EMPLOYMENT CONTRACT
This AGREEMENT is made effective as of this 31st day of January, 2001 by and
between THE YARDVILLE NATIONAL BANCORP (the "Holding Company"), a corporation
organized under the laws of the State of New Jersey, and Patrick M. Ryan (the
"Executive").
RECITALS
WHEREAS, the Bank desires to employ and retain the services of the
Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of the Bank on a
full-time basis for said period;
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
During the period of his employment hereunder, the Executive shall serve as
President and Chief Executive Officer of the Yardville National Bank (the
"Bank") reporting to the Board of Directors of the Bank and as Chief Executive
Officer of the Holding Company reporting to the Board of Directors of the
Holding Company (collectively, the "Board"). During said period, the Executive
shall also serve as a director of the Bank and as a director of the Holding
Company. Failure to re-elect Executive as President and Chief Executive Officer
of the Bank or the Holding Company or failure to re-elect Executive as a member
of the Board of Directors of the Bank or of the Holding Company shall constitute
a Breach of this Agreement.
2. TERMS AND DUTIES
(A) The period of the Executive's employment under this Agreement shall
commence as of January 31, 2001 and shall continue for a period of twenty-four
(24) full calendar months thereafter, unless terminated by the Bank on account
of death, disability or cause (as herein defined). This Agreement is subject to
approval, for continuation, by the Board of Directors of the Yardville National
Bancorp, at the conclusion of each contract period. Renewals shall be on the
same terms and conditions as set forth herein, except for such modification of
compensation and benefits as may hereafter be agreed upon between the parties
hereto from time to time. This Agreement shall be deemed to continue for an
additional twelve (12) months from each succeeding anniversary date of the
Agreement, it being the intention of the parties that, unless notice is given to
the contrary by either party, the Agreement shall be extended for an additional
one year period so that there be a full twelve month term remaining.
(B) During the period of employment, the Executive shall devote full time
and attention to such employment and shall perform such duties as are
customarily and appropriately vested in the President and Chief Executive
Officer of a commercial bank and from time to time may be perceived by the
Board.
3. DEFINITIONS
For purposes of the Agreement,
(A) "Cause" means any of the following:
(i) the willful commission of an act that causes or that probably
will cause substantial economic damage to the Bank or substantial
injury to the Bank's business reputation; or,
(ii) the commission of an act of fraud in the performance of the
Executive's duties; or
(iii) a continuing willful failure to perform the duties of the
Executive's position with the Bank; or
(iv) the order of a bank regulatory agency or court requiring the
termination of the Executive's employment.
(B) "Change in Control": means any of the following:
(i) the acquisition by any person or group acting in concert of
beneficial ownership of forty percent (40%) or more of any class
of equity security of the Bank or the Bank's Holding Company, or
(ii) the approval by the Board of the sale of all or substantially all
of the assets of the Bank or Holding Company; or,
(iii) the approval by the Board of any merger, consolidation, issuance
of securities or purchase of assets, the result of which would be
the occurrence of any event described in clause (i) or (ii)
above.
(C) "Disability" means a mental or physical illness or condition rendering
the Executive incapable of performing his normal duties for the Bank.
(D) "Willfulness" means an act or failure to act done not in good faith and
without reasonable belief that the action or omission was in the best interest
of the Bank.
4. COMPENSATION AND REIMBURSEMENT
(A) During the period of employment, the Bank shall pay to the Executive an
annual salary of not less than $325,000.00 in the first year of the contract
period; and $340,000.00 in the second year of the contract period, which shall
be paid in either bi-weekly or monthly installments as the Executive prefers.
Such salary shall be reviewed by the Board or a duly appointed committee thereof
at least annually and any adjustments in the amount of salary on said review
shall be fixed by Board from time to time.
(B) The Executive shall be entitled to participate in or receive benefits
under any retirement plan, salary continuation plan, pension plan,
profit-sharing plan, stock plan, group term replacement plan,
health-and-accident plan, medical coverage or any other employee benefit plan or
prerequisite arrangement currently available or which may hereafter be adopted
by the Bank for its senior executives and key management employees, subject to
and on a basis consistent with the terms, conditions and overall administration
of such plans and arrangements. Nothing paid to the Executive under any such
plan or arrangement will be deemed to be in lieu of other compensation to which
the Executive is entitled under this Agreement.
(C) The Executive shall be provided, by the Bank, with an automobile for
his individual use.
