EXHIBIT 10.7
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of September 25,
2002, by and among TRUSTCOMPANY BANCORP, a New Jersey corporation (the
"Company"), THE TRUST COMPANY OF NEW JERSEY, a New Jersey bank (the "Bank"), and
Xxxx X. Xxxxxx, an individual residing at 00 X. Xxxxx Xxxxxx, Xxx. 0X, Xxx Xxxx,
Xxx Xxxx 00000 (the "Executive").
INTRODUCTORY STATEMENTS
A. The Bank and the Company are undertaking a reorganization pursuant to
which the Bank will become a wholly owned subsidiary of the Company (the
"Reorganization"). The Executive has served the Bank in multiple capacities,
including as an executive officer, for many years and is familiar with the
Bank's operations.
B. The Boards of Directors of the Company and the Bank have concluded that
it is in the best interests of the Bank, the Company and their shareholders to
secure a continuity in management following the Reorganization. They also
consider it desirable to establish a working environment for the Executive which
minimizes the personal distractions that might result from possible business
combinations in which the Company or the Bank might be involved. For these
reasons, the Board of Directors of the Company and the Bank have decided to
offer to enter into a contract with the Executive for his future services on the
terms and conditions set forth in this Agreement.
C. The Executive has accepted the Bank's and the Company's offers to enter
into a contract with the Executive for his future services on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, the parties hereto, in consideration of the foregoing, the
mutual covenants and agreements hereinafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, agree as follows:
Section 1. EMPLOYMENT. The Company and the Bank hereby offer to employ the
Executive, and the Executive hereby accepts such employment, during the period
and upon the terms and conditions set forth in this Agreement.
Section 2. EMPLOYMENT PERIOD; REMAINING UNEXPIRED EMPLOYMENT PERIOD.
(a) The Company and the Bank shall employ the Executive during (i) an
initial period of three (3) years beginning on the date of this Agreement
(the "Employment Commencement Date") and ending on the day before the third
(3rd) anniversary of the Employment Commencement Date, and (ii) the period
of any additional extensions described in Section 2(b) (the "Employment
Period").
(b) The Employment Period shall be subject to extension in the
following manner: The Boards of Directors of the Company and the Bank (or a
compensation committee thereof) shall conduct an annual review of the
Executive's performance on or about each
anniversary of the Employment Commencement Date (each, an "Anniversary
Date") and may, on the basis of such review and by written notice to the
Executive, offer to extend the Employment Period through the day before the
third (3rd) anniversary of the relevant Anniversary Date, it being
understood that each such Board of Directors shall act independently in
making such determination and either the Company or the Bank (or both) may
(but neither is required to) make an offer of extension. In the event of
such an offer, the Employment Period shall be deemed extended in the
absence of objection from the Executive by written notice to the Company
and/or the Bank given within ten (10) business days after his receipt of
the Company's and/or the Bank's offer of extension.
(c) Except as otherwise expressly provided in this Agreement, any
reference in this Agreement to the term "Remaining Unexpired Employment
Period" as of any date shall mean the period beginning on such date and
ending on the day before the third (3rd) anniversary of the Employment
Commencement Date or, if later, on the day before the third (3rd)
anniversary of the last Anniversary Date as of which the Employment Period
was extended pursuant to Section 2(b).
(d) Nothing in this Agreement shall be deemed to prohibit the Company
or the Bank from terminating the Executive's employment before the end of
the Employment Period with or without notice for any reason. This Agreement
shall determine the relative rights and obligations of the Bank, the
Company and the Executive in the event of any such termination. In
addition, nothing in this Agreement shall require the termination of the
Executive's employment at the expiration of the Employment Period. Any such
continuation shall be subject to the terms of this Agreement.
Section 3. DUTIES; OTHER ACTIVITIES.
(a) The Executive shall serve as President and Chief Executive Officer
of the Bank and the Company, having such power, authority and
responsibility and performing such duties as are prescribed by or under
their respective By-laws and as are customarily associated with such
positions. The Executive shall devote his full business time and attention
to the business and affairs of the Bank and the Company and shall use his
best efforts to advance their respective best interests.
(b) The Executive may serve as a member of the boards of directors of
such business, community and charitable organizations as he may disclose to
and as may be approved by the Boards of Directors of the Company and the
Bank (which approval shall not be unreasonably withheld); provided,
however, that such service shall not materially interfere with the
performance of his duties under this Agreement. The Executive may also
engage in personal business and investment activities which do not
materially interfere with the performance of his duties hereunder;
provided, however, that such activities are not prohibited under any code
of conduct, ethics policy, or investment or securities trading policy
established by the Company or the Bank and generally applicable to all
similarly situated executives.
Section 4. COMPENSATION. In consideration for the services to be rendered
by the Executive hereunder, the Company and/or the Bank, as the case may be
(subject to Section 20), shall pay to him a salary at an initial annual rate of
Four Hundred Seventy Thousand Dollars
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($470,000), payable in approximately equal installments in accordance with their
respective customary payroll practices for senior officers. The Bank's and the
Company's respective Boards of Directors shall review the Executive's annual
rate of salary at such times during the Employment Period as they deem
appropriate, but not less frequently than once every twelve (12) months, and
may, in their discretion, approve a salary increase. In addition to salary, the
Executive shall receive from the Company and/or the Bank, as the case may be, a
minimum annual bonus of Fifty Percent (50%) of the Executive's annual salary
then in effect, paid in accordance with their respective bonus policies for
executive officers, and may receive other cash compensation from the Company or
the Bank for services hereunder at such times, in such amounts and on such terms
and conditions as the Boards of Directors of the Bank and the Company may
determine. If the Executive is discharged or suspended, or is subject to any
regulatory prohibition or restriction with respect to participation in the
affairs of the Bank, he shall continue to perform services for the Company in
accordance with this Agreement but shall not directly or indirectly provide
services to or participate in the affairs of the Bank in a manner inconsistent
with the terms of such discharge or suspension or any applicable regulatory
order.
