EMPLOYMENT AGREEMENT
Employment
Agreement (the "Employment Agreement") made as of this 20th day of February,
2008 and effective as of January 23, 2008 (the "Effective Date) is by and
between XXXXX XXXXXXXX,
an individual residing at 00 Xxxxxx Xxxx, Xxxxxx, Xxx Xxxxxx 00000 (the
"Employee"), SUSSEX
BANK, a state chartered bank with its principal place of business located
at 000 Xxxxx Xxxxxxx 00, Xxxxxxxx, Xxx Xxxxxx 00000 (the “Employer”), and SUSSEX BANCORP, a New Jersey
corporation with its principal place of business located at 000 Xxxxx Xxxxxxx
00, Xxxxxxxx, Xxx Xxxxxx 00000 (the "Company").
WHEREAS,
the Board of
Directors of the Employer and the Board of Directors of the Company have each
determined that it is in the best interests of each of the Employer and the
Company to enter into this Agreement with Employee, and each respective Board
has authorized the Employer and the Company to enter into this
Agreement;
WHEREAS,
the Employee agrees
to be employed pursuant to the terms and conditions of this
Agreement;
NOW,
THEREFORE, in
consideration of the premises and covenants contained herein, and with the
intent to be legally bound hereby, the parties hereto hereby agree as
follows:
1. Employment. The
Employer agrees to employ the Employee, and the Employee hereby accepts such
employment, upon the terms and conditions set forth herein.
2. Position
and
Duties. The Employee shall be employed as President and the
Chief Operating Officer of the Employer, to perform such services in that
capacity as are usual and customary for comparable institutions and as shall
from time-to-time be established by the Chief Executive Officer and the Board
of
Directors of the Employer. Employee agrees that he will devote his
full business time and efforts to his duties hereunder.
3. Cash
Compensation. Employer shall pay to the Employee compensation
for his services as follows:
(a) Base
Salary. The Employee shall be entitled to receive, commencing
upon the date of this Agreement, an annual base salary (the "Base Salary")
of
$140,343, which shall be payable in installments in accordance with Employer's
usual payroll method. Annually thereafter, on or prior to the
anniversary date of this Agreement, the Chief Executive Officer
and
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Board
of
Directors shall review the Employee's performance, the status of Employer and
such other factors as the Board of Directors or a committee thereof shall deem
appropriate and shall adjust the Base Salary accordingly. Employee acknowledges
that his Base Salary hereunder may be adjusted upward or downward; provided,
however, that in no event will his Base Salary be adjusted downward below the
minimum base salary established by the Employer as part of its regular annual
employee review process for employees having the same grade as
Employee.
(b) Discretionary
Bonus. Employee may be entitled to receive annually at the
discretion of the Board of Directors or a committee thereof a cash
bonus.
4. Other
Benefits; Fringe
Benefits. The Employee shall be entitled to the exclusive and
unlimited use of an automobile or a cash allowance to be used for the purpose
of
maintaining an automobile of a type and style commensurate with the Employee's
status as President of the Employer. In addition, the Employee shall
be entitled to receive hospital, health, medical, and life insurance of a type
currently provided to and enjoyed by other senior officers of Employer, and
shall be entitled to participate in any other employee benefit or retirement
plans offered by Employer to its employees generally or to its senior
management.
5. Term. The
term of this Agreement shall be three (3) years, commencing on the date hereof
and continuing until the third anniversary of the date hereof; provided,
however, that the term of this Agreement shall automatically renew for one
(1)
additional year on the third anniversary hereof unless, at least
three (3) months prior to such anniversary date, either Employer or Employee
shall have provided the other with written notice of their intention not to
extend the term of this Agreement; further provided, however, that in the event
the term of this Agreement is so extended, it shall also automatically renew
for
one (1) additional year on the fourth anniversary hereof unless, at
least three (3) months prior to such anniversary date, either Employer or
Employee shall have provided the other with written notice of their intention
not to further extend the term of this Agreement.
6. Termination. Employee
may be terminated at any time, without prejudice to Employee's right to
compensation or benefits as provided herein. Employee's rights upon a
termination shall be as follows:
(a) Cause. As
used in this Agreement, the term "Cause" shall mean the Employee's personal
dishonesty, willful misconduct, breach of fiduciary duty involving
personal
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profit,
intentional failure to perform stated duties, willful violation of any law,
rule
or regulation (other than traffic violations or similar offenses) or final
cease-and-desist order, or a material breach of any provision of this
Agreement. Notwithstanding the above, the Employee shall not be
deemed to have been terminated for cause unless and until there shall have
been
delivered to him a copy of a resolution duly adopted by the affirmative vote
of
not less than three-fourths of the members of the Board of Directors of the
Employer at a meeting of its Board called and held for that purpose (after
reasonable notice to the Employee and an opportunity for him, together with
counsel, to be heard before such Board of Directors), finding that in the good
faith opinion of the Board of Directors, the Employee was guilty of conduct
justifying termination for cause and specifying the particulars thereof in
detail; provided, however, that nothing contained herein shall prohibit Employee
from being suspended from his duties hereunder by a duly authorized agent of
the
Board upon a good faith determination that "cause" exists. Such
suspension shall last until such time as the Board meeting provided for above
shall have occurred, provided that such Board meeting shall occur within a
reasonable period of time. During such suspension Employee shall
continue to be an employee, entitled to all salary and benefits provided for
hereunder.
