FORM OF
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of this ____ day of
____________, 1999, by and between Xxxxxxxx Financial, Inc., a Delaware
corporation ("Xxxxxxxx") and Xxxxxx X. Xxxxxxx, an individual ("Executive") to
be effective on _________, 1999.
WHEREAS, concurrently with the execution of this Agreement, all of the
issued and outstanding stock of Xxxxxxxx is being distributed (the
"Distribution") to the shareholders of Kansas City Southern Industries, Inc.
("KCSI") which has been the parent of Xxxxxxxx since its formation on January
23, 1998; and
WHEREAS, Executive previously was employed by KCSI, and Xxxxxxxx and
Executive desire for Xxxxxxxx to continue to employ Executive on the terms and
conditions set forth in this Agreement and to provide an incentive to Executive
to remain in the employ of Xxxxxxxx hereafter, particularly in the event of any
Change in Control (as herein defined) of Xxxxxxxx or any Significant Subsidiary
(as herein defined), thereby establishing and preserving continuity of
management of Xxxxxxxx.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, it is agreed by and between Xxxxxxxx and Executive as
follows:
1. EMPLOYMENT. Xxxxxxxx hereby employs Executive as its Chairman of
the Board, President and Chief Executive Officer to serve at the pleasure of
the Board of Directors of Xxxxxxxx (the "Xxxxxxxx Board") and to have such
duties, powers and responsibilities as may be prescribed or delegated from time
to time by the Xxxxxxxx Board, subject to the powers vested in the Xxxxxxxx
Board and in the stockholders of Xxxxxxxx. Executive shall faithfully perform
his duties under this Agreement to the best of his ability and shall devote
substantially all of his working time and efforts to the business and affairs
of Xxxxxxxx and its affiliates.
2. COMPENSATION.
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(a) BASE COMPENSATION. Xxxxxxxx shall pay Executive as
compensation for his services hereunder an annual base salary at the rate of
$750,000. Such rate shall not be increased prior to January 1, 2000 and shall
not be reduced except as agreed by the parties or except as part of a general
salary reduction program imposed by Xxxxxxxx and applicable to all officers of
Xxxxxxxx.
(b) INCENTIVE COMPENSATION. For the year 1999, Executive shall
not be entitled to participate in any Xxxxxxxx incentive compensation plan.
3. BENEFITS AND STOCK OWNERSHIP.
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(a) BENEFITS. During the period of his employment hereunder,
Xxxxxxxx shall provide Executive with coverage under such benefit plans and
programs as are made generally available to similarly situated employees of
Xxxxxxxx, provided (a) Xxxxxxxx shall have no obligation with respect to any
plan or program if Executive is not eligible for coverage thereunder, and (b)
Executive acknowledges that stock options and other stock and equity
participation awards are granted in the discretion of the Xxxxxxxx Board or the
Compensation Committee of the Xxxxxxxx Board and that Executive has no right to
receive stock options or other equity participation awards or any particular
number or level of stock options or other awards. In determining
contributions, coverage and benefits under any disability insurance policy and
under any cash compensation-based plan provided to Executive by Xxxxxxxx, it
shall be assumed that the value of Executive's annual compensation, pursuant to
this Agreement is $875,000. Executive acknowledges that all rights and
benefits under benefit plans and programs shall be governed by the official
text of each such plan or program and not by any summary or description thereof
or any provision of this Agreement (except to the extent this Agreement
expressly modifies such benefit plans or programs) and that Xxxxxxxx is not
under any obligation to continue in effect or to fund any such plan or program,
except as provided in Paragraph 7 hereof. Xxxxxxxx also shall reimburse
Executive for ordinary and necessary travel and other business expenses in
accordance with policies and procedures established by Xxxxxxxx.
(b) STOCK OWNERSHIP. During the period of his employment
hereunder, Executive shall retain ownership in himself or in members of his
immediate family of at least a majority of the number of shares of (i) Xxxxxxxx
stock received by Executive or members of his immediate family in the
Distribution, and (ii) Xxxxxxxx stock acquired upon the exercise of stock
options, but excluding from such number of shares any such shares transferred
to KCSI to pay the purchase price upon the exercise of stock options or to meet
withholding tax requirements.
4. TERMINATION.
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(a) TERMINATION BY EXECUTIVE. Executive may terminate this
Agreement and his employment hereunder by at least thirty (30) days advance
written notice to Xxxxxxxx, except that in the event of any material breach of
this Agreement by Xxxxxxxx, Executive may terminate this Agreement and his
employment hereunder immediately upon notice to Xxxxxxxx.
(b) DEATH OR DISABILITY. This Agreement and Executive's
employment hereunder shall terminate automatically on the death or disability
of Executive, except to the extent employment is continued under Xxxxxxxx'x
disability plan. For purposes of this Agreement, Executive shall be deemed to
be disabled if he qualifies for disability benefits under Xxxxxxxx'x long-term
disability plan.
