RELEASE, COVENANT NOT TO XXX,
NON-DISCLOSURE AND NON-SOLICITATION
AGREEMENT
This RELEASE, COVENANT NOT TO XXX, NON-DISCLOSURE AND NON- SOLICITATION
AGREEMENT (the "AGREEMENT") dated as of April 18, 2000 among (1) Xxxxxx X. Xxx
("Executive"), and (2) Summit Bancorp. and all parent and subsidiary
corporations, partnerships and other entities and affiliates controlled by,
controlling or under common control with Summit Bancorp. (together with any
predecessor and successor entities hereinafter being collectively referred to as
"SUB") sets forth the agreements of the parties hereto with regard to the
matters set forth herein:
1. Background. Executive is an Executive of SUB and a party to a Participation
Agreement last amended October 15, 1997 pursuant to which Executive
participates in SUB's Executive Severance Plan (the "Plan") and a
Termination Agreement last amended October 15, 1997 and an Employment
Agreement dated as of March 1, 1996, as amended by Amendment No. 1 dated as
of March 1, 1999 (the Plan and these Agreements together being collectively
referred to as the "Contracts"). Any capitalized terms used but not defined
herein shall have the meaning set forth in the applicable Contract.
a. A Change of Control has NOT occurred. If a Change of Control has NOT
occurred, Executive is not entitled to any benefits under the
Termination Agreement.
b. Executive's employment with SUB has terminated on April 30, 2000,
which shall be the Date of Termination for purposes of the Contracts,
notwithstanding any failure to adhere to the provisions for giving a
Notice of Termination and the method of determining the Date of
Termination set forth in the Contracts, any such failures being hereby
waived by the parties.
c. This termination shall constitute a termination "by retirement" for
purposes of any stock options and restricted stock which Executive
holds, and the Termination Date shall be the termination date for the
purposes of such options. Attached hereto as Appendix A is a list of
all outstanding SUB options held by Executive on the date hereof, and
the last date for exercise of each, subject to the subsequent death or
disability of the Executive.
2. Payments.
a. Executive shall receive within two business days following the
EFFECTIVE DATE (as defined in paragraph 7 hereof) $1,999,300, the
gross amount due to Executive under the Contracts, which shall be paid
to Executive by check or deposit in Executive's bank account, less
amounts withheld in respect of federal, state and local taxes and
benefits contributions, which Executive acknowledges represents all
amounts currently due Executive under the Contracts. Executive
acknowledges and agrees that Executive is not entitled to any
severance payments under any other contract or severance program of
SUB, the Contracts and this Agreement being intended
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to substitute for any such other severance program. SUB continues to
be obligated to provide certain welfare and pension benefits and
perquisites, as more fully set forth herein and in the Contracts.
Executive has been provided with a summary of these benefits, but, in
the event of any conflict between the terms of (1) this Agreement
versus the Contracts, this Agreement will govern, or (2) this
Agreement and the Contracts and SUB's various benefits plans versus
the summary, this Agreement and the Contracts and benefits plans will
govern. SUB will also pay Executive's reasonable legal expenses for
review of this Agreement.
