EXHIBIT (10)I
CHANGE-IN-CONTROL AGREEMENT
(XXXXX XXXXXXXX)
THIS EMPLOYMENT AGREEMENT (the "Agreement"), is made as of this 1st day of
January, 1998, among VALLEY NATIONAL BANK ("Bank"), a national banking
association with its principal office at 0000 Xxxxxx Xxxx, Xxxxx, Xxx Xxxxxx,
XXXXXX NATIONAL BANCORP ("Valley"), a New Jersey Corporation which maintains its
principal office at 0000 Xxxxxx Xxxx, Xxxxx, Xxx Xxxxxx (Valley and the Bank
collectively are the "Company") and XXXXX XXXXXXXX (the "Executive").
BACKGROUND
WHEREAS, the Executive has been continuously employed by the Bank for many
years;
WHEREAS, the Executive throughout his tenure has worked diligently in his
position in the business of the Bank and Valley;
WHEREAS, the Board of Directors of the Bank and Valley believe that the
future services of the Executive are of great value to the Bank and Valley and
that it is important for the growth and development of the Bank that the
Executive continue in his position;
WHEREAS, if the Company receives any proposal from a third person
concerning a possible business combination with, or acquisition of equities
securities of, the Company, the Board of Directors of the Company (the "Board")
believes it is imperative that the Company and the Board be able to rely upon
the Executive to continue in his position, and that they be able to receive
and rely upon his advice, if they request it, as to the best interests of the
Company and its shareholders, without concern that the Executive might be
distracted by the personal uncertainties and risks created by such a proposal;
WHEREAS, to achieve that goal, and to retain the Executive's services
prior to any such activity, the Board of Directors and the Executive have agreed
to enter into this Agreement to govern the Executive's termination benefits in
the event of a Change in Control of the Company, as hereinafter defined.
NOW, THEREFORE, to assure the Company that it will have the continued
dedication of the Executive and the availability of his advice and counsel
notwithstanding the possibility, threat or occurrence of a bid to take over
control of the Company, and to induce the Executive to remain in the employ of
the Company, and for other good and valuable consideration, the Company and the
Executive, each intending to be legally bound hereby agree as follows:
Definitions
a) Cause. For purposes of this Agreement "Cause" with respect to the
termination by the Company of Executive's employment shall mean (i) willful and
continued failure by the Executive to perform his duties for the Company under
this Agreement after at least one warning in writing from the Company's Board of
Directors identifying specifically any such failure; (ii) the willful engaging
by the Executive in misconduct which causes material injury to the Company as
specified in a written notice to the Executive from the Board of Directors; or
(iii) conviction of a crime, other than a traffic violation, habitual
drunkenness, drug abuse, or excessive absenteeism other than for illness, after
a warning (with respect to drunkenness or absenteeism only) in writing from the
Board of Directors to refrain from such behavior. No act or failure to act
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on the part of the Executive shall be considered willful unless done, or omitted
to be done, by the Executive not in good faith and without reasonable belief
that the action or omission was in the best interest of the Company.
b) Change in Control. "Change in Control" means any of the following
events: (i) when Valley or a Subsidiary acquires actual knowledge that any
person (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange
Act), other than an affiliate of Valley or a Subsidiary or an employee benefit
plan established or maintained by Valley, a Subsidiary or any of their
respective affiliates, is or becomes the beneficial owner (as defined in Rule
13d-3 of the Exchange Act) directly or indirectly, of securities of Valley
representing more than twenty-five percent (25%) of the combined voting power of
Valley's then outstanding securities (a "Control Person"), (ii) upon the first
purchase of Valley's common stock pursuant to a tender or exchange offer (other
than a tender or exchange offer made by Valley, a Subsidiary or an employee
benefit plan established or maintained by Valley, a Subsidiary or any of their
respective affiliates), (iii) upon the approval by Valley's stockholders of (A)
a merger or consolidation of Valley with or into another corporation (other than
a merger or consolidation which is approved by at least two-thirds of the
Continuing Directors (as hereinafter defined) or the definitive agreement for
which provides that at least two-thirds of the directors of the surviving or
resulting corporation immediately after the transaction are Continuing Directors
(in either case, a "Non-Control Transaction")), (B) a sale or disposition of all
or substantially all of Valley's assets or (C) a plan of liquidation or
dissolution of Valley, (iv) if during any period of two (2) consecutive years,
individuals who at the beginning of such period constitute the Board (the
"Continuing Directors") cease for any reason to constitute at least two-thirds
thereof or, following a Non-Control Transaction, two-thirds of the board of
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directors of the surviving or resulting corporation; provided that any
individual whose election or nomination for election as a member of the Board
(or, following a Non-Control Transaction, the board of directors of the
surviving or resulting corporation) was approved by a vote of at least
two-thirds of the Continuing Directors then in office shall be considered a
Continuing Director, or (v) upon a sale of (A) common stock of the Bank if after
such sale any person (as such term is used in Section 13(d) and 14(d)(2) of the
Exchange Act) other than Valley, an employee benefit plan established or
maintained by Valley or a Subsidiary, or an affiliate of Valley or a Subsidiary,
owns a majority of the Bank's common stock or (B) all or substantially all of
the Bank's assets (other than in the ordinary course of business). No person
shall be considered a Control Person for purposes of clause (i) above if (A)
such person is or becomes the beneficial owner, directly or indirectly, of more
than ten percent (10%) but less than twenty-five percent (25%) of the combined
voting power of Valley's then outstanding securities if the acquisition of all
voting securities in excess of ten percent (10%) was approved in advance by a
majority of the Continuing Directors then in office or (B) such person acquires
in excess of ten percent (10%) of the combined voting power of Valley's then
outstanding voting securities in violation of law and by order of a court of
competent jurisdiction, settlement or otherwise, disposes or is required to
dispose of all securities acquired in violation of law.
c) Contract Period. "Contract Period" shall mean the period commencing the
day immediately preceding a Change in Control and ending on the earlier of (i)
the third anniversary of the Change in Control or (ii) the date the Executive
would attain age 65 or (iii) the death of the Executive. For the purpose of this
Agreement, a Change in Control shall be deemed to have occurred at the date
specified in the definition of Change-in-Control.
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d) Exchange Act. "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
e) Good Reason. When used with reference to a voluntary termination by
Executive of his employment with the Company, "Good Reason" shall mean any of
the following, if taken without Executive's express written consent:
(1) The assignment to Executive of any duties inconsistent with, or the
reduction of powers or functions associated with, Executive's position, title,
duties, responsibilities and status with the Company immediately prior to a
Change in Control; any removal of Executive from, or any failure to re-elect
Executive to, any position(s) or office(s) Executive held immediately prior to
such Change in Control. A change in title or positions resulting merely from a
merger of the Company into or with another bank or company which does not
downgrade in any way the Executive's powers, duties and responsibilities shall
not meet the requirements of this paragraph;
(2) A reduction by the Company in Executive's annual base compensation as
in effect immediately prior to a Change in Control or the failure to award
Executive annual increases in accordance herewith;
(3) A failure by the Company to continue any bonus plan in which Executive
participated immediately prior to the Change in control or a failure by the
Company to continue Executive as a participant in such plan on at least the same
basis as Executive participated in such plan prior to the Change in Control;
(4) The Company's transfer of Executive to another geographic location
outside of New Jersey or more than 25 miles from his present office location,
except for
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required travel on the Company's business to an extent substantially consistent
with Executive's business travel obligations immediately prior to such Change in
Control;
(5) The failure by the Company to continue in effect any employee benefit
plan, program or arrangement (including, without limitation the Company's
retirement plan, benefit equalization plan, life insurance plan, health and
accident plan, disability plan, deferred compensation plan or long term stock
incentive plan) in which Executive is participating immediately prior to a
Change in Control (except that the Company may institute or continue plans,
programs or arrangements providing Executive with substantially similar
benefits); the taking of any action by the Company which would adversely affect
Executive's participation in or materially reduce Executive's benefits under,
any of such plans, programs or arrangements; the failure to continue, or the
taking of any action which would deprive Executive, of any material fringe
benefit enjoyed by Executive immediately prior to such Change in Control; or the
failure by the Company to provide Executive with the number of paid vacation
days to which Executive was entitled immediately prior to such Change in
Control;
(6) The failure by the Company to obtain an assumption in writing of the
obligations of the Company to perform this Agreement by any successor to the
Company and to provide such assumption to the Executive prior to any Change in
Control; or
(7) Any purported termination of Executive's employment by the Company
during the term of this Agreement which is not effected pursuant to all of the
requirements of this Agreement; and, for purposes of this Agreement, no such
purported termination shall be effective.
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f) Subsidiary. "Subsidiary" means any corporation in an unbroken chain of
corporations, beginning with Valley, if each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
2. Employment. The Company hereby agrees to employ the Executive, and the
Executive hereby accepts employment, during the Contract Period upon the terms
and conditions set forth herein.
3. Position. During the Contract Period the Executive shall be employed as
Executive Vice President of Valley and the Bank, or such other corporate or
divisional profit center as shall then be the principal successor to the
business, assets and properties of the Company, with substantially the same
title and the same duties and responsibilities as before the Change in Control.
The Executive shall devote his full time and attention to the business of the
Company, and shall not during the Contract Period be engaged in any other
business activity. This paragraph shall not be construed as preventing the
Executive from managing any investments of his which do not require any service
on his part in the operation of such investments.
4. Cash Compensation. The Company shall pay to the Executive compensation
for his services during the Contract Period as follows:
a) Base Salary. A base annual salary equal to the annual salary in effect
as of the Change in Control. The annual salary shall be payable in installments
in accordance with the Company's usual payroll method.
b) Annual Bonus. An annual cash bonus equal to at least the average of the
bonuses paid to the Executive in the three years prior to the Change in Control.
The bonus shall
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be payable at the time and in the manner which the Company paid such bonuses
prior to the Change in Control.
c) Annual Review. The Board of Directors of the Company during the
Contract Period shall review annually, or at more frequent intervals which the
Board determines is appropriate, the Executive's compensation and shall award
him additional compensation to reflect the Executive's performance, the
performance of the Company and competitive compensation levels, all as
determined in the discretion of the Board of Directors.
5. Expenses and Fringe Benefits.
a) Expenses. During the Contract Period, the Executive shall be entitled
to reimbursement for all business expenses incurred by him with respect to the
business of the Company in the same manner and to the same extent as such
expenses were previously reimbursed to him immediately prior to the Change in
Control.
b) Benefit Equalization Plan. During the Contract Period, if the Executive
was entitled to benefits under the Company's Benefit Equalization Plan ("BEP")
prior to the Change in Control, the Executive shall be entitled to continued
benefits under the BEP after the Change in Control and such BEP may not be
modified to reduce or eliminate such benefits during the Contract Period.
c) Club Membership and Automobile. If prior to the Change in Control, the
Executive was entitled to membership in a country club and/or the use of an
automobile, he shall be entitled to the same membership and/or use of an
automobile at least comparable to the automobile provided to him prior to the
Change in Control.