(b) Termination
With
Cause. Employer shall have the right to terminate the Employee
for "cause", upon written notice to him of such determination, specifying the
alleged "cause". In the event of such termination, the Employee shall
not be entitled to any further benefits under this Agreement.
(c) Termination
Without
Cause. Upon a termination of Employee's employment
hereunder without "cause", Employee shall be entitled to receive his then
current base salary for the remaining term of this Agreement. Such
payments may be made over the remaining term of this Agreement in periodic
payments in the same manner in which the Employee's salary was paid through
the
time of such termination, or by a lump sum payment of the discounted present
value of all base salary payments through the remaining term of this
Agreement. The determination of the method of payment shall be made
mutually by Employer and the Employee; provided, however, that in the event
the
parties cannot agree on the method of payment, Employer shall be entitled to
choose. In addition, Employer shall continue to provide the Employee
with hospital, health, medical and life insurance, and any other like benefits
in
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effect
at
the time of such termination through the end of the term of this
Agreement. The Employee shall have no duty to mitigate damages in
connection with his termination by Employer without "cause". However,
if the Employee obtains new employment and such new employment provides for
hospital, health, medical and life insurance, and other benefits, in a manner
substantially similar to the benefits payable by Employer hereunder, Employer
may permanently terminate the duplicative benefits it is obligated to provide
hereunder.
(d) Suspension
and Special Regulatory Rules.
(i) If
the Employee is suspended and/or temporarily prohibited from participating
in
the conduct of the affairs of the Employer by a notice served under Section
8(e)(3) or Section 8(g)(1) of the Federal Deposit Insurance Act ("FDI Act"),
Employer's obligations under this Agreement shall be suspended as of the date
of
service, unless stayed by appropriate proceedings.
(ii) If
the Employee is removed and/or permanently prohibited from participating in
the
conduct of the affairs of the Employer by an order issued under Section 8(e)
or
Section 8(g)(1) of the FDI Act, all obligations of Employer under this Agreement
shall terminate as of the effective date of the order and the Employee shall
not
be entitled to received the payments provided for under Paragraph (c)
above.
(iii) If
the Employer is in default, as defined in Section 3(x)(1) of the FDI Act, all
obligations of Employer under this Agreement shall terminate as of the date
of
default.
7. Resignation
for
Cause. During the term of this Agreement, the Employee shall
be entitled to resign from his employment with Employer, and receive the
payments provided for below, in the event that the Employee is not in breach
of
this Agreement and Employer (i) reassigns the Employee to a position of lesser
rank or status than President, or (ii) reduces the Employee's compensation
or
other benefits below the amounts provided for under Sections 3 and 4
hereof. Upon the occurrence of any of these events, the Employee
shall have thirty days to provide Employer notice of his intention to terminate
this Agreement. In the event the Employee elects to so terminate this
Agreement, such termination shall be treated as a termination without "cause"
by
Employer under Section 6(c) hereof, and the Employee shall be entitled to
receive all payments and other benefits called for under such Section
6(c).
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8. Change
in
Control.
(a) Upon
the occurrence of a Change in Control (as herein defined) followed at any time
during the term of this Agreement by the involuntary termination of the
Employee's employment other than for "cause", as defined in Section 6(a) hereof,
or, as provided below the voluntary termination of the Employee within eighteen
(18) months of such Change in Control, Employee shall become entitled to receive
the payments provided for under paragraph (c) below. Upon the
occurrence of a Change in Control, the Employee shall have the right to elect
to
voluntarily terminate his employment within eighteen (18) months of such Change
in Control following any demotion, loss of title, office of significantly
authority, reduction in his annual compensation or benefits, or relocation
of
his principal place of employment by more than thirty (30) miles from its
location immediately prior to the Change in Control.
