Exhibit 10(a)
AGREEMENT
THIS AGREEMENT dated as of February 15, 1999 (the "Agreement),
is by and between The Cornerstone Formation Group, L.L.C. and its successors and
assigns ("Cornerstone") 000 Xxxxxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000
and Xxxxx Xxxxxxxxxx, 0000 Xxxx Xxxxx Xxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000
("Consultant");
BACKGROUND
Whereas, Cornerstone is currently a Limited Liability Company (LLC)
established to submit and obtain a commercial bank charter from the State of New
Jersey, and upon the issuance of a bank charter the LLC's interests will be
assigned to the Bank corporation (Bank), as will the rights and obligations of
this Agreement.
Whereas, Cornerstone considers it essential to the best interests of
its stockholders to xxxxxx the continuous employment of the Consultant. In this
connection, Cornerstone recognizes that, in the future, the possibility of a
termination of employment of the Consultant may exist and that such possibility,
and the uncertainty and questions which it might raise may result in the
departure or distraction of the Consultant to the detriment of Cornerstone and
its stockholders.
Whereas, Cornerstone has' determined that appropriate steps should be
taken to enforce and encourage the continued attention and dedication of the
Consultant to his assigned duties without distraction in the face of potentially
disturbing circumstances arising from the possibility in the future of an
employment termination.
Whereas, in order to induce Consultant to remain in the employ of
Cornerstone, Cornerstone agrees that Consultant shall receive the severance
benefits set forth in this Agreement in the event Consultant's employment with
Cornerstone is terminated under the circumstances described below.
Whereas, Cornerstone also feels it is important to memorialize the
relationship between Cornerstone and Consultant by way of this Agreement and it
is the intention of the parties hereto to have the understanding set forth
herein remain effective after the Bank charter is approved by the regulators.
NOW THEREFORE, in consideration of the premises and the mutual
agreements, covenants and promises hereafter set forth, the parties hereby agree
as follows:
1. TERM OF AGREEMENT. This Agreement shall commence on the date
hereof (the "Effective Date"), and shall continue in effect until such time as
the Consultant's employment is terminated and all obligations hereunder shall
have been satisfied.
2. EMPLOYMENT STATUS AND TITLE. Consultant shall act as a consultant
to Cornerstone during the formation period, and after the bank charter is
approved Consultant. The Consultant shall serve as the Executive Vice President
and Chief Financial Officer (EVP & CFO) of the Bank and shall be responsible for
and discharge the duties of Executive Vice President and Chief Financial Officer
(EVP & CFO) as well as any and all other responsibilities and duties that may be
granted to Consultant by the Board of the Bank.
3. COMPENSATION. Consultant's compensation shall be set by the Board,
from time to time. The initial amount of compensation to be paid Consultant
shall be set forth in the schedule attached hereto as Schedule "A". During the
term of this Agreement, Consultant's compensation may be adjusted or modified,
by the Board and the appropriate amended schedule shall be incorporated in this
Agreement by reference. Consultant's initial amount of compensation shall be set
forth in the Schedule" A", dated, as of the date of this Agreement, and attached
hereto.
4. CHANGE IN CONTROL. Consultant's employment status may be effected
by a change in control of Cornerstone and this provision of the Agreement
shall address those circumstances.
(a) For purposes of this Agreement, a "Change in Control" shall
have occurred if any of the following events shall occur:
(i) Cornerstone is merged, consolidated or
reorganized into or with another corporation or other legal person in any
transaction or series of related transactions (other than a transaction to
which only Cornerstone and one or more of it's subsidiaries are parties)
and as a result of such merger, consolidation or reorganization, less than
a majority of the combined voting power of the then-outstanding voting
securities of the surviving entity or person immediately after such
transaction or series of related transactions are held in the aggregate by
persons or entities who were holders of voting securities of Cornerstone
immediately prior to such transaction;
(ii) Cornerstone sells all or substantially all of
its assets to any other corporation or other legal person in any sale or
series of related sales (other than a transaction to which only Cornerstone and
one or more of its subsidiaries are parties); or
(iii) any person, corporation or group of associated
persons acting in concert within the meaning of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), excluding, for this purpose,
Cornerstone or its subsidiaries, or any Consultant benefit plan of Cornerstone
or its subsidiaries, becomes a direct or indirect beneficial owner of shares of
stock of Cornerstone (within the meaning of the rules promulgated under the
Exchange Act) representing an aggregate of more than 50% of the votes then
entitled to be cast at an election of directors of Cornerstone.
