EMPLOYMENT AND CHANGE-IN-CONTROL AGREEMENT
BY AND BETWEEN
XXXXXXX X. XXXXXX ("Executive")
UNITED NATIONAL BANCORP, a New Jersey Corporation
and
UNITED NATIONAL BANK
DATED AS OF November 14, 2000
TABLE OF CONTENTS
PAGE
BACKGROUND ....................................................................... 1
ARTICLE I
TERM OF EMPLOYMENT AND DUTIES
1.1 Agreement ...................................................... 2
1.2 Term ........................................................... 2
1.3 Position ....................................................... 3
ARTICLE II
COMPENSATION AND BENEFITS
2.1 Base Compensation .............................................. 3
2.2 Additional Incentive Compensation .............................. 4
2.3 Retirement Plans ............................................... 4
2.4 Medical, Disability and Life Insurance Plans ................... 4
2.5 Stock Award Plans .............................................. 5
2.6 No Adverse Change After Change in Control....................... 5
2.7 Expense Reimbursement .......................................... 5
2.8 W-2 Compensation................................................ 5
ARTICLE III
DISABILITY OR DEATH
3.1 Termination for Disability ..................................... 6
3.2 Termination Due to Death ....................................... 6
ARTICLE IV
OTHER TERMINATION
4.1 Termination for Cause .......................................... 7
4.2 Termination for Poor Performance ............................... 8
4.3 Termination Without Cause Prior to Change in Control ........... 9
4.4 Compensation and Benefits After Change in Control .............. 9
4.5 Resignation Without Good Reason ................................10
4.6 Definition of Change in Control ................................10
4.7 Notice .........................................................11
4.8 Mitigation .....................................................11
4.9 Parachute Payment Tax Gross-Up..................................12
ARTICLE V
MISCELLANEOUS
5.1 Severance Compensation and Benefits Not in
Derogation of Other Benefits .................................14
5.2 Indemnification by Company For Executive's
Expenses .....................................................14
5.3 Non-Disclosure of Confidential Information
and Non-Compete ..............................................15
5.4 Payroll and Withholding Taxes ..................................16
5.5 Changes ........................................................16
5.6 Notices ........................................................16
5.7 Rights Absolute ................................................17
5.8 Successors .....................................................17
5.9 Non-Assignability ..............................................17
5.10 Governing Law ..................................................18
ii
EMPLOYMENT AND CHANGE-IN-CONTROL AGREEMENT
THIS AGREEMENT is made as of the 14th day of November, 2000 by and
between United National Bancorp, a New Jersey corporation ("UNB"), United
National Bank (the "Bank") (jointly hereinafter referred to as the "Company")
and Xxxxxxx X. Xxxxxx (hereinafter referred to as the "Executive").
BACKGROUND
WHEREAS, the Executive is employed by the Company; and
WHEREAS, the Executive, throughout his tenure, has worked diligently in
his position for the business of the Bank and UNB; and
WHEREAS, the Boards of Directors of the Bank and UNB (collectively, the
"Boards") are of the opinion that the future services of the Executive are of
substantial value to the Bank and UNB and that it is important for the growth
and development of the Bank and UNB that the Executive continue in his position;
and
WHEREAS, if the Company should receive any proposal from a third party
concerning a possible business combination with, or acquisition of the equity
securities of, the Company, the Boards believe it is imperative that the Company
and the Boards be able to rely upon the Executive to continue in his position,
and that the Boards be able to receive and rely upon the advice of the
Executive, if requested, as to the best interests of the Company and its
shareholders, without concern that the Executive may be distracted by personal
uncertainties or risks created by such a proposal; and
WHEREAS, to achieve such a goal, and to retain the services of the
Executive prior to any such activity, the Boards and the Executive have agreed
to enter into this Employment Agreement.
NOW, THEREFORE, to assure the Company that it will retain the continued
dedication of the Executive as well as the availability of the advice and
counsel of the Executive notwithstanding the possibility or occurrence of a
Change in Control (as hereafter defined) of the Company, and to induce the
Executive to remain in the employ of the Company, and for other good and
valuable consideration, the Company and the Executive, each intending to be
legally bound hereby, agree as follows:
ARTICLE I.
TERM OF EMPLOYMENT AND DUTIES
1.1 Agreement. The Company hereby employs the Executive and the
Executive hereby agrees to render such services to the Company on the terms and
conditions set forth in this Agreement.
1.2 Term. The term of employment under this Agreement (hereinafter the
"term") shall commence on November 14, 2000 and shall terminate June 30, 2003,
except that if this Agreement is not renewed, its term and Employee's term of
employment shall be automatically renewed for successive five (5) year terms
with the first such term commencing on July 1, 2003, unless the Company gives
Employee notice of termination of this Agreement ninety (90) days prior to June
30, 2003, or any succeeding termination date pursuant to this provision; and
except further that if there shall occur a Change in Control of the Company
during such period, the term shall end on the third anniversary of the Change in
Control (regardless of whether such third anniversary
2
occurs before or after June 30, 2003). Notwithstanding the foregoing, the term
shall expire on the date the Executive turns age 65 if it has not yet expired by
such date. The Agreement may be sooner terminated in accordance with the terms
and conditions hereinafter set forth.
1.3 Position. During the term of this Agreement, the Executive shall be
employed as the President & Chief Operating Officer United Commercial Capital
Group, and Executive Vice President, Real Estate Lending of the Bank or in
comparable positions, or the same positions with such other corporate or
divisional centers as shall succeed to the business, assets and properties of
UNB or the Bank, as the case may be. The Executive shall devote his full time
and attention to the business of the Company, and shall not during the term be
engaged in any other business activity. This paragraph shall not be construed as
preventing the Executive from managing any investments of his or his family's
which do not require significant service in the operation of such investments,
nor as preventing his service on any other Board of Directors for which he
served as of the date hereof or serves hereafter with the consent of the Board
of Directors of UNB.
ARTICLE II.
COMPENSATION AND BENEFITS
2.1 Base Compensation. The Company will compensate and pay the
Executive for his services during the term of this Agreement at a minimum base
salary per year of $152,000 with annual increases in amounts to be determined by
the Board of Directors of UNB each year ("Base Salary"). In no event shall the
Base Salary of the Executive under this Agreement in effect at any particular
time be reduced without the prior written consent of Executive, except that
prior to a Change in Control of the Company (but not thereafter), the Base
Salary may be reduced without
3
the Executive's consent no more than once per year, with each such reduction
limited to ten percent (10%) of the prior year's Base Salary.
2.2 Additional Incentive Compensation. During the term of this
Agreement, the Executive shall also be entitled to participate in other
executive incentive compensation arrangements, similar to the incentive
compensation arrangements now in effect for executives of the Company pursuant
to which executives are paid an annual bonus; provided, however, that prior to a
Change in Control of the Company the participation of the Executive in such
arrangements shall mean that the Executive is eligible for an incentive award
but shall not obligate the Company to make any incentive award or pay any
incentive compensation to Executive; provided further, however, that after a
Change in Control of the Company, the Executive must be paid an annual bonus
that is at least as large as the highest bonus paid to the Executive in any year
during the three years immediately prior to a Change in Control.
2.3 Retirement Plans. During the term of this Agreement, the Executive
shall be entitled to participate in any plans of the Company relating to
pension, profit sharing, benefit equalization, or other programs now in effect
or that the Company may hereafter adopt for the benefit of its employees or
executives.
2.4 Medical, Disability and Life Insurance Plans. During the term of
this Agreement, the Executive shall be entitled to participate in any medical
coverage, hospitalization, medical reimbursement, disability, and life insurance
plans now in effect or that the Company may hereafter adopt.
2.5 Stock Award Plans. During the term of this Agreement, the Executive
shall be entitled to participate in and receive the benefits of any stock
option, restricted stock or similar
4
stock based compensation plans covering executives of the Company which
presently exist or may come into existence hereafter (a "Stock Plan"); provided,
however, that the participation of the Executive in such Stock Plans shall mean
that the Executive is eligible to receive benefits and awards but shall not
obligate the Company to grant the Executive any particular benefits or awards.
2.6 No Adverse Change After Change in Control. Before a
Change-in-Control of the Company, the Company may change or terminate any
benefit plan or bonus plan provided to the Executive. Following a Change in
Control of the Company, the Company may not change or terminate any plans set
forth above under Sections 2.2, 2.3, 2.4 and 2.5, which would adversely affect
the Executive's rights or benefits thereunder unless such change is consented to
by the Executive or occurs as a consequence of a change in law or regulation.
2.7 Expense Reimbursement. During the term of this Agreement, the
Company shall reimburse the Executive or otherwise provide for or pay for all
reasonable expenses incurred by the Executive in furtherance or in connection
with the business of the Company including but not limited to automobile and
travel expenses, and all reasonable entertainment expenses, subject to such
reasonable limitations as may be established by the Boards from time to time. If
such expenses are paid by the Executive, the Company will reimburse the
Executive therefor.
2.8 W-2 Compensation. "W-2 Compensation" as used in this Agreement
means the Employee's "Gross Pay" (or any analogous term having the same or a
similar meaning as "Gross Pay" hereafter used) as reported or reportable on his
W-2 statement for the period or periods in question. When referring to a current
tax year, "W-2 Compensation" refers to the annualized total computed to the end
of such current year of all items includable in "Gross Pay" at their current
level or levels unless the context clearly indicates otherwise.
5
ARTICLE III.
DISABILITY OR DEATH
3.1 Termination for Disability. If the Executive shall become disabled
or incapacitated to the extent that he is unable to perform his duties for a
period of four (4) months in any twelve (12) month period, the Company may
terminate the employment of the Executive by written notice of termination
provided to the Executive. In the event of a termination for disability or
incapacity hereunder, the Executive shall have no right to compensation or other
benefits for any period after the date of termination, except as follows: (i)
before a Change in Control of the Company, if and to the extent that the
Executive is not receiving from public or private insurance policies paid for by
the Company disability benefits equal to or greater than his current W-2
Compensation for such six month period prior to the termination, then for a
period of six months following the termination, the Company shall continue to
pay to the Executive, as severance pay, an amount which together with the
disability insurance payments equals 100% of his current W-2 Compensation for
such six month period; and (ii) after a Change in Control of the Company, such
termination shall trigger compensation and benefits in accordance with section
4.4 of this Agreement.
3.2 Termination Due to Death. Employment of the Executive shall
automatically terminate by reason of the death of the Executive and no notice of
termination shall be required. In the event of a termination due to the death of
the Executive, either before or after a Change in Control of the Company, the
estate of the Executive and his heirs and beneficiaries shall have no right to
compensation or other benefits for any period after the date of death except as
follows: if and to the extent that the Executive's estate, designated
beneficiaries and heirs do not
6
receive, from life insurance policies paid for by the Company, proceeds equal to
or greater than 200% of his current W-2 Compensation as of the date of death,
then the Company shall continue to pay to the Executive's estate, as severance
pay, the Executive's W-2 Compensation for up to six months or, if earlier, until
such payments, together with the proceeds of the life insurance policies, equal
to 200% of the Executive's current W-2 Compensation.
ARTICLE IV.
OTHER TERMINATION
4.1 Termination For Cause.
(a) The Company shall have the right, at any time upon prior written
Notice of Termination (as herein defined), to terminate the employment of the
Executive for Cause. For the purpose of this Agreement, "Cause" shall mean
willful misconduct, breach of fiduciary duty involving personal benefit to the
Executive, conviction of a felony, willful breach or willful neglect by the
Executive of his duties as an Executive of the Company, or persistent negligence
or misconduct in the performance of such duties. For purposes of this paragraph,
no act or failure to act on the part of the Executive shall be considered
"willful" unless done or omitted not in good faith and without reasonable belief
that the action or omission was in the best interest of the Company. Any acts
undertaken by the Executive on the instruction of the Board of Directors of UNB
or the Bank shall not constitute Cause. If the termination for Cause occurs
after a Change in Control, the Executive shall not be deemed to have been
terminated for Cause hereunder unless and until: (i) there shall have been
delivered to the Executive a copy of a certification by a majority of the
non-officer members of the Board of Directors of the Bank finding that, in the
good faith opinion of such majority, the Executive was guilty of conduct which
was deemed to be Cause for
7
termination and specifying the particulars thereof in detail, and (ii) after
reasonable notice to the Executive there shall have been an opportunity for the
Executive, together with counsel to the Executive, to be heard before such
non-officer members of the Board of Directors.
(b) In the event employment is validly terminated for Cause pursuant to
Section 4.1(a) hereof, the Executive shall have no right to further compensation
or benefits hereunder for any period after the date of such termination.
4.2 Termination For Poor Performance.
(a) The Company shall have the right, at any time prior to a Change in
Control of the Company (but not thereafter), to terminate the employment of the
Executive for Poor Performance by written Notice of Termination (as defined in
Section 4.7 hereof). For the purpose of this Agreement, "Poor Performance" shall
mean a finding by a majority of the non-officer members of each of the Boards of
Directors of UNB and the Bank that, in the good faith opinion of each such
majority: (i) the Executive's performance of his duties was sufficiently
unsatisfactory to merit termination, and (ii) prior notice of such
unsatisfactory performance was given to the Executive without cure having
occurred. In making such a finding, the Board of Directors shall utilize the
input of the Chief Executive Officer ("CEO") unless the CEO is being terminated.
(b) In the event employment is validly terminated for Poor Performance
pursuant to Section 4.2(a) hereof, the Company shall continue to pay to the
Executive, as severance pay, his Base Salary for a period of one year following
such termination and shall continue to pay for and to provide medical insurance
for the Executive and his family for such period, but the Executive shall have
no right to any other form of compensation or benefits hereunder for any period
after the date of such termination.
8
4.3 Termination Without Cause Prior to Change in Control.
(a) Right to Terminate. The Company shall have the right to terminate
the employment of the Executive without Cause if the Company does so by prior
written Notice of Termination which specifies that the Company agrees to pay the
severance compensation and benefits herein set forth.
(b) Severance Compensation and Benefits Prior to Change in Control. If
prior to a Change in Control of the Company, the Company terminates the
employment of the Executive other than for Cause, Poor Performance, disability
or death of the Executive, the Company shall continue to pay to the Executive,
as severance pay, his current W-2 Compensation in each of the two years
following such termination and shall continue to pay for and to provide medical
insurance for the Executive and his family for such period. The Executive shall
be entitled to no other compensation or benefits hereunder after the effective
date of such termination.
4.4 Compensation and Benefits After Change in Control. After a Change
in Control of the Company, the Company shall pay to the Executive within ten
(10) business days following the date of Change in Control a lump sum equal to
the product of (x) 2.00, times (y) the average of W-2 Compensation, paid to the
Executive by the Company in each of the five years (or such fewer years as the
Executive shall have been employed by the Company) up to and including the year
of Change-in-Control. The Executive shall be entitled to no other compensation
or benefits hereunder after the effective date of such Change in Control (except
as provided by Section 5.2). Upon payment of such benefits as provided in this
Section 4.4 and Section 5.2, this Agreement shall terminate and be of no further
force or effect.
9
4.5 Resignation Without Good Reason Prior to Change in Control.
(a) Right to Resign. The Executive may resign without Good Reason at
any time upon four weeks prior notice prior to a Change in Control.
(b) No Compensation or Benefits. If the Executive resigns without Good
Reason at any time prior to a Change in Control, the Executive shall be entitled
to no further compensation or benefits hereunder after the effective date of
such resignation.
4.6 Definition of Change in Control. For purposes of this Agreement, a
"Change in Control" of the Company shall mean the first to occur of any of the
following events:
(a) Any person or entity or group of affiliated persons or entities
(other than UNB) becomes a beneficial owner, directly or indirectly, of 25% or
more of UNB's and/or the Bank's voting securities or all or substantially all of
the assets of UNB and/or the Bank.
(b) UNB and/or the Bank consummates a definitive agreement pursuant to
which either UNB or the Bank is merged, consolidated or combined with or into an
unaffiliated entity in which either or both of the following occurs: (i) the
directors of UNB and/or Bank, as applicable, immediately prior to such merger,
consolidation or combination will constitute less than a majority of the board
of directors of the surviving, new or combined entity; or (ii) less than 75% of
the outstanding voting securities of the surviving, new or combined entity will
be beneficially owned by the stockholders of UNB immediately prior to such
merger, consolidation or combination.
(c) UNB and/or the Bank consummates a definitive agreement pursuant to
which all or substantially all of UNB's and/or the Bank's assets are transferred
other than to a wholly-owned subsidiary of UNB.
10
(d) A majority of the members of the Board of Directors of either UNB
or the Bank shall be persons who: (i) were not members of such Board on the date
hereof ("current members"); and (ii) were not nominated by a vote of the Board
which included the affirmative vote of a majority of the current members on the
Board at the time of their nomination ("future designees") and (iii) were not
nominated by a vote of the Board which included the affirmative vote of a
majority of the current members and future designees, taken as a group, on the
Board at the time of their nomination.
4.7 Notice. Any notice of termination of the employment of the
Executive by the Company or by the Executive to the Company shall be
communicated by written Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a dated notice
which shall (i) indicate the specific termination provision in this Agreement
relied upon; (ii) except for a termination without Cause, set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the employment of the Executive under the provision so indicated;
(iii) specify a date of termination, which shall be not less than thirty (30)
nor more than ninety (90) days after such Notice of Termination is given, except
in the case of termination of employment by the Company of the Executive for
Cause pursuant to Section 4.1 hereof, in which case the Notice of Termination
may specify a date of termination as of the date such Notice of Termination is
given; and (iv) be given in the manner specified in Section 5.6 hereof.
4.8 Mitigation. Executive shall not be required to mitigate the amount
of any payment provided for in Article IV by seeking other employment or
otherwise. There shall be no
11
offset from payments or benefits due the Executive hereunder if Executive shall
obtain any other employment or otherwise.
4.9 Parachute Payment Tax Gross-Up.
(a) Additional Payments. If, for any taxable year, Executive shall be
liable for the payment of an excise tax under Section 4999 or other substitute
or similar tax assessment (the "Excise Tax") of the Internal Revenue Code of
1986, as amended (the "Code"), including the corresponding provisions of any
succeeding law, with respect to any payments under this Section 4.9 or any
payments and/or benefits under this Agreement or under any benefit plan of the
Company applicable to Executive individually or generally to executives or
employees of the Company, then, notwithstanding any other provisions of this
Agreement, the Company shall pay to the Executive an additional amount (the
"Gross-Up Payment") such that the net amount retained by the Executive, after
deduction of any Excise Tax on such payments and benefits and any federal, state
and local income tax and Excise Tax upon payments provided for in this Section
4.9, shall be equal to the payments due to the Executive hereunder and the
payments and/or benefits due to the Executive under any benefit plan of the
Company. Each Gross-Up Payment shall be made by domestic cashier's or
treasurer's check, certified check or wire transfer, upon the later of (i) five
(5) days after the date the Executive notifies the Company of its need to make
such Gross-Up Payment, or (ii) the date of any payment causing the liability for
such Excise Tax. The amount of any Gross-Up Payment under this section shall be
computed by a nationally recognized certified public accounting firm designated
jointly by the Company and the Executive. The cost of such services by the
accounting firm shall be paid by the Company. If the Company and the Executive
are unable to
12
designate jointly the accounting firm, then the firm shall be the accounting
firm used by the Company immediately prior to the Change in Control.
(b) IRS Disputed Claims. The Executive shall notify the Company in
writing of any claim by the Internal Revenue Service ("IRS") that, if
successful, would require the payment by the Company of a Gross-Up Payment in
addition to that payment previously paid by the Company pursuant to this
section. Such notification shall be given as soon as practicable but no later
than fifteen (15) business days after the Executive is informed in writing of
such claim and shall apprise the Company of the nature of such claim, the date
on which such claim is requested to be paid, and attach a copy of the IRS
notice. The Executive shall not pay such claim prior to the expiration of the
thirty (30) day period following the date on which the Executive gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such period that it desires to
contest such claim, the Executive shall:
(i) Give the Company any information reasonably requested by
the Company relating to such claim;
(ii) Take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company;
(iii) Cooperate with the Company in good faith in order
effectively to contest such claim; and
13
(iv) Permit the Company to participate in any proceedings
relating to such claim;
provided, however that the Company shall pay directly all costs and expenses
(including legal and accounting fees, as well as other expenses and any
additional interest and penalties) incurred by the Executive and the Company in
connection with an IRS levy, contest or claim and provided further that the
Company shall not take any action or fail to make any Gross-Up Payment so as to
cause the assessment of any IRS levy and the Company shall cause any levy so
assessed to be immediately released by payment of the Gross-Up Amount, together
with all costs, interest and penalties.
ARTICLE V.
MISCELLANEOUS
5.1 Severance Compensation and Benefits Not in Derogation of Other
Benefits. Anything to the contrary herein contained notwithstanding, the payment
or obligation to pay any monies, or granting of any benefits, rights or
privileges to Executive as provided in this Agreement shall not be in lieu or
derogation of the rights and privileges that the Executive now has or will have
under any plans or programs of the Company specified in Sections 2.3 through 2.5
inclusive, except that the Executive shall not be entitled to the benefits of
any other plan or program of the Company expressly providing for severance or
termination pay.
5.2 Indemnification By Company For Executive's Expenses. If the
termination of Executive's employment occurs after a Change in Control of the
Company, the Company shall pay all expenses incurred by the Executive in
connection with any claim by the Executive against the Company hereunder,
including but not limited to attorneys' and accountants' fees in addition to
other expenses incurred by the Executive. Such expenses shall be payable monthly
upon demand
14
by the Executive. A court of competent jurisdiction shall be empowered to deny
payment to the Executive of such expenses, including attorneys' and accountants'
fees, only if it determines that the Executive instituted a lawsuit or
proceeding hereunder in bad faith or without reasonable cause. The Executive
shall not be entitled to reimbursement for his legal fees if his termination of
employment occurs prior to a Change in Control of the Company.
5.3 Non-Disclosure of Confidential Information and Non-Compete.
(a) Non-Disclosure of Confidential Information. Except in the course of
the employment of the Executive by the Company, and in the pursuit of the
business of the Company or any of its subsidiaries or affiliates, the Executive
shall not, at any time during or following the term of this Agreement, disclose
or use, any confidential information or proprietary data of the Company or any
of its subsidiaries or affiliates. The Executive agrees that all information
concerning the identity of the customers of the Company and the relations of the
Company to its customers is confidential information, unless such information is
otherwise publicly known.
(b) Non-Competition. The Executive agrees that during the Executive's
employment by the Company pursuant to this Agreement and during the
Post-Employment Non-Compete Period (as hereinafter defined), the Executive will
not, without the prior written consent of the Bank, engage in, become
interested, directly or indirectly, as a sole proprietor, as a partner in a
partnership, or as a substantial shareholder in a corporation, nor become
associated with, in the capacity of an employee, director, officer, principal
agent, trustee or in any other capacity whatsoever, any enterprise conducted in
the trading area of business of the Bank (specifically, in New Jersey, New York
or Pennsylvania) which enterprise is, or may be deemed to be, competitive with
any business carried on by the Bank as of the date of the termination of the
Executive's
15
employment or his retirement. The Post-Employment Non-Compete Period shall mean
a two-year period of time following termination of the Executive's employment
with the Company, except if the termination of employment occurs after a Change
in Control of the Company the Non-Compete Period shall be reduced to zero, and
in the case of termination for Poor Performance prior to a Change in Control of
the Company, it shall be reduced to one year.
(c) Specific Performance. The Executive agrees that the Company does
not have an adequate remedy at law for the breach of this Section 5.3 and agrees
that the Executive shall be subject to injunctive relief and equitable remedies
as a result of a breach of any provision of this Section 5.3. The invalidity or
unenforceability of any provision of this Section 5.3 (or this Agreement) shall
not affect the force and effect of the remaining valid portions. Except as
expressly provided in this Agreement, no breach by the Executive of the
provisions of this Section 5.3 shall entitle the Company to withhold any
benefits payable to the Executive hereunder.
5.4 Payroll and Withholding Taxes. All payments to be made or benefits
to be provided hereunder by the Company shall be subject to reduction by the
applicable federal payroll or withholding taxes.
5.5 Changes. This Agreement may not be modified, changed, amended, or
altered except in a writing signed by the Executive and by an officer of the
Company duly authorized by the Boards of Directors or the executive committee of
both the Bank and UNB.
5.6 Notices. All notices given or required to be given herein shall be
in writing or sent by United States first-class certified or registered mail,
postage prepaid, to the Executive at the last-known address for the Executive
(or to the personal representative of the Executive upon his death), and to the
Company at the principal executive office for UNB (or any successor thereto), to
16
the attention of the Chairman of the Board. All such notices shall be effective
when deposited in the mail in the manner specified in this Section 5.6. Either
party by a notice in writing to the other party may change or designate the
place for receipt of such notices.
5.7 Rights Absolute. No course of conduct between the Company and the
Executive and no delay or omission by the Company or the Executive to exercise
any right or power given under this Agreement shall: (i) impair the subsequent
exercise of any right or power or (ii) be construed to be a waiver of any
default or to be an acquiescence in or consent to the curing of any default
while any other default shall continue to exist, or be construed to be a waiver
of such continuing default or of any other right or power that shall theretofore
have arisen; and every power and remedy granted by law and by this Agreement to
any party hereto may be exercised from time to time and as often as may be
deemed expedient. All such rights and powers shall be cumulative to the fullest
extent permitted by law.
5.8 Successors. This Agreement shall inure to the benefit of and be
binding upon (i) the Executive and, to the extent applicable, his heirs,
assigns, executors, and personal representatives and (ii) the Company, its
successors and assigns, including, without limitation, any person, partnership,
or corporation which may acquire all or substantially all of the assets and
business of the Company, or with or into which the Company may be consolidated
or merged, and this provision shall apply in the event of any subsequent merger,
consolidation, or transfer.
5.9 Non-Assignability. This Agreement is personal to each of the
parties and none of the parties may assign or delegate any of its rights or
obligations under this Agreement without the prior written consent of the other
party.
17
5.10 Governing Law. This Agreement shall be governed in all respects
and be interpreted by and under the laws of the State of New Jersey.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
ATTEST UNITED NATIONAL BANCORP
By: By:
--------------------------------- --------------------------------
Xxxxx X. Xxxxx, Xx., Secretary Xxxxxx X. Xxxxx, Chairman
Compensation Committee of
the Board of Directors
ATTEST: UNITED NATIONAL BANK
By: By:
--------------------------------- --------------------------------
Xxxxx X. Xxxxx, Xx., Cashier Xxxxxx X. Xxxxx, Chairman
Compensation Committee of
the Board of Directors
--------------------------- --------------------------------
Witness XXXXXXX X. XXXXXX
18
EMPLOYMENT AND CHANGE-IN-CONTROL AGREEMENT
BY AND BETWEEN
XXXX X. XXXXXX ("Executive")
UNITED NATIONAL BANCORP, a New Jersey Corporation
and
UNITED NATIONAL BANK
DATED AS OF November 14, 2000
TABLE OF CONTENTS
PAGE
BACKGROUND ...................................................................................................... 1
ARTICLE I
TERM OF EMPLOYMENT AND DUTIES
1.1 Agreement ..................................................................................... 2
1.2 Term .......................................................................................... 2
1.3 Position ...................................................................................... 3
ARTICLE II
COMPENSATION AND BENEFITS
2.1 Base Compensation ............................................................................. 3
2.2 Additional Incentive Compensation ............................................................. 4
2.3 Retirement Plans .............................................................................. 4
2.4 Medical, Disability and Life Insurance Plans .................................................. 4
2.5 Stock Award Plans ............................................................................. 5
2.6 No Adverse Change After Change in Control...................................................... 5
2.7 Expense Reimbursement ......................................................................... 5
2.8 W-2 Compensation............................................................................... 5
ARTICLE III
DISABILITY OR DEATH
3.1 Termination for Disability .................................................................... 6
3.2 Termination Due to Death ...................................................................... 6
ARTICLE IV
OTHER TERMINATION
4.1 Termination for Cause ......................................................................... 7
4.2 Termination for Poor Performance .............................................................. 8
4.3 Termination Without Cause Prior to Change in Control .......................................... 9
4.4 Compensation and Benefits After Change in Control ............................................. 9
4.5 Resignation Without Good Reason ...............................................................10
4.6 Definition of Change in Control ...............................................................10
4.7 Notice ........................................................................................11
4.8 Mitigation ....................................................................................11
4.9 Parachute Payment Tax Gross-Up.................................................................12
ARTICLE V
MISCELLANEOUS
5.1 Severance Compensation and Benefits Not in
Derogation of Other Benefits ................................................................14
5.2 Indemnification by Company For Executive's
Expenses ....................................................................................14
5.3 Non-Disclosure of Confidential Information
and Non-Compete .............................................................................15
5.4 Payroll and Withholding Taxes .................................................................16
5.5 Changes .......................................................................................16
5.6 Notices .......................................................................................16
5.7 Rights Absolute ...............................................................................17
5.8 Successors ....................................................................................17
5.9 Non-Assignability .............................................................................17
5.10 Governing Law .................................................................................18
ii
EMPLOYMENT AND CHANGE-IN-CONTROL AGREEMENT
THIS AGREEMENT is made as of the 14th day of November, 2000 by
and between United National Bancorp, a New Jersey corporation ("UNB"), United
National Bank (the "Bank") (jointly hereinafter referred to as the "Company")
and Xxxx X. Xxxxxx (hereinafter referred to as the "Executive").
BACKGROUND
WHEREAS, the Executive is employed by the Company; and
WHEREAS, the Executive, throughout his tenure, has worked
diligently in his position for the business of the Bank and UNB; and
WHEREAS, the Boards of Directors of the Bank and UNB
(collectively, the "Boards") are of the opinion that the future services of the
Executive are of substantial value to the Bank and UNB and that it is important
for the growth and development of the Bank and UNB that the Executive continue
in his position; and
WHEREAS, if the Company should receive any proposal from a
third party concerning a possible business combination with, or acquisition of
the equity securities of, the Company, the Boards believe it is imperative that
the Company and the Boards be able to rely upon the Executive to continue in his
position, and that the Boards be able to receive and rely upon the advice of the
Executive, if requested, as to the best interests of the Company and its
shareholders, without concern that the Executive may be distracted by personal
uncertainties or risks created by such a proposal; and
WHEREAS, to achieve such a goal, and to retain the services of
the Executive prior to any such activity, the Boards and the Executive have
agreed to enter into this Employment Agreement.