(c) TERMINATION BY XXXXXXXX FOR CAUSE. Xxxxxxxx may terminate
this Agreement and Executive's employment "for cause" immediately upon notice
to Executive. For purposes of this Agreement (except for Paragraph 7),
termination "for cause" shall mean termination based upon any one or more of
the following:
(i) Any material breach of this Agreement by Executive;
(ii) Executive's dishonesty involving Xxxxxxxx or any
subsidiary of Xxxxxxxx;
(iii) Gross negligence or willful misconduct in the
performance of Executive's duties as determined in good faith by the
Xxxxxxxx Board;
(iv) Willful failure by Executive to follow reasonable
instructions of the President or other officer to whom Executive reports
concerning the operations or business of Xxxxxxxx or any subsidiary of
Xxxxxxxx;
(v) Executive's fraud or criminal activity; or
(vi) Embezzlement or misappropriation by Executive.
(d) TERMINATION BY XXXXXXXX OTHER THAN FOR CAUSE.
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(i) Xxxxxxxx may terminate this Agreement and Executive's
employment other than for cause immediately upon notice to Executive, and
in such event, Xxxxxxxx shall provide severance benefits to Executive in
accordance with Paragraph 4(d)(ii) below.
(ii) Unless the provisions of Paragraph 7 of this Agreement
are applicable, if Executive's employment is terminated under Paragraph
4(d)(i), Xxxxxxxx shall continue, for a period of two (2) years following
such termination, (a) to pay to Executive as severance pay a monthly
amount equal to one-twelfth (1/12th) of the annual base salary referenced
in Paragraph 2(a) above, at the rate in effect immediately prior to
termination, and, (b) to reimburse Executive for the cost (including
state and federal income taxes payable with respect to this
reimbursement) of continuing the health insurance coverage provided
pursuant to this Agreement or obtaining health insurance coverage
comparable to the health insurance provided pursuant to this Agreement,
and obtaining coverage comparable to the life insurance provided pursuant
to this Agreement, unless Executive is provided comparable health or life
insurance coverage in connection with other employment. The foregoing
obligations of Xxxxxxxx shall continue until the end of such two (2) year
period notwithstanding the death or disability of Executive during said
period (except, in the event of death, the obligation to reimburse
Executive for the cost of life insurance shall not continue). In the
year in which termination of employment occurs, Executive shall be
eligible to receive benefits under the Xxxxxxxx Incentive Compensation
Plan and the Xxxxxxxx Executive Plan (if such Plans then are in existence
and Executive was entitled to participate immediately prior to
termination) in accordance with the provisions of such plans then
applicable, and severance pay received in such year shall be taken into
account for the purpose of determining benefits, if any, under the
Xxxxxxxx Incentive Compensation Plan but not under the Xxxxxxxx Executive
Plan. After the year in which termination occurs, Executive shall not be
entitled to accrue or receive benefits under the Xxxxxxxx Incentive
Compensation Plan or the Xxxxxxxx Executive Plan with respect to the
severance pay provided herein, notwithstanding that benefits under such
plan then are still generally available to executive employees of
Xxxxxxxx. After termination of employment, Executive shall not be
entitled to accrue or receive benefits under any other employee benefit
plan or program, except that Executive shall be entitled to participate
in the Xxxxxxxx Profit Sharing Plan, the Xxxxxxxx Employee Stock
Ownership Plan and the Xxxxxxxx Section 401(k) Plan in the year of
termination of employment only if Executive meets all requirements of
such plans for participation in such year.
5. NON-DISCLOSURE AND NON-COMPETE.
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(a) NON-DISCLOSURE. During the term of this Agreement and at all
times after any termination of this Agreement, Executive shall not, either
directly or indirectly, use or disclose any Xxxxxxxx trade secret, except to
the extent necessary for Executive to perform his duties for Xxxxxxxx while an
employee. For purposes of this Agreement, the term "Xxxxxxxx trade secret"
shall mean any information regarding the business or activities of Xxxxxxxx or
any subsidiary or affiliate, including any formula, pattern, compilation,
program, device, method, technique, process, customer list, technical
information or other confidential or proprietary information, that (a) derives
independent economic value, actual or potential, from not being generally known
to, and not being readily ascertainable by proper means by, other persons who
can obtain economic value from its disclosure or use, and (b) is the subject of
efforts of Xxxxxxxx or its subsidiary or affiliate that are reasonable under
the circumstance to maintain its secrecy. In the event of any breach of this
Paragraph 5 by Executive, Xxxxxxxx shall be entitled to terminate any and all
remaining severance benefits under Paragraph 4(d)(ii) and shall be entitled to
pursue such other legal and equitable remedies as may be available.
