Exhibit 10.4
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into this 17th day of June 2008, but shall be
effective as of January 1, 2008 (hereinafter the "Effective Date") by and
between American Bank of New Jersey, Bloomfield, New Jersey (hereinafter the
"Bank") and Xxxxxx Xxxxxxxxx (hereinafter the "Executive").
WITNESSETH
WHEREAS, the Executive has heretofore been employed by the Bank as the
Chief Executive Officer and is experienced in all phases of the business of the
Bank; and
WHEREAS, the Bank desires to be ensured of the Executive's continued
active participation in the business of the Bank; and
WHEREAS, this Agreement is intended to replace the previous employment
agreement between the Executive and the Bank and to comply with the requirements
of Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"),
and to reflect such additional changes as the Bank deems appropriate;
NOW THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereby agree as follows:
1. Employment. The Bank hereby employs the Executive in the capacity of
Chief Executive Officer. The Executive hereby accepts said employment and agrees
to render such administrative and management services to the Bank and to its
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 Bank and Parent. The Executive's
other duties shall be such as the Board of Directors for the Bank (the "Board of
Directors" or "Board") may from time to time reasonably direct, including normal
duties as an officer of the Bank.
2. Term of Employment. The term of employment of Executive under this
Agreement shall be for the period commencing on the Effective Date and ending
thirty-six (36) months thereafter (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 Bank shall compensate and pay the Executive during
the Term of this Agreement a minimum base salary at the rate of $258,750 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 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 shall be
deemed a substitute for the Executive's right to participate in such
discretionary bonuses when and as declared by the Board. Any discretionary bonus
shall be paid no later than 2 1/2 months after the end of the year in which the
Executive obtains a legally binding right to the bonus. If the discretionary
bonus cannot be paid by that date, then it shall be paid on the next following
April 15, or such other date during the year as permitted by Section 409A of the
Code and the regulations thereunder (Section 409A).
(c) Participation in Benefit and Retirement Plans. The Executive shall
be entitled to participate in and receive the benefits of any plan of the Bank
which may be or may become applicable to senior management relating to pension
or other retirement benefit plans, supplementary retirement plan,
profit-sharing, stock options or incentive plans, or other plans, benefits and
privileges given to employees and executives of the Bank, to the extent
commensurate with his then duties and responsibilities, as fixed by the Board of
directors of the 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 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. 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. Additionally, upon termination without cause or as a result
of a change of control, Executive's dependent family shall be eligible to
participate in medical and dental insurance plans sponsored by the Bank or
Parent for the remaining term of this Agreement with the total cost of such
premiums paid by the 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, which shall, in no event, be less than six
(6) 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
Bank.
(f) Expenses. The 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 Bank, including, but
not by way of limitation, premium country club dues, 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 Bank. If such expenses are paid, in the first instance, by the
Executive, the Bank shall reimburse the Executive therefor.
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(g) Changes in Benefits. The 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 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 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; Non-competition.
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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
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 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
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 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.
(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 this 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 and acting in good
faith, terminate the Executive for Just Cause and shall notify such Executive
accordingly. Termination for Just Cause shall be defined as 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 this Agreement.
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(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 Bank shall be obligated to continue to pay the
Executive the salary provided pursuant to Section 3(a) herein, through the
remaining Term of this Agreement, but in no event for a period of less than
twenty-four (24) months, 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 benefit levels substantially equal
to those being provided to the Executive at the date of termination of
employment. No payment shall be made under this Section 6(c) unless the
Executive's termination of employment qualifies as a Separation from Service (as
that phrase is defined in Section 409A taking into account all rules and
presumptions provided for in the Section 409A regulations). If the Executive is
a Specified Employee (as defined in Section 409A) at the time of his Separation
from Service, then payments under this Section 6(c) which constitute deferred
compensation under Section 409A shall not be paid until the 185th day following
the Executive's Separation from Service, or his earlier death (the Delayed
Distribution Date). To the extent permitted by Section 409A, amounts payable
under this Section 6(c) which are considered deferred compensation shall be
treated as payable after amounts which are not considered deferred compensation.
(d) The voluntary termination by the Executive during the term of this
Agreement with the delivery of no less than sixty (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 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
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 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 (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 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 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 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 that it is determined that the continuation of this Agreement is
necessary for the continued operation of the Bank: (i) by the Director of the
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Office of Thrift Supervision (hereinafter "Director of OTS"), or his or her
designee, at the time that the Federal Deposit Insurance Corporation
(hereinafter "FDIC") enters into an agreement to provide assistance to or on
behalf of the Bank under the authority contained in Section 13(c) of FDIA; 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 Bank or when the 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 U.S.C. 1828(k) and any regulations
promulgated thereunder.
(f) Payments under the Agreement that are suspended under this Section
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payable, shall be paid on the earliest date practicable thereafter.
