AGREEMENT
THIS AGREEMENT, dated as of September 1, 1995 (this "Agreement"), is
made by and between The Summit Bancorporation, a New Jersey corporation, having
its principal offices at Xxx Xxxx Xxxxxx, Xxxxxxx, Xxx Xxxxxx 00000 (the
"Company"), and Xx. Xxxxxx X. Xxx residing at 000 Xxxxxxx Xxxxxx Xxxx, Xxx
Xxxxx, Xxx Xxxxxx 00000 (the "Executive").
WHEREAS, the Company considers it essential to the best interests of
its shareholders to xxxxxx the continued employment of key executive management
personnel; and
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that, as is the case with many publicly-held corporations, the
possibility of a Change in Control (as defined in Section 1.3 below) of the
Company exists from time to time and that such possibility, and the
uncertainty, instability and questions which it may raise for and among key
executive management personnel, may result in the premature departure or
significant distraction of such management personnel to the material detriment
of the Company and its shareholders; and
WHEREAS, the Board has determined that appropriate steps should be
taken to reinforce, focus and encourage the continued attention and dedication
of key members of the executive management of the Company and its subsidiaries,
including (without limitation) the Executive, to their assigned duties without
distraction in the face of potentially disturbing or unsettling circumstances
arising from the possibility of a Change in Control of the Company;
NOW THEREFORE, in consideration of the premises and the mutual cove-
nants herein contained, the Company and the Executive hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms
shall have the meanings set forth below:
1.1 "ANNUAL BASE SALARY" shall mean the Executive's rate of regular
basic annual compensation prior to any reduction under a salary reduction
agreement pursuant to section 401(k) or section 125 of the Internal Revenue
Code of 1986, as amended from time to time (the "Code"), and shall not include
(without limitation) cost of living allowances, fees, retainers,
reimbursements, car allowances, bonuses, incentive awards, prizes or similar
payments.
1.2 "CAUSE" for termination by the Company of the Executive's
employment, after any Change in Control, shall mean (i) the willful and
continued failure by the Executive to substantially perform the Executive's
duties with the Company, or a subsidiary of the Company, including (without
limitation) Summit Bank, a New Jersey chartered bank (the "Bank"), as such
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duties may reasonably be defined from time to time by the Board (or a duly
designated and authorized committee thereof), or to abide by the reasonable
written policies of the Company or of the Executive's primary employer (other
than any such failure resulting from the Executive's incapacity due to physical
or mental illness or any such actual or anticipated failure after the issuance
of a Notice of Termination by the Executive for Good Reason pursuant to Section
7.1) after a written demand for substantial performance is delivered to the
Executive by the Board, which demand specifically identifies the manner in
which the Board believes that the Executive has not substantially performed the
Executive's duties or has not abided by any reasonable written policies, or
(ii) the continued and willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company or its subsidiaries,
monetarily or otherwise. For purposes of clauses (i) and (ii) of this
definition, no act, or failure to act, on the Executive's part shall be deemed
"willful" unless done, or omitted to be done, by the Executive in bad faith and
without reasonable belief that the Executive's act, or failure to act, was in
the best interest of the Company or its subsidiaries. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by the
Board or upon the instructions of the Board or based upon the advice of counsel
for the Company shall be conclusively presumed to be done, or omitted to be
done, by the Executive in good faith and in the best interests of the Company
and its subsidiaries. The cessation of employment of the Executive shall not
be deemed to be for Cause unless and until there shall have been delivered to
the Executive a copy of a resolution duly adopted by the affirmative vote of
not less than three quarters of the entire membership of the Board at a meeting
of the Board called and held for such purpose (after reasonable notice of any
such meeting is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board), finding
that, in the good faith opinion of the Board, the Executive is guilty of the
conduct described in clause (i) or (ii) above, and specifying the particulars
thereof in detail.
1.3 "CHANGE IN CONTROL" shall mean and be deemed to have occurred
if:
(i) any Person is or becomes the Beneficial Owner (as that
term is defined in Rule 13d-3 under the Securities Exchange Act of
1934 (the "Exchange Act")), directly or indirectly, of securities of
the Company (not including in the securities beneficially owned by
such Person any securities acquired directly from the Company)
representing twenty-five percent (25%) or more of the combined voting
power of the Company's then outstanding securities, or there occurs
any transaction which the Company is required to disclose pursuant to
Item 1(a) of Form 8-K (as filed pursuant to Rule 13a-11 or Rule 15d-
11 of the Exchange Act); or
(ii) during any period of twenty-four (24) consecutive
months (not including any period prior to September 1, 1995),
individuals who at the beginning of such period constitute the Board
and any new director (other than a director designated by a Person
who has entered into an agreement with the Company to effect a
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transaction described in clause (i), (iii) or (iv) of this definition
or any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies
or consents) whose election by the Board or nomination for election
by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of such period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority of the Board; or
(iii) the shareholders of the Company approve a
reorganization, merger or consolidation, other than a reorganization,
merger or consolidation with respect to which all or substantially
all of the individuals and entities who were Beneficial Owners,
immediately prior to such reorganization, merger or consolidation, of
the combined voting power of the Company's then outstanding
securities beneficially own, directly or indirectly, immediately
after such reorganization, merger or consolidation, more then
seventy-five percent (75%) of the combined voting power of the
securities of the corporation resulting from such reorganization,
merger or consolidation in substantially the same proportions as
their respective ownership, immediately prior to such reorganization,
merger or consolidation, of the combined voting power of the
Company's securities; or
(iv) the shareholders of the Company approve (a) the sale
or disposition by the Company (other than to a subsidiary of the
Company) of the Bank, or (b) a complete liquidation or dissolution of
the Company or the Bank.
Notwithstanding the foregoing, a Change in Control shall not include any event,
circumstance or transaction which results from the action (excluding the
Executive's employment activities with the Company, the Bank or any of their
respective subsidiaries) of any Person or group of Persons which includes, is
directly affiliated with or is wholly or partly controlled by one or more
executive officers of the Company and in which the Executive actively
participates.
1.4 "COMPANY" shall include The Summit Bancorporation and any
successor to its business and/or assets which assumes (either expressly, by
operation of law or otherwise) and/or agrees to perform this Agreement by
operation of law or otherwise (except in determining, under Section 1.3 hereof,
whether or not any Change in Control of the Company has occurred in connection
with such succession).
1.5 "DISABILITY" shall mean and be deemed the reason for the
termination by the Company of the Executive's employment, if, as a result of
the Executive's incapacity due to physical or mental illness, (i) the Executive
shall have been absent from the full-time performance of the Executive's duties
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with the Company for a period of six (6) consecutive months, (ii) the Company
gives the Executive a Notice of Termination for Disability, and (iii) within
thirty (30) days after such Notice of Termination is given, the Executive does
not return to the full-time performance of the Executive's duties.
1.6 "GOOD REASON" for termination by the Executive of the
Executive's employment, in connection with or as a result of any Change in
Control, shall mean the occurrence (without the Executive's prior express
written consent) of any one of the following acts, or failures to act, unless,
in the case of any act or failure to act described in clauses (i), (iv), (v) or
(vi) below, such act or failure to act is corrected by the Company prior to the
Date of Termination specified in the Notice of Termination given in respect
thereof:
(i) the assignment to the Executive of any duties or
responsibilities inconsistent with those described in Section 3.2
below or with the Executive's position(s) (including without
limitation status, offices, titles, and reporting
responsibilities/rights) as an executive officer of the Company and
its subsidiaries or a substantial adverse alteration in the nature of
the Executive's authority, duties, or responsibilities from those
described in Section 3.2 below or otherwise;
(ii) a reduction in the Executive's Annual Base Salary as
in effect on the date of this Agreement or as the same may be
increased at any time thereafter and from time to time;
(iii) the relocation of the Company's principal executive
offices to a location more than thirty (30) miles from its location
on the date of this Agreement (or, if different, more than thirty
(30) miles from where such offices are located immediately prior to
any Potential Change in Control) or the Company's requiring the
Executive to be based anywhere other than the Company's principal
executive offices except for required travel on the Company's
business to an extent substantially consistent with the Executive's
business travel obligations as of the date of this Agreement;
(iv) any failure by the Company to comply with any of the
provisions of this Agreement, other than an isolated, insubstantial
and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof
given by the Executive;
(v) the failure by the Company or a subsidiary to continue
in effect any pension benefit or incentive or deferred compensation
plan in which the Executive participates immediately prior to any
Potential Change in Control which is material to the Executive's
total compensation, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan or arrangement) has been made
with respect to such plan, or the failure by the Company or a
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subsidiary to continue the Executive's participation therein (or in
such substitute or alternative plan or arrangement) on a basis not
materially less favorable, both in terms of the amount of benefits
provided and the level of the Executive's participation relative to
other participants, as existed at the time of the Potential Change in
Control;
(vi) the failure by the Company or a subsidiary to
continue to provide the Executive with health and welfare benefits
substantially similar to those enjoyed by the Executive under any of
the Company's or a subsidiary's retirement, life insurance, medical,
health and accident, or disability or similar plans in which the
Executive was participating at the time of any Potential Change in
Control, the taking of any action by the Company or a subsidiary
which would directly or indirectly materially reduce any of such
benefits or deprive the Executive of any material fringe benefit
enjoyed by the Executive at the time of the Potential Change in
Control, or the failure by the Company or a subsidiary to provide the
Executive with the number of paid vacation days to which the
Executive is entitled in accordance with the Company's or a
subsidiary's normal vacation policy in effect at the time of the
Potential Change in Control;
(vii) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of Termination
satisfying the requirements of Section 7.1; and/or
(viii) a termination by the Executive for any reason
during the thirty (30) day period immediately following the first
anniversary of any Change in Control.
1.7 "PERSON" shall have the meaning ascribed thereto in Section
3(a)(9) of the Exchange Act, as modified applied, and used in Sections 13(d)
and 14(d) thereof; provided, however, a Person shall not include (i) the
Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any of its
subsidiaries (in its capacity as such), (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by the stockholders of the Company
in substantially the same character and proportions as their ownership of stock
of the Company.
1.8 "POTENTIAL CHANGE IN CONTROL" shall mean and be deemed to have
occurred if:
(i) the Company commences negotiations in respect of or
enters into an agreement, the consummation of which would result in
the occurrence of a Change in Control;
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(ii) the Company or any Person publicly announces an
intention to take actions which, if consummated, would constitute a
Change in Control; and/or
(iii) any Person becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing ten percent
(10%) or more of the combined voting power of the Company's then
outstanding securities, or any Person increases such Person's
beneficial ownership of such securities by five (5) percentage points
or more over the percentage so owned by such Person on September 1,
1995.
1.9 "RETIREMENT" shall mean and be deemed the reason for the
termination by the Executive of the Executive's employment if such employment
is terminated in accordance with the Company's normal retirement policy for
those aged 65 and older, not including early retirement or so-called "window
period" retirements, generally applicable to its salaried employees, as in
effect immediately prior to any Potential Change in Control.
2. TERM OF THIS AGREEMENT. This Agreement shall commence on the date
hereof and shall continue in effect through December 31, 1998; provided,
--------
however, that commencing on January 1, 1998 and each January 1 thereafter, the
-------
term of this Agreement shall automatically be extended for one additional year
unless, not later than June 30 of the preceding year, the Company or the
Executive shall have given written notice to the other not to extend this
Agreement or a Change in Control shall have occurred prior to any such January
1; provided, further, however, that if a Change in Control shall have occurred
-------- ------- -------
during the term of this Agreement, this Agreement shall continue in effect for
a period of not less than thirty-six (36) months beyond the month in which such
Change in Control occurred (the "Term"). Notwithstanding the foregoing
provisions of this Section 2, the Term shall terminate upon the Executive's
attaining the age of sixty-five (65) years.
3. COMPANY'S COVENANTS.
3.1 SEVERANCE PAYMENTS. In order to induce the Executive to remain
in the employ of the Company and/or one or more of its subsidiaries and in
consideration of the Executive's covenants set forth in Section 4 below, the
Company agrees, under the terms and conditions described herein and in addition
to the amounts payable to the Executive under Section 5 below, to pay the
Executive the "Severance Payments" described in Section 6.1 below and the other
payments and benefits described herein in the event the Executive's employment
with the Company is terminated during the Term and after a Change in Control or
under the other circumstances set forth in Section 6.1 below.
3.2 POSITION AND DUTIES. During the period commencing on the date
of any Change in Control until the earliest to occur of (i) the date which is
thirty-six (36) months from the date of any such Change in Control, (ii) the
date of termination by the Executive of the Executive's employment for any
reason, or (iii) the termination by the Company of the Executive's employment
for any reason (the "Employment Period"), (a) the Executive's position
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(including status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be at least commensurate in all material
respects with the most significant of those held, exercised and assigned at any
time during the one hundred eighty (180) day period immediately preceding any
related Potential Change in Control, and (b) the Executive's services shall be
performed at the location where the Executive was employed immediately
preceding any such Potential Change in Control, or any office or location less
than thirty (30) miles from such location.
3.3 BASE SALARY. During the Employment Period, the Executive shall
receive Annual Base Salary at least equal to twelve (12) times the highest
monthly base salary paid or payable, including (without limitation) any base
salary which has been earned but deferred, to the Executive by the Company and
its affiliated companies in respect of the twelve (12) month period immediately
preceding the month in which any related Potential Change in Control occurs.
In addition, Annual Base Salary shall not be reduced after the occurrence of a
Potential Change in Control. As used in this Agreement, the term "affiliated
companies" shall include any company controlled by, controlling or under common
control with the Company.
3.4 ANNUAL BONUS. In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year ending during the Employment Period, an
annual bonus (the "Annual Bonus") in cash at least equal to the Executive's
highest bonus for the last three (3) full fiscal years prior to the fiscal year
in which the related Potential Change in Control occurs (annualized in the
event that the Executive was not employed by the Company for the whole of any
such prior fiscal year). Each Annual Bonus shall be paid no later than the end
of the third month of the fiscal year next following the fiscal year for which
the Annual Bonus is awarded, unless the Executive shall elect to defer the
receipt of such Annual Bonus.
3.5 INCENTIVE, SAVINGS AND RETIREMENT PLANS. During the Employment
Period, the Executive shall be entitled to participate in all incentive,
savings and retirement plans, practices, policies and programs applicable
generally to other peer executives of the Company and its affiliated companies,
but in no event shall such plans, practices, policies and programs provide the
Executive with incentive opportunities (measured with respect to both regular
and special incentive opportunities, to the extent, if any, that such
distinction is applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than the most
favorable of those provided by the Company and its affiliated companies for the
Executive under such plans, practices, policies and programs as in effect at
any time during the one hundred eighty (180) day period immediately preceding
any related Potential Change in Control or if more favorable to the Executive,
those provided generally at any time thereafter to other peer executives of the
Company and its affiliated companies.
3.6 WELFARE BENEFIT PLANS. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be entitled
to participate in and shall receive all benefits under all of the health and
welfare benefit plans, practices, policies and programs provided by the Company
and its affiliated companies (including, without limitation, medical,
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prescription, dental, disability, employee life, group life, accidental death
and travel accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and its affiliated companies,
but in no event shall such plans, practices, policies and programs provide the
Executive with benefits which are less favorable, in the aggregate, than the
most favorable of such plans, practices, policies and programs in effect for
the Executive at any time during the one hundred eighty (180) day period
immediately preceding any related Potential Change in Control or, if more
favorable to the Executive, those provided generally at any time thereafter to
other peer executives of the Company and its affiliated companies.
3.7 EXPENSES. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred
by the Executive in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in effect for the
Executive at any time during the one hundred eighty (180) day period
immediately preceding any related Potential Change in Control or, if more
favorable to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated companies.
3.8 FRINGE BENEFITS. During the Employment Period, the Executive
shall be entitled to fringe benefits, including, without limitation, tax and
financial planning services, payment of club dues, and an automobile allowance
and payment of related expenses, in accordance with the most favorable plans,
practices, programs and policies of the Company and its affiliated companies in
effect for the Executive at any time during the one hundred eighty (180) day
period immediately preceding any related Potential Change in Control or, if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
3.9 OFFICE AND SUPPORT STAFF. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, at least equal to the most favorable of the foregoing
provided to the Executive by the Company and its affiliated companies at any
time during the one hundred eighty (180) day period immediately preceding any
related Potential Change in Control or, if more favorable to the Executive, as
provided generally at any time thereafter with respect to other peer executives
of the Company and its affiliated companies.
3.10 VACATION. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated companies as
in effect for the Executive at any time during the one hundred eighty (180) day
period immediately preceding any related Potential Change in Control or, if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
4. THE EXECUTIVE'S COVENANTS.
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4.1 EMPLOYMENT. The Executive agrees that, subject to the terms and
conditions of this Agreement, in the event of a Change in Control during the
Term the Executive will remain in the employ of the Company during any related
Employment Period.
4.2 TIME AND ATTENTION. During the Employment Period, and excluding
any periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during normal business
hours to the business and affairs of the Company and, to the extent necessary
to discharge the responsibilities and duties assigned to the Executive
hereunder, to use the Executive's reasonable best efforts to perform faithfully
and efficiently such responsibilities and duties. During the Employment Period
it shall not be a violation of this Agreement for the Executive to (i) serve on
corporate, civic or charitable boards or committees, (ii) deliver lectures,
fulfill speaking engagements or teach at educational institutions, and (iii)
manage personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to any Potential Change in Control, the
reinstatement or continued conduct of such activities (or the reinstatement or
conduct of activities similar in nature and scope thereto) subsequent to any
related Potential Change in Control shall not thereafter be deemed to interfere
with the performance of the Executive's responsibilities to the Company.
4.3 CONFIDENTIAL INFORMATION. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other
than by direct or indirect acts by the Executive in violation of this
Agreement). After termination of the Executive's employment with the Company,
the Executive shall not, without the prior written consent of the Company or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it. In no event, however, shall an asserted violation of the
provisions of this Section 4.3 constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this Agreement.
5. COMPENSATION OTHER THAN SEVERANCE PAYMENTS.
5.1 DISABILITY. Following a Potential Change in Control and during
the Term, during any period that the Executive fails to perform the Executive's
full-time duties with the Company as a result of incapacity due to physical or
mental illness, the Executive's full salary shall be paid to the Executive by
the Company at a rate no less than the rate in effect at the commencement of
any such disability period, together with all compensation and benefits payable
to the Executive under the terms of any compensation or benefit plan, program
25
or arrangement maintained by the Company or its subsidiaries during such
disability period, until the Executive's employment is terminated by the
Company for Disability.
5.2 BASE SALARY. If the Executive's employment shall be terminated
for any reason following a Potential Change in Control and during the Term, the
Executive's full salary shall be paid to the Executive by the Company through
the Date of Termination (as defined below in Section 7.2) at the rate in effect
at the time the Notice of Termination is given, together with all compensation
and benefits payable to or with respect to the Executive through the Date of
Termination under the terms of any compensation or benefit plan, program or
arrangement maintained by the Company or its subsidiaries during such period.
5.3 BENEFITS. If the Executive's employment shall be terminated for
any reason following a Potential Change in Control and during the Term, the
Executive's normal post-termination compensation and benefits shall be paid to
the Executive as such payments become due. Such post-termination compensation
and benefits shall be determined under, and paid in accordance with, the
retirement, insurance and other compensation or benefit plans, programs and
arrangements maintained by the Company or its subsidiaries.
6. SEVERANCE PAYMENTS.
6.1 SEVERANCE. The Company shall pay the Executive the payments
described in this Section 6.1 (the "Severance Payments") upon the termination
of the Executive's employment with the Company following a Change in Control
and during the Term, in addition to the payments and benefits described in
Section 5 hereof, unless such termination is (i) by the Company for Cause, (ii)
by reason of Retirement, or (iii) by the Executive without Good Reason. In
addition, the Executive's employment shall be deemed to have been terminated
following a Change in Control by the Company without Cause or by the Executive
with Good Reason (a) if the Executive reasonably demonstrates that the
Executive's employment was terminated prior to a Change in Control without
Cause (1) at the request of a Person who has entered into an agreement with the
Company the consummation of which will constitute a Change in Control (or who
has taken other steps reasonably calculated to effect a Change in Control) or
(2) otherwise in connection with, as a result of or in anticipation of a Change
in Control, (b) if the Executive terminates his employment for Good Reason
prior to a Change in Control and the Executive reasonably demonstrates that the
circumstance(s) or event(s) which constitute such Good Reason occurred (1) at
the request of such Person or (2) otherwise in connection with, as a result of
or in anticipation of a Change in Control, or (c) if the Executive dies or is
terminated by the Company due to Disability, in each case, after the occurrence
of a Potential Change in Control and a related Change in Control actually
occurs within one (1) year after the Date of Termination or the date of death,
as the case may be. The Executive's right to terminate the Executive's
employment for Good Reason shall not be affected by the Executive's incapacity
due to physical or mental illness. The Executive's continued employment shall
not constitute consent to, or a waiver of rights with respect to, any act or
failure to act constituting Good Reason hereunder.
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6.1.1 In lieu of any further salary and annual bonus
payments to the Executive for periods subsequent to the Date of
Termination, the Company shall pay to the Executive a lump sum
severance payment, in cash, equal to three (3) or, if less, the
number of years, including fractions, from the Date of Termination
until the Executive reaches the age of sixty-five (65) years times
the sum of (i) the highest Annual Base Salary paid or payable to the
Executive during the thirty-six (36) month period immediately
preceding the month in which the Change in Control occurs, and (ii)
the highest annual bonus paid or determined and payable to the
Executive during such thirty-six (36) month period.
6.1.2 For a thirty-six (36) month period after the Date of
Termination, or if sooner, until the Executive reaches the age of
sixty-five (65) years, the Company shall arrange to provide the
Executive with life, disability, accident and health insurance
benefits substantially similar to those which the Executive is
receiving immediately prior to any related Potential Change in
Control or the receipt of the Notice of Termination (without giving
effect to any reduction in such benefits subsequent to a Change in
Control which reduction constitutes Good Reason), whichever is
greater. Benefits otherwise receivable by the Executive pursuant to
this Section 6.1.2 shall be reduced to the extent comparable benefits
are actually received by or made available to the Executive without
cost during such period following the Executive's termination of
employment (and any such benefits actually received by the Executive
shall be reported to the Company by the Executive).
6.2 SPECIAL REIMBURSEMENT. In the event that the Executive becomes
entitled to the Severance Payments, if any payment or benefit paid or payable,
or received or to be received, by or on behalf of the Executive in connection
with a Change in Control or the termination of the Executive's employment,
whether any such payments or benefits are pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the Company, any of
its subsidiaries, any Person, or otherwise (the "Total Payments"), will or
would be subject to the excise tax imposed under section 4999 of the Code (the
"Excise Tax"), the Company shall pay to the Executive an additional amount (the
"Gross-Up Payment") which amount shall be equal to the sum of (a) the amount of
such Excise Tax imposed (determined without regard to the Gross-Up Payment),
and (b) the product of (i) such Excise Tax (determined without regard to the
Gross-Up Payment), and (ii) the Aggregate Combined Marginal Tax Rate. For
purposes of this Section 6.2, "Aggregate Combined Marginal Tax Rate" means (and
shall equal) the sum of (A) the combined highest marginal state and local
income tax rates applicable for the tax year in which the Executive receives
the Gross-Up Payment (adjusted downward to take into account the tax
deductibility, if any, of such state and local income taxes), plus (B) the rate
of excise tax imposed on "golden parachute" payments under Section 4999 of the
Code, plus (C) the highest marginal federal income tax rate applicable for the
tax year in which the Executive receives the Gross-Up Payment (adjusted upward
to take into account any reduction in otherwise allowable itemized deductions
attributable to Section 68 of the Code), plus (D) the tax rate applicable to
27
the Executive under the hospital insurance portion of the Federal Insurance
Contributions Act under Section 3101(b) of the Code for the tax year in which
the Executive receives the Gross-Up Payment.
6.2.1 For purposes of determining whether any of the Total
Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (i) the Total Payments shall be treated as "parachute
payments" within the meaning of section 280G(b)(2) of the Code, and
all "excess parachute payments" within the meaning of
section 280G(b)(1) of the Code shall be treated as subject to the
Excise Tax, unless in the opinion of tax counsel (delivered to the
Executive) selected by the Company and reasonably acceptable to the
Executive such Total Payments (in whole or in part) (a) do not
constitute parachute payments, including (without limitation) by
reason of section 280G(b)(4)(A) of the Code, (b) such excess
parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered, within the meaning of
section 280G(b)(4)(B) of the Code, or (c) are otherwise not subject
to the Excise Tax, and (ii) the value of any non-cash benefits or any
deferred payment or benefit shall be determined by the Company's
independent auditors in accordance with the principles of sections
280G(d)(3) and (4) of the Code.
6.2.2 In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder at
the time of termination of the Executive's employment, the Executive
shall repay to the Company, at the time that the amount of such
reduction in Excise Tax is finally determined, the portion of the
Gross-Up Payment attributable to such reduction plus interest on the
amount of such repayment at the rate provided in section
1274(b)(2)(B) of the Code. In the event that the Excise Tax is
determined to exceed the amount taken into account hereunder at the
time of the termination of the Executive's employment (including by
reason of any payment the existence or amount of which cannot be
determined at the time of the Gross-Up Payment), the Company shall
make an additional Gross-Up Payment in respect of such excess (plus
any interest, penalties or additions payable by the Executive with
respect to such excess) at the time that the amount of such excess is
finally determined. The Executive and the Company shall each
reasonably cooperate with the other in connection with any
administrative or judicial proceedings concerning the existence or
amount of any such subsequent liability for Excise Tax with respect
to the Severance Payments.
6.3 DATE OF PAYMENT. The payments provided for in Section 6.1.1 and
Section 6.2 hereof shall be made not later than the fifteenth (15th) day
following the Date of Termination; provided, however, that if the amounts of
-------- -------
such payments cannot be finally determined on or before such day, the Company
shall pay to the Executive on such day an estimate, as determined in good faith
by the Company, of the minimum amount of such payments to which the Executive
28
is likely to be entitled to and shall pay the remainder of such payments
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later
than the thirtieth (30th) day after the Date of Termination. In the event that
the amount of the estimated payments exceeds the amount subsequently determined
to have been due, such excess shall constitute a loan by the Company to the
Executive, payable on the fifth (5th) business day after demand by the Company
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code). At the time that payments are made under this Section 6.3, the Company
shall provide the Executive with a detailed written statement setting forth the
manner in which such payments were calculated and the basis for such
calculations including, without limitation, any opinions or other advice the
Company has received from outside counsel, auditors or consultants (and any
such opinions or advice which are in writing shall be attached to the
statement).
6.4 LEGAL COSTS. The Company shall also reimburse the Executive for
all legal fees and expenses incurred in good faith by the Executive as a result
of any dispute with any party (including, but not limited to, the Company or
the Bank) regarding the payment of any benefit provided for in this Agreement
(including, but not limited, all such fees and expenses incurred in disputing
any termination or in seeking in good faith to obtain or enforce any benefit or
right provided by this Agreement or in connection with any tax audit or
proceeding to the extent attributable to the application of section 4999 of the
Code plus in each case interest on any delayed payment at the applicable
Federal rate provided for in section 7872(f)(2)(A) of the Code. Such payments
shall be made within five (5) business days after delivery of the Executive's
written requests for payment accompanied by such evidence of fees and expenses
incurred as the Company reasonably may require.
7. TERMINATION PROCEDURES AND COMPENSATION DURING DISPUTE.
7.1 NOTICE OF TERMINATION. After a Change in Control and during the
Term, any purported termination of the Executive's employment with the Company
(other than by reason of death) shall be communicated by written Notice of
Termination from one party hereto to the other party hereto in accordance with
Section 10 hereof. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment with the Company under the provision so indicated. Further, a
Notice of Termination for Cause is required to include a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters (3/4) of
the entire membership of the Board at a meeting of the Board which was called
and held for the purpose of considering such termination (which meeting may be
a regular meeting of the Board where prior notice of consideration of such
termination is given to members of the Board) finding that, in the good faith
opinion of the Board, the Executive engaged in conduct set forth in clause (i)
or (ii) of the definition of Cause herein, and specifying the particulars
thereof in detail. For purposes of this Agreement, any purported termination
not effected in accordance with this Section 7.1 shall not be considered
effective.
29
7.2 DATE OF TERMINATION. "Date of Termination", with respect to any
purported termination of the Executive's employment after a Change in Control
and during the Term, shall mean (i) if the Executive's employment is terminated
for Disability, thirty (30) days after Notice of Termination is given (provided
that the Executive shall not have returned to the full-time performance of the
Executive's duties during such thirty (30) day period), and (ii) if the
Executive's employment is terminated for any other reason, the date specified
in the Notice of Termination (which, in the case of a termination by the
Company, shall not be less than thirty (30) days (except in the case of a
termination for Cause) and, in the case of a termination by the Executive,
shall not be less than fifteen (15) days nor more than sixty (60) days,
respectively, after the date such Notice of Termination is given).