(b) A
"Change in Control" shall mean:
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(i)
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a
reorganization, merger, consolidation or sale of all or substantially
all
of the assets of the Company, or a similar transaction, in which
the
shareholders of the Company prior to such transaction hold less than
a
majority of the voting power of the resulting
entity;
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(ii)
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individuals
who constitute the Incumbent Board (as herein defined) of the Company
cease for any reason to constitute a majority
thereof;
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(iii)
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an
event of a nature that would be required to be reported in response
to
Item I of the current report on Form 8-K, as in effect on the date
hereof,
pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
(the "Exchange Act") if Employer were a reporting company subject
to the
Exchange Act; or
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(iv)
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Without
limitation, a change in control shall be deemed to have occurred
at such
time as any "person" (as the term is used in Section 13(d) and 14(d)
of
the Exchange Act) other than the Company or the Employer or the trustees
or any administration of any employee stock ownership plan and trust,
or
any other employee benefit plans, established by the Company or the
Employer from time-to-time in is or becomes a "beneficial owner"
(as
defined in Rule 13-d under the Exchange Act) directly or indirectly,
of
securities of the Employer representing 25% or more of the Company’s
outstanding securities ordinarily having the right to vote at the
election
of directors (the “Trigger
Amount”);
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provided,
however, that in the event any such person acquires the Trigger Amount in a
transaction (i) which has been approved in advance by the Incumbent Board and
(ii) which does not result in such person controlling a majority of
the voting power of the full Board of Directors of the Company, then any such
transaction shall not be deemed a Change in Control under this subsection (iv);
or
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(v)
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A
tender offer is made for 25% or more of the voting securities of
the
Company and the shareholder owning beneficially or of record 25%
or more
of the outstanding securities of the Company have tendered or offered
to
sell their shares pursuant to such tender and such tendered shares
have
been accepted by the tender
offeror.
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For
these
purposes, "Incumbent Board" means the Board of Directors of the Company on
the
date hereof, provided that any person becoming a director subsequent to the
date
hereof whose election was approved by a voting of at least three-quarters of
the
directors comprising the Incumbent Board, or whose nomination for election
by
members or stockholders was approved by the same nominating committee serving
under an Incumbent Board, shall be considered as though he were a member of
the
Incumbent Board.
(c) In
the event the conditions of Section (a) above are satisfied, Employee shall
be
entitled to receive a lump sum payment equal to 2.99 times Employee's then
current Base Salary; provided, however,
that
in no event shall any payments provided for hereunder constitute an "excess
parachute payment" under Section 280G of the Internal Revenue Code of 1986,
as
amended or any successor thereto, and in order to avoid such a result the
benefits provided for hereunder will be reduced, if necessary, to an amount
which is One Dollar ($1.00) less than an amount equal to three (3) times
Employee's "base amount" as determined in accordance with such Section
280G. In addition to the foregoing, Employee shall be entitled to
receive from Employer, or its successor, hospital, health, medical and life
insurance on the terms and at the cost to Employee as Employee was receiving
such benefits upon the date of his termination. Employer's obligation
to continue such insurance benefits will be for a period of three (3)
years.
9. Covenant
Not to
Compete. Employee agrees that during the term of his
employment hereunder and for a period of one (1) year after the termination
of
his employment, he will not in any way, directly or indirectly, manage, operate,
control, accept employment or a consulting position with or otherwise advise
or
assist or be connected with or own or have any
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other
interest in or right with respect to (other than through ownership of not more
than five percent (5%) of the outstanding shares of a corporation whose stock
is
listed on a national securities exchange or on the National Association of
Securities Dealers Automated Quotation System) any enterprise which competes
with the Company in the financial services business in the counties
in which the Company conducts its business on the date of Employee's
termination. In the event that this covenant not to compete shall be
found by a court of competent jurisdiction to be invalid or unenforceable as
against public policy, such court shall exercise discretion in reforming such
covenant to the end that Employee shall be subject to a covenant not to compete
that is reasonable under the circumstances and enforceable by the
Company. Employee agrees to be bound by any such modified covenant
not to compete.
10. Miscellaneous.
(a) Governing
Law. In the absence of controlling Federal law, this Agreement
shall be governed by and interpreted under the substantive law of the State
of
New Jersey.
(b) Severability. If
any provision of this Agreement shall be held to be invalid, void, or
unenforceable, the remaining provisions hereof shall in no way be affected
or
impaired, and such remaining provisions shall remain in full force and
effect.
(c) Entire
Agreement;
Amendment. This Agreement sets for the entire understanding of
the parties with regarding to the subject matter contained herein and supersedes
any and all prior agreements, arrangements or understandings relating to the
subject matter hereof and may only be amended by written agreement signed by
both parties hereto or their duly authorized representatives.
(d)
Successors
and
Assigns. This Agreement shall be binding upon and become
the legal obligation of the successors and assigns of
Employer.
[this
space left intentionally blank; signature for Employment Agreement on next
page]
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IN
WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the date first above
written.
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SUSSEX
BANK
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By:
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Name: Xxxxxx
X. Xxxxxx
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Title: Chief
Executive Officer
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EMPLOYEE:
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Name: Xxxxx
Xxxxxxxx
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Sussex
Bancorp guarantees the payments
described in paragraphs 4(b), 6(c), 7 & 8(c) of this Agreement and executes
this Agreement solely for that purpose.
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By:
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Name: Xxxxxx
X. Xxxxxx
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Title: President
and Chief Executive Officer
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