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Exhibit 6.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT entered into as of April 22,1999, by and
between 1ST CONSTITUTION BANCORP, a New Jersey corporation having its principal
place of business at 0000 Xxxxx 000 Xxxxx, Xxxxxxxx, Xxx Xxxxxx 00000 (the
"Employer"), and XXXXXX X. XXXXXXX, residing at 00 Xxxxxx Xxx, Xxxxxxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000 (the "Employee").
WHEREAS, the Employee has heretofore been employed as the President of
1st Constitution Bank, a New Jersey commercial bank (the "Bank"); and
WHEREAS, the Bank is engaged in the business of commercial banking,
with offices in Middlesex County, New Jersey; and
WHEREAS, the Bank and the Employer have entered into the Plan of
Acquisition providing for the acquisition of the Bank by the Employer; and
WHEREAS, the parties desire by this writing to set forth their
intentions with respect to the employment relationship between the Employee and
the Employer after the consummation of the Plan of Acquisition;
NOW, THEREFORE, it is AGREED as follows:
1. Employment Duties.
a. Employment. The Employer hereby employs the Employee, and
the Employee hereby accepts employment by the Employer, as the President and
Chief Executive Officer of the Employer. The Employee also agrees to serve as
President and Chief Executive Officer of the Bank and a Director of the Employer
and the Bank if elected to such position, and the Employer agrees to include the
Employee on management's slate of directors for the Bank and the Employer.
b. Duties. Subject to the direction of the Board of Directors
of the Employer (the "Board"), the Employee shall have responsibility for the
general management and control of the business and affairs of the Employer and
its subsidiaries and shall perform all duties and shall have all powers which
are commonly incident to the offices of President and Chief Executive Officer or
which, consistent therewith, are delegated to him by the Board. Such duties
include, but are not limited to, (1) managing the day-to-day operations of the
Employer and the Bank, (2) managing the efforts of the Employer and the Bank to
comply with applicable laws and regulations, (3) promotion of the Bank and its
services, (4) supervising employees of the Employer and the Bank, (5) providing
prompt and accurate reports to the Board regarding the affairs and condition of
the Employer and its subsidiaries, and (6) making recommendations to the Board
concerning the strategies, capital structure, tactics, and general operations of
the Employer and its subsidiaries.
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2. Base Compensation. The Employer agrees to pay the Employee so long
as he is employed pursuant to this Agreement a base salary at the total rate of
One Hundred Eighty Thousand Dollars ($180,000) per annum commencing with the
Commencement Date or at such higher rate as the Board may thereafter establish.
Base salary shall be payable on the same schedule as salaries of other executive
officers of the Employer are paid. Once increased, the Employee's base salary
may not thereafter be decreased. The Employer will pay the Employee such salary
for so long as the Employer is an employer of the Employee hereunder. The
Commencement Date shall be the date of the closing under the Plan of Acquisition
between the Bank and the Employer.
3. Term. The Employee's employment by the Employer pursuant to this
Agreement is for the period commencing on the Commencement Date and ending
thirty-six (36) months thereafter or on such earlier date as is determined in
accordance with Section 10 and 12 of this Agreement or such later date as
provided herein. On the first anniversary of the Commencement Date and on each
successive anniversary of such date thereafter the term of this Agreement shall
be extended for one additional year, unless this Agreement is sooner terminated
as provided in Section 10 and 12 or unless the Board advises the Employee that
this Agreement will no longer be extended.
4. Equity Participation.
The Employee will participate in the Employer's stock option plans on
at least an annual basis at levels appropriate for the President and Chief
Executive Officer of the Employer.
5. Cash Bonuses.
The Employer will pay the Employee a cash bonus within 90 days after
the end of each calendar year. The amount of the bonus will be determined by the
compensation committee of the Board based upon the profit plan of the Employer
developed by the Employee and approved by the Board prior to the calendar year
with respect to which the bonus is payable. The bonus amount shall be a sliding
scale for achieving the profit plan at various levels up to fifty percent of the
Employee's base salary. For purposes of calculating the bonus for the calendar
year ended December 31, 1999, the Board shall deem the Plan of Acquisition to
have been consummated on January 1, 1999.
