CHANGE IN CONTROL AGREEMENT
AGREEMENT,
made
as
of July 31, 2006, by and between VALLEY BANK, a banking corporation organized
and existing by virtue of the laws of the State of Connecticut (the “Bank”) and
XXXXXXX XXXXXXXXX, the “Employee”).
WHEREAS,
Employee is currently rendering services to the Bank as its Senior Vice
President.
WHEREAS,
the
Bank considers the performance and dedication of its management team to be
significant for its overall corporate strategy and to be essential to protecting
and enhancing the best interests of the Bank; and
WHEREAS,
the
banking industry is a dynamic one with independent public institutions like
the
Bank subject to unexpected changes in ownership; and
WHEREAS,
the
performance by Employee of services to the Bank may be negatively affected
by
his uncertainty over the possibility of a change in ownership of the Bank and
possible affect thereof on his employment with the Bank; and
WHEREAS,
the
Bank wishes to mitigate the fears of Employee regarding a potential Bank
ownership change, so as to avoid a negative effect on his performance of
services to the Bank, and in that interest the Bank desires to afford certain
protection to Employee in the event of dismissal or substantial change in duties
or compensation upon the occurrence of certain events as specified
herein.
NOW,
THEREFORE,
to
further the above recited corporate objective, and for other good and valuable
consideration, the receipt and adequacy of which each party hereby acknowledges,
the Bank and the Employee agree as follows:
1.
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(a)
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The
term of this Agreement shall be from July 1, 2006 until July 1, 2007,
subject to renewal and extension as provided for in subparagraph
(1) (b)
hereof. Such period, as from time to time renewed, is referred to
herein
as the “term hereof”.
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(b)
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On
each July 1st
commencing in 2007 (a “Renewal Date”), this Agreement shall be
automatically renewed for an additional year, so that after such
extension, this Agreement shall have a term ending one (1) year after
such
Renewal Date, unless prior to such Renewal Date either party hereto
shall
have given notice to the other that such renewal shall not take place
(but
no such notice shall have the effect of terminating this Agreement
prior
to the expiration of one (1) year from and after the Effective Date
hereof); provided, however, that upon the occurrence of any Change
in
Control Event (as defined in paragraph 2 hereof) during the term
hereof,
this Agreement shall be automatically extended for the one period
following the date of Change of
Control.
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2.
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Should
at any time there occur any one of the following events (any one
of which
shall be referred to as a “Change in Control Event”):
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(a)
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Any
person shall become the beneficial owner, directly or indirectly,
of
securities representing 20 percent or more of the combined voting
power of
the then outstanding securities of the Bank (as used in this subparagraph
(a), the term “beneficial ownership” shall have the meaning ascribed to
that term from time to time under the rules and regulations promulgated
by
the Federal Deposit Insurance Corporation (“FDIC”) (currently codified at
12 C.F.R. Section 335.403 or any similar, successor statute and rules);
a
“person” shall include any natural person, corporation, partnership,
trust, association or any group of persons, whose ownership of the
Bank’s
securities would be required to be reported collectively pursuant
to rules
and regulations of the FDIC; and “affiliate” shall mean a person that
directly, or indirectly through one or more intermediaries, controls,
or
is controlled by, or is under common control with, the person specified,
pursuant to the rules and regulations of the FDIC.
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(b)
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The
Bank shall be a party to any merger or consolidation with another
corporation, association or business entity, which merger or consolidation
shall be consummated or shall sell, exchange or transfer all or
substantially all of its respective assets to some other person (as
“person” is defined in subparagraph (a), above), except in any such case
in a transaction in which immediately after such merger or consolidation
or such sale, exchange or transfer, the shareholders of the Bank,
in their
capacities as such and as a result thereof, shall own at least 50
percent
in voting power of the then outstanding securities of the Bank or
of any
surviving corporation or business entity pursuant to any such merger
(or
of its parent), the consolidated corporation or business entity in
any
such consolidation or of all the persons or their parents to which
such
sale, exchange or transfer of assets is made; or
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(c)
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The
Bank shall cease to be a publicly owned corporation; or
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(d)
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During
the period of one (1) year, individuals who at the beginning of any
such
period constitute the Directors of the Bank shall have ceased for
any
reason to constitute at least a majority thereof unless the election,
or
the nomination for election by the Bank’s shareholders, of each new
director of the Bank was approved by a vote of at least two-thirds
of the
Directors of the Bank then still in office who were Directors of
the Bank
at the beginning of such period, provided, that a majority is composed
of
Directors who were Directors before the occurrence of an event which
would
otherwise constitute a Change in Control Event (the “Continuing
Directors”), together with any Directors whose election was approved by
a
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2
majority
of the Continuing Directors in office at that time, may specifically
determine in the good faith exercise of their judgment that such
event
does not constitute a Change in Control Event because it is not likely
to
change the existing management, personnel or management policies
of the
Bank;
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then
(i) if in any such case within one (1) year thereafter there shall
be a
termination of Employee’s employment other than for Good Cause as defined
in paragraph 3, or (ii) if within one (1) year thereafter the Employee
terminates his employment for Good Reason as defined in paragraph
4, then
in either such case the Bank shall, subject to the restriction contained
in paragraph 5 thereof:
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(A)
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within
fifteen (15) days of such termination, make a cash payment to the
Employee
in an amount equal to three (3) times Employee’s Annual Compensation as
defined below in this paragraph less one dollar and minus any and
all cash
compensation that has actually been paid to Employee following the
Change
in Control Event by the Bank or its successor; and
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(B)
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maintain
and provide for a period ending at the earlier of (i) one (1) year
after
the date of termination of the Employee’s employment, or (ii) the date of
Employee’s full-time employment by another employer (provided that
Employee is entitled under the terms of such employment to benefits
substantially similar to those described in this subparagraph (B),
at a
cost to Employee not greater than it would have been had he continued
as
an employee at the Bank), Employee’s continued participation in all group
insurance, life insurance, health and accident, disability and other
employee benefit plans, programs and arrangements (other than any
retirement benefit plan, program or arrangement) in which the Employee
was
entitled to participate immediately prior to the date of termination,
provided that the Employee’s continued participation is possible under the
general terms and provisions of such plans, programs and
arrangements.
