, until the last of such children attains age 21. In the event that a
Participant dies without a surviving spouse eligible for benefits under this
Section 11, but with surviving children who have not attained age 21, payment of
the monthly amount that would have been payable to a qualifying surviving spouse
of the same age as the Participant under this Section 11 shall be paid in equal
shares to and among such children while they are each under age 21, until the
last of such children attains age 21. For purposes of this Section 11, and
notwithstanding anything herein to the contrary, if a Participant dies after a
Change in Control (as defined in Section 12) occurs and if, following such
Change in Control, but prior to the Participant's death or other termination of
employment with the Company and any Parent or Subsidiary, the Participant's
employer (i) makes a material change in the Participant's functions, duties or
responsibilities, which change would cause the Participant's position with his
or her employer to become one of lesser responsibility, importance or scope from
that in effect immediately prior to the occurrence of such Change in Control or
(ii) reduces the Participant's annual salary to a level below that in effect
immediately prior to the occurrence of such Change in Control, the Participant
shall be vested in his or her benefit under the Plan to the same extent as if
the Participant had terminated service with the Company or any Parent or
Subsidiary immediately prior to his or her death, and the preretirement survivor
benefit provisions of this Section 11 shall apply with respect to such benefit
and with such applicable vesting. Notwithstanding anything in this Plan to the
contrary, the Bank shall be jointly and severally liable for the payment of all
preretirement survivor benefits payable under the Plan.
12. Change in Control. For purposes of this Plan, a Change in
Control shall mean the occurrence of any of the following events:
(i) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the
Securities beneficially owned by such Person any securities acquired
directly from the Company or its Affiliates) representing 35% or
more of the combined voting power of the Company's then outstanding
securities;
(ii) the following individuals cease for any reason to constitute a
majority of the number of directors then serving as directors of the
Company: individuals who, on July 24, 1997, constitute the Board of
Directors of the Company and any new director (other than a director
whose initial
<PAGE> 10
10
assumption of office is in connection with the settlement of an
actual or threatened election contest, including but not limited to
a consent solicitation, relating to the election of directors of the
Company) whose appointment or election by the Board of Directors of
the Company or nomination for election by the Company's stockholders
was approved or recommended by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors on
July 24, 1997 or whose appointment, election or nomination for
election was previously so approved or recommended;
(iii) there is consummated a merger or consolidation of the Company or any
director or indirect subsidiary of the Company with any other
corporation or entity, other than (A) a merger or consolidation
which would result in the voting securities of the Company
outstanding immediately prior to such merger or consolidation
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or any
Parent thereof), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan of
the Company or any subsidiary of the Company, at least 65% of the
combined voting power of the securities of the Company, such
surviving entity or any Parent thereof outstanding immediately after
such merger or consolidation of (B) a merger or consolidation
effected solely to implement a recapitalization of the Company or
the Bank (or similar transaction) in which no Person is or becomes
the Beneficial Owner, directly or indirectly, of securities of the
Company or the Bank (not including in the securities beneficially
owned by such Person any securities acquired directly from the
Company or its Affiliates) representing 35% or more of the combined
voting power of the Company's or the Bank's then outstanding
securities;
(iv) the stockholders of the Company or the Bank approve a plan of
complete liquidation or dissolution of the Company or the Bank,
respectively, or there is consummated a sale or disposition by the
Company or any of its subsidiaries of any assets which individually
or as part of a series of related transactions constitute all or
substantially all of the Company's consolidated assets (provided
that, for these purposes, a sale of all or substantially all of the
voting securities of the Bank or a Parent of the Bank shall be
deemed to constitute a sale of substantially all of the Company's
consolidated assets), other than any such sale or disposition to an
entity at least 65% of the combined voting power of the voting
securities of which are owned by stockholders of the Company in
substantially the same proportions at their ownership of the voting
securities of the Company immediately prior to such sale or
disposition; or
<PAGE> 11
11
(v) the execution of a binding agreement that if consummated would
result in a Change in Control of a type specified in clause (i) or
(iii) of this Section 12 (an "Acquisition Agreement") or of a
binding agreement for the sale or disposition of assets that, if
consummated, would result in a Change in Control of a type specified
in clause (iv) of this Section 12 (an "Asset Sale Agreement") or the
adoption by the Board of Directors of the Company or the Bank of a
plan of complete liquidation or dissolution of the Company or the
Bank that, if consummated, would result in a Change in Control of a
type specified in clause (iv) of this Section 12 (a "Plan of
Liquidation").
As used in connection with the foregoing definition of Change in
Control, "Affiliate" shall have the meaning set forth in Rule 12b-2
promulgated under Section 12 of the Exchange Act; "Beneficial Owner"
shall have the meaning set forth in Rule 13d-3 under the Exchange
Act; "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time; "Parent" shall mean any entity that
becomes the Beneficial Owner of at least 80% of the voting power of
the outstanding voting securities of the Company or of an entity
that survives any merger or consolidation of the Company or any
direct or indirect subsidiary of the Company; and "Person" shall
have the meaning given in Section 3(a)(9) of the Exchange Act, as
modified and used in Sections 13(d) and 14(d) thereof, except that
such term shall not include (i) the Company or any of its
subsidiaries, (ii) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any of its
Affiliates, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities, or (iv) a corporation or
entity owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of
stock of the Company.
13. General Creditor Status. Participants hereunder and their
beneficiaries shall have the status of unsecured creditors with respect to their
benefits under this Plan, and it is intended that the Plan be unfunded for tax
purposes and for purposes of Title I of the Employee Retirement Income Security
Act of 1974, as amended. The Company or, as applicable, any Parent or
Subsidiaries, will be named sole owner of any investments made with respect to
the benefits to be provided hereunder, and of all rights and privileges
conferred by the terms of the instruments evidencing such investments. Nothing
stated herein shall cause any such investments to be treated as anything but the
general assets of the Company or, as applicable, a Parent or Subsidiary, nor
will anything stated herein cause any such investments to represent the vested,
secured or preferred interest of any Participant, surviving spouse or
beneficiary hereunder.
14. Obligations of Successor. The obligations of the Company and any
Parent or Subsidiary under the Plan shall be binding upon any successor
corporation or
<PAGE> 12
12
organization resulting form the merger, consolidation or other reorganization or
from any reincorporation or change of name of the Company or any Parent or
Subsidiary, or upon any successor entity succeeding to substantially all of the
assets and business of any such entity. The Company agrees that it will make
appropriate provision for the preservation of Participant's rights under the
Plan in any agreement or plan which it may enter into or adopt to effect any
such merger, consolidation, reorganization, reincorporation, change of name or
transfer of assets.
15. Nonalienation. The right to receive a benefit under the Plan
shall not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by creditors of the
Participant or the Participant's beneficiaries.
16. Tax Withholding. The Company (or other entity from which
payments are made hereunder) shall deduct from all amounts paid under the Plan
all federal, state, local and other taxes required by law to be withheld with
respect to such payments, and to the extent that any withholding or other taxes
are required to be paid prior to the payment of amounts payable hereunder,
amounts shall be withheld from other amounts otherwise payable to the
Participant, or the Company or a Parent or Subsidiary may require the
Participant to make other arrangements for the payments of such obligations.
17. Incapacitated Payee. If the Committee shall find that any person
to whom any amount is payable under the Plan is unable to care for his or her
affairs because of illness or accident, or because such person is a minor, or
has died, then any payment due to such person or his or her estate may, if so
directed by the Committee, be paid to such person's spouse, child, a relative,
an institution maintaining or having custody of such person, or any other person
deemed by the Committee to be a proper recipient on behalf of such person
otherwise entitled to payment. Any such payment shall be a complete discharge of
the liability of the Committee and the Company and any Parent or Subsidiary
hereunder.
18. Indemnification. The Company shall indemnify, hold harmless and
defend each member of the Board and each member of the Committee, and each of
their designees who are employees of the Company or of any subsidiaries, in
connection with any action they take or fail to take in connection with the Plan
to the fullest extent provided in the Certificate of Incorporation of the
Company and applicable law.
19. Severability. A determination that any provision of the Plan is
invalid or unenforceable shall not affect the validity or enforceability of any
other provision hereof.
<PAGE> 13
13
20. Waiver. Failure to insist upon strict compliance with any of the
terms, covenants or conditions of the Plan shall not be deemed a waiver of such
term, covenant or condition. A waiver of any provision of the Plan must be made
in writing, designated as a waiver, and signed by the party against whom its
enforcement is sought. Any waiver or relinquishment of any right or power
hereunder at any one or more times shall not be deemed a waiver or
relinquishment of such right or power at any other time or times.
21. Governing Law. The Plan shall be construed, administered and
enforced according to the laws of the State of New York without respect to
conflict of laws principles, except to the extent that such laws are preempted
by federal law.
22. Construction of Language. Wherever appropriate in the Plan,
words used in the singular may be read in the plural, words in the plural may be
read in the singular, and words importing the masculine gender shall be deemed
equally to refer to the feminine or the neuter. Any reference to a Section shall
be to a Section of the Plan, unless otherwise indicated. The captions preceding
the provisions of the Plan have been inserted solely as a matter of convenience
and in no way define or limit the scope or intent of any provision of the Plan.
23. Amendment or Termination. The Board or the Committee may amend,
discontinue or terminate the Plan at any time; provided, however, that no
amendment or termination shall adversely affect the right of any Participant to
a previously vested benefit hereunder, or shall extend the period over which a
Participant shall vest in benefits under the Plan beyond the period as in effect
at the commencement of the Participant's participation in the Plan, without such
Participant's written consent; and, provided further, that upon the occurrence
of a Change in Control, the last sentence of Section 6 of the Plan, as in effect
on July 24, 1997, may not be amended, modified or revised as to any affected
Participant, unless such Participant consents to such amendment, modification or
revision. Notwithstanding anything in the Plan to the contrary, following the
occurrence of a Change in Control, neither any provision of the Plan nor any of
the terms of any related grant letter or agreement regarding Plan participation
may be amended, modified or revised in a manner affecting any Participant who is
in service with the Company or any of its subsidiaries at the time of the Change
in Control if such amendment, modification or revision would cause, or have the
effect of causing, the benefit payable under the Plan with respect to such
Participant to be less than what such benefit would have been had the benefit
been calculated based on the terms of the Plan and the related grant letter or
agreement regarding Plan participation as in effect immediately prior to the
Change in Control (but considering, without limitation, but based on such terms
as in effect immediately prior to the Change in Control, compensation, service
and attained age after the Change in Control), unless the Participant (or, as
applicable, such Participant's designated beneficiary) consents to such
amendment, modification or revision.
<PAGE> 14
14
24. Other Plans. Benefits payable under the Plan shall not be deemed
salary or other compensation to the Participant for the purpose of computing
benefits to which he or she may be entitled under any other plan or arrangement
of the Company, any Parent or Subsidiary.
<PAGE> 1
Exhibit 10.35
Amendment to the Dime Bancorp, Inc.
Supplemental Executive Retirement Plan
Effective January 29, 1998
The Dime Bancorp, Inc. Supplemental Executive Retirement Plan
(the "Plan") is hereby amended in the following particulars:
1. Clause (ii) of the second paragraph of Paragraph 5 of the Plan is
amended to read as follows:
(ii) is the Participant's other taxable cash-based
compensation payable under the Dime Bancorp,
Inc. Officer Incentive Plan or other cash-based
incentive plan or program or individual
arrangement providing for cash-based incentive
compensation, in each case with respect to the
period for which the determination is made, but
excluding any amounts paid (A) to the
Participant as a sign-on bonus in connection
with the initial commencement of employment of
the Participant with the Company or any Parent
or Subsidiary and (B) to the Participant with
respect to the grant of rights to purchase, and
the related purchase of, restricted common
stock of the Company;"
<PAGE> 1
Exhibit 10.36
DIME BANCORP, INC.
VOLUNTARY DEFERRED COMPENSATION PLAN
(As Amended and Restated Effective as of July 24, 1997)
1. Establishment and Purpose of the Plan. This Voluntary
Deferred Compensation Plan (the "Plan") is established to enable certain
management and highly compensated employees of Dime Bancorp, Inc. (the
"Company") and its subsidiaries to defer a portion of their income and to,
instead, receive such income at a later date. The Plan provides a means to
attract and retain the executive talent needed to achieve the Company's
long-term growth and profitability objectives. Effective as of January 1, 1996,
the Anchor Bancorp, Inc. Voluntary Deferred Compensation Plan (the "Anchor
Plan") was merged into this Plan.
2. Administration. The Plan shall be administered by the
Compensation Committee of the Board of Directors of Dime Bancorp, Inc. or such
other committee appointed either by the Board of Directors of the Company (the
"Board") or by such Compensation Committee (the "Committee"); provided, however,
to the extent determined necessary to satisfy the requirements for exemption
from Section 16(b) of the Securities Exchange Act of 1934, as amended (the
"Act"), with respect to investments deemed made hereunder in phantom stock of
the Company, action by the Committee may be by a committee composed solely of
two or more "non-employee directors," within the meaning of Rule 16b-3 as
promulgated under Section 16(b) of the Act, appointed by the Board or by the
Compensation Committee of the Board. The Committee shall be authorized to
interpret the Plan and make decisions regarding any questions arising
thereunder, and any such interpretation or decision of the Committee shall,
unless overruled or modified by the Board, be final, conclusive and binding upon
all employees of the Company and its subsidiaries and upon any person claiming
benefits or rights under the Plan by or through any such employee. No member of
the Committee shall be entitled to act on or decide any matter relating solely
to himself or herself or any of his or her rights or benefits under the Plan.
The Committee may, in its discretion, designate a person or persons to carry out
such duties or functions as the Committee so determines, and to the extent
provided under the Company's fiduciary delegation policy (and not inconsistent
with the requirements of Section 16(b) of the Act) shall be deemed to have so
designated the Benefits Committee of the Company. Notwithstanding any provision
of the Plan to the contrary, any duty or function which may be performed by the
Committee or its delegatee under the Plan may instead be performed by the Board
if the Board so determines in its sole discretion.
3. Eligibility. With respect to each opportunity to defer
compensation hereunder, officers and full-time salaried employees of the Company
and its subsidiaries (including members of the Board or members of the boards of
directors of any of its subsidiaries who are otherwise employees of the Company
or any of its subsidiaries) shall be permitted to participate if and to the
extent that they are designated, by name or classification, for participation by
the Committee in its sole discretion. In all events, it is intended that this
program be limited to a select group of
<PAGE> 2
management or highly compensated employees, within the meaning of the Employee
Retirement Income Security Act of 1974, as amended.
4. (a) Voluntary Deferrals of Compensation. With respect to
each year as to which an individual has been designated as eligible to
participate in this Plan, the individual may elect to become a Participant in
the Plan by submitting to the Committee or its designee a written election to
defer receipt of a specified dollar amount (with respect to basic salary) or
either a specified dollar amount or a percentage (with respect to incentive
compensation) of the amounts that would otherwise be earned by the Participant
in connection with his or her employment by the Company or one or more of its
subsidiaries in the next following calendar year. Except as otherwise provided
by the Committee in accordance with law, such election shall be made on or
before the last day of the calendar year preceding the calendar year with
respect to which the election relates. Notwithstanding the foregoing, elections
may be made with respect to compensation to be earned after the date of the
election and during the period July 1, 1994 through December 31, 1994, no later
than July 29, 1994, and, with respect to each individual who is first designated
as eligible hereunder after July 29, 1994, elections may be made to defer
receipt of such compensation to be earned after the date of election through the
end of the calendar year of the election within 30 days after the individual is
so designated. The Committee may provide that certain Participants are only
permitted to elect deferrals of incentive compensation or of basic salary. No
election for a deferral of compensation shall apply to an amount (of both salary
and incentive compensation) that totals less than $5,000, and no deferral of
salary with respect to any period shall apply to more than 50% of the salary of
the Participant for such period.
(b) Automatic Deferrals of Compensation. Whether or
not an individual otherwise participates in the Plan pursuant to subparagraph
(a) above, an individual shall automatically participate in the Plan to the
extent any compensation that would otherwise be payable to such individual
(including amounts otherwise payable under this Plan) is required to be deferred
in accordance with a policy adopted by the Compensation Committee of any of the
Company or any of its subsidiaries with regard to the limitation on
deductibility of compensation payments under Section 162(m) of the Internal
Revenue Code of 1986, as amended, and to such extent, for purposes of this Plan
and other benefit arrangements of the Company and each of its subsidiaries, the
individual shall be deemed to have timely elected that payment of such amounts
be deferred hereunder.
5. Accounts under the Plan. Amounts deferred by a Participant
pursuant to Paragraph 4(a) hereof, or otherwise automatically deemed deferred
pursuant to Paragraph 4(b) hereof, shall be maintained in an Account for such
Participant by the Company or by the subsidiary of the Company responsible to
pay the compensation so deferred. Each Account shall constitute a bookkeeping
account, the records with respect to which shall reflect the amounts of
compensation that have been deferred and the amount of deemed earnings or
losses, if any, that relate to such amounts. Accounts shall include amounts
previously deferred under the Anchor Plan, and deemed earnings or losses on such
amounts with respect to periods prior to January 1, 1996, the date as of which
the Anchor Plan was merged into this Plan. Notwithstanding anything in the Plan
to the
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contrary, the Bank shall be jointly and severally liable for the payment of all
benefits payable under the Plan.
6. Deemed Investment of Accounts. The Account maintained on
behalf of each Participant with respect to the amounts deferred by that
Participant hereunder (and, with respect to periods prior to January 1, 1996
during which amounts were deferred under the Anchor Plan, under the Anchor Plan)
with respect to each year of participation by the Participant shall be deemed to
be invested in, and shall be adjusted to reflect earnings and losses of, such
investments or investment funds as is designated as available from time to time
by the Committee. To the extent the Committee makes available alternative deemed
investment vehicles with respect to amounts eligible to be deferred under the
Plan, each Participant shall, upon making a deferral election hereunder,
designate, in the form and manner prescribed by the Committee, that the amounts
to be credited to his or her Account be applied in such proportions as he or she
may designate, in such multiples as is permitted by the Committee, in each
deemed investment made available by the Committee. The Committee may make
available different deemed investments for amounts deferred at different times
under the Plan, and may change the available deemed investments under the Plan
from time to time. The Committee may also designate that only one deemed
investment be available with respect to any amounts deferred hereunder, in which
event that deemed investment shall apply to all such amounts without regard to
any other election that a Participant may desire. Notwithstanding anything
herein to the contrary, if, following a Change in Control (as defined in
Paragraph 13) or a Corporate Event (as defined below), one or more of the
investment options under the Plan are eliminated, the Committee shall make
available an investment option or have all Accounts credited with earnings based
on a single deemed investment (or, if the Committee fails to so act, an
investment option or single deemed investment, as described in this sentence,
shall automatically be made available under the Plan) providing for a monthly
investment return equal to no less than the published fixed rate return for
30-year U.S. Treasury securities as in effect on the last business day of each
month (or, in the event such a return on 30-year U.S. Treasury securities is not
then available, there shall be provided an investment return as shall be
determined by the "Committee" under the Umbrella Trust Agreement among the
Company, The Dime Savings Bank of New York, FSB (the "Bank") and Marine Midland
Bank with respect to the Covered Arrangements for Outside Directors of the Bank
and Related Entities). For purposes of this Paragraph 6, a "Corporate Event"
shall mean the execution of a binding agreement that, if consummated, would
result in a Change in Control of a type specified in clause (i) or (iii) of
Paragraph 13 (an "Acquisition Agreement") or of a binding agreement for the sale
or disposition of assets that, if consummated, would result in a Change in
Control of a type specified in clause (iv) of Paragraph 13 (an "Asset Sale
Agreement") or the adoption by the Board of Directors of the Company or the Bank
of a plan of complete liquidation or dissolution of the Company or the Bank
that, if consummated, would result in a Change in Control of a type specified in
clause (iv) of Paragraph 13 (a "Plan of Liquidation"); provided, however, that a
Corporate Event shall not be deemed to exist after the Abandonment Date. As used
in this Paragraph 6, the term "Abandonment Date" shall mean the date on which
(A) an Acquisition Agreement, Asset Sale Agreement or Plan of Liquidation is
terminated (pursuant to its terms or otherwise) without having been consummated,
(B) the parties to an Acquisition Agreement or Asset Sale Agreement abandon the
transactions contemplated thereby, (C) the Bank or the Company
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abandons a Plan of Liquidation or (D) a court or regulatory body having
competent jurisdiction enjoins or issues a cease and desist or stop order with
respect to or otherwise prevents the consummation of, or a regulatory body
notifies the Bank or the Company that it will not approve, an Acquisition
Agreement, Asset Sale Agreement or Plan of Liquidation or the transactions
contemplated thereby and such injunction, order or notice has become final and
not subject to appeal.
7. (a) Change in Investment Directions. A Participant may, by
filing a notice in the form and manner prescribed by the Committee, elect to
change his or her investment direction with respect to all or a portion of the
amounts then held, or to be held, in such Participant's Account, with such
election and the new investment direction becoming effective as of the first day
of any calendar quarter (i.e. January 1, April 1, July 1 or October 1), provided
such investment direction election is made, and not revoked, prior to 10:00 a.m.
on the first day of such calendar quarter. Such direction may relate solely to
amounts already allocated to the Participant's Account (in which event it shall
constitute a direction to transfer amounts in the Participant's Account among
the various available deemed investments) or may relate solely to amounts to be
deferred in the future, or may relate to both amounts already allocated to the
Participant's Account and amounts to be deferred in the future. Any investment
direction election made by a Participant shall remain in effect until changed,
to the extent such change is permitted under the Plan. Elections previously made
with respect to amounts allocated to accounts under the Anchor Plan prior to
January 1, 1996 and allocated to Accounts under this Plan as of such date shall
continue in effect under this Plan unless changed pursuant to this Paragraph 7.