(b) NON-COMPETE. Following termination of this Agreement, except
termination pursuant to Paragraph 4(d) or any termination after a Change in
Control (as herein defined of Xxxxxxxx), for a period ending three (3) years
after the last payment of salary or severance pay to Executive, Executive shall
not, directly or indirectly, as an individual, consultant, employer, employee,
officer, director, advisory director, principal, agent, partner, member,
stockholder (except non-controlling holdings of stock of not more than 2% of a
publicly traded company) or otherwise, (i) engage in a business in competition
with any business conducted by Xxxxxxxx or any subsidiary of Xxxxxxxx at any
time within five (5) years preceding the commencement of the period of non-
compete provided herein or any business which Xxxxxxxx or any of its
subsidiaries was actively considering for ownership or conduct during the
aforesaid five (5) year period, or (ii) participate in management of any
holding company owning, directly or indirectly, more than 5% of any such
business. Executive acknowledges that certain subsidiaries of Stilwell now
conduct business throughout the United States and in foreign countries, and
agrees that this non-compete shall apply in all countries and jurisdictions in
which Xxxxxxxx or any of its subsidiaries conduct business or was actively
considering for the conduct of business during the aforesaid five (5) year
period.
6. DUTIES UPON TERMINATION; SURVIVAL.
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(a) DUTIES. Upon termination of this Agreement by Xxxxxxxx or
Executive for any reason, Executive shall immediately return to Xxxxxxxx all
Xxxxxxxx trade secrets which exist in tangible form and shall sign such written
resignations from all positions as an officer, director or member of any
committee or board of Xxxxxxxx and all direct and indirect subsidiaries and
affiliates of Xxxxxxxx as may be requested by Xxxxxxxx and shall sign such
other documents and papers relating to Executive's employment, benefits and
benefit plans as Xxxxxxxx may reasonably request.
(b) SURVIVAL. The provisions of Paragraphs 5, 6(a) and 7 of this
Agreement shall survive any termination of this Agreement by Xxxxxxxx or
Executive, and the provisions of Paragraph 4(d)(ii) shall survive any
termination of this Agreement by Xxxxxxxx under Paragraph 4(d)(i).
7. CONTINUATION OF EMPLOYMENT UPON CHANGE IN CONTROL OF XXXXXXXX.
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(a) CONTINUATION OF EMPLOYMENT. Subject to the terms and
conditions of this Paragraph 7, in the event of a Change in Control (as
defined in Paragraph 7(d)) at any time during the term of this Agreement,
Executive agrees to remain in the employ of Xxxxxxxx for a period of three
years (the "Three-Year Period") from the date of such Change in Control (the
"Control Change Date"). Xxxxxxxx agrees to continue to employ Executive for
the Three-Year Period. During the Three-Year Period, (i) the Executive's
position (including offices, titles, reporting requirements and
responsibilities), authority and duties shall be at least commensurate in all
material respects with the most significant of those held, exercised and
assigned at any time during the 12 month period immediately before the Control
Change Date and (ii) the Executive's services shall be performed at the
location where Executive was employed immediately before the Control Change
Date or at any other location less than 40 miles from such former location.
During the Three-Year Period, Xxxxxxxx shall continue to pay to Executive an
annual base salary on the same basis and at the same intervals as in effect
prior to the Control Change Date at a rate not less than 12 times the highest
monthly base salary paid or payable to the Executive by Xxxxxxxx in respect of
the 12-month period immediately before the Control Change Date.
(b) BENEFITS. During the Three-Year Period, Executive shall be
entitled to participate, on the basis of his executive position, in each of
the following Xxxxxxxx plans (together, the "Specified Benefits") in
existence, and in accordance with the terms thereof, at the Control Change
Date:
(i) any benefit plan, and trust fund associated therewith,
related to (a) life, health, dental, disability, accidental death and
dismemberment insurance or accrued but unpaid vacation time, (b) profit
sharing, thrift or deferred savings (including deferred compensation,
such as under Sec. 401(k) plans), (c) retirement or pension benefits,
(d) ERISA excess benefits and similar plans and (e) tax favored employee
stock ownership (such as under ESOP, and Employee Stock Purchase
programs); and
(ii) any other benefit plans hereafter made generally
available to executives of Executive's level or to the employees of
Xxxxxxxx generally.
In addition, Xxxxxxxx shall use its best efforts to cause all
outstanding options held by Executive under any stock option plan of Xxxxxxxx
or its affiliates to become immediately exercisable on the Control Change Date
and to the extent that such options are not vested and are subsequently
forfeited, the Executive shall receive a lump-sum cash payment within 5 days
after the options are forfeited equal to the difference between the fair
market value of the shares of stock subject to the non-vested, forfeited
options determined as of the date such options are forfeited and the exercise
price for such options. During the Three-Year Period Executive shall be
entitled to participate, on the basis of his executive position, in any
incentive compensation plan of Xxxxxxxx in accordance with the terms thereof
at the Control Change Date; provided that if under Xxxxxxxx programs or
Executive's Employment Agreement in existence immediately prior to the Control
Change Date, there are written limitations on participation for a designated
time period in any incentive compensation plan, such limitations shall
continue after the Control Change Date to the extent so provided for prior to
the Control Change Date.