6. Other Benefits.
a. Participation in 401(k). Medical and Insurance Plans. The
Employee shall be entitled to participate in the employee benefit plans that the
Employer or the Bank maintains from time to time for the benefit of its
employees and which include its executive employees relating to (1) 401(k)
benefits, (2) medical insurance and/or the reimbursement of uninsured medical
expenses commencing on the Commencement Date, (3) group term life insurance
benefits (for which the current death benefit applicable to the Employee will be
twice his annual salary); and (4) group disability benefits. This provision
shall not preclude the Employer or the Bank from any amendment to, or
termination of, any such plan. The Employer will consider, but does not commit
itself to adopt, a 3% or higher match up to 6% of salary under
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its 401 (k) plan; in any event, the Employer will provide an annuity contract
for the Employee at a cost of $10,000 per year during the term of this
Agreement.
b. Expenses. The Employee shall be entitled to be reimbursed
for all reasonable out-of-pocket business expenses which he shall incur in
connection with his rendition of services under this Agreement upon
substantiation of such expenses in accordance with applicable policies of the
Employer. The Employer shall provide the Employee with (1) the use for business
purposes at no cost to him of a late-model mid-sized automobile and (2)
membership in the Forsgate Country Club or its equivalent.
c. Moving Expenses. The Employer will reimburse the Employee
for reasonable moving costs in connection with the Employee's relocation from
his current residence to the market area of the Bank.
7. Loyalty.
a. Devotion to Performance. During the period of his
employment hereunder and except for illnesses, reasonable vacation periods, and
reasonable leaves of absence, the Employee shall devote all his full business
time, attention, skill, and efforts to the faithful performance of his duties
hereunder. The phrase "full business time" as used herein means that the
Employee cannot be gainfully employed in any other position or job and that the
time devoted to the Employer shall be at least that amount of time usually
devoted to like companies by similarly situated executive officers. During the
term of his employment under this Agreement, the Employee shall not engage in
any business or activity contrary to the business affairs or interests of the
Employer or its subsidiaries.
b. Investments. Nothing contained in this Section 7 shall be
deemed to prevent or limit the Employee's right to invest in the capital stock
or other securities of any business dissimilar from that of the Employer or,
solely as a passive or minority investor, in any business.
8. Standards.
a. General. The Employee shall perform his duties under this
Agreement in accordance with such reasonable standards as the Board may
establish from time to time. The Employer will provide the Employee with working
facilities and staff customary for similarly situated executive officers and
necessary for him to perform his duties.
b. Written Employment Objectives. During the term of this
Agreement, the Employee will submit annually lists of his employment objectives
to the Board. Such objectives will promptly thereafter be discussed, reasonably
modified and agreed upon in writing by the Employee and the Board. The Employee
shall thereafter use reasonable efforts to achieve such agreed upon written
employment objectives (the "Written Employment Objectives"), unless modified
with the consent of the Board.
9. Vacation. At such reasonable times as the Board shall in its
discretion permit, the Employee shall be entitled, without loss of pay, to
absent himself voluntarily from the
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performance of his employment with respect to the Employer under this Agreement,
all such voluntary absences to count as vacation time, provided that:
a. Annual Vacation. The Employee shall be entitled to an
annual vacation of 20 days to be taken in accordance with such policies as the
Board may periodically establish for senior management employees of the
Employer.
b. No Additional Compensation. The Employee shall not receive
any additional compensation from the Employer on account of his failure to take
a vacation, and the Employee shall not accumulate unused vacation from one
fiscal year to the next, except in either case to the extent authorized by the
Board.
