Exhibit 10.21

 

Valley National Bancorp

 

 

 

 

August 15, 2006

 

 

Mr. Gerald H. Lipkin, Chairman and CEO

Valley National Bancorp

Valley National Bank

1445 Valley Road

Wayne, New Jersey 07470

 

Dear Mr. Lipkin:

 

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 Bancorp and the Bank for the Company to agree to
provide you with an increased minimum overall pension benefit, as provided
herein.

The Board recognizes that your employment by the Company without an increased
pension benefit creates tensions which may cause you to seek opportunities
elsewhere or affect your views of your present compensation. This arrangement is
being made to alleviate, in part, those concerns.

We previously entered into a letter agreement with you, dated August 17, 1994,
and subsequently amended, concerning this pension benefit. This letter restates
and amends those provisions of the prior agreements, and the prior agreements
are rescinded upon your consent to this letter.

In view of the foregoing, and 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 Chief Executive Officer
of Bancorp and/or the 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 gross misconduct by you in
connection with company business or otherwise. This provision is inapplicable in
the event of your death or disability, or if you are paid a severance benefit
pursuant to any change in control agreement with the Company, or upon your
attainment of age 70.

2.            In the event of your death while you are employed by the Company,
the Company will pay to your spouse, if you predecease her, otherwise to your
estate, (i) a portion of

 

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your most recent bonus (calculated by multiplying 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),
and (ii) your annual base salary (as in effect at your death) for 12 months,
payable in monthly installments. Such payments shall be reduced by the amount,
if any, of the regular monthly benefit payable to your spouse in the 12 months
following your death from the Company’s defined benefit pension plan and benefit
equalization plan.

3.            You shall be entitled to an increased minimum combined benefit of
six hundred thousand dollars ($600,000.00) per year (which previously had been
three hundred thousand dollars ($300,000.00)) from the Company’s defined benefit
pension plan and benefit equalization plan, and, to the extent necessary, from
the Company. If your spouse survives you, she shall be entitled to a minimum
survivor benefit of two-thirds of such amount ($400,000.00) per year, for the
remainder of her life. Should you die before commencing receipt of the defined
benefit pension benefits, and should your spouse survive you, then she will be
entitled to a minimum survivor benefit of four hundred thousand dollars
($400,000.00) per year, for the remainder of her life. The foregoing assumes
pension benefits under the Company’s defined benefit pension plan and benefit
equalization plan are paid to you in the form of a joint and two-thirds survivor
annuity. You will need, however, to follow the administrative processes under
the plans in order to actually commence receipt of such benefits (and if you
elect another form of payment, then the above amounts will be actuarially
adjusted). As a matter of clarity, the parties agree that this minimum annual
benefit constitutes a payment under “any benefit plan of the Company” under the
first sentence of Section 12 a of the Amended and Restated Change in Control
Agreement dated as of November 30, 2004 among Bancorp, the Bank and you (as
subsequently amended), and this benefit will be covered by the Gross-Up Payment
provided for under Section 12 of that agreement if and to the extent that this
benefit may constitute a parachute payment and/or a payment that is subject to
the excise tax under Section 409A of the Internal Revenue Code. You also
acknowledge that any payments otherwise required hereunder may be delayed until
the six (6) month anniversary of your separation from service, if such delay is
deemed necessary in order to comply with the requirements of Section 409A of the
Internal Revenue Code, and that at the end of such period of delay you will be
paid the delayed payment amount, plus interest (as provided for in the amendment
to your Amended and Restated Change in Control Agreement) for the period of any
such delay. The term “spouse” as used herein means the person you are married to
at the time of your termination from service, but not any person to whom you may
become married thereafter.

In addition, following termination of your employment by the Company or by you
for any reason, the Company will pay to you a lump sum amount, equal to one
hundred twenty five percent (125%) of the aggregate COBRA premium amounts (based
upon COBRA rates then in effect) that would apply to you (and your spouse, as
defined above) for health and dental benefits for you and your spouse, each
through age 70.

As partial consideration for the Company entering into this Agreement, you agree
as follows:

 

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4.            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.

5.            While you are employed by the Company, and for a period of two
years 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 either (i) such insured
depository institution maintains an office in New Jersey or New York from which
you act on behalf of such institution or (ii) if such insured depository
institution employs you in any capacity to solicit loans, trust, deposits or
other customers of the Company. However this paragraph shall not prohibit you
from owning bonds, preferred stock or up to five percent (5%) of the outstanding
common shares of any insured depository institution or its parent holding
company.

6.            You agree that the Company has no adequate remedy at law for the
violation of paragraphs 4 and 5 and that the Company shall be entitled to
injunctive relief to enforce such provisions.

Both parties mutually agree as follows:

7.            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.

8.            This Agreement shall be effective as of the date of execution.
This Agreement may be amended, supplemented or changed at any time only by a
writing signed by you and Bancorp.

9.            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 shall be
entitled to enjoy and enforce the benefits of this Agreement. The Company may
not offset amounts due to you hereunder. However, in the event you breach the
non-compete contained in paragraph 5 hereof, the Company shall not be obligated
to pay you any benefits hereunder, and you shall not be entitled to be paid your
legal fees or expenses as provided in paragraph 7 hereof.

 

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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   AGREED AND ACCEPTED:
By: /s/ Robert McEntee  

    

  Robert McEntee, Chairman of the
Compensation and Human Resources Committee          

          VALLEY NATIONAL BANK /s/ Gerald H. Lipkin         Gerald H. Lipkin  
By: /s/ Robert McEntee       Robert McEntee, Chairman of the
Compensation and Human Resources Committee          

 

 

 

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