EMPLOYMENT AGREEMENT
EMPLOYMENT
AGREEMENT (this “Agreement”) made as of this 1st_____
day
of _____September________________,
2006__
by and
between TRI-STATE
INSURANCE AGENCY, INC.,
a New
Jersey corporation ("Employer"), and
Xxxxxx Xxxxx,
an
individual residing at 000 Xxxxxxx Xxxx, Xxxxxxx, XX 00000, (the
"Executive").
W
I T N E S S E T H:
WHEREAS,
Employer
is a subsidiary of Sussex Bank (“Sussex”);
WHEREAS,
Executive has heretofore been employed by Employer pursuant to a certain
Employment Agreement dated the 28th
day of
September, 2001 (the "2001 Agreement");
WHEREAS,
the
parties wish to enter into this Agreement commencing on January 1, 2007 (the
"Effective Date") in accordance with the terms and conditions as contained
herein;
WHEREAS,
the
parties agree to extend the employment of Executive by Employer pursuant to
the
2001 Agreement until December 31, 2006 (the "Extension Period");
NOW,
THEREFORE,
in
consideration of the mutual promises and undertakings herein contained, the
parties hereto, intending to be legally bound, agree as follows:
1. Extension
of 2001 Employment Agreement.
Employer
agrees to extend the 2001 Agreement from the 28th
day of
September, 2001 until December 31, 2006, according to the terms and conditions
thereof with the exception of Section 3 (c) (the "Bonus") which terminates
on
September 28, 2006.
2. Employment
and Term.
(a) Employer
hereby employs the Executive as the Chief Executive Officer (“CEO”) of the
Employer (the "Position") and the Executive agrees to serve in the Position
from
and after January 1, 2007 (the "Effective Date") for a term of five (5) years
(the "Term"), and which, subject to Section 2(b), hereof, shall terminate on
December 31, 2011, unless extended
pursuant
to the terms hereof. Unless either Executive or Employer give written notice
at
least twelve (12) months prior to the end of the Term of their intention not
to
have this Agreement renew, this Agreement shall automatically renew for two
additional one (1) year terms (the “Additional Terms”) at the expiration of the
Term. For purposes of this Agreement, each Additional Term shall be considered
to be a part of the Term hereof.
(b) Employer
shall have the right to terminate the Executive's employment hereunder prior
to
the expiration of the Term hereof; provided, however, that unless such
termination is for "cause", as defined below, Executive shall be entitled to
receive his Base Salary (as defined herein) and all insurance benefits provided
on the date of such termination for the remaining term of this Agreement. In
addition, to the extent such termination is without Cause, for the remaining
term of this Agreement, Executive shall be entitled to an annual payment equal
to the commissions earned by Executive under Section 4(b) hereof for the
proceeding fiscal year. Such payments shall be made in accordance with
Employer's normal payroll practices. If such termination is for "cause",
Executive shall not be entitled to receive any compensation from and after
the
date of such termination; provided, however, that Executive shall be entitled
to
payments for periods, or partial periods, that occurred prior to the date of
termination and for which Executive has not yet been paid. For purposes of
this
Agreement, "cause" means (i) the Executive's willful and continued failure
substantially to perform the duties of the Position, (ii) fraud,
misappropriation or other deliberate dishonesty of Executive with respect to
Employer's business or property or that of Sussex, (iii) the Executive's plea
of
guilty to or conviction of, or plea of nolo
contendere
to, any
felony that, in the reasonable judgment of the Board of Directors of Employer
(the "Board"), adversely affects Employer's reputation or the Executive's
ability to perform his duties hereunder; or (iv) Executive's willful violation
of (A) any law, rule or regulation relating to the business of Employer and
Sussex or (B) final cease-
2
and-desist
order issued by or regulatory consent agreement with any regulatory agency
having jurisdiction over Employer or Sussex.
(c) This
Agreement shall terminate upon Executive's death or his disability, as defined
herein. Upon Executive's death or his disability, the obligation of Employer
hereunder to pay Executive the compensation called for under Section 4 hereof
shall terminate, and Employer’s only obligation shall be to pay Executive any
and all benefits to which Executive was entitled at the time of such death
or
disability under any benefit plans of Employer then in place. For purposes
of
this Agreement, the term "disability" shall mean Executive's inability to
substantially perform his material duties as prescribed in this Agreement due
to
his incapacity or disability, physical or mental, for a period of six (6)
consecutive months. The determination of whether a disability exists will be
made by the Board in its good faith discretion.