10. Termination and Termination Pay. The Employer may terminate
employment hereunder at any time and for any reason and nothing herein shall be
interpreted to circumscribe that right; however, the parties agree that
differing financial obligations and entitlements shall pertain to various types
of termination as described in this Agreement.
a. Death. Employment under this Agreement shall terminate upon
the Employee's death during the term of this Agreement, in which event the
Employee's estate shall be entitled to receive the base compensation due the
Employee through the last day of the calendar month in which his death occurred
plus any appropriate cash bonus prorated to the date of termination.
b. Disability. Employment may be terminated hereunder upon the
Bank's determination that the Employee is suffering a Disability. For purposes
of this Agreement, "Disability" means a physical or mental infirmity which
impairs the Employee's ability to substantially perform his duties under this
Agreement for a period of 180 days during a 365 consecutive day period and which
results in the Employee's becoming eligible for long-term disability benefits
under the Employer's long-term disability plan (or, if the Employer does not
have such a plan in effect, which impairs the Employee's ability to
substantially perform his duties under this Agreement for any period of one
hundred eighty (180) days, whether consecutive or not, within any twelve-month
period of his employment hereunder). In the event of such termination, the
Employee shall be entitled to the base compensation plus any appropriate cash
bonus prorated to the date of termination and non-monetary employee benefits
provided for under this Agreement (less any amounts which the Employee receives
from any short or long term disability programs) for (1) any period during the
term of this Agreement and prior to the establishment of the Employee's
Disability during which the Employee is unable to work due to the physical or
mental infirmity, and (2) any period of Disability which is within six months
after the Employee's termination of employment pursuant to this subsection.
c. Just Cause. In the event that employment hereunder is
terminated by the Employer for Just Cause, the Employee shall not be entitled to
receive compensation or other benefits for any period after such termination,
except as provided by law. The phrase "Just Cause" as used herein shall exist
when there has been a good faith determination by the Board that there shall
have occurred one or more of the following events with respect to the Employee:
(a) the conviction of the Employee of a felony or of any lesser criminal offense
involving moral turpitude; (b) the willful commission by the Employee of a
criminal or other act that, in the
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judgment of the Board, causes or will likely cause substantial economic damage
to the Employer or substantial injury to the business reputation of the
Employer; (c) the commission by the Employee of an act of fraud in the
performance of his duties on behalf of the Employer; (d) the continuing willful
failure of the Employee to perform his duties to the Employer (other than any
such failure resulting from the Employee's incapacity due to physical or mental
illness) after written notice thereof (specifying the particulars thereof in
reasonable detail) and a reasonable opportunity to be heard and cure such
failure are given to the Employee by the Board; or (e) an order of a federal or
state regulatory agency or a court of competent jurisdiction requiring the
termination of the Employee's employment by the Employer. Notwithstanding the
foregoing, Just Cause shall not be deemed to exist unless there shall have been
delivered to the Employee a copy of a resolution duly adopted by the affirmative
vote of not less than a majority of the entire membership of the Board at a
meeting of the Board called and held for the purpose (after reasonable notice to
the Employee and an opportunity for the Employee to be heard before the Board),
finding that in the good faith opinion of the Board the Employee was guilty of
conduct described above and specifying the particulars thereof. Prior to holding
a meeting at which the Board is to make a final determination whether Just Cause
exists, if the Board determines in good faith at a meeting of the Board, by not
less than a majority of its entire membership, that there is probable cause for
it to find that the Employee was guilty of conduct constituting Just Cause as
described above, the Board may suspend the Employee from his duties hereunder
for a reasonable time not to exceed fourteen (14) days pending a further meeting
at which the Employee shall be given the opportunity to be heard before the
Board. For purposes of this subparagraph, no act, or failure to act, on the
Employee's part shall be considered "willful" unless done, or omitted to be
done, by him not in good faith and without reasonable belief that his action or
omission was in the best interests of the Employer.
d. Termination by the Employer Without Just Cause or by the
Employee for Good Reason.
