EMPLOYMENT AGREEMENT
THIS AGREEMENT, is entered into this 14th day of March 2005,
(hereinafter the "Effective Date") by and between American Savings Bank of New
Jersey, Bloomfield, New Jersey (the "Savings Bank") and Xxxx X. Xxxxx
(hereinafter the "Executive").
WITNESSETH
WHEREAS, the Executive has accepted employment with the Savings Bank as
the President and Chief Operating Officer and is experienced in all phases of
the business of the Savings Bank; and
WHEREAS, the Savings Bank desires to be ensured of the Executive's
continued active participation in the business of the Savings Bank; and
WHEREAS, in order to induce the Executive to commence employment with
the Savings Bank and in consideration of the Executive's agreeing to remain in
the employ of the Savings Bank, the parties desire to specify the continuing
employment relationship between the Savings Bank and the Executive;
NOW THEREFORE, in consideration of the mutual covenants and agreements
between the parties, as herein contained, the parties, intending to be legally
bound, do hereby agree as follows:
1. Employment. The Savings Bank hereby employs the Executive in the
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capacity of President and Chief Operating Officer. The Executive hereby accepts
said employment and agrees to render such administrative and management services
to the Savings Bank and to ASB Holding Company or any future parent holding
company of the Savings Bank (hereinafter the "Parent") as are currently rendered
and as are customarily performed by persons situated in a similar executive
capacity. The Executive shall promote the business of the Savings Bank and the
Parent. The Executive's other duties shall be such as the Chief Executive
Officer ("CEO") of the Savings Bank or the Board of Directors for the Savings
Bank (the "Board of Directors" or "Board") may from time to time reasonably
direct, including normal duties as an officer of the Savings Bank.
2. Term of Employment. The term of employment of Executive under this
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Agreement shall be for the period commencing on the Effective Date and ending as
of March 14, 2008 (hereinafter the "Term"). Additionally, on, or before, each
annual anniversary date from the Effective Date, the Term of employment under
this Agreement shall be extended for an additional year beyond the then
effective expiration date upon a determination and resolution of the Board of
Directors that the performance of the Executive has met the requirements and
standards of the Board, so that the contract, when extended, will be for a new
thirty-six (36) month term. References herein to the Term of this Agreement
shall refer both to the initial term and successive terms.
3. Compensation, Benefits and Expenses.
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(a) Base Salary. The Savings Bank shall compensate and pay the
Executive during the Term of this Agreement a minimum base salary at the rate of
$225,000 per annum (hereinafter the "Base Salary"), payable in cash not less
frequently than monthly; provided, that the rate of such salary shall be
reviewed by the Board of Directors not less often than annually, and the
Executive shall be entitled to receive increases at such percentages or in such
amounts as determined by the Board of Directors. The Base Salary may not be
decreased without the Executive's express written consent.
(b) Discretionary Bonus. The Executive shall be entitled to
participate in an equitable manner with all other senior management employees of
the Savings Bank in discretionary bonuses that may be authorized and declared by
the Board of Directors to its senior management executives from time to time,
and any Management Incentive Plan that may be authorized. No other compensation
provided for in this Agreement shall be deemed a substitute for the Executive's
right to participate in such discretionary bonuses when and as declared by the
Board.
(c) Participation in Benefit and Retirement Plans. The Executive
shall be entitled to participate in and receive the benefits of any plan of the
Savings Bank which may be or may become applicable to senior management relating
to pension or other retirement benefit plans, profit-sharing, stock options or
incentive plans, or other plans, benefits and privileges given to employees and
executives of the Savings Bank, to the extent commensurate with his then duties
and responsibilities, as fixed by the Board of Directors of the Savings Bank.
(d) Participation in Medical Plans and Insurance Policies. The
Executive shall be entitled to participate in and receive the benefits of any
plan or policy of the Savings Bank which may be or may become applicable to
senior management relating to life insurance, short-term and long-term
disability, medical, dental, vision-care, prescription drugs or medical
reimbursement plans. During the term of the Executive's employment with the
Bank, the Executive's dependent family may participate in such programs, with
the cost of premiums paid in part by the Bank and by the Executive in accordance
with policies established by the Board of Directors.
(e) Vacations and Sick Leave. The Executive shall be entitled to
paid annual vacation leave in accordance with the policies as established from
time to time by the Board of Directors, which shall in no event be less than
four (4) weeks per annum. The Executive shall also be entitled to an annual sick
leave benefit as established by the Board for senior management employees of the
Savings Bank.