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d) Other Benefits. The Executive also shall be entitled to vacations and
sick days, in accordance with the practices and procedures of the Company, as
such existed immediately prior to the Change in Control. During the Contract
Period, the Executive also shall be entitled to hospital, health, medical and
life insurance, and any other benefits enjoyed, from time to time, by senior
officers of the Company, all upon terms as favorable as those enjoyed by other
senior officers of the Company. Notwithstanding anything in this paragraph 5(d)
to the contrary, if the Company adopts any change in the benefits provided for
senior officers of the Company, and such policy is uniformly applied to all
officers of the Company (and any successor or acquiror of the Company, if any),
including the chief executive officer of such entities, then no such change
shall be deemed to be contrary to this paragraph.
6. Termination for Cause. The Company shall have the right to terminate
the Executive for Cause, upon written notice to him of the termination which
notice shall specify the reasons for the termination. In the event of
termination for Cause the Executive shall not be entitled to any further
benefits under this Agreement.
7. Disability. During the Contract Period if the Executive becomes
permanently disabled, or is unable to perform his duties hereunder for 4
consecutive months in any 12 month period, the Company may terminate the
employment of the Executive. In such event, the Executive shall not be entitled
to any further benefits under this Agreement.
8. Death Benefits. Upon the Executive's death during the Contract Period,
his estate shall not be entitled to any further benefits under this Agreement.
9. Termination Without Cause or Resignation for Good Reason. The Company
may terminate the Executive without Cause during the Contract Period by written
notice
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to the Executive providing four weeks notice. The Executive may resign for Good
Reason during the Contract Period upon four weeks' written notice to the Company
specifying facts and circumstances claimed to support the Good Reason. The
Executive shall be entitled to give a Notice of Termination that his or her
employment is being terminated for Good Reason at any time during the Contract
Period, not later than twelve months after any occurrence of an event stated to
constitute Good Reason. If the Company terminates the Executive's employment
during the Contract Period without Cause or if the Executive Resigns for Good
Reason, the Company shall, subject to Section 12 hereof:
(a) Within 20 business days of the termination of employment pay the
Executive a lump sum severance payment in an amount equal to three (3.0) times
the highest annual cash compensation, consisting solely of salary and bonus,
paid to the Executive during any calendar year in each of the three calendar
years immediately prior to the Change in Control; and
(b) Continue to provide the Executive during the remainder of the Contract
Period with health, hospitalization and medical insurance, as were provided at
the time of the termination of his employment with the Company, at the Company's
cost (subject to standard deductibles and co-pays, and the Executive's
continuing payment of his part of the premium for family coverage, if
applicable).
The Executive shall not have a duty to mitigate the damages suffered by
him in connection with the termination by the Company of his employment without
Cause or a resignation for Good Reason during the Contract Period. If the
Company fails to pay the Executive the lump sum amount due him hereunder or to
provide him with the health, hospitalization and medical insurance benefits due
under this section, the Executive, after giving 10 days' written notice to the
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Company identifying the Company's failure, shall be entitled to recover from the
Company all of his reasonable legal fees and expenses incurred in connection
with his enforcement against the Company of the terms of this Agreement. The
Executive shall be denied payment of his legal fees and expenses only if a court
finds that the Executive sought payment of such fees without reasonable cause
and not in good faith.
10. Resignation Without Good Reason. The Executive shall be entitled to
resign from the employment of the Company at any time during the Contract Period
without Good Reason, but upon such resignation the Executive shall not be
entitled to any additional compensation for the time after which he ceases to be
employed by the Company, and shall not be entitled to any of the other benefits
provided hereunder. No such resignation shall be effective unless in writing
with four weeks' notice thereof.
11. Non-Disclosure of Confidential Information.
a) Non-Disclosure of Confidential Information. Except in the course of his
employment with the Company and in the pursuit of the business of the Company or
any of its subsidiaries or affiliates, the Executive shall not, at any time
during or following the Contract Period, disclose or use, any confidential
information or proprietary data of the Company or any of its subsidiaries or
affiliates. The Executive agrees that, among other things, all information
concerning the identity of and the Company's relations with its customers is
confidential information.
b) Specific Performance. Executive agrees that the Company does not have an
adequate remedy at law for the breach of this section and agrees that he shall
be subject to injunctive relief and equitable remedies as a result of the breach
of this section. The invalidity or
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unenforceability of any provision of this Agreement shall not affect the force
and effect of the remaining valid portions.
c) Survival. This section shall survive the termination of the Executive's
employment hereunder and the expiration of this Agreement.
12. Certain Reduction of Payments by the Company.
a) Anything in this Agreement to the contrary notwithstanding, prior to the
payment of any lump sum amount payable hereunder, the certified public
accountants of the Company immediately prior to a Change of Control (the
"Certified Public Accountants) shall determine as promptly as practical and in
any event within 20 business days following the termination of employment of
Executive whether any payment or distribution by the Company to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise) (a
"Payment") would more likely than not be nondeductible by the Company for
Federal income purposes because of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), and if it is then the aggregate present value of
amounts payable or distributable to or for the benefit of Executive pursuant to
this Agreement (such payments or distributions pursuant to this Agreement are
thereinafter referred to as "Agreement Payments") shall be reduced (but not
below zero) to the reduced Amount. For purposes of this paragraph, the "Reduced
Amount" shall be an amount expressed in present value which maximizes the
aggregate present value of Agreement Payments without causing any Payment to be
nondeductible by the Company because of said Section 280G of the Code.
b) If under paragraph (a) of this section the Certified Public Accountants
determine that any Payment would more likely than not be nondeductible by the
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Company because of Section 280G of the Code, the Company shall promptly give the
Executive notice to that effect and a copy of the detailed calculation thereof
and of the Reduced Amount, and the Executive may then elect, in his sole
discretion, which and how much of the Agreement Payments shall be eliminated or
reduced (as long as after such election the aggregate present value of the
Agreement Payments equals the Reduced Amount), and shall advise the Company in
writing of his election within 20 business days of his receipt of notice. If no
such election is made by the Executive within such 20-day period, the Company
may elect which and how much of the Agreement Payments shall be eliminated or
reduced (as long as after such election the Aggregate present Value of the
Agreement Payments equals the Reduced Amount) and shall notify the Executive
promptly of such election. For purposes of this paragraph, present Value shall
be determined in accordance with Section 280G(d)(4) of the Code. All
determinations made by the Certified Public Accountants shall be binding upon
the Company and Executive shall be made within 20 business days of a termination
of employment of Executive. With the consent of the Executive, the Company may
suspend part or all of the lump sum payment due under Section 9 hereof and any
other payments due to the Executive hereunder until the Certified Public
Accountants finish the determination and the Executive (or the Company, as the
case may be) elect how to reduce the Agreement Payments, if necessary. As
promptly as practicable following such determination and the elections
hereunder, the Company shall pay to or distribute to or for the benefit of
Executive such amounts as are then due to Executive under this Agreement and
shall promptly pay to or distribute for the benefit of Executive in the future
such amounts as become due to Executive under this Agreement.
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c) As a result of the uncertainty in the application of Section 280G of the
Code, it is possible that Agreement Payments may have been made by the Company
which should not have been made ("Overpayment") or that additional Agreement
Payments which will have not been made by the Company could have been made
("Underpayment"), in each case, consistent with the calculation of the Reduced
Amount hereunder. In the event that the Certified Public Accountants, based upon
the assertion of a deficiency by the Internal Revenue Service against the
Company or Executive which said Certified Public Accountants believe has a high
probability of success, determines that an Overpayment has been made, any such
Overpayment shall be treated for all purposes as a loan to Executive which
Executive shall repay to the Company together with interest at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Code; provided,
however, that no amount shall be payable by Executive to the Company in and for
the extent such payment would not reduce the amount which is subject to taxation
under Section 4999 of the Code. In the event that the Certified Public
Accountants, based upon controlling precedent, determine that an Underpayment
has occurred, any such Underpayment shall be promptly paid by the Company to or
for the benefit of the Executive together with interest at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Code.
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13. Term and Effect Prior to Change in Control.
a) Term. Except as otherwise provided for hereunder, this Agreement shall
commence on the date hereof and shall remain in effect for a period of 3 years
from the date hereof (the "Initial Term") or until the end of the Contract
Period, whichever is later. The Initial Term shall be automatically extended for
an additional one year period on the anniversary date hereof (so that the
Initial Term is always 3 years) unless, prior to a Change in Control, the Chief
Executive Officer of the Bank notifies the Executive in writing at any time that
the Contract is not so extended, in which case the Initial Term shall end upon
the later of (i) 3 years after the date hereof, or (ii) 2 years after the date
of such written notice. Notwithstanding anything to the contrary contained
herein, the Initial Term shall cease when the Executive attains age 65.
b) No Effect Prior to Change in Control. This Agreement shall not effect
any rights of the Company to terminate the Executive prior to a Change in
Control or any rights of the Executive granted in any other agreement or
contract or plan with the Company. The rights, duties and benefits provided
hereunder shall only become effective upon and after a Change in Control. If the
full-time employment of the Executive by the Company is ended for any reason
prior to a Change in Control, this Agreement shall thereafter be of no further
force and effect.
14. Severance Compensation and Benefits Not in Derogation of Other
Benefits. Anything to the contrary herein contained notwithstanding, the payment
or obligation to pay any monies, or granting of any benefits, rights or
privileges to Executive as provided in this Agreement shall not be in lieu or
derogation of the rights and privileges that the Executive now has or will have
under any plans or programs of or agreements with the Company, except that if
the Executive
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received any payment hereunder, he shall not be entitled to any payment under
the Company's severance policies for officers and employees.
15. Miscellaneous. This Agreement is the joint and several obligation of
the Bank and Valley. The terms of this Agreement shall be governed by, and
interpreted and construed in accordance with the provisions of, the laws of New
Jersey. This Agreement supersedes all prior agreements and understandings with
respect to the matters covered hereby, including expressly any prior agreement
with the Company concerning change-in-control benefits. The parties hereto
expressly agree that the Change-in-Control Agreement among the Executive, the
Bank and Valley, dated as of January 1, 1995, is hereby terminated, effective
the date hereof. The amendment or termination of this Agreement may be made only
in a writing executed by the Company and the Executive, and no amendment or
termination of this Agreement shall be effective unless and until made in such a
writing. This Agreement shall be binding upon any successor (whether direct or
indirect, by purchase, merge, consolidation, liquidation or otherwise) to all or
substantially all of the assets of the Company. This Agreement is personal to
the Executive and the Executive may not assign any of his rights or duties
hereunder but this Agreement shall be enforceable by the Executive's legal
representatives, executors or administrators. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, and it
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
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IN WITNESS WHEREOF, Valley National Bank and Valley National Bancorp each
have caused this Agreement to be signed by their duly authorized representatives
pursuant to the authority of their Boards of Directors, and the Executive has
personally executed this Agreement, all as of the day and year first written
above.
