EMPLOYMENT AGREEMENT
Exhibit
10.16
This
Employment Agreement (“Agreement”) made as of the 1st
day of
January, 2005, between Greater Community Bank, a New Jersey corporation with
a
business address of 00 Xxxxx Xxxxxxxxx, Xxxxxx, Xxx Xxxxxx, (the “Company”) and
Xxxx Xxxxx (“Executive”).
WHEREAS,
the Company desires to employ the Executive upon the terms and conditions
hereinafter set forth; and
WHEREAS,
the Executive is willing to enter into this Agreement with respect to her
employment and services upon the terms and conditions hereinafter set
forth.
WITNESSETH:
NOW,
THEREFORE, in consideration of the mutual promises set forth herein, the parties
hereto, intending to be legally bound, agree as follows:
1. Employment.
The
Company hereby employs Executive, and Executive hereby accepts such employment
and agrees to perform Executive’s duties and responsibilities hereunder, in
accordance with the terms and conditions hereinafter set forth.
2. Term.
The
term of this Agreement (the “Employment Term”) shall commence on the date of the
execution of this Agreement by both parties and shall continue from that date
for three (3) years. The Employment Term shall be subject to one (1) year
extensions at the mutual agreement of the Executive and the Highland Capital
Corp. Board of Directors. The one (1) year extension must be exercised within
forty-five (45) days of the expiration of each contract year.
3. Position
and Duties.
During
the Employment Term, Executive shall serve as the President and Chief Executive
Officer of Highland Capital Corp. (“HCC”), reporting to the President of Greater
Community Bank (the “President”). Executive shall perform all duties and accept
all responsibility for the general management and operation of HCC. Executive
shall at all times be subject to the direction and control of the President.
Executive shall use her best efforts in the business of HCC, and shall devote
her full time, attention and energy to the business and affairs of HCC and
its
subsidiaries.
4. Compensation,
Benefits and Expense Reimbursement
(a) Salary.
The
Company shall pay Executive an annual salary of $137,800.00 (“Annual Salary”)
payable in the manner consistent with the payroll practices for the executive
officers of the Company. Effective July 1, 2005 the Company shall adjust the
Annual Salary of Executive to $162,800.00. The Annual Salary shall be subject
to
review and increase by the President of Company, in his sole discretion, with
such review to be conducted at least annually at such time as it reviews the
salaries of the HCC’s officers.
(b) Bonus.
The
Company shall pay Executive a Bonus, if earned in accordance with this
paragraph in
addition to Annual Salary. The Bonus shall be based upon the pre-tax profit
as
defined in schedule “A”, attached hereto and made a part hereof, for all current
and subsequent business of HCC. The bonus due Executive will be 6.42% of the
total annual pre-tax profit of HCC which shall be calculated based upon
generally accepted accounting principals and will be determined prior to any
extra ordinary charges and/or disbursements. The Bonus, if any, due Executive
from HCC shall
be
paid on or before March 31 of the calendar year following the year for which
HCC
has a pre-tax profit.
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(c) Fringe
Benefits.
The
Company shall provide to Executive such fringe benefits as are accorded to
other
executive officers of the Company.
(d) Expense
Reimbursement.
The
Company shall reimburse Executive for all ordinary and necessary business
expenses incurred by her in the performance of her duties hereunder, which
shall
be accounted for in accordance with the reimbursement policies of the
Company.
5. Confidentiality
and Non-compete.
(a) Executive
recognizes and acknowledges that by reason of her employment by the Company
and
service to HCC, she has had and will continue to have (both during the
Employment Term and at any time thereafter during which she may service HCC,
access to confidential information of the Company and its affiliates, including,
without limitation, information and knowledge deemed confidential under New
Jersey Law pertaining to products and services offered, inventions, innovations,
designs, ideas, plans, trade secrets, proprietary information, manufacturing,
packaging, advertising, distribution and sales methods and systems, sales and
profit figures, customer and client lists, and relationships between the Company
and its affiliates and dealers, distributors, wholesalers, customers, clients,
suppliers and others who have business dealings with the Company and its
affiliates (“Confidential Information”). Executive acknowledges that such
Confidential Information is a valuable and unique asset and covenants that
she
will not, either during or at any time after the Employment Term, disclose
any
such Confidential Information to any person for any reason whatsoever (except
as
her duties described herein may require) without the prior written authorization
of the Board, unless such information is in the public domain through no fault
of Executive or except as may be required by law.
