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Exhibit 10.3
DIME MORTGAGE, INC.
0000 Xxxxxxxx Xxxxxxxx Xxxxxxxx
Xxxxx, Xxxxxxx 00000
June 22, 1997
Xxxxxx Xxxxxxxxx
0000 Xxxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Re: Agreement Regarding Initial Employment Terms
Dear Xx. Xxxxxxxxx:
This letter agreement (the "Letter Agreement") is intended to detail
elements of your initial compensation arrangements with Dime Mortgage, Inc.
("DMI") to become applicable upon your commencement of employment by DMI. DMI
agrees to employ you, and you agree to be employed by DMI, on the following
terms and conditions:
1. As an employee of DMI, your principal duties will include
responsibility for the management of DMI's production network. You will also
have responsibility for such other duties as may be assigned to you by DMI from
time to time. Your place of employment will be Santa Rosa, California. Your
initial annual salary will be at the rate of $265,000.00 per annum. You will be
eligible to participate in DMI's incentive plan during 1997; provided, that you
will receive a minimum incentive award in the amount of (x) $155,000 for such
year less (y) the total amount of any performance or other bonuses or awards
which are paid, or accrued to be paid, to you by North American Mortgage Company
(and its subsidiaries) prior to the date of Consummation (as defined below) in
respect of such year, except that no incentive award will be payable to you by
DMI if prior to December 31, 1997 your employment is terminated (a) by you or
(b) by DMI for "cause" (as defined in the Employment Agreement referenced
below). In addition, you will receive a special incentive award in the amount of
$100,000 payable twelve (12) months after the date of Consummation unless prior
to the end of such twelve month period your employment is terminated (a) by you
or (b) by DMI for "cause." Later levels of target incentive opportunity and
other terms of participation will be as set by DMI's Board of Directors or a
committee thereof. You will be eligible to participate in such life, medical and
other insurance plans or programs as are made available by DMI to other
similarly
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situated employees of DMI. You will be eligible to participate in one or more
qualified and non-qualified programs providing defined contribution retirement
benefits with the rate of employer contributions (or deemed employer
contributions) not less in the aggregate than that previously provided by North
American Mortgage Company (but with no such contributions to be made or to
accrue with respect to the special incentive award described above, or with
respect to any payments to be made pursuant to Section 3 of this Letter
Agreement).
2. In addition to the terms described in this Letter Agreement, the
terms of your employment will be as set forth in an employment agreement to be
executed by you and DMI (the "Employment Agreement") which will contain terms
substantially in accordance with those described in Exhibit A attached hereto
and made a part of this Letter Agreement, provided, however, that the
non-solicitation provisions of the Employment Agreement as so executed shall be
limited to a nine (9) month duration rather than a (12) month duration in the
event that, during the initial twelve (12) month term of the Employment
Agreement, your employment is terminated for any reason other than for "cause."
Your employment by DMI will commence, and DMI agrees to execute and deliver the
Employment Agreement contemporaneous with, consummation ("Consummation") of the
transaction contemplated by that certain Agreement and Plan of Combination,
dated as of June 22, 1997, between Dime Bancorp, Inc. and North American
Mortgage Company (the "Transaction Agreement"). (If in connection with the
transactions contemplated by the Transaction Agreement, the mortgage banking
operations of DMI are transferred to another entity that is a direct or indirect
subsidiary of Dime Bancorp, Inc. then this Letter Agreement and the Employment
Agreement shall be assumed by, and be binding upon, such entity, and the term
"DMI" as used herein and in the Employment Agreement shall mean such entity.)
Your employment by DMI, and DMI's agreement to enter into the Employment
Agreement, is expressly conditioned upon and subject to Consummation. If for any
reason the Consummation does not occur as contemplated in the Transaction
Agreement, DMI shall have no obligation to employ you, or to enter into the
Employment Agreement, shall have no further obligation or liability to you
whatsoever, and the terms of this Letter Agreement shall become automatically
void and without further effect.