(f) Expenses. The Savings Bank shall reimburse the Executive or
otherwise provide for or pay for all reasonable expenses incurred by the
Executive in furtherance of, or in connection with the business of the Savings
Bank, including, but not by way of limitation, use of a Savings Bank leased
automobile and related traveling expenses, and all reasonable entertainment
expenses, subject to such reasonable documentation and other limitations as may
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be established by the Board of Directors of the Savings Bank. If such expenses
are paid, in the first instance, by the Executive, the Savings Bank shall
reimburse the Executive therefor.
(g) Changes in Benefits. The Savings Bank shall not make any
changes in such plans, benefits or privileges previously described in Section
3(c), (d) and (e) which would adversely affect the Executive's rights or
benefits thereunder, unless such change occurs pursuant to a program applicable
to all executive officers of the Savings Bank and does not result in a
proportionately greater adverse change in the rights of, or benefits to, the
Executive as compared with any other executive officer of the Savings Bank.
Nothing paid to Executive under any plan or arrangement presently in effect or
made available in the future shall be deemed to be in lieu of the salary payable
to Executive pursuant to Section 3(a) hereof.
4. Loyalty; Noncompetition.
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(a) The Executive shall devote his full time and attention to the
performance of his employment under this Agreement. During the term of the
Executive's employment under this Agreement, the Executive shall not engage in
any business or activity contrary to the business affairs or interests of the
Savings Bank or Parent.
(b) Nothing contained in this Section 4 shall be deemed to
prevent or limit the right of Executive to invest in the capital stock or other
securities of any business dissimilar from that of the Savings Bank or Parent,
or, solely as a passive or minority investor, in any business.
5. Standards. During the term of this Agreement, the Executive shall
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perform his duties in accordance with such reasonable standards expected of
executives with comparable positions in comparable organizations and as may be
established from time to time by the Board of Directors.
6. Termination and Termination Pay. The Executive's employment under
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this Agreement shall be terminated upon any of the following occurrences:
(a) The death of the Executive during the term of this Agreement,
in which event the Executive's estate shall be entitled to receive the
compensation due the Executive for at least one calendar month after the date of
the Executive's death shall have occurred.
(b) The Board of Directors may terminate the Executive's
employment at any time, but any termination by the Board of Directors other than
termination for Just Cause, shall not prejudice the Executive's right to
compensation or other benefits under the Agreement. The Executive shall have no
right to receive compensation or other benefits for any period after termination
for Just Cause. The Board may, within its sole discretion, acting in good faith,
terminate the Executive for Just Cause and shall notify such Executive
accordingly. Termination for "Just Cause" shall include termination because of
the Executive's personal dishonesty,
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incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated 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.
(c) Except as provided pursuant to Section 9 hereof, in the event
Executive's employment under this Agreement is terminated by the Board of
Directors without Just Cause, the Savings Bank shall be obligated to continue to
pay the Executive the salary provided pursuant to Section 3(a) herein, up to the
date of termination of the remaining Term of this Agreement, but in no event for
a period of less than one year, and the cost of Executive obtaining all health,
life, disability, and other benefits which the Executive would be eligible to
participate in through such date based upon the benefit levels substantially
equal to those being provided Executive at the date of termination of
employment.
(d) The voluntary termination by the Executive during the term of
this Agreement with the delivery of no less than 60 days written notice to the
Board of Directors, other than pursuant to Section 9(b), in which case the
Executive shall be entitled to receive only the compensation, vested rights, and
all employee benefits up to the date of such termination.
7. Regulatory Exclusions.
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(a) If the Executive is suspended and/or temporarily prohibited from
participating in the conduct of the Savings Bank's affairs by a notice served
under Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C.
1818(e)(3) and (g)(1)), the Savings Bank's obligations under the Agreement shall
be suspended as of the date of service, unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the Savings Bank may in
its discretion (i) pay the Executive all or part of the compensation withheld
while its contract obligations were suspended and (ii) reinstate (in whole or in
part) any of its obligations which were suspended.
(b) If the Executive is removed and/or permanently prohibited from
participating in the conduct of the Savings Bank's affairs by an order issued
under Sections 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act (12
U.S.C. 1818(e)(4) and (g)(1)), all obligations of the Savings Bank under this
Agreement shall terminate, as of the effective date of the order, but the vested
rights of the contracting parties shall not be affected.
