Document:

Exhibit
10.(ii)(10)

 

MANAGEMENT
CONTINUITY AGREEMENT

 

This Management
Continuity Agreement (“Agreement”) is made and entered into as of January 15,
2004, by and between Illini Corporation, an Illinois bank holding company
organized under the laws of the Illinois (“Illini”),
Illini Bank, a bank organized under the Illinois Banking Act (“Bank”), and Gaylon E. Martin, 13788 North
2200 Avenue, Geneseo, Illinois (“Officer”).

 

WITNESSETH

 

WHEREAS, the Officer is seeking employment
with Illini as Executive Vice President, and with Bank as President with the
salary as set forth in this Agreement;

 

WHEREAS, Illini and Bank wishes to attract
and retain highly qualified executives and to achieve this goal it is in the
best interests of Illini and Bank to secure the continued services of the
Officer regardless of a change in control of Illini, and to reward the Officer
in accordance with his contributions to Illini’s success;

 

WHEREAS, Illini and Officer are willing, in
order to induce the Officer to remain an employee of Illini and Bank, and to
provide the Officer a measure of security with respect to his employment with
Illini in the event of a change in control of Illini so that the Officer will
be in a position to act with respect to a possible change in control of Illini
in the best interests of Illini and its shareholders without concern as to the
Officer’s own financial security, to agree that employment of the Officer shall
be terminable only in accordance with Section II herein;

 

WHEREAS, Illini is willing, in order to compensate the Officer fairly for the
Officer’s contribution to the prosperity of Illini, and in order to induce the
Officer to remain in employment with Illini, to agree that Officer shall be
compensated in accordance with the terms and conditions herein; and

 

NOW, THEREFORE, Illini, Bank, and Officer agree
as follows:

 

I.  EMPLOYMENT

 

A.  Term.  Illini shall continue to employ Officer as
its Executive Vice President, and Bank shall continue to employ Officer at its
President until December 31, 2006,  (the
“Term”), unless terminated prior to the expiration of the Term pursuant to
Section II herein.

 

B.  Compensation.  As compensation for services provided to
Illini and Bank by Officer pursuant to this Agreement, Illini shall pay the
Officer an annual base salary of $135,000.00, which salary may be increased
from time to time. It is expressly understood that the annual base salary of
Officer shall be allocated between Illini and Bank in accordance to the time
devoted to each position.  The Officer
shall also be eligible to participate in any other compensation and benefit
plans generally available to executive employees of Illini of like grade and
salary including, but not limited to, retirement plans,

 

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group life, disability,
accidental death and dismemberment, travel and accident, and health and dental
insurance plans, incentive compensation plans, stock compensation plans,
deferred compensation plans, supplemental retirement plans, qualified and non-qualified
incentive stock option plans, and excess benefit plans. Such other compensation
and benefit plans are hereinafter referred to collectively as the “Compensation
and Benefits Plans”.

 

C.  Duties.
Officer shall perform such duties and functions as are assigned to him by the
bylaws of Illini or Bank, as amended or restated by the Board of Directors of
Illini or by the Board of Directors of Bank. Illini shall provide the Officer
with a description of his duties at the inception of his employment which shall
remain unchanged until such time as changes in duties or function are approved
by Illini’s or Bank’s Board of Directors. In the event of an actual or
potential Change in Control (as defined in Section II, H) of Illini, Officer
shall perform his duties and function in a manner that is consistent with the
best interests of Illini and its shareholders, without regard to the effect
that the potential or actual Change in Control may have on the officer
personally.

 

D.  Duty Of Loyalty.  The Officer shall work full-time for Illini
and Bank only, or for a subsidiary thereof, provided that:

 

(a) He may also engage in
charitable, civic and other similar activities;

 

(b) With the consent of
the Board of Directors of Illini or Bank, he may serve as a director of a
business organization not competing with the Illini or Bank; and

 

(c) He may make such
investment and reinvestment in business activities as shall not require a
substantial portion of his time.