(b) Non-Competition.
During
the Employment Term and for the twelve (12) month period following the
termination of employment of Executive from the Company or any of its affiliates
has ended (whether or not such employment is pursuant to this Agreement),
Executive will not, unless acting pursuant hereto or with the prior written
consent of the Board, directly or indirectly, own, manage, operate, join,
control, finance or participate in the ownership, management, operation, control
or financing of, or be connected as an officer, director, Executive, partner,
principal, agent, representative, consultant, employee or otherwise with or
use
or permit her name to be used in connection with, any business or enterprise
engaged within any portion of the medical market or such other markets in which
HCC does business in the leasing industry.
(c) Non-Solicit.
During
the Employment Term and for the twelve (12) month period following the
termination of employment of Executive with the Company, Executive will not,
hire or cause to be hired as an employee any person who was employed by the
Company or any of its affiliates on a full or part-time basis at any time during
the course of Executive’s employment for those services HCC has previously
provided.
(d) Equitable
Relief.
Executive acknowledges that the restrictions contained in this paragraph 5
hereof are reasonable and necessary to protect the legitimate interests of
the
Company and its affiliates, that the Company would not have entered into this
Agreement in the absence of such restrictions.
6. Arbitration
Clause.
Any
claim, dispute or other matter in question arising out of or related to this
Agreement shall be subject to binding arbitration by three (3) neutral
arbitrators in accordance with the Banking Industry Arbitration rules of the
American Arbitration Association in effect. The demand for arbitration shall
be
filed in writing with the other party to this Agreement and with the American
Arbitration Association.
A
demand
for arbitration shall be made within a reasonable time after the claim, dispute
or other matter in question has arisen. In no event shall the demand for
arbitration be made after the date when institution of legal or equitable
proceedings based on such claim, dispute or other matter in question would
be
barred by the applicable statute of limitations.
No
arbitration arising out of or relating to this
Agreement shall include, by consolidation or joinder or in any other manner,
an
additional person or entity not a party to this Agreement, except by written
consent containing a specific reference to this Agreement and signed by the
Executive and the Company, and any other person or entity sought to be joined.
Consent to arbitration involving an additional person or entity shall not
constitute consent to arbitration of any claim, dispute or other matter in
question not described in the written consent or with a person or entity not
named or described therein. The foregoing agreement to arbitrate and other
agreements to arbitrate with an additional person or entity duly consented
to by
parties to this Agreement shall be specifically enforceable in accordance with
applicable law in any court having jurisdiction thereof. The award rendered
by
the arbitrator or arbitrators shall be final, and judgment may be entered upon
it in accordance with applicable law in any court having jurisdiction
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7. Termination.
(a) Voluntary.
In
the
event the Executive’s employment with the Company is voluntarily terminated
within the Employment Term, except in the event of change of control, the
Company at its sole discretion may elect to pay the executive in accordance
with
Paragraph 7
(b) and
the
terms and conditions of Paragraph 5 will apply, in the event the Company does
not elect to pay the executive the terms and conditions of Paragraph 5 shall
not
apply and the Executive shall not be entitled to Bonus or any future Salary.
The
executive will be required to provide one hundred eighty (180) days notice
except in the event of change of control. Executive cannot provide notice or
terminate employment if Xxxxx Xxxxxxxxxx or Xxxxxx Rough have provided notice
in
accordance with their employment agreement until such a time that they have
fulfilled their obligation of notice.
(b) Involuntary.