(c) If the Savings Bank is in default (as defined in Section 3(x)(1) of
Federal Deposit Insurance Act) all obligations under this Agreement shall
terminate as of the date of default, but this paragraph shall not affect any
vested rights of the contracting parties.
(d) All obligations under this Agreement shall be terminated, except to
the extent determined that continuation of this Agreement is necessary for the
continued operation of the Savings Bank: (i) by the Director of the Office of
Thrift Supervision (hereinafter the "Director of
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OTS"), or his or her designee, at the time that the Federal Deposit Insurance
Corporation (hereinafter the "FDIC") enters into an agreement to provide
assistance to or on behalf of the Savings Bank under the authority contained in
Section 13(c) of Federal Deposit Insurance Act; or (ii) by the Director of the
OTS, or his or her designee, at the time that the Director of the OTS, or his or
her designee approves a supervisory merger to resolve problems related to
operation of the Savings Bank or when the Savings Bank is determined by the
Director of the OTS to be in an unsafe or unsound condition. Any rights of the
parties that have already vested, however, shall not be affected by such action.
(e) Notwithstanding anything herein to the contrary, any payments made
to the Executive pursuant to the Agreement, or otherwise, shall be subject to
and conditioned upon compliance with 12 USC 1828(k) and FDIC Regulation 12 CFR
Part 359, Golden Parachute Indemnification Payments promulgated thereunder.
8. Disability. If the Executive shall become disabled or incapacitated
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to the extent that he is unable to perform his duties hereunder, by reason of
medically determinable physical or mental impairment ("Disability"), as
determined by a doctor engaged by the Board of Directors, the Savings Bank will
pay the Executive, as disability pay, a weekly payment equal to one hundred
percent (100%) of the Executive's weekly rate of Base Salary for a period of up
to one year and a weekly payment equal to sixty-five percent of the Executive's
weekly rate of Base Salary for the remaining Term of such Agreement. These
Disability payments shall commence on the effective date of the determination of
such Disability and will end on the earlier of (i) the date Executive returns to
full-time employment with the Savings Bank in an executive capacity; (ii)
Executive commences full-time employment with another employer; (iii)
Executive's death; or (iv) the expiration of the Term of this Agreement. Such
benefits noted herein shall be reduced by any benefits otherwise provided to the
Executive during such period under the provisions of any disability insurance
coverage in effect for the Executive. Thereafter, if such Disability continues,
Executive shall be eligible to receive benefits provided by the Savings Bank, if
any, under the provisions of disability insurance coverage in effect for Savings
Bank employees. Upon returning to active full-time employment, the Executive's
full compensation as set forth in this Agreement shall be reinstated as of the
date of commencement of such activities. In the event that the Executive returns
to active employment on other than a full-time basis, then his compensation (as
set forth in Section 3(a) of this Agreement) shall be reduced in proportion to
the time spent in said employment, or as shall otherwise be agreed to by the
parties.
9. Change in Control.
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(a) Notwithstanding any provision herein to the contrary, in the event
of the involuntary termination of Executive's employment during the term of this
Agreement following any Change in Control of the Savings Bank or Parent, or
within 24 months thereafter of such Change in Control, absent Just Cause, the
Executive shall be paid an amount equal to the product of 2.999 times the
Executive's "base amount" as defined in Section 280G(b)(3) of the Internal
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Revenue Code of 1986, as amended (hereinafter the "Code") and regulations
promulgated thereunder. Said sum shall be paid in one (1) lump sum not later
than the date of such termination of service, and such payments shall be in lieu
of any other future payments that the Executive would be otherwise entitled to
receive under Section 6 of this Agreement. Further, the Executive and his
dependents shall be eligible to continue participation in the medical and dental
reimbursement programs available to continuing employees of the Savings Bank or
its successor entity with the cost of such participation to be paid by the
Executive. Notwithstanding the forgoing, all sums payable hereunder shall be
reduced in such manner and to such extent so that no such payments made
hereunder when aggregated with all other payments to be made to the Executive by
the Savings Bank or the Parent shall be deemed an "excess parachute payment" in
accordance with Section 280G of the Code and be subject to the excise tax
provided at Section 4999(a) of the Code. The term "Change in Control" shall
refer to (i) the sale of all, or a material portion, of the assets of the Parent
or the Savings Bank; (ii) the merger or recapitalization of the Parent or the
Savings Bank whereby the Parent or the Savings Bank is not the surviving entity;
(iii) a change in control of the Parent or the Savings Bank, as otherwise
defined or determined by the Office of Thrift Supervision ("OTS") or regulations
promulgated by it; or (iv) the acquisition, directly or indirectly, of the
beneficial ownership (within the meaning of that term as it is used in Section
13(d) of the 1934 Act and the rules and regulations promulgated thereunder) of
twenty-five percent (25%) or more of the outstanding voting securities of the
Parent by any person, trust, entity or group. This limitation shall not apply to
the purchase of shares of up to 25% of any class of securities of the Parent by
a tax-qualified employee stock benefit plan which is exempt from the approval
requirements, set forth under 12 C.F.R. '574.3(c)(1)(vi) as now in effect or as
may hereafter be amended. The term "person" refers to an individual or a
corporation, partnership, trust, association, joint venture, pool, syndicate,
sole proprietorship, unincorporated organization or any other form of entity not
specifically listed herein. A Change in Control shall not include a transaction
whereby the mutual holding company of the Savings Bank shall merge with the
Parent or the Bank and a new parent corporation of the Parent or the Bank is
formed. The provisions of this Section 9(a) shall survive the expiration of this
Agreement occurring after a Change in Control.
