1
EMPLOYMENT AGREEMENT
AGREEMENT made effective as of May 24, 1997 by and among CITY NATIONAL
BANK OF NEW JERSEY (the "Bank") a national banking association, CITY
NATIONAL BANCSHARES CORPORATION (the "Corporation"), a New Jersey
corporation, each with its principal office at 000 Xxxxx Xxxxxx, Xxxxxx,
Xxx Xxxxxx (the Bank and the Corporation sometimes collectively referred to
as the "Employer"), and XXXXX X. XXXXXXX ("Executive").
WHEREAS, the Corporation is a bank holding company, and the Bank is a
wholly owned subsidiary of the Corporation
WHEREAS, the Bank, the Corporation and the Executive have previously
entered into an Employment Agreement made as of May 24, 1993, which
employment Agreement has been extended to the date hereof by action of the
respective Boards of Directors of the Bank and the Corporation:
WHEREAS, the Bank and the Corporation desire to continue to retain the
services of Executive as President and Chief Executive Officer of the
Corporation and the Bank for the period provided in this Agreement and
subject to the terms and conditions hereofand
WHEREAS, Executive is willing to serve in the employ of the Bank and
the Corporation as President and Chief Executive Officer on a full-time
basis for said period on the terms and conditions specified herein:
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and upon the other terms and conditions hereinafter provided,
the parties hereto agree as follows.
1. POSITION AND RESPONSIBILITIES.
(a) During the period of his employment hereunder, Executive shall
serve as President and Chief Executive Officer of the Corporation and the
Bank. Executive shall have such duties as are customarily or appropriately
vested in the President and Chief Executive Officer of a publicly-held bank
holding company and a national bank, and as from time to time may be
prescribed by the Board, provided such duties are consistent with
Executive's present duties and with Executive's current position as the
President and Chief Executive Officer of the Employer. During the period of
his employment hereunder, Executive shall devote substantially all of his
business time, attention, skill, and efforts to the faithful performance of
his duties hereunder, including activities and services related to the
organization, operation and management of the Employer. Executive shall be
allowed to devote a sufficient amount of time to service his existing
private accounting practice clients, provided that such practice does not
interfere with the adequate performance of his obligations hereunder.
(b) During the period of employment hereunder, Corporation shall elect
Executive as director of the Bank and shall nominate and recommend the
Executive for election as a director of the Corporation.
2. TERM.
The period of Executive's employment under this Agreement shall be
deemed to have commenced as of the effective date first above written and
shall continue for a period of three (3) years thereafter. Thereafter,
subject to Section 9(b) hereof, the Employer may, in its discretion, renew
this Agreement upon such terms and conditions as shall be mutually
agreeable to the parties.
3. COMPENSATION AND RELATED MATTERS.
(a) Salary. As compensation for the responsibilities and duties
described in Section 1, the Employer shall pay Executive an annual salary
of $150,000 during the First year of employment (such annual salary as
adjusted from time to time, the "Base Salary"), payable biweekly.
Executive's salary during the second and third year of employment hereunder
may be increased from the immediately preceding year as determined by the
Board or a duly appointed committee prior to commencement of such second
and third year. At Executive's option and expense, the Executive may defer
part of his salary pursuant to Section 83 of the Internal Revenue Code, and
Executive shall be responsible for notifying Employer of such election and
making all necessary arrangements for such deferral (with respect to any
trusts, agreements, etc.). In addition to his Base Salary, Executive shall
be entitled to the same directors fees as directors of the Bank and the
Corporation.
(b) Employee Benefits. So long as Executive shall be employed,
hereunder, the Bank shall provide Executive. at no cost to Executive, with
all such other benefits as are provided uniformly to permanent full-time
employees of the Employer. In addition, Executive will be entitled to
incentive compensation and bonuses as provided in any plan of the Employer
in which officers of the Bank are eligible to participate.
(c) Expenses. In addition to the salary and other benefits provided
hereunder, the Employer shall reimburse Executive for all reasonable
travel, commutation and other expenses incurred and accounted for by
Executive in performing his obligations under this Agreement. In addition.
Employer shall pay executive an additional non-accountable expense
allowance of $6,000.00 irrespective of actual expenses incurred by the
Executive. Executive may receive advances for business expenses to be
incurred by Executive in accordance with normal business practices. The
non-accountable expense allowance will increase by $2,000 a year for each
new branch.
(d) Life Insurance. So long as Executive is employed by the Employer
hereunder, the Employer shall pay, for the benefit of Executive, 100% of
that amount of annual premium on life insurance policy no. 37-627041 issued
by the Equitable Life Insurance Company as is allocable to a death benefit
of up to three (3) times the Executive's annual Base Salary then in effect.
