Item 2 - Properties
The Bank conducts its business through 12 full-service offices located in Essex, Monmouth, Morris, Ocean, and Sussex Counties, New Jersey. In addition to its branch offices, the Bank owns and occupies a portion of the second floor of the building as its corporate headquarters. The building also houses a full-service branch office, a consumer loan department, and a commercial loan department.
The Bank's 14 branch network is the result of mergers in 1977, 1982 and 1994, as well as the purchase of two branches in 1985 and the opening of two new offices in 1987, one in 1993 and two in 1996.
Personnel
At September 30, 1996, the Holding Company and subsidiaries had approximately 196 employees, including approximately 62 part-time employees. The Bank's employees are not represented by any collective bargaining group. The Bank considers its employee relations to be excellent.
Item 3
Item 3 - Legal Proceedings
At September 30, 1996, and for the year ended on that date, the Company and the Bank were not involved in any pending legal proceedings, other than routine legal proceedings occurring in the ordinary course of business which are believed by management, with the advice of counsel, to be immaterial to the business, financial condition, and liquidity of the Company and Bank.
Item 4
Item 4 - Submission of Matters to a Vote of Security Holders
None.
Part II
Item 5
Item 5 - Market for Registrants Common Equity and Related Stockholder Matters
The information contained on page 45 of the 1996 Annual Report under the caption "Market Information for Common Stock" is incorporated herein by reference. Information regarding dividend restrictions contained on page 40 of the 1996 Annual Report under the caption "(16) Stockholder's Equity and Regulatory Matters" of the notes to the consolidated financial statements is also incorporated herein by reference.
Item 6
Item 6 - Selected Financial Data
The information contained on page 4 of the 1996 Annual Report under the caption "Selected Consolidated Financial and Other Data" is incorporated herein by reference.
Item 7
Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operation
The information contained on pages 5 through 15 of the 1996 Annual Report under the caption "Management's Discussion and Analysis" is incorporated herein by reference.
Item 8
Item 8 - Financial Statements and Supplementary Data
The Financial Statements and the Report of Independent Auditors' Report appearing on pages 16 through 44 of the 1996 Annual Report are incorporated herein by reference.
Item 9
Item 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Part III Item 10
Item 10 - Executive Officers of the Registrant
The following table sets forth the executive officers name, age, and position held with First State and the Bank. Age at Name September 30, 1996 Position Held
Michael J. Quigley, III 56 Chairman, President and Chief Executive Officer First State Financial Services,Inc. Chairman, President and Chief Executive Officer First DeWitt Bank.
Emil J. Butchko 61 Vice President, Treasurer and Chief Financial Officer, First State Financial Services,Inc. Sr. Vice President, Treasurer and Chief Financial Officer, First DeWitt Bank.
John A. Rogers 54 Vice President, First State Financial Services, Inc. Sr. Vice President, First DeWitt Bank.
Robert H. Blum 48 Vice President, First DeWitt Bank.
Joseph J Burghardt 61 Vice President, First Dewitt Bank.
Alan M. Chadrjian 40 Vice President, First DeWitt Bank.
John M. Fields, Jr. 33 Vice President and Principal Accounting Officer, First State Financial Services,Inc. Vice President and Controller, First DeWitt Bank.
John H. Isemann 54 Vice President, First State Financial Services, Inc. Vice President, First DeWitt Bank.
Richard O Lindsey 56 Vice President, First Dewitt Bank.
Marie G. Martino 55 Secretary, First State Financial Services, Inc. Vice President and Secretary, First DeWitt Bank.
Henrik Tvedt, Jr. 35 Vice President, First DeWitt Bank.
Part IV
Item 14
Item 14 - Exhibits, Financial Statement Schedules, and Reports on Form 8-K Financial Statements
The following financial statements are included in the Bank's Annual Report to Shareholders for the year ended September 30, 1996
- Consolidated Balance Sheets at September 30, 1996 and 1995
- Consolidated Statements of Operations for each of the years in the three-year period ended September 30, 1996
- Consolidated Statements of Changes in Stockholders' Equity for each of the years in the three-year period ended September 30, 1996
- Consolidated Statements of Cash Flows for each of the years in the three year period ended September 30, 1996
- Notes to Consolidated Financial Statements
- Independent Auditors' Report
Financial Statement Schedules
Financial Statement schedules are omitted because they are not required or because the required information is set forth in the consolidated financial statements or notes thereto.
