Exhibit 10.6
TWO YEAR
RELIANCE BANCORP, INC.
EMPLOYMENT AGREEMENT
(As Amended September 11, 1996)
This AGREEMENT, originally effective as of July 1, 1994, and as amended as
of November 29, 1995 and September 11, 1996, is made by and between Reliance
Bancorp, Inc. (the "Holding Company"), a corporation organized under the laws of
Delaware, with its principal administrative office at 585 Stewart Avenue, Garden
City, New York, and___________ ("Executive"). Any reference to "Bank" herein
shall mean Reliance Federal Savings Bank or any successor thereto.
WHEREAS, the Holding Company wishes to assure itself of the services of
Executive for the period provided in this Agreement; and
WHEREAS, Executive is willing to serve in the employ of the Holding Company
on a full-time basis for said period.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, Executive agrees to serve as
___________ of the Holding Company. Executive shall render administrative and
management services to the Holding Company such as are customarily performed by
persons in a similar executive capacity. During said period, Executive also
agrees to serve, if elected, as an officer and director of any subsidiary of the
Holding Company. Failure to reelect Executive as ___________ of the Holding
Company or failure to reelect Executive as ___________ of the Bank without the
consent of Executive shall constitute a breach of this Agreement.
2. TERMS.
(a) The period of Executive's employment under this Agreement shall be
deemed to have commenced as July 1, 1996 and shall continue for a period of
twenty-four (24) full calendar months thereafter; provided, however, that for
purposes only of the obligation to make payments to the Executive pursuant to
Section 5 of this Agreement (the "Section 5 Obligation") the term of this
Agreement shall continue for a period of thirty-six (36) full calendar months
after the date of such written notice. Commencing on July 1, 1996, the
twenty-four (24) or thirty-six (36) month, as the case may be, terms of this
Agreement shall be extended for one day each day until such time as the Board of
Directors of the Holding Company (the "Board") or Executive elects not to extend
the terms of the Agreement by giving written notice to the other party in
accordance with
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Section 8 of this Agreement, in which case the terms of this Agreement shall be
fixed and shall end on the second anniversary of the date of such written
notice; except as regards the Section 5 Obligation, in which case the term of
the Section 5 Obligation shall be fixed and shall end on the third anniversary
of the date of such written notice.
(b) During the period of his employment hereunder, except for periods of
absence occasioned by illness, reasonable vacation periods, and reasonable
leaves of absence, Executive shall devote substantially all his business time,
attention, skill, and efforts to the faithful performance of his duties
hereunder including activities and services related to the organization,
operation and management of the Holding Company and participation in community
and civic organizations; provided, however, that, with the approval of the
Board, as evidenced by a resolution of such Board, from time to time, Executive
may serve, or continue to serve, on the boards of directors of, and hold any
other offices or positions in, companies or organizations, which, in such
Board's judgment, will not present any conflict of interest with the Holding
Company, or materially affect the performance of Executive's duties pursuant to
this Agreement.
(c) In the event that Executive's duties and responsibilities with respect
to the Bank are temporarily or permanently terminated pursuant to Sections 7 or
16 of the Employment Agreement dated July 1, 1996, between Executive and the
Bank ("Bank Agreement") and the course of conduct upon which such termination is
based would not constitute grounds for Termination for Cause under Section 7 of
this Agreement then Executive shall continue to serve as___________ of the
Holding Company. However, Executive shall not perform, in any respect, directly
or indirectly, during the pendency of his temporary or permanent suspension or
termination from the Bank, duties and responsibilities formerly performed at the
Bank as part of his duties and responsibilities as ___________ of the Holding
Company. Nothing in this provision shall be interpreted as restricting the
Holding Company's right to remove Executive for cause in accordance with Section
7 of this Agreement. Notwithstanding any other provisions of this Agreement,
subsequent to Executive's temporary or permanent termination pursuant to Section
7 or 16 of the Bank Agreement, any benefits and payments to Executive for future
services under this Agreement shall be made only to the extent those benefits
and payments are commensurate with the level of such future services rendered
and time expended by the Executive in connection with Executive's duties and
responsibilities performed under this Agreement subsequent to such termination.
In the event Executive is temporarily or permanently terminated pursuant to
Section 7 or 16 of the Bank Agreement and continues his duties under this
Agreement, the Holding Company shall promptly provide written notification of
such occurrence to the Regional Director of the Office of Thrift Supervision.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall constitute the
salary and benefits paid for the duties described in Section 1. The Holding
Company shall pay Executive as compensation a salary of not less than $________
per year ("Base Salary"). Base Salary shall include any amounts of compensation
deferred by Executive under any employee benefit plan
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maintained by the Bank or Holding Company. Such Base Salary shall be payable
weekly. During the period of this Agreement, Executive's Base Salary shall be
reviewed at least annually; the first such review will be made no later than one
year from the date of this Agreement. Such review shall be conducted by the
Board or a Committee designated by the Board, and the Board may increase
Executive's Base Salary. The increased Base Salary shall become the "Base
Salary" for purposes of this Agreement. In addition to the Base Salary provided
in this Section 3(a), the Holding Company shall also provide Executive at no
cost to Executive with all such other benefits as are provided uniformly to
permanent full-time employees of the Holding Company and the Bank.
(b) The Holding Company will provide Executive with employee benefit plans,
arrangements and perquisites substantially equivalent to those in which
Executive was participating or otherwise deriving benefit from immediately prior
to the beginning of the term of this Agreement, and the Holding Company will
not, without Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect Executive's rights or
benefits thereunder. Without limiting the generality of the foregoing provisions
of this Subsection (b), Executive will be entitled to participate in or receive
benefits under any employee benefit plans including, but not limited to,
retirement plans, supplemental retirement plans, pension plans, profit-sharing
plans, health-and-accident plan, medical coverage or any other employee benefit
plan or arrangement made available by the Holding Company in the future to its
senior executives and key management employees, subject to and on a basis
consistent with the terms, conditions and overall administration of such plans
and arrangements. Executive will be entitled to incentive compensation and
bonuses as provided in any plan of the Holding Company in which Executive is
eligible to participate. Nothing paid to Executive under any such plan or
arrangement will be deemed to be in lieu of other compensation to which
Executive is entitled under this Agreement.
