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 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 with duties
primarily relating to Xxxxxxxx since its formation in 1998, 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 Executive
Vice President 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 President or other
officer to whom Executive reports, 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
$600,000. 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. 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 166.67% of Executive's annual base salary.
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.
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 one (1)
year 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 one (1) 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. 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.
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) 166.67% 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 00000 Xxxxx Xxxxx, Xxxxxxxx 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
