Exhibit 10(d)
AGREEMENT
THIS AGREEMENT ("Agreement") made the 10th day of January, 2008 between
CORNERSTONE BANK, a New Jersey business corporation (the "Bank"), and
XXXXXX X. XXXXXX, XX., an individual (the "Executive").
WITNESSETH:
WHEREAS, Bank has employed Executive as its President and Chief
Executive Officer since March 6, 2006; and
WHEREAS, Bank and the Executive desire to enter in an agreement
regarding, among other things, the employment of and services to be rendered by
the Executive.
AGREEMENT:
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Employment. The Executive is hereby employed on the terms
and conditions set forth in this Agreement.
2. Duties of Executive. The Executive shall perform and
discharge well and faithfully such duties as an executive officer of Bank as may
be assigned to the Executive from time to time by the Board of Directors of the
Bank. The Executive shall be employed as Chairman and Chief Executive Officer of
the Bank, shall be a member of the Office of the Chairman, and such other
management committees as the Executive may choose, and shall hold such other
titles as may be given to him from time to time by the Board of Directors of the
Bank. The Executive shall devote his full time, attention and energies to the
business of the Bank and shall not, during the Employment Period (as defined in
Section 3 hereof), be employed or involved in any other business activity,
whether or not such activity is pursued for gain, profit or other pecuniary
advantage; provided, however, that this Section 2 shall not be construed as
preventing the Executive from (a) investing the Executive's personal assets, (b)
acting as a member of the Board of Directors of any other corporation or as "a
member of the Board of Trustees of any other organization, or (c) being involved
in any other substantial activity with the prior written approval of the Board
of Directors.
3. Term of Employment. The Executive's employment under this
Agreement shall be for a period (the "Employment Period") commencing on the date
of this Agreement and ending on March 31, 2009, provided that on the first and
each subsequent annual anniversary date of the termination or ending date of
this Agreement, and unless a party has given the other party written notice at
least sixty (60) days prior to such anniversary date that such party does not
agree to renew this Agreement, the term of this Agreement and the Employment
Period shall be deemed renewed for a tenn ending one (1) year subsequent to such
anniversary date, unless sooner terminated in accordance with this Section 5
hereof or one of the following provisions:
(a) The Executive's employment under this Agreement
may be terminated at any time during the Employment Period for "Cause" (as
herein defined), by action of the Board of Directors of the Bank, upon giving
notice of such termination to the Executive at least fifteen (15) days prior to
the date upon which such termination shall take effect. As used in this
Agreement, "Cause" means any of the following events:
(i) The Executive is convicted of or enters a plea of guilty or nolo contendere
to a felony, a crime of falsehood, or a crime involving fraud or moral
turpitude, or the actual incarceration of the Executive for a period of five (5)
consecutive days;
(ii) The Executive willfully fails to follow the lawful instructions of the
Board of Directors of the Bank after the Executive's receipt of written notice
of such instructions, other than a failure resulting from the Executive's
incapacity because of physical or mental illness; or
(iii) Any government regulatory agency formally recommends or orders, in either
case in writing, that the Bank terminate the employment of the Executive or
relieve him of his duties.
If the Executive's employment is terminated under the provisions of this Section
3(a), then all rights of the Executive under Section 4 hereof shall cease as of
the effective date of such termination.
(b) The Executive's employment under this Agreement
may be terminated at any time during the Employment Period without "Cause" (as
defined in Section 3(a) hereof), by action of the Board of Directors of the
Bank, upon giving notice of such termination to the Executive at least thirty
(30) days prior to the date upon which such termination shall take effect. If
the Executive's employment is terminated under the provisions of this Section
3(b), then the Executive shall be entitled to receive the compensation and
benefits set forth in Section 6 or Section 7 hereof, whichever shall be
applicable. To the extent the Executive becomes entitled to and receives the
payment and benefits set forth in Section 6 or 7, such payments and benefits
shall constitute liquidated damages for any possible breach of this Agreement by
the Bank and shall represent the maximum extent of liability therefore that the
Executive can claim against the Bank or any of its affiliates or Directors.
