EXHIBIT 10L
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of August 15, 1996, by and between First Bank
System, Inc., a Delaware corporation (as further defined in Section 8.13.11
hereof, "Employer"), and Xxxx X. Xxxxxxxxxx ("Executive"), amending and
restating the Employment Agreement by and between Executive and Employer dated
as of January 18, 1995.
In consideration of the respective undertakings of Employer and Executive
set forth below, Employer and Executive agree as follows:
1. Employment. Employer hereby employs Executive, and Executive accepts
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such employment and agrees to perform services for the Employer, for the period
and upon the other terms and conditions set forth in this Agreement.
2. Term of Employment. The term of Executive's employment pursuant to
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this Agreement will commence on January 30, 1995 (the "Commencement Date") and,
unless terminated at an earlier date in accordance with Section 5 of this
Agreement, shall continue in effect until the third anniversary of the
Commencement Date; and, commencing on the first anniversary of the Commencement
Date and on each anniversary thereafter, the term of this Agreement shall
automatically be extended for one additional year unless, not later than 30 days
prior to any such date of automatic extension of this Agreement, Employer or
Executive shall have given the other party to this Agreement written notice that
the Agreement will not be so extended. The term of Executive's employment
commencing on the Commencement Date and ending pursuant to the terms hereof is
hereinafter referred to as the "Period of Employment."
3. Position and Duties.
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3.01 Service with Employer. During the Period of Employment,
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Executive agrees to perform such reasonable executive employment duties as
Employer shall assign to him from time to time and shall have the title of
Chairman of the Board, President and Chief Executive Officer. Executive also
agrees to serve, for any period for which he is elected, as a director on the
Board of Directors of Employer and to serve as a member of any committee of the
Board of Directors of Employer to which Executive may be elected or appointed.
3.02 Performance of Duties. Executive agrees to serve Employer
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faithfully and to the best of his ability and to devote his full business time,
attention and efforts to the business and affairs of Employer during the Period
of Employment; provided, however, that Executive may engage in other activities,
such as activities involving charitable, educational, religious and similar
types of
organizations, speaking engagements, membership on the boards of directors of
other organizations (as Employer may from time to time approve), management of
Executive's personal investments, and similar types of activities to the extent
that such other activities do not inhibit in any material way or prohibit the
performance of Executive's duties under this Agreement, or inhibit in any
material way or conflict with the business of Employer and its subsidiaries.
4. Compensation.
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4.01 Base Salary. As base compensation for all services to be
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rendered by Executive under this Agreement, Employer will pay to Executive
during the Period of Employment a base annual salary to be paid in substantially
equal installments in accordance with Employer's standard payroll procedures and
policies. The initial base annual salary will be at least $620,000, but the
base annual salary may be increased (but not reduced) from time to time in the
sole discretion of Employer; provided, however, that for any of the three years
beginning after a Change in Control, as defined in Section 8.13, during the
Period of Employment Executive's base annual salary shall be increased by a
percentage not less than the average percentage increase in the base annual
salary for each of the next five highest paid officers of Employer for such
year.
4.02 Annual Bonus. During the Period of Employment, Executive will be
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entitled to participate in the Employer's Executive Incentive Plan (or, if such
Plan shall cease to exist, Employer's annual bonus award program, if any, for
Employer's executives at Executive's grade level). The award of an annual bonus
is highly discretionary and is subject to the terms and provisions of the
Executive Incentive Plan (or, if such Plan shall cease to exist, Employer's
annual bonus award program, if any, for Employer's executives at Executive's
grade level).
4.03 Options and Restricted Stock. During the Period of Employment,
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Executive will be eligible to receive grants of Employer's stock options and
restricted stock, or other awards pursuant to equity-based plans of Employer.
Such grants are highly discretionary and would be subject to the terms of the
applicable agreements prescribed by Employer from time to time.
4.04 Participation in Other Benefit Plans. During the Period of
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Employment, Executive will be entitled to participate in such retirement plans,
major medical, hospital, surgical and dental plans, executive disability plans
and other Employer benefits not described elsewhere in this Section 4 as are
being provided by Employer to executives at Executive's grade level from time to
time to the extent that Executive's age, positions and other factors qualify him
for such benefits. If, for any period during the Period of Employment,
Executive is not eligible by reason of length of service to participate in such
plans maintained by Employer, Employer shall provide Executive with benefits
equivalent to those
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provided under such plans and, with respect to benefits provided by Employer
equivalent to those provided under Employer's major medical, hospital, surgical
and dental plans, shall compensate Executive on an after-tax basis for any
additional income taxes payable by Executive by reason of Employer providing
such benefits directly rather than through such plans.
4.05 Long-Term Disability Benefits. During the Period of Employment,
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Executive's annual benefit under Employer's long-term disability plan will not
be less than 60% of the total of (i) Executive's base annual salary at the date
of disability plus (ii) the annual average of bonuses received by Executive
during the three prior Executive Incentive Plan years (or, if such Plan shall
cease to exist, such other annual bonus award program, if any, pursuant to which
Executive received annual bonus payments), and Employer agrees to pay Executive
(at the time benefits are payable under the long-term disability plan) the
excess, if any, of such annual benefit over the annual benefit provided by
Employer's long-term disability plan.
4.06 Survivor Benefit Programs; Life Insurance. During the Period of
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Employment, Executive will be entitled to participate in survivor benefit
programs covering Employer's executives at Executive's grade level in effect on
the Commencement Date or as modified or supplemented by Employer from time to
time. If, for any period during the Period of Employment, Executive is not
eligible to participate in such survivor benefit programs, Employer shall
provide Executive with benefits equivalent to those provided under such
programs. In addition, during the Period of Employment Employer shall continue
to provide a life insurance policy with a face value of at least $1 million for
the benefit of a beneficiary designated by Executive (or, if no beneficiary is
designated, for the benefit of Executive's spouse). Such insurance policy shall
be in addition to the amount of group term insurance, if any, provided to
Executive under an insurance plan maintained by Employer for its employees
generally. Executive hereby represents to Employer that Executive is insurable
on normal terms and conditions.
