Exhibit 10(x)
As of December 31, 1997
Xx. Xxxxxxxxx X. Xxxxxxx
000 Xxxxxxx Xxxx
Xxxxxx, Xxx Xxxx 00000
Dear Xxxx:
The following is a Letter Agreement detailing the terms and conditions of
your employment as President and Chief Operating Officer of Xxxxxx Financial,
Inc. commencing December 31, 1997, pursuant to my earlier letter of
understanding dated December 3, 1997.
LETTER AGREEMENT
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Xxxxxx Financial, Inc. (hereinafter sometimes referred to as the "Company" or
"Xxxxxx") agrees to employ you as President and Chief Operating Officer
effective as of January 1, 1998, and you agree to accept such employment under
the terms and conditions provided in this Letter Agreement. In this capacity,
you shall have the usual powers and duties vested in the office of the President
and Chief Operating Officer of a corporation of the size, stature, and nature of
the Company. Consistent with and subject to the authority of the Chief
Executive Officer, and further, to the ultimate authority which reposes in the
Board of Directors of the Company, you will have full authority over and the
responsibility for overall policy making and for the day-to-day operations of
the Company. In addition to the foregoing authorities and responsibilities, you
also may be given additional authority and/or responsibility as deemed
appropriate by the Chief Executive Officer or the Board of Directors of the
Company.
The terms and conditions of your employment are specified below:
1. Except as may otherwise be approved in advance by the Chief Executive
Officer of the Company (the "CEO"), you will devote your full business
time, attention and best efforts to the performance of your duties under
this Letter Agreement.
2. Subject to the provisions of Paragraph 12, the term of your employment
hereunder (the "Employment Term"), shall commence on December 31, 1997 and
terminate on December 31, 1999. Your base salary for the period from
January 1, 1998 through December 31, 1999 shall be $400,000 per year. Your
salary for periods subsequent to December 31, 1999 shall be reviewed
annually and may be increased by the Company but, except as provided in
Paragraph 12 of this Letter Agreement, your salary will not be reduced
below the level stated in this Paragraph during the Employment Term.
3. As compensation for forfeiture of your 1997 bonus from Key Corp., you have
been granted a sign-on bonus in the amount of $175,000, less applicable
payroll taxes. This sign-on bonus shall be forfeited by you and must be
returned to Xxxxxx within five business days of the effective date of your
voluntary resignation or discharge for cause if either such event shall
become effective no later than six months from your first day of employment
with Xxxxxx.
4. You will continue so long as you are employed by the Company to be eligible
for the executive perquisites outlined in the Company's policies. Your
annual allowance for financial counseling will be $5,000 in 1998 and $4,000
annually thereafter. You are also entitled to a $2,000 annual allowance
for tax and financial legal assistance. Costs including, but not limited
to, normal monthly dues and special assessments relating to your membership
in a suitable lunch club and country club or tennis club of your choosing
will be borne by the Company.
5. You will be covered under all Xxxxxx health, welfare, and pension programs
including health, dental, short and long-term disability, life insurance, a
retirement plan, a salary savings plan, and the "excess IRS" supplemental
coverage under the "Supplemental Executive Retirement Plan" which, together
with the benefits you are entitled to receive under the Company's
retirement plan, provides you with a benefit equivalent to the amount you
would have received under the Company's retirement plan without regard to
the annual retirement benefit limitations of Sections 401(a)(17) and 415 of
the Internal Revenue Code, as amended from time to time.
6. You are eligible for benefits under the Company's relocation policy,
including a relocation allowance of $32,000, which shall be included in
your first paycheck and is intended to cover items not directly
reimbursable under the relocation policy, including tax liability
associated with your relocation. You are entitled to such other benefits
as are identified in the Company's relocation policy.
7. You are entitled to an additional payment of up to $50,000, if as a result
of your relocation, you experience a loss of equity upon the sale of your
Delmar, New York residence. Request for such payment shall be accompanied
with written documentation of the loss of equity, and such documentation
shall be in the form of the executed agreement for your purchase of the
Xxxxxx, New York residence, and the executed agreement for your sale of the
same residence. In order to claim such payment, such documentation must be
provided to the Executive Vice President-Human Resources before December
31, 1998.
8. Assuming continued employment, you will be a participant in the Annual
Incentive Plan (referred to herein as the "Annual Incentive Plan") or
whatever other incentive plan is established in place of the Annual
Incentive Plan for the calendar years 1998 and 1999 at a target bonus of
55% of salary. In calculating your bonus under the Annual Incentive Plan,
unless otherwise agreed to by you and the Company prior to March 4 of any
plan year, the financial measurements as determined annually for the
Company's Annual Incentive Plan as such measurements are specified in an
annual Side Letter Agreement and applicable to all participants in the
Annual Incentive Plan (which for the 1997 plan year were Net Income, Return
on Assets, and the Ratio of Non-Earning Assets, weighted 50%, 10% and 20%,
respectively); and certain nonfinancial measurements, as determined by the
CEO with a 20% weight, will be used for the year 1998. The specific target
numbers for the three financial measurements will be the corresponding
numbers established in the Company's budget for the Annual Incentive Plan
for such years as approved by the Company's Board of Directors.
