CHANGE OF CONTROL AGREEMENT
---------------------------
THIS AGREEMENT, entered into as of the 16th day of April, 2001, by and
between XXXXXXXX & XXXXXX CORPORATION (the "Company"), and XXXX X. XXXXXXX (the
"Executive") (hereinafter collectively referred to as "the parties").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that the possibility of a Change of Control (as hereinafter defined in Section
2) exists and that the threat of or the occurrence of a Change of Control can
result in significant distractions of its key management personnel because of
the uncertainties inherent in such a situation; and
WHEREAS, the Board has determined that it is essential and in the best
interest of the Company and its shareholders to retain the services of the
Executive in the event of a threat or occurrence of a Change of Control and to
ensure his continued dedication and efforts in such event without undue concern
for his personal financial and employment security; and
WHEREAS, in order to induce the Executive to remain in the employ of the
Company, particularly in the event of a threat of or the occurrence of a Change
of Control, the Company desires to enter into this Agreement with the
Executive.
NOW, THEREFORE, in consideration of the respective agreements of the
parties contained herein, it is agreed as follows:
1. EMPLOYMENT TERM. (a) The "Employment Term" shall commence on the
first date during the Protected Period (as defined in Section 1(c), below) on
which a Change of Control (as defined in Section 2, below) occurs (the
"Effective Date") and shall expire on the third anniversary of the Effective
Date; provided, however, that at the end of each day of the Employment Term the
Employment Term shall automatically be extended for one (1) day unless either
the Company or the Executive shall have given written notice to the other at
least thirty (30) days prior thereto that the Employment Term shall not be so
extended.
(b) Notwithstanding anything contained in this Agreement to the
contrary, if the Executive's employment is terminated prior to the Effective
Date and the Executive reasonably demonstrates that such termination (i) was
at the request of a third party who has indicated an intention or taken steps
reasonably calculated to effect a Change of Control, or (ii) otherwise occurred
in connection with or in anticipation of a Change of Control, then for all
purposes of this Agreement, the Effective Date shall mean the date immediately
prior to the date of such termination of the Executive's employment.
(c) For purposes of this Agreement, the "Protected Period" shall be the
three (3) year period commencing on the date hereof; provided, however, that
at the end of each day the Protected Period shall be automatically extended for
one (1) day unless at least thirty (30) days prior thereto the Company shall
have given written notice to the Executive that the Protected Period shall not
be so extended; and provided, further, that notwithstanding any such notice by
the Company not to extend, the Protected Period shall not end if prior to the
expiration thereof any third party has indicated an intention or taken steps
reasonably calculated to effect a Change of Control, in which event the
Protected Period shall end only after such third party publicly announces that
it has abandoned all efforts to effect a Change of Control.
2. CHANGE OF CONTROL. For purposes of this Agreement, a "Change of
Control" shall mean the first to occur of the following:
(a) The acquisition by any individual, entity or "group" (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of thirty-three percent (33%)
or more of either (i) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (ii) the combined voting
power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that the following acquisitions of common
stock shall not constitute a Change of Control: (i) any acquisition directly
from the Company (excluding an acquisition by virtue of the exercise of a
conversion privilege or by one person or a group of persons acting in concert),
(ii) any acquisition by the Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any acquisition by any
corporation pursuant to a reorganization, merger, statutory share exchange or
consolidation which would not be a Change of Control under subsection (c) of
this Section 2; or
(b) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of
the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of either an actual or threatened "election contest" or other actual or
threatened "solicitation" (as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act) of proxies or consents by or on behalf
of a person other than the Incumbent Board; or
(c) Consummation of a reorganization, merger, statutory share exchange
or consolidation, unless, following such reorganization, merger, statutory
share exchange or consolidation, (i) more than two-thirds (2/3) of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such reorganization, merger, statutory share exchange or
consolidation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such reorganization, merger,
statutory share exchange or consolidation in substantially the same proportions
as their ownership, immediately prior to such reorganization, merger, statutory
share exchange or consolidation, (ii) no person (excluding the Company, any
employee benefit plan (or related trust) of the Company or such corporation
resulting from such reorganization, merger, statutory share exchange or
consolidation and any person beneficially owning, immediately prior to such
reorganization, merger, statutory share exchange or consolidation, directly or
indirectly, thirty-three percent (33%) or more of the Outstanding Company
Common Stock or Outstanding Voting Securities, as the case may be) beneficially
owns, directly or indirectly, thirty-three percent (33%) or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such reorganization, merger, statutory share exchange or
consolidation or the combined voting power of the then outstanding voting
securities of such corporation, entitled to vote generally in the election of
directors and (iii) at least a majority of the members of the board of
directors of the corporation resulting from such reorganization, merger,
statutory share exchange or consolidation were members of the Incumbent Board
at the time of the execution of the initial agreement providing for such
reorganization, merger or consolidation; or
(d) Consummation of (i) a complete liquidation or dissolution of the
Company or (ii) the sale or other disposition of all or substantially all of
the assets of the Company, other than to a corporation, with respect to which
following such sale or other disposition, (A) more than two-thirds (2/3) of,
respectively, the then outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such sale or other disposition in substantially the same
proportion as their ownership, immediately prior to such sale or other
disposition, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (B) no person (excluding the Company and
any employee benefit plan (or related trust) of the Company or such corporation
and any person beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, thirty-three percent (33%) or more of the
Outstanding Company Common Stock or Outstanding Company Voting Securities, as
the case may be) beneficially owns, directly or indirectly, thirty-three
percent (33%) or more of, respectively, the then outstanding shares of common
stock of such corporation or the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the
election of directors and (C) at least a majority of the members of the board
of directors of such corporation were members of the Incumbent Board at the
time of the execution of the initial agreement or action of the Board providing
for such sale or other disposition of assets of the Company.