(D) In addition to the salary provided for under Section 4:
(i) The Bank shall pay for all reasonable travel and other reasonable
expenses incurred by the Executive in performing his obligations
under this Agreement.
(ii) The Executive shall be eligible for an annual cash bonus, based
upon the Bank's performance during the fiscal year.
In the first year of the contract period the cash bonus allowance
will be set at 2% of profits, after taxes and prior to
shareholder dividend payments, if earnings, in the fiscal year,
exceed $11,000,000.00. If earnings should fall below
$11,000,000.00 the cash bonus allowance will be set at 1.8%,
after taxes and prior to shareholder dividend payment.
In the second year of the contract period the cash bonus
allowance will be set at 2% of profits, after taxes and prior to
shareholder dividend payments, if earnings, in the fiscal year
exceed $12,000,000.00. If earnings should fall below
$12,000,000.00 the cash bonus allowance will be set at 1.8%,
after taxes and prior to shareholder dividend payment.
All cash bonuses, for the Executive, are subject to the
recommendation and approval of the Directors' Organization and
Compensation Committee and all bonus provisions will be reviewed
annually for appropriate revisions.
5. STOCK OPTIONS
(A) The Bank agrees to grant to the Executive the right, privilege, and
option to purchase 100,000 shares of its common stock of the Bank Holding
company at a price of $10.9375 per share (the fair market value of said stock as
of the date of the Board of Directors approval of the agreement, December 20,
2000) subject to the terms and conditions of the Holding Company's 1997 Stock
Option Plan (the "Plan"). It is the intention of this Agreement that the
Executive be granted options that will not be subject to state or federal income
taxes when they are exercised, but rather only when the resultant stock is sold,
assuming that such date of sale is at least two years after the date such
options were granted one year after the date such stock was acquired by the
Executive. It is understood that the Holding Company will receive no tax
benefits or tax deduction in connection with these options.
(B) The options as to the 100,000 shares may be exercised by the Executive
at any time during a period commencing with the vesting date of such options and
ending ten years after the option grant date, except to the extent that said
time period may be decreased in accordance with the provisions contained in
Subsection 5(C).
The options shall vest in accordance with the following schedule:
Number of Options Vesting Date
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20,000 December 20, 2001
20,000 December 20, 2002
20,000 December 20, 2003
20,000 December 20, 2004
20,000 December 20, 2005
The rights to exercise shall be cumulative, and any option not exercised in
a prior year may be exercised in a subsequent year throughout the ten-year
option period.
(C) In connection with any proposed sale or conveyance of all or
substantially all of the assets of the Bank or Holding company or recently
accomplished Change in Control of the Holding Company, the vesting schedule of
all options granted hereunder to the Executive shall accelerate and 100% of all
options shall immediately vest to the Executive.
(D) If and to the extent that the number of issued shares of common stock
of the Holding Company shall be increased or reduced by any change in the par
value, split-up, reclassification, distribution of a dividend payable in stock
or the like, the number of shares will be proportionately adjusted. If the
Holding Company is reorganized, consolidated or merged with another corporation
the number of issued shares of common stock of the Holding Company shall be
increased or reduced in the same proportion and at an equivalent price and
subject to the same conditions. For the purposes of the preceding sentence, the
excess of the aggregate fair market value of the shares subject to the option
immediately after the reorganization
consolidation or merger over the aggregate option price of such shares shall not
be more than the excess of the aggregate fair market value of all shares subject
to the option immediately before such reorganization, consolidation or merger
over the aggregate option price of such shares, and a new option or of the old
option shall not give the Executive additional benefits which he did not have
under the old option.
(E) The options granted hereunder are nontransferable by the Executive.
6. TERMINATION FOR CAUSE
(A) The Executive shall not have the right to receive compensation or other
benefits provided hereunder for any period after termination for Cause, except
to the extent that Executive may be legally entitled to participate by virtue of
COBRA or any other State or Federal Law concerning employee rights to benefits
upon termination.
(B) Any unexercised stock option granted to the Executive shall become null
and void effective upon the Executive's receipt of notice of termination for
Cause and shall not be exercisable by the Executive at any time subsequent to
such termination for Cause.
(C) The Executive shall not be deemed to have been terminated for Cause
unless and until there is delivered to him a copy of a resolution duly adopted
by the affirmative vote of not less than two-thirds of the full Board at a
meeting of such Board called and held for the purpose (after the Executive,
together with counsel, has been given the opportunity to be heard before the
Board), finding the Executive guilty of conduct set forth above in the
definition of "Cause" in Subsection 3(A) and specifying the particulars thereof
in detail.