(c) If the Executive dies, the Executive's employment
under this Agreement shall be deemed terminated as of the date of the
Executive's death, and all rights of the Executive under Section 4 hereof shall
cease as of the date of such termination and any benefits payable to the
Executive shall be determined in accordance with the retirement and insurance
programs of the Bank then in effect.
(d) If the Executive is incapacitated by accident,
sickness, or otherwise so as to render the Executive mentally or physically
incapable of performing the services required of the Executive under Section 2
of this Agreement for a continuous period of five (5) months, then, upon the
expiration of such period or at any time thereafter, by action of the Board of
Directors of the Bank, the Executive's employment under this Agreement may be
terminated immediately upon giving the Executive notice to that effect. If the
Executive's employment is terminated under the provisions of this Section 3(d),
then all rights of the Executive under Section 4 hereof shall cease as of the
last business day of the week in which such termination occurs and any benefits
payable to the Executive shall be determined in accordance with the retirement
and insurance programs of the Bank then in effect.
(e) The Executive may resign for "Good Reason" (as
herein defined). As used in this Agreement, "Good Reason" means any of the
following:
(i) Any reduction in title, change in reporting structure or significant
reduction in the Executive's responsibilities, authority or status, including
such responsibilities and authority as the same may be increased at any time
during the term of this Agreement, or the assignment to the Executive of duties
inconsistent with the Executive's status as Chairman and Chief Executive Officer
of the Bank;
(ii) Any reassignment of the Executive which necessitates or requires the
Executive to move his principal residence;
(iii) Any removal of the Executive from office or any material adverse change
in the terms and conditions of the Executive's emploYment, except for either a
termination of the Executive's employment under the provisions of Section 3(a)
hereof;
(iv) Any reduction in the Executive's annual base salary as in effect on the
date hereof or as the same may be increased from time to time;
(v) Following a Change in Control, any failure of the Bank to provide the
Executive with benefits at least as favorable as those enjoyed by the Executive
under any of the retirement, life insurance, medical, health and accident,
disability or other employee plans of the Bank in which the Executive
participated at the time of the Change in Control, or the taking of any action
that would materially reduce any of such benefits in effect at the time of the
Change in Control unless such reduction is part of a reduction applicable to all
employees;
(vi) Any failure of the Bank to provide the Executive with benefits at least as
favorable as those received by any comparable executive employees of the Bank
the Executive under any of the retirement, life insurance, medical, health and
accident, disability or other employee benefit plans or policies of the Bank,
unless such reduction is part of a reduction applicable to all comparable
executive employees.
(vii) Any material failure to obtain a satisfactory agreement from any
successor to assume and agree to perform this Agreement, as contemplated in
Section 14 hereof;
(viii) Any breach of a material provision of this Agreement on the part of the
Bank
At the option of the Executive, exercisable by the Executive within 45 days
after the occurrence of the event constituting "Good Reason" (provided that the
Bank has not cured such action constituting "Good Reason" during the 30 days),
the Executive may resign from employment under this Agreement by a notice in
writing (the "Notice of Termination") delivered to the Bank (or its successor),
and the provisions of either Section 6 or Section 7 hereof shall thereupon
apply. Section 6 shall apply where "Good Reason" resulted from or occurred
contemporaneous with a Change in Control as defined by Section 5 hereof. Section
7 shall apply in all other instances where "Good Reason" exists. Should
Executive resign for any reason other than those specified in Sections (e )(i)
thru (viii), it shall be considered a voluntary resignation and all rights of
Executive under Section 4. shall cease as of the date of such voluntary
resignation.
4. Employment Period Compensation.
(a) Salary. For services performed by the Executive
under this Agreement, the Bank shall pay (or cause to be paid to) the Executive
a salary, during the Employment Period, at no less than the following rate:
From June 20, 2007 to March 1, 2008 - $262,500.00
with adjustments thereafter as determined by the Board of
Directors of the Bank.
