EXHIBIT 10.2
Management Agreement
This Management Agreement ("Agreement") dated as of the 28th day of
June, 1996 by and between River Bank America, a New York chartered savings bank
("Bank") and RB Management Company LLC, a New York limited liability company
("RB Management").
WITNESSETH:
WHEREAS, on or about June 28, 1996 the Bank will consummate the
Branch Sale (as defined in a Proxy Statement ("Proxy Statement") dated May 13,
1996 issued by the Bank); and
WHEREAS, pursuant to the Proxy Statement the Bank wishes to engage RB
Management to provide general and bank management services ("Bank Services") and
asset management services ("Asset Services") (collectively "Management
Services") as more fully detailed herein and in accordance with applicable law
and regulations; and
WHEREAS, pursuant to a commitment letter from Marine Midland Bank
("Marine Commitment") to provide a loan ("Marine Loan") to the Bank to
facilitate the Branch Sale, RB Management (a company controlled by the current
owner of 39% of the common stock of the Bank) must remain actively involved in
the day-to-day management of the affairs of the Bank while the Marine Loan is
outstanding; and
WHEREAS, since the Bank and RB Management may be deemed to be
affiliates, the Management Services have been reviewed by the Xxxxxxx Xxxxxxxxx
Real Estate Group of Ernst & Young LLP ("EY") as to form and amount of fees
payable to assure that they are and will be comparable to similar arrangements
negotiated on an arms length basis, all as more fully described herein.
NOW THEREFORE, in consideration of the covenants contained herein,
the parties agree as follows:
1. Engagement. Effective July 1, 1996 ("Effective Date"), the Bank
through its Board of Directors (the "Bank Board") hereby exclusively engages RB
Management, as an independent contractor, to provide the Bank with the
Management Services (as hereinafter defined and described) in accordance with
the provisions hereof, and RB Management accepts such engagement. RB Management
will report directly to the Bank Board and/or its duly authorized committees.
2. Term.
(a) The initial term of this Agreement shall be three
years commencing on the Effective Date (the "Initial Term") unless extended or
terminated pursuant to the terms hereof.
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This Agreement shall automatically extend for a one year term upon the
termination of the Initial Term if the Marine Loan remains outstanding and shall
automatically further extend for an additional one year term upon the
termination of the first extension term if the Marine Loan remains outstanding.
(b) This Agreement may be terminated by the Bank and RB
Management as follows:
(i) Subject to the consent of Marine Midland (or such
other senior lender as may be applicable), either the Bank or RB
Management may terminate this Agreement for any reason by giving 180
days prior written to the other of such termination.
(ii) Subject to the consent of Marine Midland (or such
other senior lender as may be applicable), RB Management may
terminate this Agreement in the event of the failure of the Bank to
make any payment due RB Management pursuant to Section 4 of this
Agreement when due and the continued failure to make such payment for
a period of 45 days after written demand for such payment has been
made.
(iii) Subject to the consent of Marine Midland (or such
other senior lender as may be applicable), the Bank terminate this
Agreement for "Cause". For purposes hereof, "Cause" shall be defined
as a material breach of this Agreement and/or willful act or omission
by RB Management that is materially detrimental to the best interests
of the Bank and which breach, act or omission is not cured within a
reasonable time after notice of such breach, act or omission.
(iv) Subject to the consent of Marine Midland (or such
other senior lender as may be applicable), both the Bank and RB
Management may terminate this Agreement by their mutual written
consent.
(v) The Bank may terminate this Agreement during the
last years of the Initial Term or during either extension term upon
60 days notice from RB Management that all assets of the Bank have
been sold.
(c) Any termination under this Section 2(b) shall be
approved by action of the Bank Board and/or the Board of Directors of RB
Management ("Board"), as the case may be. Written notice of termination shall be
given by the terminating party in accordance with Section 10 of Agreement, as
well as this Section 2(b). In connection with any termination, each of the
parties hereto shall timely return to the other any property, assets, records or
documents of the other and shall cooperate with the other in order to assure the
orderliness of the termination. Terminations shall be without prejudice to the
rights of either party.
(d) Upon any termination of this Agreement, the fees
payable to RB Management will be pro rated for such year to the date of
termination. If the Agreement is terminated prior to
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the expiration of any term, the Bank will also reimburse RB Management for the
reasonable costs incurred by RB Management as a result of the termination of the
Management Services, including, but not limited to, reasonable termination or
severance payments made to service providers or employees terminated by RB
Management as a result of such termination. Furthermore, on termination RB
Management shall provide the Bank with a list of all asset dispositions which it
is in the process of working on and if any such disposition is successfully
completed within six (6) months from said termination then RB Management shall
be entitled to the Asset Disposition Fee as defined in Paragraph 4(b)(ii)
hereinafter.
