1
Exhibit 10(a)
CHANGE OF CONTROL AGREEMENT
THIS AGREEMENT, entered into as of the 19th day of February, 2004, by
and between XXXXXXXX & XXXXXX CORPORATION (the "Company"), and Xxxxx X.
Xxxxxxx (the "Executive") (hereinafter collectively referred to as "the
parties").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that the possibility of a Change of Control (as hereinafter defined in Section
2) exists and that the threat of or the occurrence of a Change of Control can
result in significant distractions of its key management personnel because of
the uncertainties inherent in such a situation; and
WHEREAS, the Board has determined that it is essential and in the best
interest of the Company and its shareholders to retain the services of the
Executive in the event of a threat or occurrence of a Change of Control and
to ensure his continued dedication and efforts in such event without undue
concern for his personal financial and employment security; and
WHEREAS, in order to induce the Executive to remain in the employ of the
Company, particularly in the event of a threat of or the occurrence of a
Change of Control, the Company desires to enter into this Agreement with the
Executive.
NOW, THEREFORE, in consideration of the respective agreements of the
parties contained herein, it is agreed as follows:
1. Employment Term. (a) The "Employment Term" shall commence on the
first date during the Protected Period (as defined in Section 1(c), below) on
which a Change of Control (as defined in Section 2, below) occurs (the
"Effective Date") and shall expire on the third anniversary of the Effective
Date; provided, however, that at the end of each day of the Employment Term
the Employment Term shall automatically be extended for one (1) day unless
either the Company or the Executive shall have given written notice to the
other at least thirty (30) days prior thereto that the Employment Term shall
not be so extended.
(b) Notwithstanding anything contained in this Agreement to the
contrary, if the Executive's employment is terminated prior to the Effective
Date and the Executive reasonably demonstrates that such termination (i) was
at the request of a third party who has indicated an intention or taken steps
reasonably calculated to effect a Change of Control, or (ii) otherwise
occurred in connection with or in anticipation of a Change of Control, then
for all purposes of this Agreement, the Effective Date shall mean the date
immediately prior to the date of such termination of the Executive's
employment.
(c) For purposes of this Agreement, the "Protected Period" shall be
the three (3) year period commencing on the date hereof; provided, however,
that at the end of each day the Protected Period shall be automatically
extended for one (1) day unless at least thirty (30) days prior thereto the
Company shall have given written notice to the Executive that the Protected
Period shall not be so extended; and provided, further, that notwithstanding
any such notice by the Company not to extend, the Protected Period shall not
end if prior to the expiration thereof any third party has indicated an
intention or taken steps reasonably calculated to effect a Change of Control,
in which event the Protected Period shall end only after such third party
publicly announces that it has abandoned all efforts to effect a Change of
Control.
2
2. Change of Control. For purposes of this Agreement, a "Change of
Control" shall mean the first to occur of the following:
(a) The acquisition by any individual, entity or "group" (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of thirty-three
percent (33%) or more of either (i) the then outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the "Outstanding
Company Voting Securities"); provided, however, that the following
acquisitions of common stock shall not constitute a Change of Control: (i)
any acquisition directly from the Company (excluding an acquisition by virtue
of the exercise of a conversion privilege or by one person or a group of
persons acting in concert), (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or (iv)
any acquisition by any corporation pursuant to a reorganization, merger,
statutory share exchange or consolidation which would not be a Change of
Control under subsection (c) of this Section 2; or
(b) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of
the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by
the Company's shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of office
occurs as a result of either an actual or threatened "election contest" or
other actual or threatened "solicitation" (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act) of proxies or
consents by or on behalf of a person other than the Incumbent Board; or
(c) Consummation of a reorganization, merger, statutory share exchange
or consolidation, unless, following such reorganization, merger, statutory
share exchange or consolidation, (i) more than two-thirds (2/3) of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such reorganization, merger, statutory share exchange or
consolidation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such reorganization, merger,
statutory share exchange or consolidation in substantially the same
proportions as their ownership, immediately prior to such reorganization,
merger, statutory share exchange or consolidation, (ii) no person (excluding
the Company, any employee benefit plan (or related trust) of the Company or
such corporation resulting from such reorganization, merger, statutory share
exchange or consolidation and any person beneficially owning, immediately
prior to such reorganization, merger, statutory share exchange or
consolidation, directly or indirectly, thirty-three percent (33%) or more of
the Outstanding Company Common Stock or Outstanding Voting Securities, as the
case may be) beneficially owns, directly or indirectly, thirty-three percent
(33%) or more of, respectively, the then outstanding shares of common stock
of the corporation resulting from such reorganization, merger, statutory share
exchange or consolidation or the combined voting power of the then outstanding
voting securities of such corporation, entitled to vote generally in the
election of directors and (iii) at least a majority of the members of the
board of directors of the corporation resulting from such reorganization,
merger, statutory share exchange or consolidation were members of the
Incumbent Board at the time of the execution of the initial agreement
providing for such reorganization, merger or consolidation; or
3
(d) Consummation of (i) a complete liquidation or dissolution of the
Company or (ii) the sale or other disposition of all or substantially all of
the assets of the Company, other than to a corporation, with respect to which
following such sale or other disposition, (A) more than two-thirds (2/3) of,
respectively, the then outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting securities of
such corporation entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or substantially all
of the individuals and entities who were the beneficial owners, respectively,
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to
such sale or other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) no person
(excluding the Company and any employee benefit plan (or related trust) of the
Company or such corporation and any person beneficially owning, immediately
prior to such sale or other disposition, directly or indirectly, thirty-three
percent (33%) or more of the Outstanding Company Common Stock or Outstanding
Company Voting Securities, as the case may be) beneficially owns, directly or
indirectly, thirty-three percent (33%) or more of, respectively, the then
outstanding shares of common stock of such corporation or the combined voting
power of the then outstanding voting securities of such corporation entitled
to vote generally in the election of directors and (C) at least a majority of
the members of the board of directors of such corporation were members of the
Incumbent Board at the time of the execution of the initial agreement or
action of the Board providing for such sale or other disposition of assets of
the Company.