 

E. Duty Not To Disclose Confidential Information.  The Officer acknowledges that his
relationship with the Illini is one of high trust and confidence, and that he
has access to Confidential Information, as hereinafter defined, of Illini and
Bank.  The Officer shall not directly or
indirectly, communicate, deliver, exhibit or provide Confidential Information
to any person, firm, partnership, corporation, organization or entity, except
as required in the normal course of the Officer’s duties. The duties contained
in this paragraph shall be binding upon the Officer during the time that he is
employed under this Agreement and following the termination of such employment.
Such duties will not apply to any such Confidential Information that is or
becomes in the public domain through no action on the part of the Officer, is
generally disclosed to third parities by Illini without restriction on such
third parties, or is approved for release by written authorization of the Board
of Directors of Illini or Bank.  The
term “Confidential Information” shall mean any and all confidential,
proprietary, or secret information relating to the Illini’s or Bank’s business,
services, customers, business operations, or activities and any and all trade
secrets, products, methods of conducting business, information, skills,
knowledge, ideas, know-

 

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how or devices used in,
developed by, or pertaining to Illini’s or Bank’s business and not generally
known, in whole or in part, in any trade or industry in which Illini is
engaged.

 

Section
II. TERMINATION

 

A.  Term of Agreement.  This Agreement shall run for an initial term
of three years from its inception. Subject to the approval of the Board of
Directors of Illini, or unless Illini terminates for cause, or Officer
terminates in accordance with Section II, the original agreement shall be
extended each year for one additional year for each year that lapses from the
initial term so that the Agreement maintains a length of three years. In the
event of a termination by Illini for cause, or by the Officer under Section II,
all obligations hereunder shall terminate except as specifically set forth in
the Agreement.

 

B.
Voluntary Termination by Officer. The Officer may voluntarily
terminate this Agreement by providing thirty days notice to Illini, in which
event Illini shall have no further obligation to the Officer hereunder from the
date of such termination except to pay Officer earned but unpaid salary and
benefits and to honor vested option rights without imposing further condition
or reduction thereof, and the Officer shall have no further obligation to
Illini hereunder except the duty to not disclose Confidential Information in
accordance with Section E.

 

C.
Termination By Death Of Officer. In the event the Officer’s
employment with Illini is terminated due to the Officer’s death, Illini shall
have no further obligation to the Officer, his heirs or legatees hereunder from
the date of such termination, except to notify Officer’s heirs or legatees of
earned but unpaid salary and benefits due under the Compensation and Benefit
Plans and the value, terms and condition of vested option rights, and to pay
Officer’s heirs or legatees amounts due officer hereunder without imposing
further condition or reduction thereof and the heirs and legatees of the Officer
shall have no further obligation.

 

D.
Termination By Disability Of Officer. In the event the
Officer’s employment with the Illini is terminated due to the Officer’s
Permanent Disability, Illini shall have no further obligation to the Officer
hereunder from the date of such termination except to notify the employee of
and pay at the direction of Officer or person empowered by Officer to direct
payment earned but unpaid salary and benefits due under the Compensation and
Benefit Plans and to honor vested option rights without imposing further
condition or reduction thereof, and Illini shall have no further obligation to
Officer or person empowered by Officer to direct payments due under the
Agreement. For purposes of this Agreement, the term “Permanent Disability”
means a physical or mental condition of the Officer which:

 

1.               Has
continued uninterrupted for six months;

 

2.               Is
expected to continue indefinitely; and

 

3.               Is
determined by Illini to render the Officer incapable of adequately performing
his duties.

 

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In
case of dispute in applying “Permanent Disability” to a physical or mental
condition of Officer, the test of disability used by the United States Social
Security Administration for the same or similar purposes shall be the final
standard for determining the “Permanent Disability” of the Officer.

 

E.  Termination by
Illini Without Cause. 
Illini may terminate this Agreement without cause prior to the Firm Term
as hereinafter defined by providing thirty days notice to the Officer. In such
event, the Officer shall have no further obligation to Illini hereunder, except
the duty to not disclose Confidential Information in accordance with Section
II, E, and Illini shall have no further obligation to the Officer hereunder
from the date of such termination except (i) to pay to the Officer the salary
payments described in Section II, B, in the amount in effect on the date of
termination, for a period of twelve months from the date of termination, (ii)
to pay to the Officer earned but unpaid salary and any other benefits under the
Compensation and Benefit Plans without imposing further condition or reduction,
and (iii) to pay to the Officer reasonable expenses of out placement within the
financial institutions or financial industry during the twelve month period
following the date of termination; provided, however, out placement expenses
shall be paid only upon actually incurring such expense and Officer’s
furnishing of evidence thereof to Illini and shall not include moving or
relocation expense; and provided, however, that any benefit to be provided by a
Compensation and Benefit Plan may be provided by Illini through cash or
equivalent value or through a nonqualified arrangement or arrangements if, in
the judgment of Illini, permitting the Officer to participate in such plan
after the date of termination would adversely affect the tax status of such
plan, and if, in the judgment of the Officer, any proposed cash or equivalent
value through a nonqualified arrangement or arrangement would not materially
increase the tax liabilities of Officer under federal or state income tax or
estate tax laws.