3. Services. Pursuant to the provisions of this Agreement, RB
Management shall exclusively (I) during the first ninety days of the term
hereof, coordinate with the Bank to effectuate and (II) thereafter provide the
Bank the Management Services as follows:
(a) Bank Management Services: RB Management will manage the
general business affairs and corporate activities of the Bank and oversee third
party providers, including and not by way of limitation:
(i) Development and implementation of policies and
procedures for the ordinary day to day general management of the Bank
and disposition of its assets and as approved by the Bank Board;
(ii) Manage corporate activities, including:
[a] Prepare and maintain business plans;
[b] Provide treasury and tax services,
e.g. cash management, Marine Loan
monitoring and tax return preparation;
[c] Provide financial and accounting
services, e.g. corporate operating
budgets, accounts payable, general
ledger financial reporting, Bank Board
reporting packages, financial
statements, regulating reporting;
[d] Monitor Bank's progress e.g. internal
controls, internal audits, operational
audits, processing of systems and
controls and operations;
[e] Monitor portfolio progress, e.g.
performance of asset management and
workout groups, review restructuring
plans, review loan status, review
asset business plans, coordinate with
asset management;
(iii) Provide, obtain and oversee third party services
when required such as loan servicing, general ledger, reporting IT
support, legal, accounting, audit, human resources.
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(iv) Notwithstanding the foregoing, RB Management, nor
any of its employees, members or directors, shall be deemed to be or
will act as officers of the Bank and any action which requires
signatures by Bank officers shall be presented to the Bank Board for
direction by it to be executed by Bank officers.
(b) Asset Management Services: Commencing with the
Effective Date, RB Management will manage assets, properties, loans and oversee
third party providers, including and not by way of limitation:
(i) Manage assets properties and loans, including:
[a] Troubleshoot loan portfolio, e.g.
borrower delinquencies and loan
status;
[b] Review loans to determine development
and recommendation of loan plans,
restructures or litigation strategies;
[c] Restructure loans, including planning,
implementing and monitoring;
[d] Foreclose assets, including hiring
attorneys, obtaining title and
commencing management;
[e] Prepare Asset Business Plans including
enhancement strategies;
[f] Manage and monitor REO assets,
including site visits, liaison with
brokers and property RB Managements,
review property reports, leasing;
[g] Dispose of REO assets, including
solicitation and review of offers,
recommendation of "best offer",
negotiation and closing of sale;
[h] Providing financial and operating
reports, including monthly reports,
quarterly analyses, financial
statements, reports for Bank Board and
regulatory agencies;
(ii) Provide, obtain and oversee third party services
when required such as property RB Managements, third party loan
marketing, brokerage, leasing, legal accounting and audit.
4. Compensation To Company. RB Management shall be compensated for
Management Services and expenses as follows:
(a) For Bank Management Services: RB Management shall be
paid an annual fee ("Base Fee"), payable monthly, not to exceed $1,250,000 based
on the costs expected to be
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incurred by RB Management to provide the Bank Management Services. The Base Fee
will be reviewed no less frequently than annually by the Audit Committee of the
Bank Board and adjusted based upon the costs expected to be incurred as
aforesaid. To the extent that RB Management determines it feasible to engage or
cause Bank to engage third party service providers (with the approval of the
Bank Board), which services would be considered part of RB Management's
functions (as opposed to expenses which would ordinarily require third party
services and out of pocket expenses), the Base Fee shall be adjusted
accordingly.
(b) For Asset Management Services:
(i) An annual fee ("Asset Services Fee"), payable
monthly equal to 0.75% of the average month-end book value of the
Bank's assets; and
(ii) An asset Disposition success fee ("Asset
Disposition Fee") equal to 0.75% of the proceeds from the sale or
collection or refinancing of any Bank asset.
(c) RB Management shall be reimbursed by Bank for any third
party service bills arising out of approved third party service agreements as
set forth in Paragraph 6 below which RB Management may (but shall not be
obligated to) pay. Further RB Management shall be reimbursed by the Bank for
reasonable out-of-pocket expenses incurred by RB Management in connection with
the rendering of Management Services. Approved third party bills and
out-of-pocket expenses arising out of services incurred prior to the date hereof
but which were in connection with consummation of the Branch Sale shall be
reimbursed hereunder.