Section 5. PARTICIPATION IN EMPLOYEE BENEFIT PLANS. During the Employment
Period, the Executive shall be treated as an employee of the Company and the
Bank and shall be entitled to participate in and receive benefits under any and
all qualified or non-qualified retirement, pension, savings, profit-sharing or
stock bonus plans, any and all group life, health (including hospitalization,
medical and major medical), dental, accident and long-term disability insurance
plans, and any other employee benefit and compensation plans (including, but not
limited to, any incentive compensation plans or programs, stock option and
appreciation rights plans and restricted stock plans) as may from time to time
be maintained by, or cover senior executive officers of, the Company and the
Bank, in accordance with the terms and conditions of such employee benefit plans
and programs and compensation plans and programs and consistent with the
Company's and the Bank's customary practices.
Section 6. INDEMNIFICATION AND INSURANCE.
(a) During the Employment Period and for a period of six years
thereafter, the Company and the Bank shall cause the Executive to be
covered by and named as an insured under any policy or contract of
insurance obtained by them to insure their directors and officers against
personal liability for acts or omissions in connection with service as an
officer or director of the Company or the Bank or service in other
capacities at their request. The coverage provided to the Executive
pursuant to this Section 6 shall be of the same scope and on the same terms
and conditions as the coverage (if any) provided to other officers or
directors of the Company and the Bank.
(b) To the maximum extent permitted under applicable law, during the
Employment Period and for a period of six years thereafter, the Company and
the Bank shall indemnify the Executive against and hold him harmless from
any costs, liabilities, losses and exposures to the fullest extent and on
the most favorable terms and conditions that similar indemnification is
offered to any director or officer of the Company and the Bank or any
subsidiary or affiliate thereof.
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Section 7. WORKING FACILITIES AND EXPENSES. The Executive's principal place
of employment shall be at the Bank's executive offices, or at such other
location as the Bank, the Company and the Executive may mutually agree upon. The
Bank and the Company shall provide the Executive at his principal place of
employment with a private office, secretarial services and other support
services and facilities suitable to his positions with the Company and the Bank
and necessary or appropriate in connection with the performance of his assigned
duties under this Agreement. The Bank shall provide to the Executive for his
exclusive use an automobile owned or leased by the Bank and appropriate to his
position and driver, to be used in the performance of his duties hereunder,
including commuting to and from his personal residence. The Bank or the Company
shall reimburse the Executive for his ordinary and necessary business expenses,
including, without limitation, all expenses associated with his business use of
the aforementioned automobile, fees for memberships in such clubs and
organizations as the Executive and the Company shall mutually agree are
necessary and appropriate for business purposes, and his travel and
entertainment expenses incurred in connection with the performance of his duties
under this Agreement, in each case upon presentation to the payer of an itemized
account of such expenses in such form as the payer may reasonably require.
Section 8. TERMINATION OF EMPLOYMENT DUE TO DEATH. The Executive's
employment with the Bank and the Company shall terminate, automatically and
without any further action on the part of any party to this Agreement, on the
date of the Executive's death. In such event: (a) the Bank and the Company shall
pay to the Executive's estate his earned but unpaid compensation (including,
without limitation, salary, the bonus for the prior year pro rated for the
number of days worked, and all other items which constitute wages under
applicable law) as of the date of his termination of employment, which payment
shall be made to the Executive's estate within 30 days after the date of the
Executive's death; and (b) the Company and the Bank shall provide the benefits,
if any, due to the Executive or his estate, surviving dependents or his
designated beneficiaries under the employee benefit plans and programs and
compensation plans and programs maintained for the benefit of the officers and
employees of the Company and the Bank. The time and manner of payment or other
delivery of these benefits and the recipients of such benefits shall be
determined according to the terms and conditions of the applicable plans and
programs. The payments and benefits described in (a) and (b) above shall be
referred to in this Agreement as the "Standard Termination Entitlements".
Section 9. TERMINATION OF EMPLOYMENT DUE TO DISABILITY. The Bank and
the Company may terminate the Executive's employment upon a determination, by
separate votes of a majority of the members of the Boards of Directors of the
Company and the Bank, acting in reliance on the written advice of a medical
professional acceptable to them, that the Executive is suffering from a physical
or mental impairment which, at the date of the determination, has prevented the
Executive from performing the essential duties of his position on a
substantially full-time basis for a period of at least one hundred and eighty
(180) days during the period of one (1) year ending with the date of the
determination or is likely to result in death or prevent the Executive from
performing his assigned duties on a substantially full-time basis for a period
of at least one hundred and eighty (180) days during the period of one (1) year
beginning with the date of the determination. In such event: (a) The Bank and
the Company shall pay and deliver to the Executive (or in the event of his death
before payment, to his estate and surviving dependents and beneficiaries, as
applicable) the Standard Termination Entitlements; and (b) in addition to the
Standard Termination Entitlements, the Bank and the Company shall continue to
pay the
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Executive his base salary, at the annual rate in effect for him immediately
prior to the termination of his employment, during a period ending on the
earliest of: (i) the expiration of one hundred and eighty (180) days after the
date of termination of his employment; (ii) the date on which long-term
disability insurance benefits are first payable to him under any long-term
disability insurance plan covering employees of the Bank or the Company (the
"LTD Eligibility Date"); (iii) the date of his death; and (iv) the expiration of
the Remaining Unexpired Employment Period (the "Initial Continuation Period").