7.3 DISPUTE CONCERNING TERMINATION. If within fifteen (15) days
after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this Section 7.3), the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall be the date on
which the dispute is finally resolved, either by mutual written agreement of
the parties or by a final judgment, order or decree of a court of competent
jurisdiction (which is not appealable or with respect to which the time for
appeal therefrom has expired and no appeal has been perfected); provided,
--------
however, that the Date of Termination shall be extended by a notice of dispute
-------
only if the basis for such notice is reasonable, such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence.
7.4 COMPENSATION DURING DISPUTE. If a purported termination occurs
following a Change in Control and during the Term, and such termination is
disputed in accordance with Section 7.3 above, the Company shall continue to
pay the Executive the full compensation (including without limitation Annual
Base Salary and Annual Bonus) in effect at the time of any related Potential
Change in Control or when the notice giving rise to the dispute was given
(whichever is greater) and continue the Executive as a participant in all
compensation, incentive, pension and welfare benefit and insurance plans in
which the Executive was participating at the time of any Potential Change in
Control or when the notice giving rise to the dispute was given, whichever is
greater, until the dispute is finally resolved in accordance with Section 7.3
hereof. Amounts paid under this Section 7.4 are in addition to all other
amounts due under this Agreement (other than those due under Section 5.2
hereof) and shall not be offset against or reduce any other amounts due under
this Agreement or any other plan, agreement or arrangement.
8. NO MITIGATION. The Company agrees that, if the Executive's
employment is terminated during the Term, the Executive is not required to seek
other employment or to attempt in any way to reduce any amounts payable to the
Executive by the Company pursuant to Section 6 or Section 7.4. Further, the
amount of any payment or benefit provided for in Section 6 (other than pursuant
to Section 6.1.2) or Section 7.4 shall not be reduced by any compensation
earned by the Executive as the result of employment by another employer, by
retirement benefits, or offset against any amount claimed to be owed by the
Executive to the Company or any of its subsidiaries, or otherwise.
30
9. SUCCESSORS; BINDING AGREEMENT.
9.1 SUCCESSORS. In addition to any obligations imposed by law upon
any successor to the Company, the Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption and
agreement prior to the effectiveness of any such succession shall be a breach
of this Agreement and shall entitle the Executive to compensation from the
Company in the same amount and on the same terms as the Executive would be
entitled to hereunder if the Executive were to terminate the Executive's
employment for Good Reason after a Change in Control, except that, for purposes
of implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.
9.2 BINDING AGREEMENT. This Agreement shall inure to the benefit of
and be enforceable by this Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive shall die while any amount would still be payable
to the Executive hereunder (other than amounts which, by their terms, terminate
upon the death of the Executive) if the Executive had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the executors, personal representatives or
administrators of the Executive's estate.
10. NOTICES. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below, or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon actual receipt:
To the Company:
The Summit Bancorporation
Xxx Xxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attention: Corporate Secretary
To the Executive:
Xx. Xxxxxx X. Xxx
000 Xxxxxxx Xxxxxx Xxxx
Xxx Xxxxx, Xxx Xxxxxx 00000
31
11. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.
The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of New Jersey without regard to the
principles of conflict of laws thereof. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to and include any
successor provisions to such sections. Any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state
or local law and any additional withholding to which the Executive has agreed.
The rights and obligations of the Company and the Executive under this
Agreement shall survive the expiration of the Term and the Employment Period.
12. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
13. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
14. NO LIMITATION. Nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any plan, program, policy or
practice provided by the Company or any of its affiliated companies and for
which the Executive may qualify, nor shall anything herein limit or otherwise
affect such rights as the Executive may have under any other contract or
agreement with the Company or any of its affiliated companies. Amounts which
are vested benefits or which the Executive is otherwise entitled to receive
under any plan, policy, practice or program of or any contract or agreement
with the Company or any of its affiliated companies at or subsequent to the
Date of Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly modified by
this Agreement.
The Summit Bancorporation
By:
/s/ Xxxxxx X. Xxxxxx Xx.
----------------------------
Xxxxxx X. Xxxxxx Xx.
32
/s/ Xxxxxx X. Xxx
----------------------------
Xxxxxx X. Xxx
33
AGREEMENT
THIS AGREEMENT, dated as of September 1, 1995 (this "Agreement"), is
made by and between The Summit Bancorporation, a New Jersey corporation, having
its principal offices at Xxx Xxxx Xxxxxx, Xxxxxxx, Xxx Xxxxxx 00000 (the
"Company"), and Xx. Xxxx X. Xxxxxx residing at 000 Xxxxxxxxxxxx Xxxxx,
Xxxxxxxxxx, Xxx Xxxxxx 00000 (the "Executive").
WHEREAS, the Company considers it essential to the best interests of
its shareholders to xxxxxx the continued employment of key executive management
personnel; and
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that, as is the case with many publicly-held corporations, the
possibility of a Change in Control (as defined in Section 1.3 below) of the
Company exists from time to time and that such possibility, and the
uncertainty, instability and questions which it may raise for and among key
executive management personnel, may result in the premature departure or
significant distraction of such management personnel to the material detriment
of the Company and its shareholders; and
WHEREAS, the Board has determined that appropriate steps should be
taken to reinforce, focus and encourage the continued attention and dedication
of key members of the executive management of the Company and its subsidiaries,
including (without limitation) the Executive, to their assigned duties without
distraction in the face of potentially disturbing or unsettling circumstances
arising from the possibility of a Change in Control of the Company;
NOW THEREFORE, in consideration of the premises and the mutual cove-
nants herein contained, the Company and the Executive hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms
shall have the meanings set forth below:
1.1 "ANNUAL BASE SALARY" shall mean the Executive's rate of regular
basic annual compensation prior to any reduction under a salary reduction
agreement pursuant to section 401(k) or section 125 of the Internal Revenue
Code of 1986, as amended from time to time (the "Code"), and shall not include
(without limitation) cost of living allowances, fees, retainers,
reimbursements, car allowances, bonuses, incentive awards, prizes or similar
payments.
1.2 "CAUSE" for termination by the Company of the Executive's
employment, after any Change in Control, shall mean (i) the willful and
continued failure by the Executive to substantially perform the Executive's
duties with the Company, or a subsidiary of the Company, including (without
limitation) Summit Bank, a New Jersey chartered bank (the "Bank"), as such
34
duties may reasonably be defined from time to time by the Board (or a duly
designated and authorized committee thereof), or to abide by the reasonable
written policies of the Company or of the Executive's primary employer (other
than any such failure resulting from the Executive's incapacity due to physical
or mental illness or any such actual or anticipated failure after the issuance
of a Notice of Termination by the Executive for Good Reason pursuant to Section
7.1) after a written demand for substantial performance is delivered to the
Executive by the Board, which demand specifically identifies the manner in
which the Board believes that the Executive has not substantially performed the
Executive's duties or has not abided by any reasonable written policies, or
(ii) the continued and willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company or its subsidiaries,
monetarily or otherwise. For purposes of clauses (i) and (ii) of this
definition, no act, or failure to act, on the Executive's part shall be deemed
"willful" unless done, or omitted to be done, by the Executive in bad faith and
without reasonable belief that the Executive's act, or failure to act, was in
the best interest of the Company or its subsidiaries. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by the
Board or upon the instructions of the Board or the Company's chief executive
officer or other duly authorized senior officer of the Company or based upon
the advice of counsel for the Company shall be conclusively presumed to be
done, or omitted to be done, by the Executive in good faith and in the best
interests of the Company and its subsidiaries. The cessation of employment of
the Executive shall not be deemed to be for Cause unless and until there shall
have been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three quarters of the entire membership of
the Board at a meeting of the Board called and held for such purpose (after
reasonable notice of any such meeting is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before
the Board), finding that, in the good faith opinion of the Board, the Executive
is guilty of the conduct described in clause (i) or (ii) above, and specifying
the particulars thereof in detail.
1.3 "CHANGE IN CONTROL" shall mean and be deemed to have occurred
if:
(i) any Person is or becomes the Beneficial Owner (as that
term is defined in Rule 13d-3 under the Securities Exchange Act of
1934 (the "Exchange Act")), directly or indirectly, of securities of
the Company (not including in the securities beneficially owned by
such Person any securities acquired directly from the Company)
representing twenty-five percent (25%) or more of the combined voting
power of the Company's then outstanding securities, or there occurs
any transaction which the Company is required to disclose pursuant to
Item 1(a) of Form 8-K (as filed pursuant to Rule 13a-11 or Rule 15d-
11 of the Exchange Act); or
(ii) during any period of twenty-four (24) consecutive
months (not including any period prior to September 1, 1995),
individuals who at the beginning of such period constitute the Board
and any new director (other than a director designated by a Person
who has entered into an agreement with the Company to effect a
35
transaction described in clause (i), (iii) or (iv) of this definition
or any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies
or consents) whose election by the Board or nomination for election
by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of such period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority of the Board; or
(iii) the shareholders of the Company approve a
reorganization, merger or consolidation, other than a reorganization,
merger or consolidation with respect to which all or substantially
all of the individuals and entities who were Beneficial Owners,
immediately prior to such reorganization, merger or consolidation, of
the combined voting power of the Company's then outstanding
securities beneficially own, directly or indirectly, immediately
after such reorganization, merger or consolidation, more then
seventy-five percent (75%) of the combined voting power of the
securities of the corporation resulting from such reorganization,
merger or consolidation in substantially the same proportions as
their respective ownership, immediately prior to such reorganization,
merger or consolidation, of the combined voting power of the
Company's securities; or
(iv) the shareholders of the Company approve (a) the sale
or disposition by the Company (other than to a subsidiary of the
Company) of the Bank, or (b) a complete liquidation or dissolution of
the Company or the Bank.
Notwithstanding the foregoing, a Change in Control shall not include any event,
circumstance or transaction which results from the action (excluding the
Executive's employment activities with the Company, the Bank or any of their
respective subsidiaries) of any Person or group of Persons which includes, is
directly affiliated with or is wholly or partly controlled by one or more
executive officers of the Company and in which the Executive actively
participates.
1.4 "COMPANY" shall include The Summit Bancorporation and any
successor to its business and/or assets which assumes (either expressly, by
operation of law or otherwise) and/or agrees to perform this Agreement by
operation of law or otherwise (except in determining, under Section 1.3 hereof,
whether or not any Change in Control of the Company has occurred in connection
with such succession).
1.5 "DISABILITY" shall mean and be deemed the reason for the
termination by the Company of the Executive's employment, if, as a result of
the Executive's incapacity due to physical or mental illness, (i) the Executive
shall have been absent from the full-time performance of the Executive's duties
36
with the Company for a period of six (6) consecutive months, (ii) the Company
gives the Executive a Notice of Termination for Disability, and (iii) within
thirty (30) days after such Notice of Termination is given, the Executive does
not return to the full-time performance of the Executive's duties.
1.6 "GOOD REASON" for termination by the Executive of the
Executive's employment, in connection with or as a result of any Change in
Control, shall mean the occurrence (without the Executive's prior express
written consent) of any one of the following acts, or failures to act, unless,
in the case of any act or failure to act described in clauses (i), (iv), (v) or
(vi) below, such act or failure to act is corrected by the Company prior to the
Date of Termination specified in the Notice of Termination given in respect
thereof:
(i) the assignment to the Executive of any duties or
responsibilities inconsistent with those described in Section 3.2
below or with the Executive's position(s) (including without
limitation status, offices, titles, and reporting
responsibilities/rights) as an executive officer of the Company and
its subsidiaries or a substantial adverse alteration in the nature of
the Executive's authority, duties, or responsibilities from those
described in Section 3.2 below or otherwise;
(ii) a reduction in the Executive's Annual Base Salary as
in effect on the date of this Agreement or as the same may be
increased at any time thereafter and from time to time;
(iii) the relocation of the Company's principal executive
offices to a location more than thirty (30) miles from its location
on the date of this Agreement (or, if different, more than thirty
(30) miles from where such offices are located immediately prior to
any Potential Change in Control) or the Company's requiring the
Executive to be based anywhere other than the Company's principal
executive offices except for required travel on the Company's
business to an extent substantially consistent with the Executive's
business travel obligations as of the date of this Agreement;
(iv) any failure by the Company to comply with any of the
provisions of this Agreement, other than an isolated, insubstantial
and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof
given by the Executive;
(v) the failure by the Company or a subsidiary to continue
in effect any pension benefit or incentive or deferred compensation
plan in which the Executive participates immediately prior to any
Potential Change in Control which is material to the Executive's
total compensation, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan or arrangement) has been made
with respect to such plan, or the failure by the Company or a
37
subsidiary to continue the Executive's participation therein (or in
such substitute or alternative plan or arrangement) on a basis not
materially less favorable, both in terms of the amount of benefits
provided and the level of the Executive's participation relative to
other participants, as existed at the time of the Potential Change in
Control;
(vi) the failure by the Company or a subsidiary to
continue to provide the Executive with health and welfare benefits
substantially similar to those enjoyed by the Executive under any of
the Company's or a subsidiary's retirement, life insurance, medical,
health and accident, or disability or similar plans in which the
Executive was participating at the time of any Potential Change in
Control, the taking of any action by the Company or a subsidiary
which would directly or indirectly materially reduce any of such
benefits or deprive the Executive of any material fringe benefit
enjoyed by the Executive at the time of the Potential Change in
Control, or the failure by the Company or a subsidiary to provide the
Executive with the number of paid vacation days to which the
Executive is entitled in accordance with the Company's or a
subsidiary's normal vacation policy in effect at the time of the
Potential Change in Control;
(vii) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of Termination
satisfying the requirements of Section 7.1; and/or
(viii) a termination by the Executive for any reason
during the thirty (30) day period immediately following the first
anniversary of any Change in Control.
1.7 "PERSON" shall have the meaning ascribed thereto in Section
3(a)(9) of the Exchange Act, as modified applied, and used in Sections 13(d)
and 14(d) thereof; provided, however, a Person shall not include (i) the
-------- -------
Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any of its
subsidiaries (in its capacity as such), (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by the stockholders of the Company
in substantially the same character and proportions as their ownership of stock
of the Company.
1.8 "POTENTIAL CHANGE IN CONTROL" shall mean and be deemed to have
occurred if:
(i) the Company commences negotiations in respect of or
enters into an agreement, the consummation of which would result in
the occurrence of a Change in Control;
38
(ii) the Company or any Person publicly announces an
intention to take actions which, if consummated, would constitute a
Change in Control; and/or
(iii) any Person becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing ten percent
(10%) or more of the combined voting power of the Company's then
outstanding securities, or any Person increases such Person's
beneficial ownership of such securities by five (5) percentage points
or more over the percentage so owned by such Person on September 1,
1995.
1.9 "RETIREMENT" shall mean and be deemed the reason for the
termination by the Executive of the Executive's employment if such employment
is terminated in accordance with the Company's normal retirement policy for
those aged 65 and older, not including early retirement or so-called "window
period" retirements, generally applicable to its salaried employees, as in
effect immediately prior to any Potential Change in Control.
2. TERM OF THIS AGREEMENT. This Agreement shall commence on the date
hereof and shall continue in effect through December 31, 1998; provided,
--------
however, that commencing on January 1, 1998 and each January 1 thereafter, the
-------
term of this Agreement shall automatically be extended for one additional year
unless, not later than June 30 of the preceding year, the Company or the
Executive shall have given written notice to the other not to extend this
Agreement or a Change in Control shall have occurred prior to any such January
1; provided, further, however, that if a Change in Control shall have occurred
-------- ------- -------
during the term of this Agreement, this Agreement shall continue in effect for
a period of not less than thirty-six (36) months beyond the month in which such
Change in Control occurred (the "Term"). Notwithstanding the foregoing
provisions of this Section 2, the Term shall terminate upon the Executive's
attaining the age of sixty-five (65) years.
3. COMPANY'S COVENANTS.
3.1 SEVERANCE PAYMENTS. In order to induce the Executive to remain
in the employ of the Company and/or one or more of its subsidiaries and in
consideration of the Executive's covenants set forth in Section 4 below, the
Company agrees, under the terms and conditions described herein and in addition
to the amounts payable to the Executive under Section 5 below, to pay the
Executive the "Severance Payments" described in Section 6.1 below and the other
payments and benefits described herein in the event the Executive's employment
with the Company is terminated during the Term and after a Change in Control or
under the other circumstances set forth in Section 6.1 below.
3.2 POSITION AND DUTIES. During the period commencing on the date
of any Change in Control until the earliest to occur of (i) the date which is
thirty-six (36) months from the date of any such Change in Control, (ii) the
date of termination by the Executive of the Executive's employment for any
reason, or (iii) the termination by the Company of the Executive's employment
for any reason (the "Employment Period"), (a) the Executive's position
39
(including status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be at least commensurate in all material
respects with the most significant of those held, exercised and assigned at any
time during the one hundred eighty (180) day period immediately preceding any
related Potential Change in Control, and (b) the Executive's services shall be
performed at the location where the Executive was employed immediately
preceding any such Potential Change in Control, or any office or location less
than thirty (30) miles from such location.
3.3 BASE SALARY. During the Employment Period, the Executive shall
receive Annual Base Salary at least equal to twelve (12) times the highest
monthly base salary paid or payable, including (without limitation) any base
salary which has been earned but deferred, to the Executive by the Company and
its affiliated companies in respect of the twelve (12) month period immediately
preceding the month in which any related Potential Change in Control occurs.
In addition, Annual Base Salary shall not be reduced after the occurrence of a
Potential Change in Control. As used in this Agreement, the term "affiliated
companies" shall include any company controlled by, controlling or under common
control with the Company.
3.4 ANNUAL BONUS. In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year ending during the Employment Period, an
annual bonus (the "Annual Bonus") in cash at least equal to the Executive's
highest bonus for the last three (3) full fiscal years prior to the fiscal year
in which the related Potential Change in Control occurs (annualized in the
event that the Executive was not employed by the Company for the whole of any
such prior fiscal year). Each Annual Bonus shall be paid no later than the end
of the third month of the fiscal year next following the fiscal year for which
the Annual Bonus is awarded, unless the Executive shall elect to defer the
receipt of such Annual Bonus.
3.5 INCENTIVE, SAVINGS AND RETIREMENT PLANS. During the Employment
Period, the Executive shall be entitled to participate in all incentive,
savings and retirement plans, practices, policies and programs applicable
generally to other peer executives of the Company and its affiliated companies,
but in no event shall such plans, practices, policies and programs provide the
Executive with incentive opportunities (measured with respect to both regular
and special incentive opportunities, to the extent, if any, that such
distinction is applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than the most
favorable of those provided by the Company and its affiliated companies for the
Executive under such plans, practices, policies and programs as in effect at
any time during the one hundred eighty (180) day period immediately preceding
any related Potential Change in Control or if more favorable to the Executive,
those provided generally at any time thereafter to other peer executives of the
Company and its affiliated companies.
3.6 WELFARE BENEFIT PLANS. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be entitled
to participate in and shall receive all benefits under all of the health and
welfare benefit plans, practices, policies and programs provided by the Company
and its affiliated companies (including, without limitation, medical,
40
prescription, dental, disability, employee life, group life, accidental death
and travel accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and its affiliated companies,
but in no event shall such plans, practices, policies and programs provide the
Executive with benefits which are less favorable, in the aggregate, than the
most favorable of such plans, practices, policies and programs in effect for
the Executive at any time during the one hundred eighty (180) day period
immediately preceding any related Potential Change in Control or, if more
favorable to the Executive, those provided generally at any time thereafter to
other peer executives of the Company and its affiliated companies.
3.7 EXPENSES. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred
by the Executive in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in effect for the
Executive at any time during the one hundred eighty (180) day period
immediately preceding any related Potential Change in Control or, if more
favorable to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated companies.
3.8 FRINGE BENEFITS. During the Employment Period, the Executive
shall be entitled to fringe benefits, including, without limitation, tax and
financial planning services, payment of club dues, and an automobile allowance
and payment of related expenses, in accordance with the most favorable plans,
practices, programs and policies of the Company and its affiliated companies in
effect for the Executive at any time during the one hundred eighty (180) day
period immediately preceding any related Potential Change in Control or, if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
3.9 OFFICE AND SUPPORT STAFF. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, at least equal to the most favorable of the foregoing
provided to the Executive by the Company and its affiliated companies at any
time during the one hundred eighty (180) day period immediately preceding any
related Potential Change in Control or, if more favorable to the Executive, as
provided generally at any time thereafter with respect to other peer executives
of the Company and its affiliated companies.
3.10 VACATION. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated companies as
in effect for the Executive at any time during the one hundred eighty (180) day
period immediately preceding any related Potential Change in Control or, if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
4. THE EXECUTIVE'S COVENANTS.
41
4.1 EMPLOYMENT. The Executive agrees that, subject to the terms and
conditions of this Agreement, in the event of a Change in Control during the
Term the Executive will remain in the employ of the Company during any related
Employment Period.
4.2 TIME AND ATTENTION. During the Employment Period, and excluding
any periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during normal business
hours to the business and affairs of the Company and, to the extent necessary
to discharge the responsibilities and duties assigned to the Executive
hereunder, to use the Executive's reasonable best efforts to perform faithfully
and efficiently such responsibilities and duties. During the Employment Period
it shall not be a violation of this Agreement for the Executive to (i) serve on
corporate, civic or charitable boards or committees, (ii) deliver lectures,
fulfill speaking engagements or teach at educational institutions, and (iii)
manage personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to any Potential Change in Control, the
reinstatement or continued conduct of such activities (or the reinstatement or
conduct of activities similar in nature and scope thereto) subsequent to any
related Potential Change in Control shall not thereafter be deemed to interfere
with the performance of the Executive's responsibilities to the Company.
4.3 CONFIDENTIAL INFORMATION. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other
than by direct or indirect acts by the Executive in violation of this
Agreement). After termination of the Executive's employment with the Company,
the Executive shall not, without the prior written consent of the Company or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it. In no event, however, shall an asserted violation of the
provisions of this Section 4.3 constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this Agreement.
5. COMPENSATION OTHER THAN SEVERANCE PAYMENTS.
5.1 DISABILITY. Following a Potential Change in Control and during
the Term, during any period that the Executive fails to perform the Executive's
full-time duties with the Company as a result of incapacity due to physical or
mental illness, the Executive's full salary shall be paid to the Executive by
the Company at a rate no less than the rate in effect at the commencement of
any such disability period, together with all compensation and benefits payable
to the Executive under the terms of any compensation or benefit plan, program
42
or arrangement maintained by the Company or its subsidiaries during such
disability period, until the Executive's employment is terminated by the
Company for Disability.
5.2 BASE SALARY. If the Executive's employment shall be terminated
for any reason following a Potential Change in Control and during the Term, the
Executive's full salary shall be paid to the Executive by the Company through
the Date of Termination (as defined below in Section 7.2) at the rate in effect
at the time the Notice of Termination is given, together with all compensation
and benefits payable to or with respect to the Executive through the Date of
Termination under the terms of any compensation or benefit plan, program or
arrangement maintained by the Company or its subsidiaries during such period.
5.3 BENEFITS. If the Executive's employment shall be terminated for
any reason following a Potential Change in Control and during the Term, the
Executive's normal post-termination compensation and benefits shall be paid to
the Executive as such payments become due. Such post-termination compensation
and benefits shall be determined under, and paid in accordance with, the
retirement, insurance and other compensation or benefit plans, programs and
arrangements maintained by the Company or its subsidiaries.
6. SEVERANCE PAYMENTS.
6.1 SEVERANCE. The Company shall pay the Executive the payments
described in this Section 6.1 (the "Severance Payments") upon the termination
of the Executive's employment with the Company following a Change in Control
and during the Term, in addition to the payments and benefits described in
Section 5 hereof, unless such termination is (i) by the Company for Cause, (ii)
by reason of Retirement, or (iii) by the Executive without Good Reason. In
addition, the Executive's employment shall be deemed to have been terminated
following a Change in Control by the Company without Cause or by the Executive
with Good Reason (a) if the Executive reasonably demonstrates that the
Executive's employment was terminated prior to a Change in Control without
Cause (1) at the request of a Person who has entered into an agreement with the
Company the consummation of which will constitute a Change in Control (or who
has taken other steps reasonably calculated to effect a Change in Control) or
(2) otherwise in connection with, as a result of or in anticipation of a Change
in Control, (b) if the Executive terminates his employment for Good Reason
prior to a Change in Control and the Executive reasonably demonstrates that the
circumstance(s) or event(s) which constitute such Good Reason occurred (1) at
the request of such Person or (2) otherwise in connection with, as a result of
or in anticipation of a Change in Control, or (c) if the Executive dies or is
terminated by the Company due to Disability, in each case, after the occurrence
of a Potential Change in Control and a related Change in Control actually
occurs within one (1) year after the Date of Termination or the date of death,
as the case may be. The Executive's right to terminate the Executive's
employment for Good Reason shall not be affected by the Executive's incapacity
due to physical or mental illness. The Executive's continued employment shall
not constitute consent to, or a waiver of rights with respect to, any act or
failure to act constituting Good Reason hereunder.
43
6.1.1 In lieu of any further salary and annual bonus
payments to the Executive for periods subsequent to the Date of
Termination, the Company shall pay to the Executive a lump sum
severance payment, in cash, equal to two (2) or, if less, the number
of years, including fractions, from the Date of Termination until the
Executive reaches the age of sixty-five (65) years times the sum of
(i) the highest Annual Base Salary paid or payable to the Executive
during the thirty-six (36) month period immediately preceding the
month in which the Change in Control occurs, and (ii) the highest
annual bonus paid or determined and payable to the Executive during
such thirty-six (36) month period.
6.1.2 For a twenty-four (24) month period after the Date
of Termination, or if sooner, until the Executive reaches the age of
sixty-five (65) years, the Company shall arrange to provide the
Executive with life, disability, accident and health insurance
benefits substantially similar to those which the Executive is
receiving immediately prior to any related Potential Change in
Control or the receipt of the Notice of Termination (without giving
effect to any reduction in such benefits subsequent to a Change in
Control which reduction constitutes Good Reason), whichever is
greater. Benefits otherwise receivable by the Executive pursuant to
this Section 6.1.2 shall be reduced to the extent comparable benefits
are actually received by or made available to the Executive without
cost during such period following the Executive's termination of
employment (and any such benefits actually received by the Executive
shall be reported to the Company by the Executive).
6.2 SPECIAL REIMBURSEMENT. In the event that the Executive becomes
entitled to the Severance Payments, if any payment or benefit paid or payable,
or received or to be received, by or on behalf of the Executive in connection
with a Change in Control or the termination of the Executive's employment,
whether any such payments or benefits are pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the Company, any of
its subsidiaries, any Person, or otherwise (the "Total Payments"), will or
would be subject to the excise tax imposed under section 4999 of the Code (the
"Excise Tax"), the Company shall pay to the Executive an additional amount (the
"Gross-Up Payment") which amount shall be equal to the sum of (a) the amount of
such Excise Tax imposed (determined without regard to the Gross-Up Payment),
and (b) the product of (i) such Excise Tax (determined without regard to the
Gross-Up Payment), and (ii) the Aggregate Combined Marginal Tax Rate. For
purposes of this Section 6.2, "Aggregate Combined Marginal Tax Rate" means (and
shall equal) the sum of (A) the combined highest marginal state and local
income tax rates applicable for the tax year in which the Executive receives
the Gross-Up Payment (adjusted downward to take into account the tax
deductibility, if any, of such state and local income taxes), plus (B) the rate
of excise tax imposed on "golden parachute" payments under Section 4999 of the
Code, plus (C) the highest marginal federal income tax rate applicable for the
tax year in which the Executive receives the Gross-Up Payment (adjusted upward
to take into account any reduction in otherwise allowable itemized deductions
attributable to Section 68 of the Code), plus (D) the tax rate applicable to
44
the Executive under the hospital insurance portion of the Federal Insurance
Contributions Act under Section 3101(b) of the Code for the tax year in which
the Executive receives the Gross-Up Payment.
6.2.1 For purposes of determining whether any of the Total
Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (i) the Total Payments shall be treated as "parachute
payments" within the meaning of section 280G(b)(2) of the Code, and
all "excess parachute payments" within the meaning of
section 280G(b)(1) of the Code shall be treated as subject to the
Excise Tax, unless in the opinion of tax counsel (delivered to the
Executive) selected by the Company and reasonably acceptable to the
Executive such Total Payments (in whole or in part) (a) do not
constitute parachute payments, including (without limitation) by
reason of section 280G(b)(4)(A) of the Code, (b) such excess
parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered, within the meaning of
section 280G(b)(4)(B) of the Code, or (c) are otherwise not subject
to the Excise Tax, and (ii) the value of any non-cash benefits or any
deferred payment or benefit shall be determined by the Company's
independent auditors in accordance with the principles of sections
280G(d)(3) and (4) of the Code.
