CENTER BANCORP INC
WILLIAM E. ARNOLD EMPLOYMENT AGREEMENT
<DOCUMENT>
<TYPE>EX-10.9
<SEQUENCE>4
<FILENAME>b316764_ex10-9.txt
<DESCRIPTION>WILLIAM E. ARNOLD EMPLOYMENT AGREEMENT
<TEXT>
<PAGE>

                                   AGREEMENT

                  THIS AGREEMENT ("Agreement"), dated as of January 1, 2002, 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 WILLIAM E. ARNOLD
("Employee"),

                              W I T N E S S E T H:

                  WHEREAS, the Company, the Bank and the Employee desire to
enter into an employment agreement providing for the Employee's employment by
the Company and the Bank;

                  WHEREAS, the Bank and/or the Company have adopted certain
benefit plans, including the following plans: (i) an Achievement Incentive Plan
(as it may be amended from time to time, the "AIP"), (ii) a split dollar
insurance plan (as it may be amended from time to time, the "SDIP") and (iii) a
401(k) Savings Plan (as it may be amended from time to time, the "401(k)Plan"
and, together with the AIP and the SDIP, the "Plans");

                  WHEREAS, it is understood that the Company shall remain fully
liable hereunder, regardless of the extent to which the Bank is liable
hereunder; and

                  WHEREAS, the Bank and the Company desire to employ Employee to
devote full time to the business of the Bank and the Company, and Employee
desires to be so employed,

                  NOW, THEREFORE, in consideration of the mutual covenants set
forth herein, the parties hereto hereby agree as follows:

                  1. Employment. Bank and the Company agree to employ Employee,
and Employee agrees to be so employed, in the capacity of Senior Vice President
of the Bank and Vice President of the Company. Except as otherwise provided in
the next sentence of this Section 1, employment shall be for a term of three (3)
years, effective as of January 1, 2002 and terminating December 31, 2004 (the
"Initial Term"). Notwithstanding the foregoing, this Agreement shall
automatically be extended (i) at the end of the Initial Term, for successive one
year renewal terms unless, at least two years 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 (ii) if a "Change in Control Event" (as
defined in Section 8(a) hereof) occurs at any time during the Initial Term or
during any such renewal term, for a period of three years from the date of such
Change in Control Event. It is understood that the effect of the immediately
preceding sentence is to assure Employee that in the event that he receives
notice of termination of employment pursuant to Section 8(a) hereunder, he will
be entitled to severance benefits covering at least two full years of employment
in the absence of a Change in Control Event or covering at least three full
years of employment in the case of a Change in Control Event.


<PAGE>

         2. Time and Efforts. Employee shall diligently and conscientiously
devote his full and exclusive time and attention and best efforts in discharging
his duties as a Senior Vice President of the Bank and as a Vice President of the
Company.

         3. Board of Directors. Employee shall at all times discharge his duties
in consultation with and under the supervision of the President and the Boards
of Directors of the Bank and the Company. In the performance of his duties,
Employee shall make his principal office in such place as the President of the
Bank and the Company and Employee may from time to time mutually agree.

         4. Compensation.

         (a) Salary-Initial Period. During the period from January 1, 2002
through December 31, 2002 (the "Initial Period"), Employee shall receive,
pursuant to the determination of the Executive Compensation Committee of the
Bank's Board of Directors (the "Executive Compensation Committee"), as
compensation for his services hereunder, a salary at the rate of one hundred and
five thousand dollars ($105,000) per annum. This amount shall be paid in twenty
four (24) equal semi-monthly installments on the 15th and 30th day of each
month, or as near thereto as practicable.

         (b) Salary-Subsequent Years. During each twelve month period following
the Initial Period, Employee shall receive, as compensation for his services,
his salary set forth for the immediately preceding twelve month period plus such
salary increment as shall be determined by the Executive Compensation Committee,
with reference to the Bank's salary guide. During each such twelve month period,
Employee's salary shall be paid in twenty-four (24) equal semimonthly
installments on the 15th and 30th day of each month, or as near thereto as
practicable.

         (c) Bonuses. Employee shall be entitled to participate in the AIP and
shall receive incentive compensation in accordance with the terms of the AIP. In
the event that the AIP is terminated, Employee shall receive such incentive
compensation as shall be awarded to him by the Executive Compensation Committee.

         5. Expenses; Benefits.

         (a) Reimbursement. The Bank and the Company shall reimburse Employee
for all reasonable and necessary expenses incurred in carrying out his duties
under this Agreement. Employee shall either (i) present to the Bank from time to
time an itemized account of such expenses in any form reasonably required by the
Bank and the Company for reimbursement; or (ii) post such expenses to a credit
card or other payment means issued to Employee by the Bank and the Company.