NOW, THEREFORE, to assure the Company that it will retain the
continued dedication of the Executive as well as the availability of the advice
and counsel of the Executive notwithstanding the possibility or occurrence of a
Change in Control (as hereafter defined) of the Company, and to induce the
Executive to remain in the employ of the Company, and for other good and
valuable consideration, the Company and the Executive, each intending to be
legally bound hereby, agree as follows:
ARTICLE I.
TERM OF EMPLOYMENT AND DUTIES
1.1 Agreement. The Company hereby employs the Executive and
the Executive hereby agrees to render such services to the Company on the terms
and conditions set forth in this Agreement.
1.2 Term. The term of employment under this Agreement
(hereinafter the "term") shall commence on November 14, 2000 and shall terminate
June 30, 2003, except that if this Agreement is not renewed, its term and
Employee's term of employment shall be automatically renewed for successive five
(5) year terms with the first such term commencing on July 1, 2003, unless the
Company gives Employee notice of termination of this Agreement ninety (90) days
prior to June 30, 2003, or any succeeding termination date pursuant to this
provision; and except further that if there shall occur a Change in Control of
the Company during such period, the term shall end on the third anniversary of
the Change in Control (regardless of whether such third anniversary
2
occurs before or after June 30, 2003). Notwithstanding the foregoing, the term
shall expire on the date the Executive turns age 65 if it has not yet expired by
such date. The Agreement may be sooner terminated in accordance with the terms
and conditions hereinafter set forth.
1.3 Position. During the term of this Agreement, the Executive
shall be employed as the Senior Vice President and Senior Trust Officer of the
Bank or in comparable positions, or the same positions with such other corporate
or divisional centers as shall succeed to the business, assets and properties of
UNB or the Bank, as the case may be. The Executive shall devote his full time
and attention to the business of the Company, and shall not during the term be
engaged in any other business activity. This paragraph shall not be construed as
preventing the Executive from managing any investments of his or his family's
which do not require significant service in the operation of such investments,
nor as preventing his service on any other Board of Directors for which he
served as of the date hereof or serves hereafter with the consent of the Board
of Directors of UNB.
ARTICLE II.
COMPENSATION AND BENEFITS
2.1 Base Compensation. The Company will compensate and pay the
Executive for his services during the term of this Agreement at a minimum base
salary per year of $120,000 with annual increases in amounts to be determined by
the Board of Directors of UNB each year ("Base Salary"). In no event shall the
Base Salary of the Executive under this Agreement in effect at any particular
time be reduced without the prior written consent of Executive, except that
prior to a Change in Control of the Company (but not thereafter), the Base
Salary may be reduced without
3
the Executive's consent no more than once per year, with each such reduction
limited to ten percent (10%) of the prior year's Base Salary.
2.2 Additional Incentive Compensation. During the term of this
Agreement, the Executive shall also be entitled to participate in other
executive incentive compensation arrangements, similar to the incentive
compensation arrangements now in effect for executives of the Company pursuant
to which executives are paid an annual bonus; provided, however, that prior to a
Change in Control of the Company the participation of the Executive in such
arrangements shall mean that the Executive is eligible for an incentive award
but shall not obligate the Company to make any incentive award or pay any
incentive compensation to Executive; provided further, however, that after a
Change in Control of the Company, the Executive must be paid an annual bonus
that is at least as large as the highest bonus paid to the Executive in any year
during the three years immediately prior to a Change in Control.
2.3 Retirement Plans. During the term of this Agreement, the
Executive shall be entitled to participate in any plans of the Company relating
to pension, profit sharing, benefit equalization, or other programs now in
effect or that the Company may hereafter adopt for the benefit of its employees
or executives.
2.4 Medical, Disability and Life Insurance Plans. During the
term of this Agreement, the Executive shall be entitled to participate in any
medical coverage, hospitalization, medical reimbursement, disability, and life
insurance plans now in effect or that the Company may hereafter adopt.
2.5 Stock Award Plans. During the term of this Agreement, the
Executive shall be entitled to participate in and receive the benefits of any
stock option, restricted stock or similar
4
stock based compensation plans covering executives of the Company which
presently exist or may come into existence hereafter (a "Stock Plan"); provided,
however, that the participation of the Executive in such Stock Plans shall mean
that the Executive is eligible to receive benefits and awards but shall not
obligate the Company to grant the Executive any particular benefits or awards.
2.6 No Adverse Change After Change in Control. Before a
Change-in-Control of the Company, the Company may change or terminate any
benefit plan or bonus plan provided to the Executive. Following a Change in
Control of the Company, the Company may not change or terminate any plans set
forth above under Sections 2.2, 2.3, 2.4 and 2.5, which would adversely affect
the Executive's rights or benefits thereunder unless such change is consented to
by the Executive or occurs as a consequence of a change in law or regulation.
2.7 Expense Reimbursement. During the term of this Agreement,
the Company shall reimburse the Executive or otherwise provide for or pay for
all reasonable expenses incurred by the Executive in furtherance or in
connection with the business of the Company including but not limited to
automobile and travel expenses, and all reasonable entertainment expenses,
subject to such reasonable limitations as may be established by the Boards from
time to time. If such expenses are paid by the Executive, the Company will
reimburse the Executive therefor.
2.8 W-2 Compensation. "W-2 Compensation" as used in this
Agreement means the Employee's "Gross Pay" (or any analogous term having the
same or a similar meaning as "Gross Pay" hereafter used) as reported or
reportable on his W-2 statement for the period or periods in question. When
referring to a current tax year, "W-2 Compensation" refers to the annualized
total computed to the end of such current year of all items includable in "Gross
Pay" at their current level or levels unless the context clearly indicates
otherwise.
5
ARTICLE III.
DISABILITY OR DEATH
3.1 Termination for Disability. If the Executive shall become
disabled or incapacitated to the extent that he is unable to perform his duties
for a period of four (4) months in any twelve (12) month period, the Company may
terminate the employment of the Executive by written notice of termination
provided to the Executive. In the event of a termination for disability or
incapacity hereunder, the Executive shall have no right to compensation or other
benefits for any period after the date of termination, except as follows: (i)
before a Change in Control of the Company, if and to the extent that the
Executive is not receiving from public or private insurance policies paid for by
the Company disability benefits equal to or greater than his current W-2
Compensation for such six month period prior to the termination, then for a
period of six months following the termination, the Company shall continue to
pay to the Executive, as severance pay, an amount which together with the
disability insurance payments equals 100% of his current W-2 Compensation for
such six month period; and (ii) after a Change in Control of the Company, such
termination shall trigger compensation and benefits in accordance with section
4.4 of this Agreement.
3.2 Termination Due to Death. Employment of the Executive
shall automatically terminate by reason of the death of the Executive and no
notice of termination shall be required. In the event of a termination due to
the death of the Executive, either before or after a Change in Control of the
Company, the estate of the Executive and his heirs and beneficiaries shall have
no right to compensation or other benefits for any period after the date of
death except as follows: if and to the extent that the Executive's estate,
designated beneficiaries and heirs do not
6
receive, from life insurance policies paid for by the Company, proceeds equal to
or greater than 200% of his current W-2 Compensation as of the date of death,
then the Company shall continue to pay to the Executive's estate, as severance
pay, the Executive's W-2 Compensation for up to six months or, if earlier, until
such payments, together with the proceeds of the life insurance policies, equal
to 200% of the Executive's current W-2 Compensation.
ARTICLE IV.
OTHER TERMINATION
4.1 Termination For Cause.
(a) The Company shall have the right, at any time upon prior
written Notice of Termination (as herein defined), to terminate the employment
of the Executive for Cause. For the purpose of this Agreement, "Cause" shall
mean willful misconduct, breach of fiduciary duty involving personal benefit to
the Executive, conviction of a felony, willful breach or willful neglect by the
Executive of his duties as an Executive of the Company, or persistent negligence
or misconduct in the performance of such duties. For purposes of this paragraph,
no act or failure to act on the part of the Executive shall be considered
"willful" unless done or omitted not in good faith and without reasonable belief
that the action or omission was in the best interest of the Company. Any acts
undertaken by the Executive on the instruction of the Board of Directors of UNB
or the Bank shall not constitute Cause. If the termination for Cause occurs
after a Change in Control, the Executive shall not be deemed to have been
terminated for Cause hereunder unless and until: (i) there shall have been
delivered to the Executive a copy of a certification by a majority of the
non-officer members of the Board of Directors of the Bank finding that, in the
good faith opinion of such majority, the Executive was guilty of conduct which
was deemed to be Cause for
7
termination and specifying the particulars thereof in detail, and (ii) after
reasonable notice to the Executive there shall have been an opportunity for the
Executive, together with counsel to the Executive, to be heard before such
non-officer members of the Board of Directors.
(b) In the event employment is validly terminated for Cause
pursuant to Section 4.1(a) hereof, the Executive shall have no right to further
compensation or benefits hereunder for any period after the date of such
termination.
4.2 Termination For Poor Performance.
(a) The Company shall have the right, at any time prior to a
Change in Control of the Company (but not thereafter), to terminate the
employment of the Executive for Poor Performance by written Notice of
Termination (as defined in Section 4.7 hereof). For the purpose of this
Agreement, "Poor Performance" shall mean a finding by a majority of the
non-officer members of each of the Boards of Directors of UNB and the Bank that,
in the good faith opinion of each such majority: (i) the Executive's performance
of his duties was sufficiently unsatisfactory to merit termination, and (ii)
prior notice of such unsatisfactory performance was given to the Executive
without cure having occurred. In making such a finding, the Board of Directors
shall utilize the input of the Chief Executive Officer ("CEO") unless the CEO is
being terminated.
(b) In the event employment is validly terminated for Poor
Performance pursuant to Section 4.2(a) hereof, the Company shall continue to pay
to the Executive, as severance pay, his Base Salary for a period of one year
following such termination and shall continue to pay for and to provide medical
insurance for the Executive and his family for such period, but the Executive
shall have no right to any other form of compensation or benefits hereunder for
any period after the date of such termination.
8
4.3 Termination Without Cause Prior to Change in Control.
(a) Right to Terminate. The Company shall have the right to
terminate the employment of the Executive without Cause if the Company does so
by prior written Notice of Termination which specifies that the Company agrees
to pay the severance compensation and benefits herein set forth.
(b) Severance Compensation and Benefits Prior to Change in
Control. If prior to a Change in Control of the Company, the Company terminates
the employment of the Executive other than for Cause, Poor Performance,
disability or death of the Executive, the Company shall continue to pay to the
Executive, as severance pay, his current W-2 Compensation in each of the two
years following such termination and shall continue to pay for and to provide
medical insurance for the Executive and his family for such period. The
Executive shall be entitled to no other compensation or benefits hereunder after
the effective date of such termination.
4.4 Compensation and Benefits After Change in Control. After a
Change in Control of the Company, the Company shall pay to the Executive within
ten (10) business days following the date of Change in Control a lump sum equal
to the product of (x) 2.00, times (y) the average of W-2 Compensation, paid to
the Executive by the Company in each of the five years (or such fewer years as
the Executive shall have been employed by the Company) up to and including the
year of Change-in-Control. The Executive shall be entitled to no other
compensation or benefits hereunder after the effective date of such Change in
Control (except as provided by Section 5.2). Upon payment of such benefits as
provided in this Section 4.4 and Section 5.2, this Agreement shall terminate and
be of no further force or effect.
9
4.5 Resignation Without Good Reason Prior to Change in
Control.
(a) Right to Resign. The Executive may resign without Good
Reason at any time upon four weeks prior notice prior to a Change in Control.
(b) No Compensation or Benefits. If the Executive resigns
without Good Reason at any time prior to a Change in Control, the Executive
shall be entitled to no further compensation or benefits hereunder after the
effective date of such resignation.
4.6 Definition of Change in Control. For purposes of this
Agreement, a "Change in Control" of the Company shall mean the first to occur of
any of the following events:
(a) Any person or entity or group of affiliated persons or
entities (other than UNB) becomes a beneficial owner, directly or indirectly, of
25% or more of UNB's and/or the Bank's voting securities or all or substantially
all of the assets of UNB and/or the Bank.
(b) UNB and/or the Bank consummates a definitive agreement
pursuant to which either UNB or the Bank is merged, consolidated or combined
with or into an unaffiliated entity in which either or both of the following
occurs: (i) the directors of UNB and/or Bank, as applicable, immediately prior
to such merger, consolidation or combination will constitute less than a
majority of the board of directors of the surviving, new or combined entity; or
(ii) less than 75% of the outstanding voting securities of the surviving, new or
combined entity will be beneficially owned by the stockholders of UNB
immediately prior to such merger, consolidation or combination.
(c) UNB and/or the Bank consummates a definitive agreement
pursuant to which all or substantially all of UNB's and/or the Bank's assets are
transferred other than to a wholly-owned subsidiary of UNB.
10
(d) A majority of the members of the Board of Directors of
either UNB or the Bank shall be persons who: (i) were not members of such Board
on the date hereof ("current members"); and (ii) were not nominated by a vote of
the Board which included the affirmative vote of a majority of the current
members on the Board at the time of their nomination ("future designees") and
(iii) were not nominated by a vote of the Board which included the affirmative
vote of a majority of the current members and future designees, taken as a
group, on the Board at the time of their nomination.
4.7 Notice. Any notice of termination of the employment of the
Executive by the Company or by the Executive to the Company shall be
communicated by written Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a dated notice
which shall (i) indicate the specific termination provision in this Agreement
relied upon; (ii) except for a termination without Cause, set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the employment of the Executive under the provision so indicated;
(iii) specify a date of termination, which shall be not less than thirty (30)
nor more than ninety (90) days after such Notice of Termination is given, except
in the case of termination of employment by the Company of the Executive for
Cause pursuant to Section 4.1 hereof, in which case the Notice of Termination
may specify a date of termination as of the date such Notice of Termination is
given; and (iv) be given in the manner specified in Section 5.6 hereof.
4.8 Mitigation. Executive shall not be required to mitigate
the amount of any payment provided for in Article IV by seeking other employment
or otherwise. There shall be no
11
offset from payments or benefits due the Executive hereunder if Executive shall
obtain any other employment or otherwise.
4.9 Parachute Payment Tax Gross-Up.
(a) Additional Payments. If, for any taxable year, Executive
shall be liable for the payment of an excise tax under Section 4999 or other
substitute or similar tax assessment (the "Excise Tax") of the Internal Revenue
Code of 1986, as amended (the "Code"), including the corresponding provisions of
any succeeding law, with respect to any payments under this Section 4.9 or any
payments and/or benefits under this Agreement or under any benefit plan of the
Company applicable to Executive individually or generally to executives or
employees of the Company, then, notwithstanding any other provisions of this
Agreement, the Company shall pay to the Executive an additional amount (the
"Gross-Up Payment") such that the net amount retained by the Executive, after
deduction of any Excise Tax on such payments and benefits and any federal, state
and local income tax and Excise Tax upon payments provided for in this Section
4.9, shall be equal to the payments due to the Executive hereunder and the
payments and/or benefits due to the Executive under any benefit plan of the
Company. Each Gross-Up Payment shall be made by domestic cashier's or
treasurer's check, certified check or wire transfer, upon the later of (i) five
(5) days after the date the Executive notifies the Company of its need to make
such Gross-Up Payment, or (ii) the date of any payment causing the liability for
such Excise Tax. The amount of any Gross-Up Payment under this section shall be
computed by a nationally recognized certified public accounting firm designated
jointly by the Company and the Executive. The cost of such services by the
accounting firm shall be paid by the Company. If the Company and the Executive
are unable to
12
designate jointly the accounting firm, then the firm shall be the accounting
firm used by the Company immediately prior to the Change in Control.
(b) IRS Disputed Claims. The Executive shall notify the
Company in writing of any claim by the Internal Revenue Service ("IRS") that, if
successful, would require the payment by the Company of a Gross-Up Payment in
addition to that payment previously paid by the Company pursuant to this
section. Such notification shall be given as soon as practicable but no later
than fifteen (15) business days after the Executive is informed in writing of
such claim and shall apprise the Company of the nature of such claim, the date
on which such claim is requested to be paid, and attach a copy of the IRS
notice. The Executive shall not pay such claim prior to the expiration of the
thirty (30) day period following the date on which the Executive gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such period that it desires to
contest such claim, the Executive shall:
(i) Give the Company any information reasonably requested by
the Company relating to such claim;
(ii) Take such action in connection with contesting such
claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by the Company;
(iii) Cooperate with the Company in good faith in order
effectively to contest such claim; and
13
(iv) Permit the Company to participate in any proceedings
relating to such claim; provided, however that the Company shall
pay directly all costs and expenses (including legal and
accounting fees, as well as other expenses and any additional
interest and penalties) incurred by the Executive and the Company
in connection with an IRS levy, contest or claim and provided
further that the Company shall not take any action or fail to
make any Gross-Up Payment so as to cause the assessment of any
IRS levy and the Company shall cause any levy so assessed to be
immediately released by payment of the Gross-Up Amount, together
with all costs, interest and penalties.
ARTICLE V.
MISCELLANEOUS
5.1 Severance Compensation and Benefits Not in Derogation of
Other Benefits. Anything to the contrary herein contained notwithstanding, the
payment or obligation to pay any monies, or granting of any benefits, rights or
privileges to Executive as provided in this Agreement shall not be in lieu or
derogation of the rights and privileges that the Executive now has or will have
under any plans or programs of the Company specified in Sections 2.3 through 2.5
inclusive, except that the Executive shall not be entitled to the benefits of
any other plan or program of the Company expressly providing for severance or
termination pay.
5.2 Indemnification By Company For Executive's Expenses. If
the termination of Executive's employment occurs after a Change in Control of
the Company, the Company shall pay all expenses incurred by the Executive in
connection with any claim by the Executive against the Company hereunder,
including but not limited to attorneys' and accountants' fees in addition to
other expenses incurred by the Executive. Such expenses shall be payable monthly
upon demand
14
by the Executive. A court of competent jurisdiction shall be empowered to deny
payment to the Executive of such expenses, including attorneys' and accountants'
fees, only if it determines that the Executive instituted a lawsuit or
proceeding hereunder in bad faith or without reasonable cause. The Executive
shall not be entitled to reimbursement for his legal fees if his termination of
employment occurs prior to a Change in Control of the Company.
5.3 Non-Disclosure of Confidential Information and
Non-Compete.
(a) Non-Disclosure of Confidential Information. Except in the
course of the employment of the Executive by the Company, and in the pursuit of
the business of the Company or any of its subsidiaries or affiliates, the
Executive shall not, at any time during or following the term of this Agreement,
disclose or use, any confidential information or proprietary data of the Company
or any of its subsidiaries or affiliates. The Executive agrees that all
information concerning the identity of the customers of the Company and the
relations of the Company to its customers is confidential information, unless
such information is otherwise publicly known.
(b) Non-Competition. The Executive agrees that during the
Executive's employment by the Company pursuant to this Agreement and during the
Post-Employment Non-Compete Period (as hereinafter defined), the Executive will
not, without the prior written consent of the Bank, engage in, become
interested, directly or indirectly, as a sole proprietor, as a partner in a
partnership, or as a substantial shareholder in a corporation, nor become
associated with, in the capacity of an employee, director, officer, principal
agent, trustee or in any other capacity whatsoever, any enterprise conducted in
the trading area of business of the Bank (specifically, in New Jersey, New York
or Pennsylvania) which enterprise is, or may be deemed to be, competitive with
any business carried on by the Bank as of the date of the termination of the
Executive's
15
employment or his retirement. The Post-Employment Non-Compete Period shall mean
a two-year period of time following termination of the Executive's employment
with the Company, except if the termination of employment occurs after a Change
in Control of the Company the Non-Compete Period shall be reduced to zero, and
in the case of termination for Poor Performance prior to a Change in Control of
the Company, it shall be reduced to one year.
(c) Specific Performance. The Executive agrees that the
Company does not have an adequate remedy at law for the breach of this Section
5.3 and agrees that the Executive shall be subject to injunctive relief and
equitable remedies as a result of a breach of any provision of this Section 5.3.
The invalidity or unenforceability of any provision of this Section 5.3 (or this
Agreement) shall not affect the force and effect of the remaining valid
portions. Except as expressly provided in this Agreement, no breach by the
Executive of the provisions of this Section 5.3 shall entitle the Company to
withhold any benefits payable to the Executive hereunder.
5.4 Payroll and Withholding Taxes. All payments to be made or
benefits to be provided hereunder by the Company shall be subject to reduction
by the applicable federal payroll or withholding taxes.
5.5 Changes. This Agreement may not be modified, changed,
amended, or altered except in a writing signed by the Executive and by an
officer of the Company duly authorized by the Boards of Directors or the
executive committee of both the Bank and UNB.
5.6 Notices. All notices given or required to be given herein
shall be in writing or sent by United States first-class certified or registered
mail, postage prepaid, to the Executive at the last-known address for the
Executive (or to the personal representative of the Executive upon his death),
and to the Company at the principal executive office for UNB (or any successor
thereto), to
16
the attention of the Chairman of the Board. All such notices shall be effective
when deposited in the mail in the manner specified in this Section 5.6. Either
party by a notice in writing to the other party may change or designate the
place for receipt of such notices.
5.7 Rights Absolute. No course of conduct between the Company
and the Executive and no delay or omission by the Company or the Executive to
exercise any right or power given under this Agreement shall: (i) impair the
subsequent exercise of any right or power or (ii) be construed to be a waiver of
any default or to be an acquiescence in or consent to the curing of any default
while any other default shall continue to exist, or be construed to be a waiver
of such continuing default or of any other right or power that shall theretofore
have arisen; and every power and remedy granted by law and by this Agreement to
any party hereto may be exercised from time to time and as often as may be
deemed expedient. All such rights and powers shall be cumulative to the fullest
extent permitted by law.
5.8 Successors. This Agreement shall inure to the benefit of
and be binding upon (i) the Executive and, to the extent applicable, his heirs,
assigns, executors, and personal representatives and (ii) the Company, its
successors and assigns, including, without limitation, any person, partnership,
or corporation which may acquire all or substantially all of the assets and
business of the Company, or with or into which the Company may be consolidated
or merged, and this provision shall apply in the event of any subsequent merger,
consolidation, or transfer.
5.9 Non-Assignability. This Agreement is personal to each of
the parties and none of the parties may assign or delegate any of its rights or
obligations under this Agreement without the prior written consent of the other
party.
17
5.10 Governing Law. This Agreement shall be governed in all
respects and be interpreted by and under the laws of the State of New Jersey.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
ATTEST UNITED NATIONAL BANCORP
By: By:
--------------------------------- --------------------------------
Xxxxx X. Xxxxx, Xx., Secretary Xxxxxx X. Xxxxx, Chairman
Compensation Committee of
the Board of Directors
ATTEST: UNITED NATIONAL BANK
By: By:
--------------------------------- --------------------------------
Xxxxx X. Xxxxx, Xx., Cashier Xxxxxx X. Xxxxx, Chairman
Compensation Committee of
the Board of Directors
--------------------------- --------------------------------
Witness XXXX X. XXXXXX
18
EMPLOYMENT AND CHANGE-IN-CONTROL AGREEMENT
BY AND BETWEEN
XXXXXX X. XXXXXXX ("Executive")
UNITED NATIONAL BANCORP, a New Jersey Corporation
and
UNITED NATIONAL BANK
DATED AS OF November 14, 2000
TABLE OF CONTENTS
PAGE
BACKGROUND ...................................................................... 1
ARTICLE I
TERM OF EMPLOYMENT AND DUTIES
1.1 Agreement ..................................................... 2
1.2 Term .......................................................... 2
1.3 Position ...................................................... 3
ARTICLE II
COMPENSATION AND BENEFITS
2.1 Base Compensation ............................................. 3
2.2 Additional Incentive Compensation ............................. 4
2.3 Retirement Plans .............................................. 4
2.4 Medical, Disability and Life Insurance Plans .................. 4
2.5 Stock Award Plans ............................................. 5
2.6 No Adverse Change After Change in Control...................... 5
2.7 Expense Reimbursement ......................................... 5
2.8 W-2 Compensation............................................... 5
ARTICLE III
DISABILITY OR DEATH
3.1 Termination for Disability .................................... 6
3.2 Termination Due to Death ...................................... 6
ARTICLE IV
OTHER TERMINATION
4.1 Termination for Cause ......................................... 7
4.2 Termination for Poor Performance .............................. 8
4.3 Termination Without Cause Prior to Change in Control .......... 9
4.4 Compensation and Benefits After Change in Control ............. 9
4.5 Resignation Without Good Reason ...............................10
4.6 Definition of Change in Control ...............................10
4.7 Notice ........................................................11
4.8 Mitigation ....................................................11
4.9 Parachute Payment Tax Gross-Up.................................12
ARTICLE V
MISCELLANEOUS
5.1 Severance Compensation and Benefits Not in
Derogation of Other Benefits ................................14
5.2 Indemnification by Company For Executive's
Expenses ....................................................14
5.3 Non-Disclosure of Confidential Information
and Non-Compete .............................................15
5.4 Payroll and Withholding Taxes .................................16
5.5 Changes .......................................................16
5.6 Notices .......................................................16
5.7 Rights Absolute ...............................................17
5.8 Successors ....................................................17
5.9 Non-Assignability .............................................17
5.10 Governing Law .................................................18
ii
EMPLOYMENT AND CHANGE-IN-CONTROL AGREEMENT
THIS AGREEMENT is made as of the 14th day of November, 2000 by and
between United National Bancorp, a New Jersey corporation ("UNB"), United
National Bank (the "Bank") (jointly hereinafter referred to as the "Company")
and Xxxxxx X. Xxxxxxx (hereinafter referred to as the "Executive").
BACKGROUND
WHEREAS, the Executive is employed by the Company; and
WHEREAS, the Executive, throughout his tenure, has worked diligently in
his position for the business of the Bank and UNB; and
WHEREAS, the Boards of Directors of the Bank and UNB (collectively, the
"Boards") are of the opinion that the future services of the Executive are of
substantial value to the Bank and UNB and that it is important for the growth
and development of the Bank and UNB that the Executive continue in his position;
and
WHEREAS, if the Company should receive any proposal from a third party
concerning a possible business combination with, or acquisition of the equity
securities of, the Company, the Boards believe it is imperative that the Company
and the Boards be able to rely upon the Executive to continue in his position,
and that the Boards be able to receive and rely upon the advice of the
Executive, if requested, as to the best interests of the Company and its
shareholders, without concern that the Executive may be distracted by personal
uncertainties or risks created by such a proposal; and
WHEREAS, to achieve such a goal, and to retain the services of the
Executive prior to any such activity, the Boards and the Executive have agreed
to enter into this Employment Agreement.
NOW, THEREFORE, to assure the Company that it will retain the continued
dedication of the Executive as well as the availability of the advice and
counsel of the Executive notwithstanding the possibility or occurrence of a
Change in Control (as hereafter defined) of the Company, and to induce the
Executive to remain in the employ of the Company, and for other good and
valuable consideration, the Company and the Executive, each intending to be
legally bound hereby, agree as follows:
ARTICLE I.
TERM OF EMPLOYMENT AND DUTIES
1.1 Agreement. The Company hereby employs the Executive and the
Executive hereby agrees to render such services to the Company on the terms and
conditions set forth in this Agreement.
1.2 Term. The term of employment under this Agreement (hereinafter the
"term") shall commence on November 14, 2000 and shall terminate June 30, 2003,
except that if this Agreement is not renewed, its term and Employee's term of
employment shall be automatically renewed for successive five (5) year terms
with the first such term commencing on July 1, 2003, unless the Company gives
Employee notice of termination of this Agreement ninety (90) days prior to June
30, 2003, or any succeeding termination date pursuant to this provision; and
except further that if there shall occur a Change in Control of the Company
during such period, the term shall end on the third anniversary of the Change in
Control (regardless of whether such third anniversary
2
occurs before or after June 30, 2003). Notwithstanding the foregoing, the term
shall expire on the date the Executive turns age 65 if it has not yet expired by
such date. The Agreement may be sooner terminated in accordance with the terms
and conditions hereinafter set forth.
1.3 Position. During the term of this Agreement, the Executive shall be
employed as the President and Chief Operating Officer of the Bank or in
comparable positions, or the same positions with such other corporate or
divisional centers as shall succeed to the business, assets and properties of
UNB or the Bank, as the case may be. The Executive shall devote his full time
and attention to the business of the Company, and shall not during the term be
engaged in any other business activity. This paragraph shall not be construed as
preventing the Executive from managing any investments of his or his family's
which do not require significant service in the operation of such investments,
nor as preventing his service on any other Board of Directors for which he
served as of the date hereof or serves hereafter with the consent of the Board
of Directors of UNB.
ARTICLE II.
COMPENSATION AND BENEFITS
2.1 Base Compensation. The Company will compensate and pay the
Executive for his services during the term of this Agreement at a minimum base
salary per year of $190,000, with annual increases in amounts to be determined
by the Board of Directors of UNB each year ("Base Salary"). In no event shall
the Base Salary of the Executive under this Agreement in effect at any
particular time be reduced without the prior written consent of Executive,
except that prior to a Change in Control of the Company (but not thereafter),
the Base Salary may be reduced without
3
the Executive's consent no more than once per year, with each such reduction
limited to ten percent (10%) of the prior year's Base Salary.
2.2 Additional Incentive Compensation. During the term of this
Agreement, the Executive shall also be entitled to participate in other
executive incentive compensation arrangements, similar to the incentive
compensation arrangements now in effect for executives of the Company pursuant
to which executives are paid an annual bonus; provided, however, that prior to a
Change in Control of the Company the participation of the Executive in such
arrangements shall mean that the Executive is eligible for an incentive award
but shall not obligate the Company to make any incentive award or pay any
incentive compensation to Executive; provided further, however, that after a
Change in Control of the Company, the Executive must be paid an annual bonus
that is at least as large as the highest bonus paid to the Executive in any year
during the three years immediately prior to a Change in Control.