3. Employment. (a) Subject to the provisions of Section 3, hereof,
the Company agrees to continue to employ the Executive and the Executive
agrees to remain in the employ of the Company during the Employment Term.
During the Employment Term, the Executive shall be employed in such executive
capacity as may be mutually agreed to by the parties. During the Employment
Term, Executive's position (including status, offices, titles and reporting
requirements), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those held
or assigned at any time during the twelve (12) month period immediately
preceding the Effective Date, and Executive's services shall be performed at
the location where Executive was employed immediately preceding the Effective
Date or at any office or location less than thirty-five (35) miles from such
location, unless mutually agreed to in writing by the parties.
(b) Excluding periods of vacation and sick leave to which the
Executive is entitled, during the Employment Term the Executive agrees to
devote full time attention to the business and affairs of the Company to the
extent necessary to discharge the responsibilities assigned to the Executive
hereunder, provided that the Executive may take reasonable amounts of time to
(i) serve on corporate, civil or charitable boards or committees, and (ii)
deliver lectures, fulfill speaking engagements or teach at educational
institutions, if such activities do not significantly interfere with the
performance of the Executive's responsibilities hereunder. It is expressly
understood and agreed that to the extent any such activities have been
conducted by the Executive prior to the Effective Date, the continued conduct
of such activities (or the conduct of activities similar in nature and scope)
subsequent to the Effective Date shall not thereafter be deemed to interfere
with the performance of Executive's responsibilities hereunder.
4
4. Compensation. (a) Base Salary. During the Employment Term, the
Executive shall receive an annual base salary ("Annual Base Salary"), which
shall be paid at a monthly rate, at least equal to twelve (12) times the
highest monthly base salary paid or payable to the Executive by the Company
and its affiliated companies in respect of the twelve (12) month period
immediately preceding the month in which the Effective Date occurs, including
any amounts which were deferred under any plans of the Company and its
affiliated companies. During the Employment Term, the Annual Base Salary
shall be reviewed at least annually and shall be increased at any time and
from time to time as shall be substantially consistent with increases in base
salary generally awarded in the ordinary course of business to other peer
executives of the Company and its affiliated companies. Any increase in
Annual Base Salary shall not serve to limit or reduce any other obligation to
the Executive under this Agreement. Annual Base Salary shall not be reduced
after any such increase and the term Annual Base Salary as utilized in this
Agreement shall refer to Annual Base Salary as so increased. As used in this
Agreement, the term "affiliated companies" shall include any company
controlled by, controlling or under common control with the Company.
(b) Annual Bonus. In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year ending during the Employment Term, an
annual bonus (the "Annual Bonus") in cash at least equal to the average
annualized (for any fiscal year consisting of less than twelve (12) full
months or with respect to which the Executive has been employed by the Company
for less than twelve (12) full months) bonuses paid or payable, including any
amounts which were deferred under any plans of the Company and its affiliated
companies, to the Executive by the Company and its affiliated companies in
respect of the three (3) fiscal years immediately preceding the fiscal year
in which the Effective Date occurs (the "Recent Average Bonus"). Each such
Annual Bonus shall be paid no later than seventy-five (75) days after the end
of the fiscal year for which the Annual Bonus is awarded, unless the Executive
shall elect to defer the receipt of such Annual Bonus under any plan or
arrangement of the Company allowing therefor.
(c) Incentive, Savings and Retirement Plans. During the Employment
Term, the Executive shall be entitled to participate in all incentive, savings
and retirement plans, practices, policies and programs applicable generally
to other peer executives of the Company and its affiliated companies, but in
no event shall such plans, practices, policies and programs provide the
Executive with incentive opportunities (measured with respect to both regular
and special incentive opportunities, to the extent, if any, that such
distinction is applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than the most
favorable of those provided by the Company and its affiliated companies for
the Executive under such plans, practices, policies and programs as in effect
at any time during the twelve (12) month period immediately preceding the
Effective Date, or, if more favorable to the Executive, those provided
generally at any time after the Effective Date to other peer executives of the
Company and its affiliated companies.