(1) Payment of Base Compensation. The Board may, during the
term of this Agreement, by written notice to the Employee, immediately terminate
his employment at any time for a reason other than Just Cause or the Employee
may terminate this Agreement for Good Reason, by written notice to the Employer
delineating in detail such Good Reason and by providing reasonable opportunity
for the Employer to cure or correct any such Good Reason, in which event the
Employee shall be entitled to receive, as a severance benefit, his base
compensation for one year and 90 days, plus any appropriate cash bonus on an
annual basis, following such termination of this Agreement at the annual rate
then in effect; provided, however, if termination is made in connection with a
Change in Control of the Employer, then the provisions of paragraph 12 shall
apply. For purposes of this subparagraph "Good Reason" shall mean those items
delineated in paragraph 12(b)(1) through 12(b)(5) below (relating to Change in
Control).
(2) Manner of Payment. Subject to Sections 12(d) and 12(e),
said sum shall be paid, at the option of the Employer either (a) in equal,
consecutive monthly payments beginning the month following such termination as
if the Employee's employment had not been terminated, or (b) in one lump sum
within ten (10) days after such termination.
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e. Voluntarily Termination by the Employee. The Employee may
voluntarily terminate employment with the Employer during the term of this
Agreement upon at least ninety (90) days' prior written notice to its Board. In
the event of such voluntary termination hereunder, the Employee shall receive
only his compensation, vested rights and employee benefits up to the date of his
termination.
11. Covenant Not to Compete. Regardless of the reason for termination
or discontinuation of employment, the Employee covenants and agrees, and
acknowledges receipt of adequate consideration for such covenant and agreement,
that he will not, for one year following such termination or discontinuation of
employment or during the remaining term of this Agreement (including any
extensions or renewals thereof) serve as an officer or director or employee of
any community bank, savings association or mortgage company with principal
offices in Middlesex County, New Jersey, and which offers products and/or
services from offices in Middlesex County, New Jersey, competing with those
offered by the Bank.
12. Change in Control.
a. Involuntary Termination After Change in Control.
Notwithstanding any provision herein to the contrary, if, in connection with or
within twelve (12) months after any Change in Control of the Employer the
employment of the Employee under this Agreement is terminated by the Employer
without the Employee's prior written consent and for a reason other than Just
Cause, or Disability or death of the Employee or the Employee terminated his
employment for Good Reason, the Employee shall be paid an amount equal to two
times base annual compensation plus a prorated projected annual cash bonus or
payment of the base annual compensation for the balance of the remaining term of
this Agreement plus a prorated projected annual cash bonus, whichever is
greater, unless the Bank was placed in conservatorship or receivership in
connection with a Change in Control and the Board determines in good faith that
the Change in Control was directed by or otherwise required by the Federal
Deposit Insurance Corporation. Subject to Sections 12(d) and 12(e) said sum
shall be paid in one lump sum within ten (10) days of such termination. The term
"Change in Control" shall mean if any of the following events shall occur after
the effective date of this Agreement: (1) the acquisition by any person of
ownership or power to vote more than thirty-five percent (35%) of the Employer's
voting stock; (2) the acquisition by any person of the control of the election
of a majority of the Employer's directors; (3) the exercise of a controlling
influence over the management or policies of the Employer by any person or by
persons acting as a group within the meaning of Section13 (d) of the Securities
Exchange Act of 1934; as amended, or (4) during any period of two consecutive
years, individuals who at the beginning of such two-year period constitute the
Board (the "Continuing Directors") cease for any reason to constitute at least
two-thirds (2/3) thereof, provided that any individual whose election or
nomination for election as a member of the Board was approved by a vote of at
least two-thirds (2/3) of the Continuing Directors then in office shall be
considered a Continuing Director. The term "person" as used above means an
individual (other than the Employee), corporation, partnership, trust,
association, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization or any other form of entity not specifically listed herein. Any
other provision hereof to the contrary notwithstanding, no Change of Control
shall be deemed to have occurred for purposes of this Agreement as a result of
any offering registered with the Securities and Exchange Commission of stock to
the Employer's
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shareholders and/or other investors or other offering conducted by the Employer
to meet regulatory capital requirements at the demand of a bank regulatory
authority.
b. Voluntary Termination After Change in Control.
