EXHIBIT 99(c)(2)
EXECUTIVE EMPLOYMENT AGREEMENT
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AGREEMENT by and between Xxxxx & Co., a Delaware corporation (the
"Company"), and ________________ (the "Executive"), dated as of the ______ day
of ____, 1998.
In light of the acquisition (the "Acquisition") by First Chicago NBD
Corporation ("FCN") of the assets and liabilities of Xxxxx & Co., L.L.C.
("Xxxxx"), and the transfer of certain of the Xxxxx assets and liabilities to
the Company pursuant to the Asset Purchase Agreement dated as of November 18,
1997 (the "Purchase Agreement") by and between Xxxxx and FCN, the Board of
Directors of the Company (the "Board") has determined that it is in the best
interests of the Company and its shareholders to assure that the Company will
have the continued dedication of the Executive to provide the Company with
continuity of management and services after the Acquisition. Therefore, in order
to accomplish these objectives, the Board has caused the Company to enter into
this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Effective Date. The "Effective Date" shall mean the Closing Date (as
defined in the Purchase Agreement).
2. Employment Period. Subject to the terms and conditions of this
Agreement, the Company hereby agrees to employ the Executive, and the Executive
hereby agrees to remain in the employ of the Company, for the period commencing
on the Effective Date and ending on third annual anniversary of the Effective
Date (the "Employment Period").
3. Terms of Employment. (a) Position and Duties. (i) During the
Employment Period [period ending on the first annual anniversary of the
Effective Date for the cfo], (A) the Executive shall serve as [ceo/coo/cfo] of
the Company, and perform such services for the Company as are generally
consistent with the authority, duties and responsibilities as are assigned to
the Executive on the Effective Date or which may be assigned to the Executive
thereafter by the Chief Executive Officer of the Company [the Board in the case
of the CEO]; provided, however, that any and all such authority, duties and
responsibilities shall be consistent with and similar to those duties which the
Executive performed for Xxxxx immediately prior to the Effective Date unless
consented to by the Executive in such Executive's discretion.
(ii) During the Employment Period, and excluding any periods of vacation
and sick leave to which the Executive is entitled, the Executive agrees to
devote substantially all of his attention and time during normal business hours
to the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder, to use the
Executive's reasonable best efforts to perform such responsibilities. During the
Employment Period it shall not be a violation of this Agreement for the
Executive to (A) serve on corporate, civic or charitable boards or
committees, (B) deliver lectures, fulfill speaking engagements or teach at
educational institutions and (C) manage personal investments, so long as such
activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
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 thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company.
(iii) Notwithstanding anything in this Agreement to the contrary, the
Executive shall not be required to regularly work at an office which is located
more than 50 miles outside of the radius of the current headquarters office of
Xxxxx at the Effective Date without the prior written consent of the Executive,
which consent may be granted or withheld in the Executive's sole discretion.
(b) Compensation. (i) Base Salary and Bonus. During the Employment Period
[first year following the Effective Date for the cfo], the Executive shall
receive a minimum annual base salary of [] and an annual cash bonus of [].
(ii) Other Employee Benefits. During the Employment Period, the
Executive shall be entitled to participate in other applicable employee plans or
arrangements under the Company's compensation and benefit plans in effect at the
Effective Date or in effect during the Employment Period, it being understood
that FCN shall maintain Roney's compensation and other employee plans or
arrangements existing on the Effective Date for a period of three years from the
Effective Date or such shorter period as may be agreed upon by FCN and the
Board.
4. Termination of Employment. (a) Death or Disability. The Executive's
employment shall terminate automatically upon the Executive's death during the
Employment Period. If the Company determines in good faith that the Disability
of the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive written
notice in accordance with Section 11(b) 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 30th day after receipt of
such notice by the Executive (the "Disability Effective Date"), provided that,
within the 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 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. If the
Executive's employment is terminated by reason of death or Disability, the Date
of Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be.
