CHANGE IN CONTROL AGREEMENT
This
CHANGE IN CONTROL AGREEMENT (the "Agreement") is
made
on of this 19th day
of
February, 2008 by and among UNION CENTER
NATIONAL BANK, a bank chartered under the laws of Congress (the "Bank"),
CENTER
BANCORP INC., a New Jersey corporation that owns all of the capital stock of
the
Bank
(the
"Company") and A. XXXXXXX XXXXXXXXXX ("EMPLOYEE").
BACKGROUND:
WHEREAS,
EMPLOYEE is currently employed as a Senior Vice President of the Bank and
as
a Vice
President of the Company; and
WHEREAS,
the Boards of Directors of the Bank and the Company believe it is imperative
that the Bank and the Company be able to rely upon EMPLOYEE to continue in
his
position
in the event that the Bank or the Company receives any proposal from a third
person concerning
a possible acquisition of the equity securities or assets of the Bank or the
Company, and
that
the Bank and the Company be able to receive and rely upon EMPLOYEE's advice,
if
they request
it, as to the best interests of the Company, the Bank and their respective
shareholders, without
concern that EMPLOYEE might be distracted by the personal uncertainties and
risks created
by such a proposal; and
WHEREAS,
to achieve that goal, and to retain EMPLOYEE's services prior to any such
activity, the Bank, the Company and EMPLOYEE have agreed to enter into this
Agreement to govern
EMPLOYEE's termination benefits in the event of a Change in Control Event (as
defined below).
NOW,
THEREFORE, in consideration of the foregoing premises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. Certain
Definitions:
As used
in the Agreement, the following terms shall have the respective meanings set
forth below:
(a)
"Cause"
means
(i) EMPLOYEE's conviction of, guilty plea to, or confession of
guilt
of, any crime that constitutes a felony or criminal act involving moral
turpitude, (ii) EMPLOYEE's
commission of a fraudulent, illegal, disloyal or dishonest act in respect of
the
Bank or
the
Company, (iii) termination of the Bank's business due to unprofitability,
insolvency, bankruptcy
or directive by governmental regulators, (iv) EMPLOYEE's willful misconduct
or
gross negligence
that reasonably could be expected to be materially injurious to the business,
operations,
or reputation of the Bank and/or the Company, (v) EMPLOYEE's violation of a
material nature
of
the Bank's or the Company's policies or procedures in effect from time to time;
provided,
however, to the extent such violation is subject to cure, such violation shall
not constitute
"Cause"
unless
EMPLOYEE fails to cure such violation within 10 days after written notice
thereof, (vi) EMPLOYEE's material failure to perform EMPLOYEE's duties as
assigned to EMPLOYEE
by the Bank and/or the Company from time to time; provided, however, to the
extent such failure is subject to cure, such failure shall not constitute
"Cause" unless EMPLOYEE fails to cure
such
failure within 10 days after written notice thereof, or (vii) EMPLOYEE's
death.
Termination
for "Cause" shall not be construed to include the takeover of the Bank or the
Company,
in either a hostile or voluntary manner, by another person, firm or
corporation.
(b) "Change
in Control Event" means (i) the consummation of an acquisition by
a
third party of a majority of the voting capital stock of the Company or the
Bank
or substantially
all of the assets of the Company or the Bank or (ii) a change in the composition
of the
Board
of Directors of the Company (the "Board") such that the Continuing Directors
(as
hereinafter defined) no longer constitute a majority of the Board.
(c) "Continuing
Directors" shall mean (i) each current member of the Company's
Board of Directors and (ii) each person who is hereinafter first nominated
to
such Board
by
unanimous vote of the persons who then constitute Continuing
Directors.
(d) "Good
Reason" means
the
resignation by EMPLOYEE within 180 days after the occurrence of a Change in
Control Event.
(e) "Release"
means a general release agreement in a form acceptable to the Company and the
Bank, which Release shall include, among other things, a general release of
the
Bank, the Company and related parties from all liability.
(f) "Trigger
Event" shall mean, the occurrence during the Term (as defined below)
of
either: (i) the termination of EMPLOYEE's employment by the Bank and the Company
(or
their
respective successors) upon, or within 12 months following, a Change in Control
Event, other
than a termination of EMPLOYEE's employment by the Bank and the Company (or
their respective
successors) for Cause; or (ii) EMPLOYEE's resignation for Good Reason, upon,
or
within 12 months following, a Change in Control Event, provided that
EMPLOYEE
delivers written notice of EMPLOYEE's resignation to the Bank and the Company
(or their
respective successors ) at least 30 days prior to the effective date of such
resignation.