3. EMPLOYMENT. (a) Subject to the provisions of Section 3, hereof, the
Company agrees to continue to employ the Executive and the Executive agrees to
remain in the employ of the Company during the Employment Term. During the
Employment Term, the Executive shall be employed in such executive capacity as
may be mutually agreed to by the parties. During the Employment Term,
Executive's position (including status, offices, titles and reporting
requirements), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those held
or assigned at any time during the twelve (12) month period immediately
preceding the Effective Date, and Executive's services shall be performed at
the location where Executive was employed immediately preceding the Effective
Date or at any office or location less than thirty-five (35) miles from such
location, unless mutually agreed to in writing by the parties.
(b) Excluding periods of vacation and sick leave to which the Executive
is entitled, during the Employment Term the Executive agrees to devote full
time attention to the business and affairs of the Company to the extent
necessary to discharge the responsibilities assigned to the Executive
hereunder, provided that the Executive may take reasonable amounts of time to
(i) serve on corporate, civil or charitable boards or committees, and (ii)
deliver lectures, fulfill speaking engagements or teach at educational
institutions, if such activities do not significantly interfere with the
performance of the Executive's responsibilities hereunder. It is expressly
understood and agreed that to the extent any such activities have been
conducted by the Executive prior to the Effective Date, the continued conduct
of such activities (or the conduct of activities similar in nature and scope)
subsequent to the Effective Date shall not thereafter be deemed to interfere
with the performance of Executive's responsibilities hereunder.
4. COMPENSATION. (a) BASE SALARY. During the Employment Term, the
Executive shall receive an annual base salary ("Annual Base Salary"), which
shall be paid at a monthly rate, at least equal to twelve (12) times the
highest monthly base salary paid or payable to the Executive by the Company and
its affiliated companies in respect of the twelve (12) month period immediately
preceding the month in which the Effective Date occurs, including any amounts
which were deferred under any plans of the Company and its affiliated
companies. During the Employment Term, the Annual Base Salary shall be
reviewed at least annually and shall be increased at any time and from time to
time as shall be substantially consistent with increases in base salary
generally awarded in the ordinary course of business to other peer executives
of the Company and its affiliated companies. Any increase in Annual Base
Salary shall not serve to limit or reduce any other obligation to the Executive
under this Agreement. Annual Base Salary shall not be reduced after any such
increase and the term Annual Base Salary as utilized in this Agreement shall
refer to Annual Base Salary as so increased. As used in this Agreement, the
term "affiliated companies" shall include any company controlled by,
controlling or under common control with the Company.
(b) ANNUAL BONUS. In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year ending during the Employment Term, an
annual bonus (the "Annual Bonus") in cash at least equal to the average
annualized (for any fiscal year consisting of less than twelve (12) full months
or with respect to which the Executive has been employed by the Company for
less than twelve (12) full months) bonuses paid or payable, including any
amounts which were deferred under any plans of the Company and its affiliated
companies, to the Executive by the Company and its affiliated companies in
respect of the three (3) fiscal years immediately preceding the fiscal year in
which the Effective Date occurs (the "Recent Average Bonus"). Each such Annual
Bonus shall be paid no later than seventy-five (75) days after the end of the
fiscal year for which the Annual Bonus is awarded, unless the Executive shall
elect to defer the receipt of such Annual Bonus under any plan or arrangement
of the Company allowing therefor.
(c) INCENTIVE, SAVINGS AND RETIREMENT PLANS. During the Employment
Term, the Executive shall be entitled to participate in all incentive, savings
and retirement plans, practices, policies and programs applicable generally to
other peer executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide the Executive
with incentive opportunities (measured with respect to both regular and special
incentive opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit opportunities, in
each case, less favorable, in the aggregate, than the most favorable of those
provided by the Company and its affiliated companies for the Executive under
such plans, practices, policies and programs as in effect at any time during
the twelve (12) month period immediately preceding the Effective Date, or, if
more favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and its affiliated
companies.
