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EXHIBIT (c)(10)(B)
CHANGE-IN-CONTROL AGREEMENT
(SENIOR VICE PRESIDENT)
THIS EMPLOYMENT AGREEMENT (the "Agreement"), is made as of this first
day of February, 1996, among VALLEY NATIONAL BANK ("Bank"), a national banking
association with its principal office at 000 Xxxx Xxxxxx, Xxxxxxx, 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 Xxxx Xxxxxxx (the "Executive").
BACKGROUND
WHEREAS, the Executive has been continuously employed by the Bank for
at least three full 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
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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:
1. Definitions
a. Base Salary. "Base Salary", as used in Section 9 hereof,
means the annual cash base salary (excluding any bonus and the value of any
fringe benefits) paid to the Executive at the time of the termination of
employment unless such amount has been reduced after a Change in Control, in
which case such amount shall be the highest base salary in effect during the 18
months prior to the Change in Control.
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b. 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 Executive not in good faith and without
reasonable belief that the action or omission was in the best interest of the
Company.
c. 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
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(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
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
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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.
d. Continuously Employed. "Continuously employed", as used in
Section 9, means continuously employed by the Bank but excludes any period of
employment by a bank or financial institution acquired by or merged into the
Bank and excludes any period of employment by the Bank if such period is
separated from the current employment with the Bank by a break in service (other
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a break in service resulting solely from illness, disability or family leave).
e. 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 first 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.
f. Exchange Act. "Exchange Act" means the Securities Exchange
Act of 1934, as amended.
g. 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, duties, responsibilities and status with the Company immediately prior
to a 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
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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 more than 35 miles from his present office location, 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, life insurance plan, health and accident plan,
disability 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
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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.
h. Pro-rata Bonus Amount. "Pro-rata Bonus Amount", as used in
Section 9, means an amount equal to a "portion" of the highest cash bonus paid
to the Executive in the three calendar years immediately prior to the Change in
Control. The "portion" of such cash bonus shall be a fraction, the numerator of
which is the number of calendar months or part thereof which the Executive has
worked in the calendar year in which the termination occurs and the denominator
of which is 12.
i. 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
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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 a Senior Officer by 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
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years prior to the Change in Control. The 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. 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(b) to the contrary, if
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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), 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
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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 equal to: (i), if the Executive has been
continuously employed by the Bank for 6 full years or more, one (1) year of Base
Salary plus a Pro-rata Bonus Amount or (ii), if the Executive has been
continuously employed by the Bank for less than 6 full years but more than 3
years, then six (6) months of Base Salary plus a Pro-rata Bonus Amount; and
b. Continue to provide the Executive with medical, dental and
life insurance for the period equal to the equivalent of lump sum payment (e.g.
6 months or 1 year) as were provided at the time of the termination of his
employment with the Company, at the Company's cost. Upon expiration of benefit
coverages, full COBRA benefits (18 months) will be made available to Executive.
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
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with the health, hospitalization and 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 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.
10. Resignation Without Good Reason. The Executive shall be
entitled to resign from the employment of the Company at any time during the
Contact 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
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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.
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
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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 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
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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 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
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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.
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) nine months
after the date of such written notice. Notwithstanding anything to
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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 received any payment hereunder, he shall not be entitled to any
payment under the Company's severance policy for officers and directors.
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
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respect to the matters covered hereby, including expressly any prior agreement
with the Company concerning change in control benefits. 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.
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
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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. XXXXXX
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, Secretary Xxxxxx X. Xxxxxx, Chairman
and Chief Executive Officer
ATTEST: VALLEY NATIONAL BANK
/s/ XXXX X. XXXXX By: /s/ XXXXXX X. XXXXXX
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, Secretary Xxxxxx X. Xxxxxx, Chairman
and Chief Executive Officer
WITNESS:
/s/ XXXXX XXXXXXX /s/ XXXX XXXXXXX
--------------------------------- ---------------------------------
Xxxx Xxxxxxx, Executive
2/1/93
---------------------------------
"Executive" Valley
National Bank
Service Date
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