(d) Benefit Plans. During the Employment Term, the Executive and/or
the Executive's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under benefit plans,
practices, policies and programs provided by the Company and its affiliated
companies (including, without limitation, medical, prescription drug, dental,
disability, salary continuance, employee life, group life, accidental death
and travel accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and its affiliated companies
and their families; but in no event shall such plans, practices, policies and
programs provide the Executive with benefits which are less favorable, in the
aggregate, than the most favorable of such plans, practices, policies and
programs in effect for the Executive and his family at any time during the
twelve (12) month period immediately preceding the Effective Date or, if more
favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and its affiliated
companies and their families.
5
(e) Expenses. During the Employment Term, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred
by the Executive in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in effect for the
Executive at any time during the twelve (12) month period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives
of the Company and its affiliated companies.
(f) Fringe Benefits. During the Employment Term, the Executive shall
be entitled to fringe benefits (including but not limited to Company cars,
club dues and physical examinations) in accordance with the most favorable
plans, practices, programs and policies of the Company and its affiliated
companies in effect for the Executive at any time during the twelve (12) month
period immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.
(g) Office and Support Staff. During the Employment Term, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, in accordance with the most favorable of the foregoing
provided to the Executive by the company and its affiliated companies at any
time during the twelve (12) month period immediately preceding the Effective
Date or, if more favorable to the Executive, as provided generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies.
(h) Vacation and Sick Leave. During the Employment Term, the
Executive shall be entitled to paid vacation and sick leave (without loss of
pay) in accordance with the most favorable plans, policies, programs and
practices of the Company and its affiliated companies as in effect for the
Executive at any time during the twelve (12) month period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives
of the Company and its affiliated companies.
(i) Restrictions. As of the Effective Date, all restrictions limiting
the exercise, transferability or other incidents of ownership of any
outstanding award, including but not limited to restricted stock, options,
stock appreciation rights, or other property or rights of the Company granted
to the Executive shall lapse, and such awards shall become fully vested and
be held by the Executive free and clear of all such restrictions. This
provision shall apply to all such property or rights notwithstanding the
provisions of any other plan or agreement, unless the effect of the
application of this provision to a particular right or property would result
in the loss of favorable securities law treatment for participants under the
plan pursuant to which the award was granted.
5. Termination of Employment. During the Employment Term, the
Executive's employment hereunder may be terminated under the following
circumstances:
6
(a) Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Term. If the
Company determines in good faith that the Disability of the Executive has
occurred during the Employment Term (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice in accordance
with Section 5 of this Agreement of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company shall
terminate effective on the thirtieth (30th) day after receipt of such notice
by the Executive (the "Disability Effective Date"), provided that, within
thirty (30) days after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For purposes of this
Agreement, "Disability" shall mean the absence of the Executive from the
Executive's duties with the Company on a full-time basis for one hundred
eighty (180) consecutive business days as a result of incapacity due to mental
or physical illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to the
Executive or the Executive's legal representative, provided if the parties are
unable to agree, the parties shall request the Xxxx of the Medical College of
Wisconsin to choose such physician.
(b) Cause. The Company may terminate the Executive's employment for
"Cause." A termination for Cause is a termination evidenced by a resolution
adopted in good faith by a majority of the Board that the Executive (i)
willfully, deliberately and continually failed to substantially perform his
duties under Section 3, above (other than a failure resulting from the
Executive's incapacity due to physical or mental illness) which failure
constitutes gross misconduct, and results in and was intended to result in
demonstrable material injury to the Company, monetary or otherwise, or (ii)
committed acts of fraud and dishonesty constituting a felony, as determined
by a final judgment or order of a court of competent jurisdiction, and
resulting or intended to result in gain to or personal enrichment of the
Executive at the Company's expense, provided, however, that no termination of
the Executive's employment shall be for Cause as set forth in (i), above,
until (a) Executive shall have had at least sixty (60) days to cure any
conduct or act alleged to provide Cause for termination after a written notice
of demand has been delivered to the Executive specifying in detail the manner
in which the Executive's conduct violates this Agreement, and (b) the
Executive shall have been provided an opportunity to be heard by the Board
(with the assistance of the Executive's counsel if the Executive so desires).
No act, or failure to act, on the Executive's part, shall be considered
"willful" unless he has acted or failed to act in bad faith and without a
reasonable belief that his action or failure to act was in the best interest
of the Company. Notwithstanding anything contained in this Agreement to the
contrary, no failure to perform by the Executive after Notice of Termination
is given by the Executive shall constitute Cause for purposes of this
Agreement.
(c) Good Reason.
(1) The Executive may terminate his employment for Good Reason.