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Unless
otherwise prohibited under paragraph 5 hereof, in the event that
the
Employee’s participation in any plan, program or arrangement as provided
in subparagraph (B) above is barred, or any such plan, program or
arrangement is discontinued or the benefits thereunder are materially
reduced, during such period the Bank shall arrange to provide Employee
with, or reimburse Employee for his cost of obtaining, benefits
substantially similar to those which the Employee was entitled to
receive
under such plans, programs and arrangements (other than any retirement
benefit plan, program or arrangement) immediately prior to the date
of
termination. At the end of the period of coverage hereinabove provided
for, the Employee shall have apportionment of prepaid premiums, any
assignable insurance owned by the Bank and relating specifically
to the
Employee.
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3
For
purposes of this Agreement, Employee’s “Annual Compensation” shall be
deemed to mean the greater of (i) the annual base salary and average
bonus
for the past three years of Employee as in effect on the date of
the
occurrence of the Change of Control Event immediately preceding Employee’s
termination, or (ii) the annual base salary and projected bonus
compensation of Employee as of the date of termination of Employee’s
employment. Employee’s annual base salary for purposes of calculating
Employee’s Annual Compensation shall include any annual base salary paid
to Employee by any Subsidiary (as defined in subparagraph 9(d) hereof).
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3.
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For
purposes of this Agreement, termination of the Employee by the Bank
for
“Good Cause” shall mean termination only by reason of one or more of the
following occurrences:
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(a)
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His
conviction, by a court of competent jurisdiction, of a crime involving
moral turpitude, whether or not committed during the term hereof;
or
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(b)
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His
commission of an act of fraud upon, or materially evidencing bad
faith
toward, the Bank; or
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(c)
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A
willful breach by him of any material duty or obligation imposed
upon him
under the terms of his employment with the Bank, as to which breach
the
Bank shall have given him thirty (30) days’ notice, and which breach shall
not have been cured within such thirty-day period; or
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(d)
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His
inability, by reason of physical or mental disability, to carry out
the
normal and usual duties of his employment for six (6) consecutive
months.
Such disability shall, in the event of a dispute between Employee
and the
Bank concerning Employee’s physical or mental ability to perform his
duties, be finally determined by a competent physician mutually agreeable
to both parties; or
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(e)
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His
breach of a fiduciary duty to the Bank or violation of any banking
law or
regulation.
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(f)
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For
purposes of this paragraph 3, no act, or failure to act, on Employee’s
part shall be considered, “willful” unless done, or omitted to be done, by
Employee not in good faith and without reasonable belief that Employee’s
action or omission was in the best interest of the Bank; provided
that any
act or omission to act on the Employee’s behalf in reliance upon an
opinion of counsel to the Bank or counsel to the Employee received
prior
to such act or omission to act shall not be deemed to be
willful.
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4.
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For
purposes of this Agreement, termination by the Employee of his employment
for “Good Reason” shall mean:
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(a)
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The
assignment of duties to the Employee by the Bank or a Subsidiary
which (i)
are materially inferior to the Employee’s duties immediately prior to a
Change in Control Event, or (ii) result in the Employee having
significantly less authority and/or responsibility than he had prior
to a
Change in Control Event, without his express written consent;
or
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(b)
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The
removal of the Employee from, or any failure to reelect him to, the
position(s) held by Employee immediately prior to a Change in Control
Event, except in connection with a termination of his employment
by the
Bank or a Subsidiary for Good Cause; or
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(c)
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A
reduction by the Bank or a Subsidiary of the Employee’s base salary as in
effect on the date of a Change in Control Event or as the same may
be
increased from time to time thereafter; or
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(d)
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The
relocation of the Bank’s principal executive offices to a location outside
of the Bristol, Connecticut area, or the Bank’s or a Subsidiary’s
requiring the Employee to be located anywhere other than the Bank’s
principal executive offices except for required travel on business
to an
extent substantially consistent with his business travel obligations
at
the time this Agreement was entered into, or, in the event the Employee
consents to any such relocation of the Bank’s executive offices, the
failure by the Bank or a Subsidiary to pay (or reimburse him for)
all
reasonable moving expenses incurred by him relating to a change in
his
principal residence in connection with such relocation and to indemnify
him against any loss realized in the sale of his principal residence
in
connection with any such change of residence; or
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(e)
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The
failure of the Bank or a Subsidiary to provide the Employee with
substantially the same fringe benefits (including paid vacations)
that
were provided to him immediately prior to a Change in Control Event,
or
with a package of fringe benefits that, though one or more of such
benefits may vary from those in effect immediately prior to a Change
in
Control Event, is substantially comparable in all material respects
to
such fringe benefits taken as a whole; or
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(f)
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The
failure of the Bank or a Subsidiary to obtain the assumption of an
agreement to perform this Agreement by any successor as contemplated
in
subparagraph 9(b) (ii) hereof.