(b) For purposes of this Agreement, a "Potential Change in Control
of Cornerstone" shall be deemed to have occurred if:
(i) Cornerstone enters into an agreement, the
consummation of which would result in the occurrence of a Change in Control of
Cornerstone;
(ii) any person (including Cornerstone) publicly announces
an intention to take or to consider taking actions which if consummated would
constitute a Change in Control of Cornerstone;
(iii) the Board adopts a resolution to the effect that,
for purposes of this Agreement, a Potential Change in Control of Cornerstone
has occurred.
5. TERMINATION EVENTS
(a) GENERAL. Consultant shall be entitled to the benefits
provided in Section 6 hereof upon termination of employment in the following
circumstances:
(i) if none of the events described in Section constituting
a Change in Control of Cornerstone shall have occurred within two years prior to
the Date of Termination (as defined below) Consultant shall be entitled to the
benefits provided in Section 6 unless such termination is (A) because of
Consultant's death, (B) by Cornerstone for Cause (as defined below). (C) by
Consultant other than for Good Reason (as defined below).
(ii) if any of the events described in Section 4
constituting a Change in Control of Cornerstone shall have occurred and the Date
of Termination is prior to the second anniversary of the date such Change in
Control of Cornerstone occurred Consultant shall be entitled to the benefits
provided in Section 6 unless such termination is because of Consultant's death.
(b) CAUSE. Termination by Cornerstone of Consultant's employment for
"Cause" shall mean termination:
(i) upon the commission by Consultant of a willful unlawful
act, such as but not limited to embezzlement, against Cornerstone which is
intended to enrich the Consultant at the expense of Cornerstone or upon
Consultant's conviction of a felony;
(ii) in the event of willful, gross neglect or willful,
gross misconduct, resulting in either case in material harm to Cornerstone. For
purposes of this Subsection, no act, or failure to act, on Consultant's part
shall be deemed "willful" unless done or omitted to be done, by Consultant not
in good faith and without reasonable belief that his action or omission was in
the best interest of Cornerstone.
(c) GOOD REASON. For purposes of this Agreement, "Good Reason" shall
mean, without Consultant's consent, the occurrence of any of the following
circumstances, unless such circumstances are fully corrected prior to the Date
of Termination (as defined below) specified in the Notice of Termination (as
defined below) given in respect thereof
(i) an arbitrary reduction by Cornerstone in Consultant's
annual base salary or Consultant benefits as in effect immediately prior to such
reduction;
(ii) Cornerstone requiring Consultant to be based at a
Cornerstone office more than twenty (20) miles from Cornerstone's offices at
which Consultant is principally employed on the date hereof, except for required
travel on Cornerstone's business to an extent substantially consistent with
Consultant's present business travel obligations;
(iii) an arbitrary and material reduction in Consultant's
position~ duties or responsibilities as in effect immediately prior to such
reduction;
(iv) the failure of Cornerstone to obtain the agreement to
assume and to perform this Agreement by any successor as contemplated in Section
7 hereof; or
(v) any purported termination of Consultant's employment
that is not effected pursuant to a Notice of Termination satisfying the
requirements of Subsection 5 (d) hereof, which purported termination shall not
be effective for purposes of this Agreement.
Consultant's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any circumstance constituting Good Reason
hereunder.
(d) NOTICE OF TERMINATION. Any purported termination of Consultant's
employment by Cornerstone or by Consultant shall be communicated by written
Notice of Termination to the other party hereto in accordance with Section 8.
"Notice of Termination" shall mean a notice that shall indicate the specific
termination provision in this Agreement relied upon and, if applicable, shall
set forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of Consultant's employment under the provision so
indicated.