4.07 Vacation and Sick Leave. During the Period of Employment,
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Executive will be entitled to reasonable paid vacation periods each year, will
be entitled to carry over to subsequent years unused vacation periods, and upon
termination of employment will be entitled to be paid for unused vacation
periods, in each case in accordance with Employer's policy for executives at
Executive's grade level from time to time. Executive will also be entitled to
reasonable sick leave in accordance with Employer's policy for executives at
Executive's grade level from time to time.
4.08 Perquisites. During the Period of Employment, Employer will
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provide Executive with such perquisites as Employer from time to time provides
to executives at Executive's grade level including, without limitation, (a) an
automobile or an automobile allowance consistent with Employer's policies for an
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executive at Executive's grade level, (b) reimbursement of initiation fees, if
any, and dues for one country club and one business club of Executive's choice,
and (c) the reimbursement of the cost of financial and tax counseling (subject
to an annual limit of two percent of current base annual salary). Additionally,
during the Period of Employment, Employer will reimburse Executive for the
difference between (i)interest payments made by Executive on Executive's real
estate mortgage loan for his personal residence (with the loan amount not to
exceed 80% of the purchase price for such residence) and (ii) the interest
payments that would apply to such loan if the interest rate on such loan were
one percentage point less than the interest rate generally prevailing in the
market at the time the loan was entered into.
4.09 Expenses. Employer will reimburse Executive for all expenses and
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disbursements reasonably incurred by Executive in the performance of his duties
during the Period of Employment, and such other facilities or services as
Employer and Executive may, from time to time, agree are reimbursable, subject
to the presentment of appropriate vouchers in accordance with the Employer's
normal policies for expense verification.
4.10 [This Section is intentionally omitted.]
4.11 Indemnity and Hold Harmless. Except to the extent inconsistent
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with Employer's charter or bylaws, Employer will indemnify Executive and hold
Executive harmless to the fullest extent permitted by law with respect to acts
of Executive as an officer and director of Employer during the Period of
Employment. Employer further agrees that if and to the extent Employer in its
sole discretion maintains directors' and officers' insurance policies, Executive
will be covered by such policies with respect to acts of Executive as an officer
and director of Employer during the Period of Employment to the same extent as
all other officers and directors of Employer under such policies.
4.12 Payments on Account of Restricted Stock Relating to Former
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Employment. Employer has established and is maintaining a bookkeeping account
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for Executive (the "Bookkeeping Account"), which account was initially credited
with $305,074, representing the amount agreed to be paid to Executive and not
paid to date in respect of shares of Xxxxx Fargo & Company ("Xxxxx Fargo")
Common Stock transferred by Xxxxx Fargo to Executive, but not vested, as of
January 30, 1990. The amount credited to the Bookkeeping Account shall be
deemed to have been invested in such stock, bonds or other securities as
Executive shall, from time to time, designate in writing to Employer's Executive
Vice President, Human Resources, or such other individual as Employer shall
designate, which deemed investments must be reasonably acceptable to Employer
and must be of a type that Employer would be permitted to make under applicable
laws and regulations. The Bookkeeping Account shall be credited or debited, as
the case may be, with gains or losses deemed incurred as a result of such
designated, deemed investments.
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Certain debits have been made to the Bookkeeping Account as provided
in the Employment Agreement dated December 30, 1992 by and between Employer and
Executive (the "Prior Employment Agreement"). The balance of the Bookkeeping
Account shall become payable to, or with respect to, Executive upon the earliest
of the following events (i) January 30, 2003, (ii) Executive's death or
(iii)Executive's termination of employment for any reason within 24 months after
a Change in Control. In the event the balance of the Bookkeeping Account
becomes payable upon Executive's termination of employment for any reason other
than death within 24 months after a Change in Control, the entire balance shall
be paid within 30 days of such event. In the event the balance of the
Bookkeeping Account becomes payable upon Executive's death, the entire balance
shall be paid by December 31 of the calendar year in which Executive dies. Upon
the occurrence of any other event giving rise to Employer's obligation to pay
Executive the balance of the Bookkeeping Account, on January 30 of each year
beginning in the year 2003 and for each of the next nine consecutive years,
after taking into account any amount credited or debited to the Bookkeeping
Account as a result of the deemed investment thereof or otherwise pursuant to
the terms of this Section 4.12, the following proportions of the Bookkeeping
Account shall be paid to Executive: 1/10, 1/9, 1/8, 1/7, 1/6, 1/5, 1/4, 1/3,
1/2 and the entire remaining balance thereof.
Employer, in its sole and absolute discretion, may alter the timing or
manner of payment of the balance of the Bookkeeping Account in the event that
Executive establishes to the satisfaction of Employer severe financial hardship.
Severe financial hardship will be deemed to have occurred in the event of
Executive's impending bankruptcy, a dependent's long and serious illness or
other events of similar magnitude. Executive may designate a beneficiary or
beneficiaries who, upon his death, are to receive distributions that otherwise
would have been paid to Executive. All designations shall be in writing and
shall be effective only if and when delivered to Employer during the lifetime of
Executive.
Employer shall have the right to deduct from all payments made
pursuant to this Section 4.12 any federal, state or local taxes required by law
to be withheld with respect to such payments. Executive and Employer understand
and agree that the timetable set forth above with respect to the payment of the
balance of the Bookkeeping Account is irrevocable and shall not be subject to
any amendment or modification. Further, Executive and Employer understand and
agree that Employer is under a contractual obligation to make payments to
Executive in accordance with this Section 4.12. Such payments shall not be
financed from any trust fund, insurance or otherwise and shall be paid solely
out of the general funds of Employer, and Executive shall have no interest
whatsoever in any investments made by Employer on account of Executive's request
with respect to deemed investments of the Bookkeeping Account. Executive will
not have any interest whatsoever in any specific asset of Employer as a result
of this Agreement, and Executive's rights to payments hereunder shall be no
greater than the right of any
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other general, unsecured creditor of Employer. In no event shall Employer make
any payment hereunder to any assignee or creditor of Executive or a beneficiary.