(b) Notwithstanding any other provision of this Agreement to
the contrary, Executive may voluntarily terminate his employment during the term
of this Agreement following a Change in Control of the Savings Bank or Parent,
or within twenty-four (24) months following such Change in Control, and
Executive shall thereupon be entitled to receive the payment described in
Section 9(a) of this Agreement, upon the occurrence, or within 120 days
thereafter, of any of the following events, which have not been consented to in
advance by the Executive in writing: (i) if Executive would be required to move
his personal residence or perform his principal executive functions more than
thirty-five (35) miles from the Executive's primary office as of the signing of
this Agreement; (ii) if in the organizational structure of the Savings Bank,
Executive would be required to report to a person or persons other than the CEO
or the Board of Directors of the Savings Bank; (iii) if the Savings Bank should
fail to maintain
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Executive's base compensation in effect as of the date of the Change in Control
and the existing employee benefit plans, including material fringe benefit,
stock option and retirement plans; (iv) if Executive would be assigned duties
and responsibilities other than those normally associated with his position as
referenced at Section 1, herein; (v) if Executive's responsibilities or
authority have in any way been materially diminished or reduced; or (vi) if
Executive would not be reelected to the Board of Directors of the Savings Bank.
The provisions of this Section 9(b) shall survive the expiration of this
Agreement occurring after a Change in Control.
10. Source of Payments. All payments provided in this Agreement shall
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be timely paid in cash or check from the general funds of the Savings Bank. The
Savings Bank unconditionally guarantees payment and provision of all amounts and
benefits due hereunder to Executive.
11. Withholding. All payments required to be made by the Savings Bank
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hereunder to the Executive shall be subject to the withholding of such amounts,
if any, relating to tax and other payroll deductions as the Savings Bank may
reasonably determine should be withheld pursuant to any applicable law or
regulation.
12. Payment of Costs and Legal Fees. All reasonable costs and legal
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fees paid or incurred by Executive pursuant to any dispute or question of
interpretation relating to this Agreement shall be paid or reimbursed by the
Savings Bank if Executive is successful pursuant to a legal judgment,
arbitration or settlement.
13. Successors and Assigns.
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(a) This Agreement shall inure to the benefit of and be binding
upon any corporate or other successor of the Savings Bank or Parent which shall
acquire, directly or indirectly, by merger, consolidation, purchase or
otherwise, all or substantially all of the assets or stock of the Savings Bank
or Parent.
(b) The Savings Bank 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 Savings Bank, expressly
and unconditionally to assume and agree to perform the Savings Bank's
obligations under this Agreement, in the same manner and to the same extent that
the Savings Bank would be required to perform if no such succession or
assignment had taken place.
(c) Since the Savings Bank is contracting for the unique and
personal skills of the Executive, the Executive shall be precluded from
assigning or delegating his rights or duties hereunder without first obtaining
the written consent of the Savings Bank.
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14. Indemnification.
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(a) The Savings Bank 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
Executive (and his heirs, executors and administrators) as permitted under
federal 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
maybe involved by reason of his having been a director or officer of the Savings
Bank (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.
