CHANGE IN CONTROL AGREEMENT
This
CHANGE IN CONTROL AGREEMENT (the “Agreement”)
is
made on of this 6th
day of
February, 2006, effective as of the 3rd
day of
January, 2006, by and among UNION CENTER NATIONAL BANK, a bank chartered under
the laws of Congress (the “Bank”),
CENTER BANCORP INC., a New Jersey corporation that owns all of the capital
stock
of the Bank (the “Company”)
and
XXXXXXX X. XXXX, XX. (“Employee”).
BACKGROUND:
WHEREAS,
Employee is currently employed as a Senior Vice President of
the
Bank and as a Vice President of the Company; and
WHEREAS,
the Boards of Directors of the Bank and the Company believe it is imperative
that the Bank and the Company be able to rely upon Employee to continue in
his
position in the event that the Bank or the Company receives any proposal from
a
third person concerning a possible acquisition of the equity securities or
assets of the Bank or the Company, and that the Bank and the Company be able
to
receive and rely upon Employee’s advice, if they request it, as to the best
interests of the Company, the Bank and their respective shareholders, without
concern that Employee might be distracted by the personal uncertainties and
risks created by such a proposal; and
WHEREAS,
to achieve that goal, and to retain Employee’s services prior to any such
activity, the Bank, the Company and Employee have agreed to enter into this
Agreement to govern Employee’s termination benefits in the event of a Change in
Control Event (as defined below).
NOW,
THEREFORE, in consideration of the foregoing premises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1.
Certain
Definitions:
As used
in the Agreement, the following terms shall have the respective meanings set
forth below:
(a)
“Cause”
means
(i) Employee’s conviction of, guilty plea to, or confession of guilt of, any
crime that constitutes a felony or criminal act involving moral turpitude,
(ii)
Employee’s commission of a fraudulent, illegal, disloyal or dishonest act in
respect of the Bank or the Company, (iii) termination of the Bank’s business due
to unprofitability, insolvency, bankruptcy or directive by governmental
regulators, (iv) Employee’s willful misconduct or gross negligence that
reasonably could be expected to be materially injurious to the business,
operations, or reputation of the Bank and/or the Company, (v) Employee’s
violation of a material nature of the Bank’s or the Company’s policies or
procedures in effect from time to time; provided, however, to the extent such
violation is subject to cure, such violation shall not constitute “Cause”
unless
Employee fails to cure such violation within 10 days after written notice
thereof, (vi) Employee’s material failure to perform Employee’s duties as
assigned to Employee by the Bank and/or the Company from time to time; provided,
however, to the extent such failure is subject to cure, such failure shall
not
constitute “Cause”
unless
Employee fails to cure such failure within 10 days after written notice thereof,
or (vii) Employee’s death.
Termination
for “Cause” shall not be construed to include the takeover of the Bank or the
Company, in either a hostile or voluntary manner, by another person, firm or
corporation.
(b)
“Change
in Control Event”
means
(i) the consummation of an acquisition by a third party of a majority of the
voting capital stock of the Company or the Bank or substantially all of the
assets of the Company or the Bank or (ii) a change in the composition of the
Board of Directors of the Company (the “Board”)
such
that the Continuing Directors (as hereinafter defined) no longer constitute
a
majority of the Board.
(c)
“Continuing
Directors”
shall
mean (i) each current member of the Company’s Board of Directors and (ii) each
person who is hereinafter first nominated to such Board by unanimous vote of
the
persons who then constitute Continuing Directors.
(d)
“Good
Reason”
means
the resignation by Employee within 180 days after the occurrence of a Change
in
Control Event.
(e)
“Release”
means
a
general release agreement in a form acceptable to the Company and the Bank,
which Release shall include, among other things, a general release of the Bank,
the Company and related parties from all liability.
(f)
“Trigger
Event”
shall
mean, the occurrence during the Term (as defined below) of either: (i) the
termination of Employee’s employment by the Bank and the Company (or their
respective successors) upon, or within 12 months following, a Change in Control
Event, other than a termination of Employee’s employment by the Bank and the
Company (or their respective successors) for Cause; or (ii) Employee’s
resignation for Good Reason, provided that Employee delivers written notice
of
Employee’s resignation to the Bank and the Company (or their respective
successors ) at least 30 days prior to the effective date of such
resignation.