In addition to the foregoing, Executive shall receive a signing bonus equal to
Thirty Thousand Dollars ($30,000.00), vested immediately, but payable during the
year 2008 as follows:
Fifteen Thousand Dollars ($15,000.00) on or before April 15, 2008; and
Fifteen Thousand Dollars ($15,000.00) payable on or before September 15,2008.
(b) Bonus. Executive shall be eligible to
participate in any bonus plan implemented by the Bank (commencing at such time
as the Board of Directors - in its sole and absolute discretion - decides to
implement such a plan) for executive employees, on terms no less favorable than
that applicable to any comparable executive employees of the Bank.
Notwithstanding the foregoing, in lieu of Executive' s participation in any
bonus plan established for any other comparable executive employees, the Bank
may establish a bonus plan specific to Executive, which shall be at least as
favorable to Executive as any plan applicable to any or all comparable executive
employees.
(c) Other Benefits. The Bank will provide the
Executive, during the Employment Period, with insurance, vacation, retirement,
and other fringe benefits, which benefits are, in the aggregate, not less
favorable than those received by any comparable executive employees of the Bank.
(d) Stock-Based Compensation.
(i) At the first Board of Directors meeting following the annual shareholders
meeting in 2008, the Executive shall receive a non-qualified stock option award
of 45,000 shares of Bank common stock, 30,000 shares of which shall vest at the
time of such award, with the remaining 15,000 options vesting on March 2, 2009.
In addition, upon a "Change in Control" as defined in Section 5(b) hereof, a
termination for Good Reason, a termination without cause, the Executive's death,
or the Executive's termination based on a disability under Section 3(d), all the
options not previously vested shall immediately vest upon such occurrence.
(ii) The options discussed in this paragraph are intended to be issued pursuant
to a plan to be adopted for executive officers of the Bank and shall be subject
to such shareholder approval and other approval the Bank deems necessary or
appropriate under its corporate governance procedures or applicable law.
(iii) Should the Bank fail to adopt the Plan as anticipated, the Bank and
Executive shall use their reasonable best efforts to provide Executive with
appropriate additional employee benefits that are substantially the economic
equivalent thereof.
(e) Other Matters.
(i) The Executive shall be entitled to the use of an automobile and/or
automobile allowances consistent with his title and responsibilities, as
determined in the reasonable discretion of the Board of Directors of the Bank.
(ii) The Executive shall be paid or reimbursed for country club dues and
business-related expenses in accordance with policies and procedures adopted by
the Board of Directors.
(iii) Within thirty (30) days of the presentation to Bank of a copy of an
invoice for services rendered in connection with his counsel's review and
negotiation of this Agreement, the Bank will reimburse the Executive for the
legal fees actually incurred by him, but not in excess of $5000.
5. Change in Control
(a) As used in this Agreement, "Change in Control" means a
change of control of a nature that would be required to be reported in response
to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as enacted and in force
on the date hereof, whether or not the Bank is then subject to such reporting
requirement; provided, however, that, without limitation, such a Change in
Control shall be deemed to have occurred if:
(i) Any "person" (including a group acting in concert, as the term "person" is
defined in Section 13 (d) of the Exchange Act, as enacted and in force on the
date hereof) becomes the beneficial owner" (as that term is defined in Rule
13d-3, as enacted and in force on the date hereof, under the Exchange Act) of
securities of the Bank representing 25% or more of the combined voting power of
the Bank's securities then outstanding;
(ii) There occurs a merger, consolidation or other business combination or
reorganization to which the Bank is a party, whether or not approved in advance
by the Board of Directors of the Bank in which (A) the members of the Board of
Directors of the Bank immediately preceding the consummation of such transaction
do not constitute a majority of the members of the Board of Directors of the
resulting corporation and of any parent corporation thereof immediately after
the consummation of such transaction, and (B) the shareholders of the acquired
corporation immediately before such transaction do not hold 51 % or more of the
voting power of securities of the resulting corporation;
(iii) There occurs a sale, exchange, transfer, or other disposition of
substantially all of the assets of the Bank to another entity, whether or not
approved in advance by the Board of Directors of the Bank;
(iv) A plan of liquidation or dissolution, other than pursuant to bankruptcy
or insolvency, is adopted; or
(v) During a period of two consecutive years, individuals who at the beginning
of such period constitute the Board of Directors of the Bank cease to constitute
a majority of such Board (unless the election or nomination of each new director
was approved by a vote of at least 51 % of directors who were directors at the
beginning of such period).
