Exhibit 10.6

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (the Agreement”) is made as of this 26th day of
February, 2002, by and between ANTHONY J. FERARO, an individual residing
at                                (“Executive”), UNITY BANK, a New Jersey state
bank with its principal place of business located at 64 Old Highway 22, Clinton,
New Jersey 08809 (the “Bank) and UNITY BANCORP, INC. a Delaware corporation and
holding company of the Bank with its principal place of business located at 64
Old Highway 22, Clinton, New Jersey 08809 (“Unity”) (Bank and Unity
collectively, “Employer”).

WHEREAS, Executive is currently employed as the President of Employer pursuant
to an employment agreement between Executive and the Bank dated as of the 18th
day of October, 1999 (the “Original Agreement”); and

WHEREAS, Executive and Employer desire for Executive to continue his employment
with the Employer and desire that this Agreement replace the Original Agreement
and govern the terms and conditions of Executive’s employment.

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.  Employer hereby agrees to employ the Executive, and
the Executive hereby accepts such employment, upon the terms and conditions set
forth herein.

2.             Position and Duties.  The Executive shall be employed as
President of Employer, to perform such services in that capacity as are usual
and customary for comparable institutions and as shall from time to time be
established the Board of Directors of the Employer.  Executive agrees that he
will devote his full business time and efforts to his duties hereunder.

3.             Cash Compensation.  Employer shall pay to the Executive
compensation for his services as follows:

(a)           Base Salary.  The Executive shall be entitled to receive,
commencing upon the date of this Agreement, an annual base salary (the “Base
Salary”) of $305,000 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
Executive’s performance, the status of Employer and such other factors as the
Board of Directors or a committee thereof shall deem appropriate, and may, but
shall not be obligated to, adjust the Base Salary accordingly.

(b)           Discretionary Bonus.  Executive and the Board of Directors of
Employer or a committee thereof shall meet and establish performance criteria
for the Executive.  Based upon the

 

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Executive’s satisfaction of such criteria, the Executive shall be entitled to
receive annually a bonus, the amount to be agreed upon by the Board of Directors
or a committee thereof and the Executive.  The Executive and the Board of
Directors or a committee thereof shall meet annually on or prior to the
anniversary date of the Agreement to review the Executive’s performance and to
mutually agree upon new performance criteria for the upcoming year.

4.             Other Benefits.

(a)           Fringe Benefits.  Executive shall be entitled to participate in
such benefit programs as are made available generally to employees of Employer.

(b)        Life Insurance.    Employer shall obtain for the benefit of Executive
life insurance on the life of Executive in the amount of two and one-half times
Executive’s annual Base Salary.  Upon any termination of Executive without
“Cause” hereunder pursuant to Section 6(c), or upon any Change in Control (as
defined below), Employer shall transfer to Executive any rights Employer may
have in any policies of insurance acquired to satisfy this provision.  Payment
of any premiums under any such policies shall thereafter be the sole obligation
of Executive, and not of Employer.

(c)        Stock Options.   Executive shall be entitled to participate in such
stock option plans as the Board of Directors may, in its discretion, determine.

5.             Term.  The term of this Agreement shall be three (3) years,
commencing upon the date hereof and continuing until the third anniversary
hereof; provided, however, that on a daily basis, one additional day shall be
added to the term of this Agreement, so that the remaining term shall always be
three (3) years, either the Executive or Employer shall have provided the other
with written notice of its intention to cease extending the term of this
Agreement.

6.             Termination.

(a)           Cause.   As used in this Agreement, the term “Cause” shall mean
any of the following actions:  the Executive’s personal dishonesty,
incompetence,  willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful violation of any
law, rule or regulation or final cease-and-desist order or a material breach of
any provision of this Agreement.

(b)           Termination With Cause.   Employer shall have the right to
terminate the Executive for Cause, upon written notice to him of such
determination, specifying the alleged Cause.  In the event of such termination,
the Executive shall not be entitled to any further benefits under this
Agreement; provided, however, that nothing contained herein shall excuse
Employer from paying all benefits earned or accrued up to the date of such
termination.

(c)           Termination Without Cause.  If Employer terminates the Executive’s
employment hereunder without Cause, Executive will be entitled to receive a
payment equal to twice his then current

 

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annual Base Salary.  Any payments provided for hereunder shall be made by a lump
sum payment within ten (10) days of any such termination.  In addition, to the
extent Executive participated in Employer’s hospital, health and medical
programs as of the date of such termination, Employer shall continue to provide
Executive with such benefits for a period of twelve (12) months after such
termination.  The Executive shall have no duty to mitigate damages in connection
with the termination of his employment without cause.  If the Executive 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)           Death or Disability.  This Agreement shall terminate upon
Executive’s death or his disability, as defined herein.  Upon Executive’s death
or his disability, the obligation of Employer hereunder to pay Executive the
compensation called for under Section 3 hereof shall terminate, and Employer’s
only obligation shall be to pay Executive any and all benefits to which
Executive was entitled at the time of such death or disability under any benefit
plans of Employer then in place.  For purposes of this Agreement, the term
“disability” shall mean a good faith determination by the Board of Directors of
Unity that Executive is unable to substantially perform his material duties as
prescribed in this Agreement due to his incapacity or disability, physical or
mental, for a period of six (6) consecutive months,

7.             Change in Control.

(a)           Upon the consummation of a Change in Control (as herein defined),
Executive shall have the right, upon written notice to the Employer, to
terminate his employment hereunder and the provisions of Section 7(c) shall
apply as if the Executive had been terminated.