(b) Securities Law Limitations. Notwithstanding
anything in the Plan to the contrary, if at any time a Participant who is an
Insider (as defined below) is prohibited by the Section 16 Rules (as defined
below) from directing that his or her Account be (i) deemed invested in an
investment fund that invests in common stock of the Company, (ii) deemed
transferred to a deemed investment in common stock of the Company or (iii) to
the extent of any deemed investment in common stock of the Company, deemed
redeemed for whatever reason, any such direction shall be disregarded and not
given effect. For purposes of this Paragraph 7, an Insider shall mean, with
respect to the Company or any of its subsidiaries, (i) any Participant who is
subject to the Section 16 Rules, determined in accordance with Rule 16a-2
thereof, and (ii) solely with respect to certain trading restrictions with
respect to common stock of the Company imposed from time to time by the Company
or any of its subsidiaries, any Participant who is subject to such trading
restrictions. For purposes of this Paragraph 7, the Section 16 Rules mean those
rules (as from time to time amended) promulgated by the Securities and Exchange
Commission ("SEC") under Section 16 of the Act. For purposes of the Plan, an
action shall be deemed to be prohibited by the Section 16 Rules, if it could, if
permitted or occurring, result in a transaction not being exempt from the
provisions of Section 16(b) of the Act. An action in violation of certain
trading restrictions with respect to common stock of the Company imposed from
time to time by the Company or any of its subsidiaries shall be deemed to be
prohibited by the Section 16 Rules solely for purposes of the Plan.
(c) Special Phantom Stock Valuation. If amounts
credited to a Participant's Account and deemed invested in phantom stock of
the Company on the date of a Change
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in Control (as defined in Paragraph 13), are, in accordance with the election of
the Participant, deemed redeemed and deemed reinvested in any one or more of the
deemed investment funds then made available under the Plan and the deemed
redemption occurs after the occurrence of a Change in Control, but on or before
the first day of the third calendar quarter following the occurrence of the
Change in Control, the deemed redemption of such phantom stock shall be valued
based on the greater of (A) the closing price of the common stock of the
Company, as reported on the New York Stock Exchange, on the date on which the
deemed redemption occurs or (B) the highest closing price of the common stock of
the Company, as reported on the New York Stock Exchange, during the 90-day
period ending on, and including, the date of the Change in Control. If amounts
credited to a Participant's Account, and deemed invested in phantom stock of the
Company, are deemed redeemed after the occurrence of a Change in Control (as
defined in Paragraph 13), but on or before the first day of the third calendar
quarter following the occurrence of the Change in Control and, in accordance
with Paragraph 12, are paid to the Participant (or his or her Beneficiary) as a
distribution under the Plan, the deemed redemption of such phantom stock shall
be valued based on the greater of (A) the closing price of the common stock of
the Company, as reported on the New York Stock Exchange, on the date on which
the deemed redemption occurs or (B) the highest closing price of the common
stock of the Company, as reported on the New York Stock Exchange, during the
90-day period ending on, and including, the date of the Change in Control.
Notwithstanding anything in this Plan to the contrary, in the case of a
Participant who, as of July 24, 1997, had elected under the Plan to receive a
distribution of his or her Account (to the extent attributable to deferrals made
through 1997 (and related earnings)) upon a Change in Control or a Transfer of
Control (as such terms were defined under the Plan immediately prior to July 24,
1997), the special phantom stock valuation provision, provided in this
subparagraph (c), shall apply to such Participant only if the Participant has
consented, in the form and manner prescribed by the Chief Human Resources
Officer of the Company, to an amendment to the Plan replacing the prior change
in control provisions hereunder with the Change in Control provisions (as
defined in Paragraph 13) under this Plan. Once such consent is provided no
further consent of a Participant shall be required for such provisions to remain
effective. In the case of a Participant who, as of July 24, 1997, has not
elected to receive a distribution of his or her Account upon a Change in Control
or Transfer of Control (as such terms were defined under the Plan immediately
prior to July 24, 1997), the special phantom stock valuation provision shall
apply without regard to the consent requirements described above.
8. Crediting of Accounts. Each Participant's Account shall be
deemed credited at the end of each calendar quarter (or on such other dates as
is designated by the Committee) with the earnings or losses that the amount in
the Account would have experienced had the Account actually been invested in the
deemed investment designated by the Participant or, as appropriate, the
Committee.
9. Investment in Phantom Stock of Dime Bancorp, Inc. In
accordance with such administrative rules and procedures as may be prescribed by
the Committee, phantom investments in Dime Bancorp, Inc. common stock shall be
offered for the investment of Participant Accounts. In accordance with Rule
16b-3 (as in effect pursuant to rules issued by the SEC under Section 16(b) of
the Act on May 31, 1996) and relevant interpretations of the SEC thereunder, it
is
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intended that approval of the Plan by the Board shall satisfy the condition for
approval under Rule 16b-3 with respect to the investment of new deferrals in
phantom stock of Dime Bancorp, Inc.
10. Status of Investments. All investments actually made by the
Company or any subsidiary pursuant to this Plan will be deemed made solely for
the purpose of aiding such entity in measuring and meeting its obligations under
the Plan. Further, the Company and its subsidiaries are not limited to the
investments described in the provisions set forth above but are merely obligated
to provide payments pursuant to the terms of this Plan that reflect the
investment returns offered by the deemed investments made available under the
Plan. The Company or, as applicable, one or more of its subsidiaries, will be
named sole owner of all such investments and of all rights and privileges
conferred by the terms of the instruments evidencing such investments. This Plan
places no obligation upon the Company or any of its subsidiaries to invest any
portion of the amount in a Participant's Account, to invest or continue to
invest in any specific asset, to liquidate any particular investment, or to
apply in any specific manner the proceeds from the sale, liquidation, or
maturity of any particular investment. Nothing stated herein shall cause such
investments to be treated as anything but the general assets of the Company or,
as applicable, its subsidiaries, nor will anything stated herein cause such
investments to represent the vested, secured or preferred interest of the
Participant or his or her beneficiaries designated under this Plan. Participants
hereunder have the status of unsecured creditors with respect to their Accounts,
and it is intended that the Plan be unfunded for tax purposes and for purposes
of Title I of the Employee Retirement Income Security Act of 1974, as amended.
11. Vesting. Participants shall be fully vested in all amounts
in their Accounts at all times.
12. (a) Payment of Accounts. At the time a Participant elects
to defer compensation pursuant to Paragraph 4(a) hereunder, the Participant
shall designate the time and the manner for the payment of the amounts to be
thereby allocated to such Participant's Account with respect to such deferral of
compensation. Except as otherwise provided below, and subject to the provisions
of Paragraph 4(b) hereunder, payment of such amounts, along with deemed earnings
thereon, to a Participant shall commence upon a fixed date selected by the
Participant at the time of the deferral chosen from the following dates:
(i) The last day of a calendar quarter ending at
least three years from the end of the calendar year in which the deferred
compensation would otherwise be payable, but occurring on or before the March
31st that follows the Participant's attaining age 702.
(ii) The last day of any one of the four calendar
quarters ending after the employment of the participant with the Company or any
of its subsidiaries terminates (as designated by the participant at the time of
deferral).
Except as otherwise provided below, payment of amounts in a Participant's
Account in connection with deferrals pursuant to Paragraph 4(a) hereunder shall
be either in a lump sum or such number of
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quarterly or annual installments (limited in such manner as is determined by the
Committee) that is designated by the Participant at the time the compensation is
deferred. Except as otherwise provided below, and subject to the provisions of
Paragraph 4(b) hereunder, a Participant may elect (at the time of deferral of
compensation pursuant to Paragraph 4(a) hereunder) to receive a designated
dollar amount (to the extent such amount is allocated to the Participant's
Account with respect to the deferral of compensation in question) or percentage
of the Participant's Account at the end of one or more calendar quarters
otherwise available for election for the commencement of distributions as
described above, with the remainder of the amount subject to such designation to
be distributed commencing at such other date chosen from clause (i) or (ii)
above. A Participant may also, solely to the extent permitted by the Committee,
and subject to the provisions of Paragraph 4(b) hereunder, direct that all of
the amounts then allocated to the Participant's Account in connection with
deferrals pursuant to Paragraph 4(a) hereunder be distributable to the
Participant upon a Change in Control of the Company (as defined below), or that
all or a portion of such amounts otherwise payable to the Participant be
distributable in the event of a Hardship (as defined below), in which event the
amount of any further scheduled distribution shall be reduced by the amount
previously distributed on account of such event. To the extent permitted by the
Committee, a Participant may elect that if the Participant dies before payments
of a deferred amount have otherwise commenced to the Participant, the amount
allocated to the Participant's Account in connection with deferrals pursuant to
Paragraph 4(a) hereunder be distributed to the Participant's Beneficiary (as
defined below) either on the last day of the calendar quarter in which the
Participant dies (or as soon as practicable thereafter) or on the last day of
the first calendar quarter in the calendar year immediately following the date
of the Participant's death; provided, however that if no such election is made,
payment shall be made in a single lump sum at the end of the calendar quarter in
which the Participant died, or as soon as practicable thereafter. If payments of
a deferred amount in the form of installments have already commenced to the
Participant, they shall continue to be made after the Participant's death to the
Participant's Beneficiary, who shall otherwise be granted the same rights as
were held by the Participant hereunder. Each Participant's Account under the
Plan shall be reduced by the amount of any distribution hereunder.
Notwithstanding the foregoing, in the case of a Participant who, as of July 24,
1997, had elected under the Plan to receive a distribution of his or her Account
(to the extent attributable to deferrals made through 1997 (and related
earnings)) upon a Change in Control or a Transfer of Control (as such terms were
defined under the Plan immediately prior to July 24, 1997)), such distribution,
if any, shall continue to be made upon a Change in Control or a Transfer of
Control (as the case may be), unless the Participant has consented, in the form
and manner prescribed by the Chief Human Resources Officer of the Company, to
the applicability of the amendment to the Plan replacing, under Paragraph 13,
the change in control provisions (as they applied under the Plan immediately
prior to July 24, 1997) with the Change in Control provision (as provided in
Paragraph 13) as it relates to the distribution of a Participant=s deferrals
under the Plan through 1997 (and related earnings). In the case of a Participant
who, as of July 24, 1997, had not elected to receive a distribution of his or
her Account (as provided in the preceding sentence) upon a Change in Control or
Transfer of Control (as such terms were defined under the Plan immediately prior
to July 24, 1997), the distribution of such Participant=s Account shall, if
elected by the Participant, be made upon a Change in Control (as defined in
Paragraph 13). To the extent otherwise necessary to enable the transactions
relating to a distribution under this Paragraph 12 to qualify for exemption
under Section
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16(b) of the Act, the distribution of a Participant=s Account under this
Paragraph 12 shall occur on the earliest date such distribution may be made
whereby the transactions relating to the distribution qualify for exemption
under Section 16(b) of the Act, provided that, with the consent of the
Participant, the Committee may direct that any such distribution be made on any
earlier date.
(b) Additional Payment Elections. Notwithstanding
the preceding provisions of this Paragraph 12 to the contrary, and subject to
the provisions of Paragraph 4(b) hereunder, a Participant may subsequently
elect, in such form and manner as may be prescribed by the Committee, that the
amounts credited to his or her Account be distributed commencing on one of the
dates described in clause (a)(i) or (a)(ii) above in lieu of the date(s)
initially selected, provided that any such election is made at least twenty-four
(24) months prior to the earlier of the date payments would otherwise commence
(other than on account of Hardship or a Change in Control) or the Participant's
termination of service for any reason with the Company and, as applicable, all
subsidiaries of the Company. Further, notwithstanding the preceding provisions
of this Paragraph 12 to the contrary, and subject to the provisions of Paragraph
4(b) hereunder, a Participant may also subsequently elect, in such form and
manner as may be prescribed by the Committee, that the amounts credited to his
or her Account be paid in any one of the forms of benefit payment provided under
this Paragraph 12 in lieu of the form of payment initially selected, provided
that any such election is made at least twenty-four (24) months prior to the
earlier of the date payments would otherwise commence (other than on account of
Hardship or a Change in Control) or the Participant's termination of service for
any reason with the Company and, as applicable, all subsidiaries of the Company.
(c) Payment of Automatic Deferrals of Compensation.
All amounts in a Participant's Account in connection with deferrals pursuant to
Paragraph 4(b) hereunder shall be paid in a lump sum (or such other form of
benefit elected in accordance with clause (b) above) commencing on the later of
(i) last day of the first calendar quarter in the calendar year immediately
following the date of the Participant=s termination of employment with the
Company and all subsidiaries of the Company (or such earlier date that the
Committee directs) or (ii) the date such amounts would otherwise be paid
pursuant to the terms of the Plan.
13. Change in Control. For purposes of the Plan, a "Change in
Control" shall mean the occurrence of any of the following events:
(i) any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired directly
from the Company or its Affiliates) representing 35% or more of the combined
voting power of the Company's then outstanding securities;
(ii) the following individuals cease for any reason
to constitute a majority of the number of directors then serving as directors of
the Company: individuals who, on July 24, 1997, constitute the Board of
Directors of the Company and any new director (other than a director whose
initial assumption of office is in connection with the settlement of an actual
or threatened election contest, including but not limited to a consent
solicitation, relating to the election
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of directors of the Company) whose appointment or election by the Board of
Directors of the Company or nomination for election by the Company's
stockholders was approved or recommended by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors on July 24, 1997
or whose appointment, election or nomination for election was previously so
approved or recommended;
(iii) there is consummated a merger or consolidation
of the Company or any direct or indirect subsidiary of the Company with any
other corporation or entity, other than (A) a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior to such merger or consolidation continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity or any Parent thereof), in combination with the ownership of
any trustee or other fiduciary holding securities under an employee benefit plan
of the Company or any subsidiary of the Company, at least 65% of the combined
voting power of the securities of the Company, such surviving entity or any
Parent thereof outstanding immediately after such merger or consolidation or (B)
a merger or consolidation effected solely to implement a recapitalization of the
Company or the Bank (or similar transaction) in which no Person is or becomes
the Beneficial Owner, directly or indirectly, of securities of the Company or
the Bank (not including in the securities beneficially owned by such Person any
securities acquired directly from the Company or its Affiliates) representing
35% or more of the combined voting power of the Company's or the Bank's then
outstanding securities; or
(iv) the stockholders of the Company or the Bank
approve a plan of complete liquidation or dissolution of the Company or the
Bank, respectively, or there is consummated a sale or disposition by the Company
or any of its subsidiaries of any assets which individually or as part of a
series of related transactions constitute all or substantially all of the
Company's consolidated assets (provided that, for these purposes, a sale of all
or substantially all of the voting securities of the Bank or a Parent of the
Bank shall be deemed to constitute a sale of substantially all of the Company's
consolidated assets), other than any such sale or disposition to an entity at
least 65% of the combined voting power of the voting securities of which are
owned by stockholders of the Company in substantially the same proportions as
their ownership of the voting securities of the Company immediately prior to
such sale or disposition.
As used in connection with the foregoing definition of Change
in Control, "Affiliate" shall have the meaning set forth in Rule 12b-2
promulgated under Section 12 of the Act; "Beneficial Owner" shall have the
meaning set forth in Rule 13d-3 under the Act; "Parent" shall mean any entity
that becomes the Beneficial Owner of at least 80% of the voting power of the
outstanding voting securities of the Company or of an entity that survives any
merger or consolidation of the Company or any direct or indirect subsidiary of
the Company; and "Person" shall have the meaning given in Section 3(a)(9) of the
Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such
term shall not include (i) the Company or any of its subsidiaries, (ii) a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or any of its Affiliates, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv)
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a corporation or entity owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their ownership of stock of
the Company.
14. Hardship. Unless otherwise determined by the Committee,
for purposes of this Plan, a Participant shall be deemed to have incurred a
Hardship in the event the Participant experiences severe financial difficulties
resulting from a sudden and unexpected illness or accident of the Participant or
of a dependent (as defined in Section 152(a) of the Internal Revenue Code) of
the Participant, loss of the Participant's property due to casualty, or another
similar extraordinary and unforeseeable circumstance arising as a result of
events beyond the control of the Participant. The determination of whether or
not a Participant has incurred a Hardship shall be made by the Committee, and no
distribution on account of a Hardship shall be in excess of the amount necessary
to meet the emergency.
15. Designation of Beneficiaries. In the event that a
Participant dies prior to the receipt of all amounts payable to him or her
pursuant to the Plan, all remaining amounts credited to his Account shall be
paid to such one or more beneficiaries and in such proportions as the
Participant may designate, in accordance with the provisions of Paragraph 12. If
no Beneficiary has been named by the Participant, or if a named Beneficiary has
predeceased the Participant and no successor beneficiary has been named or if a
beneficiary designation is otherwise ineffective, payment shall be made to the
estate of the Participant, and if any Beneficiary shall die after payments to
that Beneficiary have commenced, if any remaining payments would otherwise be
made to such Beneficiary, they shall instead be made to the estate of the
Beneficiary. A Beneficiary designation pursuant to this Paragraph 15 shall not
be effective unless it is in writing and is received by the Committee prior to
the death of the Participant making the designation.
16. Withholding. Taxes (including income and employment
taxes) shall be withheld from payments under the Plan to the extent required by
law, and to the extent that any withholding or other taxes are required to be
paid prior to the payment of deferred amounts hereunder, amounts shall be
withheld from other amounts otherwise payable to the Participant, or the Company
(or the subsidiary of the Company responsible to pay the compensation deferred
hereunder) may require the Participant to make other arrangements for the
payment of such obligations, or both.
17. Nonalienation. The right to receive a benefit under the
Plan shall not be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment, or garnishment by
creditors of the Participant or the Participant's beneficiaries.
18. Indemnification. The Company shall indemnify, hold
harmless and defend each member of the Board, each member of the Committee, each
member of the Benefits Committee, and each of their designees who are employees
of the Company or any of its subsidiaries, against their reasonable costs,
including legal fees, incurred by them, or arising out of any action, suit or
proceeding in which they may be involved, as a result of their efforts, in good
faith, to defend or enforce the terms of the Plan.
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19. Severability. A determination that any provision of the
Plan is invalid or unenforceable shall not affect the validity or enforceability
of any other provision hereof.
20. Waiver. Failure to insist upon strict compliance with any
of the terms, covenants or conditions of the Plan shall not be deemed a waiver
of such term, covenant or condition. A waiver of any provision of the Plan must
be made in writing, designated as a waiver, and signed by the party against whom
its enforcement is sought. Any waiver or relinquishment of any right or power
hereunder at any one or more times shall not be deemed a waiver or
relinquishment of such right or power at any other time or times.
21. Notices. Any notice or other communication required or
permitted to be given to a party under the Plan shall be deemed given if
personally delivered or if mailed, postage prepaid, by certified mail, return
receipt requested, to the party at the address listed below, or at such other
address as one such party may by written notice specify to the other:
(a) if to the Committee:
Dime Bancorp, Inc.
589 Fifth Avenue
New York, New York 10017
Attention: Chief Human Resources Officer
(b) if to any party other than the Committee, to
such party at the address last furnished by such party by written notice to the
Committee.
22. Governing Law. The Plan shall be construed, administered
and enforced according to the laws of the State of New York, except to the
extent that such laws are preempted by federal law.
23. Construction of Language. Wherever appropriate in the
Plan, words used in the singular may be read in the plural, words in the plural
may be read in the singular, and words importing the masculine gender shall be
deemed equally to refer to the feminine or the neuter. Any reference to an
Article or Section shall be to an Article or Section of the Plan, unless
otherwise indicated.
24. Amendment or Discontinuance. The Board, the Committee, or
any duly designated delegatee of the Board or the Committee may amend,
discontinue or terminate the Plan at any time; provided, however, that no
amendment or discontinuance shall affect the rights of Participants to amounts
already allocated to their Accounts under the Plan or that shall be allocated in
accordance with deferral elections already made under the terms of the Plan. The
Benefits Committee of the Company may make any amendment to the Plan that may be
necessary or appropriate to facilitate the administration, management, and
interpretation of the plan or to conform
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the Plan thereto or that may be necessary or appropriate to satisfy requirements
of law, provided that any such amendment does not significantly affect the cost
to the Company or any of its subsidiaries of maintaining the Plan.
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Exhibit 10.37
DIME BANCORP, INC.
VOLUNTARY DEFERRED COMPENSATION PLAN
FOR DIRECTORS
(As Amended and Restated Effective
as of July 24, 1997)
1. Establishment and Purpose of the Plan. This Voluntary
Deferred Compensation Plan for Directors (the "Plan") is established to enable
the members of the Boards of Directors of Dime Bancorp, Inc. (the "Company") and
its subsidiaries to defer a portion of the fees that would otherwise be paid to
them as directors and to, instead, receive such amounts at a later date, and, to
the extent provided in Paragraph 5, to provide for the payment of amounts
transferred to the Plan representing the present value of benefits previously
accrued under the Retainer Continuation Plan for Independent Directors of The
Dime Savings Bank of New York, FSB (the "Retainer Continuation Plan").
2. Administration. The Plan shall be administered by the
Compensation Committee of the Board of Directors of Dime Bancorp, Inc. or such
other committee appointed either by the Board of Directors of the Company (the
"Board") or by such Compensation Committee (the "Committee"), provided, however,
to the extent determined necessary to satisfy the requirements for exemption
from Section 16(b) of the Securities Exchange Act of 1934, as amended (the
"Act"), with respect to investments deemed made hereunder in phantom stock of
the Company, action by the Committee may be by a committee composed solely of
two or more "non-employee directors," within the meaning of Rule 16b-3 as
promulgated under Section 16(b) of the Act, appointed by the Board or by the
Compensation Committee of the Board or such action may instead be taken by the
Board. The Committee shall be authorized to interpret the Plan and make
decisions regarding any questions arising thereunder, and any such
interpretation or decision of the Committee shall, unless overruled or modified
by the Board, be final, conclusive and binding upon all directors of the Company
and its subsidiaries and upon any person claiming benefits or rights under the
Plan by or through any such individual. No member of the Committee shall be
entitled to act on or decide any matter relating solely to himself or herself or
any of his or her rights or benefits under the Plan. The Committee may, in its
discretion, designate a person or persons to carry out such duties or functions
as the Committee so determines, and to the extent provided under the Company's
fiduciary delegation policy (and not inconsistent with the requirements of
Section 16(b) of the Act) shall be deemed to have so designated the Benefits
Committee of the Company. Notwithstanding any provision of the Plan to the
contrary, any duty or function which may be performed by the Committee or its
delegatee under the Plan may instead be performed by the Board if the Board so
determines in its sole discretion.
3. Eligibility. Members of the Boards of Directors of the
Company and its subsidiaries shall be permitted to participate in the Plan. To
the extent, if any, the provisions of the Employee Retirement Income Security
Act of 1974, as amended, apply to this Plan with respect to any directors who
are otherwise employees of the Company or its subsidiaries, it is intended that
this program be limited to a select group of management or highly compensated
employees, within the meaning of such law.