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(b) Cause. The Company may terminate the Executive's employment during the
Employment Period for Cause. For purposes of the Agreement, "Cause" shall mean:
(i) the continued and willful failure of the Executive to perform
substantially the Executive's duties with the Company or one of its affiliates
(other than any such failure resulting from incapacity due to physical or mental
illness), after (A) a written demand for substantial performance is delivered to
the Executive by the Board [or the Chief Executive Officer of the Company - for
coo and cfo] which specifically identifies the manner in which the Board [or
Chief Executive Officer] believes that the Executive has not substantially
performed the Executive's duties and (B) a reasonable opportunity is provided to
the Executive to cure such failure, or
(ii) the willful engaging by the Executive in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the Company, or
(iii) conviction of a felony or any other offense involving dishonesty or
breach of trust, or entry of a guilty or nolo contendere plea by the Executive
or participation in a pre-trial diversion with respect thereto, or
(iv) a material breach of the covenants contained in Section 7.
For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without a good faith belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the [Chief Executive Officer of
the Company - for the COO and CFO] or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company. The cessation
of employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of not less than three-fourths of the
entire membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before the
Board) finding that, in the good faith opinion of the Board, the Executive is
guilty of the conduct described in subparagraph (i), (ii), (iii) or (iv) above
(and in the case of conduct described in subparagraph (i) above, such conduct
was not cured within the period provided for in subparagraph (i)(B) above), and
specifying the particulars thereof in detail.
(c) Notice of Termination for Cause. Any termination by the Company for
Cause shall be communicated by Notice of Termination to the other party hereto
given in accordance with Section 11(b) of this Agreement. For purposes of this
Agreement, a "Notice of Termination" means a written notice which (i) indicates
the specific termination provision in this Agreement relied upon, (ii) to the
extent applicable, sets forth in
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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) if the Date of Termination is other than the date of receipt of such
notice, specifies the termination date (which date shall be not more than thirty
days after the giving of such notice). The failure by the Company to set forth
in the Notice of Termination any fact or circumstance which contributes to a
showing of Cause shall not waive any right of the Company hereunder or preclude
the Company from asserting such fact or circumstance in enforcing the Company's
rights hereunder.
(d) Certain Dates of Termination. If the Executive's employment is
terminated by the Company for Cause, the Date of Termination shall be the date
of receipt of the Notice of Termination or any later date specified therein
within 30 days of such notice. If the Executive's employment is terminated by
the Company other than for Cause, death or Disability, the Date of Termination
shall be the date on which the Company notifies the Executive of such
termination.
5. Damages. (a) The Executive acknowledges that the continuity of
existing senior management, including the Executive, following completion of the
Acquisition was a critical factor in FCN's assessment of the likely benefits to
be derived from the Acquisition and that the willingness of the senior
Executives, including the Executive, to enter into employment agreements such as
this was a material inducement to proceed with the Acquisition. The Executive
also acknowledges that, if the Executive's employment hereunder is terminated
prior to the end of the Employment Period by the Executive voluntarily and not
for reasons attributable either to (i) the Company's failure to comply with the
terms of this Agreement or (ii) such Executive's death or Disability (a
"Voluntary Quit"), the damages to the Company would be material, but that the
amount of such damages would be uncertain and not readily ascertainable.
(b) Accordingly, the Executive agrees that if the Executive Voluntarily
Quits prior to the expiration of the Employment Period, the Executive shall make
a cash payment as and for liquidated damages. If the Voluntary Quit occurs prior
to the first anniversary of the Effective Date, the amount of such cash payment
shall be the amount set forth on Exhibit A hereto; if the Voluntary Quit occurs
on or after the first anniversary, but prior to the second anniversary, of the
Effective Date, the amount of such cash payment shall be the amount set forth on
Exhibit A hereto; if the Voluntary Quit occurs on or after the second
anniversary of the Effective Date, but prior to the expiration of the Employment
Period, the amount of such cash payment shall be the amount set forth in Exhibit
A.