If the end of the Initial Continuation Period is neither the LTD Eligibility
Date nor the date of his death, the Company and the Bank shall continue to pay
the Executive his base salary, at an annual rate equal to sixty percent (60%) of
the annual rate in effect for him immediately prior to the termination of his
employment, during an additional period ending on the earliest of the LTD
Eligibility Date, the date of his death and the expiration of the Remaining
Unexpired Employment Period.
Section 10. DISCHARGE OF THE EXECUTIVE FOR CAUSE.
(a) The Bank and/or the Company may terminate the Executive's employment
during the Employment Period, and such termination shall be deemed to have
occurred for "Cause" only if: (i) the Board of Directors of the Bank and/or the
Board of Directors of the Company, by separate majority votes of their
respective entire membership, determine that the Executive (A) has willfully and
intentionally failed to perform his assigned duties under this Agreement in any
material respect; (B) has willfully and intentionally engaged in dishonest or
illegal conduct in connection with his performance of services for the Company
or the Bank or has been convicted of a felony; (C) has willfully violated, in
any material respect, any law, rule, regulation, written agreement or final
cease-and-desist order with respect to his performance of services for the
Company or the Bank; or (D) has willfully and intentionally breached the
material terms of this Agreement in any material respect; and (ii) at least
thirty (30) days prior to the votes contemplated by Section 10(a)(i), the Bank
and/or the Company have provided the Executive with notice of intent to
discharge the Executive for Cause, detailing with particularity the facts and
circumstances which are alleged to constitute Cause (the "Notice of Intent to
Discharge"); and (iii) after the giving of the Notice of Intent to Discharge and
before the taking of the votes contemplated by Section 10(a)(i), the Executive
(together with his legal counsel, if he so desires) is afforded a reasonable
opportunity to make both written and oral presentations before the applicable
Board of Directors of the Company and/or the Bank for the purpose of refuting
the alleged grounds for Cause for his discharge; and (iv) after the votes
contemplated by section 10(a)(i), the Company and/or the Bank have furnished to
the Executive a notice of termination which shall specify the effective date of
his termination of employment (which shall in no event be earlier than the date
on which such notice is deemed given) and include a copy of a resolution or
resolutions adopted by the Board of Directors of the Bank and/or the Board of
Directors of the Company, certified by their respective corporate secretary and
signed by each member of the applicable Board of Directors voting in favor of
adoption of the resolution(s), authorizing the termination of the Executive's
employment for Cause and stating with particularity the facts and circumstances
found to constitute Cause for his discharge (the "Final Discharge Notice"). The
Board of Directors of the Company and/or the Board of Directors of the Bank may,
upon giving a Notice of Intent to Discharge, suspend the Executive pending a
determination of whether to give a Final Discharge Notice, provided that during
such suspension the Executive shall be entitled to the compensation and benefits
set forth herein.
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(b) If the Executive is discharged by both the Company and the Bank
for Cause during the Employment Period, the Company and the Bank shall pay
and provide to him (or, in the event of his death, to his estate, his
surviving beneficiaries and his dependents) the Standard Termination
Entitlements. If the Executive is discharged by the Company or the Bank
(but not both) for Cause during the Employment Period, the Executive (i)
shall be discharged from his position with the terminating employer; (ii)
shall remain employed with the other employer that has not discharged him
pursuant to the terms hereof and all benefits and entitlements due to the
Executive hereunder shall be provided by such employer, notwithstanding
anything herein to the contrary; and (iii) shall not be entitled to the
Standard Termination Entitlements. If the Bank and/or the Company do not
give a Final Discharge Notice to the Executive within ninety (90) days
after giving a Notice of Intent to Discharge, the Notice of Intent to
Discharge shall be deemed withdrawn and any future action to discharge the
Executive for Cause shall require the giving of a new Notice of Intent to
Discharge.
Section 11. DISCHARGE OTHER THAN FOR CAUSE. The Bank and the Company may
discharge the Executive at any time during the Employment Period and, unless
such discharge constitutes a discharge for Cause: (a) the Bank and the Company
shall pay and deliver to the Executive (or in the event of his death before
payment, to his estate and surviving dependents and beneficiaries, as
applicable) the Standard Termination Entitlements; and (b) in addition to the
Standard Termination Entitlements: (i) the Bank and the Company shall make a
lump sum payment to the Executive (or, in the event of his death before payment,
to his estate), in an amount equal to the sum of the remaining salary and bonus
payments that the Executive would have earned if he had continued working for
the Company and the Bank through the later of (x) the last day of the Employment
Period or (y) the second anniversary of the effective date of termination, at
the highest annual rate of salary and bonus achieved during the Employment
Period, without discount for early payment; (ii) through later of (x) the last
day of the Employment Period or (y) the second anniversary of the effective date
of termination, the Bank and the Company shall provide for the Executive and his
dependents continued group life, health (including hospitalization, medical and
major medical), dental, accident and long-term disability insurance benefits on
substantially the same terms and conditions (including any required
premium-sharing arrangements, co-payments and deductibles) in effect for them
immediately prior to the Executive's termination; (iii) through the sooner of
(x) the last day of the Employment Period or (y) the first anniversary of the
effective date of termination, the Company or the Bank shall provide to the
Executive for his use the working facilities described in the second sentence
and the driver described in the third sentence of Section 7; and (iv) the Bank
shall transfer unencumbered title to the automobile used by the Executive prior
to termination, subject to appropriate tax reporting; and (v) the vesting of all
options for the purchase of stock of the Bank and/or the Company granted to the
Executive shall accelerate, to the extent that the applicable stock option plans
permit, or give the administrator of such plans discretion to permit, such
acceleration (the lump sum payment specified in (i), the benefits specified in
(ii) and (iii), the automobile specified in (iv), and the acceleration of stock
options, if any, provided in (v) are collectively referred to as the "Additional
Termination Entitlements"). The payment pursuant to Section 11(b)(i) shall be
made within five (5) business days after the Executive's termination of
employment and shall be in lieu of any claim to a continuation of base salary
which the Executive might otherwise have and in lieu of cash severance benefits
under any severance benefits program which may be in effect for officers or
employees of the Bank or the Company. The coverage provided pursuant to Section
11(b)(ii) may, at the election of the Bank and the
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Company, be secondary to the coverage provided as part of the Standard
Termination Entitlements and to any employer-paid coverage provided by a
subsequent employer or through Medicare, with the result that benefits under the
other coverages will offset the coverage required by this Section 11(b)(ii).