Exhibits
The following exhibits are either filed as part of this report or are incorporated herein by reference to documents previously filed by the Corporation with the SEC.
Exhibit Number Description
3 Certificate of Incorporation and Bylaws of First State Financial Services, Inc.(1)
10.1 First DeWitt Bank. Employee Stock Ownership Plan(1)
10.2 First State Financial Services, Inc. Incentive Stock Option Plan(2)
10.3 First State Financial Services, Inc. 1993 Stock Option Plan for Outside Directors(3)
10.4 First State Financial Services, Inc. 1993 Long Term Incentive Stock Benefit Plan(3)
10.5 Employment Agreements between the Bank and the Holding company and Mr. Quigley(1)
10.5 Special Termination Agreements between the Bank and the Holding Company and Messrs. Butchko, Isemann, and Rogers(1)
10.6 Special Termination Agreements between the Bank and the Holding Company and Messrs. Fields and Lindsey
11 Statement re: computation of per share earnings
22 Subsidiaries of First State Financial Services, Inc.
23 Accountant's consent to incorporation by reference of Audit report in Registration statements on Form S-8.
(1) Incorporated by reference to Exhibits filed with Registration Statement on Form S-1, No. 33-16532
(2) Incorporated by reference to Exhibits filed with Registration Statement on Form S-8, No. 33-25608
(3) Incorporated by reference to Exhibits filed with Registration Statement on Form S-8, No. 33-90434
Reports on Form 8-K There were no Form 8-K reports filed during the last quarter of the fiscal year.
FIRST STATE FINANCIAL SERVICES, INC. 1120 Bloomfield Avenue, CN 2449 West Caldwell, New Jersey 07007-2449
Form 10-K September 30, 1996
Exhibit 10.6 Special Termination Agreements between the Bank and the Holding Company and Messrs. Fields and Lindsey
SPECIAL TERMINATION AGREEMENT
This AGREEMENT is made effective as of September 20, 1995, by and between First State Financial Services, Inc. (the "Company"), a corporation organized under the laws of the State of Delaware, with its office at 1120 Bloomfield Avenue, West Caldwell, New Jersey, and John M. Fields, Jr. ("Executive"). The term "Bank" refers to First DeWitt Bank, the wholly-owned subsidiary of the Company.
WHEREAS, the Company recognizes the substantial contribution Executive has made to the Company and the Bank and wishes to provide him with further incentive by protecting his position therewith for the period and under the circumstances provided in this Agreement; and
WHEREAS, Executive has been elected to, and has agreed to serve in the position of Vice President and Controller of the Bank, a position of substantial responsibility;
NOW, THEREFORE, in consideration of the contribution and responsibilities of Executive, and upon the other terms and conditions hereinafter provided, the parties hereto agree as follows:
1. TERM OF AGREEMENT.
The term of this Agreement shall be deemed to have commenced as of the date first above written and shall continue for a period of thirty-six (36) full calendar months thereafter. Commencing on the first anniversary date of this Agreement and continuing at each anniversary date thereafter, the Agreement shall renew for an additional year such that the remaining term shall be three (3) years unless written notice is provided to Executive at least ten (10) days and not more than twenty (20) days prior to any such anniversary date, in which event this Agreement shall cease at the end of thirty-six (36) months following such anniversary date. Prior to the written notice period for nonrenewal, the Board of Directors of the Holding Company ("Board") will conduct an evaluation of the Executive for purposes of determining whether to extend the Agreement, and the results thereof shall be included in the minutes of the Board's meeting.
2. PAYMENTS TO EXECUTIVE UPON CHANGE IN CONTROL.
(a) Upon the occurrence of a Change in Control of the Company (as herein defined) followed at any time during the term of this Agreement by the voluntary or involuntary termination of Executive's employment by the Bank or the Company, other than for Cause, as defined in Section 2(c) hereof, the provisions of Section 3 shall apply. Upon the occurrence of a Change in Control, Executive shall have the right to elect to voluntarily terminate his employment at any time during the term of this Agreement following any demotion, loss of title, office or significant authority, reduction in his annual compensation or benefits, or relocation of his principal place of employment by more than 30 miles from its location immediately prior to the Change in Control.