6. Rights in Event of Termination of Employment After Change
in Control. In the event that Executive resigns from employment for Good Reason
following a Change in Control, by delivery of a Notice of Termination to the
Bank, or Executive's employment is terminated by the Bank without Cause after a
Change in Control, Executive shall be absolutely entitled to receive the amounts
and benefits set forth in this section.
(a) For a period of two (2) years from the date of termination
of employment, Executive shall be paid his Current Compensation at Termination.
(i) For purposes of this section, the term "Current Compensation at Termination"
means the sum of (A) the greatest of the Executive's base salary as of the date
of termination of employment (or prior to any reduction thereof resulting in
Good Reason for resignation) and for any of the three (3) immediately preceding
calendar years, and (B) a dollar amount equal to the highest of the awards
Executive received as bonuses in any of the three (3) calendar years preceding
the year in which the termination of employment occurs, or preceding and
including the year of termination of a bonus was previously paid in said year.
(ii) Amounts required to be paid to Executive under Section 6(a) shall be paid
in equal monthly installments, beginning on the later of thirty (30) days
following the date of termination of employment or the receipt by the Bank of
the approval of payment of such amounts by any applicable regulatory agency to
the extent such approval is required at that time.
(b) For a period of two (2) years from the date of termination
of employment, Executive shall receive a continuation of all life, disability,
medical insurance and other normal welfare benefits in effect with respect to
Executive during the two (2) calendar years prior to his termination of
employment, or, if the Bank cannot provide such benefits because Executive is no
longer an employee, a dollar amount which after any applicable taxes is equal to
the cost to Executive of obtaining such benefits (or substantially similar
benefits).
(c) In the event that the amounts and benefits payable under
this Agreement, when added to other amounts and benefits which may become
payable to the Executive by the Bank and any affiliated company, are such that
he becomes subject to the excise tax provisions of Section 4999 of the Internal
Revenue Code of 1986, as amended, and regulations promulgated thereunder (the
"Code"), the Bank shall pay him such additional amount or amounts as will result
in his retention (after the payment of all federal, state and local excise,
employment and income taxes on such payments and the value of such benefits) of
a net amount equal to the net amount he would have retained had the initially
calculated payment and benefits not been subject to such excise taxes under Code
Section 4999. For purposes of the preceding sentence, the Executive shall be
deemed to be subject to the highest marginal federal, relevant state and
relevant local tax rates. All calculations required to be made under this
subsection shall be made by the Bank's independent public accountants, subject
to the right of Executive's representative to review the same. All such amounts
required to be paid shall be paid at the time any withholding may be required
under applicable law, and any additional amounts to which the Executive may be
entitled shall be paid or reimbursed no later than fifteen (15) days following
confirmation of such amount by the Bank's accountants. In the event any amounts
paid hereunder are subsequently determined to be in error because estimates were
required or otherwise, the parties agree to reimburse each other to correct such
error, as appropriate, and to pay interest thereon at the applicable federal
rate (as determined under Code Section 1274 for the period of time such
erroneous amount remained outstanding and unreimbursed). The parties recognize
that the actual implementation of the provisions of this subsection are complex
and agree to deal with each other in good faith to resolve any questions or
disagreements arising hereunder.
(d) Notwithstanding any other provision of this Section, no
cash payments shall be made to Executive pursuant to this Section unless and
until he has experienced a "separation from service" with the Bank and its
affiliates, within the meaning of Code Section 409A. In addition, if the
Executive is a "specified employee," within the meaning of Code Section 409A,
such cash payments shall be suspended for a period of six months from the date
of such separation from service. Any cash payments so suspended shall be made in
a single lump sum as soon as practicable following the expiration of such
six-month period.