7. CHANGE IN CONTROL
(A) In the event that within three (3) years after a Change in Control (as
herein defined), the Executive's employment is terminated by the Bank, other
than for death, disability or Cause, the Executive shall be entitled to receive
three (3) years' salary at the base salary currently being paid, and the cash
bonus paid for the most recent prior calendar year, which payment shall be made
in a lump sum within 30 days after the occurrence of such termination.
(B) The Executive will have the option within six (6) months after a Change
in Control (as herein defined), to elect to resign his position. If the
Executive's voluntary departure is for other than death, disability or cause the
Executive shall be entitled to receive three (3) years' salary at an annual
salary currently being paid, which payment shall be made in a lump sum within 30
days after the occurrence of such voluntary resignation.
(C) Under the provisions of Section 7 the Executive is entitled to receive
a lump sum payment of three (3) years' salary at the annual salary currently
being paid at the time of the event and the cash bonus paid for the most recent
prior calendar year. The Holding Company's independent accountants will
determine if an excess payment (as defined in Section 4999 of the Internal
Revenue Code of 1954, as amended (the "Code") exists after reductions permitted
pursuant to Section 280G (b) (4) of the Code (such excess parachute payment
after taking into account such reductions, if any, being hereafter referred to
as the "Excess Parachute Payment"). As soon as practicable after the Excess
Parachute Payment, if any, has been so determined, the Holding Company will pay
to the Executive, subject to applicable withholding requirements under state or
federal law.
(i) twenty (20%) percent of the Excess Parachute Payment, and
(ii) such additional amount, if any (including Federal and State
income and excise taxes applicable thereto) as may be necessary
to compensate the Executive for the payment of state and federal
income and excise taxes on the aforesaid payment, as outlined in
Section C.
8. TERMINATION UPON DISABILITY
(A) In the event that the Executive experiences a Disability during the
period of his employment, his salary shall continue at the same rate as was in
effect on the day of the occurrence of such Disability, reduced by an concurrent
disability benefit payments provided under disability insurance maintained by
the Holding Company. If such Disability continues for a period of six (6)
consecutive months, the Holding Company at its option may thereafter, upon
written notice to the Executive or his personal representative, terminate the
Executive's employment with no further notice.
9. OTHER TERMINATION BY THE HOLDING COMPANY
(A) In the event the Executive's employment is terminated by the Holding
Company, other than for disability, death or Cause, and in the absence of
occurrence of a Change in Control, the Executive will be entitled to payment of
the remaining term of this agreement or twelve (12) months salary, whichever is
greater, at the annual salary currently being paid with said payment to be a
lump sum payable within 30 days after termination.
10. TERMINATION BY THE EXECUTIVE
(A) In the event of the Executive's voluntary termination, the Executive
shall not have the right to receive compensation or benefits as provided
hereunder after such date of termination, except to the extent that Executive
may be legally entitled to participate by virtue of COBRA or any other State or
Federal Law concerning employee rights to benefits upon termination.
11. SOURCE OF PAYMENTS
It is intended by the parties hereto that all payments provided in this
Agreement shall be paid in cash or checks from the general funds of the Bank, as
the case may be.
12. MODIFICATION AND WAIVER
This Agreement may not be modified or amended except by an instrument in
writing signed by the parties hereto.
13. NOTICES
Any notice required or permitted to be given under this Agreement shall be
sufficient if in writing and if sent by registered mail to his residence in the
case of the Executive or to its principal place of business in the case of the
Bank.
14. GOVERNING LAW
This Agreement and the obligations of the parties hereto shall be
interpreted, construed and enforced in accordance with the laws of the State of
New Jersey.
15. ENTIRE AGREEMENT
This instrument contains the entire agreement of the parties. It may not be
changed orally, but only by an agreement in writing signed by the party against
whom enforcement of any waiver, change, modification, extension or discharge is
sought.
IN WITHNESS WHEREOF, the parties have hereunto executed this Agreement
on the 31st day of January 2001.
ATTEST: YARDVILLE NATIONAL BANCORP
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Jay G. Destribats
Chairman of the Board
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F. Kevin Tylus, Chairman
Directors' Organization &
Compensation Committee
WITNESS
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Patrick M. Ryan
the Executive