EMPLOYMENT AGREEMENT
Employment Agreement (the "Employment Agreement") made as of this 15th day
of September, 1999, by and between XXXXXX X. XXXXXX, an individual residing at
Branchville, New Jersey (the "Employee"), SUSSEX COUNTY STATE BANK, a state
chartered bank with its principal place of business located at 000 Xxxxx Xxxxxxx
00, Xxxxxxxx, Xxx Xxxxxx 00000 (the "Bank"), and SUSSEX BANCORP, a New Jersey
corporation with its principal place of business located at 000 Xxxxx Xxxxxxx
00, Xxxxxxxx, Xxx Xxxxxx 00000 (the "Company"; the Bank and the company
sometimes collectively are referred to herein as "Employer").
WHEREAS, the Board of Directors of the Bank and the Board of Directors of
the Company have each determined that it is in the best interests of each of the
Bank and the Company to enter into this Agreement with Employee, and each
respective Board has authorized the Bank and the Company to enter into this
Agreement;
WHEREAS, the Employee agrees to be employed pursuant to the terms and
conditions of this Agreement;
NOW, THEREFORE, in consideration of the premises and covenants contained
herein, and with the intent to be legally bound hereby, the parties hereto
hereby agree as follows:
1. Employment. The Company and the Bank hereby jointly agree to employ the
Employee, and the Employee hereby accepts such employment, upon the terms and
conditions set forth herein.
2. Position and Duties. The Employee shall be employed as President and
Chief Executive Officer of the Company and President and Chief Executive Officer
of the Bank, to perform such services in that capacity as are usual and
customary for comparable institutions and as shall from time-to-time be
established by the Board of Directors of the Company and the Bank. Employee
agrees that he will devote his full business time and efforts to his duties
hereunder. Notwithstanding the foregoing, the Company and the Bank acknowledge
that Employer may maintain a position as a non-equity partner or of Counsel with
a law firm of his choosing, provided that such association shall not conflict
with Employee's performance of his duties hereunder.
3. Cash Compensation. Employer shall pay to the Employee compensation for
his services as follows:
(a) Base Salary. The Employee shall be entitled to receive, commencing
upon the date of this Agreement, an annual base salary (the "Base Salary") of
One Hundred Sixty Thousand and Two Hundred Dollars ($160,200), which shall be
payable in installments in accordance with Employer's usual payroll method.
Annually thereafter, on or prior to the anniversary date of this Agreement, the
Board of Directors shall review the Employee's performance, the status of
Employer and such other factors as the Board of Directors or a committee thereof
shall deem appropriate and shall adjust the Base Salary accordingly.
(b) Discretionary Bonus. Employee shall be entitled to receive
annually at the discretion of the Board of Directors or a committee thereof a
cash bonus.
4. Other Benefits.
(a) Fringe Benefits. The Employee shall be entitled to the exclusive
and unlimited use of an automobile or a cash allowance to be used for the
purpose of maintaining an automobile of a type and style commensurate with the
Employee's status as President and Chief Executive Officer of Employer. In
addition, the Employee shall be entitled to receive hospital, health, medical,
and life insurance of a type currently provided to and enjoyed by other senior
officers of Employer, and shall be entitled to participate in any other employee
benefit or retirement plans offered by Employer to its employees generally or to
its senior management.
(b) Retirement Plan. Employer and Employee shall immediately commence
negotiations for the adoption of a mutually acceptable retirement plan for
Employee. Such retirement plan will include provisions for post-employment
payments, an equity position in Employer, or any combination of the foregoing or
any other benefits which Employer and Employee may consider mutually acceptable.
In the event that Employer and Employee are unable to agree upon a mutually
acceptable form of retirement benefits package for Employee within one (1) year
of the date of this agreement, Employee and Employer shall immediately
renegotiate the compensation and other terms of this agreement to reflect the
absence of a retirement plan for Employee. Alternatively, Employee may, upon
written notice to Employer within thirty (30) days of such anniversary date,
terminate his employment with Employer. In such case, he shall be paid a lump
sum payment equal to three (3) times his then current Base Salary. Such payment
shall be made by Employer within thirty (30) days of receipt of Employee's
written notice of termination.
5. Term. The term of this Agreement shall be three years, commencing on
September 15, 1999 and continuing until August 31, 2002; provided, however, that
the term of this Agreement shall automatically renew for one (1) additional year
on each anniversary date hereof unless, at least sixty (60) days prior to such
anniversary date, either Employer or Employee shall have provided the other with
written notice of their intention not to extend the term of this Agreement;
further provided, however, that this Agreement shall not be extended for more
than two (2) additional one (1) year terms under this provision.
