EXHIBIT 10(aa)
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CONSULTING AGREEMENT
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AGREEMENT by and between BankBoston Corporation, a Massachusetts
corporation ("BankBoston" or the "Company") and Xxxxxxx X. Xxxxxxx, Xx. (the
"Consultant" or the "Executive"), dated as of the 30th day of December, 1997.
The Board of Directors of BankBoston (the "Board"), has determined that
it is in the best interests of BankBoston and its shareholders to assure that
the Company will have the Consultant's expertise available to it after the
Consultant's retirement as Chairman of the Board of Directors of the Company on
December 31, 1997 in a manner that did not constitute a termination by the
Consultant for Good Reason under the Employment Agreement (as defined below).
Therefore, in order to accomplish these objectives, the Board of Directors of
BankBoston has caused BankBoston to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Effective Date. The "Effective Date" shall mean January 1, 1998.
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2. Consulting Period. The Company agrees to employ the services of
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the Consultant, and the Consultant hereby agrees to provide consulting services
to the Company subject to the terms and conditions of this Agreement, for the
period commencing on the Effective Date and ending on December 31, 1998 (the
"Consulting Period"). The Consultant agrees that he shall not be paid for his
services as a director of the Company during the Consulting Period.
3. Terms of Service. (a) Position and Duties. During the Consulting
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Period, the Consultant shall be available to consult with the Company on matters
of overall strategy and policy for up to 40 hours per month at such times as are
mutually convenient for the Company and the Consultant.
(b) Remuneration. (i) Monthly Fee. During the Consulting Period,
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the Consultant shall receive a monthly fee, payable in advance, equal to
$66,666.67 plus an amount equal to one-twelfth of the annual bonus the
Consultant is to receive with respect to calendar year 1997 (the "Monthly Fee").
As used in this Agreement, the term "affiliated companies" shall include any
company controlled by, controlling or under common control with the Company.
(ii) Retirement Plans. For purposes of all retirement plans in which
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the Consultant participated prior to the Effective Date, the Consultant shall be
deemed to have retired on December 31, 1997 and shall be entitled to receive
benefits immediately. For purposes of determining the Consultant's benefits
under such plans, including, without limitation, the BayBank's Supplemental
Executive Retirement Plan, the Consultant shall be deemed to have been employed
by the Company and its affiliates until the end of the Consulting Period and his
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benefits shall be based on his compensation that includes the Monthly Fee
payable during the Consulting Period. To the extent any benefits payable by
reason of the preceding sentence cannot be provided under the qualified
retirement plans of the Company and its affiliates they shall be provided under
the nonqualified retirement plans of the Company and its affiliates.
(iii) Welfare Benefit Plans. During the Consulting Period, the
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Consultant and/or the Consultant's family, as the case may be, shall be eligible
for participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its affiliated
companies (including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel accident
insurance plans and programs) to the extent and on the same basis provided to
the Consultant as an employee immediately prior to the Consulting Period, it
being understood that to the extent the Consultant cannot be continued under the
terms of any such plan the Company shall provide for equivalent coverage or
benefits. Upon termination of the Consulting Period, the Consultant shall be
provided the Company's retiree health benefits provided to its senior executives
in respect of the Consultant's services as an executive prior to the Consulting
Period but taking into account the Consulting Period for purposes of determining
the Consultant's level of participation in such retiree health benefits. In
determining the Consultant's level of participation in such retiree health
benefits, the Consultant's service with BayBanks shall be deemed to be service
with the Company for all purposes.
(iv) Stock Incentives. The Company acknowledges that for purposes of
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the Nonqualified Stock Option and Performance Restricted Stock Agreement (the
"Stock Agreement") between the Company and the Consultant dated as of January
23, 1997, the Consultant shall be treated as commencing "Retirement" on January
1, 1998 for purposes of Section 6 and Section 14 of the Stock Agreement.
(v) Expenses. During the Consulting Period, the Consultant shall be
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entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Consultant in accordance with the Company's policies.
(vi) Fringe Benefits. During the Consulting Period, the Consultant
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shall be entitled to fringe benefits, including, without limitation, payment of
club dues, and, if applicable, use of an automobile and payment of related
expenses, to the extent provided to the Consultant immediately prior to the
Effective Date.
(vii) Office and Support Staff. During the Consulting Period, the
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Consultant shall be provided with an office and secretarial assistance in the
Boston, Massachusetts Metropolitan Area.
4. Termination of Consulting. (a) Death or Disability. The
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Consultant's consulting services shall terminate automatically upon the
Consultant's death during the Consulting Period. If the Company determines in
good faith that the Disability of the Consultant has occurred during the
Consulting Period (pursuant to the definition of Disability set forth
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below), it may give to the Consultant written notice in accordance with Section
12(b) of this Agreement of its intention to terminate the Consultant's
consulting services. In such event, the Consultant's consulting services with
the Company shall terminate effective on the 30th day after receipt of such
notice by the Consultant (the "Disability Effective Date"). For purposes of this
Agreement, "Disability" shall mean 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 Consultant or the Consultant's
legal representative.