b. Subject to any applicable withholding obligations, Executive shall
receive a total monthly pension of $45,200 during his lifetime based
on Executive's binding election under all pension plans and contracts
of the "qualified joint and survivor annuity" (as defined in Section
4.01(a) of the Summit Bancorp Retirement Plan for Executive for a
married person as "an annuity for the life of the Participant with a
survivor annuity for the life of his spouse which is fifty percent
(50%) of the amount of the annuity payable during the joint lives of
the Participant and his spouse and which is the Actuarial Equivalent
of a single annuity for the life of the Participant"). Executive's
spouse shall receive a total monthly pension of $22,600 after the
death of Executive for the balance of her lifetime if she survives
him. Pension payments shall be coincident in time and form with the
benefits paid to, or on behalf of, Executive or a beneficiary by the
Summit Bancorp Retirement Plan, and shall be inclusive of all payments
under all past and present defined benefit retirement plans (which may
include qualified, non-qualified, supplemental and excess benefits
plans ), previously or presently maintained by SUB and any
predecessor, and under the Contracts. The monthly pension benefit
payable to the Executive or Executive's spouse and the "alternate
payee," as defined in Section 17.02(f) of the Summit Bancorp
Retirement Plan as a former spouse who is recognized in a domestic
relations order, under this subparagraph shall, in the aggregate,
equal the difference between (1) $45,200 per month during the
Executive's lifetime and $22,600 during the life of the surviving
spouse based on the "qualified joint and survivor annuity," less (2)
the monthly retirement benefits that are payable to the Executive or
the Executive's spouse and "alternate payee" under all retirement
plans and other employment contracts of SUB in which the Executive
participates (the "Special Retirement Benefits"). These Special
Retirement Benefits are provided on an unfunded basis, are not
intended to meet the qualification requirements of Section 401 of the
Internal Revenue Code of 1986, as amended (the "Code"), and shall be
payable solely from the general assets of SUB.
c. Executive shall receive a grant of 5,000 shares of incentive stock
under the SUB 1993 Incentive Stock and Option Plan, effective February
29, 2000, which shares will vest on the Termination Date due to
Executive's retirement.
d. Executive's non-qualified options granted under the former 1994 The
Summit Bancorporation Stock Incentive Plan as noted on Appendix A
which are currently outstanding and exercisable shall be exercisable
until the earlier of the expiration of such options or April 30, 2003,
subject to the subsequent death or disability of the Executive.
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3. Restrictive Covenants. In consideration of the payments to Executive as
specified in paragraph 2 above, Executive agrees as follows:
a. Non-Solicitation of SUB Customers. For a period of two (2) years from
the date hereof, Executive will not actively solicit or induce any
person, corporation, or other entity that is a customer of SUB to
become a customer of any other person, firm, corporation, or other
entity which directly or indirectly competes with SUB, or approach any
such person, firm, corporation, or other entity for such purpose or
authorize or knowingly approve the taking of such actions by other
persons, without the prior written consent of SUB. This shall not be
deemed to prohibit (i) responding to requests for service initiated by
customers of SUB, (ii) solicitation of the public at large through
television, radio, newspapers, magazines, newsletters or Internet home
pages, or (iii) resolicitation by the competitor of persons, firms,
corporations or other entities who were customers of both SUB and the
competitor on the date hereof for those services provided to the
customer by the competitor on the date hereof.
b. Non-Solicitation of SUB Employees. For a period of five (5) years from
the date hereof, Executive will not solicit or induce any person who
is an employee of SUB or was such at any time within three months
prior to the date hereof to become employed by any other person, firm
or corporation or approach any such employee for such purpose or
authorize or knowingly approve the taking of such actions by other
persons, without the prior written consent of SUB.
c. Non-Disclosure of Proprietary Information. Executive acknowledges that
during the course of Executive's employment with SUB Executive
received, obtained or became aware of or had access to proprietary
information, lists and records of customers and trade secrets which
are the property of SUB and which are not known by competitors or
generally by the public ("Proprietary Information") and recognizes
such Proprietary Information to be valuable and unique assets of SUB.
For purposes of this subparagraph: (i) Proprietary Information is
deemed to include, without limitation, (A) marketing materials,
marketing manuals, policy manuals, procedure manuals, policy and
procedure manuals, operating manuals and procedures and product
documentation, (B) all information about pricing, products,
procedures, practices, business methods, systems, plans, strategies or
personnel of SUB, (C) circumstances surrounding the relationships
with, knowledge of, or information about the customers, clients, and
accounts of SUB, including but not limited to the identity of current
active customers or prospects who have been contacted by SUB, the
expiration dates and other terms of loans or deposit or other banking
relationships, details or special product provisions or special
combinations of products, or special prices, and (D) all other
information about SUB which has not been disclosed in documents filed
with the U.S. Securities and Exchange Commission or otherwise publicly
disseminated by SUB, whether or not that information is recorded and
notwithstanding the method of recordation, if any; and (ii)
Proprietary Information is deemed to exclude all information legally
in the public domain. Executive agrees to hold the Proprietary
Information in the strictest confidence and agrees not to use or
disclose any Proprietary Information, directly or indirectly, at any
time for any purpose, without the prior written consent of SUB or to
use
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for Executive's benefit or the benefit of any person, firm,
corporation or other entity (other than SUB), any Proprietary
Information, and to use Executive's best efforts to prevent such
prohibited use or disclosure by any other persons. Executive has
returned all Proprietary Information in Executive's possession or
control to SUB. In the event that Executive is required or compelled
by judicial or investigative process to disclose Proprietary
Information, such disclosure shall be permitted, provided that
Executive shall promptly notify SUB upon receipt of such process in
order to afford SUB the opportunity to obtain an appropriate
protective order concerning the Proprietary Information, and Executive
agrees to cooperate with SUB in the event that SUB seeks such a
protective order.