(c) The Executive acknowledges that the amounts referenced in this Section
5 and set forth in Exhibit A are reasonable in proportion to the probable
damages likely to be sustained by the Company if the Executive Voluntarily Quits
prior to the expiration of the Employment Period, that the amount of actual
damages to be sustained by the Company in the event the Executive Voluntarily
Quits is incapable of precise estimation, that the payment of such cash amounts
by the Executive would not result in severe economic hardship for the Executive
and his family, and that such cash payments are not
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intended to constitute a penalty or punitive damages for any purposes.
(d) The Executive's payment obligations under this Section 5 shall be full
recourse obligations and shall be secured by a pledge of the number of the
shares of FCN Common Stock received by the Executive in the Acquisition
(pursuant to Section II.A of the Purchase Agreement) pursuant to an Executive
Pledge Agreement, in substantially the form of Exhibit B hereto (the "Pledge
Agreement"), to be entered into by the Executive and the Company concurrently
with the execution and delivery of this Agreement, provided that the Executive
shall have the right to substitute collateral reasonably acceptable to the
Company (the "Collateral") which shall then be subject to the Pledge Agreement.
If the net proceeds of the disposition of such shares of FCN Common Stock or the
Collateral pursuant to the Pledge Agreement are insufficient to satisfy the
Executive's payment obligation hereunder, the Executive shall be obligated to
make up the shortfall out of his or her other personal assets. If the net
proceeds of the disposition of such shares of FCN Common Stock or the Collateral
pursuant to the Pledge Agreement exceed the amount of the Executive's payment
obligation hereunder, the Company promptly shall pay such excess amount and, if
applicable, return any excess shares or Collateral, to the Executive as soon as
is reasonably practicable.
(e) No liquidated damages shall be payable by the Executive, the Pledge
Agreement shall terminate and the FCN Common Stock or other Collateral held by
the Company shall be returned to the Executive in accordance with the Pledge
Agreement in the event the Executive's employment is terminated prior to the
expiration of the Employment Period for any reason other than if the Executive
Voluntarily Quits.
(f) During the Employment Period, the provisions of this Section 5 and the
Pledge Agreement shall constitute the Company's sole and exclusive remedy if an
Executive Voluntarily Quits.
6. Obligations of the Company upon Termination. (a) Death. If the
Executive's employment is terminated by reason of the Executive's death during
the Employment Period, this Agreement shall terminate without further
obligations to the Executive's legal representatives under this Agreement, other
than for payment of any accrued obligations with respect to the Executive,
payment of a pro rata portion of the Executive's annual cash bonus for the year
of the Executive's death, and a release of the shares of FCN Common Stock or
Collateral subject to the Pledge Agreement. Any such accrued obligations shall
be paid to the Executive's estate or beneficiary, as applicable, in a lump sum
in cash within 30 days of the Date of Termination.
(b) Disability. If the Executive's employment is terminated by reason of
the Executive's Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than for payment
of any accrued obligations to the Executive, payment of a pro rata portion of
the Executive's annual cash bonus for the year of the Executive's Disability,
and a release of the shares of FCN Common Stock or Collateral subject to the
Pledge Agreement. Any such accrued obligations shall be paid to the Executive in
a lump sum in cash within 30 days of the Date
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of Termination.
(c) Cause or Voluntary Quit. If during the Employment Period the
Executive's employment shall be terminated for Cause or the Executive
Voluntarily Quits, this Agreement, other than the provisions of Sections 7 and
10 which shall survive such termination, shall terminate without further
obligations to the Executive other than the obligation to pay to the Executive
(x) his annual base salary through the Date of Termination, (y) the amount of
any compensation previously deferred by the Executive (such deferred amounts
payable pursuant to the terms of the applicable plan or deferral election) and
(z) any accrued vacation pay, in each case to the extent theretofore unpaid. In
addition, in the case of a termination for Cause, the Company shall transfer to
the Executive the shares of FCN Common Stock and Collateral, if any, subject to
the Pledge Agreement and in the case where the Executive Voluntarily Quits, the
Company shall transfer and/or pay to the Executive any shares of FCN Common
Stock and Collateral held under the Pledge Agreement in excess of the amount of
liquidated damages owing by the Executive.
