Chief Financial Officer Employment Agreement

FORM OF
EMPLOYMENT AGREEMENT
FOR
ATLANTIC LIBERTY FINANCIAL CORP.


This Agreement is made effective as of the ____ day of _____________, 2002 by and between Atlantic Liberty Financial Corp., a Delaware corporation (the "Company"), with its principal administrative office at 186 Montague Street, Brooklyn, New York 11201-3001, and William M. Gilfillan (the "Executive").


WHEREAS, the Executive is currently employed as the Executive Vice President, Chief Financial Officer and Corporate Secretary of the Association; and


WHEREAS, the Association is in the process of converting from the mutual to the stock form of organization and will concurrently become a wholly-owned subsidiary of Atlantic Liberty Savings, F.A., a federally chartered stock savings association (the "Association") (the "Conversion"); and


WHEREAS, concurrently herewith, the Association intends to enter into an employment agreement with the Executive (the "Association Employment Agreement") on substantially similar terms as set forth herein; and


WHEREAS, the Executive is also currently employed as the Executive Vice President, Chief Financial Officer and Corporate Secretary of the Company; and


WHEREAS, the Company desires to assure itself of the continued availability of the Executive's services as provided in this Agreement; and


WHEREAS, the Executive is willing to serve the Company on the terms and conditions hereinafter set forth.


NOW, THEREFORE, in consideration of the premises and the mutual covenants and conditions hereinafter set forth, the Company and the Executive hereby agree as follows:


1. POSITION AND RESPONSIBILITIES


During the period of his employment hereunder, Executive agrees to serve as Executive Vice President, Chief Financial Officer and Corporate Secretary of the Company. During said period, Executive also agrees to serve, if elected, as an officer and director of any subsidiary or affiliate of the Company. Failure to reelect Executive as Executive Vice President, Chief Financial Officer and Corporate Secretary without the consent of the Executive during the term of this Agreement shall constitute a breach of this Agreement.


2. TERMS AND DUTIES


(a) The period of Executive's employment under this Agreement shall begin as of the date first above written and shall continue for thirty-six (36) full calendar months thereafter. Commencing on the first anniversary date of this Agreement (the "Anniversary Date"), and


continuing on each Anniversary Date thereafter, this Agreement shall renew for an additional year such that the remaining term shall be three (3) years unless written notice of non-renewal ("Non-Renewal Notice") is provided to Executive at least ten (10) days and not more than thirty (30) days prior to any such Anniversary Date, that his employment shall cease at the end of thirty-six (36) months following such Anniversary Date. Prior to each notice period for non-renewal, the disinterested members of the Board of Directors of the Company ("Board") will conduct a comprehensive performance evaluation and review of the Executive for purposes of determining whether to extend the Agreement, and the results thereof shall be included in the minutes of the Board's meeting.


(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 faithfully perform his duties hereunder including activities and services related to the organization, operation and management of the Company.


3. COMPENSATION AND REIMBURSEMENT


(a) The compensation specified under this Agreement shall constitute the salary and benefits paid for the duties described in Section 2(b). In consideration of the services to be rendered by Executive hereunder, the Company and/or its subsidiaries shall pay Executive as compensation a salary of not less than $___________ per year ("Base Salary"). Such Base Salary shall be payable bi-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 January 31 of each year during the term of this Agreement and shall be effective from the first day of said month through the end of the calendar year. Such review shall be conducted by a Committee designated by the Board of Directors of the Company and the Board of Directors of the Association (collectively the "Boards"), and the Boards may increase, but not decrease, Executive's Base Salary (any increase in 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 Company and/or its subsidiaries shall provide Executive at no cost to Executive with all such other benefits as are provided uniformly to permanent full-time employees of the Company and/or its subsidiaries.


(b) The Company and/or its subsidiaries 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 Company and/or its subsidiaries 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 plans, medical coverage or any other employee benefit plan or arrangement made available by the Company and/or its subsidiaries 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 Company and/or its subsidiaries in


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which Executive is eligible to participate (and he shall be entitled to a pro rata distribution under any incentive compensation or bonus plan as to any year in which a termination of employment occurs, other than termination for Cause). Nothing paid to the Executive under any such plan or arrangement will be deemed to be in lieu of other compensation to which the Executive is entitled under this Agreement.


(c) In addition to the Base Salary provided for by paragraph (a) of this Section 3, the Company and/or its subsidiaries 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. OUTSIDE ACTIVITIES


The Executive may serve as a member of the board of directors of business, community and charitable organizations subject to the approval of the Board, provided that in each case such service shall not materially interfere with the performance of his duties under this Agreement or present any conflict of interest. Such service to and participation in outside organizations shall be presumed for these purposes to be for the benefit of the Company, and the Company shall reimburse the Executive his reasonable expenses associated therewith.


5. WORKING FACILITIES AND EXPENSES


The Executive's principal place of employment shall be the Company's principal executive offices. The Company shall provide the Executive, at his principal place of employment, with a private office, stenographic services and other support services and facilities suitable to his position with the Company and necessary or appropriate in connection with the performance of his duties under this Agreement. The Company shall reimburse the Executive for his ordinary and necessary business expenses incurred in connection with the performance of his duties under this Agreement, including, without limitation, fees for memberships in such clubs and organizations that the Executive and the Board mutually agree are necessary and appropriate to further the business of the Company, and travel and reasonable entertainment expenses. Reimbursement of such expenses shall be made upon presentation to the Company of an itemized account of the expenses in such form as the Company may reasonably require.


6. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION


The provisions of this Section shall in all respects be subject to the terms and conditions stated in Sections 9 and 17.


(a) The provisions of this Section shall apply upon the occurrence of an Event of Termination (as herein defined) during the Executive's term of employment under this Agreement. 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 Company or the Association of Executive's
full-time employment hereunder for any reason other than (A) Disability or
Retirement, as defined in Section 7 below, or (B) Termination for Cause as
defined in Section 8 hereof; or


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(ii) Executive's resignation from the Association's employ, upon any


(A) failure to elect or reelect or to appoint or reappoint
Executive as Executive Vice President, Chief Financial
Officer and Corporate Secretary,


(B) 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,


(C) liquidation or dissolution of the Company or the Association
other than liquidations or dissolutions that are caused by
reorganizations that do not affect the status of Executive,
or


(D) breach of this Agreement by the Company.


Upon the occurrence of any event described in clauses (ii) (A), (B), (C)or (D), above, Executive shall have the right to elect to terminate his employment under this Agreement by resignation upon sixty (60) days prior written notice given within a reasonable period of time not to exceed four calendar months after the initial event giving rise to said right to elect. Notwithstanding the preceding sentence, in the event of a continuing breach of this Agreement by the Company, the Executive, after giving due notice within the prescribed time frame of an initial event specified above, shall not waive any of his rights solely under this Agreement and this Section by virtue of the fact that Executive has submitted his resignation but has remained in the employment of the Company and is engaged in good faith discussions to resolve any occurrence of an event described in clauses (A), (B), (C) or (D) above.


(iii) Executive's voluntary resignation from the Company's employ on the effective date of, or at any time following, a Change in Control during the term of this Agreement. For these purposes, a Change in Control of the Company or the Association shall mean a change in control 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 Association or the Company within the meaning of the Home Owners' Loan Act, as amended, and applicable rules and regulations promulgated thereunder (collectively, the "HOLA") as in effect at the time of the Change in Control; 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 Company representing 25% or more of the combined voting power of Company's outstanding securities, except for any securities purchased by the Association's employee stock ownership plan or trust; 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 ...