If the amount of contributions or benefits with respect to the Specified
Benefits or any incentive compensation is determined on a discretionary basis
under the terms of the Specified Benefits or any incentive compensation plan
immediately prior to the Control Change Date, the amount of such contributions
or benefits during the Three-Year Period for each of the Specified Benefits
shall not be less than the average annual contributions or benefits for each
Specified Benefit for the three plan years ending prior to the Control Change
Date and, in the case of any incentive compensation plan, the amount of the
incentive compensation during the Three-Year Period shall not be less than 75%
of the maximum that could have been paid to the Executive under the terms of
the incentive compensation plan.
(c) PAYMENT. With respect to any plan or agreement under which
Executive would be entitled at the Control Change Date to receive Specified
Benefits or incentive compensation as a general obligation of Xxxxxxxx which
has not been separately funded (including specifically, but not limited to,
those referred to under Paragraph 7(b)(i)(d) above), Executive shall receive
within five (5) days after such date full payment in cash (discounted to the
then present value on the basis of a rate of seven percent (7%) per annum) of
all amounts to which he is then entitled thereunder.
(d) CHANGE IN CONTROL. Except as provided in the last sentence
of this Paragraph 7(d), for purposes of this Agreement, a "Change in Control"
shall be deemed to have occurred if:
(i) for any reason at any time less than seventy-five
percent (75%) of the members of the Xxxxxxxx Board shall be individuals
who fall into any of the following categories: (a) individuals who were
members of the Xxxxxxxx Board on the date of the Agreement; or (b)
individuals whose election, or nomination for election by Xxxxxxxx'x
stockholders, was approved by a vote of at least seventy-five percent
(75%) of the members of the Xxxxxxxx Board then still in office who were
members of the Xxxxxxxx Board on the date of the Agreement; or (c)
individuals whose election, or nomination for election, by Xxxxxxxx'x
stockholders, was approved by a vote of at least seventy-five percent
(75%) of the members of the Xxxxxxxx Board then still in office who were
elected in the manner described in (a) or (b) above; provided however,
that no individuals described in (b) or (c) above shall be treated as so
elected or nominated if such election or nomination shall have occurred
as part of a proxy contest, tender offer or any proposed purchase,
merger or other similar transaction; or
(ii) any "person" (as such term is used in Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934 (the "Exchange
Act")) shall have become, according to a public announcement or filing,
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of Xxxxxxxx representing
thirty percent (30%) (or, with respect to Paragraph 7(c) hereof, 40%) or
more (calculated in accordance with Rule 13d-3) of the combined voting
power of the then outstanding voting securities ("Voting Power") of
Xxxxxxxx; or
(iii) the stockholders of Xxxxxxxx shall have approved a
merger, consolidation or dissolution of Xxxxxxxx or a sale, lease,
exchange or disposition of all or substantially all of Xxxxxxxx'x
assets, if persons who were the beneficial owners of the Voting Power of
Xxxxxxxx immediately before any such merger, consolidation, dissolution,
sale, lease, exchange or disposition do not immediately thereafter,
beneficially own, directly or indirectly, in substantially the same
proportions, more than 60% of the Voting Power of any corporation or
other entity resulting from any such transaction.
(iv) Xxxxxxxx shall have directly or indirectly sold or
disposed of, whether by merger, consolidation, combination, lease,
exchange, spin-off, split-off, or other means, any Significant
Subsidiary or otherwise reduced Xxxxxxxx'x direct or indirect
beneficial ownership of any Significant Subsidiary to less than 50% of
the Voting Power of such entity.
For purposes of this Agreement, "Significant Subsidiary" shall mean (A) any
entity of which at least 50% of the Voting Power is beneficially owned,
directly or indirectly, by Xxxxxxxx and which contributed 30% or more of the
total combined revenues of Xxxxxxxx and all entities of which Xxxxxxxx owned
at least 50% of the Voting Power for the prior calendar year, and (B) any one
or more entities, businesses or groups of assets directly or indirectly sold
or disposed of by Xxxxxxxx (within the meaning of paragraph 7(d)(iv)) within
any two year period that contributed 30% of more of such total combined
revenues or would have contributed such 30% based on revenues of such
entities, businesses or groups of assets for the calendar year prior to their
sale or disposition.
Notwithstanding the foregoing provisions of this Paragraph 7(d) to the
contrary, the distribution of all or substantially all of the shares of
Xxxxxxxx owned by KCSI to the shareholders of KCSI shall not constitute a
Change in Control.
