FORM OF
CHANGE IN CONTROL SEVERANCE AGREEMENT
Exhibit 10.42
This AGREEMENT entered into as of the by and among
Xxxxxx Capital Group, Inc. a Delaware corporation, Xxxx Xxxxxx Bank, an Illinois
banking corporation (the "Bank"), and Employee Name (the "Executive"),
WITNESSETH:
WHEREAS, the Executive provides valuable services as an employee of the
Bank;
WHEREAS, the Company wishes to provide security to the Executive to induce
the Executive to continue in the employ of the Bank.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained the value of which is hereby acknowledged, the
Executive and the Bank agree as follows:
1. Bank Obligation. Subject to the limitations of this Agreement, if
during the Change in Control Period the Bank shall terminate the Executive's
employment, or if during the Change in Control Period the Executive shall
terminate his employment with the Bank for Good Reason, the Bank shall pay to
the Executive in a single sum within thirty (30) days after the termination of
employment an amount equal to [two and one-half (2-1/2) times] the Executive's
annual Compensation and the Bank shall continue to the Executive, for a period
of eighteen consecutive months beginning with the date of the Executive's
termination of employment, Medical and Hospital Benefits. The Bank shall also
provide executive level outplacement assistance benefits beginning with the
date of the Executive's termination of employment. If the Executive's
employment is terminated with the Bank during the Change in Control Period for
any reason, excluding a termination for Good Reason, or if the Bank shall
terminate the Executive's employment due to Cause, death or the Executive's
disability which renders him unable to perform the essential functions of the
position, this Agreement shall terminate without any obligation of the Company
to the Executive hereunder. If the Executive is offered employment by a
successor to the Bank or its business or assets or by an Affiliate or a
successor to an Affiliate or its business or assets on terms and conditions
that are reasonably comparable to the Executive's terms and conditions of
employment with the Bank (including this Agreement), the Company shall not have
an obligation hereunder to the Executive. If any payment under this Agreement,
either alone or together with any other payment, benefit or transfer of
property which the Executive receives or has a right to receive form the Bank or
its Affiliate, ("Total Payments"), would constitute a nondeductible "excess
parachute payment" (as defined in Section 280G of the Internal Revenue Code of
1986, amended ("Code")) or nondeductible "employee remuneration" under Section
162(m) of the Code, such payment under this Agreement shall be reduced to the
largest amount as will result in no portion of the payment under this Agreement
being such a nondeductible payment under the Code. The Bank agrees to undertake
such reasonable efforts as it may determine in its sole discretion to prevent
any payment under this Agreement from constituting a nondeductible payment,
provided the Bank is not obligated to incur additional cost in order to make a
payment nondeductible. The determination of any reduction under the preceding
sentences shall be made by the Bank in good faith, and such determination shall
be binding on the Executive. The reduction provided by the fifth sentence of
this paragraph 1 shall apply only if, after reduction for any applicable federal
excise tax imposed by Section 4999 of the Code and federal income tax imposed by
the Code, the total payment accruing to the Executive would be less than the
amount of the Total Payments as reduced under said fifth sentence and after
reduction for federal income taxes.
2. Other Benefits. Nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any other plan, program,
policy or practice of the Company, Bank or any Affiliate for which the Executive
may qualify, nor shall anything in this Agreement limit or otherwise affect the
rights of the Bank or the Executive under any other plan, program, policy,
practice, contract or agreement to which the Company, Bank or any Affiliate may
be a party. Any amounts payable or rights or benefits furnished the Executive
under any other plan, program, policy, practice, contract or agreement with the
Company, Bank or any of its Affiliates at or subsequent to the date of the
Executive's termination of employment shall be payable in accordance with the
terms of such plan, program, policy, practice, contract or agreement and without
regard to this Agreement, except as explicitly modified by this Agreement.
Amounts payable or in respect of this Agreement shall not be taken into account
with respect to any other employee benefit plan or arrangement.