(b)           A “Change in Control”  shall mean:

(1)                                  a reorganization, merger, consolidation or
sale of all or substantially all of the assets of Unity, or a similar
transaction in which Unity is not the resulting entity;

 

(2)                                  individuals who constitute the Incumbent
Board (as herein defined) of the Unity cease for any reason to constitute a
majority thereof;

 

(3)                                  the occurrence of any transaction requiring
the approval of the Board of Governors of the Federal Reserve System under 12
C.F.R. §225.41 et seq., except a transaction by any party owning 10% or more of
Unity’s outstanding stock as of the date hereof; or

 

(4)                                  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 1934 (the “Exchange Act”); or

 

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(5)                                  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 Unity is or
becomes a “beneficial owner” (as defined in Rule 13–d under the Exchange Act)
directly or indirectly, of securities of Unity representing 25% or more of
Unity’s outstanding securities ordinarily having the right to vote at the
election of directors, excluding any securities purchased by Employer’s employee
stock ownership plan and trust, or any other employee benefit plans established
by Employer from time to time in determining whether such person is the
beneficial owner of more than 25% of Unity’s securities; or

 

(6)                                  A proxy statement soliciting proxies from
stockholders of Unity is disseminated by someone other than the current
management of Unity, seeking stockholder approval of a plan of reorganization,
merger or consolidation of Unity 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 Unity;

 

(7)                                  A tender offer is made for 25% or more of
the voting securities of Unity and the shareholders owning beneficially or of
record 25% or more of the outstanding securities of Unity have tendered or
offered to sell their shares pursuant to such tender offer and such tendered
shares have been accepted by the tender offeror.

 

.                               For these purposes, “Incumbent Board” means the
Board of Directors of Unity on the date hereof, provided that any person
becoming a director subsequent to the date hereof whose election was approved by
a vote 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)           Upon the termination of Executive’s employment, either by
Executive as permitted under Section 7(a) or by Employer or its successor
without cause and within eighteen (18) months following a Change in Control,
Executive shall be entitled to receive a lump sum payment equal to three (3)
times his then current Base Salary (giving no effect to any bonuses Executive
may have earned under Section 3(b) hereof).  In addition, Employer shall be
obligated to maintain all policies of medical or disability insurance then
covering Executive for a term of one year after such termination.  The payments
provided for hereunder shall be in lieu of, and not in addition to, any payments
Executive may be entitled to under Section 6(c).

 

(d)           Upon the occurrence of Change in Control and the negotiation by
Executive of a mutually acceptable replacement employment agreement with the
Employer or its successor, in lieu of

 

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any rights which Executive may have under paragraph (c) hereof, Executive shall
be entitled to a payment equal to 1.5 times his then current Base Salary.  This
payment to Executive shall be in lieu of any other right to payment Executive
may have pursuant to this Agreement (other than for compensation or bonuses
earned but not yet paid).

 

Notwithstanding anything contained in section 7 above, in the event all
compensation to be provided to Executive conditioned upon the occurrence of a
Change in Control, whether under this Agreement or in connection with any other
agreement or benefit plan of the Employer to which Executive is a party or in
which he participates, exceeds 2.99 times the Executive’s Base Amount, as that
term is defined under Section 280G of the Internal Revenue Code and regulations
of the Internal Revenue Service promulgated thereunder, the total compensation
to be paid to the Executive shall be reduced to an amount that is $1.00 less
than 2.99 times the Executive’s Base Amount. Executive shall have the right to
determine which benefits to which he would otherwise be entitled shall be
reduced.

8.             Covenant Not to Compete.  Executive 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 geographic areas in which
Employer conducts its business on the date of Executive’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 Executive
shall be subject to a covenant not to compete that is reasonable under the
circumstances and enforceable by Employer.  Executive agrees to be bound by any
such modified covenant not to compete.

9.             Miscellaneous.

(a)           Governing 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 forth the entire
understanding of the parties with regarding to the subject matter contained
herein and supersedes any and

 

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all prior agreements, arrangements or understandings relating to the subject
matter hereof, including specifically the Original Agreement, and may only be
amended by written agreement signed by both parties hereto or their duly
authorized representatives.

(d)           Notices.  Notices hereunder shall be sent by Certified Mail,
Return Receipt Requested, to the address set forth for each party on the first
page of this Agreement.  Notices to Employer shall be directed to the attention
of the Chairman of the Board.

(e)           Termination of Original Agreement.  Upon the execution of this
Agreement, the Original Agreement shall be deemed terminated and voided and the
rights of the parties hereto shall be determined solely by reference to this
Agreement.

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

 

 

UNITY BANK

 

 

 

By:

/s/ DAVID D. DALLAS

 

 

David D. Dallas, Chairman of the Board

 

 

 

 

 

UNITY BANCORP, INC.

 

 

 

By:

/s/ DAVID D. DALLAS

 

 

David D. Dallas, Chairman of the Board

 

 

 

 

 

EXECUTIVE:

 

 

 

 

 

By:

/s/ ANTHONY J. FERARO

 

 

Anthony J. Feraro

 

 

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