6.2.2 In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder at
the time of termination of the Executive's employment, the Executive
shall repay to the Company, at the time that the amount of such
reduction in Excise Tax is finally determined, the portion of the
Gross-Up Payment attributable to such reduction plus interest on the
amount of such repayment at the rate provided in section
1274(b)(2)(B) of the Code. In the event that the Excise Tax is
determined to exceed the amount taken into account hereunder at the
time of the termination of the Executive's employment (including by
reason of any payment the existence or amount of which cannot be
determined at the time of the Gross-Up Payment), the Company shall
make an additional Gross-Up Payment in respect of such excess (plus
any interest, penalties or additions payable by the Executive with
respect to such excess) at the time that the amount of such excess is
finally determined. The Executive and the Company shall each
reasonably cooperate with the other in connection with any
administrative or judicial proceedings concerning the existence or
amount of any such subsequent liability for Excise Tax with respect
to the Severance Payments.
6.3 DATE OF PAYMENT. The payments provided for in Section 6.1.1 and
Section 6.2 hereof shall be made not later than the fifteenth (15th) day
following the Date of Termination; provided, however, that if the amounts of
-------- -------
such payments cannot be finally determined on or before such day, the Company
shall pay to the Executive on such day an estimate, as determined in good faith
by the Company, of the minimum amount of such payments to which the Executive
45
is likely to be entitled to and shall pay the remainder of such payments
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later
than the thirtieth (30th) day after the Date of Termination. In the event that
the amount of the estimated payments exceeds the amount subsequently determined
to have been due, such excess shall constitute a loan by the Company to the
Executive, payable on the fifth (5th) business day after demand by the Company
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code). At the time that payments are made under this Section 6.3, the Company
shall provide the Executive with a detailed written statement setting forth the
manner in which such payments were calculated and the basis for such
calculations including, without limitation, any opinions or other advice the
Company has received from outside counsel, auditors or consultants (and any
such opinions or advice which are in writing shall be attached to the
statement).
6.4 LEGAL COSTS. The Company shall also reimburse the Executive for
all legal fees and expenses incurred in good faith by the Executive as a result
of any dispute with any party (including, but not limited to, the Company or
the Bank) regarding the payment of any benefit provided for in this Agreement
(including, but not limited, all such fees and expenses incurred in disputing
any termination or in seeking in good faith to obtain or enforce any benefit or
right provided by this Agreement or in connection with any tax audit or
proceeding to the extent attributable to the application of section 4999 of the
Code plus in each case interest on any delayed payment at the applicable
Federal rate provided for in section 7872(f)(2)(A) of the Code. Such payments
shall be made within five (5) business days after delivery of the Executive's
written requests for payment accompanied by such evidence of fees and expenses
incurred as the Company reasonably may require.
7. TERMINATION PROCEDURES AND COMPENSATION DURING DISPUTE.
7.1 NOTICE OF TERMINATION. After a Change in Control and during the
Term, any purported termination of the Executive's employment with the Company
(other than by reason of death) shall be communicated by written Notice of
Termination from one party hereto to the other party hereto in accordance with
Section 10 hereof. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment with the Company under the provision so indicated. Further, a
Notice of Termination for Cause is required to include a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters (3/4) of
the entire membership of the Board at a meeting of the Board which was called
and held for the purpose of considering such termination (which meeting may be
a regular meeting of the Board where prior notice of consideration of such
termination is given to members of the Board) finding that, in the good faith
opinion of the Board, the Executive engaged in conduct set forth in clause (i)
or (ii) of the definition of Cause herein, and specifying the particulars
thereof in detail. For purposes of this Agreement, any purported termination
not effected in accordance with this Section 7.1 shall not be considered
effective.
46
7.2 DATE OF TERMINATION. "Date of Termination", with respect to any
purported termination of the Executive's employment after a Change in Control
and during the Term, shall mean (i) if the Executive's employment is terminated
for Disability, thirty (30) days after Notice of Termination is given (provided
that the Executive shall not have returned to the full-time performance of the
Executive's duties during such thirty (30) day period), and (ii) if the
Executive's employment is terminated for any other reason, the date specified
in the Notice of Termination (which, in the case of a termination by the
Company, shall not be less than thirty (30) days (except in the case of a
termination for Cause) and, in the case of a termination by the Executive,
shall not be less than fifteen (15) days nor more than sixty (60) days,
respectively, after the date such Notice of Termination is given).
7.3 DISPUTE CONCERNING TERMINATION. If within fifteen (15) days
after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this Section 7.3), the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall be the date on
which the dispute is finally resolved, either by mutual written agreement of
the parties or by a final judgment, order or decree of a court of competent
jurisdiction (which is not appealable or with respect to which the time for
appeal therefrom has expired and no appeal has been perfected); provided,
--------
however, that the Date of Termination shall be extended by a notice of dispute
-------
only if the basis for such notice is reasonable, such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence.
7.4 COMPENSATION DURING DISPUTE. If a purported termination occurs
following a Change in Control and during the Term, and such termination is
disputed in accordance with Section 7.3 above, the Company shall continue to
pay the Executive the full compensation (including without limitation Annual
Base Salary and Annual Bonus) in effect at the time of any related Potential
Change in Control or when the notice giving rise to the dispute was given
(whichever is greater) and continue the Executive as a participant in all
compensation, incentive, pension and welfare benefit and insurance plans in
which the Executive was participating at the time of any Potential Change in
Control or when the notice giving rise to the dispute was given, whichever is
greater, until the dispute is finally resolved in accordance with Section 7.3
hereof. Amounts paid under this Section 7.4 are in addition to all other
amounts due under this Agreement (other than those due under Section 5.2
hereof) and shall not be offset against or reduce any other amounts due under
this Agreement or any other plan, agreement or arrangement.
8. NO MITIGATION. The Company agrees that, if the Executive's
employment is terminated during the Term, the Executive is not required to seek
other employment or to attempt in any way to reduce any amounts payable to the
Executive by the Company pursuant to Section 6 or Section 7.4. Further, the
amount of any payment or benefit provided for in Section 6 (other than pursuant
to Section 6.1.2) or Section 7.4 shall not be reduced by any compensation
earned by the Executive as the result of employment by another employer, by
retirement benefits, or offset against any amount claimed to be owed by the
Executive to the Company or any of its subsidiaries, or otherwise.
47
9. SUCCESSORS; BINDING AGREEMENT.
9.1 SUCCESSORS. In addition to any obligations imposed by law upon
any successor to the Company, the Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption and
agreement prior to the effectiveness of any such succession shall be a breach
of this Agreement and shall entitle the Executive to compensation from the
Company in the same amount and on the same terms as the Executive would be
entitled to hereunder if the Executive were to terminate the Executive's
employment for Good Reason after a Change in Control, except that, for purposes
of implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.
9.2 BINDING AGREEMENT. This Agreement shall inure to the benefit of
and be enforceable by this Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive shall die while any amount would still be payable
to the Executive hereunder (other than amounts which, by their terms, terminate
upon the death of the Executive) if the Executive had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the executors, personal representatives or
administrators of the Executive's estate.
10. NOTICES. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below, or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon actual receipt:
To the Company:
The Summit Bancorporation
Xxx Xxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attention: Corporate Secretary
To the Executive:
Xx. Xxxx X. Xxxxxx
000 Xxxxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
48
11. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.
The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of New Jersey without regard to the
principles of conflict of laws thereof. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to and include any
successor provisions to such sections. Any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state
or local law and any additional withholding to which the Executive has agreed.
The rights and obligations of the Company and the Executive under this
Agreement shall survive the expiration of the Term and the Employment Period.
12. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
13. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
14. NO LIMITATION. Nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any plan, program, policy or
practice provided by the Company or any of its affiliated companies and for
which the Executive may qualify, nor shall anything herein limit or otherwise
affect such rights as the Executive may have under any other contract or
agreement with the Company or any of its affiliated companies. Amounts which
are vested benefits or which the Executive is otherwise entitled to receive
under any plan, policy, practice or program of or any contract or agreement
with the Company or any of its affiliated companies at or subsequent to the
Date of Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly modified by
this Agreement.
The Summit Bancorporation
By:
/s/ Xxxxxx X. Xxx
----------------------------
Xxxxxx X. Xxx
49
/s/ Xxxx X. Xxxxxx
----------------------------
Xxxx X. Xxxxxx
50
AGREEMENT
THIS AGREEMENT, dated as of September 1, 1995 (this "Agreement"), is
made by and between The Summit Bancorporation, a New Jersey corporation, having
its principal offices at Xxx Xxxx Xxxxxx, Xxxxxxx, Xxx Xxxxxx 00000 (the
"Company"), and Xx. Xxxxxx X. XxXxxxxxx residing at 00 Xxxxxxx Xxxxx, Xxxxxx,
Xxx Xxxxxx 00000 (the "Executive").
WHEREAS, the Company considers it essential to the best interests of
its shareholders to xxxxxx the continued employment of key executive management
personnel; and
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that, as is the case with many publicly-held corporations, the
possibility of a Change in Control (as defined in Section 1.3 below) of the
Company exists from time to time and that such possibility, and the
uncertainty, instability and questions which it may raise for and among key
executive management personnel, may result in the premature departure or
significant distraction of such management personnel to the material detriment
of the Company and its shareholders; and
WHEREAS, the Board has determined that appropriate steps should be
taken to reinforce, focus and encourage the continued attention and dedication
of key members of the executive management of the Company and its subsidiaries,
including (without limitation) the Executive, to their assigned duties without
distraction in the face of potentially disturbing or unsettling circumstances
arising from the possibility of a Change in Control of the Company;
NOW THEREFORE, in consideration of the premises and the mutual cove-
nants herein contained, the Company and the Executive hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms
shall have the meanings set forth below:
1.1 "ANNUAL BASE SALARY" shall mean the Executive's rate of regular
basic annual compensation prior to any reduction under a salary reduction
agreement pursuant to section 401(k) or section 125 of the Internal Revenue
Code of 1986, as amended from time to time (the "Code"), and shall not include
(without limitation) cost of living allowances, fees, retainers,
reimbursements, car allowances, bonuses, incentive awards, prizes or similar
payments.
1.2 "CAUSE" for termination by the Company of the Executive's
employment, after any Change in Control, shall mean (i) the willful and
continued failure by the Executive to substantially perform the Executive's
duties with the Company, or a subsidiary of the Company, including (without
limitation) Summit Bank, a New Jersey chartered bank (the "Bank"), as such
51
duties may reasonably be defined from time to time by the Board (or a duly
designated and authorized committee thereof), or to abide by the reasonable
written policies of the Company or of the Executive's primary employer (other
than any such failure resulting from the Executive's incapacity due to physical
or mental illness or any such actual or anticipated failure after the issuance
of a Notice of Termination by the Executive for Good Reason pursuant to Section
7.1) after a written demand for substantial performance is delivered to the
Executive by the Board, which demand specifically identifies the manner in
which the Board believes that the Executive has not substantially performed the
Executive's duties or has not abided by any reasonable written policies, or
(ii) the continued and willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company or its subsidiaries,
monetarily or otherwise. For purposes of clauses (i) and (ii) of this
definition, no act, or failure to act, on the Executive's part shall be deemed
"willful" unless done, or omitted to be done, by the Executive in bad faith and
without reasonable belief that the Executive's act, or failure to act, was in
the best interest of the Company or its subsidiaries. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by the
Board or upon the instructions of the Board or the Company's chief executive
officer or other duly authorized senior officer of the Company or based upon
the advice of counsel for the Company shall be conclusively presumed to be
done, or omitted to be done, by the Executive in good faith and in the best
interests of the Company and its subsidiaries. The cessation of employment of
the Executive shall not be deemed to be for Cause unless and until there shall
have been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three quarters of the entire membership of
the Board at a meeting of the Board called and held for such purpose (after
reasonable notice of any such meeting is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before
the Board), finding that, in the good faith opinion of the Board, the Executive
is guilty of the conduct described in clause (i) or (ii) above, and specifying
the particulars thereof in detail.
1.3 "CHANGE IN CONTROL" shall mean and be deemed to have occurred
if:
(i) any Person is or becomes the Beneficial Owner (as that
term is defined in Rule 13d-3 under the Securities Exchange Act of
1934 (the "Exchange Act")), directly or indirectly, of securities of
the Company (not including in the securities beneficially owned by
such Person any securities acquired directly from the Company)
representing twenty-five percent (25%) or more of the combined voting
power of the Company's then outstanding securities, or there occurs
any transaction which the Company is required to disclose pursuant to
Item 1(a) of Form 8-K (as filed pursuant to Rule 13a-11 or Rule 15d-
11 of the Exchange Act); or
(ii) during any period of twenty-four (24) consecutive
months (not including any period prior to September 1, 1995),
individuals who at the beginning of such period constitute the Board
and any new director (other than a director designated by a Person
52
who has entered into an agreement with the Company to effect a
transaction described in clause (i), (iii) or (iv) of this definition
or any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies
or consents) whose election by the Board or nomination for election
by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of such period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority of the Board; or
(iii) the shareholders of the Company approve a
reorganization, merger or consolidation, other than a reorganization,
merger or consolidation with respect to which all or substantially
all of the individuals and entities who were Beneficial Owners,
immediately prior to such reorganization, merger or consolidation, of
the combined voting power of the Company's then outstanding
securities beneficially own, directly or indirectly, immediately
after such reorganization, merger or consolidation, more then
seventy-five percent (75%) of the combined voting power of the
securities of the corporation resulting from such reorganization,
merger or consolidation in substantially the same proportions as
their respective ownership, immediately prior to such reorganization,
merger or consolidation, of the combined voting power of the
Company's securities; or
(iv) the shareholders of the Company approve (a) the sale
or disposition by the Company (other than to a subsidiary of the
Company) of the Bank, or (b) a complete liquidation or dissolution of
the Company or the Bank.
Notwithstanding the foregoing, a Change in Control shall not include any event,
circumstance or transaction which results from the action (excluding the
Executive's employment activities with the Company, the Bank or any of their
respective subsidiaries) of any Person or group of Persons which includes, is
directly affiliated with or is wholly or partly controlled by one or more
executive officers of the Company and in which the Executive actively
participates.
1.4 "COMPANY" shall include The Summit Bancorporation and any
successor to its business and/or assets which assumes (either expressly, by
operation of law or otherwise) and/or agrees to perform this Agreement by
operation of law or otherwise (except in determining, under Section 1.3 hereof,
whether or not any Change in Control of the Company has occurred in connection
with such succession).
1.5 "DISABILITY" shall mean and be deemed the reason for the
termination by the Company of the Executive's employment, if, as a result of
the Executive's incapacity due to physical or mental illness, (i) the Executive
shall have been absent from the full-time performance of the Executive's duties
53
with the Company for a period of six (6) consecutive months, (ii) the Company
gives the Executive a Notice of Termination for Disability, and (iii) within
thirty (30) days after such Notice of Termination is given, the Executive does
not return to the full-time performance of the Executive's duties.
1.6 "GOOD REASON" for termination by the Executive of the
Executive's employment, in connection with or as a result of any Change in
Control, shall mean the occurrence (without the Executive's prior express
written consent) of any one of the following acts, or failures to act, unless,
in the case of any act or failure to act described in clauses (i), (iv), (v) or
(vi) below, such act or failure to act is corrected by the Company prior to the
Date of Termination specified in the Notice of Termination given in respect
thereof:
(i) the assignment to the Executive of any duties or
responsibilities inconsistent with those described in Section 3.2
below or with the Executive's position(s) (including without
limitation status, offices, titles, and reporting
responsibilities/rights) as an executive officer of the Company and
its subsidiaries or a substantial adverse alteration in the nature of
the Executive's authority, duties, or responsibilities from those
described in Section 3.2 below or otherwise;
(ii) a reduction in the Executive's Annual Base Salary as
in effect on the date of this Agreement or as the same may be
increased at any time thereafter and from time to time;
(iii) the relocation of the Company's principal executive
offices to a location more than thirty (30) miles from its location
on the date of this Agreement (or, if different, more than thirty
(30) miles from where such offices are located immediately prior to
any Potential Change in Control) or the Company's requiring the
Executive to be based anywhere other than the Company's principal
executive offices except for required travel on the Company's
business to an extent substantially consistent with the Executive's
business travel obligations as of the date of this Agreement;
(iv) any failure by the Company to comply with any of the
provisions of this Agreement, other than an isolated, insubstantial
and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof
given by the Executive;
(v) the failure by the Company or a subsidiary to continue
in effect any pension benefit or incentive or deferred compensation
plan in which the Executive participates immediately prior to any
Potential Change in Control which is material to the Executive's
total compensation, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan or arrangement) has been made
with respect to such plan, or the failure by the Company or a
54
subsidiary to continue the Executive's participation therein (or in
such substitute or alternative plan or arrangement) on a basis not
materially less favorable, both in terms of the amount of benefits
provided and the level of the Executive's participation relative to
other participants, as existed at the time of the Potential Change in
Control;
(vi) the failure by the Company or a subsidiary to
continue to provide the Executive with health and welfare benefits
substantially similar to those enjoyed by the Executive under any of
the Company's or a subsidiary's retirement, life insurance, medical,
health and accident, or disability or similar plans in which the
Executive was participating at the time of any Potential Change in
Control, the taking of any action by the Company or a subsidiary
which would directly or indirectly materially reduce any of such
benefits or deprive the Executive of any material fringe benefit
enjoyed by the Executive at the time of the Potential Change in
Control, or the failure by the Company or a subsidiary to provide the
Executive with the number of paid vacation days to which the
Executive is entitled in accordance with the Company's or a
subsidiary's normal vacation policy in effect at the time of the
Potential Change in Control;
(vii) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of Termination
satisfying the requirements of Section 7.1; and/or
(viii) a termination by the Executive for any reason
during the thirty (30) day period immediately following the first
anniversary of any Change in Control.
1.7 "PERSON" shall have the meaning ascribed thereto in Section
3(a)(9) of the Exchange Act, as modified applied, and used in Sections 13(d)
and 14(d) thereof; provided, however, a Person shall not include (i) the
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Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any of its
subsidiaries (in its capacity as such), (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by the stockholders of the Company
in substantially the same character and proportions as their ownership of stock
of the Company.
1.8 "POTENTIAL CHANGE IN CONTROL" shall mean and be deemed to have
occurred if:
(i) the Company commences negotiations in respect of or
enters into an agreement, the consummation of which would result in
the occurrence of a Change in Control;
55
(ii) the Company or any Person publicly announces an
intention to take actions which, if consummated, would constitute a
Change in Control; and/or
(iii) any Person becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing ten percent
(10%) or more of the combined voting power of the Company's then
outstanding securities, or any Person increases such Person's
beneficial ownership of such securities by five (5) percentage points
or more over the percentage so owned by such Person on September 1,
1995.
1.9 "RETIREMENT" shall mean and be deemed the reason for the
termination by the Executive of the Executive's employment if such employment
is terminated in accordance with the Company's normal retirement policy for
those aged 65 and older, not including early retirement or so-called "window
period" retirements, generally applicable to its salaried employees, as in
effect immediately prior to any Potential Change in Control.
2. TERM OF THIS AGREEMENT. This Agreement shall commence on the date
hereof and shall continue in effect through December 31, 1998; provided,
--------
however, that commencing on January 1, 1998 and each January 1 thereafter, the
-------
term of this Agreement shall automatically be extended for one additional year
unless, not later than June 30 of the preceding year, the Company or the
Executive shall have given written notice to the other not to extend this
Agreement or a Change in Control shall have occurred prior to any such January
1; provided, further, however, that if a Change in Control shall have occurred
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during the term of this Agreement, this Agreement shall continue in effect for
a period of not less than thirty-six (36) months beyond the month in which such
Change in Control occurred (the "Term"). Notwithstanding the foregoing
provisions of this Section 2, the Term shall terminate upon the Executive's
attaining the age of sixty-five (65) years.
3. COMPANY'S COVENANTS.
3.1 SEVERANCE PAYMENTS. In order to induce the Executive to remain
in the employ of the Company and/or one or more of its subsidiaries and in
consideration of the Executive's covenants set forth in Section 4 below, the
Company agrees, under the terms and conditions described herein and in addition
to the amounts payable to the Executive under Section 5 below, to pay the
Executive the "Severance Payments" described in Section 6.1 below and the other
payments and benefits described herein in the event the Executive's employment
with the Company is terminated during the Term and after a Change in Control or
under the other circumstances set forth in Section 6.1 below.
3.2 POSITION AND DUTIES. During the period commencing on the date
of any Change in Control until the earliest to occur of (i) the date which is
thirty-six (36) months from the date of any such Change in Control, (ii) the
date of termination by the Executive of the Executive's employment for any
reason, or (iii) the termination by the Company of the Executive's employment
for any reason (the "Employment Period"), (a) the Executive's position
56
(including status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be at least commensurate in all material
respects with the most significant of those held, exercised and assigned at any
time during the one hundred eighty (180) day period immediately preceding any
related Potential Change in Control, and (b) the Executive's services shall be
performed at the location where the Executive was employed immediately
preceding any such Potential Change in Control, or any office or location less
than thirty (30) miles from such location.
3.3 BASE SALARY. During the Employment Period, the Executive shall
receive Annual Base Salary at least equal to twelve (12) times the highest
monthly base salary paid or payable, including (without limitation) any base
salary which has been earned but deferred, to the Executive by the Company and
its affiliated companies in respect of the twelve (12) month period immediately
preceding the month in which any related Potential Change in Control occurs.
In addition, Annual Base Salary shall not be reduced after the occurrence of a
Potential Change in Control. As used in this Agreement, the term "affiliated
companies" shall include any company controlled by, controlling or under common
control with the Company.
3.4 ANNUAL BONUS. In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year ending during the Employment Period, an
annual bonus (the "Annual Bonus") in cash at least equal to the Executive's
highest bonus for the last three (3) full fiscal years prior to the fiscal year
in which the related Potential Change in Control occurs (annualized in the
event that the Executive was not employed by the Company for the whole of any
such prior fiscal year). Each Annual Bonus shall be paid no later than the end
of the third month of the fiscal year next following the fiscal year for which
the Annual Bonus is awarded, unless the Executive shall elect to defer the
receipt of such Annual Bonus.
3.5 INCENTIVE, SAVINGS AND RETIREMENT PLANS. During the Employment
Period, the Executive shall be entitled to participate in all incentive,
savings and retirement plans, practices, policies and programs applicable
generally to other peer executives of the Company and its affiliated companies,
but in no event shall such plans, practices, policies and programs provide the
Executive with incentive opportunities (measured with respect to both regular
and special incentive opportunities, to the extent, if any, that such
distinction is applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than the most
favorable of those provided by the Company and its affiliated companies for the
Executive under such plans, practices, policies and programs as in effect at
any time during the one hundred eighty (180) day period immediately preceding
any related Potential Change in Control or if more favorable to the Executive,
those provided generally at any time thereafter to other peer executives of the
Company and its affiliated companies.
3.6 WELFARE BENEFIT PLANS. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be entitled
to participate in and shall receive all benefits under all of the health and
welfare benefit plans, practices, policies and programs provided by the Company
and its affiliated companies (including, without limitation, medical,
57
prescription, dental, disability, employee life, group life, accidental death
and travel accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and its affiliated companies,
but in no event shall such plans, practices, policies and programs provide the
Executive with benefits which are less favorable, in the aggregate, than the
most favorable of such plans, practices, policies and programs in effect for
the Executive at any time during the one hundred eighty (180) day period
immediately preceding any related Potential Change in Control or, if more
favorable to the Executive, those provided generally at any time thereafter to
other peer executives of the Company and its affiliated companies.
3.7 EXPENSES. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred
by the Executive in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in effect for the
Executive at any time during the one hundred eighty (180) day period
immediately preceding any related Potential Change in Control or, if more
favorable to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated companies.
3.8 FRINGE BENEFITS. During the Employment Period, the Executive
shall be entitled to fringe benefits, including, without limitation, tax and
financial planning services, payment of club dues, and an automobile allowance
and payment of related expenses, in accordance with the most favorable plans,
practices, programs and policies of the Company and its affiliated companies in
effect for the Executive at any time during the one hundred eighty (180) day
period immediately preceding any related Potential Change in Control or, if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
3.9 OFFICE AND SUPPORT STAFF. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, at least equal to the most favorable of the foregoing
provided to the Executive by the Company and its affiliated companies at any
time during the one hundred eighty (180) day period immediately preceding any
related Potential Change in Control or, if more favorable to the Executive, as
provided generally at any time thereafter with respect to other peer executives
of the Company and its affiliated companies.
3.10 VACATION. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated companies as
in effect for the Executive at any time during the one hundred eighty (180) day
period immediately preceding any related Potential Change in Control or, if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
4. THE EXECUTIVE'S COVENANTS.
58
4.1 EMPLOYMENT. The Executive agrees that, subject to the terms and
conditions of this Agreement, in the event of a Change in Control during the
Term the Executive will remain in the employ of the Company during any related
Employment Period.
4.2 TIME AND ATTENTION. During the Employment Period, and excluding
any periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during normal business
hours to the business and affairs of the Company and, to the extent necessary
to discharge the responsibilities and duties assigned to the Executive
hereunder, to use the Executive's reasonable best efforts to perform faithfully
and efficiently such responsibilities and duties. During the Employment Period
it shall not be a violation of this Agreement for the Executive to (i) serve on
corporate, civic or charitable boards or committees, (ii) deliver lectures,
fulfill speaking engagements or teach at educational institutions, and (iii)
manage personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to any Potential Change in Control, the
reinstatement or continued conduct of such activities (or the reinstatement or
conduct of activities similar in nature and scope thereto) subsequent to any
related Potential Change in Control shall not thereafter be deemed to interfere
with the performance of the Executive's responsibilities to the Company.
4.3 CONFIDENTIAL INFORMATION. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other
than by direct or indirect acts by the Executive in violation of this
Agreement). After termination of the Executive's employment with the Company,
the Executive shall not, without the prior written consent of the Company or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it. In no event, however, shall an asserted violation of the
provisions of this Section 4.3 constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this Agreement.
5. COMPENSATION OTHER THAN SEVERANCE PAYMENTS.
5.1 DISABILITY. Following a Potential Change in Control and during
the Term, during any period that the Executive fails to perform the Executive's
full-time duties with the Company as a result of incapacity due to physical or
mental illness, the Executive's full salary shall be paid to the Executive by
the Company at a rate no less than the rate in effect at the commencement of
any such disability period, together with all compensation and benefits payable
to the Executive under the terms of any compensation or benefit plan, program
59
or arrangement maintained by the Company or its subsidiaries during such
disability period, until the Executive's employment is terminated by the
Company for Disability.
5.2 BASE SALARY. If the Executive's employment shall be terminated
for any reason following a Potential Change in Control and during the Term, the
Executive's full salary shall be paid to the Executive by the Company through
the Date of Termination (as defined below in Section 7.2) at the rate in effect
at the time the Notice of Termination is given, together with all compensation
and benefits payable to or with respect to the Executive through the Date of
Termination under the terms of any compensation or benefit plan, program or
arrangement maintained by the Company or its subsidiaries during such period.
5.3 BENEFITS. If the Executive's employment shall be terminated for
any reason following a Potential Change in Control and during the Term, the
Executive's normal post-termination compensation and benefits shall be paid to
the Executive as such payments become due. Such post-termination compensation
and benefits shall be determined under, and paid in accordance with, the
retirement, insurance and other compensation or benefit plans, programs and
arrangements maintained by the Company or its subsidiaries.
6. SEVERANCE PAYMENTS.
6.1 SEVERANCE. The Company shall pay the Executive the payments
described in this Section 6.1 (the "Severance Payments") upon the termination
of the Executive's employment with the Company following a Change in Control
and during the Term, in addition to the payments and benefits described in
Section 5 hereof, unless such termination is (i) by the Company for Cause, (ii)
by reason of Retirement, or (iii) by the Executive without Good Reason. In
addition, the Executive's employment shall be deemed to have been terminated
following a Change in Control by the Company without Cause or by the Executive
with Good Reason (a) if the Executive reasonably demonstrates that the
Executive's employment was terminated prior to a Change in Control without
Cause (1) at the request of a Person who has entered into an agreement with the
Company the consummation of which will constitute a Change in Control (or who
has taken other steps reasonably calculated to effect a Change in Control) or
(2) otherwise in connection with, as a result of or in anticipation of a Change
in Control, (b) if the Executive terminates his employment for Good Reason
prior to a Change in Control and the Executive reasonably demonstrates that the
circumstance(s) or event(s) which constitute such Good Reason occurred (1) at
the request of such Person or (2) otherwise in connection with, as a result of
or in anticipation of a Change in Control, or (c) if the Executive dies or is
terminated by the Company due to Disability, in each case, after the occurrence
of a Potential Change in Control and a related Change in Control actually
occurs within one (1) year after the Date of Termination or the date of death,
as the case may be. The Executive's right to terminate the Executive's
employment for Good Reason shall not be affected by the Executive's incapacity
due to physical or mental illness. The Executive's continued employment shall
not constitute consent to, or a waiver of rights with respect to, any act or
failure to act constituting Good Reason hereunder.