(c) In addition to the Base Salary provided for by paragraph (a) of this
Section 3 and other compensation provided for by paragraph (b) of this Section
3, the Holding Company shall pay or reimburse Executive for all reasonable
travel and other reasonable expenses incurred by Executive performing his
obligations under this Agreement and may provide such additional compensation in
such form and such amounts as the Board may from time to time determine.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during Executive's term of employment under this Agreement, the provisions of
this Section shall apply. As used in this Agreement, an "Event of Termination"
shall mean and include any one or more of the following: (i) the termination by
the Holding Company of Executive's full-time employment hereunder for any reason
other than a Change in Control, as defined in Section 5(a) hereof, upon
Retirement, as defined in Section 6 hereof or Termination for Cause, as defined
in Section 7 hereof; (ii) Executive's resignation from the Holding Company's
employ, upon any (A) failure to elect or reelect or to appoint or reappoint
Executive as___________ , unless consented to by
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Executive, (B) a material change in Executive's function, duties, or
responsibilities, which change would cause Executive's position to become one of
lesser responsibility, importance, or scope from the position and attributes
thereof described in Section 1, above, (and any such material change shall be
deemed a continuing breach of this Agreement), (C) a relocation of Executive's
principal place of employment by more than thirty (30) miles from its location
at the effective date of this Agreement, or a material reduction in the benefits
and perquisites to Executive from those being provided as of the effective date
of this Agreement, provided, however, that the Holding Company may materially
reduce benefits and perquisites generally provided on a nondiscriminatory basis
to all employees without incurring the payments pursuant to the provisions of
this Section, (D) liquidation or dissolution of the Bank or Holding Company, or
(E) breach of this Agreement by the Holding Company. Upon the occurrence of any
event described in clauses (A),(B),(C), (D), (E), above, Executive shall have
the right to elect to terminate his employment under this Agreement by
resignation upon not less than sixty (60) days prior written notice given within
a reasonable period of time not to exceed, except in case of a continuing
breach, four calendar months after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination on the Date of
Termination as defined in Section 8, the Holding Company shall be obligated to
pay Executive, or, in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be, as severance pay or liquidated
damages, or both, a sum equal to: (i) the amount of the remaining salary
payments that the Executive would have earned if he continued his employment
with the Holding Company or Bank during the remaining unexpired term of this
Agreement at the Executive's Base Salary at the Date of Termination; (ii) the
average of the amount of bonus and any other compensation paid to the Executive
during the term of the Agreement times the remaining number of years of the
Agreement and any fraction thereof, and; (iii) an amount equal to the average of
the annual contributions that were made on the Executive's behalf to any
employee benefit plans of the Holding Company or Bank during the term of the
Agreement times the remaining number of years of the Agreement and any fraction
thereof. At the election of Executive, which election is to be made within
thirty (30) days of the Date of Termination, such payments shall be made in a
lump sum or paid monthly during the remaining term of the agreement following
Executive's termination. In the event that no election is made, payment to
Executive will be made on a monthly basis during the remaining term of the
Agreement. Such payments shall not be reduced in the event Executive obtains
other employment following termination of employment.
(c) Upon the occurrence of an Event of Termination, the Holding Company
will cause to be continued life, medical, dental and disability coverage
substantially identical to the coverage maintained by the Bank or the Holding
Company for Executive prior to his termination, except to the extent such
coverage may be changed in its application to all bank or Holding Company
employees on a nondiscriminatory basis. Such coverage shall cease upon the
expiration of the remaining term of this Agreement.
(d) Upon the occurrence of an event of Termination, Executive will be
entitled to receive benefits due him under or contributed by the Bank or the
Holding Company on his behalf pursuant
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to any retirement, incentive, profit sharing, bonus, performance, disability or
other employee benefit plan maintained by the Bank or the Holding Company on
Executive's behalf to the extent such benefits are not otherwise paid to
Executive under a separate provision of this Agreement.
(e) In the event that Executive is receiving monthly payments pursuant to
Section 4(b) hereof, on an annual basis thereafter, between the dates of January
1 and January 31 of each year, Executive shall elect whether the balance of the
amount payable under the Agreement at that time shall be paid in a lump sum or
on a pro rata basis. Such election shall be irrevocable for the year for which
such election is made.
5. CHANGE IN CONTROL.
(a) No benefit shall be payable under this Section 5 unless there shall
have been a Change in Control of the Bank or the Holding Company as set forth
below. For purposes of this Agreement, a "Change in Control" of the Bank or
Holding Company shall mean an event of a nature that: (i) would be required to
be reported in response to Item 1 (a) of the current report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act"); or (ii) results in a Change in
Control of the Bank or the Holding Company within the meaning of the Home
Owners' Loan Act of 1933 and the Rules and Regulations promulgated by the Office
of Thrift Supervision ("OTS") (or its predecessor agency), as in effect on the
date hereof (provided, that in applying the definition of change in control as
set forth under the rules and regulations of the OTS, the Board shall substitute
its judgment for that of the OTS); or (iii) without limitation such a Change in
Control shall be deemed to have occurred at such time as (A) any "person" (as
the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Bank or the Holding Company
representing 20% or more of the Bank's or the Holding Company's outstanding
securities except for any securities of the Bank purchased by the Holding
Company in connection with the conversion of the Bank to the stock form and any
securities purchased by any employee benefit plan of the Bank, or (B)
individuals who constitute the Board on the date hereof (the "Incumbent Board")
cease for any reason to constitute at least a majority thereof, provided that
any person becoming a director subsequent to the date hereof whose election was
approved by a vote of at least three-quarters of the directors comprising the
Incumbent Board, or whose nomination for election by the Holding Company's
stockholders was approved by the same Nominating Committee serving under an
Incumbent Board, shall be, for purposes of this clause (B), considered as though
he were a member of the Incumbent Board, or (C) a plan of reorganization,
merger, consolidation, sale of all or substantially all the assets of the Bank
or the Holding Company or similar transaction occurs in which the Bank or
Holding Company is not the resulting entity, or (D) a proxy statement is
distributed soliciting proxies from stockholders of the Holding Company, by
someone other than the current management of the Holding Company, seeking
stockholder approval of a plan of reorganization, merger or consolidation of the
Holding Company or Bank with one or more corporations as a result of which the
outstanding shares of the class of securities then subject to such plan or
transaction are exchanged for or converted into
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cash or property or securities not issued by the Bank or the Holding Company or
(E) a tender offer is made for 20% or more of the voting securities of the Bank
or Holding Company then outstanding.
(b) If any of the events described in Section 5(a) hereof constituting a
Change in Control have occurred or the Board has determined that a Change in
Control has occurred, Executive shall be entitled to the benefits provided in
paragraphs (c), (d), (e), (f) and (g) of this Section 5 upon his subsequent
termination of employment at any time during the term of this Agreement due to
(1) Executive's dismissal or (2) Executive's voluntary resignation following any
demotion, loss of title, office or significant authority or responsibility,
reduction in annual compensation or benefits or relocation of his principal
place of employment by more than 30 miles from its location immediately prior to
the Change in Control, unless such termination is because of his death, or
Termination for Cause.
(c) Upon the occurrence of a Change in Control followed by Executive's
termination of employment as provided in Section 5(b), the Holding Company shall
pay Executive, or in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be, as severance pay or liquidated
damages, or both, a sum equal to the greater of the payments due for the
remaining term of the Agreement or three (3) times Executive's average annual
compensation for the two (2) preceding taxable years, such annual compensation
shall include any Base Salary, commissions, bonuses, pension and profit sharing
plan benefits, severance payments, retirement benefits, director or committee
fees, fringe benefits, or any other amount in the nature of compensation earned,
recognized or paid or to be earned, recognized or paid to Executive during any
such year. At the election of Executive, which election is to be made within
thirty (30) days of the Date of Termination following a Change in Control, such
payment may be made in a lump sum or paid in equal monthly installments during
the twenty-four (24) months following Executive's termination. In the event that
no election is made, payment to Executive will be made on a monthly basis during
the twenty-four (24) months following Executive's termination.
(d) Upon the occurrence of a Change in Control, Executive will be entitled
to receive benefits due him under or contributed by the Bank or the Holding
Company on his behalf pursuant to any retirement, incentive, profit sharing,
bonus, performance, disability or other employee benefit plan maintained by the
Bank or the Holding Company on Executive's behalf to the extent such benefits
are not otherwise paid to Executive under a separate provision of this
Agreement.