<PAGE> 2
4. Deferrals of Compensation. With respect to each year as to
which an individual has been designated as eligible to participate in this Plan,
the individual may elect to become a Participant in the Plan by submitting to
the Committee or its designee a written election to defer receipt of a either a
percentage, or specified dollar amount of the amounts that would otherwise be
earned by the Participant in connection with his or her services as a director
of the Company or one or more of its subsidiaries in the next following calendar
year. Except as otherwise provided by the Committee in accordance with law, such
election shall be made on or before the last day of the calendar year preceding
the calendar year with respect to which the election relates. Notwithstanding
the foregoing, elections may be made to defer receipt of compensation to be
earned after the date of the election and during the period August 15, 1994
through December 31, 1994, no later than August 31, 1994, and, with respect to
each individual who first becomes an eligible director who is to receive
compensation as a director after August 31, 1994, elections may be made to defer
receipt of such compensation to be earned after the date of election through the
end of the calendar year of the election within 30 days after the individual
first becomes such an eligible director. No election for a deferral of a
specified dollar amount of compensation shall apply to an amount that totals
less than $5,000.
5. Conversion of Retainer Continuation Plan Benefit. If an
individual eligible to participate in the Plan has elected to convert his or her
accrued benefit under the Retainer Continuation Plan, as determined and
calculated under such plan, into its present value and to transfer such present
value to the Plan, then such transferred benefit shall be credited to a "Benefit
Transfer Account" to be held and administered under the Plan for the benefit of
such Participant. The present value to be transferred to the Participant's
Benefit Transfer Account shall be determined in accordance with the terms of the
Retainer Continuation Plan, as of January 1, 1997. The present value to be
transferred to the Participant's Benefit Transfer Account shall be determined in
accordance with the terms of the Retainer Continuation Plan as of January 1,
1997, or in the event the transfer of the present value occurs after January 1,
1997, as of the date of such transfer.
6. Accounts under the Plan. Amounts deferred by a Participant
pursuant to Paragraph 4 hereof shall be maintained in an "Account" for such
Participant by the Company or by the subsidiary of the Company responsible to
pay the compensation being deferred by the participant hereunder; provided,
however, that effective December 12, 1995, all amounts previously deferred and
deferred in the future under the Plan by all Participants with respect to
compensation otherwise payable by the Company shall be transferred by the
Company to The Dime Savings Bank of New York, FSB (the "Bank"), along with
amounts representing deemed earnings (net of deemed losses) on previously
deferred amounts, and provided, further, that the transferred amounts, increased
by deemed earnings and reduced by deemed losses thereon, shall be maintained in
Accounts for such Participants by the Bank, which shall be responsible for the
payment of such amounts hereunder. Amounts transferred to the Plan from the
Retainer Continuation Plan pursuant to Paragraph 5 hereof shall be credited to a
Benefit Transfer Account for each affected Participant. The Benefit Transfer
Accounts, increased by deemed earnings and reduced by deemed losses, shall be
payable by, and the responsibility of, the Bank. Notwithstanding anything in
this Plan to the contrary, the Bank shall be jointly and severally liable for
the payment of all benefits payable under the Plan.
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<PAGE> 3
7. (a) Deemed Investment of Accounts. The Account maintained
on behalf of each Participant with respect to the amounts deferred by that
Participant hereunder with respect to each year of participation by the
Participant shall be deemed to be invested in, and shall be adjusted to reflect
earnings and losses of, such investments or investment funds as is designated as
available from time to time by the Committee. To the extent the Committee makes
available alternative deemed investment vehicles with respect to amounts
eligible to be deferred under the Plan, each Participant shall, upon making a
deferral election hereunder, designate, in the form and manner prescribed by the
Committee, that the amounts to be credited to his or her Account be applied in
such proportions as he or she may designate, in such multiples as is permitted
by the Committee, in each deemed investment made available by the Committee. The
Committee may make available different deemed investments for amounts deferred
at different times under the Plan, and may change the available deemed
investments under the Plan from time to time. The Committee may also designate
that only one deemed investment be available with respect to any amounts
deferred hereunder, in which event that deemed investment shall apply to all
such amounts without regard to any other election that a Participant may desire.
Notwithstanding anything herein to the contrary, if, following a Change in
Control (as defined in Paragraph 14) or a Corporate Event (as defined below),
one or more of the investment options under the Plan are eliminated, the
Committee shall make available an investment option or have all Accounts and
Benefit Transfer Accounts credited with earnings based on a single deemed
investment (or, if the Committee fails to so act, an investment option or single
deemed investment, as described in this sentence, shall automatically be made
available under the Plan) providing for a monthly investment return equal to no
less than the published fixed rate return for 30-year U.S. Treasury securities
as in effect on the last business day of each month (or, in the event such a
return on 30-year U.S. Treasury securities is not then available, there shall be
provided an investment return as shall be determined by the "Committee" under
the Umbrella Trust Agreement among the Company, The Dime Savings Bank of New
York, FSB (the "Bank") and Marine Midland Bank with respect to the Covered
Arrangements for Outside Directors of the Bank and Related Entities). For
purposes of this Paragraph 7(a), a "Corporate Event" shall mean the execution of
a binding agreement that, if consummated, would result in a Change in Control of
a type specified in clause (i) or (iii) of Paragraph 14 (an "Acquisition
Agreement") or of a binding agreement for the sale or disposition of assets
that, if consummated, would result in a Change in Control of a type specified in
clause (iv) of Paragraph 14 (an "Asset Sale Agreement") or the adoption by the
Board of Directors of the Company or the Bank of a plan of complete liquidation
or dissolution of the Company or the Bank that, if consummated, would result in
a Change in Control of a type specified in clause (iv) of Paragraph 14 (a "Plan
of Liquidation"); provided, however, that a Corporate Event shall not be deemed
to exist after the Abandonment Date. As used in this Paragraph 7(a), the term
"Abandonment Date" shall mean the date on which (A) an Acquisition Agreement,
Asset Sale Agreement or Plan of Liquidation is terminated (pursuant to its terms
or otherwise) without having been consummated, (B) the parties to an Acquisition
Agreement or Asset Sale Agreement abandon the transactions contemplated thereby,
(C) the Bank or the Company abandons a Plan of Liquidation or (D) a court or
regulatory body having competent jurisdiction enjoins or issues a cease and
desist or stop order with respect to or otherwise prevents the consummation of,
or a regulatory body notifies the Bank or the Company that it will not approve,
an Acquisition Agreement, Asset Sale Agreement or Plan of Liquidation or the
transactions contemplated thereby and such injunction, order or notice has
become final and not subject to appeal.
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<PAGE> 4
(b) Deemed Investment of Benefit Transfer Accounts. The
Benefit Transfer Account maintained on behalf of a Participant with respect to
amounts transferred from the Retainer Continuation Plan shall be initially
deemed to be invested in, and shall be adjusted to reflect earnings and losses
of, phantom investments in Dime Bancorp, Inc. common stock. The number of shares
of phantom stock initially credited to a Participant's Benefit Transfer Account
shall be determined based on the average of the closing price of the common
stock of the Company on each trading day during the twelve month period ending
on the day immediately preceding the date amounts are deemed to be transferred
from the Retainer Continuation Plan to the Plan. Except as permitted by
Paragraph 8(b), the amount credited to a Participant's Benefit Transfer Account
shall remain deemed invested in phantom stock of the Company.
8. (a) Change in Investment Directions. A Participant may, by
filing a notice in the form and manner prescribed by the Committee, elect to
change his or her investment direction with respect to all or a portion of the
amounts then held, or to be held, in such Participant's Account, with such
election and the new investment direction becoming effective as of the first day
of any calendar quarter (i.e. January 1, April 1, July 1 or October 1), provided
such investment direction election is made, and not revoked, prior to 10:00 a.m.
on the first day of such calendar quarter. Such direction may relate solely to
amounts already allocated to the Participant's Account (in which event it shall
constitute a direction to transfer amounts in the Participant's Account among
the various available deemed investments) or may relate solely to amounts to be
deferred in the future, or may relate to both amounts already allocated to the
Participant's Account and amounts to be deferred in the future. Any investment
direction election made by a Participant shall remain in effect until changed,
to the extent such change is permitted under the Plan.
(b) Benefit Transfer Account Transfer Restrictions. (i)
In the case of amounts credited to a Participant's Benefit Transfer Account,
such amounts shall remain invested in phantom stock of the Company until the
Restriction Lapse Date (as defined below). For purposes of this Paragraph 8(b),
the Restriction Lapse Date shall mean the earlier of (A) a Participant's
attainment of age 73 (or, if later, the date on which the Participant's benefit
under the Retainer Continuation Plan is deemed to be transferred to the Plan) or
(B) the second anniversary of the date on which the Participant's benefit under
the Retainer Continuation Plan is deemed to be transferred to the Plan. Upon
such Restriction Lapse Date, a Participant may, by filing a notice in the form
and manner prescribed by the Committee, elect to change his or her investment
direction with respect to all or a portion of the amounts then credited to such
Participant's Benefit Transfer Account, with such election and the new
investment direction to invest in one or more of the deemed investment funds
then made available under the Plan becoming effective as of the first day of any
calendar quarter (i.e., January 1, April 1, July 1 or October 1), provided such
investment direction election is made, and not revoked, prior to 10:00 a.m. on
the first day of such calendar quarter.
(ii) If, following the Restriction Lapse Date, and to the
extent of amounts initially credited to a Participant's Benefit Transfer Account
and deemed invested in phantom stock of the Company, the amounts then credited
to a Participant's Benefit Transfer Account are, in accordance with the election
of the Participant, deemed redeemed for the first time and deemed reinvested in
any one or more of the deemed investment funds then made available under the
Plan, the deemed redemption of such phantom stock shall be valued either (A)
based on the average of the
4
<PAGE> 5
closing price of the common stock of the Company, as reported on the New York
Stock Exchange, on each trading day during the twelve-month period ending on the
day immediately preceding the date the amounts are deemed so redeemed, or (B)
solely if such deemed redemption occurs after the occurrence of a Change in
Control (as defined in Paragraph 14) and on or before the later of the
Restriction Lapse Date or the first day of the third calendar quarter after such
Change in Control occurs, and only with respect to such phantom stock credited
to the Participant's Benefit Transfer Account on the date of the Change in
Control, based on the greater of the amount described in (A) above or the
highest closing price of the common stock of the Company, as reported on the New
York Stock Exchange, during the 90-day period ending on, and including, the date
of the Change in Control. After such initial deemed redemption and, as
applicable, deemed reinvestment in any of the other deemed investment funds
under the Plan, the Participant may thereafter change his or her investment
direction with respect to such reinvested amounts in accordance with the
provisions of Paragraph 8(a), provided that, except as provided in Paragraph
8(c), in the case of any such subsequent deemed reinvestment in, or deemed
redemption of, investments in phantom stock of the Company, such phantom stock
shall be valued based on the closing price of the common stock of the Company,
as reported on the New York Stock Exchange on the date of such deemed
reinvestment or redemption.
(iii) Further, to the extent of amounts initially credited to
a Participant's Benefit Transfer Account and deemed invested in phantom stock of
the Company, if the amounts then credited to a Participant's Benefit Transfer
Account are deemed redeemed for the first time and, in accordance with Paragraph
14, paid to the Participant (or his or her Beneficiary) as a distribution under
the Plan, the deemed redemption of such phantom stock shall be valued based on
the average of the closing price of the common stock of the Company, as reported
on the New York Stock Exchange, on each trading day during the twelve month
period ending on the day immediately preceding the date the amounts are deemed
so redeemed. Notwithstanding the foregoing, if the deemed redemption described
in the preceding sentence occurs after the occurrence of a Change in Control and
on or before the later of the Restriction Lapse Date and the start of the third
calendar quarter after such Change in Control, the deemed redemption of such
phantom stock shall be valued based on the greater of the amount described in
the preceding sentence or the highest closing price of the common stock of the
Company, as reported on the New York Stock Exchange, during the 90-day period
ending on, and including, the date of the Change in Control.
(c) Special Phantom Stock Valuation. Except as provided
in Paragraph 8(b), if amounts credited to a Participant's Account, and deemed
invested in phantom stock of the Company on the date of a Change in Control (as
defined in Paragraph 14), are, in accordance with the election of the
Participant, deemed redeemed and deemed reinvested in any one or more of the
deemed investment funds then made available under the Plan and the deemed
redemption occurs after the occurrence of a Change in Control (as defined in
Paragraph 14), but on or before the first day of the third calendar quarter
following the occurrence of the Change in Control, the deemed redemption of such
phantom stock shall be valued based on the greater of (A) the closing price of
the common stock of the Company, as reported on the New York Stock Exchange, on
the date on which the deemed redemption occurs or (B) the highest closing price
of the common stock of the Company as reported on the New York Stock Exchange,
during the 90-day period ending on, and including, the date of the Change in
Control. If amounts credited to a Participant's Account, and
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<PAGE> 6
deemed invested in phantom stock of the Company, are deemed redeemed after the
occurrence of a Change in Control (as defined in Paragraph 14), but on or before
the first day of the third calendar quarter following the occurrence of the
Change in Control, and, in accordance with Paragraph 13, are paid to the
Participant (or his or her Beneficiary) as a distribution under the Plan, the
deemed redemption of such phantom stock shall be valued based on the greater of
(A) the closing price of the common stock of the Company, as reported on the New
York Stock Exchange, on the date on which the deemed redemption occurs or (B)
the highest closing price of the common stock of the Company, as reported on the
New York Stock Exchange, during the 90-day period ending on, and including, the
date of the Change in Control.
(d) Securities Law Limitations. Notwithstanding anything
in the Plan to the contrary, if at any time a Participant who is an Insider (as
defined below) is prohibited by the Section 16 Rules (as defined below) from
directing that his or her Account or Benefit Transfer Account be (i) deemed
invested in an investment fund that invests in common stock of the Company, (ii)
deemed transferred to a deemed investment in common stock of the Company or
(iii) to the extent of any deemed investment in common stock of the Company,
deemed redeemed for whatever reason, any such direction shall be disregarded and
not given effect. For purposes of this Paragraph 8, an Insider shall mean, with
respect to the Company or any of its subsidiaries, (i) any Participant who is
subject to the Section 16 Rules, determined in accordance with Rule 16a-2
thereof, and (ii) solely with respect to certain trading restrictions with
respect to common stock of the Company imposed from time to time by the Company
or any of its subsidiaries, any Participant who is subject to such trading
restrictions. For purposes of this Paragraph 7, the Section 16 Rules mean those
rules (as from time to time amended) promulgated by the Securities and Exchange
Commission ("SEC") under Section 16 of the Act. For purposes of the Plan, an
action shall be deemed to be prohibited by the Section 16 Rules, if it could, if
permitted or occurring, result in a transaction not being exempt from the
provisions of Section 16(b) of the Act. An action in violation of certain
trading restrictions with respect to common stock of the Company imposed from
time to time by the Company or any of its subsidiaries shall be deemed to be
prohibited by the Section 16 Rules solely for purposes of the Plan.
9. Crediting of Accounts. Each Participant's Account and, as
applicable, Benefit Transfer Account shall be deemed credited at the end of each
calendar quarter (or on such other dates as is designated by the Committee) with
the earnings or losses that the amount in the Account or Benefit Transfer
Account would have experienced had the Account or Benefit Transfer Account
actually been invested in the deemed investment designated by the Participant
or, as appropriate, the Committee.
10. Investment in Phantom Stock of Dime Bancorp, Inc. In
accordance with such administrative rules and procedures as may be prescribed by
the Committee, phantom investments in Dime Bancorp, Inc. common stock shall be
offered for the investment of Participant Accounts and, as applicable, Benefit
Transfer Accounts. In accordance with Rule 16b-3 (as in effect pursuant to rules
issued by the SEC under Section 16(b) of the Act on May 31, 1996) and relevant
interpretations of the SEC thereunder, it is intended that approval of the Plan
by the Board shall satisfy the condition for approval under Rule 16b-3 with
respect to the investment of new deferrals in phantom stock of Dime Bancorp,
Inc.
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<PAGE> 7
11. Status of Investments. All investments actually made by
the Bank or any other subsidiary of the Company pursuant to this Plan will be
deemed made solely for the purpose of aiding such entity in measuring and
meeting its obligations under the Plan. Further, such entities are not limited
to the investments described in the provisions set forth above but are merely
obligated to provide payments pursuant to the terms of this Plan that reflect
the investment returns offered by the deemed investments made available under
the Plan. The Bank or, as applicable, one or more of the subsidiaries of the
Company, will be named sole owner of all such investments and of all rights and
privileges conferred by the terms of the instruments evidencing such
investments. This Plan places no obligation upon any entity to invest any
portion of the amount in a Participant's Account or Benefit Transfer Account, to
invest or continue to invest in any specific asset, to liquidate any particular
investment, or to apply in any specific manner the proceeds from the sale,
liquidation, or maturity of any particular investment. Nothing stated herein
shall cause such investments to be treated as anything but the general assets of
the Bank or, as applicable, other subsidiaries of the Company, nor will anything
stated herein cause such investments to represent the vested, secured or
preferred interest of the Participant or his or her beneficiaries designated
under this Plan. Participants hereunder have the status of unsecured creditors
with respect to their Accounts or Benefit Transfer Account, and it is intended
that the Plan be unfunded for tax purposes and, to any extent applicable, for
purposes of Title I of the Employee Retirement Income Security Act of 1974, as
amended.
12. Vesting. Participants shall be fully vested in all amounts
in their Accounts and Benefit Transfer Account at all times.
13. (a) Payment of Accounts. At the time a Participant elects
to defer compensation hereunder, the Participant shall designate the time and
the manner for the payment of the amounts to be allocated to such Participant's
Account with respect to such deferral of compensation. Except as otherwise
provided below, payment to a Participant shall commence upon a fixed date
selected by the Participant at the time of the deferral chosen from the
following dates:
(i) The last day of a calendar quarter ending at least three
years from the end of the calendar year in which the deferred compensation would
otherwise be payable, but no later than the end of the calendar quarter in which
occurs the Participant's 75th birthday.
(ii) The last day of any one of the four calendar quarters
ending after the service of the Participant as a director of the Company and any
of its subsidiaries terminates (as designated by the Participant at the time of
deferral).
Except as otherwise provided below, the form of payment of deferred amounts in a
Participant's Account shall be designated by the Participant at the time the
election to defer compensation is made and shall be from among the following
options, to the extent such optional forms are made available by the Committee.
All forms of payment shall be based on the value of a Participant's Account
attributable to the particular deferral election and all forms of payment shall
be actuarially equivalent to each other. The options that may be made available
are:
(A) a lump sum;
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<PAGE> 8
(B) a number of quarterly or annual installments, limited in
such manner as is determined by the Committee;
(C) one or more forms of annuity providing a fixed quarterly
or monthly payment, which shall include, in addition to
such forms of annuity as shall be determined from time to
time by the Committee, the following:
(1) Single Life Annuity;
(2) Single Life Annuity With A Ten-Year Term Certain;
(3) Joint and 50% Survivor Annuity;
(4) Joint and 100% Survivor Annuity;
(5) Joint and 50% Survivor Annuity With A Ten-Year
Term Certain;
(6) Joint and 100% Survivor Annuity With A Ten-Year
Term Certain
The forms of annuity described in options (3) through (6)
shall be available only if the Participant is married at
the time benefits commence. If a Participant is not
married at the time benefits commence, such Participant
shall be permitted to select only the form of annuity
described in option (1) or (2); or
(D) a designated dollar amount (to the extent such amount is
allocated to the Participant's Account with respect to
the deferral of compensation in question) or percentage
of the Participant's Account payable in either a lump sum
or quarterly or annual installments at the end of one or
more calendar quarters otherwise available for election
for the commencement of distributions as described above,
with the remainder of the amount subject to such
designation to be distributed in either a lump sum or
quarterly or annual installments commencing at such other
date chosen from clauses (a)(i) or (a)(ii) above.
In the event that payment is to be made on the form of an annuity, the amount of
each annuity payment shall be determined by the Committee or its designee in its
sole discretion, which amount shall be based on the amounts that could be
payable under one or more commercial annuity products that could be purchased
with the amount in a Participant's Account that is to be paid in the form of an
annuity at a date set by the Committee that is within 60 days of the starting
date of the annuity, with the identity of the commercial annuity products to be
used for this purpose to be determined in the sole discretion of the Committee,
or by the Committee's designee in accordance with standards
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<PAGE> 9
established by the Committee. Any such determination, and the determination by
the Committee or its delegatee of the amount of any annuity payments to be made
hereunder shall be final and binding upon all Participants and beneficiaries. In
the event that the Committee or its designee, in their sole and absolute
discretion, shall direct that a commercial annuity be purchased in order to fund
any payment obligations hereunder, such annuity contract, when purchased, shall
be the property of the Bank or other purchasing subsidiary of the Company, and
the Participant will continue to be no more than an unsecured creditor of the
Bank or, as applicable, another subsidiary of the Company, as described above.
Each Participant's Account under the Plan shall be reduced by the amount of any
distribution hereunder. To the extent otherwise necessary to enable the
transactions relating to a distribution under this Paragraph 13 to qualify for
exemption under Section 16(b) of the Act, the distribution of a Participant's
Account and/or Benefit Transfer Account under this Paragraph 13 shall occur on
the earliest date such distribution (or distributions) may be made whereby the
transactions relating to the distribution (or distributions) qualify for
exemption under Section 16(b) of the Act, provided that, with the consent of the
Participant, the Committee may direct that any such distribution (or
distributions) be made on any earlier date.
(b) Payment of Benefit Transfer Accounts. A
Participant who has elected to convert his or her accrued benefit under the
Retainer Continuation Plan and transfer such converted benefit to a Benefit
Transfer Account under the Plan, as provided in Paragraph 5, shall be permitted
to designate the time and manner for the payment of the amounts credited to his
or her Benefit Transfer Account, provided that any such election is made at
least twenty-four (24) months prior to the earlier of (i) the date payment of
amounts credited to the Benefit Transfer Account would otherwise commence (other
than on account of Hardship or a Change in Control) or (ii) the date the
Participant's service as a member of the Board and, as applicable, as a member
of the boards of directors of all subsidiaries of the Company terminates. If a
Participant, in accordance with this Paragraph 13(b), has not made an effective
election with respect to the time of payment of his or her Benefit Transfer
Account, the amount credited to such account shall be paid commencing on the
last day of the calendar quarter next following the Participant's termination of
service as a member of the Board and, as applicable, as a member of the boards
of directors of all subsidiaries of the Company. If a Participant, in accordance
with this Paragraph 13(b), has not made an effective election with respect to
the form of payment of his or her Benefit Transfer Account, the amount credited
to such account shall be paid in the form of a single life annuity (unless the
Committee, in its sole discretion, directs that another form of benefit
otherwise available under the Plan be paid).