2.3 Retirement Plans. During the term of this Agreement, the Executive
shall be entitled to participate in any plans of the Company relating to
pension, profit sharing, benefit equalization, or other programs now in effect
or that the Company may hereafter adopt for the benefit of its employees or
executives.
2.4 Medical, Disability and Life Insurance Plans. During the term of
this Agreement, the Executive shall be entitled to participate in any medical
coverage, hospitalization, medical reimbursement, disability, and life insurance
plans now in effect or that the Company may hereafter adopt.
2.5 Stock Award Plans. During the term of this Agreement, the Executive
shall be entitled to participate in and receive the benefits of any stock
option, restricted stock or similar
4
stock based compensation plans covering executives of the Company which
presently exist or may come into existence hereafter (a "Stock Plan"); provided,
however, that the participation of the Executive in such Stock Plans shall mean
that the Executive is eligible to receive benefits and awards but shall not
obligate the Company to grant the Executive any particular benefits or awards.
2.6 No Adverse Change After Change in Control. Before a
Change-in-Control of the Company, the Company may change or terminate any
benefit plan or bonus plan provided to the Executive. Following a Change in
Control of the Company, the Company may not change or terminate any plans set
forth above under Sections 2.2, 2.3, 2.4 and 2.5, which would adversely affect
the Executive's rights or benefits thereunder unless such change is consented to
by the Executive or occurs as a consequence of a change in law or regulation.
2.7 Expense Reimbursement. During the term of this Agreement, the
Company shall reimburse the Executive or otherwise provide for or pay for all
reasonable expenses incurred by the Executive in furtherance or in connection
with the business of the Company including but not limited to automobile and
travel expenses, and all reasonable entertainment expenses, subject to such
reasonable limitations as may be established by the Boards from time to time. If
such expenses are paid by the Executive, the Company will reimburse the
Executive therefor.
2.8 W-2 Compensation. "W-2 Compensation" as used in this Agreement
means the Employee's "Gross Pay" (or any analogous term having the same or a
similar meaning as "Gross Pay" hereafter used) as reported or reportable on his
W-2 statement for the period or periods in question. When referring to a current
tax year, "W-2 Compensation" refers to the annualized total computed to the end
of such current year of all items includable in "Gross Pay" at their current
level or levels unless the context clearly indicates otherwise.
5
ARTICLE III.
DISABILITY OR DEATH
3.1 Termination for Disability. If the Executive shall become disabled
or incapacitated to the extent that he is unable to perform his duties for a
period of four (4) months in any twelve (12) month period, the Company may
terminate the employment of the Executive by written notice of termination
provided to the Executive. In the event of a termination for disability or
incapacity hereunder, the Executive shall have no right to compensation or other
benefits for any period after the date of termination, except as follows: (i)
before a Change in Control of the Company, if and to the extent that the
Executive is not receiving from public or private insurance policies paid for by
the Company disability benefits equal to or greater than his current W-2
Compensation for such six month period prior to the termination, then for a
period of six months following the termination, the Company shall continue to
pay to the Executive, as severance pay, an amount which together with the
disability insurance payments equals 100% of his current W-2 Compensation for
such six month period; and (ii) after a Change in Control of the Company, such
termination shall trigger compensation and benefits in accordance with section
4.4 of this Agreement.
3.2 Termination Due to Death. Employment of the Executive shall
automatically terminate by reason of the death of the Executive and no notice of
termination shall be required. In the event of a termination due to the death of
the Executive, either before or after a Change in Control of the Company, the
estate of the Executive and his heirs and beneficiaries shall have no right to
compensation or other benefits for any period after the date of death except as
follows: if and to the extent that the Executive's estate, designated
beneficiaries and heirs do not
6
receive, from life insurance policies paid for by the Company, proceeds equal to
or greater than 200% of his current W-2 Compensation as of the date of death,
then the Company shall continue to pay to the Executive's estate, as severance
pay, the Executive's W-2 Compensation for up to six months or, if earlier, until
such payments, together with the proceeds of the life insurance policies, equal
to 200% of the Executive's current W-2 Compensation.
ARTICLE IV.
OTHER TERMINATION
4.1 Termination For Cause.
(a) The Company shall have the right, at any time upon prior written
Notice of Termination (as herein defined), to terminate the employment of the
Executive for Cause. For the purpose of this Agreement, "Cause" shall mean
willful misconduct, breach of fiduciary duty involving personal benefit to the
Executive, conviction of a felony, willful breach or willful neglect by the
Executive of his duties as an Executive of the Company, or persistent negligence
or misconduct in the performance of such duties. For purposes of this paragraph,
no act or failure to act on the part of the Executive shall be considered
"willful" unless done or omitted not in good faith and without reasonable belief
that the action or omission was in the best interest of the Company. Any acts
undertaken by the Executive on the instruction of the Board of Directors of UNB
or the Bank shall not constitute Cause. If the termination for Cause occurs
after a Change in Control, the Executive shall not be deemed to have been
terminated for Cause hereunder unless and until: (i) there shall have been
delivered to the Executive a copy of a certification by a majority of the
non-officer members of the Board of Directors of the Bank finding that, in the
good faith opinion of such majority, the Executive was guilty of conduct which
was deemed to be Cause for
7
termination and specifying the particulars thereof in detail, and (ii) after
reasonable notice to the Executive there shall have been an opportunity for the
Executive, together with counsel to the Executive, to be heard before such
non-officer members of the Board of Directors.
(b) In the event employment is validly terminated for Cause pursuant to
Section 4.1(a) hereof, the Executive shall have no right to further compensation
or benefits hereunder for any period after the date of such termination.
4.2 Termination For Poor Performance.
(a) The Company shall have the right, at any time prior to a Change in
Control of the Company (but not thereafter), to terminate the employment of the
Executive for Poor Performance by written Notice of Termination (as defined in
Section 4.7 hereof). For the purpose of this Agreement, "Poor Performance" shall
mean a finding by a majority of the non-officer members of each of the Boards of
Directors of UNB and the Bank that, in the good faith opinion of each such
majority: (i) the Executive's performance of his duties was sufficiently
unsatisfactory to merit termination, and (ii) prior notice of such
unsatisfactory performance was given to the Executive without cure having
occurred. In making such a finding, the Board of Directors shall utilize the
input of the Chief Executive Officer ("CEO") unless the CEO is being terminated.
(b) In the event employment is validly terminated for Poor Performance
pursuant to Section 4.2(a) hereof, the Company shall continue to pay to the
Executive, as severance pay, his Base Salary for a period of one year following
such termination and shall continue to pay for and to provide medical insurance
for the Executive and his family for such period, but the Executive shall have
no right to any other form of compensation or benefits hereunder for any period
after the date of such termination.
8
4.3 Termination Without Cause Prior to Change in Control.
(a) Right to Terminate. The Company shall have the right to terminate
the employment of the Executive without Cause if the Company does so by prior
written Notice of Termination which specifies that the Company agrees to pay the
severance compensation and benefits herein set forth.
(b) Severance Compensation and Benefits Prior to Change in Control. If
prior to a Change in Control of the Company, the Company terminates the
employment of the Executive other than for Cause, Poor Performance, disability
or death of the Executive, the Company shall continue to pay to the Executive,
as severance pay, his current W-2 Compensation in each of the two years
following such termination and shall continue to pay for and to provide medical
insurance for the Executive and his family for such period. The Executive shall
be entitled to no other compensation or benefits hereunder after the effective
date of such termination.
4.4 Compensation and Benefits After Change in Control. After a Change
in Control of the Company, the Company shall pay to the Executive within ten
(10) business days following the date of Change in Control a lump sum equal to
the product of (x) 2.99, times (y) the average of W-2 Compensation, paid to the
Executive by the Company in each of the five years (or such fewer years as the
Executive shall have been employed by the Company) up to and including the year
of Change-in-Control. The Executive shall be entitled to no other compensation
or benefits hereunder after the effective date of such Change in Control (except
as provided by Section 5.2). Upon payment of such benefits as provided in this
Section 4.4 and Section 5.2, this Agreement shall terminate and be of no further
force or effect.
9
4.5 Resignation Without Good Reason Prior to Change in Control.
(a) Right to Resign. The Executive may resign without Good Reason at
any time upon four weeks prior notice prior to a Change in Control.
(b) No Compensation or Benefits. If the Executive resigns without Good
Reason at any time prior to a Change in Control, the Executive shall be entitled
to no further compensation or benefits hereunder after the effective date of
such resignation.
4.6 Definition of Change in Control. For purposes of this Agreement, a
"Change in Control" of the Company shall mean the first to occur of any of the
following events:
(a) Any person or entity or group of affiliated persons or entities
(other than UNB) becomes a beneficial owner, directly or indirectly, of 25% or
more of UNB's and/or the Bank's voting securities or all or substantially all of
the assets of UNB and/or the Bank.
(b) UNB and/or the Bank consummates a definitive agreement pursuant to
which either UNB or the Bank is merged, consolidated or combined with or into an
unaffiliated entity in which either or both of the following occurs: (i) the
directors of UNB and/or Bank, as applicable, immediately prior to such merger,
consolidation or combination will constitute less than a majority of the board
of directors of the surviving, new or combined entity; or (ii) less than 75% of
the outstanding voting securities of the surviving, new or combined entity will
be beneficially owned by the stockholders of UNB immediately prior to such
merger, consolidation or combination.
(c) UNB and/or the Bank consummates a definitive agreement pursuant to
which all or substantially all of UNB's and/or the Bank's assets are transferred
other than to a wholly-owned subsidiary of UNB.
10
(d) A majority of the members of the Board of Directors of either UNB
or the Bank shall be persons who: (i) were not members of such Board on the date
hereof ("current members"); and (ii) were not nominated by a vote of the Board
which included the affirmative vote of a majority of the current members on the
Board at the time of their nomination ("future designees") and (iii) were not
nominated by a vote of the Board which included the affirmative vote of a
majority of the current members and future designees, taken as a group, on the
Board at the time of their nomination.
4.7 Notice. Any notice of termination of the employment of the
Executive by the Company or by the Executive to the Company shall be
communicated by written Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a dated notice
which shall (i) indicate the specific termination provision in this Agreement
relied upon; (ii) except for a termination without Cause, set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the employment of the Executive under the provision so indicated;
(iii) specify a date of termination, which shall be not less than thirty (30)
nor more than ninety (90) days after such Notice of Termination is given, except
in the case of termination of employment by the Company of the Executive for
Cause pursuant to Section 4.1 hereof, in which case the Notice of Termination
may specify a date of termination as of the date such Notice of Termination is
given; and (iv) be given in the manner specified in Section 5.6 hereof.
4.8 Mitigation. Executive shall not be required to mitigate the amount
of any payment provided for in Article IV by seeking other employment or
otherwise. There shall be no
11
offset from payments or benefits due the Executive hereunder if Executive shall
obtain any other employment or otherwise.
4.9 Parachute Payment Tax Gross-Up.
(a) Additional Payments. If, for any taxable year, Executive shall be
liable for the payment of an excise tax under Section 4999 or other substitute
or similar tax assessment (the "Excise Tax") of the Internal Revenue Code of
1986, as amended (the "Code"), including the corresponding provisions of any
succeeding law, with respect to any payments under this Section 4.9 or any
payments and/or benefits under this Agreement or under any benefit plan of the
Company applicable to Executive individually or generally to executives or
employees of the Company, then, notwithstanding any other provisions of this
Agreement, the Company shall pay to the Executive an additional amount (the
"Gross-Up Payment") such that the net amount retained by the Executive, after
deduction of any Excise Tax on such payments and benefits and any federal, state
and local income tax and Excise Tax upon payments provided for in this Section
4.9, shall be equal to the payments due to the Executive hereunder and the
payments and/or benefits due to the Executive under any benefit plan of the
Company. Each Gross-Up Payment shall be made by domestic cashier's or
treasurer's check, certified check or wire transfer, upon the later of (i) five
(5) days after the date the Executive notifies the Company of its need to make
such Gross-Up Payment, or (ii) the date of any payment causing the liability for
such Excise Tax. The amount of any Gross-Up Payment under this section shall be
computed by a nationally recognized certified public accounting firm designated
jointly by the Company and the Executive. The cost of such services by the
accounting firm shall be paid by the Company. If the Company and the Executive
are unable to
12
designate jointly the accounting firm, then the firm shall be the accounting
firm used by the Company immediately prior to the Change in Control.
(b) IRS Disputed Claims. The Executive shall notify the Company in
writing of any claim by the Internal Revenue Service ("IRS") that, if
successful, would require the payment by the Company of a Gross-Up Payment in
addition to that payment previously paid by the Company pursuant to this
section. Such notification shall be given as soon as practicable but no later
than fifteen (15) business days after the Executive is informed in writing of
such claim and shall apprise the Company of the nature of such claim, the date
on which such claim is requested to be paid, and attach a copy of the IRS
notice. The Executive shall not pay such claim prior to the expiration of the
thirty (30) day period following the date on which the Executive gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such period that it desires to
contest such claim, the Executive shall:
(i) Give the Company any information reasonably requested by
the Company relating to such claim;
(ii) Take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company;
(iii) Cooperate with the Company in good faith in order
effectively to contest such claim; and
13
(iv) Permit the Company to participate in any proceedings
relating to such claim; provided, however that the Company shall pay
directly all costs and expenses (including legal and accounting fees,
as well as other expenses and any additional interest and penalties)
incurred by the Executive and the Company in connection with an IRS
levy, contest or claim and provided further that the Company shall not
take any action or fail to make any Gross-Up Payment so as to cause the
assessment of any IRS levy and the Company shall cause any levy so
assessed to be immediately released by payment of the Gross-Up Amount,
together with all costs, interest and penalties.
ARTICLE V.
MISCELLANEOUS
5.1 Severance Compensation and Benefits Not in Derogation of Other
Benefits. Anything to the contrary herein contained notwithstanding, the payment
or obligation to pay any monies, or granting of any benefits, rights or
privileges to Executive as provided in this Agreement shall not be in lieu or
derogation of the rights and privileges that the Executive now has or will have
under any plans or programs of the Company specified in Sections 2.3 through 2.5
inclusive, except that the Executive shall not be entitled to the benefits of
any other plan or program of the Company expressly providing for severance or
termination pay.
5.2 Indemnification By Company For Executive's Expenses. If the
termination of Executive's employment occurs after a Change in Control of the
Company, the Company shall pay all expenses incurred by the Executive in
connection with any claim by the Executive against the Company hereunder,
including but not limited to attorneys' and accountants' fees in addition to
other expenses incurred by the Executive. Such expenses shall be payable monthly
upon demand
14
by the Executive. A court of competent jurisdiction shall be empowered to deny
payment to the Executive of such expenses, including attorneys' and accountants'
fees, only if it determines that the Executive instituted a lawsuit or
proceeding hereunder in bad faith or without reasonable cause. The Executive
shall not be entitled to reimbursement for his legal fees if his termination of
employment occurs prior to a Change in Control of the Company.
5.3 Non-Disclosure of Confidential Information and Non-Compete.
(a) Non-Disclosure of Confidential Information. Except in the course of
the employment of the Executive by the Company, and in the pursuit of the
business of the Company or any of its subsidiaries or affiliates, the Executive
shall not, at any time during or following the term of this Agreement, disclose
or use, any confidential information or proprietary data of the Company or any
of its subsidiaries or affiliates. The Executive agrees that all information
concerning the identity of the customers of the Company and the relations of the
Company to its customers is confidential information, unless such information is
otherwise publicly known.
(b) Non-Competition. The Executive agrees that during the Executive's
employment by the Company pursuant to this Agreement and during the
Post-Employment Non-Compete Period (as hereinafter defined), the Executive will
not, without the prior written consent of the Bank, engage in, become
interested, directly or indirectly, as a sole proprietor, as a partner in a
partnership, or as a substantial shareholder in a corporation, nor become
associated with, in the capacity of an employee, director, officer, principal
agent, trustee or in any other capacity whatsoever, any enterprise conducted in
the trading area of business of the Bank (specifically, in New Jersey, New York
or Pennsylvania) which enterprise is, or may be deemed to be, competitive with
any business carried on by the Bank as of the date of the termination of the
Executive's
15
employment or his retirement. The Post-Employment Non-Compete Period shall mean
a two-year period of time following termination of the Executive's employment
with the Company, except if the termination of employment occurs after a Change
in Control of the Company the Non-Compete Period shall be reduced to zero, and
in the case of termination for Poor Performance prior to a Change in Control of
the Company, it shall be reduced to one year.
(c) Specific Performance. The Executive agrees that the Company does
not have an adequate remedy at law for the breach of this Section 5.3 and agrees
that the Executive shall be subject to injunctive relief and equitable remedies
as a result of a breach of any provision of this Section 5.3. The invalidity or
unenforceability of any provision of this Section 5.3 (or this Agreement) shall
not affect the force and effect of the remaining valid portions. Except as
expressly provided in this Agreement, no breach by the Executive of the
provisions of this Section 5.3 shall entitle the Company to withhold any
benefits payable to the Executive hereunder.
5.4 Payroll and Withholding Taxes. All payments to be made or benefits
to be provided hereunder by the Company shall be subject to reduction by the
applicable federal payroll or withholding taxes.
5.5 Changes. This Agreement may not be modified, changed, amended, or
altered except in a writing signed by the Executive and by an officer of the
Company duly authorized by the Boards of Directors or the executive committee of
both the Bank and UNB.
5.6 Notices. All notices given or required to be given herein shall be
in writing or sent by United States first-class certified or registered mail,
postage prepaid, to the Executive at the last-known address for the Executive
(or to the personal representative of the Executive upon his death), and to the
Company at the principal executive office for UNB (or any successor thereto), to
16
the attention of the Chairman of the Board. All such notices shall be effective
when deposited in the mail in the manner specified in this Section 5.6. Either
party by a notice in writing to the other party may change or designate the
place for receipt of such notices.
5.7 Rights Absolute. No course of conduct between the Company and the
Executive and no delay or omission by the Company or the Executive to exercise
any right or power given under this Agreement shall: (i) impair the subsequent
exercise of any right or power or (ii) be construed to be a waiver of any
default or to be an acquiescence in or consent to the curing of any default
while any other default shall continue to exist, or be construed to be a waiver
of such continuing default or of any other right or power that shall theretofore
have arisen; and every power and remedy granted by law and by this Agreement to
any party hereto may be exercised from time to time and as often as may be
deemed expedient. All such rights and powers shall be cumulative to the fullest
extent permitted by law.
5.8 Successors. This Agreement shall inure to the benefit of and be
binding upon (i) the Executive and, to the extent applicable, his heirs,
assigns, executors, and personal representatives and (ii) the Company, its
successors and assigns, including, without limitation, any person, partnership,
or corporation which may acquire all or substantially all of the assets and
business of the Company, or with or into which the Company may be consolidated
or merged, and this provision shall apply in the event of any subsequent merger,
consolidation, or transfer.
5.9 Non-Assignability. This Agreement is personal to each of the
parties and none of the parties may assign or delegate any of its rights or
obligations under this Agreement without the prior written consent of the other
party.
17
5.10 Governing Law. This Agreement shall be governed in all respects
and be interpreted by and under the laws of the State of New Jersey.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
ATTEST UNITED NATIONAL BANCORP
By: By:
--------------------------------- --------------------------------
Xxxxx X. Xxxxx, Xx., Secretary Xxxxxx X. Xxxxx, Chairman
Compensation Committee of
the Board of Directors
ATTEST: UNITED NATIONAL BANK
By: By:
--------------------------------- --------------------------------
Xxxxx X. Xxxxx, Xx., Cashier Xxxxxx X. Xxxxx, Chairman
Compensation Committee of
the Board of Directors
--------------------------- --------------------------------
Witness XXXXXX X. XXXXXXX
00
EMPLOYMENT AND CHANGE-IN-CONTROL AGREEMENT
BY AND BETWEEN
XXXXXX X. XXXXXX ("Executive")
UNITED NATIONAL BANCORP, a New Jersey Corporation
and
UNITED NATIONAL BANK
DATED AS OF November 14, 2000
TABLE OF CONTENTS
PAGE
BACKGROUND .......................................................................... 1
ARTICLE I
TERM OF EMPLOYMENT AND DUTIES
1.1 Agreement ......................................................... 2
1.2 Term .............................................................. 2
1.3 Position .......................................................... 3
ARTICLE II
COMPENSATION AND BENEFITS
2.1 Base Compensation ................................................. 3
2.2 Additional Incentive Compensation ................................. 4
2.3 Retirement Plans .................................................. 4
2.4 Medical, Disability and Life Insurance Plans ...................... 4
2.5 Stock Award Plans ................................................. 5
2.6 No Adverse Change After Change in Control.......................... 5
2.7 Expense Reimbursement ............................................. 5
2.8 W-2 Compensation................................................... 5
ARTICLE III
DISABILITY OR DEATH
3.1 Termination for Disability ........................................ 6
3.2 Termination Due to Death .......................................... 6
ARTICLE IV
OTHER TERMINATION
4.1 Termination for Cause ............................................. 7
4.2 Termination for Poor Performance .................................. 8
4.3 Termination Without Cause Prior to Change in Control .............. 9
4.4 Compensation and Benefits After Change in Control ................. 9
4.5 Resignation Without Good Reason ...................................10
4.6 Definition of Change in Control ...................................10
4.7 Notice ............................................................11
4.8 Mitigation ........................................................11
4.9 Parachute Payment Tax Gross-Up.....................................12
ARTICLE V
MISCELLANEOUS
5.1 Severance Compensation and Benefits Not in
Derogation of Other Benefits ....................................14
5.2 Indemnification by Company For Executive's
Expenses ........................................................14
5.3 Non-Disclosure of Confidential Information
and Non-Compete .................................................15
5.4 Payroll and Withholding Taxes .....................................16
5.5 Changes ...........................................................16
5.6 Notices ...........................................................16
5.7 Rights Absolute ...................................................17
5.8 Successors ........................................................17
5.9 Non-Assignability .................................................17
5.10 Governing Law .....................................................18
ii
EMPLOYMENT AND CHANGE-IN-CONTROL AGREEMENT
THIS AGREEMENT is made as of the 14th day of November, 2000 by and
between United National Bancorp, a New Jersey corporation ("UNB"), United
National Bank (the "Bank") (jointly hereinafter referred to as the "Company")
and Xxxxxx X. Xxxxxx (hereinafter referred to as the "Executive").
BACKGROUND
WHEREAS, the Executive is employed by the Company; and
WHEREAS, the Executive, throughout his tenure, has worked diligently in
his position for the business of the Bank and UNB; and
WHEREAS, the Boards of Directors of the Bank and UNB (collectively, the
"Boards") are of the opinion that the future services of the Executive are of
substantial value to the Bank and UNB and that it is important for the growth
and development of the Bank and UNB that the Executive continue in his position;
and
WHEREAS, if the Company should receive any proposal from a third party
concerning a possible business combination with, or acquisition of the equity
securities of, the Company, the Boards believe it is imperative that the Company
and the Boards be able to rely upon the Executive to continue in his position,
and that the Boards be able to receive and rely upon the advice of the
Executive, if requested, as to the best interests of the Company and its
shareholders, without concern that the Executive may be distracted by personal
uncertainties or risks created by such a proposal; and
WHEREAS, to achieve such a goal, and to retain the services of the
Executive prior to any such activity, the Boards and the Executive have agreed
to enter into this Employment Agreement.
NOW, THEREFORE, to assure the Company that it will retain the continued
dedication of the Executive as well as the availability of the advice and
counsel of the Executive notwithstanding the possibility or occurrence of a
Change in Control (as hereafter defined) of the Company, and to induce the
Executive to remain in the employ of the Company, and for other good and
valuable consideration, the Company and the Executive, each intending to be
legally bound hereby, agree as follows:
ARTICLE I.
TERM OF EMPLOYMENT AND DUTIES
1.1 Agreement. The Company hereby employs the Executive and the
Executive hereby agrees to render such services to the Company on the terms and
conditions set forth in this Agreement.
1.2 Term. The term of employment under this Agreement (hereinafter the
"term") shall commence on November 14, 2000 and shall terminate June 30, 2003,
except that if this Agreement is not renewed, its term and Employee's term of
employment shall be automatically renewed for successive five (5) year terms
with the first such term commencing on July 1, 2003, unless the Company gives
Employee notice of termination of this Agreement ninety (90) days prior to June
30, 2003, or any succeeding termination date pursuant to this provision; and
except further that if there shall occur a Change in Control of the Company
during such period, the term shall end on the third anniversary of the Change in
Control (regardless of whether such third anniversary
2
occurs before or after June 30, 2003). Notwithstanding the foregoing, the term
shall expire on the date the Executive turns age 65 if it has not yet expired by
such date. The Agreement may be sooner terminated in accordance with the terms
and conditions hereinafter set forth.
1.3 Position. During the term of this Agreement, the Executive shall be
employed as the Chairman and Chief Executive Officer of the Bank or in
comparable positions, or the same positions with such other corporate or
divisional centers as shall succeed to the business, assets and properties of
UNB or the Bank, as the case may be. The Executive shall devote his full time
and attention to the business of the Company, and shall not during the term be
engaged in any other business activity. This paragraph shall not be construed as
preventing the Executive from managing any investments of his or his family's
which do not require significant service in the operation of such investments,
nor as preventing his service on any other Board of Directors for which he
served as of the date hereof or serves hereafter with the consent of the Board
of Directors of UNB.
ARTICLE II.
COMPENSATION AND BENEFITS
2.1 Base Compensation. The Company will compensate and pay the
Executive for his services during the term of this Agreement at a minimum base
salary per year of $322,500 with annual increases in amounts to be determined by
the Board of Directors of UNB each year ("Base Salary"). In no event shall the
Base Salary of the Executive under this Agreement in effect at any particular
time be reduced without the prior written consent of Executive, except that
prior to a Change in Control of the Company (but not thereafter), the Base
Salary may be reduced without
3
the Executive's consent no more than once per year, with each such reduction
limited to ten percent (10%) of the prior year's Base Salary.
2.2 Additional Incentive Compensation. During the term of this
Agreement, the Executive shall also be entitled to participate in other
executive incentive compensation arrangements, similar to the incentive
compensation arrangements now in effect for executives of the Company pursuant
to which executives are paid an annual bonus; provided, however, that prior to a
Change in Control of the Company the participation of the Executive in such
arrangements shall mean that the Executive is eligible for an incentive award
but shall not obligate the Company to make any incentive award or pay any
incentive compensation to Executive; provided further, however, that after a
Change in Control of the Company, the Executive must be paid an annual bonus
that is at least as large as the highest bonus paid to the Executive in any year
during the three years immediately prior to a Change in Control.
2.3 Retirement Plans. During the term of this Agreement, the Executive
shall be entitled to participate in any plans of the Company relating to
pension, profit sharing, benefit equalization, or other programs now in effect
or that the Company may hereafter adopt for the benefit of its employees or
executives.
2.4 Medical, Disability and Life Insurance Plans. During the term of
this Agreement, the Executive shall be entitled to participate in any medical
coverage, hospitalization, medical reimbursement, disability, and life insurance
plans now in effect or that the Company may hereafter adopt.
2.5 Stock Award Plans. During the term of this Agreement, the Executive
shall be entitled to participate in and receive the benefits of any stock
option, restricted stock or similar
4
stock based compensation plans covering executives of the Company which
presently exist or may come into existence hereafter (a "Stock Plan"); provided,
however, that the participation of the Executive in such Stock Plans shall mean
that the Executive is eligible to receive benefits and awards but shall not
obligate the Company to grant the Executive any particular benefits or awards.
2.6 No Adverse Change After Change in Control. Before a
Change-in-Control of the Company, the Company may change or terminate any
benefit plan or bonus plan provided to the Executive. Following a Change in
Control of the Company, the Company may not change or terminate any plans set
forth above under Sections 2.2, 2.3, 2.4 and 2.5, which would adversely affect
the Executive's rights or benefits thereunder unless such change is consented to
by the Executive or occurs as a consequence of a change in law or regulation.
2.7 Expense Reimbursement. During the term of this Agreement, the
Company shall reimburse the Executive or otherwise provide for or pay for all
reasonable expenses incurred by the Executive in furtherance or in connection
with the business of the Company including but not limited to automobile and
travel expenses, and all reasonable entertainment expenses, subject to such
reasonable limitations as may be established by the Boards from time to time. If
such expenses are paid by the Executive, the Company will reimburse the
Executive therefor.
2.8 W-2 Compensation. "W-2 Compensation" as used in this Agreement
means the Employee's "Gross Pay" (or any analogous term having the same or a
similar meaning as "Gross Pay" hereafter used) as reported or reportable on his
W-2 statement for the period or periods in question. When referring to a current
tax year, "W-2 Compensation" refers to the annualized total computed to the end
of such current year of all items includable in "Gross Pay" at their current
level or levels unless the context clearly indicates otherwise.
5
ARTICLE III.
DISABILITY OR DEATH
3.1 Termination for Disability. If the Executive shall become disabled
or incapacitated to the extent that he is unable to perform his duties for a
period of four (4) months in any twelve (12) month period, the Company may
terminate the employment of the Executive by written notice of termination
provided to the Executive. In the event of a termination for disability or
incapacity hereunder, the Executive shall have no right to compensation or other
benefits for any period after the date of termination, except as follows: (i)
before a Change in Control of the Company, if and to the extent that the
Executive is not receiving from public or private insurance policies paid for by
the Company disability benefits equal to or greater than his current W-2
Compensation for such six month period prior to the termination, then for a
period of six months following the termination, the Company shall continue to
pay to the Executive, as severance pay, an amount which together with the
disability insurance payments equals 100% of his current W-2 Compensation for
such six month period; and (ii) after a Change in Control of the Company, such
termination shall trigger compensation and benefits in accordance with section
4.4 of this Agreement.