(e) Upon the occurrence of a Change in Control followed by Executive's
termination of employment, the Holding Company will cause to be continued life,
medical and disability coverage substantially identical to the coverage
maintained by the Bank or Holding Company for Executive prior to his severance,
except to the extent that such coverage may be changed in its applications for
all Bank or Holding Company employees on a nondiscriminatory basis. Such
coverage and payments shall cease upon the expiration of twenty-four (24) full
calendar months following the Date of Termination.
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(f) In the event that Executive is receiving monthly payments pursuant to
Section 5(c) hereof, on an annual basis, thereafter, between the dates of
January 1 and January 31 of each year, Executive shall elect whether the balance
of the amount payable under the Agreement at that time shall be paid in a lump
sum or on a pro rata basis pursuant to such section. Such election shall be
irrevocable for the year for which such election is made.
(g) Notwithstanding the preceding paragraphs of this Section 5, for any
taxable year in which it is determined that the Executive shall be liable for
the payment of an excise tax under Section 4999 of the Code, with respect to any
payment in the nature of the compensation made by the Holding Company, the Bank,
or any affiliate or successor thereof to (or for the benefit of) Executive, the
Company shall pay to the Executive an amount determined under the following
formula:
An amount equal to: (E x P) + X
WHERE:
X = E x P
--------------------------------
1 - [(FI x (1 - SLI)) + SLI + E]
E = the rate at which the excise tax is assessed under Section
4999 of the Code;
P = the amount with respect to which such excise tax is
assessed, determined without regard to this paragraph (g);
FI = the highest marginal rate of federal income tax applicable
to Executive under the Code for the taxable year in
question; and
SLI = the sum of the highest marginal rates of income and payroll
tax applicable to Executive under applicable state and
local laws for the taxable year in question.
With respect to any payment in the nature of compensation that is made to (or
for the benefit of) Executive under the terms of this Agreement or otherwise and
on which an excise tax under Section 4999 of the Code will be assessed, the
payment determined under this Section 5(g) shall be made to Executive on the
earlier of (i) the date the Holding Company is required to withhold such tax, or
(ii) the date the tax is required to be paid by Executive.
(h) Notwithstanding the foregoing, if it shall subsequently be determined
in a final judicial determination or a final administrative settlement to which
Executive is a party that the excess parachute payment as defined in Section
4999 of the Code, is different from the amount determined as "P", above (such
different amount being hereafter referred to as the "Determinative Excess
Parachute Payment") then the Holding Company's independent accountants shall
determine
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the amount (the "Adjustment Amount") the Executive must pay to the Holding
Company, or the Holding Company must pay to the Executive, in order to put the
Executive (or the Holding Company, as the case may be) in the same position as
the Executive (or the Holding Company, as the case may be) would have been if
the amount determined as "P" above had been equal to the Determinative Excess
Parachute Payment. In determining the Adjustment Amount, the independent
accountants shall take into account any and all taxes (including any penalties
and interest) paid by or for Executive or refunded to Executive or for
Executive's benefit. As soon as practicable after the Adjustment Amount has been
so determined, the Holding Company shall pay the Adjustment amount to Executive
or the Executive shall repay the Adjustment Amount to the Holding Company, as
the case may be.
(i) In each calendar year that Executive receives payments or benefits
under the Employment Agreement, Executive shall report on his state and federal
income tax returns such information as is consistent with the determination made
by the independent accountants of the Holding Company as described above. The
Holding Company shall indemnify and hold Executive harmless from any and all
losses, costs and expenses (including without limitation, reasonable attorney's
fees, interest, fines and penalties) which Executive incurs as a result of so
reporting such information. Executive shall promptly notify the Holding Company
in writing whenever the Executive receives notice of the institution of a
judicial or administrative proceeding, formal or informal, in which the federal
tax treatment under Section 4999 of the Code of any amount paid or payable under
this Supplemental Agreement is being reviewed or is in dispute. The Holding
Company shall assume control at its expense over all legal and accounting
matters pertaining to such federal tax treatment (except to the extent necessary
or appropriate for Executive to resolve any such proceeding with respect to any
matter unrelated to amounts paid or payable pursuant to this contract) and
Executive shall cooperate fully with the Holding Company in any such proceeding.
The Executive shall not enter into any compromise or settlement or otherwise
prejudice any rights the Holding Company may have in connection therewith
without prior consent to the Holding Company.
6. TERMINATION UPON RETIREMENT.
Termination of Executive based on "Retirement" shall mean termination in
accordance with the Holding Company's or Bank's retirement policy or in
accordance with any retirement arrangement established with Executive's consent
with respect to him. Upon termination of Executive upon Retirement, Executive
shall be entitled to all benefits under any retirement plan of the Holding
Company or the Bank and other plans to which Executive is a party.
7. TERMINATION FOR CAUSE.
The term "Termination for Cause" shall mean termination because of a
material loss to the Holding Company or one of its affiliates caused by
Executive's intentional failure to perform stated duties, personal dishonesty,
willful violation of any law, rule, regulation (other than traffic violations or
similar offenses) or final cease and desist order, or any material breach of
this
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Agreement. For purposes of this Section, no act, or the failure to act, on
Executive's part shall be "willful" unless done, or omitted to be done, not in
good faith and without reasonable belief that the action or omission was in the
best interest of the Holding Company or its affiliates. Notwithstanding the
foregoing, Executive shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to him a Notice of Termination
which shall include a copy of a resolution duly adopted by the affirmative vote
of not less than three-fourths of the members of the Board at a meeting of the
Board called and held for that purpose (after reasonable notice to Executive and
an opportunity for him, together with counsel, to be heard before the Board),
finding that in the good faith opinion of the Board, Executive was guilty of
conduct justifying Termination for Cause and specifying the particulars thereof
in detail. Executive shall not have the right to receive compensation or other
benefits for any period after Termination for Cause. Any stock options and
related limited rights granted to Executive under any stock option plan, or any
unvested awards granted to Executive under any stock benefit plan of the Bank,
the Holding Company or any subsidiary or affiliate thereof, shall become null
and void effective upon Executive's receipt of Notice of Termination for Cause
pursuant to Section 8 hereof, and shall not be exercisable by or delivered to
Executive at any time subsequent to such Termination for Cause.
8. NOTICE.
(a) Any purported termination by the Holding Company or by Executive shall
be communicated by Notice of Termination to the other party hereto. For purposes
of this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.
(b) "Date of Termination" shall mean the date specified in the Notice of
Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given).
(c) If, within thirty (30) days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, the Date of Termination shall be the
date on which the dispute is finally determined, either by mutual written
agreement of the parties, by a binding arbitration award, or by a final
judgment, order or decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been perfected) and
provided further that the Date of Termination shall be extended by a notice of
dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, the Holding Company will
continue to pay Executive his full compensation in effect when the notice giving
rise to the dispute was given (including, but not limited to, Base Salary) and
continue him as a participant in all compensation, benefit and insurance plans
in which he was participating when the notice of dispute was given,
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until the dispute is finally resolved in accordance with this Agreement. Amounts
paid under this Section are in addition to all other amounts due under this
Agreement and shall not be offset against or reduce any other amounts due under
this Agreement.
9. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with paragraph (b) of this Section 9 during
the term of this Agreement and for one (1) full year after the expiration or
termination hereof.
(b) Executive shall, upon reasonable notice, furnish such information and
assistance to the Holding Company as may reasonably be required by the Holding
Company in connection with any litigation in which it or any of its subsidiaries
or affiliates is, or may become, a party.