If an election as to the commencement date for the payment of a Participant's
Benefit Transfer Account is timely made, as provided in this Paragraph 13(b),
the Participant may designate the date on which the payment of his or her
Benefit Transfer Account shall commence from the following dates:
(i) The last day of a calendar quarter ending at least
twenty-four (24) months after date on which the election is
made, but in no event may payments commence later than the last
day of the calendar quarter in which occurs the Participant's
75th birthday.
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(ii) The last day of any one of the four calendar
quarters ending after the service of the Participant as a
director of the Company and any of its subsidiaries terminates.
If an election as to the form of payment of a Participant's Benefit Transfer
Account is timely made, as provided in this Paragraph 13(b), the Participant may
designate the form of payment from the following:
(A) a lump sum;
(B) a number of quarterly or annual installments, limited in
such manner as is determined by the Committee;
(C) one or more forms of annuity providing a fixed quarterly
or monthly payment, which shall include, in addition to
such forms of annuity as shall be determined from time to
time by the Committee, the following:
(1) Single Life Annuity;
(2) Single Life Annuity With A Ten-Year Term Certain;
(3) Joint and 50% Survivor Annuity;
(4) Joint and 100% Survivor Annuity;
(5) Joint and 50% Survivor Annuity With A Ten-Year
Term Certain;
(6) Joint and 100% Survivor Annuity With A Ten-Year
Term Certain
The forms of annuity described in options (3) through (6)
shall be available only if the Participant is married at
the time benefits commence. Accordingly, if a Participant
is not married at the time benefits commence, such
Participant shall be permitted to select only the form of
annuity described in option (1) or (2); or
(D) a designated dollar amount (to the extent such amount is
allocated to the Participant's Benefit Transfer Account)
or percentage of the Participant's Benefit Transfer
Account payable in either a lump sum or quarterly or
annual installments at the end of one or more calendar
quarters otherwise available for election for the
commencement of distributions as described above, with
the remainder of the amount subject to such designation
to be distributed in either a lump sum or
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quarterly or annual installments commencing at such other
date chosen from clauses (b)(i) or (b)(ii) above.
In the event that payment is to be made on the form of an annuity, the amount of
each annuity payment shall be determined by the Committee or its designee in its
sole discretion, which amount shall be based on the amounts that could be
payable under one or more commercial annuity products that could be purchased
with the amount in a Participant's Benefit Transfer Account that is to be paid
in the form of an annuity at a date set by the Committee that is within 60 days
of the starting date of the annuity, with the identity of the commercial annuity
products to be used for this purpose to be determined in the sole discretion of
the Committee, or by the Committee's designee in accordance with standards
established by the Committee. Any such determination, and the determination by
the Committee or its delegatee of the amount of any annuity payments to be made
hereunder shall be final and binding upon all Participants and beneficiaries. In
the event that the Committee or its designee, in their sole and absolute
discretion, shall direct that a commercial annuity be purchased in order to fund
any payment obligations hereunder, such annuity contract, when purchased, shall
be the property of the Bank or other purchasing entity, and the Participant will
continue to be no more than an unsecured creditor of the Bank or, as applicable,
another subsidiary of the Company, as described above. Each Participant's
Benefit Transfer Account under the Plan shall be reduced by the amount of any
distribution hereunder.
(c) Payments Upon Change in Control or Hardship. A
Participant may also, solely to the extent permitted by the Committee, direct
that all of the amounts then credited to the Participant's Account and Benefit
Transfer Account be distributable to the Participant upon a Change in Control of
the Company (as defined below), or that all or a portion of the amounts
otherwise payable to the Participant be distributable in the event of a Hardship
(as defined below), in which event the amount of any further scheduled
distribution shall be reduced by the amount previously distributed on account of
such event. Notwithstanding the foregoing, in the case of a Participant who, as
of July 24, 1997, had elected under the Plan to receive a distribution of his or
her Account (to the extent attributable to deferrals made through 1997 (and
related earnings)) and/or his or her Benefit Transfer Account (to the extent
attributable to amounts transferred to such account as of July 24, 1997 (and
related earnings) upon a Change in Control or a Transfer of Control (as such
terms were defined under the Plan immediately prior to July 24, 1997), such
distribution (or distributions), if any, shall continue to be made upon a Change
in Control or Transfer of Control (as the case may be), unless the Participant
has consented, in the form and manner prescribed by the Chief Human Resources
Officer of the Company, to the applicability of the amendment to the Plan
replacing, under this Paragraph 13, the previously applicable change in control
provisions with the Change in Control provision (as provided in Paragraph 14) as
it relates to the distribution of a Participant's deferrals under the Plan
through 1997 (and related earnings) and/or the distribution of a Participant's
Benefit Transfer Account (to the extent attributable to amounts transferred to
such account as of July 24, 1997 (and related earnings)). In the case of a
Participant who, as of July 24, 1997, had not elected to receive a distribution
of his or her Account and/or Benefit Transfer Account (as provided in the
preceding sentence) upon a change in control, the distribution of such
Participant's Account and/or Benefit Transfer Account shall, if elected by the
Participant, be made upon a Change in Control (as defined in Paragraph 14).
11
<PAGE> 12
(d) Payments Upon Death. To the extent permitted by
the Committee, a Participant may elect that if the Participant dies before
payments of a deferred amount have otherwise commenced to the Participant, the
amount allocated to the Participant's Account and Benefit Transfer Account be
distributed in a single lump sum to the Participant's Beneficiary (as defined
below) commencing either on the last day of the calendar quarter in which the
Participant dies (or as soon as practicable thereafter) or on the last day of
the first calendar quarter in the calendar year immediately following the date
of the Participant's death; provided, however, that if no such election is made,
payment shall be made in a single lump sum at the end of the calendar quarter in
which the Participant died, or as soon as practicable thereafter. If payments of
a deferred amount in the form of installments or an annuity have already
commenced to the Participant, they shall continue to be made after the
Participant's death to the Participant's Beneficiary, who shall otherwise be
granted the same rights as were held by the Participant hereunder.
(e) Additional Payment Elections. Notwithstanding
the preceding provisions of this Paragraph 13 to the contrary, a Participant may
subsequently elect, in such form and manner as may be prescribed by the
Committee, that the amounts credited to his or her Account be distributed
commencing on one of the dates described in clause (a)(i) or (a)(ii) above in
lieu of the date(s) initially selected, provided that any such election is made
at least twenty-four (24) months prior to the earlier of (i) the date payment of
amounts credited to the Account would otherwise commence (other than on account
of Hardship or a Change in Control) or (ii) the Participant's termination of
service for any reason as a member of the Board and, as applicable, as a member
of the boards of directors of all subsidiaries of the Company. Further,
notwithstanding the preceding provisions of this Paragraph 13 to the contrary, a
Participant may also subsequently elect, in such form and manner as may be
prescribed by the Committee, that the amounts credited to his or her Account be
paid in any one of the forms of benefit payment provided under this Paragraph 13
in lieu of the form of payment initially selected, provided that any such
election is made at least twenty-four (24) months prior to the earlier of (i)
the date payment of amounts credited to the Account would otherwise commence
(other than on account of Hardship or a Change in Control) or (ii) the
Participant's termination of service for any reason as a member of the Board
and, as applicable, as a member of the boards of directors of all subsidiaries
of the Company.
14. Change in Control. For purposes of the Plan, a "Change in
Control" shall mean the occurrence of any of the following events:
(i) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from the
Company or its Affiliates) representing 35% or more of the combined voting power
of the Company's then outstanding securities;
(ii) the following individuals cease for any reason to
constitute a majority of the number of directors then serving as directors of
the Company: individuals who, on July 24, 1997, constitute the Board of
Directors of the Company and any new director (other than a director whose
initial assumption of office is in connection with the settlement of an actual
or threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company) whose
appointment or election by the Board of Directors of the Company or
12
<PAGE> 13
nomination for election by the Company's stockholders was approved or
recommended by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors on July 24, 1997 or whose appointment,
election or nomination for election was previously so approved or recommended;
(iii) there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with any other
corporation or entity, other than (i) a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior to
such merger or consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving entity
or any Parent thereof), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan of the Company
or any subsidiary of the Company, at least 65% of the combined voting power of
the securities of the Company, such surviving entity or any Parent thereof
outstanding immediately after such merger or consolidation or (ii) a merger or
consolidation effected solely to implement a recapitalization of the Company or
the Bank (or similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company or the
Bank (not including in the securities beneficially owned by such Person any
securities acquired directly from the Company or its Affiliates) representing
35% or more of the combined voting power of the Company's or the Bank's then
outstanding securities; or
(iv) the stockholders of the Company or the Bank approve a plan
of complete liquidation or dissolution of the Company or the Bank, respectively,
or there is consummated a sale or disposition by the Company or any of its
subsidiaries of any assets which individually or as part of a series of related
transactions constitute all or substantially all of the Company's consolidated
assets (provided that, for these purposes, a sale of all or substantially all of
the voting securities of the Bank or a Parent of the Bank shall be deemed to
constitute a sale of substantially all of the Company's consolidated assets),
other than any such sale or disposition to an entity at least 65% of the
combined voting power of the voting securities of which are owned by
stockholders of the Company in substantially the same proportions as their
ownership of the voting securities of the Company immediately prior to such sale
or disposition.
As used in connection with the foregoing definition of Change
in Control, "Affiliate" shall have the meaning set forth in Rule 12b-2
promulgated under Section 12 of the Act; "Beneficial Owner" shall have the
meaning set forth in Rule 13d-3 under the Act; "Parent" shall mean any entity
that becomes the Beneficial Owner of at least 80% of the voting power of the
outstanding voting securities of the Company or of an entity that survives any
merger or consolidation of the Company or any direct or indirect subsidiary of
the Company; and "Person" shall have the meaning given in Section 3(a)(9) of the
Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such
term shall not include (a) the Company or any of its subsidiaries, (b) a trustee
or other fiduciary holding securities under an employee benefit plan of the
Company or any of its Affiliates, (c) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (d) a corporation or
entity owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company.
13
<PAGE> 14
15. Hardship. Unless otherwise determined by the Committee,
for purposes of this Plan, a Participant shall be deemed to have incurred a
Hardship in the event the Participant experiences severe financial difficulties
resulting from a sudden and unexpected illness or accident of the Participant or
of a dependent (as defined in Section 152(a) of the Internal Revenue Code) of
the Participant, loss of the Participant's property due to casualty, or another
similar extraordinary and unforeseeable circumstance arising as a result of
events beyond the control of the Participant. The determination of whether or
not a Participant has incurred a Hardship shall be made by the Committee, and no
distribution on account of a Hardship shall be in excess of the amount necessary
to meet the emergency.
16. Designation of Beneficiaries. In the event that a
Participant dies prior to the receipt of all amounts payable to him or her
pursuant to the Plan, all remaining amounts credited to his Account and Benefit
Transfer Account shall be paid to such one or more beneficiaries and in such
proportions as the Participant may designate, in accordance with the provisions
of Paragraph 13. If no Beneficiary has been named by the Participant, or if a
named Beneficiary has predeceased the Participant and no successor beneficiary
has been named or if a beneficiary designation is otherwise ineffective, payment
shall be made to the estate of the Participant, and if any Beneficiary shall die
after payments to that Beneficiary have commenced, if any remaining payments
would otherwise be made to such Beneficiary, they shall instead be made to the
estate of the Beneficiary. A Beneficiary designation pursuant to this Paragraph
16 shall not be effective unless it is in writing and is received by the
Committee prior to the death of the Participant making the designation.
17. Nonalienation. The right to receive a benefit under the
Plan shall not be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment, or garnishment by
creditors of the Participant or the Participant's beneficiaries.
18. Indemnification. The Company shall indemnify, hold
harmless and defend each member of the Board, each member of the Committee, each
member of the Benefits Committee, and each of their designees who are employees
of the Company or any of its subsidiaries, against their reasonable costs,
including legal fees, incurred by them, or arising out of any action, suit or
proceeding in which they may be involved, as a result of their efforts, in good
faith, to defend or enforce the terms of the Plan.
19. Severability. A determination that any provision of the
Plan is invalid or unenforceable shall not affect the validity or enforceability
of any other provision hereof.
20. Waiver. Failure to insist upon strict compliance with any
of the terms, covenants or conditions of the Plan shall not be deemed a waiver
of such term, covenant or condition. A waiver of any provision of the Plan must
be made in writing, designated as a waiver, and signed by the party against whom
its enforcement is sought. Any waiver or relinquishment of any right or power
hereunder at any one or more times shall not be deemed a waiver or
relinquishment of such right or power at any other time or times.
21. Notices. Any notice or other communication required or
permitted to be given to a party under the Plan shall be deemed given if
personally delivered or if mailed, postage
14
<PAGE> 15
prepaid, by certified mail, return receipt requested, to the party at the
address listed below, or at such other address as one such party may by written
notice specify to the other:
(a) if to the Committee:
Dime Bancorp, Inc.
589 Fifth Avenue
New York, New York 10017
Attention: Chief Human Resources Officer
(b) if to any party other than the Committee, to such
party at the address last furnished by such party by written
notice to the Committee.
22. Governing Law. The Plan shall be construed, administered
and enforced according to the laws of the State of New York, except to the
extent that such laws are preempted by federal law.
23. Construction of Language. Wherever appropriate in the
Plan, words used in the singular may be read in the plural, words in the plural
may be read in the singular, and words importing the masculine gender shall be
deemed equally to refer to the feminine or the neuter. Any reference to an
Article or Section shall be to an Article or Section of the Plan, unless
otherwise indicated.
24. Amendment or Discontinuance. The Board or the
Compensation Committee of the Board may amend, discontinue or terminate the Plan
at any time; provided, however, that no amendment or discontinuance shall affect
the rights of Participants to amounts already allocated to their Accounts and
Benefit Transfer Accounts under the Plan. The Benefits Committee of the Company
may make any amendment to the Plan that may be necessary or appropriate to
facilitate the administration, management, and interpretation of the Plan or to
conform the Plan thereto or that may be necessary or appropriate to satisfy
requirements of law, provided that any such amendment does not significantly
affect the cost to the Company or any of its subsidiaries of maintaining the
Plan. Notwithstanding the foregoing, no amendment by the Compensation Committee
of the Board or the Benefits Committee of the Company shall be made to the
extent that any such amendment would cause any Participant who administers any
employee benefit plan of the Company (or any subsidiary of the Company) and who,
in accordance with the terms of any such plan or applicable law, must be
"disinterested", to cease to qualify as an "outside director", within the
meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended, and
the treasury regulations thereunder.
15
<PAGE> 1
Exhibit 10.38
Dime Bancorp, Inc.
Officer Incentive Plan
As Amended and Restated Effective as of July 24, 1997
1. Establishment and Purpose of the Plan. This Officer Incentive
Plan (the "Plan") was established to further the financial success of Dime
Bancorp, Inc. (the "Company"), by providing incentive compensation to certain
officers of the company or any of its subsidiaries or affiliates whereby they
can share in achieving and sustaining such success. The Plan also provides a
means to attract and retain the executive talent needed to achieve the Company's
long-term growth and profitability objectives. The Plan is made up of two parts,
the Dime Bancorp, Inc. Senior Management Incentive Plan, and the Dime Bancorp,
Inc. Middle Management Incentive Plan (the "Underlying Plans"). The terms of the
Underlying Plans are governed by separate documents which, together with this
document, govern the terms of this Officer Incentive Plan.
2. Administration of the Plan. The Plan (and each of its parts)
shall be administered by the Compensation Committee of the Board of Directors of
the Company (the "Committee"). (Prior to May 25, 1994, the Committee under the
Plan was the Compensation Committee of the Board of Directors of The Dime
Savings Bank of New York, FSB). Except as may otherwise be provided under the
terms of either Underlying Plan, the Committee shall have the authority, in its
discretion, to adopt, amend and rescind such rules and regulations as, in its
opinion, may be advisable in the administration of the Plan and each of the
Underlying Plans.
3. Effective Date and Term of the Plan. The Plan became effective as
of January 1, 1992. Prior to May 25, 1994 the Plan was known as The Dime Savings
Bank of New York, FSB Officer Incentive Plan, and all references in the Plan to
Dime Bancorp, Inc. or to the Company referred to The Dime Savings Bank of New
York, FSB.
4. Amendment and Termination of the Plan. The Board of Directors of
the Company or the Committee may at any time alter, amend, suspend or terminate
this Plan or any of the Underlying Plans. However, no such action, amendment,
suspension or termination of the Plan shall, without any Plan participant's
consent, alter or impair any rights or obligations with respect to any awards
granted to a participant under the Plan.
<PAGE> 2
DIME BANCORP, INC.
SENIOR MANAGEMENT INCENTIVE PLAN
1. Establishment and Purpose of the Plan. This Senior Management
Incentive Plan (the "Plan"), a part of the Dime Bancorp, Inc. Officer Incentive
Plan (the "Officer Incentive Plan") was established to further the financial
success of Dime Bancorp, Inc. (the "Company") by providing incentive
compensation to certain executive officers and non-executive senior officers of
the Company or any of its subsidiaries or affiliates whereby they can share in
achieving and sustaining such success. The Plan also provides a means to attract
and retain the executive talent needed to achieve the Company's long-term growth
and profitability objectives. As a part of the Officer Incentive Plan, the Plan
is subject to the terms of the Officer Incentive Plan.
2. Eligibility. Persons who shall be eligible for the grant of
awards hereunder ("Awards") shall be executive officers and non-executive senior
officers of the Company or any of its subsidiaries or affiliates (including
members of the Board of Directors of the Company (the "Board") or any of such
other entities who are also employees of the Company or any of its subsidiaries
or affiliates), who, in the judgement of the Board or the Committee, are in a
position to make a substantial contribution to the management, growth and
success of the Company and who are designated by the Board or by the Committee
to receive awards under the Plan.
3. Administration of the Plan. The Plan shall be administered by the
Committee designated under the terms of the Officer Incentive Plan (the
"Committee"). The Committee shall have the authority, in its discretion, to
adopt, amend and rescind such rules and regulations as, in its opinion, may be
advisable in the administration of the Plan, to construe and interpret the Plan,
the rules and regulations, and the instruments, if any, evidencing Awards under
the Plan. The Committee may amend the terms of any instrument evidencing an
Award, but no such amendment may be made in a manner unfavorable to the holder
without his or her consent. All decisions, determinations, and interpretations
of the Committee shall be binding on all Plan participants. Notwithstanding the
foregoing, any decisions with respect to Awards to Executive Officers under the
Plan, or modifications of such awards by the Committee, shall be subject to the
review of the Board.
4. Awards Under the Plan. With respect to each year that Awards may
be made under the Plan, at such time as is determined in the sole discretion of
the Committee, the Committee shall designate those individuals who shall receive
awards ("Participants"), and the amount and terms of such Awards (except for
Awards to Executive Officers, which shall be determined by the Board in its sole
discretion). Awards under the Plan shall be subject to the conditions
established in accordance with the provisions of Section 6 below. The amount and
terms of Awards may be different for each Participant in the Plan. A Participant
may be granted Awards in all years that Awards may be granted under the Plan or
in only certain years of the Plan; the grant of an Award in one year of the Plan
does not give to any Participant the right to be granted an Award in a later
year.
<PAGE> 3
2
5. Effective Date and Term of the Plan. The Plan became effective as
of January 1, 1992. Prior to May 25, 1994, the Plan was known as The Dime
Savings Bank of New York, FSB Senior Management Incentive Plan, and all
references in the Plan to Dime Bancorp, Inc. or to the Company referred to The
Dime Savings Bank of New York, FSB (the "Bank"). Awards may be granted under the
Plan at any time prior to the termination of the Plan by the Board or the
Committee. The Plan and all outstanding Awards thereunder shall remain in effect
until all outstanding Awards have been earned and distributed, have expired or
have been cancelled.
6. Terms of Awards/Performance Goals. Unless determined otherwise by
the Committee or the Board, Awards shall be earned by Participants in connection
with the attainment of performance goals set by the Committee (or, with respect
to Executive Officers, unless otherwise delegated to the Committee, as set by
the Board) (the "Performance Goals"). Performance Goals shall relate to a
specified period (the "Performance Period") established by the Committee (or, as
applicable, the Board), and may relate to one or more of the performance of the
Company, a portion of the business of the Company or one or more of its
subsidiaries or affiliates, and the Participant. The earning of an Award by a
Participant may require satisfaction of a single Performance Goal at the end of
the Performance Period, or, to the extent determined by the Committee or the
Board, partial satisfaction of a Performance Goal may permit the partial earning
of an Award. If, during the course of a Performance Period, there should occur,
in the opinion of the Committee (or the Board), significant changes in economic
conditions or in the nature of the operations of the Company, or any other
pertinent changes which, in the Committee's (or the Board's) judgment, have, or
are expected to have, a substantial effect on the relative performance of the
Company during such Performance Period, the Committee or the Board may make such
adjustment to the Performance Goals as the Committee or the Board may deem
appropriate.
7. Payment of Awards. The amount payable with respect to any Award,
which, except as otherwise provided in the Award shall depend on the
satisfaction of all or a portion of the Performance Goals established with
respect to such Award, shall be determined by the Committee as soon as
practicable after the end of the relevant Performance Period. Such amount shall
then be payable to the participant in cash, to the extent earned, at such time
and in such manner as is determined by the Committee in its sole discretion.
Notwithstanding the foregoing, in the event that all of a portion of the
Performance Goals with respect to any Award are determined by the Committee to
have been earned prior to the end of the Performance Period, the Committee may
direct that all or a portion of the amount of the Award earned in connection
with such satisfaction of Performance Goals may be paid to a Participant prior
to the end of the Performance Period. An Award hereunder may, in the discretion
of the Committee (or, in the case of awards to Executive Officers, in the
discretion of the Board), provide that amounts are payable to a Participant even
if the Participant is no longer employed by the Company or a subsidiary or
affiliate of the Company at the end of the Performance Period, on account of
retirement, disability, death or other termination of employment; provided,
however, that, except as otherwise provided in Section 8 below, in the absence
of any such provision, no Participant shall have a right to payment with respect
to any Award hereunder in the event the Participant is
<PAGE> 4
3
not employed by the Company or a subsidiary or affiliate of the Company at the
end of the relevant Performance Period.