3. It is a further condition to DMI's agreement to employ you under
this Letter Agreement and the Employment Agreement that you hereby agree you
will not be entitled to, and shall by and upon your execution of this Letter
Agreement be deemed to have irrevocably waived, any rights to severance benefits
to which you are or may become entitled prior to the Consummation or other
termination of the Transaction Agreement, or otherwise in connection with the
transactions contemplated by the Transaction Agreement under any severance
agreement, arrangement or plan to which you are party or in which you
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are a participant, including, without limitation, as provided in that certain
Termination Agreement, dated as of December 11, 1995 between you and North
American Mortgage Company (the "Termination Agreement"), and under the North
American Mortgage Company Senior Executive Severance Pay Plan (the "Severance
Pay Plan"), and that upon the effectiveness of the Employment Agreement, the
Termination Agreement and your right to any benefits under the Severance Pay
Plan shall finally terminate and be of no further force or effect. For and in
consideration of the foregoing, DMI agrees that:
(a) In connection with you entering into DMI's employ pursuant to the
Employment Agreement, DMI shall make supplemental payments to you in the
aggregate amount of $350,927.25, which shall accrue and be payable to you
in twelve equal monthly installments, in arrears, commencing on the date
that is one month following the Consummation; provided that in the event
you voluntarily terminate your employment other than for "good reason" (as
defined below) or on account of death or permanent disability, or your
employment is terminated by DMI for "cause" (as defined in the Employment
Agreement) at any time prior to the end of such twelve month period, you
shall be entitled to receive, and DMI shall be obligated to pay, only the
amount of such supplemental payment as shall have accrued as of the last
full month ending prior to the date notice of such termination is given.
For these purposes, "good reason" means any material reduction in your
duties and responsibilities from those initially contemplated herein, a
reduction in your base salary or target incentive opportunity under DMI's
incentive plan, or any requirement that you relocate your principal place
of business to any location in excess of 50 miles from Santa Rosa,
California.
(b) Notwithstanding anything to the contrary contained in the Employment
Agreement, and in addition to any payments described in (a) above, upon
termination by DMI of your employment under the Employment Agreement for
any reason other than for "cause" (as defined in the Employment Agreement)
the total of your cash severance benefits under the Employment Agreement
and this Letter Agreement shall be at least $350,927.25 if the effective
date of your termination of employment is within the first twelve (12)
months of the commencement of the term of the Employment Agreement, or at
least $701,854.50 if the effective date of your termination of employment
occurs thereafter (as applicable, each the "Minimum Severance Amount"). If
the total of any cash severance payments payable to you under the
Employment Agreement in respect of a termination of employment by DMI
other than for "cause" (as defined in the Employment Agreement) either (i)
as salary continuation other than in connection with a Change in Control
(as defined in the Employment Agreement), or (ii) as a lump sum in
connection with a Change
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in Control, shall be less than the Minimum Severance Amount, then DMI
shall pay you the difference between the total of such cash severance
payments payable to you under the Employment Agreement and such Minimum
Severance Amount as a lump sum, within thirty (30) days after the
effective date of termination of your employment.
4. Any payments due you under this Letter Agreement shall be reduced
by all applicable withholding and other taxes. Nothing in this Letter Agreement
confers upon you the right to continue in the employment of DMI or interferes
with or restricts in any way the right of DMI to terminate your employment at
any time, with or without cause.
5. Notwithstanding anything in the foregoing, if any statute,
regulation, order, agreement or regulatory interpretation thereof that is valid
and binding upon DMI, including, without limitation, 12 USC Section 1828(k) and
regulations thereunder (each a "Regulatory Restriction") restricts, prohibits or
limits the amount of any payment or the provision of any benefit that DMI would
otherwise be liable for pursuant to this Letter Agreement, then the amount that
DMI will pay to you will not exceed the maximum amount permissible under such
Regulatory Restriction; provided, that if such Regulatory Restriction shall
subsequently be rescinded, superseded, amended or otherwise determined not to
restrict, limit or prohibit payment by DMI of amounts otherwise due you
hereunder, the DMI shall promptly thereafter pay to you any amounts (or the
value of any benefit) previously withheld from you as a result of such
Regulatory Restriction. As of the date hereof, DMI represents there are no
Regulatory Restrictions restricting your right to the payments contemplated
hereby. Further, if any amount otherwise payable hereunder would be deemed to
constitute a parachute payment (a "Parachute Payment") within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), and
if any such Parachute Payment, when added to any other payments that are deemed
to constitute Parachute Payments, would otherwise result in the imposition of an
excise tax under Section 4999 of the Code, the amounts payable hereunder shall
be reduced by the smallest amount necessary to avoid the imposition of such
excise tax. Any such limitation shall be applied to such compensation and
benefit amounts, and in such order, as DMI shall determine in its sole
discretion. References to the Code hereunder shall be to the Code as presently
in effect or to the corresponding provisions of any succeeding law.
6. This Letter Agreement shall be governed by the laws of the State
of New York, without regard to conflict of laws principles applied in the State
of New York. In the event of any conflict between the express provisions of this
Letter Agreement and the Employment Agreement, the express provisions of the
Employment Agreement shall
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be controlling. Except as otherwise provided above, this Letter Agreement may
only be amended in writing signed by both parties hereto.