10. NON-COMPETITION.
(a) Upon any termination of Executive's employment hereunder pursuant to
Section 8 hereof, Executive agrees not to compete with the Bank and/or the
Holding Company for a period of one (1) year following such termination in any
city, town or county in which the Bank and/or the Holding Company has an office
or has filed an application for regulatory approval to establish an office,
determined as of the effective date of such termination, except as agreed to
pursuant to a resolution duly adopted by the Board. Executive agrees that during
such period and within said cities, towns and counties, Executive shall not work
for or advise, consult or otherwise serve with, directly or indirectly, any
entity whose business materially competes with the depository, lending or other
business activities of the Bank and/or the Holding Company. The parties hereto,
recognizing that irreparable injury will result to the Bank and/or the Holding
Company, its business and property in the event of Executive's breach of this
Subsection 10(a) agree that in the event of any such breach by Executive, the
Bank and/or the Holding Company will be entitled, in addition to any other
remedies and damages available, to an injunction to restrain the violation
hereof by Executive, Executive's partners, agents, servants, employers,
employees and all persons acting for or with Executive. Executive represents and
admits that in the event of the termination of his employment pursuant to
Section 8 hereof, Executive's experience and capabilities are such that
Executive can obtain employment in a business engaged in other lines and/or of a
different nature than the Bank and/or the Holding Company, and that the
enforcement of a remedy by way of injunction will not prevent Executive from
earning a livelihood. Nothing herein will be construed as prohibiting the Bank
and/or the Holding Company from pursuing any other remedies available to the
Bank and/or the Holding Company for such breach or threatened breach, including
the recovery of damages from Executive.
(b) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Holding Company and
affiliates thereof, as it may exist from time to time, is a valuable, special
and unique asset of the business of the Bank. Executive will not, during or
after the term of his employment, disclose any knowledge of the past, present,
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planned or considered business activities of the Bank or affiliates thereof to
any person, firm, corporation, or other entity for any reason or purpose
whatsoever. Notwithstanding the foregoing, Executive may disclose any knowledge
of banking, financial and/or economic principles, concepts or ideas which are
not solely and exclusively derived from the business plans and activities of the
Holding Company. In the event of a breach or threatened breach by Executive of
the provisions of this Section, the Holding Company will be entitled to an
injunction restraining Executive from disclosing, in whole or in part, the
knowledge of the past, present, planned or considered business activities of the
Holding Company or affiliates thereof, or from rendering any services to any
person, firm, corporation, other entity to whom such knowledge, in whole or in
part, has been disclosed or is threatened to be disclosed. Nothing herein will
be construed as prohibiting the Holding Company from pursuing any other remedies
available to the Holding Company for such breach or threatened breach, including
the recovery of damages from Executive.
11. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Holding Company subject to Section 13
hereof.
12. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior employment agreement between the Holding Company or any
predecessor of the Holding Company and Executive, except that this Agreement
shall not affect or operate to reduce any benefit or compensation inuring to
Executive of a kind elsewhere provided. No provision of this Agreement shall be
interpreted to mean that Executive is subject to receiving fewer benefits than
those available to him without reference to this Agreement.
13. EFFECT OF ACTION UNDER BANK AGREEMENT.
Notwithstanding any provision herein to the contrary, to the extent that
payments and benefits, as provided by this Agreement, are paid to or received by
Executive under the Employment Agreement dated July 1, 1994, between Executive
and the Bank, such compensation payments and benefits paid by the Bank will be
subtracted from any amount due simultaneously to Executive under similar
provisions of this Agreement.
14. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation
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of law, and any attempt, voluntary or involuntary, to affect any such action
shall be null, void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive and the Holding Company and their respective successors and assigns.
15. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.
16. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
17. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
18. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Delaware,
unless otherwise specified herein.
19. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by Executive within fifty
(50) miles from the location of the Holding Company's executive office, in
accordance with the rules of the American Arbitration Bank then in effect.
Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided,
12
however, that Executive shall be entitled to seek specific performance of his
right to be paid until the Date of Termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
In the event any dispute or controversy arising under or in connection with
Executive's termination is resolved in favor of Executive, whether by judgment,
arbitration or settlement, Executive shall be entitled to the payment of all
back-pay, including salary, bonuses and any other cash compensation, fringe
benefits and any compensation and benefits due Executive under this Agreement.
20. PAYMENT OF LEGAL FEES.
All reasonable legal fees and other expenses paid or incurred by Executive
pursuant to any dispute or question of interpretation relating to this Agreement
shall be paid or reimbursed by the Holding Company, if Executive is successful
pursuant to a legal judgment, arbitration or settlement.
21. INDEMNIFICATION.
The Holding Company shall provide Executive (including his heirs, executors
and administrators) with coverage under a standard directors' and officers'
liability insurance policy at its expense, or in lieu thereof, shall indemnify
Executive (and his heirs, executors and administrators) to the fullest extent
permitted under Delaware law against all expenses and liabilities reasonably
incurred by him in connection with or arising out of any action, suit or
proceeding in which he may be involved by reason of his having been a director
or officer of the Holding Company (whether or not he continues to be a director
or officer at the time of incurring such expenses or liabilities), such expenses
and liabilities to include, but not be limited to, judgments, court costs and
attorneys' fees and the cost of reasonable settlements.
22. SUCCESSOR TO THE HOLDING COMPANY.
The Holding Company shall require any successor or assignee, whether direct
or indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Bank or the Holding Company,
expressly and unconditionally to assume and agree to perform the Holding
Company's obligations under this Agreement, in the same manner and to the same
extent that the Holding Company would be required to perform if no such
succession or assignment had taken place.
13
SIGNATURES
IN WITNESS WHEREOF, Reliance Bancorp, Inc. has caused this Agreement, as
originally executed on July 1, 1994 and amended on November 29, 1995 to be
executed as amended on September 11, 1996 and its seal to be affixed hereunto by
its duly authorized officer and its directors, and Executive has signed this
Agreement, as amended, on the 11th day of September, 1996.
ATTEST: RELIANCE BANCORP, INC.
BY:
- ----------------------- ----------------------
Robert F. Pelosi
Secretary
[SEAL]
WITNESS:
- ----------------------- -----------------------
14
Exhibit 10.6
FIVE YEAR
RELIANCE BANCORP, INC.
EMPLOYMENT AGREEMENT
(As Amended September 11, 1996)
This AGREEMENT is made effective as of September 11, 1996, by and between
Reliance Bancorp, Inc. (the "Holding Company"), a corporation organized under
the laws of Delaware, with its principal administrative office at 585 Stewart
Avenue, Garden City, New York, and ___________ ("Executive"). Any reference to
"Bank" herein shall mean Reliance Federal Savings Bank or any successor thereto.
WHEREAS, the Holding Company wishes to assure itself of the services of
Executive for the period provided in this Agreement; and
WHEREAS, Executive is willing to serve in the employ of the Holding Company
on a full-time basis for said period.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:
1. CONSIDERATION PROVIDED BY THE EXECUTIVE.
During the period of his employment hereunder, Executive agrees to serve as
___________ of the Holding Company. Executive shall render administrative and
management services to the Holding Company such as are customarily performed by
persons in a similar executive capacity. During said period, Executive also
agrees to serve, if elected, as an officer and director of any subsidiary of the
Holding Company. Failure to reelect Executive as ___________ of the Holding
Company, failure to reelect Executive as ___________ of the Bank or, failure to
nominate or reelect Executive to the Board of Directors of the Holding Company
or Bank, without the consent of Executive shall constitute a breach of this
Agreement.