ATTEST: VALLEY NATIONAL BANCORP
/s/ Xxxx X. Xxxxx By: /s/ Xxxxxx X. XxXxxxx
------------------------ -------------------------------------
Xxxx X. Xxxxx, Secretary Xxxxxx X. XxXxxxx, Chairman, Personnel
and Compensation Committee
ATTEST: VALLEY NATIONAL BANK
/s/ Xxxx X. Xxxxx By: /s/ Xxxxxx X. XxXxxxx
------------------------ -------------------------------------
Xxxx X. Xxxxx, Secretary Xxxxxx X. XxXxxxx, Chairman, Personnel
and Compensation Committee
WITNESS:
/s/ Xxxxx Xxxxxxx /s/ Xxxxx Xxxxxxxx
------------------------ -------------------------------------
Xxxxx Xxxxxxxx, Executiv
Executive Seniority date with
Valley National Bank: 3/7/77.
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VALLEY NATIONAL BANK
0000 XXXXXX XXXX
XXXXX, XX 00000
January 1, 1998
Xx. Xxxxx Xxxxxxxx
Executive Vice President
Valley National Bancorp
Valley National Bank
0000 Xxxxxx Xxxx
Xxxxx, Xxx Xxxxxx 00000
Dear Xx. Xxxxxxxx:
The Board of Directors of Valley National Bancorp ("Bancorp") and Valley
National Bank (the "Bank") (collectively, the "Company") have determined that it
is in the best interests of the Bancorp and the Bank for the Company to agree to
provide you with certain limited severance rights as provided herein.
The Board recognizes that your employment by the Company without any
severance agreement creates tensions which may cause you to seek opportunities
elsewhere or affect your views of your present compensation. These arrangements
are being made to alleviate, in part, those concerns.
In view of the foregoing, in consideration of your continued employment
with the Company and your consent to this letter, the Company agrees:
1. If the Company elects to terminate you as Executive Vice President of
Valley National Bancorp and/or Valley National Bank, upon the termination of
your employment the Company will pay you a lump sum severance benefit equal to
12 months of your annual base salary plus a portion of your most recent bonus.
The bonus amount shall equal your most recent bonus multiplied by a fraction,
the numerator of which is the number of months which have elapsed in the current
calendar year and the denominator of which is 12. This severance benefit will
not be paid if the Company terminates you for "Cause". "Cause" means (i) willful
and continued failure by the Executive to perform his duties for the Company
after at least one warning in writing from the Company's Board of Directors
identifying specifically any such failure; (ii) the willful engaging by the
Executive in misconduct which causes material injury to the Company as specified
in a written notice to the Executive from the Board of Directors; or (iii)
conviction of a crime, other than a traffic violation, habitual drunkenness,
drug abuse, or excessive absenteeism other than for illness, after a warning
(with respect to drunkenness or absenteeism only) in writing from the Board
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of Directors to refrain from such behavior. No act or failure to act on the part
of the Executive shall be considered willful unless done, or omitted to be done,
by the Executive not in good faith and without reasonable belief that the action
or omission was in the best interest of the Company. No severance will be paid
under this paragraph in the event you are paid a severance benefit pursuant to
any change in control agreement with the Company.
2. If you are terminated other than for Cause, or you die or become
disabled, the Company will provide and pay for hospital, health and medical
insurance for you and your spouse and minor children (subject to deductibles,
co-pays and premiums which you previously paid), as well as (where applicable)
life insurance and disability insurance for a period of three years following
your employment termination or death, unless such benefits are provided to you
or your spouse by another party.
As partial consideration for the Company entering into this Agreement, you
agree as follows:
3. Following the termination of your employment with the Company for any
reason, you shall retain in confidence any confidential information known to you
concerning the Company and its business.
4. While you are employed by the Company and for a period of one year
thereafter, you will not, without the prior written approval of the Board of
Directors of Bancorp, directly or indirectly, as officer, director, employee,
shareholder, principal or agent, or in any other capacity, own, manage, operate,
consult with or be employed by any insured depository institution which
transacts business in the State of New Jersey if such insured depository
institution employs or utilizes you in any capacity to solicit the Company's
loan, trust, deposit customers, or other customers of the Company, or employees
of the Company.
5. You agree that the Company has no adequate remedy at law for the
violation of paragraphs 3 and 4 and that the Company shall be entitled to
injunctive relief to enforce such provisions.
Both parties mutually agree as follows:
6. In the event the Company fails to pay to you or your spouse any of the
benefits provided herein for a period in excess of 10 business days after a
written request to do so, you (or your spouse) shall be entitled to be paid or
reimbursed by the Company for the legal fees and expenses incurred by you (or
your spouse) in enforcing or interpreting the provisions of this Agreement. The
Company hereby agrees to pay or reimburse you for such fees and expenses on a
monthly basis, upon your submission of bills or requests for payment. A court
shall be entitled to deny you your legal fees and expenses only if it finds you
made a claim for benefits hereunder not in good faith and without reasonable
cause.
7. This Agreement shall commence on the date hereof and expire on the
earlier of (i) your attainment of age 65 or (ii) January 1, 2001 (January 1,
2001 is referred to hereafter as
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the "Initial Expiration Date"). On January 1 of each year starting January 1,
1999, the Initial Expiration Date shall be automatically extended for an
additional one year period (so it remains a three year contract until you reach
age 65) unless you or Bancorp otherwise elect and so notify the other party in
writing prior to January 1 of any year starting with January 1, 2000. This
Agreement may be amended, supplemented or changed at any time only by a writing
signed by Bancorp and yourself.
8. This Agreement shall be binding upon and inure to the benefit of you,
your estate and the Company, and any successor to the Company by merger,
consolidation or sale. Neither this Agreement nor any rights arising hereunder
may be assigned or pledged by you. After your death, your spouse and minor
children shall be entitled to enjoy and enforce the benefits of this Agreement.
In the event your services are terminated and you are entitled to payments, you
shall not be obligated to mitigate your damages and the Company may not offset
amounts due to you hereunder. However, in the event you breach the
non-solicitation contained in paragraph 4 hereof, the Company shall not
thereafter be obligated to provide you with any benefits hereunder and you shall
not be entitled to be paid your legal fees or expenses as provided in paragraph
6 hereof.
20
If you are in agreement with the foregoing, please so indicate by signing
and returning to the Company the enclosed copy of this letter, whereupon this
letter shall constitute an agreement between you and the Company.
Very truly yours,
VALLEY NATIONAL BANCORP
By: /s/ Xxxxxx X. XxXxxxx
--------------------------------------
AGREED AND ACCEPTED: Xxxxxx X. XxXxxxx, Chairman, Personnel
and Compensation Committee
/s/ Xxxxx Xxxxxxxx
-------------------------
Xxxxx Xxxxxxxx, Executive VALLEY NATIONAL BANK
By: /s/ Xxxxxx X. XxXxxxx
--------------------------------------
Xxxxxx X. XxXxxxx, Chairman, Personnel
and Compensation Committee
Executive Seniority date with Valley
National Bank: 3/7/77.
21
CHANGE-IN-CONTROL AGREEMENT
(XXXXXX XXXXX)
THIS EMPLOYMENT AGREEMENT (the "Agreement"), is made as of this 1st day of
January, 1998, among VALLEY NATIONAL BANK ("Bank"), a national banking
association with its principal office at 0000 Xxxxxx Xxxx, Xxxxx, Xxx Xxxxxx,
XXXXXX NATIONAL BANCORP ("Valley"), a New Jersey Corporation which maintains its
principal office at 0000 Xxxxxx Xxxx, Xxxxx, Xxx Xxxxxx (Valley and the Bank
collectively are the "Company") and XXXXXX XXXXX (the "Executive").
BACKGROUND
WHEREAS, the Executive has been continuously employed by the Bank or its
predecessor for many years;
WHEREAS, the Executive throughout his tenure has worked diligently in his
position in the business of the Bank and Valley or their predecessors;
WHEREAS, the Board of Directors of the Bank and Valley believe that the
future services of the Executive are of great value to the Bank and Valley and
that it is important for the growth and development of the Bank that the
Executive continue in his position;
WHEREAS, if the Company receives any proposal from a third person
concerning a possible business combination with, or acquisition of equities
securities of, the Company, the Board of Directors of the Company (the "Board")
believes it is imperative that the Company and the Board be able to rely upon
the Executive to continue in his position, and that they be able to receive and
rely upon his advice, if they request it, as to the best interests of the
Company and its
22
shareholders, without concern that the Executive might be distracted by the
personal uncertainties and risks created by such a proposal;
WHEREAS, to achieve that goal, and to retain the Executive's services prior
to any such activity, the Board of Directors and the Executive have agreed to
enter into this Agreement to govern the Executive's termination benefits in the
event of a Change in Control of the Company, as hereinafter defined.
NOW, THEREFORE, to assure the Company that it will have the continued
dedication of the Executive and the availability of his advice and counsel
notwithstanding the possibility, threat or occurrence of a bid to take over
control of the Company, and to induce the Executive to remain in the employ of
the Company, and for other good and valuable consideration, the Company and the
Executive, each intending to be legally bound hereby agree as follows:
Definitions
a) Cause. For purposes of this Agreement "Cause" with respect to the
termination by the Company of Executive's employment shall mean (i) willful and
continued failure by the Executive to perform his duties for the Company under
this Agreement after at least one warning in writing from the Company's Board of
Directors identifying specifically any such failure; (ii) the willful engaging
by the Executive in misconduct which causes material injury to the Company as
specified in a written notice to the Executive from the Board of Directors; or
(iii) conviction of a crime, other than a traffic violation, habitual
drunkenness, drug abuse, or excessive absenteeism other than for illness, after
a warning (with respect to drunkenness or absenteeism only) in writing from the
Board of Directors to refrain from such behavior. No act or failure to act on
the part of the Executive shall be considered willful unless done, or omitted to
be done, by the
23
Executive not in good faith and without reasonable belief that the action or
omission was in the best interest of the Company.