Please indicate your acceptance to the terms of this Letter
Agreement by signing below. This Letter Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all of which together shall constitute but one and the
same instrument.
Very truly yours,
DIME MORTGAGE, INC.
By: /s/ D. Xxxxx Xxxxx
________________________________________
AGREED AND ACCEPTED
/s/ Xxxxxx Xxxxxxxxx
_____________________________
Xxxxxx Xxxxxxxxx
Date: June 22, 1997
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EXHIBIT A
STANDARD FORM EMPLOYMENT AGREEMENT
Employer: Dime Mortgage, Inc. ("Employer")
Term: The initial term of the Employment Agreement ends March 1, 1999. The
Agreement provides for automatic renewal on each March 1st (commencing and
including March 1, 1998) for an additional year (so that at that point they
would have a two-year term) unless prior written notice of nonrenewal is given
by either party, at least 10 days in advance. The Agreement also provides that
the Board of Directors, or a Committee or subcommittee of the Board (if so
delegated by the Board) will annually review it to determine whether or not to
give the notice of nonrenewal.
Duties: The Agreement specifies the position and duties of each individual
officer and permits the assignment of comparable or additional duties or
positions.
Compensation: The Agreement gives the Board of Directors or a committee
thereof broad latitude in adjusting compensation levels, except that decreases
in annual salary may not exceed 25% in any one year, other than decreases that
are applied generally to officers of comparable rank. Compensation payments are
automatically deferred to the extent necessary to comply with Dime Bancorp, Inc.
("Bancorp") policy regarding Code Section 162(m) ($1 million dollar cap on
deductible compensation). To the extent so deferred, those amounts are payable
under the applicable provisions of the Voluntary Deferred Compensation Plan.
Benefits are generally as provided by applicable Employer plans.
Death & Disability: The Agreement provides no special death benefits.
However, full salary (less available disability insurance benefits) is provided
for up to one year of permanent disability (or, if less, the end of the
remaining term of the agreement), with continued life, medical and dental
insurance coverage for the remaining term (as long as continued contributions
are made).
Severance Benefits: The Agreement provides that if, prior to a Change in
Control, Dime terminates the officer's employment (other than for cause),
Employer will continue, during a
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"Severance Period," to pay the officer's salary and to maintain the officer's
life, medical and dental insurance coverage as in effect (subject to continuing
officer contributions) immediately prior to termination. The base Severance
Period is either six months for officers who have been employed for two years or
less (including service with North American Mortgage Company) or twelve months
for those employed for more than two years. The base Severance Period may be
increased by an "age multiplier," which increases the Severance Period for
officers age fifty and over as follows: 1.25x for officers age 50 to 54, 1.375x
for officers age 55 to 59, and 1.5x for officers age 60 or over. All such
severance payments are subject to limitation to the extent necessary to comply
with applicable regulatory restrictions. Finally, no benefits are provided upon
a termination for cause or if the officer voluntarily terminates. For purposes
of the Agreement, "cause" means the officer's personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform assigned duties, willful violation of any law,
rule or regulation (other than traffic violations or similar offenses) or final
cease and desist order or material breach of any provision of the Agreement.
Change in Control: The Agreement provides for Change in Control benefits
to apply in lieu of the otherwise applicable severance benefits if, during a
specified period following a Change in Control, the officer's employment is
terminated by Employer (other than for cause) or, in certain circumstances,
either constructively terminated or terminated by the officer.
For these purposes, a Change in Control includes any of the following:
1. A merger, consolidation or reorganization where voting securities of
Bancorp (or The Dime Savings Bank of New York, FSB (the "Bank")),
either as still outstanding or after conversion into other
securities, do not continue to represent at least 65% of the
combined voting power of the resulting entity.
2. Shareholder approval for the liquidation or sale of substantially
all of the assets of Bancorp or the Bank.
3. Acquisition of more than 35% of the stock of Bancorp or the Bank by
a person or entity or persons or entities acting as a group.
4. If the directors designated for election by the nominating committee
of Bancorp or the Bank stop constituting a majority of the members
of the Board of Directors of
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Bancorp or the Bank.
5. Entering into a binding agreement which, if consummated, would
result in a change in control as described in items (1) or (3)
above, a sale of substantially all assets of Bancorp or the Bank, or
adoption of a Plan of Liquidation.
The Agreement provides that in addition to an involuntary termination by
Employer (which includes a termination in connection with permanent disability
but not a termination for cause), Change in Control benefits are also generally
payable on a constructive termination (where the officer terminates his or her
employment, following a material lessening of the officer's responsibilities, or
where his or her salary is reduced below its pre-Change in Control level).