2. TERMS.
(a) The period of Executive's employment under this Agreement shall be
deemed to have commenced as of the date first above written and shall continue
for a period of sixty (60) full calendar months thereafter. Commencing on the
date of the execution of this Agreement, the term of this Agreement shall be
extended for one day each day until such time as the Board of Directors of the
Holding Company (the "Board") or Executive elects not to extend the term of the
Agreement by giving written notice to the other party in accordance with Section
8 of this Agreement, in which case the term of this Agreement shall be fixed and
shall end on the fifth anniversary of the date of such written notice.
1
(b) During the period of his employment hereunder, except for periods of
absence occasioned by illness, reasonable vacation periods, and reasonable
leaves of absence, Executive shall devote substantially all his business time,
attention, skill, and efforts to the faithful performance of his duties
hereunder including activities and services related to the organization,
operation and management of the Holding Company and the Bank and participation
in community and civic organizations; provided, however, that, with the approval
of the Board, as evidenced by a resolution of such Board, from time to time,
Executive may serve, or continue to serve, on the boards of directors of, and
hold any other offices or positions in, companies or organizations, which, in
such Board's judgment, will not present any conflict of interest with the
Holding Company, or materially affect the performance of Executive's duties
pursuant to this Agreement.
(c) In the event that Executive's duties and responsibilities with respect
to the Bank are temporarily or permanently terminated pursuant to Sections 7 or
16 of the Employment Agreement dated July 1, 1994, as amended between Executive
and the Bank ("Bank Agreement") and the course of conduct upon which such
termination is based would not constitute grounds for Termination for Cause
under Section 7 of this Agreement, then Executive shall continue to serve as
___________ of the Holding Company. However, Executive shall not perform, in any
respect, directly or indirectly, during the pendency of his temporary or
permanent suspension or termination from the Bank, duties and responsibilities
formerly performed at the Bank as part of his duties and responsibilities as
___________ of the Holding Company. Nothing in this provision shall be
interpreted as restricting the Holding Company's right to remove Executive for
cause in accordance with Section 7 of this Agreement. Notwithstanding any other
provisions of this Agreement, subsequent to Executive's temporary or permanent
termination pursuant to Section 7 or 16 of the Bank Agreement, any benefits and
payments to Executive for future services under this Agreement shall be made
only to the extent those benefits and payments are commensurate with the level
of such future services rendered and time expended by the Executive in
connection with Executive's duties and responsibilities performed under this
Agreement subsequent to such termination. In the event Executive is temporarily
or permanently terminated pursuant to Section 7 or 16 of the Bank Agreement and
continues his duties under this Agreement, the Holding Company shall promptly
provide written notification of such occurrence to the Regional Director of the
Office of Thrift Supervision.
3. CONSIDERATION PROVIDED BY THE HOLDING COMPANY.
(a) The compensation specified under this Agreement shall constitute the
consideration paid by the Holding Company in exchange for the duties described
in Section 1. The Holding Company shall pay Executive as compensation a salary
of not less than $ _______ per year ("Base Salary"). Base Salary shall include
any amounts of compensation deferred by Executive under any employee benefit
plan maintained by the Bank or Holding Company. Such Base Salary shall be
payable weekly. During the period of this Agreement, Executive's Base Salary
shall be reviewed at least annually; the first such review will be made no later
than one year from the date of this Agreement. Such review shall be conducted by
the Board or a Committee designated by the Board, and the Board may increase
Executive's Base Salary. The increased Base Salary shall
2
become the "Base Salary" for purposes of this Agreement. In addition to the Base
Salary provided in this Section 3(a), the Holding Company shall also provide
Executive at no cost to Executive with all such other benefits as are provided
uniformly to permanent full-time employees of the Holding Company and the Bank.
(b) The Holding Company will provide Executive with employee benefit plans,
arrangements and perquisites substantially equivalent to those in which
Executive was participating or otherwise deriving benefit from immediately prior
to the beginning of the term of this Agreement, and the Holding Company will
not, without Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect Executive's rights or
benefits thereunder. Without limiting the generality of the foregoing provisions
of this Subsection (b), Executive will be entitled to participate in or receive
benefits under any employee benefit plans, whether tax-qualified or otherwise,
including, but not limited to, retirement plans, supplemental retirement plans,
pension plans, profit-sharing plans, health-and-accident plan, medical coverage
or any other employee benefit plan or arrangement made available by the Holding
Company in the future to its senior executives and key management employees,
subject to and on a basis consistent with the terms, conditions and overall
administration of such plans and arrangements. Executive will be entitled to
incentive compensation and bonuses as provided in any plan of the Holding
Company in which Executive is eligible to participate. Nothing paid to Executive
under any such plan or arrangement will be deemed to be in lieu of other
compensation to which Executive is entitled under this Agreement.
(c) In addition to the Base Salary provided for by paragraph (a) of this
Section 3 and other compensation provided for by paragraph (b) of this Section
3, the Holding Company shall pay or reimburse Executive for all reasonable
travel and other reasonable expenses including out time or capital expenses
associated with membership in clubs or organizations as mutually agreed to
between the Board and the executive incurred by Executive performing his
obligations under this Agreement and may provide such additional compensation in
such form and such amounts as the Board may from time to time determine.
(d) Except as otherwise provided in this Section 3(d), the Holding Company
will provide to Executive for each calendar year during the term of this
Agreement and for the remaining term of this Agreement after a termination of
employment following an Event of Termination as defined in Section 4 of this
Agreement, no later than 90 days after the close of the calendar year to which
such payment pertains ("Benefit Year"), a "Benefit Equity Payment" in addition
to the contributions actually made (or benefits actually accrued) with respect
to such year to any tax-qualified or non-tax-qualified compensation or benefit
plan, arrangement, policy or program funded or sponsored by the Holding Company
or the Bank, including but not limited to those of the following types: deferred
compensation, retirement, defined benefit pension, defined contribution pension,
supplemental executive retirement, profit sharing, stock option or stock bonus
award, life insurance, health, medical, dental, disability, incentive
compensation or bonus plan, perquisites, or other fringe benefits ("Benefit
Plans") made on his behalf or otherwise accrued as consideration for his
services described in Section 1 of this Agreement. The Benefit
3
Equity Payment shall be an amount calculated by an actuary accountant or other
licensed professional to equal the amount of the contributions (or other
benefits) which would have been made or accrued for the Executive for such year
pursuant to all Benefit Plans as consideration for his services described in
Section 1 of this Agreement but were not made or accrued because (i) any of the
Benefit Plans were terminated or not funded, or (ii) the Executive was no longer
employed or will not be employed by the Holding Company or Bank.
For purposes of calculating the Benefit Equity Payment for Benefit Years
during which the Executive was employed by the Holding Company for the full year
and for the first partial year of this Agreement, the difference between (i) and
(ii) is deemed to be zero (0).
(e) To the extent that the Holding Company or Bank continues to offer any
life, medical, health, disability or dental insurance in which Executive
participates in on the last day of his employment (each being a "Welfare Plan"),
after an Event of Termination (as herein defined), Executive and his dependents
shall be continued as participants in such Welfare Plans subject to the same
premium contributions on the part of Executive as were required immediately
prior to the Event of Termination until the earlier of (i) his death (ii) his
employment by another employer other than one of which he is the majority owner
or (iii) the end of the remaining term of this Agreement. If the Holding Company
or Bank does not offer the Welfare Plans after the Event of Termination, then
the Holding Company shall provide the Executive with a payment equal to the
actuarial value of the provision of such benefit for the period which runs until
the earlier of (i) his death (ii) his employment by another employer other than
one of which he is the majority owner or (iii) the end of the remaining term of
this Agreement.