Executive shall be the owner of such policy and shall be entitled to
exercise all rights of ownership of such policy, including naming the
beneficiary of such policy.
(e) Automobile. So long as Executive is employed hereunder, the
Employer shall provide Executive, for his exclusive use, with a 1995
Oldsmobile Aurora, or an automobile (which shall be new or used within
Executive's discretion) of comparable make and model, which is no more than
three (3) years old from model year. The Employer shall pay (or reimburse
Executive for) all expenses relate to the operation, maintenance and
up-keep of such automobile, including insurance, gas, service and repairs.
(f) Vacation. Executive shall be entitled to four weeks paid vacation
per year, of which up to two weeks vacation may be carried forward to the
next year (entitling Executive to a maximum of six weeks vacation in any
one year if two weeks of vacation from the prior year were not used). Time
spent at banking conventions shall not be counted as vacation time.
Executive will be compensated for all unused vacation at the termination of
his employment for any reason (to extent Executive would have been entitled
to such vacation time in the year of termination).
(g) Conventions. Employer shall reimburse Executive and his spouse for
all expenses related to their attendance at three banking conventions a
year selected by the Executive (such as the National Bankers Association,
the New Jersey Bankers Association and the American Bankers Association,
etc.). (h) Financial Tax/Legal Consultant. Employer shall reimburse
Executive for expenses related to to the consultation of a Financial
Tax/Legal Consultant for his personal finances. This benefit is available
for one time anytime during his contract.
(i) Annual Medical Checkup. Employer shall reimburse Executive for the
expenses related to an annual complete physical.
4. PERFORMANCE BONUS.
(a) Calculation of Bonus. Executive shall be entitled to an annual
performance bonus ("Performance Bonus") equal to the following:
0 to 10% Return on Average Common Equity (ROACE) - No Bonus Over 10% up to
15% ROACE - 10% on excess up to 15% ROACE Over 15% ROACE - 10% on the first
5% plus 20% on excess over 15%
In any year, the Board has the discretion to increase the Bonus award
over the level indicated above .
(b) Payment of Performance Bonus. The Performance Bonus shall be paid
in cash, the Corporation's common stock, or any combination thereof, as the
Executive shall decide, as follows:
(i) if all or any, portion of the Performance Bonus is to be paid in
cash, such cash payment shall be made within thirty (30) days after the
Corporation has received the final year-end audit report for the
Corporation and the Bank prepared and certified by the Corporation's
independent auditors'
(ii) if all or any portion of the Performance Bonus is to be paid in
the Corporation's common stock, the purchase of such shares will be limited
to the number of shares specified under Stock Options (5a) and the value of
each share of such stock shall be equal to the price as quoted under Stock
Options (5b).
(c) Pro Rate Share on Termination. Except as provided in Sections
8(b), 11(b) or otherwise herein, in the event the Executive's employment
shall be terminated (other than pursuant to Section 5 hereof), either
voluntary or involuntary or by death, prior to the expiration of the term
hereof the Executive shall nonetheless be entitled to receive a bonus
payable in accordance with the terms hereof equal to (i) the Performance
Bonus to which the Executive would otherwise be entitled as calculated in
accordance with Section 4(a) hereof, multiplied by (ii) a fraction the
numerator of which is the number of days employed by the Executive during
the year in which the Executive's employment was terminated and the
denominator of which is 365.
(d) Certification of Bonus. If executive and Employer shall disagree
as to the amount of the Performance Bonus, the Employer shall request the
Employer's independent auditors to prepare a certificate showing the amount
of Net Operating Profit, Common Stockholders Equity and the Performance
Bonus. Such certificate shall be binding upon the parties, absent manifest
error.
5. STOCK OPTIONS. (a) The Corporation hereby grants to Executive an
option to purchase 5,700 shares of the Corporation's common stock (such
shares being the "Option Shares") at the price set forth below. The option
granted by this paragraph 5(a) can be exercised as follows:
Year 1 - May 1, 1997 to April 30, 1998 - 1900 shares Year 2 - May
1,1998 to April 30, 1999 - 3800 shares less any shares executed in Year 1
Year 3 - May 1, 1999 to April 30, 2000 - 5700 shares less any shares
executed in Years 1 & 2
(b) The price to be paid by Executive for each Option Share (The "
Option Price") shall be $20.00. All payments of purchase price must be made
in cash in full at the time of delivery of the Option Shares to Executive.
Executive may exercise the option granted hereunder and purchase Option
Shares by giving written notice of his election to exercise his option
hereunder. The notice shall comply with Section 22 hereof, and shall state
the number of Option Shares which Executive desires to purchase.