8. Change in Control.
(a) Subject to the consent requirements described in this subsection
(a), upon the occurrence of a Change in Control (as defined in subsection (b)
below), all Participants who are in service with the Company or any of its
subsidiaries or affiliates at the time of the Change in Control, and who may
otherwise (if all conditions related to such award were met) be entitled
pursuant to an Award under this Plan to receive a target bonus amount for the
calendar year in which a Change in Control occurs, shall be entitled to receive
not less than a pro-rated portion of such target bonus amount, calculated by
multiplying such target bonus amount by a fraction, the numerator of which is
the number of days during which the employee was employed by the Company or any
of its subsidiaries or affiliates during the calendar year in which the Change
in Control occurs and the denominator of which is the number of days in such
calendar year. Notwithstanding the foregoing, in the case of a Participant who,
as of July 24, 1997, is a participant in the Dime Bancorp, Inc. Voluntary
Deferred Compensation Plan (the "Deferred Compensation Plan") and who, as of
July 24, 1997, had elected under the Deferred Compensation Plan to receive a
distribution of his or her account thereunder upon a change in control, the
special Change in Control minimum target bonus payment, as provided in this
subsection (a), shall apply only if the Participant has consented, in the form
and manner prescribed by the Chief Human Resources Officer of the Company, to
the applicability of the amendment to the Deferred Compensation Plan which
replaces the change in control provisions thereunder with a revised change in
control definition under the Deferred Compensation Plan. Once such consent is
provided, no further consent of a Participant shall be required for the special
Change in Control minimum target bonus payment provision to remain effective. In
the case of a Participant who, as of July 24, 1997, had not elected under the
Deferred Compensation Plan to receive a distribution of his or her account
thereunder (if any) upon a change in control, the provisions regarding the
special Change in Control minimum target bonus payment, as provided in this
subsection (a), shall apply without regard to the consent requirements described
above.
(b) For purposes of this Section 8, a "Change in Control" shall mean
the occurrence of any of the following events:
(i) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from
the Company or its Affiliates) representing 35% or more of the combined
voting power of the Company's then outstanding securities;
(ii) the following individuals cease for any reason to constitute a
majority of the number of directors then serving as directors of the
Company: individuals who, on July 24, 1997, constitute the Board of
Directors of the Company and any new director (other than a director whose
initial assumption of office is in connection with the settlement of an
<PAGE> 5
4
actual or threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of the
Company) whose appointment or election by the Board of Directors of the
Company or nomination for election by the Company's stockholders was
approved or recommended by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors on July 24, 1997
or whose appointment, election or nomination for election was previously
so approved or recommended;
(iii) there is consummated a merger or consolidation of the Company
or any direct or indirect subsidiary of the Company with any other
corporation or entity, other than (A) a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity or any Parent thereof), in combination
with the ownership of any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any subsidiary of the
Company, at least 65% of the combined voting power of the securities of
the Company, such surviving entity or any Parent thereof outstanding
immediately after such merger or consolidation or (B) a merger or
consolidation effected solely to implement a recapitalization of the
Company or the Bank (or similar transaction) in which no Person is or
becomes the Beneficial Owner, directly or indirectly, of securities of the
Company or the Bank (not including in the securities beneficially owned by
such Person any securities acquired directly from the Company or its
Affiliates) representing 35% or more of the combined voting power of the
Company's or the Bank's then outstanding securities;
(iv) the stockholders of the Company or the Bank approve a plan of
complete liquidation or dissolution of the Company or the Bank,
respectively, or there is consummated a sale or disposition by the Company
or any of its subsidiaries of any assets which individually or as part of
a series of related transactions constitute all or substantially all of
the Company's consolidated assets (provided that, for these purposes, a
sale of all or substantially all of the voting securities of the Bank or a
Parent of the Bank shall be deemed to constitute a sale of substantially
all of the Company's consolidated assets), other than any such sale or
disposition to an entity at least 65% of the combined voting power of the
voting securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the voting
securities of the Company immediately prior to such sale or disposition;
or
(v) the execution of a binding agreement that if consummated would
result in a Change in Control of a type specified in clause (i) or (iii)
of this Section 8 (an "Acquisition Agreement") or of a binding agreement
for the sale or disposition of assets that, if consummated, would result
in a Change in Control of a type specified in clause (iv) of this Section
8 (an "Asset Sale Agreement") or the adoption by the Board of Directors of
the Company or the Bank of a plan of complete liquidation or dissolution
of the Company or
<PAGE> 6
5
the Bank that, if consummated, would result in a Change in Control of a
type specified in clause (iv) of this Section 8 (a "Plan of Liquidation");
provided, however, that a Change in Control of the type specified in this
clause (v) shall be deemed to exist or have occurred as a result of the
execution of such Acquisition Agreement or Asset Sale Agreement or the
adoption of such a Plan of Liquidation only if (A) the Participant's
employment is terminated by the Company and its subsidiaries (other than
for "cause" (as defined below)) or (B) the Participant terminates his or
her employment with the Company and its subsidiaries after the
Participant's employer has reduced the Participant's annual salary below
that in effect immediately prior to the occurrence of the event described
in this clause (v), provided that, in the case of subclauses (A) and (B)
of this clause (v), such termination of employment occurs after the
occurrence of the event described in this clause (v), but during the
remaining term of any applicable employment or change in control agreement
between the Participant and the Company or any of its subsidiaries in
effect at the time of the occurrence of any such event (or, if later, or
if there is no such agreement, within one year after the event described
in this clause (v) occurs), and otherwise on or before the earlier of the
Abandonment Date or the date the transaction contemplated by any such
event, described in this clause (v), is consummated. As used in this
Section 8, the term "Abandonment Date" shall mean the date on which (A) an
Acquisition Agreement, Asset Sale Agreement or Plan of Liquidation is
terminated (pursuant to its terms or otherwise) without having been
consummated, (B) the parties to an Acquisition Agreement or Asset Sale
Agreement abandon the transactions contemplated thereby, (C) the Bank or
the Company abandons a Plan of Liquidation or (D) a court or regulatory
body having competent jurisdiction enjoins or issues a cease and desist or
stop order with respect to or otherwise prevents the consummation of, or a
regulatory body notifies the Bank or the Company that it will not approve,
an Acquisition Agreement, Asset Sale Agreement or Plan of Liquidation or
the transactions contemplated thereby and such injunction, order or notice
has become final and not subject to appeal. For purposes of the Plan,
"cause" shall mean (except as otherwise provided in a Participant's
employment or change in control agreement with the Company or any of its
subsidiaries, which definition of "cause" shall then apply), the
Participant's personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional failure to
perform assigned duties, willful violation of any law, rule or regulation
(other than traffic violations or similar offenses) or final cease and
desist order.
As used in connection with the foregoing definition of Change in
Control, "Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated
under Section 12 of the Exchange Act; "Beneficial Owner" shall have the meaning
set forth in Rule 13d-3 under the Exchange Act; "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended from time to time; "Parent" shall
mean any entity that becomes the Beneficial Owner of at least 80% of the voting
power of the outstanding voting securities of the Company or of an entity that
survives any merger or consolidation of the Company or any direct or indirect
subsidiary of the Company; and "Person" shall have the meaning given in Section
3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d)
thereof, except that such term shall not include (i)
<PAGE> 7
6
the Company or any of its subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any of its
Affiliates, (iii) an underwriter temporarily holding securities pursuant to an
offering of such securities, or (iv) a corporation or entity owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
9. Treatment under Employment Agreements. With respect to any
Participant hereunder who has an employment agreement with the Company or a
subsidiary or affiliate thereof, the amount of any Award that was paid, or that
would be payable under the Plan (in the event that all relevant Performance
Goals have been satisfied and the Participant remains in service until the end
of the relevant Performance Period) shall be treated as part of the annual
salary of the Participant when determining the amount, if any, of any payments
to be made to such Participant pursuant to such employment agreement in
connection with a change in control of the Company or any subsidiary or
affiliate of the Company.
10. Non-Transferability. During a Participant's lifetime, no
amount payable pursuant to an Award may be transferable otherwise than by will
or the laws of descent and distribution.
11. No Guarantee of Employment. Receipt of an Award under
this Plan shall not constitute an assurance of continued employment with the
Company or any subsidiary or affiliate of the Company for any period.
12. Withholding Taxes. The Company (or, as appropriate, a
subsidiary or affiliate of the Company) shall have the right to withhold from
the amount payable pursuant to an Award, or to withhold from a Participant's
salary or other amounts payable to or with respect to the Participant, the
appropriate amount of applicable withholding taxes with regard to any Award
hereunder to such Participant, or to require the Participant or the
representative of the Participant to make arrangements to pay such amount in a
manner satisfactory to such entity.
13. Government and Other Regulations. All obligations under
the Plan shall be subject to all applicable laws, rules and regulations, and to
such approvals by any government agencies as may be required. The interpretation
of the Plan and the application of any rules implemented hereunder shall be
determined solely in accordance with the laws of the State of New York, except
to the extent preempted by federal law.
14. Unfunded Character of the Plan. The Plan and the Awards
established hereunder shall be unfunded for tax purposes and for purposes of
Title I of the Employee Retirement Income Security Act of 1974, as amended.
Payment of Awards under the Plan shall be made, as due, from the general assets
of the Company. The Company or any of its subsidiaries or affiliates may, in
their sole and absolute discretion, establish one or more accounts, funds or
trusts to reflect their obligations under this Plan, and may make such
investments as they may deem desirable to assist them in meeting such
obligations. Any assets held in such accounts,
<PAGE> 8
7
funds or trusts shall be subject to claims of the Company's (or, as appropriate,
the Company's subsidiary's or affiliate's) creditors, and no person eligible for
a benefit under this Plan shall have any right, title or interest in any such
assets. This Plan shall constitute solely an unsecured promise by the Company
(or, as appropriate, a subsidiary or affiliate) to pay benefits to the extent
provided herein. Notwithstanding anything in this Plan to the contrary, the Bank
shall be jointly and severally liable for the payment of all benefits payable
under the Plan.
15. Construction of Language. Wherever appropriate in the
Plan, words used in the singular may be read in the plural, words used in the
plural may be read in the singular, and words importing the masculine gender
shall be deemed equally to refer to the feminine and the neuter.
16. Amendment and Termination of the Plan. The Plan may at
any time be altered, amended, suspended or terminated in accordance with the
terms of the Officer Incentive Plan.
<PAGE> 9
DIME BANCORP, INC.
MIDDLE MANAGEMENT INCENTIVE PLAN
1. Establishment and Purpose of the Plan. This Middle
Management Incentive Plan (the "Plan"), a part of the Dime Bancorp, Inc. Officer
Incentive Plan (the "Officer Incentive Plan") was established to further the
financial success of Dime Bancorp, Inc. (the "Company") by providing incentive
compensation to certain non-senior officers of the Company or any of its
subsidiaries or affiliates whereby they can share in achieving and sustaining
such success. The Plan also provides a means to attract and retain the executive
talent needed to achieve the Company's long-term growth and profitability
objectives. As a part of the Officer Incentive Plan, the Plan is subject to the
terms of the Officer Incentive Plan.
2. Eligibility. Persons who shall be eligible for the grant
of awards hereunder ("Awards") shall be non-senior officers of the Company or
any of its subsidiaries or affiliates (including members of the Board of
Directors of the Company (the "Board") or any of such other entities who are
also employees of the Company or any of its subsidiaries or affiliates), who, in
the judgement of the Committee, are in a position to make a substantial
contribution to the management, growth and success of the Company and who are
designated by the Committee to receive awards under the Plan.
3. Administration of the Plan. The Plan shall be administered
by the Committee designated under the terms of the Officer Incentive Plan (the
"Committee"). The Committee shall have the authority, in its discretion, to
adopt, amend and rescind such rules and regulations as, in its opinion, may be
advisable in the administration of the Plan, to construe and interpret the Plan,
the rules and regulations, and the instruments, if any, evidencing Awards under
the Plan. The Committee may amend the terms of any instrument evidencing an
Award, but no such amendment may be made in a manner unfavorable to the holder
without his or her consent. All decisions, determinations, and interpretations
of the Committee shall be binding on all Plan participants.
4. Awards Under the Plan. With respect to each year that
Awards may be made under the Plan, at such time as is determined in the sole
discretion of the Committee, the Committee shall designate those individuals who
shall receive awards ("Participants"), and the amount and terms of such Awards.
Awards under the Plan shall be subject to the conditions established in
accordance with the provisions of Section 6 below. The amount and terms of
Awards may be different for each Participant in the Plan; as the Committee may
determine such difference may be based on individual considerations, on the tier
level to which the Participant has been assigned, or on any combination of such
factors. A Participant may be granted Awards in all years that Awards may be
granted under the Plan or in only certain years of the Plan; the grant of an
Award in one year of the Plan does not give to any Participant the right to be
granted an Award in a later year.
5. Effective Date and Term of the Plan. The Plan became
effective as of January 1, 1992. Prior to May 25, 1994, the Plan was known as
The Dime Savings Bank of
<PAGE> 10
2
New York, FSB Middle Management Incentive Plan, and all references in the Plan
to Dime Bancorp, Inc. or to the Company referred to The Dime Savings Bank of New
York, FSB (the "Bank"). Awards may be granted under the Plan at any time prior
to the termination of the Plan by the Board or the Committee. The Plan and all
outstanding Awards thereunder shall remain in effect until all outstanding
Awards have been earned and distributed, have expired or have been cancelled.
6. Terms of Awards/Performance Goals. Unless determined
otherwise by the Committee, Awards shall be earned by Participants in connection
with the attainment of performance goals set by the Committee (the "Performance
Goals"). Performance Goals shall relate to a specified period (the "Performance
Period") established by the Committee, and may relate to one or more of the
performance of the Company, a portion of the business of the Company or one or
more of its subsidiaries or affiliates, and the Participant. The earning of an
Award by a Participant may require satisfaction of a single Performance Goal at
the end of the Performance Period, or, to the extent determined by the
Committee, partial satisfaction of a Performance Goal may permit the partial
earning of an Award. If, during the course of a Performance Period, there should
occur, in the opinion of the Committee, significant changes in economic
conditions or in the nature of the operations of the Company, or any other
pertinent changes which, in the Committee's judgment, have, or are expected to
have, a substantial effect on the relative performance of the Company during
such Performance Period, the Committee may make such adjustment to the
Performance Goals as the Committee may deem appropriate.
7. Payment of Awards. The amount payable with respect to any
Award, which, except as otherwise provided in the Award shall depend on the
satisfaction of all or a portion of the Performance Goals established with
respect to such Award, shall be determined by the Committee as soon as
practicable after the end of the relevant Performance Period. Such amount shall
then be payable to the participant in cash, to the extent earned, at such time
and in such manner as is determined by the Committee in its sole discretion.
Notwithstanding the foregoing, in the event that all of a portion of the
Performance Goals with respect to any Award are determined by the Committee to
have been earned prior to the end of the Performance Period, the Committee may
direct that all or a portion of the amount of the Award earned in connection
with such satisfaction of Performance Goals may be paid to a Participant prior
to the end of the Performance Period. An Award hereunder may, in the discretion
of the Committee, provide that amounts are payable to a Participant even if the
Participant is no longer employed by the Company or a subsidiary or affiliate of
the Company at the end of the Performance Period, on account of retirement,
disability, death or other termination of employment; provided, however, that in
the absence of any such provision, no Participant shall have a right to payment
with respect to any Award hereunder in the event the Participant is not employed
by the Company or a subsidiary or affiliate of the Company at the end of the
relevant Performance Period.
<PAGE> 11
3
8. Change in Control.
(a) Subject to the consent requirements described in this
subsection (a), upon the occurrence of a Change in Control (as defined in
subsection (b) below), all Participants who are in service with the Company or
any of its subsidiaries or affiliates at the time of the Change in Control, and
who may otherwise (if all conditions related to such award were met) be entitled
pursuant to an Award under this Plan to receive a target bonus amount for the
calendar year in which a Change in Control occurs, shall be entitled to receive
not less than a pro-rated portion of such target bonus amount, calculated by
multiplying such target bonus amount by a fraction, the numerator of which is
the number of days during which the employee was employed by the Company or any
of its subsidiaries or affiliates during the calendar year in which the Change
in Control occurs and the denominator of which is the number of days in such
calendar year. Notwithstanding the foregoing, in the case of a Participant who,
as of July 24, 1997, is a participant in the Dime Bancorp, Inc. Voluntary
Deferred Compensation Plan (the "Deferred Compensation Plan") and who, as of
July 24, 1997, had elected under the Deferred Compensation Plan to receive a
distribution of his or her account thereunder upon a change in control, the
special Change in Control minimum target bonus payment, as provided in this
subsection (a), shall apply only if the Participant has consented, in the form
and manner prescribed by the Chief Human Resources Officer of the Company, to
the applicability of the amendment to the Deferred Compensation Plan which
replaces the change in control provisions thereunder with a revised change in
control definition under the Deferred Compensation Plan. Once such consent is
provided, no further consent of a Participant shall be required for the special
Change in Control minimum target bonus payment provision to remain effective. In
the case of a Participant who, as of July 24, 1997, had not elected under the
Deferred Compensation Plan to receive a distribution of his or her account
thereunder (if any) upon a change in control, the provisions regarding the
special Change in Control minimum target bonus payment, as provided in this
subsection (a), shall apply without regard to the consent requirements described
above.
(b) For purposes of this Section 8, a "Change in Control"
shall mean the occurrence of any of the following events:
(i) any Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired
directly from the Company or its Affiliates) representing 35% or
more of the combined voting power of the Company's then outstanding
securities;
(ii) the following individuals cease for any reason to
constitute a majority of the number of directors then serving as
directors of the Company: individuals who, on July 24, 1997,
constitute the Board of Directors of the Company and any new
director (other than a director whose initial assumption of office
is in connection with the settlement of an actual or threatened
election contest, including but not limited to a consent
solicitation, relating to the election of
<PAGE> 12
4
directors of the Company) whose appointment or election by the Board
of Directors of the Company or nomination for election by the
Company's stockholders was approved or recommended by a vote of at
least two-thirds (2/3) of the directors then still in office who
either were directors on July 24, 1997 or whose appointment,
election or nomination for election was previously so approved or
recommended;
(iii) there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with any
other corporation or entity, other than (A) a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity or any Parent thereof), in combination with the
ownership of any trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any subsidiary of the
Company, at least 65% of the combined voting power of the securities
of the Company, such surviving entity or any Parent thereof
outstanding immediately after such merger or consolidation or (B) a
merger or consolidation effected solely to implement a
recapitalization of the Company or the Bank (or similar transaction)
in which no Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company or the Bank (not including
in the securities beneficially owned by such Person any securities
acquired directly from the Company or its Affiliates) representing
35% or more of the combined voting power of the Company's or the
Bank's then outstanding securities;
(iv) the stockholders of the Company or the Bank approve a
plan of complete liquidation or dissolution of the Company or the
Bank, respectively, or there is consummated a sale or disposition by
the Company or any of its subsidiaries of any assets which
individually or as part of a series of related transactions
constitute all or substantially all of the Company's consolidated
assets (provided that, for these purposes, a sale of all or
substantially all of the voting securities of the Bank or a Parent
of the Bank shall be deemed to constitute a sale of substantially
all of the Company's consolidated assets), other than any such sale
or disposition to an entity at least 65% of the combined voting
power of the voting securities of which are owned by stockholders of
the Company in substantially the same proportions as their ownership
of the voting securities of the Company immediately prior to such
sale or disposition; or
(v) the execution of a binding agreement that if consummated
would result in a Change in Control of a type specified in clause
(i) or (iii) of this Section 8 (an "Acquisition Agreement") or of a
binding agreement for the sale or disposition of assets that, if
consummated, would result in a Change in Control of a type specified
in clause (iv) of this Section 8 (an "Asset Sale Agreement") or the
<PAGE> 13
5
adoption by the Board of Directors of the Company or the Bank of a
plan of complete liquidation or dissolution of the Company or the
Bank that, if consummated, would result in a Change in Control of a
type specified in clause (iv) of this Section 8 (a "Plan of
Liquidation"); provided, however, that a Change in Control of the
type specified in this clause (v) shall be deemed to exist or have
occurred as a result of the execution of such Acquisition Agreement
or Asset Sale Agreement or the adoption of such a Plan of
Liquidation only if (A) the Participant's employment is terminated
by the Company and its subsidiaries (other than for "cause" (as
defined below)) or (B) the Participant terminates his or her
employment with the Company and its subsidiaries after the
Participant's employer has reduced the Participant's annual salary
below that in effect immediately prior to the occurrence of the
event described in this clause (v), provided that, in the case of
subclauses (A) and (B) of this clause (v), such termination of
employment occurs after the occurrence of the event described in
this clause (v), but during the remaining term of any applicable
employment or change in control agreement between the Participant
and the Company or any of its subsidiaries in effect at the time of
the occurrence of any such event (or, if later, or if there is no
such agreement, within one year after the event described in this
clause (v) occurs), and otherwise on or before the earlier of the
Abandonment Date or the date the transaction contemplated by any
such event, described in this clause (v), is consummated. As used in
this Section 8, the term "Abandonment Date" shall mean the date on
which (A) an Acquisition Agreement, Asset Sale Agreement or Plan of
Liquidation is terminated (pursuant to its terms or otherwise)
without having been consummated, (B) the parties to an Acquisition
Agreement or Asset Sale Agreement abandon the transactions
contemplated thereby, (C) the Bank or the Company abandons a Plan of
Liquidation or (D) a court or regulatory body having competent
jurisdiction enjoins or issues a cease and desist or stop order with
respect to or otherwise prevents the consummation of, or a
regulatory body notifies the Bank or the Company that it will not
approve, an Acquisition Agreement, Asset Sale Agreement or Plan of
Liquidation or the transactions contemplated thereby and such
injunction, order or notice has become final and not subject to
appeal. For purposes of the Plan, "cause" shall mean (except as
otherwise provided in a Participant's employment or change in
control agreement with the Company or any of its subsidiaries, which
definition of "cause" shall then apply), the Participant's personal
dishonesty, incompetence, willful misconduct, breach of fiduciary
duty involving personal profit, intentional failure to perform
assigned duties, willful violation of any law, rule or regulation
(other than traffic violations or similar offenses) or final cease
and desist order.