(f) The use or provision of any membership, license, automobile use, or
other perquisites shall be continued during the remaining term of the Agreement
on the same financial terms and obligations as were in place immediately prior
to the Change In Control. To the extent that any item referred to in this
paragraph will at the end of the term of this Agreement, no longer be available
to the Executive, the Executive will have the option to purchase all rights then
held by the Holding Company or Bank to such item for a price equal to the then
fair market value of the item.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during Executive's term of employment under this Agreement, the provisions of
this Section shall apply. As used in this Agreement, an "Event of Termination"
shall mean and include any one or more of the following: (i) the termination by
the Holding Company of Executive's full-time employment hereunder for any reason
other than, upon Retirement, as defined in Section 6 hereof or Termination for
Cause, as defined in Section 7 hereof; (ii) Executive's resignation from the
Holding Company's employ, upon any (A) failure to elect or reelect or to appoint
or reappoint Executive as ___________ of the Holding Company, failure to elect
or reelect or to appoint or reappoint Executive as ___________ of the Bank, or,
failure to nominate or reelect Executive to
4
the Board of Directors of the Holding Company or Bank, unless any such event was
consented to by Executive (B) a material change in Executive's function, duties,
or responsibilities, which change would cause Executive's position to become one
of lesser responsibility, importance, or scope from the position and attributes
thereof described in Section 1, above, (and any such material change shall be
deemed a continuing breach of this Agreement), (C) a relocation of Executive's
principal place of employment by more than thirty (30) miles from its location
at the effective date of this Agreement, or a material reduction in the benefits
and perquisites to Executive from those being provided as of the effective date
of this Agreement, provided, however, that the Holding Company may materially
reduce benefits and perquisites generally provided on a nondiscriminatory basis
to all employees without incurring the payments pursuant to the provisions of
this Section, (D) liquidation or dissolution of the Bank or Holding Company, or
(E) breach of this Agreement by the Holding Company. Upon the occurrence of any
event described in clauses (A), (B), (C), (D) or (E), above, Executive shall
have the right to elect to terminate his employment under this Agreement by
resignation upon not less than sixty (60) days prior written notice given within
a reasonable period of time not to exceed, except in case of a continuing
breach, four calendar months after the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination on the Date of
Termination as defined in Section 8, the Holding Company shall be obligated to
pay Executive, or, in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be: (i) the amount of the
remaining payments (or benefits) that the Executive would have earned if he
continued his employment with the Holding Company or Bank during the remaining
unexpired term of this Agreement, based on the Executive's Base Salary at the
Date of Termination, as set out in Sections 3(a)(b) and (d) and the amount still
due the Executive under any paragraph of Section 3 for service through the Date
of Termination. At the election of Executive, which election is to be made
within thirty (30) days of the Date of Termination, such payments shall be made
in a lump sum or paid monthly during the remaining term of the agreement
following Executive's termination. In the event that no election is made,
payment to Executive will be made in a lump sum. Such payments shall not be
reduced in the event Executive obtains other employment following termination of
employment.
(c) Upon the occurrence of an Event of Termination, Executive will be
entitled to receive benefits due him under or contributed by the Bank or the
Holding Company on his behalf pursuant to any retirement, incentive, profit
sharing, bonus, performance, disability or other employee benefit plan
maintained by the Bank or the Holding Company on Executive's behalf to the
extent such benefits are not otherwise paid to Executive under a separate
provision of this Agreement.
(d) In the event that Executive is receiving monthly payments pursuant to
Section 4(b) hereof, on an annual basis, thereafter, between the dates of
January 1 and January 31 of each year, Executive shall elect whether, the
balance of the amount payable under the Agreement at that time shall be paid in
a lump sum or on a pro rata basis. Such election shall be irrevocable for the
year for which such election is made.
5
5. CHANGE IN CONTROL.
(a) No benefit shall be payable under this Section 5 unless there shall
have been a Change in Control of the Bank or the Holding Company as set forth
below. For purposes of this Agreement, a "Change in Control" of the Bank or
Holding Company shall mean an event of a nature that: (i) would be required to
be reported in response to Item 1(a) of the current report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act"); or (ii) results in a Change in
Control of the Bank or the Holding Company within the meaning of the Home
Owners' Loan Act of 1933 and the Rules and Regulations promulgated by the Office
of Thrift Supervision ("OTS") (or its predecessor agency), as in effect on the
date hereof (provided, that in applying the definition of change in control as
set forth under the rules and regulations of the OTS, the Board shall substitute
its judgment for that of the OTS); or (iii) without limitation such a Change in
Control shall be deemed to have occurred at such time as (A) any "person" (as
the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Bank or the Holding Company
representing 20% or more of the Bank's or the Holding Company's outstanding
securities except for any securities of the Bank purchased by the Holding
Company in connection with the conversion of the Bank to the stock form and any
securities purchased by any employee benefit plan of the Bank, or (B)
individuals who constitute the Board on the date hereof (the "Incumbent Board")
cease for any reason to constitute at least a majority thereof, provided that
any person becoming a director subsequent to the date hereof whose election was
approved by a vote of at least three-quarters of the directors comprising the
Incumbent Board, or whose nomination for election by the Holding Company's
stockholders was approved by the same Nominating Committee serving under an
Incumbent Board, shall be, for purposes of this clause (B), considered as though
he were a member of the Incumbent Board, or (C) a plan of reorganization,
merger, consolidation, sale of all or substantially all the assets of the Bank
or the Holding Company or similar transaction occurs in which the Bank or
Holding Company is not the resulting entity, or (D) a proxy statement is
distributed soliciting proxies from stockholders of the Holding Company, by
someone other than the current management of the Holding Company, seeking
stockholder approval of a plan of reorganization, merger or consolidation of the
Holding Company or Bank with one or more corporations as a result of which the
outstanding shares of the class of securities then subject to such plan or
transaction are exchanged for or converted into cash or property or securities
not issued by the Bank or the Holding Company or (E) a tender offer is made for
20% or more of the voting securities of the Bank or Holding Company then
outstanding.
(b) If any of the events described in Section 5(a) hereof constituting a
Change in Control have occurred or the Board has determined that a Change in
Control has occurred, Executive shall be entitled to the benefits provided in
paragraphs (c), (d), (e), (f) and (g) of this Section 5 upon his subsequent
termination of employment at any time during the term of this Agreement due to
(1) Executive's dismissal or (2) Executive's voluntary resignation following any
demotion, loss of title, office or significant authority or responsibility,
reduction in annual
6
compensation or benefits or relocation of his principals place of employment by
more than 30 miles from its location immediately prior to the Change in Control,
unless such termination is because of his death, or Termination for Cause
provided, however, that such payments shall be reduced by any payment made under
Section 4 of this agreement.
(c) Upon the occurrence of a Change in Control followed by Executive's
termination of employment as provided in Section 5(b), the Holding Company shall
pay Executive, or in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be, as severance pay or liquidated
damages, or both, a sum equal to the greater of: 1) the payments due for the
remaining term of the Agreement or 2) five (5) times Executive's average annual
compensation for the three (3) preceding taxable years. Such annual compensation
shall include Base Salary and any other taxable income, including but not
limited to amounts related to the granting, vesting or exercise of stock or
stock option awards, commissions, bonuses, pension and profit sharing plan
benefits, severance payments, retirement benefits, director or committee fees
and fringe benefits paid or to be paid to Executive during any such year. At the
election of Executive, which election is to be made within thirty (30) days of
the Date of Termination following a Change in Control, such payment may be made
in a lump sum or paid in equal monthly installments during the sixty (60) months
following Executive's termination. In the event that no election is made,
payment to Executive will be made on a monthly basis during the thirty-six (36)
months following Executive's termination.