(e) TERMINATION AFTER CONTROL CHANGE DATE. Notwithstanding any
other provision of this Paragraph 7, at any time after the Control Change
Date, Xxxxxxxx may terminate the employment of Executive (the "Termination"),
but unless such Termination is for Cause as defined in subparagraph (g) or for
disability, within five (5) days of the Termination Xxxxxxxx shall pay to
Executive his full base salary through the Termination, to the extent not
theretofore paid, plus a lump sum amount (the "Special Severance Payment")
equal to the product (discounted to the then present value on the basis of a
rate of seven percent (7%) per annum) of (i) 175% of his annual base salary
specified in Paragraph 7(a) multiplied by (ii) three and Specified Benefits
(excluding any incentive compensation) to which Executive was entitled
immediately prior to Termination shall continue until the end of the 3-year
period ("Benefits Period") beginning on the date of Termination. If any plan
pursuant to which Specified Benefits are provided immediately prior to
Termination would not permit continued participation by Executive after
Termination, then Xxxxxxxx shall pay to Executive within five (5) days after
Termination a lump sum payment equal to the amount of Specified Benefits
Executive would have received under such plan if Executive had been fully
vested in the average annual contributions or benefits in effect for the three
plan years ending prior to the Control Change Date (regardless of any
limitations based on the earnings or performance of Xxxxxxxx) and a continuing
participant in such plan to the end of the Benefits Period. Following the end
of the Benefits Period, Xxxxxxxx shall continue to provide to the Executive
and the Executive's family the following benefits ("Post-Period Benefits"):
(1) prior to the Executive's attainment of age sixty (60), health,
prescription and dental benefits equivalent to those then applicable to active
peer executives of Xxxxxxxx and their families, as the same may be modified
from time to time, and (2) following the Executive's attainment of age sixty
(60) (and without regard to the Executive's period of service with Xxxxxxxx),
health and prescription benefits equivalent to those then applicable to
retired peer executives of Xxxxxxxx and their families, as the same may be
modified from time to time. The cost to the Executive of such Post-Period
Benefits shall not exceed the cost of such benefits to active or retired (as
applicable) peer executives, as the same may be modified from time to time.
Notwithstanding the preceding two sentences of this Paragraph 7(e), if the
Executive is covered under any health, prescription or dental plan provided by
a subsequent employer, then the corresponding type of plan coverage (i.e.,
health, prescription or dental) required to be provided as Post-Period
Benefits under this Paragraph 7(e) shall cease. The Executive's rights under
this Paragraph 7(e) shall be in addition to, and not in lieu of, any post-
termination continuation coverage or conversion rights the Executive may have
pursuant to applicable law, including without limitation continuation coverage
required by Section 4980 of the Code. Nothing in this Paragraph 7(e) shall be
deemed to limit in any manner the reserved right of Xxxxxxxx, in its sole and
absolute discretion, to at any time amend, modify or terminate health,
prescription or dental benefits for active or retired employees generally.
(f) RESIGNATION AFTER CONTROL CHANGE DATE. In the event of a
Change in Control as defined in Paragraph 7(d), thereafter, upon good reason
(as defined below), Executive may, at any time during the 3-year period
following the Change in Control, in his sole discretion, on not less than
thirty (30) days' written notice (the "Notice of Resignation") to the
Secretary of Xxxxxxxx and effective at the end of such notice period, resign
his employment with Xxxxxxxx (the "Resignation"). Within five (5) days of
such a Resignation, Xxxxxxxx shall pay to Executive his full base salary
through the effective date of such Resignation, to the extent not theretofore
paid, plus a lump sum amount equal to the Special Severance Payment (computed
as provided in the first sentence of Paragraph 7(e), except that for purposes
of such computation all references to "Termination" shall be deemed to be
references to "Resignation"). Upon Resignation of Executive, Specified
Benefits to which Executive was entitled immediately prior to Resignation
shall continue on the same terms and conditions as provided in Paragraph 7(e)
in the case of Termination (including equivalent payments provided for
therein), and Post-Period Benefits shall be provided on the same terms and
conditions as provided in Paragraph 7(e) in the case of Termination. For
purposes of this Agreement, "good reason" means any of the following:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position (including
offices, titles, reporting requirements or responsibilities), authority
or duties as contemplated by Section 7(a)(i), or any other action by
Xxxxxxxx which results in a diminution or other material adverse change
in such position, authority or duties;
(ii) any failure by Xxxxxxxx to comply with any of the
provisions of Paragraph 7;
(iii) Xxxxxxxx'x requiring the Executive to be based at any
office or location other than the location described in Section
7(a)(ii);
(iv) any other material adverse change to the terms and
conditions of the Executives employment; or
(v) any purported termination by Xxxxxxxx of the
Executive's employment other than as expressly permitted by this
Agreement (any such purported termination shall not be effective for any
other purpose under this Agreement).
A passage of time prior to delivery of the Notice of Resignation or a failure
by the Executive to include in the Notice of Resignation any fact or
circumstance which contributes to a showing of Good Reason shall not waive any
right of the Executive under this Agreement or preclude the Executive from
asserting such fact or circumstance in enforcing rights under this Agreement.
(g) TERMINATION FOR CAUSE AFTER CONTROL CHANGE DATE.