9. As compensation for forfeiture of your unvested options at Key Corp., you
have been granted participation in the Xxxxxx 1996-1998 and 1997-1999 Long
Term Compensation Plans, with 1,600 and 5,400 shares in each Plan
respectively. In the event that Xxxxxx terminates your employment or does
not renew the term of your employment beyond December 31, 1999, these
shares shall be deemed fully vested at the greater of Plan value or
$700,000.
10. In addition, and independent from the participation granted in Paragraph 9,
you have been granted participation in the HFI Long Term Incentive Plan
(the "Long Term Incentive Plan") for the 1998-2000 period, and your
participation shall be governed by the terms thereof. 2,600 shares have
been granted to you under this Plan. Any participation in the Long Term
Incentive Plan (or any successor plan) for subsequent periods will be
granted separately but shall not be at a level such that the projected
value of such benefit is less than the projected benefit for the 1998-2000
cycle.
The value of each of such shares shall be paid to you or your estate if you
are employed as of the end of each Plan Period in cash as promptly as
practicable after the determination of HFI's return on equity for the year
ending December 31, 2000, and shall be determined as provided in a separate
letter agreement between you and HFI.
11. You have been granted participation in Xxxxxx'x Executive Deferred
Compensation Plan. The terms of your participation shall be dictated by
the terms of such plan.
12. (a) Your employment will terminate hereunder in the event of your
death or "permanent disability" (as defined below) during the
Employment Term. In the event of such termination, the Company shall
pay to you or your legal representatives (as applicable) all amounts
and benefits which have accrued through the date of such termination
but which have not been paid out (other than payments under the Long
Term Incentive Plan), including, but not limited to, amounts accrued
as of the date of such termination under the Annual Incentive Plan.
In the event of a termination of your employment pursuant to this
subparagraph (a) in the midst of a plan year, payments will be based
upon performance for the entire year, prorated based upon days to the
date of termination. Such amounts shall be paid in a lump sum to you
or to your estate or beneficiary (as applicable) within 45 days of the
end of the year of such termination. For purposes of this Letter
Agreement "permanent disability" shall mean a "total disability" (as
such term is defined in the Company's Long-Term Disability Plan) which
total disability shall exist for any continuous period of 180 days.
Termination of your employment hereunder pursuant to this subparagraph
(a) shall be deemed to occur on the date of your death or on a date
specified by the Company in a written notice to you stating that the
Company has determined (pursuant to the terms of the Long-Term
Disability Plan) that you have become permanently disabled.
(b) Your employment may be terminated at any time by either you or the
Company, upon a date specified in a written notice of such termination
given to the other. If (1) your employment is terminated by the
Company at its election for any reason other than for "cause", as
defined in subparagraph (c) below, or (2) your employment is
terminated by you at your election because there has been a
significant diminution of your assigned duties and responsibilities
including, without limitation, any removal of your titles as either
President or Chief Operating Officer or any material diminution of the
powers associated with either of such positions or (B) after any date
upon which the Fuji Bank Limited and its subsidiaries shall cease to
own at least fifty percent voting control of the Company provided that
in the case of a termination by you pursuant to subclause (A) of this
clause (2) you have delivered written notice to the Company specifying
the diminution in your assigned duties which you believe justifies
such termination and the Company shall have failed to reverse the same
or to take all reasonable steps to
that end within 30 days of its receipt of such notice, then the
Company will pay you severance benefits consisting of all of the
following:
(i) Amounts equal to your salary in effect at the time of your
termination through the later of (x) December 31, 2000 or (y)
the date eighteen months from the date of such termination at
the same time and in the same manner as your salary was paid
during your employment (including the right to defer such
amounts under any deferred compensation program covering you)
or, at your election, in a single lump sum.
(ii) For the year in which your employment is terminated, you will
receive an Annual Incentive Plan bonus at the applicable target
bonus level for the full year in which such termination occurs.
Such bonus shall be paid in a lump sum within 45 days of the end
of the year of such termination. If termination occurs on or
prior to December 31 of any year, you will not be eligible for
an Annual Incentive Plan bonus for any subsequent year.
(iii) You will continue to be covered for all allowable health and
welfare benefits through the later of (x) December 31, 2000 or
(y) the date eighteen months from the date of such termination
and you will receive a lump sum payment equivalent to the
present value (as reasonably determined by the Company) of the
additional benefit which you would have accrued under the
Company's retirement plans had you continued to receive benefits
thereunder from the date of termination through the last day of
the benefit continuation period described in this clause (iii).