(d) Upon the occurrence of a Change in Control, Executive will be entitled
to receive benefits due him under or contributed by the Bank or the Holding
Company on his behalf pursuant to any retirement, incentive, profit sharing,
bonus, performance, disability or other employee benefit plan maintained by the
Bank or the Holding Company on Executive's behalf to the extent such benefits
are not otherwise paid to Executive under a separate provision of this
Agreement.
(e) Upon the occurrence of a Change in Control followed by Executive's
termination of employment, the Holding Company will cause to be continued life,
medical and disability coverage substantially identical to the coverage
maintained by the Bank or Holding Company for Executive and any of his
dependents covered under such plans prior to the Change in Control. Such
coverage and payments shall cease upon the expiration of sixty (60) full
calendar months following the Date of Termination.
(f) In the event that Executive is receiving monthly payments pursuant to
Section 5(c) hereof, on an annual basis, thereafter, between the dates of
January 1 and January 31 of each year, Executive shall elect whether the balance
of the amount payable under the Agreement at that time shall be paid in a lump
sum or on a pro rata basis pursuant to such section. Such election shall be
irrevocable for the year for which such election is made.
(g) Notwithstanding the preceding paragraphs of this Section 5, for any
taxable year in which the Executive shall be liable, as determined for the
payment of an excise tax under Section 4999 of the Code, with respect to any
payment in the nature of the compensation made
7
by the Company or the Bank to (or for the benefit of) Executive, the Company
shall pay to the Executive an amount determined under the following formula:
An amount equal to: (E x P) + X
WHERE:
X = E x P
--------------------------------
1 - [(FI x (1 - SLI)) + SLI + E]
E = the rate at which the excise tax is assessed under Section
4999 of the Code;
P = the amount with respect to which such excise tax is
assessed, determined without regard to this Section 2;
FI = the highest marginal rate of deferral income tax applicable
to Executive under the Code for the taxable year in
question; and
SLI = the sum of the highest marginal rates of income and payroll
tax applicable to Executive under applicable state and
local laws for the taxable year in question.
With respect to any payment in the nature of compensation that is made to (or
for the benefit of) Executive under the terms of this Supplemental Agreement or
otherwise and on which an excise tax under Section 4999 of the Code will be
assessed, the payment determined under this Section 2 shall be made to Executive
on the earlier of (i) the date the Company is required to withhold such tax, or
(ii) the date the tax is required to be paid by Executive.
(h) Notwithstanding the foregoing, if it shall subsequently be determined
in a final judicial determination or a final administrative settlement to which
Executive is a party that the excess parachute payment as defined in Section
4999 of the Code, reduced as described above, is more than the amount determined
as "P", above (such greater amount being hereafter referred to as the
"Determinative Excess Parachute Payment") then the Company's independent
accountants shall determine the amount (the "Adjustment Amount") the Company
must pay to the Executive, in order to put the Executive (or the Company, as the
case may be) in the same position as the Executive (or the Company, as the case
may be) would have been if the amount determined as "P" above had been equal to
the Determinative Excess Parachute Payment. In determining the Adjustment
Amount, the independent accountants shall take into account any and all taxes
(including any penalties and interest) paid by or for Executive or refunded to
Executive or for Executive's benefit. As soon as practicable after the
Adjustment Amount has been so determined, the Company shall pay the Adjustment
Amount to Executive.
8
(i) In each calendar year that Executive receives payments or benefits
under the Employment Agreement, Executive shall report on his state and federal
income tax returns such information as is consistent with the determination made
by the independent accountants of the Company as described above. The Company
shall indemnify and hold Executive harmless from any and all losses, costs and
expenses (including without limitation, reasonable attorney's fees, interest,
fines and penalties) which Executive incurs as a result of so reporting such
information. Executive shall promptly notify the Company in writing whenever the
Executive receives notice of the institution of a judicial or administrative
proceeding, formal or informal, in which the federal tax treatment under Section
4999 of the Code of any amount paid or payable under this Supplemental Agreement
is being reviewed or is in dispute. The Company shall assume control at its
expense over all legal and accounting matters pertaining to such federal tax
treatment (except to the extent necessary or appropriate for Executive to
resolve any such proceeding with respect to any matter unrelated to amounts paid
or payable pursuant to this contract) and Executive shall cooperate fully with
the Company in any such proceeding. The Executive shall cooperate fully with the
Company in any such proceeding. The Executive shall not enter into any
compromise or settlement or otherwise prejudice any rights the Company may have
in connection therewith without prior consent to the Company.
6. TERMINATION UPON RETIREMENT.
Termination of Executive based on "Retirement" shall mean termination in
accordance with the Holding Company's or Bank's retirement policy or in
accordance with any retirement arrangement established with Executive's consent
with respect to him. Upon termination of Executive upon Retirement, Executive
shall be entitled to all benefits under any retirement plan of the Holding
Company or the Bank and other plans to which Executive is a party.
7. TERMINATION FOR CAUSE.
The term "Termination for Cause" shall mean termination because of a
material loss to the Holding Company or one of its affiliates caused by
Executive's intentional failure to perform stated duties, personal dishonesty,
willful violation of any law, rule, regulation (other than traffic violations or
similar offenses) or final cease and desist order, or any material breach of
this Agreement. For purposes of this Section, no act, or the failure to act, on
Executive's part shall be "willful" unless done, or omitted to be done, not in
good faith and without reasonable belief that the action or omission was in the
best interest of the Holding Company or its affiliates. Notwithstanding the
foregoing, Executive shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to him a Notice of Termination
which shall include a copy of a resolution duly adopted by the affirmative vote
of not less than three-fourths of the members of the Board at a meeting of the
Board called and held for that purpose (after reasonable notice to Executive and
an opportunity for him, together with counsel, to be heard before the Board),
finding that in the good faith opinion of the Board, Executive was guilty of
conduct justifying termination for Cause and specifying the particulars thereof
in detail. Executive shall not have the right to receive compensation or other
benefits for any period after Termination
9
for Cause. Any stock options and related limited rights granted to Executive
under any stock option plan, or any unvested awards granted to Executive under
any stock benefit plan of the Bank, the Holding Company or any subsidiary or
affiliate thereof, shall become null and void effective upon Executive's receipt
of Notice of Termination for Cause pursuant to Section 8 hereof, and shall not
be exercisable by or delivered to Executive at any time subsequent to such
Termination for Cause.
8. NOTICE.
(a) Any purported termination by the Holding Company or by Executive shall
be communicated by Notice of Termination to the other party hereto. For purposes
of this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.
(b) "Date of Termination" shall mean the date specified in the Notice of
Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given);
provided, however, that if a dispute regarding the Executive's termination
exists, the "Date of Termination" shall be determined in accordance with Section
8(c) of this Agreement.