(c) The options and the accompanying terms set forth in this Section 5
shall be deemed to be the sole and exclusive property of Executive and can
not be sold, assigned, transferred, pledged or otherwise disposed of in any
manner whatsoever by Executive. Any attempt by Executive to sell, assign,
transfer, pledge or otherwise dispose of the options granted him hereunder
shall be absolutely void, and shall not be binding upon the Corporation or
its successors and assigns.
(d) The existence of the options hereunder shall not affect in any way
the right or power of the Corporation or its stockholders to make or
authorize any or all adjustments recapitalizations, reorganizations or
other changes in its capital structure or its business, or any merger or
consolidation, of the corporation, or any issue of bonds, debentures,
preferred or prior preference stock ahead of or affecting the common stock
or the rights thereof, or the dissolution or liquidation of the
Corporation, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding, whether of a similar
character or otherwise.
(e) If after the date hereof while the option is outstanding, the
Corporation shall effect a subdivision or combination of shares or other
capital readjustment, the payment of a stock dividend, or other increase or
reduction of the number of shares of common stock outstanding (other than
the issuance or repurchase of shares for fair consideration, then (i) in
the event of an increase in the number of such shares outstanding, the
number of Option Shares then subject to the option shall be proportionately
increased and the Option Price shall be proportionately reducedand (ii) in
the event of a reduction in the number of such shares outstanding, the
number or Option Shares then subject to the option shall be proportionately
reduced and the Option Price shall be proportionately increased.
(f) Executive acknowledges that the Option Shares may be "restricted
stock" within the meaning of Rule 144 of the Securities Act of 1533. and
may be disposed of only in accordance with Rule 144.
6. TERMINATION UPON DISABILITY
(a) Employer may terminate Executive's employment hereunder upon the
occurrence of Executive's Disability. As used herein, the terms
"Disability" or "Disabled" shall mean the inability of the Executive, by
reason of injury, illness or other similar cause, to perform major part of
his duties and responsibilities in connection with the conduct of the
business and affairs of the Employer for a period of six (6) consecutive
months. The determination of whether the Executive is Disabled shall be
made by the majority vote of the Board, whose decision on this matter shall
be final. Executive hereby authorizes any physician, hospital or health
care professional to furnish to the Employer medical records covering his
health or physical condition, but only in the event that Executive is
unable to perform a major part of his duties or responsibilities for one
(1) month.
(b) Upon termination for Disability, Executive shall be entitled to
receive the amount of any unpaid Performance Bonus calculated in accordance
with Section 4(d) hereof. In addition, the Executive shall be entitled to
Long term disability benefits which shall be provided pursuant to (i) any
group disability insurance policy in which Executive is a participant and
(ii) an additional long-term disability policy providing such amount of
disability benefit as is necessary to cause the total amounts of disability
benefits under this paragraph (b) to equal two-thirds of the Executive's
annual Base Salary in effect at the time of termination for Disability.
Premiums on the additional policy referred to in the preceding clause (ii)
shall be paid by Employer so long as Executive shall be employed hereunder.
7. TERMINATION UPON DEATH. Executive's employment hereunder shall be
immediately terminated upon his death, in which case Employer shall pay
Executive's beneficiaries or his estate, the amount of any accrued but
unpaid salary pursuant to Section 3(a) and the amount of any unpaid
Performance bonus calculate In accordance with Section 4(d) hereof. In
addition, the Employer shall continue all health insurance benefits for
Executives family member (which his family members were receiving on the
date of death) for one year after the date of death. at the Employer's
expense. Thereafter, the Employer shall have no further obligation
hereunder.
8. TERMINATION FOR CAUSE.
(a) Termination by the Employer of Executive's (i) breach of fiduciary
duty involving personal dishonesty (ii) commission of a felony or of a
misdemeanor involving dishonesty or moral turpitude, (iii) commission of
embezzlement or fraud against Employer or any of its affiliates, (iv)
continuous or habitual alcohol or drug abuse, (v) habitual unexcused
absence, or (vi) continuous gross negligence or willful disregard for his
duties hereunder. For purposes of this Section, no act, or the failure to
act, on Executive's part shall be considered "willful" unless done, or
omitted to be done, not in good faith and without reasonable belief that
the action or omission was in the best interest of the Employer.
(b) Employer may, at any time, terminate the Executive's employment
for "cause" in which case Executive shall be entitled to receive only the
amount of any accrued but unpaid salary pursuant to Section 3(a) but shall
be entitled to no further compensation or benefits hereunder.