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6.1.1 In lieu of any further salary and annual bonus
payments to the Executive for periods subsequent to the Date of
Termination, the Company shall pay to the Executive a lump sum
severance payment, in cash, equal to two (2) or, if less, the number
of years, including fractions, from the Date of Termination until the
Executive reaches the age of sixty-five (65) years times the sum of
(i) the highest Annual Base Salary paid or payable to the Executive
during the thirty-six (36) month period immediately preceding the
month in which the Change in Control occurs, and (ii) the highest
annual bonus paid or determined and payable to the Executive during
such thirty-six (36) month period.
6.1.2 For a twenty-four (24) month period after the Date
of Termination, or if sooner, until the Executive reaches the age of
sixty-five (65) years, the Company shall arrange to provide the
Executive with life, disability, accident and health insurance
benefits substantially similar to those which the Executive is
receiving immediately prior to any related Potential Change in
Control or the receipt of the Notice of Termination (without giving
effect to any reduction in such benefits subsequent to a Change in
Control which reduction constitutes Good Reason), whichever is
greater. Benefits otherwise receivable by the Executive pursuant to
this Section 6.1.2 shall be reduced to the extent comparable benefits
are actually received by or made available to the Executive without
cost during such period following the Executive's termination of
employment (and any such benefits actually received by the Executive
shall be reported to the Company by the Executive).
6.2 SPECIAL REIMBURSEMENT. In the event that the Executive becomes
entitled to the Severance Payments, if any payment or benefit paid or payable,
or received or to be received, by or on behalf of the Executive in connection
with a Change in Control or the termination of the Executive's employment,
whether any such payments or benefits are pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the Company, any of
its subsidiaries, any Person, or otherwise (the "Total Payments"), will or
would be subject to the excise tax imposed under section 4999 of the Code (the
"Excise Tax"), the Company shall pay to the Executive an additional amount (the
"Gross-Up Payment") which amount shall be equal to the sum of (a) the amount of
such Excise Tax imposed (determined without regard to the Gross-Up Payment),
and (b) the product of (i) such Excise Tax (determined without regard to the
Gross-Up Payment), and (ii) the Aggregate Combined Marginal Tax Rate. For
purposes of this Section 6.2, "Aggregate Combined Marginal Tax Rate" means (and
shall equal) the sum of (A) the combined highest marginal state and local
income tax rates applicable for the tax year in which the Executive receives
the Gross-Up Payment (adjusted downward to take into account the tax
deductibility, if any, of such state and local income taxes), plus (B) the rate
of excise tax imposed on "golden parachute" payments under Section 4999 of the
Code, plus (C) the highest marginal federal income tax rate applicable for the
tax year in which the Executive receives the Gross-Up Payment (adjusted upward
to take into account any reduction in otherwise allowable itemized deductions
attributable to Section 68 of the Code), plus (D) the tax rate applicable to
61
the Executive under the hospital insurance portion of the Federal Insurance
Contributions Act under Section 3101(b) of the Code for the tax year in which
the Executive receives the Gross-Up Payment.
6.2.1 For purposes of determining whether any of the Total
Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (i) the Total Payments shall be treated as "parachute
payments" within the meaning of section 280G(b)(2) of the Code, and
all "excess parachute payments" within the meaning of
section 280G(b)(1) of the Code shall be treated as subject to the
Excise Tax, unless in the opinion of tax counsel (delivered to the
Executive) selected by the Company and reasonably acceptable to the
Executive such Total Payments (in whole or in part) (a) do not
constitute parachute payments, including (without limitation) by
reason of section 280G(b)(4)(A) of the Code, (b) such excess
parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered, within the meaning of
section 280G(b)(4)(B) of the Code, or (c) are otherwise not subject
to the Excise Tax, and (ii) the value of any non-cash benefits or any
deferred payment or benefit shall be determined by the Company's
independent auditors in accordance with the principles of sections
280G(d)(3) and (4) of the Code.
6.2.2 In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder at
the time of termination of the Executive's employment, the Executive
shall repay to the Company, at the time that the amount of such
reduction in Excise Tax is finally determined, the portion of the
Gross-Up Payment attributable to such reduction plus interest on the
amount of such repayment at the rate provided in section
1274(b)(2)(B) of the Code. In the event that the Excise Tax is
determined to exceed the amount taken into account hereunder at the
time of the termination of the Executive's employment (including by
reason of any payment the existence or amount of which cannot be
determined at the time of the Gross-Up Payment), the Company shall
make an additional Gross-Up Payment in respect of such excess (plus
any interest, penalties or additions payable by the Executive with
respect to such excess) at the time that the amount of such excess is
finally determined. The Executive and the Company shall each
reasonably cooperate with the other in connection with any
administrative or judicial proceedings concerning the existence or
amount of any such subsequent liability for Excise Tax with respect
to the Severance Payments.
6.3 DATE OF PAYMENT. The payments provided for in Section 6.1.1 and
Section 6.2 hereof shall be made not later than the fifteenth (15th) day
following the Date of Termination; provided, however, that if the amounts of
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such payments cannot be finally determined on or before such day, the Company
shall pay to the Executive on such day an estimate, as determined in good faith
by the Company, of the minimum amount of such payments to which the Executive
62
is likely to be entitled to and shall pay the remainder of such payments
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later
than the thirtieth (30th) day after the Date of Termination. In the event that
the amount of the estimated payments exceeds the amount subsequently determined
to have been due, such excess shall constitute a loan by the Company to the
Executive, payable on the fifth (5th) business day after demand by the Company
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code). At the time that payments are made under this Section 6.3, the Company
shall provide the Executive with a detailed written statement setting forth the
manner in which such payments were calculated and the basis for such
calculations including, without limitation, any opinions or other advice the
Company has received from outside counsel, auditors or consultants (and any
such opinions or advice which are in writing shall be attached to the
statement).
6.4 LEGAL COSTS. The Company shall also reimburse the Executive for
all legal fees and expenses incurred in good faith by the Executive as a result
of any dispute with any party (including, but not limited to, the Company or
the Bank) regarding the payment of any benefit provided for in this Agreement
(including, but not limited, all such fees and expenses incurred in disputing
any termination or in seeking in good faith to obtain or enforce any benefit or
right provided by this Agreement or in connection with any tax audit or
proceeding to the extent attributable to the application of section 4999 of the
Code plus in each case interest on any delayed payment at the applicable
Federal rate provided for in section 7872(f)(2)(A) of the Code. Such payments
shall be made within five (5) business days after delivery of the Executive's
written requests for payment accompanied by such evidence of fees and expenses
incurred as the Company reasonably may require.
7. TERMINATION PROCEDURES AND COMPENSATION DURING DISPUTE.
7.1 NOTICE OF TERMINATION. After a Change in Control and during the
Term, any purported termination of the Executive's employment with the Company
(other than by reason of death) shall be communicated by written Notice of
Termination from one party hereto to the other party hereto in accordance with
Section 10 hereof. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment with the Company under the provision so indicated. Further, a
Notice of Termination for Cause is required to include a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters (3/4) of
the entire membership of the Board at a meeting of the Board which was called
and held for the purpose of considering such termination (which meeting may be
a regular meeting of the Board where prior notice of consideration of such
termination is given to members of the Board) finding that, in the good faith
opinion of the Board, the Executive engaged in conduct set forth in clause (i)
or (ii) of the definition of Cause herein, and specifying the particulars
thereof in detail. For purposes of this Agreement, any purported termination
not effected in accordance with this Section 7.1 shall not be considered
effective.
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7.2 DATE OF TERMINATION. "Date of Termination", with respect to any
purported termination of the Executive's employment after a Change in Control
and during the Term, shall mean (i) if the Executive's employment is terminated
for Disability, thirty (30) days after Notice of Termination is given (provided
that the Executive shall not have returned to the full-time performance of the
Executive's duties during such thirty (30) day period), and (ii) if the
Executive's employment is terminated for any other reason, the date specified
in the Notice of Termination (which, in the case of a termination by the
Company, shall not be less than thirty (30) days (except in the case of a
termination for Cause) and, in the case of a termination by the Executive,
shall not be less than fifteen (15) days nor more than sixty (60) days,
respectively, after the date such Notice of Termination is given).
7.3 DISPUTE CONCERNING TERMINATION. If within fifteen (15) days
after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this Section 7.3), the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall be the date on
which the dispute is finally resolved, either by mutual written agreement of
the parties or by a final judgment, order or decree of a court of competent
jurisdiction (which is not appealable or with respect to which the time for
appeal therefrom has expired and no appeal has been perfected); provided,
--------
however, that the Date of Termination shall be extended by a notice of dispute
-------
only if the basis for such notice is reasonable, such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence.
7.4 COMPENSATION DURING DISPUTE. If a purported termination occurs
following a Change in Control and during the Term, and such termination is
disputed in accordance with Section 7.3 above, the Company shall continue to
pay the Executive the full compensation (including without limitation Annual
Base Salary and Annual Bonus) in effect at the time of any related Potential
Change in Control or when the notice giving rise to the dispute was given
(whichever is greater) and continue the Executive as a participant in all
compensation, incentive, pension and welfare benefit and insurance plans in
which the Executive was participating at the time of any Potential Change in
Control or when the notice giving rise to the dispute was given, whichever is
greater, until the dispute is finally resolved in accordance with Section 7.3
hereof. Amounts paid under this Section 7.4 are in addition to all other
amounts due under this Agreement (other than those due under Section 5.2
hereof) and shall not be offset against or reduce any other amounts due under
this Agreement or any other plan, agreement or arrangement.
8. NO MITIGATION. The Company agrees that, if the Executive's
employment is terminated during the Term, the Executive is not required to seek
other employment or to attempt in any way to reduce any amounts payable to the
Executive by the Company pursuant to Section 6 or Section 7.4. Further, the
amount of any payment or benefit provided for in Section 6 (other than pursuant
to Section 6.1.2) or Section 7.4 shall not be reduced by any compensation
earned by the Executive as the result of employment by another employer, by
retirement benefits, or offset against any amount claimed to be owed by the
Executive to the Company or any of its subsidiaries, or otherwise.
64
9. SUCCESSORS; BINDING AGREEMENT.
9.1 SUCCESSORS. In addition to any obligations imposed by law upon
any successor to the Company, the Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption and
agreement prior to the effectiveness of any such succession shall be a breach
of this Agreement and shall entitle the Executive to compensation from the
Company in the same amount and on the same terms as the Executive would be
entitled to hereunder if the Executive were to terminate the Executive's
employment for Good Reason after a Change in Control, except that, for purposes
of implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.
9.2 BINDING AGREEMENT. This Agreement shall inure to the benefit of
and be enforceable by this Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive shall die while any amount would still be payable
to the Executive hereunder (other than amounts which, by their terms, terminate
upon the death of the Executive) if the Executive had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the executors, personal representatives or
administrators of the Executive's estate.
10. NOTICES. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below, or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon actual receipt:
To the Company:
The Summit Bancorporation
Xxx Xxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attention: Corporate Secretary
To the Executive:
Xx. Xxxxxx X. XxXxxxxxx
00 Xxxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
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11. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.
The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of New Jersey without regard to the
principles of conflict of laws thereof. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to and include any
successor provisions to such sections. Any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state
or local law and any additional withholding to which the Executive has agreed.
The rights and obligations of the Company and the Executive under this
Agreement shall survive the expiration of the Term and the Employment Period.
12. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
13. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
14. NO LIMITATION. Nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any plan, program, policy or
practice provided by the Company or any of its affiliated companies and for
which the Executive may qualify, nor shall anything herein limit or otherwise
affect such rights as the Executive may have under any other contract or
agreement with the Company or any of its affiliated companies. Amounts which
are vested benefits or which the Executive is otherwise entitled to receive
under any plan, policy, practice or program of or any contract or agreement
with the Company or any of its affiliated companies at or subsequent to the
Date of Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly modified by
this Agreement.
The Summit Bancorporation
By:
/s/ Xxxxxx X. Xxx
----------------------------
Xxxxxx X. Xxx
66
/s/ Xxxxxx X. XxXxxxxxx
----------------------------
Xxxxxx X. XxXxxxxxx
67
AGREEMENT
THIS AGREEMENT, dated as of September 1, 1995 (this "Agreement"), is
made by and between The Summit Bancorporation, a New Jersey corporation, having
its principal offices at Xxx Xxxx Xxxxxx, Xxxxxxx, Xxx Xxxxxx 00000 (the
"Company"), and Xx. Xxxxx X. Little residing at 00 Xxxxxxx Xxxx, Xxxxxx, Xxx
Xxxxxx 00000 (the "Executive").
WHEREAS, the Company considers it essential to the best interests of
its shareholders to xxxxxx the continued employment of key executive management
personnel; and
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that, as is the case with many publicly-held corporations, the
possibility of a Change in Control (as defined in Section 1.3 below) of the
Company exists from time to time and that such possibility, and the
uncertainty, instability and questions which it may raise for and among key
executive management personnel, may result in the premature departure or
significant distraction of such management personnel to the material detriment
of the Company and its shareholders; and
WHEREAS, the Board has determined that appropriate steps should be
taken to reinforce, focus and encourage the continued attention and dedication
of key members of the executive management of the Company and its subsidiaries,
including (without limitation) the Executive, to their assigned duties without
distraction in the face of potentially disturbing or unsettling circumstances
arising from the possibility of a Change in Control of the Company;
NOW THEREFORE, in consideration of the premises and the mutual cove-
nants herein contained, the Company and the Executive hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms
shall have the meanings set forth below:
1.1 "ANNUAL BASE SALARY" shall mean the Executive's rate of regular
basic annual compensation prior to any reduction under a salary reduction
agreement pursuant to section 401(k) or section 125 of the Internal Revenue
Code of 1986, as amended from time to time (the "Code"), and shall not include
(without limitation) cost of living allowances, fees, retainers,
reimbursements, car allowances, bonuses, incentive awards, prizes or similar
payments.
1.2 "CAUSE" for termination by the Company of the Executive's
employment, after any Change in Control, shall mean (i) the willful and
continued failure by the Executive to substantially perform the Executive's
duties with the Company, or a subsidiary of the Company, including (without
limitation) Summit Bank, a New Jersey chartered bank (the "Bank"), as such
68
duties may reasonably be defined from time to time by the Board (or a duly
designated and authorized committee thereof), or to abide by the reasonable
written policies of the Company or of the Executive's primary employer (other
than any such failure resulting from the Executive's incapacity due to physical
or mental illness or any such actual or anticipated failure after the issuance
of a Notice of Termination by the Executive for Good Reason pursuant to Section
7.1) after a written demand for substantial performance is delivered to the
Executive by the Board, which demand specifically identifies the manner in
which the Board believes that the Executive has not substantially performed the
Executive's duties or has not abided by any reasonable written policies, or
(ii) the continued and willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company or its subsidiaries,
monetarily or otherwise. For purposes of clauses (i) and (ii) of this
definition, no act, or failure to act, on the Executive's part shall be deemed
"willful" unless done, or omitted to be done, by the Executive in bad faith and
without reasonable belief that the Executive's act, or failure to act, was in
the best interest of the Company or its subsidiaries. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by the
Board or upon the instructions of the Board or the Company's chief executive
officer or other duly authorized senior officer of the Company or based upon
the advice of counsel for the Company shall be conclusively presumed to be
done, or omitted to be done, by the Executive in good faith and in the best
interests of the Company and its subsidiaries. The cessation of employment of
the Executive shall not be deemed to be for Cause unless and until there shall
have been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three quarters of the entire membership of
the Board at a meeting of the Board called and held for such purpose (after
reasonable notice of any such meeting is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before
the Board), finding that, in the good faith opinion of the Board, the Executive
is guilty of the conduct described in clause (i) or (ii) above, and specifying
the particulars thereof in detail.
1.3 "CHANGE IN CONTROL" shall mean and be deemed to have occurred
if:
(i) any Person is or becomes the Beneficial Owner (as that
term is defined in Rule 13d-3 under the Securities Exchange Act of
1934 (the "Exchange Act")), directly or indirectly, of securities of
the Company (not including in the securities beneficially owned by
such Person any securities acquired directly from the Company)
representing twenty-five percent (25%) or more of the combined voting
power of the Company's then outstanding securities, or there occurs
any transaction which the Company is required to disclose pursuant to
Item 1(a) of Form 8-K (as filed pursuant to Rule 13a-11 or Rule 15d-
11 of the Exchange Act); or
(ii) during any period of twenty-four (24) consecutive
months (not including any period prior to September 1, 1995),
individuals who at the beginning of such period constitute the Board
and any new director (other than a director designated by a Person
69
who has entered into an agreement with the Company to effect a
transaction described in clause (i), (iii) or (iv) of this definition
or any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies
or consents) whose election by the Board or nomination for election
by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of such period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority of the Board; or
(iii) the shareholders of the Company approve a
reorganization, merger or consolidation, other than a reorganization,
merger or consolidation with respect to which all or substantially
all of the individuals and entities who were Beneficial Owners,
immediately prior to such reorganization, merger or consolidation, of
the combined voting power of the Company's then outstanding
securities beneficially own, directly or indirectly, immediately
after such reorganization, merger or consolidation, more then
seventy-five percent (75%) of the combined voting power of the
securities of the corporation resulting from such reorganization,
merger or consolidation in substantially the same proportions as
their respective ownership, immediately prior to such reorganization,
merger or consolidation, of the combined voting power of the
Company's securities; or
(iv) the shareholders of the Company approve (a) the sale
or disposition by the Company (other than to a subsidiary of the
Company) of the Bank, or (b) a complete liquidation or dissolution of
the Company or the Bank.
Notwithstanding the foregoing, a Change in Control shall not include any event,
circumstance or transaction which results from the action (excluding the
Executive's employment activities with the Company, the Bank or any of their
respective subsidiaries) of any Person or group of Persons which includes, is
directly affiliated with or is wholly or partly controlled by one or more
executive officers of the Company and in which the Executive actively
participates.
1.4 "COMPANY" shall include The Summit Bancorporation and any
successor to its business and/or assets which assumes (either expressly, by
operation of law or otherwise) and/or agrees to perform this Agreement by
operation of law or otherwise (except in determining, under Section 1.3 hereof,
whether or not any Change in Control of the Company has occurred in connection
with such succession).
1.5 "DISABILITY" shall mean and be deemed the reason for the
termination by the Company of the Executive's employment, if, as a result of
the Executive's incapacity due to physical or mental illness, (i) the Executive
shall have been absent from the full-time performance of the Executive's duties
70
with the Company for a period of six (6) consecutive months, (ii) the Company
gives the Executive a Notice of Termination for Disability, and (iii) within
thirty (30) days after such Notice of Termination is given, the Executive does
not return to the full-time performance of the Executive's duties.
1.6 "GOOD REASON" for termination by the Executive of the
Executive's employment, in connection with or as a result of any Change in
Control, shall mean the occurrence (without the Executive's prior express
written consent) of any one of the following acts, or failures to act, unless,
in the case of any act or failure to act described in clauses (i), (iv), (v) or
(vi) below, such act or failure to act is corrected by the Company prior to the
Date of Termination specified in the Notice of Termination given in respect
thereof:
(i) the assignment to the Executive of any duties or
responsibilities inconsistent with those described in Section 3.2
below or with the Executive's position(s) (including without
limitation status, offices, titles, and reporting
responsibilities/rights) as an executive officer of the Company and
its subsidiaries or a substantial adverse alteration in the nature of
the Executive's authority, duties, or responsibilities from those
described in Section 3.2 below or otherwise;
(ii) a reduction in the Executive's Annual Base Salary as
in effect on the date of this Agreement or as the same may be
increased at any time thereafter and from time to time;
(iii) the relocation of the Company's principal executive
offices to a location more than thirty (30) miles from its location
on the date of this Agreement (or, if different, more than thirty
(30) miles from where such offices are located immediately prior to
any Potential Change in Control) or the Company's requiring the
Executive to be based anywhere other than the Company's principal
executive offices except for required travel on the Company's
business to an extent substantially consistent with the Executive's
business travel obligations as of the date of this Agreement;
(iv) any failure by the Company to comply with any of the
provisions of this Agreement, other than an isolated, insubstantial
and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof
given by the Executive;
(v) the failure by the Company or a subsidiary to continue
in effect any pension benefit or incentive or deferred compensation
plan in which the Executive participates immediately prior to any
Potential Change in Control which is material to the Executive's
total compensation, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan or arrangement) has been made
with respect to such plan, or the failure by the Company or a
71
subsidiary to continue the Executive's participation therein (or in
such substitute or alternative plan or arrangement) on a basis not
materially less favorable, both in terms of the amount of benefits
provided and the level of the Executive's participation relative to
other participants, as existed at the time of the Potential Change in
Control;
(vi) the failure by the Company or a subsidiary to
continue to provide the Executive with health and welfare benefits
substantially similar to those enjoyed by the Executive under any of
the Company's or a subsidiary's retirement, life insurance, medical,
health and accident, or disability or similar plans in which the
Executive was participating at the time of any Potential Change in
Control, the taking of any action by the Company or a subsidiary
which would directly or indirectly materially reduce any of such
benefits or deprive the Executive of any material fringe benefit
enjoyed by the Executive at the time of the Potential Change in
Control, or the failure by the Company or a subsidiary to provide the
Executive with the number of paid vacation days to which the
Executive is entitled in accordance with the Company's or a
subsidiary's normal vacation policy in effect at the time of the
Potential Change in Control;
(vii) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of Termination
satisfying the requirements of Section 7.1; and/or
(viii) a termination by the Executive for any reason
during the thirty (30) day period immediately following the first
anniversary of any Change in Control.
1.7 "PERSON" shall have the meaning ascribed thereto in Section
3(a)(9) of the Exchange Act, as modified applied, and used in Sections 13(d)
and 14(d) thereof; provided, however, a Person shall not include (i) the
-------- -------
Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any of its
subsidiaries (in its capacity as such), (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by the stockholders of the Company
in substantially the same character and proportions as their ownership of stock
of the Company.
1.8 "POTENTIAL CHANGE IN CONTROL" shall mean and be deemed to have
occurred if:
(i) the Company commences negotiations in respect of or
enters into an agreement, the consummation of which would result in
the occurrence of a Change in Control;
72
(ii) the Company or any Person publicly announces an
intention to take actions which, if consummated, would constitute a
Change in Control; and/or
(iii) any Person becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing ten percent
(10%) or more of the combined voting power of the Company's then
outstanding securities, or any Person increases such Person's
beneficial ownership of such securities by five (5) percentage points
or more over the percentage so owned by such Person on September 1,
1995.
1.9 "RETIREMENT" shall mean and be deemed the reason for the
termination by the Executive of the Executive's employment if such employment
is terminated in accordance with the Company's normal retirement policy for
those aged 65 and older, not including early retirement or so-called "window
period" retirements, generally applicable to its salaried employees, as in
effect immediately prior to any Potential Change in Control.
2. TERM OF THIS AGREEMENT. This Agreement shall commence on the date
hereof and shall continue in effect through December 31, 1998; provided,
--------
however, that commencing on January 1, 1998 and each January 1 thereafter, the
-------
term of this Agreement shall automatically be extended for one additional year
unless, not later than June 30 of the preceding year, the Company or the
Executive shall have given written notice to the other not to extend this
Agreement or a Change in Control shall have occurred prior to any such January
1; provided, further, however, that if a Change in Control shall have occurred
-------- ------- -------
during the term of this Agreement, this Agreement shall continue in effect for
a period of not less than thirty-six (36) months beyond the month in which such
Change in Control occurred (the "Term"). Notwithstanding the foregoing
provisions of this Section 2, the Term shall terminate upon the Executive's
attaining the age of sixty-five (65) years.
3. COMPANY'S COVENANTS.
3.1 SEVERANCE PAYMENTS. In order to induce the Executive to remain
in the employ of the Company and/or one or more of its subsidiaries and in
consideration of the Executive's covenants set forth in Section 4 below, the
Company agrees, under the terms and conditions described herein and in addition
to the amounts payable to the Executive under Section 5 below, to pay the
Executive the "Severance Payments" described in Section 6.1 below and the other
payments and benefits described herein in the event the Executive's employment
with the Company is terminated during the Term and after a Change in Control or
under the other circumstances set forth in Section 6.1 below.
3.2 POSITION AND DUTIES. During the period commencing on the date
of any Change in Control until the earliest to occur of (i) the date which is
thirty-six (36) months from the date of any such Change in Control, (ii) the
date of termination by the Executive of the Executive's employment for any
reason, or (iii) the termination by the Company of the Executive's employment
for any reason (the "Employment Period"), (a) the Executive's position
73
(including status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be at least commensurate in all material
respects with the most significant of those held, exercised and assigned at any
time during the one hundred eighty (180) day period immediately preceding any
related Potential Change in Control, and (b) the Executive's services shall be
performed at the location where the Executive was employed immediately
preceding any such Potential Change in Control, or any office or location less
than thirty (30) miles from such location.
3.3 BASE SALARY. During the Employment Period, the Executive shall
receive Annual Base Salary at least equal to twelve (12) times the highest
monthly base salary paid or payable, including (without limitation) any base
salary which has been earned but deferred, to the Executive by the Company and
its affiliated companies in respect of the twelve (12) month period immediately
preceding the month in which any related Potential Change in Control occurs.
In addition, Annual Base Salary shall not be reduced after the occurrence of a
Potential Change in Control. As used in this Agreement, the term "affiliated
companies" shall include any company controlled by, controlling or under common
control with the Company.
3.4 ANNUAL BONUS. In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year ending during the Employment Period, an
annual bonus (the "Annual Bonus") in cash at least equal to the Executive's
highest bonus for the last three (3) full fiscal years prior to the fiscal year
in which the related Potential Change in Control occurs (annualized in the
event that the Executive was not employed by the Company for the whole of any
such prior fiscal year). Each Annual Bonus shall be paid no later than the end
of the third month of the fiscal year next following the fiscal year for which
the Annual Bonus is awarded, unless the Executive shall elect to defer the
receipt of such Annual Bonus.
3.5 INCENTIVE, SAVINGS AND RETIREMENT PLANS. During the Employment
Period, the Executive shall be entitled to participate in all incentive,
savings and retirement plans, practices, policies and programs applicable
generally to other peer executives of the Company and its affiliated companies,
but in no event shall such plans, practices, policies and programs provide the
Executive with incentive opportunities (measured with respect to both regular
and special incentive opportunities, to the extent, if any, that such
distinction is applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than the most
favorable of those provided by the Company and its affiliated companies for the
Executive under such plans, practices, policies and programs as in effect at
any time during the one hundred eighty (180) day period immediately preceding
any related Potential Change in Control or if more favorable to the Executive,
those provided generally at any time thereafter to other peer executives of the
Company and its affiliated companies.
3.6 WELFARE BENEFIT PLANS. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be entitled
to participate in and shall receive all benefits under all of the health and
welfare benefit plans, practices, policies and programs provided by the Company
and its affiliated companies (including, without limitation, medical,
74
prescription, dental, disability, employee life, group life, accidental death
and travel accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and its affiliated companies,
but in no event shall such plans, practices, policies and programs provide the
Executive with benefits which are less favorable, in the aggregate, than the
most favorable of such plans, practices, policies and programs in effect for
the Executive at any time during the one hundred eighty (180) day period
immediately preceding any related Potential Change in Control or, if more
favorable to the Executive, those provided generally at any time thereafter to
other peer executives of the Company and its affiliated companies.
3.7 EXPENSES. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred
by the Executive in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in effect for the
Executive at any time during the one hundred eighty (180) day period
immediately preceding any related Potential Change in Control or, if more
favorable to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated companies.
3.8 FRINGE BENEFITS. During the Employment Period, the Executive
shall be entitled to fringe benefits, including, without limitation, tax and
financial planning services, payment of club dues, and an automobile allowance
and payment of related expenses, in accordance with the most favorable plans,
practices, programs and policies of the Company and its affiliated companies in
effect for the Executive at any time during the one hundred eighty (180) day
period immediately preceding any related Potential Change in Control or, if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
3.9 OFFICE AND SUPPORT STAFF. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, at least equal to the most favorable of the foregoing
provided to the Executive by the Company and its affiliated companies at any
time during the one hundred eighty (180) day period immediately preceding any
related Potential Change in Control or, if more favorable to the Executive, as
provided generally at any time thereafter with respect to other peer executives
of the Company and its affiliated companies.
3.10 VACATION. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated companies as
in effect for the Executive at any time during the one hundred eighty (180) day
period immediately preceding any related Potential Change in Control or, if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
4. THE EXECUTIVE'S COVENANTS.
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4.1 EMPLOYMENT. The Executive agrees that, subject to the terms and
conditions of this Agreement, in the event of a Change in Control during the
Term the Executive will remain in the employ of the Company during any related
Employment Period.