6. Termination. Employee may be terminated at any time, without prejudice
to Employee's right to compensation or benefits as provided herein. Employee's
rights upon a termination shall be as follows:
(a) Cause. As used in this Agreement, the term "Cause" shall mean the
Employee's personal dishonesty, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties, willful
violation of any law, rule or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order, or a material breach of any
provision of this Agreement. Notwithstanding the above, the Employee shall not
be deemed to have been terminated for cause unless and until there shall have
been delivered to him a copy of a resolution duly adopted by the affirmative
vote of not less than three-fourths of the members of the Board of Directors of
the Bank at a meeting of its Board called and held for that purpose (after
reasonable notice to the Employee and an opportunity for him, together with
counsel, to be heard before such Board of Directors), finding that in the good
faith opinion of the Board of Directors, the Employee was guilty of conduct
justifying termination for cause and specifying the particulars thereof in
detail; provided, however, that nothing contained herein shall prohibit Employee
from being suspended from his duties hereunder by a duly authorized agent of the
Board upon a good faith determination that "cause" exists. Such suspension shall
last until such time as the Board meeting provided for above shall have
occurred, provided that such Board meeting shall occur within a reasonable
period of time. During such suspension Employee shall continue to be an
employee, entitled to all salary and benefits provided for hereunder.
(b) Termination With Cause. Employer shall have the right to terminate
the Employee for "cause", upon written notice to him of such determination,
specifying the alleged "cause". In the event of such termination, the Employee
shall not be entitled to any further benefits under this Agreement.
(c) Termination Without Cause. Upon a termination of Employee's
employment hereunder without "cause", Employee shall be entitled to receive his
then current base salary for the remaining term of this Agreement. Such payments
may be made over the remaining term of this Agreement in periodic payments in
the same manner in which the Employee's salary was paid through the time of such
termination, or by a lump sum payment of the discounted present value of all
base salary payments through the remaining term of this Agreement. The
determination of the method of payment shall be made mutually by Employer and
the Employee; provided, however, that in the event the parties cannot agree on
the method of payment, Employee shall be entitled to choose. In addition,
Employer shall continue to provide the Employee with hospital, health, medical
and life insurance, and any other like benefits in effect at the time of such
termination through the end of the term of this Agreement. The Employee shall
have no duty to mitigate damages in connection with his termination by Employer
without "cause". However, if the Employer obtains new employment and such new
employment provides for hospital, health, medical and life insurance, and other
benefits, in a manner substantially similar to the benefits payable by Employer
hereunder, Employer may permanently terminate the duplicative benefits it is
obligated to provide hereunder.
(d) Suspension and Special Regulatory Rules.
(i) If the Employee is suspended and/or temporarily prohibited
from participating in the conduct of the affairs of the Company of the Bank by a
notice served under Section 8(e)(3) or Section 8(g)(1) of the Federal Deposit
Insurance Act ("FDI Act"), Employer's obligations under this Agreement shall be
suspended as of the date of service, unless stayed by appropriate proceedings.
(ii) If the Employee is removed and/or permanently prohibited
from participating in the conduct of the affairs of the Company or the Bank by
an order issued under Section 8(e) or Section 8(g)(1) of the FDI Act, all
obligations of Employer under this Agreement shall terminate as of the effective
date of the order and the Employee shall not be entitled to received the
payments provided for under Paragraph (c) above.
(iii) If the Bank is in default, as defined in Section 3(x)(1) of
the FDI Act, all obligations of Employer under this Agreement shall terminate as
of the date of default.
7. Resignation for Cause. During the term of this Agreement, the Employee
shall be entitled to resign from his employment with Employer, and receive the
payments provided for below, in the event that the Employee is not in breach of
this Agreement and Employer (i) reassigns the Employee to a position of lesser
rank or status than President and Chief Executive Officer, (ii) relocates the
Employee's principal place of employment by more than thirty miles from its
location on the date hereof, or (iii) reduces the Employee's compensation or
other benefits. Upon the occurrence of any of these events, the Employee shall
have thirty days to provide Employer notice of his intention to terminate this
Agreement. In the event the Employee elects to so terminate this Agreement, such
termination shall be treated as a termination without "cause" by Employer under
Section 6(c) hereof, and the Employee shall be entitled to receive all payments
and other benefits called for under such Section 6(c).
8. Change in Control.
(a) Upon the occurrence of a Change in Control (as herein defined)
followed at any time during the term of this Agreement by the involuntary
termination of the Employee's employment other than for "cause", as defined in
Section 6(a) hereof, or, as provided below the voluntary termination of the
Employee within eighteen months of such Change in Control, Employee shall become
entitled to receive the payments provided for under paragraph (c) below. Upon
the occurrence of a Change in Control, the Employee shall have the right to
elect to voluntarily terminate his employment within eighteen months of such
Change in Control following any demotion, loss of title, office of significantly
authority, reduction in his annual compensation or benefits, or relocation of
his principal place of employment by more than thirty miles from its location
immediately prior to the Change in Control.