2.
Term
of Agreement.
Except
as otherwise provided in the next sentence of this Section
2, the term of this Agreement shall be two (2) years, effective as of February
19, 2008 and terminating
February 19, 2010(the "Initial Term"). This Agreement
shall not automatically renew or be automatically extended beyond February
19,
2010. Notwithstanding the foregoing, if
a
"Change in Control Event" occurs at any time prior to February 19, 2010, then
the term of this Agreement shall automatically be extended for
a
period of one (1) year from the date of such Change in Control Event.
3.
Trigger
Event Payments and Benefits.
(A) Upon
the
occurrence of a Trigger Event (a) subject to EMPLOYEE's execution,
delivery and non-revocation of the Release, EMPLOYEE shall be entitled to:
(i) a
lump sum
payment equal to the product of (x) three (3) and (y) the sum of (1) EMPLOYEE's
annual base salary as in effect immediately prior to the Trigger Event, (2)
the
largest annual cash bonus ever received by EMPLOYEE from the Bank and/or the
Company (the "Largest Bonus"), (3) the amount recorded
on EMPLOYEE's W-2 (for the calendar year preceding the calendar year in which
the Trigger
Event occurs) that is attributable to fringe benefits provided to EMPLOYEE
by
the Bank and/or
the Company, and (4) the
maximum matching contribution that
could have been made under the Bank's 401(k) plan if EMPLOYEE had remained
employed by the
Bank
and the Company for an additional one (1) year following the Trigger Event
(the
"Trigger
Event Payment" and together with the "Pension Trigger Event Payment" described
in subparagraph
B below, the "Combined Trigger Event Payments"); and (ii) if EMPLOYEE timely
elects
COBRA coverage and provided EMPLOYEE continues to make contributions for such
continuation
coverage equal to EMPLOYEE's contribution amount in effect immediately preceding
the
date
of EMPLOYEE's termination of employment, the Bank and/or the Company, as
applicable, shall
waive the remaining portion of EMPLOYEE's healthcare continuation payments
under
COBRA
for
an eighteen (18)-month period following the Trigger Event; and (b) all stock
options granted to EMPLOYEE by the Company shall be exercisable in full,
effective as of the date of the Trigger
Event. Notwithstanding the foregoing, in the event that EMPLOYEE becomes
eligible to obtain alternate healthcare coverage from a new employer before
the
18-month anniversary of the
Trigger Event, the Bank's and/or the Company's obligation to waive the remaining
portion of EMPLOYEE's
healthcare continuation coverage under COBRA shall cease. EMPLOYEE understands
and
affirms that EMPLOYEE is obligated to inform the Bank and the Company if
EMPLOYEE becomes
eligible to obtain alternate healthcare coverage from a new employer before
the
18-month
anniversary of the Trigger Event. In addition, for a period of three years
following the Trigger
Event, the Bank and the Company, at their expense, shall continue to provide
EMPLOYEE with
life
insurance coverage commensurate with the coverage that was being provided to
EMPLOYEE
immediately prior to EMPLOYEE's date of termination.
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(B) Within
thirty (30) days following the occurrence of a Trigger Event, the EMPLOYEE
shall, subject to EMPLOYEE's execution, delivery and non-revocation of the
Release, also be entitled to a lump sum payment equal to the excess, if any,
of
(x) the lump sum present value
of
the benefit that the EMPLOYEE would have been entitled to under the Bank's
tax-qualified
defined benefit pension plan (the "Pension Plan") had he continued to be
employed by the
Bank
and the Company for an additional three (3) year period following the Triggering
Event (assuming that he continued during such period to receive a salary equal
to the salary in effect on the date of the Trigger Event and an annual incentive
bonus equal to the Largest Bonus), over (y) the
lump
sum present value of the benefit that the EMPLOYEE is entitled to under the
Pension Plan as
of the
date of EMPLOYEE's termination of employment. Present value calculations, for
purposes
of the foregoing, shall be made in the manner used under the Pension Plan for
purposes of
determining lump sum distributions.
(C)
The
Trigger Event Payment (less applicable withholdings and deductions) shall
be
paid to EMPLOYEE in a lump sum on the next regular payroll date following the
8th
day
after
EMPLOYEE's execution and delivery of the Release and the Pension Trigger Event
Payment shall
be
paid in accordance with subparagraph B above (but no earlier than the
8th
day
after
EMPLOYEE's
execution and delivery of the Release); provided, however, that if necessary
to
comply
with the restriction in Section 409A(a)(2)(B) of the Internal Revenue Code
of
1986, as amended
(the "Code")
concerning payments to "specified EMPLOYEEs," the Combined Trigger Event
Payments shall be made on the first business day of the seventh month following
the Trigger
Event. EMPLOYEE shall have no obligation to seek substitute employment or
otherwise mitigate
the Bank's and the Company's obligations to make the payments set forth in
this
Section
3.
