Exhibit 10.3
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into this 17th day of June, 2008, but shall
be effective as of January 1, 2008 ("Effective Date") by and between American
Bank of New Jersey (the "Bank") and Xxxx X. Xxxxx (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive has heretofore been employed by the Bank as the
Senior Vice President and Chief Financial Officer and is experienced in all
phases of the business of the Bank; and
WHEREAS, the Bank wishes to be assured 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 covenants and the mutual
agreements herein contained, the parties hereby agree as follows:
1. Employment. The Bank hereby employs the Executive in the capacity of
Senior Vice President and Chief Financial Officer. The Executive hereby accepts
said employment and agrees to render such administrative and management services
to the Bank and American Bancorp of New Jersey, Inc. the parent holding company
of the Bank ("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 Agreement. The term of this Agreement shall be for the
period commencing on the Effective Date and ending December 31, 2008 thereafter
("Term"). Additionally, on, or before, each annual anniversary date from the
Effective Date, the Term of 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. 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 $165,328
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 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. 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 or its Parent 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 Bank or its Parent, to the extent commensurate
with his then duties and responsibilities, as fixed by the Board of Directors of
the Bank or its Parent.
(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.
Additionally, Executive's dependent family shall be eligible to participate in
medical and dental insurance plans sponsored by the Bank or Parent with 70% of
the 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. The Executive shall also be entitled to
an annual sick leave benefit as established by the Board for senior management
employees of the Bank. The Executive shall not be entitled to receive any
additional compensation from the Bank for failure to take a vacation or sick
leave, nor shall he 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 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 or Parent,
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
Bank. If such expenses are paid in the first instance by the Executive, the Bank
shall reimburse the Executive therefor. Expenses incurred by Executive on behalf
of Parent shall be paid or advanced by Parent or reimbursed by Parent to the
Bank.
(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
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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 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 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 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.
(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 during the Term of this Agreement (including any renewal Term), the
Bank shall be obligated to continue to pay the Executive: i) the salary provided
pursuant to Section 3(a) herein, up to the date of termination of the remaining
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Term of this Agreement, but in no event for a period of less than one year from
such date of termination of employment; and ii) for the same minimum one year
period, the cost of Executive obtaining all health, life, disability and other
benefits which the Executive would be eligible to participate in during such
period of payment, based upon 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. 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 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 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 determined that continuation of this Agreement is necessary for
the continued operation of the 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 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 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 Bank or when the Bank is determined
by the Director of the OTS to be in an unsafe or unsound condition. Any rights
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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.
(f) Payments under the Agreement that are suspended under this
Section 7, but are later determined by the applicable regulatory authority to be
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, Executive shall receive compensation and
benefits in accordance with the terms of any plans or policies of the Bank
relating to short and long term disability, rather than pursuant to this
Agreement. 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 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 Code and
regulations promulgated thereunder. Said sum shall be paid in one (1) lump sum
as of 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
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 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 Bank or the Parent; (ii) the merger or recapitalization of the
Bank or the Parent whereby the Bank or the Parent is not the surviving entity;
(iii) a change in control of the 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 Bank or 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 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" means an individual other than the Executive, or a corporation,
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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
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 his personal residence or perform his 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 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 benefit 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.
(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.
10. 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.
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 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.
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12. 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 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
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
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.
15. 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.
16. 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.
17. Arbitration. Any controversy or claim arising out of or relating to
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 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. The provisions of this Section 17 shall
survive the expiration of this Agreement.
18. 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
("Confidential Information"). The Executive agrees and covenants not to disclose
or use for his 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 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.
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19. 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
By: /s/ W. Xxxxxx Xxxxxx
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W. Xxxxxx Xxxxxx
Chairman
ATTEST:
/s/ Xxxxxxx Xxxxx
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Secretary
/s/ Xxxxxxxx Xxxxx /s/ Xxxx X. Xxxxx
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Witness Xxxx X. Xxxxx