(b) Company Termination. The Company may terminate the Consultant's
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consulting services during the Consulting Period for any reason.
(c) Notice of Termination. Any termination by the Company shall be
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communicated by Notice of Termination to the Consultant given in accordance with
Section 12(b) of this Agreement.
(d) Date of Termination. "Date of Termination" means (i) if the
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Consultant's consulting services are terminated by the Company, the date of
receipt of the Notice of Termination or any later date specified therein within
30 days of such notice, as the case may be and (ii) if the Consultant's
consulting services are terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Consultant or the Disability
Effective Date, as the case may be.
5. Obligations of the Company upon Termination. If, during the
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Consulting Period, the Company shall terminate the Consultant's services
whether for Disability or otherwise or the Consultant's services shall be
terminated by reason of death:
(i) the Company shall pay to the Consultant or his estate, as the case
may be, in a lump sum in cash within 30 days after the Date of Termination the
aggregate of the following amounts:
A. any unpaid annual salary and annual bonus in respect of
calendar year 1997 required to be paid to the Consultant pursuant to
the Employment Agreement between the Company, BayBanks, Inc. and the
Consultant dated as of December 12, 1995 (the "Employment Agreement");
and
B. the amount equal to the product of (1) the number of months
(including fractions thereof) from the Date of Termination until
December 31, 1998 (the "Continuation Period") and (2) the Monthly Fee;
and
(ii) for the Continuation Period, or such longer period as may be
provided by the terms of the appropriate plan, program, practice or policy, the
Company shall continue benefits to the Consultant and/or the Consultant's family
at least equal to those that would have been provided to them in accordance with
the plans, programs, practices and policies described in Section 3(b)(iii) of
this Agreement if the Consultant's services had not been terminated or, if
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more favorable to the Consultant, as in effect generally at any time thereafter.
For purposes of determining eligibility (but not the time of commencement of
benefits) of the Consultant for retiree benefits pursuant to such plans,
practices, programs and policies, the Consultant shall be considered to have
been an employee throughout the Continuation Period and to have retired on the
last day of such period and such benefits shall commence immediately after the
Continuation Period; and
(iii) to the extent not theretofore paid or provided, the Company
shall timely pay or provide to the Consultant any other amounts or benefits
required to be paid or provided or which the Consultant is eligible to receive
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").
6. Non-exclusivity of Rights. Amounts that are vested benefits or
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that the Consultant is otherwise entitled to receive under any plan, policy,
practice or program of or any contract or agreement with the Company or any of
its affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.
7. Full Settlement. The Company's obligation to make the payments
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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
Consultant or others. In no event shall the Consultant be obligated to seek
other employment or self-employment or take any other action by way of
mitigation of the amounts payable to the Consultant under any of the provisions
of this Agreement and, such amounts shall not be reduced whether or not the
Consultant obtains other employment or self-employment. The Company agrees to
pay as incurred, to the full extent permitted by law, all legal fees and
expenses that the Consultant may reasonably incur as a result of any contest
(regardless of the outcome thereof) by the Company, the Consultant or others of
the validity or enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a result of any
contest by the Consultant about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code
of 1986, as amended (the "Code").
8. Certain Additional Payments by the Company.
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(a) While it is the intention of the parties that none of the payments
hereunder constitute "parachute payments" within the meaning of Section 280G of
the Code, anything in this Agreement to the contrary notwithstanding and except
as set forth below, in the event it shall be determined that any payment or
distribution by the Company to or for the benefit of the Consultant (whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this Section 8) (a "Payment") would be subject to the excise tax
imposed by Section 4999
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of the Code or any interest or penalties are incurred by the Consultant with
respect to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
the Consultant shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Consultant of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Consultant retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments. Notwithstanding the foregoing provisions of this
Section 8(a), if it shall be determined that the Consultant is entitled to a
Gross-Up Payment, but that the Payments do not exceed 110% of the greatest
amount (the "Reduced Amount") that could be paid to the Consultant such that the
receipt of Payments would not give rise to any Excise Tax, then no Gross-Up
Payment shall be made to the Consultant and the Payments, in the aggregate,
shall be reduced to the Reduced Amount.
(b) Subject to the provisions of Section 8(c), all determinations
required to be made under this Section 8, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by Coopers &
Xxxxxxx LLC or such other certified public accounting firm reasonably acceptable
to the Company as may be designated by the Consultant (the "Accounting Firm")
which shall provide detailed supporting calculations both to the Company and the
Consultant within 15 business days of the receipt of notice from the Consultant
that there has been a Payment, or such earlier time as is requested by the
Company. In the event that the Accounting Firm is serving as accountant or
auditor for the Company or its successors, the Consultant shall appoint another
nationally recognized accounting firm reasonably acceptable to the Company to
make the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 8, shall be paid by the Company to the
Consultant within five days of (i) the later of the due date for the payment of
any Excise Tax, and (ii) the receipt of the Accounting Firm's determination.