For purposes of this Agreement, "Good Reason" shall mean the occurrence
after a Change of Control of any of the events or conditions described
in Subsections (i) through (vi) hereof:
(i) A change in the Executive's status, title, position
or responsibilities (including reporting responsibilities) which,
in the Executive's reasonable judgment, does not represent a
promotion from his status, title, position or responsibilities as
in effect immediately prior thereto; the assignment to the
Executive of any duties or responsibilities which, in the
Executive's reasonable judgment, are inconsistent with his status,
title, position or responsibilities in effect immediately prior
to such assignment; or any removal of the Executive from or
failure to reappoint or reelect him to any position, except in
connection with the termination of his employment for Disability,
Cause, as a result of his death or by the Executive other than for
Good Reason;
7
(ii) Any failure by the Company to comply with any of the
provisions of Section 4 of this Agreement.
(iii) The insolvency or the filing (by any party, including
the Company) of a petition for bankruptcy of the Company;
(iv) Any material breach by the Company of any provision
of this Agreement;
(v) Any purported termination of the Executive's
employment for Cause by the Company which does not comply with the
terms of Section 5 of this Agreement; and
(vi) The failure of the Company to obtain an agreement,
satisfactory to the Executive, from any successor or assign of the
Company, to assume and agree to perform this Agreement, as
contemplated in Section 10 hereof.
(2) Any event or condition described in Section 5(c)(1) which
occurs prior to the Effective Date but which the Executive reasonably
demonstrates (i) was at the request of a third party who has indicated
an intention or taken steps reasonably calculated to effect a Change of
Control, or (ii) otherwise arose in connection with or in anticipation
of a Change of Control, shall constitute Good Reason for purposes of
this Agreement notwithstanding that it occurred prior to the Effective
Date.
(3) The Executive's right to terminate his employment pursuant
to this Section 5(c) shall not be affected by his incapacity due to
physical or mental illness. The Executive's continued employment or
failure to give Notice of Termination shall not constitute consent to,
or a waiver of rights with respect to, any circumstances constituting
Good Reason hereunder.
(4) For purposes of this Section 5(c), any good faith
determination of Good Reason made by the Executive shall be conclusive.
Anything in this Agreement to the contrary notwithstanding, a
termination by the Executive for any reason or for no reason during the
sixty (60) day period commencing on the date six (6) months after the
Effective Date shall be deemed to be a termination by the Executive for
Good Reason for all purposes of this Agreement.
(d) Voluntary Termination. The Executive may voluntarily terminate
his employment hereunder at any time.
(e) Notice of Termination. Any purported termination by the Company
or by the Executive (other than by death of the Executive) shall be
communicated by Notice of Termination to the other. For purposes of this
Agreement, a "Notice of Termination" shall mean a written notice which (i)
indicates the specific termination provision in this Agreement relied upon,
(ii) to the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated, and (iii) the Termination Date.
For purposes of this Agreement, no such purported termination of employment
shall be effective without such Notice of Termination.
8
(f) Termination Date, etc. "Termination Date" shall mean in the case
of the Executive's death, his date of death, or in all other cases, the date
specified in the Notice of Termination subject to the following:
(1) If the Executive's employment is terminated by the Company,
the date specified in the Notice of Termination shall be at least thirty
(30) days after the date the Notice of Termination is given to the
Executive, provided, however, that in the case of Disability, the
Executive shall not have returned to the full-time performance of his
duties during such period of at least thirty (30) days;
(2) If the Executive's employment is terminated for Good Reason,
the date specified in the Notice of Termination shall not be more than
sixty (60) days after the date the Notice of Termination is given to the
Company; and
(3) In the event that within thirty (30) days following the date
of receipt of the Notice of Termination, one party notifies the other
that a dispute exists concerning the basis for termination, the
Executive's employment hereunder shall not be terminated except after
the dispute is finally resolved and a Termination Date is determined
either by a mutual written agreement of the parties, or by a binding and
final judgment order or decree of a court of competent jurisdiction (the
time for appeal therefrom having expired and no appeal having been
perfected).
6. Obligations of the Company Upon Termination.
(a) Good Reason; Other Than for Cause, Death or Disability. If,
during the Employment Term, the Company shall terminate the Executive's
employment other than for Cause or Disability or the Executive shall terminate
employment for Good Reason:
(i) The Company shall pay to the Executive in a lump sum in cash
within five (5) days after the Termination Date the aggregate of the
following amounts:
A. The sum of:
(1) The Executive's Annual Base Salary through the
Termination Date to the extent not theretofore paid; and
(2) The product of (x) the higher of (I) the Recent
Average Bonus and (II) the Annual Bonus paid or payable,
including any amount deferred, (and annualized for any
fiscal year consisting of less than twelve (12) full months
or for which the Executive has been employed for less than
twelve (12) full months) for the most recently completed
fiscal year during the Employment Term, if any (such higher
amount being referred to as the "Highest Annual Bonus.")
and (y) a fraction, the numerator of which is the number of
days completed in the current fiscal year through the
Termination Date, and the denominator of which is 365.