8. Disability. If the Executive shall become disabled or incapacitated to
the extent that he is unable to perform his duties hereunder, by reason of
medically determinable physical or mental impairment, as determined by a doctor
engaged by the Board of Directors, the Bank will pay Executive, as disability
pay, a weekly payment equal to one hundred percent (100%) of Executive's weekly
rate of Base Salary, on the effective date of such termination. These disability
payments shall commence on the effective date of Executive's termination and
will end on the earlier of (i) the date Executive returns to the full-time
employment of the Bank in the same capacity as he was employed prior to his
termination for Disability and pursuant to an employment agreement between
Executive and the Bank; Executive's full-time employment by another employer;
Executive's death; or (iv) the expiration of the term of Executive's disability
insurance policy at age 65 as currently provided by the Bank. Such benefits
noted herein shall be reduced by any benefits otherwise provided to the
Executive during such period under the provisions of disability insurance
coverage in effect for the Executive. Thereafter, Executive shall be eligible to
receive benefits provided by the Bank, if any, under the provisions of
disability insurance coverage in effect for 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.
(a) Notwithstanding any provision herein to the contrary, in the event
of the involuntary termination of the Executive's employment during the term of
this Agreement following any Change in Control of the Bank or Parent, or within
twenty-four (24) months thereafter of such Change in Control, absent Just Cause,
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 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 which the Executive would be otherwise
entitled to receive under Section 6 of this Agreement. Notwithstanding the
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foregoing, 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 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. Any
successor or assignee of the Bank following a Change in Control of the Parent or
the Bank shall be required to maintain in place any life insurance on the life
of the Executive that was acquired by the Parent or the Bank in connection with
the Executive Life Insurance Agreement or Endorsement Method Split Dollar
Agreement then in effect between Executive and the Parent or the Bank. 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 Bank; (ii) the merger or recapitalization of
the Parent or the Bank whereby the Parent or the Bank is not the surviving
entity; (iii) a change in control of the Parent or the 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 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 Parent or the Bank 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 or the Bank by a tax-qualified employee
stock benefit plan which is exempt from the approval requirements set forth
under 12 C.F.R. ss.574.3(c)(1)(vii) 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. 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 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 Bank, Executive would be required to report
to a person or persons other than the Board of Directors of the Bank; (iii) if
the Bank should fail to maintain 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, retirement and insurance 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 Bank.
(c) Notwithstanding anything in this Section 9 to the contrary: (1) no
payment shall be permitted under this Section 9 unless the Executive's
termination of employment qualifies as a Separation from Service; and (2) if at
the time of the Executive's Separation from Service, the Executive is a
Specified Employee as defined in Section 409A, then the payment due to the
Executive under this Section 9 shall be paid to him (or his beneficiary) on the
Delayed Distribution Date. Defined terms in this Section 9(c) shall have the
same meaning as in Section 6(c) hereof.
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10. Source of Payments. All payments provided in this Agreement shall be
timely paid in cash or check from the general funds of the Bank. The 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 Bank hereunder to
the Executive shall be subject to the withholding of such amounts, if any,
relating to tax and other payroll deductions as the 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 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
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 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 Bank or Parent.
(b) The 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 Bank, expressly and
unconditionally to assume and agree to perform the Bank's obligations under this
Agreement, in the same manner and to the same extent that the Bank would be
required to perform if no such succession or assignment had taken place.
(c) Since the 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 Bank.
14. Indemnification.
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(a) The 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 may be involved by
reason of his having been a director or officer of the Parent or the 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.
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15. Amendment: Waiver. No provisions of this Agreement may be modified,
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 Bank to sign on its
behalf. No waiver by any party hereto at any time of any breach by any 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
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
require the 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 Bank hereunder, such right shall be no greater than
the right of any unsecured general creditor of the Bank.
18. Headings. The section headings contained in this Agreement are for
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
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.
20. Arbitration. Any controversy or claim arising out of or relating to
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 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. Furthermore, the settlement of the dispute to be
approved by the Board of the Bank may include a provision for the reimbursement
by the 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 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
Bank evidence, which may be in the form, among other things, of a cancelled
check or receipt, of any costs or expenses incurred by Executive.
21. Confidential Information. The Executive acknowledges that during his
employment he will learn and have access to confidential information regarding
the Bank and the Parent and its customers and businesses (hereinafter
"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 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 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 Bank
and the Parent. The Executive shall not otherwise knowingly act or conduct
himself (a) to the material detriment of the Bank or the Parent, or its
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subsidiaries or affiliates, or (b) in a manner which is inimical or contrary to
the interests of the 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 Bank, disciplinary action against the Executive taken by the
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.
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.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first hereinabove written.
American Bank of New Jersey
ATTEST: By: /s/ W. Xxxxxx Xxxxxx
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Secretary
/s/ Xxxxxxx Xxxxx
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WITNESS:
/s/ Xxxxxxxx Xxxxx /s/ Xxxxxx Xxxxxxxxx
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Xxxxxx Xxxxxxxxx, Executive