7. Rights in Event of Termination of Employment Without Cause
or Executive's Resignation for Good Reason, in Absence of Change in Control. In
the event that Executive's employment is terminated by the Bank without Cause
and no Change in Control shall have occurred at the date of such tennination, or
Executive's Resignation for Good Reason, Executive shall be entitled to receive
the amounts and benefits set forth in this section.
(a) For a period of the greater of eighteen (18)
months from the date of termination of employment or the remaining tenn of this
Agreement, Executive shall be paid his Current Compensation.
(i) For purposes of this section, the term "Current Compensation at Termination"
means the sum of (A) Executive's base salary as of the date of termination of
employment (or prior to any reduction thereof preceding termination of
employment), and (B) a dollar amount equal to the average of the awards
Executive received as bonuses for each of the three (3) calendar years preceding
the year in which the termination of employment occurs, or preceding and
including the year of termination of a bonus was previously paid in said year .
(ii) Amounts required to be paid to Executive under Section 7(a) shall be paid
in equal monthly installments, beginning on the later of thirty (30) days
following the date of termination of employment or the receipt by the Bank of
the approval of payment of such amounts by any applicable regulatory agency to
the extent such approval is required at that time.
(b) For a period of the greater of eighteen (18)
months from the date of termination of employment or the remaining term of this
Agreement, Executive shall receive a continuation of all life, disability,
medical insurance and other normal welfare benefits in effect with respect to
Executive during the two (2) calendar years prior to his termination of
employment, or, if the Bank cannot provide such benefits because Executive is no
longer an employee, a dollar amount which after any applicable taxes is equal to
the cost after-tax to Executive of obtaining such benefits (or substantially
similar benefits).
(c) Executive shall not be required to mitigate the
amount of any payment provided for in this section by seeking employment or
otherwise.
(d) Notwithstanding any other provision of this
Section, no cash payments shall be made to Executive pursuant to this Section
unless and until he has experienced a "separation from service" with the Bank
and its affiliates, within the meaning of Code Section 409A. In addition, if the
Executive is a "specified employee," within the meaning of Code Section 409A,
such cash payments shall be suspended for a period of six months from the date
of such separation from service. Any cash payments so suspended shall be made in
a single lump sum as soon as practicable following the expiration of such
six-month period.
8. Covenant Not to Compete: Non-Solicitation of Customers and
Employees. If Executive voluntarily resigns his employment without "Good Reason"
hereunder during the term of this Agreement, Executive agrees that, for a period
of twelve (12) months following the date of the termination of his employment,
Executive shall not work directly or indirectly for or on behalf of another bank
that offers products or services similar or equivalent to those offered by the
Bank in the geographic area in which the Bank or its affiliate are conducting
such business at the date of termination of Executive's employment. Nor during
such period shall Executive solicit customers or employees of the Bank or any of
its affiliates to cease doing business, in whole or in part, or cease employment
with the Bank, or any of its affiliates.
9. Arbitration. The Bank and the Executive recognize that in
the event a dispute should arise between them concerning the interpretation or
implementation of this Agreement, lengthy and expensive litigation will not
afford a practical resolution of the issues within a reasonable period of time.
Consequently, each party agrees that all disputes, disagreements and questions
of interpretation concerning this Agreement are to be submitted for resolution
to the American Arbitration Association (the "Association") in Philadelphia,
Pennsylvania the Bank, or the Executive may initiate an arbitration proceeding
at any time by giving notice to the others in accordance with the rules of the
Association. The Association shall designate a single arbitrator to conduct the
proceeding, but the Bank or the Executive may, as a matter of right, require the
substitution of a different arbitrator chosen by the Association. Each such
right of substitution may be exercised only once. The arbitrator shall not be
bound by the rules of evidence and procedure of the courts of the State of New
Jersey but shall be bound by the substantive law applicable to this Agreement.