         (b) Automobile. The Bank and the Company recognize the Employee's need
for an automobile for business purposes. The Bank and the Company, therefore,
shall provide (without expense to Employee) the Employee with an automobile,
including all related maintenance, repairs, insurance, and other costs, for
business and personal use and shall reimburse


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the Employee for all taxes payable by him as a result of the provision of this
benefit to the Employee. The automobile shall be the automobile last provided to
the Employee and the related costs shall be comparable to those which the Bank
provided to the Employee during the last six months of 2001.

         (c) Miscellaneous Benefits. The Bank and the Company shall provide
Employee with all benefits that are generally provided to officers of the Bank
and/or the Company, other than the President.

         6. Health Insurance; Life Insurance; Disability Insurance; Pension; and
Other Plans. The Bank and the Company shall provide Employee with life
insurance, disability insurance, health insurance, pension benefits and benefits
under the SDIP and the 401(k) Plan to the extent that such benefits are provided
to Employee on the date hereof, together with any benefit enhancements that may
be added to such plans in the future. The monetary amount of such benefits
received by Employee shall be in accordance with the terms and conditions of
such plans.

         7. Vacation. Employee shall receive annual vacations in conformity with
Bank and Company policies on vacations.

         8. Termination by the Bank Without Cause or by the Employee With and
Without Good Reason; Death.

         (a) The Bank and the Company may, without "Cause" (as defined herein),
terminate this Agreement at any time by giving 30 days' written notice to the
Employee. In such event, (i) the Employee, if requested by either the Bank or
the Company, shall continue to render services, and regardless of whether such
request is made, shall be paid his regular compensation and shall continue to
participate in all benefit plans of the Company and the Bank, up to the date of
termination, (ii) the Employee shall be paid in a single sum, on the date of
termination, a severance allowance equal to Employee's regular compensation for
the duration of the term of this Agreement, as theretofore renewed pursuant to
Section 1 hereof, less all amounts required to be withheld and deducted, (iii)
the Employee shall be paid in a single sum, on the date of termination, an
amount equal to the largest annual benefit received by Employee under the AIP
since the commencement of the AIP (the "Largest Bonus") multiplied by the number
of years (rounded to the nearest tenth of a year) remaining in the term of this
Agreement, as theretofore renewed pursuant to Section 1 hereof; (iv) the
Employee shall be entitled to receive, during the period commencing on the date
of termination and ending on the last day of the term (as theretofore renewed
pursuant to Section 1 hereof) (the "Extension Period"), the same benefits (or
the economic equivalent thereof) that he would have received under the SDIP, the
401(k) Plan and the other benefit plans described in Section 6 hereof had he
remained employed by the Bank during the Extension Period (assuming a salary
equal to the salary in effect on the date of termination and an annual incentive
under the AIP equal to the Largest Bonus), (v) the Bank and the Company shall
fund the obligations set forth in the immediately preceding clause (iv) and (vi)
all stock options granted to Employee by the Company shall be exercisable in
full, effective as of the date of termination.


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         (b) The Employee shall have the right to resign (and thereby terminate
this Agreement) with "Good Reason" (as defined herein) by delivering notice of
such resignation to the Bank and the Company at least 30 days prior to the
effective date of such resignation. If, prior to the expiration of the term
hereof (as theretofore renewed pursuant to Section 1 hereof), the Employee shall
resign for Good Reason, the Employee shall be entitled to the same benefits that
he would have received pursuant to Section 8(a) hereof had his employment been
terminated (on the effective date of such resignation) by the Bank or the
Company without Cause.

         (c) The Employee shall have no obligation to seek substitute employment
or otherwise mitigate the Company's obligation to make the payments and provide
the benefits described in Sections 8(a) and 8(b) hereof; provided, however, that
in the event that (i) Employee's employment terminates prior to a Change in
Control Event and (ii) Employee obtains other employment, then the salary and
benefits which he actually receives pursuant to such other employment shall be
offset against the Employer's obligations hereunder.

         (d) For purposes of this Agreement, the term "Good Reason" shall mean a
resignation by the Employee within 180 days after (i) a materially adverse
change in the Employee's duties or title, (ii) a material breach of this
Agreement by the Bank or the Company, (iii) 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 (iv) a
change in the composition of the Board of Directors of the Company such that the
"Continuing Directors" (as defined herein) no longer constitute a majority of
the Board (the events referred to in clauses "iii" and "iv" being referred to
herein as "Change in Control Events"). For purposes of this Agreement, the term
"Continuing Director" 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.