(d) BENEFIT PLANS. During the Employment Term, the Executive and/or the
Executive's family, as the case may be, shall be eligible for participation in
and shall receive all benefits under benefit plans, practices, policies and
programs provided by the Company and its affiliated companies (including,
without limitation, medical, prescription drug, dental, disability, salary
continuance, employee life, group life, accidental death and travel accident
insurance plans and programs) to the extent applicable generally to other peer
executives of the Company and its affiliated companies and their families; but
in no event shall such plans, practices, policies and programs provide the
Executive with benefits which are less favorable, in the aggregate, than the
most favorable of such plans, practices, policies and programs in effect for
the Executive and his family at any time during the twelve (12) month period
immediately preceding the Effective Date or, if more favorable to the
Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and its affiliated companies and their
families.
(e) EXPENSES. During the Employment Term, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred
by the Executive in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in effect for the
Executive at any time during the twelve (12) month period immediately preceding
the Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of the
Company and its affiliated companies.
(f) FRINGE BENEFITS. During the Employment Term, the Executive shall
be entitled to fringe benefits (including but not limited to Company cars, club
dues and physical examinations) in accordance with the most favorable plans,
practices, programs and policies of the Company and its affiliated companies
in effect for the Executive at any time during the twelve (12) month period
immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.
(g) OFFICE AND SUPPORT STAFF. During the Employment Term, the Executive
shall be entitled to an office or offices of a size and with furnishings and
other appointments, and to exclusive personal secretarial and other assistance,
in accordance with the most favorable of the foregoing provided to the
Executive by the company and its affiliated companies at any time during the
twelve (12) month period immediately preceding the Effective Date or, if more
favorable to the Executive, as provided generally at any time thereafter with
respect to other peer executives of the Company and its affiliated companies.
(h) VACATION AND SICK LEAVE. During the Employment Term, the Executive
shall be entitled to paid vacation and sick leave (without loss of pay) in
accordance with the most favorable plans, policies, programs and practices of
the Company and its affiliated companies as in effect for the Executive at any
time during the twelve (12) month period immediately preceding the Effective
Date or, if more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and its
affiliated companies.
(i) RESTRICTIONS. As of the Effective Date, all restrictions limiting
the exercise, transferability or other incidents of ownership of any
outstanding award, including but not limited to restricted stock, options,
stock appreciation rights, or other property or rights of the Company granted
to the Executive shall lapse, and such awards shall become fully vested and be
held by the Executive free and clear of all such restrictions. This provision
shall apply to all such property or rights notwithstanding the provisions of
any other plan or agreement, unless the effect of the application of this
provision to a particular right or property would result in the loss of
favorable securities law treatment for participants under the plan pursuant to
which the award was granted.
5. TERMINATION OF EMPLOYMENT. During the Employment Term, the
Executive's employment hereunder may be terminated under the following
circumstances:
(a) DEATH OR DISABILITY. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Term. If the
Company determines in good faith that the Disability of the Executive has
occurred during the Employment Term (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice in accordance
with Section 5 of this Agreement of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company shall
terminate effective on the thirtieth (30th) day after receipt of such notice
by the Executive (the "Disability Effective Date"), provided that, within
thirty (30) days after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For purposes of this
Agreement, "Disability" shall mean the absence of the Executive from the
Executive's duties with the Company on a full-time basis for one hundred eighty
(180) consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the Executive or the
Executive's legal representative, provided if the parties are unable to agree,
the parties shall request the Xxxx of the Medical College of Wisconsin to
choose such physician.
(b) CAUSE. The Company may terminate the Executive's employment for
"Cause". A termination for Cause is a termination evidenced by a resolution
adopted in good faith by a majority of the Board that the Executive (i)
willfully, deliberately and continually failed to substantially perform his
duties under Section 3, above (other than a failure resulting from the
Executive's incapacity due to physical or mental illness) which failure
constitutes gross misconduct, and results in and was intended to result in
demonstrable material injury to the Company, monetary or otherwise, or (ii)
committed acts of fraud and dishonesty constituting a felony, as determined by
a final judgment or order of a court of competent jurisdiction, and resulting
or intended to result in gain to or personal enrichment of the Executive at the
Company's expense, provided, however, that no termination of the Executive's
employment shall be for Cause as set forth in (i), above, until (a) Executive
shall have had at least sixty (60) days to cure any conduct or act alleged to
provide Cause for termination after a written notice of demand has been
delivered to the Executive specifying in detail the manner in which the
Executive's conduct violates this Agreement, and (b) the Executive shall have
been provided an opportunity to be heard by the Board (with the assistance of
the Executive's counsel if the Executive so desires). No act, or failure to
act, on the Executive's part, shall be considered "willful" unless he has acted
or failed to act in bad faith and without a reasonable belief that his action
or failure to act was in the best interest of the Company. Notwithstanding
anything contained in this Agreement to the contrary, no failure to perform by
the Executive after Notice of Termination is given by the Executive shall
constitute Cause for purposes of this Agreement.