As used in connection with the foregoing definition of Change in
Control, "Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated
under Section 12 of the Exchange Act; "Beneficial Owner" shall have the meaning
set forth in Rule 13d-3 under the
<PAGE> 14
6
Exchange Act; "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time; "Parent" shall mean any entity that becomes the
Beneficial Owner of at least 80% of the voting power of the outstanding voting
securities of the Company or of an entity that survives any merger or
consolidation of the Company or any direct or indirect subsidiary of the
Company; and "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except
that such term shall not include (i) the Company or any of its subsidiaries,
(ii) a trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any of its Affiliates, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (iv) a
corporation or entity owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock of the
Company.
9. Non-Transferability. During a Participant's lifetime, no
amount payable pursuant to an Award may be transferable otherwise than by will
or the laws of descent and distribution.
10. No Guarantee of Employment. Receipt of an Award under
this Plan shall not constitute an assurance of continued employment with the
Company or any subsidiary or affiliate of the Company for any period.
11. Withholding Taxes. The Company (or, as appropriate, a
subsidiary or affiliate of the Company) shall have the right to withhold from
the amount payable pursuant to an Award, or to withhold from a Participant's
salary or other amounts payable to or with respect to the Participant, the
appropriate amount of applicable withholding taxes with regard to any Award
hereunder to such Participant, or to require the Participant or the
representative of the Participant to make arrangements to pay such amount in a
manner satisfactory to such entity.
12. Government and Other Regulations. All obligations under
the Plan shall be subject to all applicable laws, rules and regulations, and to
such approvals by any government agencies as may be required. The interpretation
of the Plan and the application of any rules implemented hereunder shall be
determined solely in accordance with the laws of the State of New York, except
to the extent preempted by federal law.
13. Unfunded Character of the Plan. The Plan and the Awards
established hereunder shall be unfunded for tax purposes and for purposes of
Title I of the Employee Retirement Income Security Act of 1974, as amended.
Payment of Awards under the Plan shall be made, as due, from the general assets
of the Company. The Company or any of its subsidiaries or affiliates may, in
their sole and absolute discretion, establish one or more accounts, funds or
trusts to reflect their obligations under this Plan, and may make such
investments as they may deem desirable to assist them in meeting such
obligations. Any assets held in such accounts, funds or trusts shall be subject
to claims of the Company's (or, as appropriate, the Company's subsidiary's or
affiliate's) creditors, and no person eligible for a benefit under this Plan
shall have any right, title or interest in any such assets. This Plan shall
constitute solely an unsecured
<PAGE> 15
7
promise by the Company (or, as appropriate, a subsidiary or affiliate) to pay
benefits to the extent provided herein. Notwithstanding anything in this Plan to
the contrary, the Bank shall be jointly and severally liable for the payment of
all benefits payable under the Plan.
14. Construction of Language. Wherever appropriate in the
Plan, words used in the singular may be read in the plural, words used in the
plural may be read in the singular, and words importing the masculine gender
shall be deemed equally to refer to the feminine and the neuter.
15. Amendment and Termination of the Plan. The Plan may at
any time be altered, amended, suspended or terminated in accordance with the
terms of the Officer Incentive Plan.
<PAGE> 1
Exhibit 10.40
DIME BANCORP, INC.
1997 STOCK INCENTIVE PLAN FOR OUTSIDE DIRECTORS
1. Establishment and Purpose of the Plan. The Dime Bancorp, Inc.
1997 Stock Incentive Plan for Outside Directors (the "Plan") is established by
Dime Bancorp, Inc. (the "Company"). The Plan is designed to enable the Company
to attract, retain and motivate members of the Boards of Directors of the
Company and certain of its subsidiaries who are not employees of the Company or
certain of its subsidiaries by providing for or increasing their proprietary
interest in the Company and to enable such directors to participate in the
long-term success and growth of the Company. The Plan provides for the grant of
options ("Non-Qualified Options") to purchase common stock of the Company, par
value $.01 per share ("Common Stock"), which do not qualify as incentive stock
options under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), and for the sale of shares of restricted Common Stock ("Restricted
Stock").
2. Stock Subject to Plan. The maximum number of shares of Common
Stock that may be subject to Non-Qualified Options granted hereunder and the
number of shares of Common Stock that may be sold as Restricted Stock hereunder
shall not, in the aggregate, exceed 350,000 shares of Common Stock, subject to
the adjustments under Section 6. The shares of Common Stock that are issuable
under the Plan may consist of authorized but unissued shares or treasury shares.
Shares of Common Stock subject to the unexercised portions of any Non-Qualified
Options granted under the Plan that expire or terminate or are canceled or
surrendered, and shares of Restricted Stock sold under the Plan that are
repurchased by the Company or, as applicable, any Eligible Subsidiary (as
defined below), may again become available for the grant of Non-Qualified
Options and the sale of Restricted Stock under the Plan.
3. Eligibility. Each person who shall be eligible for the grant of
Non-Qualified Options and the purchase of Restricted Stock hereunder shall be a
member of the Board of Directors of the Company or of any Eligible Subsidiary
(as defined below) who is not an employee of the Company or any entity in which
the Company owns, directly or indirectly, at least a twenty percent (20%)
beneficial ownership interest (an "Outside Director"). For purposes of this
Section 3, an "Eligible Subsidiary" shall mean any corporation, partnership,
joint venture or other entity in which the Company has, directly or indirectly,
a greater than fifty percent (50%) beneficial ownership interest. The Outside
Director to whom a Non-Qualified Option is granted under the Plan is referred to
herein as an "Optionee."
4. Administration of the Plan. The Plan shall be administered by the
Board of Directors of the Company (the "Board"). The Board shall have the
authority to adopt, amend, and rescind such rules and regulations as, in its
opinion, may be advisable in the administration of the Plan, to construe and
interpret the Plan, the rules and regulations, and the instruments evidencing
Non-Qualified Options granted and Restricted Stock sold under the Plan and to
make all other determinations deemed necessary or advisable for the
administration of the Plan. All deci-
<PAGE> 2
2
sions, determinations, and interpretations of the Board shall be binding on all
Plan participants. The Board may from time to time delegate to one or more
officers of the Company or any of its subsidiaries any or all of its authorities
granted hereunder, except that no such authority shall be delegated by the Board
if the possession or exercise thereof by such other person could cause any
transaction, if it occurred or were to occur under the Plan, to fail to qualify
for an exemption under Section 16(b) of the Securities Exchange Act of 1934, as
amended (the "Act"). Notwithstanding anything in this Section 4 to the contrary,
the Compensation Committee of the Board or a subcommittee appointed for this
purpose by the Board or the Compensation Committee and the Benefits Committee of
the Company (herein any such committee shall be referred to as the "Committee")
shall be authorized to exercise any of the administrative authorities otherwise
available to the Board under the Plan, except (i) with respect to the right to
make initial and annual grants to an Outside Director of an Eligible Subsidiary,
(ii) with respect to the right to alter, amend, suspend or terminate the Plan,
and (iii) to the extent the possession or exercise of any such authority by the
Committee could cause any transaction, if it occurred or were to occur under the
Plan, to fail to qualify for an exemption under Section 16(b) of the Act.
5. Types of Awards.
(a) Initial Grant. Each Outside Director who first becomes an
Outside Director of the Company on or after the Effective Date of the Plan, as
provided in Section 15, shall receive, automatically and without further action
of the Board or the Committee, a one-time grant on the date of his or her
election to the Board or, if later, on the date of the meeting of the
shareholders of the Company at which the Plan is initially approved, of: (i) a
Non-Qualified Option to purchase 3,000 shares of Common Stock under the terms
and conditions set forth in Section 8; and (ii) the right to purchase 1,000
shares of Restricted Stock under the terms and conditions set forth in Section
9, in each case subject to adjustment under Section 6. The Board may make an
initial, one-time grant of any number of Non-Qualified Options and rights to
purchase Restricted Stock to any Outside Director of an Eligible Subsidiary upon
his or her first becoming an Outside Director of the Eligible Subsidiary on or
after the Effective Date of the Plan as the Board may in its sole discretion
determine; provided, however, that in no event may any such Outside Director
receive an initial grant of Non-Qualified Options or rights to purchase
Restricted Stock in an amount greater than the amount that is otherwise granted
to an Outside Director of the Company under this Section 5(a), and in no event
may any Outside Director receive more than one initial grant award under the
Plan.
(b) Annual Grant. On the date that is one month following each
annual meeting of the shareholders of the Company occurring on or after the
Effective Date of the Plan (or, if on such date the Common Stock does not trade
on the New York Stock Exchange, on the next following day on which the Common
Stock trades on the New York Stock Exchange), each Outside Director then elected
to the Board or continuing to serve on the Board immediately following such
shareholder meeting shall receive, automatically and without further action of
the Board or the Committee, a grant of a Non-Qualified Option to purchase 1,500
shares of Common Stock under the terms and conditions set forth in Section 8,
subject to adjustment under Section
<PAGE> 3
3
6. The Board may make annual grants of any number of Non-Qualified Options to
any Outside Director of an Eligible Subsidiary as the Board may in its sole
discretion determine; provided, however, that in no event may any such Outside
Director receive in any year an annual grant of Non-Qualified Options in an
amount greater than the amount that is otherwise granted annually to an Outside
Director of the Company under this Section 5(b), and in no event may any Outside
Director receive in any year more than one annual grant award under the Plan.
6. Adjustments. In the event of any merger, reorganization,
consolidation, sale of all or substantially all of the assets, recapitalization,
Common Stock dividend, Common Stock split, spin-off, split-up, split-off,
distribution of assets (including cash) or other change in corporate structure
of the Company affecting the Common Stock, a substitution or adjustment, as may
be determined to be appropriate, shall be made in the aggregate number of shares
of Common Stock reserved for issuance under the Plan, the identity of the stock
to be issued under the Plan, the initial and annual grants of Non-Qualified
Options and Restricted Stock under the Plan, the number of shares of Common
Stock subject to outstanding awards and the amounts to be paid by an Outside
Director, a permissible transferee (as provided in Section 10), the Company or
any Eligible Subsidiary, as the case may be, with respect to outstanding awards.
7. Duration of Plan. No Non-Qualified Options may be granted or
Restricted Stock sold following the tenth anniversary of the date on which the
Plan is initially approved by the shareholders of the Company.
8. Terms and Conditions of Non-Qualified Options.
Non-Qualified Options granted under the Plan shall be subject to the
following terms and conditions:
(a) Written Documentation. Each Non-Qualified Option granted
pursuant to the Plan shall be evidenced by a grant letter executed by the
Company.
(b) Option Term. Each Non-Qualified Option shall have a term
of eleven (11) years.
(c) Exercisability. Each Non-Qualified Option shall become
exercisable to the extent of one-third of the shares covered by such
Non-Qualified Option from and after the first anniversary of the date on which
such Non-Qualified Option is granted and an additional one-third of the shares
covered by such Non-Qualified Option from and after each of the second and third
anniversaries of such grant date, provided in each case that the Optionee is in
continuous service as an Outside Director from the grant date through the
applicable anniversary of such grant date. Notwithstanding the foregoing, each
Non-Qualified Option shall become one hundred percent (100%) exercisable (A) in
the event the Optionee terminates his or her status as an Outside Director by
reason of (i) termination of service as an Outside Director upon or after the
later of (1) the attainment of age sixty-five (65) or (2) the rendering of
service as an Outside Director
<PAGE> 4
4
for at least five (5) full years (including, for this purpose, service rendered
as an Outside Director prior to the Effective Date of the Plan, and service
rendered as a member of the Board of Directors of Anchor Bancorp, Inc. or any of
its subsidiaries, provided such member was not an employee of Anchor Bancorp,
Inc. or any of its subsidiaries during such service period (herein, an "Anchor
Outside Director"), (ii) death, or (iii) disability, or (B) upon the occurrence
of (x) a Terminating Event (as defined in Section 13), (y) the dissemination of
a proxy statement soliciting proxies from stockholders of the Company, by
someone other than the Company, seeking stockholder approval of a Terminating
Event of the type described in clause (a) of Section 13, or (z) the publication
or dissemination of an announcement of action intended to result in a
Terminating Event of the type described in clause (b) or (c) of Section 13,
provided the Optionee is in service as an Outside Director at the time of the
occurrence of such event. Notwithstanding anything in the Plan to the contrary,
no Non-Qualified Option that had been granted to an Optionee shall be
exercisable if the Optionee's status as an Outside Director is terminated for
cause.
(d) Exercise Price. The exercise price per share of Common
Stock purchasable under a Non-Qualified Option shall be equal to the closing
price of the Common Stock, as reported on the New York Stock Exchange, on the
date the Non-Qualified Option is granted.
(e) Method of Exercise. Non-Qualified Options may be
exercised, in whole or in part and to the extent then vested, during the
relevant option period by giving written notice of exercise to the Company
specifying the number of shares of Common Stock to be purchased and accompanied
by payment of the applicable exercise price. Payment of the exercise price may
be made in cash (including cash equivalents), by delivery of unrestricted shares
of Common Stock that have been owned by the Optionee or, as applicable, by a
permissible transferee (as provided in Section 10) for at least six (6) months,
or in any combination of the foregoing.
(f) Termination of Outside Director Status. Except as provided
below, if an Optionee's status as an Outside Director is terminated for any
reason other than (i) termination of service as an Outside Director upon or
after the later of (A) the attainment of age sixty-five (65) or (B) the
rendering of service as an Outside Director for at least five (5) full years
(including, for this purpose, service as an Anchor Non-Employee Director), (ii)
death, (iii) disability, (iv) for cause, or (v) in connection with the
occurrence of a Terminating Event (as provided below), the Non-Qualified Options
that had been granted to such Optionee may be exercised only within twelve (12)
months after such termination of his or her status as an Outside Director, but
only to the extent the Non-Qualified Options were exercisable on the date of his
or her termination, and in no event may such options be exercisable following
the end of the applicable option term. Except as provided below, if an
Optionee's status as an Outside Director is terminated by reason of (i)
termination of service as an Outside Director upon or after the later of (A) the
attainment of age sixty-five (65) or (B) the rendering of service as an Outside
Director for at least five (5) full years (including, for this purpose, service
rendered as an Outside Director prior to the Effective Date of the Plan, and
service rendered as Anchor Outside Director), (ii) death, or (iii) disability,
the Non-Qualified Options that had been granted to such Optionee may be
exercised
<PAGE> 5
5
only within thirty-six (36) months after such termination his or her status as
an Outside Director, but in no event may such options be exercisable following
the end of the applicable option term. Notwithstanding the foregoing, if an
Optionee's status as an Outside Director is terminated at any time within the
two (2) - year period immediately following the occurrence of a Terminating
Event (as defined in Section 13) that occurred while the Optionee was an Outside
Director, the vested Non-Qualified Options that had been granted to such
Optionee may be exercised at any time during the remainder of the applicable
option term. Notwithstanding anything in the Plan to the contrary, if an
Optionee's status as an Outside Director is terminated for cause, the
Non-Qualified Options that had been granted to such Optionee shall immediately
terminate and cease to be exercisable upon the giving of notice of such
termination for cause.
(g) No Shareholder Rights. An Optionee or, as appropriate, a
permissible transferee of a Non-Qualified Option hereunder (as provided in
Section 10) shall not have any rights of a shareholder with respect to shares of
Common Stock relating to the Non-Qualified Option granted under the Plan,
including, but not limited to, rights to any dividends that may be declared and
paid with respect to such Common Stock, until written notice of exercise of such
option has been given and the exercise price has been paid for such shares.
9. Terms and Conditions of Rights to Purchase Restricted Stock.
All grants of Restricted Stock under the Plan shall be subject to
the following terms and conditions:
(a) Purchase Period. Each right to purchase Restricted Stock
under the Plan shall expire sixty (60) days after it is granted.
(b) Purchase Price. The purchase price per share required to
be paid upon exercise of the right to purchase Restricted Stock shall be equal
to $1.00 per share or the par value of the shares purchased if greater than
$1.00 per share.
(c) Lapse of Restrictions. No shares of Restricted Stock may
be sold or otherwise transferred or hypothecated until the restrictions
applicable thereto have lapsed pursuant to this Section 9(c). The restrictions
applicable to shares of Restricted Stock purchased shall lapse as to one-third
of the shares of Restricted Stock so purchased on the third anniversary of the
date of grant of the right to purchase such shares, with the restrictions
lapsing as to an additional one-third of the shares on the fourth anniversary of
such grant date for the shares, and the restrictions lapsing as to the remaining
one-third of the shares on the fifth anniversary of such grant date for the
shares, provided that, in each such case, the holder is in continuous service as
an Outside Director from the grant date through the applicable anniversary of
such grant date. Notwithstanding the foregoing, the restrictions applicable to
shares of Restricted Stock purchased shall immediately lapse upon the earlier of
(A) the holder's (i) death, (ii) disability, or (iii) termination of service as
an Outside Director upon or after the later of (1) the attainment of age
sixty-five (65) or (2) the rendering of service as an Outside Director for at
least five (5) full years (includ-
<PAGE> 6
6
ing, for this purpose, service rendered as an Outside Director prior to the
Effective Date of the Plan, and service rendered as an Anchor Outside Director),
or (B) upon the occurrence of (x) a Terminating Event (as defined in Section
13), (y) the dissemination of a proxy statement soliciting proxies from
stockholders of the Company, by someone other than the Company, seeking
stockholder approval of a Terminating Event of the type described in clause (a)
of Section 13, or (z) the publication or dissemination of an announcement of
action intended to result in a Terminating Event of the type described in clause
(b) or (c) of Section 13, provided the holder is in service as an Outside
Director at the time of the occurrence of such event. In addition, if any of the
events described in clause (x), (y), or (z) above occurs while an Outside
Director holds rights to purchase Restricted Stock, then, upon the exercise of
such rights and the purchase of shares of Restricted Stock, the restrictions
applicable to such shares shall immediately lapse. Notwithstanding anything in
the Plan to the contrary, if the Restricted Stock holder's service as an Outside
Director is terminated for cause, then all shares of Restricted Stock for which
the restrictions had not then lapsed and all rights to purchase Restricted Stock
that had not then been exercised shall be immediately forfeited.
(d) Repurchase of Shares. In the event of the termination of
the status of the holder of Restricted Stock as an Outside Director for any
reason other than (i) death, (ii) disability, or (iii) termination of service as
an Outside Director upon or after the later of (A) the attainment of age
sixty-five (65) or (B) the rendering of service as an Outside Director for at
least five (5) full years (including, for this purpose, service rendered as an
Outside Director prior to the Effective Date of the Plan, and service rendered
as an Anchor Outside Director), unless the restrictions on such stock have
lapsed prior to such termination, the Company (or any Eligible Subsidiary
designated by it) shall, unless then prohibited from purchasing or acquiring
shares of its stock, repurchase for cash all of the holder's Restricted Stock at
the lesser of (x) the price paid by the holder (without interest) or (y) the
fair market value (determined without regard to any restrictions) of the
Restricted Stock on the date of such termination.
(e) Shareholder Rights. The holder of Restricted Stock shall
have the right to vote with respect to such Restricted Stock and shall be
entitled to dividends, if any, paid with respect to shares of Common Stock. If
dividends are paid with respect to the shares of Common Stock, an amount equal
to the amount of any such dividends will be paid to the holder of the Restricted
Stock currently. If dividends paid on Common Stock are payable in the form of
shares of Common Stock, or if shares of Common Stock are to be received by the
holder of Restricted Stock in connection with a stock split regarding the Common
Stock, the shares received as a result of such dividend or stock split shall be
subject to the same restrictions as the Restricted Stock with respect to which
they were paid.
10. Nontransferability. Except as provided in this Section 10,
Non-Qualified Options granted under the Plan shall not be transferable other
than by will or the laws of descent and distribution and shall be exercisable
during the Optionee's lifetime only by the Optionee or by the Optionee's
guardian or legal representative. Subject to such administrative conditions as
the Board may prescribe, an Outside Director may, upon providing written notice
to the Committee
<PAGE> 7
7
or its designee, elect to transfer, without consideration therefor, all or any
portion of the Non-Qualified Options granted to the Outside Director under the
Plan to members of his or her "immediate family" (as defined below), to a trust
or trusts maintained solely for the benefit of the Outside Director and/or the
members of his or her immediate family, or to such other entities as may be
determined by the Board. Any purported assignment, alienation, pledge,
attachment, sale, transfer, or encumbrance that does not qualify as a
permissible transfer under this Section 10 shall be void and unenforceable
against the Plan and the Company. For purposes of this Section 10, the term
"immediate family" shall mean, with respect to a particular Outside Director,
the Outside Director's spouse, parents, children, stepchildren, legally adopted
children, and grandchildren, and such other persons as may be determined by the
Board. The terms of any such Non-Qualified Option, as set forth under the Plan
or otherwise, shall be binding upon the beneficiaries, executors,
administrators, heirs and successors of the Optionee and, as applicable, a
permissible transferee hereunder. The exercise of a Non-Qualified Option that is
transferred pursuant to this Section 10 and the shares of Common Stock acquired
thereby shall be subject to the applicable provisions of the Plan and to all
applicable requirements of law, including, but not limited to, the registration
requirements under the Securities Act of 1933, as amended. Upon any transfer of
a Non-Qualified Option, as provided in this Section 10, the transferee with
respect to such option shall be subject to the provisions of the Plan that
otherwise would apply to such option if it was still held by the Optionee.
11. Shareholder Approval. No Non-Qualified Options granted under the
Plan may be exercised and no Restricted Stock may be sold prior to approval of
the Plan by the holders of a majority of the shares of Common Stock present, or
represented, and entitled to vote at a meeting of shareholders of the Company.
12. Amendment and Termination of the Plan. The Board may, at any
time, alter, amend, suspend, or terminate the Plan. No such action of the Board
shall require the approval of the shareholders of the Company, unless required
by applicable law or by the rules or regulations of any securities exchange or
regulatory agency, or otherwise required in order to enable transactions
associated with grants of Non-Qualified Options or grants of rights to purchase,
and purchases of, Restricted Stock to qualify for an exemption from Section
16(b) of the Act or, to the extent desirable, to qualify for the exception for
qualified performance-based compensation under Section 162(m) of the Code. No
Non-Qualified Option or right to purchase Restricted Stock may be granted, or
Restricted Stock sold, during any suspension of the Plan or after the
termination of the Plan, and no alteration, amendment, suspension, or
termination of the Plan shall, without the Optionee's (or, as applicable,
permissible transferee's (as provided in Section 10)) or holder's consent, alter
or impair any rights or obligations under any Non-Qualified Option theretofore
granted, or Restricted Stock theretofore sold, to him or her under the Plan.