 

F. Termination by Illini With Cause. Prior
to or during the Firm Term, Illini may terminate this Agreement for Cause.  For purposes of this Agreement, Cause shall
mean;

 

1.               The
Officer’s willful and material breach of a provision of this Agreement;  or

 

2.               The
Officer willfully engages in illegal conduct or gross misconduct, which
materially and demonstrably injures Illini;

 

For purposes of
determining whether “Cause” exists, no act or failure to act, on the Officer’s
part shall be considered “willful” unless it is done, or omitted to be done, by
the Officer in bad faith or without reasonable belief by the Officer that his
action or omission was in the best interest of Illini. In the event of the
Officer’s termination for Cause, Illini will have no further obligation to the
Officer under the Agreement from the date of such termination.

 

G. Termination Following Change in Control.
In the event there is a Change in Control of Illini, as defined in Section H
below, during the Term, and (1) within the period

 

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commencing twelve months
prior to the date of a Change in Control and ending twelve months following the
date of the Change in Control (the “Firm Term”), the Officer’s employment
hereunder is terminated by the Illini other than for Cause, as defined in
Section II, F; or (2) Within the Firm Term, the Officer resigns from his employment
hereunder upon thirty days written notice given to Illini within thirty days
following a material change in the Officer’s title, authorities or duties, in
effect immediately prior to the Change in Control, a reduction in the
compensation or a reduction in benefits provided pursuant to this Agreement or
the Compensation and Benefit Plans below the amount of compensation and
benefits in effect immediately prior to the Change in Control, or a change of
the Officer’s principal place of employment without his consent to a city more
than 25 miles from Springfield, Illinois, then the Officer shall have no
further obligation to Illini hereunder, except the duty not to disclose
Confidential Information in accordance with Section I, E, and Illini shall have
no further obligation to the Officer hereunder from the date of termination
except (i) to pay to the Officer the salary payments described in Section I, B,
in the amount in effect on the date of termination, for a period of twelve
months from the date of termination, (ii) to pay to the Officer any other
benefits due under the Compensation and Benefit Plans without imposing further
condition or reduction thereof, and (iii) to pay to the Officer reasonable
expenses of out placement within the financial institutions industry or
financial industry following the date of termination; provided, however, out
placement expenses shall be paid only upon actually incurring such expenses and
Officer’s furnishing of evidence thereof to the Illini and shall not include
moving or relocation expenses and provided, however, that any benefit to be
provided  by the Illini through cash of
equivalent values or through a nonqualified arrangement or arrangements if, in
the judgment of the Illini, permitting the Officer to participate in such plan
after the date of termination would adversely affect the tax status of such
plan.

 

H. Change in Control Defined. A Change in
Control of the Illini shall have occurred:

 

1.               On
the fifth day preceding the scheduled expiration date of a tender offer by, or
exchange offer by any corporation, person, other entity or group (other than
Illini or any of its wholly owned subsidiaries), to acquire Voting Stock of
Illini if:

 

i.                  After
giving effect to such offer such corporation, person, other entity or group
would own 50% or more of the Voting Stock of the Illini;

 

ii.               There
shall have been filed documents with the Securities and Exchange Commission in
connection therewith (or, if no such filing is required, public evidence that
the offer has already commenced); and such corporation, person, other entity or
group has secured all

 

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required regulatory approvals to own or control 50% or
more of the Voting Stock of Illini;

 

2.               If
the shareholders of Illini approve a definitive agreement to merger or
consolidate Illini with or into another corporation in a transaction in which
neither Illini nor any of its wholly owned subsidiaries will be the surviving
corporation, or to sell or otherwise dispose of all or substantially all of the
Illini’s assets to any corporation, person, other entity or group (other than
Illini or any of its wholly owned subsidiaries), and such definitive agreement
is consummated;

 

i.                  (c)
If any corporation, person, other entity or group (other than Illini or any of
its wholly owned subsidiaries) becomes the Beneficial Owner (as that term is
defined in the Securities and Exchange Commission’s Rule 13d-3 under the
Securities Exchange Act of 1934) of stock representing 50% or more of the
Voting Stock of Illini; or

 

ii.               (d)
If during any period of two consecutive years Continuing Directors cease to
comprise a majority of Illini’s Board of Directors.