2.
Term
of Agreement.
Except
as otherwise provided in the next sentence of this Section 2, the term of this
Agreement shall be three (3) years, effective as of January 3, 2006 and
terminating January 2, 2009 (the “Initial
Term”).
Notwithstanding the foregoing, this Agreement shall automatically be extended
(a) at the end of the Initial Term, for successive one year renewal terms
unless, at least twelve-months prior to the commencement of any such renewal
term, notice of termination of this Agreement is given by any party hereto
to
the other parties hereto and (b) if a Change in Control Event occurs at any
time
during the Initial Term or any such renewal term, for a period of one (1) year
from the date of such Change in Control Event. The Initial Term, together with
any renewal term, shall be referred to in this Agreement as the “Term.”
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3.
Trigger
Event Payments and Benefits.
Upon
the occurrence of a Trigger Event (a) subject to Employee’s execution, delivery
and non-revocation of the Release, Employee shall be entitled to: (i) a lump
sum
payment equal to the product of (x) three (3) and (y) the sum of (1) Employee’s
annual base salary as in effect immediately prior to the Trigger Event, (2)
the
largest annual cash bonus received by Employee from the Bank and/or the Company
in the 2 year period preceding the Trigger Event, (3) the amount recorded on
Employee’s W-2 (for the calendar year preceding the calendar year in which the
Trigger Event occurs) that is attributable to fringe benefits provided to
Employee by the Bank and/or the Company, (4) the annual premium of Employee’s
long-term care policy as in effect immediately preceding the Trigger Event
(to
the extent such amount is not recorded on Employee’s W-2 as attributable to
fringe benefits), and (5) the maximum matching contribution that could have
been
made under the Bank’s 401(k) plan if Employee had remained employed by the Bank
and the Company for an additional one (1) year following the Trigger Event
(the
“Trigger
Event Payment”);
and
(ii) if Employee timely elects COBRA coverage and provided Employee continues
to
make contributions for such continuation coverage equal to Employee’s
contribution amount in effect immediately preceding the date of Employee’s
termination of employment, the Bank and/or the Company, as applicable, shall
waive the remaining portion of Employee’s healthcare continuation payments under
COBRA for an eighteen (18)-month period following the Trigger Event; and (b)
all
stock options granted to Employee by the Company shall be exercisable in full,
effective as of the date of the Trigger Event. Notwithstanding the foregoing,
in
the event that Employee becomes eligible to obtain alternate healthcare coverage
from a new employer before the 18-month anniversary of the Trigger Event, the
Bank’s and/or the Company’s obligation to waive the remaining portion of
Employee’s healthcare continuation coverage under COBRA shall cease. Employee
understands and affirms that Employee is obligated to inform the Bank and the
Company if Employee becomes eligible to obtain alternate healthcare coverage
from a new employer before the 18-month anniversary of the Trigger Event. The
Trigger Event Payment (less applicable withholdings and deductions) shall be
paid to Employee in a lump sum on the next regular payroll date following the
8th
day
after Employee’s execution and delivery of the Release; provided, however, that
if necessary to comply with the restriction in Section 409A(a)(2)(B) of the
Internal Revenue Code of 1986, as amended (the “Code”)
concerning payments to “specified employees,” the Trigger Event Payment shall be
made on the first business day of the seventh month following the Trigger Event.
Employee shall have no obligation to seek substitute employment or otherwise
mitigate the Bank’s and the Company’s obligations to make the payments set forth
in this Section 3.
4.
Taxes.