3. Duties.
(a) Subject
to the ultimate reasonable control and discretion of the Board of Directors
of
Employer, the Executive shall serve in the position and perform all the duties
and services as CEO of the Employer. In such capacity, Executive shall have
full
authority over the day to day business operations of the Employer, shall have
the authority to retain and terminate personnel, set compensation, determine
the
product lines offered by the Employer and insurance companies with whom Employer
conducts business, establish and maintain competitive product lines by adding
carriers, support negotiations in new agency acquisitions, hire new producers
consistent with the annual budget requirements and policies of the Employer
and
Sussex, coordinate the regulatory compliance of the Employer under its industry
specific rules and regulations, oversee the origination and maintenance of
all
records of activity on client accounts including reconciling and reporting
activity for the books of original entry for all financial activities resulting
from Employer's operation, sales of personal line and commercial
line,
3
property
and casualty, life, health and disability insurance policies; review and monitor
claims, policy changes, and audits; collecting and processing direct payment
premiums to the Employer and generally have the authority to manage the
operations of the Employer as its CEO. The CEO shall report to the Sussex Chief
Executive Officer and the Board.
(b) In
addition to the above defined duties, the Executive shall participate in the
development of a cross-selling plan by and among Sussex, Employer and their
affiliates and its implementation and execution in cooperation with Sussex
executives, with direct responsibility for the cross-selling between loan
officers and insurance producers and development of a program to monitor
specific sales goals and objectives.
(c) The
Executive shall devote all of the Executive's professional time and attention
to
the performance of the Executive's duties hereunder and, during the term of
the
Executive's employment hereunder, shall not engage in any other business
enterprise which, in the reasonable, good faith opinion of the Board, interferes
with Executive’s performance of the duties set forth in subparagraph (a) above.
The foregoing shall not prevent the Executive's purchase, ownership or sale
of
investment securities or of any interest in, any business which competes with
the business of Employer, provided that such ownership or investment constitutes
not more than five percent of the outstanding shares of a corporation whose
stock is listed on a National Securities Exchange or on the National Association
of Securities Dealers Automated Quotation System, or
the
Executive's involvement in charitable or community activities, provided that
the
time and attention which the Executive devotes to such activities does not
materially interfere with the performance of the Executive's duties
hereunder.
4
4. Compensation
pursuant to this Agreement
(a) For
all
services to be rendered by the Executive under this Agreement, Employer agrees
to pay the Executive a salary of $140,000 annually, to be paid in bi-weekly
installments (the “Base Salary”), said base salary to be adjusted annually on
January 1st
for
applicable CPI increase;
(b) In
addition to the compensation provided for under subparagraph (a) hereof,
Executive shall be entitled to receive personal commissions on the sale of
insurance products actually placed by Executive as the agent of record of 40%
of
the gross commissions earned by Employer on such sales.
(c) In
addition to the compensation provided for under subsections (a) and (b) hereof,
Executive shall be entitled to a bonus (the “Bonus”) as a participant in the
Sussex Executive Incentive and Deferred Compensation Plan (the “Plan”), as it
may be amended from time to time. Executive's participation in such plan will
commence as of January 1, 2007, and Executive shall execute such plan agreements
as may be necessary to evidence his participation on such plan. Executive’s
initial bonus calculation formula shall be as set forth on Exhibit B hereto,
although Executive acknowledges that pursuant to the Plan, the Plan
Administrators and the Compensation Committee of Sussex Bancorp have authority
to alter the terms of the Plan.
(d) In
addition to the compensation provided for under subsections (a), (b) and (c),
Executive shall be entitled to participate in those employee benefit plans
generally made available to executive officers of Sussex and its
Parent.
5. Additional
Covenants.
(a) Confidential
Information.
Except
as required in the performance of his duties hereunder, the Executive shall
not
use or disclose to any third party any Confidential Information (as hereinafter
defined) or any know-how or experience related thereto without the express
prior
written authorization of Sussex, either during the term of this Agreement or
thereafter. Upon termination of his employment, the Executive shall leave with
Employer all documents and other items in his possession which contain
Confidential Information, and shall be prohibited from disclosing to any third
party any Confidential Information. For purposes of
5
this
Section 5(a), the term "Confidential Information" shall mean all information
about Employer and Sussex or relating to any of their respective services or
any
phase of their respective operations not generally known to any of their
competitors and which is treated by Employer and Sussex as confidential
information, and shall specifically include all customer lists of Employer
and
Sussex.
The
term
“Confidential Information” shall not include any of the foregoing which (i) is
in the public domain, (ii) is in Executive’s lawful possession prior to a
disclosure thereof and not subject to a confidentiality agreement or (iii)
is
hereafter lawfully disclosed to Executive by a third party who or which did
not
acquire the information under an obligation of confidentiality to
Employer.
(b) Non-Compete.