4.2 TIME AND ATTENTION. During the Employment Period, and excluding
any periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during normal business
hours to the business and affairs of the Company and, to the extent necessary
to discharge the responsibilities and duties assigned to the Executive
hereunder, to use the Executive's reasonable best efforts to perform faithfully
and efficiently such responsibilities and duties. During the Employment Period
it shall not be a violation of this Agreement for the Executive to (i) serve on
corporate, civic or charitable boards or committees, (ii) deliver lectures,
fulfill speaking engagements or teach at educational institutions, and (iii)
manage personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to any Potential Change in Control, the
reinstatement or continued conduct of such activities (or the reinstatement or
conduct of activities similar in nature and scope thereto) subsequent to any
related Potential Change in Control shall not thereafter be deemed to interfere
with the performance of the Executive's responsibilities to the Company.
4.3 CONFIDENTIAL INFORMATION. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other
than by direct or indirect acts by the Executive in violation of this
Agreement). After termination of the Executive's employment with the Company,
the Executive shall not, without the prior written consent of the Company or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it. In no event, however, shall an asserted violation of the
provisions of this Section 4.3 constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this Agreement.
5. COMPENSATION OTHER THAN SEVERANCE PAYMENTS.
5.1 DISABILITY. Following a Potential Change in Control and during
the Term, during any period that the Executive fails to perform the Executive's
full-time duties with the Company as a result of incapacity due to physical or
mental illness, the Executive's full salary shall be paid to the Executive by
the Company at a rate no less than the rate in effect at the commencement of
any such disability period, together with all compensation and benefits payable
to the Executive under the terms of any compensation or benefit plan, program
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or arrangement maintained by the Company or its subsidiaries during such
disability period, until the Executive's employment is terminated by the
Company for Disability.
5.2 BASE SALARY. If the Executive's employment shall be terminated
for any reason following a Potential Change in Control and during the Term, the
Executive's full salary shall be paid to the Executive by the Company through
the Date of Termination (as defined below in Section 7.2) at the rate in effect
at the time the Notice of Termination is given, together with all compensation
and benefits payable to or with respect to the Executive through the Date of
Termination under the terms of any compensation or benefit plan, program or
arrangement maintained by the Company or its subsidiaries during such period.
5.3 BENEFITS. If the Executive's employment shall be terminated for
any reason following a Potential Change in Control and during the Term, the
Executive's normal post-termination compensation and benefits shall be paid to
the Executive as such payments become due. Such post-termination compensation
and benefits shall be determined under, and paid in accordance with, the
retirement, insurance and other compensation or benefit plans, programs and
arrangements maintained by the Company or its subsidiaries.
6. SEVERANCE PAYMENTS.
6.1 SEVERANCE. The Company shall pay the Executive the payments
described in this Section 6.1 (the "Severance Payments") upon the termination
of the Executive's employment with the Company following a Change in Control
and during the Term, in addition to the payments and benefits described in
Section 5 hereof, unless such termination is (i) by the Company for Cause, (ii)
by reason of Retirement, or (iii) by the Executive without Good Reason. In
addition, the Executive's employment shall be deemed to have been terminated
following a Change in Control by the Company without Cause or by the Executive
with Good Reason (a) if the Executive reasonably demonstrates that the
Executive's employment was terminated prior to a Change in Control without
Cause (1) at the request of a Person who has entered into an agreement with the
Company the consummation of which will constitute a Change in Control (or who
has taken other steps reasonably calculated to effect a Change in Control) or
(2) otherwise in connection with, as a result of or in anticipation of a Change
in Control, (b) if the Executive terminates his employment for Good Reason
prior to a Change in Control and the Executive reasonably demonstrates that the
circumstance(s) or event(s) which constitute such Good Reason occurred (1) at
the request of such Person or (2) otherwise in connection with, as a result of
or in anticipation of a Change in Control, or (c) if the Executive dies or is
terminated by the Company due to Disability, in each case, after the occurrence
of a Potential Change in Control and a related Change in Control actually
occurs within one (1) year after the Date of Termination or the date of death,
as the case may be. The Executive's right to terminate the Executive's
employment for Good Reason shall not be affected by the Executive's incapacity
due to physical or mental illness. The Executive's continued employment shall
not constitute consent to, or a waiver of rights with respect to, any act or
failure to act constituting Good Reason hereunder.
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6.1.1 In lieu of any further salary and annual bonus
payments to the Executive for periods subsequent to the Date of
Termination, the Company shall pay to the Executive a lump sum
severance payment, in cash, equal to two (2) or, if less, the number
of years, including fractions, from the Date of Termination until the
Executive reaches the age of sixty-five (65) years times the sum of
(i) the highest Annual Base Salary paid or payable to the Executive
during the thirty-six (36) month period immediately preceding the
month in which the Change in Control occurs, and (ii) the highest
annual bonus paid or determined and payable to the Executive during
such thirty-six (36) month period.
6.1.2 For a twenty-four (24) month period after the Date
of Termination, or if sooner, until the Executive reaches the age of
sixty-five (65) years, the Company shall arrange to provide the
Executive with life, disability, accident and health insurance
benefits substantially similar to those which the Executive is
receiving immediately prior to any related Potential Change in
Control or the receipt of the Notice of Termination (without giving
effect to any reduction in such benefits subsequent to a Change in
Control which reduction constitutes Good Reason), whichever is
greater. Benefits otherwise receivable by the Executive pursuant to
this Section 6.1.2 shall be reduced to the extent comparable benefits
are actually received by or made available to the Executive without
cost during such period following the Executive's termination of
employment (and any such benefits actually received by the Executive
shall be reported to the Company by the Executive).
6.2 SPECIAL REIMBURSEMENT. In the event that the Executive becomes
entitled to the Severance Payments, if any payment or benefit paid or payable,
or received or to be received, by or on behalf of the Executive in connection
with a Change in Control or the termination of the Executive's employment,
whether any such payments or benefits are pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the Company, any of
its subsidiaries, any Person, or otherwise (the "Total Payments"), will or
would be subject to the excise tax imposed under section 4999 of the Code (the
"Excise Tax"), the Company shall pay to the Executive an additional amount (the
"Gross-Up Payment") which amount shall be equal to the sum of (a) the amount of
such Excise Tax imposed (determined without regard to the Gross-Up Payment),
and (b) the product of (i) such Excise Tax (determined without regard to the
Gross-Up Payment), and (ii) the Aggregate Combined Marginal Tax Rate. For
purposes of this Section 6.2, "Aggregate Combined Marginal Tax Rate" means (and
shall equal) the sum of (A) the combined highest marginal state and local
income tax rates applicable for the tax year in which the Executive receives
the Gross-Up Payment (adjusted downward to take into account the tax
deductibility, if any, of such state and local income taxes), plus (B) the rate
of excise tax imposed on "golden parachute" payments under Section 4999 of the
Code, plus (C) the highest marginal federal income tax rate applicable for the
tax year in which the Executive receives the Gross-Up Payment (adjusted upward
to take into account any reduction in otherwise allowable itemized deductions
attributable to Section 68 of the Code), plus (D) the tax rate applicable to
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the Executive under the hospital insurance portion of the Federal Insurance
Contributions Act under Section 3101(b) of the Code for the tax year in which
the Executive receives the Gross-Up Payment.
6.2.1 For purposes of determining whether any of the Total
Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (i) the Total Payments shall be treated as "parachute
payments" within the meaning of section 280G(b)(2) of the Code, and
all "excess parachute payments" within the meaning of
section 280G(b)(1) of the Code shall be treated as subject to the
Excise Tax, unless in the opinion of tax counsel (delivered to the
Executive) selected by the Company and reasonably acceptable to the
Executive such Total Payments (in whole or in part) (a) do not
constitute parachute payments, including (without limitation) by
reason of section 280G(b)(4)(A) of the Code, (b) such excess
parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered, within the meaning of
section 280G(b)(4)(B) of the Code, or (c) are otherwise not subject
to the Excise Tax, and (ii) the value of any non-cash benefits or any
deferred payment or benefit shall be determined by the Company's
independent auditors in accordance with the principles of sections
280G(d)(3) and (4) of the Code.
6.2.2 In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder at
the time of termination of the Executive's employment, the Executive
shall repay to the Company, at the time that the amount of such
reduction in Excise Tax is finally determined, the portion of the
Gross-Up Payment attributable to such reduction plus interest on the
amount of such repayment at the rate provided in section
1274(b)(2)(B) of the Code. In the event that the Excise Tax is
determined to exceed the amount taken into account hereunder at the
time of the termination of the Executive's employment (including by
reason of any payment the existence or amount of which cannot be
determined at the time of the Gross-Up Payment), the Company shall
make an additional Gross-Up Payment in respect of such excess (plus
any interest, penalties or additions payable by the Executive with
respect to such excess) at the time that the amount of such excess is
finally determined. The Executive and the Company shall each
reasonably cooperate with the other in connection with any
administrative or judicial proceedings concerning the existence or
amount of any such subsequent liability for Excise Tax with respect
to the Severance Payments.
6.3 DATE OF PAYMENT. The payments provided for in Section 6.1.1 and
Section 6.2 hereof shall be made not later than the fifteenth (15th) day
following the Date of Termination; provided, however, that if the amounts of
-------- -------
such payments cannot be finally determined on or before such day, the Company
shall pay to the Executive on such day an estimate, as determined in good faith
by the Company, of the minimum amount of such payments to which the Executive
79
is likely to be entitled to and shall pay the remainder of such payments
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later
than the thirtieth (30th) day after the Date of Termination. In the event that
the amount of the estimated payments exceeds the amount subsequently determined
to have been due, such excess shall constitute a loan by the Company to the
Executive, payable on the fifth (5th) business day after demand by the Company
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code). At the time that payments are made under this Section 6.3, the Company
shall provide the Executive with a detailed written statement setting forth the
manner in which such payments were calculated and the basis for such
calculations including, without limitation, any opinions or other advice the
Company has received from outside counsel, auditors or consultants (and any
such opinions or advice which are in writing shall be attached to the
statement).
6.4 LEGAL COSTS. The Company shall also reimburse the Executive for
all legal fees and expenses incurred in good faith by the Executive as a result
of any dispute with any party (including, but not limited to, the Company or
the Bank) regarding the payment of any benefit provided for in this Agreement
(including, but not limited, all such fees and expenses incurred in disputing
any termination or in seeking in good faith to obtain or enforce any benefit or
right provided by this Agreement or in connection with any tax audit or
proceeding to the extent attributable to the application of section 4999 of the
Code plus in each case interest on any delayed payment at the applicable
Federal rate provided for in section 7872(f)(2)(A) of the Code. Such payments
shall be made within five (5) business days after delivery of the Executive's
written requests for payment accompanied by such evidence of fees and expenses
incurred as the Company reasonably may require.
7. TERMINATION PROCEDURES AND COMPENSATION DURING DISPUTE.
7.1 NOTICE OF TERMINATION. After a Change in Control and during the
Term, any purported termination of the Executive's employment with the Company
(other than by reason of death) shall be communicated by written Notice of
Termination from one party hereto to the other party hereto in accordance with
Section 10 hereof. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment with the Company under the provision so indicated. Further, a
Notice of Termination for Cause is required to include a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters (3/4) of
the entire membership of the Board at a meeting of the Board which was called
and held for the purpose of considering such termination (which meeting may be
a regular meeting of the Board where prior notice of consideration of such
termination is given to members of the Board) finding that, in the good faith
opinion of the Board, the Executive engaged in conduct set forth in clause (i)
or (ii) of the definition of Cause herein, and specifying the particulars
thereof in detail. For purposes of this Agreement, any purported termination
not effected in accordance with this Section 7.1 shall not be considered
effective.
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7.2 DATE OF TERMINATION. "Date of Termination", with respect to any
purported termination of the Executive's employment after a Change in Control
and during the Term, shall mean (i) if the Executive's employment is terminated
for Disability, thirty (30) days after Notice of Termination is given (provided
that the Executive shall not have returned to the full-time performance of the
Executive's duties during such thirty (30) day period), and (ii) if the
Executive's employment is terminated for any other reason, the date specified
in the Notice of Termination (which, in the case of a termination by the
Company, shall not be less than thirty (30) days (except in the case of a
termination for Cause) and, in the case of a termination by the Executive,
shall not be less than fifteen (15) days nor more than sixty (60) days,
respectively, after the date such Notice of Termination is given).
7.3 DISPUTE CONCERNING TERMINATION. If within fifteen (15) days
after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this Section 7.3), the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall be the date on
which the dispute is finally resolved, either by mutual written agreement of
the parties or by a final judgment, order or decree of a court of competent
jurisdiction (which is not appealable or with respect to which the time for
appeal therefrom has expired and no appeal has been perfected); provided,
--------
however, that the Date of Termination shall be extended by a notice of dispute
-------
only if the basis for such notice is reasonable, such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence.
7.4 COMPENSATION DURING DISPUTE. If a purported termination occurs
following a Change in Control and during the Term, and such termination is
disputed in accordance with Section 7.3 above, the Company shall continue to
pay the Executive the full compensation (including without limitation Annual
Base Salary and Annual Bonus) in effect at the time of any related Potential
Change in Control or when the notice giving rise to the dispute was given
(whichever is greater) and continue the Executive as a participant in all
compensation, incentive, pension and welfare benefit and insurance plans in
which the Executive was participating at the time of any Potential Change in
Control or when the notice giving rise to the dispute was given, whichever is
greater, until the dispute is finally resolved in accordance with Section 7.3
hereof. Amounts paid under this Section 7.4 are in addition to all other
amounts due under this Agreement (other than those due under Section 5.2
hereof) and shall not be offset against or reduce any other amounts due under
this Agreement or any other plan, agreement or arrangement.
8. NO MITIGATION. The Company agrees that, if the Executive's
employment is terminated during the Term, the Executive is not required to seek
other employment or to attempt in any way to reduce any amounts payable to the
Executive by the Company pursuant to Section 6 or Section 7.4. Further, the
amount of any payment or benefit provided for in Section 6 (other than pursuant
to Section 6.1.2) or Section 7.4 shall not be reduced by any compensation
earned by the Executive as the result of employment by another employer, by
retirement benefits, or offset against any amount claimed to be owed by the
Executive to the Company or any of its subsidiaries, or otherwise.
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9. SUCCESSORS; BINDING AGREEMENT.
9.1 SUCCESSORS. In addition to any obligations imposed by law upon
any successor to the Company, the Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption and
agreement prior to the effectiveness of any such succession shall be a breach
of this Agreement and shall entitle the Executive to compensation from the
Company in the same amount and on the same terms as the Executive would be
entitled to hereunder if the Executive were to terminate the Executive's
employment for Good Reason after a Change in Control, except that, for purposes
of implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.
9.2 BINDING AGREEMENT. This Agreement shall inure to the benefit of
and be enforceable by this Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive shall die while any amount would still be payable
to the Executive hereunder (other than amounts which, by their terms, terminate
upon the death of the Executive) if the Executive had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the executors, personal representatives or
administrators of the Executive's estate.
10. NOTICES. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below, or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon actual receipt:
To the Company:
The Summit Bancorporation
Xxx Xxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attention: Corporate Secretary
To the Executive:
Xx. Xxxxx X. Little
00 Xxxxxxx Xxxx
Xxxxxx, Xxx Xxxxxx 00000
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11. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.
The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of New Jersey without regard to the
principles of conflict of laws thereof. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to and include any
successor provisions to such sections. Any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state
or local law and any additional withholding to which the Executive has agreed.
The rights and obligations of the Company and the Executive under this
Agreement shall survive the expiration of the Term and the Employment Period.
12. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
13. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
14. NO LIMITATION. Nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any plan, program, policy or
practice provided by the Company or any of its affiliated companies and for
which the Executive may qualify, nor shall anything herein limit or otherwise
affect such rights as the Executive may have under any other contract or
agreement with the Company or any of its affiliated companies. Amounts which
are vested benefits or which the Executive is otherwise entitled to receive
under any plan, policy, practice or program of or any contract or agreement
with the Company or any of its affiliated companies at or subsequent to the
Date of Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly modified by
this Agreement.
The Summit Bancorporation
By:
/s/ Xxxxxx X. Xxx
----------------------------
Xxxxxx X. Xxx
83
/s/ Xxxxx X. Little
----------------------------
Xxxxx X. Little
84
AGREEMENT
THIS AGREEMENT, dated as of September 1, 1995 (this "Agreement"), is
made by and between The Summit Bancorporation, a New Jersey corporation, having
its principal offices at Xxx Xxxx Xxxxxx, Xxxxxxx, Xxx Xxxxxx 00000 (the
"Company"), and Xx. Xxxxxx X. Xxxxxx XX residing at 000 Xxxxxxxx Xxxx,
Xxxxxxxxxx, Xxx Xxxxxx 00000 (the "Executive").
WHEREAS, the Company considers it essential to the best interests of
its shareholders to xxxxxx the continued employment of key executive management
personnel; and
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that, as is the case with many publicly-held corporations, the
possibility of a Change in Control (as defined in Section 1.3 below) of the
Company exists from time to time and that such possibility, and the
uncertainty, instability and questions which it may raise for and among key
executive management personnel, may result in the premature departure or
significant distraction of such management personnel to the material detriment
of the Company and its shareholders; and
WHEREAS, the Board has determined that appropriate steps should be
taken to reinforce, focus and encourage the continued attention and dedication
of key members of the executive management of the Company and its subsidiaries,
including (without limitation) the Executive, to their assigned duties without
distraction in the face of potentially disturbing or unsettling circumstances
arising from the possibility of a Change in Control of the Company;
NOW THEREFORE, in consideration of the premises and the mutual cove-
nants herein contained, the Company and the Executive hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms
shall have the meanings set forth below:
1.1 "ANNUAL BASE SALARY" shall mean the Executive's rate of regular
basic annual compensation prior to any reduction under a salary reduction
agreement pursuant to section 401(k) or section 125 of the Internal Revenue
Code of 1986, as amended from time to time (the "Code"), and shall not include
(without limitation) cost of living allowances, fees, retainers,
reimbursements, car allowances, bonuses, incentive awards, prizes or similar
payments.
1.2 "CAUSE" for termination by the Company of the Executive's
employment, after any Change in Control, shall mean (i) the willful and
continued failure by the Executive to substantially perform the Executive's
duties with the Company, or a subsidiary of the Company, including (without
limitation) Summit Bank, a New Jersey chartered bank (the "Bank"), as such
85
duties may reasonably be defined from time to time by the Board (or a duly
designated and authorized committee thereof), or to abide by the reasonable
written policies of the Company or of the Executive's primary employer (other
than any such failure resulting from the Executive's incapacity due to physical
or mental illness or any such actual or anticipated failure after the issuance
of a Notice of Termination by the Executive for Good Reason pursuant to Section
7.1) after a written demand for substantial performance is delivered to the
Executive by the Board, which demand specifically identifies the manner in
which the Board believes that the Executive has not substantially performed the
Executive's duties or has not abided by any reasonable written policies, or
(ii) the continued and willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company or its subsidiaries,
monetarily or otherwise. For purposes of clauses (i) and (ii) of this
definition, no act, or failure to act, on the Executive's part shall be deemed
"willful" unless done, or omitted to be done, by the Executive in bad faith and
without reasonable belief that the Executive's act, or failure to act, was in
the best interest of the Company or its subsidiaries. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by the
Board or upon the instructions of the Board or the Company's chief executive
officer or other duly authorized senior officer of the Company or based upon
the advice of counsel for the Company shall be conclusively presumed to be
done, or omitted to be done, by the Executive in good faith and in the best
interests of the Company and its subsidiaries. The cessation of employment of
the Executive shall not be deemed to be for Cause unless and until there shall
have been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three quarters of the entire membership of
the Board at a meeting of the Board called and held for such purpose (after
reasonable notice of any such meeting is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before
the Board), finding that, in the good faith opinion of the Board, the Executive
is guilty of the conduct described in clause (i) or (ii) above, and specifying
the particulars thereof in detail.
1.3 "CHANGE IN CONTROL" shall mean and be deemed to have occurred
if:
(i) any Person is or becomes the Beneficial Owner (as that
term is defined in Rule 13d-3 under the Securities Exchange Act of
1934 (the "Exchange Act")), directly or indirectly, of securities of
the Company (not including in the securities beneficially owned by
such Person any securities acquired directly from the Company)
representing twenty-five percent (25%) or more of the combined voting
power of the Company's then outstanding securities, or there occurs
any transaction which the Company is required to disclose pursuant to
Item 1(a) of Form 8-K (as filed pursuant to Rule 13a-11 or Rule 15d-
11 of the Exchange Act); or
(ii) during any period of twenty-four (24) consecutive
months (not including any period prior to September 1, 1995),
individuals who at the beginning of such period constitute the Board
and any new director (other than a director designated by a Person
who has entered into an agreement with the Company to effect a
86
transaction described in clause (i), (iii) or (iv) of this definition
or any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies
or consents) whose election by the Board or nomination for election
by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of such period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority of the Board; or
(iii) the shareholders of the Company approve a
reorganization, merger or consolidation, other than a reorganization,
merger or consolidation with respect to which all or substantially
all of the individuals and entities who were Beneficial Owners,
immediately prior to such reorganization, merger or consolidation, of
the combined voting power of the Company's then outstanding
securities beneficially own, directly or indirectly, immediately
after such reorganization, merger or consolidation, more then
seventy-five percent (75%) of the combined voting power of the
securities of the corporation resulting from such reorganization,
merger or consolidation in substantially the same proportions as
their respective ownership, immediately prior to such reorganization,
merger or consolidation, of the combined voting power of the
Company's securities; or
(iv) the shareholders of the Company approve (a) the sale
or disposition by the Company (other than to a subsidiary of the
Company) of the Bank, or (b) a complete liquidation or dissolution of
the Company or the Bank.
Notwithstanding the foregoing, a Change in Control shall not include any event,
circumstance or transaction which results from the action (excluding the
Executive's employment activities with the Company, the Bank or any of their
respective subsidiaries) of any Person or group of Persons which includes, is
directly affiliated with or is wholly or partly controlled by one or more
executive officers of the Company and in which the Executive actively
participates.
1.4 "COMPANY" shall include The Summit Bancorporation and any
successor to its business and/or assets which assumes (either expressly, by
operation of law or otherwise) and/or agrees to perform this Agreement by
operation of law or otherwise (except in determining, under Section 1.3 hereof,
whether or not any Change in Control of the Company has occurred in connection
with such succession).
1.5 "DISABILITY" shall mean and be deemed the reason for the
termination by the Company of the Executive's employment, if, as a result of
the Executive's incapacity due to physical or mental illness, (i) the Executive
shall have been absent from the full-time performance of the Executive's duties
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with the Company for a period of six (6) consecutive months, (ii) the Company
gives the Executive a Notice of Termination for Disability, and (iii) within
thirty (30) days after such Notice of Termination is given, the Executive does
not return to the full-time performance of the Executive's duties.
1.6 "GOOD REASON" for termination by the Executive of the
Executive's employment, in connection with or as a result of any Change in
Control, shall mean the occurrence (without the Executive's prior express
written consent) of any one of the following acts, or failures to act, unless,
in the case of any act or failure to act described in clauses (i), (iv), (v) or
(vi) below, such act or failure to act is corrected by the Company prior to the
Date of Termination specified in the Notice of Termination given in respect
thereof:
(i) the assignment to the Executive of any duties or
responsibilities inconsistent with those described in Section 3.2
below or with the Executive's position(s) (including without
limitation status, offices, titles, and reporting
responsibilities/rights) as an executive officer of the Company and
its subsidiaries or a substantial adverse alteration in the nature of
the Executive's authority, duties, or responsibilities from those
described in Section 3.2 below or otherwise;
(ii) a reduction in the Executive's Annual Base Salary as
in effect on the date of this Agreement or as the same may be
increased at any time thereafter and from time to time;
(iii) the relocation of the Company's principal executive
offices to a location more than thirty (30) miles from its location
on the date of this Agreement (or, if different, more than thirty
(30) miles from where such offices are located immediately prior to
any Potential Change in Control) or the Company's requiring the
Executive to be based anywhere other than the Company's principal
executive offices except for required travel on the Company's
business to an extent substantially consistent with the Executive's
business travel obligations as of the date of this Agreement;
(iv) any failure by the Company to comply with any of the
provisions of this Agreement, other than an isolated, insubstantial
and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof
given by the Executive;
(v) the failure by the Company or a subsidiary to continue
in effect any pension benefit or incentive or deferred compensation
plan in which the Executive participates immediately prior to any
Potential Change in Control which is material to the Executive's
total compensation, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan or arrangement) has been made
with respect to such plan, or the failure by the Company or a
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subsidiary to continue the Executive's participation therein (or in
such substitute or alternative plan or arrangement) on a basis not
materially less favorable, both in terms of the amount of benefits
provided and the level of the Executive's participation relative to
other participants, as existed at the time of the Potential Change in
Control;
(vi) the failure by the Company or a subsidiary to
continue to provide the Executive with health and welfare benefits
substantially similar to those enjoyed by the Executive under any of
the Company's or a subsidiary's retirement, life insurance, medical,
health and accident, or disability or similar plans in which the
Executive was participating at the time of any Potential Change in
Control, the taking of any action by the Company or a subsidiary
which would directly or indirectly materially reduce any of such
benefits or deprive the Executive of any material fringe benefit
enjoyed by the Executive at the time of the Potential Change in
Control, or the failure by the Company or a subsidiary to provide the
Executive with the number of paid vacation days to which the
Executive is entitled in accordance with the Company's or a
subsidiary's normal vacation policy in effect at the time of the
Potential Change in Control;
(vii) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of Termination
satisfying the requirements of Section 7.1; and/or
(viii) a termination by the Executive for any reason
during the thirty (30) day period immediately following the first
anniversary of any Change in Control.
1.7 "PERSON" shall have the meaning ascribed thereto in Section
3(a)(9) of the Exchange Act, as modified applied, and used in Sections 13(d)
and 14(d) thereof; provided, however, a Person shall not include (i) the
Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any of its
subsidiaries (in its capacity as such), (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by the stockholders of the Company
in substantially the same character and proportions as their ownership of stock
of the Company.
1.8 "POTENTIAL CHANGE IN CONTROL" shall mean and be deemed to have
occurred if:
(i) the Company commences negotiations in respect of or
enters into an agreement, the consummation of which would result in
the occurrence of a Change in Control;
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(ii) the Company or any Person publicly announces an
intention to take actions which, if consummated, would constitute a
Change in Control; and/or
(iii) any Person becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing ten percent
(10%) or more of the combined voting power of the Company's then
outstanding securities, or any Person increases such Person's
beneficial ownership of such securities by five (5) percentage points
or more over the percentage so owned by such Person on September 1,
1995.
1.9 "RETIREMENT" shall mean and be deemed the reason for the
termination by the Executive of the Executive's employment if such employment
is terminated in accordance with the Company's normal retirement policy for
those aged 65 and older, not including early retirement or so-called "window
period" retirements, generally applicable to its salaried employees, as in
effect immediately prior to any Potential Change in Control.
2. TERM OF THIS AGREEMENT. This Agreement shall commence on the date
hereof and shall continue in effect through December 31, 1998; provided,
--------
however, that commencing on January 1, 1998 and each January 1 thereafter, the
-------
term of this Agreement shall automatically be extended for one additional year
unless, not later than June 30 of the preceding year, the Company or the
Executive shall have given written notice to the other not to extend this
Agreement or a Change in Control shall have occurred prior to any such January
1; provided, further, however, that if a Change in Control shall have occurred
-------- ------- -------
during the term of this Agreement, this Agreement shall continue in effect for
a period of not less than thirty-six (36) months beyond the month in which such
Change in Control occurred (the "Term"). Notwithstanding the foregoing
provisions of this Section 2, the Term shall terminate upon the Executive's
attaining the age of sixty-five (65) years.
3. COMPANY'S COVENANTS.
3.1 SEVERANCE PAYMENTS. In order to induce the Executive to remain
in the employ of the Company and/or one or more of its subsidiaries and in
consideration of the Executive's covenants set forth in Section 4 below, the
Company agrees, under the terms and conditions described herein and in addition
to the amounts payable to the Executive under Section 5 below, to pay the
Executive the "Severance Payments" described in Section 6.1 below and the other
payments and benefits described herein in the event the Executive's employment
with the Company is terminated during the Term and after a Change in Control or
under the other circumstances set forth in Section 6.1 below.
3.2 POSITION AND DUTIES. During the period commencing on the date
of any Change in Control until the earliest to occur of (i) the date which is
thirty-six (36) months from the date of any such Change in Control, (ii) the
date of termination by the Executive of the Executive's employment for any
reason, or (iii) the termination by the Company of the Executive's employment
for any reason (the "Employment Period"), (a) the Executive's position
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(including status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be at least commensurate in all material
respects with the most significant of those held, exercised and assigned at any
time during the one hundred eighty (180) day period immediately preceding any
related Potential Change in Control, and (b) the Executive's services shall be
performed at the location where the Executive was employed immediately
preceding any such Potential Change in Control, or any office or location less
than thirty (30) miles from such location.