9
The sum of the amounts described in Clauses (1) and (2)
shall be hereinafter referred to as the "Accrued Obligations";
B. The amount equal to the product of (1) three and (2)
the sum of (x) the Executive's Annual Base Salary (increased for
this purpose by any Section 401(k) deferrals, cafeteria plan
elections, or other deferrals that would have increased
Executive's Annual Base Salary if paid in cash to Executive when
earned) and (y) the Executive's Highest Annual Bonus;
C. A separate lump-sum supplemental retirement benefit
equal to the difference between (1) the actuarial equivalent
(utilizing for this purpose the most favorable to the Executive
actuarial assumptions and Company contribution history with
respect to the applicable retirement plan, incentive plans,
savings plans and other plans described in Section 4(c) (or any
successor plan thereto) (the "Retirement Plans") during the twelve
(12) month period immediately preceding the Effective Date) of the
benefit payable under the Retirement Plans and any supplemental
and/or excess retirement plan providing benefits for the Executive
(the "SERP") which the Executive would receive if the Executive's
employment continued for an additional three (3) years after the
Termination Date with annual compensation equal to the sum of the
Annual Base Salary and Highest Annual Bonus, assuming for this
purpose that all accrued benefits and contributions are fully
vested and that benefit accrual formulas and Company contributions
are no less advantageous to the Executive than those in effect
10
during the twelve (12) month period immediately preceding the
Effective Date, and (2) the actuarial equivalent (utilizing for
this purpose the actuarial assumptions utilized with respect to
the Retirement Plans during the twelve (12) month period
immediately preceding the Effective Date) of the Executive's
actual benefit (paid or payable), if any, under the Retirement
Plans and the SERP. For example, if there were a termination
today this supplemental retirement benefit would be interpreted
with respect to two plans in existence today as follows: (i) with
respect to the Retirement Growth component of the retirement
program of the Company, the Executive would receive three times
eight percent (8%) (or twenty-four percent (24%)) of the sum of
the Executive's Annual Base Salary (determined in accordance with
subsection C of Section 6(a)(i)) and the Executive's Highest
Annual Bonus; and (ii) with respect to the Incentive Savings
component of the retirement plan of the Company, the Executive
would receive three times the annual Company match of fifty
percent (50%) of the Executive's maximum allowable contribution
to the Plan assuming Executive's compensation is as set forth
above; and
D. The amount equal to the product of (i) three and (ii)
the sum of (x) the imputed income reflected on Executive's W-2
attributable to the car provided to Executive by the Company or
its affiliates for the last calendar year ending before the
Effective Date and (y) the club dues for Executive paid by the
Company or its affiliates attributable to such year.
(ii) For thirty-six (36) months after the Termination Date,
the Company shall continue to provide medical and dental benefits to the
Executive and/or the Executive's family in accordance with the most
favorable plans, practices, programs or policies of the Company and its
affiliated companies applicable generally to other peer executives who
are active employees and their families as in effect from time to time
thereafter; provided, however, that if the Executive becomes reemployed
with another employer and is eligible to receive medical or other
benefits under another employer provided plan, the medical and other
benefits described herein shall be secondary to those provided under
such other plan during such applicable period of eligibility, provided
that the aggregate coverage of the combined benefit plans is no less
favorable to the Executive, in terms of amounts and deductibles and
costs to him, than the coverage required hereunder. For purposes of
determining eligibility of the Executive for retiree health insurance,
the Executive shall be considered to have remained employed until the
end of such thirty-six (36) month period and to have retired on the last
day of such period. If the Executive would qualify at the end of such
thirty-six (36) month period for retiree health insurance under the
Company's plan guidelines as in existence on the Effective Date, the
Company shall provide to the Executive and his or her spouse, for life,
retiree health insurance, subsidized to at least the same percentage
extent as under the Company's plan as in existence on the Effective
Date. Such retiree health insurance shall provide medical benefits to
the Executive and/or the Executive's spouse in accordance with the most
favorable plans, practices, programs or policies of the Company and its
affiliated companies applicable generally to other peer executives who
are active employees and their spouses as in effect from time to time
thereafter; provided, however, that if the Executive and/or the
Executive's spouse qualifies for coverage by Medicare or any successor
program, the Company may require that the Executive and/or the
Executive's spouse fully participate in Medicare and pay the premiums
therefor personally.
11
(iii) The Executive shall have the right to purchase the car
provided to him by the Company or its affiliates during the twelve (12)
month period immediately preceding the Effective Date, if applicable,
(or a comparable car acceptable to the Executive if such car is no
longer owned by the Company or its affiliates), at the book value
thereof on the Termination Date, exercisable within thirty (30) days
after the Termination Date; and if the car is not purchased, Executive
shall return the car to the Company.