b) Change in Control. "Change in Control" means any of the following
events: (i) when Valley or a Subsidiary acquires actual knowledge that any
person (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange
Act), other than an affiliate of Valley or a Subsidiary or an employee benefit
plan established or maintained by Valley, a Subsidiary or any of their
respective affiliates, is or becomes the beneficial owner (as defined in Rule
13d-3 of the Exchange Act) directly or indirectly, of securities of Valley
representing more than twenty-five percent (25%) of the combined voting power of
Valley's then outstanding securities (a "Control Person"), (ii) upon the first
purchase of Valley's common stock pursuant to a tender or exchange offer (other
than a tender or exchange offer made by Valley, a Subsidiary or an employee
benefit plan established or maintained by Valley, a Subsidiary or any of their
respective affiliates), (iii) upon the approval by Valley's stockholders of (A)
a merger or consolidation of Valley with or into another corporation (other than
a merger or consolidation which is approved by at least two-thirds of the
Continuing Directors (as hereinafter defined) or the definitive agreement for
which provides that at least two-thirds of the directors of the surviving or
resulting corporation immediately after the transaction are Continuing Directors
(in either case, a "Non-Control Transaction")), (B) a sale or disposition of all
or substantially all of Valley's assets or (C) a plan of liquidation or
dissolution of Valley, (iv) if during any period of two (2) consecutive years,
individuals who at the beginning of such period constitute the Board (the
"Continuing Directors") cease for any reason to constitute at least two-thirds
thereof or, following a Non-Control Transaction, two-thirds of the board of
directors of the surviving or resulting corporation; provided that any
individual whose election or
24
nomination for election as a member of the Board (or, following a Non-Control
Transaction, the board of directors of the surviving or resulting corporation)
was approved by a vote of at least two-thirds of the Continuing Directors then
in office shall be considered a Continuing Director, or (v) upon a sale of (A)
common stock of the Bank if after such sale any person (as such term is used in
Section 13(d) and 14(d)(2) of the Exchange Act) other than Valley, an employee
benefit plan established or maintained by Valley or a Subsidiary, or an
affiliate of Valley or a Subsidiary, owns a majority of the Bank's common stock
or (B) all or substantially all of the Bank's assets (other than in the ordinary
course of business). No person shall be considered a Control Person for purposes
of clause (i) above if (A) such person is or becomes the beneficial owner,
directly or indirectly, of more than ten percent (10%) but less than twenty-five
percent (25%) of the combined voting power of Valley's then outstanding
securities if the acquisition of all voting securities in excess of ten percent
(10%) was approved in advance by a majority of the Continuing Directors then in
office or (B) such person acquires in excess of ten percent (10%) of the
combined voting power of Valley's then outstanding voting securities in
violation of law and by order of a court of competent jurisdiction, settlement
or otherwise, disposes or is required to dispose of all securities acquired in
violation of law.
c) Contract Period. "Contract Period" shall mean the period commencing the
day immediately preceding a Change in Control and ending on the earlier of (i)
the third anniversary of the Change in Control or (ii) the date the Executive
would attain age 65 or (iii) the death of the Executive. For the purpose of this
Agreement, a Change in Control shall be deemed to have occurred at the date
specified in the definition of Change-in-Control.
25
d) Exchange Act. "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
e) Good Reason. When used with reference to a voluntary termination by
Executive of his employment with the Company, "Good Reason" shall mean any of
the following, if taken without Executive's express written consent:
(1) The assignment to Executive of any duties inconsistent with, or the
reduction of powers or functions associated with, Executive's position, title,
duties, responsibilities and status with the Company immediately prior to a
Change in Control; any removal of Executive from, or any failure to re-elect
Executive to, any position(s) or office(s) Executive held immediately prior to
such Change in Control. A change in title or positions resulting merely from a
merger of the Company into or with another bank or company which does not
downgrade in any way the Executive's powers, duties and responsibilities shall
not meet the requirements of this paragraph;
(2) A reduction by the Company in Executive's annual base compensation as
in effect immediately prior to a Change in Control or the failure to award
Executive annual increases in accordance herewith;
(3) A failure by the Company to continue any bonus plan in which Executive
participated immediately prior to the Change in control or a failure by the
Company to continue Executive as a participant in such plan on at least the same
basis as Executive participated in such plan prior to the Change in Control;
(4) The Company's transfer of Executive to another geographic location
outside of New Jersey or more than 25 miles from his present office location,
except for
26
required travel on the Company's business to an extent substantially consistent
with Executive's business travel obligations immediately prior to such Change in
Control;
(5) The failure by the Company to continue in effect any employee benefit
plan, program or arrangement (including, without limitation the Company's
retirement plan, benefit equalization plan, life insurance plan, health and
accident plan, disability plan, deferred compensation plan or long term stock
incentive plan) in which Executive is participating immediately prior to a
Change in Control (except that the Company may institute or continue plans,
programs or arrangements providing Executive with substantially similar
benefits); the taking of any action by the Company which would adversely affect
Executive's participation in or materially reduce Executive's benefits under,
any of such plans, programs or arrangements; the failure to continue, or the
taking of any action which would deprive Executive, of any material fringe
benefit enjoyed by Executive immediately prior to such Change in Control; or the
failure by the Company to provide Executive with the number of paid vacation
days to which Executive was entitled immediately prior to such Change in
Control;
(6) The failure by the Company to obtain an assumption in writing of the
obligations of the Company to perform this Agreement by any successor to the
Company and to provide such assumption to the Executive prior to any Change in
Control; or
(7) Any purported termination of Executive's employment by the Company
during the term of this Agreement which is not effected pursuant to all of the
requirements of this Agreement; and, for purposes of this Agreement, no such
purported termination shall be effective.
27
f) Subsidiary. "Subsidiary" means any corporation in an unbroken chain of
corporations, beginning with Valley, if each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
2. Employment. The Company hereby agrees to employ the Executive, and the
Executive hereby accepts employment, during the Contract Period upon the terms
and conditions set forth herein.
3. Position. During the Contract Period the Executive shall be employed as
Executive Vice President of Valley and the Bank, or such other corporate or
divisional profit center as shall then be the principal successor to the
business, assets and properties of the Company, with substantially the same
title and the same duties and responsibilities as before the Change in Control.
The Executive shall devote his full time and attention to the business of the
Company, and shall not during the Contract Period be engaged in any other
business activity. This paragraph shall not be construed as preventing the
Executive from managing any investments of his which do not require any service
on his part in the operation of such investments.
4. Cash Compensation. The Company shall pay to the Executive compensation
for his services during the Contract Period as follows:
a) Base Salary. A base annual salary equal to the annual salary in effect
as of the Change in Control. The annual salary shall be payable in installments
in accordance with the Company's usual payroll method.
b) Annual Bonus. An annual cash bonus equal to at least the average of the
bonuses paid to the Executive in the three years prior to the Change in Control.
The bonus shall
28
be payable at the time and in the manner which the Company paid such bonuses
prior to the Change in Control.
c) Annual Review. The Board of Directors of the Company during the Contract
Period shall review annually, or at more frequent intervals which the Board
determines is appropriate, the Executive's compensation and shall award him
additional compensation to reflect the Executive's performance, the performance
of the Company and competitive compensation levels, all as determined in the
discretion of the Board of Directors.
5. Expenses and Fringe Benefits.
a. Expenses. During the Contract Period, the Executive shall be entitled to
reimbursement for all business expenses incurred by him with respect to the
business of the Company in the same manner and to the same extent as such
expenses were previously reimbursed to him immediately prior to the Change in
Control.
b. Club Membership and Automobile. If prior to the Change in Control, the
Executive was entitled to membership in a country club and/or the use of an
automobile, he shall be entitled to the same membership and/or use of an
automobile at least comparable to the automobile provided to him prior to the
Change in Control.
c. Other Benefits. The Executive also shall be entitled to vacations and
sick days, in accordance with the practices and procedures of the Company, as
such existed immediately prior to the Change in Control. During the Contract
Period, the Executive also shall be entitled to hospital, health, medical and
life insurance, and any other benefits enjoyed, from time to time, by senior
officers of the Company, all upon terms as favorable as those enjoyed by other
senior officers of the Company. Notwithstanding anything in this paragraph 5(d)
to the contrary, if
29
the Company adopts any change in the benefits provided for senior officers of
the Company, and such policy is uniformly applied to all officers of the Company
(and any successor or acquiror of the Company, if any), including the chief
executive officer of such entities, then no such change shall be deemed to be
contrary to this paragraph.
6. Termination for Cause. The Company shall have the right to terminate the
Executive for Cause, upon written notice to him of the termination which notice
shall specify the reasons for the termination. In the event of termination for
Cause the Executive shall not be entitled to any further benefits under this
Agreement.
7. Disability. During the Contract Period if the Executive becomes
permanently disabled, or is unable to perform his duties hereunder for 4
consecutive months in any 12 month period, the Company may terminate the
employment of the Executive. In such event, the Executive shall not be entitled
to any further benefits under this Agreement.
8. Death Benefits. Upon the Executive's death during the Contract Period,
his estate shall not be entitled to any further benefits under this Agreement.
9. Termination Without Cause or Resignation for Good Reason. The Company
may terminate the Executive without Cause during the Contract Period by written
notice to the Executive providing four weeks notice. The Executive may resign
for Good Reason during the Contract Period upon four weeks' written notice to
the Company specifying facts and circumstances claimed to support the Good
Reason. The Executive shall be entitled to give a Notice of Termination that his
or her employment is being terminated for Good Reason at any time during the
Contract Period, not later than twelve months after any occurrence of an event
stated to constitute Good Reason. If the Company terminates the Executive's
employment during the
30
Contract Period without Cause or if the Executive Resigns for Good Reason, the
Company shall, subject to Section 12 hereof:
(a) Within 20 business days of the termination of employment pay the
Executive a lump sum severance payment in an amount equal to three (3.0) times
the highest annual cash compensation, consisting solely of salary and bonus,
paid to the Executive by the Company or its predecessor by merger during any
calendar year in each of the three calendar years immediately prior to the
Change in Control; provided, however, that any deferred compensation or bonus
(unrelated to performance) paid to Executive prior to March 7, 1997 as a
consequence of the acquisition of Midland Bancorp, Inc. shall be excluded from
the definition of cash compensation; and
(b) Continue to provide the Executive during the remainder of the Contract
Period with health, hospitalization and medical insurance, as were provided at
the time of the termination of his employment with the Company, at the Company's
cost (subject to standard deductibles and co-pays, and the Executive's
continuing payment of his part of the premium for family coverage, if
applicable).
The Executive shall not have a duty to mitigate the damages suffered by him
in connection with the termination by the Company of his employment without
Cause or a resignation for Good Reason during the Contract Period. If the
Company fails to pay the Executive the lump sum amount due him hereunder or to
provide him with the health, hospitalization and medical insurance benefits due
under this section, the Executive, after giving 10 days' written notice to the
Company identifying the Company's failure, shall be entitled to recover from the
Company all of his reasonable legal fees and expenses incurred in connection
with his enforcement against the
31
Company of the terms of this Agreement. The Executive shall be denied payment of
his legal fees and expenses only if a court finds that the Executive sought
payment of such fees without reasonable cause and not in good faith.
10. Resignation Without Good Reason. The Executive shall be entitled to
resign from the employment of the Company at any time during the Contract Period
without Good Reason, but upon such resignation the Executive shall not be
entitled to any additional compensation for the time after which he ceases to be
employed by the Company, and shall not be entitled to any of the other benefits
provided hereunder. No such resignation shall be effective unless in writing
with four weeks' notice thereof.