Prior to the time of payment hereunder, Executive or a beneficiary thereof shall
have no rights by way of anticipation or otherwise to assign or otherwise
dispose of any interest under this Section 4.12, nor shall such rights be
assigned or transferred by operation of law.
4.13 Reimbursement of Professional Fees. Employer will pay to (or
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reimburse Executive for) the reasonable fees and expenses of Executive's
personal professional advisors for professional services rendered to Executive
in connection with this Agreement and matters related thereto; provided,
however, that payment by Employer pursuant to this Section 4.13 will not exceed
$[10,000].
5. Termination.
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5.01 Grounds for Termination. The Period of Employment will terminate
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prior to the expiration of the term set forth in Section 2 of this Agreement in
the event that:
(a) Executive shall die.
(b) Executive shall qualify for and accrue payments under Employer's
Disability Program for a period covering 90 consecutive days.
(c) Employer shall terminate the Period of Employment for Cause. "Cause"
means termination upon (i) the willful and continued failure by
Executive to substantially perform his duties with Employer (other
than any such failure resulting from his disability or from
termination by Executive for Good Reason), after a written demand for
substantial performance is delivered to Executive that specifically
identifies the manner in which Employer believes that Executive has
not substantially performed his duties, and Executive has failed to
resume substantial performance of his duties on a continuous basis
within 14 days of receiving such demand, (ii) the willful engaging by
Executive in conduct which is demonstrably and materially injurious to
Employer, monetarily or otherwise, (iii) Executive's conviction of a
felony which impairs his ability substantially to perform his duties
with Employer or (iv) the issuance of an order under Section 8(e)(4)
or 8(g)(1) of the Federal Deposit Insurance Act ("FDIC") by which
Executive is removed and/or permanently prohibited from participating
in the conduct of the affairs of Employer and/or any other Affiliate
of Employer. For purposes of this paragraph, no act, or failure to
act, on Executive's part will be deemed "willful" unless done, or
omitted to be done, by Executive not in good faith and without
reasonable belief that his
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action or omission was in the best interest of Employer. Failure to
perform Executive's duties with Employer during any period of
disability shall not constitute Cause.
(d) Executive shall terminate the Period of Employment for Good Reason.
"Good Reason" means termination by Executive upon the occurrence,
without Executive's consent, of any one or more of the following:
(i)the assignment to Executive of any duties inconsistent in any
respect with Executive's position (including status, offices, titles,
and reporting requirements), authorities, duties, or other
responsibilities as in effect immediately prior to such assignment or
any other action of Employer which results in a diminishment in such
position, authority, duties, or responsibilities, other than an
insubstantial and inadvertent action which is remedied by Employer
promptly after receipt of notice thereof given by Executive; (ii) a
reduction by Employer in Executive's base salary as in effect on the
Commencement Date or as the same shall be increased from time to time;
(iii) Employer's requiring Executive to be based at a location in
excess of 30 miles from the location of Executive's principal office
as of the Commencement Date; (iv) the failure by Employer to provide
Executive with compensation and benefits at least equal (in terms of
benefit levels and/or reward opportunities) to those provided for
under each compensation or benefit plan, program, policy and practice
as in effect at the Commencement Date (or as in effect following the
Commencement Date, if greater); (v) the failure of Employer to obtain
a satisfactory agreement from the Resulting Corporation (as
hereinafter defined) or any other successor to Employer to assume and
agree to perform this Agreement; (vi) a material breach by Employer of
its obligations under this Agreement after notice in writing from
Executive and a reasonable opportunity for Employer to correct such
conduct; (vii) any purported termination by Employer of Executive's
employment that is not effected pursuant to a Notice of Termination
(as hereinafter defined); (viii) for the 24 month period following a
Full Change in Control (as hereinafter defined) (or prior to a Full
Change in Control in the event of an Anticipatory Termination (as
hereinafter defined)), the failure by the Employer to provide
Executive total cash compensation (consisting of base salary plus cash
bonus) with respect to any fiscal year or portion thereof at least
equal to the greater of (x) actual total cash compensation paid to
Executive with respect to the prior fiscal year or (y) the average
annual total cash compensation paid to Executive with respect to the
prior two fiscal years (total cash compensation "with respect to any
fiscal year or portion thereof" shall be determined at the time the
bonus with respect to such fiscal year or portion thereof is
determined, even if such bonus is determined after the 24-month period
following a Full Change in
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Control, and the bonus portion of cash compensation for services
rendered in any portion of a fiscal year within 24 months following a
Full Change in Control shall be determined by reference to the pro-
rata portion of any annual bonus for such fiscal year) and (vix)
within 24 months following a Partial Change in Control (as hereinafter
defined) (or prior to a Partial Change in Control in the event of an
Anticipatory Termination), a reduction by Employer in Executive's
annual target bonus or maximum bonus award opportunities as in effect
in the prior fiscal year. Executive's right to terminate the Period of
Employment for Good Reason shall not be affected by Executive's
incapacity due to physical or mental illness. Executive's continued
employment shall not constitute consent to, or a waiver of rights with
respect to, any circumstance constituting Good Reason. Termination by
Executive of the Period of Employment for Good Reason shall constitute
termination for Good Reason for all purposes of this Agreement,
notwithstanding that Executive may also thereby be deemed to have
"retired" under any applicable retirement programs of Employer.
(e) Employer terminates the Period of Employment other than for "Cause."
(f) Executive terminates the Period of Employment for any reason not
constituting Good Reason.