d. Covenant Not to Compete. The parties recognize that the Executive was
an important officer of SUB, that Executive's reputation and business
and personal relationships were of significant benefit to SUB, and
that Executive had access to information about SUB's plans and
projections as well as other confidential information. The parties
further agree that SUB is in direct competition with certain banks and
bank holding companies and thrifts and the Executive agrees that
Executive will not, for a period of two (2) years from the date
hereof, accept employment or serve in any capacity with any national
or state bank or a thrift institution (collectively "depository
institution") or any affiliate thereof (which affiliate is engaged in
a business competitive with SUB's existing businesses), other than
SUB, at a principal place of employment within 25 miles of any
existing branch location of SUB or any of its existing subsidiaries,
without the written permission of SUB, except that Executive may serve
as a director but not as an employee or in an other active capacity of
an affiliate of a depository institution or institutions having
deposits in the aggregate of not more than $500 million at the time of
commencement of service.
e. Cooperation, No Detrimental Actions. Executive will cooperate with SUB
in enforcing its claims against customers and former customers of SUB,
including appearing as a witness for SUB in court or administrative
proceedings, subject to reasonable reimbursement for Executive's time
and expenses. Executive will not take actions or make disparaging
statements which are detrimental to SUB or the RELEASEES, as defined
in paragraph 5 below.
f. Remedies. Executive hereby acknowledges that Executive's duties and
responsibilities under this paragraph 3 are unique and extraordinary
and that irreparable injury may result to SUB in the event of a breach
of the terms and conditions of this paragraph 3, which may be
difficult to ascertain, and that the award of damages would not be
adequate relief to SUB and the RELEASEES. Executive therefore agrees
that in the event of Executive's breach of any of the terms or
conditions of this paragraph 3, SUB shall have the right, without
posting any bond or other security, to preliminary and permanent
injunctive relief as well as damages and an equitable accounting of
all earnings, profits and other benefits arising from such violation,
which rights shall be cumulative and in addition to any other rights
or remedies in law or equity to which SUB may be entitled against
Executive. The covenants of Executive in paragraphs 3a, 3b, 3c, 3d and
3e of this Agreement shall each be construed as an agreement
independent of any other provision in this AGREEMENT, and the
existence of any claim or cause of action of Executive against SUB,
whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by SUB of paragraphs 3a, 3b,
3c, 3d and 3e.
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g. Enforcement. If at the time of the enforcement of subparagraphs 0x,
0x, 0x, 0x, 0x xx 0x above a court shall hold that the period or scope
of the provisions thereof are unreasonable under the circumstances
then existing, the parties hereby agree that the maximum period or
scope permitted by the court under the circumstances shall be
substituted for the period or scope stated in those subparagraphs.
4. Short-Swing Securities Profits. Executive acknowledges that Executive will
remain subject to the short-swing liability provisions of Section 16 of the
federal Securities Exchange Act of 1934 for six months following
termination of employment.