Section 12. RESIGNATION.
(a) The Executive may resign from his employment with the Bank and the
Company at any time. A resignation under this Section 12 shall be effected
by notice of resignation given by the Executive to the Company and the Bank
and shall take effect on the later of the effective date of termination
specified in such notice or the date on which the notice of termination is
deemed given by the Executive. The Executive's resignation of any of the
positions within the Bank or the Company to which he has been assigned
shall be deemed a resignation from all such positions.
(b) The Executive's resignation shall be deemed to be for "Good
Reason" if the effective date of resignation occurs within ninety (90) days
after any of the following: (i) the failure of the Company or the Bank
(whether by act or omission of their respective Boards of Directors, or
otherwise) to appoint or re-appoint or elect or re-elect the Executive to
the positions of President and Chief Executive of the Company and the Bank;
(ii) the failure of the Bank's and the Company's respective shareholders
(whether in an election in which the Executive stands as a nominee or in an
election where the Executive is not a nominee) to elect or re-elect the
Executive to a seat on the Board of Directors at the expiration of his term
of membership, unless such failure is a result of the Executive's refusal
to stand for election; (iii) a material failure by the Company or the Bank,
whether by amendment of their respective certificates of incorporation or
organization, by-laws, action of their respective Boards of Directors or
otherwise, to vest in the Executive the functions, duties, or
responsibilities prescribed in Section 2 of this Agreement; provided that
the Executive shall have given notice of such failure to the Company and
the Bank, and the Company or the Bank have not fully cured such failure
within thirty (30) days after such notice is deemed given; (iv) any
reduction of the Executive's rate of base salary or bonus in effect from
time to time, whether or not material, or any failure (other than due to
reasonable administrative error that is cured promptly upon notice) to pay
any portion of the Executive's compensation as and when due; (v) any
material breach by the Company or the Bank of any other material term,
condition or covenant contained in this Agreement, provided that the
Executive shall have given notice of such material breach to the Company
and the Bank, and the Company or the Bank have not fully cured such breach
within thirty (30) days after such notice is deemed given; or (vi) a change
in the Executive's principal place of employment to a place that is not the
principal executive office of the Bank, or a relocation of the Bank's
principal executive office to a location that is more than forty (40) miles
away from the location of the Bank's principal executive office on the date
of this Agreement. In all other cases, a resignation by the Executive shall
be deemed to be without Good Reason.
(c) In the event of the Executive's resignation before the expiration
of the Employment Period, the Company and the Bank shall pay and deliver to
the Executive the Standard Termination Entitlements. In addition, if the
Executive's resignation is deemed to be a resignation for Good Reason, the
Company and the Bank shall also pay and deliver to the Executive the
Additional Termination Entitlements.
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Section 13. TERMS AND CONDITIONS OF ADDITIONAL TERMINATION ENTITLEMENTS.
The Company, the Bank and the Executive hereby stipulate that the damages which
may be incurred by the Executive following any termination of employment are not
capable of accurate measurement as of the date first above written and that the
Additional Termination Entitlements constitute reasonable damages under the
circumstances and shall be payable without any requirement of proof of actual
damage and without regard to the Executive's efforts, if any, to mitigate
damages. The Additional Termination Entitlements are expressly conditioned upon
the Executive's execution and delivery of a severance and general release
agreement and the expiration of any applicable revocation periods. The Company,
the Bank and the Executive further agree that the Company and the Bank may
condition the payment and delivery of the Additional Termination Entitlements on
the receipt of the Executive's resignation from any and all positions which he
holds as an officer, director or committee member with respect to the Company,
the Bank or any subsidiary or affiliate of either of them and the receipt of a
severance and release in form reasonably acceptable to the Company.
Section 14. TERMINATION UPON OR FOLLOWING A CHANGE OF CONTROL.