         (e) The Employee may, without Good Reason, terminate this Agreement by
giving 60 days' written notice to the Bank and the Company. In such event, the
Employee shall continue to render his services, shall be paid his regular
compensation and shall continue to participate in all benefit plans of the
Company and the Bank up to the date of termination, but he shall not receive any
severance allowance pursuant to this Agreement.

         (f) In the event that the Employee dies during the term of this
Agreement as theretofore renewed pursuant to Section 1 hereof, this Agreement
shall terminate as of the date of his death, subject to the obligations of the
Company and the Bank that have accrued through the date of death and subject to
the terms of all applicable benefit plans (including insurance plans)
implemented by the Bank and the Company.

         9. Termination with Cause.

         (a) The Bank and Company may terminate this Agreement for "Cause" by
giving Employee 30 days' written notice. In such event, the Bank and the Company
shall pay Employee his compensation, and Employee shall continue to participate
in all benefit plans of the


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Company and the Bank, up to the date of termination, but the Bank and the
Company shall not be required to provide the Employee with any severance
allowance pursuant to this Agreement. For purposes of this Agreement, "Cause"
shall consist of the following:

         (i)      disloyal, dishonest or felonious conduct of Employee that
                  materially adversely affects the Bank or the Company; or

         (ii)     termination of the Bank's business due to unprofitability,
                  insolvency, bankruptcy or directive by governmental
                  regulators.

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) Notwithstanding the foregoing, in the event that termination is
intended as a result of alleged disloyal or dishonest conduct, the Boards of
Directors of the Bank and the Company shall give the Employee written notice of
the occurrence of (and the facts and circumstances surrounding) the acts
allegedly constituting "Cause" and a fair opportunity to present his position to
such Boards. Such event shall not constitute "Cause" if, no later than ten (10)
business days following Employee's receipt of such notice, the Employee
establishes that either the alleged acts did not occur, that such acts did not
constitute dishonest or disloyal conduct, that such acts did not materially
adversely affect the Company and the Bank or that such acts have been fully
corrected and shall not be repeated.

         10. Notices. All notices required or permitted to be given under this
Agreement shall be given by certified mail, return receipt requested, to the
parties at the following addresses, or to such other addresses as either may
designate in writing to the other party:



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                If to the Bank or the Company:

                Union Center National Bank
                2455 Morris Avenue
                Union, New Jersey 07083
                Attention: President

                If to Employee:

                William E. Arnold
                c/o Union Center National Bank
                2455 Morris Avenue
                Union, New Jersey 07083

         11. Indemnification; Liability. Employee shall be indemnified by the
Bank and the Company to the maximum extent permitted by law (and shall be
entitled to receive advances to the maximum extent permitted by law) with
respect to all actions and all decisions not to act taken by Employee during the
term of this Agreement. The Bank and Company shall be jointly and severally
liable under this Agreement with respect to all obligations of either such party
hereunder. Any defense available to the Bank that this Agreement is not
enforceable against it shall not constitute a defense for the Company. The
obligations of this Section 11 shall survive termination of this Agreement with
respect to acts or omissions occurring prior to such termination.

         12. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of New Jersey.

         13. Entire Contract. This Agreement constitutes the entire
understanding and agreement among the Bank, the Company and Employee with regard
to all matters set forth herein. There are no other agreements, conditions or
representations, oral or written, express or implied, with regard thereto. This
Agreement may be amended only in writing, signed by all parties.

         14. Non-Waiver. A delay or failure by any party to exercise a right
under this Agreement, or a partial or single exercise of that right, shall not
constitute a waiver of that or any other right.

         15. Headings. Headings in this Agreement are for convenience only and
shall not be used to interpret or construe its provisions.

         16. 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


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provision) of the Internal Revenue Code of 1986, as amended ("Section 4999"),
the Company and the Bank, within 30 days thereafter, shall pay to Employee, 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 16) 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 280G and 4999 not been
part of the Internal Revenue Code of 1986, as amended.

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

         18. Binding Effect. The provisions of this Agreement shall be binding
upon and inure to the benefit of both parties and their respective successors
and assigns.

                  IN WITNESS WHEREOF, the Bank and the Company each have, by its
appropriate officers, signed and affixed its seal and Employee has signed and
sealed this Agreement.

                                             UNION CENTER NATIONAL BANK


                                             By: /s/ John J. Davis
                                                ---------------------------
                                                 John J. Davis, President



                                             CENTER BANCORP INC.




                                             By: /s/ John J. Davis
                                                ---------------------------
                                                 John J. Davis, President



                                                  /s/  William E. Arnold
                                                ---------------------------
                                                  William E. Arnold


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