Notwithstanding any termination of the Period of Employment, Executive, in
consideration of his employment hereunder to the date of such termination, will
remain bound by the provisions of this Agreement that specifically relate to
periods, activities or obligations upon or subsequent to the termination of
Executive's employment.
5.02 Effect of Termination.
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(a) In the event of termination of the Period of Employment pursuant to
the provisions of Section 5.01(a) above, Executive's trust estate or
estate, as the case may be (as determined in accordance with Section
8.02 of this Agreement), will be entitled to be paid the base annual
salary otherwise payable to Executive pursuant to Section 4.01 of this
Agreement only through the date of such termination. Additionally,
Executive's survivors will be entitled to any benefits provided under
Employer's survivor benefit program.
(b) In the event of termination of the Period of Employment pursuant to
the provisions of Section 5.01(b) above, Executive will be entitled to
be paid the base annual salary otherwise payable to Executive pursuant
to
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Section 4.01 of this Agreement only through the date of such
termination. Executive will be entitled to benefits under Employer's
Disability Program and to the benefits provided for in Section 4.05 in
connection with Employer's Disability Plan. If Executive shall cease
to be eligible for long-term disability payments pursuant to the
Disability Plan within three years following the date of such
termination, Employer will pay Executive a lump sum payment in the
amount of Executive's annual base salary at the time of such
termination.
(c) In the event of termination of the Period of Employment pursuant to
the provisions of Section 5.01(c) or (f) above, Employer will have no
further obligations hereunder except that Employer will pay Executive
his base salary, at the rate then in effect, and continue to provide
Executive his health and welfare benefits through the date of such
termination. Executive will not be paid any annual bonus pursuant to
Section 4.02 of this Agreement for the calendar year in which the
termination occurs or any subsequent calendar year.
(d) In the event of termination of the Period of Employment pursuant to
the provisions of Sections 5.01(d) or 5.01(e) above, Employer will (i)
pay Executive his full base salary through the date of termination at
the rate in effect at the time Notice of Termination is given; (ii)
pay as damages to Executive, not later than 30 days following the date
of termination, a lump sum payment equal to three times the sum of
(A)Executive's annual base salary in effect at the time Notice of
Termination is given and (B) the annual target bonus potential
available to Executive at the time Notice of Termination is given (or,
in the event of termination within 24 months following a Change in
Control or in the event of an Anticipatory Termination, if either of
the following amounts is greater, the bonus earned in the last fiscal
year prior to the date of termination or the average bonus earned in
the last three fiscal years prior to the date of termination,
whichever is larger), (iii) continue to provide the employee benefits
described in Sections 4.04, 4.05 (with disability benefits to be
calculated as of the date of termination), and 4.06 to which Executive
was entitled on the date of such termination for a period of three
years from the date of such termination, (iv) continue to provide the
perquisites described in Section 4.08 to which Executive was entitled
on the date of such termination for a period of three years from the
date of such termination, (v) cause the acceleration of the
exercisability of any stock option or the vesting of any restricted
stock grants (other than those pursuant to Employer's Restricted Stock
and Performance Plan) that would have become exercisable or vested, as
the case may be, during the remaining Period of Employment had no such
termination
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occurred, (vi) cause the acceleration of vesting of restricted stock
grants under Employer's Restricted Stock and Performance Plan if the
vesting schedule has been determined at the time of such termination
and such vesting would have occurred during the remaining Period of
Employment had no such termination occurred, (vii) give Executive
credit for three additional years of service (or five additional years
of service in the event of termination within 24 months following a
Change in Control or in the event of an Anticipatory Termination)
under Employer's Nonqualified Supplemental Executive Retirement Plan
(the "SERP"), provided, however, that Executive shall not receive any
such credit if Executive has previously received five additional years
of service at age 60 under the terms of the SERP, (viii) in the event
of termination within 24 months following a Change in Control or in
the event of an Anticipatory Termination, pay Executive the full
amount of any long-term cash incentive award for any plan periods then
in progress to the extent not provided for in any Employer long-term
cash incentive plan or plans, (ix) in the event of termination within
24 months following a Change in Control or in the event of an
Anticipatory Termination, pay Executive the year-to-date pro-rata
amount of any annual cash incentive award for any plan as in effect
immediately prior to the Change in Control to the extent not provided
for in such plan or plans, and (x) pay for individual outplacement
counseling services to Executive up to a maximum of $60,000. Except as
otherwise provided in clause (ix) of this Section 5.02(d), Executive
will not be paid any annual bonus pursuant to Section 4.02 of this
Agreement for the calendar year in which the termination occurs.
5.03 Notice of Termination. Any purported termination by Employer or
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Executive of the Period of Employment shall be communicated by written Notice of
Termination to the other party hereto. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice which indicates the specific
termination provision in Section 5.01 above relied upon.