(b) A "Change in Control" shall mean:
(i) a reorganization, merger, consolidation or sale of all
or substantially all of the assets of the Company, or a
similar transaction in which the Company is not the
resulting entity;
(ii) individuals who constitute the Incumbent Board (as
herein defined) of the Company cease for any reason to
constitute a majority thereof;
(iii)(a) an event of a nature that would be required to be
reported in response to Item I of the current report on
Form 8-K, as in effect on the date hereof, pursuant to
Section 13 or 15(d) of the Securities Exchange Act of
0000 (xxx "Xxxxxxxx Xxx"); or
(iv) Without limitation, a change in control shall be deemed
to have occurred at such time as (i) any "person" (as
the term is used in Section 13(d) and 14(d) of the
Exchange Act) other than the Company or the trustees or
any administration of any employee stock ownership plan
and trust, or any other employee benefit plans,
established by Employer from time-to-time in is or
becomes a "beneficial owner" (as defined in Rule 13-d
under the Exchange Act) directly or indirectly, of
securities of the Company representing 25% or more of
the Company's outstanding securities ordinarily having
the right to vote at the election of directors; or
(v) A proxy statement soliciting proxies from stockholders
of the Company is disseminated by someone other than
the current management of the Company, seeking
stockholder approval of a plan of reorganization,
merger or consolidation of the Company or similar
transaction with one or more corporations as a result
of which the outstanding shares of the class of
securities then subject to the plan or transaction are
exchanged or converted into cash or property or
securities not issued by the Company;
(vi) A tender offer is made for 25% or more of the voting
securities of the Company and the shareholder owning
beneficially or of record 25% or more of the
outstanding securities of the Company have tendered or
offered to sell their shares pursuant to such tender
and such tendered shares have been accepted by the
tender offeror.
For these purposes, "Incumbent Board" means the Board of Directors on the
date hereof, provided that any person becoming a director subsequent to the date
hereof whose election was approved by a voting of at least three-quarters of the
directors comprising the Incumbent Board, or whose nomination for election by
members or stockholders was approved by the same nominating committee serving
under an Incumbent Board, shall be considered as though he were a member of the
Incumbent Board.
(c) In the event the conditions of Section (a) above are satisfied,
Employee shall be entitled to receive a lump sum payment equal to 2.99 times
Employee's then current Base Salary; provided, however, that in no event shall
any payments provided for hereunder constitute an "excess parachute payment"
under Section 280G of the Internal Revenue Code of 1986, as amended or any
successor thereto, and in order to avoid such a result the benefits provided for
hereunder will be reduced, if necessary, to an amount which is One Dollar
($1.00) less than an amount equal to three (3) times Employee's "base amount" as
determined in accordance with such Section 280G. In addition to the foregoing,
Employee shall be entitled to receive from Employer, or its successor, hospital,
health, medical and life insurance on the terms and at the cost to Employee as
Employee was receiving such benefits upon the date of his termination.
Employer's obligation to continue such insurance benefits will be for a period
of three years.
9. Covenant Not to Compete. Employee agrees that during the term of his
employment hereunder and for a period of one (1) year after the termination of
his employment, he will not in any way, directly or indirectly, manage, operate,
control, accept employment or a consulting position with or otherwise advise or
assist or be connected with or own or have any other interest in or right with
respect to (other than through ownership of not more than five percent (5%) of
the outstanding shares of a corporation whose stock is listed on a national
securities exchange or on the National Association of Securities Dealers
Automated Quotation System) any enterprise which competes with Employer in the
business of banking in the counties in which Employer conducts its business on
the date of Employee's termination. In the event that this covenant not to
compete shall be found by a court of competent jurisdiction to be invalid or
unenforceable as against public policy, such court shall exercise discretion in
reforming such covenant to the end that Employee shall be subject to a covenant
not to compete that is reasonable under the circumstances and enforceable by
Employer. Employee agrees to be bound by any such modified covenant not to
compete.
10. Termination of Prior Agreement. Employee and Employer acknowledge that
this Agreement is being entered into in substitution of that certain existing
Employment Agreement between Employee and Employer dated as of November 20,
1996, which is hereby terminated.
11. Miscellaneous.
(a) Governing Law. In the absence of controlling Federal law, this
Agreement shall be governed by and interpreted under the substantive law of the
State of New Jersey.
(b) Severability. If any provision of this Agreement shall be held to
be invalid, void, or unenforceable, the remaining provisions hereof shall in no
way be affected or impaired, and such remaining provisions shall remain in full
force and effect.
(c) Entire Agreement; Amendment. This Agreement sets for the entire
understanding of the parties with regarding to the subject matter contained
herein and supersedes any and all prior agreements, arrangements or
understandings relating to the subject matter hereof and may only be amended by
written agreement signed by both parties hereto or their duly authorized
representatives.
(d) Successors and Assigns. This Agreement shall be binding upon and
become the legal obligation of the successors and assigns of Employer.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SUSSEX COUNTY STATE BANK
By:_______________________________________
Name: Xxxx X. Xxxxxx
Title: Chairman, Compensation Committee
SUSSEX BANCORP
By:_______________________________________
Name: Xxxx X. Xxxxxx
Title: Chairman, Compensation Committee
EMPLOYEE:
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Name: Xxxxxx X. Xxxxxx, Esq.