(a) A "Change of Control" shall be deemed to have occurred upon the
happening of any of the following events: (i) the consummation of a
reorganization, merger or consolidation of the Company with one or more
other persons, other than a transaction following which: (A) at least 51%
of the equity ownership interests of the entity resulting from such
transaction are beneficially owned (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended
("Exchange Act")) in substantially the same relative proportions by persons
who, immediately prior to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51% of
the outstanding equity ownership interests in the Company; and (B) at least
51% of the securities entitled to vote generally in the election of
directors of the entity resulting from such transaction are beneficially
owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
in substantially the same relative proportions by persons who, immediately
prior to such transaction, beneficially owned (within the meaning of Rule
13d-3 promulgated under the Exchange Act) at least 51% of the securities
entitled to vote generally in the election of directors of the Company;
(ii) the acquisition of all or substantially all of the assets of the
Company or beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 50% or more of the outstanding
securities of the Company entitled to vote generally in the election of
directors by any person or by any persons acting in concert; (iii) a
complete liquidation or dissolution of the Company; (iv) the occurrence of
any event if, immediately following such event, at least 50% of the members
of the Board of Directors of the Company do not belong to any of the
following groups: (A) individuals who were members of the Board of
Directors of the Company on the date of this Agreement; or (B) individuals
who first became members of the Board of Directors of the Company after the
date of this Agreement either: (1) upon election to serve as a member of
the Board of Directors of the Company by affirmative vote of two-thirds of
the members of such board, or of a nominating committee thereof, in office
at the time of such first election; or (2) upon election by the
shareholders of the Board of Directors of the Company to serve as a member
of such board, but only if nominated for election by affirmative vote of
two-thirds of the members of the Board of Directors of the Company, or of a
nominating committee thereof, in office at the time of such first
nomination; provided, however, that such individual's election or
nomination did not result from an actual or threatened
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election contest (within the meaning of Rule l4a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents (within the meaning of Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) other than by or on
behalf of the Board of Directors of the Company; or (v) any event which
would be described in Section 14(a)(i), (ii), (iii) or (iv) if the term
"Bank" were substituted for the term "Company" therein. In no event,
however, shall a Change of Control be deemed to have occurred as a result
of any acquisition of securities or assets of the Company, the Bank, or a
subsidiary of either of them, by the Company, the Bank, or any subsidiary
of either of them, any employee benefit plan maintained by any of them, or
by any person who owns five percent or more of the Bank's common stock on
the date of this Agreement. For purposes of this Section 14(a), the term
"person" shall have the meaning assigned to it under Sections 13(d)(3) or
14(d)(2) of the Exchange Act.
(b) For purposes of this Agreement, a "Pending Change of Control"
shall mean: (i) the signing of a definitive agreement for a transaction
which, if consummated, would result in a Change of Control; (ii) the
commencement of a tender offer which, if successful, would result in a
Change of Control; or (iii) the circulation of a proxy statement seeking
proxies in opposition to management in an election contest which, if
successful, would result in a Change of Control.
(c) Notwithstanding anything in this Agreement to the contrary, if the
Executive's employment with the Bank and the Company terminates due to
death or disability within one (1) year after the occurrence of a Pending
Change of Control and if a Change of Control occurs within two (2) years
after such termination of employment, he (or in the event of his death, his
estate) shall be entitled to receive the Standard Termination Entitlements
and the Additional Termination Entitlements that would have been payable if
a Change of Control had occurred on the date of his termination of
employment and he had resigned for Good Reason immediately thereafter;
provided, that payment shall be deferred without interest until, and shall
be payable immediately upon, the actual occurrence of a Change of Control.
(d) Notwithstanding anything in this Agreement to the contrary: (i) in
the event of the Executive's resignation within ninety (90) days after the
occurrence of a Change of Control, he shall be entitled to receive the
Standard Termination Entitlements and the Additional Termination
Entitlements that would be payable if his resignation were a resignation
for Good Reason, without regard to the actual circumstances of his
resignation; and (ii) for a period of one (1) year after the occurrence of
a Change of Control, no discharge of the Executive shall be deemed a
discharge for Cause unless the votes contemplated by Section 10(a) of this
Agreement are supported by at least two-thirds of the members of the Board
of Directors of the Company and the Bank at the time the vote is taken who
were also members of the Board of Directors of the Company and the Bank
immediately prior to the Change of Control.
(e) Notwithstanding anything in this Agreement to the contrary, for
purposes of computing the Additional Termination Entitlements due upon a
termination of employment that occurs, or is deemed to have occurred, after
a Change of Control, the Remaining Unexpired Employment Period shall be
deemed to be three (3) full years and the last day of the Employment Period
shall be the last day of the Remaining Unexpired Employment Period.
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Section 15. TAX INDEMNIFICATION.
(a) If the Executive's employment terminates under circumstances
entitling him (or in the event of his death, his estate) to the Additional
Termination Entitlements, the Company shall pay to the Executive (or in the
event of his death, his estate) an additional amount (the "Tax Indemnity
Payment") intended to indemnify him against the financial effects of the
excise tax imposed on excess parachute payments under Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"). The Tax Indemnity
Payment shall be determined under the following formula:
E x P
X = ________________________________________
1 - [(FI x (1 - SLI)) + SLI + E + M]
where
E = the percentage rate at which an excise tax is
assessed under Section 4999 of the Code;
P = the amount with respect to which such excise tax is
assessed, determined without regard to this Section
15;
FI = the highest marginal rate of income tax
applicable to the Executive under the Code for
the taxable year in question;
SLI = the sum of the highest marginal rates of
income tax applicable to the Executive under
all applicable state and local laws for the
taxable year in question; and
M = the highest marginal rate of Medicare tax
applicable to the Executive under the Code for
the taxable year in question.
Such computation shall be made at the expense of the Company by an attorney or a
firm of independent certified public accountants selected by the Executive and
reasonably satisfactory to the Company (the "Tax Advisor") and shall be based on
the following assumptions: (i) that a change in ownership, a change in effective
ownership or control, or a change in the ownership of a substantial portion of
the assets, of the Bank or the Company has occurred within the meaning of
Section 280G of the Code (a "280G Change of Control"); (ii) that all direct or
indirect payments made to or benefits conferred upon the Executive on account of
his termination of employment are "parachute payments" within the meaning of
Section 280G of the Code; and (iii)
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that no portion of such payments is reasonable compensation for services
rendered prior to the Executive's termination of employment.