(b) A "Change in Control" of the Bank or the Company shall mean a change in control of a nature that: (i) would be required to be reported in response to Item 1(a) of the current report on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"); or (ii) results in a Change in Control of the Bank or the Company within the meaning of the Home Owners' Loan Act of 1933 and the Rules and Regulations promulgated by the Office of Thrift Supervision (or its predecessor agency), as in effect on the date hereof (provided that in applying the definition of change in control as set forth under the rules and regulations of the OTS, the Board shall substitute its judgment for that of the OTS); or (iii) without limitation, such a Change in Control shall be deemed to have occurred at such time as (a) any "person" (as the term is used in Section 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities, or makes an offer to purchase securities, of the Company representing 20% or more of the combined voting power of the Company's outstanding securities, except for any securities purchased by an employee stock ownership plan established by the Company or the Bank and approved by the Incumbent Board (as defined below); or (b) individuals who constitute the Board of Directors of the Company on the date hereof (the "Incumbent Board") cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date hereof whose election was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board, or whose nomination for election by the Company's stockholders was approved by the Company's Nominating Committee, shall be, for purposes of this clause (b), considered as though he were a member of the Incumbent Board; or (c) a plan of reorganization, merger, consolidation or sale of all or substantially all the assets of the Bank or Company or similar transaction occurs in which the Bank or the Company is not the resulting entity; or (d) a proxy statement shall be distributed soliciting proxies from stockholders of the Company, seeking stockholder approval of a plan of reorganization, merger or consolidation of the Company or Bank with one or more corporations as a result of which the outstanding shares of the class of securities then subject to such plan or transaction are exchanged for or converted into cash or property or securities not issued by the Bank or the Company shall be distributed; or (e) a tender offer is made for 20% or more of the voting securities of the Bank or Company then outstanding.
(c) Executive shall not have the right to receive termination benefits pursuant to Section 3 hereof upon Termination of Cause. The term "Termination for Cause" shall mean termination upon intentional failure to perform stated duties, personal dishonesty which results in loss to the Company or one of its affiliates, willful violation of any law, rule, regulation (other than traffic violations or similar offenses) or final cease and desist order which results in substantial loss to the Company or one of its affiliates, or any material breach of this Agreement. For purposes of the Section, no act, or the failure to act, on Executive's part shall be "willful" or "intentional" unless done, or omitted to be done, not in good faith and without reasonable belief that the action or omission was in the best interest of the Company or its affiliates.
Notwithstanding the foregoing, Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to him a copy of a resolution duly adopted by the affirmative vote of not less than three-fourths of the members of the Board at a meeting of the Board called and held for that purpose (after reasonable notice to Executive and an opportunity for him, together with counsel, to be heard before the Board), finding that in the good faith opinion of the Board, Executive was guilty of conduct justifying Termination for Cause and specifying the particulars thereof in detail. Any stock options or limited rights granted to the Executive under any stock option plan or any unvested awards granted under any other stock benefit plan of the Bank, the Company or any subsidiary thereof, shall become null and void effective upon Executive's receipt of Notice of Termination for Cause pursuant to Section 4 hereof and shall not be exercisable by Executive at any time subsequent to such Termination for Cause, unless it is determined in arbitration pursuant to Section 4 hereof that Cause for the termination of Executive did not exist.
3. TERMINATION BENEFITS.
(a) Upon the occurrence of a Change in Control, followed at any time during the term of this Agreement by the voluntary or involuntary termination of the Executive's employment, other than for Termination for Cause, the Company shall be obligated to pay Executive, or in the event of his subsequent death, his beneficiary or beneficiaries, or his estate, as the case my be, as severance pay or liquidated damages, or both, a sum equal to three (3) times the average of the Executive's three preceding years' annual base salary from the Bank and the Company, which base salary shall exclude bonuses, but which shall include any salary deferred by the Executive (under a 401(k) or similar plan) for such years. At the election of the Executive, which election is to be made within thirty (30) days of the date of this Agreement, and during the month of January in each year, and which election is irrevocable for the calendar year in which it is made, such payment may be made in a lump sum or paid in equal monthly installments during the thirty-six (36) months following the Executive's termination. In the event that no election is made, payment to the Executive will be made on a monthly basis during the remaining term of this Agreement.
(b) Upon the occurrence of a Change in Control of the Bank or the Company followed at any time during the term of this Agreement by the Executive's voluntary or involuntary termination of employment, other than for Termination for Cause, the Company shall cause to be continued life, medical, dental and disability coverage substantially identical to the coverage maintained by the Bank for the Executive prior to his severance. Such coverage and payments shall cease upon expiration of thirty-six (36) months after termination of employment.