Notwithstanding any other provision of this Paragraph 7, at any time after the
Control Change Date, Executive may be terminated by Xxxxxxxx "for cause."
Cause means commission by the Executive of any felony or willful breach of
duty by the Executive in the course of the Executive's employment; except that
Cause shall not mean:
(i) bad judgment or negligence;
(ii) any act or omission believed by the Executive in good
faith to have been in or not opposed to the interest of Xxxxxxxx
(without intent of the Executive to gain, directly or indirectly, a
profit to which the Executive was not legally entitled);
(iii) any act or omission with respect to which a
determination could properly have been made by the Xxxxxxxx Board that
the Executive met the applicable standard of conduct for indemnification
or reimbursement under Xxxxxxxx'x by-laws, any applicable
indemnification agreement, or applicable law, in each case in effect at
the time of such act or omission; or
(iv) any act or omission with respect to which Notice of
Termination of the Executive is given more than 12 months after the
earliest date on which any member of the Xxxxxxxx Board, not a party to
the act or omission, knew or should have known of such act or omission.
Any Termination of the Executive's employment by Xxxxxxxx for Cause shall
be communicated to the Executive by Notice of Termination.
(h) GROSS-UP FOR CERTAIN TAXES. If it is determined (by the
reasonable computation of Xxxxxxxx'x independent auditors, which
determinations shall be certified to by such auditors and set forth in a
written certificate ("Certificate") delivered to the Executive) that any
benefit received or deemed received by the Executive from Xxxxxxxx pursuant to
this Agreement or otherwise (collectively, the "Payments") is or will become
subject to any excise tax under Section 4999 of the Code or any similar tax
payable under any United States federal, state, local or other law (such
excise tax and all such similar taxes collectively, "Excise Taxes"), then
Xxxxxxxx shall, immediately after such determination, pay the Executive an
amount (the "Gross-up Payment") equal to the product of:
(i) the amount of such Excise Taxes;
multiplied by
(ii) the Gross-up Multiple (as defined in Paragraph 7(k).
The Gross-up Payment is intended to compensate the Executive
for the Excise Taxes and any federal, state, local or other income or
excise taxes or other taxes payable by the Executive with respect to the
Gross-up Payment.
Xxxxxxxx shall cause the preparation and delivery to the
Executive of a Certificate upon request at any time. Xxxxxxxx shall, in
addition to complying with this Paragraph 7(h), cause all determinations
and certifications under Paragraphs 7(h)-(o) to be made as soon as
reasonably possible and in adequate time to permit the Executive to
prepare and file the Executive's individual tax returns on a timely
basis.
(i) DETERMINATION BY THE EXECUTIVE.
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(i) If Xxxxxxxx shall fail (a) to deliver a Certificate to
the Executive or (b) to pay to the Executive the amount of the Gross-up
Payment, if any, within 14 days after receipt from the Executive of a
written request for a Certificate, or if at any time following receipt
of a Certificate the Executive disputes the amount of the Gross-up
Payment set forth therein, the Executive may elect to demand the payment
of the amount which the Executive, in accordance with an opinion of
counsel to the Executive ("Executive Counsel Opinion"), determines to be
the Gross-up Payment. Any such demand by the Executive shall be made by
delivery to Xxxxxxxx of a written notice which specifies the Gross-up
Payment determined by the Executive and an Executive Counsel Opinion
regarding such Gross-up Payment (such written notice and opinion
collectively, the "Executive's Determination"). Within 14 days after
delivery of the Executive's Determination to Xxxxxxxx, Xxxxxxxx shall
either (a) pay the Executive the Gross-up Payment set forth in the
Executive's Determination (less the portion of such amount, if any,
previously paid to the Executive by Xxxxxxxx) or (b) deliver to the
Executive a Certificate specifying the Gross-up Payment determined by
Xxxxxxxx'x independent auditors, together with an opinion of Xxxxxxxx'x
counsel ("Xxxxxxxx Counsel Opinion"), and pay the Executive the Gross-up
Payment specified in such Certificate. If for any reason Xxxxxxxx fails
to comply with clause (b) of the preceding sentence, the Gross-up
Payment specified in the Executive's Determination shall be controlling
for all purposes.
(ii) If the Executive does not make a request for, and
Xxxxxxxx does not deliver to the Executive, a Certificate, Xxxxxxxx
shall, for purposes of Paragraph 7(j), be deemed to have determined that
no Gross-up Payment is due.