In the
event the Executive’s employment is terminated by the Company for any reason
exclusive of Cause (as hereinafter defined), Executive shall receive either
twice her annual base salary at the time of her termination, or, the sum of
6.42% of the total annual pre-tax profit, as defined in “Schedule A”, of HCC
based upon generally accepted accounting principles and determined prior to
extra ordinary charges and/or disbursements, otherwise due but for Executive’s
termination for the next five (5) calendar years including the year of
termination and upon the Portfolio that existed at the termination, whichever
Executive selects at her exclusive option. In the event Executive is to receive
twice her annual base salary, HCC shall pay same at the time of her termination.
In the event Executive is to receive the sum of 6.42% of the total annual
pre-tax profit of HCC based upon generally accepted accounting principles and
determined prior to any extra ordinary charges and/or disbursements for the
next
five (5) calendar years including the year of Executive’s termination, otherwise
due but for Executive’s termination, HCC shall pay same in yearly installments
on or before March 31 of the calendar year following the years for which HCC
had
a pre-tax profit based upon generally accepted accounting principles and
determined prior to extra ordinary charges and/or disbursements.
(c) Notwithstanding
all preceding paragraph(s) of this agreement, in the event Company transfers
its
controlling interest in HCC to any other person, or, the controlling interest
of
Company is transferred to any other person(s), Executive shall have within
ninety (90) days of such transfer of the applicable controlling interest the
exclusive option to terminate employment and receive compensation and benefits
in accordance with the terms and conditions of this Agreement. Severance shall
be selected at the exclusive option of Executive in the amount of either: (1)
two times Executive’s annual salary at the time Executive exercises her
exclusive option to terminate employment with the Company; or (2) the 6.42%
of
the HCC’s adjusted sale price as defined in “Schedule B”, payable within one
hundred twenty (120) days after the sale. If the person(s) who purchase the
controlling interest requests Executive to continue employment and receive
benefits and compensation in accordance with the terms and conditions of this
Agreement Executive must provide written notice of same to the Company, HCC
and
Purchaser more than 60 days prior to the transfer of the applicable controlling
interest this Agreement shall remain binding on Executive, HCC, the Company
and
their representative affiliates, purchasers, successors and/or assigns.
(d) In
the
event Company and HCC are sold as a combined entity, the determination of the
“sale price” for HCC will be based on the then current market valuation of HCC.
HCC’s valuation will be determined by an agreed upon third party investment
banker who has knowledge of similar sales within HCC’s industry. It is further
agreed that a calculation of how a valuation will be done and mutually agreed
to
by both the Executive and Company within six (6) months of the date of this
contract.
(e) As
used
in this Agreement, “Cause” shall be determined by an objective standard and
mean: (i) Executive’s willful failure to substantially perform her duties for
HCC; (ii) Executive’s conviction of a felony or crime for fraud, embezzlement or
willful dishonesty relative to HCC; (iii) Executive’s willful violation of any
HCC policy of which she has been given prior written notice and which violation
is demonstrably detrimental to the best interests of HCC.
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7.1 Death
and Disability.
If
Executive dies during the employment term, the Executive’s heirs, executors,
administrators, assignees will be entitled to the same payout benefits as the
Executive as if the Executive had been terminated without cause. If Executive
becomes disabled (as defined below), the Employment Term may be terminated
by
the Company and the Company shall pay the Executive the same payout benefits
as
if the Executive had been terminated without cause as outlined in paragraph
7(b)
of this Agreement. For purposes of this Agreement, “Disability” means a physical
or mental infirmity which impairs the Executive’s ability to substantially
perform her duties under this Agreement and which results in the Executive’s
becoming eligible for long-term disability benefits under Company’s long-term
disability plan. The executive shall be entitled to such benefits and any other
benefits provided under the terms of employee benefit plans in effect at such
time to which the Executive may be entitled under the terms of such plans given
the Executive’s disabled status.
8. Notices.
Any
notices to Executive or Company shall be deemed given if delivered personally
or
mailed by certified mail to the address set forth below.
9. Applicable
Law.
The
interpretation, validity and effect of this Agreement shall be governed in
accordance with the laws of the State of New Jersey.
10. Entire
Agreement.