(e) DATE OF TERMINATION. "Date of Termination" shall mean the date
specified in the Notice of Termination (which in the case of a termination by
Cornerstone, other than termination based on death, fraud or illegal conduct
shall not be less than thirty (30) days from the date such Notice of Termination
is given, and in the case of a termination by Consultant, shall not be less than
thirty (30) nor, more than sixty (60) days from the date such Notice of
Termination is given); provided, however, that if within fifteen (15), days
after any Notice of Terinination is given, or, if the Notice of Termination is
not properly given, prior to the Date of Termination (as determined without
regard to an extension of such Date of Termination as described in this
provision) the party receiving such Notice of Termination notifies the other
party that a dispute exists concerning the termination, then the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a final, and binding arbitration
award or by a court of competent jurisdiction; and provided further, that the
Date of Termination shall be extended by a notice of dispute only if such notice
is given in good faith and the party giving such notice pursues the resolution
of such dispute with reasonable diligence. Notwithstanding the pendency of any
dispute, Cornerstone will continue to pay Consultant his full compensation in
effect when the notice giving rise to the dispute was given (including, but not
limited to, base salary) and continue to allow Consultant to participate in all
compensation, benefit and insurance plans in which Consultant was participating
when the notice giving rise to the dispute was given, until the dispute is
finally resolved in accordance with this Subsection. Amounts paid under this
Subsection are in addition to all other amounts due under this Agreement, and
shall not be offset against or reduce any other amounts due under this
Agreement, but shall be reduced by any compensation earned by Consultant as the
result of employment by another employer.
6. COMPENSATION UPON TERMINATION
(a) In the event that Consultant is entitled to benefits hereunder
upon termination pursuant to Section 5(a) hereof, Consultant shall be entitled
to the benefits provided below:
(i) Cornerstone shall pay to Consultant his full base
salary through the Date of Termination at the rate in effect at the time
Notice of Termination is given, plus all other amounts to which Consultant
is entitled under any compensation plan of Cornerstone in each case without
giving effect to any reduction in salary or benefits which would constitute
Good Reason pursuant to Section 5(c) (i) hereof, at the time such payments
are due;
(ii) Severance. Cornerstone will pay severance to the
Consultant as follows: the equivalent of six months salary for the period from
the date of filing the charter application through the first full year; the
equivalent of one year's salary starting in year two and thereafter.
(iii) Cornerstone shall provide continued uninterrupted
health care coverage to Consultant substantially comparable to that in effect at
the time Notice of Termination is given, consistent with the type and amount of
coverage in effect, by Cornerstone (without giving effect to any reduction in
benefits which would constitute Good Reason pursuant to Section 5 ( c) (i)
hereof), for a period of one year following such Date of Termination; and
(iv) vesting and exercisability of all options which may be
granted to Consultant under Cornerstone's Incentive Stock Option Plan; all
such options granted hereafter shall specifically indicate in such grant that
they are subject to this provision (collectively, "Covered Options") and shall
be accelerated to the fullest extent possible
(b) The payments provided for in Subsection 6(a) shall be made not
later than the thirtieth day following the Date of Termination; provided,
however, that if the amounts of such payments cannot be finally determined on or
before such day, Cornerstone shall pay to Consultant on such day an estimate, as
determined in good faith by Cornerstone, of the minimum amount of such payments
and shall pay the remainder of such payments as soon as the amount thereof can
be determined but in no event later than the ninetieth day after the Date of
Termination. In the event that the amount of the estimated payments exceeds the
amount subsequently determined to have been due, such excess shall constitute a
loan by Cornerstone to Consultant payable on the fifth day after demand therefor
by Cornerstone.
(c) Consultant shall not be required to mitigate the amount of any
payment provided for in this Section 6 by seeking other employment.
(d) Notwithstanding any provision of this Agreement to the contrary,
the aggregate present value of all payments in the nature of compensation
(within the meaning of Section 280C of the Code) provided to Consultant in
connection with a Change in Control of Cornerstone or the termination of
Consultant's employment shall be one dollar less than the amount that is fully
deductible by Cornerstone under Section 280G of the Code and, to the extent
necessary, payments and benefits under this Agreement shall be reduced in order
that this limitation not be exceeded. It is the intention of this Subsection 6(
d) to avoid excise taxes on Consultant under Section 4999 of the Code or the
disallowance of a deduction in Cornerstone pursuant to Section 280G of the Code.
Notwithstanding the foregoing, this Section shall not apply in the event of
termination of employment within two years following a Change in Control if such
termination is by Cornerstone without Cause or by Consultant for Good Reason
7. SUCCESSORS: BINDING AGREEMENT.
(a) Cornerstone will require any successors (whether director or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Cornerstone to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that Cornerstone could be required to perform this Agreement if no such
succession had taken place. Failure of Cornerstone to obtain such assumption and
agreement prior to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle Consultant to compensation from Cornerstone in
the same amount and on the same terms to which Consultant would be entitled
hereunder if Consultant terminated his employment for Good Reason following a
Change in Control of Cornerstone, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "Cornerstone" shall
mean Cornerstone as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise. enforceable by Consultant and his executors,
administrators, successors and heirs.