(c) Notwithstanding the preceding paragraphs of this Section 3, in the event that:
(i) the aggregate payments or benefits to be made or afforded to Executive under said paragraph (the "Termination Benefits") would be deemed to include an "excess parachute payment" under Section 280G of the Internal Revenue Code of 1986 (the "Code") or any successor thereto, and
(ii) if such Termination Benefits were reduced to an amount (the "Non-Triggering Amount"), the value of which is one dollar ($1.00) less than an amount equal to three (3) times Executive's "base amount," as determined in accordance with said Section 280G, and the Non-Triggering Amount would be greater than the aggregate value of the Termination Benefits (without such reduction) minus the amount of tax required to be paid by Executive thereon by Section 4999 of the Code, then the Termination Benefits shall be reduced to the Non-Triggering Amount. The allocation of the reduction required by the preceding paragraphs of this Section 3 shall be determined by the Executive.
4. NOTICE OF TERMINATION
Any purported termination by the Company, or by the Executive, shall be communicated by Notice of Termination to the other party hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated. "Date of Termination" shall mean the date specified in the Notice of Termination (which, in the case of a Termination for Cause, shall not be less than thirty (30) days from the date such Notice of Termination is given). If within thirty (30) days after any Notice of Termination for Cause is given, the Executive notifies the Company that a dispute exists concerning the termination, the Date of Termination shall be the date on which the dispute is finally determined, either by written agreement of the parties, by a binding arbitration award, and provided further that the Date of Termination shall be extended by a notice of dispute only if such notice is given in good faith and the party giving such notice pursues the resolution of such dispute with reasonable diligence. Notwithstanding the pendency of any such dispute, the Company will continue to pay the Executive his full compensation in effect when the notice giving rise to the dispute was given (including, but not limited to, annual base salary) and continue him as a participant in all compensation, benefit and insurance plans in which he was participating when the notice of dispute was given, until the dispute is finally resolved in accordance with the Agreement. Amounts and benefits paid under this Section pending resolution of the dispute in arbitration shall be offset against any amounts and benefits that are determined to be due Executive under this Agreement as a result of the termination of his employment.
5. SOURCE OF PAYMENTS.
It is intended by the parties hereto that all payments provided in this Agreement shall be paid in cash or check from the general funds of the Company.
6. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFIT PLANS.
This Agreement contains the entire understanding between the parties hereto and supersedes any prior agreement between the Company and Executive, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring to Executive of a kind elsewhere provided. No provision of this Agreement shall be interpreted to mean that Executive is subject to receiving fewer benefits than those available to him without reference to this Agreement.
7. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation, or to execution, attachment, levy, or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to affect any such action shall be null, void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of, Executive, the Company and their respective successors and assigns.
8. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.
9. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provision of this Agreement or any part of such provision not held so invalid, and each such other provision and part thereof shall to the full extent consistent with law continue in full force and effect.
10. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement.
11. GOVERNING LAW.
The validity, interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Delaware, unless otherwise specified herein.
12. ARBITRATION.
Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a panel of three arbitrators sitting in a location selected by the employee within fifty (50) miles from West Caldwell, New Jersey, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction; provided, however, that Executive shall be entitled to seek specific performance of his right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement.
13. PAYMENT OF LEGAL FEES.
All reasonable 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 Company if Executive is successful pursuant to arbitration or settlement.
14. INDEMNIFICATION.
The Company shall provide the Executive (including his heirs, executors and administrators) with coverage under a standard directors' and officers' liability insurance policy at its expense, and shall indemnify the Executive (and his heirs, executors and administrators) to the fullest extent permitted under Delaware law and as provided in the Company's certificate of incorporation 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 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.
15. SIGNATURES.
IN WITNESS WHEREOF, First State Financial Services, Inc. has caused this Agreement to be executed by its duly authorized officer, and Executive has signed this Agreement, on the 20th day of September, 1995.
ATTEST: FIRST STATE FINANCIAL SERVICES,INC. /s/Emil J. Butchko - --------------------------- BY: /s/Michael J. Quigley, III --------------------------------------
WITNESS: /s/Emil J. Butchko /s/John M. Fields, Jr. - ---------------------------- -------------------------------------- Executive
Seal
SPECIAL TERMINATION AGREEMENT
This AGREEMENT is made effective as of 2nd day of June, 1995, by and between FIRST DEWITT BANK, a federally chartered stock savings bank (the "Bank"), and RICHARD O. LINDSEY ("Executive"). Any reference to "Company" herein shall mean FIRST STATE FINANCIAL SERVICES, INC. or any successor thereto.