(iv) The Executive shall have the option of purchasing any
split dollar life insurance owned by the Company or its affiliates on
the life of Executive for the Company's investment in the contract,
exercisable at any time within thirty (30) days after the Termination
Date; and the Company agrees during the Employment Term not to
terminate, sell, transfer or otherwise dispose of any such insurance
without first allowing Executive the opportunity to exercise such
option. For the thirty-six (36) month period after the Termination
Date, the Company shall continue to provide group term life insurance
(or comparable term coverage) in the same face amount and on
substantially the same terms as in effect for the Executive just prior
to the Effective Time. At the end of the thirty-six (36) month period,
the Executive shall have any conversion rights as regards such coverage
as are provided by law.
(v) To the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive any other amounts
or benefits required to be paid or provided or which the Executive is
eligible to receive pursuant to this Agreement under any plan, program,
policy or practice or contract or agreement of the Company and its
affiliated companies (such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits").
(vi) All options awarded by the Company to the Executive on or
after the date of this Agreement which are outstanding as of the
Termination Date shall remain exercisable for the lesser of (A) the
remainder of their respective terms or (B) one year after the
Executive's death. The option term for each option is set out in the
relevant agreement granting each option.
Notwithstanding anything herein contained to the contrary, the payments
and benefits provided in this Section 6(a) (other than the Accrued
Obligations) shall not be paid or provided to the Executive unless and until
he executes a Complete and Permanent Release (the "Release") in the form
attached hereto, and the applicable period for rescission of the Release has
expired. The parties agree that the Release may be expanded to include any
company acquiring the Company and its affiliates as "Released Parties" as
defined in the Release.
(b) Death. If the Executive's employment is terminated by reason of
the Executive's death during the Employment Term, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, except that the Company shall pay or provide the Accrued
Obligations, six (6) months of Annual Base Salary, and the Other Benefits.
The Accrued Obligations shall be paid to the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within thirty (30) days of
the Termination Date. The six (6) months of Annual Base Salary shall be paid
during the six (6) month period following the Termination Date on a monthly
basis. With respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 6(b) shall include, and the Executive's
family shall be entitled to receive, benefits at least equal to the most
favorable benefits provided by the Company and any of its affiliated companies
to surviving families of peer executives of the Company and such affiliated
companies under such plans, programs, practices and policies relating to
family death benefits, if any, as in effect with respect to other peer
executives and their families at any time during the twelve (12) month period
immediately preceding the Effective Date or, if more favorable to the
Executive and/or the Executive's family, as in effect on the date of the
Executive's death with respect to other peer executives of the Company and its
affiliated companies and their families.
12
(c) Disability. If the Executive's employment is terminated by reason
of the Executive's Disability during the Employment Term, this Agreement shall
terminate without further obligations to the Executive, except that the
Company shall pay or provide the Accrued Obligations and the Other Benefits.
The Accrued Obligations shall be paid to the Executive in a lump sum in cash
within thirty (30) days of the Termination Date. With respect to the
provision of Other Benefits, the term Other Benefits as utilized in this
Section 6(c) shall include, and the Executive shall be entitled after the
Disability Effective Date to receive, disability and other benefits at least
equal to the most favorable of those generally provided by the Company and its
affiliated companies to disabled executives and/or their families in
accordance with such plans, programs, practices and policies relating to
disability, if any, as in effect generally with respect to other peer
executives and their families at any time during the twelve (12) month period
immediately preceding the Effective Date or, if more favorable to the
Executive and/or the Executive's family, as in effect at any time thereafter
generally with respect to other peer executives of the Company and its
affiliated companies and their families.
(d) Cause; Other Than for Good Reason. If the Executive's employment
shall be terminated for Cause during the Employment Term, or if the Executive
voluntarily terminates employment during the Employment Term for other than
Good Reason, this Agreement shall terminate without further obligations to the
Executive other than the obligation to pay to the Executive Annual Base Salary
through the Date of Termination and any other amounts earned or accrued
through the Termination Date, in each case to the extent theretofore unpaid;
provided that if Executive voluntarily terminates, Executive shall receive the
benefits normally provided upon normal or early retirement with respect to
other peer Executives and their families to the extent he qualifies therefore
All salary or compensation hereunder shall be paid to the Executive in a lump
sum in cash within thirty (30) days of the Date of Termination.
(e) Delinquent Payments. If any of the payments referred to in this
Section 6 are not paid within the time specified after the Termination Date
(hereinafter a "Delinquent Payment"), in addition to such principal sum, the
Company will pay to the Executive interest on all such Delinquent Payments
computed at the prime rate as announced from time to time by M&I Xxxxxxxx &
Xxxxxx Bank, or its successor, compounded monthly. Notwithstanding the
foregoing, no interest shall be due and owing as regards payments which are
delayed because of Executive's failure to execute the Release or the recission
thereof.
13
(f) Vacation Pay. In consideration of all payments made by the
Company to the Executive pursuant to this Agreement, the Executive hereby
waives any claim he may have for accrued and unpaid vacation pay as of the
Termination Date.