5.04 Offsets. Executive shall have no duty to seek other employment.
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However, in the event of termination of the Period of Employment pursuant to the
provisions of Sections 5.01(d) or 5.01(e), the following offsets will apply to
reduce the payments and benefits which Executive shall be entitled to receive
pursuant to Section 5.02(d): (i)(A) in the event of termination within 24 months
following a Change in Control or in the event of an Anticipatory Termination,
the amount payable to Executive pursuant to Section 5.02(d)(ii) will be offset
by any salary, cash bonus and other earned income (within the meaning of Section
911(d)(2)(A) of the Internal Revenue Code of 1986, as amended (the "Code"))
received by Executive for services rendered by Executive to persons or entities
other than the Employer during or with respect to the 36-month period after the
date of termination, or (B) in
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the event of termination at any time not within 24 months following a Change in
Control and that is not an Anticipatory Termination, one-third of the amount
payable to Executive pursuant to Section 5.02(d)(ii)(A) and the entire amount
payable to Executive pursuant to Section 5.02(d)(ii)(B) shall be offset by
amounts received by Executive which are described in subparagraph (A) above;
(ii) the benefits payable to Executive pursuant to Section 5.02(d)(iii) and (iv)
shall be discontinued if Executive obtains full-time employment providing
welfare benefits during the 36-month period following the date of termination;
and (iii) in the event of termination at any time within 24 months following a
Change in Control or in the event of an Anticipatory Termination, any additional
benefits under Employer's SERP pursuant to Section 5.02(d) will be reduced by
the amount of vested defined benefit pension benefits and vested defined benefit
non-qualified supplemental retirement benefits actually payable to Executive
without any risk of forfeiture from persons or entities other than Employer
which are attributable to services rendered by Executive to such other persons
or entities during the 36 months following the date of termination of
Executive's employment. Such reduction shall be calculated based on the vested
benefits payable at age 65 under the single life annuity form of payment under
the applicable plans which are accrued by Executive during such period. The
foregoing calculations for a particular plan shall be made by the actuary for
such plan in accordance with generally accepted actuarial principles. The amount
of such reduction at age 65 shall be actuarially reduced if Executive's benefits
under the Employer's SERP commence before Executive attains age 65.
Not less frequently than annually (by December 31 of each year),
Executive shall account to Employer with respect to all payments and benefits
received by Executive which are required hereunder to be offset against payments
or benefits received by Executive from Employer. If the Employer has paid
amounts in excess of those to which Executive is entitled (after giving effect
to the offsets provided above), Executive shall reimburse Employer for such
excess by December31 of such year. The requirements imposed under this
paragraph shall terminate on December 31 of the calendar year which includes the
third anniversary of the date of termination.
5.05 Additional Payments. In the event Executive becomes entitled to
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payments under Article 5 of this Agreement, Employer shall cause its independent
auditors promptly to review, at Employer's sole expense, the applicability of
Section 4999 of the Code to such payments. If such auditors shall determine
that any payment or distribution of any type by Employer to Executive or for his
benefit, whether paid or payable or distributed or distributable pursuant to the
terms of this Agreement or otherwise (the "Total Payments"), would be subject to
the excise tax imposed by Section 4999 of the Code, or any interest or penalties
with respect to such excise tax (such excise tax, together with any such
interest and penalties, are collectively referred to as the "Excise Tax"), then
Executive shall be entitled to receive an additional cash payment (a "Gross-Up
Payment") within 30
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days of such determination equal to an amount such that after payment by
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,
Executive would retain an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Total Payments. For purposes of the foregoing determination,
Executive's tax rate shall be deemed to be the highest statutory marginal state
and Federal tax rate (on a combined basis) (including Executive's share of
F.I.C.A. and Medicare taxes) then in effect. If no determination by Employer's
auditors is made prior to the time a tax return reflecting the Total Payments is
required to be filed by Executive, Executive will be entitled to receive a
Gross-Up Payment calculated on the basis of the Total Payments reported by
Executive in such tax return, within 30 days of the filing of such tax return.
In all events, if any tax authority determines that a greater Excise Tax should
be imposed upon the Total Payments than is determined by the Employer's
independent auditors or reflected in Executive's tax return pursuant to this
Section 5.05, Executive shall be entitled to receive the full Gross-Up Payment
calculated on the basis of the amount of Excise Tax determined to be payable by
such tax authority from Employer within 30 days of such determination.
5.06 Nonexclusivity of Rights. Nothing in this Agreement shall
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prevent or limit Executive from continuing or future participation in any
benefit, bonus, incentive, retirement or other plan or program provided by
Employer and for which Executive may qualify, nor, except as expressly provided
in this Agreement, shall anything herein limit or reduce such rights as
Executive may have under any other agreement with, or plan, program, policy or
practice of, Employer. Amounts which are vested benefits or which Executive is
otherwise entitled to receive under any agreement with, or plan, program, policy
or practice of, Employer (including, without limitation, the cashout of unused
vacation days upon termination of employment) shall be payable in accordance
with such agreement, plan, program, policy or practice, except as explicitly
modified by this Agreement. Notwithstanding the foregoing, if Executive becomes
entitled to benefits under Article 5 of this Agreement, Executive shall not be
entitled to receive payments under any other severance pay plan or program
sponsored or maintained by Employer or any of its Affiliates.
6. Non-Competition and Unfair Competition.
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6.01 Agreement Not to Compete. Without the approval by resolution of
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the Board of Directors of Employer, upon termination of Executive's employment
with Employer by Employer for Cause pursuant to Section 5.01(c) or by Executive
without Good Reason pursuant to Section 5.01(f), Executive will not, for a
period of three years thereafter, become an officer, employee, agent, partner,
director or substantial stockholder (holding more than 5% of the voting
securities) of any bank, savings bank, trust company, bank and trust company,
savings and loan
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association or holding company thereof, in each case if such entity conducts
business in the State of Colorado, the State of Illinois, the State of Iowa, the
State of Kansas, the State of Minnesota, the State of Montana, the State of
Nebraska, the State of North Dakota, the State of South Dakota, the State of
Wisconsin, the State of Wyoming or any other State in which Employer has
substantial operations.
6.02 Agreement Not to Solicit. Without the approval by resolution of
------------------------
the Board of Directors of Employer, upon termination of Executive's employment
with Employer for any reason whatsoever, Executive will not, for the remainder
of the Period of Employment if no termination had occurred (or, if longer, for
the one-year period following such termination), (i) solicit or aid in
soliciting as a customer or client of banking or related financial services
(including, without limitation trust, credit card and investment management
services) any person, firm, corporation, association or other entity (A) that
was a customer or client of Employer or any other Affiliate of Employer, and for
which Executive or anyone under Executive's supervision performed any services
or with which substantial business relations were maintained by Employer or any
other Affiliate of Employer at any time during the five years prior to the
termination of the Period of Employment or (B) whose identity or particular
needs Executive otherwise discovered as a result of his employment with
Employer, or (ii) solicit or aid in soliciting any employees of Employer or any
other Affiliate of Employer to leave their employment. Without the approval by
resolution of the Board of Directors of Employer, upon termination of
Executive's Employment with Employer for any reason whatsoever, Executive agrees
never to copy, remove from Employer or its Affiliates, dispose or make any use
of any confidential customer list, confidential business information with
respect to customers, confidential materials relating to the practices or
procedures of Employer or its Affiliates, or any other proprietary information.