(c) GOOD REASON.
(1) The Executive may terminate his employment for Good Reason.
For purposes of this Agreement, "Good Reason" shall mean the occurrence
after a Change of Control of any of the events or conditions described
in Subsections (i) through (vi) hereof:
(i) A change in the Executive's status, title, position or
responsibilities (including reporting responsibilities) which, in
the Executive's reasonable judgment, does not represent a
promotion from his status, title, position or responsibilities as
in effect immediately prior thereto; the assignment to the
Executive of any duties or responsibilities which, in the
Executive's reasonable judgment, are inconsistent with his status,
title, position or responsibilities in effect immediately prior to
such assignment; or any removal of the Executive from or failure
to reappoint or reelect him to any position, except in connection
with the termination of his employment for Disability, Cause, as
a result of his death or by the Executive other than for Good
Reason;
(ii) Any failure by the Company to comply with any of the
provisions of Section 4 of this Agreement.
(iii) The insolvency or the filing (by any party, including
the Company) of a petition for bankruptcy of the Company;
(iv) Any material breach by the Company of any provision of
this Agreement;
(v) Any purported termination of the Executive's employment
for Cause by the Company which does not comply with the terms of
Section 5 of this Agreement; and
(vi) The failure of the Company to obtain an agreement,
satisfactory to the Executive, from any successor or assign of the
Company, to assume and agree to perform this Agreement, as
contemplated in Section 10 hereof.
(2) Any event or condition described in Section 5(c)(1) which
occurs prior to the Effective Date but which the Executive reasonably
demonstrates (i) was at the request of a third party who has indicated
an intention or taken steps reasonably calculated to effect a Change of
Control, or (ii) otherwise arose in connection with or in anticipation
of a Change of Control, shall constitute Good Reason for purposes of this
Agreement notwithstanding that it occurred prior to the Effective Date.
(3) The Executive's right to terminate his employment pursuant to
this Section 5(c) shall not be affected by his incapacity due to physical
or mental illness. The Executive's continued employment or failure to
give Notice of Termination shall not constitute consent to, or a waiver
of rights with respect to, any circumstances constituting Good Reason
hereunder.
(4) For purposes of this Section 5(c), any good faith
determination of Good Reason made by the Executive shall be conclusive.
Anything in this Agreement to the contrary notwithstanding, a termination
by the Executive for any reason or for no reason during the sixty (60)
day period commencing on the date six (6) months after the Effective Date
shall be deemed to be a termination by the Executive for Good Reason for
all purposes of this Agreement.
(d) VOLUNTARY TERMINATION. The Executive may voluntarily terminate his
employment hereunder at any time.
(e) NOTICE OF TERMINATION. Any purported termination by the Company or
by the Executive (other than by death of the Executive) shall be communicated
by Notice of Termination to the other. For purposes of this Agreement, a
"Notice of Termination" shall mean a written notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) to the
extent applicable, sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated, and (iii) the Termination Date. For purposes of
this Agreement, no such purported termination of employment shall be effective
without such Notice of Termination.
(f) TERMINATION DATE, ETC. "Termination Date" shall mean in the case
of the Executive's death, his date of death, or in all other cases, the date
specified in the Notice of Termination subject to the following:
(1) If the Executive's employment is terminated by the Company,
the date specified in the Notice of Termination shall be at least thirty
(30) days after the date the Notice of Termination is given to the
Executive, provided, however, that in the case of Disability, the
Executive shall not have returned to the full-time performance of his
duties during such period of at least thirty (30) days;
(2) If the Executive's employment is terminated for Good Reason,
the date specified in the Notice of Termination shall not be more than
sixty (60) days after the date the Notice of Termination is given to the
Company; and
(3) In the event that within thirty (30) days following the date
of receipt of the Notice of Termination, one party notifies the other
that a dispute exists concerning the basis for termination, the
Executive's employment hereunder shall not be terminated except after the
dispute is finally resolved and a Termination Date is determined either
by a mutual written agreement of the parties, or by a binding and final
judgment order or decree of a court of competent jurisdiction (the time
for appeal therefrom having expired and no appeal having been perfected).
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) GOOD REASON; OTHER THAN FOR CAUSE, DEATH OR DISABILITY. If, during
the Employment Term, the Company shall terminate the Executive's employment
other than for Cause or Disability or the Executive shall terminate employment
for Good Reason:
(i) The Company shall pay to the Executive in a lump sum in cash
within five (5) days after the Termination Date the aggregate of the
following amounts:
A. The sum of:
(1) The Executive's Annual Base Salary through the
Termination Date to the extent not theretofore paid; and
(2) The product of (x) the higher of (I) the Recent
Average Bonus and (II) the Annual Bonus paid or payable,
including any amount deferred, (and annualized for any
fiscal year consisting of less than twelve (12) full months
or for which the Executive has been employed for less than
twelve (12) full months) for the most recently completed
fiscal year during the Employment Term, if any (such higher
amount being referred to as the "Highest Annual Bonus") and
(y) a fraction, the numerator of which is the number of days
completed in the current fiscal year through the Termination
Date, and the denominator of which is 365.