5. Release. In consideration of the payments to Executive as specified in
paragraph 2 above, Executive grants SUB a RELEASE of only all claims, both
known and unknown, that Executive may have that relate to the termination
of Executive's employment (hereafter a "WRONGFUL TERMINATION CLAIM"). The
Executive and SUB agree that a WRONGFUL TERMINATION CLAIM, specifically and
without limitation, does not include claims:
a. for indemnification as a corporate agent of SUB against claims by
third parties;
b. under employee benefit plans, including supplemental employee
retirement plans, maintained by SUB or any of the predecessor
organizations thereof, including but not limited to rights under any
workers compensation program, Section 502(a) of the Employee
Retirement Income Security Act, as amended, 29 U.S.C.ss.1001 et seq.,
and under the Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA");
c. arising out of enforcement of the Contracts or this Agreement by
Executive; or
d. constituting cross-claims against SUB as a result of claims brought by
unaffiliated third parties against Executive based on Executive's
service as an executive of SUB.
The statutes which could form the basis for a WRONGFUL TERMINATION
CLAIM include, but are not limited to, Title VII of the Civil Rights
Act of 1964, as amended, 42 U.S.C.ss.1971 et seq.; the Age
Discrimination in Employment Act of 1967, as amended, 29 U.S.C.ss.621
et seq.; Section 510 of the Employee Retirement Income Security Act of
1974, as amended, 29 U.S.C.ss.1001 et seq.; the Americans With
Disabilities Act, as amended, 42 U.S.C.ss.12101 et seq.; the Older
Workers Benefit Protection Act, as amended, 29 U.S.C.ss.621 et seq.;
the Civil Rights Act of 1866, as amended, 42 U.S.C.ss.1981 et seq.;
the New Jersey Law Against Discrimination, as amended, N.J.S.A. 10:5-1
et seq.; the New Jersey Conscientious Employee Protection Act, as
amended, N.J.S.A. 34:19-1 et seq.; the New York Human Rights Law,
Executive Lawss.290 et seq.; the Pennsylvania Human Relations Act, as
amended, 43 P.S.ss.951 et seq.; and the Pennsylvania Whistleblower
Law, as amended, 43 P.S.ss.1421 et seq. The common law (non-
statutory) theories under which a WRONGFUL TERMINATION CLAIM could be
made include, but are not limited to, breach of an express employment
contract, breach of a contract implied from a personnel handbook or
manual, or commission of a civil wrong (known as a "tort") resulting
in Executive's termination, or for alleged violation of the public
policy of the United States or any state. Granting a RELEASE of any
WRONGFUL TERMINATION CLAIM pursuant to this AGREEMENT means that on
behalf of Executive and all who succeed to
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Executive's rights and responsibilities, Executive releases and gives
up only any and all WRONGFUL TERMINATION CLAIMS that Executive may
have against SUB, and any of its subsidiaries, affiliates or
divisions, and all of their directors, officers, representatives,
shareholders, agents, employees, and all who succeed to their rights
and responsibilities (collectively referred to as "RELEASEES"). With
respect to any charges filed concerning events or actions relating to
a WRONGFUL TERMINATION CLAIM that occurred on or before the date of
this AGREEMENT or Executive's Termination Date (whichever is later),
Executive waives and releases any right that Executive may have to
recover in any lawsuit or proceeding brought by Executive or by an
administrative agency on Executive's behalf against the RELEASEES.
Nothing contained herein shall diminish Executive's rights under the
law, SUB's by-laws, or any contract of insurance to indemnification
and advancement of defense costs respecting liabilities and expenses
arising in connection with actions performed by Executive as a
corporate agent for SUB.
6. Covenant Not to Xxx. Executive covenants not to xxx the RELEASEES over any
WRONGFUL TERMINATION CLAIM. Such a covenant not to xxx the RELEASEES means
that Executive represents that Executive has not through the date of
execution of this Agreement filed a WRONGFUL TERMINATION CLAIM, charge or
lawsuit with any court or government agency against the RELEASEES, and that
Executive will not file such a lawsuit subsequent to execution of this
Agreement. Executive also waives any right to become, and promises not to
become, a member of any class in a case in which WRONGFUL TERMINATION
CLAIMS are asserted against any of the RELEASEES.