11. Non-Disclosure of Confidential Information.
a) Non-Disclosure of Confidential Information. Except in the course of his
employment with the Company and in the pursuit of the business of the Company or
any of its subsidiaries or affiliates, the Executive shall not, at any time
during or following the Contract Period, disclose or use, any confidential
information or proprietary data of the Company or any of its subsidiaries or
affiliates. The Executive agrees that, among other things, all information
concerning the identity of and the Company's relations with its customers is
confidential information.
b) Specific Performance. Executive agrees that the Company does not have an
adequate remedy at law for the breach of this section and agrees that he shall
be subject to injunctive relief and equitable remedies as a result of the breach
of this section. The invalidity or unenforceability of any provision of this
Agreement shall not affect the force and effect of the remaining valid portions.
32
c) Survival. This section shall survive the termination of the Executive's
employment hereunder and the expiration of this Agreement. 12. Certain Reduction
of Payments by the Company.
a) Anything in this Agreement to the contrary notwithstanding, prior to the
payment of any lump sum amount payable hereunder, the certified public
accountants of the Company immediately prior to a Change of Control (the
"Certified Public Accountants) shall determine as promptly as practical and in
any event within 20 business days following the termination of employment of
Executive whether any payment or distribution by the Company to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise) (a
"Payment") would more likely than not be nondeductible by the Company for
Federal income purposes because of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), and if it is then the aggregate present value of
amounts payable or distributable to or for the benefit of Executive pursuant to
this Agreement (such payments or distributions pursuant to this Agreement are
thereinafter referred to as "Agreement Payments") shall be reduced (but not
below zero) to the reduced Amount. For purposes of this paragraph, the "Reduced
Amount" shall be an amount expressed in present value which maximizes the
aggregate present value of Agreement Payments without causing any Payment to be
nondeductible by the Company because of said Section 280G of the Code.
b) If under paragraph (a) of this section the Certified Public Accountants
determine that any Payment would more likely than not be nondeductible by the
Company because of Section 280G of the Code, the Company shall promptly give the
Executive notice to that effect and a copy of the detailed calculation thereof
and of the Reduced Xxxxxx,
00
and the Executive may then elect, in his sole discretion, which and how much of
the Agreement Payments shall be eliminated or reduced (as long as after such
election the aggregate present value of the Agreement Payments equals the
Reduced Amount), and shall advise the Company in writing of his election within
20 business days of his receipt of notice. If no such election is made by the
Executive within such 20-day period, the Company may elect which and how much of
the Agreement Payments shall be eliminated or reduced (as long as after such
election the Aggregate present Value of the Agreement Payments equals the
Reduced Amount) and shall notify the Executive promptly of such election. For
purposes of this paragraph, present Value shall be determined in accordance with
Section 280G(d)(4) of the Code. All determinations made by the Certified Public
Accountants shall be binding upon the Company and Executive shall be made within
20 business days of a termination of employment of Executive. With the consent
of the Executive, the Company may suspend part or all of the lump sum payment
due under Section 9 hereof and any other payments due to the Executive hereunder
until the Certified Public Accountants finish the determination and the
Executive (or the Company, as the case may be) elect how to reduce the Agreement
Payments, if necessary. As promptly as practicable following such determination
and the elections hereunder, the Company shall pay to or distribute to or for
the benefit of Executive such amounts as are then due to Executive under this
Agreement and shall promptly pay to or distribute for the benefit of Executive
in the future such amounts as become due to Executive under this Agreement.
c) As a result of the uncertainty in the application of Section 280G of the
Code, it is possible that Agreement Payments may have been made by the Company
which should not have been made ("Overpayment") or that additional Agreement
Payments which will
34
have not been made by the Company could have been made ("Underpayment"), in each
case, consistent with the calculation of the Reduced Amount hereunder. In the
event that the Certified Public Accountants, based upon the assertion of a
deficiency by the Internal Revenue Service against the Company or Executive
which said Certified Public Accountants believe has a high probability of
success, determines that an Overpayment has been made, any such Overpayment
shall be treated for all purposes as a loan to Executive which Executive shall
repay to the Company together with interest at the applicable Federal rate
provided for in Section 7872(f)(2)(A) of the Code; provided, however, that no
amount shall be payable by Executive to the Company in and for the extent such
payment would not reduce the amount which is subject to taxation under Section
4999 of the Code. In the event that the Certified Public Accountants, based upon
controlling precedent, determine that an Underpayment has occurred, any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive together with interest at the applicable Federal rate provided for in
Section 7872(f)(2)(A) of the Code.
35
13. Term and Effect Prior to Change in Control.
a) Term. Except as otherwise provided for hereunder, this Agreement shall
commence on the date hereof and shall remain in effect for a period of 3 years
from the date hereof (the "Initial Term") or until the end of the Contract
Period, whichever is later. The Initial Term shall be automatically extended for
an additional one year period on the anniversary date hereof (so that the
Initial Term is always 3 years) unless, prior to a Change in Control, the Chief
Executive Officer of the Bank notifies the Executive in writing at any time that
the Contract is not so extended, in which case the Initial Term shall end upon
the later of (i) 3 years after the date hereof, or (ii) 2 years after the date
of such written notice. Notwithstanding anything to the contrary contained
herein, the Initial Term shall cease when the Executive attains age 65.
b) No Effect Prior to Change in Control. This Agreement shall not effect
any rights of the Company to terminate the Executive prior to a Change in
Control or any rights of the Executive granted in any other agreement or
contract or plan with the Company. The rights, duties and benefits provided
hereunder shall only become effective upon and after a Change in Control. If the
full-time employment of the Executive by the Company is ended for any reason
prior to a Change in Control, this Agreement shall thereafter be of no further
force and effect.
14. Severance Compensation and Benefits Not in Derogation of Other
Benefits. Anything to the contrary herein contained notwithstanding, the payment
or obligation to pay any monies, or granting of any benefits, rights or
privileges to Executive as provided in this Agreement shall not be in lieu or
derogation of the rights and privileges that the Executive now has or will have
under any plans or programs of or agreements with the Company, except that if
the Executive
36
received any payment hereunder, he shall not be entitled to any payment under
the Company's severance policies for officers and employees.
15. Miscellaneous. This Agreement is the joint and several obligation of
the Bank and Valley. The terms of this Agreement shall be governed by, and
interpreted and construed in accordance with the provisions of, the laws of New
Jersey. This Agreement supersedes all prior agreements and understandings with
respect to the matters covered hereby, including expressly any prior agreement
with the Company concerning change-in-control benefits. The parties hereto
expressly agree that the Employment Agreement between the Executive and Midland
Bancorporation, Inc. dated as of January 1, 1996, assumed by the Bank and
Valley, dated February 28, 1997, is hereby terminated, effective the date
hereof, for all purposes. The amendment or termination of this Agreement may be
made only in a writing executed by the Company and the Executive, and no
amendment or termination of this Agreement shall be effective unless and until
made in such a writing. This Agreement shall be binding upon any successor
(whether direct or indirect, by purchase, merge, consolidation, liquidation or
otherwise) to all or substantially all of the assets of the Company. This
Agreement is personal to the Executive and the Executive may not assign any of
his rights or duties hereunder but this Agreement shall be enforceable by the
Executive's legal representatives, executors or administrators. This Agreement
may be executed in two or more counterparts, each of which shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart.
37
IN WITNESS WHEREOF, Valley National Bank and Valley National Bancorp each
have caused this Agreement to be signed by their duly authorized representatives
pursuant to the authority of their Boards of Directors, and the Executive has
personally executed this Agreement, all as of the day and year first written
above.
ATTEST: VALLEY NATIONAL BANCORP
/s/ Xxxx X. Xxxxx By: /s/ Xxxxxx X. XxXxxxx
------------------------ --------------------------------------
Xxxx X. Xxxxx, Secretary Xxxxxx X. XxXxxxx, Chairman, Personnel
and Compensation Committee
ATTEST: VALLEY NATIONAL BANK
------------------------ By: /s/ Xxxxxx X. XxXxxxx
/s/ Xxxx X. Xxxxx --------------------------------------
Xxxx X. Xxxxx, Secretary Xxxxxx X. XxXxxxx, Chairman, Personnel
and Compensation Committee
WITNESS:
/s/ Xxxxx Xxxxxxx /s/ Xxxxxx Xxxxx
------------------------ --------------------------------------
Xxxxx Xxxxxxx Xxxxxx Xxxxx, Executive
Executive Seniority Date from Midland
Bank merger: 8/21/89.
Date of Midland Bank Merger: 3/1/97.
38
VALLEY NATIONAL BANK
0000 XXXXXX XXXX
XXXXX, XX 00000
January 1, 1998
Xx. Xxxxxx Xxxxx
Executive Vice President
Valley National Bancorp
Valley National Bank
0000 Xxxxxx Xxxx
Xxxxx, Xxx Xxxxxx 00000
Dear Xx. Xxxxx:
The Board of Directors of Valley National Bancorp ("Bancorp") and Valley
National Bank (the "Bank") (collectively, the "Company") have determined that it
is in the best interests of the Bancorp and the Bank for the Company to agree to
provide you with certain limited severance rights as provided herein.
The Board recognizes that your employment by the Company without any
severance agreement creates tensions which may cause you to seek opportunities
elsewhere or affect your views of your present compensation. These arrangements
are being made to alleviate, in part, those concerns.
In view of the foregoing, in consideration of your continued employment
with the Company and your consent to this letter, the Company agrees:
1. If the Company elects to terminate you as Executive Vice President of
Valley National Bancorp and/or Valley National Bank, upon the termination of
your employment the Company will pay you a lump sum severance benefit equal to
12 months of your annual base salary plus a portion of your most recent bonus.
The bonus amount shall equal your most recent bonus multiplied by a fraction,
the numerator of which is the number of months which have elapsed in the current
calendar year and the denominator of which is 12. This severance benefit will
not be paid if the Company terminates you for "Cause". "Cause" means (i) willful
and continued failure by the Executive to perform his duties for the Company
after at least one warning in writing from the Company's Board of Directors
identifying specifically any such failure; (ii) the willful engaging by the
Executive in misconduct which causes material injury to the Company as specified
in a written notice to the Executive from the Board of Directors; or (iii)
conviction of a crime, other than a traffic violation, habitual drunkenness,
drug abuse, or excessive absenteeism other than for illness, after a warning
(with respect to drunkenness or absenteeism only) in writing from the Board of
Directors to refrain from such behavior. No act or failure to act on the part of
the Executive shall
39
be considered willful unless done, or omitted to be done, by the Executive
not in good faith and without reasonable belief that the action or omission was
in the best interest of the Company. No severance will be paid under this
paragraph in the event you are paid a severance benefit pursuant to any change
in control agreement with the Company.
2. If you are terminated other than for Cause, or you die or become
disabled, the Company will provide and pay for hospital, health and medical
insurance for you and your spouse and minor children (subject to deductibles,
co-pays and premiums which you previously paid), as well as (where applicable)
life insurance and disability insurance for a period of three years following
your employment termination or death, unless such benefits are provided to you
or your spouse by another party.