3.2 Termination Due to Death. Employment of the Executive shall
automatically terminate by reason of the death of the Executive and no notice of
termination shall be required. In the event of a termination due to the death of
the Executive, either before or after a Change in Control of the Company, the
estate of the Executive and his heirs and beneficiaries shall have no right to
compensation or other benefits for any period after the date of death except as
follows: if and to the extent that the Executive's estate, designated
beneficiaries and heirs do not
6
receive, from life insurance policies paid for by the Company, proceeds equal to
or greater than 200% of his current W-2 Compensation as of the date of death,
then the Company shall continue to pay to the Executive's estate, as severance
pay, the Executive's W-2 Compensation for up to six months or, if earlier, until
such payments, together with the proceeds of the life insurance policies, equal
to 200% of the Executive's current W-2 Compensation.
ARTICLE IV.
OTHER TERMINATION
4.1 Termination For Cause.
(a) The Company shall have the right, at any time upon prior written
Notice of Termination (as herein defined), to terminate the employment of the
Executive for Cause. For the purpose of this Agreement, "Cause" shall mean
willful misconduct, breach of fiduciary duty involving personal benefit to the
Executive, conviction of a felony, willful breach or willful neglect by the
Executive of his duties as an Executive of the Company, or persistent negligence
or misconduct in the performance of such duties. For purposes of this paragraph,
no act or failure to act on the part of the Executive shall be considered
"willful" unless done or omitted not in good faith and without reasonable belief
that the action or omission was in the best interest of the Company. Any acts
undertaken by the Executive on the instruction of the Board of Directors of UNB
or the Bank shall not constitute Cause. If the termination for Cause occurs
after a Change in Control, the Executive shall not be deemed to have been
terminated for Cause hereunder unless and until: (i) there shall have been
delivered to the Executive a copy of a certification by a majority of the
non-officer members of the Board of Directors of the Bank finding that, in the
good faith opinion of such majority, the Executive was guilty of conduct which
was deemed to be Cause for
7
termination and specifying the particulars thereof in detail, and (ii) after
reasonable notice to the Executive there shall have been an opportunity for the
Executive, together with counsel to the Executive, to be heard before such
non-officer members of the Board of Directors.
(b) In the event employment is validly terminated for Cause pursuant to
Section 4.1(a) hereof, the Executive shall have no right to further compensation
or benefits hereunder for any period after the date of such termination.
4.2 Termination For Poor Performance.
(a) The Company shall have the right, at any time prior to a Change in
Control of the Company (but not thereafter), to terminate the employment of the
Executive for Poor Performance by written Notice of Termination (as defined in
Section 4.7 hereof). For the purpose of this Agreement, "Poor Performance" shall
mean a finding by a majority of the non-officer members of each of the Boards of
Directors of UNB and the Bank that, in the good faith opinion of each such
majority: (i) the Executive's performance of his duties was sufficiently
unsatisfactory to merit termination, and (ii) prior notice of such
unsatisfactory performance was given to the Executive without cure having
occurred. In making such a finding, the Board of Directors shall utilize the
input of the Chief Executive Officer ("CEO") unless the CEO is being terminated.
(b) In the event employment is validly terminated for Poor Performance
pursuant to Section 4.2(a) hereof, the Company shall continue to pay to the
Executive, as severance pay, his Base Salary for a period of one year following
such termination and shall continue to pay for and to provide medical insurance
for the Executive and his family for such period, but the Executive shall have
no right to any other form of compensation or benefits hereunder for any period
after the date of such termination.
8
4.3 Termination Without Cause Prior to Change in Control.
(a) Right to Terminate. The Company shall have the right to terminate
the employment of the Executive without Cause if the Company does so by prior
written Notice of Termination which specifies that the Company agrees to pay the
severance compensation and benefits herein set forth.
(b) Severance Compensation and Benefits Prior to Change in Control. If
prior to a Change in Control of the Company, the Company terminates the
employment of the Executive other than for Cause, Poor Performance, disability
or death of the Executive, the Company shall continue to pay to the Executive,
as severance pay, his current W-2 Compensation in each of the two years
following such termination and shall continue to pay for and to provide medical
insurance for the Executive and his family for such period. The Executive shall
be entitled to no other compensation or benefits hereunder after the effective
date of such termination.
4.4 Compensation and Benefits After Change in Control. After a Change
in Control of the Company, the Company shall pay to the Executive within ten
(10) business days following the date of Change in Control a lump sum equal to
the product of (x) 2.99, times (y) the average of W-2 Compensation, paid to the
Executive by the Company in each of the five years (or such fewer years as the
Executive shall have been employed by the Company) up to and including the year
of Change-in-Control. The Executive shall be entitled to no other compensation
or benefits hereunder after the effective date of such Change in Control (except
as provided by Section 5.2). Upon payment of such benefits as provided in this
Section 4.4 and Section 5.2, this Agreement shall terminate and be of no further
force or effect.
9
4.5 Resignation Without Good Reason Prior to Change in Control.
(a) Right to Resign. The Executive may resign without Good Reason at
any time upon four weeks prior notice prior to a Change in Control.
(b) No Compensation or Benefits. If the Executive resigns without Good
Reason at any time prior to a Change in Control, the Executive shall be entitled
to no further compensation or benefits hereunder after the effective date of
such resignation.
4.6 Definition of Change in Control. For purposes of this Agreement, a
"Change in Control" of the Company shall mean the first to occur of any of the
following events:
(a) Any person or entity or group of affiliated persons or entities
(other than UNB) becomes a beneficial owner, directly or indirectly, of 25% or
more of UNB's and/or the Bank's voting securities or all or substantially all of
the assets of UNB and/or the Bank.
(b) UNB and/or the Bank consummates a definitive agreement pursuant to
which either UNB or the Bank is merged, consolidated or combined with or into an
unaffiliated entity in which either or both of the following occurs: (i) the
directors of UNB and/or Bank, as applicable, immediately prior to such merger,
consolidation or combination will constitute less than a majority of the board
of directors of the surviving, new or combined entity; or (ii) less than 75% of
the outstanding voting securities of the surviving, new or combined entity will
be beneficially owned by the stockholders of UNB immediately prior to such
merger, consolidation or combination.
(c) UNB and/or the Bank consummates a definitive agreement pursuant to
which all or substantially all of UNB's and/or the Bank's assets are transferred
other than to a wholly-owned subsidiary of UNB.
10
(d) A majority of the members of the Board of Directors of either UNB
or the Bank shall be persons who: (i) were not members of such Board on the date
hereof ("current members"); and (ii) were not nominated by a vote of the Board
which included the affirmative vote of a majority of the current members on the
Board at the time of their nomination ("future designees") and (iii) were not
nominated by a vote of the Board which included the affirmative vote of a
majority of the current members and future designees, taken as a group, on the
Board at the time of their nomination.
4.7 Notice. Any notice of termination of the employment of the
Executive by the Company or by the Executive to the Company shall be
communicated by written Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a dated notice
which shall (i) indicate the specific termination provision in this Agreement
relied upon; (ii) except for a termination without Cause, set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the employment of the Executive under the provision so indicated;
(iii) specify a date of termination, which shall be not less than thirty (30)
nor more than ninety (90) days after such Notice of Termination is given, except
in the case of termination of employment by the Company of the Executive for
Cause pursuant to Section 4.1 hereof, in which case the Notice of Termination
may specify a date of termination as of the date such Notice of Termination is
given; and (iv) be given in the manner specified in Section 5.6 hereof.
4.8 Mitigation. Executive shall not be required to mitigate the amount
of any payment provided for in Article IV by seeking other employment or
otherwise. There shall be no
11
offset from payments or benefits due the Executive hereunder if Executive shall
obtain any other employment or otherwise.
4.9 Parachute Payment Tax Gross-Up.
(a) Additional Payments. If, for any taxable year, Executive shall be
liable for the payment of an excise tax under Section 4999 or other substitute
or similar tax assessment (the "Excise Tax") of the Internal Revenue Code of
1986, as amended (the "Code"), including the corresponding provisions of any
succeeding law, with respect to any payments under this Section 4.9 or any
payments and/or benefits under this Agreement or under any benefit plan of the
Company applicable to Executive individually or generally to executives or
employees of the Company, then, notwithstanding any other provisions of this
Agreement, the Company shall pay to the Executive an additional amount (the
"Gross-Up Payment") such that the net amount retained by the Executive, after
deduction of any Excise Tax on such payments and benefits and any federal, state
and local income tax and Excise Tax upon payments provided for in this Section
4.9, shall be equal to the payments due to the Executive hereunder and the
payments and/or benefits due to the Executive under any benefit plan of the
Company. Each Gross-Up Payment shall be made by domestic cashier's or
treasurer's check, certified check or wire transfer, upon the later of (i) five
(5) days after the date the Executive notifies the Company of its need to make
such Gross-Up Payment, or (ii) the date of any payment causing the liability for
such Excise Tax. The amount of any Gross-Up Payment under this section shall be
computed by a nationally recognized certified public accounting firm designated
jointly by the Company and the Executive. The cost of such services by the
accounting firm shall be paid by the Company. If the Company and the Executive
are unable to
12
designate jointly the accounting firm, then the firm shall be the accounting
firm used by the Company immediately prior to the Change in Control.
(b) IRS Disputed Claims. The Executive shall notify the Company in
writing of any claim by the Internal Revenue Service ("IRS") that, if
successful, would require the payment by the Company of a Gross-Up Payment in
addition to that payment previously paid by the Company pursuant to this
section. Such notification shall be given as soon as practicable but no later
than fifteen (15) business days after the Executive is informed in writing of
such claim and shall apprise the Company of the nature of such claim, the date
on which such claim is requested to be paid, and attach a copy of the IRS
notice. The Executive shall not pay such claim prior to the expiration of the
thirty (30) day period following the date on which the Executive gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such period that it desires to
contest such claim, the Executive shall:
(i) Give the Company any information reasonably requested by
the Company relating to such claim;
(ii) Take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company;
(iii) Cooperate with the Company in good faith in order
effectively to contest such claim; and
13
(iv) Permit the Company to participate in any proceedings
relating to such claim; provided, however that the Company shall pay
directly all costs and expenses (including legal and accounting fees,
as well as other expenses and any additional interest and penalties)
incurred by the Executive and the Company in connection with an IRS
levy, contest or claim and provided further that the Company shall not
take any action or fail to make any Gross-Up Payment so as to cause the
assessment of any IRS levy and the Company shall cause any levy so
assessed to be immediately released by payment of the Gross-Up Amount,
together with all costs, interest and penalties.
ARTICLE V.
MISCELLANEOUS
5.1 Severance Compensation and Benefits Not in Derogation of Other
Benefits. Anything to the contrary herein contained notwithstanding, the payment
or obligation to pay any monies, or granting of any benefits, rights or
privileges to Executive as provided in this Agreement shall not be in lieu or
derogation of the rights and privileges that the Executive now has or will have
under any plans or programs of the Company specified in Sections 2.3 through 2.5
inclusive, except that the Executive shall not be entitled to the benefits of
any other plan or program of the Company expressly providing for severance or
termination pay.
5.2 Indemnification By Company For Executive's Expenses. If the
termination of Executive's employment occurs after a Change in Control of the
Company, the Company shall pay all expenses incurred by the Executive in
connection with any claim by the Executive against the Company hereunder,
including but not limited to attorneys' and accountants' fees in addition to
other expenses incurred by the Executive. Such expenses shall be payable monthly
upon demand
14
by the Executive. A court of competent jurisdiction shall be empowered to deny
payment to the Executive of such expenses, including attorneys' and accountants'
fees, only if it determines that the Executive instituted a lawsuit or
proceeding hereunder in bad faith or without reasonable cause. The Executive
shall not be entitled to reimbursement for his legal fees if his termination of
employment occurs prior to a Change in Control of the Company.
5.3 Non-Disclosure of Confidential Information and Non-Compete.
(a) Non-Disclosure of Confidential Information. Except in the course of
the employment of the Executive by the Company, and in the pursuit of the
business of the Company or any of its subsidiaries or affiliates, the Executive
shall not, at any time during or following the term of this Agreement, disclose
or use, any confidential information or proprietary data of the Company or any
of its subsidiaries or affiliates. The Executive agrees that all information
concerning the identity of the customers of the Company and the relations of the
Company to its customers is confidential information, unless such information is
otherwise publicly known.
(b) Non-Competition. The Executive agrees that during the Executive's
employment by the Company pursuant to this Agreement and during the
Post-Employment Non-Compete Period (as hereinafter defined), the Executive will
not, without the prior written consent of the Bank, engage in, become
interested, directly or indirectly, as a sole proprietor, as a partner in a
partnership, or as a substantial shareholder in a corporation, nor become
associated with, in the capacity of an employee, director, officer, principal
agent, trustee or in any other capacity whatsoever, any enterprise conducted in
the trading area of business of the Bank (specifically, in New Jersey, New York
or Pennsylvania) which enterprise is, or may be deemed to be, competitive with
any business carried on by the Bank as of the date of the termination of the
Executive's
15
employment or his retirement. The Post-Employment Non-Compete Period shall mean
a two-year period of time following termination of the Executive's employment
with the Company, except if the termination of employment occurs after a Change
in Control of the Company the Non-Compete Period shall be reduced to zero, and
in the case of termination for Poor Performance prior to a Change in Control of
the Company, it shall be reduced to one year.
(c) Specific Performance. The Executive agrees that the Company does
not have an adequate remedy at law for the breach of this Section 5.3 and agrees
that the Executive shall be subject to injunctive relief and equitable remedies
as a result of a breach of any provision of this Section 5.3. The invalidity or
unenforceability of any provision of this Section 5.3 (or this Agreement) shall
not affect the force and effect of the remaining valid portions. Except as
expressly provided in this Agreement, no breach by the Executive of the
provisions of this Section 5.3 shall entitle the Company to withhold any
benefits payable to the Executive hereunder.
5.4 Payroll and Withholding Taxes. All payments to be made or benefits
to be provided hereunder by the Company shall be subject to reduction by the
applicable federal payroll or withholding taxes.
5.5 Changes. This Agreement may not be modified, changed, amended, or
altered except in a writing signed by the Executive and by an officer of the
Company duly authorized by the Boards of Directors or the executive committee of
both the Bank and UNB.
5.6 Notices. All notices given or required to be given herein shall be
in writing or sent by United States first-class certified or registered mail,
postage prepaid, to the Executive at the last-known address for the Executive
(or to the personal representative of the Executive upon his death), and to the
Company at the principal executive office for UNB (or any successor thereto), to
16
the attention of the Chairman of the Board. All such notices shall be effective
when deposited in the mail in the manner specified in this Section 5.6. Either
party by a notice in writing to the other party may change or designate the
place for receipt of such notices.
5.7 Rights Absolute. No course of conduct between the Company and the
Executive and no delay or omission by the Company or the Executive to exercise
any right or power given under this Agreement shall: (i) impair the subsequent
exercise of any right or power or (ii) be construed to be a waiver of any
default or to be an acquiescence in or consent to the curing of any default
while any other default shall continue to exist, or be construed to be a waiver
of such continuing default or of any other right or power that shall theretofore
have arisen; and every power and remedy granted by law and by this Agreement to
any party hereto may be exercised from time to time and as often as may be
deemed expedient. All such rights and powers shall be cumulative to the fullest
extent permitted by law.
5.8 Successors. This Agreement shall inure to the benefit of and be
binding upon (i) the Executive and, to the extent applicable, his heirs,
assigns, executors, and personal representatives and (ii) the Company, its
successors and assigns, including, without limitation, any person, partnership,
or corporation which may acquire all or substantially all of the assets and
business of the Company, or with or into which the Company may be consolidated
or merged, and this provision shall apply in the event of any subsequent merger,
consolidation, or transfer.
5.9 Non-Assignability. This Agreement is personal to each of the
parties and none of the parties may assign or delegate any of its rights or
obligations under this Agreement without the prior written consent of the other
party.
17
5.10 Governing Law. This Agreement shall be governed in all respects
and be interpreted by and under the laws of the State of New Jersey.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
ATTEST UNITED NATIONAL BANCORP
By: By:
-------------------------------- ---------------------------------
Xxxxx X. Xxxxx, Xx., Secretary Xxxxxx X. Xxxxx, Chairman
Compensation Committee of
the Board of Directors
ATTEST: UNITED NATIONAL BANK
By: By:
-------------------------------- ---------------------------------
Xxxxx X. Xxxxx, Xx., Cashier Xxxxxx X. Xxxxx, Chairman
Compensation Committee of
the Board of Directors
--------------------------- --------------------------------
Witness XXXXXX X. XXXXXX
18
EMPLOYMENT AND CHANGE-IN-CONTROL AGREEMENT
BY AND BETWEEN
XXXXXX X. XXXX ("Executive")
UNITED NATIONAL BANCORP, a New Jersey Corporation
and
UNITED NATIONAL BANK
DATED AS OF November 14, 2000
TABLE OF CONTENTS
PAGE
BACKGROUND ...................................................................................................... 1
ARTICLE I
TERM OF EMPLOYMENT AND DUTIES
1.1 Agreement ..................................................................................... 2
1.2 Term .......................................................................................... 2
1.3 Position ...................................................................................... 3
ARTICLE II
COMPENSATION AND BENEFITS
2.1 Base Compensation ............................................................................. 3
2.2 Additional Incentive Compensation ............................................................. 4
2.3 Retirement Plans .............................................................................. 4
2.4 Medical, Disability and Life Insurance Plans .................................................. 4
2.5 Stock Award Plans ............................................................................. 5
2.6 No Adverse Change After Change in Control...................................................... 5
2.7 Expense Reimbursement ......................................................................... 5
2.8 W-2 Compensation............................................................................... 5
ARTICLE III
DISABILITY OR DEATH
3.1 Termination for Disability .................................................................... 6
3.2 Termination Due to Death ...................................................................... 6
ARTICLE IV
OTHER TERMINATION
4.1 Termination for Cause ......................................................................... 7
4.2 Termination for Poor Performance .............................................................. 8
4.3 Termination Without Cause Prior to Change in Control .......................................... 9
4.4 Compensation and Benefits After Change in Control ............................................. 9
4.5 Resignation Without Good Reason ...............................................................10
4.6 Definition of Change in Control ...............................................................10
4.7 Notice ........................................................................................11
4.8 Mitigation ....................................................................................11
4.9 Parachute Payment Tax Gross-Up.................................................................12
ARTICLE V
MISCELLANEOUS
5.1 Severance Compensation and Benefits Not in
Derogation of Other Benefits ................................................................14
5.2 Indemnification by Company For Executive's
Expenses ....................................................................................14
5.3 Non-Disclosure of Confidential Information
and Non-Compete .............................................................................15
5.4 Payroll and Withholding Taxes .................................................................16
5.5 Changes .......................................................................................16
5.6 Notices .......................................................................................16
5.7 Rights Absolute ...............................................................................17
5.8 Successors ....................................................................................17
5.9 Non-Assignability .............................................................................17
5.10 Governing Law .................................................................................18
ii
EMPLOYMENT AND CHANGE-IN-CONTROL AGREEMENT
THIS AGREEMENT is made as of the 14th day of November, 2000 by
and between United National Bancorp, a New Jersey corporation ("UNB"), United
National Bank (the "Bank") (jointly hereinafter referred to as the "Company")
and Xxxxxx X. Xxxx (hereinafter referred to as the "Executive").
BACKGROUND
WHEREAS, the Executive is employed by the Company; and
WHEREAS, the Executive, throughout her tenure, has worked
diligently in her position for the business of the Bank and UNB; and
WHEREAS, the Boards of Directors of the Bank and UNB
(collectively, the "Boards") are of the opinion that the future services of the
Executive are of substantial value to the Bank and UNB and that it is important
for the growth and development of the Bank and UNB that the Executive continue
in her position; and
WHEREAS, if the Company should receive any proposal from a
third party concerning a possible business combination with, or acquisition of
the equity securities of, the Company, the Boards believe it is imperative that
the Company and the Boards be able to rely upon the Executive to continue in her
position, and that the Boards be able to receive and rely upon the advice of the
Executive, if requested, as to the best interests of the Company and its
shareholders, without concern that the Executive may be distracted by personal
uncertainties or risks created by such a proposal; and
WHEREAS, to achieve such a goal, and to retain the services of
the Executive prior to any such activity, the Boards and the Executive have
agreed to enter into this Employment Agreement.
NOW, THEREFORE, to assure the Company that it will retain the
continued dedication of the Executive as well as the availability of the advice
and counsel of the Executive notwithstanding the possibility or occurrence of a
Change in Control (as hereafter defined) of the Company, and to induce the
Executive to remain in the employ of the Company, and for other good and
valuable consideration, the Company and the Executive, each intending to be
legally bound hereby, agree as follows:
ARTICLE I.
TERM OF EMPLOYMENT AND DUTIES
1.1 Agreement. The Company hereby employs the Executive
and the Executive hereby agrees to render such services to the Company on the
terms and conditions set forth in this Agreement.
1.2 Term. The term of employment under this Agreement
(hereinafter the "term") shall commence on November 14, 2000 and shall terminate
June 30, 2003, except that if this Agreement is not renewed, its term and
Employee's term of employment shall be automatically renewed for successive five
(5) year terms with the first such term commencing on July 1, 2003, unless the
Company gives Employee notice of termination of this Agreement ninety (90) days
prior to June 30, 2003, or any succeeding termination date pursuant to this
provision; and except further that if there shall occur a Change in Control of
the Company during such period, the term shall end on the third anniversary of
the Change in Control (regardless of whether such third anniversary
2
occurs before or after June 30, 2003). Notwithstanding the foregoing, the term
shall expire on the date the Executive turns age 65 if it has not yet expired by
such date. The Agreement may be sooner terminated in accordance with the terms
and conditions hereinafter set forth.
1.3 Position. During the term of this Agreement, the Executive
shall be employed as the Senior Vice President and Strategic Planning/Systems
Manager, of the Bank or in comparable positions, or the same positions with such
other corporate or divisional centers as shall succeed to the business, assets
and properties of UNB or the Bank, as the case may be. The Executive shall
devote her full time and attention to the business of the Company, and shall not
during the term be engaged in any other business activity. This paragraph shall
not be construed as preventing the Executive from managing any investments of
hers or her family's which do not require significant service in the operation
of such investments, nor as preventing her service on any other Board of
Directors for which she served as of the date hereof or serves hereafter with
the consent of the Board of Directors of UNB.
ARTICLE II.
COMPENSATION AND BENEFITS
2.1 Base Compensation. The Company will compensate and pay the
Executive for her services during the term of this Agreement at a minimum base
salary per year of $97,400 with annual increases in amounts to be determined by
the Board of Directors of UNB each year ("Base Salary"). In no event shall the
Base Salary of the Executive under this Agreement in effect at any particular
time be reduced without the prior written consent of Executive, except that
prior to a Change in Control of the Company (but not thereafter), the Base
Salary may be reduced without
3
the Executive's consent no more than once per year, with each such reduction
limited to ten percent (10%) of the prior year's Base Salary.
2.2 Additional Incentive Compensation. During the term of this
Agreement, the Executive shall also be entitled to participate in other
executive incentive compensation arrangements, similar to the incentive
compensation arrangements now in effect for executives of the Company pursuant
to which executives are paid an annual bonus; provided, however, that prior to a
Change in Control of the Company the participation of the Executive in such
arrangements shall mean that the Executive is eligible for an incentive award
but shall not obligate the Company to make any incentive award or pay any
incentive compensation to Executive; provided further, however, that after a
Change in Control of the Company, the Executive must be paid an annual bonus
that is at least as large as the highest bonus paid to the Executive in any year
during the three years immediately prior to a Change in Control.
2.3 Retirement Plans. During the term of this Agreement, the
Executive shall be entitled to participate in any plans of the Company relating
to pension, profit sharing, benefit equalization, or other programs now in
effect or that the Company may hereafter adopt for the benefit of its employees
or executives.
2.4 Medical, Disability and Life Insurance Plans. During the
term of this Agreement, the Executive shall be entitled to participate in any
medical coverage, hospitalization, medical reimbursement, disability, and life
insurance plans now in effect or that the Company may hereafter adopt.
2.5 Stock Award Plans. During the term of this Agreement, the
Executive shall be entitled to participate in and receive the benefits of any
stock option, restricted stock or similar
4
stock based compensation plans covering executives of the Company which
presently exist or may come into existence hereafter (a "Stock Plan"); provided,
however, that the participation of the Executive in such Stock Plans shall mean
that the Executive is eligible to receive benefits and awards but shall not
obligate the Company to grant the Executive any particular benefits or awards.
2.6 No Adverse Change After Change in Control. Before a
Change-in-Control of the Company, the Company may change or terminate any
benefit plan or bonus plan provided to the Executive. Following a Change in
Control of the Company, the Company may not change or terminate any plans set
forth above under Sections 2.2, 2.3, 2.4 and 2.5, which would adversely affect
the Executive's rights or benefits thereunder unless such change is consented to
by the Executive or occurs as a consequence of a change in law or regulation.
2.7 Expense Reimbursement. During the term of this Agreement,
the Company shall reimburse the Executive or otherwise provide for or pay for
all reasonable expenses incurred by the Executive in furtherance or in
connection with the business of the Company including but not limited to
automobile and travel expenses, and all reasonable entertainment expenses,
subject to such reasonable limitations as may be established by the Boards from
time to time. If such expenses are paid by the Executive, the Company will
reimburse the Executive therefor.
2.8 W-2 Compensation. "W-2 Compensation" as used in this
Agreement means the Employee's "Gross Pay" (or any analogous term having the
same or a similar meaning as "Gross Pay" hereafter used) as reported or
reportable on her W-2 statement for the period or periods in question. When
referring to a current tax year, "W-2 Compensation" refers to the annualized
total computed to the end of such current year of all items includable in "Gross
Pay" at their current level or levels unless the context clearly indicates
otherwise.
5
ARTICLE III.
DISABILITY OR DEATH
3.1 Termination for Disability. If the Executive shall become
disabled or incapacitated to the extent that she is unable to perform her duties
for a period of four (4) months in any twelve (12) month period, the Company may
terminate the employment of the Executive by written notice of termination
provided to the Executive. In the event of a termination for disability or
incapacity hereunder, the Executive shall have no right to compensation or other
benefits for any period after the date of termination, except as follows: (i)
before a Change in Control of the Company, if and to the extent that the
Executive is not receiving from public or private insurance policies paid for by
the Company disability benefits equal to or greater than her current W-2
Compensation for such six month period prior to the termination, then for a
period of six months following the termination, the Company shall continue to
pay to the Executive, as severance pay, an amount which together with the
disability insurance payments equals 100% of her current W-2 Compensation for
such six month period; and (ii) after a Change in Control of the Company, such
termination shall trigger compensation and benefits in accordance with section
4.4 of this Agreement.
3.2 Termination Due to Death. Employment of the Executive
shall automatically terminate by reason of the death of the Executive and no
notice of termination shall be required. In the event of a termination due to
the death of the Executive, either before or after a Change in Control of the
Company, the estate of the Executive and her heirs and beneficiaries shall have
no right to compensation or other benefits for any period after the date of
death except as follows: if and to the extent that the Executive's estate,
designated beneficiaries and heirs do not
6
receive, from life insurance policies paid for by the Company, proceeds equal to
or greater than 200% of her current W-2 Compensation as of the date of death,
then the Company shall continue to pay to the Executive's estate, as severance
pay, the Executive's W-2 Compensation for up to six months or, if earlier, until
such payments, together with the proceeds of the life insurance policies, equal
to 200% of the Executive's current W-2 Compensation.
ARTICLE IV.
OTHER TERMINATION
4.1 Termination For Cause.
(a) The Company shall have the right, at any time upon prior
written Notice of Termination (as herein defined), to terminate the employment
of the Executive for Cause. For the purpose of this Agreement, "Cause" shall
mean willful misconduct, breach of fiduciary duty involving personal benefit to
the Executive, conviction of a felony, willful breach or willful neglect by the
Executive of her duties as an Executive of the Company, or persistent negligence
or misconduct in the performance of such duties. For purposes of this paragraph,
no act or failure to act on the part of the Executive shall be considered
"willful" unless done or omitted not in good faith and without reasonable belief
that the action or omission was in the best interest of the Company. Any acts
undertaken by the Executive on the instruction of the Board of Directors of UNB
or the Bank shall not constitute Cause. If the termination for Cause occurs
after a Change in Control, the Executive shall not be deemed to have been
terminated for Cause hereunder unless and until: (i) there shall have been
delivered to the Executive a copy of a certification by a majority of the
non-officer members of the Board of Directors of the Bank finding that, in the
good faith opinion of such majority, the Executive was guilty of conduct which
was deemed to be Cause for
7
termination and specifying the particulars thereof in detail, and (ii) after
reasonable notice to the Executive there shall have been an opportunity for the
Executive, together with counsel to the Executive, to be heard before such
non-officer members of the Board of Directors.
(b) In the event employment is validly terminated for Cause
pursuant to Section 4.1(a) hereof, the Executive shall have no right to further
compensation or benefits hereunder for any period after the date of such
termination.
4.2 Termination For Poor Performance.
(a) The Company shall have the right, at any time prior to a
Change in Control of the Company (but not thereafter), to terminate the
employment of the Executive for Poor Performance by written Notice of
Termination (as defined in Section 4.7 hereof). For the purpose of this
Agreement, "Poor Performance" shall mean a finding by a majority of the
non-officer members of each of the Boards of Directors of UNB and the Bank that,
in the good faith opinion of each such majority: (i) the Executive's performance
of her duties was sufficiently unsatisfactory to merit termination, and (ii)
prior notice of such unsatisfactory performance was given to the Executive
without cure having occurred. In making such a finding, the Board of Directors
shall utilize the input of the Chief Executive Officer ("CEO") unless the CEO is
being terminated.
(b) In the event employment is validly terminated for Poor
Performance pursuant to Section 4.2(a) hereof, the Company shall continue to pay
to the Executive, as severance pay, her Base Salary for a period of six months
following such termination and shall continue to pay for and to provide medical
insurance for the Executive and her family for such period, but the Executive
shall have no right to any other form of compensation or benefits hereunder for
any period after the date of such termination.