The sum of the amounts described in Clauses (1) and (2)
shall be hereinafter referred to as the "Accrued Obligations";
B. The amount equal to the product of (1) three and (2) the
sum of (x) the Executive's Annual Base Salary (increased for this
purpose by any Section 401(k) deferrals, cafeteria plan elections,
or other deferrals that would have increased Executive's Annual
Base Salary if paid in cash to Executive when earned) and (y) the
Executive's Highest Annual Bonus;
C. A separate lump-sum supplemental retirement benefit
equal to the difference between (1) the actuarial equivalent
(utilizing for this purpose the most favorable to the Executive
actuarial assumptions and Company contribution history with
respect to the applicable retirement plan, incentive plans,
savings plans and other plans described in Section 4(c) (or any
successor plan thereto) (the "Retirement Plans") during the twelve
(12) month period immediately preceding the Effective Date) of the
benefit payable under the Retirement Plans and any supplemental
and/or excess retirement plan providing benefits for the Executive
(the "SERP") which the Executive would receive if the Executive's
employment continued for an additional three (3) years after the
Termination Date with annual compensation equal to the sum of the
Annual Base Salary and Highest Annual Bonus, assuming for this
purpose that all accrued benefits and contributions are fully
vested and that benefit accrual formulas and Company contributions
are no less advantageous to the Executive than those in effect
during the twelve (12) month period immediately preceding the
Effective Date, and (2) the actuarial equivalent (utilizing for
this purpose the actuarial assumptions utilized with respect to
the Retirement Plans during the twelve (12) month period
immediately preceding the Effective Date) of the Executive's
actual benefit (paid or payable), if any, under the Retirement
Plans and the SERP. For example, if there were a termination
today this supplemental retirement benefit would be interpreted
with respect to two plans in existence today as follows: (i) with
respect to the Retirement Growth component of the retirement
program of the Company, the Executive would receive three times
eight percent (8%) (or twenty-four percent (24%)) of the sum of
the Executive's Annual Base Salary (determined in accordance with
subsection C of Section 6(a)(i)) and the Executive's Highest
Annual Bonus; and (ii) with respect to the Incentive Savings
component of the retirement plan of the Company, the Executive
would receive three times the annual Company match of fifty
percent (50%) of the Executive's maximum allowable contribution to
the Plan assuming Executive's compensation is as set forth above;
and
D. The amount equal to the product of (i) three and (ii)
the sum of (x) the imputed income reflected on Executive's W-2
attributable to the car provided to Executive by the Company or
its affiliates for the last calendar year ending before the
Effective Date and (y) the club dues for Executive paid by the
Company or its affiliates attributable to such year.
(ii) For thirty-six (36) months after the Termination Date, the
Company shall continue to provide medical and dental benefits to the
Executive and/or the Executive's family in accordance with the most
favorable plans, practices, programs or policies of the Company and its
affiliated companies applicable generally to other peer executives who
are active employees and their families as in effect from time to time
thereafter; provided, however, that if the Executive becomes reemployed
with another employer and is eligible to receive medical or other
benefits under another employer provided plan, the medical and other
benefits described herein shall be secondary to those provided under such
other plan during such applicable period of eligibility, provided that
the aggregate coverage of the combined benefit plans is no less favorable
to the Executive, in terms of amounts and deductibles and costs to him,
than the coverage required hereunder. For purposes of determining
eligibility of the Executive for retiree health insurance, the Executive
shall be considered to have remained employed until the end of such
thirty-six (36) month period and to have retired on the last day of such
period. If the Executive would qualify at the end of such thirty-six
(36) month period for retiree health insurance under the Company's plan
guidelines as in existence on the Effective Date, the Company shall
provide to the Executive and his or her spouse, for life, retiree health
insurance, subsidized to at least the same percentage extent as under the
Company's plan as in existence on the Effective Date. Such retiree
health insurance shall provide medical benefits to the Executive and/or
the Executive's spouse in accordance with the most favorable plans,
practices, programs or policies of the Company and its affiliated
companies applicable generally to other peer executives who are active
employees and their spouses as in effect from time to time thereafter;
provided, however, that if the Executive and/or the Executive's spouse
qualifies for coverage by Medicare or any successor program, the Company
may require that the Executive and/or the Executive's spouse fully
participate in Medicare and pay the premiums therefor personally.