9. TERMINATION WITHOUT CAUSE: FAILURE TO RENEWSEVERANCE.
(a) Except as otherwise provided herein, if the termination of
Executive's employment by the Employer without "Cause", the Employer shall
pay to Executive in one lump sum (in addition to the amount of any accrued
but unpaid salary pursuant to Section 3(a) and any unpaid Performance Bonus
calculated in Executive's employment by the Employer without "Cause
accordance with Section 4(d) hereof:
(i)an amount equal to Executive's then annual Base Salary if Executive
is terminated without cause any time.
(b) Upon the expiration of this Agreement, if the Employer shall fail
to offer to renew this Agreement on substantially the same terms then in
effect or such other terms as shall be acceptable to Executive, the
Employer shall pay to the Executive in one lump sum an amount equal to
Executive's then current annual Base Salary
10. CONTINUATION OF BENEFITS FOLLOWING TERMINATION. In the event
Executive's Employment is terminate without "Cause" or pursuant to Section
5, 6 or 11(a) hereof, the Employer shall cause to be continued for one year
following the date on which Executive's employment is terminated, life and
health coverage substantially identical to any group coverage in which
Executive participated prior to termination, provided, however, that the
Employer's obligation under this Section 10 shall cease prior to expiration
of such one year period upon (i) Executive's full-time employment by
another employer. (ii) executive's normal retirement as defined in any
qualified retirement plan of the Employeror (iii) the Executive's death.
11. TERMINATION BY EXECUTIVE.
(a) Executive may at any time for "Good Reason" voluntarily terminate
his employment hereunder by giving Notice of Termination in accordance with
Section 12 hereof, in which case Executive shall be entitled to receive
liquidated damages and full satisfaction of any claims Executive may
otherwise have hereunder (in addition to the amount of any accrued but
unpaid salary pursuant to Section 3(a) and any unpaid Performance Bonus
calculated in accordance with Section 4(d) hereof).
(b) If Executive terminates his employment other than for "Good
Reason", he shall be entitled to receive the amount of any accrued but
unpaid salary but shall be entitled to no further compensation or benefits
(c) As used herein, "Good Reason" shall mean:
(i)any change in control (A) of a nature that would require approval
under the Change in Bank Control Act, 12 U.S.C. ss 1817(j) and the
regulations promulgated thereunder, whether or not such change in control
is subject to that act, and (B) which is not approved by the Board prior to
such change in control,
(ii) a failure by the Employer to comply with a material provision of
this Agreement which is not cured within thirty (30) days after notice of
such noncompliance has been given by Executive to the Employeror
(iii) a failure of the stockholders of the Corporation to elect
Executive as a director of the Corporation at a stockholders meeting held
during the term of this Agreement at which the Executive is up for election
as a director of the Corporation .
12. NOTICE OF TERMINATION. Any purported termination by the Executive
or by the Employer shall be communicated by a Notice of Termination to the
other party thereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a written notice which shall indicate the specific
termination provisions in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of Executive's employment under the provision so indicated.
Unless otherwise specified therein, a Notice of Termination shall be deemed
effective in accordance with Section 22.
13. NON-COMPETITIVE: NON-DISCLOSURE.
(a) Upon (i) voluntary termination by Executive of his employment
hereunder for any reason other than Good Reason, (ii) termination of
Executive's employment by the Employer for Cause, or (iii) expiration of
this Agreement, Executive agrees not to compete with the Employer or any of
its affiliates for a period of one (1) year following such termination
within a 60 miles radius of City National Bank. Executive agrees that
during such period and within said radius, Executive will not work for or
advise, consult or otherwise serve with, directly or indirectly, any entity
whose business materially competes with the depository, lending or other
business activities of the Employer or any affiliate. The parties hereto,
recognizing that irreparable injury will result to the Employer, its
business and property in the event of Executive's breach of this
Subsection, agree that in the event of any such breach by Executive, the
Employer will be entitled, in addition to any other remedies and damages
available, to an injunction to restrain the violation hereof by Executive,
Executive's partners, agents, servants. employers, employees and all
persons acting for or with the Executive.
(b) Executive agrees not to disclose, during or after the term of his
employment, any knowledge of the past, present, planned or considered
business activities of the Employer or affiliates thereof to any person,
firm, corporation, association or other entity for any reason or purpose
whatsoever. Notwithstanding the foregoing, Executive may disclose any
knowledge of banking, financial and/or economic principles, concepts or
ideas which are not solely and exclusively derived from the business plans
and activities of the Employer. In the event of a breach or threatened
breach by the Executive of the provisions of this Subsection, the Employer
shall be entitled to an injunction restraining Executive from disclosing,
in whole or in part, the knowledge of the past, present, planned or
considered business activities of the Employer or affiliates thereof, or
from rendering any services to any person, firm, corporation, association