 

3.               The
term “Continuing Director’ means:

 

i.                  Any
member of the Board of Directors of the Illini at the beginning of any period
of two consecutive years; and

 

ii.               Any
person who subsequently become s a member of the Board of Directors of the
Illini, if:

 

(i) Such person’s
nomination for election or election to the Board of Directors of Illini or
Illini is recommended or approved by resolution of a majority of the Continuing
Directors; or

 

(ii) Such person is
included a nominee in a proxy statement of the Illini  distributed when a majority of the Board of Directors of Illini
or Illini consists of Continuing Directors.

 

4.               “Voting
Stock” means those shares of Illini entitled to vote generally in the election
of directors.

 

I. Termination of Related Offices.  The parties agree that in the event
Officer’s employment by Illini is terminated for any reason, Officer will
immediately resign from all other positions or offices held with Illini,
including any directorships with Illini, or any subsidiaries thereof.

 

J. Officer’s Costs of Enforcement.  Illini shall pay all expenses of Officer,
including but not limited to attorney’s fees, incurred in enforcing payments by
Illini pursuant to this Agreement.

 

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Section III. MISCELLANEOUS

 

A. Assignment of Officer’s Rights.  The Officer may not assign, pledge or
otherwise transfer any of the benefits of this Agreement either before or after
termination of employment, and any purported assignment, pledge or transfer of
any payment to be made by Illini” hereunder shall be void and of no effect.  No payment to be made to the Officer
hereunder shall be subject to the claims of creditors of the Officer.

 

B. Agreements Binding on Successor.  This Agreement shall be binding and inure to
the benefit of the parties hereto and their respective successors, assign,
personal representatives, heirs, legatees and beneficiaries.

 

C. Notices.  Any notice required or desired to be given under this Agreement
shall be deemed given if in writing and sent by first class mail to the Officer
or Illini, at his or its address as set forth above, or to such other address
of which either the Officer or Illini shall notify the other in writing.

 

D. Waiver of Breach.  The waiver by either party of a breach of
any provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach by either the Officer or Illini.

 

E. Intellectual Property Rights.  Officer
shall have sole and exclusive rights over any intellectual property created by
him while employed under this Agreement, and shall not be subject to claims by
Illini of rights they may have under equity or statute arising from Officer’s
employment with Illini.

 

F. Entire Agreement.  This Agreement contains the entire
understanding of the parties and supersedes prior agreements between Officer
and Illini.  It may be modified or amended
only by an agreement in writing signed by the party against whom enforcement of
any change or amendment is sought.

 

G. Severability of Provisions.  If for any reason any paragraph, term or
provision of this Agreement is held to be invalid or unenforceable, all other
valid provisions herein shall remain in full force and effect and all
paragraphs, terms and provisions of this Agreement shall be deemed to be
several in nature. An Offer of Employment containing various special terms and
conditions of the Officer’s employment was made between Illini and Officer and
is attached to this Agreement and incorporated hereinto by this reference.

 

H. Governing Law.  This Agreement is made in, and shall be governed by, the laws of
the State of Illinois.

 

 

IN WITNESS WHEREOF, the parties have
executed this Agreement as of the day and year first set forth above.

 

	
  ILLINI
  CORPORATION

  	
  [OFFICER]

  	
   

  
	
  ILLINI
  BANK

  	
   

  
	
  By: 

  	
  /s/ Burnard K. McHone

  	
   

  	
  /s/ Gaylon E. Martin

  	
   

  
	
  Its:  President

  	
  Date:

  	
  1-7-04

  	
   

  
	
  Date:  January
  15, 2004

  	
   

  
								

 

7

 

Exhibit
A

 

DESCRIPTION
OF RESPONSIBILITES AND DUTIES

 

 

[Insert or attach job
description.]