13. Terminating Event.
As used in this Plan, a "Terminating Event" shall be:
<PAGE> 8
8
(a) the reorganization, merger, or consolidation of the
Company with or into any other entity as a result of which the Common Stock is
exchanged for or converted into cash or property or securities not issued by the
Company, unless the reorganization, merger, or consolidation shall have been
affirmatively recommended to the Company's shareholders by a majority of the
members of the Board and provision shall have been made for Non-Qualified
Options and rights to purchase Restricted Stock then outstanding to be continued
in effect following the reorganization, merger, or consideration;
(b) the acquisition of all or substantially all of the
property or of more than thirty-five percent (35%) of the voting power of the
Company by any person or entity; or
(c) the occurrence of any circumstance having the effect that
directors of the Company who were nominated for election as directors by the
Nominating Committee of the Board shall cease for any reason to constitute a
majority of the authorized number of directors of the Company's Board.
14. General Provisions.
(a) Each grant under the Plan shall, as applicable, be subject
to (i) the listing, registration or qualification of the Common Stock upon any
securities exchange or under any state or federal law and (ii) the consent or
approval of any governmental regulatory body.
(b) Neither the adoption of the Plan nor any grant hereunder
shall confer upon any Outside Director any right to continue in the service as a
director of the Company or any of its subsidiaries.
(c) No member of the Board or the Committee, nor any officer
or employee of the Company or any of its subsidiaries acting on behalf of the
Board or the Committee, shall be personally liable for any action, determination
or interpretation taken or made with respect to the Plan, and all members of the
Board or the Committee and all officers or employees of the Company and any of
its subsidiaries acting on their behalf shall, to the extent permitted by law,
be fully indemnified and protected by the Company in respect of any such action,
determination or interpretation.
15. Effective Date. Subject to the approval of the Plan by the
affirmative votes of the holders of a majority of the shares of Common Stock
present, or represented, and entitled to vote at a meeting of shareholders, the
Plan shall be effective as of January 1, 1997.
<PAGE> 1
Exhibit 10.41
Amendment to the Dime Bancorp, Inc.
1997 Stock Incentive Plan for Outside Directors
Effective June 27, 1997
1. The second textual sentence of Section 8(c) of the Plan is
amended to read as follows:
"Notwithstanding the foregoing, each Non-Qualified Option shall become one
hundred percent (100%) exercisable (A) in the event the Optionee terminates his
or her status as an Outside Director by reason of (i) termination of service as
an Outside Director upon or after the later of (1) the attainment of age
sixty-five (65) or (2) the rendering of service as an Outside Director for at
least five (5) full years (including, for this purpose, service rendered as an
Outside Director prior to the Effective Date of the Plan, and service rendered
as a member of the Board of Directors of Anchor Bancorp, Inc. or any of its
subsidiaries, provided such member was not an employee of Anchor Bancorp, Inc.
or any of its subsidiaries during such service period (herein, an "Anchor
Outside Director"), (ii) death, or (iii) disability, or (B) upon the occurrence
of (I) with respect to the initial and annual grants made prior to June 27,
1997, (x) a Terminating Event (as defined in Section 13(a)), (y) the
dissemination of a proxy statement soliciting proxies from stockholders of the
Company, by someone other than the Company, seeking stockholder approval of a
Terminating Event of the type described in clause (i) of Section 13(a), or (z)
the publication or dissemination of an announcement of action intended to result
in a Terminating Event of the type described in clause (ii) or (iii) of Section
13(a), provided the Optionee is in service as an Outside Director at the time of
the occurrence of such event or (II) with respect to initial or annual grants
made on or after June 27, 1997, a Change in Control (as defined in Section
13(b)), provided the Optionee is in service as an Outside Director at the time
of the occurrence of the Change in Control."
2. The first, second and third textual sentences of Section 8(f) of the
Plan are amended to read as follows:
"Except as provided below, if an Optionee's status as an Outside Director is
terminated for any reason other than (i) termination of service as an Outside
Director upon or after the later of (A) the attainment of age sixty-five (65) or
(B) the rendering of service as an Outside Director for at least five (5) full
years (including, for this purpose, service as an Anchor Non-Employee Director),
(ii) death, (iii) disability, (iv) for cause, or (v) in connection with the
occurrence of (I) with respect to the initial and annual grants made prior to
June 27, 1997, a Terminating Event (as defined in Section 13 (a)) or (II) with
respect to initial or annual grants made on or after June 27, 1997, a Change in
Control (as
<PAGE> 2
defined in Section 13(b)), the Non-Qualified Options that had been granted to
such Optionee may be exercised only within twelve (12) months after such
termination of his or her status as an Outside Director, but only to the extent
the Non-Qualified Options were exercisable on the date of his or her
termination, and in no event may such options be exercisable following the end
of the applicable option term. Except as provided below, if an Optionee's status
as an Outside Director is terminated by reason of (i) termination of service as
an Outside Director upon or after the later of (A) the attainment of age
sixty-five (65) or (B) the rendering of service as an Outside Director for at
least five (5) full years (including, for this purpose, service rendered as an
Outside Director prior to the Effective Date of the Plan, and service rendered
as Anchor Outside Director), (ii) death, or (iii) disability, the Non-Qualified
Options that had been granted to such Optionee may be exercised only within
thirty-six (36) months after such termination of his or her status as an Outside
Director, but in no event may such options be exercisable following the end of
the applicable option term. Notwithstanding the foregoing, if an Optionee's
status as an Outside Director is terminated at any time within the two (2) -
year period immediately following (I) with respect to the initial and annual
grants made prior to June 27, 1997, the occurrence of a Terminating Event (as
defined in Section 13(a)) that occurred while the Optionee was an Outside
Director or (II) with respect to initial or annual grants made on or after June
27, 1997, the occurrence of a Change in Control (as defined in Section 13(b))
that occurred while the Optionee was an Outside Director, the vested
Non-Qualified Options that had been granted to such Optionee may be exercised at
any time during the remainder of the applicable option term."
3. The third and fourth textual sentences of Section 9(c) of the Plan are
amended to read as follows:
"Notwithstanding the foregoing, the restrictions applicable to shares of
Restricted Stock purchased shall immediately lapse upon the earlier of (A) the
holder's (i) death, (ii) disability, or (iii) termination of service as an
Outside Director upon or after the later of (1) the attainment of age sixty-five
(65) or (2) the rendering of service as an Outside Director for at least five
(5) full years (including, for this purpose, service rendered as an Outside
Director prior to the Effective Date of the Plan, and service rendered as an
Anchor Outside Director), or (B) upon the occurrence of (I) with respect to the
initial and annual grants made prior to June 27, 1997, (x) a Terminating Event
(as defined in Section 13(a)), (y) the dissemination of a proxy statement
soliciting proxies from stockholders of the Company, by someone other than the
Company, seeking stockholder approval of a Terminating Event of the type
described in clause (i) of Section 13(a), or (z) the publication or
dissemination of an announcement of action intended to result in a Terminating
Event of the type described in clause (ii) or (iii) of Section 13(a), provided
the holder is in service as an Outside Director at the time of the occurrence of
such event or (II) with respect to initial and annual grants made on or after
June 27, 1997, a Change in Control (as defined in Section 13(b)), provided the
holder is in service as an Outside Director at the time of the occurrence of the
Change in Control. In addition, if any of the
-2-
<PAGE> 3
events, described in the otherwise applicable clause (I) or (II) above, occurs
while an Outside Director holds rights to purchase Restricted Stock, then, upon
the exercise of such rights and the purchase of shares of Restricted Stock, the
restrictions applicable to such shares shall immediately lapse."
4. Section 13 of the Plan is amended to designate the language currently
therein as subsection (a) and to redesignate clauses (a), (b) and (c) thereof as
clauses (i), (ii) and (iii), respectively, to change the heading thereof to read
as "Terminating Event and Change in Control," and to add a new subsection (b) to
read as follows:
"(b) As used in this Plan, a "Change in Control" shall be: (a) the merger,
consolidation or reorganization of the Company or The Dime Savings Bank of New
York, FSB (the "Bank") with any other entity (or the issuance by the Company or
the Bank of its voting securities as consideration in a merger, consolidation or
reorganization of a subsidiary of the Bank or the Company with any other entity)
whether or not such merger, consolidation or reorganization shall have been
affirmatively recommended to the Company's stockholders or the Bank's
stockholders by action of the Board or the Bank's Board of Directors,
respectively, other than such a merger, consolidation or reorganization which
would result in the voting securities of the Company or the Bank (as the case
may be) outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the other
entity) at least 65% of the combined voting power of the voting securities of
the Company or the Bank (as the case may be) or such other entity outstanding
immediately after such merger, consolidation or reorganization; (b) the approval
by the stockholders of the Company or the Bank of a plan of complete liquidation
of the Company or the Bank, respectively, or of an agreement for the sale or
disposition by the Company or the Bank of all or substantially all of the
Company's assets or the Bank's assets; (c) the acquisition of more than 35% of
the voting power of the Company or the Bank by any person or entity, or any
persons or entities acting as a group for purposes of Section 13(d) of the Act;
(d) the occurrence of any circumstance having the effect that directors
nominated by the Governance and Nominating Committee of the Company's or the
Bank's Board of Directors cease to constitute a majority of the authorized
number of directors of the Company or the Bank, respectively; (e) the conversion
or exchange of the Common Stock into securities other than the Common Stock
unless provisions have been made for the awards made under the Plan, and then
outstanding, to be continued in effect under the Plan following such conversion
or exchange on substantially similar terms and conditions; (f) the dissemination
of a proxy statement soliciting proxies from Company stockholders by someone
other than the Company seeking stockholder approval of an event described in (a)
above; or (g) the publication or dissemination of an announcement of action
intended to result in an event described in (c) or (d) above."
-3-
<PAGE> 1
Exhibit 10.42
Amendment to the Dime Bancorp, Inc.
1997 Stock Incentive Plan for Outside Directors
Effective September 19, 1997
1. The second textual sentence of Section 8(c) of the Plan is amended to
read as follows:
"Notwithstanding the foregoing, each Non-Qualified Option shall become one
hundred percent (100%) exercisable (A) in the event the Optionee
terminates his or her status as an Outside Director by reason of (i)
termination of service as an Outside Director upon or after the later of
(1) the attainment of age sixty-five (65) or (2) the rendering of service
as an Outside Director for at least five (5) full years (including, for
this purpose, service rendered as an Outside Director prior to the
Effective Date of the Plan, and service rendered as a member of the Board
of Directors of Anchor Bancorp, Inc. or any of its subsidiaries, provided
such member was not an employee of Anchor Bancorp, Inc. or any of its
subsidiaries during such service period (herein, an "Anchor Outside
Director"), (ii) death, or (iii) disability, or (B) upon the occurrence of
(w) a Terminating Event (as defined in Section 13(a)), (x) a Change in
Control (as defined in Section 13(b)), (y) the dissemination of a proxy
statement soliciting proxies from stockholders of the Company, by someone
other than the Company, seeking stockholder approval of a Terminating
Event of the type described in clause (i) of Section 13(a), or (z) the
publication or dissemination of an announcement of action intended to
result in a Terminating Event of the type described in clause (ii) or
(iii) of Section 13(a), provided the Optionee is in service as an Outside
Director at the time of the occurrence of such event."
2. The first, second and third textual sentences of Section 8(f) of the
Plan are amended to read as follows:
"Except as provided below, if an Optionee's status as an Outside Director
is terminated for any reason other than (i) termination of service as an
Outside Director upon or after the later of (A) the attainment of age
sixty-five (65) or (B) the rendering of service as an Outside Director for
at least five (5) full years (including, for this purpose, service as an
Anchor Non-Employee Director), (ii) death, (iii) disability, (iv) for
cause, or (v) in connection with the occurrence of a Terminating Event (as
defined in Section 13(a)) or a Change in Control (as defined in Section
13(b)), the Non-Qualified Options that had been granted to such Optionee
may be exercised only within twelve (12) months after such termination of
his or her status as an Outside Director, but only to the extent the
Non-Qualified Options were exercisable on the date of his or her
termination, and in no event may such options be exercisable following the
end of the applicable option term. Except as provided below, if an
Optionee's status as an Outside Director is terminated by reason
<PAGE> 2
of (i) termination of service as an Outside Director upon or after the
later of (A) the attainment of age sixty-five (65) or (B) the rendering of
service as an Outside Director for at least five (5) full years
(including, for this purpose, service rendered as an Outside Director
prior to the Effective Date of the Plan, and service rendered as Anchor
Outside Director), (ii) death, or (iii) disability, the Non-Qualified
Options that had been granted to such Optionee may be exercised only
within thirty-six (36) months after such termination of his or her status
as an Outside Director, but in no event may such options be exercisable
following the end of the applicable option term. Notwithstanding the
foregoing, if an Optionee's status as an Outside Director is terminated at
any time within the two (2) - year period immediately following the
occurrence of a Terminating Event (as defined in Section 13(a)) or a
Change in Control (as defined in Section 13(b)) that occurred while the
Optionee was an Outside Director, the vested Non-Qualified Options that
had been granted to such Optionee may be exercised at any time during the
remainder of the applicable option term."
3. The third and fourth textual sentences of Section 9(c) of the Plan are
amended to read as follows:
"Notwithstanding the foregoing, the restrictions applicable to shares of
Restricted Stock purchased shall immediately lapse upon the earlier of (A)
the holder's (i) death, (ii) disability, or (iii) termination of service
as an Outside Director upon or after the later of (1) the attainment of
age sixty-five (65) or (2) the rendering of service as an Outside Director
for at least five (5) full years (including, for this purpose, service
rendered as an Outside Director prior to the Effective Date of the Plan,
and service rendered as an Anchor Outside Director), or (B) the occurrence
of (w) a Terminating Event (as defined in Section 13(a)), (x) a Change in
Control (as defined in Section 13(b)), (y) the dissemination of a proxy
statement soliciting proxies from stockholders of the Company, by someone
other than the Company, seeking stockholder approval of a Terminating
Event of the type described in clause (i) of Section 13(a), (z) the
publication or dissemination of an announcement of action intended to
result in a Terminating Event of the type described in clause (ii) or
(iii) of Section 13(a), provided the holder is in service as an Outside
Director at the time of the occurrence of such event. In addition, if any
of the events described in clause (B) of the preceding sentence occur
while an Outside Director holds rights to purchase Restricted Stock, then,
upon the exercise of such rights and the purchase of shares of Restricted
Stock, the restrictions applicable to such shares shall immediately
lapse."
4. Section 13(b) of the Plan is amended to read as follows:
"(b) As used in this Plan, a "Change in Control" shall mean
the occurrence of any of the following events: (i) any Person is or
becomes the Beneficial Owner, directly or indirectly, of securities of the
Company (not including in the securities beneficially owned by such Person
any securities acquired directly from the Company or its Affiliates)
-2-
<PAGE> 3
representing 35% or more of the combined voting power of the Company's
then outstanding securities; (ii) the following individuals cease for any
reason to constitute a majority of the number of directors then serving as
directors of the Company: individuals who, on July 24, 1997, constitute
the Board of Directors of the Company and any new director (other than a
director whose initial assumption of office is in connection with the
settlement of an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of directors
of the Company) whose appointment or election by the Board of Directors of
the Company or nomination for election by the Company's stockholders was
approved or recommended by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors on July 24, 1997
or whose appointment, election or nomination for election was previously
so approved or recommended; (iii) there is consummated a merger or
consolidation of the Company or any direct or indirect subsidiary of the
Company with any other corporation or entity, other than (A) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior to such merger or consolidation continuing
to represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any Parent thereof), in
combination with the ownership of any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any subsidiary
of the Company, at least 65% of the combined voting power of the
securities of the Company, such surviving entity or any Parent thereof
outstanding immediately after such merger or consolidation or (B) a merger
or consolidation effected solely to implement a recapitalization of the
Company or The Dime Savings Bank of New York, FSB (the "Bank") (or similar
transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company or the Bank (not
including in the securities beneficially owned by such Person any
securities acquired directly from the Company or its Affiliates)
representing 35% or more of the combined voting power of the Company's or
the Bank's then outstanding securities; or (iv) the stockholders of the
Company or the Bank approve a plan of complete liquidation or dissolution
of the Company or the Bank, respectively, or there is consummated a sale
or disposition by the Company or any of its subsidiaries of any assets
which individually or as part of a series of related transactions
constitute all or substantially all of the Company's consolidated assets
(provided that, for these purposes, a sale of all or substantially all of
the voting securities of the Bank or a Parent of the Bank shall be deemed
to constitute a sale of substantially all of the Company's consolidated
assets), other than any such sale or disposition to an entity at least 65%
of the combined voting power of the voting securities of which are owned
by stockholders of the Company in substantially the same proportions as
their ownership of the voting securities of the Company immediately prior
to such sale or disposition."
5. Section 13 of the Plan is amended to add a new subsection (c) after
subsection (b) therein to read as follows:
-3-
<PAGE> 4
"(c) As used in connection with the definition of Change in Control
(as set forth in subsection (b) of this Section 13), "Affiliate" shall
have the meaning set forth in Rule 12b-2 promulgated under Section 12 of
the Act; "Beneficial Owner" shall have the meaning set forth in Rule 13d-3
under the Act; "Parent" shall mean any entity that becomes the Beneficial
Owner of at least 80% of the voting power of the outstanding voting
securities of the Company or of an entity that survives any merger or
consolidation of the Company or any direct or indirect subsidiary of the
Company; and "Person" shall have the meaning given in Section 3(a)(9) of
the Act, as modified and used in Sections 13(d) and 14(d) thereof, except
that such term shall not include (i) the Company or any of its
subsidiaries, (ii) a trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any of its Affiliates, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation or entity owned, directly or indirectly,
by the stockholders of the Company in substantially the same proportions
as their ownership of stock of the Company."
-4-
<PAGE> 1
Exhibit 21
(As of December 31, 1997)
DIME BANCORP, INC.'S SUBSIDIARIES
DIME CAPITAL TRUST I
DIME CAPITAL TRUST II
THE DIME SAVINGS BANK OF NEW YORK, FSB
DIME SAVINGS BANK SUBSIDIARIES
ACCORD AGENCY, INC.
ACCORD REALTY MANAGEMENT CORPORATION
ACORN PROPERTIES INC.
ANCHOR MORTGAGE RESOURCES, INC.(1)
ANCHOR PROPERTIES OF NEW JERSEY, INC.
ANCHOR PROPERTY CORP.
ANCHOR RESIDENTIAL FACILITIES CORPORATION(2)
ANCHOR SYSTEMS CORP.(3)
APRIL PARK CORP.
ASB AGENCY, INC.
69-30 AUSTIN HOLDING CORP.
BANKERS FEDERAL SERVICE CORPORATION
BEECH REAL ESTATE MANAGEMENT INC.
BFED I CORP.
BFS CREDIT CORP.
BFS FINANCIAL CORPORATION(4)
555 BILTMORE, INC.(5)
CEDAR REAL ESTATE MANAGEMENT CORP.
445 CEDARHURST, INC.
THE CHELSEA ACCORD CORPORATION
COLONIAL BRISTOL INC.
THE DALTON ACCORD CORPORATION(6)
THE DIME AGENCY, INC.
DIME CRE, INC.
DIME FLORIDA CONSOLIDATION CORP.(7)
DIME FUNDING, INC.
- --------
(1) Formerly known as MORTGAGE RESOURCES, INC.
(2) Formerly known as ANCHOR FACILITIES CORP.
(3) Formerly known as SUBURBAN COASTAL SYSTEMS CORPORATION f/k/a COASTAL
COMPUTER SERVICES, INC.
(4) Formerly known as BFS FINANCE CORP.
(5) Formerly known as ALHAMBRA CIRCLE, INC.
(6) Formerly known as THE SUTTON EAST ACCORD CORPORATION
(7) Formerly known as DIME MORTGAGE COMPANY, INC.
f/k/a THE DIME REAL ESTATE SERVICES, INC.
<PAGE> 2
DIME MORTGAGE OF NEW JERSEY, INC.(8)
DIME NJ AGENCY, INC.(9)
THE DIME REAL ESTATE SERVICES - CONNECTICUT, INC.
DIME SECURITIES OF NEW YORK, INC.(10)
DNJ AGENCY, INC.
DOGWOOD REAL ESTATE CORP.
THE E-F BATTERY ACCORD CORPORATION
EVERGREEN REAL ESTATE CORP.
FAIRFIELD FINANCIAL HOLDINGS INC.
FAMESLINC, INC.(11)
FAYETTE PROPERTIES INC.
FAYETTE PROPERTIES OF NEW JERSEY, INC.
F.C. LTD.
FIR REAL ESTATE CORP.
GARDEN MANAGEMENT CO., INC.
GRANNY ROAD LAND CORP.
GREENLEAF REAL ESTATE CORP.
HARMONY AGENCY, INC.(12)
HEMLOCK REAL ESTATE MANAGEMENT CORP.
HERITAGE COMMUNITY SERVICE CORP.
IC CAPITAL CO., INC.(13)
IMCO CAPITAL CO., INC.
INSERVCO, INC.
IRIS REAL ESTATE MANAGEMENT CORP.
JOHN STREET SERVICE CORP.
JUNIPER REAL ESTATE MANAGEMENT CORP.
1101 KENNEDY, INC.
LAKEVIEW LAND CORP.(14)
LAWRENCE AVENUE CORP.(15)
520 LINC, INC.
LINCOLN BARRY GARDENS ACQUISITION CORP.
LINCOLN REALTY CAPITAL, INC.(16)
LINCOLN RRE CORPORATION
- ----------
(8) Formerly known as DIME OF NEW JERSEY, INC.
(9) Formerly known as ASB/NJ AGENCY INC.
f/k/a SUBURBAN COASTAL INSURANCE SERVICES, INC.
f/k/a COASTAL INSURANCE SERVICES, INC.
(10) Formerly known as TDA SECURITIES INC.
(11) Formerly known as 3489 BROADLINC, INC.
(12) Formerly known as ALLRISK AGENCY, INC.
(13) Formerly known as INTEGRATED CAPITAL CO., INC.
(14) Formerly known as 685 PARKER STREET INC.
(15) Formerly known as 220 CENTRAL AVENUE CORP.
f/k/a HICKS STREET, INC.
(16) Formerly known as ACCORD PROPERTIES, INC.
<PAGE> 3
LINCOLN TUDOR COURT ACQUISITION CORP.