As partial consideration for the Company entering into this Agreement, you
agree as follows:
3. Following the termination of your employment with the Company for any
reason, you shall retain in confidence any confidential information known to you
concerning the Company and its business.
4. While you are employed by the Company and for a period of one year
thereafter, you will not, without the prior written approval of the Board of
Directors of Bancorp, directly or indirectly, as officer, director, employee,
shareholder, principal or agent, or in any other capacity, own, manage, operate,
consult with or be employed by any insured depository institution which
transacts business in the State of New Jersey if such insured depository
institution employs or utilizes you in any capacity to solicit the Company's
loan, trust, deposit customers, or other customers of the Company, or employees
of the Company.
5. You agree that the Company has no adequate remedy at law for the
violation of paragraphs 3 and 4 and that the Company shall be entitled to
injunctive relief to enforce such provisions.
Both parties mutually agree as follows:
6. In the event the Company fails to pay to you or your spouse any of the
benefits provided herein for a period in excess of 10 business days after a
written request to do so, you (or your spouse) shall be entitled to be paid or
reimbursed by the Company for the legal fees and expenses incurred by you (or
your spouse) in enforcing or interpreting the provisions of this Agreement. The
Company hereby agrees to pay or reimburse you for such fees and expenses on a
monthly basis, upon your submission of bills or requests for payment. A court
shall be entitled to deny you your legal fees and expenses only if it finds you
made a claim for benefits hereunder not in good faith and without reasonable
cause.
7. This Agreement shall commence on the date hereof and expire on the
earlier of (i) your attainment of age 65 or (ii) January 1, 2001 (January 1,
2001 is referred to hereafter as the "Initial Expiration Date"). On January 1 of
each year starting January 1, 1999, the Initial Expiration Date shall be
automatically extended for an additional one year period (so it remains a three
year contract until you reach age 65) unless you or Bancorp otherwise elect and
so notify the other party in writing prior to January 1 of any year starting
with January 1, 2000. This Agreement may be amended, supplemented or changed at
any time only by a writing signed by Bancorp and yourself.
40
8. This Agreement shall be binding upon and inure to the benefit of you,
your estate and the Company, and any successor to the Company by merger,
consolidation or sale. Neither this Agreement nor any rights arising hereunder
may be assigned or pledged by you. After your death, your spouse and minor
children shall be entitled to enjoy and enforce the benefits of this Agreement.
In the event your services are terminated and you are entitled to payments, you
shall not be obligated to mitigate your damages and the Company may not offset
amounts due to you hereunder. However, in the event you breach the
non-solicitation contained in paragraph 4 hereof, the Company shall not
thereafter be obligated to provide you with any benefits hereunder and you shall
not be entitled to be paid your legal fees or expenses as provided in paragraph
6 hereof.
If you are in agreement with the foregoing, please so indicate by signing
and returning to the Company the enclosed copy of this letter, whereupon this
letter shall constitute an agreement between you and the Company.
Very truly yours,
VALLEY NATIONAL BANCORP
By: /s/ Xxxxxx X. XxXxxxx
--------------------------------------
AGREED AND ACCEPTED: Xxxxxx X. XxXxxxx, Chairman, Personnel
and Compensation Committee
/s/ Xxxxxx Xxxxx
----------------------- VALLEY NATIONAL BANK
Xxxxxx Xxxxx, Executive
By: /s/ Xxxxxx X. XxXxxxx
--------------------------------------
Xxxxxx X. XxXxxxx, Chairman, Personnel
and Compensation Committee
Executive Seniority date from Midland
Date of Midland Bank Merger: 3/1/97.
41
CHANGE-IN-CONTROL AGREEMENT
(XXXXX XXXX XXXXXXXX)
THIS EMPLOYMENT AGREEMENT (the "Agreement"), is made as of this 1st day of
January, 1998, among VALLEY NATIONAL BANK ("Bank"), a national banking
association with its principal office at 0000 Xxxxxx Xxxx, Xxxxx, Xxx Xxxxxx,
XXXXXX NATIONAL BANCORP ("Valley"), a New Jersey Corporation which maintains its
principal office at 0000 Xxxxxx Xxxx, Xxxxx, Xxx Xxxxxx (Valley and the Bank
collectively are the "Company") and XXXXX XXXX XXXXXXXX (the "Executive").
BACKGROUND
WHEREAS, the Executive has been continuously employed by the Bank for many
years;
WHEREAS, the Executive throughout his tenure has worked diligently in his
position in the business of the Bank and Valley;
WHEREAS, the Board of Directors of the Bank and Valley believe that the
future services of the Executive are of great value to the Bank and Valley and
that it is important for the growth and development of the Bank that the
Executive continue in his position;
WHEREAS, if the Company receives any proposal from a third person
concerning a possible business combination with, or acquisition of equities
securities of, the Company, the Board of Directors of the Company (the "Board")
believes it is imperative that the Company and the Board be able to rely upon
the Executive to continue in his position, and that they be able to receive and
rely upon his advice, if they request it, as to the best interests of the
Company and its
42
shareholders, without concern that the Executive might be distracted by the
personal uncertainties and risks created by such a proposal;
WHEREAS, to achieve that goal, and to retain the Executive's services prior
to any such activity, the Board of Directors and the Executive have agreed to
enter into this Agreement to govern the Executive's termination benefits in the
event of a Change in Control of the Company, as hereinafter defined.
NOW, THEREFORE, to assure the Company that it will have the continued
dedication of the Executive and the availability of his advice and counsel
notwithstanding the possibility, threat or occurrence of a bid to take over
control of the Company, and to induce the Executive to remain in the employ of
the Company, and for other good and valuable consideration, the Company and the
Executive, each intending to be legally bound hereby agree as follows:
Definitions
a) Cause. For purposes of this Agreement "Cause" with respect to the
termination by the Company of Executive's employment shall mean (i) willful and
continued failure by the Executive to perform his duties for the Company under
this Agreement after at least one warning in writing from the Company's Board of
Directors identifying specifically any such failure; (ii) the willful engaging
by the Executive in misconduct which causes material injury to the Company as
specified in a written notice to the Executive from the Board of Directors; or
(iii) conviction of a crime, other than a traffic violation, habitual
drunkenness, drug abuse, or excessive absenteeism other than for illness, after
a warning (with respect to drunkenness or absenteeism only) in writing from the
Board of Directors to refrain from such behavior. No act or failure to act on
the part of the Executive shall be considered willful unless done, or omitted to
be done, by the
43
Executive not in good faith and without reasonable belief that the action or
omission was in the best interest of the Company.
b) Change in Control. "Change in Control" means any of the following
events: (i) when Valley or a Subsidiary acquires actual knowledge that any
person (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange
Act), other than an affiliate of Valley or a Subsidiary or an employee benefit
plan established or maintained by Valley, a Subsidiary or any of their
respective affiliates, is or becomes the beneficial owner (as defined in Rule
13d-3 of the Exchange Act) directly or indirectly, of securities of Valley
representing more than twenty-five percent (25%) of the combined voting power of
Valley's then outstanding securities (a "Control Person"), (ii) upon the first
purchase of Valley's common stock pursuant to a tender or exchange offer (other
than a tender or exchange offer made by Valley, a Subsidiary or an employee
benefit plan established or maintained by Valley, a Subsidiary or any of their
respective affiliates), (iii) upon the approval by Valley's stockholders of (A)
a merger or consolidation of Valley with or into another corporation (other than
a merger or consolidation which is approved by at least two-thirds of the
Continuing Directors (as hereinafter defined) or the definitive agreement for
which provides that at least two-thirds of the directors of the surviving or
resulting corporation immediately after the transaction are Continuing Directors
(in either case, a "Non-Control Transaction")), (B) a sale or disposition of all
or substantially all of Valley's assets or (C) a plan of liquidation or
dissolution of Valley, (iv) if during any period of two (2) consecutive years,
individuals who at the beginning of such period constitute the Board (the
"Continuing Directors") cease for any reason to constitute at least two-thirds
thereof or, following a Non-Control Transaction, two-thirds of the board of
directors of the surviving or resulting corporation; provided
44
that any individual whose election or nomination for election as a member of the
Board (or, following a Non-Control Transaction, the board of directors of the
surviving or resulting corporation) was approved by a vote of at least
two-thirds of the Continuing Directors then in office shall be considered a
Continuing Director, or (v) upon a sale of (A) common stock of the Bank if after
such sale any person (as such term is used in Section 13(d) and 14(d)(2) of the
Exchange Act) other than Valley, an employee benefit plan established or
maintained by Valley or a Subsidiary, or an affiliate of Valley or a Subsidiary,
owns a majority of the Bank's common stock or (B) all or substantially all of
the Bank's assets (other than in the ordinary course of business). No person
shall be considered a Control Person for purposes of clause (i) above if (A)
such person is or becomes the beneficial owner, directly or indirectly, of more
than ten percent (10%) but less than twenty-five percent (25%) of the combined
voting power of Valley's then outstanding securities if the acquisition of all
voting securities in excess of ten percent (10%) was approved in advance by a
majority of the Continuing Directors then in office or (B) such person acquires
in excess of ten percent (10%) of the combined voting power of Valley's then
outstanding voting securities in violation of law and by order of a court of
competent jurisdiction, settlement or otherwise, disposes or is required to
dispose of all securities acquired in violation of law.
c) Contract Period. "Contract Period" shall mean the period commencing the
day immediately preceding a Change in Control and ending on the earlier of (i)
the third anniversary of the Change in Control or (ii) the date the Executive
would attain age 65 or (iii) the death of the Executive. For the purpose of this
Agreement, a Change in Control shall be deemed to have occurred at the date
specified in the definition of Change-in-Control.