(iii) The Executive shall have the right to purchase the car
provided to him by the Company or its affiliates during the twelve (12)
month period immediately preceding the Effective Date, if applicable, (or
a comparable car acceptable to the Executive if such car is no longer
owned by the Company or its affiliates), at the book value thereof on the
Termination Date, exercisable within thirty (30) days after the
Termination Date; and if the car is not purchased, Executive shall return
the car to the Company.
(iv) The Executive shall have the option of purchasing any split
dollar life insurance owned by the Company or its affiliates on the life
of Executive for the Company's investment in the contract, exercisable
at any time within thirty (30) days after the Termination Date; and the
Company agrees during the Employment Term not to terminate, sell,
transfer or otherwise dispose of any such insurance without first
allowing Executive the opportunity to exercise such option. For the
thirty-six (36) month period after the Termination Date, the Company
shall continue to provide group term life insurance (or comparable term
coverage) in the same face amount and on substantially the same terms as
in effect for the Executive just prior to the Effective Time. At the end
of the thirty-six (36) month period, the Executive shall have any
conversion rights as regards such coverage as are provided by law.
(v) To the extent not theretofore paid or provided, the Company
shall timely pay or provide to the Executive any other amounts or
benefits required to be paid or provided or which the Executive is
eligible to receive pursuant to this Agreement under any plan, program,
policy or practice or contract or agreement of the Company and its
affiliated companies (such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits").
Notwithstanding anything herein contained to the contrary, the payments
and benefits provided in this Section 6(a) (other than the Accrued Obligations)
shall not be paid or provided to the Executive unless and until he executes a
Complete and Permanent Release (the "Release") in the form attached hereto, and
the applicable period for rescission of the Release has expired. The parties
agree that the Release may be expanded to include any company acquiring the
Company and its affiliates as "Released Parties" as defined in the Release.
(b) DEATH. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Term, this Agreement shall terminate
without further obligations to the Executive's legal representatives under this
Agreement, except that the Company shall pay or provide the Accrued
Obligations, six (6) months of Annual Base Salary, and the Other Benefits. The
Accrued Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within thirty (30) days of the Termination
Date. The six (6) months of Annual Base Salary shall be paid during the six
(6) month period following the Termination Date on a monthly basis. With
respect to the provision of Other Benefits, the term Other Benefits as utilized
in this Section 6(b) shall include, and the Executive's family shall be
entitled to receive, benefits at least equal to the most favorable benefits
provided by the Company and any of its affiliated companies to surviving
families of peer executives of the Company and such affiliated companies under
such plans, programs, practices and policies relating to family death benefits,
if any, as in effect with respect to other peer executives and their families
at any time during the twelve (12) month period immediately preceding the
Effective Date or, if more favorable to the Executive and/or the Executive's
family, as in effect on the date of the Executive's death with respect to other
peer executives of the Company and its affiliated companies and their families.
(c) DISABILITY. If the Executive's employment is terminated by reason
of the Executive's Disability during the Employment Term, this Agreement shall
terminate without further obligations to the Executive, except that the Company
shall pay or provide the Accrued Obligations and the Other Benefits. The
Accrued Obligations shall be paid to the Executive in a lump sum in cash within
thirty (30) days of the Termination Date. With respect to the provision of
Other Benefits, the term Other Benefits as utilized in this Section 6(c) shall
include, and the Executive shall be entitled after the Disability Effective
Date to receive, disability and other benefits at least equal to the most
favorable of those generally provided by the Company and its affiliated
companies to disabled executives and/or their families in accordance with such
plans, programs, practices and policies relating to disability, if any, as in
effect generally with respect to other peer executives and their families at
any time during the twelve (12) month period immediately preceding the
Effective Date or, if more favorable to the Executive and/or the Executive's
family, as in effect at any time thereafter generally with respect to other
peer executives of the Company and its affiliated companies and their families.
(d) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's employment
shall be terminated for Cause during the Employment Term, or if the Executive
voluntarily terminates employment during the Employment Term for other than
Good Reason, this Agreement shall terminate without further obligations to the
Executive other than the obligation to pay to the Executive Annual Base Salary
through the Date of Termination and any other amounts earned or accrued through
the Termination Date, in each case to the extent theretofore unpaid; provided
that if Executive voluntarily terminates, Executive shall receive the benefits
normally provided upon normal or early retirement with respect to other peer
Executives and their families to the extent he qualifies therefore All salary
or compensation hereunder shall be paid to the Executive in a lump sum in cash
within thirty (30) days of the Date of Termination.
(e) DELINQUENT PAYMENTS. If any of the payments referred to in this
Section 6 are not paid within the time specified after the Termination Date
(hereinafter a "Delinquent Payment"), in addition to such principal sum, the
Company will pay to the Executive interest on all such Delinquent Payments
computed at the prime rate as announced from time to time by M&I Xxxxxxxx &
Xxxxxx Bank, or its successor, compounded monthly. Notwithstanding the
foregoing, no interest shall be due and owing as regards payments which are
delayed because of Executive's failure to execute the Release or the recission
thereof.