(b) With respect to any payment that is presumed to be a parachute
payment for purposes of Section 280G of the Code, the Tax Indemnity Payment
shall be made to the Executive on the earlier of the date the Company, the
Bank or any direct or indirect subsidiary or affiliate of the Company or
the Bank is required to withhold such tax or the date the tax is required
to be paid by the Executive, unless, prior to such date, the Company
delivers to the Executive the written opinion, in form and substance
reasonably satisfactory to the Executive, of the Tax Advisor or of an
attorney or firm of independent certified public accountants selected by
the Company and reasonably satisfactory to the Executive, to the effect
that the Executive has a reasonable basis on which to conclude that (i) no
280G Change in Control has occurred, or (ii) all or part of the payment or
benefit in question is not a parachute payment for purposes of Section 280G
of the Code, or (iii) all or a part of such payment or benefit constitutes
reasonable compensation for services rendered prior to the 280G Change of
Control, or (iv) for some other reason which shall be set forth in detail
in such letter, no excise tax is due under Section 4999 of the Code with
respect to such payment or benefit (the "Opinion Letter"). If the Company
delivers an Opinion Letter, the Tax Advisor shall recompute, and the
Company shall make, the Tax Indemnity Payment in reliance on the
information contained in the Opinion Letter.
(c) In the event that the Executive's liability for the excise tax
under Section 4999 of the Code for a taxable year is subsequently
determined to be different than the amount with respect to which the Tax
Indemnity Payment is made, the Executive or the Company, as the case may
be, shall pay to the other party at the time that the amount of such excise
tax is finally determined, an appropriate amount, plus interest, such that
the payment made under Section 15(b), when increased by the amount of the
payment made to the Executive under this Section 15(c), or when reduced by
the amount of the payment made to the Company under this Section 15(c),
equals the amount that should have properly been paid to the Executive
under Section 15(a). The interest paid to the Company under this Section
15(c) shall be determined at the rate provided under section 1274(b)(2)(B)
of the Code. The payment made to the Executive shall include such amount of
interest as is necessary to satisfy any interest assessment made by the
Internal Revenue Service and an additional amount equal to any monetary
penalties assessed by the Internal Revenue Service on account of an
underpayment of the excise tax. To confirm that the proper amount, if any,
was paid to the Executive under this Section 15, the Executive shall
furnish to the Company a copy of each tax return which reflects a liability
for an excise tax, at least 20 days before the date on which such return is
required to be filed with the Internal Revenue Service. Nothing in this
Agreement shall give the Company any right to control or otherwise
participate in any action, suit or proceeding to which the Executive is a
party as a result of positions taken on his federal income tax return with
respect to his liability for excise taxes under section 4999 of the Code.
Section 16. RESTRICTIVE COVENANTS.
(a) Covenant Not to Compete. The Executive hereby covenants and agrees
that, for a period of eighteen (18) months following the date of his
termination of employment with the Company or the Bank (the "Restricted
Period"), he shall not, without the written
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consent of the Company and the Bank, become an officer, employee,
consultant, director or trustee of any bank, trust company, savings bank,
savings and loan association, savings and loan holding company, or bank
holding company, insurance company or agency, or any direct or indirect
subsidiary or affiliate of any such entity, that entails working within any
city or county in the State of New Jersey, Rockland County, New York, or
any other county in which the Company or the Bank maintains an office (the
"Restricted Area"); provided, however, that this Section 16(a) shall not
apply if the Executive is entitled to the Additional Termination
Entitlements.
(b) Solicitation. The Executive hereby covenants and agrees that, for
the Restricted Period, he shall not, without the written consent of the
Company and the Bank, either directly or indirectly: (i) solicit, offer
employment to, or take any other action intended, or that a reasonable
person acting in like circumstances would expect, to have the effect of
causing any officer or employee, or any person who was within the twelve
(12) months prior to the Executive's termination of employment an officer
or employee, of the Company, the Bank or any of their respective
subsidiaries or affiliates to terminate his or her employment and accept
employment or become affiliated with, or provide services for compensation
in any capacity whatsoever to, any bank, trust company, savings bank,
savings and loan association, savings and loan holding company, bank
holding company, insurance company or agency or other institution engaged
in the business of accepting deposits, making loans or doing business
within the Restricted Area; (ii) provide any information, advice or
recommendation with respect to any such officer or employee of any bank,
trust company, savings bank, savings and loan association, savings and loan
holding company, bank holding company, insurance company or agency or other
institution engaged in the business of accepting deposits, making loans or
doing business within the Restricted Area that is intended, or that a
reasonable person acting in like circumstances would expect, to have the
effect of causing any officer or employee of the Company, the Bank, or any
of their respective subsidiaries or affiliates to terminate his employment
and accept employment or become affiliated with, or provide services for
compensation in any capacity whatsoever to, any bank, trust company,
savings bank, savings and loan association, savings and loan holding
company, or bank holding company, insurance company or agency, or other
institution engaged in the business of accepting deposits, making loans or
doing business within the Restricted Area; or (iii) solicit, provide any
information, advice or recommendation or take any other action intended, or
that a reasonable person acting in like circumstances would expect, to have
the effect of causing any customer of the Company or the Bank to terminate
an existing business or commercial relationship with the Company or the
Bank.
(c) Confidentiality. Unless he obtains the prior written consent of
the Company, or the Bank, as applicable, the Executive shall keep
confidential and shall refrain from using for the benefit of himself, or
any person or entity other than the Company, the Bank or any entity which
is a subsidiary of the Company or the Bank or of which the Company is a
subsidiary, any document or information obtained from the Company, or from
its parent or subsidiaries, in the course of his employment with any of
them concerning their properties, operations, businesses, or customers
(unless such document or information is readily ascertainable from public
or published information or trade sources or has otherwise been made
available to the public through no fault of his own) until the same ceases
to be material (or
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becomes so ascertainable or available); provided, however, that nothing in
this Section 16(c) shall prevent the Executive, with or without the
Company's consent, from participating in or disclosing documents or
information in connection with any judicial, regulatory, or administrative
investigation, inquiry or proceeding to the extent that such participation
or disclosure is required under applicable law and the Executive provides
reasonable prior notice of such disclosure to the Bank and the Company.