8
4.3 Termination Without Cause Prior to Change in Control.
(a) Right to Terminate. The Company shall have the right to
terminate the employment of the Executive without Cause if the Company does so
by prior written Notice of Termination which specifies that the Company agrees
to pay the severance compensation and benefits herein set forth.
(b) Severance Compensation and Benefits Prior to Change in
Control. If prior to a Change in Control of the Company, the Company terminates
the employment of the Executive other than for Cause, Poor Performance,
disability or death of the Executive, the Company shall continue to pay to the
Executive, as severance pay, her current W-2 Compensation in each of the two
years following such termination and shall continue to pay for and to provide
medical insurance for the Executive and her family for such period. The
Executive shall be entitled to no other compensation or benefits hereunder after
the effective date of such termination.
4.4 Compensation and Benefits After Change in Control. After a
Change in Control of the Company, the Company shall pay to the Executive within
ten (10) business days following the date of Change in Control a lump sum equal
to the product of (x) 2.00, times (y) the average of W-2 Compensation, paid to
the Executive by the Company in each of the five years (or such fewer years as
the Executive shall have been employed by the Company) up to and including the
year of Change-in-Control. The Executive shall be entitled to no other
compensation or benefits hereunder after the effective date of such Change in
Control (except as provided by Section 5.2). Upon payment of such benefits as
provided in this Section 4.4 and Section 5.2, this Agreement shall terminate and
be of no further force or effect.
9
4.5 Resignation Without Good Reason Prior to Change in
Control.
(a) Right to Resign. The Executive may resign without Good
Reason at any time upon four weeks prior notice prior to a Change in Control.
(b) No Compensation or Benefits. If the Executive resigns
without Good Reason at any time prior to a Change in Control, the Executive
shall be entitled to no further compensation or benefits hereunder after the
effective date of such resignation.
4.6 Definition of Change in Control. For purposes of this
Agreement, a "Change in Control" of the Company shall mean the first to occur of
any of the following events:
(a) Any person or entity or group of affiliated persons or
entities (other than UNB) becomes a beneficial owner, directly or indirectly, of
25% or more of UNB's and/or the Bank's voting securities or all or substantially
all of the assets of UNB and/or the Bank.
(b) UNB and/or the Bank consummates a definitive agreement
pursuant to which either UNB or the Bank is merged, consolidated or combined
with or into an unaffiliated entity in which either or both of the following
occurs: (i) the directors of UNB and/or Bank, as applicable, immediately prior
to such merger, consolidation or combination will constitute less than a
majority of the board of directors of the surviving, new or combined entity; or
(ii) less than 75% of the outstanding voting securities of the surviving, new or
combined entity will be beneficially owned by the stockholders of UNB
immediately prior to such merger, consolidation or combination.
(c) UNB and/or the Bank consummates a definitive agreement
pursuant to which all or substantially all of UNB's and/or the Bank's assets are
transferred other than to a wholly-owned subsidiary of UNB.
10
(d) A majority of the members of the Board of Directors of
either UNB or the Bank shall be persons who: (i) were not members of such Board
on the date hereof ("current members"); and (ii) were not nominated by a vote of
the Board which included the affirmative vote of a majority of the current
members on the Board at the time of their nomination ("future designees") and
(iii) were not nominated by a vote of the Board which included the affirmative
vote of a majority of the current members and future designees, taken as a
group, on the Board at the time of their nomination.
4.7 Notice. Any notice of termination of the employment of the
Executive by the Company or by the Executive to the Company shall be
communicated by written Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a dated notice
which shall (i) indicate the specific termination provision in this Agreement
relied upon; (ii) except for a termination without Cause, set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the employment of the Executive under the provision so indicated;
(iii) specify a date of termination, which shall be not less than thirty (30)
nor more than ninety (90) days after such Notice of Termination is given, except
in the case of termination of employment by the Company of the Executive for
Cause pursuant to Section 4.1 hereof, in which case the Notice of Termination
may specify a date of termination as of the date such Notice of Termination is
given; and (iv) be given in the manner specified in Section 5.6 hereof.
4.8 Mitigation. Executive shall not be required to mitigate
the amount of any payment provided for in Article IV by seeking other employment
or otherwise. There shall be no
11
offset from payments or benefits due the Executive hereunder if Executive shall
obtain any other employment or otherwise.
4.9 Parachute Payment Tax Gross-Up.
(a) Additional Payments. If, for any taxable year, Executive
shall be liable for the payment of an excise tax under Section 4999 or other
substitute or similar tax assessment (the "Excise Tax") of the Internal Revenue
Code of 1986, as amended (the "Code"), including the corresponding provisions of
any succeeding law, with respect to any payments under this Section 4.9 or any
payments and/or benefits under this Agreement or under any benefit plan of the
Company applicable to Executive individually or generally to executives or
employees of the Company, then, notwithstanding any other provisions of this
Agreement, the Company shall pay to the Executive an additional amount (the
"Gross-Up Payment") such that the net amount retained by the Executive, after
deduction of any Excise Tax on such payments and benefits and any federal, state
and local income tax and Excise Tax upon payments provided for in this Section
4.9, shall be equal to the payments due to the Executive hereunder and the
payments and/or benefits due to the Executive under any benefit plan of the
Company. Each Gross-Up Payment shall be made by domestic cashier's or
treasurer's check, certified check or wire transfer, upon the later of (i) five
(5) days after the date the Executive notifies the Company of its need to make
such Gross-Up Payment, or (ii) the date of any payment causing the liability for
such Excise Tax. The amount of any Gross-Up Payment under this section shall be
computed by a nationally recognized certified public accounting firm designated
jointly by the Company and the Executive. The cost of such services by the
accounting firm shall be paid by the Company. If the Company and the Executive
are unable to
12
designate jointly the accounting firm, then the firm shall be the accounting
firm used by the Company immediately prior to the Change in Control.
(b) IRS Disputed Claims. The Executive shall notify the
Company in writing of any claim by the Internal Revenue Service ("IRS") that, if
successful, would require the payment by the Company of a Gross-Up Payment in
addition to that payment previously paid by the Company pursuant to this
section. Such notification shall be given as soon as practicable but no later
than fifteen (15) business days after the Executive is informed in writing of
such claim and shall apprise the Company of the nature of such claim, the date
on which such claim is requested to be paid, and attach a copy of the IRS
notice. The Executive shall not pay such claim prior to the expiration of the
thirty (30) day period following the date on which the Executive gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such period that it desires to
contest such claim, the Executive shall:
(i) Give the Company any information reasonably
requested by the Company relating to such claim;
(ii) Take such action in connection with contesting
such claim as the Company shall reasonably request in writing from time
to time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the
Company;
(iii) Cooperate with the Company in good faith in
order effectively to contest such claim; and
13
(iv) Permit the Company to participate in any
proceedings relating to such claim; provided, however that the Company
shall pay directly all costs and expenses (including legal and
accounting fees, as well as other expenses and any additional interest
and penalties) incurred by the Executive and the Company in connection
with an IRS levy, contest or claim and provided further that the
Company shall not take any action or fail to make any Gross-Up Payment
so as to cause the assessment of any IRS levy and the Company shall
cause any levy so assessed to be immediately released by payment of the
Gross-Up Amount, together with all costs, interest and penalties.
ARTICLE V.
MISCELLANEOUS
5.1 Severance Compensation and Benefits Not in Derogation of
Other Benefits. Anything to the contrary herein contained notwithstanding, the
payment or obligation to pay any monies, or granting of any benefits, rights or
privileges to Executive as provided in this Agreement shall not be in lieu or
derogation of the rights and privileges that the Executive now has or will have
under any plans or programs of the Company specified in Sections 2.3 through 2.5
inclusive, except that the Executive shall not be entitled to the benefits of
any other plan or program of the Company expressly providing for severance or
termination pay.
5.2 Indemnification By Company For Executive's Expenses. If
the termination of Executive's employment occurs after a Change in Control of
the Company, the Company shall pay all expenses incurred by the Executive in
connection with any claim by the Executive against the Company hereunder,
including but not limited to attorneys' and accountants' fees in addition to
other expenses incurred by the Executive. Such expenses shall be payable monthly
upon demand
14
by the Executive. A court of competent jurisdiction shall be empowered to deny
payment to the Executive of such expenses, including attorneys' and accountants'
fees, only if it determines that the Executive instituted a lawsuit or
proceeding hereunder in bad faith or without reasonable cause. The Executive
shall not be entitled to reimbursement for her legal fees if her termination of
employment occurs prior to a Change in Control of the Company.
5.3 Non-Disclosure of Confidential Information and
Non-Compete.
(a) Non-Disclosure of Confidential Information. Except in the
course of the employment of the Executive by the Company, and in the pursuit of
the business of the Company or any of its subsidiaries or affiliates, the
Executive shall not, at any time during or following the term of this Agreement,
disclose or use, any confidential information or proprietary data of the Company
or any of its subsidiaries or affiliates. The Executive agrees that all
information concerning the identity of the customers of the Company and the
relations of the Company to its customers is confidential information, unless
such information is otherwise publicly known.
(b) Non-Competition. The Executive agrees that during the
Executive's employment by the Company pursuant to this Agreement and during the
Post-Employment Non-Compete Period (as hereinafter defined), the Executive will
not, without the prior written consent of the Bank, engage in, become
interested, directly or indirectly, as a sole proprietor, as a partner in a
partnership, or as a substantial shareholder in a corporation, nor become
associated with, in the capacity of an employee, director, officer, principal
agent, trustee or in any other capacity whatsoever, any enterprise conducted in
the trading area of business of the Bank (specifically, in New Jersey, New York
or Pennsylvania) which enterprise is, or may be deemed to be, competitive with
any business carried on by the Bank as of the date of the termination of the
Executive's
15
employment or her retirement. The Post-Employment Non-Compete Period shall mean
a two-year period of time following termination of the Executive's employment
with the Company, except if the termination of employment occurs after a Change
in Control of the Company the Non-Compete Period shall be reduced to zero, and
in the case of termination for Poor Performance prior to a Change in Control of
the Company, it shall be reduced to one year.
(c) Specific Performance. The Executive agrees that the
Company does not have an adequate remedy at law for the breach of this Section
5.3 and agrees that the Executive shall be subject to injunctive relief and
equitable remedies as a result of a breach of any provision of this Section 5.3.
The invalidity or unenforceability of any provision of this Section 5.3 (or this
Agreement) shall not affect the force and effect of the remaining valid
portions. Except as expressly provided in this Agreement, no breach by the
Executive of the provisions of this Section 5.3 shall entitle the Company to
withhold any benefits payable to the Executive hereunder.
5.4 Payroll and Withholding Taxes. All payments to be made or
benefits to be provided hereunder by the Company shall be subject to reduction
by the applicable federal payroll or withholding taxes.
5.5 Changes. This Agreement may not be modified, changed,
amended, or altered except in a writing signed by the Executive and by an
officer of the Company duly authorized by the Boards of Directors or the
executive committee of both the Bank and UNB.
5.6 Notices. All notices given or required to be given herein
shall be in writing or sent by United States first-class certified or registered
mail, postage prepaid, to the Executive at the last-known address for the
Executive (or to the personal representative of the Executive upon her death),
and to the Company at the principal executive office for UNB (or any successor
thereto),
16
to the attention of the Chairman of the Board. All such notices shall be
effective when deposited in the mail in the manner specified in this Section
5.6. Either party by a notice in writing to the other party may change or
designate the place for receipt of such notices.
5.7 Rights Absolute. No course of conduct between the Company
and the Executive and no delay or omission by the Company or the Executive to
exercise any right or power given under this Agreement shall: (i) impair the
subsequent exercise of any right or power or (ii) be construed to be a waiver of
any default or to be an acquiescence in or consent to the curing of any default
while any other default shall continue to exist, or be construed to be a waiver
of such continuing default or of any other right or power that shall theretofore
have arisen; and every power and remedy granted by law and by this Agreement to
any party hereto may be exercised from time to time and as often as may be
deemed expedient. All such rights and powers shall be cumulative to the fullest
extent permitted by law.
5.8 Successors. This Agreement shall inure to the benefit of
and be binding upon (i) the Executive and, to the extent applicable, her heirs,
assigns, executors, and personal representatives and (ii) the Company, its
successors and assigns, including, without limitation, any person, partnership,
or corporation which may acquire all or substantially all of the assets and
business of the Company, or with or into which the Company may be consolidated
or merged, and this provision shall apply in the event of any subsequent merger,
consolidation, or transfer.
5.9 Non-Assignability. This Agreement is personal to each of
the parties and none of the parties may assign or delegate any of its rights or
obligations under this Agreement without the prior written consent of the other
party.
17
5.10 Governing Law. This Agreement shall be governed in all
respects and be interpreted by and under the laws of the State of New Jersey.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
ATTEST UNITED NATIONAL BANCORP
By: ______________________________ By: ____________________________
Xxxxx X. Xxxxx, Xx., Secretary Xxxxxx X. Xxxxx, Chairman
Compensation Committee of
the Board of Directors
ATTEST: UNITED NATIONAL BANK
By: ______________________________ By: _____________________________
Xxxxx X. Xxxxx, Xx., Cashier Xxxxxx X. Xxxxx, Chairman
Compensation Committee of
the Board of Directors
__________________________________ _________________________________
Witness XXXXXX X. XXXX
18
EMPLOYMENT AND CHANGE-IN-CONTROL AGREEMENT
BY AND BETWEEN
XXXXXXX X. XXXXXXX ("Executive")
UNITED NATIONAL BANCORP, a New Jersey Corporation
and
UNITED NATIONAL BANK
DATED AS OF November 14, 2000
TABLE OF CONTENTS
PAGE
BACKGROUND ...................................................................................................... 1
ARTICLE I
TERM OF EMPLOYMENT AND DUTIES
1.1 Agreement ..................................................................................... 2
1.2 Term .......................................................................................... 2
1.3 Position ...................................................................................... 3
ARTICLE II
COMPENSATION AND BENEFITS
2.1 Base Compensation ............................................................................. 3
2.2 Additional Incentive Compensation ............................................................. 4
2.3 Retirement Plans .............................................................................. 4
2.4 Medical, Disability and Life Insurance Plans .................................................. 4
2.5 Stock Award Plans ............................................................................. 5
2.6 No Adverse Change After Change in Control...................................................... 5
2.7 Expense Reimbursement ......................................................................... 5
2.8 W-2 Compensation................................................................................5
ARTICLE III
DISABILITY OR DEATH
3.1 Termination for Disability .................................................................... 6
3.2 Termination Due to Death ...................................................................... 6
ARTICLE IV
OTHER TERMINATION
4.1 Termination for Cause ......................................................................... 7
4.2 Termination for Poor Performance .............................................................. 8
4.3 Termination Without Cause Prior to Change in Control .......................................... 9
4.4 Compensation and Benefits After Change in Control ............................................. 9
4.5 Resignation Without Good Reason ...............................................................10
4.6 Definition of Change in Control ...............................................................10
4.7 Notice ........................................................................................11
4.8 Mitigation ....................................................................................11
4.9 Parachute Payment Tax Gross-Up.................................................................12
ARTICLE V
MISCELLANEOUS
5.1 Severance Compensation and Benefits Not in
Derogation of Other Benefits ................................................................14
5.2 Indemnification by Company For Executive's
Expenses ....................................................................................14
5.3 Non-Disclosure of Confidential Information
and Non-Compete .............................................................................15
5.4 Payroll and Withholding Taxes .................................................................16
5.5 Changes .......................................................................................16
5.6 Notices .......................................................................................16
5.7 Rights Absolute ...............................................................................17
5.8 Successors ....................................................................................17
5.9 Non-Assignability .............................................................................17
5.10 Governing Law .................................................................................18
ii
EMPLOYMENT AND CHANGE-IN-CONTROL AGREEMENT
THIS AGREEMENT is made as of the 14th day of November, 2000 by
and between United National Bancorp, a New Jersey corporation ("UNB"), United
National Bank (the "Bank") (jointly hereinafter referred to as the "Company")
and Xxxxxxx X. Xxxxxxx (hereinafter referred to as the "Executive").
BACKGROUND
WHEREAS, the Executive is employed by the Company; and
WHEREAS, the Executive, throughout his tenure, has worked
diligently in his position for the business of the Bank and UNB; and
WHEREAS, the Boards of Directors of the Bank and UNB
(collectively, the "Boards") are of the opinion that the future services of the
Executive are of substantial value to the Bank and UNB and that it is important
for the growth and development of the Bank and UNB that the Executive continue
in his position; and
WHEREAS, if the Company should receive any proposal from a
third party concerning a possible business combination with, or acquisition of
the equity securities of, the Company, the Boards believe it is imperative that
the Company and the Boards be able to rely upon the Executive to continue in his
position, and that the Boards be able to receive and rely upon the advice of the
Executive, if requested, as to the best interests of the Company and its
shareholders, without concern that the Executive may be distracted by personal
uncertainties or risks created by such a proposal; and
WHEREAS, to achieve such a goal, and to retain the services of
the Executive prior to any such activity, the Boards and the Executive have
agreed to enter into this Employment Agreement.
NOW, THEREFORE, to assure the Company that it will retain the
continued dedication of the Executive as well as the availability of the advice
and counsel of the Executive notwithstanding the possibility or occurrence of a
Change in Control (as hereafter defined) of the Company, and to induce the
Executive to remain in the employ of the Company, and for other good and
valuable consideration, the Company and the Executive, each intending to be
legally bound hereby, agree as follows:
ARTICLE I.
TERM OF EMPLOYMENT AND DUTIES
1.1 Agreement. The Company hereby employs the Executive and
the Executive hereby agrees to render such services to the Company on the terms
and conditions set forth in this Agreement.
1.2 Term. The term of employment under this Agreement
(hereinafter the "term") shall commence on November 14, 2000 and shall terminate
June 30, 2003, except that if this Agreement is not renewed, its term and
Employee's term of employment shall be automatically renewed for successive five
(5) year terms with the first such term commencing on July 1, 2003, unless the
Company gives Employee notice of termination of this Agreement ninety (90) days
prior to June 30, 2003, or any succeeding termination date pursuant to this
provision; and except further that if there shall occur a Change in Control of
the Company during such period, the term shall end on the third anniversary of
the Change in Control (regardless of whether such third anniversary
2
occurs before or after June 30, 2003). Notwithstanding the foregoing, the term
shall expire on the date the Executive turns age 65 if it has not yet expired by
such date. The Agreement may be sooner terminated in accordance with the terms
and conditions hereinafter set forth.
1.3 Position. During the term of this Agreement, the Executive
shall be employed as the Executive Vice President, Consumer and Commercial
Lending of the Bank or in comparable positions, or the same positions with such
other corporate or divisional centers as shall succeed to the business, assets
and properties of UNB or the Bank, as the case may be. The Executive shall
devote his full time and attention to the business of the Company, and shall not
during the term be engaged in any other business activity. This paragraph shall
not be construed as preventing the Executive from managing any investments of
his or his family's which do not require significant service in the operation of
such investments, nor as preventing his service on any other Board of Directors
for which he served as of the date hereof or serves hereafter with the consent
of the Board of Directors of UNB.
ARTICLE II.
COMPENSATION AND BENEFITS
2.1 Base Compensation. The Company will compensate and pay the
Executive for his services during the term of this Agreement at a minimum base
salary per year of $120,000 with annual increases in amounts to be determined by
the Board of Directors of UNB each year ("Base Salary"). In no event shall the
Base Salary of the Executive under this Agreement in effect at any particular
time be reduced without the prior written consent of Executive, except that
prior to a Change in Control of the Company (but not thereafter), the Base
Salary may be reduced without
3
the Executive's consent no more than once per year, with each such reduction
limited to ten percent (10%) of the prior year's Base Salary.
2.2 Additional Incentive Compensation. During the term of this
Agreement, the Executive shall also be entitled to participate in other
executive incentive compensation arrangements, similar to the incentive
compensation arrangements now in effect for executives of the Company pursuant
to which executives are paid an annual bonus; provided, however, that prior to a
Change in Control of the Company the participation of the Executive in such
arrangements shall mean that the Executive is eligible for an incentive award
but shall not obligate the Company to make any incentive award or pay any
incentive compensation to Executive; provided further, however, that after a
Change in Control of the Company, the Executive must be paid an annual bonus
that is at least as large as the highest bonus paid to the Executive in any year
during the three years immediately prior to a Change in Control.
2.3 Retirement Plans. During the term of this Agreement, the
Executive shall be entitled to participate in any plans of the Company relating
to pension, profit sharing, benefit equalization, or other programs now in
effect or that the Company may hereafter adopt for the benefit of its employees
or executives.
2.4 Medical, Disability and Life Insurance Plans. During the
term of this Agreement, the Executive shall be entitled to participate in any
medical coverage, hospitalization, medical reimbursement, disability, and life
insurance plans now in effect or that the Company may hereafter adopt.
2.5 Stock Award Plans. During the term of this Agreement, the
Executive shall be entitled to participate in and receive the benefits of any
stock option, restricted stock or similar
4
stock based compensation plans covering executives of the Company which
presently exist or may come into existence hereafter (a "Stock Plan"); provided,
however, that the participation of the Executive in such Stock Plans shall mean
that the Executive is eligible to receive benefits and awards but shall not
obligate the Company to grant the Executive any particular benefits or awards.
2.6 No Adverse Change After Change in Control. Before a
Change-in-Control of the Company, the Company may change or terminate any
benefit plan or bonus plan provided to the Executive. Following a Change in
Control of the Company, the Company may not change or terminate any plans set
forth above under Sections 2.2, 2.3, 2.4 and 2.5, which would adversely affect
the Executive's rights or benefits thereunder unless such change is consented to
by the Executive or occurs as a consequence of a change in law or regulation.
2.7 Expense Reimbursement. During the term of this Agreement,
the Company shall reimburse the Executive or otherwise provide for or pay for
all reasonable expenses incurred by the Executive in furtherance or in
connection with the business of the Company including but not limited to
automobile and travel expenses, and all reasonable entertainment expenses,
subject to such reasonable limitations as may be established by the Boards from
time to time. If such expenses are paid by the Executive, the Company will
reimburse the Executive therefor.
2.8 W-2 Compensation. "W-2 Compensation" as used in this
Agreement means the Employee's "Gross Pay" (or any analogous term having the
same or a similar meaning as "Gross Pay" hereafter used) as reported or
reportable on his W-2 statement for the period or periods in question. When
referring to a current tax year, "W-2 Compensation" refers to the annualized
total computed to the end of such current year of all items includable in "Gross
Pay" at their current level or levels unless the context clearly indicates
otherwise.
5
ARTICLE III.
DISABILITY OR DEATH
3.1 Termination for Disability. If the Executive shall become
disabled or incapacitated to the extent that he is unable to perform his duties
for a period of four (4) months in any twelve (12) month period, the Company may
terminate the employment of the Executive by written notice of termination
provided to the Executive. In the event of a termination for disability or
incapacity hereunder, the Executive shall have no right to compensation or other
benefits for any period after the date of termination, except as follows: (i)
before a Change in Control of the Company, if and to the extent that the
Executive is not receiving from public or private insurance policies paid for by
the Company disability benefits equal to or greater than his current W-2
Compensation for such six month period prior to the termination, then for a
period of six months following the termination, the Company shall continue to
pay to the Executive, as severance pay, an amount which together with the
disability insurance payments equals 100% of his current W-2 Compensation for
such six month period; and (ii) after a Change in Control of the Company, such
termination shall trigger compensation and benefits in accordance with section
4.4 of this Agreement.
3.2 Termination Due to Death. Employment of the Executive
shall automatically terminate by reason of the death of the Executive and no
notice of termination shall be required. In the event of a termination due to
the death of the Executive, either before or after a Change in Control of the
Company, the estate of the Executive and his heirs and beneficiaries shall have
no right to compensation or other benefits for any period after the date of
death except as follows: if and to the extent that the Executive's estate,
designated beneficiaries and heirs do not
6
receive, from life insurance policies paid for by the Company, proceeds equal to
or greater than 200% of his current W-2 Compensation as of the date of death,
then the Company shall continue to pay to the Executive's estate, as severance
pay, the Executive's W-2 Compensation for up to six months or, if earlier, until
such payments, together with the proceeds of the life insurance policies, equal
to 200% of the Executive's current W-2 Compensation.
ARTICLE IV.
OTHER TERMINATION
4.1 Termination For Cause.
(a) The Company shall have the right, at any time upon prior
written Notice of Termination (as herein defined), to terminate the employment
of the Executive for Cause. For the purpose of this Agreement, "Cause" shall
mean willful misconduct, breach of fiduciary duty involving personal benefit to
the Executive, conviction of a felony, willful breach or willful neglect by the
Executive of his duties as an Executive of the Company, or persistent negligence
or misconduct in the performance of such duties. For purposes of this paragraph,
no act or failure to act on the part of the Executive shall be considered
"willful" unless done or omitted not in good faith and without reasonable belief
that the action or omission was in the best interest of the Company. Any acts
undertaken by the Executive on the instruction of the Board of Directors of UNB
or the Bank shall not constitute Cause. If the termination for Cause occurs
after a Change in Control, the Executive shall not be deemed to have been
terminated for Cause hereunder unless and until: (i) there shall have been
delivered to the Executive a copy of a certification by a majority of the
non-officer members of the Board of Directors of the Bank finding that, in the
good faith opinion of such majority, the Executive was guilty of conduct which
was deemed to be Cause for
7
termination and specifying the particulars thereof in detail, and (ii) after
reasonable notice to the Executive there shall have been an opportunity for the
Executive, together with counsel to the Executive, to be heard before such
non-officer members of the Board of Directors.
(b) In the event employment is validly terminated for Cause
pursuant to Section 4.1(a) hereof, the Executive shall have no right to further
compensation or benefits hereunder for any period after the date of such
termination.
4.2 Termination For Poor Performance.
(a) The Company shall have the right, at any time prior to a
Change in Control of the Company (but not thereafter), to terminate the
employment of the Executive for Poor Performance by written Notice of
Termination (as defined in Section 4.7 hereof). For the purpose of this
Agreement, "Poor Performance" shall mean a finding by a majority of the
non-officer members of each of the Boards of Directors of UNB and the Bank that,
in the good faith opinion of each such majority: (i) the Executive's performance
of his duties was sufficiently unsatisfactory to merit termination, and (ii)
prior notice of such unsatisfactory performance was given to the Executive
without cure having occurred. In making such a finding, the Board of Directors
shall utilize the input of the Chief Executive Officer ("CEO") unless the CEO is
being terminated.
(b) In the event employment is validly terminated for Poor
Performance pursuant to Section 4.2(a) hereof, the Company shall continue to pay
to the Executive, as severance pay, his Base Salary for a period of one year
following such termination and shall continue to pay for and to provide medical
insurance for the Executive and his family for such period, but the Executive
shall have no right to any other form of compensation or benefits hereunder for
any period after the date of such termination.
8
4.3 Termination Without Cause Prior to Change in Control.
(a) Right to Terminate. The Company shall have the right to
terminate the employment of the Executive without Cause if the Company does so
by prior written Notice of Termination which specifies that the Company agrees
to pay the severance compensation and benefits herein set forth.
(b) Severance Compensation and Benefits Prior to Change in
Control. If prior to a Change in Control of the Company, the Company terminates
the employment of the Executive other than for Cause, Poor Performance,
disability or death of the Executive, the Company shall continue to pay to the
Executive, as severance pay, his current W-2 Compensation in each of the two
years following such termination and shall continue to pay for and to provide
medical insurance for the Executive and his family for such period. The
Executive shall be entitled to no other compensation or benefits hereunder after
the effective date of such termination.
4.4 Compensation and Benefits After Change in Control. After a
Change in Control of the Company, the Company shall pay to the Executive within
ten (10) business days following the date of Change in Control a lump sum equal
to the product of (x) 2.00, times (y) the average of W-2 Compensation, paid to
the Executive by the Company in each of the five years (or such fewer years as
the Executive shall have been employed by the Company) up to and including the
year of Change-in-Control. The Executive shall be entitled to no other
compensation or benefits hereunder after the effective date of such Change in
Control (except as provided by Section 5.2). Upon payment of such benefits as
provided in this Section 4.4 and Section 5.2, this Agreement shall terminate and
be of no further force or effect.
9
4.5 Resignation Without Good Reason Prior to Change in
Control.
(a) Right to Resign. The Executive may resign without Good
Reason at any time upon four weeks prior notice prior to a Change in Control.
(b) No Compensation or Benefits. If the Executive resigns
without Good Reason at any time prior to a Change in Control, the Executive
shall be entitled to no further compensation or benefits hereunder after the
effective date of such resignation.
4.6 Definition of Change in Control. For purposes of this
Agreement, a "Change in Control" of the Company shall mean the first to occur of
any of the following events:
(a) Any person or entity or group of affiliated persons or
entities (other than UNB) becomes a beneficial owner, directly or indirectly, of
25% or more of UNB's and/or the Bank's voting securities or all or substantially
all of the assets of UNB and/or the Bank.
(b) UNB and/or the Bank consummates a definitive agreement
pursuant to which either UNB or the Bank is merged, consolidated or combined
with or into an unaffiliated entity in which either or both of the following
occurs: (i) the directors of UNB and/or Bank, as applicable, immediately prior
to such merger, consolidation or combination will constitute less than a
majority of the board of directors of the surviving, new or combined entity; or
(ii) less than 75% of the outstanding voting securities of the surviving, new or
combined entity will be beneficially owned by the stockholders of UNB
immediately prior to such merger, consolidation or combination.
(c) UNB and/or the Bank consummates a definitive agreement
pursuant to which all or substantially all of UNB's and/or the Bank's assets are
transferred other than to a wholly-owned subsidiary of UNB.
10
(d) A majority of the members of the Board of Directors of
either UNB or the Bank shall be persons who: (i) were not members of such Board
on the date hereof ("current members"); and (ii) were not nominated by a vote of
the Board which included the affirmative vote of a majority of the current
members on the Board at the time of their nomination ("future designees") and
(iii) were not nominated by a vote of the Board which included the affirmative
vote of a majority of the current members and future designees, taken as a
group, on the Board at the time of their nomination.