3.3 BASE SALARY. During the Employment Period, the Executive shall
receive Annual Base Salary at least equal to twelve (12) times the highest
monthly base salary paid or payable, including (without limitation) any base
salary which has been earned but deferred, to the Executive by the Company and
its affiliated companies in respect of the twelve (12) month period immediately
preceding the month in which any related Potential Change in Control occurs.
In addition, Annual Base Salary shall not be reduced after the occurrence of a
Potential Change in Control. As used in this Agreement, the term "affiliated
companies" shall include any company controlled by, controlling or under common
control with the Company.
3.4 ANNUAL BONUS. In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year ending during the Employment Period, an
annual bonus (the "Annual Bonus") in cash at least equal to the Executive's
highest bonus for the last three (3) full fiscal years prior to the fiscal year
in which the related Potential Change in Control occurs (annualized in the
event that the Executive was not employed by the Company for the whole of any
such prior fiscal year). Each Annual Bonus shall be paid no later than the end
of the third month of the fiscal year next following the fiscal year for which
the Annual Bonus is awarded, unless the Executive shall elect to defer the
receipt of such Annual Bonus.
3.5 INCENTIVE, SAVINGS AND RETIREMENT PLANS. During the Employment
Period, the Executive shall be entitled to participate in all incentive,
savings and retirement plans, practices, policies and programs applicable
generally to other peer executives of the Company and its affiliated companies,
but in no event shall such plans, practices, policies and programs provide the
Executive with incentive opportunities (measured with respect to both regular
and special incentive opportunities, to the extent, if any, that such
distinction is applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than the most
favorable of those provided by the Company and its affiliated companies for the
Executive under such plans, practices, policies and programs as in effect at
any time during the one hundred eighty (180) day period immediately preceding
any related Potential Change in Control or if more favorable to the Executive,
those provided generally at any time thereafter to other peer executives of the
Company and its affiliated companies.
3.6 WELFARE BENEFIT PLANS. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be entitled
to participate in and shall receive all benefits under all of the health and
welfare benefit plans, practices, policies and programs provided by the Company
and its affiliated companies (including, without limitation, medical,
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prescription, dental, disability, employee life, group life, accidental death
and travel accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and its affiliated companies,
but in no event shall such plans, practices, policies and programs provide the
Executive with benefits which are less favorable, in the aggregate, than the
most favorable of such plans, practices, policies and programs in effect for
the Executive at any time during the one hundred eighty (180) day period
immediately preceding any related Potential Change in Control or, if more
favorable to the Executive, those provided generally at any time thereafter to
other peer executives of the Company and its affiliated companies.
3.7 EXPENSES. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred
by the Executive in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in effect for the
Executive at any time during the one hundred eighty (180) day period
immediately preceding any related Potential Change in Control or, if more
favorable to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated companies.
3.8 FRINGE BENEFITS. During the Employment Period, the Executive
shall be entitled to fringe benefits, including, without limitation, tax and
financial planning services, payment of club dues, and an automobile allowance
and payment of related expenses, in accordance with the most favorable plans,
practices, programs and policies of the Company and its affiliated companies in
effect for the Executive at any time during the one hundred eighty (180) day
period immediately preceding any related Potential Change in Control or, if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
3.9 OFFICE AND SUPPORT STAFF. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, at least equal to the most favorable of the foregoing
provided to the Executive by the Company and its affiliated companies at any
time during the one hundred eighty (180) day period immediately preceding any
related Potential Change in Control or, if more favorable to the Executive, as
provided generally at any time thereafter with respect to other peer executives
of the Company and its affiliated companies.
3.10 VACATION. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated companies as
in effect for the Executive at any time during the one hundred eighty (180) day
period immediately preceding any related Potential Change in Control or, if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
4. THE EXECUTIVE'S COVENANTS.
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4.1 EMPLOYMENT. The Executive agrees that, subject to the terms and
conditions of this Agreement, in the event of a Change in Control during the
Term the Executive will remain in the employ of the Company during any related
Employment Period.
4.2 TIME AND ATTENTION. During the Employment Period, and excluding
any periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during normal business
hours to the business and affairs of the Company and, to the extent necessary
to discharge the responsibilities and duties assigned to the Executive
hereunder, to use the Executive's reasonable best efforts to perform faithfully
and efficiently such responsibilities and duties. During the Employment Period
it shall not be a violation of this Agreement for the Executive to (i) serve on
corporate, civic or charitable boards or committees, (ii) deliver lectures,
fulfill speaking engagements or teach at educational institutions, and (iii)
manage personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to any Potential Change in Control, the
reinstatement or continued conduct of such activities (or the reinstatement or
conduct of activities similar in nature and scope thereto) subsequent to any
related Potential Change in Control shall not thereafter be deemed to interfere
with the performance of the Executive's responsibilities to the Company.
4.3 CONFIDENTIAL INFORMATION. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other
than by direct or indirect acts by the Executive in violation of this
Agreement). After termination of the Executive's employment with the Company,
the Executive shall not, without the prior written consent of the Company or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it. In no event, however, shall an asserted violation of the
provisions of this Section 4.3 constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this Agreement.
5. COMPENSATION OTHER THAN SEVERANCE PAYMENTS.
5.1 DISABILITY. Following a Potential Change in Control and during
the Term, during any period that the Executive fails to perform the Executive's
full-time duties with the Company as a result of incapacity due to physical or
mental illness, the Executive's full salary shall be paid to the Executive by
the Company at a rate no less than the rate in effect at the commencement of
any such disability period, together with all compensation and benefits payable
to the Executive under the terms of any compensation or benefit plan, program
93
or arrangement maintained by the Company or its subsidiaries during such
disability period, until the Executive's employment is terminated by the
Company for Disability.
5.2 BASE SALARY. If the Executive's employment shall be terminated
for any reason following a Potential Change in Control and during the Term, the
Executive's full salary shall be paid to the Executive by the Company through
the Date of Termination (as defined below in Section 7.2) at the rate in effect
at the time the Notice of Termination is given, together with all compensation
and benefits payable to or with respect to the Executive through the Date of
Termination under the terms of any compensation or benefit plan, program or
arrangement maintained by the Company or its subsidiaries during such period.
5.3 BENEFITS. If the Executive's employment shall be terminated for
any reason following a Potential Change in Control and during the Term, the
Executive's normal post-termination compensation and benefits shall be paid to
the Executive as such payments become due. Such post-termination compensation
and benefits shall be determined under, and paid in accordance with, the
retirement, insurance and other compensation or benefit plans, programs and
arrangements maintained by the Company or its subsidiaries.
6. SEVERANCE PAYMENTS.
6.1 SEVERANCE. The Company shall pay the Executive the payments
described in this Section 6.1 (the "Severance Payments") upon the termination
of the Executive's employment with the Company following a Change in Control
and during the Term, in addition to the payments and benefits described in
Section 5 hereof, unless such termination is (i) by the Company for Cause, (ii)
by reason of Retirement, or (iii) by the Executive without Good Reason. In
addition, the Executive's employment shall be deemed to have been terminated
following a Change in Control by the Company without Cause or by the Executive
with Good Reason (a) if the Executive reasonably demonstrates that the
Executive's employment was terminated prior to a Change in Control without
Cause (1) at the request of a Person who has entered into an agreement with the
Company the consummation of which will constitute a Change in Control (or who
has taken other steps reasonably calculated to effect a Change in Control) or
(2) otherwise in connection with, as a result of or in anticipation of a Change
in Control, (b) if the Executive terminates his employment for Good Reason
prior to a Change in Control and the Executive reasonably demonstrates that the
circumstance(s) or event(s) which constitute such Good Reason occurred (1) at
the request of such Person or (2) otherwise in connection with, as a result of
or in anticipation of a Change in Control, or (c) if the Executive dies or is
terminated by the Company due to Disability, in each case, after the occurrence
of a Potential Change in Control and a related Change in Control actually
occurs within one (1) year after the Date of Termination or the date of death,
as the case may be. The Executive's right to terminate the Executive's
employment for Good Reason shall not be affected by the Executive's incapacity
due to physical or mental illness. The Executive's continued employment shall
not constitute consent to, or a waiver of rights with respect to, any act or
failure to act constituting Good Reason hereunder.
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6.1.1 In lieu of any further salary and annual bonus
payments to the Executive for periods subsequent to the Date of
Termination, the Company shall pay to the Executive a lump sum
severance payment, in cash, equal to two (2) or, if less, the number
of years, including fractions, from the Date of Termination until the
Executive reaches the age of sixty-five (65) years times the sum of
(i) the highest Annual Base Salary paid or payable to the Executive
during the thirty-six (36) month period immediately preceding the
month in which the Change in Control occurs, and (ii) the highest
annual bonus paid or determined and payable to the Executive during
such thirty-six (36) month period.
6.1.2 For a twenty-four (24) month period after the Date
of Termination, or if sooner, until the Executive reaches the age of
sixty-five (65) years, the Company shall arrange to provide the
Executive with life, disability, accident and health insurance
benefits substantially similar to those which the Executive is
receiving immediately prior to any related Potential Change in
Control or the receipt of the Notice of Termination (without giving
effect to any reduction in such benefits subsequent to a Change in
Control which reduction constitutes Good Reason), whichever is
greater. Benefits otherwise receivable by the Executive pursuant to
this Section 6.1.2 shall be reduced to the extent comparable benefits
are actually received by or made available to the Executive without
cost during such period following the Executive's termination of
employment (and any such benefits actually received by the Executive
shall be reported to the Company by the Executive).
6.2 SPECIAL REIMBURSEMENT. In the event that the Executive becomes
entitled to the Severance Payments, if any payment or benefit paid or payable,
or received or to be received, by or on behalf of the Executive in connection
with a Change in Control or the termination of the Executive's employment,
whether any such payments or benefits are pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the Company, any of
its subsidiaries, any Person, or otherwise (the "Total Payments"), will or
would be subject to the excise tax imposed under section 4999 of the Code (the
"Excise Tax"), the Company shall pay to the Executive an additional amount (the
"Gross-Up Payment") which amount shall be equal to the sum of (a) the amount of
such Excise Tax imposed (determined without regard to the Gross-Up Payment),
and (b) the product of (i) such Excise Tax (determined without regard to the
Gross-Up Payment), and (ii) the Aggregate Combined Marginal Tax Rate. For
purposes of this Section 6.2, "Aggregate Combined Marginal Tax Rate" means (and
shall equal) the sum of (A) the combined highest marginal state and local
income tax rates applicable for the tax year in which the Executive receives
the Gross-Up Payment (adjusted downward to take into account the tax
deductibility, if any, of such state and local income taxes), plus (B) the rate
of excise tax imposed on "golden parachute" payments under Section 4999 of the
Code, plus (C) the highest marginal federal income tax rate applicable for the
tax year in which the Executive receives the Gross-Up Payment (adjusted upward
to take into account any reduction in otherwise allowable itemized deductions
attributable to Section 68 of the Code), plus (D) the tax rate applicable to
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the Executive under the hospital insurance portion of the Federal Insurance
Contributions Act under Section 3101(b) of the Code for the tax year in which
the Executive receives the Gross-Up Payment.
6.2.1 For purposes of determining whether any of the Total
Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (i) the Total Payments shall be treated as "parachute
payments" within the meaning of section 280G(b)(2) of the Code, and
all "excess parachute payments" within the meaning of
section 280G(b)(1) of the Code shall be treated as subject to the
Excise Tax, unless in the opinion of tax counsel (delivered to the
Executive) selected by the Company and reasonably acceptable to the
Executive such Total Payments (in whole or in part) (a) do not
constitute parachute payments, including (without limitation) by
reason of section 280G(b)(4)(A) of the Code, (b) such excess
parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered, within the meaning of
section 280G(b)(4)(B) of the Code, or (c) are otherwise not subject
to the Excise Tax, and (ii) the value of any non-cash benefits or any
deferred payment or benefit shall be determined by the Company's
independent auditors in accordance with the principles of sections
280G(d)(3) and (4) of the Code.
6.2.2 In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder at
the time of termination of the Executive's employment, the Executive
shall repay to the Company, at the time that the amount of such
reduction in Excise Tax is finally determined, the portion of the
Gross-Up Payment attributable to such reduction plus interest on the
amount of such repayment at the rate provided in section
1274(b)(2)(B) of the Code. In the event that the Excise Tax is
determined to exceed the amount taken into account hereunder at the
time of the termination of the Executive's employment (including by
reason of any payment the existence or amount of which cannot be
determined at the time of the Gross-Up Payment), the Company shall
make an additional Gross-Up Payment in respect of such excess (plus
any interest, penalties or additions payable by the Executive with
respect to such excess) at the time that the amount of such excess is
finally determined. The Executive and the Company shall each
reasonably cooperate with the other in connection with any
administrative or judicial proceedings concerning the existence or
amount of any such subsequent liability for Excise Tax with respect
to the Severance Payments.
6.3 DATE OF PAYMENT. The payments provided for in Section 6.1.1 and
Section 6.2 hereof shall be made not later than the fifteenth (15th) day
following the Date of Termination; provided, however, that if the amounts of
-------- -------
such payments cannot be finally determined on or before such day, the Company
shall pay to the Executive on such day an estimate, as determined in good faith
by the Company, of the minimum amount of such payments to which the Executive
96
is likely to be entitled to and shall pay the remainder of such payments
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later
than the thirtieth (30th) day after the Date of Termination. In the event that
the amount of the estimated payments exceeds the amount subsequently determined
to have been due, such excess shall constitute a loan by the Company to the
Executive, payable on the fifth (5th) business day after demand by the Company
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code). At the time that payments are made under this Section 6.3, the Company
shall provide the Executive with a detailed written statement setting forth the
manner in which such payments were calculated and the basis for such
calculations including, without limitation, any opinions or other advice the
Company has received from outside counsel, auditors or consultants (and any
such opinions or advice which are in writing shall be attached to the
statement).
6.4 LEGAL COSTS. The Company shall also reimburse the Executive for
all legal fees and expenses incurred in good faith by the Executive as a result
of any dispute with any party (including, but not limited to, the Company or
the Bank) regarding the payment of any benefit provided for in this Agreement
(including, but not limited, all such fees and expenses incurred in disputing
any termination or in seeking in good faith to obtain or enforce any benefit or
right provided by this Agreement or in connection with any tax audit or
proceeding to the extent attributable to the application of section 4999 of the
Code plus in each case interest on any delayed payment at the applicable
Federal rate provided for in section 7872(f)(2)(A) of the Code. Such payments
shall be made within five (5) business days after delivery of the Executive's
written requests for payment accompanied by such evidence of fees and expenses
incurred as the Company reasonably may require.
7. TERMINATION PROCEDURES AND COMPENSATION DURING DISPUTE.
7.1 NOTICE OF TERMINATION. After a Change in Control and during the
Term, any purported termination of the Executive's employment with the Company
(other than by reason of death) shall be communicated by written Notice of
Termination from one party hereto to the other party hereto in accordance with
Section 10 hereof. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment with the Company under the provision so indicated. Further, a
Notice of Termination for Cause is required to include a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters (3/4) of
the entire membership of the Board at a meeting of the Board which was called
and held for the purpose of considering such termination (which meeting may be
a regular meeting of the Board where prior notice of consideration of such
termination is given to members of the Board) finding that, in the good faith
opinion of the Board, the Executive engaged in conduct set forth in clause (i)
or (ii) of the definition of Cause herein, and specifying the particulars
thereof in detail. For purposes of this Agreement, any purported termination
not effected in accordance with this Section 7.1 shall not be considered
effective.
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7.2 DATE OF TERMINATION. "Date of Termination", with respect to any
purported termination of the Executive's employment after a Change in Control
and during the Term, shall mean (i) if the Executive's employment is terminated
for Disability, thirty (30) days after Notice of Termination is given (provided
that the Executive shall not have returned to the full-time performance of the
Executive's duties during such thirty (30) day period), and (ii) if the
Executive's employment is terminated for any other reason, the date specified
in the Notice of Termination (which, in the case of a termination by the
Company, shall not be less than thirty (30) days (except in the case of a
termination for Cause) and, in the case of a termination by the Executive,
shall not be less than fifteen (15) days nor more than sixty (60) days,
respectively, after the date such Notice of Termination is given).
7.3 DISPUTE CONCERNING TERMINATION. If within fifteen (15) days
after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this Section 7.3), the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall be the date on
which the dispute is finally resolved, either by mutual written agreement of
the parties or by a final judgment, order or decree of a court of competent
jurisdiction (which is not appealable or with respect to which the time for
appeal therefrom has expired and no appeal has been perfected); provided,
--------
however, that the Date of Termination shall be extended by a notice of dispute
-------
only if the basis for such notice is reasonable, such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence.
7.4 COMPENSATION DURING DISPUTE. If a purported termination occurs
following a Change in Control and during the Term, and such termination is
disputed in accordance with Section 7.3 above, the Company shall continue to
pay the Executive the full compensation (including without limitation Annual
Base Salary and Annual Bonus) in effect at the time of any related Potential
Change in Control or when the notice giving rise to the dispute was given
(whichever is greater) and continue the Executive as a participant in all
compensation, incentive, pension and welfare benefit and insurance plans in
which the Executive was participating at the time of any Potential Change in
Control or when the notice giving rise to the dispute was given, whichever is
greater, until the dispute is finally resolved in accordance with Section 7.3
hereof. Amounts paid under this Section 7.4 are in addition to all other
amounts due under this Agreement (other than those due under Section 5.2
hereof) and shall not be offset against or reduce any other amounts due under
this Agreement or any other plan, agreement or arrangement.
8. NO MITIGATION. The Company agrees that, if the Executive's
employment is terminated during the Term, the Executive is not required to seek
other employment or to attempt in any way to reduce any amounts payable to the
Executive by the Company pursuant to Section 6 or Section 7.4. Further, the
amount of any payment or benefit provided for in Section 6 (other than pursuant
to Section 6.1.2) or Section 7.4 shall not be reduced by any compensation
earned by the Executive as the result of employment by another employer, by
retirement benefits, or offset against any amount claimed to be owed by the
Executive to the Company or any of its subsidiaries, or otherwise.
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9. SUCCESSORS; BINDING AGREEMENT.
9.1 SUCCESSORS. In addition to any obligations imposed by law upon
any successor to the Company, the Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption and
agreement prior to the effectiveness of any such succession shall be a breach
of this Agreement and shall entitle the Executive to compensation from the
Company in the same amount and on the same terms as the Executive would be
entitled to hereunder if the Executive were to terminate the Executive's
employment for Good Reason after a Change in Control, except that, for purposes
of implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.
9.2 BINDING AGREEMENT. This Agreement shall inure to the benefit of
and be enforceable by this Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive shall die while any amount would still be payable
to the Executive hereunder (other than amounts which, by their terms, terminate
upon the death of the Executive) if the Executive had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the executors, personal representatives or
administrators of the Executive's estate.
10. NOTICES. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below, or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon actual receipt:
To the Company:
The Summit Bancorporation
Xxx Xxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attention: Corporate Secretary
To the Executive:
Xx. Xxxxxx X. Xxxxxx XX
000 Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
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11. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.
The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of New Jersey without regard to the
principles of conflict of laws thereof. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to and include any
successor provisions to such sections. Any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state
or local law and any additional withholding to which the Executive has agreed.
The rights and obligations of the Company and the Executive under this
Agreement shall survive the expiration of the Term and the Employment Period.
12. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
13. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
14. NO LIMITATION. Nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any plan, program, policy or
practice provided by the Company or any of its affiliated companies and for
which the Executive may qualify, nor shall anything herein limit or otherwise
affect such rights as the Executive may have under any other contract or
agreement with the Company or any of its affiliated companies. Amounts which
are vested benefits or which the Executive is otherwise entitled to receive
under any plan, policy, practice or program of or any contract or agreement
with the Company or any of its affiliated companies at or subsequent to the
Date of Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly modified by
this Agreement.
The Summit Bancorporation
By:
/s/ Xxxxxx X. Xxx
----------------------------
Xxxxxx X. Xxx
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/s/ Xxxxxx X. Xxxxxx XX
----------------------------
Xxxxxx X. Xxxxxx XX
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AGREEMENT
THIS AGREEMENT, dated as of September 1, 1995 (this "Agreement"), is
made by and between The Summit Bancorporation, a New Jersey corporation, having
its principal offices at Xxx Xxxx Xxxxxx, Xxxxxxx, Xxx Xxxxxx 00000 (the
"Company"), and Xx. Xxxxxxx X. XxXxxxx, Xx. residing at 00 Xxxx Xxxx, Xxxxxxx,
Xxx Xxxxxx 00000 (the "Executive").
WHEREAS, the Company considers it essential to the best interests of
its shareholders to xxxxxx the continued employment of key executive management
personnel; and
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that, as is the case with many publicly-held corporations, the
possibility of a Change in Control (as defined in Section 1.3 below) of the
Company exists from time to time and that such possibility, and the
uncertainty, instability and questions which it may raise for and among key
executive management personnel, may result in the premature departure or
significant distraction of such management personnel to the material detriment
of the Company and its shareholders; and
WHEREAS, the Board has determined that appropriate steps should be
taken to reinforce, focus and encourage the continued attention and dedication
of key members of the executive management of the Company and its subsidiaries,
including (without limitation) the Executive, to their assigned duties without
distraction in the face of potentially disturbing or unsettling circumstances
arising from the possibility of a Change in Control of the Company;
NOW THEREFORE, in consideration of the premises and the mutual cove-
nants herein contained, the Company and the Executive hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms
shall have the meanings set forth below:
1.1 "ANNUAL BASE SALARY" shall mean the Executive's rate of regular
basic annual compensation prior to any reduction under a salary reduction
agreement pursuant to section 401(k) or section 125 of the Internal Revenue
Code of 1986, as amended from time to time (the "Code"), and shall not include
(without limitation) cost of living allowances, fees, retainers,
reimbursements, car allowances, bonuses, incentive awards, prizes or similar
payments.
1.2 "CAUSE" for termination by the Company of the Executive's
employment, after any Change in Control, shall mean (i) the willful and
continued failure by the Executive to substantially perform the Executive's
duties with the Company, or a subsidiary of the Company, including (without
limitation) Summit Bank, a New Jersey chartered bank (the "Bank"), as such
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duties may reasonably be defined from time to time by the Board (or a duly
designated and authorized committee thereof), or to abide by the reasonable
written policies of the Company or of the Executive's primary employer (other
than any such failure resulting from the Executive's incapacity due to physical
or mental illness or any such actual or anticipated failure after the issuance
of a Notice of Termination by the Executive for Good Reason pursuant to Section
7.1) after a written demand for substantial performance is delivered to the
Executive by the Board, which demand specifically identifies the manner in
which the Board believes that the Executive has not substantially performed the
Executive's duties or has not abided by any reasonable written policies, or
(ii) the continued and willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company or its subsidiaries,
monetarily or otherwise. For purposes of clauses (i) and (ii) of this
definition, no act, or failure to act, on the Executive's part shall be deemed
"willful" unless done, or omitted to be done, by the Executive in bad faith and
without reasonable belief that the Executive's act, or failure to act, was in
the best interest of the Company or its subsidiaries. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by the
Board or upon the instructions of the Board or the Company's chief executive
officer or other duly authorized senior officer of the Company or based upon
the advice of counsel for the Company shall be conclusively presumed to be
done, or omitted to be done, by the Executive in good faith and in the best
interests of the Company and its subsidiaries. The cessation of employment of
the Executive shall not be deemed to be for Cause unless and until there shall
have been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three quarters of the entire membership of
the Board at a meeting of the Board called and held for such purpose (after
reasonable notice of any such meeting is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before
the Board), finding that, in the good faith opinion of the Board, the Executive
is guilty of the conduct described in clause (i) or (ii) above, and specifying
the particulars thereof in detail.
1.3 "CHANGE IN CONTROL" shall mean and be deemed to have occurred
if:
(i) any Person is or becomes the Beneficial Owner (as that
term is defined in Rule 13d-3 under the Securities Exchange Act of
1934 (the "Exchange Act")), directly or indirectly, of securities of
the Company (not including in the securities beneficially owned by
such Person any securities acquired directly from the Company)
representing twenty-five percent (25%) or more of the combined voting
power of the Company's then outstanding securities, or there occurs
any transaction which the Company is required to disclose pursuant to
Item 1(a) of Form 8-K (as filed pursuant to Rule 13a-11 or Rule 15d-
11 of the Exchange Act); or
(ii) during any period of twenty-four (24) consecutive
months (not including any period prior to September 1, 1995),
individuals who at the beginning of such period constitute the Board
and any new director (other than a director designated by a Person
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who has entered into an agreement with the Company to effect a transaction
described in clause (i), (iii) or (iv) of this definition or any such
individual whose initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents) whose election by the Board or
nomination for election by the Company's stockholders was approved by a vote of
at least two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of such period or whose election or nomination for
election was previously so approved, cease for any reason to constitute a
majority of the Board; or
(iii) the shareholders of the Company approve a
reorganization, merger or consolidation, other than a reorganization,
merger or consolidation with respect to which all or substantially
all of the individuals and entities who were Beneficial Owners,
immediately prior to such reorganization, merger or consolidation, of
the combined voting power of the Company's then outstanding
securities beneficially own, directly or indirectly, immediately
after such reorganization, merger or consolidation, more then
seventy-five percent (75%) of the combined voting power of the
securities of the corporation resulting from such reorganization,
merger or consolidation in substantially the same proportions as
their respective ownership, immediately prior to such reorganization,
merger or consolidation, of the combined voting power of the
Company's securities; or
(iv) the shareholders of the Company approve (a) the sale
or disposition by the Company (other than to a subsidiary of the
Company) of the Bank, or (b) a complete liquidation or dissolution of
the Company or the Bank.
Notwithstanding the foregoing, a Change in Control shall not include any event,
circumstance or transaction which results from the action (excluding the
Executive's employment activities with the Company, the Bank or any of their
respective subsidiaries) of any Person or group of Persons which includes, is
directly affiliated with or is wholly or partly controlled by one or more
executive officers of the Company and in which the Executive actively
participates.
1.4 "COMPANY" shall include The Summit Bancorporation and any
successor to its business and/or assets which assumes (either expressly, by
operation of law or otherwise) and/or agrees to perform this Agreement by
operation of law or otherwise (except in determining, under Section 1.3 hereof,
whether or not any Change in Control of the Company has occurred in connection
with such succession).
1.5 "DISABILITY" shall mean and be deemed the reason for the
termination by the Company of the Executive's employment, if, as a result of
the Executive's incapacity due to physical or mental illness, (i) the Executive
shall have been absent from the full-time performance of the Executive's duties
104
with the Company for a period of six (6) consecutive months, (ii) the Company
gives the Executive a Notice of Termination for Disability, and (iii) within
thirty (30) days after such Notice of Termination is given, the Executive does
not return to the full-time performance of the Executive's duties.
1.6 "GOOD REASON" for termination by the Executive of the
Executive's employment, in connection with or as a result of any Change in
Control, shall mean the occurrence (without the Executive's prior express
written consent) of any one of the following acts, or failures to act, unless,
in the case of any act or failure to act described in clauses (i), (iv), (v) or
(vi) below, such act or failure to act is corrected by the Company prior to the
Date of Termination specified in the Notice of Termination given in respect
thereof:
(i) the assignment to the Executive of any duties or
responsibilities inconsistent with those described in Section 3.2
below or with the Executive's position(s) (including without
limitation status, offices, titles, and reporting
responsibilities/rights) as an executive officer of the Company and
its subsidiaries or a substantial adverse alteration in the nature of
the Executive's authority, duties, or responsibilities from those
described in Section 3.2 below or otherwise;
(ii) a reduction in the Executive's Annual Base Salary as
in effect on the date of this Agreement or as the same may be
increased at any time thereafter and from time to time;
(iii) the relocation of the Company's principal executive
offices to a location more than thirty (30) miles from its location
on the date of this Agreement (or, if different, more than thirty
(30) miles from where such offices are located immediately prior to
any Potential Change in Control) or the Company's requiring the
Executive to be based anywhere other than the Company's principal
executive offices except for required travel on the Company's
business to an extent substantially consistent with the Executive's
business travel obligations as of the date of this Agreement;
(iv) any failure by the Company to comply with any of the
provisions of this Agreement, other than an isolated, insubstantial
and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof
given by the Executive;
(v) the failure by the Company or a subsidiary to continue
in effect any pension benefit or incentive or deferred compensation
plan in which the Executive participates immediately prior to any
Potential Change in Control which is material to the Executive's
total compensation, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan or arrangement) has been made
with respect to such plan, or the failure by the Company or a
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subsidiary to continue the Executive's participation therein (or in
such substitute or alternative plan or arrangement) on a basis not
materially less favorable, both in terms of the amount of benefits
provided and the level of the Executive's participation relative to
other participants, as existed at the time of the Potential Change in
Control;
(vi) the failure by the Company or a subsidiary to
continue to provide the Executive with health and welfare benefits
substantially similar to those enjoyed by the Executive under any of
the Company's or a subsidiary's retirement, life insurance, medical,
health and accident, or disability or similar plans in which the
Executive was participating at the time of any Potential Change in
Control, the taking of any action by the Company or a subsidiary
which would directly or indirectly materially reduce any of such
benefits or deprive the Executive of any material fringe benefit
enjoyed by the Executive at the time of the Potential Change in
Control, or the failure by the Company or a subsidiary to provide the
Executive with the number of paid vacation days to which the
Executive is entitled in accordance with the Company's or a
subsidiary's normal vacation policy in effect at the time of the
Potential Change in Control;
(vii) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of Termination
satisfying the requirements of Section 7.1; and/or
(viii) a termination by the Executive for any reason
during the thirty (30) day period immediately following the first
anniversary of any Change in Control.