7. Taxes. All payments to be made to Executive under this Agreement will
-----
be net of required withholding of federal, state and local income and employment
taxes. Whenever under this Agreement Executive is to be compensated or
reimbursed on an "after-tax basis," Executive will be assumed to be subject to
federal income taxes at the highest marginal rate applicable to individuals and
to state income taxes at the highest marginal effective rate for residents of
Minneapolis, Minnesota.
8. Miscellaneous.
-------------
8.01 Governing Law. This Agreement is made under and shall be
-------------
governed by and construed in accordance with the laws of the State of Minnesota.
8.02 Successors. This Agreement shall be binding upon and inure to
----------
the benefit of Employer and its successors. This Agreement will inure to the
benefit of, be enforceable by, and any amounts and benefits owed to Executive at
the time of
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Executive's death, unless otherwise provided herein, will be paid to, the
Trustee under the Xxxx X. and Xxxxxxx X. Xxxxxxxxxx Living Trust Agreement, or,
if such Trust is not then in existence, the personal representative or personal
representatives of Executive's estate. Reference to the "Xxxx X. and Xxxxxxx X.
Xxxxxxxxxx Living Trust Agreement" means that certain Declaration of Trust,
Xxxx X. and Xxxxxxx X. Xxxxxxxxxx Living Trust, dated February 22, 1988, by and
between Xxxx X. and Xxxxxxx X. Xxxxxxxxxx, as donors and as original Trustees,
as amended and existing at Xxxx X. Xxxxxxxxxx'x death. Reference to the Trustee
under the Xxxx X. and Xxxxxxx X. Xxxxxxxxxx Living Trust Agreement means the
then acting Trustee or Trustees under the Xxxx X. and Xxxxxxx X. Xxxxxxxxxx
Living Trust Agreement and any successor Trustees.
Employer will require the Resulting Corporation or any other successor
(whether direct or indirect, by purchase, merger, consolidation, or otherwise)
to all or substantially all of the business and/or consolidated assets of
Employer and its subsidiaries 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 had taken place. Failure of Employer
to obtain such assumption and agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle Executive to
compensation from Employer in the same amount and on the same terms as Executive
would be entitled to hereunder if Executive terminated his employment for Good
Reason following a Change in Control, except that for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be
deemed the date of termination and Notice of Termination shall be deemed to have
been given on such date. In any case where a successor assumes the Employer's
obligations under this Agreement by operation of law, the requirements imposed
in this paragraph will be satisfied if the successor acknowledges to Executive
in writing that it has assumed the Employer's obligations under this Agreement
by operation of law within 30 days of receipt of a written notice from Executive
requesting such acknowledgment.
8.03 Prior Agreements. This Agreement contains the entire agreement
----------------
of the parties relating to the employment of Executive by Employer and the other
matters discussed herein and supersedes all prior agreements and understandings
with respect to such subject matter, and the parties hereto have made no
agreements, representations or warranties relating to the subject matter of this
Agreement which are not set forth herein. The Prior Employment Agreement is
hereby terminated and shall have no further force or effect. The Change in
Control Severance Pay Agreement entered into between Employer and Executive on
March 16, 1992, which was attached as Exhibit A to the Prior Employment
Agreement with Employer, is hereby terminated and shall have no further force or
effect.
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8.04 Amendments. No amendment or modification of this Agreement will
----------
be deemed effective unless made in writing and signed by each party hereto.
8.05 No Waiver. No term or condition of this Agreement will be deemed
---------
to have been waived, nor will there be any estoppel to enforce any provisions of
this Agreement, except by a statement in writing signed by the party against
whom enforcement of the waiver or estoppel is sought. Any written waiver will
not be deemed a continuing waiver unless specifically stated, will operate only
as to the specific term or condition waived and will not constitute a waiver of
such term or condition for the future or as to any act other than that
specifically waived.
8.06 Assignment. This Agreement is not assignable, in whole or in
----------
part, by any party without the written consent of the other party.
8.07 Injunctive Relief. Executive agrees that it would be difficult
-----------------
to compensate Employer fully for damages for any violation of the provisions of
this Agreement, including without limitation the provisions of Section 6.
Accordingly, Executive specifically agrees that Employer will be entitled to
temporary and permanent injunctive relief to enforce the provisions of this
Agreement and that such relief may be granted without the necessity of proving
actual damages. This provision with respect to injunctive relief will not,
however, diminish the right of Employer to claim and recover damages in addition
to injunctive relief.
8.08 Disputes and Legal Fees.
-----------------------
(a) Before a Change in Control. Any controversy or claim arising out of
--------------------------
or relating to this Agreement, or the breach thereof, which is not
resolved by the parties will not sooner than 30 days after the dispute
shall arise, be settled by arbitration before three arbitrators in
accordance with the rules of the American Arbitration Association, and
judgment upon an award rendered by the arbitrators, or at least a
majority of them, may be entered in any court having jurisdiction
thereof; provided, however, that Employer will be entitled to seek
injunctive or other equitable relief in a court of law to enforce the
provisions of Section 6. Such arbitration shall be conducted in
Minneapolis, Minnesota. The expenses incurred in connection with any
arbitration, including but not limited to each party's legal fees and
the arbitrators' fees and expenses, will be allocated between the
parties according to the relative fault of each, as determined by the
arbitrators.