WHEREAS, the Bank recognizes the substantial contribution Executive has made to the Bank and wishes to protect his position therewith for the period provided in this Agreement; and
WHEREAS, Executive has been elected to, and has agreed to serve in the position of Vice President and Controller of the Bank, a position of substantial responsibility;
NOW, THEREFORE, in consideration of the contribution of Executive, and upon the other terms and conditions hereinafter provided, the parties hereto agree as follows:
1. TERM OF AGREEMENT
The term of this Agreement shall be deemed to have commenced as of the date first above written and shall continue for a period of thirty-six (36) full calendar months thereafter. Commencing on the first anniversary date of this Agreement and continuing at each anniversary date thereafter, the Board of Directors of the Bank ("Board") may extend the Agreement for an additional year. The Board will conduct a performance evaluation of the Executive for purposes of determining whether to extend the Agreement, and the results thereof shall be included in the minutes of the Board's meeting. If Executive is also a director then he shall abstain from any and all voting with respect to the extension of the term of such Executive's Agreement.
2. PAYMENTS TO EXECUTIVE UPON CHANGE IN CONTROL
(a) Upon the occurrence of a Change in Control of the Company (as herein defined) of the Bank or the Company followed at any time during the term of this Agreement by the voluntary (as provided in the next sentence) or involuntary termination of Executive's employment, other than for Cause, as defined in Section 2(c) hereof, the provisions of Section 3 shall apply. Upon the occurrence of a Change in Control, Executive shall have the right to elect to voluntarily terminate his employment at any time during the term of this Agreement following any demotion, loss of title, office or significant authority, reduction in his annual compensation or benefits, or relocation of his principal place of employment by more than 30 miles from its location immediately prior to the Change in Control.
(b) A "Change in Control" of the Bank or the Company shall mean an event of a nature that: (i) would be required to be reported in response to Item 1(a) of the current report on Form 8- K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"); or (ii) results in a Change in Control of the Bank or the Company within the meaning of the Home Owners' Loan Act of 1933 and the Rules and Regulations promulgated by the Office of Thrift Supervision (or its predecessor agency), as in effect on the date hereof ;or (iii) without limitation, such a Change in Control shall be deemed to have occurred at such time as (a) any "Person" (as the term is used in Section 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d- 3 under the Exchange Act), directly or indirectly, of securities of the Bank or the Company representing 25% or more of the Bank's or the Company's outstanding securities, except for any securities of the Bank purchased by the Company in connection with the conversion of the Bank to the stock form and any securities purchased by the Bank's employee stock ownership plan and trust; or (b) individuals who constitute the Board on the date hereof (the "Incumbent Board") cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date hereof whose election was approved by a vote of at least two-thirds of the directors comprising the Incumbent Board or whose nomination for election by the Company's stockholders was approved by the same Nominating Committee serving under an Incumbent Board, shall be, for purposes of this clause (b), considered as though he were a member of the Incumbent Board; or (c) a plan of reorganization, merger, consolidation, sale of all or substantially all the assets of the Bank or Company or similar transaction in which the Bank or the Company is not the resulting entity occurs and which the Incumbent Board does not approve of or consent to; or (d) a proxy statement soliciting proxies from stockholders of the Company, by someone other than the current management of the Company, seeking stockholder approval of a plan of reorganization, merger or consolidation of the Company or Bank or similar transaction with one or more corporations as a result of which the outstanding shares of the class of securities then subject to such plan or transaction are exchanged for or converted into cash or property or securities not issued by the Bank or the Company shall be distributed and proxies approving such plan or reorganization, merger or consolidation of the Company or Bank are received and voted; or (e) a tender offer is made for 25% or more of the outstanding securities of the Bank or Company and shareholders owning beneficially or of record 25% or more of the outstanding securities of the Bank or Company have tendered or offered to sell their shares pursuant to such tender offer and such tendered shares have been accepted by the tender offeror.