1.7 "PERSON" shall have the meaning ascribed thereto in Section
3(a)(9) of the Exchange Act, as modified applied, and used in Sections 13(d)
and 14(d) thereof; provided, however, a Person shall not include (i) the
-------- -------
Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any of its
subsidiaries (in its capacity as such), (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by the stockholders of the Company
in substantially the same character and proportions as their ownership of stock
of the Company.
1.8 "POTENTIAL CHANGE IN CONTROL" shall mean and be deemed to have
occurred if:
(i) the Company commences negotiations in respect of or
enters into an agreement, the consummation of which would result in
the occurrence of a Change in Control;
106
(ii) the Company or any Person publicly announces an
intention to take actions which, if consummated, would constitute a
Change in Control; and/or
(iii) any Person becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing ten percent
(10%) or more of the combined voting power of the Company's then
outstanding securities, or any Person increases such Person's
beneficial ownership of such securities by five (5) percentage points
or more over the percentage so owned by such Person on September 1,
1995.
1.9 "RETIREMENT" shall mean and be deemed the reason for the
termination by the Executive of the Executive's employment if such employment
is terminated in accordance with the Company's normal retirement policy for
those aged 65 and older, not including early retirement or so-called "window
period" retirements, generally applicable to its salaried employees, as in
effect immediately prior to any Potential Change in Control.
2. TERM OF THIS AGREEMENT. This Agreement shall commence on the date
hereof and shall continue in effect through December 31, 1998; provided,
--------
however, that commencing on January 1, 1998 and each January 1 thereafter, the
-------
term of this Agreement shall automatically be extended for one additional year
unless, not later than June 30 of the preceding year, the Company or the
Executive shall have given written notice to the other not to extend this
Agreement or a Change in Control shall have occurred prior to any such January
1; provided, further, however, that if a Change in Control shall have occurred
-------- ------- -------
during the term of this Agreement, this Agreement shall continue in effect for
a period of not less than thirty-six (36) months beyond the month in which such
Change in Control occurred (the "Term"). Notwithstanding the foregoing
provisions of this Section 2, the Term shall terminate upon the Executive's
attaining the age of sixty-five (65) years.
3. COMPANY'S COVENANTS.
3.1 SEVERANCE PAYMENTS. In order to induce the Executive to remain
in the employ of the Company and/or one or more of its subsidiaries and in
consideration of the Executive's covenants set forth in Section 4 below, the
Company agrees, under the terms and conditions described herein and in addition
to the amounts payable to the Executive under Section 5 below, to pay the
Executive the "Severance Payments" described in Section 6.1 below and the other
payments and benefits described herein in the event the Executive's employment
with the Company is terminated during the Term and after a Change in Control or
under the other circumstances set forth in Section 6.1 below.
3.2 POSITION AND DUTIES. During the period commencing on the date
of any Change in Control until the earliest to occur of (i) the date which is
thirty-six (36) months from the date of any such Change in Control, (ii) the
date of termination by the Executive of the Executive's employment for any
reason, or (iii) the termination by the Company of the Executive's employment
for any reason (the "Employment Period"), (a) the Executive's position
107
(including status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be at least commensurate in all material
respects with the most significant of those held, exercised and assigned at any
time during the one hundred eighty (180) day period immediately preceding any
related Potential Change in Control, and (b) the Executive's services shall be
performed at the location where the Executive was employed immediately
preceding any such Potential Change in Control, or any office or location less
than thirty (30) miles from such location.
3.3 BASE SALARY. During the Employment Period, the Executive shall
receive Annual Base Salary at least equal to twelve (12) times the highest
monthly base salary paid or payable, including (without limitation) any base
salary which has been earned but deferred, to the Executive by the Company and
its affiliated companies in respect of the twelve (12) month period immediately
preceding the month in which any related Potential Change in Control occurs.
In addition, Annual Base Salary shall not be reduced after the occurrence of a
Potential Change in Control. As used in this Agreement, the term "affiliated
companies" shall include any company controlled by, controlling or under common
control with the Company.
3.4 ANNUAL BONUS. In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year ending during the Employment Period, an
annual bonus (the "Annual Bonus") in cash at least equal to the Executive's
highest bonus for the last three (3) full fiscal years prior to the fiscal year
in which the related Potential Change in Control occurs (annualized in the
event that the Executive was not employed by the Company for the whole of any
such prior fiscal year). Each Annual Bonus shall be paid no later than the end
of the third month of the fiscal year next following the fiscal year for which
the Annual Bonus is awarded, unless the Executive shall elect to defer the
receipt of such Annual Bonus.
3.5 INCENTIVE, SAVINGS AND RETIREMENT PLANS. During the Employment
Period, the Executive shall be entitled to participate in all incentive,
savings and retirement plans, practices, policies and programs applicable
generally to other peer executives of the Company and its affiliated companies,
but in no event shall such plans, practices, policies and programs provide the
Executive with incentive opportunities (measured with respect to both regular
and special incentive opportunities, to the extent, if any, that such
distinction is applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than the most
favorable of those provided by the Company and its affiliated companies for the
Executive under such plans, practices, policies and programs as in effect at
any time during the one hundred eighty (180) day period immediately preceding
any related Potential Change in Control or if more favorable to the Executive,
those provided generally at any time thereafter to other peer executives of the
Company and its affiliated companies.
3.6 WELFARE BENEFIT PLANS. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be entitled
to participate in and shall receive all benefits under all of the health and
welfare benefit plans, practices, policies and programs provided by the Company
and its affiliated companies (including, without limitation, medical,
108
prescription, dental, disability, employee life, group life, accidental death
and travel accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and its affiliated companies,
but in no event shall such plans, practices, policies and programs provide the
Executive with benefits which are less favorable, in the aggregate, than the
most favorable of such plans, practices, policies and programs in effect for
the Executive at any time during the one hundred eighty (180) day period
immediately preceding any related Potential Change in Control or, if more
favorable to the Executive, those provided generally at any time thereafter to
other peer executives of the Company and its affiliated companies.
3.7 EXPENSES. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred
by the Executive in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in effect for the
Executive at any time during the one hundred eighty (180) day period
immediately preceding any related Potential Change in Control or, if more
favorable to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated companies.
3.8 FRINGE BENEFITS. During the Employment Period, the Executive
shall be entitled to fringe benefits, including, without limitation, tax and
financial planning services, payment of club dues, and an automobile allowance
and payment of related expenses, in accordance with the most favorable plans,
practices, programs and policies of the Company and its affiliated companies in
effect for the Executive at any time during the one hundred eighty (180) day
period immediately preceding any related Potential Change in Control or, if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
3.9 OFFICE AND SUPPORT STAFF. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, at least equal to the most favorable of the foregoing
provided to the Executive by the Company and its affiliated companies at any
time during the one hundred eighty (180) day period immediately preceding any
related Potential Change in Control or, if more favorable to the Executive, as
provided generally at any time thereafter with respect to other peer executives
of the Company and its affiliated companies.
3.10 VACATION. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated companies as
in effect for the Executive at any time during the one hundred eighty (180) day
period immediately preceding any related Potential Change in Control or, if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
4. THE EXECUTIVE'S COVENANTS.
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4.1 EMPLOYMENT. The Executive agrees that, subject to the terms and
conditions of this Agreement, in the event of a Change in Control during the
Term the Executive will remain in the employ of the Company during any related
Employment Period.
4.2 TIME AND ATTENTION. During the Employment Period, and excluding
any periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during normal business
hours to the business and affairs of the Company and, to the extent necessary
to discharge the responsibilities and duties assigned to the Executive
hereunder, to use the Executive's reasonable best efforts to perform faithfully
and efficiently such responsibilities and duties. During the Employment Period
it shall not be a violation of this Agreement for the Executive to (i) serve on
corporate, civic or charitable boards or committees, (ii) deliver lectures,
fulfill speaking engagements or teach at educational institutions, and (iii)
manage personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to any Potential Change in Control, the
reinstatement or continued conduct of such activities (or the reinstatement or
conduct of activities similar in nature and scope thereto) subsequent to any
related Potential Change in Control shall not thereafter be deemed to interfere
with the performance of the Executive's responsibilities to the Company.
4.3 CONFIDENTIAL INFORMATION. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other
than by direct or indirect acts by the Executive in violation of this
Agreement). After termination of the Executive's employment with the Company,
the Executive shall not, without the prior written consent of the Company or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it. In no event, however, shall an asserted violation of the
provisions of this Section 4.3 constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this Agreement.
5. COMPENSATION OTHER THAN SEVERANCE PAYMENTS.
5.1 DISABILITY. Following a Potential Change in Control and during
the Term, during any period that the Executive fails to perform the Executive's
full-time duties with the Company as a result of incapacity due to physical or
mental illness, the Executive's full salary shall be paid to the Executive by
the Company at a rate no less than the rate in effect at the commencement of
any such disability period, together with all compensation and benefits payable
to the Executive under the terms of any compensation or benefit plan, program
110
or arrangement maintained by the Company or its subsidiaries during such
disability period, until the Executive's employment is terminated by the
Company for Disability.
5.2 BASE SALARY. If the Executive's employment shall be terminated
for any reason following a Potential Change in Control and during the Term, the
Executive's full salary shall be paid to the Executive by the Company through
the Date of Termination (as defined below in Section 7.2) at the rate in effect
at the time the Notice of Termination is given, together with all compensation
and benefits payable to or with respect to the Executive through the Date of
Termination under the terms of any compensation or benefit plan, program or
arrangement maintained by the Company or its subsidiaries during such period.
5.3 BENEFITS. If the Executive's employment shall be terminated for
any reason following a Potential Change in Control and during the Term, the
Executive's normal post-termination compensation and benefits shall be paid to
the Executive as such payments become due. Such post-termination compensation
and benefits shall be determined under, and paid in accordance with, the
retirement, insurance and other compensation or benefit plans, programs and
arrangements maintained by the Company or its subsidiaries.
6. SEVERANCE PAYMENTS.
6.1 SEVERANCE. The Company shall pay the Executive the payments
described in this Section 6.1 (the "Severance Payments") upon the termination
of the Executive's employment with the Company following a Change in Control
and during the Term, in addition to the payments and benefits described in
Section 5 hereof, unless such termination is (i) by the Company for Cause, (ii)
by reason of Retirement, or (iii) by the Executive without Good Reason. In
addition, the Executive's employment shall be deemed to have been terminated
following a Change in Control by the Company without Cause or by the Executive
with Good Reason (a) if the Executive reasonably demonstrates that the
Executive's employment was terminated prior to a Change in Control without
Cause (1) at the request of a Person who has entered into an agreement with the
Company the consummation of which will constitute a Change in Control (or who
has taken other steps reasonably calculated to effect a Change in Control) or
(2) otherwise in connection with, as a result of or in anticipation of a Change
in Control, (b) if the Executive terminates his employment for Good Reason
prior to a Change in Control and the Executive reasonably demonstrates that the
circumstance(s) or event(s) which constitute such Good Reason occurred (1) at
the request of such Person or (2) otherwise in connection with, as a result of
or in anticipation of a Change in Control, or (c) if the Executive dies or is
terminated by the Company due to Disability, in each case, after the occurrence
of a Potential Change in Control and a related Change in Control actually
occurs within one (1) year after the Date of Termination or the date of death,
as the case may be. The Executive's right to terminate the Executive's
employment for Good Reason shall not be affected by the Executive's incapacity
due to physical or mental illness. The Executive's continued employment shall
not constitute consent to, or a waiver of rights with respect to, any act or
failure to act constituting Good Reason hereunder.
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6.1.1 In lieu of any further salary and annual bonus
payments to the Executive for periods subsequent to the Date of
Termination, the Company shall pay to the Executive a lump sum
severance payment, in cash, equal to two (2) or, if less, the number
of years, including fractions, from the Date of Termination until the
Executive reaches the age of sixty-five (65) years times the sum of
(i) the highest Annual Base Salary paid or payable to the Executive
during the thirty-six (36) month period immediately preceding the
month in which the Change in Control occurs, and (ii) the highest
annual bonus paid or determined and payable to the Executive during
such thirty-six (36) month period.
6.1.2 For a twenty-four (24) month period after the Date
of Termination, or if sooner, until the Executive reaches the age of
sixty-five (65) years, the Company shall arrange to provide the
Executive with life, disability, accident and health insurance
benefits substantially similar to those which the Executive is
receiving immediately prior to any related Potential Change in
Control or the receipt of the Notice of Termination (without giving
effect to any reduction in such benefits subsequent to a Change in
Control which reduction constitutes Good Reason), whichever is
greater. Benefits otherwise receivable by the Executive pursuant to
this Section 6.1.2 shall be reduced to the extent comparable benefits
are actually received by or made available to the Executive without
cost during such period following the Executive's termination of
employment (and any such benefits actually received by the Executive
shall be reported to the Company by the Executive).
6.2 SPECIAL REIMBURSEMENT. In the event that the Executive becomes
entitled to the Severance Payments, if any payment or benefit paid or payable,
or received or to be received, by or on behalf of the Executive in connection
with a Change in Control or the termination of the Executive's employment,
whether any such payments or benefits are pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the Company, any of
its subsidiaries, any Person, or otherwise (the "Total Payments"), will or
would be subject to the excise tax imposed under section 4999 of the Code (the
"Excise Tax"), the Company shall pay to the Executive an additional amount (the
"Gross-Up Payment") which amount shall be equal to the sum of (a) the amount of
such Excise Tax imposed (determined without regard to the Gross-Up Payment),
and (b) the product of (i) such Excise Tax (determined without regard to the
Gross-Up Payment), and (ii) the Aggregate Combined Marginal Tax Rate. For
purposes of this Section 6.2, "Aggregate Combined Marginal Tax Rate" means (and
shall equal) the sum of (A) the combined highest marginal state and local
income tax rates applicable for the tax year in which the Executive receives
the Gross-Up Payment (adjusted downward to take into account the tax
deductibility, if any, of such state and local income taxes), plus (B) the rate
of excise tax imposed on "golden parachute" payments under Section 4999 of the
Code, plus (C) the highest marginal federal income tax rate applicable for the
tax year in which the Executive receives the Gross-Up Payment (adjusted upward
to take into account any reduction in otherwise allowable itemized deductions
attributable to Section 68 of the Code), plus (D) the tax rate applicable to
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the Executive under the hospital insurance portion of the Federal Insurance
Contributions Act under Section 3101(b) of the Code for the tax year in which
the Executive receives the Gross-Up Payment.
6.2.1 For purposes of determining whether any of the Total
Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (i) the Total Payments shall be treated as "parachute
payments" within the meaning of section 280G(b)(2) of the Code, and
all "excess parachute payments" within the meaning of
section 280G(b)(1) of the Code shall be treated as subject to the
Excise Tax, unless in the opinion of tax counsel (delivered to the
Executive) selected by the Company and reasonably acceptable to the
Executive such Total Payments (in whole or in part) (a) do not
constitute parachute payments, including (without limitation) by
reason of section 280G(b)(4)(A) of the Code, (b) such excess
parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered, within the meaning of
section 280G(b)(4)(B) of the Code, or (c) are otherwise not subject
to the Excise Tax, and (ii) the value of any non-cash benefits or any
deferred payment or benefit shall be determined by the Company's
independent auditors in accordance with the principles of sections
280G(d)(3) and (4) of the Code.
6.2.2 In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder at
the time of termination of the Executive's employment, the Executive
shall repay to the Company, at the time that the amount of such
reduction in Excise Tax is finally determined, the portion of the
Gross-Up Payment attributable to such reduction plus interest on the
amount of such repayment at the rate provided in section
1274(b)(2)(B) of the Code. In the event that the Excise Tax is
determined to exceed the amount taken into account hereunder at the
time of the termination of the Executive's employment (including by
reason of any payment the existence or amount of which cannot be
determined at the time of the Gross-Up Payment), the Company shall
make an additional Gross-Up Payment in respect of such excess (plus
any interest, penalties or additions payable by the Executive with
respect to such excess) at the time that the amount of such excess is
finally determined. The Executive and the Company shall each
reasonably cooperate with the other in connection with any
administrative or judicial proceedings concerning the existence or
amount of any such subsequent liability for Excise Tax with respect
to the Severance Payments.
6.3 DATE OF PAYMENT. The payments provided for in Section 6.1.1 and
Section 6.2 hereof shall be made not later than the fifteenth (15th) day
following the Date of Termination; provided, however, that if the amounts of
-------- -------
such payments cannot be finally determined on or before such day, the Company
shall pay to the Executive on such day an estimate, as determined in good faith
by the Company, of the minimum amount of such payments to which the Executive
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is likely to be entitled to and shall pay the remainder of such payments
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later
than the thirtieth (30th) day after the Date of Termination. In the event that
the amount of the estimated payments exceeds the amount subsequently determined
to have been due, such excess shall constitute a loan by the Company to the
Executive, payable on the fifth (5th) business day after demand by the Company
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code). At the time that payments are made under this Section 6.3, the Company
shall provide the Executive with a detailed written statement setting forth the
manner in which such payments were calculated and the basis for such
calculations including, without limitation, any opinions or other advice the
Company has received from outside counsel, auditors or consultants (and any
such opinions or advice which are in writing shall be attached to the
statement).
6.4 LEGAL COSTS. The Company shall also reimburse the Executive for
all legal fees and expenses incurred in good faith by the Executive as a result
of any dispute with any party (including, but not limited to, the Company or
the Bank) regarding the payment of any benefit provided for in this Agreement
(including, but not limited, all such fees and expenses incurred in disputing
any termination or in seeking in good faith to obtain or enforce any benefit or
right provided by this Agreement or in connection with any tax audit or
proceeding to the extent attributable to the application of section 4999 of the
Code plus in each case interest on any delayed payment at the applicable
Federal rate provided for in section 7872(f)(2)(A) of the Code. Such payments
shall be made within five (5) business days after delivery of the Executive's
written requests for payment accompanied by such evidence of fees and expenses
incurred as the Company reasonably may require.
7. TERMINATION PROCEDURES AND COMPENSATION DURING DISPUTE.
7.1 NOTICE OF TERMINATION. After a Change in Control and during the
Term, any purported termination of the Executive's employment with the Company
(other than by reason of death) shall be communicated by written Notice of
Termination from one party hereto to the other party hereto in accordance with
Section 10 hereof. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment with the Company under the provision so indicated. Further, a
Notice of Termination for Cause is required to include a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters (3/4) of
the entire membership of the Board at a meeting of the Board which was called
and held for the purpose of considering such termination (which meeting may be
a regular meeting of the Board where prior notice of consideration of such
termination is given to members of the Board) finding that, in the good faith
opinion of the Board, the Executive engaged in conduct set forth in clause (i)
or (ii) of the definition of Cause herein, and specifying the particulars
thereof in detail. For purposes of this Agreement, any purported termination
not effected in accordance with this Section 7.1 shall not be considered
effective.
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7.2 DATE OF TERMINATION. "Date of Termination", with respect to any
purported termination of the Executive's employment after a Change in Control
and during the Term, shall mean (i) if the Executive's employment is terminated
for Disability, thirty (30) days after Notice of Termination is given (provided
that the Executive shall not have returned to the full-time performance of the
Executive's duties during such thirty (30) day period), and (ii) if the
Executive's employment is terminated for any other reason, the date specified
in the Notice of Termination (which, in the case of a termination by the
Company, shall not be less than thirty (30) days (except in the case of a
termination for Cause) and, in the case of a termination by the Executive,
shall not be less than fifteen (15) days nor more than sixty (60) days,
respectively, after the date such Notice of Termination is given).
7.3 DISPUTE CONCERNING TERMINATION. If within fifteen (15) days
after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this Section 7.3), the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall be the date on
which the dispute is finally resolved, either by mutual written agreement of
the parties or by a final judgment, order or decree of a court of competent
jurisdiction (which is not appealable or with respect to which the time for
appeal therefrom has expired and no appeal has been perfected); provided,
--------
however, that the Date of Termination shall be extended by a notice of dispute
-------
only if the basis for such notice is reasonable, such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence.
7.4 COMPENSATION DURING DISPUTE. If a purported termination occurs
following a Change in Control and during the Term, and such termination is
disputed in accordance with Section 7.3 above, the Company shall continue to
pay the Executive the full compensation (including without limitation Annual
Base Salary and Annual Bonus) in effect at the time of any related Potential
Change in Control or when the notice giving rise to the dispute was given
(whichever is greater) and continue the Executive as a participant in all
compensation, incentive, pension and welfare benefit and insurance plans in
which the Executive was participating at the time of any Potential Change in
Control or when the notice giving rise to the dispute was given, whichever is
greater, until the dispute is finally resolved in accordance with Section 7.3
hereof. Amounts paid under this Section 7.4 are in addition to all other
amounts due under this Agreement (other than those due under Section 5.2
hereof) and shall not be offset against or reduce any other amounts due under
this Agreement or any other plan, agreement or arrangement.
8. NO MITIGATION. The Company agrees that, if the Executive's
employment is terminated during the Term, the Executive is not required to seek
other employment or to attempt in any way to reduce any amounts payable to the
Executive by the Company pursuant to Section 6 or Section 7.4. Further, the
amount of any payment or benefit provided for in Section 6 (other than pursuant
to Section 6.1.2) or Section 7.4 shall not be reduced by any compensation
earned by the Executive as the result of employment by another employer, by
retirement benefits, or offset against any amount claimed to be owed by the
Executive to the Company or any of its subsidiaries, or otherwise.
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9. SUCCESSORS; BINDING AGREEMENT.
9.1 SUCCESSORS. In addition to any obligations imposed by law upon
any successor to the Company, the Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption and
agreement prior to the effectiveness of any such succession shall be a breach
of this Agreement and shall entitle the Executive to compensation from the
Company in the same amount and on the same terms as the Executive would be
entitled to hereunder if the Executive were to terminate the Executive's
employment for Good Reason after a Change in Control, except that, for purposes
of implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.
9.2 BINDING AGREEMENT. This Agreement shall inure to the benefit of
and be enforceable by this Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive shall die while any amount would still be payable
to the Executive hereunder (other than amounts which, by their terms, terminate
upon the death of the Executive) if the Executive had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the executors, personal representatives or
administrators of the Executive's estate.
10. NOTICES. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below, or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon actual receipt:
To the Company:
The Summit Bancorporation
Xxx Xxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attention: Corporate Secretary
To the Executive:
Xx. Xxxxxxx X. XxXxxxx, Xx.
00 Xxxx Xxxx
Xxxxxxx, Xxx Xxxxxx 00000
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11. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.
The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of New Jersey without regard to the
principles of conflict of laws thereof. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to and include any
successor provisions to such sections. Any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state
or local law and any additional withholding to which the Executive has agreed.
The rights and obligations of the Company and the Executive under this
Agreement shall survive the expiration of the Term and the Employment Period.
12. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
13. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
14. NO LIMITATION. Nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any plan, program, policy or
practice provided by the Company or any of its affiliated companies and for
which the Executive may qualify, nor shall anything herein limit or otherwise
affect such rights as the Executive may have under any other contract or
agreement with the Company or any of its affiliated companies. Amounts which
are vested benefits or which the Executive is otherwise entitled to receive
under any plan, policy, practice or program of or any contract or agreement
with the Company or any of its affiliated companies at or subsequent to the
Date of Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly modified by
this Agreement.
The Summit Bancorporation
By:
/s/ Xxxxxx X. Xxx
----------------------------
Xxxxxx X. Xxx
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/s/ Xxxxxxx X. XxXxxxx, Xx.
----------------------------
Xxxxxxx X. XxXxxxx, Xx.
118
AGREEMENT
THIS AGREEMENT, dated as of September 1, 1995 (this "Agreement"), is
made by and between The Summit Bancorporation, a New Jersey corporation, having
its principal offices at Xxx Xxxx Xxxxxx, Xxxxxxx, Xxx Xxxxxx 00000 (the
"Company"), and Xx. Xxxxxxx X. Xxxxxxx residing at 00 X-0 Xxxxxx Xxxxxx,
Xxxxxxxxx, Xxx Xxxxxx 00000 (the "Executive").
WHEREAS, the Company considers it essential to the best interests of
its shareholders to xxxxxx the continued employment of key executive management
personnel; and
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that, as is the case with many publicly-held corporations, the
possibility of a Change in Control (as defined in Section 1.3 below) of the
Company exists from time to time and that such possibility, and the
uncertainty, instability and questions which it may raise for and among key
executive management personnel, may result in the premature departure or
significant distraction of such management personnel to the material detriment
of the Company and its shareholders; and
WHEREAS, the Board has determined that appropriate steps should be
taken to reinforce, focus and encourage the continued attention and dedication
of key members of the executive management of the Company and its subsidiaries,
including (without limitation) the Executive, to their assigned duties without
distraction in the face of potentially disturbing or unsettling circumstances
arising from the possibility of a Change in Control of the Company;
NOW THEREFORE, in consideration of the premises and the mutual cove-
nants herein contained, the Company and the Executive hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms
shall have the meanings set forth below:
1.1 "ANNUAL BASE SALARY" shall mean the Executive's rate of regular
basic annual compensation prior to any reduction under a salary reduction
agreement pursuant to section 401(k) or section 125 of the Internal Revenue
Code of 1986, as amended from time to time (the "Code"), and shall not include
(without limitation) cost of living allowances, fees, retainers,
reimbursements, car allowances, bonuses, incentive awards, prizes or similar
payments.
1.2 "CAUSE" for termination by the Company of the Executive's
employment, after any Change in Control, shall mean (i) the willful and
continued failure by the Executive to substantially perform the Executive's
duties with the Company, or a subsidiary of the Company, including (without
limitation) Summit Bank, a New Jersey chartered bank (the "Bank"), as such
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duties may reasonably be defined from time to time by the Board (or a duly
designated and authorized committee thereof), or to abide by the reasonable
written policies of the Company or of the Executive's primary employer (other
than any such failure resulting from the Executive's incapacity due to physical
or mental illness or any such actual or anticipated failure after the issuance
of a Notice of Termination by the Executive for Good Reason pursuant to Section
7.1) after a written demand for substantial performance is delivered to the
Executive by the Board, which demand specifically identifies the manner in
which the Board believes that the Executive has not substantially performed the
Executive's duties or has not abided by any reasonable written policies, or
(ii) the continued and willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company or its subsidiaries,
monetarily or otherwise. For purposes of clauses (i) and (ii) of this
definition, no act, or failure to act, on the Executive's part shall be deemed
"willful" unless done, or omitted to be done, by the Executive in bad faith and
without reasonable belief that the Executive's act, or failure to act, was in
the best interest of the Company or its subsidiaries. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by the
Board or upon the instructions of the Board or the Company's chief executive
officer or other duly authorized senior officer of the Company or based upon
the advice of counsel for the Company shall be conclusively presumed to be
done, or omitted to be done, by the Executive in good faith and in the best
interests of the Company and its subsidiaries. The cessation of employment of
the Executive shall not be deemed to be for Cause unless and until there shall
have been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three quarters of the entire membership of
the Board at a meeting of the Board called and held for such purpose (after
reasonable notice of any such meeting is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before
the Board), finding that, in the good faith opinion of the Board, the Executive
is guilty of the conduct described in clause (i) or (ii) above, and specifying
the particulars thereof in detail.