The decision of the arbitrator, absent fraud, duress, incompetence or gross and
obvious error of fact, shall be final and binding upon the parties and shall be
enforceable in courts of proper jurisdiction. Following written notice of a
request for arbitration, the Bank, and the Executive, shall be entitled to an
injunction restraining all further proceedings in any pending or subsequently
filed litigation concerning this Agreement, except as otherwise provided herein.
The Bank will pay the costs of arbitration, incl xxxxx filing fees and
arbitrator expenses.
10. Notices. Any notice required or pennitted to be given
under this Agreement shall be deemed properly given if in writing and if mailed
by registered or certified mail, postage prepaid with return receipt requested,
to the residence of the Executive, in the case of notices to the Executive, and
to the principal office of the Bank, in the case of notices to the Bank.
11. Waiver. No provision of this Agreement may be modified,
waived, or discharged unless such waiver, modification, or discharge is agreed
to in writing and signed by the Executive and an executive officer of the Bank
specifically designated by the Board of Directors of the Bank. No waiver by any
party hereto at any time of any breach by any other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
12. Assignment. This Agreement shall not be assignable by
either party hereto, except by the Bank to any successor in interest to the
business of the Bank.
13. Entire Agreement. This Agreement contains the entire
agreement of the parties relating to the subject matter of this Agreement and
supersedes any prior agreement of the parties.
14. Successors, Binding Agreement.
(a) The Bank will require any successor (whether
direct or indirect, by purchase, merger, consolidation, or otherwise) to all or
substantially all of the business and/or assets of the Bank to expressly assign
and agree to perform this Agreement in the same manner and to the same extent
that the Bank would be required to perform it if no such succession had taken
place. Failure by the Bank to obtain such assumption and agreement prior to the
effectiveness of any such succession shall constitute a breach of this Agreement
and the provisions of Section 6 hereof shall apply. As used in this Agreement,
"the Bank" shall mean the Bank as hereinbefore defined and any successor to the
respective business and/or assets of the Bank as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or otherwise.
(b) This Agreement shall inure to the benefit of and
be enforceable by the Executive's personal or legal representatives, executors,
administrators, heirs, distributees, devisees, and legatees. If the Executive
should die while any amount is payable to the Executive under this Agreement if
the Executive had continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to the
Executive's devisee, legatee, or other designee, or, if there is no such
designee, to the Executive's estate.
15. Termination. Any termination of the Executive's employment
under this Agreement or of this Agreement shall not affect the provisions of
Sections 6, 7 or 8 hereof which shall survive any such termination and remain in
full force and effect in accordance with their respective terms.
16. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
17. Applicable Law. This Agreement shall be governed by and
construed in accordance with the domestic laws (but not the law of conflict of
laws) of the State of New Jersey.
18. Headings. The headings of the Sections of this Agreement
are for convenience only and shall not control or affect the meaning or
construction or limit the scope or intent of any of the provisions of this
Agreement.
19. Effective Date: Termination of Prior Agreement. This
Agreement shall become effective immediately, upon the execution and delivery of
this Agreement by the parties hereto. Upon the execution and delivery of this
Agreement by the parties hereto, any prior agreement relating to the subject
matter hereof shall be automatically terminated and be of no further force or
effect.
20. Cooperation Covenant. Both during and after the Employment
Period, the Executive shall cooperate fully with the Bank and with any legal
counsel, expert or consultant it may retain to assist it in connection with any
judicial proceeding, arbitration, administrative proceeding, governmental
investigation or inquiry or internal audit in which the Bank or any affiliate
thereof, including the Bank, may be or become involved, including full
disclosure of all relevant information and truthfully testifying on the Bank's
behalf (or, at the request of the Bank, on behalf of such affiliate of the Bank,
including the Bank) in connection with any such proceeding or investigation.
21. Tax Withholding. All payments made and benefits provided
hereunder shall be subject to required tax withholding. In the case of a noncash
benefit, the Bank may require the Executive, as a condition of the receipt of
such benefit, to deposit sufficient funds with the Bank to discharge any
required withholding obligation.