In the
event that either the Company's independent public accountants or the Internal
Revenue Service determines that any payment, coverage or benefit provided to
Employee is subject to the excise tax imposed by Section 4999 (or any successor
provision) of the Code (“Section
4999”),
the
Company and the Bank shall pay to Employee, on the later of the 30th
day
thereafter (or the first business day following such 30th
day) or
the date that the Trigger Event Payment is paid pursuant to Section 3 above,
in
addition to any other payment, coverage or benefit due and owing hereunder,
an
amount determined by multiplying the rate of excise tax then imposed by Section
4999 by the amount of the “excess parachute payment” received by Employee
(determined without regard to any payments made to Employee pursuant to this
Section 4) and dividing the product so obtained by the amount obtained by
subtracting the aggregate local, state and Federal income tax rate applicable
to
the receipt by Employee of the "excess parachute payment" (taking into account
the deductibility for Federal income tax purposes of the payment of state and
local income taxes thereon) from the amount obtained by subtracting from 1.00
the rate of excise tax then imposed by Section 4999 of the Code, it being the
intention of the parties hereto that Employee's net after tax position be
identical to that which would have obtained had Sections 28OG and 4999 not
been
part of the Code.
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5.
At
Will Employment.
This
Agreement shall not affect any rights of the Bank, the Company or the Employee
prior to a Change in Control Event or any of your rights granted in any other
agreement, plan or arrangements, except that if Employee receive all payments
under this Agreement, Employee shall not be entitled to receive any payments
or
benefits under any other severance arrangement (if any) with the Bank or the
Company. The rights, duties and benefits provided under this Agreement only
shall become effective upon a Change in Control Event. Nothing in this Agreement
shall alter Employee’s status as an “at-will” employee. If Employee’s employment
by the Bank and/or the Company is terminated for any reason prior to a Change
in
Control Event, this Agreement shall thereafter be of no further force and
effect
6.
Headings.
Headings used in this Agreement are for convenience of reference only and do
not
affect the meaning of any provision.
7.
Counterparts.
This
Agreement may be executed as of the same effective date in one or more
counterparts, each of which shall be deemed an original.
8.
Binding
Agreement; Assignment.
This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns.
9.
Governing
Law; Jurisdiction.
This
Agreement and any and all matters arising directly or indirectly herefrom shall
be governed by, and construed in accordance with, the internal laws of the
State
of New Jersey, without reference to the choice of law principles thereof. Any
legal action, suit or other proceeding arising out of or in any way connected
with this Agreement shall be brought in the courts of the State of New Jersey,
or in the United States courts for the District of New Jersey. With respect
to
any such proceeding in any such court: (i) each party generally and
unconditionally submits itself and its property to the exclusive jurisdiction
of
such court (and corresponding appellate courts therefrom), and (ii) each party
waives, to the fullest extent permitted by law, any objection it has or
hereafter may have the venue of such proceeding as well as any claim that it
has
or may have that such proceeding is in an inconvenient forum.
10.
Amendments.
This
Agreement may only be amended or otherwise modified, and the provisions hereof
may only be waived, by a writing executed by the parties hereto.
11.
Entire
Agreement.
This
Agreement shall constitute the entire agreement of the parties with respect
to
the matters covered hereby and shall supersede all previous written, oral or
implied understandings between them with respect to such matters. Without
limitation, this Agreement supercedes and replaces the provisions set forth
in
the third and fourth paragraphs of the offer letter dated February 23, 2004
from
the Bank to the Employee.
12.
Opportunity
to Consult Counsel.
Employee hereby acknowledges that he has read and fully understands this
Agreement, that he has been advised that Xxxxxxxxxx Xxxxxxx PC
is
counsel to the Bank and the Company and not to Employee, and that Employee
has
been advised to, and has had the opportunity to, consult with counsel and
Employee’s personal financial or tax advisor with respect to this Agreement.
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
first written above.
UNION CENTER NATIONAL BANK | ||
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|
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By: | /s/ Xxxx X. Xxxxx | |
Name: Xxxx X. Xxxxx
Title:
President & Chief Executive Officer
Date:
February 6, 2006
|
CENTER BANCORP INC. | ||
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By: | /s/ Xxxx X. Xxxxx | |
Name: Xxxx X. Xxxxx
Title: President & Chief Executive
Officer
Date: February 6,
2006
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WITNESS: | EMPLOYEE: | ||
/s/ Xxxxx X’Xxxxx | /s/ Xxxxxxx X. Xxxx Xx. | ||
Name: Xxxxx X’Xxxxx
Date: February 6, 2006
|
Name: Xxxxxxx X. Xxxx, Xx.
Date: February 6,
2006
|
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