LINCOLN VENTURES GROUP LTD.
LOCUST REAL PROPERTY MANAGEMENT INC.
MAPLE REAL PROPERTY MANAGEMENT INC.
MEDFORD ASSOCIATES, INC.
MIDWAY HOLDINGS INC.(17)
THE MOUNT KISCO ACCORD CORPORATION
NAMIS INSURANCE AGENCY OF MASSACHUSETTS, INC.
NAMIS INSURANCE SERVICES OF KENTUCKY, INC.
NAMIS INSURANCE SERVICES OF NEVADA, INC.
NAMIS INSURANCE SERVICES OF TEXAS, INC.(18)
78 NEW LINC CORPORATION(19)
NEW PELHAMCO INC.
NICKEL PURCHASING COMPANY, INC.
NORTH AMERICAN INSURANCE AGENCY OF OHIO, INC.
NORTH AMERICAN MORTGAGE COMPANY
NORTH AMERICAN MORTGAGE INSURANCE SERVICES(20)
NORTHEAST APPRAISALS, INC.
NORTHSHORE CONSOLIDATION CORP.(21)
NUTMEG REAL ESTATE CORP.
OAK REAL ESTATE CORP.
847218 ONTARIO LIMITED
847219 ONTARIO LIMITED
847220 ONTARIO LIMITED
847221 ONTARIO LIMITED
PANTHER LANE INC.
PELHAM VENTURE INC.
620-622 PELHAMDALE AVENUE OWNERS CORPORATION
PEMBROKE AND LIVINGSTON, INC.
PINE REAL ESTATE MANAGEMENT CORP.
PLAINVIEW INN, INC.
1804 PLAZA CORP.(22)
RECON SERVICES CORP.(23)
RESERVOIR AVENUE MANAGEMENT, INC.
- ----------
(17) Formerly known as MIDWAY GREEN INC.
(18) Formerly known as NORTH AMERICAN MORTGAGE INSURANCE SERVICES, INC.
(19) Formerly known as 78 NEW LINC CORP.
(20) Formerly known as SONOMA INSURANCE AGENCY
f/k/a IMCO INSURANCE SERVICES
f/k/a SONOMA INSURANCE AGENCY
(21) Formerly known as DIME CONSOLIDATION COMPANY, INC.
(22) Formerly known as PRINCE FARMS DEVELOPMENT CORP.
f/k/a PEARL PLAZA INC.
f/k/a PARK LANE SOUTH CORP.
(23) Formerly known as 1441 GRANT LINC, INC.
<PAGE> 4
65 ROOSEVELT INC.(24)
THE SEVENTH AVENUE ACCORD CORPORATION
299 SHORE LEE CORP.
THE SIXTH AVENUE ACCORD CORPORATION
SKY RESORT, INC.
SOMERSET CONSOLIDATION CORPORATION
SONOMA CONVEYANCING CORPORATION
STANDARD OF GEORGIA INSURANCE AGENCY, INC.
SOUTH MUNN INC.(25)
UNIONDALE HOLDINGS INC.
VANDERVENTER CORP.
VINTAGE REINSURANCE COMPANY
WACCABORO CORP.
WAPPINGERS FALLS DEVELOPMENT CORP.
WINDY RIDGE CORP.
YELLOWSTONE VENTURE, INC.
- ----------
(24) Formerly known as NIFTY CORP.
(25) Formerly known as 952 W. THIRD ST. CORP. f/k/a MACARTHUR INC.
<PAGE> 1
Exhibit 23
Independent Auditors' Consent
The Board of Directors
Dime Bancorp, Inc.:
We consent to incorporation by reference in the Registration Statements (Nos.
33-88552, 33-88554,33-88556, 33-88558, 33-88560, 33-88564, 33-88566, 333-04477,
333-26609, 333-26777, 333-35565 and 333-48127) on Form S-8 of Dime Bancorp, Inc.
of our report dated January 19, 1998 relating to the consolidated statements of
financial condition of Dime Bancorp, Inc. and subsidiaries as of December 31,
1997 and 1996, and the related consolidated statements of income, changes in
stockholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1997, which report is incorporated by reference in
the December 31, 1997 Annual Report on Form 10-K of Dime Bancorp, Inc.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
New York, New York
March 30, 1998
<PAGE> 1
Exhibit 24
POWER OF ATTORNEY
The undersigned hereby appoints Lawrence J. Toal and James E. Kelly or
either of the foregoing persons acting alone, each with the full power of
substitution, as his true and lawful attorney-in-fact and agent, for him and in
his name and place, to sign the name of the undersigned in the capacity or
capacities indicated below to the Annual Report of Dime Bancorp, Inc. on Form
10-K for the year ended December 31, 1997 and any and all amendments to such
Form 10-K and to file the same, with all exhibits thereto and other documents in
connection therewith, with all necessary or appropriate governmental or other
entities, including, but not limited to, the Securities and Exchange Commission
and the New York Stock Exchange, granting to such attorney-in-fact and agent
full power and authority to perform each act necessary to be done as fully to
all intents and purposes as he might do in person, hereby ratifying and
confirming all that such attorney-in-fact and agent may lawfully do or cause to
be done by virtue hereof.
SIGNATURE Title Date
/s/ James M. Large, Jr. March 21, 1998
- ---------------------------- Director ----------------------------
James M. Large, Jr.
<PAGE> 2
POWER OF ATTORNEY
The undersigned hereby appoints James E. Kelly as his true and lawful
attorney-in-fact and agent, for him and in his name and place, to sign the name
of the undersigned in the capacity or capacities indicated below to the Annual
Report of Dime Bancorp, Inc. on Form 10-K for the year ended December 31, 1997
and any and all amendments to such Form 10-K and to file the same, with all
exhibits thereto and other documents in connection therewith, with all necessary
or appropriate governmental or other entities, including, but not limited to,
the Securities and Exchange Commission and the New York Stock Exchange, granting
to such attorney-in-fact and agent full power and authority to perform each act
necessary to be done as fully to all intents and purposes as he might do in
person, hereby ratifying and confirming all that such attorney-in-fact and agent
may lawfully do or cause to be done by virtue hereof.
SIGNATURE Title Date
/s/ Lawrence J. Toal March 27, 1998
- ---------------------------- Chief Executive Officer, -------------------
Lawrence J. Toal President and Director
<PAGE> 3
POWER OF ATTORNEY
The undersigned hereby appoints Lawrence J. Toal and James E. Kelly or
either of the foregoing persons acting alone, each with the full power of
substitution, as his true and lawful attorney-in-fact and agent, for him and in
his name and place, to sign the name of the undersigned in the capacity or
capacities indicated below to the Annual Report of Dime Bancorp, Inc. on Form
10-K for the year ended December 31, 1997 and any and all amendments to such
Form 10-K and to file the same, with all exhibits thereto and other documents in
connection therewith, with all necessary or appropriate governmental or other
entities, including, but not limited to, the Securities and Exchange Commission
and the New York Stock Exchange, granting to such attorney-in-fact and agent
full power and authority to perform each act necessary to be done as fully to
all intents and purposes as he might do in person, hereby ratifying and
confirming all that such attorney-in-fact and agent may lawfully do or cause to
be done by virtue hereof.
SIGNATURE Title Date
/s/ Derrick D. Cephas March 27, 1998
- --------------------------- Director ----------------------------
Derrick D. Cephas
<PAGE> 4
POWER OF ATTORNEY
The undersigned hereby appoints Lawrence J. Toal and James E. Kelly or
either of the foregoing persons acting alone, each with the full power of
substitution, as his true and lawful attorney-in-fact and agent, for him and in
his name and place, to sign the name of the undersigned in the capacity or
capacities indicated below to the Annual Report of Dime Bancorp, Inc. on Form
10-K for the year ended December 31, 1997 and any and all amendments to such
Form 10-K and to file the same, with all exhibits thereto and other documents in
connection therewith, with all necessary or appropriate governmental or other
entities, including, but not limited to, the Securities and Exchange Commission
and the New York Stock Exchange, granting to such attorney-in-fact and agent
full power and authority to perform each act necessary to be done as fully to
all intents and purposes as he might do in person, hereby ratifying and
confirming all that such attorney-in-fact and agent may lawfully do or cause to
be done by virtue hereof.
SIGNATURE Title Date
/s/ Frederick C. Chen March 26, 1998
- --------------------------- Director ---------------------------
Frederick C. Chen
<PAGE> 5
POWER OF ATTORNEY
The undersigned hereby appoints Lawrence J. Toal and James E. Kelly or
either of the foregoing persons acting alone, each with the full power of
substitution, as his true and lawful attorney-in-fact and agent, for him and in
his name and place, to sign the name of the undersigned in the capacity or
capacities indicated below to the Annual Report of Dime Bancorp, Inc. on Form
10-K for the year ended December 31, 1997 and any and all amendments to such
Form 10-K and to file the same, with all exhibits thereto and other documents in
connection therewith, with all necessary or appropriate governmental or other
entities, including, but not limited to, the Securities and Exchange Commission
and the New York Stock Exchange, granting to such attorney-in-fact and agent
full power and authority to perform each act necessary to be done as fully to
all intents and purposes as he might do in person, hereby ratifying and
confirming all that such attorney-in-fact and agent may lawfully do or cause to
be done by virtue hereof.
SIGNATURE Title Date
/s/ J. Barclay Collins II March 24, 1998
- --------------------------- Director ---------------------------
J. Barclay Collins II
<PAGE> 6
POWER OF ATTORNEY
The undersigned hereby appoints Lawrence J. Toal and James E. Kelly or
either of the foregoing persons acting alone, each with the full power of
substitution, as his true and lawful attorney-in-fact and agent, for him and in
his name and place, to sign the name of the undersigned in the capacity or
capacities indicated below to the Annual Report of Dime Bancorp, Inc. on Form
10-K for the year ended December 31, 1997 and any and all amendments to such
Form 10-K and to file the same, with all exhibits thereto and other documents in
connection therewith, with all necessary or appropriate governmental or other
entities, including, but not limited to, the Securities and Exchange Commission
and the New York Stock Exchange, granting to such attorney-in-fact and agent
full power and authority to perform each act necessary to be done as fully to
all intents and purposes as he might do in person, hereby ratifying and
confirming all that such attorney-in-fact and agent may lawfully do or cause to
be done by virtue hereof.
SIGNATURE Title Date
/s/ Richard W. Dalrymple March 23, 1998
- --------------------------- Director ---------------------------
Richard W. Dalrymple
<PAGE> 7
POWER OF ATTORNEY
The undersigned hereby appoints Lawrence J. Toal and James E. Kelly or
either of the foregoing persons acting alone, each with the full power of
substitution, as his true and lawful attorney-in-fact and agent, for him and in
his name and place, to sign the name of the undersigned in the capacity or
capacities indicated below to the Annual Report of Dime Bancorp, Inc. on Form
10-K for the year ended December 31, 1997 and any and all amendments to such
Form 10-K and to file the same, with all exhibits thereto and other documents in
connection therewith, with all necessary or appropriate governmental or other
entities, including, but not limited to, the Securities and Exchange Commission
and the New York Stock Exchange, granting to such attorney-in-fact and agent
full power and authority to perform each act necessary to be done as fully to
all intents and purposes as he might do in person, hereby ratifying and
confirming all that such attorney-in-fact and agent may lawfully do or cause to
be done by virtue hereof.
SIGNATURE Title Date
/s/ James F. Fulton March 26, 1998
- --------------------------- Director ---------------------------
James F. Fulton
<PAGE> 8
POWER OF ATTORNEY
The undersigned hereby appoints Lawrence J. Toal and James E. Kelly or
either of the foregoing persons acting alone, each with the full power of
substitution, as his true and lawful attorney-in-fact and agent, for him and in
his name and place, to sign the name of the undersigned in the capacity or
capacities indicated below to the Annual Report of Dime Bancorp, Inc. on Form
10-K for the year ended December 31, 1997 and any and all amendments to such
Form 10-K and to file the same, with all exhibits thereto and other documents in
connection therewith, with all necessary or appropriate governmental or other
entities, including, but not limited to, the Securities and Exchange Commission
and the New York Stock Exchange, granting to such attorney-in-fact and agent
full power and authority to perform each act necessary to be done as fully to
all intents and purposes as he might do in person, hereby ratifying and
confirming all that such attorney-in-fact and agent may lawfully do or cause to
be done by virtue hereof.
SIGNATURE Title Date
/s/ Virginia M. Kopp March 24, 1998
- --------------------------- Director ---------------------------
Virginia M. Kopp
<PAGE> 9
POWER OF ATTORNEY
The undersigned hereby appoints Lawrence J. Toal and James E. Kelly or
either of the foregoing persons acting alone, each with the full power of
substitution, as his true and lawful attorney-in-fact and agent, for him and in
his name and place, to sign the name of the undersigned in the capacity or
capacities indicated below to the Annual Report of Dime Bancorp, Inc. on Form
10-K for the year ended December 31, 1997 and any and all amendments to such
Form 10-K and to file the same, with all exhibits thereto and other documents in
connection therewith, with all necessary or appropriate governmental or other
entities, including, but not limited to, the Securities and Exchange Commission
and the New York Stock Exchange, granting to such attorney-in-fact and agent
full power and authority to perform each act necessary to be done as fully to
all intents and purposes as he might do in person, hereby ratifying and
confirming all that such attorney-in-fact and agent may lawfully do or cause to
be done by virtue hereof.
SIGNATURE Title Date
/s/ John Morning March 21, 1998
- --------------------------- Director ---------------------------
John Morning
<PAGE> 10
POWER OF ATTORNEY
The undersigned hereby appoints Lawrence J. Toal and James E. Kelly or
either of the foregoing persons acting alone, each with the full power of
substitution, as his true and lawful attorney-in-fact and agent, for him and in
his name and place, to sign the name of the undersigned in the capacity or
capacities indicated below to the Annual Report of Dime Bancorp, Inc. on Form
10-K for the year ended December 31, 1997 and any and all amendments to such
Form 10-K and to file the same, with all exhibits thereto and other documents in
connection therewith, with all necessary or appropriate governmental or other
entities, including, but not limited to, the Securities and Exchange Commission
and the New York Stock Exchange, granting to such attorney-in-fact and agent
full power and authority to perform each act necessary to be done as fully to
all intents and purposes as he might do in person, hereby ratifying and
confirming all that such attorney-in-fact and agent may lawfully do or cause to
be done by virtue hereof.
SIGNATURE Title Date
/s/ Margaret Osmer-McQuade March 23, 1998
- --------------------------- Director ---------------------------
Margaret Osmer-McQuade
<PAGE> 11
POWER OF ATTORNEY
The undersigned hereby appoints Lawrence J. Toal and James E. Kelly or
either of the foregoing persons acting alone, each with the full power of
substitution, as his true and lawful attorney-in-fact and agent, for him and in
his name and place, to sign the name of the undersigned in the capacity or
capacities indicated below to the Annual Report of Dime Bancorp, Inc. on Form
10-K for the year ended December 31, 1997 and any and all amendments to such
Form 10-K and to file the same, with all exhibits thereto and other documents in
connection therewith, with all necessary or appropriate governmental or other
entities, including, but not limited to, the Securities and Exchange Commission
and the New York Stock Exchange, granting to such attorney-in-fact and agent
full power and authority to perform each act necessary to be done as fully to
all intents and purposes as he might do in person, hereby ratifying and
confirming all that such attorney-in-fact and agent may lawfully do or cause to
be done by virtue hereof.
SIGNATURE Title Date
/s/ Sally Hernandez-Pinero March 25, 1998
- --------------------------- Director ---------------------------
Sally Hernandez-Pinero
<PAGE> 12
POWER OF ATTORNEY
The undersigned hereby appoints Lawrence J. Toal and James E. Kelly or
either of the foregoing persons acting alone, each with the full power of
substitution, as his true and lawful attorney-in-fact and agent, for him and in
his name and place, to sign the name of the undersigned in the capacity or
capacities indicated below to the Annual Report of Dime Bancorp, Inc. on Form
10-K for the year ended December 31, 1997 and any and all amendments to such
Form 10-K and to file the same, with all exhibits thereto and other documents in
connection therewith, with all necessary or appropriate governmental or other
entities, including, but not limited to, the Securities and Exchange Commission
and the New York Stock Exchange, granting to such attorney-in-fact and agent
full power and authority to perform each act necessary to be done as fully to
all intents and purposes as he might do in person, hereby ratifying and
confirming all that such attorney-in-fact and agent may lawfully do or cause to
be done by virtue hereof.
SIGNATURE Title Date
/s/ Paul A. Qualben March 26, 1998
- --------------------------- Director ---------------------------
Paul A. Qualben
<PAGE> 13
POWER OF ATTORNEY
The undersigned hereby appoints Lawrence J. Toal and James E. Kelly or
either of the foregoing persons acting alone, each with the full power of
substitution, as his true and lawful attorney-in-fact and agent, for him and in
his name and place, to sign the name of the undersigned in the capacity or
capacities indicated below to the Annual Report of Dime Bancorp, Inc. on Form
10-K for the year ended December 31, 1997 and any and all amendments to such
Form 10-K and to file the same, with all exhibits thereto and other documents in
connection therewith, with all necessary or appropriate governmental or other
entities, including, but not limited to, the Securities and Exchange Commission
and the New York Stock Exchange, granting to such attorney-in-fact and agent
full power and authority to perform each act necessary to be done as fully to
all intents and purposes as he might do in person, hereby ratifying and
confirming all that such attorney-in-fact and agent may lawfully do or cause to
be done by virtue hereof.
SIGNATURE Title Date
/s/ Eugene G. Schulz, Jr. March 21, 1998
- --------------------------- Director ---------------------------
Eugene G. Schulz, Jr.
<PAGE> 14
POWER OF ATTORNEY
The undersigned hereby appoints Lawrence J. Toal and James E. Kelly or
either of the foregoing persons acting alone, each with the full power of
substitution, as his true and lawful attorney-in-fact and agent, for him and in
his name and place, to sign the name of the undersigned in the capacity or
capacities indicated below to the Annual Report of Dime Bancorp, Inc. on Form
10-K for the year ended December 31, 1997 and any and all amendments to such
Form 10-K and to file the same, with all exhibits thereto and other documents in
connection therewith, with all necessary or appropriate governmental or other
entities, including, but not limited to, the Securities and Exchange Commission
and the New York Stock Exchange, granting to such attorney-in-fact and agent
full power and authority to perform each act necessary to be done as fully to
all intents and purposes as he might do in person, hereby ratifying and
confirming all that such attorney-in-fact and agent may lawfully do or cause to
be done by virtue hereof.
SIGNATURE Title Date
/s/ Howard Smith March 23, 1998
- --------------------------- Director ---------------------------
Howard Smith
<PAGE> 15
POWER OF ATTORNEY
The undersigned hereby appoints Lawrence J. Toal and James E. Kelly or
either of the foregoing persons acting alone, each with the full power of
substitution, as his true and lawful attorney-in-fact and agent, for him and in
his name and place, to sign the name of the undersigned in the capacity or
capacities indicated below to the Annual Report of Dime Bancorp, Inc. on Form
10-K for the year ended December 31, 1997 and any and all amendments to such
Form 10-K and to file the same, with all exhibits thereto and other documents in
connection therewith, with all necessary or appropriate governmental or other
entities, including, but not limited to, the Securities and Exchange Commission
and the New York Stock Exchange, granting to such attorney-in-fact and agent
full power and authority to perform each act necessary to be done as fully to
all intents and purposes as he might do in person, hereby ratifying and
confirming all that such attorney-in-fact and agent may lawfully do or cause to
be done by virtue hereof.
SIGNATURE Title Date
/s/ Norman R. Smith March 25, 1998
- --------------------------- Director ---------------------------
Norman R. Smith
<PAGE> 16
POWER OF ATTORNEY
The undersigned hereby appoints Lawrence J. Toal and James E. Kelly or
either of the foregoing persons acting alone, each with the full power of
substitution, as his true and lawful attorney-in-fact and agent, for him and in
his name and place, to sign the name of the undersigned in the capacity or
capacities indicated below to the Annual Report of Dime Bancorp, Inc. on Form
10-K for the year ended December 31, 1997 and any and all amendments to such
Form 10-K and to file the same, with all exhibits thereto and other documents in
connection therewith, with all necessary or appropriate governmental or other
entities, including, but not limited to, the Securities and Exchange Commission
and the New York Stock Exchange, granting to such attorney-in-fact and agent
full power and authority to perform each act necessary to be done as fully to
all intents and purposes as he might do in person, hereby ratifying and
confirming all that such attorney-in-fact and agent may lawfully do or cause to
be done by virtue hereof.
SIGNATURE Title Date
/s/ Ira T. Wender March 21, 1998
- --------------------------- Director ---------------------------
Ira T. Wender
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM DIME BANCORP INC.'S
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FORM 10-K.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 295,369
<INT-BEARING-DEPOSITS> 5,095
<FED-FUNDS-SOLD> 152,063
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 4,992,304
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 14,826,369
<ALLOWANCE> 104,718
<TOTAL-ASSETS> 21,848,000
<DEPOSITS> 13,847,275
<SHORT-TERM> 5,613,794
<LIABILITIES-OTHER> 366,555
<LONG-TERM> 705,518
0
0
<COMMON> 1,203
<OTHER-SE> 1,313,655
<TOTAL-LIABILITIES-AND-EQUITY> 21,848,000
<INTEREST-LOAN> 919,890
<INTEREST-INVEST> 430,555
<INTEREST-OTHER> 32,370
<INTEREST-TOTAL> 1,382,815
<INTEREST-DEPOSIT> 559,359
<INTEREST-EXPENSE> 899,753
<INTEREST-INCOME-NET> 483,062
<LOAN-LOSSES> 49,000
<SECURITIES-GAINS> (17,794)
<EXPENSE-OTHER> 381,145
<INCOME-PRETAX> 198,208
<INCOME-PRE-EXTRAORDINARY> 123,174
<EXTRAORDINARY> (1,460)
<CHANGES> 0
<NET-INCOME> 121,714
<EPS-PRIMARY> 1.14
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<LOANS-NON> 118,988
<LOANS-PAST> 0
<LOANS-TROUBLED> 84,209
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<ALLOWANCE-OPEN> 106,495
<CHARGE-OFFS> 71,608
<RECOVERIES> 7,582
<ALLOWANCE-CLOSE> 104,718
<ALLOWANCE-DOMESTIC> 103,218
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,500
</TABLE>