(c) Executive shall not have the right to receive termination benefits pursuant to Section 3 hereof upon Termination of Cause. The term "Termination for Cause" shall mean termination because of the Executive's intentional failure to perform stated duties, personal dishonesty, incompetence, willful misconduct, any breach of fiduciary duty involving personal profit, willful violation of any law, rule, regulation (other than traffic violations or similar offenses) or final cease and desist order, or any material breach of any material provision of this Agreement. In determining incompetence, the acts or omissions shall be measured against standards generally prevailing in the savings institution industry. Notwithstanding the foregoing, Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to him a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the members of the Board at a meeting of the Board called and held for that purpose (after reasonable notice to Executive and an opportunity for him, together with counsel, to be heard before the Board), finding that in the good faith opinion of the Board, Executive was guilty of conduct justifying Termination for Cause and specifying the particulars thereof in detail. The Executive shall not have the right to receive compensation or other benefits for any period after Termination of Cause.
3. TERMINATION
(a) Upon the occurrence of a Change in Control, followed at any time during the term of this Agreement by the voluntary or involuntary termination of the Executive's employment, other than for Termination for Cause, the Bank shall be obligated to pay the Executive, or in the event of his subsequent death, his beneficiary or beneficiaries, or his estate, as the case my be, as severance pay, a sum equal to the average of the five preceding years' annual base salary, including bonuses and any other cash compensation paid or accrued by the Bank for the benefit of the Executive during such years, and the amount of any benefits received pursuant to any employee benefit plans on behalf of the Executive maintained by the Bank during such years, excluding benefits continued pursuant to (b) below. In the event the Executive was not employed by the Bank for five years at the time of the Change in Control, the sum shall equal the annualized average of the portion of such period during which the Executive performed services for the Bank. In the event of a short taxable year or period of less than a full year, the compensation paid or accrued for the Executive during such period shall be annualized before applying the above formula. At the election of the Executive, or his estate, as the case may be, which election is to be made on an annual basis during the month of January of each year (and which election is irrevocable for such year; and provided that the first election may be made within thirty days of the execution of this Agreement), such payment may be made in a lump sum or paid in equal monthly installments during the twelve (12) months following the Executive's termination. In the event that no election is made, payment to the Executive will be made on a monthly basis during the remaining term of this Agreement.
(b) Upon the occurrence of a Change in Control of the Bank or the Company followed at any time during the term of this Agreement by the Executive's voluntary or involuntary termination of employment, other than for Termination for Cause, the Bank shall cause to be continued life, medical, dental and disability coverage substantially identical to the coverage maintained by the Bank for the Executive prior to his severance. Such coverage and payments shall cease upon expiration of twelve (12) months.
(c) Upon the occurrence of a Change in Control, the Executive will have such rights as specified in any option plan or restricted stock plan or any other employee benefit plan in which the Executive was a participant, with respect to options, restricted stock and/or any other rights, as may have been granted to the Executive under such plans.
4. NOTICE OF TERMINATION
(a) Any purported termination by the Bank or by the Executive shall be communicated by Notice of Termination to the other party hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive's employment under the provision so indicated.
(b) "Date of Termination" shall mean the date specified in the Notice of Termination (which, in the case of a Termination for Cause, shall not be immediate). Except as to termination for Cause, or otherwise as set forth in paragraph (c), in no event shall the Date of Termination be less than 30 days from the date Notice of Termination was given.
(c) If, within thirty (30) days after any Notice of Termination is given, the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, except upon the voluntary termination by the Executive in which case the date of termination shall be the date specified in the Notice, the Date of Termination shall be the date on which the dispute is finally determined, either by mutual written agreement of the parties, by a binding arbitration award, or by a final judgment, order or decree of a court of competent jurisdiction (the time for appeal there from having expired and no appeal having been perfected) and provided further that the Date of Termination shall be extended by a notice of dispute only if such notice is given in good faith and the party giving such notice pursues the resolution of such dispute with reasonable diligence. Notwithstanding the pendency of any such dispute, the Bank will continue to pay the Executive his full compensation in effect when the notice giving rise to the dispute was given (including, but not limited to, Base Salary) and continue him as a participant in all compensation, benefit and insurance plans in which he was participating when the notice of dispute was given, until the earlier of 120 days from the date of the Notice of Termination or the date upon which the dispute is finally resolved in accordance with this Agreement. Amounts paid under this Section pending resolution in arbitration shall offset against and reduce any amounts determined to be due Executive under this Agreement. Notwithstanding the foregoing, no compensation or benefits shall be paid to the Executive in the event the Executive is Terminated for Cause. In the event that such Termination for Cause is found to have been wrongful or such dispute is otherwise decided in the Executive's favor, the Executive shall be entitled to receive all compensation and benefits which accrued for up to a period of nine months after the Termination for Cause.