The
terms of this Agreement set forth the entire agreement and understanding between
Executive and Company. This Agreement completely supersedes and nullifies all
prior agreements, discussions, negotiations and agreements between Executive
and
Company. No changes in this Agreement shall be valid unless made in writing
and
signed by Executive and person authorized by Company to sign on their respective
behalf. This Agreement supersedes all prior agreements and sets forth the entire
understanding of the parties with respect to the terms of Executive’s employment
with the HCC, except that Executive shall further be bound by the terms of
all
employee manuals, handbooks and guidelines generally applicable to employees,
officers, or directors of the HCC.
IN
WITNESS WHEREOF, the parties hereof have executed this Employment Agreement
as
of the day and year first above written.
|
Xxxx
X. Xxxxx
|
Greater
Community Bank
|
|
|
By:
/s/
Xxxx X. Xxxxx
|
By:
|
/s/
Xxxxxxx X. Xxxxx, Xx.
|
|
Xxxxxxx
X. Xxxxx, Xx.
|
||
|
Chairman
and CEO
|
||
|
Date:
June 29, 2005
|
Date: June 29, 2005 | |
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Schedule
A
The
following parameters will be used to calculate the pretax profit of Highland
Capital Corp. for the purpose of calculating the Sr. Management Bonus
Pool.
Paid
in Capital:
Will be
adjusted on a monthly basis to reflect a 9 to 1 debit to paid in capital ratio.
The adjusted debit outstanding will be used to calculate the monthly interest
expense to be used in preparing the pretax profit or loss. The adjusted pretax
profit or loss will be used in calculating the Sr. Management bonus pool.
Interest
Expense:
Actual
Interest Expense on the HCC Line of Credit shall be one-half percent over the
floating three month Federal Funds Index. The actual Interest Expense for each
Term Loan secured by HCC with GCB shall be fixed ten days prior to the closing
date for the sixty month term to the Federal Home Loan Bank Amortizing Advance
Indications Index Rate based upon a five year balance term, or such other rate
as secured by GCB for like term financing. Should HCC seek funding outside
Greater Community Bank the actual interest will be based upon costs of funds
charged to HCC by outside parties. The interest expense for each month will
be
adjusted based on the new debit to paid in capital ratio. The recalculated
interest expense will replace the actual interest expense for the purposes
of
calculating HCC monthly pretax profit. The Interest rate utilized will be based
on the weighted average interest rates as related the total HCC
portfolio.
Sr.
Management Pool:
Each
month 15% of the calculated Pretax Profit or Loss at HCC will be accrued to
the
Sr. Management bonus pool. The bonus pool accrual will be recorded below the
Pretax Profit or Loss calculation for each month.
Example:
|
Pre-Tax
Earnings 05/31/05
|
$
|
82,727.00
|
||
|
Less:
Current interest exp.
|
($117,920.63
|
)
|
||
|
Add:
Adj. Int. Exp. for 9 to 1
|
($118,387.55
|
)
|
||
|
Adjusted
Pre-Tax Earnings
|
||||
|
As
of 05/31/05
|
$
|
82,259.61
|
||
|
Sr.
Mgt. Pool Multiplier
|
15
|
%
|
||
|
Total
Accrual contribution 05/31/05
|
$
|
12,338.95
|
||
|
Current
Debt to Equity as of 05/31/05
|
8.66
to 1
|
|||
Schedule
B
The
following will be used to calculate the Adjusted Sale Price of Highland Capital
Corp. The total Sale Price, Less the Adjustment below will be in used to
determine the Adjusted Sale Price for the purpose calculating the Sr. Mgt.
Sale
Pool. The Sale Pool will be distributed in accordance with the Sr. Management
contract.
|
Paid
in Capital:
|
$
|
440,000.00
|
||
|
$
|
5,000,000.00
|
|||
|
Less:
Losses
|
||||
|
12/31/04
to 03/31/98
|
($2,172,289.00
|
)
|
||
|
Add:
Recoveries
|
$
|
137,528.00
|
||
|
Adjustment
to Sale
|
||||
|
Price
|
$
|
3,405,239.00
|
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