(b) After a Change in Control. Subparagraph (a) above shall not apply
-------------------------
after a Change in Control, and the provisions of this subparagraph (b)
shall apply instead. If Executive so elects, any dispute or
controversy arising
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under or in connection with this Agreement shall be settled
exclusively by arbitration in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction. If
Executive does not elect arbitration, Executive may pursue any and all
legal remedies available to him. Employer shall pay to Executive any
legal fees and expenses incurred by him after a Change in Control (i)
as a result of successful litigation or arbitration against Employer
for nonpayment of any benefit hereunder or (ii) in connection with any
dispute with any Federal, state or local governmental agency with
respect to benefits claimed under this Agreement. If Executive elects
arbitration, Employer will pay all fees and expenses of the
arbitrator.
8.09 Severability. To the extent that any provision of this Agreement
------------
shall be determined to be invalid or unenforceable, the invalid or unenforceable
portion of such provision will be deleted from this Agreement, and the validity
and enforceability of the remainder of such provision and of this Agreement will
be unaffected. In furtherance of and not in limitation of the foregoing, it is
expressly agreed that should the duration of or geographical extent of, or
business activities covered by, the noncompetition covenant contained in Section
6 be determined to be in excess of that which is valid or enforceable under
applicable law, then such provision will be construed to cover only that
duration or extent, or those activities which may validly or enforceably be
covered. Executive acknowledges the uncertainty of the law in this respect and
expressly stipulates that this Agreement will be construed in a manner which
renders its provisions valid and enforceable to the maximum extent (not
exceeding its express terms) possible under applicable law.
8.10 Notices. All notices under this Agreement will be in writing and
-------
will be deemed effective when delivered in person (in Employer's case, to its
Secretary) or twenty-four (24) hours after deposit thereof in the U.S. mails,
postage prepaid, for delivery as registered or certified mail -- addressed, in
the case of Executive, to him at his last residential address known by Employer
and, in the case of Employer, to its corporate headquarters, attention of its
Secretary, or to such other address as Executive or Employer may designate in
writing at any time or from time to time to the other party. In lieu of notice
by deposit in the U.S. mails, a party may give notice by telegram, telex or
telecopy, in which case such notice will be deemed effective upon receipt.
8.11 Counterparts. This Agreement may be executed by the parties
------------
hereto in counterparts, each of which will be deemed to be an original, but all
such counterparts will together constitute one and the same instrument.
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8.12 Headings. The headings of paragraphs herein are included solely
--------
for convenience of reference and shall not control the meaning or interpretation
of any of the provisions of this Agreement.
8.13 Change in Control. For purposes of this Agreement, the following
-----------------
additional definitions shall apply:
8.13.1. "Acquiring Person" shall mean any Person who or which, together
with all Affiliates and Associates of such person, is the Beneficial Owner,
directly or indirectly, of securities of Employer representing 20% or more
of the combined voting power of Employer's then outstanding securities, but
shall not include any Company Entity.
8.13.2. "Affiliate" shall have the meaning ascribed to such term in Rule
12b-2 promulgated under the Exchange Act.
8.13.3. "Announcement Date" shall mean the date of the public announcement
of the transaction, event or course of action that results in a Change in
Control.
8.13.4. "Anticipatory Termination" shall mean a termination of employment
pursuant to Section 5.01(d) or 5.01(e) hereof as a result of an act or
event that occurs prior to a Change in Control and after the Announcement
Date and either (i) at the request of any other party to a transaction, or
any Person associated with the event or course of events (other than
Employer or a Company Entity), that results in a Change in Control, or (ii)
otherwise in contemplation of a Change in Control; provided, that no
termination shall be deemed an Anticipatory Termination unless the Change
in Control to which it relates actually occurs.
8.13.5. "Associate" shall have the meaning ascribed to such term in
Rule 12b-2 promulgated under the Exchange Act.
8.13.6. "Beneficial Owner" shall have the meaning ascribed to such term in
Rule 13d-3 promulgated under the Exchange Act.
8.13.7. "Board of Directors" shall mean the board of directors of
Employer.
8.13.8. "Change in Control" shall mean a Full Change in Control or a
Partial Change in Control.
8.13.9. "Company Entity" shall mean Employer, any subsidiary of Employer
or any employee benefit plan of Employer or of any subsidiary of Employer
or
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any entity holding shares of the voting capital stock of Employer
organized, appointed or established for, or pursuant to the terms of, any
such plan.
8.13.10. "Continuing Director" shall mean any person who is a member of
the Board of Directors, while such person is a member of the Board of
Directors, who is not an Acquiring Person or an Affiliate or Associate of
an Acquiring Person, or a representative of an Acquiring Person or of any
such Affiliate or Associate, and who (x) was a member of the Board of
Directors as of the date of this Agreement or (y) subsequently becomes a
member of the Board of Directors, if such person's initial nomination for
election or initial election to the Board of Directors has been approved in
advance by the Continuing Directors; provided that any director designated
by or on behalf of a Person who has entered into an agreement with Employer
(or who is contemplating entering into such an agreement) to effect a
consolidation or merger of Employer or a Company Entity, or other
reorganization, with or into one or more entities which are not Company
Entities, and any director that serves in connection with the act of the
Board of Directors of increasing the number of directors and filling
vacancies in connection with, or in contemplation of, any such transaction,
shall not be deemed to have received such advance approval for initial
nomination or election, and any such director shall not be deemed to be a
Continuing Director; provided, further, that any such director shall
subsequently become a Continuing Director at such time as a new term of
office as a director is approved by Employer's shareholders at an annual
meeting of shareholders occurring subsequent to the completion of any such
transaction (and excluding any annual meeting at which the shareholders
approve any such transaction); and, provided, further, that in the case of
a Permitted Transaction, any such director shall not become a Continuing
Director until the later of (i) the end of the three-year period following
consummation of such Permitted Transaction or (ii) such time as a new term
of office as a director is approved by Employer's shareholders at an annual
meeting of shareholders occurring subsequent to the completion of such
Permitted Transaction.