5. SOURCE OF PAYMENTS
It is intended by the parties hereto that all payments provided in this Agreement shall be paid in cash or check from the general funds of the Bank.
6. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFIT PLANS
This Agreement contains the entire understanding between the parties hereto and supersedes any prior agreement between the Bank and Executive, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring to Executive of a kind elsewhere provided. No provision of this Agreement shall be interpreted to mean that Executive is subject to receiving fewer benefits than those available to him without reference to this Agreement.
7. NO ATTACHMENT
(a) Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation, or to execution, attachment, levy, or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to affect any such action shall be null, void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of, Executive, the Bank and their respective successors and assigns.
8. MODIFICATION AND WAIVER
(a) This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.
9. MISCELLANEOUS PROVISIONS
(a) The Bank's Board of Directors may terminate the Executive's employment at any time. Executive shall not have the right to receive compensation or other benefits for any period after Termination for Cause as defined in Section 2(c) hereinabove.
(b) If the Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Bank's affairs by a notice served under Section 8(e)(3) (12 USC 1818(e)(3)) or 8(g) (12 USC 1818(g)) of the Federal Deposit Insurance Act, as amended by the Financial Institutions Reform, Recovery and Enforcement Act of 1989, the Bank's obligations under this contract 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 in its discretion (i) pay the Executive all or part of the compensation withheld while their contract obligations were suspended and (ii) reinstate (in whole or in part) any of the obligations which were suspended.
(c) If the Executive is removed and/or permanently prohibited from participating in the conduct of the Bank's affairs by an order issued under Section 8(e) (12 USC 1818(e)) or 8 (g) (12 USC 1818(g)) of the Federal Deposit Insurance Act, as amended by the Financial Institutions Reform, Recovery and Enforcement Act of 1989, all obligations of the Bank under this contract shall terminate as of the effective date of the order, buy vested rights of the contracting parties shall not be affected.
(d) If the Bank is in default as defined in Section 3(x) (12 USC 1813 (x)(1)) of the Federal Deposit Insurance Act, as amended by the Financial Institutions Reform, Recovery and Enforcement Act of 1989, all obligations of the Bank under this contract shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting parties.
(e) All obligations of the Bank under this contract shall be terminated, except to the extent determined that continuation of the contract is necessary for the continued operation of the Bank, (i) by the Director, at the time the Resolution Trust Corporation or Federal Deposit Insurance Corporation ("FDIC") enters into an agreement to provide assistance to or on behalf of the Bank; or (ii) by the Office of Thrift Supervision ("OTS") at the time the OTS or its District Director approves a supervisory merger to resolve problems related to the operations of the Bank or when the Bank is determined by the OTS or FDIC 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.
(f) Any payments made to Executive pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with 12 USC Section 1828(k) and any regulations promulgated thereunder.
10. SEVERABILITY
If, for any reason, any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provision of this Agreement or any part of such provision not held so invalid, and each such other provision and part thereof shall to the full extent consistent with law continue in full force and effect.
11. HEADINGS FOR REFERENCE ONLY
The headings of sections and paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement.
12. GOVERNING LAW
The validity, interpretation, performance and enforcement of this Agreement shall be governed in accordance with New Jersey law, except to the extent superseded by Federal law, as now or hereafter in effect.
13. ARBITRATION
Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a panel of three arbitrators sitting in a location selected by the employee within fifty (50) miles from the location of the Bank, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction; provided, however, that subject to Sections 2(c) and 4(c) hereof, Executive shall be entitled to seek specific performance of his right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement.
14. PAYMENT OF LEGAL FEES
All reasonable 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 on the merits pursuant to a legal judgment, arbitration or settlement.
15. INDEMNIFICATION
The Bank shall provide the Executive (including his heirs, executors and administrators) with coverage under a standard directors' and officers' liability insurance policy at its expense, and shall indemnify the Executive (and his heirs, executors and administrators) to the fullest extent permitted under federal law and as provided in the Bank's Charter and Bylaws 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 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. No indemnification shall be paid that would violate 12 US 1828(k) or any regulations promulgated thereunder, or 121 C.F.R. 545.121.
16. SUCCESSOR TO THE BANK
This Agreement shall be binding on the Bank and 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, 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.
17. SIGNATURES
IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed by its duly authorized officer, and Executive has signed this Agreement, on the date first above written.