(d) Terminations Other than Death, Disability, Cause or Voluntary Quit.
If, during the Employment Period, the Executive's employment with the Company
shall be terminated other than by reason of death, Disability or for Cause, or
the Executive shall Voluntarily Quit:
(i) the Company shall pay to the Executive in a lump sum in cash within 30
days after the Date of Termination the aggregate of the following amounts:
A. the Executive's annual base salary through the Date of
Termination to the extent not theretofore paid; and
B. the unpaid amount of the executive's annual base salary and
annual cash bonus from the Date of Termination through the end of the
Employment Period [through the end of the first anniversary of the
Effective Date for the cfo];
(ii) the Company shall pay to the Executive after the Date of Termination
pursuant to the terms of the applicable plan and/or deferral election any
compensation previously deferred (other than pursuant to a qualified plan) by
the Executive (together with any accrued interest or earnings thereon) and any
accrued vacation pay, in each case to the extent not theretofore paid;
(iii) for 30 months after the Executive's Date of Termination, or such
longer period as may be provided by the terms of the appropriate plan, the
Company shall continue benefits to the Executive and/or the Executive's family
at least equal to those which would have been provided to them in accordance
with the Company's welfare benefit plans, if any, if the Executive's employment
had not been terminated; provided, however, that if the Executive becomes
reemployed with another employer and is eligible to receive medical or other
welfare benefits under another employer provided plan, the medical and
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other welfare benefits described herein shall be secondary to those provided
under such other plan during such applicable period of eligibility. For
purposes of determining eligibility (but not the time of commencement of
benefits) of the Executive for retiree benefits, if any, pursuant to such plans,
the Executive shall be considered to have remained employed until 30 months
after the Date of Termination and to have retired on the last day of such
period; and
(iv) the Company shall transfer to the Executive the shares of FCN
Common Stock and Collateral, if any, subject to the Pledge Agreement.
(e) Set-Off. The Company's obligation to pay any accrued obligations
pursuant to this Section 6 (other than the Company's obligation to release
shares of FCN Common Stock or Collateral subject to the Pledge Agreement as
provided for in this Section 6) is subject to and may be reduced by all rights
of set-off, counterclaim, recoupment, defense or other claim, right or action
which the Company may have against the Executive.
7. Confidential Information. (a) The Executive shall hold in a fiduciary
capacity for the benefit of the Company and its affiliates all secret or
confidential information, knowledge or data (including, without limitation,
customer lists) relating to Xxxxx, the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Executive during the Executive's employment by Xxxxx, the Company or any of
its affiliated companies and which shall not be or become public knowledge
(other than by acts by the Executive or representatives of the Executive in
violation of this Agreement). After termination of the Executive's employment
with the Company, the Executive shall not, without the prior written consent of
the Company or as may otherwise be required by law or legal process, communicate
or divulge any such secret or confidential information, knowledge or data to
anyone other than the Company and those designated by it.
(b) In the event of a breach or threatened breach of this Section 7, the
Executive agrees that the Company shall be entitled to injunctive relief in a
court of appropriate jurisdiction to remedy any such breach or threatened breach
and the Executive acknowledges that damages would be inadequate and
insufficient.
(c) Any termination of the Executive's employment or of this Agreement
shall have no effect on the continuing operation of this Section 7.
8. Indemnification. The Company hereby reaffirms its obligation under
Section X.X. of the Purchase Agreement to provide for indemnification of the
Executive on the terms and conditions set forth in said Section X.X.