3. Mitigation. The Executive shall not be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under this Agreement, and the amount payable under this
Agreement shall not be reduced whether or not the Executive obtains other
employment. The Company's obligation to make the payment provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others.
4. Successors.
(a) This Agreement is personal to the Executive and shall not be
assignable by the Executive. This Agreement shall inure to the benefit of and be
enforceable by the
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Executive's legal representatives including the Executive's executor,
trustee or administrator.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement.
5. Resolution of Disputes. Any dispute related to the interpretation or
enforcement of this Agreement shall be enforceable only by arbitration in Xxxx
County, Illinois (or such other metropolitan area to which the Company's
principal executive officers may be relocated if such relocation does not result
in Good Reason for the Executive to terminate employment), in accordance with
the commercial arbitration rules then in effect of the American Arbitration
Association, before a panel of three arbitrators, one of whom shall be selected
by the Company, the second of whom shall be selected by the Executive and the
third of whom shall be selected by the other two arbitrators. In the absence of
the American Arbitration Association, or if for any reason arbitration under the
arbitration rules of the American Arbitration Association cannot be initiated,
or if one of the parties fails or refuses to select an arbitrator, or if the
arbitrators selected by the Company and the Executive cannot agree on the
selection of the third arbitrator within seven days after such time as the
Company and the Executive have each been notified of the selection of the
other's arbitrator, the necessary arbitrator or arbitrators shall be selected by
the presiding judge of the court of general jurisdiction in the metropolitan
area where arbitration under this Section would otherwise have been conducted.
The arbitrators shall award to the Executive his reasonable legal fees and
expenses in connection with any arbitration proceeding hereunder if (i) the
arbitration is commenced by the Company, and the Company has no reasonable basis
for initiating such proceeding, or (ii) the arbitration is commenced by the
Executive, and the Executive prevails on the Executive's claim in the
arbitration proceeding.
The arbitrators shall award to the Company its legal fees and
expenses incurred in connection with any arbitration proceeding hereunder if the
arbitration proceeding is commenced by the Executive, and the Executive has no
reasonable basis for initiating such proceeding. The parties agree that the
arbitration panel shall construe this paragraph to determine whether either
party is entitled to recover its cost and fees hereunder. Any award entered by
the arbitrators shall be formal, binding and nonappealable and judgment may be
entered thereon by any party in accordance with applicable law in any court of
competent jurisdiction. This arbitration provision shall be specifically
enforceable.
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6. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance with
the laws of the State of Illinois, 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:
Employee Name
Employee Address
Employee City, State, Zip
If to the Company:
Xxxxxx Capital Group, Inc.
000 Xxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Chairperson of the Compensation Committee
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications shall be effective
when actually received by the 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 or local taxes as shall be required to be withheld pursuant
to any applicable law or regulation.
(e) The Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between the Executive
and the Company or the Bank, the employment of the Executive by the Bank is "at
will" and, 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
Bank terminates, then the Executive shall have no rights under this
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Agreement.
(f) This Agreement constitutes the entire agreement between the
parties hereto and contains all the agreements between such parties with
respect to the subject matter hereof. This Agreement supersedes all other
agreements, oral or in writing, between the parties hereto with respect to
the subject matter hereof.
7. Defined Terms. For purposes of this Agreement the following whenever
used in the capitalized form shall have the meaning set forth below unless the
context clearly indicates otherwise.
(a) "Affiliate" means, with respect to any person, any individual,
corporation, partnership, association, joint-stock company, trust,
unincorporated association or other entity (other than such person) that
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with that person.
(b) "Annual Bonus" means the gross, annual bonus payable to the
Executive for the fiscal year of the Company ending immediately preceding
the Effective Date, but annualized in the event the Executive was not
employed for the entire fiscal year with respect to which such bonus was
paid.