1.3 "CHANGE IN CONTROL" shall mean and be deemed to have occurred
if:
(i) any Person is or becomes the Beneficial Owner (as that
term is defined in Rule 13d-3 under the Securities Exchange Act of
1934 (the "Exchange Act")), directly or indirectly, of securities of
the Company (not including in the securities beneficially owned by
such Person any securities acquired directly from the Company)
representing twenty-five percent (25%) or more of the combined voting
power of the Company's then outstanding securities, or there occurs
any transaction which the Company is required to disclose pursuant to
Item 1(a) of Form 8-K (as filed pursuant to Rule 13a-11 or Rule 15d-
11 of the Exchange Act); or
(ii) during any period of twenty-four (24) consecutive
months (not including any period prior to September 1, 1995),
individuals who at the beginning of such period constitute the Board
and any new director (other than a director designated by a Person
120
who has entered into an agreement with the Company to effect a
transaction described in clause (i), (iii) or (iv) of this definition
or any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies
or consents) whose election by the Board or nomination for election
by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of such period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority of the Board; or
(iii) the shareholders of the Company approve a
reorganization, merger or consolidation, other than a reorganization,
merger or consolidation with respect to which all or substantially
all of the individuals and entities who were Beneficial Owners,
immediately prior to such reorganization, merger or consolidation, of
the combined voting power of the Company's then outstanding
securities beneficially own, directly or indirectly, immediately
after such reorganization, merger or consolidation, more then
seventy-five percent (75%) of the combined voting power of the
securities of the corporation resulting from such reorganization,
merger or consolidation in substantially the same proportions as
their respective ownership, immediately prior to such reorganization,
merger or consolidation, of the combined voting power of the
Company's securities; or
(iv) the shareholders of the Company approve (a) the sale
or disposition by the Company (other than to a subsidiary of the
Company) of the Bank, or (b) a complete liquidation or dissolution of
the Company or the Bank.
Notwithstanding the foregoing, a Change in Control shall not include any event,
circumstance or transaction which results from the action (excluding the
Executive's employment activities with the Company, the Bank or any of their
respective subsidiaries) of any Person or group of Persons which includes, is
directly affiliated with or is wholly or partly controlled by one or more
executive officers of the Company and in which the Executive actively
participates.
1.4 "COMPANY" shall include The Summit Bancorporation and any
successor to its business and/or assets which assumes (either expressly, by
operation of law or otherwise) and/or agrees to perform this Agreement by
operation of law or otherwise (except in determining, under Section 1.3 hereof,
whether or not any Change in Control of the Company has occurred in connection
with such succession).
1.5 "DISABILITY" shall mean and be deemed the reason for the
termination by the Company of the Executive's employment, if, as a result of
the Executive's incapacity due to physical or mental illness, (i) the Executive
shall have been absent from the full-time performance of the Executive's duties
121
with the Company for a period of six (6) consecutive months, (ii) the Company
gives the Executive a Notice of Termination for Disability, and (iii) within
thirty (30) days after such Notice of Termination is given, the Executive does
not return to the full-time performance of the Executive's duties.
1.6 "GOOD REASON" for termination by the Executive of the
Executive's employment, in connection with or as a result of any Change in
Control, shall mean the occurrence (without the Executive's prior express
written consent) of any one of the following acts, or failures to act, unless,
in the case of any act or failure to act described in clauses (i), (iv), (v) or
(vi) below, such act or failure to act is corrected by the Company prior to the
Date of Termination specified in the Notice of Termination given in respect
thereof:
(i) the assignment to the Executive of any duties or
responsibilities inconsistent with those described in Section 3.2
below or with the Executive's position(s) (including without
limitation status, offices, titles, and reporting
responsibilities/rights) as an executive officer of the Company and
its subsidiaries or a substantial adverse alteration in the nature of
the Executive's authority, duties, or responsibilities from those
described in Section 3.2 below or otherwise;
(ii) a reduction in the Executive's Annual Base Salary as
in effect on the date of this Agreement or as the same may be
increased at any time thereafter and from time to time;
(iii) the relocation of the Company's principal executive
offices to a location more than thirty (30) miles from its location
on the date of this Agreement (or, if different, more than thirty
(30) miles from where such offices are located immediately prior to
any Potential Change in Control) or the Company's requiring the
Executive to be based anywhere other than the Company's principal
executive offices except for required travel on the Company's
business to an extent substantially consistent with the Executive's
business travel obligations as of the date of this Agreement;
(iv) any failure by the Company to comply with any of the
provisions of this Agreement, other than an isolated, insubstantial
and inadvertent failure not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof
given by the Executive;
(v) the failure by the Company or a subsidiary to continue
in effect any pension benefit or incentive or deferred compensation
plan in which the Executive participates immediately prior to any
Potential Change in Control which is material to the Executive's
total compensation, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan or arrangement) has been made
with respect to such plan, or the failure by the Company or a
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subsidiary to continue the Executive's participation therein (or in
such substitute or alternative plan or arrangement) on a basis not
materially less favorable, both in terms of the amount of benefits
provided and the level of the Executive's participation relative to
other participants, as existed at the time of the Potential Change in
Control;
(vi) the failure by the Company or a subsidiary to
continue to provide the Executive with health and welfare benefits
substantially similar to those enjoyed by the Executive under any of
the Company's or a subsidiary's retirement, life insurance, medical,
health and accident, or disability or similar plans in which the
Executive was participating at the time of any Potential Change in
Control, the taking of any action by the Company or a subsidiary
which would directly or indirectly materially reduce any of such
benefits or deprive the Executive of any material fringe benefit
enjoyed by the Executive at the time of the Potential Change in
Control, or the failure by the Company or a subsidiary to provide the
Executive with the number of paid vacation days to which the
Executive is entitled in accordance with the Company's or a
subsidiary's normal vacation policy in effect at the time of the
Potential Change in Control;
(vii) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of Termination
satisfying the requirements of Section 7.1; and/or
(viii) a termination by the Executive for any reason
during the thirty (30) day period immediately following the first
anniversary of any Change in Control.
1.7 "PERSON" shall have the meaning ascribed thereto in Section
3(a)(9) of the Exchange Act, as modified applied, and used in Sections 13(d)
and 14(d) thereof; provided, however, a Person shall not include (i) the
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Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any of its
subsidiaries (in its capacity as such), (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by the stockholders of the Company
in substantially the same character and proportions as their ownership of stock
of the Company.
1.8 "POTENTIAL CHANGE IN CONTROL" shall mean and be deemed to have
occurred if:
(i) the Company commences negotiations in respect of or
enters into an agreement, the consummation of which would result in
the occurrence of a Change in Control;
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(ii) the Company or any Person publicly announces an
intention to take actions which, if consummated, would constitute a
Change in Control; and/or
(iii) any Person becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing ten percent
(10%) or more of the combined voting power of the Company's then
outstanding securities, or any Person increases such Person's
beneficial ownership of such securities by five (5) percentage points
or more over the percentage so owned by such Person on September 1,
1995.
1.9 "RETIREMENT" shall mean and be deemed the reason for the
termination by the Executive of the Executive's employment if such employment
is terminated in accordance with the Company's normal retirement policy for
those aged 65 and older, not including early retirement or so-called "window
period" retirements, generally applicable to its salaried employees, as in
effect immediately prior to any Potential Change in Control.
2. TERM OF THIS AGREEMENT. This Agreement shall commence on the date
hereof and shall continue in effect through December 31, 1998; provided,
--------
however, that commencing on January 1, 1998 and each January 1 thereafter, the
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term of this Agreement shall automatically be extended for one additional year
unless, not later than June 30 of the preceding year, the Company or the
Executive shall have given written notice to the other not to extend this
Agreement or a Change in Control shall have occurred prior to any such January
1; provided, further, however, that if a Change in Control shall have occurred
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during the term of this Agreement, this Agreement shall continue in effect for
a period of not less than thirty-six (36) months beyond the month in which such
Change in Control occurred (the "Term"). Notwithstanding the foregoing
provisions of this Section 2, the Term shall terminate upon the Executive's
attaining the age of sixty-five (65) years.
3. COMPANY'S COVENANTS.
3.1 SEVERANCE PAYMENTS. In order to induce the Executive to remain
in the employ of the Company and/or one or more of its subsidiaries and in
consideration of the Executive's covenants set forth in Section 4 below, the
Company agrees, under the terms and conditions described herein and in addition
to the amounts payable to the Executive under Section 5 below, to pay the
Executive the "Severance Payments" described in Section 6.1 below and the other
payments and benefits described herein in the event the Executive's employment
with the Company is terminated during the Term and after a Change in Control or
under the other circumstances set forth in Section 6.1 below.
3.2 POSITION AND DUTIES. During the period commencing on the date
of any Change in Control until the earliest to occur of (i) the date which is
thirty-six (36) months from the date of any such Change in Control, (ii) the
date of termination by the Executive of the Executive's employment for any
reason, or (iii) the termination by the Company of the Executive's employment
for any reason (the "Employment Period"), (a) the Executive's position
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(including status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be at least commensurate in all material
respects with the most significant of those held, exercised and assigned at any
time during the one hundred eighty (180) day period immediately preceding any
related Potential Change in Control, and (b) the Executive's services shall be
performed at the location where the Executive was employed immediately
preceding any such Potential Change in Control, or any office or location less
than thirty (30) miles from such location.
3.3 BASE SALARY. During the Employment Period, the Executive shall
receive Annual Base Salary at least equal to twelve (12) times the highest
monthly base salary paid or payable, including (without limitation) any base
salary which has been earned but deferred, to the Executive by the Company and
its affiliated companies in respect of the twelve (12) month period immediately
preceding the month in which any related Potential Change in Control occurs.
In addition, Annual Base Salary shall not be reduced after the occurrence of a
Potential Change in Control. As used in this Agreement, the term "affiliated
companies" shall include any company controlled by, controlling or under common
control with the Company.
3.4 ANNUAL BONUS. In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year ending during the Employment Period, an
annual bonus (the "Annual Bonus") in cash at least equal to the Executive's
highest bonus for the last three (3) full fiscal years prior to the fiscal year
in which the related Potential Change in Control occurs (annualized in the
event that the Executive was not employed by the Company for the whole of any
such prior fiscal year). Each Annual Bonus shall be paid no later than the end
of the third month of the fiscal year next following the fiscal year for which
the Annual Bonus is awarded, unless the Executive shall elect to defer the
receipt of such Annual Bonus.
3.5 INCENTIVE, SAVINGS AND RETIREMENT PLANS. During the Employment
Period, the Executive shall be entitled to participate in all incentive,
savings and retirement plans, practices, policies and programs applicable
generally to other peer executives of the Company and its affiliated companies,
but in no event shall such plans, practices, policies and programs provide the
Executive with incentive opportunities (measured with respect to both regular
and special incentive opportunities, to the extent, if any, that such
distinction is applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than the most
favorable of those provided by the Company and its affiliated companies for the
Executive under such plans, practices, policies and programs as in effect at
any time during the one hundred eighty (180) day period immediately preceding
any related Potential Change in Control or if more favorable to the Executive,
those provided generally at any time thereafter to other peer executives of the
Company and its affiliated companies.
3.6 WELFARE BENEFIT PLANS. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be entitled
to participate in and shall receive all benefits under all of the health and
welfare benefit plans, practices, policies and programs provided by the Company
and its affiliated companies (including, without limitation, medical,
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prescription, dental, disability, employee life, group life, accidental death
and travel accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and its affiliated companies,
but in no event shall such plans, practices, policies and programs provide the
Executive with benefits which are less favorable, in the aggregate, than the
most favorable of such plans, practices, policies and programs in effect for
the Executive at any time during the one hundred eighty (180) day period
immediately preceding any related Potential Change in Control or, if more
favorable to the Executive, those provided generally at any time thereafter to
other peer executives of the Company and its affiliated companies.
3.7 EXPENSES. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred
by the Executive in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in effect for the
Executive at any time during the one hundred eighty (180) day period
immediately preceding any related Potential Change in Control or, if more
favorable to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated companies.
3.8 FRINGE BENEFITS. During the Employment Period, the Executive
shall be entitled to fringe benefits, including, without limitation, tax and
financial planning services, payment of club dues, and an automobile allowance
and payment of related expenses, in accordance with the most favorable plans,
practices, programs and policies of the Company and its affiliated companies in
effect for the Executive at any time during the one hundred eighty (180) day
period immediately preceding any related Potential Change in Control or, if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
3.9 OFFICE AND SUPPORT STAFF. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, at least equal to the most favorable of the foregoing
provided to the Executive by the Company and its affiliated companies at any
time during the one hundred eighty (180) day period immediately preceding any
related Potential Change in Control or, if more favorable to the Executive, as
provided generally at any time thereafter with respect to other peer executives
of the Company and its affiliated companies.
3.10 VACATION. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated companies as
in effect for the Executive at any time during the one hundred eighty (180) day
period immediately preceding any related Potential Change in Control or, if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
4. THE EXECUTIVE'S COVENANTS.
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4.1 EMPLOYMENT. The Executive agrees that, subject to the terms and
conditions of this Agreement, in the event of a Change in Control during the
Term the Executive will remain in the employ of the Company during any related
Employment Period.
4.2 TIME AND ATTENTION. During the Employment Period, and excluding
any periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote reasonable attention and time during normal business
hours to the business and affairs of the Company and, to the extent necessary
to discharge the responsibilities and duties assigned to the Executive
hereunder, to use the Executive's reasonable best efforts to perform faithfully
and efficiently such responsibilities and duties. During the Employment Period
it shall not be a violation of this Agreement for the Executive to (i) serve on
corporate, civic or charitable boards or committees, (ii) deliver lectures,
fulfill speaking engagements or teach at educational institutions, and (iii)
manage personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to any Potential Change in Control, the
reinstatement or continued conduct of such activities (or the reinstatement or
conduct of activities similar in nature and scope thereto) subsequent to any
related Potential Change in Control shall not thereafter be deemed to interfere
with the performance of the Executive's responsibilities to the Company.
4.3 CONFIDENTIAL INFORMATION. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by the Company or any of its
affiliated companies and which shall not be or become public knowledge (other
than by direct or indirect acts by the Executive in violation of this
Agreement). After termination of the Executive's employment with the Company,
the Executive shall not, without the prior written consent of the Company or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it. In no event, however, shall an asserted violation of the
provisions of this Section 4.3 constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this Agreement.
5. COMPENSATION OTHER THAN SEVERANCE PAYMENTS.
5.1 DISABILITY. Following a Potential Change in Control and during
the Term, during any period that the Executive fails to perform the Executive's
full-time duties with the Company as a result of incapacity due to physical or
mental illness, the Executive's full salary shall be paid to the Executive by
the Company at a rate no less than the rate in effect at the commencement of
any such disability period, together with all compensation and benefits payable
to the Executive under the terms of any compensation or benefit plan, program
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or arrangement maintained by the Company or its subsidiaries during such
disability period, until the Executive's employment is terminated by the
Company for Disability.
5.2 BASE SALARY. If the Executive's employment shall be terminated
for any reason following a Potential Change in Control and during the Term, the
Executive's full salary shall be paid to the Executive by the Company through
the Date of Termination (as defined below in Section 7.2) at the rate in effect
at the time the Notice of Termination is given, together with all compensation
and benefits payable to or with respect to the Executive through the Date of
Termination under the terms of any compensation or benefit plan, program or
arrangement maintained by the Company or its subsidiaries during such period.
5.3 BENEFITS. If the Executive's employment shall be terminated for
any reason following a Potential Change in Control and during the Term, the
Executive's normal post-termination compensation and benefits shall be paid to
the Executive as such payments become due. Such post-termination compensation
and benefits shall be determined under, and paid in accordance with, the
retirement, insurance and other compensation or benefit plans, programs and
arrangements maintained by the Company or its subsidiaries.
6. SEVERANCE PAYMENTS.
6.1 SEVERANCE. The Company shall pay the Executive the payments
described in this Section 6.1 (the "Severance Payments") upon the termination
of the Executive's employment with the Company following a Change in Control
and during the Term, in addition to the payments and benefits described in
Section 5 hereof, unless such termination is (i) by the Company for Cause, (ii)
by reason of Retirement, or (iii) by the Executive without Good Reason. In
addition, the Executive's employment shall be deemed to have been terminated
following a Change in Control by the Company without Cause or by the Executive
with Good Reason (a) if the Executive reasonably demonstrates that the
Executive's employment was terminated prior to a Change in Control without
Cause (1) at the request of a Person who has entered into an agreement with the
Company the consummation of which will constitute a Change in Control (or who
has taken other steps reasonably calculated to effect a Change in Control) or
(2) otherwise in connection with, as a result of or in anticipation of a Change
in Control, (b) if the Executive terminates his employment for Good Reason
prior to a Change in Control and the Executive reasonably demonstrates that the
circumstance(s) or event(s) which constitute such Good Reason occurred (1) at
the request of such Person or (2) otherwise in connection with, as a result of
or in anticipation of a Change in Control, or (c) if the Executive dies or is
terminated by the Company due to Disability, in each case, after the occurrence
of a Potential Change in Control and a related Change in Control actually
occurs within one (1) year after the Date of Termination or the date of death,
as the case may be. The Executive's right to terminate the Executive's
employment for Good Reason shall not be affected by the Executive's incapacity
due to physical or mental illness. The Executive's continued employment shall
not constitute consent to, or a waiver of rights with respect to, any act or
failure to act constituting Good Reason hereunder.
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6.1.1 In lieu of any further salary and annual bonus
payments to the Executive for periods subsequent to the Date of
Termination, the Company shall pay to the Executive a lump sum
severance payment, in cash, equal to two (2) or, if less, the number
of years, including fractions, from the Date of Termination until the
Executive reaches the age of sixty-five (65) years times the sum of
(i) the highest Annual Base Salary paid or payable to the Executive
during the thirty-six (36) month period immediately preceding the
month in which the Change in Control occurs, and (ii) the highest
annual bonus paid or determined and payable to the Executive during
such thirty-six (36) month period.
6.1.2 For a twenty-four (24) month period after the Date
of Termination, or if sooner, until the Executive reaches the age of
sixty-five (65) years, the Company shall arrange to provide the
Executive with life, disability, accident and health insurance
benefits substantially similar to those which the Executive is
receiving immediately prior to any related Potential Change in
Control or the receipt of the Notice of Termination (without giving
effect to any reduction in such benefits subsequent to a Change in
Control which reduction constitutes Good Reason), whichever is
greater. Benefits otherwise receivable by the Executive pursuant to
this Section 6.1.2 shall be reduced to the extent comparable benefits
are actually received by or made available to the Executive without
cost during such period following the Executive's termination of
employment (and any such benefits actually received by the Executive
shall be reported to the Company by the Executive).
6.2 SPECIAL REIMBURSEMENT. In the event that the Executive becomes
entitled to the Severance Payments, if any payment or benefit paid or payable,
or received or to be received, by or on behalf of the Executive in connection
with a Change in Control or the termination of the Executive's employment,
whether any such payments or benefits are pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the Company, any of
its subsidiaries, any Person, or otherwise (the "Total Payments"), will or
would be subject to the excise tax imposed under section 4999 of the Code (the
"Excise Tax"), the Company shall pay to the Executive an additional amount (the
"Gross-Up Payment") which amount shall be equal to the sum of (a) the amount of
such Excise Tax imposed (determined without regard to the Gross-Up Payment),
and (b) the product of (i) such Excise Tax (determined without regard to the
Gross-Up Payment), and (ii) the Aggregate Combined Marginal Tax Rate. For
purposes of this Section 6.2, "Aggregate Combined Marginal Tax Rate" means (and
shall equal) the sum of (A) the combined highest marginal state and local
income tax rates applicable for the tax year in which the Executive receives
the Gross-Up Payment (adjusted downward to take into account the tax
deductibility, if any, of such state and local income taxes), plus (B) the rate
of excise tax imposed on "golden parachute" payments under Section 4999 of the
Code, plus (C) the highest marginal federal income tax rate applicable for the
tax year in which the Executive receives the Gross-Up Payment (adjusted upward
to take into account any reduction in otherwise allowable itemized deductions
attributable to Section 68 of the Code), plus (D) the tax rate applicable to
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the Executive under the hospital insurance portion of the Federal Insurance
Contributions Act under Section 3101(b) of the Code for the tax year in which
the Executive receives the Gross-Up Payment.
6.2.1 For purposes of determining whether any of the Total
Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (i) the Total Payments shall be treated as "parachute
payments" within the meaning of section 280G(b)(2) of the Code, and
all "excess parachute payments" within the meaning of
section 280G(b)(1) of the Code shall be treated as subject to the
Excise Tax, unless in the opinion of tax counsel (delivered to the
Executive) selected by the Company and reasonably acceptable to the
Executive such Total Payments (in whole or in part) (a) do not
constitute parachute payments, including (without limitation) by
reason of section 280G(b)(4)(A) of the Code, (b) such excess
parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered, within the meaning of
section 280G(b)(4)(B) of the Code, or (c) are otherwise not subject
to the Excise Tax, and (ii) the value of any non-cash benefits or any
deferred payment or benefit shall be determined by the Company's
independent auditors in accordance with the principles of sections
280G(d)(3) and (4) of the Code.
6.2.2 In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder at
the time of termination of the Executive's employment, the Executive
shall repay to the Company, at the time that the amount of such
reduction in Excise Tax is finally determined, the portion of the
Gross-Up Payment attributable to such reduction plus interest on the
amount of such repayment at the rate provided in section
1274(b)(2)(B) of the Code. In the event that the Excise Tax is
determined to exceed the amount taken into account hereunder at the
time of the termination of the Executive's employment (including by
reason of any payment the existence or amount of which cannot be
determined at the time of the Gross-Up Payment), the Company shall
make an additional Gross-Up Payment in respect of such excess (plus
any interest, penalties or additions payable by the Executive with
respect to such excess) at the time that the amount of such excess is
finally determined. The Executive and the Company shall each
reasonably cooperate with the other in connection with any
administrative or judicial proceedings concerning the existence or
amount of any such subsequent liability for Excise Tax with respect
to the Severance Payments.
6.3 DATE OF PAYMENT. The payments provided for in Section 6.1.1 and
Section 6.2 hereof shall be made not later than the fifteenth (15th) day
following the Date of Termination; provided, however, that if the amounts of
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such payments cannot be finally determined on or before such day, the Company
shall pay to the Executive on such day an estimate, as determined in good faith
by the Company, of the minimum amount of such payments to which the Executive
130
is likely to be entitled to and shall pay the remainder of such payments
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code) as soon as the amount thereof can be determined but in no event later
than the thirtieth (30th) day after the Date of Termination. In the event that
the amount of the estimated payments exceeds the amount subsequently determined
to have been due, such excess shall constitute a loan by the Company to the
Executive, payable on the fifth (5th) business day after demand by the Company
(together with interest at the rate provided in section 1274(b)(2)(B) of the
Code). At the time that payments are made under this Section 6.3, the Company
shall provide the Executive with a detailed written statement setting forth the
manner in which such payments were calculated and the basis for such
calculations including, without limitation, any opinions or other advice the
Company has received from outside counsel, auditors or consultants (and any
such opinions or advice which are in writing shall be attached to the
statement).
6.4 LEGAL COSTS. The Company shall also reimburse the Executive for
all legal fees and expenses incurred in good faith by the Executive as a result
of any dispute with any party (including, but not limited to, the Company or
the Bank) regarding the payment of any benefit provided for in this Agreement
(including, but not limited, all such fees and expenses incurred in disputing
any termination or in seeking in good faith to obtain or enforce any benefit or
right provided by this Agreement or in connection with any tax audit or
proceeding to the extent attributable to the application of section 4999 of the
Code plus in each case interest on any delayed payment at the applicable
Federal rate provided for in section 7872(f)(2)(A) of the Code. Such payments
shall be made within five (5) business days after delivery of the Executive's
written requests for payment accompanied by such evidence of fees and expenses
incurred as the Company reasonably may require.
7. TERMINATION PROCEDURES AND COMPENSATION DURING DISPUTE.
7.1 NOTICE OF TERMINATION. After a Change in Control and during the
Term, any purported termination of the Executive's employment with the Company
(other than by reason of death) shall be communicated by written Notice of
Termination from one party hereto to the other party hereto in accordance with
Section 10 hereof. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive's
employment with the Company under the provision so indicated. Further, a
Notice of Termination for Cause is required to include a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters (3/4) of
the entire membership of the Board at a meeting of the Board which was called
and held for the purpose of considering such termination (which meeting may be
a regular meeting of the Board where prior notice of consideration of such
termination is given to members of the Board) finding that, in the good faith
opinion of the Board, the Executive engaged in conduct set forth in clause (i)
or (ii) of the definition of Cause herein, and specifying the particulars
thereof in detail. For purposes of this Agreement, any purported termination
not effected in accordance with this Section 7.1 shall not be considered
effective.
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7.2 DATE OF TERMINATION. "Date of Termination", with respect to any
purported termination of the Executive's employment after a Change in Control
and during the Term, shall mean (i) if the Executive's employment is terminated
for Disability, thirty (30) days after Notice of Termination is given (provided
that the Executive shall not have returned to the full-time performance of the
Executive's duties during such thirty (30) day period), and (ii) if the
Executive's employment is terminated for any other reason, the date specified
in the Notice of Termination (which, in the case of a termination by the
Company, shall not be less than thirty (30) days (except in the case of a
termination for Cause) and, in the case of a termination by the Executive,
shall not be less than fifteen (15) days nor more than sixty (60) days,
respectively, after the date such Notice of Termination is given).
7.3 DISPUTE CONCERNING TERMINATION. If within fifteen (15) days
after any Notice of Termination is given, or, if later, prior to the Date of
Termination (as determined without regard to this Section 7.3), the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall be the date on
which the dispute is finally resolved, either by mutual written agreement of
the parties or by a final judgment, order or decree of a court of competent
jurisdiction (which is not appealable or with respect to which the time for
appeal therefrom has expired and no appeal has been perfected); provided,
--------
however, that the Date of Termination shall be extended by a notice of dispute
-------
only if the basis for such notice is reasonable, such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence.
7.4 COMPENSATION DURING DISPUTE. If a purported termination occurs
following a Change in Control and during the Term, and such termination is
disputed in accordance with Section 7.3 above, the Company shall continue to
pay the Executive the full compensation (including without limitation Annual
Base Salary and Annual Bonus) in effect at the time of any related Potential
Change in Control or when the notice giving rise to the dispute was given
(whichever is greater) and continue the Executive as a participant in all
compensation, incentive, pension and welfare benefit and insurance plans in
which the Executive was participating at the time of any Potential Change in
Control or when the notice giving rise to the dispute was given, whichever is
greater, until the dispute is finally resolved in accordance with Section 7.3
hereof. Amounts paid under this Section 7.4 are in addition to all other
amounts due under this Agreement (other than those due under Section 5.2
hereof) and shall not be offset against or reduce any other amounts due under
this Agreement or any other plan, agreement or arrangement.
8. NO MITIGATION. The Company agrees that, if the Executive's
employment is terminated during the Term, the Executive is not required to seek
other employment or to attempt in any way to reduce any amounts payable to the
Executive by the Company pursuant to Section 6 or Section 7.4. Further, the
amount of any payment or benefit provided for in Section 6 (other than pursuant
to Section 6.1.2) or Section 7.4 shall not be reduced by any compensation
earned by the Executive as the result of employment by another employer, by
retirement benefits, or offset against any amount claimed to be owed by the
Executive to the Company or any of its subsidiaries, or otherwise.
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9. SUCCESSORS; BINDING AGREEMENT.
9.1 SUCCESSORS. In addition to any obligations imposed by law upon
any successor to the Company, the Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption and
agreement prior to the effectiveness of any such succession shall be a breach
of this Agreement and shall entitle the Executive to compensation from the
Company in the same amount and on the same terms as the Executive would be
entitled to hereunder if the Executive were to terminate the Executive's
employment for Good Reason after a Change in Control, except that, for purposes
of implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.
9.2 BINDING AGREEMENT. This Agreement shall inure to the benefit of
and be enforceable by this Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive shall die while any amount would still be payable
to the Executive hereunder (other than amounts which, by their terms, terminate
upon the death of the Executive) if the Executive had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the executors, personal representatives or
administrators of the Executive's estate.
10. NOTICES. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below, or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon actual receipt:
To the Company:
The Summit Bancorporation
Xxx Xxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attention: Corporate Secretary
To the Executive:
Xx. Xxxxxxx X. Xxxxxxx
00 X-0 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
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11. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.
The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of New Jersey without regard to the
principles of conflict of laws thereof. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to and include any
successor provisions to such sections. Any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state
or local law and any additional withholding to which the Executive has agreed.
The rights and obligations of the Company and the Executive under this
Agreement shall survive the expiration of the Term and the Employment Period.
12. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
13. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
14. NO LIMITATION. Nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any plan, program, policy or
practice provided by the Company or any of its affiliated companies and for
which the Executive may qualify, nor shall anything herein limit or otherwise
affect such rights as the Executive may have under any other contract or
agreement with the Company or any of its affiliated companies. Amounts which
are vested benefits or which the Executive is otherwise entitled to receive
under any plan, policy, practice or program of or any contract or agreement
with the Company or any of its affiliated companies at or subsequent to the
Date of Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly modified by
this Agreement.
The Summit Bancorporation
By:
/s/ Xxxxxx X. Xxx
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Xxxxxx X. Xxx
134
/s/ Xxxxxxx X. Xxxxxxx
----------------------------
Xxxxxxx X. Xxxxxxx
135