(f) VACATION PAY. In consideration of all payments made by the Company
to the Executive pursuant to this Agreement, the Executive hereby waives any
claim he may have for accrued and unpaid vacation pay as of the Termination
Date.
7. NO MITIGATION. In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement and such
amounts shall not be reduced (except to the extent set forth in Section
6(a)(ii)) whether or not the Executive obtains other employment.
8. EXCISE TAX PAYMENTS.
(a) Notwithstanding anything contained in this Agreement to the
contrary, in the event that any payment or distribution to or for the benefit
of the Executive, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise in connection with, or
arising out of, his employment with the Company (a "Payment" or "Payments"),
would be subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code")), or any interest or penalties
are incurred by the Executive with respect to such excise tax (such excise tax,
together with any interest and penalties, are collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including any Excise Tax, imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments.
(b) A determination shall be made as to whether and when a Gross-Up
Payment is required pursuant to this Section 8 and the amount of such Gross-Up
Payment, such determination to be made within fifteen (15) business days of the
Termination Date, or such other time as requested by the Company or by the
Executive (provided the Executive reasonably believes that any of the Payments
may be subject to the Excise Tax). Such determination shall be made by a
national independent accounting firm selected by the Executive (the "Accounting
Firm"). All fees, costs and expenses (including, but not limited to, the cost
of retaining experts) of the Accounting Firm shall be borne by the Company and
the Company shall pay such fees, costs and expenses as they become due. The
Accounting Firm shall provide detailed supporting calculations, acceptable to
the Executive, both to the Company and the Executive. The Gross-Up Payment,
if any, as determined pursuant to this Section 8(b) shall be paid by the
Company to the Executive or paid by the Company on behalf of the Executive to
the applicable government taxing authorities by means of payroll tax
withholding if required by law or if timely requested by the Executive within
five (5) business days of the receipt of the Accounting Firm's determination.
If the Accounting Firm determines that no Excise Tax is payable by the
Executive with respect to a Payment or Payments, it shall furnish the Executive
with an unqualified opinion that no Excise Tax will be imposed with respect to
any such Payment or Payments. Any such initial determination by the Accounting
Firm of the Gross-Up Payment shall be binding upon the Company and the
Executive subject to the application of Section 8(c).
(c) As a result of the uncertainty in the application of Sections 4999
and 280G of the Code, it is possible that a Gross-Up Payment (or a portion
thereof) will be paid which should not have been paid (an "Overpayment") or a
Gross-Up Payment (or a portion thereof) which should have been paid will not
have been paid (an "Underpayment"). An Underpayment shall be deemed to have
occurred upon notice (formal or informal) to the Executive from any
governmental taxing authority that the tax liability of the Executive (whether
in respect of the then current taxable year of the Executive or in respect of
any prior taxable year of the Executive) may be increased by reason of the
imposition of the Excise Tax on a Payment or Payments with respect to which the
Company has failed to make a sufficient Gross-Up Payment. An Overpayment shall
be deemed to have occurred upon a "Final Determination" (as hereinafter
defined) that the Excise Tax shall not be imposed upon a Payment or Payments
with respect to which the Executive had previously received a Gross-Up Payment.
A Final Determination shall be deemed to have occurred when the Executive has
received from the applicable governmental taxing authority a refund of taxes
or other reduction in his tax liability by reason of the Overpayment and upon
either (i) the date a determination is made by, or an agreement is entered into
with, the applicable governmental taxing authority which finally and
conclusively binds the Executive and such taxing authority, or in the event
that a claim is brought before a court of competent jurisdiction, the date upon
which a final determination has been made by such court and either all appeals
have been taken and finally resolved or the time for all appeals has expired
or (ii) the expiration of the statute of limitations with respect to the
Executive's applicable tax return. If an Underpayment occurs, the Executive
shall promptly notify the Company and the Company shall pay to the Executive
at least five (5) business days prior to the date on which the applicable
governmental taxing authority has requested payment, an additional Gross-Up
Payment equal to the amount of the Underpayment plus any interest and penalties
imposed on the Underpayment. If an Overpayment occurs, the amount of the
Overpayment shall be treated as a loan by the Company to the Executive and the
Executive shall, within ten (10) business days of the occurrence of such
Overpayment, pay to the Company the amount of the Overpayment plus interest at
an annual rate equal to the rate provided for in Section 1274(b)(2)(B) of the
Code from the date the Gross-Up Payment (to which the Overpayment relates) was
paid to the Executive.
9. UNAUTHORIZED DISCLOSURE. During the term of the Executive's
employment with the Company, and during the two-year period following the
Termination Date, the Executive shall not make any Unauthorized Disclosure.