7. Review Period. Executive acknowledges that Executive has up to 21 days to
review this AGREEMENT, and was advised to review it with an attorney of
Executive's choice. Executive also acknowledges that Executive was further
advised that Executive has seven days after Executive signs this AGREEMENT
to revoke it by notifying SUB in writing, of such revocation as set forth
under Notices below. This AGREEMENT shall become effective on the tenth
(10th) day following its execution by Executive (the "EFFECTIVE DATE"),
unless revoked in accordance with the preceding sentence.
8. Revocation of Authority. Executive agrees and acknowledges that as of the
Termination Date Executive shall no longer be empowered to bind SUB in any
agreement, whether verbal or written, and that Executive shall have no
authority to execute any documents, deeds, leases, or other contracts on
behalf of SUB. To the extent not effected by termination of Executive under
the Contracts, Executive resigns from all offices and positions with SUB.
9. Successors and Assigns. All rights and duties of SUB under this Agreement
shall be binding on and inure to the benefit of SUB, its successors and
assigns. All rights of Executive hereunder shall be binding upon and inure
to the benefit of Executive's personal or legal representatives.
10. Notices. All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if
delivered personally with receipt acknowledged or sent by registered or
certified mail, postage prepaid or by reputable national overnight delivery
service, to the addresses shown below, unless changed by notices given as
herein provided, except that notice of change of address only shall be
effective upon actual receipt:
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If to SUB, to:
Summit Bancorp.
000 Xxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: Executive Vice President
of Human Resources
With a copy to:
Summit Bancorp.
000 Xxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: General Counsel
If to the Executive, to:
Xx. Xxxxxx X. Xxx
000 Xxxxxxx Xxxxxx Xxxx
Xxx Xxxxx, Xxx Xxxxxx 00000
With a copy to:
Xxxx X. Xxxxx, Esquire
Bourne, Xxxx & Xxxxxx
000 Xxxxxxxxxxx Xxxxxx, X.X. Xxx 000
Xxxxxx, Xxx Xxxxxx 00000-0000
11. Covenant Not to Challenge Enforceability. Both Executive and SUB understand
that this AGREEMENT is final and binding when executed by both parties,
subject to paragraph 7 above, and both agree not to thereafter challenge
its enforceability.
12. Applicable Law. This AGREEMENT shall be deemed to have been made within the
State of New Jersey, and it shall be interpreted, construed, and enforced
in accordance with the law of the State of New Jersey, and before the
Courts of the State of New Jersey.
13. Amendments, Modifications, Waivers. This AGREEMENT cannot be amended or
modified except by a written document signed by both SUB and Executive and
no provision can be waived except by a written document signed by the
waiving party.
14. By signing this AGREEMENT, Executive acknowledges:
a. EXECUTIVE HAS READ THIS AGREEMENT COMPLETELY.
b. EXECUTIVE HAS HAD AN OPPORTUNITY TO CONSIDER THE TERMS OF THIS
AGREEMENT.
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c. EXECUTIVE HAS BEEN ADVISED TO CONSULT WITH AN ATTORNEY OF EXECUTIVE'S
CHOOSING PRIOR TO EXECUTING THIS AGREEMENT.
d. EXECUTIVE KNOWS THAT EXECUTIVE MAY BE GIVING UP IMPORTANT LEGAL RIGHTS
BY SIGNING THIS AGREEMENT.
e. EXECUTIVE UNDERSTANDS AND MEANS EVERYTHING THAT EXECUTIVE HAS SAID IN
THIS AGREEMENT, AND EXECUTIVE AGREES TO ALL ITS TERMS.
f. EXECUTIVE IS NOT RELYING ON SUB OR ANY REPRESENTATIVE OF SUB TO
EXPLAIN THIS AGREEMENT AND RELEASE TO EXECUTIVE. EXECUTIVE HAS HAD AN
OPPORTUNITY TO CONSULT AN ATTORNEY OR OTHER ADVISOR TO EXPLAIN THIS
AGREEMENT AND ITS CONSEQUENCES TO EXECUTIVE BEFORE EXECUTIVE SIGNED
IT, AND EXECUTIVE HAS AVAILED HIMSELF OR HERSELF OF THIS OPPORTUNITY
TO WHATEVER EXTENT EXECUTIVE DESIRED.
g. EXECUTIVE HAS SIGNED THIS AGREEMENT VOLUNTARILY AND ENTIRELY OF
EXECUTIVE'S OWN FREE WILL, WITHOUT ANY PRESSURE FROM SUB OR ANY
REPRESENTATIVE OF SUB, OR ANYONE ELSE.