Notwithstanding any other provision of this Agreement to the contrary, the
Employee may voluntarily terminate his employment under this Agreement within
twelve (12) months following a Change in Control and the Employee shall
thereupon be entitled to receive the payment described in subsection 12(a) of
this Agreement, upon the occurrence of any of the following events, or within
ninety (90) days thereafter, which shall have not been consented to in advance
by the Employee in writing: (1) the requirement that the Employee move his
personal residence out of the geographic area of the Bank and/or a further
distance from said area than is his present residence, as the case may be; (2)
the assignment to the Employee of duties and responsibilities substantially
inconsistent with those normally associated with his position described in
Section 1 hereof; (3) a material reduction in the Employee's responsibilities or
authority (including reporting responsibilities) in connection with his
employment with the Employer; (4) a reduction of the Employee's base salary or a
material reduction of his benefits provided hereunder taken as a whole; or (5)
the Employer shall materially breach this Agreement and upon written notice by
the Employee to the Employer of said breach, the Employer shall not cure said
breach within thirty (30) days after such notice from the Employee.
c. Dispute Resolution. In the event that any dispute arises
between the Employee and the Employer as to the terms or interpretation of this
Agreement, each party hereto agrees that such dispute shall, at the request of
any other party hereto, be submitted to binding arbitration before the American
Arbitration Association in Northern New Jersey or any other professionally
recognized alternate dispute resolution company or forum to which the parties
can agree.
d. Limitation on Payments. In the event that any payment or
benefit received or to be received by the Employee in connection with a Change
in Control or the termination of the Employee's employment (whether pursuant to
the terms of this Agreement or any other plan, arrangement or agreement with the
Employer, any person whose actions result in a Change in Control or any person
affiliated with the Employer or such person) (collectively with the payments and
benefits hereunder, "Total Payments") would not be deductible (in whole or part)
as a result of section 280G of the Internal Revenue Code of 1986, as amended and
the regulations thereunder (the "Code") by the Employer, an affiliate or other
person making such payment or providing such benefit, the payments and benefits
hereunder shall be reduced until no portion of the Total Payments is not
deductible, or the payments and benefits hereunder are reduced to zero. At the
Employee's request, such reduction may be effected by extending the date the
payment would otherwise be due by not more than five years or by decreasing the
amount of the payment or benefit otherwise due and payable or a combination
thereof. For purposes of this limitation (i) no portion of the Total Payments
the receipt or enjoyment of which the Employee shall have effectively waived in
writing prior to the date of payment under subsection (a) shall be taken into
account, (ii) no portion of the Total Payments shall be taken into account
which, in the opinion of tax counsel selected by the Employee and acceptable to
the Employer's independent auditors, is not likely to constitute a "parachute
payment" within the meaning of section 280G(b)(2) of the Code, (iii) the
payments and benefits hereunder shall be reduced only to the extent necessary so
that, in the opinion of the tax counsel referred to in
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clause (ii), the Total Payments (other than those referred to in clauses (i) or
(ii)) in their entirety are likely to constitute reasonable compensation for
services actually rendered within the meaning of section 280G(b)(4) of the code
or are otherwise not likely to be subject to disallowance as deductions; and
(iv) the value of any non-cash benefit or any deferred payment or benefit
included in the Total Payments shall be determined by the Employer's independent
auditors in accordance with the principles of sections 28OG(d)(3) and (4) of the
Code.
e. In the event that any Total Payments would not be
deductible (in whole or part) as a result of Section 162(m) of the Code, or any
combination of Section 162(m) and Section 280G of the Code, by the Employer, an
affiliate or other person making any Total Payments, the payments and benefits
hereunder shall be reduced until no portion of the Total Payments is not
deductible, or the payments and benefits hereunder are reduced to zero. At the
Employee's request, such reduction may be effected by extending the date the
payment would otherwise be due by not more than five years or by decreasing the
amount of the payment or benefit otherwise due and payable or a combination of
the foregoing. For purposes of this limitation (i) no portion of the Total
Payments the receipt or enjoyment of which the Employee shall have effectively
waived in writing prior to the date of payment under subsection (a) shall be
taken into account, and (ii) the payments and benefits hereunder shall be
reduced only to the extent necessary so that, in the opinion of tax counsel
selected by the Employee and acceptable to the Employer's independent auditors,
the Total Payments (other than those referred to in clause (i)) in their
entirety are likely to constitute performance-based compensation or remuneration
payable on a commission basis within the meaning of Section 162(m)(4) of the
Code, do not exceed the $1,000,000 limitation of Section 162(m)(1) of the Code,
or are otherwise not likely to be subject to disallowance as deductions.