(j) ADDITIONAL GROSS-UP AMOUNTS. If, despite the initial
conclusion of Xxxxxxxx and/or the Executive that certain Payments are neither
subject to Excise Taxes nor to be counted in determining whether other
Payments are subject to Excise Taxes (any such item, a "Non-Parachute Item"),
it is later determined (pursuant to subsequently-enacted provisions of the
Code, final regulations or published rulings of the IRS, final IRS
determination or judgment of a court of competent jurisdiction or Xxxxxxxx'x
independent auditors) that any of the Non-Parachute Items are subject to
Excise Taxes, or are to be counted in determining whether any Payments are
subject to Excise Taxes, with the result that the amount of Excise Taxes
payable by the Executive is greater than the amount determined by Xxxxxxxx or
the Executive pursuant to Paragraph 7(h) or Paragraph 7(i), as applicable,
then Xxxxxxxx shall pay the Executive an amount (which shall also be deemed a
Gross-up Payment) equal to the product of:
(i) the sum of (a) such additional Excise Taxes and (b)
any interest, fines, penalties, expenses or other costs incurred by the
Executive as a result of having taken a position in accordance with a
determination made pursuant to Paragraph 7(h); multiplied by
(ii) the Gross-up Multiple.
(k) GROSS-UP MULTIPLE. The Gross-up Multiple shall equal a
fraction, the numerator of which is one (1.0), and the denominator of
which is one (1.0) minus the sum, expressed as a decimal fraction, of
the rates of all federal, state, local and other income and other taxes
and any Excise Taxes applicable to the Gross-up Payment; provided that,
if such sum exceeds 0.8, it shall be deemed equal to 0.8 for purposes of
this computation. (If different rates of tax are applicable to various
portions of a Gross-up Payment, the weighted average of such rates shall
be used.)
(l) OPINION OF COUNSEL. "Executive Counsel Opinion" means a
legal opinion of nationally recognized executive compensation counsel that
there is a reasonable basis to support a conclusion that the Gross-up Payment
determined by the Executive has been calculated in accord with this Paragraph
7 and applicable law. "Company Counsel Opinion" means a legal opinion of
nationally recognized executive compensation counsel that (i) there is a
reasonable basis to support a conclusion that the Gross-up Payment set forth
in the Certificate of Xxxxxxxx'x independent auditors has been calculated in
accord with this Paragraph 7 and applicable law, and (ii) there is no
reasonable basis for the calculation of the Gross-up Payment determined by the
Executive.
(m) AMOUNT INCREASED OR CONTESTED. The Executive shall notify
Xxxxxxxx in writing of any claim by the IRS or other taxing authority that, if
successful, would require the payment by Xxxxxxxx of a Gross-up Payment. Such
notice shall include the nature of such claim and the date on which such claim
is due to be paid. The Executive shall give such notice as soon as
practicable, but no later than 10 business days, after the Executive first
obtains actual knowledge of such claim; provided, however, that any failure to
give or delay in giving such notice shall affect Xxxxxxxx'x obligations under
this Paragraph 7 only if and to the extent that such failure results in actual
prejudice to Xxxxxxxx. The Executive shall not pay such claim less than 30
days after the Executive gives such notice to Xxxxxxxx (or, if sooner, the
date on which payment of such claim is due). If Xxxxxxxx notifies the
Executive in writing before the expiration of such period that it desires to
contest such claim, the Executive shall:
(i) give Xxxxxxxx any information that it reasonably
requests relating to such claim;
(ii) take such action in connection with contesting such
claim as Xxxxxxxx reasonably requests in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by Xxxxxxxx;
(iii) cooperate with Xxxxxxxx in good faith to contest such
claim; and
(iv) permit Xxxxxxxx to participate in any proceedings
relating to such claim; provided, however, that Xxxxxxxx shall bear and
pay directly all costs and expenses (including additional interest and
penalties) incurred in connection with such contest and shall indemnify
and hold the Executive harmless, on an after-tax basis, for any Excise
Tax or income tax, including related interest and penalties, imposed as
a result of such representation and payment of costs and expenses.
Without limiting the foregoing, Xxxxxxxx shall control all proceedings
in connection with such contest and, at its sole option, may pursue or
forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may,
at its sole option, either direct the Executive to pay the tax claimed
and xxx for a refund or contest the claim in any permissible manner.
The Executive agrees to prosecute such contest to a determination before
any administrative tribunal, in a court of initial jurisdiction and in
one or more appellate courts, as Xxxxxxxx shall determine; provided,
however, that if Xxxxxxxx directs the Executive to pay such claim and
xxx for a refund, Xxxxxxxx shall advance the amount of such payment to
the Executive, on an interest-free basis and shall indemnify the
Executive, on an after-tax basis, for any Excise Tax or income tax,
including related interest or penalties, imposed with respect to such
advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be
due is limited solely to such contested amount. The Stilwell's control
of the contest shall be limited to issues with respect to which a Gross-
up Payment would be payable. The Executive shall be entitled to settle
or contest, as the case may be, any other issue raised by the IRS or
other taxing authority.