Executive hereby agrees that for the Covenant Term (as defined below), he will
not work for any entity which is engaged in competition with Employer and Sussex
during the Term of this Agreement and as of the date of its termination nor
himself so engage during such Covenant Term, directly or indirectly, as
principal, agent, partner, shareholder, consultant, or employee, in any such
business in competition with Employer and Sussex during the Term of this
Agreement and as of the date of its termination; provided, however, that the
parties agree that those positions listed on Schedule A hereto shall not be
deemed to be in competition with Employer and Sussex and shall not be prohibited
hereunder. For purposes of this provision, the “Covenant Term” shall mean the
Term of this Agreement and a period of six (6) months thereafter. ; further
provided, however, that in the event Executive's employment is terminated
without Cause pursuant to Section 2(b) hereof, the Covenant Term shall be
extended to run contemporaneously with the period during which Executive
receives payments under Section 4(b )
and for
six months thereafter.
(c) Non-Solicitation.
6
(i)
Executive
agrees that for a period of six months following the termination of this
Agreement, he will not recruit for employment or induce to terminate his or
her
employment with Employer and Sussex, any person who is, at the time of such
solicitation, or who was within thirty (30) days of such solicitation, an
employee of Employer or Sussex.
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(ii)
|
Executive
agrees that for a period of six months following the termination
of this
Agreement, he will not directly or indirectly solicit, cause any
other
person to solicit, or assist any other person with soliciting any
customer, depositor or borrower of Employer and Sussex to become
a
customer, depositor or borrower of another financial institution.
|
(d) Modification.
If a
court of competent jurisdiction determines that the scope, time duration or
other limitations of any of the restrictive covenants contained in this Section
5 are not reasonably necessary to protect the legitimate business interests
of
Employer and Sussex, then such scope, time duration or other limitations will
be
deemed to become and thereafter will be the maximum time period or scope which
such court deems reasonable and enforceable.
(e) Definitions.
For
purposes of this Section 5, to act "directly or indirectly" means to act
personally or through an associate, affiliate, family member or otherwise,
as
proprietor, partner, shareholder, director, officer, employee, agent, consultant
or in any other capacity or manner whatsoever.
(f) Specific
Performance.
Employer and the Executive agree that in the event of a breach of the provisions
of this Section 5, the injury which would be suffered by Employer and Sussex
would be of a character which could not be fully compensated for solely by
a
recovery of monetary damages. Accordingly, Executive agrees that in the event
of
a breach of the terms of this Section 5, in addition to and not in lieu of
any
other remedies which Employer may pursue, Employer shall have the right to
equitable relief, including issuance of a temporary
7
or
permanent injunction by any court of competent jurisdiction against the
commission or continuance of any breach of this Section 5.
6. Notices.
Any and
all notices, demands or requests required or permitted to be given under this
Agreement shall be given in writing and sent, (i) by registered or certified
U.S. mail, return receipt requested, (ii) by hand, (iii) by overnight courier
or
(iv) by telecopier addressed to the parties hereto at their addresses set forth
above or such other addresses as they may from time-to-time designate by written
notice, given in accordance with the terms of this Section, together with copies
thereof as follows:
In
the
case of Executive, with a copy to:
Tri-State
Insurance Agency
00
Xxxxxxx 000
Xxxxxxx,
Xxx Xxxxxx 00000
Telecopier
No. (000) 000-0000
Attention:
Xxxxxx Xxxxx
In
the
case of Employer, with a copy to:
Xxxxxxx
Xxxx Xxxx & Xxxxxxxxxx, LLP
000
Xxxxxx Xxxxxx, 0xx
Xxxxx
Xxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Telecopier
No. (000) 000-0000
Attention:
Xxxxxx X. Xxxxxxxx
Notice
given as provided in this Section shall be deemed effective: (i) on the date
hand delivered, (ii) on the first business day following the sending thereof
by
overnight courier, (iii) on the seventh calendar day (or, if it is not a
business day, then the next succeeding business day thereafter) after the
depositing thereof into the exclusive custody of the U.S. Postal Service or
(iv)
on the date telecopied.
7. Assignability.
The
services of the Executive hereunder are personal in nature, and neither this
Agreement nor the rights or obligations of Executive hereunder may be assigned,
8
whether
by operation of law or otherwise. This Agreement shall be binding upon, and
inure to the benefit of, Employer and its Successors and assigns. This Agreement
shall inure to the benefit of the Executive's heirs, executors, administrators
and other legal representatives.
8. Waiver.
The waiver by Employer or the Executive of a breach of any provision of this
Agreement by the other shall not operate or be construed as a waiver of any
subsequent or other breach hereof.
9. Applicable
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New Jersey without giving effect to principles of conflict of
laws.
10. Entire
Agreement.
This
Agreement contains the entire agreement of the parties hereto with respect
to
the subject matter hereof and may not be amended, waived, changed, modified
or
discharged, except by an agreement in writing signed by the parties
hereto.
11. Counterparts.
This
Employment Agreement may be executed in two or more counterparts, each of which
shall be deemed an original but all of which taken together shall constitute
one
and the same instrument.