 

8Exhibit 10(vi)

 

EMPLOYMENT
AGREEMENT

 

EMPLOYMENT AGREEMENT
(the “Agreement”) made as of this 23rd day of March, 2004 by and
between JAMES
A. HUGHES, an individual residing at 4 Lance Road, Lebanon, New
Jersey 08833 (“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”), UNITY BANCORP, INC. a New Jersey
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 and Employer desire for Executive to continue his employment with the
Employer and desire that this Agreement 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.

 

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 an annual base salary (the “Base
Salary”) of $185,000 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)           Bonus.
The Executive shall receive such additional discretionary bonuses as the Board
of Directors of Employer or a committee thereof may, from time to time,
authorize to be paid to him during the term of his employment.

 

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)           Stock
Options. Executive shall be entitled to participate in such stock
option or stock bonus plans as the Board of Directors or a committee thereof
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, unless
either the Executive or Employer shall have provided the other with written
notice of its intention to cease extending the term of this Agreement.  Notwithstanding the preceding sentence or
any other provision of this Agreement, the terms of this Agreement shall
immediately end upon: (i) the Bank or Unity entering into a Memorandum of
Understanding with the FDIC or the New Jersey Department of Banking and
Insurance; (ii) a cease-and-desist order being issued with respect to the Bank
or Unity by the FDIC or the New Jersey Department of Banking and Insurance; or
(iii) the receipt by either the Bank or Unity of any notice under Federal or state
law, which (in any way) restricts the payment of any amount or benefits which
may become due under this Agreement.  It
is hereby understood and agreed that, upon the occurrence of any of the events
described in the foregoing clauses (i), (ii) or (iii), this Agreement shall be
deemed terminated and the Employer shall have no further obligation to pay any
amounts by the Executive or provide any further benefits to the Executive.

 

(a)           Cause.
Employer may, at any time (without prejudice to Executive’s right to
compensation or benefits as provided herein) terminate Executive for “cause”.
Upon such a termination, Executive shall be entitled to no further compensation
or employment related benefits from and after the date of such termination,
except for the payment of accrued and unpaid compensation through the date of
such termination and except for the provision of any statutorily required
benefits. As used in this Agreement, the term “cause” shall mean the
Executive’s personal dishonesty, willful misconduct, inappropriate or
unprofessional behavior (as determined by the Employer), breach of fiduciary
duty involving personal profit, intentional failure to perform stated duties,
willful violation of any law, rule or regulation (other than traffic violations
or similar minor offenses which do not adversely effect Employer’s reputation
or standing in the community) or a material breach of any provision of this
Agreement.

 

(b)           Termination
Without Cause. Upon a termination of Executive’s employment by
Employer without “cause”, Executive shall be entitled to receive a payment
equal to eighteen (18) months of his then current Base Salary. Such amount
shall, at the option of the Executive, be paid in: either (i) periodic
payments, over eighteen (18) months in the same manner in which the Executive’s
Base Salary was paid through the time of such termination; or (ii) in a single
lump sum payment within thirty (30) days of such termination. Employer shall,
solely in the event Executive determines to receive the amount due under this
paragraph (b) in periodic payments, continue to provide the Executive with
hospital, health, medical and life insurance benefits which the Executive was
receiving at the time of such termination for the period that Executive
continues to receive such periodic payments. Executive shall also be entitled
to payments for periods or partial periods that occurred prior to the date of
termination and for which the Executive has not yet been paid.

 

The Executive shall have no duty to mitigate damages in connection with
his termination by Employer without “cause”. However, it is understood and
agreed that, upon the Executive receiving a single lump sum payment of any
amounts which may become due under this paragraph (b), no further amounts shall
be owed to the Executive and the Employer shall have no further obligation to
provide any further benefits to the Executive. It is also understood and agreed
that, notwithstanding any provisions of this paragraph (b) and in the event the
Executive

 

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obtains new employment during
any period that the Employer is obligated to provide hospital, health, medical
and life insurance benefits hereunder and such new employment provides for
hospital, health, medical and life insurance benefits in a manner substantially
similar to the benefits to be provided by Employer hereunder, Employer may
permanently terminate the duplicative benefits it is obligated to provide
hereunder.