45
d) Exchange Act. "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
e) Good Reason. When used with reference to a voluntary termination by
Executive of his employment with the Company, "Good Reason" shall mean any of
the following, if taken without Executive's express written consent:
(1) The assignment to Executive of any duties inconsistent with, or the
reduction of powers or functions associated with, Executive's position, title,
duties, responsibilities and status with the Company immediately prior to a
Change in Control; any removal of Executive from, or any failure to re-elect
Executive to, any position(s) or office(s) Executive held immediately prior to
such Change in Control. A change in title or positions resulting merely from a
merger of the Company into or with another bank or company which does not
downgrade in any way the Executive's powers, duties and responsibilities shall
not meet the requirements of this paragraph;
(2) A reduction by the Company in Executive's annual base compensation as
in effect immediately prior to a Change in Control or the failure to award
Executive annual increases in accordance herewith;
(3) A failure by the Company to continue any bonus plan in which Executive
participated immediately prior to the Change in control or a failure by the
Company to continue Executive as a participant in such plan on at least the same
basis as Executive participated in such plan prior to the Change in Control;
(4) The Company's transfer of Executive to another geographic location
outside of New Jersey or more than 25 miles from his present office location,
46
except for required travel on the Company's business to an extent substantially
consistent with Executive's business travel obligations immediately prior to
such Change in Control;
(5) The failure by the Company to continue in effect any employee benefit
plan, program or arrangement (including, without limitation the Company's
retirement plan, benefit equalization plan, life insurance plan, health and
accident plan, disability plan, deferred compensation plan or long term stock
incentive plan) in which Executive is participating immediately prior to a
Change in Control (except that the Company may institute or continue plans,
programs or arrangements providing Executive with substantially similar
benefits); the taking of any action by the Company which would adversely affect
Executive's participation in or materially reduce Executive's benefits under,
any of such plans, programs or arrangements; the failure to continue, or the
taking of any action which would deprive Executive, of any material fringe
benefit enjoyed by Executive immediately prior to such Change in Control; or the
failure by the Company to provide Executive with the number of paid vacation
days to which Executive was entitled immediately prior to such Change in
Control;
(6) The failure by the Company to obtain an assumption in writing of the
obligations of the Company to perform this Agreement by any successor to the
Company and to provide such assumption to the Executive prior to any Change in
Control; or
(7) Any purported termination of Executive's employment by the Company
during the term of this Agreement which is not effected pursuant to all of the
requirements of this Agreement; and, for purposes of this Agreement, no such
purported termination shall be effective.
47
f) Subsidiary. "Subsidiary" means any corporation in an unbroken chain of
corporations, beginning with Valley, if each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
2. Employment. The Company hereby agrees to employ the Executive, and the
Executive hereby accepts employment, during the Contract Period upon the terms
and conditions set forth herein.
3. Position. During the Contract Period the Executive shall be employed as
Executive Vice President of Valley and the Bank, or such other corporate or
divisional profit center as shall then be the principal successor to the
business, assets and properties of the Company, with substantially the same
title and the same duties and responsibilities as before the Change in Control.
The Executive shall devote his full time and attention to the business of the
Company, and shall not during the Contract Period be engaged in any other
business activity. This paragraph shall not be construed as preventing the
Executive from managing any investments of his which do not require any service
on his part in the operation of such investments.
4. Cash Compensation. The Company shall pay to the Executive compensation
for his services during the Contract Period as follows:
a) Base Salary. A base annual salary equal to the annual salary in effect
as of the Change in Control. The annual salary shall be payable in installments
in accordance with the Company's usual payroll method.
b) Annual Bonus. An annual cash bonus equal to at least the average of the
bonuses paid to the Executive in the three years prior to the Change in Control.
The
48
bonus shall be payable at the time and in the manner which the Company paid
such bonuses prior to the Change in Control.
c) Annual Review. The Board of Directors of the Company during the Contract
Period shall review annually, or at more frequent intervals which the Board
determines is appropriate, the Executive's compensation and shall award him
additional compensation to reflect the Executive's performance, the performance
of the Company and competitive compensation levels, all as determined in the
discretion of the Board of Directors.
5. Expenses and Fringe Benefits.
a) Expenses. During the Contract Period, the Executive shall be entitled to
reimbursement for all business expenses incurred by him with respect to the
business of the Company in the same manner and to the same extent as such
expenses were previously reimbursed to him immediately prior to the Change in
Control.
b) Benefit Equalization Plan. During the Contract Period, if the Executive
was entitled to benefits under the Company's Benefit Equalization Plan ("BEP")
prior to the Change in Control, the Executive shall be entitled to continued
benefits under the BEP after the Change in Control and such BEP may not be
modified to reduce or eliminate such benefits during the Contract Period.
c) Club Membership and Automobile. If prior to the Change in Control, the
Executive was entitled to membership in a country club and/or the use of an
automobile, he shall be entitled to the same membership and/or use of an
automobile at least comparable to the automobile provided to him prior to the
Change in Control.
49
d) Other Benefits. The Executive also shall be entitled to vacations and
sick days, in accordance with the practices and procedures of the Company, as
such existed immediately prior to the Change in Control. During the Contract
Period, the Executive also shall be entitled to hospital, health, medical and
life insurance, and any other benefits enjoyed, from time to time, by senior
officers of the Company, all upon terms as favorable as those enjoyed by other
senior officers of the Company. Notwithstanding anything in this paragraph 5(d)
to the contrary, if the Company adopts any change in the benefits provided for
senior officers of the Company, and such policy is uniformly applied to all
officers of the Company (and any successor or acquiror of the Company, if any),
including the chief executive officer of such entities, then no such change
shall be deemed to be contrary to this paragraph.
6. Termination for Cause. The Company shall have the right to terminate the
Executive for Cause, upon written notice to him of the termination which notice
shall specify the reasons for the termination. In the event of termination for
Cause the Executive shall not be entitled to any further benefits under this
Agreement.
7. Disability. During the Contract Period if the Executive becomes
permanently disabled, or is unable to perform his duties hereunder for 4
consecutive months in any 12 month period, the Company may terminate the
employment of the Executive. In such event, the Executive shall not be entitled
to any further benefits under this Agreement.
8. Death Benefits. Upon the Executive's death during the Contract Period,
his estate shall not be entitled to any further benefits under this Agreement.
9. Termination Without Cause or Resignation for Good Reason. The Company
may terminate the Executive without Cause during the Contract Period by written
notice
50
to the Executive providing four weeks notice. The Executive may resign
for Good Reason during the Contract Period upon four weeks' written notice to
the Company specifying facts and circumstances claimed to support the Good
Reason. The Executive shall be entitled to give a Notice of Termination that his
or her employment is being terminated for Good Reason at any time during the
Contract Period, not later than twelve months after any occurrence of an event
stated to constitute Good Reason. If the Company terminates the Executive's
employment during the Contract Period without Cause or if the Executive Resigns
for Good Reason, the Company shall, subject to Section 12 hereof:
(a) Within 20 business days of the termination of employment pay the
Executive a lump sum severance payment in an amount equal to three (3.0) times
the highest annual cash compensation, consisting solely of salary and bonus,
paid to the Executive during any calendar year in each of the three calendar
years immediately prior to the Change in Control; and
(b) Continue to provide the Executive during the remainder of the Contract
Period with health, hospitalization and medical insurance, as were provided at
the time of the termination of his employment with the Company, at the Company's
cost (subject to standard deductibles and co-pays, and the Executive's
continuing payment of his part of the premium for family coverage, if
applicable).
The Executive shall not have a duty to mitigate the damages suffered by him
in connection with the termination by the Company of his employment without
Cause or a resignation for Good Reason during the Contract Period. If the
Company fails to pay the Executive the lump sum amount due him hereunder or to
provide him with the health, hospitalization and medical insurance benefits due
under this section, the Executive, after giving 10 days' written notice to the
51
Company identifying the Company's failure, shall be entitled to recover from the
Company all of his reasonable legal fees and expenses incurred in connection
with his enforcement against the Company of the terms of this Agreement. The
Executive shall be denied payment of his legal fees and expenses only if a court
finds that the Executive sought payment of such fees without reasonable cause
and not in good faith.
10. Resignation Without Good Reason. The Executive shall be entitled to
resign from the employment of the Company at any time during the Contract Period
without Good Reason, but upon such resignation the Executive shall not be
entitled to any additional compensation for the time after which he ceases to be
employed by the Company, and shall not be entitled to any of the other benefits
provided hereunder. No such resignation shall be effective unless in writing
with four weeks' notice thereof.
11. Non-Disclosure of Confidential Information.
a) Non-Disclosure of Confidential Information. Except in the course of his
employment with the Company and in the pursuit of the business of the Company or
any of its subsidiaries or affiliates, the Executive shall not, at any time
during or following the Contract Period, disclose or use, any confidential
information or proprietary data of the Company or any of its subsidiaries or
affiliates. The Executive agrees that, among other things, all information
concerning the identity of and the Company's relations with its customers is
confidential information.
b) Specific Performance. Executive agrees that the Company does not have an
adequate remedy at law for the breach of this section and agrees that he shall
be subject to injunctive relief and equitable remedies as a result of the breach
of this section. The
52
invalidity or unenforceability of any provision of this Agreement shall not
affect the force and effect of the remaining valid portions.
c) Survival. This section shall survive the termination of the Executive's
employment hereunder and the expiration of this Agreement.
12. Certain Reduction of Payments by the Company.
a) Anything in this Agreement to the contrary notwithstanding, prior to the
payment of any lump sum amount payable hereunder, the certified public
accountants of the Company immediately prior to a Change of Control (the
"Certified Public Accountants) shall determine as promptly as practical and in
any event within 20 business days following the termination of employment of
Executive whether any payment or distribution by the Company to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise) (a
"Payment") would more likely than not be nondeductible by the Company for
Federal income purposes because of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), and if it is then the aggregate present value of
amounts payable or distributable to or for the benefit of Executive pursuant to
this Agreement (such payments or distributions pursuant to this Agreement are
thereinafter referred to as "Agreement Payments") shall be reduced (but not
below zero) to the reduced Amount. For purposes of this paragraph, the "Reduced
Amount" shall be an amount expressed in present value which maximizes the
aggregate present value of Agreement Payments without causing any Payment to be
nondeductible by the Company because of said Section 280G of the Code.
b) If under paragraph (a) of this section the Certified Public Accountants
determine that any Payment would more likely than not be nondeductible by the
53
Company because of Section 280G of the Code, the Company shall promptly give the
Executive notice to that effect and a copy of the detailed calculation thereof
and of the Reduced Amount, and the Executive may then elect, in his sole
discretion, which and how much of the Agreement Payments shall be eliminated or
reduced (as long as after such election the aggregate present value of the
Agreement Payments equals the Reduced Amount), and shall advise the Company in
writing of his election within 20 business days of his receipt of notice. If no
such election is made by the Executive within such 20-day period, the Company
may elect which and how much of the Agreement Payments shall be eliminated or
reduced (as long as after such election the Aggregate present Value of the
Agreement Payments equals the Reduced Amount) and shall notify the Executive
promptly of such election. For purposes of this paragraph, present Value shall
be determined in accordance with Section 280G(d)(4) of the Code. All
determinations made by the Certified Public Accountants shall be binding upon
the Company and Executive shall be made within 20 business days of a termination
of employment of Executive. With the consent of the Executive, the Company may
suspend part or all of the lump sum payment due under Section 9 hereof and any
other payments due to the Executive hereunder until the Certified Public
Accountants finish the determination and the Executive (or the Company, as the
case may be) elect how to reduce the Agreement Payments, if necessary. As
promptly as practicable following such determination and the elections
hereunder, the Company shall pay to or distribute to or for the benefit of
Executive such amounts as are then due to Executive under this Agreement and
shall promptly pay to or distribute for the benefit of Executive in the future
such amounts as become due to Executive under this Agreement.