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IN WITNESS WHEREOF, and intending to be legally bound hereby,
this Agreement has been executed as of the day and year first above written.
ATTEST: SUMMIT BANCORP.
/s/ Xxxxxxx X. Xxxx, Xx. By: /s/ Xxxxxx X. D'Augusta
Secretary Executive Vice President
/s/ Xxxxxx X. Xxx
EXECUTIVE: Xxxxxx X. Xxx
STATE OF NEW JERSEY:
COUNTY OF UNION:
I certify that on this 18th day of April, 2000 personally came before
me Xxxxxx X. Xxx (Executive), who, being duly sworn, acknowledged under oath to
my satisfaction that such person is named in and personally executed the
foregoing Receipt and Release as such person's voluntary act and deed, for the
purposes set forth therein.
IN WITNESS WHEREOF, I have set my hand this 18th day of April, 2000.
By: /s/ Xxxxxxx Xxxxxxx
Notary Public of the State of New Jersey
My Commission expires February 3, 0000
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Xxxxxxxx A
===============================================================================
Closing Statement
Summit Bancorp.
ID: 00-0000000
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Retirement Date: 4/30/2000
Xxxxxx X. Xxx
000 Xxxxxxx Xxxxxx Xxxx
Xxx Xxxxx, XX 00000
===============================================================================
Exercisable Options
Vesting Last
Option Option Plan/ Option Shares Shares Stop Shares Date to
Number Date Type Price Granted Exercised Date Exercisable Total Price Exercise
-----------------------------------------------------------------------------------------------------------------------
CM000283 12/18/1984 SUMM/NS $6.9400 42,267 42,267 4/30/2000 0 $0.00
CM000285 3/13/1986 SUMM/NS $12.5800 14,557 14,557 4/30/2000 0 $0.00
CM000289 6/29/1988 SUMM/NS $13.2445 11,953 11,953 4/30/2000 0 $0.00
CM000291 3/2/1989 SUMM/NS $13.8889 11,137 11,137 4/30/2000 0 $0.00
CM000293 12/21/1989 SUMM/NS $10.9407 11,137 11,137 4/30/2000 0 $0.00
CM000295 3/6/1991 SUMM/NS $7.2371 29,700 29,700 4/30/2000 0 $0.00
CM000298 3/10/1992 SUMM/NS $10.1037 35,640 35,640 4/30/2000 0 $0.00
CM000300 3/9/1993 SUMM/NS $14.4815 26,730 0 4/30/2000 26,730 $387,090.50 3/9/2003
CM000301 3/8/1994 SUMM/NS $13.2963 22,275 0 4/30/2000 22,275 $296,175.08 4/30/2003
CM000304 1/17/1995 SUMM/NS $14.3519 64,665 0 4/30/2000 64,665 $928,065.61 4/30/2003
CM000305 1/17/1995 SUMI/IS $14.3519 6,885 6,885 4/30/2000 0 $0.00
CM000307 2/20/1996 SUMM/NS $26.0185 82,755 0 4/30/2000 82,755 $2,153,160.97 4/30/2003
ES004242 1/24/1997 1993/NQ $29.4167 95,625 0 4/30/2000 95,625 $2,812,971.94 4/30/2003
00000138 1/23/1998 1993/NQ $49.2188 109,000 0 4/30/2000 109,000 $5,364,849.20 4/30/2003
ES6846 1/22/1999 1993/NQ $39.8750 81,000 0 4/30/2000 81,000 $3,229,875.00 4/30/2003
--------- --------------
T O T A L S 482,050 $15,172,188.30