(c) "Cause" shall means termination because of (1) an act of fraud,
embezzlement or theft in connection with the Employee's duties or in the
course of the Employee's employment, (2) unreasonable neglect or refusal by
the Employee to perform his duties (other than any such failure resulting
from the Employee's incapacity due to disability), (3) the engaging by the
Employee in willful, reckless, or grossly negligent misconduct which is or
may be materially injurious to the Company, or (4) the Employee's
conviction of or plea of guilty or nolo contendere to a felony.
(d) "Change of Control" means, and be deemed to have occurred, on the
date of the first to occur of any of the following:
(i) upon the vote of the shareholders of the Company approving a
merger or consolidation in which the Company's shareholders
immediately prior to the effective time of the merger or consolidation
will beneficially own immediately after the effective time of the
merger or consolidation securities of the surviving or new corporation
having less than 50% of the "voting power" of the surviving or new
corporation, including "voting power" exercisable on a contingent or
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deferred basis as well as immediately exercisable "voting power"; provided,
however, that no such merger or consolidation shall constitute a "change of
control" in the event that following such transaction the Xxxxxx Family (as
defined below) owns, directly or indirectly, 30% or more of the combined
"voting power" of the surviving or new corporation's outstanding
securities, excluding "voting power" exercisable on a contingent or
deferred basis.
(ii) upon the consummation of a sale, lease, exchange or other
transfer or disposition by the Company of all or substantially all of the
assets of the Company on a consolidated basis, provided, however, that the
mortgage, pledge or hypothecation of all or substantially all of the assets
of the Company on a consolidated basis, in connection with a bona fide
financing shall not constitute a Sale of the Company; or
(iii) when any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 of the Securities Exchange Act as in
effect on date hereof, but excluding (a) any Company sponsored employee
benefit plan and (b) any member of the Xxxxxx Family), directly or
indirectly, of shares of Company stock such that the Xxxxxx Family owns
less than 30% of the combined "voting power" of the Company's then
outstanding securities, excluding "voting power" exercisable on a
contingent or deferred basis.
(e) "Change in Control Period" means the continuous period commencing on
the Effective Date and ending on the SECOND anniversary of the Effective Date.
(f) "Compensation" means the gross, annual base salary and Annual Bonus
paid by the Bank (including amounts accrued but not paid) to the Executive in
accordance with the generally applied payroll practices of the Bank for the
completed fiscal year of the Bank immediately preceding the Effective Date.
Compensation, for purposes of applying the two and one half (2 1/2) multiplier
in paragraph 1 of this agreement, does not include any accrued balances in the
1997 Long Term Incentive Plan or any other compensation program the executive
participates in. For purposes of this Agreement, any amounts due the Executive
under any compensation plan other than base salary and annual bonus, shall be
paid out in accordance with the provisions of the specific plan governing those
said programs.
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(g) "Effective Date" means the date on which a Change in Control occurs.
Anything in this Agreement to the contrary notwithstanding, if a Change in
Control occurs and if the Executive's employment with the Company is
terminated prior to the date on which the Change in Control occurs, and if it
is reasonably demonstrated by the Executive that such termination of employment
(i) was at the request of a third party who has taken steps reasonably
calculated to effect the Change in Control or (ii) otherwise arose in
connection with or anticipation of the Change in Control, then for all purposes
of this Agreement the "Effective Date" shall mean the date immediately prior to
the date of such termination of employment.