(d) Remedies. The Executive acknowledges that, in the event of any
breach of this Section 16 by him, the Company and the Bank and their
affiliates would be harmed irreparably and immediately and could not be
made whole by monetary damages. Accordingly, the Company, the Bank and each
such affiliate, in addition to any other remedy to which it may be
entitled, shall be entitled to equitable relief, including injunctive
relief, to prevent any breach of the provisions of Section 16 and to compel
specific performance of the provisions hereof. Each of the covenants of the
Executive under Section 16 shall be for the benefit of the Company, the
Bank and each of their affiliates (and their successors and assigns). In
the event any such party obtains injunctive relief through judicial
enforcement of the provisions contained in this Section 16, the periods of
time for each restriction or right shall commence at the point in time at
which there is judicial enforcement of each such restriction or right. In
the event of a stay of a lower court ruling, the period of time shall
commence upon the higher court's disposition of any appeal, writ or
petition. None of the Company, the Bank, and any affiliate shall not be
required to post any bond or other security in connection with any
proceeding to enforce this Section 16.
(e) Interpretation of Covenants. Each of the covenants in this Section
16 shall be construed as independent of any other covenants or other
provisions of this Agreement. If any court of competent jurisdiction at any
time deems the Restricted Period unreasonably lengthy, or the Restricted
Area unreasonably extensive, or any of the covenants set forth in this
Section 16 not fully enforceable, the other provisions of this Section 16,
and this Agreement in general, will nevertheless stand and to the fullest
extent consistent with law continue in full force and effect, and it is the
intention and desire of the parties that the court treat any provisions of
this Agreement which are not fully enforceable as having been modified to
the extent deemed necessary by the court to render them reasonable and
enforceable and that the court enforce them to such extent (for example,
that the Restricted Period be deemed to be the longest period permissible
by law, but not in excess of the length provided for in this Section 16,
and the Restricted Area be deemed to comprise the largest territory
permissible by law under the circumstances, but not larger than the
Restricted Area set forth in this Section 16). In the event the Executive
breaches any of the covenants in this Section 16, the Restricted Period for
any such covenant shall be extended by that amount of time in which the
Executive is in breach of said covenant.
Section 17. NO EFFECT ON EMPLOYEE BENEFIT PLANS OR PROGRAMS. Other than the
acceleration of the vesting of the Executive's stock options, the termination of
the Executive's employment during the term of this Agreement or thereafter,
whether by the Company, by the Bank or by the Executive, shall have no effect on
the rights and obligations of the parties hereto under the Company's or the
Bank's qualified or non-qualified retirement, pension, savings, thrift,
profit-sharing or stock bonus plans, group life, health (including
hospitalization, medical and major medical), dental, accident and long term
disability insurance plans or such other employee benefit plans or programs, or
compensation plans or programs, as may be maintained by, or cover employees of,
the Company or the Bank from time to time; provided, however, that
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nothing in this Agreement shall be deemed to duplicate any compensation or
benefits provided under any agreement, plan or program covering the Executive to
which the Company is a party and any duplicative amount payable under any such
agreement, plan or program shall be applied as an offset to reduce the amounts
otherwise payable hereunder.
Section 18. SUCCESSORS AND ASSIGNS. This Agreement will inure to the
benefit of and be binding upon the Executive, his legal representatives and
testate or intestate distributees, and the Company and the Bank and their
respective successors and assigns, including any successor by merger or
consolidation or a statutory receiver or any other person or firm or corporation
to which all or substantially all of the assets and business of the Company may
be sold or otherwise transferred. Failure of the Company to obtain from any
successor its express written assumption of the Company's obligations hereunder
at least 60 days in advance of the scheduled effective date of any such
succession shall be deemed a material breach of this Agreement. This Agreement
is personal to the Executive and the Executive may not assign or delegate any of
his or its rights or obligations hereunder without first obtaining the written
consent of the Company and the Bank. Any assignment in violation of this Section
18 shall be null and void.
Section 19. INDEMNIFICATION FOR ATTORNEY'S FEES.
(a) The Company shall indemnify, hold harmless and defend the
Executive against reasonable costs, including legal fees and expenses,
incurred by him in connection with or arising out of any action, suit or
proceeding (including any tax controversy) in which he may be involved, as
a result of his efforts, in good faith, to defend or enforce the terms of
this Agreement, provided that Executive shall not be entitled to such
indemnification if he is duly terminated for Cause pursuant to Section 10.
For purposes of this Agreement, any settlement agreement which provides for
payment of any amounts in settlement of the Company's or the Bank's
obligations hereunder shall be conclusive evidence of the Executive's
entitlement to indemnification hereunder, and any such indemnification
payments shall be in addition to amounts payable pursuant to such
settlement agreement, unless such settlement agreement expressly provides
otherwise.
(b) The Company's obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim,
right or action which the Company may have against the Executive or others.
In no event shall the Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Executive obtains other employment.
Unless the Executive is duly terminated for Cause or it is determined by a
unanimous vote of the Board of Directors of the Company that the Executive
has acted in bad faith, the Company shall pay as incurred, to the full
extent permitted by law, all legal fees and expenses which the Executive
may reasonably incur as a result of or in connection with his consultation
with legal counsel or arising out of any action, suit, proceeding, tax
controversy or contest (regardless of the outcome thereof) by the Company,
the Executive or others regarding the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of
performance thereof (including as a result of any contest by the Executive
about the amount of any payment pursuant to this Agreement), plus
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in each case interest on any delayed payment or required reimbursement at
the applicable Federal rate provided for in Section 7872(f)(2)(A) of the
Code. This Section 19(b) shall apply whether such consultation, action,
suit, proceeding or contest arises before, on, after or as a result of a
Change of Control.