ATTEST: FIRST DEWITT BANK /s/Emil J. Butchko - ------------------------ By:/s/Michael J. Quigley, III ----------------------------------- Michael J. Quigley, III, President and Chief Executive Officer
WITNESS: /s/Emil J. Butchko - --------------------------
By:/s/Richard O. Lindsey ----------------------------------- Richard O. Lindsey
Seal
FIRST STATE FINANCIAL SERVICES, INC. 1120 Bloomfield Avenue, CN 2449 West Caldwell, New Jersey 07007-2449
Form 10-K September 30, 1996
Exhibit 11. Statement re: Computation of Per Share Earnings
Year ended Year ended Year ended September September September 30,1996 30,1995 30,1994 (In thousands, except per share amounts)
Net income (loss) ($5,649) $3,998 $3,501
Average primary common shares outstanding 4,043 3,963 3,847
Primary earnings per share ($1.40) $1.01 $0.91
Average fully diluted common shares outstanding(1) 4,050 3,995 3,885
Fully diluted earnings ($1.39) $1.00 $0.90 per share
(1) - Fully diluted shares outstanding were calculated via the treasury stock method by using the ending period market value regarding stock options. The average primary common shares outstanding was used if this calculation was anti-dilutive.
FIRST STATE FINANCIAL SERVICES, INC. 1120 Bloomfield Avenue, CN 2449 West Caldwell, New Jersey 07007-2449
Form 10-K September 30, 1996
Exhibit 22. Subsidiaries of the Registrant
First DeWitt Bank 1120 Bloomfield Avenue, CN 2449 West Caldwell, New Jersey 07007-2449
State of Incorporation: New Jersey
First State Investment Services, Inc. 1120 Bloomfield Avenue, CN 2449 West Caldwell, New Jersey 07007-2449
State of Incorporation: Delaware
Subsidiaries of First DeWitt Bank:
Cedar Grove Service Corp. 1120 Bloomfield Avenue, CN 2449 West Caldwell, New Jersey 07007-2449
State of Incorporation: New Jersey
Southport (Wall) Associates 1120 Bloomfield Avenue, CN 2449 West Caldwell, New Jersey 07007-2449
State of Incorporation: New Jersey
Ridge (Caldwell) Associates 1120 Bloomfield Avenue, CN 2449 West Caldwell, New Jersey 07007-2449
State of Incorporation: New Jersey
FIRST STATE FINANCIAL SERVICES, INC. 1120 Bloomfield Avenue, CN 2449 West Caldwell, New Jersey 07007-2449
Form 10-K September 30, 1996
Exhibit 23. Accountant's consent to incorporation by reference of Audit report in Registration statements on form S-8
INDEPENDENT AUDITOR'S CONSENT
The Board of Directors First State Financial Services, Inc.:
We consent to the incorporation by reference in the registration statement (No. 33-90434) relating to the First State Financial Services, Inc. 1993 Long-Term Incentive Stock Benefit Plan and the First State Financial Services, Inc. 1993 Stock Option Plan for Outside Directors on Form S-8 of First State Financial Services, Inc. and subsidiary of our report dated November 26,1996, relating to the consolidated balance sheets of First State Financial Services, Inc. and subsidiary as of September 30, 1996 and 1995, and the related consolidated statements of operations, changes in stockholders' equity and cash flows for each of the years in the three-year period ended September 30, 1996, which report appears in the September 30, 1996 annual report on Form 10-K.
/s/ KPMG Peat Marwick LLP Short Hills, New Jersey December 19, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and as of the date indicated.
/s/Michael J. Quigley, III Chairman of the Board of Directors, - ----------------------------- President and Chief Executive Michael J. Quigley, III Officer
/s/Emil J. Butchko Vice President and Chief Financial - ----------------------------- Officer Emil J. Butchko
/s/ John M. Fields, Jr Vice President and Principal - ----------------------------- Accounting Officer John M. Fields, Jr.
/s/Henry F. Albinson Director /s/Frank H. Bridge Director - ----------------------------- ---------------------- Henry F. Albinson Frank H. Bridge
/s/June D. Castano Director /s/Patrick N. Ciccone Director - ----------------------------- ---------------------- June D. Castano Patrick N. Ciccone
/s/Theodore F. Cox Director /s/Walter J. Davis Director - ----------------------------- ---------------------- Theodore F. Cox Walter J. Davis
/s/Marie G. Martino Director /s/Ralph M. Riefolo Director - ----------------------------- ---------------------- Marie G. Martino Ralph M. Riefolo
Dated December 26, 1996