9. Successors. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns. This Agreement may be assigned by the
Company with notice to, but without the consent of, the Executive to an
affiliate of the
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Company but may not be assigned to any other person without the prior written
consent of the Executive; provided, however, that the Company may not assign
this Agreement to an affiliate unless and until it concurrently assigns the
Pledge Agreement to such affiliate. For purposes of this Section 9, an affiliate
shall be an entity controlling, controlled by, or under common control with, the
Company.
(c) As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of law
or otherwise.
10. Non-Solicitation. The Executive acknowledges that the Executive has
and will learn confidential information relating to the customers of the Company
and its affiliated companies. The Executive further acknowledges that the
Company's relationships with its customers are extremely valuable to the Company
and its affiliates, are generally the result of the investment of substantial
time and effort by them, and tend to be near permanent. Therefore, the Executive
agrees that in the event Executive's employment terminates during the Employment
Period for any reason other than (i) as a result of a breach of this Agreement
by the Company or (ii) as a result of the termination of the employment of the
Executive by the Company without Cause, the Executive shall not, for a period of
one year after the occurrence of such termination, for himself, or as the agent
of, on behalf of, or in conjunction with, any person or entity, solicit or
attempt to solicit, whether directly or indirectly: (A) any employee of the
Company or its affiliated companies to terminate such employee's employment
relationship with the Company or its affiliated companies, or (B) any business
of the type provided by the Company or its affiliated companies from any person
or entity that is or was a client, employee, or customer of the Company or its
affiliated companies and had dealt with the Executive or any other employee of
the Company or its affiliated companies under the supervision of the Executive.
11. Miscellaneous. (a) This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
-------------------
To the Executive named above at the address indicated
for said Executive in the Company's records
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If to the Company:
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Xxxxx & Co.
c/o First Chicago NBD Corporation
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxx
Suite 0035
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee or a representative or authorized agent
of such addressee.
(c) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.
(d) The Company may withhold from any amounts payable under this Agreement
such Federal, state, local or foreign taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder shall not be deemed to be
a waiver of such provision or right or any other provision or right of this
Agreement.
(f) From and after the Effective Date, this Agreement shall supersede any
other employment, severance or change of control agreement between the parties
with respect to the subject matter hereof.
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IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
EXECUTIVE XXXXX & CO.
By:
----------------------------- -----------------------------
Name:
Title:
10
EXHIBIT A
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Cash Payment for Voluntary Quit prior
to first annual anniversary of Effective Date* $
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Cash Payment for Voluntary Quit on or after
first annual anniversary of Effective Date and
prior to second annual anniversary of Effective Date* $
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Cash Payment for Voluntary Quit on or after second
annual anniversary of Effective Date and prior to
third annual anniversary of Effective Date* $
---------
*To the extent that the aggregate amount of the Deferred Payment (as defined
in the Purchase Agreement) payable pursuant to Section II.A of the Purchase
Agreement is adjusted pursuant to the Purchase Agreement or as a result of the
termination of another Principal's interest prior to the Effective Date, the
amounts set forth on this Exhibit A for liquidated damages will be adjusted
automatically by the amount of the increase or decrease in the Executive's
Deferred Payment without the need for any action by the Executive or the
Company. (For example, if the Executive's Deferred Payment amount is increased
by $30,000, the liquidated damages amount set forth above will be increased by
$30,000 for the period prior to the first annual anniversary of the Effective
Date, will be increased by $20,000 for the period from and after the first
annual anniversary and prior to the second annual anniversary of the Effective
Date, and will be increased by $10,000 for the period from and after the second
annual anniversary and prior to the third annual anniversary of the Effective
Date.)
A - 1
EXHIBIT B
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EXECUTIVE PLEDGE AGREEMENT
--------------------------
EXECUTIVE PLEDGE AGREEMENT, dated as of _______________, 199__ (this
"Agreement"), by and between Xxxxx & Co., a Delaware corporation ("Company"),
and_________________ (the "Pledgor").
RECITALS
A. Employment Agreement. Company and the Pledgor have entered into
an Executive Employment Agreement dated as of the date hereof (the "Employment
Agreement"). (Capitalized terms used herein and not otherwise defined having the
same meanings ascribed to them in the Employment Agreement.)