Section 20. NON-DUPLICATION. This Agreement provides that the Executive
shall perform services for the Company, the Bank and other direct or indirect
subsidiary or affiliate of the Company or the Bank. Any compensation or benefits
provided to the Executive by each such employer shall be applied to offset the
obligations of the Company and the Bank hereunder, it being intended that this
Agreement set forth the aggregate compensation and benefits payable to the
Executive for all services to the Company, the Bank and all of their respective
direct or indirect subsidiaries and affiliates.
Section 21. RELATIVE OBLIGATIONS OF THE BANK AND THE COMPANY. The Company
shall, with respect to the Executive's services hereunder and the compensation
therefor and with respect to any termination of the Executive's employment, have
all of the obligations imposed on the Bank under this Agreement to the same
extent as though the name of the Company were substituted for the name of the
Bank herein and the Executive shall, with respect to the services hereunder and
the compensation therefor and with respect to any termination of the Executive's
employment, have all of the rights, privileges and duties relative to the
Company as though the name of the Company were substituted for the name of the
Bank herein. If the Executive performs services for both the Bank and the
Company, any entitlement of the Executive to severance compensation and other
termination benefits under this Agreement shall be determined on the basis of
the aggregate compensation payable to the Executive by the Bank and the Company,
and liability therefor shall be apportioned between the Bank and the Company in
the same manner as compensation paid to the Executive for services to each of
them; provided, however, that the Company shall be jointly and severally liable
with the Bank for all obligations of the Bank under this Agreement; and
provided, further, that in no event shall the Bank bear any liability for
actions of, or obligations undertaken by, the Company under this Agreement. It
is the intent and purpose of this Section 21 that the Executive have the same
legal and economic rights that he would have if all of his services were
rendered to and all of his compensation were paid by the Company. This Section
21 shall be construed and enforced to give effect to such intent and purpose.
Section 22. REQUIRED REGULATORY PROVISIONS. Notwithstanding anything herein
contained to the contrary, any payments to the Executive by the Company or the
Bank, whether pursuant to this Agreement or otherwise, are subject to and
conditioned upon their compliance with Section 18(k) of the Federal Deposit
Insurance Act, 12 U.S.C. Section 1828(k), and any regulations promulgated
thereunder.
Section 23. Notices. Any communication required or permitted to be given
under this Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally, or five days after
mailing if mailed, postage prepaid, by registered or certified mail, return
receipt requested, addressed to such party at the address listed below or at
such other address as one such party may by written notice specify to the other
party:
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If to the Executive to the address set forth in the heading of this
Agreement
If to the Company or the Bank: The Trust Company of New Jersey
00 Xxxxxxx Xxxxxx
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: Compensation Committee
with a copy to: Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
24. MISCELLANEOUS.
(a) Entire Agreement. This Agreement constitutes the entire agreement
of the parties with respect to the subject matter hereof and supersedes any
prior written or oral agreements.
(b) Amendments or Additions. No amendments or additions to this
Agreement shall be binding unless in writing and signed by the parties
hereto.
(c) Waiver. Failure to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such
term, covenant, or condition. A waiver of any provision of this Agreement
must be made in writing, designated as a waiver, and signed by the party
against whom its enforcement is sought. Any waiver or relinquishment of any
right or power hereunder at any one or more times shall not be deemed a
waiver or relinquishment of such right or power at any other time or times.
(d) Section Headings and Construction. The section headings used in
this Agreement are included solely for convenience and shall not affect, or
be used in connection with, the interpretation of this Agreement. Any
reference to a section number shall refer to a section of this Agreement,
unless otherwise stated.
(e) Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
(f) Governing Law; Jurisdiction. Except to the extent preempted by
federal law, this Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of New Jersey applicable to
contracts entered into and to be performed entirely within the State of New
Jersey. The parties hereto irrevocably submit to the exclusive jurisdiction
of the courts of the state of New Jersey and the United States District
Court for the District of New Jersey for the purpose of any suit, action,
proceeding or judgment relating to or arising out of this Agreement and the
transactions contemplated hereby. Service of process in connection with any
such suit, action or proceeding may be served on each party hereto anywhere
in the world by the same methods as are specified for the giving of notices
under this
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Agreement. Each of the parties hereto irrevocably consents to the
jurisdiction of any such court in any such suit, action or proceeding and
to the laying of venue in such court. Each party hereto irrevocably waives
any objection to the laying of venue of any such suit, action or proceeding
brought in such courts and irrevocably waives any claim that any such suit,
action or proceeding brought in any such court has been brought in an
inconvenient forum.
(g) Withholding. The Bank and the Company may directly or indirectly
withhold from any payments made under this Agreement all Federal, state,
city or other taxes and all other deductions as shall be required pursuant
to any law or governmental regulation or ruling or pursuant to any
contributory benefit plan maintained by or on behalf of the Company or the
Bank.
(h) Counterparts. This Agreement may be executed in several
counterparts, for the convenience of the parties, but shall constitute one
and the same instrument.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date and year first above written.
THE TRUST COMPANY OF NEW JERSEY
By: /s/ XXXXXX X. XXXXXXX
-------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Director & Vice Chairman of the
Board
TRUSTCOMPANY BANCORP
By: /s/ XXXXXX X. XXXXXXX
-------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Director
EXECUTIVE
/s/ XXXX X. XXXXXX
----------------------------------------------
Xxxx X. Xxxxxx
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