4.7 Notice. Any notice of termination of the employment of the
Executive by the Company or by the Executive to the Company shall be
communicated by written Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a dated notice
which shall (i) indicate the specific termination provision in this Agreement
relied upon; (ii) except for a termination without Cause, set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the employment of the Executive under the provision so indicated;
(iii) specify a date of termination, which shall be not less than thirty (30)
nor more than ninety (90) days after such Notice of Termination is given, except
in the case of termination of employment by the Company of the Executive for
Cause pursuant to Section 4.1 hereof, in which case the Notice of Termination
may specify a date of termination as of the date such Notice of Termination is
given; and (iv) be given in the manner specified in Section 5.6 hereof.
4.8 Mitigation. Executive shall not be required to mitigate
the amount of any payment provided for in Article IV by seeking other employment
or otherwise. There shall be no
11
offset from payments or benefits due the Executive hereunder if Executive shall
obtain any other employment or otherwise.
4.9 Parachute Payment Tax Gross-Up.
(a) Additional Payments. If, for any taxable year, Executive
shall be liable for the payment of an excise tax under Section 4999 or other
substitute or similar tax assessment (the "Excise Tax") of the Internal Revenue
Code of 1986, as amended (the "Code"), including the corresponding provisions of
any succeeding law, with respect to any payments under this Section 4.9 or any
payments and/or benefits under this Agreement or under any benefit plan of the
Company applicable to Executive individually or generally to executives or
employees of the Company, then, notwithstanding any other provisions of this
Agreement, the Company shall pay to the Executive an additional amount (the
"Gross-Up Payment") such that the net amount retained by the Executive, after
deduction of any Excise Tax on such payments and benefits and any federal, state
and local income tax and Excise Tax upon payments provided for in this Section
4.9, shall be equal to the payments due to the Executive hereunder and the
payments and/or benefits due to the Executive under any benefit plan of the
Company. Each Gross-Up Payment shall be made by domestic cashier's or
treasurer's check, certified check or wire transfer, upon the later of (i) five
(5) days after the date the Executive notifies the Company of its need to make
such Gross-Up Payment, or (ii) the date of any payment causing the liability for
such Excise Tax. The amount of any Gross-Up Payment under this section shall be
computed by a nationally recognized certified public accounting firm designated
jointly by the Company and the Executive. The cost of such services by the
accounting firm shall be paid by the Company. If the Company and the Executive
are unable to
12
designate jointly the accounting firm, then the firm shall be the accounting
firm used by the Company immediately prior to the Change in Control.
(b) IRS Disputed Claims. The Executive shall notify the
Company in writing of any claim by the Internal Revenue Service ("IRS") that, if
successful, would require the payment by the Company of a Gross-Up Payment in
addition to that payment previously paid by the Company pursuant to this
section. Such notification shall be given as soon as practicable but no later
than fifteen (15) business days after the Executive is informed in writing of
such claim and shall apprise the Company of the nature of such claim, the date
on which such claim is requested to be paid, and attach a copy of the IRS
notice. The Executive shall not pay such claim prior to the expiration of the
thirty (30) day period following the date on which the Executive gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such period that it desires to
contest such claim, the Executive shall:
(i) Give the Company any information reasonably
requested by the Company relating to such claim;
(ii) Take such action in connection with contesting
such claim as the Company shall reasonably request in writing from time
to time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the
Company;
(iii) Cooperate with the Company in good faith in
order effectively to contest such claim; and
13
(iv) Permit the Company to participate in any
proceedings relating to such claim; provided, however that the Company
shall pay directly all costs and expenses (including legal and
accounting fees, as well as other expenses and any additional interest
and penalties) incurred by the Executive and the Company in connection
with an IRS levy, contest or claim and provided further that the
Company shall not take any action or fail to make any Gross-Up Payment
so as to cause the assessment of any IRS levy and the Company shall
cause any levy so assessed to be immediately released by payment of the
Gross-Up Amount, together with all costs, interest and penalties.
ARTICLE V.
MISCELLANEOUS
5.1 Severance Compensation and Benefits Not in Derogation of
Other Benefits. Anything to the contrary herein contained notwithstanding, the
payment or obligation to pay any monies, or granting of any benefits, rights or
privileges to Executive as provided in this Agreement shall not be in lieu or
derogation of the rights and privileges that the Executive now has or will have
under any plans or programs of the Company specified in Sections 2.3 through 2.5
inclusive, except that the Executive shall not be entitled to the benefits of
any other plan or program of the Company expressly providing for severance or
termination pay.
5.2 Indemnification By Company For Executive's Expenses. If
the termination of Executive's employment occurs after a Change in Control of
the Company, the Company shall pay all expenses incurred by the Executive in
connection with any claim by the Executive against the Company hereunder,
including but not limited to attorneys' and accountants' fees in addition to
other expenses incurred by the Executive. Such expenses shall be payable monthly
upon demand
14
by the Executive. A court of competent jurisdiction shall be empowered to deny
payment to the Executive of such expenses, including attorneys' and accountants'
fees, only if it determines that the Executive instituted a lawsuit or
proceeding hereunder in bad faith or without reasonable cause. The Executive
shall not be entitled to reimbursement for his legal fees if his termination of
employment occurs prior to a Change in Control of the Company.
5.3 Non-Disclosure of Confidential Information and
Non-Compete.
(a) Non-Disclosure of Confidential Information. Except in the
course of the employment of the Executive by the Company, and in the pursuit of
the business of the Company or any of its subsidiaries or affiliates, the
Executive shall not, at any time during or following the term of this Agreement,
disclose or use, any confidential information or proprietary data of the Company
or any of its subsidiaries or affiliates. The Executive agrees that all
information concerning the identity of the customers of the Company and the
relations of the Company to its customers is confidential information, unless
such information is otherwise publicly known.
(b) Non-Competition. The Executive agrees that during the
Executive's employment by the Company pursuant to this Agreement and during the
Post-Employment Non-Compete Period (as hereinafter defined), the Executive will
not, without the prior written consent of the Bank, engage in, become
interested, directly or indirectly, as a sole proprietor, as a partner in a
partnership, or as a substantial shareholder in a corporation, nor become
associated with, in the capacity of an employee, director, officer, principal
agent, trustee or in any other capacity whatsoever, any enterprise conducted in
the trading area of business of the Bank (specifically, in New Jersey, New York
or Pennsylvania) which enterprise is, or may be deemed to be, competitive with
any business carried on by the Bank as of the date of the termination of the
Executive's
15
employment or his retirement. The Post-Employment Non-Compete Period
shall mean a two-year period of time following termination of the Executive's
employment with the Company, except if the termination of employment occurs
after a Change in Control of the Company the Non-Compete Period shall be reduced
to zero, and in the case of termination for Poor Performance prior to a Change
in Control of the Company, it shall be reduced to one year.
(c) Specific Performance. The Executive agrees that the
Company does not have an adequate remedy at law for the breach of this Section
5.3 and agrees that the Executive shall be subject to injunctive relief and
equitable remedies as a result of a breach of any provision of this Section 5.3.
The invalidity or unenforceability of any provision of this Section 5.3 (or this
Agreement) shall not affect the force and effect of the remaining valid
portions. Except as expressly provided in this Agreement, no breach by the
Executive of the provisions of this Section 5.3 shall entitle the Company to
withhold any benefits payable to the Executive hereunder.
5.4 Payroll and Withholding Taxes. All payments to be made or
benefits to be provided hereunder by the Company shall be subject to reduction
by the applicable federal payroll or withholding taxes.
5.5 Changes. This Agreement may not be modified, changed,
amended, or altered except in a writing signed by the Executive and by an
officer of the Company duly authorized by the Boards of Directors or the
executive committee of both the Bank and UNB.
5.6 Notices. All notices given or required to be given herein
shall be in writing or sent by United States first-class certified or registered
mail, postage prepaid, to the Executive at the last-known address for the
Executive (or to the personal representative of the Executive upon his death),
and to the Company at the principal executive office for UNB (or any successor
thereto), to
16
the attention of the Chairman of the Board. All such notices shall be effective
when deposited in the mail in the manner specified in this Section 5.6. Either
party by a notice in writing to the other party may change or designate the
place for receipt of such notices.
5.7 Rights Absolute. No course of conduct between the Company
and the Executive and no delay or omission by the Company or the Executive to
exercise any right or power given under this Agreement shall: (i) impair the
subsequent exercise of any right or power or (ii) be construed to be a waiver of
any default or to be an acquiescence in or consent to the curing of any default
while any other default shall continue to exist, or be construed to be a waiver
of such continuing default or of any other right or power that shall theretofore
have arisen; and every power and remedy granted by law and by this Agreement to
any party hereto may be exercised from time to time and as often as may be
deemed expedient. All such rights and powers shall be cumulative to the fullest
extent permitted by law.
5.8 Successors. This Agreement shall inure to the benefit of
and be binding upon (i) the Executive and, to the extent applicable, his heirs,
assigns, executors, and personal representatives and (ii) the Company, its
successors and assigns, including, without limitation, any person, partnership,
or corporation which may acquire all or substantially all of the assets and
business of the Company, or with or into which the Company may be consolidated
or merged, and this provision shall apply in the event of any subsequent merger,
consolidation, or transfer.
5.9 Non-Assignability. This Agreement is personal to each of
the parties and none of the parties may assign or delegate any of its rights or
obligations under this Agreement without the prior written consent of the other
party.
17
5.10 Governing Law. This Agreement shall be governed in all
respects and be interpreted by and under the laws of the State of New Jersey.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
ATTEST UNITED NATIONAL BANCORP
By: ______________________________ By: ____________________________
Xxxxx X. Xxxxx, Xx., Secretary Xxxxxx X. Xxxxx, Chairman
Compensation Committee of
the Board of Directors
ATTEST: UNITED NATIONAL BANK
By: ____________________________ By: _____________________________
Xxxxx X. Xxxxx, Xx., Cashier Xxxxxx X. Xxxxx, Chairman
Compensation Committee of
the Board of Directors
________________________________ _________________________________
Witness XXXXXXX X. XXXXXXX
18
EMPLOYMENT AND CHANGE-IN-CONTROL AGREEMENT
BY AND BETWEEN
XXXXXX X. XXXXXXX ("Executive")
UNITED NATIONAL BANCORP, a New Jersey Corporation
and
UNITED NATIONAL BANK
DATED AS OF November 14, 2000
TABLE OF CONTENTS
PAGE
BACKGROUND ..................................................................... 1
ARTICLE I
TERM OF EMPLOYMENT AND DUTIES
1.1 Agreement .................................................... 2
1.2 Term ......................................................... 2
1.3 Position ..................................................... 3
ARTICLE II
COMPENSATION AND BENEFITS
2.1 Base Compensation ............................................ 3
2.2 Additional Incentive Compensation ............................ 4
2.3 Retirement Plans ............................................. 4
2.4 Medical, Disability and Life Insurance Plans ................. 4
2.5 Stock Award Plans ............................................ 5
2.6 No Adverse Change After Change in Control..................... 5
2.7 Expense Reimbursement ........................................ 5
2.8 W-2 Compensation.............................................. 5
ARTICLE III
DISABILITY OR DEATH
3.1 Termination for Disability ................................... 6
3.2 Termination Due to Death ..................................... 6
ARTICLE IV
OTHER TERMINATION
4.1 Termination for Cause ........................................ 7
4.2 Termination for Poor Performance ............................. 8
4.3 Termination Without Cause Prior to Change in Control ......... 9
4.4 Compensation and Benefits After Change in Control ............ 9
4.5 Resignation Without Good Reason ..............................10
4.6 Definition of Change in Control ..............................10
4.7 Notice .......................................................11
4.8 Mitigation ...................................................11
4.9 Parachute Payment Tax Gross-Up................................12
ARTICLE V
MISCELLANEOUS
5.1 Severance Compensation and Benefits Not in
Derogation of Other Benefits ...............................14
5.2 Indemnification by Company For Executive's
Expenses ...................................................14
5.3 Non-Disclosure of Confidential Information
and Non-Compete ............................................15
5.4 Payroll and Withholding Taxes ................................16
5.5 Changes ......................................................16
5.6 Notices ......................................................16
5.7 Rights Absolute ..............................................17
5.8 Successors ...................................................17
5.9 Non-Assignability ............................................17
5.10 Governing Law ................................................18
ii
EMPLOYMENT AND CHANGE-IN-CONTROL AGREEMENT
THIS AGREEMENT is made as of the 14th day of November, 2000 by and
between United National Bancorp, a New Jersey corporation ("UNB"), United
National Bank (the "Bank") (jointly hereinafter referred to as the "Company")
and Xxxxxx X. Xxxxxxx (hereinafter referred to as the "Executive").
BACKGROUND
WHEREAS, the Executive is employed by the Company; and
WHEREAS, the Executive, throughout his tenure, has worked diligently in
his position for the business of the Bank and UNB; and
WHEREAS, the Boards of Directors of the Bank and UNB (collectively, the
"Boards") are of the opinion that the future services of the Executive are of
substantial value to the Bank and UNB and that it is important for the growth
and development of the Bank and UNB that the Executive continue in his position;
and
WHEREAS, if the Company should receive any proposal from a third party
concerning a possible business combination with, or acquisition of the equity
securities of, the Company, the Boards believe it is imperative that the Company
and the Boards be able to rely upon the Executive to continue in his position,
and that the Boards be able to receive and rely upon the advice of the
Executive, if requested, as to the best interests of the Company and its
shareholders, without concern that the Executive may be distracted by personal
uncertainties or risks created by such a proposal; and
WHEREAS, to achieve such a goal, and to retain the services of the
Executive prior to any such activity, the Boards and the Executive have agreed
to enter into this Employment Agreement.
NOW, THEREFORE, to assure the Company that it will retain the continued
dedication of the Executive as well as the availability of the advice and
counsel of the Executive notwithstanding the possibility or occurrence of a
Change in Control (as hereafter defined) of the Company, and to induce the
Executive to remain in the employ of the Company, and for other good and
valuable consideration, the Company and the Executive, each intending to be
legally bound hereby, agree as follows:
ARTICLE I.
TERM OF EMPLOYMENT AND DUTIES
1.1 Agreement. The Company hereby employs the Executive and the
Executive hereby agrees to render such services to the Company on the terms and
conditions set forth in this Agreement.
1.2 Term. The term of employment under this Agreement (hereinafter the
"term") shall commence on November 14, 2000 and shall terminate June 30, 2003,
except that if this Agreement is not renewed, its term and Employee's term of
employment shall be automatically renewed for successive five (5) year terms
with the first such term commencing on July 1, 2003, unless the Company gives
Employee notice of termination of this Agreement ninety (90) days prior to June
30, 2003, or any succeeding termination date pursuant to this provision; and
except further that if there shall occur a Change in Control of the Company
during such period, the term shall end on the third anniversary of the Change in
Control (regardless of whether such third anniversary
2
occurs before or after June 30, 2003). Notwithstanding the foregoing, the term
shall expire on the date the Executive turns age 65 if it has not yet expired by
such date. The Agreement may be sooner terminated in accordance with the terms
and conditions hereinafter set forth.
1.3 Position. During the term of this Agreement, the Executive shall be
employed as the Executive Vice President & Chief Financial Officer of the Bank
or in comparable positions, or the same positions with such other corporate or
divisional centers as shall succeed to the business, assets and properties of
UNB or the Bank, as the case may be. The Executive shall devote his full time
and attention to the business of the Company, and shall not during the term be
engaged in any other business activity. This paragraph shall not be construed as
preventing the Executive from managing any investments of his or his family's
which do not require significant service in the operation of such investments,
nor as preventing his service on any other Board of Directors for which he
served as of the date hereof or serves hereafter with the consent of the Board
of Directors of UNB.
ARTICLE II.
COMPENSATION AND BENEFITS
2.1 Base Compensation. The Company will compensate and pay the
Executive for his services during the term of this Agreement at a minimum base
salary per year of $167,000 with annual increases in amounts to be determined by
the Board of Directors of UNB each year ("Base Salary"). In no event shall the
Base Salary of the Executive under this Agreement in effect at any particular
time be reduced without the prior written consent of Executive, except that
prior to a Change in Control of the Company (but not thereafter), the Base
Salary may be reduced without
3
the Executive's consent no more than once per year, with each such reduction
limited to ten percent (10%) of the prior year's Base Salary.
2.2 Additional Incentive Compensation. During the term of this
Agreement, the Executive shall also be entitled to participate in other
executive incentive compensation arrangements, similar to the incentive
compensation arrangements now in effect for executives of the Company pursuant
to which executives are paid an annual bonus; provided, however, that prior to a
Change in Control of the Company the participation of the Executive in such
arrangements shall mean that the Executive is eligible for an incentive award
but shall not obligate the Company to make any incentive award or pay any
incentive compensation to Executive; provided further, however, that after a
Change in Control of the Company, the Executive must be paid an annual bonus
that is at least as large as the highest bonus paid to the Executive in any year
during the three years immediately prior to a Change in Control.
2.3 Retirement Plans. During the term of this Agreement, the Executive
shall be entitled to participate in any plans of the Company relating to
pension, profit sharing, benefit equalization, or other programs now in effect
or that the Company may hereafter adopt for the benefit of its employees or
executives.
2.4 Medical, Disability and Life Insurance Plans. During the term of
this Agreement, the Executive shall be entitled to participate in any medical
coverage, hospitalization, medical reimbursement, disability, and life insurance
plans now in effect or that the Company may hereafter adopt.
2.5 Stock Award Plans. During the term of this Agreement, the Executive
shall be entitled to participate in and receive the benefits of any stock
option, restricted stock or similar
4
stock based compensation plans covering executives of the Company which
presently exist or may come into existence hereafter (a "Stock Plan"); provided,
however, that the participation of the Executive in such Stock Plans shall mean
that the Executive is eligible to receive benefits and awards but shall not
obligate the Company to grant the Executive any particular benefits or awards.
2.6 No Adverse Change After Change in Control. Before a
Change-in-Control of the Company, the Company may change or terminate any
benefit plan or bonus plan provided to the Executive. Following a Change in
Control of the Company, the Company may not change or terminate any plans set
forth above under Sections 2.2, 2.3, 2.4 and 2.5, which would adversely affect
the Executive's rights or benefits thereunder unless such change is consented to
by the Executive or occurs as a consequence of a change in law or regulation.
2.7 Expense Reimbursement. During the term of this Agreement, the
Company shall reimburse the Executive or otherwise provide for or pay for all
reasonable expenses incurred by the Executive in furtherance or in connection
with the business of the Company including but not limited to automobile and
travel expenses, and all reasonable entertainment expenses, subject to such
reasonable limitations as may be established by the Boards from time to time. If
such expenses are paid by the Executive, the Company will reimburse the
Executive therefor.
2.8 W-2 Compensation. "W-2 Compensation" as used in this Agreement
means the Employee's "Gross Pay" (or any analogous term having the same or a
similar meaning as "Gross Pay" hereafter used) as reported or reportable on his
W-2 statement for the period or periods in question. When referring to a current
tax year, "W-2 Compensation" refers to the annualized total computed to the end
of such current year of all items includable in "Gross Pay" at their current
level or levels unless the context clearly indicates otherwise.
5
ARTICLE III.
DISABILITY OR DEATH
3.1 Termination for Disability. If the Executive shall become disabled
or incapacitated to the extent that he is unable to perform his duties for a
period of four (4) months in any twelve (12) month period, the Company may
terminate the employment of the Executive by written notice of termination
provided to the Executive. In the event of a termination for disability or
incapacity hereunder, the Executive shall have no right to compensation or other
benefits for any period after the date of termination, except as follows: (i)
before a Change in Control of the Company, if and to the extent that the
Executive is not receiving from public or private insurance policies paid for by
the Company disability benefits equal to or greater than his current W-2
Compensation for such six month period prior to the termination, then for a
period of six months following the termination, the Company shall continue to
pay to the Executive, as severance pay, an amount which together with the
disability insurance payments equals 100% of his current W-2 Compensation for
such six month period; and (ii) after a Change in Control of the Company, such
termination shall trigger compensation and benefits in accordance with section
4.4 of this Agreement.
3.2 Termination Due to Death. Employment of the Executive shall
automatically terminate by reason of the death of the Executive and no notice of
termination shall be required. In the event of a termination due to the death of
the Executive, either before or after a Change in Control of the Company, the
estate of the Executive and his heirs and beneficiaries shall have no right to
compensation or other benefits for any period after the date of death except as
follows: if and to the extent that the Executive's estate, designated
beneficiaries and heirs do not
6
receive, from life insurance policies paid for by the Company, proceeds equal to
or greater than 200% of his current W-2 Compensation as of the date of death,
then the Company shall continue to pay to the Executive's estate, as severance
pay, the Executive's W-2 Compensation for up to six months or, if earlier, until
such payments, together with the proceeds of the life insurance policies, equal
to 200% of the Executive's current W-2 Compensation.
ARTICLE IV.
OTHER TERMINATION
4.1 Termination For Cause.
(a) The Company shall have the right, at any time upon prior written
Notice of Termination (as herein defined), to terminate the employment of the
Executive for Cause. For the purpose of this Agreement, "Cause" shall mean
willful misconduct, breach of fiduciary duty involving personal benefit to the
Executive, conviction of a felony, willful breach or willful neglect by the
Executive of his duties as an Executive of the Company, or persistent negligence
or misconduct in the performance of such duties. For purposes of this paragraph,
no act or failure to act on the part of the Executive shall be considered
"willful" unless done or omitted not in good faith and without reasonable belief
that the action or omission was in the best interest of the Company. Any acts
undertaken by the Executive on the instruction of the Board of Directors of UNB
or the Bank shall not constitute Cause. If the termination for Cause occurs
after a Change in Control, the Executive shall not be deemed to have been
terminated for Cause hereunder unless and until: (i) there shall have been
delivered to the Executive a copy of a certification by a majority of the
non-officer members of the Board of Directors of the Bank finding that, in the
good faith opinion of such majority, the Executive was guilty of conduct which
was deemed to be Cause for
7
termination and specifying the particulars thereof in detail, and (ii) after
reasonable notice to the Executive there shall have been an opportunity for the
Executive, together with counsel to the Executive, to be heard before such
non-officer members of the Board of Directors.
(b) In the event employment is validly terminated for Cause pursuant to
Section 4.1(a) hereof, the Executive shall have no right to further compensation
or benefits hereunder for any period after the date of such termination.
4.2 Termination For Poor Performance.
(a) The Company shall have the right, at any time prior to a Change in
Control of the Company (but not thereafter), to terminate the employment of the
Executive for Poor Performance by written Notice of Termination (as defined in
Section 4.7 hereof). For the purpose of this Agreement, "Poor Performance" shall
mean a finding by a majority of the non-officer members of each of the Boards of
Directors of UNB and the Bank that, in the good faith opinion of each such
majority: (i) the Executive's performance of his duties was sufficiently
unsatisfactory to merit termination, and (ii) prior notice of such
unsatisfactory performance was given to the Executive without cure having
occurred. In making such a finding, the Board of Directors shall utilize the
input of the Chief Executive Officer ("CEO") unless the CEO is being terminated.
(b) In the event employment is validly terminated for Poor Performance
pursuant to Section 4.2(a) hereof, the Company shall continue to pay to the
Executive, as severance pay, his Base Salary for a period of one year following
such termination and shall continue to pay for and to provide medical insurance
for the Executive and his family for such period, but the Executive shall have
no right to any other form of compensation or benefits hereunder for any period
after the date of such termination.
8
4.3 Termination Without Cause Prior to Change in Control.
(a) Right to Terminate. The Company shall have the right to terminate
the employment of the Executive without Cause if the Company does so by prior
written Notice of Termination which specifies that the Company agrees to pay the
severance compensation and benefits herein set forth.
(b) Severance Compensation and Benefits Prior to Change in Control. If
prior to a Change in Control of the Company, the Company terminates the
employment of the Executive other than for Cause, Poor Performance, disability
or death of the Executive, the Company shall continue to pay to the Executive,
as severance pay, his current W-2 Compensation in each of the two years
following such termination and shall continue to pay for and to provide medical
insurance for the Executive and his family for such period. The Executive shall
be entitled to no other compensation or benefits hereunder after the effective
date of such termination.
4.4 Compensation and Benefits After Change in Control. After a Change
in Control of the Company, the Company shall pay to the Executive within ten
(10) business days following the date of Change in Control a lump sum equal to
the product of (x) 2.00, times (y) the average of W-2 Compensation, paid to the
Executive by the Company in each of the five years (or such fewer years as the
Executive shall have been employed by the Company) up to and including the year
of Change-in-Control. The Executive shall be entitled to no other compensation
or benefits hereunder after the effective date of such Change in Control (except
as provided by Section 5.2). Upon payment of such benefits as provided in this
Section 4.4 and Section 5.2, this Agreement shall terminate and be of no further
force or effect.
9
4.5 Resignation Without Good Reason Prior to Change in Control.
(a) Right to Resign. The Executive may resign without Good Reason at
any time upon four weeks prior notice prior to a Change in Control.
(b) No Compensation or Benefits. If the Executive resigns without Good
Reason at any time prior to a Change in Control, the Executive shall be entitled
to no further compensation or benefits hereunder after the effective date of
such resignation.
4.6 Definition of Change in Control. For purposes of this Agreement, a
"Change in Control" of the Company shall mean the first to occur of any of the
following events:
(a) Any person or entity or group of affiliated persons or entities
(other than UNB) becomes a beneficial owner, directly or indirectly, of 25% or
more of UNB's and/or the Bank's voting securities or all or substantially all of
the assets of UNB and/or the Bank.
(b) UNB and/or the Bank consummates a definitive agreement pursuant to
which either UNB or the Bank is merged, consolidated or combined with or into an
unaffiliated entity in which either or both of the following occurs: (i) the
directors of UNB and/or Bank, as applicable, immediately prior to such merger,
consolidation or combination will constitute less than a majority of the board
of directors of the surviving, new or combined entity; or (ii) less than 75% of
the outstanding voting securities of the surviving, new or combined entity will
be beneficially owned by the stockholders of UNB immediately prior to such
merger, consolidation or combination.
(c) UNB and/or the Bank consummates a definitive agreement pursuant to
which all or substantially all of UNB's and/or the Bank's assets are transferred
other than to a wholly-owned subsidiary of UNB.
10
(d) A majority of the members of the Board of Directors
of either UNB or the Bank shall be persons who: (i) were not members of such
Board on the date hereof ("current members"); and (ii) were not nominated by a
vote of the Board which included the affirmative vote of a majority of the
current members on the Board at the time of their nomination ("future
designees") and (iii) were not nominated by a vote of the Board which included
the affirmative vote of a majority of the current members and future designees,
taken as a group, on the Board at the time of their nomination.
4.7 Notice. Any notice of termination of the employment of the
Executive by the Company or by the Executive to the Company shall be
communicated by written Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a dated notice
which shall (i) indicate the specific termination provision in this Agreement
relied upon; (ii) except for a termination without Cause, set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the employment of the Executive under the provision so indicated;
(iii) specify a date of termination, which shall be not less than thirty (30)
nor more than ninety (90) days after such Notice of Termination is given, except
in the case of termination of employment by the Company of the Executive for
Cause pursuant to Section 4.1 hereof, in which case the Notice of Termination
may specify a date of termination as of the date such Notice of Termination is
given; and (iv) be given in the manner specified in Section 5.6 hereof.
4.8 Mitigation. Executive shall not be required to mitigate the amount
of any payment provided for in Article IV by seeking other employment or
otherwise. There shall be no
11
offset from payments or benefits due the Executive hereunder if Executive shall
obtain any other employment or otherwise.
4.9 Parachute Payment Tax Gross-Up.
(a) Additional Payments. If, for any taxable year, Executive shall be
liable for the payment of an excise tax under Section 4999 or other substitute
or similar tax assessment (the "Excise Tax") of the Internal Revenue Code of
1986, as amended (the "Code"), including the corresponding provisions of any
succeeding law, with respect to any payments under this Section 4.9 or any
payments and/or benefits under this Agreement or under any benefit plan of the
Company applicable to Executive individually or generally to executives or
employees of the Company, then, notwithstanding any other provisions of this
Agreement, the Company shall pay to the Executive an additional amount (the
"Gross-Up Payment") such that the net amount retained by the Executive, after
deduction of any Excise Tax on such payments and benefits and any federal, state
and local income tax and Excise Tax upon payments provided for in this Section
4.9, shall be equal to the payments due to the Executive hereunder and the
payments and/or benefits due to the Executive under any benefit plan of the
Company. Each Gross-Up Payment shall be made by domestic cashier's or
treasurer's check, certified check or wire transfer, upon the later of (i) five
(5) days after the date the Executive notifies the Company of its need to make
such Gross-Up Payment, or (ii) the date of any payment causing the liability for
such Excise Tax. The amount of any Gross-Up Payment under this section shall be
computed by a nationally recognized certified public accounting firm designated
jointly by the Company and the Executive. The cost of such services by the
accounting firm shall be paid by the Company. If the Company and the Executive
are unable to
12
designate jointly the accounting firm, then the firm shall be the accounting
firm used by the Company immediately prior to the Change in Control.
(b) IRS Disputed Claims. The Executive shall notify the Company in
writing of any claim by the Internal Revenue Service ("IRS") that, if
successful, would require the payment by the Company of a Gross-Up Payment in
addition to that payment previously paid by the Company pursuant to this
section. Such notification shall be given as soon as practicable but no later
than fifteen (15) business days after the Executive is informed in writing of
such claim and shall apprise the Company of the nature of such claim, the date
on which such claim is requested to be paid, and attach a copy of the IRS
notice. The Executive shall not pay such claim prior to the expiration of the
thirty (30) day period following the date on which the Executive gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such period that it desires to
contest such claim, the Executive shall:
(i) Give the Company any information reasonably requested by
the Company relating to such claim;
(ii) Take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Company;
(iii) Cooperate with the Company in good faith in order
effectively to contest such claim; and
13
(iv) Permit the Company to participate in any proceedings
relating to such claim; provided, however that the Company shall pay
directly all costs and expenses (including legal and accounting fees,
as well as other expenses and any additional interest and penalties)
incurred by the Executive and the Company in connection with an IRS
levy, contest or claim and provided further that the Company shall not
take any action or fail to make any Gross-Up Payment so as to cause the
assessment of any IRS levy and the Company shall cause any levy so
assessed to be immediately released by payment of the Gross-Up Amount,
together with all costs, interest and penalties.
