EMPLOYMENT AGREEMENT
THIS AGREEMENT, is entered into this 1st day of January 2003,
("Effective Date") by and between American Savings Bank of NJ (the "Savings
Bank") and Xxxxxxxxx X. Xxxxxxxxx (the "Executive").
WITNESSETH
WHEREAS, the Executive has heretofore been employed by the Savings Bank
as the Vice President and Chief Lending 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 remain in the employ of
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 premises and the mutual
agreements herein contained, the parties hereby agree as follows:
1. Employment. The Savings Bank hereby employs the Executive in the
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capacity of Vice President and Chief Lending Officer. The Executive hereby
accepts said employment and agrees to render such administrative and management
services to the Savings Bank and to any to-be-formed parent holding company
("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 Parent. The Executive's other duties shall be
such as 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. The Executive's employment shall be for no definite
period of time, and the Executive or the Bank may terminate such employment
relationship at any time for any reason or no reason. The employment at-will
relationship remains in full force and effect regardless of any statements to
the contrary made by company personnel or set forth in any documents other than
those explicitly made to the contrary and signed by the President or the
Chairman of the Bank.
2. Term of Agreement. The term of this Agreement shall be for the
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period commencing on the Effective Date and ending December 31, 2004 thereafter
("Term"). Additionally, on, or before, each annual anniversary date from the
Effective Date, the Term of this Agreement shall be extended for up to an
additional period 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, and that
the Term of such Agreement shall be extended. 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
$130,000 per annum ("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.
(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. 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 her 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 and long term disability,
medical, dental, eye-care, prescription drugs or medical reimbursement plans.
Additionally, Executive's dependent family shall be eligible to participate in
medical and dental insurance plans sponsored by the Savings Bank or Parent with
70% of the cost of such premiums paid by the Savings Bank.
(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. 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. The Executive shall not be entitled to
receive any additional compensation from the Savings Bank for failure to take a
vacation or sick leave, nor shall she be able to accumulate unused vacation or
sick leave from one year to the next, except to the extent authorized by the
Board of Directors.
(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
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connection with the business of the Savings Bank, including, but not by way of
limitation, automobile and traveling expenses, and all reasonable entertainment
expenses, subject to such reasonable documentation and other limitations as may
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 her full time and attention to
the performance of her 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 her 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 through the last day of the calendar month in
which Executive's death shall have occurred.
(b) The Bank may terminate the Executive's employment at any
time with or without Just Cause within its sole discretion. This Agreement shall
not be deemed to give Executive any right to be retained in the employment or
service of the Bank, or to interfere with the right of the Bank to terminate the
employment of the Executive at any time, but any termination by the Bank 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
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Bank 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, 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 Bank
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, 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. The provisions of this Section 6(c) shall survive the
expiration of this Agreement.
(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 FDIA (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 within its
discretion (i) pay the Executive all or part of the compensation withheld while
its contract obligations were suspended and (ii) reinstate 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
("FDIA") (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 parties shall not be affected.
(c) If the Savings Bank is in default (as defined in Section
3(x)(1) of FDIA) 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 ("Director of OTS"), or his designee, at the time
that the Federal Deposit Insurance Corporation ("FDIC") enters into an
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agreement to provide assistance to or on behalf of the Savings Bank under the
authority contained in Section 13(c) of FDIA; or (ii) by the Director of the
OTS, or his designee, at the time that the Director of the OTS, or his 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 ss.1828(k) and any
regulations promulgated thereunder.