B. The Pledge. Pursuant to Section 5(d) of the Employment Agreement,
the Pledgor has agreed to secure the Pledgor's contingent payment obligations to
the Company as set forth in Section 5(b) of the Employment Agreement (the
"Liquidated Damages") by pledging to Company the shares (the "Pledged Shares")
of common stock, $1.00 par value, of FCN (the "Common Stock") that were issued
to the Pledgor pursuant to Section II.A of the Purchase Agreement, with the
number of Pledged Shares to be reduced as set forth herein.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
1. Pledge. As collateral security for the full and timely payment of
the principal of the Liquidated Damages, the Pledgor hereby delivers, deposits,
pledges, transfers and assigns to Company, in form transferable for delivery,
and creates in Company a security interest in all the Pledged Shares and all
certificates or other instruments or documents evidencing the same now owned by
the Pledgor, and, except as set forth in Section 2(a) hereof, all proceeds
thereof (together with any securities or property to be delivered to the Pledgor
pursuant to Section 2(b) hereof, the "Pledged Securities").
The Pledgor hereby delivers to Company appropriate undated security
transfer powers duly executed in blank for the Pledged Securities set forth
above and will deliver appropriate undated security transfer powers duly
executed in blank for the Pledged Securities to be pledged hereunder from time
to time.
B - 1
2. Administration of Security. The following provisions shall govern
the administration of the Pledged Securities:
(a) So long as no Event of Default has occurred and is continuing (as
used herein, an "Event of Default" shall mean the Executive becoming obligated
to make a cash payment to Company under Section 5(b) of the Employment Agreement
and failing to make such cash payment when the same shall be due), the Pledgor
shall be entitled to vote the Pledged Securities and to receive and retain all
cash, and except as set forth in Section 2(b) below, other distributions thereon
and give consents, waivers and ratifications in respect thereof.
(b) If, while this Agreement is in effect, the Pledgor shall become
entitled to receive or shall receive any certificate representing Common Stock
in respect of any stock split, reverse stock split, stock dividend or any
distribution in connection with any reclassification, increase or reduction of
capital, in each case, with respect to the Pledged Securities, the Pledgor
agrees to accept the same as Company's agent and to hold the same in trust on
behalf of and for the benefit of Company and to deliver the same forthwith to
Company in the exact form received, with the endorsement of the Pledgor when
necessary and/or appropriate undated security transfer powers duly executed in
blank to be held by Company, subject to the terms of this Agreement, as
additional collateral security for the Liquidated Damages.
(c) The Pledgor shall immediately upon request by Company and in
confirmation of the security interest hereby created, execute and deliver to
Company such further instruments, deeds, transfers, assurances and agreements,
in such form and substance as Company shall reasonably request, including any
financing statements and amendments thereto, or any other documents, required
under Delaware law and any other applicable law to protect the security interest
created hereunder.
(d) Subject to any sale or other disposition by Company of the
Pledged Securities pursuant to this Agreement, the Pledged Securities shall be
returned promptly to the Pledgor as set forth below:
(i) upon the first anniversary of the date hereof, one-third of
the number (the "Original Number") of the Pledged Shares set forth in
Recital B of this Agreement (and any additional Pledged Securities
received by or on behalf of the Pledgor in respect of such amount of
such Pledged Shares) shall be returned to the Pledgor (and shall no
longer be considered "Pledged Shares" or "Pledged Securities");
(ii) upon the second anniversary of the date hereof, one-third
of the Original Number of the Pledged Shares (and any additional
Pledged Securities received by or on behalf of the Pledgor in respect
of such amount of such Pledged Shares) shall be returned to the
Pledgor (and shall no longer be considered "Pledged Shares" or
"Pledged Securities"); and
B - 2
(iii) upon the earliest to occur of (A) the death or Disability
of the Executive, (B) the third anniversary of the date hereof, (c)
payment in cash or other satisfaction by the Pledgor of all Liquidated
Damages due pursuant to Section 5(b) of the Employment Agreement and
(D) termination of the Executive's employment for any reason other
than a Voluntary Quit, all remaining Pledged Securities shall be
returned to Pledgor and this Agreement shall terminate.