8.13.11. "Employer" shall mean First Bank System, Inc., a Delaware
corporation, or any successor thereto pursuant to Section 8.02 hereof
(including a Resulting Corporation) or by operation of law.
8.13.12. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
8.13.13. "Full Change In Control" shall mean:
(A) the public announcement (which, for purposes of this definition,
shall include, without limitation, a report filed pursuant to Section 13(d)
of
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the Exchange Act) by Employer or any Person that a Person (other than a
Company Entity) has become the Beneficial Owner, directly or indirectly, of
securities of Employer (x) representing 20% or more, but not more than 50%,
of the combined voting power of Employer's then outstanding securities
unless the transaction resulting in such ownership has been approved in
advance by the Continuing Directors or (y) representing more than 50% of
the combined voting power of Employer's then outstanding securities
(regardless of any approval by the Continuing Directors); or
(B) the Continuing Directors cease to constitute a majority of the
Board of Directors of Employer or the Resulting Corporation, except in
accordance with the terms of a Permitted Transaction and except as a result
of the death, retirement or disability of one or more Continuing Directors
(unless any such death, retirement or disability occurs following a
Permitted Transaction and any vacancies created thereby are not filled in
accordance with the terms of the written agreement governing such Permitted
Transaction); or
(C) any sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all or substantially all of the
consolidated assets of Employer and its subsidiaries or the adoption of any
plan of liquidation or dissolution of Employer.
8.13.14. "Partial Change in Control" shall mean:
(A) a consolidation or merger of Employer or a Company Entity, or
other reorganization, with or into one or more entities which are not
Company Entities, as a result of which less than 60% of the outstanding
voting securities of the Resulting Corporation are, or are to be, owned by
former shareholders of Employer as determined immediately prior to
consummation of such transaction (excluding voting securities of the
Resulting Corporation owned, or to be owned, by such shareholders by reason
of their ownership prior to such transaction of securities of any entity
other than Employer) and as a result of which the Continuing Directors
constitute (i) more than 50% of the Board of Directors of the Resulting
Corporation or (ii) exactly 50% of the Board of Directors of the Resulting
Corporation if the transaction resulting in such event is a Permitted
Transaction; or
(B) the public announcement (which, for purposes of this definition,
shall include, without limitation, a report filed pursuant to Section 13(d)
of the Exchange Act) by Employer or any Person that a Person (other than a
Company Entity) has become the Beneficial Owner, directly or indirectly, of
securities of Employer representing 20% or more, but not more than 50%, of
the combined voting power of Employer's then outstanding securities if the
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transaction resulting in such ownership has been approved in advance by the
Continuing Directors.
8.13.15. "Permitted Transaction" shall mean a transaction in which,
pursuant to a written agreement between Employer and all Persons who have
entered into an agreement with Employer to effect a transaction described
in paragraph (A)of the definition of Partial Change in Control, it is
agreed that (w) the Chief Executive Officer of Employer immediately prior
to the consummation of such transaction shall be the Chief Executive
Officer of the Resulting Corporation for not less than three years
following consummation of such transaction, (x) upon termination of service
of any Continuing Director for any reason, including upon death, disability
or retirement, prior to the expiration of such director's term during such
three-year period, the vacancy thereby created shall be filled by a nominee
selected solely by the Continuing Directors, (y) upon expiration of the
term of any such director during such three-year period, the nominee to
succeed such director shall be selected solely by the Continuing Directors
and (z) the parties will take other appropriate steps to ensure that the
Board of Directors of the Resulting Corporation will be evenly divided
between Continuing Directors and all directors designated by other parties
to the transaction during such three-year period.
8.13.16. "Person" shall have the meaning ascribed to such term as such
term is used in Sections 13(d) and 14(d) of the Exchange Act.
8.13.17. "Resulting Corporation" shall mean the surviving corporation in
any consolidation, merger or other reorganization to which Employer is a
party; provided, however, that if the surviving corporation in any such
transaction is a subsidiary of another corporation, then the Resulting
Corporation is the ultimate parent corporation of such surviving
corporation; and provided, further, that in the event of a consolidation,
merger or other reorganization to which a Company Entity (other than
Employer) is a party, then Employer shall be deemed the Resulting
Corporation.
8.14 Code Section 162(m). Notwithstanding any other provision of
-------------------
this Agreement to the contrary, to the extent that Employer's tax deduction for
remuneration in respect of the payment of any amount under Sections 5.02, 5.05
or 8.02 of this Agreement would be disallowed under Code Section 162(m) by
reason of the fact that Executive's applicable employee remuneration, as defined
in Code Section 162(m)(4), either exceeds or, if such amount were paid, would
exceed the $1,000,000 limitation in Code Section 162(m)(1), Employer may, in its
sole discretion, defer the payment of such amount, but only to the extent that,
and for so long as, Employer's tax deduction in respect of the payment thereof
would be so disallowed under Code Section 162(m); provided that no payment may
be deferred beyond three
-20-
months after the end of Employer's fiscal year in which Executive's termination
of employment occurs, and Employer may accelerate the payment of previously
deferred amounts if it determines that the amount of the tax deduction that
would be disallowed is not significant. Amounts which are deferred under this
Section 8.14 will be credited with interest at a rate determined by Employer
from time to time, but in no event less than the long-term applicable federal
rate under Code Section 1274(d) in effect from time to time.
IN WITNESS WHEREOF, Executive and Employer have executed this
Agreement as of the date set forth in the first paragraph hereof.
FIRST BANK SYSTEM, INC.
By /s/ XXX X. MITAU
----------------------------------------
Its Executive Vice President, General
---------------------------------------
Counsel and Secretary
----------------------------------------
/s/ XXXX X. XXXXXXXXXX
--------------------------------------------
Xxxx X. Xxxxxxxxxx
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