(iv) For purposes of the determination of unit values per share,
average annual returns on equity under the Long Term Incentive
Plan shall be computed through the end of the year in which such
termination occurs. You shall be paid, as promptly as
practicable after determination of the values per share for the
portion of the applicable Plan Period ending on the last day of
which such termination occurs, an amount equal to the product of
(i) the value of such shares and (ii) a fraction, the numerator
of which is equal to the number of years in the applicable Long
Term Incentive Plan period elapsed through the last day of the
year in which such termination occurs and the denominator of
which is 3.
(c) For purposes of this Letter Agreement, termination of your employment
by the Company shall be deemed to have been for "cause" only
(i) if such termination shall have been the result of fraud or
criminal conduct on your part which is materially injurious to
the financial condition or business reputation of the Company or
any of its subsidiaries or affiliates; or
(ii) if there has been a material and willful breach on your part of
your responsibilities or a willful failure to comply with
reasonable directives or policies of the CEO or the Company's
Board of Directors; but, in each case, only if you shall have
received written notice from the Company specifying the breach
or failure to comply complained of, demanding that you remedy
such breach or failure to comply and affording you an
opportunity to be heard in connection therewith, and you either
shall have failed to remedy such alleged breach or failed to
comply within 30 days from your receipt of
such written notice or shall have failed to take all reasonable
steps to that end during such 30-day period and thereafter.
(d) (1) If your employment is terminated "for cause" as defined in
subparagraph (c) above, you will immediately be deemed to have
forfeited the right to receive any payment or benefits not paid prior
to the date of such termination (other than accrued and unpaid salary
and any prior year's Annual Incentive Plan bonus earned but not yet
paid) and coverage (including, without limitation, future accrual of
service credit) under all pension and other benefit plans and all
perquisites shall cease immediately.
(2) If you terminate your employment hereunder for any reason other
than that specified in clause 2 of subparagraph (b), you will
immediately be deemed to have forfeited: (i) the right to receive any
payment under (A) the Annual Incentive Plan (other than amounts due
but not yet paid for prior year's performance) and (B) any long term
incentive plan in which you participate at the time (other than
amounts due in accordance with the terms of such plan but not yet
paid), in each case as in effect at the date of any such termination;
and (ii) salary under Paragraph 1 above and perquisites under
Paragraph 5 above for any periods subsequent to the date of such
termination; and (iii) coverage (including, without limitation, future
accrual of service credit) under all pension and other benefit plans
shall cease immediately.
(e) Notwithstanding any other term of this Agreement to the contrary, upon
termination of your employment for any reason, (a) you shall in all
events receive, when such amounts would otherwise be then due and
owing, (i) all amounts accrued under the Executive Deferred
Compensation Plan, (ii) all statutory rights to receive or purchase
welfare benefits, (iii) reimbursement for unreimbursed expenses in
accordance with the policies of the Company in effect as of the date
of such termination, (iv) accrued vacation pay, (v) earned pension
benefits in accordance with the applicable terms of the governing
plans, and (vi) all vested monies in 401(k) or other defined
contribution plans in accordance with the applicable terms of the
governing plans; and (b) to the extent applicable law or the general
terms of any defined contribution or benefit plan prohibits the
provision of any benefit, the Company's obligation to provide such
benefit shall cease.
(f) In the event of a termination of your employment for any reason,
payments to you or your estate under the Long Term Incentive Plan will
be determined and made in accordance with the provisions of Paragraph
10.
13. With respect to any dispute or controversy arising under or in connection
with this Letter Agreement, the parties agree that any such dispute shall
be submitted to and determined by arbitration in Chicago, Illinois, in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association, and the parties agree to be bound by the decision
in any such arbitration proceeding.
14. Except as specifically provided in Paragraphs 3, 7 and 9 above, the terms
of any of Xxxxxx'x benefit plans and incentive plans referred to in this
Letter Agreement may be changed by the Board of Directors or any of its
committees and such changes shall not be deemed to be a breach of this
Letter Agreement, except that (i) no such change shall adversely affect any
benefit accrued by you at or prior to the date of such change and (ii) no
such change shall reduce your health, welfare or pension benefits, unless
such changes are applicable to all the Company's employees.
15. The validity, interpretation, construction and performance of this Letter
Agreement shall be governed by the laws of the State of Illinois.
If you are in accord with the foregoing, please so indicate by
countersigning and returning the enclosed copy of this letter.
Very truly yours,
XXXXXX FINANCIAL, INC.
By: /s/ X. X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
Agreed:
/s/ X. Xxxxxxx
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Xxxxxxxxx X. Xxxxxxx