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5.
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Nothing
in this Agreement shall be interpreted as requiring the Bank to make
payments which would constitute a prohibited excess parachute payment
pursuant to Section 280G of the Internal Revenue Code or which would
be in
violation of restrictions imposed, if any, pursuant to Section 18
of the
Federal Deposit Insurance
Act. The Employee expressly disclaims any right to a payment, which
would
be so prohibited.
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6.
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Employee
acknowledges that he relies for the payments to be made to him hereunder
solely upon the contractual obligations herein undertaken by the
Bank and
solely as a general creditor of the Bank. The parties acknowledge
that
Employee shall have no right to receive any payments or benefits
except at
the time, in the amounts, and in the manner herein provided, all
of which
are essential terms of this Agreement and essential considerations
to the
Bank in obligating itself to make the payments herein
provided.
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7.
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A
waiver by either party of any of the terms and conditions of this
Agreement in any instance shall not be deemed or construed to be
a waiver
of such terms or conditions for the future, or of any subsequent
breach
thereof.
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8.
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Any
and all notices required or permitted to be given hereunder shall
be in
writing and shall be deemed to have been given when deposited in
the
United States mails, certified or registered mail, postage prepaid
and
addressed as follows:
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To
Employee:
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Xxxxxxx
Xxxxxxxxx
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000
Xxxxxxx Xxxxxx
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Xxxxxxxxxxx,
XX 00000
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To
the Bank:
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President\CEO
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Valley
Bank
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Four
Riverside Avenue
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Bristol,
CT 06010
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Either
party may change by notice the address to which notices to him or
it are
to be addressed.
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9.
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(a)
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Employee
shall not have any right to commute, encumber or dispose of the right
to
receive payment hereunder or of the right to receive any of the benefits
provided for hereunder.
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(b)
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The
Bank may: (i) remaining obligated with respect to this Agreement,
cause
its obligations hereunder to be performed by a Subsidiary or Subsidiaries,
in whole or in part, and may, to the extent provided herein, cause
Employee to be assigned duties with respect to any such Subsidiary
or
Subsidiaries; (ii) assign this Agreement and its right hereunder
in whole,
but not in part, to any bank, corporation or other entity with or
into
which it may hereafter merge or consolidate or to which it may transfer
all or substantially all of its respective assets, if in any such
case
such bank, corporation or other entity shall by operation of law
or
expressly in writing assume
all liabilities of the Bank hereunder as fully as if it had been
originally named the Bank herein; but may not otherwise assign this
Agreement or its rights hereunder.
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(c)
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This
Agreement does not constitute an agreement for the employment of
Employee
and shall not give Employee any right to be retained in the service
or
employ of the Bank or any Subsidiary. The Bank and its Subsidiaries
retain
the right to discharge Employee at any time (provided that Employee
is an
employee of such institution) at will, with or without cause, as
if this
Agreement had never been entered into; provided, however, that upon
any
such termination and discharge following a Change in Control Event
Employee shall be entitled to the benefits of this Agreement, if
any,
payable or to be provided in connection with such
termination.
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(d)
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For
purposes of this Agreement, the term “Subsidiary” means a bank,
corporation or other entity at least 50 percent of the total combined
voting power of all classes of stock of which is owned by the Bank,
either
directly or through one or more subsidiaries.
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(e)
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Nothing
herein contained shall affect the terms and conditions of any other
written agreement between Employee and the Bank or any
Subsidiary.
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10.
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If
any provision of this Agreement, as applied to either party or to
any
circumstances, shall be adjudged by a court to be void or unenforceable,
the same shall in no way affect any other provision of this Agreement
or
the applicability of such provision to any other
circumstance.
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11.
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This
Agreement may not be varied, altered, modified, changed, or in any
way
amended except by an instrument in writing, executed by the parties
hereto
or their legal representatives.
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IN
WITNESS WHEREOF,
the
parties have executed this Agreement as the day and year above
written.
EMPLOYEE
/s/
Xxxxxxx Xxxxxxxxx
XXXXXXX
XXXXXXXXX
VALLEY
BANK
By:
/s/ Xxxxxx X. Xxxxxxx, Xx.
XXXXXX
X.
XXXXXXX, XX.
Its:
President & CEO
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