For purposes of this Agreement, "Unauthorized Disclosure" shall mean disclosure
by the Executive without the consent of the Board to any person, other than an
employee of the Company or a person to whom disclosure is reasonably necessary
or appropriate in connection with the performance by the Executive of his
duties as an executive of the Company or as may be legally required, of any
confidential information obtained by the Executive while in the employ of the
Company (including, but not limited to, any confidential information with
respect to any of the Company's customers or methods of operation) the
disclosure of which he knows or has reason to believe will be materially
injurious to the Company; provided, however, that such term shall not include
the use or disclosure by the Executive, without consent, of any information
known generally to the public (other than as a result of disclosure by him in
violation of this Section 9) or any information not otherwise considered
confidential by a reasonable person engaged in the same business as that
conducted by the Company. Notwithstanding the foregoing, the Executive's
obligation hereunder not to make any Unauthorized Disclosure shall continue
after the end of the two-year period following his termination of employment
with the Company as regards any information which is a trade secret as defined
in Section 134.90 of the Wisconsin Statutes. In no event shall an asserted
violation of this Section 9 constitute a basis for deferring or withholding any
amounts otherwise payable to the Executive under this Agreement.
10. SUCCESSORS AND ASSIGNS.
(a) This Agreement shall be binding upon and shall inure to the benefit
of the Company, its successors and assigns and the Company shall require any
successor or assign (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform if no such succession or assignment had taken place. The
term "Company" as used herein shall include such successors and assigns. The
term "successors and assigns" as used herein shall mean a corporation or other
entity acquiring all or substantially all the assets and business of the
Company (including this Agreement) whether by operation of law or otherwise.
(b) Neither this Agreement nor any right or interest hereunder shall be
assignable or transferable by the Executive, his beneficiaries or legal
representatives, except by will or by the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's legal representative.
11. FEES AND EXPENSES. From and after the Effective Date, the Company
shall pay all legal fees and related expenses (including the costs of experts,
evidence and counsel) reasonably incurred by the Executive as they become due
as a result of (i) the Executive's termination of employment (including all
such fees and expenses, if any, incurred in contesting or disputing any such
termination of employment), (ii) the Executive's hearing before the Board as
contemplated in Section 5(b) of this Agreement, (iii) the Executive's seeking
to obtain or enforce any right or benefit provided by this Agreement or by any
other plan or arrangement maintained by the Company under which the Executive
is or may be entitled to receive benefits or (iv) a dispute between the
Executive and the Internal Revenue Service (or any other taxing authority) with
regard to an "Underpayment" (as defined in Section 8 of this Agreement).
12. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by certified mail, return receipt requested,
postage prepaid, if to the Company, to Xxxxxxxx & Xxxxxx Corporation, 000 Xxxxx
Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000, or if to Executive, to the address
set forth below Executive's signature, or to such other address as the party
may be notified, provided that all notices to the Company shall be directed to
the attention of the Board with a copy to the Secretary of the Company. All
notices and communications shall be deemed to have been received on the date
of delivery thereof or on the third business day after the mailing thereof,
except that notice of change of address shall be effective only upon receipt.
13. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any benefit,
bonus, incentive or other plan or program provided by the Company or any of its
subsidiaries for which the Executive may qualify. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any plan
or program of the Company or any of its subsidiaries shall be payable in
accordance with such plan or program, except as explicitly modified by this
Agreement.
14. SETTLEMENT OF CLAIMS. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or others.
15. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed
to in writing and signed by the Executive and the Company. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time. No
agreement or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not expressly set forth in this Agreement.
16. EMPLOYMENT. The Executive and the Company acknowledge that the
employment of the Executive by the Company is "at will" and prior to the
Effective Date, may be terminated by either the Executive or the Company at any
time. Moreover, if prior to the Effective Date, the Executive's employment
with the company terminates, the Executive shall have no further rights under
this Agreement.
17. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Wisconsin without
giving effect to the conflict of law principles thereof.
18. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
19. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof.
20. HEADINGS. The headings herein contained are for reference only and
shall not affect the meaning or interpretation of any provision of this
Agreement.
21. MODIFICATION. No provision of this Agreement may be modified or
amended unless such modification or amendment is agreed to in writing signed
by both the Executive and the Company.
22. WITHHOLDING. The Company shall be entitled to withhold from amounts
paid to the Executive hereunder any federal, estate or local withholding or
other taxes or charges which it is, from time to time, required to withhold.
The Company shall be entitled to rely on an opinion of counsel if any question
as to the amount or requirement of any such withholding shall arise.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized officer and the Executive has executed this Agreement
as of the day and year first above written.
XXXXXXXX & ILSLEY CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
____________________________________
Xxxxx X. Xxxxxxx, Chairman
ATTEST:
/s/ Xxxxxxx X. Xxxxxxxx
_____________________________________
Xxxxxxx X. Xxxxxxxx, Secretary
EXECUTIVE:
/s/ Xxxx X. Xxxxxxx
__________________________________
Xxxx X. Xxxxxxx
Address:
__________________________________
__________________________________
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