(e) Company shall immediately upon request by the Pledgor execute and
deliver to the Pledgor such instruments, deeds, transfers, assurances and
agreements, in form and substance as the Pledgor shall reasonably request,
including the withdrawal or termination of any financing statements and
amendments thereto, or any filing, withdrawal, termination or amendment of any
other documents, required under law to vest in Pledgor possession of any
securities that are required to be returned to the Pledgor in accordance with
Section 2(d) hereof.
(f) In the event the number of Pledged Shares to be returned to the
Pledgor pursuant to Section 2 hereof includes a fractional share, the Company
shall return to the Pledgor the number of whole Pledged Shares equal to the next
lowest whole number of Pledges Shares.
3. Remedies in Case of an Event of Default.
(a) If an Event of Default has occurred and is continuing, as its
sole and exclusive remedy hereunder (whether or not the Company exercises such
remedy), Company may take ownership (without payment of any consideration) of
such number of Pledged Securities as are necessary (based upon the Fair Market
Value thereof) to satisfy the unpaid portion of Liquidated Damages due and
payable under Section 5(b) of the Employment Agreement by giving written notice
to the Pledgor (the "Enforcement Notice"). Effective upon the giving of the
Enforcement Notice, and without further action on the part of the parties to
this Agreement, Company (or an affiliate of the Company) shall be deemed to have
taken ownership of such Pledged Securities and to have disposed of such Pledged
Securities for proceeds having a value equal to the Fair Market Value (as
defined below) of such Pledged Securities as of such date. Company shall be
deemed to have applied such proceeds to the payment of any unpaid Liquidated
Damages. Any excess proceeds from the deemed sale of such Pledged Securities
shall be for the Pledgor's account and shall be paid over to the Pledgor in cash
no later than three days after the giving of the Enforcement Notice.
(b) The "Fair Market Value" of the Pledged Securities as of any date
for purposes of this Agreement means the product of (i) the number of shares of
Pledged Securities on such date multiplied by (ii) the average of the daily
closing prices for a share of Common Stock for the 10 consecutive trading days
before the date the Executive Voluntarily Quits (the "Average Closing Price").
The closing price for each day will be the average closing price as reported on
the New York Stock Exchange Composite
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Transaction Tape or, in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular way, in either case
as reported by the New York Stock Exchange.
(c) Section 3(a) sets forth the exclusive remedies of Company in
respect of the Pledged Securities. Company hereby waives (to the extent that
such remedy arises solely by virtue of the security interest granted hereunder)
any and all other remedies in respect of the collateral that are or may be
available to it as a secured party under Article 9 of the Uniform Commercial
Code. Neither failure nor delay on the part of Company to exercise any right,
remedy, power or privilege provided for in this Section 3 shall operate as a
waiver thereof.
4. Substitute Collateral. The Pledgor may substitute for the Pledged
Securities any collateral of equal or greater value (which, in the case of
Pledged Securities, is the Fair Market Value thereof) reasonably acceptable to
Company (the "Substitute Collateral"). From and after any such substitution, the
Pledged Securities shall be released from this Agreement and the provisions of
this Agreement shall apply to the Substitute Collateral to the same extent that
such provisions would have applied to the Pledged Securities.