54
c) As a result of the uncertainty in the application of Section 280G of the
Code, it is possible that Agreement Payments may have been made by the Company
which should not have been made ("Overpayment") or that additional Agreement
Payments which will have not been made by the Company could have been made
("Underpayment"), in each case, consistent with the calculation of the Reduced
Amount hereunder. In the event that the Certified Public Accountants, based upon
the assertion of a deficiency by the Internal Revenue Service against the
Company or Executive which said Certified Public Accountants believe has a high
probability of success, determines that an Overpayment has been made, any such
Overpayment shall be treated for all purposes as a loan to Executive which
Executive shall repay to the Company together with interest at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Code; provided,
however, that no amount shall be payable by Executive to the Company in and for
the extent such payment would not reduce the amount which is subject to taxation
under Section 4999 of the Code. In the event that the Certified Public
Accountants, based upon controlling precedent, determine that an Underpayment
has occurred, any such Underpayment shall be promptly paid by the Company to or
for the benefit of the Executive together with interest at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Code.
55
13. Term and Effect Prior to Change in Control.
a) Term. Except as otherwise provided for hereunder, this Agreement shall
commence on the date hereof and shall remain in effect for a period of 3 years
from the date hereof (the "Initial Term") or until the end of the Contract
Period, whichever is later. The Initial Term shall be automatically extended for
an additional one year period on the anniversary date hereof (so that the
Initial Term is always 3 years) unless, prior to a Change in Control, the Chief
Executive Officer of the Bank notifies the Executive in writing at any time that
the Contract is not so extended, in which case the Initial Term shall end upon
the later of (i) 3 years after the date hereof, or (ii) 2 years after the date
of such written notice. Notwithstanding anything to the contrary contained
herein, the Initial Term shall cease when the Executive attains age 65.
b) No Effect Prior to Change in Control. This Agreement shall not effect
any rights of the Company to terminate the Executive prior to a Change in
Control or any rights of the Executive granted in any other agreement or
contract or plan with the Company. The rights, duties and benefits provided
hereunder shall only become effective upon and after a Change in Control. If the
full-time employment of the Executive by the Company is ended for any reason
prior to a Change in Control, this Agreement shall thereafter be of no further
force and effect.
14. Severance Compensation and Benefits Not in Derogation of Other
Benefits. Anything to the contrary herein contained notwithstanding, the payment
or obligation to pay any monies, or granting of any benefits, rights or
privileges to Executive as provided in this Agreement shall not be in lieu or
derogation of the rights and privileges that the Executive now has or will have
under any plans or programs of or agreements with the Company, except that if
the
56
Executive received any payment hereunder, he shall not be entitled to any
payment under the Company's severance policies for officers and employees.
15. Miscellaneous. This Agreement is the joint and several obligation of
the Bank and Valley. The terms of this Agreement shall be governed by, and
interpreted and construed in accordance with the provisions of, the laws of New
Jersey. This Agreement supersedes all prior agreements and understandings with
respect to the matters covered hereby, including expressly any prior agreement
with the Company concerning change-in-control benefits. The parties hereto
expressly agree that the Change-in-Control Agreement among the Executive, the
Bank and Valley, dated as of January 1, 1995, is hereby terminated, effective
the date hereof. The amendment or termination of this Agreement may be made only
in a writing executed by the Company and the Executive, and no amendment or
termination of this Agreement shall be effective unless and until made in such a
writing. This Agreement shall be binding upon any successor (whether direct or
indirect, by purchase, merge, consolidation, liquidation or otherwise) to all or
substantially all of the assets of the Company. This Agreement is personal to
the Executive and the Executive may not assign any of his rights or duties
hereunder but this Agreement shall be enforceable by the Executive's legal
representatives, executors or administrators. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, and it
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
57
IN WITNESS WHEREOF, Valley National Bank and Valley National Bancorp each
have caused this Agreement to be signed by their duly authorized representatives
pursuant to the authority of their Boards of Directors, and the Executive has
personally executed this Agreement, all as of the day and year first written
above.
ATTEST: VALLEY NATIONAL BANCORP
/s/ Xxxx X. Xxxxx By: /s/ Xxxxxx X. XxXxxxx
------------------------ --------------------------------------
Xxxx X. Xxxxx, Secretary Xxxxxx X. XxXxxxx, Chairman, Personnel
and Compensation Committee
ATTEST: VALLEY NATIONAL BANK
/s/ Xxxx X. Xxxxx By: /s/ Xxxxxx X. XxXxxxx
------------------------ --------------------------------------
Xxxx X. Xxxxx, Secretary Xxxxxx X. XxXxxxx, Chairman, Personnel
and Compensation Committee
WITNESS:
/s/ Xxxxx Xxxxxxx /s/ Xxxxx Xxxx Xxxxxxxx
------------------------ --------------------------------------
Xxxxx Xxxx Xxxxxxxx, Executive
Executive Seniority date with Valley
National Bank: 10/2/78.
58
VALLEY NATIONAL BANK
0000 XXXXXX XXXX
XXXXX, XX 00000
January 1, 1998
Xx. Xxxxx Xxxx Xxxxxxxx
Executive Vice President
Valley National Bancorp
Valley National Bank
0000 Xxxxxx Xxxx
Xxxxx, Xxx Xxxxxx 00000
Dear Xx. Xxxxxxxx:
The Board of Directors of Valley National Bancorp ("Bancorp") and Valley
National Bank (the "Bank") (collectively, the "Company") have determined that it
is in the best interests of the Bancorp and the Bank for the Company to agree to
provide you with certain limited severance rights as provided herein.
The Board recognizes that your employment by the Company without any
severance agreement creates tensions which may cause you to seek opportunities
elsewhere or affect your views of your present compensation. These arrangements
are being made to alleviate, in part, those concerns.
In view of the foregoing, in consideration of your continued employment
with the Company and your consent to this letter, the Company agrees:
1. If the Company elects to terminate you as Executive Vice President of
Valley National Bancorp and/or Valley National Bank, upon the termination of
your employment the Company will pay you a lump sum severance benefit equal to
12 months of your annual base salary plus a portion of your most recent bonus.
The bonus amount shall equal your most recent bonus multiplied by a fraction,
the numerator of which is the number of months which have elapsed in the current
calendar year and the denominator of which is 12. This severance benefit will
not be paid if the Company terminates you for "Cause". "Cause" means (i) willful
and continued failure by the Executive to perform his duties for the Company
after at least one warning in writing from the Company's Board of Directors
identifying specifically any such failure; (ii) the willful engaging by the
Executive in misconduct which causes material injury to the Company as specified
in a written notice to the Executive from the Board of Directors; or (iii)
conviction of a crime, other than a traffic violation, habitual drunkenness,
drug abuse, or excessive absenteeism other than for illness, after a warning
(with respect to drunkenness or absenteeism only) in writing from the Board of
Directors to refrain from such behavior. No act or failure to act on the part of
the Executive shall
59
be considered willful unless done, or omitted to be done, by the Executive not
in good faith and without reasonable belief that the action or omission was in
the best interest of the Company. No severance will be paid under this paragraph
in the event you are paid a severance benefit pursuant to any change in control
agreement with the Company.
2. If you are terminated other than for Cause, or you die or become
disabled, the Company will provide and pay for hospital, health and medical
insurance for you and your spouse and minor children (subject to deductibles,
co-pays and premiums which you previously paid), as well as (where applicable)
life insurance and disability insurance for a period of three years following
your employment termination or death, unless such benefits are provided to you
or your spouse by another party.
As partial consideration for the Company entering into this Agreement, you
agree as follows:
3. Following the termination of your employment with the Company for any
reason, you shall retain in confidence any confidential information known to you
concerning the Company and its business.
4. While you are employed by the Company and for a period of one year
thereafter, you will not, without the prior written approval of the Board of
Directors of Bancorp, directly or indirectly, as officer, director, employee,
shareholder, principal or agent, or in any other capacity, own, manage, operate,
consult with or be employed by any insured depository institution which
transacts business in the State of New Jersey if such insured depository
institution employs or utilizes you in any capacity to solicit the Company's
loan, trust, deposit customers, or other customers of the Company, or employees
of the Company.
5. You agree that the Company has no adequate remedy at law for the
violation of paragraphs 3 and 4 and that the Company shall be entitled to
injunctive relief to enforce such provisions.
Both parties mutually agree as follows:
6. In the event the Company fails to pay to you or your spouse any of the
benefits provided herein for a period in excess of 10 business days after a
written request to do so, you (or your spouse) shall be entitled to be paid or
reimbursed by the Company for the legal fees and expenses incurred by you (or
your spouse) in enforcing or interpreting the provisions of this Agreement. The
Company hereby agrees to pay or reimburse you for such fees and expenses on a
monthly basis, upon your submission of bills or requests for payment. A court
shall be entitled to deny you your legal fees and expenses only if it finds you
made a claim for benefits hereunder not in good faith and without reasonable
cause.
7. This Agreement shall commence on the date hereof and expire on the
earlier of (i) your attainment of age 65 or (ii) January 1, 2001 (January 1,
2001 is referred to hereafter as the "Initial Expiration Date"). On January 1 of
each year starting January 1, 1999, the Initial
60
Expiration Date shall be automatically extended for an additional one year
period (so it remains a three year contract until you reach age 65) unless you
or Bancorp otherwise elect and so notify the other party in writing prior to
January 1 of any year starting with January 1, 2000. This Agreement may be
amended, supplemented or changed at any time only by a writing signed by Bancorp
and yourself.
8. This Agreement shall be binding upon and inure to the benefit of you,
your estate and the Company, and any successor to the Company by merger,
consolidation or sale. Neither this Agreement nor any rights arising hereunder
may be assigned or pledged by you. After your death, your spouse and minor
children shall be entitled to enjoy and enforce the benefits of this Agreement.
In the event your services are terminated and you are entitled to payments, you
shall not be obligated to mitigate your damages and the Company may not offset
amounts due to you hereunder. However, in the event you breach the
non-solicitation contained in paragraph 4 hereof, the Company shall not
thereafter be obligated to provide you with any benefits hereunder and you shall
not be entitled to be paid your legal fees or expenses s provided in paragraph 6
hereof.
If you are in agreement with the foregoing, please so indicate by signing
and returning to the Company the enclosed copy of this letter, whereupon this
letter shall constitute an agreement between you and the Company.
Very truly yours,
VALLEY NATIONAL BANCORP
By: /s/ Xxxxxx X. XxXxxxx
--------------------------------------
AGREED AND ACCEPTED: Xxxxxx X. XxXxxxx, Chairman, Personnel
and Compensation Committee
/s/ Xxxxx Xxxx Xxxxxxxx
------------------------------
Xxxxx Xxxx Xxxxxxxx, Executive VALLEY NATIONAL BANK
By: /s/ Xxxxxx X. XxXxxxx
--------------------------------------
Xxxxxx X. XxXxxxx, Chairman, Personnel
and Compensation Committee
Executive Seniority date with Valley
National Bank: 10/2/78.
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