5. Billing; Extensions of Credit. RB Management shall xxxx the Bank
for the Base Fee and the Asset Fee and out of pocket expenses no more frequently
than every two weeks in arrears. To the extent that payroll requires current
payments, the Base Fee and Asset Fee shall be paid currently and adjusted. The
Asset Disposition Fee shall be billed the month following the sale, collection
or refinancing. All bills shall be documented and itemized. Such bills will be
due upon receipt by the Bank and, after review of documentation, will be
promptly settled by the Bank. A final xxxx will be tendered within 30 days
following the effective date of any termination pursuant to Section 1 of this
Agreement and promptly settled by the Bank. It is not the intention of the
parties to extend credit one to the other in connection with this Agreement. Any
amounts not paid to RB Management within thirty (30) days of the date billed
shall bear interest at the rate of the Citibank "Prime" rate per annum.
6. Outsourced Services. As set forth in Paragraph 3 above, RB
Management will obtain and oversee the provision, on an outsourced, third party
basis of those services not provided directly by RB Management. All outsourcing
arrangements will be subject to prior review and recommendation as to
compensation terms by the Audit Committee and as to
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other terms subject to prior approval by the Asset Management Committee of the
Bank Board. The cost of approved outsourced arrangements will be borne by the
Bank. Each person or entity providing such approved outsourced services will
sign a service contract with the Bank. Notwithstanding the foregoing, to the
extent that RB Management uses Fintek, Inc., an affiliate of RB Management, to
provide certain approved outsourced services, RB Management shall retain be
responsible to pay Fintek for such services.
7. Records. RB Management shall maintain detailed written records
with regard to matters failing within the ambit of this Agreement. Each shall
make available, for review, the records of the other upon request. Such records
shall be made available to banking or tax examiners, as required by law.
8. Related Party Transaction; Adjustment. This agreement has been
negotiated and executed in accordance with the terms set forth in the Proxy
Statement. The Bank and RB Management acknowledge and understand that payment of
monies by the Bank to RB Management for Services must be made only in accordance
with applicable laws and regulations. In this regard, RB Management understands
that the Bank Board will, from time to time review this Agreement, the Base Fee
and the outsourcing agreements for comparability of fees and terms to similar
arrangements negotiated on an arm's length basis. The Bank Board, at its
expense, has engaged and may continue to engage the EY to aid it in its
independent review process. Further, The New York State Banking Department has
advised that it will monitor and periodically review this agreement and the
terms of all outsourced agreements. The terms of this agreement are subject to
applicable law.
9. Assignments. Subject to the rights of Marine Midland (or such
other senior lender) as is applicable RB Management may assign its rights and
obligations hereunder to a successor prepared to assume and with the resources
to assume RB Management's obligations hereunder.
10. Notices, Requests and Other Communications. All requests and
other communications required or permitted to be given under this Agreement
shall be in writing and sent by mail, telegram, facsimile or telex, or overnight
courier to the address and to the attention of the persons specified below. All
notices, requests and other communications required or permitted under this
Agreement:
(a) If directed to the Bank, shall be addressed as follows:
River Bank America
000 Xxxxxxxx Xxxxxx - 0xx xxxxx
Xxx Xxxxxxxx, XX 00000
Attention: Board of Directors;
(b) If directed to RB Management, shall be addressed as
follows:
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RB Management Company, LLC
000 Xxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xx. Xxxxx Xxxxxxx
11. Amendments, Waivers and Consents. No amendment, waiver or consent
with respect to this Agreement shall be effective unless set forth in an
instrument or instruments in writing, signed by the party to be bound thereby.
No waiver of any provisions of this Agreement shall constitute a waiver of any
other provision and any waiver so given shall be given only in the particular
instance and shall be considered to be a continuing waiver.
12. Entire Agreement. This Agreement sets forth the entire agreement
and understanding of the parties with respect to the transactions contemplated
hereby, and supersedes any and all prior agreements and understandings with
respect to such transactions.
13. Severability. If any provisions shall be held to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the remaining provisions of this Agreement.
14. Governing Law. This Agreement shall be governed by, and construed
and interpreted in accordance with, the substantive laws of the State of New
York.
15. Confidentiality. Each of the Bank and RB Management will take all
reasonable steps to maintain the confidentiality of records and documents of the
other in the custody of the other.
IN WITNESS WHEREOF, the Bank and RB Management have caused this
Agreement to be executed effective as of the date first above written.
RIVER BANK AMERICA
BY /s/ Xxxxxx X. XxXxxxxx
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RB MANAGEMENT COMPANY, LLC
BY /s/ Xxxxx Xxxxxxx
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