(b) Intentionally Deleted
(c) All benefits to be paid hereunder shall be addition to any
disability workers compensation, or other Cornerstone benefit plan distribution,
unpaid vacation or other unpaid benefits that Consultant has at the Date of
Termination.
8. NOTICE. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified registered mail, return receipt requested, postage prepaid, addressed
to the following addresses:
To Cornerstone:
The Cornerstone Formation Group L.L.C.
000 Xxxxxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
To the Consultant:
Xxxxx Xxxxxxxxxx
0000 Xxxx Xxxxx Xxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
All notices to Cornerstone shall also be directed to the attention of the Board
with a copy to the Secretary of Cornerstone, or to such other address as either
party may have furnished to the other in writing in accordance herewith except
that notice of change of address shall be effective only upon receipt
9. GOVERNING LAW. The validity, interpretation, construction and
performance of this agreement shall be governed by the laws of the State of
New Jersey, without giving effect to the principles of conflict of laws of
such state.
10. NO RIGHT TO CONTINUED EMPLOYMENT. This Agreement does not give to
Consultant any right to continued employment, and does not give to Consultant
any rights or remedies based on Termination of employment except as expressly
set forth herein
11. MISCELLANEOUS. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Consultant and Cornerstone. No waiver by either
party hereto at any time of any breach by the other party hereto or compliance
with any condition or provision of this Agreement to be performed by such other
party, shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, expressed or implied with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. All references to sections of the Exchange Act and
the Code shall be deemed also to refer to any successor provisions to such
Sections. Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law.
12. SEVERABILITY. The invalidity or unenforceability of any provision
of this Agreement shall not effect the validity of enforceability of any other
provision of this Agreement which shall remain in full force and effect.
13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same agreement.
14. PRIOR AGREEMENTS. Any and all agreements relating to the subject
matter hereof previously entered into between Cornerstone and Consultant are
hereby mutually terminated and canceled, and each of the parties mutually
releases and discharges the other from any and all obligations and liabilities
whatsoever existing under it by reason of any such agreements, it being the
intention of Cornerstone and Consultant that this Agreement shall supersede and
be in place of any and all prior agreements or understandings between them.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
CONSULTANT
/s/ Xxxxx Xxxxxxxxxx
---------------------------------------
Xxxxx Xxxxxxxxxx
THE CORNERSTONE FORMATION GROUP, L.L.C:
/s/ Xxxxxx X. Xxxxxx, Xx.
---------------------------------------
By: Xxxxxx X. Xxxxxx, Xx.
Managing Member
SCHEDULE "A"
CORNERSTONE COMPENSATION SCHEDULE
February 15. 1999
1. SALARY: Annual Salary: $90,000 (beginning with Bank opening 1999)
Interim Salary: (during formation and until Bank opens
for business)Annualized $65,000.00 to be
paid biweekly commencing with full time
service on behalf of Cornerstone.
Salary Adjustment Upon opening the B~ Consultant will be
paid a sum to make up the difference of
what would have been received if paid the
regular annual salary and the amount paid
as interim salary
2. STOCK OPTIONS: Upon implementation of a stock option plan
by the Bank Consultant will be entitled to
participate therein as part of its
compensation.
3. TRAVEL AND
ENTERTAINMENT: Expenses will be reimbursed during the
interim start up period.
4. CAR ALLOWANCE: Consultant win receive an auto allowance
of $400.00 per month beginning at the
time Bank opens for business and full
compensation begins to be paid.
5. ANNUAL BONUS: The Bank will implement an annual bonus
plan that will be related to the budget
established for the Bank. Consultant will
be entitled to participate in said plan.
6. BENEFITS:
(a) Life Insurance: The Bank: will provide Consultant with
life insurance equal to one times
Consultant's annual salary.
(b) Health Insurance: Consultant shall be provided with
comprehensive health insurance pursuant
to the health insurance plan to be
implemented by the Bank:.
(c) Vacation: The Consultant shall be entitled to a
total of four (4) weeks vacation, but not
all to be taken consecutively.