13. Confidentiality of Information. The Employee agrees to maintain the
confidentiality of any nonpublic information concerning the operation or
financial status of the Employer, the names or addresses of any of the Bank's
customers, borrowers and depositors, any information concerning or obtained from
such customers, borrowers and depositors and any other nonpublic information,
knowledge or data of or concerning the Bank to which the Employee may be exposed
during the course of his employment. The Employee further agrees that, unless
required by law or specifically permitted by the Employer in writing, he will
not disclose to any person or entity, either during or subsequent to his
employment, any of the above-mentioned nonpublic information which is not
generally known to the public nor shall he employ such information in any way
other than for the benefit of the Employer.
14. Injunctive Relief. If there is a breach or threatened breach of the
provisions of Section 11, or Section 13 of this Agreement, the Employee
acknowledges and agrees that there is no adequate remedy at law for such breach
and that the Employer shall be entitled to injunctive relief restraining the
Employee from such breach or threatened breach, but such relief shall not be the
exclusive remedy hereunder for such breach.
15. Representation of the Employee. The Employee hereby represents and
warrants to the Employer that he has full power and authority to enter into this
Agreement and to perform his duties and obligations hereunder, and that the
execution and performance hereof is not and will not in any manner conflict with
or result in a violation of any other contract, agreement,
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covenant or restriction to which the Employee is a party or by which he is
bound, except the employment agreement between the Employee and the Bank.
16. Successors and Assigns.
a. Acquisition of the Employer. This Agreement shall inure to
the benefit of and be binding upon any corporate or other successor of the
Employer which shall acquire, directly or indirectly, by merger, consolidation,
purchase or otherwise, all or substantially all of the assets or stock of the
Employer. The Employer will require any such successor by written agreement to
expressly assume and agree to perform this Agreement.
b. No Assignment by the Employer. Since the Employer is
contracting for the unique and personal skills of the Employee, the Employee
shall be precluded from assigning or delegating his rights or duties hereunder
without first obtaining the written consent of the Employer.
17. Amendments. No amendments or additions to this Agreement shall be
binding unless made in writing and signed by all of the parties hereto, except
as herein otherwise specifically provided.
18. Applicable Law.
a. State Law. Except to the extent preempted by Federal law,
the laws of the State of New Jersey shall govern this Agreement in all respects,
whether as to its validity, construction, capacity, performance or otherwise.
b. Compliance with Law and Regulation. All provisions of this
Agreement are intended to be consistent with and comply with all laws and
regulations enacted or promulgated both before and after the effective date of
this Agreement, applicable to the Employer, and to the extent that any provision
is inconsistent or in non-compliance, such provision shall be deemed void.
19. 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.
20. Headings. Headings contained herein are for convenience of
reference only and are not intended to affect the meaning of the text of this
Agreement.
21. Entire Agreement. This Agreement, together with any modifications
thereof as may hereafter be agreed to in writing by the parties, shall
constitute the entire agreement between the parties hereto with respect to the
subject matter hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
ATTEST: 1ST CONSTITUTION BANCORP
/s/ Xxxxxx X. Xxxxxxxxx By: /s/ Xxxxxx X. Xxxxx
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XXXXXX X. XXXXX, CHAIRMAN
OF THE BOARD OF DIRECTORS
WITNESS: EMPLOYEE
/s/ Xxxxxxx Xxxxxxxxx /s/ Xxxxxx X. Xxxxxxx
----------------------- -------------------------------
XXXXXX X. XXXXXXX
INDIVIDUALLY
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