Change in Control benefits are also payable if the officer voluntarily
terminates his or her employment after a Transfer of Control (defined below).
Change in Control benefits are only payable if the termination of
employment, as described above (or notice thereof), occurs during the remaining
term of the agreement in effect at the time of the Change in Control, with the
added requirement that voluntary terminations after a Transfer of Control (or
notice thereof), not on account of constructive termination, must occur within
90 days of the Transfer of Control. Non-renewal of the Agreement by Employer
during the remaining term of the agreement in effect at the time of the Change
in Control is treated as the equivalent of an involuntary termination for
purposes of triggering Change in Control benefits (with the employee then
eligible for Change in Control benefits at the end of the remaining term of the
Agreement). Change in Control benefits (limited as described below) include the
following:
(a) a lump-sum payment of two times annual salary plus bonus
opportunity;
(b) vesting in accordance with their original terms of all stock options
that do not otherwise vest upon a Change in Control, and provision
for continued exercisability of all outstanding options for their
full remaining terms (to the extent permitted by the underlying
stock option plan), in each case without regard to the officer's
termination of employment;
(c) continuation of life, disability, medical and dental insurance
coverage for the remaining term of the agreement at the time of
termination (as long as continued
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contributions are made by the officer);
(d) supplemental (non-qualified) benefits (including benefits related to
401(k) match) under otherwise generally applicable Employer defined
contribution plans in which the officer participates, to replace any
accrued defined contribution retirement benefits that are lost
because they were not vested at the time of termination.
In addition, if following a Change in Control, Employer relocates its
principal executive offices and as a result the officer changes his or her
principal residence, the Agreement provides that he or she will receive
relocation benefits consisting of moving expenses and reimbursement of any loss
incurred on the sale of that residence.
Unless there has been a Transfer of Control, these Change in Control
benefits, as well as other benefits payable under the Agreement, are capped so
that no payments will be required to be made that should trigger any excise
taxes relating to "golden parachute payments." The cap on Change in Control
benefits also applies, even after a Transfer of Control, if the benefits are
payable on account of a voluntary termination (and not on account of
constructive termination or deemed involuntary termination) within 90 days after
the Transfer of Control.
If, however, the Change in Control were deemed a Transfer of Control, and
the termination were on account of involuntary termination (other than for
cause) or a covered constructive termination or deemed involuntary termination,
no cutback would apply, and a gross-up for the tax costs related to any golden
parachute excise tax would apply instead.
A Transfer of Control is defined as:
1. a merger, consolidation or reorganization where voting securities of
Bancorp (or the Bank) either as still outstanding or after
conversion into other securities, do not continue to represent at
least 65% of the combined voting power of the resulting entity, and
that transaction has not been recommended for approval by the
Bancorp Board; or
2. a merger, consolidation or reorganization where either (i) voting
securities of Bancorp (or the Bank) either as still outstanding or
after conversion into other securities, do not continue to represent
at least 45% of the combined voting power of the resulting entity,
or where (ii) Bancorp's or the Bank's directors constitute less than
45% of the directors of the resulting entity; or
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3. any of the Change in Control events (other than the entering into a
binding agreement that would result in a Change in Control) that the
Board of Bancorp or the Bank, as appropriate, determines is a
Transfer of Control for purposes of the Agreement, but with the
additional rule that if it is an express condition precedent to the
consummation of any Change in Control event or occurrence that the
Bancorp or Bank Board refrain from making a "Transfer of Control"
designation, then the event or occurrence will automatically
constitute a Transfer of Control.
Confidentiality and Other Post-Termination Obligations. The Agreement
would provide that following any termination of employment, the officer may not
disclose any confidential information, must return all material documents
relating to the business of Employer and its affiliates (including Bancorp and
the Bank), and (except if the termination occurs after a Change in Control) may
not solicit, for one year following termination, the employment of any person
who is or recently was an employee of Employer or its affiliates.
Additional Provisions: Following a Change in Control, the Agreement
provides that the officer will be entitled to receive legal fees if he or she is
required to bring an action to enforce the Agreement and is the prevailing
party. All payments under the Agreement are expressly limited if compliance
would violate any FDIC "golden parachute" regulations. The Agreement also
contains provisions more generally limiting payments to the extent necessary to
comply with applicable laws and regulations and mandatory provisions relating to
the taking of regulatory action against the officer, Employer or its affiliates.
The Agreement does not limit the payment of severance or other benefits (to the
extent not otherwise capped) notwithstanding that the officer obtains other
employment.