Any determination by the Accounting Firm shall be binding upon the Company and
the Consultant. As a result of uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been made
by the Company should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that the Company
exhausts its remedies pursuant to Section 8(c) and the Consultant thereafter is
required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Consultant.
(c) The Consultant shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Consultant is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid.
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The Consultant shall not pay such claim prior to the expiration of the 30-day
period following the date on which it gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes with respect to such
claim is due). If the Company notifies the Consultant in writing prior to the
expiration of such period that it desires to contest such claim, the Consultant
shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Consultant harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions
of this Section 8(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Consultant to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner, and the Consultant agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Consultant to pay
such claim and xxx for a refund, the Company shall advance the amount of such
payment to the Consultant, on an interest-free basis and shall indemnify and
hold the Consultant harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with respect to
such advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the Consultant
with respect to which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Consultant shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
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(d) If, after the receipt by the Consultant of an amount advanced by
the Company pursuant to Section 8(c), the Consultant becomes entitled to receive
any refund with respect to such claim, the Consultant shall (subject to the
Company's complying with the requirements of Section 8(c)) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the
Consultant of an amount advanced by the Company pursuant to Section 8(c), a
determination is made that the Consultant shall not be entitled to any refund
with respect to such claim and the Company does not notify the Consultant in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.
9. Confidential Information. (a) The Consultant shall hold in a
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fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by
the Consultant during the Consultant's employment by the Company or any of its
affiliated companies or during the Consulting Period and which shall not be or
become public knowledge (other than by acts by the Consultant or representatives
of the Consultant in violation of this Agreement). After termination of the
Consultant's employment with the Company and of the Consulting Period, the
Consultant 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
information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section 9 constitute a basis for deferring or withholding any amounts
otherwise payable to the Consultant under this Agreement.
(b) In the event of a breach or threatened breach of this Section 9,
the Consultant agrees that the Company shall be entitled to injunctive relief in
a court of appropriate jurisdiction to remedy any such breach or threatened
breach.
(c) Any termination of the Consultant's services or of this Agreement
shall have no effect on the continuing operation of this Section 9.
10. Successors. (a) This Agreement is personal to the Consultant and
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without the prior written consent of the Company shall not be assignable by the
Consultant otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Consultant's
legal representatives.
(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 in the same
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manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. 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.
11. Noncompetition. Until December 31, 1998, the Consultant will not
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own, manage, operate, control or participate in the ownership, management,
operation or control of, or be connected as an officer, employee, partner,
director or otherwise with, any business which is in competition with the retail
banking business conducted by the Company or any of its affiliates in any
geographic area where such business is being conducted during such period.
Ownership, for personal investment purposes only, of not to exceed 5% of the
voting stock of any publicly held corporation shall not constitute a violation
hereof. In no event shall an asserted violation of the provisions of this
Section 11 constitute a basis for deferring or withholding any amounts otherwise
payable to the Consultant under this Agreement. The Consultant acknowledges
that a violation on his part of any of the covenants contained in this Section
11 hereof would cause immeasurable and irreparable damage to the Company.
Accordingly, the Consultant agrees that the Company shall be entitled to
injunctive relief in any court of competent jurisdiction for any actual or
threatened violation of any such covenant in addition to any other remedies it
may have. The Consultant agrees that in the event that any arbitrator or court
of competent jurisdiction shall finally hold that any provision of this Section
11 is void or constitutes an unreasonable restriction against the Consultant,
the provisions of this Section 11 shall not be rendered void but shall apply to
such extent as such arbitrator or court may determine constitutes a reasonable
restriction under the circumstances.
12. Miscellaneous. (a) This Agreement shall be governed by and
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construed in accordance with the laws of the Commonwealth of Massachusetts,
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 Consultant:
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00 Xxxxx Xxxx Xxxx Xxxx
Xxxxxxxxx, XX 00000
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If to BankBoston:
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000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: General Counsel
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.
(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 Consultant'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 Consultant 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) The Consultant and the Company acknowledge that prior to the
Effective Date, the Consultant's employment shall be governed by the Employment
Agreement. From and after the Effective Date this Agreement shall supersede the
Employment Agreement.
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IN WITNESS WHEREOF, the Consultant has hereunto set the Consultant'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.
/s/ XXXXXXX X. XXXXXXX, XX.
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Xxxxxxx X. Xxxxxxx, Xx.
BANKBOSTON CORPORATION
By /s/ XXXX X. XXXXXX
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Xxxx X. Xxxxxx, General Counsel
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