Exhibit 10.4
EXECUTIVE LIFE INSURANCE AGREEMENT
Insurer:
Policy Number:
Bank: 1st Constitution Bank
Insured:
Relationship of Insured to Bank: Executive
The respective rights and duties of the Bank and the Insured in the
above-referenced policy shall be pursuant to the terms set forth below:
I. DEFINITIONS
Refer to the policy contract for the definition of all terms in this
Agreement, which contract is incorporated by reference.
II. POLICY TITLE AND OWNERSHIP
Title and ownership shall reside in the Bank for its use and for the
use of the Insured all in accordance with this Agreement. The Bank
alone may, to the extent of its interest, exercise the right to borrow
or withdraw on the policy cash values. Where the Bank and the Insured
(or assignee, with the consent of the Insured) mutually agree to
exercise the right to increase the coverage under the subject policy,
then, in such event, the rights, duties and benefits of the parties to
such increased coverage shall continue to be subject to the terms of
this Agreement.
III. BENEFICIARY DESIGNATION RIGHTS
The Insured (or assignee) shall have the right and power to designate a
beneficiary or beneficiaries to receive the Insured's share of the
proceeds payable upon the death of the Insured, and to elect and change
a payment option for such beneficiary, subject to any right or interest
the Bank may have in such proceeds, as provided in this Agreement.
IV. PREMIUM PAYMENT METHOD
The Bank shall pay an amount equal to the planned premiums and any
other premium payments that might become necessary to keep the policy
in force.
V. TAXABLE BENEFIT
Annually the Insured will receive a taxable benefit equal to the
assumed cost of insurance as required by the Internal Revenue Service,
as determined from time to time. The Bank (or its administrator) will
report to the Insured the amount of imputed income each year on Form
W-2 or its equivalent.
VI. DIVISION OF DEATH PROCEEDS
Subject to Paragraphs VII and X herein, the division of the death
proceeds of the policy is as follows:
A. The Insured's beneficiary(ies), designated in accordance with
Paragraph III, shall be entitled to an amount equal to three
hundred percent (300%) of the Executive's base annual salary
(not including bonus, equity compensation, or any other forms
of compensation) in effect at the time of death (if employed
by the Bank at death), or in effect at the time of retirement.
B. The Bank shall be entitled to the remainder of such proceeds.
VII. OWNERSHIP OF THE CASH SURRENDER VALUE OF THE POLICY
The Bank shall at all times be entitled to one hundred percent (100%)
of the policy's cash value, as that term is defined in the policy
contract, less any policy loans and unpaid interest or cash withdrawals
previously incurred by the Bank.
VIII. POST-TERMINATION COVERAGE
Except as otherwise provided herein, death benefit coverage for the
Insured will cease at his or her termination of employment. In the
event that the Insured has both attained age 60 and completed ten years
of service with the Bank at the time that he or she terminates
employment with the Bank (for reasons other than those set forth in
Section IX.A.), or if a Change of Control has occurred prior to such
termination, then the death benefit coverage set forth in Section VI
shall remain in effect until the Insured's death, unless this Agreement
is otherwise terminated pursuant to its terms prior to such time.
Coverage under this Plan for any Insured who terminates employment with
the Bank (for reasons other than death) prior to attaining age 60 or
prior to completing ten year of service with the Bank (and prior to the
occurrence of a Change of Control) will cease on his or her last day of
employment with the Bank. For purposes of this section only, the term
"Bank" shall include all affiliates of the Bank (as well as its
successors), and the term "years of service" means each full year
(including any periods of time prior to the Effective Date) during
which the Insured was continuously employed by the Bank, all as
determined in the sole discretion of the Bank's Board of Directors.
For purposes of the above, A "Change of Control" will be deemed to have
occurred if:
(X) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Bank
or of 1st Constitution Bancorp ("Bancorp") or a person
engaging in a transaction of the type described in clause (Z)
below of this definition but which does not constitute a
change in control under such clause (Z), hereafter becomes the
"beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of
Bancorp representing more than 50% of the combined voting
power of Bancorp's then outstanding securities; or
(Y) during any period of twenty-four (24) consecutive months
during the term of this Agreement, individuals who at the
beginning of such period constitute the Bancorp Board of
Directors, and any new director (other than a director
designated by a person who has entered into an agreement with
Bancorp to effect a transaction described in clauses (X) or
(Z) of this definition) whose election by such Board of
Directors, or nomination for election by Bancorp's
shareholders, was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for
any reason to constitute a majority thereof; or
(Z) Bancorp completes a merger, consolidation or similar
transaction of Bancorp with or into any other corporation or
entity, or a binding share exchange involving Bancorp's
securities, other than any such transaction which would result
in the voting securities of Bancorp outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity) at least 50% of the combined voting
power of the voting securities of Bancorp or such surviving
entity outstanding immediately after such transaction, or
Bancorp completely liquidates, sells or otherwise disposes of
all or substantially all of its assets.