(c) If, within thirty (30) days after any Notice of Termination is given,
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, the Date of Termination shall be the
date on which the dispute is finally determined, either by mutual written
agreement of the parties, by a binding arbitration award, or by a final
judgment, order or decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been perfected) and
provided further that the Date of Termination shall be extended by a notice of
dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, the Holding Company will
continue to pay Executive his full compensation in effect when the notice giving
rise to the dispute was given (including, but not limited to, Base Salary) and
continue him as a participant in all compensation, benefit and insurance plans
in which he was participating when the notice of dispute was given, until the
dispute is finally resolved in accordance with this Agreement. Amounts paid
under this Section are in addition to all other amounts due under this Agreement
and shall not be offset against or reduce any other amounts due under this
Agreement.
9. POST-TERMINATION OBLIGATIONS.
(a) All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with paragraph (b) of this Section 9 during
the term of this Agreement and for one (1) full year after the expiration or
termination hereof.
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(b) Executive shall, upon reasonable notice, furnish such information and
assistance to the Holding Company as may reasonably be required by the Holding
Company in connection with any litigation in which it or any of its subsidiaries
or affiliates is, or may become, a party.
10. NON-COMPETITION.
(a) Upon any termination of Executive's employment hereunder pursuant to
Section 8 hereof, Executive agrees not to compete with the Bank and/or the
Holding Company for a period of one (1) year following such termination in any
city, town or county in which the Bank and/or the Holding Company has an office
or has filed an application for regulatory approval to establish an office,
determined as of the effective date of such termination, except as agreed to
pursuant to a resolution duly adopted by the Board. Executive agrees that during
such period and within said cities, towns and counties, Executive shall not work
for or advise, consult or otherwise serve with, directly or indirectly, any
entity whose business materially competes with the depository, lending or other
business activities of the Bank and/or the Holding Company. The parties hereto,
recognizing that irreparable injury will result to the Bank and/or the Holding
Company, its business and property in the event of Executive's breach of this
Subsection 10(a) agree that in the event of any such breach by Executive, the
Bank and/or the Holding Company will be entitled, in addition to any other
remedies and damages available, to an injunction to restrain the violation
hereof by Executive, Executive's partners, agents, servants, employers,
employees and all persons acting for or with Executive. Executive represents and
admits that in the event of the termination of his employment pursuant to
Section 8 hereof, Executive's experience and capabilities are such that
Executive can obtain employment in a business engaged in other lines and/or of a
different nature than the Bank and/or the Holding Company, and that the
enforcement of a remedy by way of injunction will not prevent Executive from
earning a livelihood. Nothing herein will be construed as prohibiting the Bank
and/or the Holding Company from pursuing any other remedies available to the
Bank and/or the Holding Company for such breach or threatened breach, including
the recovery of damages from Executive.
(b) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Holding Company and
affiliates thereof, as it may exist from time to time, is a valuable, special
and unique asset of the business of the Bank. Executive will not, during or
after the term of his employment, disclose any knowledge of the past, present,
planned or considered business activities of the Bank or affiliates thereof to
any person, firm, corporation, or other entity for any reason or purpose
whatsoever. Notwithstanding the foregoing, Executive may disclose any knowledge
of banking, financial and/or economic principles, concepts or ideas which are
not solely and exclusively derived from the business plans and activities of the
Holding Company. Further, Executive may disclose information regarding the
business activities of the Bank or Holding Company to the Office of Thrift
Supervision ("OTS") and the Federal Deposit Insurance Corporation ("FDIC")
pursuant to a formal regulatory request. In the event of a breach or threatened
breach by Executive of the provisions of this Section, the Holding Company will
be entitled to an injunction restraining Executive from disclosing, in whole or
in part, the knowledge of the past, present, planned or considered business
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activities of the Holding Company or affiliates thereof, or from rendering any
services to any person, firm, corporation, other entity to whom such knowledge,
in whole or in part, has been disclosed or is threatened to be disclosed.
Nothing herein will be construed as prohibiting the Holding Company from
pursuing any other remedies available to the Holding Company for such breach or
threatened breach, including the recovery of damages from Executive.
11. SOURCE OF PAYMENTS.
All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Holding Company subject to Section 13
hereof.
12. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties hereto
and supersedes any prior employment agreement between the Holding Company or any
predecessor of the Holding Company and Executive, except that this Agreement
shall not affect or operate to reduce any benefit or compensation inuring to
Executive of a kind elsewhere provided. No provision of this Agreement shall be
interpreted to mean that Executive is subject to receiving fewer benefits than
those available to him without reference to this Agreement.
13. EFFECT OF ACTION UNDER BANK AGREEMENT.
Notwithstanding any provision herein to the contrary, to the extent that
payments and benefits, as provided by this Agreement, are paid to or received by
Executive under the Employment Agreement dated July 1, 1994, between Executive
and the Bank, such compensation payments and benefits paid by the Bank will be
subtracted from any amount due simultaneously to Executive under similar
provisions of this Agreement.
14. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
Executive and the Holding Company and their respective successors and assigns.
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15. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an instrument
in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.
16. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
17. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
18. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Delaware,
unless otherwise specified herein.
19. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by Executive within fifty
(50) miles from the location of the Holding Company's executive office, in
accordance with the rules of the American Arbitration Bank then in effect.
Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that Executive shall be entitled to seek
specific performance of his right to be paid until the Date of Termination
during the pendency of any dispute or controversy arising under or in connection
with this Agreement.
20. PAYMENT OF COSTS AND LEGAL FEES AND REINSTATEMENT OF BENEFITS.
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In the event any dispute or controversy arising under or in connection with
Executive's termination is resolved in favor of the Executive, whether by
judgment, arbitration or settlement, Executive shall be entitled to the payment
of: (1) all legal fees incurred by Executive in resolving such dispute or
controversy, and (2) any back-pay, including salary, bonuses and any other cash
compensation, fringe benefits and any compensation and benefits due Executive
under this Agreement.
21. INDEMNIFICATION.
During the term of this Agreement and for an additional period of seven
years thereafter, the Holding Company shall provide Executive (including his
heirs, executors and administrators) with coverage under a standard directors'
and officers' liability insurance policy at its expense, and shall indemnify,
hold harmless and defend Executive (and his heirs, executors and administrators)
to the fullest extent permitted under Delaware law against all expenses and
liabilities reasonably incurred by him in connection with or arising out of any
action, suit or proceeding in which he may be involved by reason of his having
been a director or officer of the Holding Company (whether or not he continues
to be a director or officer at the time of incurring such expenses or
liabilities), such expenses and liabilities to include, but not be limited to,
judgments, court costs and attorneys' fees and the cost of reasonable
settlements.
22. SUCCESSOR TO THE HOLDING COMPANY.
The Holding Company shall require any successor or assignee, whether direct
or indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Bank or the Holding Company,
expressly and unconditionally to assume and agree to perform the Holding
Company's obligations under this Agreement, in the same manner and to the same
extent that the Holding Company would be required to perform if no such
succession or assignment had taken place.
23. MISCELLANEOUS.
(a) Unless otherwise subject to law, all lump sum calculations shall be
done in using the methods, rates and assumptions setout in Code Section 1274(d)
and the regulations and statements issued thereunder by the IRS.
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SIGNATURES
IN WITNESS WHEREOF, Reliance Bancorp, Inc. has caused this Agreement to be
executed and its seal to be affixed hereunto by its duly authorized officer and
its directors, and Executive has signed this Agreement, on the 11th day of
September, 1996.
ATTEST: RELIANCE BANCORP, INC.
BY:
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Robert F. Pelosi
Secretary
[SEAL]
WITNESS: Executive
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