(h) "Good Reason" shall mean the occurrence of any of the following events
unless, (i) such event occurs with the Executive's express prior written
consent, (ii) the event is an isolated, insubstantial or inadvertent action or
failure to act which was not in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Executive, (iii) the
event occurs in connection with the termination of the Executive's employment
for Cause, Disability or death or (iv) the event occurs in connection with the
Executive's voluntary termination of employment or other than due to the
occurrence of one of the following events:
(A) the assignment to the Executive by the Company or the Bank of any
duties which are inconsistent with, or are a diminution of, the Executive's
positions, duty, title, office, responsibility and status with the Company
or the Bank, including without limitation, any diminution of the
Executive's position or responsibility in the decision or management
processes of the Company, or any removal of the Executive from, or any
failure to reelect the Executive to, any of such positions;
(B) a reduction by the Company or the Bank in the Executive's rate of
base salary as in effect on the Effective Date or as the same may be
increased from time to time during the term of the Agreement, other than a
reduction which is a reduction generally applicable to all senior officers
or executives of the Company;
(C) any failure to either continue in effect any material benefit or
incentive plan or arrangement (including, without limitation, a plan
meeting the applicable provisions of Section 401(a) of the Code, group life
insurance plan, medical, dental, accident and disability plans) in which
the Executive is
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participating or eligible to participate on the Effective Date or to
substitute and continue other plans providing the Executive with
substantially similar benefits (all of the foregoing is hereinafter
referred to as "Benefit Plans"), or the taking of any action which would
substantially and adversely affect the Executive's participation in or
materially reduce the Executive's benefits or compensation under any such
Benefit Plan or deprive the Executive of any material fringe benefit
enjoyed by the Executive on the Effective Date;
(D) a relocation of more than 50 miles from their location of the principal
executive offices of the Company or the Bank, or the relocation of the
Executive's principal place of employment for the Company or the Bank of
more than 50 miles, to any place other than the location at which the
Executive performed his duties on the Effective Date; and
(E) any failure by any successor or assignee of the Company to continue
this Agreement in full force and effect.
If the Executive does not notify the Company or the Bank and incurs the
termination of employment within 120 days of the date the Executive knew or
should have reasonably known of the event giving rise to Good Reason, the
Executive shall be deemed to have waived his right to a termination for Good
Reason based upon such event or the continuing effect or occurrence of such
event.
(i) "Medical and Hospital Benefits" mean the medical and hospital benefits that
would have been offered to the Executive and the Executive's family members if
the Executive's employment had not terminated based on the same terms and
conditions applicable to non-terminated similarly situated executives of the
Company or its successor and their family members. Notwithstanding anything
contained herein to the contrary, (A) any Medical and Hospital Benefits offered
in accordance with this Agreement run simultaneously with any rights to health
coverage continuation available to the Executive and the Executive's family
under applicable law and this Agreement shall constitute notice to the Executive
and the Executive's eligible family members of any right to elect health
continuation coverage under the provisions of Section 4980B of the Internal
Revenue Service of 1986, as amended, Section 601 et. al. of the Employee
Retirement Income Security Act of 1974, as amended, (to the extent applicable)
following the expiration of the Medical and Hospital Benefits coverage period
under this Agreement; and (B) if the Executive or any of the Executive's family
members are covered under a group
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health plan of another employer, nothing in this Agreement shall obligate a
plan maintained by the Company to pay benefits on a primary basis with
respect to such person.
(j) "Xxxxxx Family" means (A) Xxxxxx X. Xxxxxx and Xxxx Xxxxxx, (B) a
descendant of Xxxxxx X. Xxxxxx and Xxxx Xxxxxx, (C) any estate, trust,
guardianship or custodianship for the primary benefit of any individual
described in (A) or (B) above, or (C) a proprietorship, partnership,
limited liability company, or corporation controlled by and substantially
all the interest in which are owned, directly or indirectly, by one or more
individuals or entities described in (A), (B), or (C) above.
IN WITNESS WHEREOF, the parties have executed this Change of Control and
Severance Agreement on the date first written above. Executed this 16th day of
September, 2000.
XXXXXX CAPITAL GROUP, INC.
By: --------------------------------
Xxxxxxx Xxxxxx, Chairman & Chief
Executive Officer
XXXX XXXXXX BANK
By: --------------------------------
Xxxxx X. Xxxxxx
President and CEO
EXECUTIVE
------------------------------------
Employee Name
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