(n) REFUNDS. If, after the receipt by the Executive of an
amount advanced by Xxxxxxxx pursuant to Paragraph 7(m), the Executive receives
any refund with respect to such claim, the Executive shall (subject to
Xxxxxxxx'x complying with the requirements of Paragraph 7(m)) promptly pay
Xxxxxxxx the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by
the Executive of an amount advanced by Xxxxxxxx pursuant to Paragraph 7(m), a
determination is made that the Executive shall not be entitled to a full
refund with respect to such claim and Xxxxxxxx does not notify the Executive
in writing of its intent to contest such determination before the expiration
of 30 days after such determination, then the applicable part of such advance
shall be forgiven and shall not be required to be repaid and the amount of
such advance shall offset, to the extent thereof, the amount of Gross-up
Payment required to be paid. Any contest of a denial of refund shall be
controlled by Paragraph 7(m).
(o) EXPENSES. If any dispute should arise under this Agreement
after the Control Change Date involving an effort by Executive to protect,
enforce or secure rights or benefits claimed by Executive hereunder, Xxxxxxxx
shall pay (promptly upon demand by Executive accompanied by reasonable
evidence of incurrence) all reasonable expenses (including attorneys' fees)
incurred by Executive in connection with such dispute, without regard to
whether Executive prevails in such dispute except that Executive shall repay
Xxxxxxxx any amounts so received if a court having jurisdiction shall make a
final, nonappealable determination that Executive acted frivolously or in bad
faith by such dispute. To assure Executive that adequate funds will be made
available to discharge Xxxxxxxx'x obligations set forth in the preceding
sentence, Xxxxxxxx has established a trust and upon the occurrence of a Change
in Control shall promptly deliver to the trustee of such trust to hold in
accordance with the terms and conditions thereof that sum which the Xxxxxxxx
Board shall have determined is reasonably sufficient for such purpose.
(p) PREVAILING PROVISIONS. On and after the Control Change
Date, the provisions of this Paragraph 7 shall control and take precedence
over any other provisions of this Agreement which are in conflict with or
address the same or a similar subject matter as the provisions of this
Paragraph 7.
8. MITIGATION AND OTHER EMPLOYMENT. After a termination of
Executive's employment pursuant to Paragraph 4(d)(i) or a Change in Control as
defined in Paragraph 7(d), Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other
employment or otherwise, and except as otherwise specifically provided in
Paragraph 4(d)(ii) with respect to health and life insurance and in Paragraph
7(e) with respect to health, prescription and dental benefits, no such other
employment, if obtained, or compensation or benefits payable in connection
therewith shall reduce any amounts or benefits to which Executive is entitled
hereunder. Such amounts or benefits payable to Executive under this Agreement
shall not be treated as damages but as severance compensation to which
Executive is entitled because Executive's employment has been terminated.
9. NOTICE. Notices and all other communications to either party
pursuant to this Agreement shall be in writing and shall be deemed to have been
given when personally delivered, delivered by facsimile or deposited in the
United States mail by certified or registered mail, postage prepaid, addressed,
in the case of Xxxxxxxx, to Xxxxxxxx at 000 Xxxx 00xx Xxxxxx, Xxxxxx Xxxx,
Xxxxxxxx 00000, Attention: Secretary, or, in the case of the Executive, to him
at EverGlades Farm, 00000 Xx. Xxxxxx, Xxxxxx Xxxx, XX 00000, or to such other
address as a party shall designate by notice to the other party.
10. AMENDMENT. No provision of this Agreement may be amended,
modified, waived or discharged unless such amendment, waiver, modification or
discharge is agreed to in a writing signed by Executive and the President of
Xxxxxxxx. No waiver by any party hereto at any time of any breach by another
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 time or at any prior or
subsequent time.
11. SUCCESSORS IN INTEREST. The rights and obligations of Xxxxxxxx
under this Agreement shall inure to the benefit of and be binding in each and
every respect upon the direct and indirect successors and assigns of Xxxxxxxx,
regardless of the manner in which such successors or assigns shall succeed to
the interest of Xxxxxxxx hereunder, and this Agreement shall not be terminated
by the voluntary or involuntary dissolution of Xxxxxxxx or by any merger or
consolidation or acquisition involving Xxxxxxxx or upon any transfer of all or
substantially all of Xxxxxxxx'x assets, or terminated otherwise than in
accordance with its terms. In the event of any such merger or consolidation or
transfer of assets, the provisions of this Agreement shall be binding upon and
shall inure to the benefit of the surviving corporation or the corporation or
other person to which such assets shall be transferred. Neither this Agreement
nor any of the payments or benefits hereunder may be pledged, assigned or
transferred by Executive either in whole or in part in any manner, without the
prior written consent of Xxxxxxxx.
12. SEVERABILITY. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if such invalid or
unenforceable provisions were omitted.
13. CONTROLLING LAW AND JURISDICTION. The validity, interpretation and
performance of this Agreement shall be subject to and construed under the laws
of the State of Missouri, without regard to principles of conflicts of law.
14. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and terminates
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the terms of Executive's employment
or severance arrangements.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above stated.
XXXXXXXX FINANCIAL, INC.
By
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Name:
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Title:
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EXECUTIVE
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Xxxxxx X. Xxxxxxx