8. Disability. If the Executive shall become disabled or incapacitated
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to the extent that she is unable to perform her duties hereunder, by reason of
medically determinable physical or mental impairment, as determined by a doctor
engaged by the Board of Directors, Executive shall continue to receive the
compensation and benefits in accordance with the terms of any plans or policies
of the Savings Bank relating to short and long term disability. Such benefits
shall be reduced by any benefits otherwise provided to the Executive during such
period under the provisions of disability insurance coverage in effect for
Savings Bank employees. Thereafter, Executive shall be eligible to receive
benefits provided by the Savings Bank under the provisions of any 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 her 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 twelve (12) months thereafter of such Change in Control,
absent Just Cause, Executive shall be paid an amount equal to the product of two
(2) times the Executive's "base amount" as defined in Section 280G(b)(3) of the
Internal Revenue Code of 1986, as amended (the "Code") and regulations
promulgated thereunder. Said sum shall be paid, at the option of Executive,
either in one (1) lump sum as of the date of such termination of service or in
periodic payments over the next 24 months or the remaining term of this
Agreement, whichever is less, as if Executive's employment had not been
terminated, and such payments shall be in lieu of any other future payments
which the Executive would be otherwise entitled to receive under Section 6 of
this Agreement. 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 control of voting proxies whether related to stockholders or
mutual members by any person, other than the Board of Directors of the Savings
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Bank, to direct more than 25% of the outstanding votes of the Savings Bank, the
control of the election of a majority of the Savings Bank's directors, or the
exercise of a controlling influence over the management or policies of the
Savings Bank by any person or by persons acting as a group within the meaning of
Section 13(d) of the Exchange Act, (ii) an event whereby the OTS, FDIC or any
other department, agency or quasi-agency of the federal government cause or
bring about, without the consent of the Savings Bank, a change in the corporate
structure or organization of the Savings Bank; (iii) an event whereby the OTS,
FDIC or any other agency or quasi-agency of the federal government cause or
bring about, without the consent of the Savings Bank, a taxation or involuntary
distribution of retained earnings or proceeds from the sale of securities to
depositors, borrowers, any government agency or organization or civic or
charitable organization; or (iv) a merger or other business combination between
the Savings Bank and another corporate entity whereby the Savings Bank is not
the surviving entity. In the event that the Savings Bank shall convert in the
future from mutual-to-stock form, the term "Change in Control" shall also refer
to: (i) the sale of all, or a material portion, of the assets of the Savings
Bank or the Parent; (ii) the merger or recapitalization of the Savings Bank or
the Parent whereby the Savings Bank or the Parent is not the surviving entity;
(iii) a change in control of the Savings Bank or the Parent, as otherwise
defined or determined by the Office of Thrift Supervision 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 Securities Exchange Act of 1934 and the rules and regulations
promulgated thereunder) of twenty-five percent (25%) or more of the outstanding
voting securities of the Savings Bank or the Parent by any person, trust, entity
or group. The term "person" means an individual other than the Executive, or a
corporation, partnership, trust, association, joint venture, pool, syndicate,
sole proprietorship, unincorporated organization or any other form of entity not
specifically listed herein. 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 her employment during the term
of this Agreement following a Change in Control of the Savings Bank or Parent,
or within twelve (12) months following such Change in Control, and 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 her personal residence or perform her
principal executive functions more than forty (40) miles from the Executive's
primary office as of the signing of this Agreement; or (ii) if the Savings Bank
should fail to maintain Executive's base compensation in effect as of the date
of the Change in Control and the existing employee benefits plans, including
material fringe and retirement plans. Upon such voluntary termination of
employment by the Executive in accordance with this subsection, Executive shall
thereupon be entitled to receive the payments described in Section 9(a) of this
Agreement. The provisions of this Section 9(b) shall survive the expiration of
this Agreement occurring after a Change in Control.
10. 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.
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11. 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) Since the Savings Bank is contracting for the unique and
personal skills of the Executive, the Executive shall be precluded from
assigning or delegating her rights or duties hereunder without first obtaining
the written consent of the Savings Bank.
12. 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.
13. 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.
14. 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.
15. 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.
16. 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 enforceability of the other
provisions of this Agreement, which shall remain in full force and effect.
17. Arbitration. Any controversy or claim arising out of or relating to
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this Agreement, or the breach thereof, shall be settled exclusively 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. The provisions of this
Section 17 shall survive the expiration of this Agreement.
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18. Confidential Information. The Executive acknowledges that during
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her employment she will learn and have access to confidential information
regarding the Savings Bank and the Parent and its customers and businesses
("Confidential Information"). The Executive agrees and covenants not to disclose
or use for 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. Executive
acknowledges and agrees that the existence of this Agreement and its terms and
conditions constitutes Confidential Information of the Savings Bank, and the
Executive agrees not to disclose the Agreement or its contents without the prior
written consent of the Savings Bank. Notwithstanding the foregoing, the Savings
Bank reserves the right in its sole discretion to make disclosure of this
Agreement as it deems necessary or appropriate in compliance with its regulatory
reporting requirements. 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.
19. Entire Agreement. This Agreement together with any understanding or
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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
By: /s/ W. Xxxxxx Xxxxxx
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W. Xxxxxx Xxxxxx
Chairman
ATTEST:
/s/ Xxxxxxx X. Xxxxx
Secretary
/s/ Xxxxxxxxx X. Xxxxxxxxx
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Xxxxxxxxx X. Xxxxxxxxx, Executive