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4. Affects
of Section 4999
Excise
Taxes. Notwithstanding
any provisions in this Agreement to the contrary, in
the
event that either the Company's independent public accountants or the
Internal Revenue Service determines that any payment, coverage or benefit
provided to EMPLOYEE
is subject to the excise tax imposed by Section 4999 (or any successor
provision) of the
Code
("Section 4999"), the
EMPLOYEE shall have no right under this Agreement or otherwise to receive all
or
any portion of such payment,
coverage or benefit that if received would result in the imposition of the
excise tax under Section 4999 (“Excess Benefit”), and neither the Bank nor the
Company shall have any obligation to pay the EMPLOYEE an Excess Benefit. If
notwithstanding the foregoing the Bank or the Company pays the EMPLOYEE an
Excess Benefit, the EMPLOYEE shall promptly repay the Excess Benefit upon notice
and demand by the Bank or the Company. This Section 4 shall survive termination
of this Agreement.
5. At
Will
Employment. This Agreement shall not affect any rights of the Bank, the
Company
or the EMPLOYEE prior to a Change in Control Event or any of your rights granted
in any
other
agreement, plan or arrangements, except that if EMPLOYEE receive all payments
under this
Agreement, EMPLOYEE shall not be entitled to receive any payments or benefits
under any other
severance arrangement (if any) with the Bank or the Company. The rights, duties
and benefits
provided under this Agreement only shall become effective upon a Change in
Control Event.
Nothing in this Agreement shall alter EMPLOYEE's status as an "at-will"
EMPLOYEE. If EMPLOYEE's
employment by the Bank and/or the Company is terminated for any reason prior
to
a Change in Control Event, this Agreement shall thereafter be of no further
force and effect.
6. Headings.
Headings used in this Agreement are for convenience of reference only
and
do not affect the meaning of any provision.
7. Counterparts.
This Agreement may be executed as of the same effective date in one
or
more counterparts, each of which shall be deemed an original.
8. Binding
Agreement; Assignment. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors
and
assigns.
9. Governing
Law; Jurisdiction. This Agreement and any and all matters arising directly
or indirectly herefrom shall be governed by, and construed in accordance with,
the internal
laws of the State of New Jersey, without reference to the choice of law
principles thereof.
Any legal action, suit or other proceeding arising out of or in any way
connected with this
Agreement shall be brought in the courts of the State of New Jersey, or in
the
United States courts
for the District of New Jersey. With respect to any such proceeding in any
such
court: (i) each
party generally and unconditionally submits itself and its property to the
exclusive jurisdiction
of such court (and corresponding appellate courts therefrom), and (ii) each
party waives, to the fullest extent permitted by law, any objection it has
or
hereafter may have the venue
of
such proceeding as well as any claim that it has or may have that such
proceeding is in an
inconvenient forum.
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10. Amendments.
This Agreement may only be amended or otherwise modified, and the provisions
hereof may only be waived, by a writing executed by the parties
hereto.
11. Entire
Agreement. This Agreement shall constitute the entire agreement of the
parties
with respect to the matters covered hereby and shall supersede all previous
written, oral or
implied understandings between them with respect to such matters.
12. Opportunity
to Consult Counsel. EMPLOYEE hereby acknowledges that he has read and
fully
understands this Agreement, and
that
EMPLOYEE has been advised to,
and
has had the opportunity to, consult with counsel and EMPLOYEE's personal
financial or tax advisor with respect to this Agreement.
13. No
Effect on Other Benefits.
Notwithstanding anything contained herein to the contrary,
nothing contained herein shall adversely effect the rights of the EMPLOYEE
and
his dependents
and beneficiaries to any and all benefits to which any of them may be entitled
under the
benefit plans and arrangements of the Company and/or the Bank in accordance
with
the terms
of
such benefit plans and arrangements.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
first written above.
| UNION CENTER NATIONAL BANK | ||||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Xxxxxxx X. Xxxxxxx, President & CEO | ||||
|
CENTER
BANCORP, INC.
|
||||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Xxxxxxx X. Xxxxxxx, President & CEO | ||||
|
EMPLOYEE
|
||||
| By: | /s/ A. Xxxxxxx Xxxxxxxxxx | |||
| A. XXXXXXX XXXXXXXXXX | ||||
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