ARTICLE V.
MISCELLANEOUS
5.1 Severance Compensation and Benefits Not in Derogation of Other
Benefits. Anything to the contrary herein contained notwithstanding, the payment
or obligation to pay any monies, or granting of any benefits, rights or
privileges to Executive as provided in this Agreement shall not be in lieu or
derogation of the rights and privileges that the Executive now has or will have
under any plans or programs of the Company specified in Sections 2.3 through 2.5
inclusive, except that the Executive shall not be entitled to the benefits of
any other plan or program of the Company expressly providing for severance or
termination pay.
5.2 Indemnification By Company For Executive's Expenses. If the
termination of Executive's employment occurs after a Change in Control of the
Company, the Company shall pay all expenses incurred by the Executive in
connection with any claim by the Executive against the Company hereunder,
including but not limited to attorneys' and accountants' fees in addition to
other expenses incurred by the Executive. Such expenses shall be payable monthly
upon demand
14
by the Executive. A court of competent jurisdiction shall be empowered to deny
payment to the Executive of such expenses, including attorneys' and accountants'
fees, only if it determines that the Executive instituted a lawsuit or
proceeding hereunder in bad faith or without reasonable cause. The Executive
shall not be entitled to reimbursement for his legal fees if his termination of
employment occurs prior to a Change in Control of the Company.
5.3 Non-Disclosure of Confidential Information and Non-Compete.
(a) Non-Disclosure of Confidential Information. Except in the course of
the employment of the Executive by the Company, and in the pursuit of the
business of the Company or any of its subsidiaries or affiliates, the Executive
shall not, at any time during or following the term of this Agreement, disclose
or use, any confidential information or proprietary data of the Company or any
of its subsidiaries or affiliates. The Executive agrees that all information
concerning the identity of the customers of the Company and the relations of the
Company to its customers is confidential information, unless such information is
otherwise publicly known.
(b) Non-Competition. The Executive agrees that during the Executive's
employment by the Company pursuant to this Agreement and during the
Post-Employment Non-Compete Period (as hereinafter defined), the Executive will
not, without the prior written consent of the Bank, engage in, become
interested, directly or indirectly, as a sole proprietor, as a partner in a
partnership, or as a substantial shareholder in a corporation, nor become
associated with, in the capacity of an employee, director, officer, principal
agent, trustee or in any other capacity whatsoever, any enterprise conducted in
the trading area of business of the Bank (specifically, in New Jersey, New York
or Pennsylvania) which enterprise is, or may be deemed to be, competitive with
any business carried on by the Bank as of the date of the termination of the
Executive's
15
employment or his retirement. The Post-Employment Non-Compete Period shall mean
a two-year period of time following termination of the Executive's employment
with the Company, except if the termination of employment occurs after a Change
in Control of the Company the Non-Compete Period shall be reduced to zero, and
in the case of termination for Poor Performance prior to a Change in Control of
the Company, it shall be reduced to one year.
(c) Specific Performance. The Executive agrees that the Company does
not have an adequate remedy at law for the breach of this Section 5.3 and agrees
that the Executive shall be subject to injunctive relief and equitable remedies
as a result of a breach of any provision of this Section 5.3. The invalidity or
unenforceability of any provision of this Section 5.3 (or this Agreement) shall
not affect the force and effect of the remaining valid portions. Except as
expressly provided in this Agreement, no breach by the Executive of the
provisions of this Section 5.3 shall entitle the Company to withhold any
benefits payable to the Executive hereunder.
5.4 Payroll and Withholding Taxes. All payments to be made or benefits
to be provided hereunder by the Company shall be subject to reduction by the
applicable federal payroll or withholding taxes.
5.5 Changes. This Agreement may not be modified, changed, amended, or
altered except in a writing signed by the Executive and by an officer of the
Company duly authorized by the Boards of Directors or the executive committee of
both the Bank and UNB.
5.6 Notices. All notices given or required to be given herein shall be
in writing or sent by United States first-class certified or registered mail,
postage prepaid, to the Executive at the last-known address for the Executive
(or to the personal representative of the Executive upon his death), and to the
Company at the principal executive office for UNB (or any successor thereto), to
16
the attention of the Chairman of the Board. All such notices shall be effective
when deposited in the mail in the manner specified in this Section 5.6. Either
party by a notice in writing to the other party may change or designate the
place for receipt of such notices.
5.7 Rights Absolute. No course of conduct between the Company and the
Executive and no delay or omission by the Company or the Executive to exercise
any right or power given under this Agreement shall: (i) impair the subsequent
exercise of any right or power or (ii) be construed to be a waiver of any
default or to be an acquiescence in or consent to the curing of any default
while any other default shall continue to exist, or be construed to be a waiver
of such continuing default or of any other right or power that shall theretofore
have arisen; and every power and remedy granted by law and by this Agreement to
any party hereto may be exercised from time to time and as often as may be
deemed expedient. All such rights and powers shall be cumulative to the fullest
extent permitted by law.
5.8 Successors. This Agreement shall inure to the benefit of and be
binding upon (i) the Executive and, to the extent applicable, his heirs,
assigns, executors, and personal representatives and (ii) the Company, its
successors and assigns, including, without limitation, any person, partnership,
or corporation which may acquire all or substantially all of the assets and
business of the Company, or with or into which the Company may be consolidated
or merged, and this provision shall apply in the event of any subsequent merger,
consolidation, or transfer.
5.9 Non-Assignability. This Agreement is personal to each of the
parties and none of the parties may assign or delegate any of its rights or
obligations under this Agreement without the prior written consent of the other
party.
17
5.10 Governing Law. This Agreement shall be governed in all respects
and be interpreted by and under the laws of the State of New Jersey.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
ATTEST UNITED NATIONAL BANCORP
By: By:
--------------------------------- --------------------------------
Xxxxx X. Xxxxx, Xx., Secretary Xxxxxx X. Xxxxx, Chairman
Compensation Committee of
the Board of Directors
ATTEST: UNITED NATIONAL BANK
By: By:
--------------------------------- --------------------------------
Xxxxx X. Xxxxx, Xx., Cashier Xxxxxx X. Xxxxx, Chairman
Compensation Committee of
the Board of Directors
--------------------------- --------------------------------
Witness XXXXXX X. XXXXXXX
18
EMPLOYMENT AND CHANGE-IN-CONTROL AGREEMENT
BY AND BETWEEN
XXXXX X. XXXXX, XX. ("Executive")
UNITED NATIONAL BANCORP, a New Jersey Corporation
and
UNITED NATIONAL BANK
DATED AS OF November 14, 2000
TABLE OF CONTENTS
PAGE
BACKGROUND ...................................................................................................... 1
ARTICLE I
TERM OF EMPLOYMENT AND DUTIES
1.1 Agreement ..................................................................................... 2
1.2 Term .......................................................................................... 2
1.3 Position ...................................................................................... 3
ARTICLE II
COMPENSATION AND BENEFITS
2.1 Base Compensation ............................................................................. 3
2.2 Additional Incentive Compensation ............................................................. 4
2.3 Retirement Plans .............................................................................. 4
2.4 Medical, Disability and Life Insurance Plans .................................................. 4
2.5 Stock Award Plans ............................................................................. 5
2.6 No Adverse Change After Change in Control...................................................... 5
2.7 Expense Reimbursement ......................................................................... 5
2.8 W-2 Compensation............................................................................... 5
ARTICLE III
DISABILITY OR DEATH
3.1 Termination for Disability .................................................................... 6
3.2 Termination Due to Death ...................................................................... 6
ARTICLE IV
OTHER TERMINATION
4.1 Termination for Cause ......................................................................... 7
4.2 Termination for Poor Performance .............................................................. 8
4.3 Termination Without Cause Prior to Change in Control .......................................... 9
4.4 Compensation and Benefits After Change in Control ............................................. 9
4.5 Resignation Without Good Reason ...............................................................10
4.6 Definition of Change in Control ...............................................................10
4.7 Notice ........................................................................................11
4.8 Mitigation ....................................................................................11
4.9 Parachute Payment Tax Gross-Up.................................................................12
ARTICLE V
MISCELLANEOUS
5.1 Severance Compensation and Benefits Not in
Derogation of Other Benefits ................................................................14
5.2 Indemnification by Company For Executive's
Expenses ....................................................................................14
5.3 Non-Disclosure of Confidential Information
and Non-Compete .............................................................................15
5.4 Payroll and Withholding Taxes .................................................................16
5.5 Changes .......................................................................................16
5.6 Notices .......................................................................................16
5.7 Rights Absolute ...............................................................................17
5.8 Successors ....................................................................................17
5.9 Non-Assignability .............................................................................17
5.10 Governing Law .................................................................................18
ii
EMPLOYMENT AND CHANGE-IN-CONTROL AGREEMENT
THIS AGREEMENT is made as of the 14th day of November, 2000 by
and between United National Bancorp, a New Jersey corporation ("UNB"), United
National Bank (the "Bank") (jointly hereinafter referred to as the "Company")
and Xxxxx X. Xxxxx, Xx. (hereinafter referred to as the "Executive").
BACKGROUND
WHEREAS, the Executive is employed by the Company; and
WHEREAS, the Executive, throughout his tenure, has worked
diligently in his position for the business of the Bank and UNB; and
WHEREAS, the Boards of Directors of the Bank and UNB
(collectively, the "Boards") are of the opinion that the future services of the
Executive are of substantial value to the Bank and UNB and that it is important
for the growth and development of the Bank and UNB that the Executive continue
in his position; and
WHEREAS, if the Company should receive any proposal from a
third party concerning a possible business combination with, or acquisition of
the equity securities of, the Company, the Boards believe it is imperative that
the Company and the Boards be able to rely upon the Executive to continue in his
position, and that the Boards be able to receive and rely upon the advice of the
Executive, if requested, as to the best interests of the Company and its
shareholders, without concern that the Executive may be distracted by personal
uncertainties or risks created by such a proposal; and
WHEREAS, to achieve such a goal, and to retain the services of
the Executive prior to any such activity, the Boards and the Executive have
agreed to enter into this Employment Agreement.
NOW, THEREFORE, to assure the Company that it will retain the
continued dedication of the Executive as well as the availability of the advice
and counsel of the Executive notwithstanding the possibility or occurrence of a
Change in Control (as hereafter defined) of the Company, and to induce the
Executive to remain in the employ of the Company, and for other good and
valuable consideration, the Company and the Executive, each intending to be
legally bound hereby, agree as follows:
ARTICLE I.
TERM OF EMPLOYMENT AND DUTIES
1.1 Agreement. The Company hereby employs the Executive and
the Executive hereby agrees to render such services to the Company on the terms
and conditions set forth in this Agreement.
1.2 Term. The term of employment under this Agreement
(hereinafter the "term") shall commence on November 14, 2000 and shall terminate
June 30, 2003, except that if this Agreement is not renewed, its term and
Employee's term of employment shall be automatically renewed for successive five
(5) year terms with the first such term commencing on July 1, 2003, unless the
Company gives Employee notice of termination of this Agreement ninety (90) days
prior to June 30, 2003, or any succeeding termination date pursuant to this
provision; and except further that if there shall occur a Change in Control of
the Company during such period, the term shall end on the third anniversary of
the Change in Control (regardless of whether such third anniversary
2
occurs before or after June 30, 2003). Notwithstanding the foregoing, the term
shall expire on the date the Executive turns age 65 if it has not yet expired by
such date. The Agreement may be sooner terminated in accordance with the terms
and conditions hereinafter set forth.
1.3 Position. During the term of this Agreement, the Executive
shall be employed as the Executive Vice President, General Counsel & Cashier of
the Bank or in comparable positions, or the same positions with such other
corporate or divisional centers as shall succeed to the business, assets and
properties of UNB or the Bank, as the case may be. The Executive shall devote
his full time and attention to the business of the Company, and shall not during
the term be engaged in any other business activity. This paragraph shall not be
construed as preventing the Executive from managing any investments of his or
his family's which do not require significant service in the operation of such
investments, nor as preventing his service on any other Board of Directors for
which he served as of the date hereof or serves hereafter with the consent of
the Board of Directors of UNB.
ARTICLE II.
COMPENSATION AND BENEFITS
2.1 Base Compensation. The Company will compensate and pay the
Executive for his services during the term of this Agreement at a minimum base
salary per year of $150,000 with annual increases in amounts to be determined by
the Board of Directors of UNB each year ("Base Salary"). In no event shall the
Base Salary of the Executive under this Agreement in effect at any particular
time be reduced without the prior written consent of Executive, except that
prior to a Change in Control of the Company (but not thereafter), the Base
Salary may be reduced without
3
the Executive's consent no more than once per year, with each such reduction
limited to ten percent (10%) of the prior year's Base Salary.
2.2 Additional Incentive Compensation. During the term of this
Agreement, the Executive shall also be entitled to participate in other
executive incentive compensation arrangements, similar to the incentive
compensation arrangements now in effect for executives of the Company pursuant
to which executives are paid an annual bonus; provided, however, that prior to a
Change in Control of the Company the participation of the Executive in such
arrangements shall mean that the Executive is eligible for an incentive award
but shall not obligate the Company to make any incentive award or pay any
incentive compensation to Executive; provided further, however, that after a
Change in Control of the Company, the Executive must be paid an annual bonus
that is at least as large as the highest bonus paid to the Executive in any year
during the three years immediately prior to a Change in Control.
2.3 Retirement Plans. During the term of this Agreement, the
Executive shall be entitled to participate in any plans of the Company relating
to pension, profit sharing, benefit equalization, or other programs now in
effect or that the Company may hereafter adopt for the benefit of its employees
or executives.
2.4 Medical, Disability and Life Insurance Plans. During the
term of this Agreement, the Executive shall be entitled to participate in any
medical coverage, hospitalization, medical reimbursement, disability, and life
insurance plans now in effect or that the Company may hereafter adopt.
2.5 Stock Award Plans. During the term of this Agreement, the
Executive shall be entitled to participate in and receive the benefits of any
stock option, restricted stock or similar
4
stock based compensation plans covering executives of the Company which
presently exist or may come into existence hereafter (a "Stock Plan"); provided,
however, that the participation of the Executive in such Stock Plans shall mean
that the Executive is eligible to receive benefits and awards but shall not
obligate the Company to grant the Executive any particular benefits or awards.
2.6 No Adverse Change After Change in Control. Before a
Change-in-Control of the Company, the Company may change or terminate any
benefit plan or bonus plan provided to the Executive. Following a Change in
Control of the Company, the Company may not change or terminate any plans set
forth above under Sections 2.2, 2.3, 2.4 and 2.5, which would adversely affect
the Executive's rights or benefits thereunder unless such change is consented to
by the Executive or occurs as a consequence of a change in law or regulation.
2.7 Expense Reimbursement. During the term of this Agreement,
the Company shall reimburse the Executive or otherwise provide for or pay for
all reasonable expenses incurred by the Executive in furtherance or in
connection with the business of the Company including but not limited to
automobile and travel expenses, and all reasonable entertainment expenses,
subject to such reasonable limitations as may be established by the Boards from
time to time. If such expenses are paid by the Executive, the Company will
reimburse the Executive therefor.
2.8 W-2 Compensation. "W-2 Compensation" as used in this
Agreement means the Employee's "Gross Pay" (or any analogous term having the
same or a similar meaning as "Gross Pay" hereafter used) as reported or
reportable on his W-2 statement for the period or periods in question. When
referring to a current tax year, "W-2 Compensation" refers to the annualized
total computed to the end of such current year of all items includable in "Gross
Pay" at their current level or levels unless the context clearly indicates
otherwise.
5
ARTICLE III.
DISABILITY OR DEATH
3.1 Termination for Disability. If the Executive shall become
disabled or incapacitated to the extent that he is unable to perform his duties
for a period of four (4) months in any twelve (12) month period, the Company may
terminate the employment of the Executive by written notice of termination
provided to the Executive. In the event of a termination for disability or
incapacity hereunder, the Executive shall have no right to compensation or other
benefits for any period after the date of termination, except as follows: (i)
before a Change in Control of the Company, if and to the extent that the
Executive is not receiving from public or private insurance policies paid for by
the Company disability benefits equal to or greater than his current W-2
Compensation for such six month period prior to the termination, then for a
period of six months following the termination, the Company shall continue to
pay to the Executive, as severance pay, an amount which together with the
disability insurance payments equals 100% of his current W-2 Compensation for
such six month period; and (ii) after a Change in Control of the Company, such
termination shall trigger compensation and benefits in accordance with section
4.4 of this Agreement.
3.2 Termination Due to Death. Employment of the Executive
shall automatically terminate by reason of the death of the Executive and no
notice of termination shall be required. In the event of a termination due to
the death of the Executive, either before or after a Change in Control of the
Company, the estate of the Executive and his heirs and beneficiaries shall have
no right to compensation or other benefits for any period after the date of
death except as follows: if and to the extent that the Executive's estate,
designated beneficiaries and heirs do not
6
receive, from life insurance policies paid for by the Company, proceeds equal to
or greater than 200% of his current W-2 Compensation as of the date of death,
then the Company shall continue to pay to the Executive's estate, as severance
pay, the Executive's W-2 Compensation for up to six months or, if earlier, until
such payments, together with the proceeds of the life insurance policies, equal
to 200% of the Executive's current W-2 Compensation.
ARTICLE IV.
OTHER TERMINATION
4.1 Termination For Cause.
(a) The Company shall have the right, at any time upon prior
written Notice of Termination (as herein defined), to terminate the employment
of the Executive for Cause. For the purpose of this Agreement, "Cause" shall
mean willful misconduct, breach of fiduciary duty involving personal benefit to
the Executive, conviction of a felony, willful breach or willful neglect by the
Executive of his duties as an Executive of the Company, or persistent negligence
or misconduct in the performance of such duties. For purposes of this paragraph,
no act or failure to act on the part of the Executive shall be considered
"willful" unless done or omitted not in good faith and without reasonable belief
that the action or omission was in the best interest of the Company. Any acts
undertaken by the Executive on the instruction of the Board of Directors of UNB
or the Bank shall not constitute Cause. If the termination for Cause occurs
after a Change in Control, the Executive shall not be deemed to have been
terminated for Cause hereunder unless and until: (i) there shall have been
delivered to the Executive a copy of a certification by a majority of the
non-officer members of the Board of Directors of the Bank finding that, in the
good faith opinion of such majority, the Executive was guilty of conduct which
was deemed to be Cause for
7
termination and specifying the particulars thereof in detail, and (ii) after
reasonable notice to the Executive there shall have been an opportunity for the
Executive, together with counsel to the Executive, to be heard before such
non-officer members of the Board of Directors.
(b) In the event employment is validly terminated for Cause
pursuant to Section 4.1(a) hereof, the Executive shall have no right to further
compensation or benefits hereunder for any period after the date of such
termination.
4.2 Termination For Poor Performance.
(a) The Company shall have the right, at any time prior to a
Change in Control of the Company (but not thereafter), to terminate the
employment of the Executive for Poor Performance by written Notice of
Termination (as defined in Section 4.7 hereof). For the purpose of this
Agreement, "Poor Performance" shall mean a finding by a majority of the
non-officer members of each of the Boards of Directors of UNB and the Bank that,
in the good faith opinion of each such majority: (i) the Executive's performance
of his duties was sufficiently unsatisfactory to merit termination, and (ii)
prior notice of such unsatisfactory performance was given to the Executive
without cure having occurred. In making such a finding, the Board of Directors
shall utilize the input of the Chief Executive Officer ("CEO") unless the CEO is
being terminated.
(b) In the event employment is validly terminated for Poor
Performance pursuant to Section 4.2(a) hereof, the Company shall continue to pay
to the Executive, as severance pay, his Base Salary for a period of one year
following such termination and shall continue to pay for and to provide medical
insurance for the Executive and his family for such period, but the Executive
shall have no right to any other form of compensation or benefits hereunder for
any period after the date of such termination.
8
4.3 Termination Without Cause Prior to Change in Control.
(a) Right to Terminate. The Company shall have the right to
terminate the employment of the Executive without Cause if the Company does so
by prior written Notice of Termination which specifies that the Company agrees
to pay the severance compensation and benefits herein set forth.
(b) Severance Compensation and Benefits Prior to Change
in Control. If prior to a Change in Control of the Company, the Company
terminates the employment of the Executive other than for Cause, Poor
Performance, disability or death of the Executive, the Company shall continue to
pay to the Executive, as severance pay, his current W-2 Compensation in each of
the two years following such termination and shall continue to pay for and to
provide medical insurance for the Executive and his family for such period. The
Executive shall be entitled to no other compensation or benefits hereunder after
the effective date of such termination.
4.4 Compensation and Benefits After Change in Control. After a
Change in Control of the Company, the Company shall pay to the Executive within
ten (10) business days following the date of Change in Control a lump sum equal
to the product of (x) 2.00, times (y) the average of W-2 Compensation, paid to
the Executive by the Company in each of the five years (or such fewer years as
the Executive shall have been employed by the Company) up to and including the
year of Change-in-Control. The Executive shall be entitled to no other
compensation or benefits hereunder after the effective date of such Change in
Control (except as provided by Section 5.2). Upon payment of such benefits as
provided in this Section 4.4 and Section 5.2, this Agreement shall terminate and
be of no further force or effect.
9
4.5 Resignation Without Good Reason Prior to Change in
Control.
(a) Right to Resign. The Executive may resign without Good
Reason at any time upon four weeks prior notice prior to a Change in Control.
(b) No Compensation or Benefits. If the Executive resigns
without Good Reason at any time prior to a Change in Control, the Executive
shall be entitled to no further compensation or benefits hereunder after the
effective date of such resignation.
4.6 Definition of Change in Control. For purposes of this
Agreement, a "Change in Control" of the Company shall mean the first to occur of
any of the following events:
(a) Any person or entity or group of affiliated persons or
entities (other than UNB) becomes a beneficial owner, directly or indirectly, of
25% or more of UNB's and/or the Bank's voting securities or all or substantially
all of the assets of UNB and/or the Bank.
(b) UNB and/or the Bank consummates a definitive agreement
pursuant to which either UNB or the Bank is merged, consolidated or combined
with or into an unaffiliated entity in which either or both of the following
occurs: (i) the directors of UNB and/or Bank, as applicable, immediately prior
to such merger, consolidation or combination will constitute less than a
majority of the board of directors of the surviving, new or combined entity; or
(ii) less than 75% of the outstanding voting securities of the surviving, new or
combined entity will be beneficially owned by the stockholders of UNB
immediately prior to such merger, consolidation or combination.
(c) UNB and/or the Bank consummates a definitive agreement
pursuant to which all or substantially all of UNB's and/or the Bank's assets are
transferred other than to a wholly-owned subsidiary of UNB.
10
(d) A majority of the members of the Board of Directors of
either UNB or the Bank shall be persons who: (i) were not members of such Board
on the date hereof ("current members"); and (ii) were not nominated by a vote of
the Board which included the affirmative vote of a majority of the current
members on the Board at the time of their nomination ("future designees") and
(iii) were not nominated by a vote of the Board which included the affirmative
vote of a majority of the current members and future designees, taken as a
group, on the Board at the time of their nomination.
4.7 Notice. Any notice of termination of the employment of the
Executive by the Company or by the Executive to the Company shall be
communicated by written Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a dated notice
which shall (i) indicate the specific termination provision in this Agreement
relied upon; (ii) except for a termination without Cause, set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the employment of the Executive under the provision so indicated;
(iii) specify a date of termination, which shall be not less than thirty (30)
nor more than ninety (90) days after such Notice of Termination is given, except
in the case of termination of employment by the Company of the Executive for
Cause pursuant to Section 4.1 hereof, in which case the Notice of Termination
may specify a date of termination as of the date such Notice of Termination is
given; and (iv) be given in the manner specified in Section 5.6 hereof.
4.8 Mitigation. Executive shall not be required to mitigate
the amount of any payment provided for in Article IV by seeking other employment
or otherwise. There shall be no
11
offset from payments or benefits due the Executive hereunder if Executive shall
obtain any other employment or otherwise.
4.9 Parachute Payment Tax Gross-Up.
(a) Additional Payments. If, for any taxable year, Executive
shall be liable for the payment of an excise tax under Section 4999 or other
substitute or similar tax assessment (the "Excise Tax") of the Internal Revenue
Code of 1986, as amended (the "Code"), including the corresponding provisions of
any succeeding law, with respect to any payments under this Section 4.9 or any
payments and/or benefits under this Agreement or under any benefit plan of the
Company applicable to Executive individually or generally to executives or
employees of the Company, then, notwithstanding any other provisions of this
Agreement, the Company shall pay to the Executive an additional amount (the
"Gross-Up Payment") such that the net amount retained by the Executive, after
deduction of any Excise Tax on such payments and benefits and any federal, state
and local income tax and Excise Tax upon payments provided for in this Section
4.9, shall be equal to the payments due to the Executive hereunder and the
payments and/or benefits due to the Executive under any benefit plan of the
Company. Each Gross-Up Payment shall be made by domestic cashier's or
treasurer's check, certified check or wire transfer, upon the later of (i) five
(5) days after the date the Executive notifies the Company of its need to make
such Gross-Up Payment, or (ii) the date of any payment causing the liability for
such Excise Tax. The amount of any Gross-Up Payment under this section shall be
computed by a nationally recognized certified public accounting firm designated
jointly by the Company and the Executive. The cost of such services by the
accounting firm shall be paid by the Company. If the Company and the Executive
are unable to
12
designate jointly the accounting firm, then the firm shall be the accounting
firm used by the Company immediately prior to the Change in Control.
(b) IRS Disputed Claims. The Executive shall notify the
Company in writing of any claim by the Internal Revenue Service ("IRS") that, if
successful, would require the payment by the Company of a Gross-Up Payment in
addition to that payment previously paid by the Company pursuant to this
section. Such notification shall be given as soon as practicable but no later
than fifteen (15) business days after the Executive is informed in writing of
such claim and shall apprise the Company of the nature of such claim, the date
on which such claim is requested to be paid, and attach a copy of the IRS
notice. The Executive shall not pay such claim prior to the expiration of the
thirty (30) day period following the date on which the Executive gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such period that it desires to
contest such claim, the Executive shall:
(i) Give the Company any information reasonably
requested by the Company relating to such claim;
(ii) Take such action in connection with contesting
such claim as the Company shall reasonably request in writing from time
to time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the
Company;
(iii) Cooperate with the Company in good faith in
order effectively to contest such claim; and
13
(iv) Permit the Company to participate in any
proceedings relating to such claim; provided, however that the Company
shall pay directly all costs and expenses (including legal and
accounting fees, as well as other expenses and any additional interest
and penalties) incurred by the Executive and the Company in connection
with an IRS levy, contest or claim and provided further that the
Company shall not take any action or fail to make any Gross-Up Payment
so as to cause the assessment of any IRS levy and the Company shall
cause any levy so assessed to be immediately released by payment of the
Gross-Up Amount, together with all costs, interest and penalties.
ARTICLE V.
MISCELLANEOUS
5.1 Severance Compensation and Benefits Not in Derogation of
Other Benefits. Anything to the contrary herein contained notwithstanding, the
payment or obligation to pay any monies, or granting of any benefits, rights or
privileges to Executive as provided in this Agreement shall not be in lieu or
derogation of the rights and privileges that the Executive now has or will have
under any plans or programs of the Company specified in Sections 2.3 through 2.5
inclusive, except that the Executive shall not be entitled to the benefits of
any other plan or program of the Company expressly providing for severance or
termination pay.
5.2 Indemnification By Company For Executive's Expenses. If
the termination of Executive's employment occurs after a Change in Control of
the Company, the Company shall pay all expenses incurred by the Executive in
connection with any claim by the Executive against the Company hereunder,
including but not limited to attorneys' and accountants' fees in addition to
other expenses incurred by the Executive. Such expenses shall be payable monthly
upon demand
14
by the Executive. A court of competent jurisdiction shall be empowered to deny
payment to the Executive of such expenses, including attorneys' and accountants'
fees, only if it determines that the Executive instituted a lawsuit or
proceeding hereunder in bad faith or without reasonable cause. The Executive
shall not be entitled to reimbursement for his legal fees if his termination of
employment occurs prior to a Change in Control of the Company.
5.3 Non-Disclosure of Confidential Information and
Non-Compete.
(a) Non-Disclosure of Confidential Information. Except in the
course of the employment of the Executive by the Company, and in the pursuit of
the business of the Company or any of its subsidiaries or affiliates, the
Executive shall not, at any time during or following the term of this Agreement,
disclose or use, any confidential information or proprietary data of the Company
or any of its subsidiaries or affiliates. The Executive agrees that all
information concerning the identity of the customers of the Company and the
relations of the Company to its customers is confidential information, unless
such information is otherwise publicly known.
(b) Non-Competition. The Executive agrees that during the
Executive's employment by the Company pursuant to this Agreement and during the
Post-Employment Non-Compete Period (as hereinafter defined), the Executive will
not, without the prior written consent of the Bank, engage in, become
interested, directly or indirectly, as a sole proprietor, as a partner in a
partnership, or as a substantial shareholder in a corporation, nor become
associated with, in the capacity of an employee, director, officer, principal
agent, trustee or in any other capacity whatsoever, any enterprise conducted in
the trading area of business of the Bank (specifically, in New Jersey, New York
or Pennsylvania) which enterprise is, or may be deemed to be, competitive with
any business carried on by the Bank as of the date of the termination of the
Executive's
15
employment or his retirement. The Post-Employment Non-Compete Period shall mean
a two-year period of time following termination of the Executive's employment
with the Company, except if the termination of employment occurs after a Change
in Control of the Company the Non-Compete Period shall be reduced to zero, and
in the case of termination for Poor Performance prior to a Change in Control of
the Company, it shall be reduced to one year.