 

(c)           Resignation
With Cause. Executive shall have the right to resign his employment
with Employer at any time hereunder, providing notice as required by the
Employer’s employment related policies then in effect. In the event such a
resignation is for “good cause” (as defined below), such resignation shall be
deemed a termination without “cause” under paragraph (b) hereof, and Executive
shall, solely in the event the Executive delivers a written resignation for
“good cause” to the Employer within 15 days of the occurrence of either of the
events described in sub-paragraphs (i) and (ii) of this paragraph (c), be
entitled to receive all such amounts and benefits as are provided for under
such paragraph (b) above.

 

For purposes of this provision, the term “good cause” shall mean any of
the following:

 

(i)            A material reduction in Executive’s duties,
responsibilities, title or employment status from its level as of the date
hereof; or

 

(ii)           Any reduction in Executive’s Base Salary.

 

(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.

 

6.             Change
in Control; Significant Acquisition.

 

(a)           For
purposes of this Agreement, a “Change in Control” shall mean:

 

(i)            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; or

 

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

 

(iii)          the occurrence of an event of a nature that
would be required to be reported in response to Item 1 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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(iv)          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 or the
trustees or any administrator of any employee stock ownership plan and trust,
or any other employee benefit plans, established by Employer from time-to-time
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; or

 

(v)           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; or

 

(vi)          A tender offer is made for 25% or more of the
voting securities of Unity and 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 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
if he were a member of the Incumbent Board.

 

(b)           Upon
the occurrence of a Change in Control and, in connection with such Change in
Control, Executive’s employment with Employer and/or its successors is
terminated within eighteen (18) months of such Change in Control, regardless of
whether such termination is by Employer or its successor, through Executive’s
resignation of employment with Employer or its successor, or Executive’s
failure to accept an offer of employment with any successor to Employer,
Executive shall be entitled to receive a payment equal to the greater of : (i)
thirty-six (36) months of Executive’s Base Salary; or (ii) thirty-six (36)
months of the Executive’s then current Base Salary plus any cash bonus received
by the Executive for the Employer’s preceding fiscal year. Such payment shall,
at the option of the Executive, be made to Executive, in either (A) periodic
payments, over thirty-six (36) months, in the same manner in which the
Executive’s Base Salary was paid through the termination of Executive’s
employment; or (B) a single lump sum payment to be made within thirty (30) days
of the termination of Executive’s employment. In addition to the foregoing,
solely in the event Executive determines to receive the amount due under this
paragraph (b) in periodic payments, Executive shall be entitled to receive from
Employer or its successor, hospital, health, medical and life insurance
benefits on the terms and at the same cost to Executive as Executive was
receiving such benefits upon the date of termination of Executive’s
employment.  Notwithstanding the
preceding sentence, in the event

 

4

 

the Executive obtains new
employment during any period that the Employer is obligated to provide
hospital, health, medical and life insurance benefits hereunder and such new
employment provides for hospital, health, medical and life insurance benefits
in a manner substantially similar to the benefits to be provided by Employer
hereunder, Employer may permanently terminate the duplicative benefits it is
obligated to provide hereunder. It is hereby understood and agreed that
payments that may become due to the Executive under this sub-paragraph (b)
shall be in lieu of, and not in addition to, any payments Executive may be
entitled to under Section 5(b) or (c) hereof.

 

(c)           Upon
the occurrence of a Change in Control, the vesting period for any stock options
or awards of Unity common stock previously granted to Executive shall
accelerate and become fully vested on the date of the Change in Control.

 

(d)           For
purposes of this Agreement, a “Significant Acquisition” shall mean an
acquisition of another entity by Unity (either by way of merger, purchase of
substantially all assets of such other entity or purchase of all outstanding
shares of securities of such other entity) pursuant to which: (i) Unity shall,
as all or part of the consideration for such acquisition, issue to the
shareholders of such other entity, such number of voting securities as shall
equal 25% or more of the then outstanding voting Unity securities (measured
prior to the consummated Significant Acquisition); and (ii) in the case of a
merger, Unity shall be the surviving entity.