7. No Mitigation. In no event shall the Executive be obligated to
seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement
and such amounts shall not be reduced (except to the extent set forth in
Section 6(a)(ii)) whether or not the Executive obtains other employment.
8. Excise Tax Payments.
(a) Notwithstanding anything contained in this Agreement to the
contrary, in the event that any payment or distribution 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 in connection with, or
arising out of, his employment with the Company (a "Payment" or "Payments"),
would be subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code"), or any interest or penalties
are incurred by the Executive with respect to such excise tax (such excise
tax, together with any interest and penalties, are collectively referred to
as the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after payment
by the Executive of all taxes (including any interest or penalties imposed
with respect to such taxes), including any Excise Tax, imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
(b) A determination shall be made as to whether and when a Gross-Up
Payment is required pursuant to this Section 8 and the amount of such Gross-Up
Payment, such determination to be made within fifteen (15) business days of
the Termination Date, or such other time as requested by the Company or by the
Executive (provided the Executive reasonably believes that any of the Payments
may be subject to the Excise Tax). Such determination shall be made by a
national independent accounting firm selected by the Executive (the
"Accounting Firm"). All fees, costs and expenses (including, but not limited
to, the cost of retaining experts) of the Accounting Firm shall be borne by
the Company and the Company shall pay such fees, costs and expenses as they
become due. The Accounting Firm shall provide detailed supporting
calculations, acceptable to the Executive, both to the Company and the
Executive. The Gross-Up Payment, if any, as determined pursuant to this
Section 8(b) shall be paid by the Company to the Executive or paid by the
Company on behalf of the Executive to the applicable government taxing
authorities by means of payroll tax withholding if required by law or if
timely requested by the Executive within five (5) business days of the receipt
of the Accounting Firm's determination. If the Accounting Firm determines
that no Excise Tax is payable by the Executive with respect to a Payment or
Payments, it shall furnish the Executive with an unqualified opinion that no
Excise Tax will be imposed with respect to any such Payment or Payments. Any
such initial determination by the Accounting Firm of the Gross-Up Payment
shall be binding upon the Company and the Executive subject to the application
of Section 8(c).
14
(c) As a result of the uncertainty in the application of Sections 4999
and 280G of the Code, it is possible that a Gross-Up Payment (or a portion
thereof) will be paid which should not have been paid (an "Overpayment") or
a Gross-Up Payment (or a portion thereof) which should have been paid will not
have been paid (an "Underpayment"). An Underpayment shall be deemed to have
occurred upon notice (formal or informal) to the Executive from any
governmental taxing authority that the tax liability of the Executive (whether
in respect of the then current taxable year of the Executive or in respect of
any prior taxable year of the Executive) may be increased by reason of the
imposition of the Excise Tax on a Payment or Payments with respect to which
the Company has failed to make a sufficient Gross-Up Payment. An Overpayment
shall be deemed to have occurred upon a "Final Determination" (as hereinafter
defined) that the Excise Tax shall not be imposed upon a Payment or Payments
with respect to which the Executive had previously received a Gross-Up
Payment. A Final Determination shall be deemed to have occurred when the
Executive has received from the applicable governmental taxing authority a
refund of taxes or other reduction in his tax liability by reason of the
Overpayment and upon either (i) the date a determination is made by, or an
agreement is entered into with, the applicable governmental taxing authority
which finally and conclusively binds the Executive and such taxing authority,
or in the event that a claim is brought before a court of competent
jurisdiction, the date upon which a final determination has been made by such
court and either all appeals have been taken and finally resolved or the time
for all appeals has expired or (ii) the expiration of the statute of
limitations with respect to the Executive's applicable tax return. If an
Underpayment occurs, the Executive shall promptly notify the Company and the
Company shall pay to the Executive at least five (5) business days prior to
the date on which the applicable governmental taxing authority has requested
payment, an additional Gross-Up Payment equal to the amount of the
Underpayment plus any interest and penalties imposed on the Underpayment. If
an Overpayment occurs, the amount of the Overpayment shall be treated as a
loan by the Company to the Executive and the Executive shall, within ten (10)
business days of the occurrence of such Overpayment, pay to the Company the
amount of the Overpayment plus interest at an annual rate equal to the rate
provided for in Section 1274(b)(2)(B) of the Code from the date the Gross-Up
Payment (to which the Overpayment relates) was paid to the Executive.
9. Unauthorized Disclosure. During the term of the Executive's
employment with the Company, and during the two-year period following the
Termination Date, the Executive shall not make any Unauthorized Disclosure.