(c) Specific Performance. The Executive agrees that the
Company does not have an adequate remedy at law for the breach of this Section
5.3 and agrees that the Executive shall be subject to injunctive relief and
equitable remedies as a result of a breach of any provision of this Section 5.3.
The invalidity or unenforceability of any provision of this Section 5.3 (or this
Agreement) shall not affect the force and effect of the remaining valid
portions. Except as expressly provided in this Agreement, no breach by the
Executive of the provisions of this Section 5.3 shall entitle the Company to
withhold any benefits payable to the Executive hereunder.
5.4 Payroll and Withholding Taxes. All payments to be made or
benefits to be provided hereunder by the Company shall be subject to reduction
by the applicable federal payroll or withholding taxes.
5.5 Changes. This Agreement may not be modified, changed,
amended, or altered except in a writing signed by the Executive and by an
officer of the Company duly authorized by the Boards of Directors or the
executive committee of both the Bank and UNB.
5.6 Notices. All notices given or required to be given herein
shall be in writing or sent by United States first-class certified or registered
mail, postage prepaid, to the Executive at the last-known address for the
Executive (or to the personal representative of the Executive upon his death),
and to the Company at the principal executive office for UNB (or any successor
thereto), to
16
the attention of the Chairman of the Board. All such notices shall be effective
when deposited in the mail in the manner specified in this Section 5.6. Either
party by a notice in writing to the other party may change or designate the
place for receipt of such notices.
5.7 Rights Absolute. No course of conduct between the Company
and the Executive and no delay or omission by the Company or the Executive to
exercise any right or power given under this Agreement shall: (i) impair the
subsequent exercise of any right or power or (ii) be construed to be a waiver of
any default or to be an acquiescence in or consent to the curing of any default
while any other default shall continue to exist, or be construed to be a waiver
of such continuing default or of any other right or power that shall theretofore
have arisen; and every power and remedy granted by law and by this Agreement to
any party hereto may be exercised from time to time and as often as may be
deemed expedient. All such rights and powers shall be cumulative to the fullest
extent permitted by law.
5.8 Successors. This Agreement shall inure to the benefit of
and be binding upon (i) the Executive and, to the extent applicable, his heirs,
assigns, executors, and personal representatives and (ii) the Company, its
successors and assigns, including, without limitation, any person, partnership,
or corporation which may acquire all or substantially all of the assets and
business of the Company, or with or into which the Company may be consolidated
or merged, and this provision shall apply in the event of any subsequent merger,
consolidation, or transfer.
5.9 Non-Assignability. This Agreement is personal to each of
the parties and none of the parties may assign or delegate any of its rights or
obligations under this Agreement without the prior written consent of the other
party.
17
5.10 Governing Law. This Agreement shall be governed in all
respects and be interpreted by and under the laws of the State of New Jersey.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
ATTEST UNITED NATIONAL BANCORP
By: __________________________ By: ____________________________
Xxxxxx X. Xxxxxxx, Treasurer Xxxxxx X. Xxxxx, Chairman
Compensation Committee of
the Board of Directors
ATTEST: UNITED NATIONAL BANK
By: ____________________________ By: _____________________________
Xxxxxx X. Xxxxxxx, Executive Xxxxxx X. Xxxxx, Chairman
Vice President & Chief Financial Compensation Committee of
Officer the Board of Directors
________________________________ _________________________________
Witness XXXXX X. XXXXX, XX.
18
EMPLOYMENT AND CHANGE-IN-CONTROL AGREEMENT
BY AND BETWEEN
A. XXXXXXX XXXXXXXXXX ("Executive")
UNITED NATIONAL BANCORP, a New Jersey Corporation
and
UNITED NATIONAL BANK
DATED AS OF November 14, 2000
TABLE OF CONTENTS
PAGE
BACKGROUND .......................................................................... 1
ARTICLE I
TERM OF EMPLOYMENT AND DUTIES
1.1 Agreement ......................................................... 2
1.2 Term .............................................................. 2
1.3 Position .......................................................... 3
ARTICLE II
COMPENSATION AND BENEFITS
2.1 Base Compensation ................................................. 3
2.2 Additional Incentive Compensation ................................. 4
2.3 Retirement Plans .................................................. 4
2.4 Medical, Disability and Life Insurance Plans ...................... 4
2.5 Stock Award Plans ................................................. 5
2.6 No Adverse Change After Change in Control.......................... 5
2.7 Expense Reimbursement ............................................. 5
2.8 W-2 Compensation....................................................5
ARTICLE III
DISABILITY OR DEATH
3.1 Termination for Disability ........................................ 6
3.2 Termination Due to Death .......................................... 6
ARTICLE IV
OTHER TERMINATION
4.1 Termination for Cause ............................................. 7
4.2 Termination for Poor Performance .................................. 8
4.3 Termination Without Cause Prior to Change in Control .............. 9
4.4 Compensation and Benefits After Change in Control ................. 9
4.5 Resignation Without Good Reason ...................................10
4.6 Definition of Change in Control ...................................10
4.7 Notice ............................................................11
4.8 Mitigation ........................................................11
4.9 Parachute Payment Tax Gross-Up.....................................12
ARTICLE V
MISCELLANEOUS
5.1 Severance Compensation and Benefits Not in
Derogation of Other Benefits ....................................14
i
5.2 Indemnification by Company For Executive's
Expenses ........................................................14
5.3 Non-Disclosure of Confidential Information
and Non-Compete .................................................15
5.4 Payroll and Withholding Taxes .....................................16
5.5 Changes ...........................................................16
5.6 Notices ...........................................................16
5.7 Rights Absolute ...................................................17
5.8 Successors ........................................................17
5.9 Non-Assignability .................................................17
5.10 Governing Law .....................................................18
ii
EMPLOYMENT AND CHANGE-IN-CONTROL AGREEMENT
THIS AGREEMENT is made as of the 14th day of November, 2000 by and
between United National Bancorp, a New Jersey corporation ("UNB"), United
National Bank (the "Bank") (jointly hereinafter referred to as the "Company")
and A. Xxxxxxx Xxxxxxxxxx (hereinafter referred to as the "Executive").
BACKGROUND
WHEREAS, the Executive is employed by the Company; and
WHEREAS, the Executive, throughout his tenure, has worked diligently in
his position for the business of the Bank and UNB; and
WHEREAS, the Boards of Directors of the Bank and UNB (collectively, the
"Boards") are of the opinion that the future services of the Executive are of
substantial value to the Bank and UNB and that it is important for the growth
and development of the Bank and UNB that the Executive continue in his position;
and
WHEREAS, if the Company should receive any proposal from a third party
concerning a possible business combination with, or acquisition of the equity
securities of, the Company, the Boards believe it is imperative that the Company
and the Boards be able to rely upon the Executive to continue in his position,
and that the Boards be able to receive and rely upon the advice of the
Executive, if requested, as to the best interests of the Company and its
shareholders, without concern that the Executive may be distracted by personal
uncertainties or risks created by such a proposal; and
WHEREAS, to achieve such a goal, and to retain the services of the
Executive prior to any such activity, the Boards and the Executive have agreed
to enter into this Employment Agreement.
NOW, THEREFORE, to assure the Company that it will retain the continued
dedication of the Executive as well as the availability of the advice and
counsel of the Executive notwithstanding the possibility or occurrence of a
Change in Control (as hereafter defined) of the Company, and to induce the
Executive to remain in the employ of the Company, and for other good and
valuable consideration, the Company and the Executive, each intending to be
legally bound hereby, agree as follows:
ARTICLE I.
TERM OF EMPLOYMENT AND DUTIES
1.1 Agreement. The Company hereby employs the Executive and the
Executive hereby agrees to render such services to the Company on the terms and
conditions set forth in this Agreement.
1.2 Term. The term of employment under this Agreement (hereinafter the
"term") shall commence on November 14, 2000 and shall terminate June 30, 2003,
except that if this Agreement is not renewed, its term and Employee's term of
employment shall be automatically renewed for successive five (5) year terms
with the first such term commencing on July 1, 2003, unless the Company gives
Employee notice of termination of this Agreement ninety (90) days prior to June
30, 2003, or any succeeding termination date pursuant to this provision; and
except further that if there shall occur a Change in Control of the Company
during such period, the term shall end on the third anniversary of the Change in
Control (regardless of whether such third anniversary
2
occurs before or after June 30, 2003). Notwithstanding the foregoing, the term
shall expire on the date the Executive turns age 65 if it has not yet expired by
such date. The Agreement may be sooner terminated in accordance with the terms
and conditions hereinafter set forth.
1.3 Position. During the term of this Agreement, the Executive shall be
employed as the Senior Vice President and Chief Accounting Officer of the Bank
or in comparable positions, or the same positions with such other corporate or
divisional centers as shall succeed to the business, assets and properties of
UNB or the Bank, as the case may be. The Executive shall devote his full time
and attention to the business of the Company, and shall not during the term be
engaged in any other business activity. This paragraph shall not be construed as
preventing the Executive from managing any investments of his or his family's
which do not require significant service in the operation of such investments,
nor as preventing his service on any other Board of Directors for which he
served as of the date hereof or serves hereafter with the consent of the Board
of Directors of UNB.
ARTICLE II.
COMPENSATION AND BENEFITS
2.1 Base Compensation. The Company will compensate and pay the
Executive for his services during the term of this Agreement at a minimum base
salary per year of $117,000 with annual increases in amounts to be determined by
the Board of Directors of UNB each year ("Base Salary"). In no event shall the
Base Salary of the Executive under this Agreement in effect at any particular
time be reduced without the prior written consent of Executive, except that
prior to a Change in Control of the Company (but not thereafter), the Base
Salary may be reduced without
3
the Executive's consent no more than once per year, with each such reduction
limited to ten percent (10%) of the prior year's Base Salary.
2.2 Additional Incentive Compensation. During the term of this
Agreement, the Executive shall also be entitled to participate in other
executive incentive compensation arrangements, similar to the incentive
compensation arrangements now in effect for executives of the Company pursuant
to which executives are paid an annual bonus; provided, however, that prior to a
Change in Control of the Company the participation of the Executive in such
arrangements shall mean that the Executive is eligible for an incentive award
but shall not obligate the Company to make any incentive award or pay any
incentive compensation to Executive; provided further, however, that after a
Change in Control of the Company, the Executive must be paid an annual bonus
that is at least as large as the highest bonus paid to the Executive in any year
during the three years immediately prior to a Change in Control.
2.3 Retirement Plans. During the term of this Agreement, the Executive
shall be entitled to participate in any plans of the Company relating to
pension, profit sharing, benefit equalization, or other programs now in effect
or that the Company may hereafter adopt for the benefit of its employees or
executives.
2.4 Medical, Disability and Life Insurance Plans. During the term of
this Agreement, the Executive shall be entitled to participate in any medical
coverage, hospitalization, medical reimbursement, disability, and life insurance
plans now in effect or that the Company may hereafter adopt.
2.5 Stock Award Plans. During the term of this Agreement,
the Executive shall be entitled to participate in and receive the benefits of
any stock option, restricted stock or similar
4
stock based compensation plans covering executives of the Company which
presently exist or may come into existence hereafter (a "Stock Plan"); provided,
however, that the participation of the Executive in such Stock Plans shall mean
that the Executive is eligible to receive benefits and awards but shall not
obligate the Company to grant the Executive any particular benefits or awards.
2.6 No Adverse Change After Change in Control. Before a
Change-in-Control of the Company, the Company may change or terminate any
benefit plan or bonus plan provided to the Executive. Following a Change in
Control of the Company, the Company may not change or terminate any plans set
forth above under Sections 2.2, 2.3, 2.4 and 2.5, which would adversely affect
the Executive's rights or benefits thereunder unless such change is consented to
by the Executive or occurs as a consequence of a change in law or regulation.
2.7 Expense Reimbursement. During the term of this Agreement, the
Company shall reimburse the Executive or otherwise provide for or pay for all
reasonable expenses incurred by the Executive in furtherance or in connection
with the business of the Company including but not limited to automobile and
travel expenses, and all reasonable entertainment expenses, subject to such
reasonable limitations as may be established by the Boards from time to time. If
such expenses are paid by the Executive, the Company will reimburse the
Executive therefor.
2.8 W-2 Compensation. "W-2 Compensation" as used in this Agreement
means the Employee's "Gross Pay" (or any analogous term having the same or a
similar meaning as "Gross Pay" hereafter used) as reported or reportable on his
W-2 statement for the period or periods in question. When referring to a current
tax year, "W-2 Compensation" refers to the annualized total computed to the end
of such current year of all items includable in "Gross Pay" at their current
level or levels unless the context clearly indicates otherwise.
5
ARTICLE III.
DISABILITY OR DEATH
3.1 Termination for Disability. If the Executive shall become disabled
or incapacitated to the extent that he is unable to perform his duties for a
period of four (4) months in any twelve (12) month period, the Company may
terminate the employment of the Executive by written notice of termination
provided to the Executive. In the event of a termination for disability or
incapacity hereunder, the Executive shall have no right to compensation or other
benefits for any period after the date of termination, except as follows: (i)
before a Change in Control of the Company, if and to the extent that the
Executive is not receiving from public or private insurance policies paid for by
the Company disability benefits equal to or greater than his current W-2
Compensation for such six month period prior to the termination, then for a
period of six months following the termination, the Company shall continue to
pay to the Executive, as severance pay, an amount which together with the
disability insurance payments equals 100% of his currnet W-2 Compensation for
such six month period; and (ii) after a Change in Control of the Company, such
termination shall trigger compensation and benefits in accordance with section
4.4 of this Agreement.
3.2 Termination Due to Death. Employment of the Executive shall
automatically terminate by reason of the death of the Executive and no notice of
termination shall be required. In the event of a termination due to the death of
the Executive, either before or after a Change in Control of the Company, the
estate of the Executive and his heirs and beneficiaries shall have no right to
compensation or other benefits for any period after the date of death except as
follows: if and to the extent that the Executive's estate, designated
beneficiaries and heirs do not
6
receive, from life insurance policies paid for by the Company, proceeds equal to
or greater than 200% of his current W-2 Compensation as of the date of death,
then the Company shall continue to pay to the Executive's estate, as severance
pay, the Executive's W-2 Compensation for up to six months or, if earlier, until
such payments, together with the proceeds of the life insurance policies, equal
to 200% of the Executive's current W-2 Compensation.
ARTICLE IV.
OTHER TERMINATION
4.1 Termination For Cause.
(a) The Company shall have the right, at any time upon
prior written Notice of Termination (as herein defined), to terminate the
employment of the Executive for Cause. For the purpose of this Agreement,
"Cause" shall mean willful misconduct, breach of fiduciary duty involving
personal benefit to the Executive, conviction of a felony, willful breach or
willful neglect by the Executive of his duties as an Executive of the Company,
or persistent negligence or misconduct in the performance of such duties. For
purposes of this paragraph, no act or failure to act on the part of the
Executive shall be considered "willful" unless done or omitted not in good faith
and without reasonable belief that the action or omission was in the best
interest of the Company. Any acts undertaken by the Executive on the instruction
of the Board of Directors of UNB or the Bank shall not constitute Cause. If the
termination for Cause occurs after a Change in Control, the Executive shall not
be deemed to have been terminated for Cause hereunder unless and until: (i)
there shall have been delivered to the Executive a copy of a certification by a
majority of the non-officer members of the Board of Directors of the Bank
finding that, in the good faith opinion of such majority, the Executive was
guilty of conduct which was deemed to be Cause for
7
termination and specifying the particulars thereof in detail, and (ii) after
reasonable notice to the Executive there shall have been an opportunity for the
Executive, together with counsel to the Executive, to be heard before such
non-officer members of the Board of Directors.
(b) In the event employment is validly terminated for Cause pursuant to
Section 4.1(a) hereof, the Executive shall have no right to further compensation
or benefits hereunder for any period after the date of such termination.
4.2 Termination For Poor Performance.
(a) The Company shall have the right, at any time prior to a Change in
Control of the Company (but not thereafter), to terminate the employment of the
Executive for Poor Performance by written Notice of Termination (as defined in
Section 4.7 hereof). For the purpose of this Agreement, "Poor Performance" shall
mean a finding by a majority of the non-officer members of each of the Boards of
Directors of UNB and the Bank that, in the good faith opinion of each such
majority: (i) the Executive's performance of his duties was sufficiently
unsatisfactory to merit termination, and (ii) prior notice of such
unsatisfactory performance was given to the Executive without cure having
occurred. In making such a finding, the Board of Directors shall utilize the
input of the Chief Executive Officer ("CEO") unless the CEO is being terminated.
(b) In the event employment is validly terminated for Poor Performance
pursuant to Section 4.2(a) hereof, the Company shall continue to pay to the
Executive, as severance pay, his Base Salary for a period of six months
following such termination and shall continue to pay for and to provide medical
insurance for the Executive and his family for such period, but the Executive
shall have no right to any other form of compensation or benefits hereunder for
any period after the date of such termination.
8
4.3 Termination Without Cause Prior to Change in Control.
(a) Right to Terminate. The Company shall have the right to terminate
the employment of the Executive without Cause if the Company does so by prior
written Notice of Termination which specifies that the Company agrees to pay the
severance compensation and benefits herein set forth.
(b) Severance Compensation and Benefits Prior to Change in Control. If
prior to a Change in Control of the Company, the Company terminates the
employment of the Executive other than for Cause, Poor Performance, disability
or death of the Executive, the Company shall continue to pay to the Executive,
as severance pay, his current W-2 Compensation in each of the two years
following such termination and shall continue to pay for and to provide medical
insurance for the Executive and his family for such period. The Executive shall
be entitled to no other compensation or benefits hereunder after the effective
date of such termination.
4.4 Compensation and Benefits After Change in Control. After a Change
in Control of the Company, the Company shall pay to the Executive within ten
(10) business days following the date of Change in Control a lump sum equal to
the product of (x) 2.00, times (y) the average of W-2 Compensation, paid to the
Executive by the Company in each of the five years (or such fewer years as the
Executive shall have been employed by the Company) up to and including the year
of Change-in-Control. The Executive shall be entitled to no other compensation
or benefits hereunder after the effective date of such Change in Control (except
as provided by Section 5.2). Upon payment of such benefits as provided in this
Section 4.4 and Section 5.2, this Agreement shall terminate and be of no further
force or effect.
9
4.5 Resignation Without Good Reason Prior to Change in Control.
(a) Right to Resign. The Executive may resign without Good Reason at
any time upon four weeks prior notice prior to a Change in Control.
(b) No Compensation or Benefits. If the Executive resigns without Good
Reason at any time prior to a Change in Control, the Executive shall be entitled
to no further compensation or benefits hereunder after the effective date of
such resignation.
4.6 Definition of Change in Control. For purposes of this Agreement, a
"Change in Control" of the Company shall mean the first to occur of any of the
following events:
(a) Any person or entity or group of affiliated persons or entities
(other than UNB) becomes a beneficial owner, directly or indirectly, of 25% or
more of UNB's and/or the Bank's voting securities or all or substantially all of
the assets of UNB and/or the Bank.
(b) UNB and/or the Bank consummates a definitive agreement pursuant to
which either UNB or the Bank is merged, consolidated or combined with or into an
unaffiliated entity in which either or both of the following occurs: (i) the
directors of UNB and/or Bank, as applicable, immediately prior to such merger,
consolidation or combination will constitute less than a majority of the board
of directors of the surviving, new or combined entity; or (ii) less than 75% of
the outstanding voting securities of the surviving, new or combined entity will
be beneficially owned by the stockholders of UNB immediately prior to such
merger, consolidation or combination.
(c) UNB and/or the Bank consummates a definitive agreement pursuant to
which all or substantially all of UNB's and/or the Bank's assets are transferred
other than to a wholly-owned subsidiary of UNB.
10
(d) A majority of the members of the Board of Directors of either UNB
or the Bank shall be persons who: (i) were not members of such Board on the date
hereof ("current members"); and (ii) were not nominated by a vote of the Board
which included the affirmative vote of a majority of the current members on the
Board at the time of their nomination ("future designees") and (iii) were not
nominated by a vote of the Board which included the affirmative vote of a
majority of the current members and future designees, taken as a group, on the
Board at the time of their nomination.
4.7 Notice. Any notice of termination of the employment of the
Executive by the Company or by the Executive to the Company shall be
communicated by written Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a dated notice
which shall (i) indicate the specific termination provision in this Agreement
relied upon; (ii) except for a termination without Cause, set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the employment of the Executive under the provision so indicated;
(iii) specify a date of termination, which shall be not less than thirty (30)
nor more than ninety (90) days after such Notice of Termination is given, except
in the case of termination of employment by the Company of the Executive for
Cause pursuant to Section 4.1 hereof, in which case the Notice of Termination
may specify a date of termination as of the date such Notice of Termination is
given; and (iv) be given in the manner specified in Section 5.6 hereof.
4.8 Mitigation. Executive shall not be required to mitigate the amount
of any payment provided for in Article IV by seeking other employment or
otherwise. There shall be no
11
offset from payments or benefits due the Executive hereunder if Executive shall
obtain any other employment or otherwise.
4.9 Parachute Payment Tax Gross-Up.
(a) Additional Payments. If, for any taxable year, Executive shall be
liable for the payment of an excise tax under Section 4999 or other substitute
or similar tax assessment (the "Excise Tax") of the Internal Revenue Code of
1986, as amended (the "Code"), including the corresponding provisions of any
succeeding law, with respect to any payments under this Section 4.9 or any
payments and/or benefits under this Agreement or under any benefit plan of the
Company applicable to Executive individually or generally to executives or
employees of the Company, then, notwithstanding any other provisions of this
Agreement, the Company shall pay to the Executive an additional amount (the
"Gross-Up Payment") such that the net amount retained by the Executive, after
deduction of any Excise Tax on such payments and benefits and any federal, state
and local income tax and Excise Tax upon payments provided for in this Section
4.9, shall be equal to the payments due to the Executive hereunder and the
payments and/or benefits due to the Executive under any benefit plan of the
Company. Each Gross-Up Payment shall be made by domestic cashier's or
treasurer's check, certified check or wire transfer, upon the later of (i) five
(5) days after the date the Executive notifies the Company of its need to make
such Gross-Up Payment, or (ii) the date of any payment causing the liability for
such Excise Tax. The amount of any Gross-Up Payment under this section shall be
computed by a nationally recognized certified public accounting firm designated
jointly by the Company and the Executive. The cost of such services by the
accounting firm shall be paid by the Company. If the Company and the Executive
are unable to
12
designate jointly the accounting firm, then the firm shall be the accounting
firm used by the Company immediately prior to the Change in Control.
(b) IRS Disputed Claims. The Executive shall notify the Company in
writing of any claim by the Internal Revenue Service ("IRS") that, if
successful, would require the payment by the Company of a Gross-Up Payment in
addition to that payment previously paid by the Company pursuant to this
section. Such notification shall be given as soon as practicable but no later
than fifteen (15) business days after the Executive is informed in writing of
such claim and shall apprise the Company of the nature of such claim, the date
on which such claim is requested to be paid, and attach a copy of the IRS
notice. The Executive shall not pay such claim prior to the expiration of the
thirty (30) day period following the date on which the Executive gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such period that it desires to
contest such claim, the Executive shall:
(i) Give the Company any information reasonably requested by the
Company relating to such claim;
(ii) Take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the Company;
(iii) Cooperate with the Company in good faith in order effectively
to contest such claim; and
13
(iv) Permit the Company to participate in any proceedings relating
to such claim; provided, however that the Company shall pay directly all
costs and expenses (including legal and accounting fees, as well as
other expenses and any additional interest and penalties) incurred by
the Executive and the Company in connection with an IRS levy, contest or
claim and provided further that the Company shall not take any action or
fail to make any Gross-Up Payment so as to cause the assessment of any
IRS levy and the Company shall cause any levy so assessed to be
immediately released by payment of the Gross-Up Amount, together with
all costs, interest and penalties.
ARTICLE V.
MISCELLANEOUS
5.1 Severance Compensation and Benefits Not in Derogation of Other
Benefits. Anything to the contrary herein contained notwithstanding, the payment
or obligation to pay any monies, or granting of any benefits, rights or
privileges to Executive as provided in this Agreement shall not be in lieu or
derogation of the rights and privileges that the Executive now has or will have
under any plans or programs of the Company specified in Sections 2.3 through 2.5
inclusive, except that the Executive shall not be entitled to the benefits of
any other plan or program of the Company expressly providing for severance or
termination pay.
5.2 Indemnification By Company For Executive's Expenses. If the
termination of Executive's employment occurs after a Change in Control of the
Company, the Company shall pay all expenses incurred by the Executive in
connection with any claim by the Executive against the Company hereunder,
including but not limited to attorneys' and accountants' fees in addition to
other expenses incurred by the Executive. Such expenses shall be payable monthly
upon demand
14
by the Executive. A court of competent jurisdiction shall be empowered to deny
payment to the Executive of such expenses, including attorneys' and accountants'
fees, only if it determines that the Executive instituted a lawsuit or
proceeding hereunder in bad faith or without reasonable cause. The Executive
shall not be entitled to reimbursement for his legal fees if his termination of
employment occurs prior to a Change in Control of the Company.
5.3 Non-Disclosure of Confidential Information and Non-Compete.
(a) Non-Disclosure of Confidential Information. Except in the
course of the employment of the Executive by the Company, and in the pursuit of
the business of the Company or any of its subsidiaries or affiliates, the
Executive shall not, at any time during or following the term of this Agreement,
disclose or use, any confidential information or proprietary data of the Company
or any of its subsidiaries or affiliates. The Executive agrees that all
information concerning the identity of the customers of the Company and the
relations of the Company to its customers is confidential information, unless
such information is otherwise publicly known.
(b) Non-Competition. The Executive agrees that during the
Executive's employment by the Company pursuant to this Agreement and during the
Post-Employment Non-Compete Period (as hereinafter defined), the Executive will
not, without the prior written consent of the Bank, engage in, become
interested, directly or indirectly, as a sole proprietor, as a partner in a
partnership, or as a substantial shareholder in a corporation, nor become
associated with, in the capacity of an employee, director, officer, principal
agent, trustee or in any other capacity whatsoever, any enterprise conducted in
the trading area of business of the Bank (specifically, in New Jersey, New York
or Pennsylvania) which enterprise is, or may be deemed to be, competitive with
any business carried on by the Bank as of the date of the termination of the
Executive's
15
employment or his retirement. The Post-Employment Non-Compete Period shall mean
a two-year period of time following termination of the Executive's employment
with the Company, except if the termination of employment occurs after a Change
in Control of the Company the Non-Compete Period shall be reduced to zero, and
in the case of termination for Poor Performance prior to a Change in Control of
the Company, it shall be reduced to one year.
(c) Specific Performance. The Executive agrees that the Company does
not have an adequate remedy at law for the breach of this Section 5.3 and agrees
that the Executive shall be subject to injunctive relief and equitable remedies
as a result of a breach of any provision of this Section 5.3. The invalidity or
unenforceability of any provision of this Section 5.3 (or this Agreement) shall
not affect the force and effect of the remaining valid portions. Except as
expressly provided in this Agreement, no breach by the Executive of the
provisions of this Section 5.3 shall entitle the Company to withhold any
benefits payable to the Executive hereunder.
5.4 Payroll and Withholding Taxes. All payments to be made or benefits
to be provided hereunder by the Company shall be subject to reduction by the
applicable federal payroll or withholding taxes.
5.5 Changes. This Agreement may not be modified, changed, amended, or
altered except in a writing signed by the Executive and by an officer of the
Company duly authorized by the Boards of Directors or the executive committee of
both the Bank and UNB.
5.6 Notices. All notices given or required to be given herein shall be
in writing or sent by United States first-class certified or registered mail,
postage prepaid, to the Executive at the last-known address for the Executive
(or to the personal representative of the Executive upon his death), and to the
Company at the principal executive office for UNB (or any successor thereto), to
16
the attention of the Chairman of the Board. All such notices shall be effective
when deposited in the mail in the manner specified in this Section 5.6. Either
party by a notice in writing to the other party may change or designate the
place for receipt of such notices.
5.7 Rights Absolute. No course of conduct between the Company and the
Executive and no delay or omission by the Company or the Executive to exercise
any right or power given under this Agreement shall: (i) impair the subsequent
exercise of any right or power or (ii) be construed to be a waiver of any
default or to be an acquiescence in or consent to the curing of any default
while any other default shall continue to exist, or be construed to be a waiver
of such continuing default or of any other right or power that shall theretofore
have arisen; and every power and remedy granted by law and by this Agreement to
any party hereto may be exercised from time to time and as often as may be
deemed expedient. All such rights and powers shall be cumulative to the fullest
extent permitted by law.
5.8 Successors. This Agreement shall inure to the benefit of and be
binding upon (i) the Executive and, to the extent applicable, his heirs,
assigns, executors, and personal representatives and (ii) the Company, its
successors and assigns, including, without limitation, any person, partnership,
or corporation which may acquire all or substantially all of the assets and
business of the Company, or with or into which the Company may be consolidated
or merged, and this provision shall apply in the event of any subsequent merger,
consolidation, or transfer.
5.9 Non-Assignability. This Agreement is personal to each of the
parties and none of the parties may assign or delegate any of its rights or
obligations under this Agreement without the prior written consent of the other
party.
17
5.10 Governing Law. This Agreement shall be governed in all respects
and be interpreted by and under the laws of the State of New Jersey.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
ATTEST UNITED NATIONAL BANCORP
By: By:
--------------------------------- ----------------------------
Xxxxx X. Xxxxx, Xx., Secretary Xxxxxx X. Xxxxx, Chairman
Compensation Committee of
the Board of Directors
ATTEST: UNITED NATIONAL BANK
By: By:
--------------------------------- ----------------------------
Xxxxx X. Xxxxx, Xx., Cashier Xxxxxx X. Xxxxx, Chairman
Compensation Committee of
the Board of Directors
--------------------------- --------------------------------
Witness A. XXXXXXX XXXXXXXXXX
18