5. Pledgor's Obligations Not Affected. The obligations of the
Pledgor under this Agreement shall remain in full force and effect without
regard to, and shall not be impaired or affected by, (a) any subordination,
amendment or modification of or addition or supplement to the Employment
Agreement or any assignment or transfer of any thereof; (b) any exercise or non-
exercise by Company of any right, remedy, power or privilege under or in respect
of this Agreement, the Employment Agreement or any waiver of any such right,
remedy, power or privilege; (c) any waiver, consent, extension, indulgence or
other action or inaction in respect of bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation or the like, of Company,
whether or not the Pledgor shall have notice or knowledge of any of the
foregoing; (e) any substitution of collateral pursuant to Section 4 above; or
(f) any other act or omission to act or delay of any kind by the Pledgor,
Company or any other Person or any other circumstance whatsoever which might,
but for the provisions of this clause (f), constitute a legal and equitable
discharge of the Pledgor's obligations hereunder.
6. Attorney-in-Fact. Company (and any affiliate of the Company) is
hereby appointed the attorney-in-fact of the Pledgor for the purpose of carrying
out the provisions of this Agreement and taking any action and executing any
instrument that Company reasonably may deem necessary or advisable to accomplish
the purposes hereof, which appointment as attorney-in-fact is irrevocable as one
coupled with an interest.
7. Termination. Upon the earliest to occur of the events set forth
in Section 2(d)(iii) hereof, this Agreement shall terminate and Company shall
return to the Pledgor the remaining Pledged Securities as provided in such
Section.
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8. Notices. All notices or other communications required or
permitted to be given hereunder shall be delivered as provided in the Employment
Agreement.
9. Binding Effect, Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns and nothing herein is intended or shall be construed to
give any other person any right, remedy or claim under, to or in respect of this
Agreement. No transfer, sale, pledge, hypothecation or other disposition of
Pledged Securities by the Pledgor shall be permitted hereunder, and any such
transfer shall be null and void.
10. Miscellaneous. Company and its assigns shall have no obligation
in respect of the Pledged Securities, except to hold and dispose of the same in
accordance with the terms of this Agreement. Neither this Agreement nor any
provision hereof may be amended, modified, waived, discharged or terminated
orally, but only by an instrument in writing signed by the party against which
enforcement of the amendment, modification, waiver, discharge or termination is
sought. The provisions of this Agreement shall be binding upon the successors
and assigns of the Pledgor. The captions in this Agreement are for convenience
of reference only and shall not define or limit the provision hereof. This
Agreement shall be governed by and construed and enforced in accordance with the
laws of the State of Delaware applicable to contracts made and to be performed
entirely within such State. This Agreement may be executed simultaneously in
several counterparts, each of which is an original, but all of which together
shall constitute one instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered on the date first above written.
XXXXX & CO.
By:
-------------------------------------
Name:
Title:
PLEDGOR
----------------------------------------
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IRREVOCABLE STOCK/BOND POWER
----------------------------
FOR VALUE RECEIVED, the undersigned does (do) hereby sell, assign and transfer
to
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SOCIAL SECURITY OR TAXPAYER IDENTIFYING NO.
--------------------------------------------------------------------------------
(Name of transferee and mailing address including zip code must be clearly
indicated)
____________ shares of the ____________ stock of ______
IF STOCK, { represented by Certificate No. _______________________________
COMPLETE standing in the name of the undersigned on the books of said
THIS PORTION Company.
____________________________ bonds of ________________________
IF BONDS, { in the principal amount of $___________________, No.__________
COMPLETE standing in the name of the undersigned on the books of said
THIS PORTION Company.
The undersigned does (do) hereby irrevocably constitute and
appoint _________________________ attorney to transfer the said stock or
bond(s), as the case may be, on the books of said Company, with full power of
substitution in the premises.
Dated
-------------
---------------------------------------
IMPORTANT - READ CAREFULLY (PERSONS EXECUTING THIS POWER SIGNS HERE)
The signature(s) to this Power must correspond with the name(s)
----------------
as written upon the face of the stock certificate(s) or bond(s),
as the case may be, in every particular without alteration or
enlargement or any change whatever and must be guaranteed by ----------------
a commercial bank or a trust company having its principal office
or a correspondent in the City of Chicago or by a firm having
membership in the New York or Midwest Stock Exchange.
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