12. Amendment.
This
Employment Agreement may be modified or amended only by an amendment in writing
signed by both parties.
13. Severability.
If any
provision of this Employment Agreement shall be held invalid or unenforceable,
such invalidity or unenforceability shall attach only to such provision, only
to
the extent it is invalid or unenforceable, and shall not in any manner affect
or
render invalid or unenforceable any other severable provision of this Agreement,
and this Agreement shall be carried out as if any such invalid or unenforceable
provision were not contained herein.
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14. Section
Headings.
The
headings contained in this Agreement are solely for convenience of reference
and
shall be given no effect in the construction or interpretation of this
Employment Agreement.
15. Fees
and Expenses.
If any
party to this Employment Agreement institutes any action or proceeding to
enforce this Employment Agreement, the prevailing party in such action or
proceeding shall be entitled to recover from the non-prevailing party all legal
costs and expenses incurred by the prevailing party in such action, including,
but not limited to, reasonable attorneys’ fees and other reasonable legal costs
and expenses.
IN
WITNESS WHEREOF,
the
parties hereto have executed this Agreement under their respective hands and
seals as of the day and year first above written.
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ATTEST:
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TRI-STATE
INSURANCE AGENCY, INC.
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||
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By:
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|||
|
XXXXXX
X. XXXXXX, CHAIRMAN
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|||
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WITNESS:
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EXECUTIVE:
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||
|
XXXXXX
XXXXX
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|||
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SCHEDULE
A
Present
and continuing outside activities and business interests:
Xxxxxx
Xxxxx & Xxxxxx Xxxxxx combined:
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·
|
TSI
Leasing, Inc. - Small Auto & Equipment Leasing
Company
|
|
·
|
Xxxxxx
Company, Inc. - Bermuda Re-Insurance
Rent-A-Captive
|
Xxxxxx
Xxxxx Only:
|
·
|
President
of Rainbows of Learning Day Care
Center
|
|
·
|
Xxxxx
Glass Shop, Inc. - Flat Glass, 4
Employees
|
|
·
|
BBC
Custom Builders LLC - Custom Home Building
Company
|
11
EXHIBIT
B
The
Bonus
will be based upon Net Profit Before Taxes, total revenue and commissions and
fees per producers. Each year, Sussex shall determine the Incentive Award amount
using the following formula or such other criteria of performance as Sussex
determines:
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i.
|
NBP/T.
Sussex
shall calculate the NPB/T portion of the Incentive Award as
follows:
|
|
a.
|
Calculate
the NPB/T for the current Plan Year
|
|
b.
|
Determine
the average of the NPB/T for the last five (5)
years
|
|
c.
|
Calculate
percent (a divided by b)
|
|
ii.
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Total
Revenue.
Sussex shall calculate the Total Revenue portion of the Incentive
Award as
follows:
|
|
a.
|
Calculate
the Total Revenue for the current Plan
Year
|
|
b.
|
Determine
the average of the Total Revenue for the last five (5)
years
|
|
c.
|
Calculate
percent (a divided by b)
|
|
iii.
|
Commissions
and fees per Non-Executive Producers.
Sussex shall calculate the Commissions and fees per Non-Executive
Producers portion of the Incentive Award as
follows:
|
|
a.
|
Calculate
the Commissions and fees per Non-Executive Producers for the current
Plan
Year
|
|
b.
|
Determine
the average of the Commissions and fees per Non-Executive Producers
for
the last five (5) years
|
|
c.
|
Calculate
percent (a divided by b)
|
|
iv.
|
Determination
of Incentive Award.
Using the percentages calculated in steps (i) through (iii) above,
determine the Incentive Award percentages according to the following
schedule:
|
Percentage
Award Schedule
|
Performance
Relative
to Average 5 Year Highest
|
Weight
|
Lista
|
|
Net
Profit before NPB/T
|
40%
|
12.0%
|
|
Below
90%
Threshold
= 90%
Target
= 100%
Stretch
= 150%
|
0.0%
6.00%
12.00%
18.00%
|
|
|
Total
Income
|
30%
|
4.0%
|
|
Below
90%
Threshold
= 90%
Target
= 100%
Stretch
= 150%
|
0.0%
2.00%
4.00%
6.00%
|
|
|
Commission
and Fees per
Non-Executive
Producers
|
30%
|
4.0%
|
|
Below
90%
Threshold
= 90%
Target
= 100%
Stretch
= 150%
|
0.0%
2.00%
4.00%
6.00%
|
|
|
Below
Threshold
|
0%
|
|
|
Threshold
Opportunity
|
10.00%
|
|
|
Target
Opportunity
|
20.00%
|
|
|
Stretch
Opportunity
|
30.00%
|
12