 

(e)           If
Executive’s employment with Employer is terminated within eighteen (18) months
of the consummation of a Significant Acquisition, regardless of whether such
termination is by Employer or through Executive’s resignation of employment
with Employer, Executive shall be entitled to receive a payment equal to the
greater of: (i) thirty-six (36) months of Executive’s Base Salary; or (ii)
thirty-six (36) months of the Executive’s Base Salary plus any cash bonus
received by the Executive for the Employer’s preceding fiscal year. The payment
shall, at the option of the Executive, be made to the Executive, in either: (a)
periodic payments, in the same manner in which the Executive’s Base Salary was
paid through the time of such termination; or (b) a lump sum payment to be made
within thirty (30) days of the termination of Executive’s employment. In
addition to the foregoing and solely in the event Executive determines to
receive the amount due under this paragraph (e) in periodic payments, Executive
shall, during the period he is receiving such periodic payments, be entitled to
receive from Employer, hospital, health, medical and life insurance benefits on
the terms and at the same cost to Executive as Executive was receiving such
benefits upon the date of termination of Executive’s employment.  Notwithstanding the preceding sentence, in
the event the Executive obtains new employment during any period that the
Employer is obligated to provide hospital, health, medical and life insurance
benefits hereunder and such new employment provides for hospital, health, medical
and life insurance benefits in a manner substantially similar to the benefits
to be provided by Employer hereunder, Employer may permanently terminate the
duplicative benefits it is obligated to provide hereunder.  In the event Executive becomes entitled to
receive the amount due under this paragraph (e), the unvested stock options or
unvested awards of Unity common stock previously granted to Executive shall
accelerate and become fully vested on the date of Executive’s termination of
employment. It is hereby understood and agreed that payments that may become
due to the Executive under this sub-paragraph (e) shall be in lieu of, and not
in addition to, any payments Executive may be entitled to under Section 5(b) or
(c) hereof.

 

5

 

(f)            Notwithstanding
anything contained in this Section 6 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.

 

7.             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 regard to the subject matter contained herein
and supersedes any and all prior agreements, arrangements or understandings
relating to the subject matter hereof, and may only be amended by written
agreement signed by both arties 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 Retention Agreement. Upon the execution of this Agreement, the
Retention Agreement dated February 26, 2002 by and between the Executive and
the Employer shall be determined terminated and voided and the rights of the
parties hereto shall be determined by reference to this Agreement.

 

(f)            Legal
Representation. The Executive hereby acknowledges that this
Agreement has been prepared by Messrs. McCarter & English, LLP as legal
counsel for the Bank and Unity and that the Executive was given the opportunity
to consult with his own independent legal counsel regarding this Agreement
prior to his execution of this Agreement.

 

(g)           Assignability.
Neither this Agreement nor the rights or obligations of Executive hereunder may
be assigned, whether by operation of law or otherwise.

 

(h)           Waiver.
The waiver by Employer or the Executive of a breach of any provision of this
Agreement by the other shall not operate or be construed as a waiver of any subsequent
or other breach hereof.

 

6

 

(i)            Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original but all of which taken together shall constitute one and
the same instrument.

 

(j)            Severability.
If any provision of this Agreement shall be held invalid or unenforceable, such
invalidity or unenforceability shall attach only to such provision, only to the
extent it is invalid or unenforceable, and shall not in any manner affect or
render invalid or unenforceable any other severable provision of this
Agreement, and this Agreement shall be carried out as if any such invalid or
unenforceable provision were not contained herein.

 

(k)           Section
Headings. The headings contained in this Agreement are solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.

 

(l)            Fees and
Expenses. If any party to this Agreement institutes any action or
proceeding to enforce this Agreement, the prevailing party in such action or
proceeding shall be entitled to recover from the non-prevailing party all legal
costs and expenses incurred by the prevailing party in such action, including,
but not limited to, reasonable attorney’s fees and other reasonable legal costs
and expenses.

 

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

 

 

	
  ATTEST:

  	
   

  	
  UNITY BANK

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ David D.
  Dallas

  	
   

  
	
   

  	
   

  	
   

  	
  David D.
  Dallas, Chairman of the Board

  
	
   

  	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  UNITY BANCORP, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ David D.
  Dallas

  	
   

  
	
   

  	
   

  	
   

  	
  David D.
  Dallas, Chairman of the Board

  
	
   

  	
   

  	
   

  	
   

  
	
  WITNESS:

  	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ James A.
  Hughes

  	
   

  
	
   

  	
   

  	
  James A.
  Hughes

  

 

7

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