(b) Any payments made to Executive pursuant to this Section are
subject to and conditioned upon compliance with 12 C.F.R. Section 545.121 and
any rules or regulations promulgated thereunder.
(c) Compliance with Regulatory Limitations. Notwithstanding
anything herein to the contrary, the provisions of this Section 14 shall be
subject to the limitations and restrictions provided at 12 CFR 545.121 as it may
be amended from time to time.
15. Amendment; Waiver. No provisions of this Agreement may be modified,
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waived or discharged unless such waiver, modification or discharge is agreed to
in writing, signed by the Executive and such officer or officers as may be
specifically designated by the Board of Directors of the Savings Bank to sign on
its behalf. No waiver by any party hereto at any time of any breach by any other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
16. Governing Law. The validity, interpretation, construction and
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performance of this Agreement shall be governed by the laws of the United States
where applicable and otherwise by the substantive laws of the State of New
Jersey.
17. Nature of Obligations. Nothing contained herein shall create or
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require the Savings Bank to create a trust of any kind to fund any benefits
which may be payable hereunder, and to the extent that the Executive acquires a
right to receive benefits from the Savings Bank hereunder, such right shall be
no greater than the right of any unsecured general creditor of the Savings Bank.
18. Headings. The section headings contained in this Agreement are for
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reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
19. Severability. The provisions of this Agreement shall be deemed
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severable and the invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or
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enforceability of the other provisions of this Agreement, which shall remain in
full force and effect.
20. Arbitration. Any controversy or claim arising out of or relating to
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this Agreement, or the breach thereof, shall be settled by arbitration in
accordance with the rules then in effect of the district office of the American
Arbitration Association ("AAA") nearest to the home office of the Savings Bank,
and judgment upon the award rendered may be entered in any court having
jurisdiction thereof, except to the extent that the parties may otherwise reach
a mutual settlement of such issue. Further, the settlement of the dispute to be
approved by the Board of the Savings Bank may include a provision for the
reimbursement by the Savings Bank to the Executive for all reasonable costs and
expenses, including reasonable attorneys' fees, arising from such dispute,
proceedings or actions, or the Board of the Savings Bank or the Parent may
authorize such reimbursement of such reasonable costs and expenses by separate
action upon a written action and determination of the Board following settlement
of the dispute. Such reimbursement shall be paid within ten (10) days of
Executive furnishing to the Savings Bank or Parent evidence, which may be in the
form, among other things, of a canceled check or receipt, of any costs or
expenses incurred by Executive. The provisions of this Section 20 shall survive
the expiration of this Agreement.
21. Confidential Information. The Executive acknowledges that during
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his or her employment he or she will learn and have access to confidential
information regarding the Savings Bank and the Parent and its customers and
businesses (hereinafter the "Confidential Information"). The Executive agrees
and covenants not to disclose or use for his or her own benefit, or the benefit
of any other person or entity, any such Confidential Information, unless or
until the Savings Bank or the Parent consents to such disclosure or use or such
information becomes common knowledge in the industry or is otherwise legally in
the public domain. The Executive shall not knowingly disclose or reveal to any
unauthorized person any Confidential Information relating to the Savings Bank,
the Parent, or any subsidiaries or affiliates, or to any of the businesses
operated by them, and the Executive confirms that such information constitutes
the exclusive property of the Savings Bank and the Parent. The Executive shall
not otherwise knowingly act or conduct himself (a) to the material detriment of
the Savings Bank or the Parent, or its subsidiaries, or affiliates, or (b) in a
manner which is inimical or contrary to the interests of the Savings Bank or the
Parent. Notwithstanding anything herein to the contrary, failure by the
Executive to comply with the provisions of this Section may result in the
immediate termination of the Agreement within the sole discretion of the Savings
Bank, disciplinary action against the Executive taken by the Savings Bank,
including but not limited to the termination of employment of the Executive for
breach of the Agreement and the provisions of this Section, and other remedies
that may be available in law or in equity.
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22. Entire Agreement. This Agreement together with any understanding or
modifications thereof as agreed to in writing by the parties, shall constitute
the entire agreement between the parties hereto.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first hereinabove written.
American Savings Bank of NJ
ATTEST: By: /s/W. Xxxxxx Xxxxxx
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Chairman
/s/Xxxxxxx Xxxxx
Secretary
WITNESS: /s/Xxxx X. Xxxxx
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/s/Xxxxx X. Xxxx, III Xxxx X. Xxxxx, Executive
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