IX. RIGHTS OF PARTIES WHERE POLICY ENDOWMENT OR ANNUITY ELECTION EXISTS
In the event the policy involves an endowment or annuity element, the
Bank's right and interest in any endowment proceeds or annuity
benefits, on expiration of the deferment period, shall be determined
under the provisions of this Agreement by regarding such endowment
proceeds or the commuted value of such annuity benefits as the policy's
cash value. Such endowment proceeds or annuity benefits shall be
considered to be like death proceeds for the purposes of division under
this Agreement.
X. TERMINATION OF AGREEMENT
This Agreement shall terminate upon the occurrence of any one of the
following:
A. The Insured shall be discharged from employment with the Bank
for cause. The term "for cause" shall mean any of the
following that result in an adverse effect on the Bank: (i)
gross negligence or gross neglect; (ii) the commission of a
felony or gross misdemeanor involving moral turpitude, fraud,
or dishonesty; (iii) the willful violation of any law, rule,
or regulation (other than a traffic violation or similar
offense); (iv) an intentional failure to perform stated
duties; or (v) a breach of fiduciary duty involving personal
profit; or
B. Surrender, lapse, or other termination of the Policy by the
Bank. The Policy (and all rights of the Insured and his/her
beneficiaries) will also terminate if any regulatory agency
requires the Bank to sever its relationship with the
Executive, if the Executive is required to not be associated
with any public company, or if the Bank is subjected to
regulatory discipline limiting its ability to pay compensation
to executives, or as may otherwise be determined by the Bank
in good faith.
Upon such termination, the Insured (or assignee) shall have a
fifteen (15) day option to receive from the Bank an absolute
assignment of the policy in consideration of a cash payment to
the Bank, whereupon this Agreement shall terminate. Such cash
payment referred to hereinabove shall be equal to the cash
value of the policy on the date of such assignment, as defined
in this Agreement.
If, within said fifteen (15) day period, the Insured fails to
exercise said option, fails to procure the entire aforestated
cash payment, or dies, then the option shall terminate and the
Insured (or assignee) agrees that all of the Insured's rights,
interest and claims in the policy shall terminate as of the
date of the termination of this Agreement.
The Insured expressly agrees that this Agreement shall
constitute sufficient written notice to the Insured of the
Insured's option to receive an absolute assignment of the
policy as set forth herein.
Except as provided above, this Agreement shall terminate upon
distribution of the death benefit proceeds in accordance with
Paragraph VI above.
XI. INSURED'S OR ASSIGNEE'S ASSIGNMENT RIGHTS
The Insured may not, without the written consent of the Bank, assign to
any individual, trust or other organization, any right, title or
interest in the subject policy nor any rights, options, privileges or
duties created under this Agreement.
XII. AGREEMENT BINDING UPON THE PARTIES
This Agreement shall bind the Insured and the Bank, their heirs,
successors, personal representatives and assigns.
XIII. GENDER
Whenever in this Agreement words are used in the masculine or neuter
gender, they shall be read and construed as in the masculine, feminine
or neuter gender, whenever they should so apply.
XIV. INSURANCE COMPANY NOT A PARTY TO THIS AGREEMENT
The Insurer shall not be deemed a party to this Agreement, but will
respect the rights of the parties as herein developed upon receiving an
executed copy of this Agreement. Payment or other performance in
accordance with the policy provisions shall fully discharge the Insurer
from any and all liability.
XV. AMENDMENT OR REVOCATION
It is agreed by and between the parties hereto that, during the
lifetime of the Insured, this Agreement may be amended or revoked at
any time or times, in whole or in part, by the mutual written consent
of the Insured and the Bank.
XVI. EFFECTIVE DATE
The Effective Date of this Agreement shall be _____________ ______,
2002.
XVII. SEVERABILITY AND INTERPRETATION
If a provision of this Agreement is held to be invalid or
unenforceable, the remaining provisions shall nonetheless be
enforceable according to their terms. Further, in the event that any
provision is held to be overbroad as written, such provision shall be
deemed amended to narrow its application to the extent necessary to
make the provision enforceable according to law and enforced as
amended.
XVIII. APPLICABLE LAW
The validity and interpretation of this Agreement shall be governed by
the laws of the State of New Jersey.
Executed at _____________________, New Jersey, this _____ day of ___________,
2002.
1ST CONSTITUTION BANK
_______________________________ By:_______________________________________
Witness Title
_______________________________ __________________________________________
Witness Insured
BENEFICIARY DESIGNATION FORM
FOR EXECUTIVE LIFE INSURANCE AGREEMENT
PRIMARY DESIGNATION:
Name Address Relationship
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SECONDARY (CONTINGENT) DESIGNATION:
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All sums payable under the Agreement by reason of my death shall be paid to the
Primary Beneficiary(ies), if he, she, or they survive me, and if no Primary
Beneficiary shall survive me, then to the Secondary (Contingent)
Beneficiary(ies).
_______________________________ ______________________________
Signature of Insured Date