For purposes of this Agreement, "Unauthorized Disclosure" shall mean
disclosure by the Executive without the consent of the Board to any person,
other than an employee of the Company or a person to whom disclosure is
reasonably necessary or appropriate in connection with the performance by the
Executive of his duties as an executive of the Company or as may be legally
required, of any confidential information obtained by the Executive while in
the employ of the Company (including, but not limited to, any confidential
information with respect to any of the Company's customers or methods of
operation) the disclosure of which he knows or has reason to believe will be
materially injurious to the Company; provided, however, that such term shall
not include the use or disclosure by the Executive, without consent, of any
information known generally to the public (other than as a result of
disclosure by him in violation of this Section 9) or any information not
otherwise considered confidential by a reasonable person engaged in the same
business as that conducted by the Company. Notwithstanding the foregoing, the
Executive's obligation hereunder not to make any Unauthorized Disclosure shall
continue after the end of the two-year period following his termination of
employment with the Company as regards any information which is a trade secret
as defined in Section 134.90 of the Wisconsin Statutes. In no event shall an
asserted violation of this Section 9 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.
15
10. Successors and Assigns.
(a) This Agreement shall be binding upon and shall inure to the
benefit of the Company, its successors and assigns and the Company shall
require any successor or assign (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company
would be required to perform if no such succession or assignment had taken
place. The term "Company" as used herein shall include such successors and
assigns. The term "successors and assigns" as used herein shall mean a
corporation or other entity acquiring all or substantially all the assets and
business of the Company (including this Agreement) whether by operation of law
or otherwise.
(b) Neither this Agreement nor any right or interest hereunder shall
be assignable or transferable by the Executive, his beneficiaries or legal
representatives, except by will or by the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's legal representative.
11. Fees and Expenses. From and after the Effective Date, the Company
shall pay all legal fees and related expenses (including the costs of experts,
evidence and counsel) reasonably incurred by the Executive as they become due
as a result of (i) the Executive's termination of employment (including all
such fees and expenses, if any, incurred in contesting or disputing any such
termination of employment), (ii) the Executive's hearing before the Board as
contemplated in Section 5(b) of this Agreement, (iii) the Executive's seeking
to obtain or enforce any right or benefit provided by this Agreement or by any
other plan or arrangement maintained by the Company under which the Executive
is or may be entitled to receive benefits or (iv) a dispute between the
Executive and the Internal Revenue Service (or any other taxing authority)
with regard to an "Underpayment" (as defined in Section 8 of this Agreement).
12. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by certified mail, return receipt requested,
postage prepaid, if to the Company, to Xxxxxxxx & Xxxxxx Corporation, 000
Xxxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000, or if to Executive, to the
address set forth below Executive's signature, or to such other address as the
party may be notified, provided that all notices to the Company shall be
directed to the attention of the Board with a copy to the Secretary of the
Company. All notices and communications shall be deemed to have been received
on the date of delivery thereof or on the third business day after the mailing
thereof, except that notice of change of address shall be effective only upon
receipt.
13. Non-Exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided by the Company or
any of its subsidiaries for which the Executive may qualify. Amounts which
are vested benefits or which the Executive is otherwise entitled to receive
under any plan or program of the Company or any of its subsidiaries shall be
payable in accordance with such plan or program, except as explicitly modified
by this Agreement.
16
14. Settlement of Claims. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any circumstances, including,
without limitation, any set-off, counterclaim, recoupment, defense or other
right which the Company may have against the Executive or others.
15. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed
to in writing and signed by the Executive and the Company. No waiver by
either party hereto at any time of any breach by the other party hereto of,
or compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreement or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement.
16. Employment. The Executive and the Company acknowledge that the
employment of the Executive by the Company is "at will" and prior to the
Effective Date, may be terminated by either the Executive or the Company at
any time. Moreover, if prior to the Effective Date, the Executive's
employment with the company terminates, the Executive shall have no further
rights under this Agreement.
17. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Wisconsin without
giving effect to the conflict of law principles thereof.
18. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
19. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof. In consideration of the terms,
conditions and benefits to be provided under this Agreement, the Executive
hereby expressly waives all rights under that certain Change of Control
Agreement between the Executive and the Company dated January 13, 2003.
20. Headings. The headings herein contained are for reference only
and shall not affect the meaning or interpretation of any provision of this
Agreement.
21. Modification. No provision of this Agreement may be modified or
amended unless such modification or amendment is agreed to in writing signed
by both the Executive and the Company.
17
22. Withholding. The Company shall be entitled to withhold from
amounts paid to the Executive hereunder any federal, estate or local
withholding or other taxes or charges which it is, from time to time, required
to withhold. The Company shall be entitled to rely on an opinion of counsel
if any question as to the amount or requirement of any such withholding shall
arise.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized officer and the Executive has executed this Agreement
as of the day and year first above written.
XXXXXXXX & ILSLEY CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
______________________________
Xxxxxx X. Xxxxxxx
Chief Executive Officer
ATTEST:
/s/ Xxxxxxx X. Xxxxxxxx
_________________________________
Xxxxxxx X. Xxxxxxxx, Secretary
EXECUTIVE:
/s/ Xxxxx X. Xxxxxxx
______________________________
Xxxxx X. Xxxxxxx
Address:
_______________________________
_______________________________
MW3yr M&I COC Agreement.doc
