Compensation Amendment and Waiver Agreement Under the TARP Capital Purchase Program July 2009
Exhibit
10.5A
Under the
TARP Capital Purchase Program
July
2009
TO: [employee
name]
As you
know, MB Financial, Inc. is a participant in the United States Department of
Treasury (“Treasury”) TARP
Capital Purchase Program (“CPP”). The
Company entered into a letter agreement with Treasury in connection
with that participation, which included a Securities Purchase Agreement –
Standard Form (“Treasury Investment
Agreement”) providing for the sale to the Treasury of preferred stock and
a warrant . The period that Treasury holds the preferred stock
acquired from the Company in the CPP is the “TARP
Period.” Certain other terms used in this agreement are
defined below.
In order
for the Company to maintain compliance with the requirements of participation in
the CPP as amended by legislation and regulations issued earlier this year, the
Company is required to take certain actions and adopt certain standards, and to
make certain changes, to certain compensation arrangements of its senior
executive officers and most highly compensated employees, in each case as those
individuals are determined under applicable rules. You are or may
become a senior executive officer and/or a most highly compensated employee to
whom some or all of the requirement may apply.
To comply
with these requirements, and in consideration of your eligibility to receive
future incentive compensation (including equity compensation) and the benefits
that you receive as an employee, officer and/or stockholder of the Company as a
result of the Company’s participation in the CPP, you agree as
follows:
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(A)
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Prohibition on Certain
Bonus, Retention or Incentive Compensation. If you are
one of the Company’s top five most highly compensated employees (a “High-5
Employee”) during the TARP Period, you may not earn, nor may the
Company pay or award to you, any bonus, retention or incentive
compensation for or at the times you are a High-5 Employee. However, this
restriction does not preclude the awarding or earning of incentive
compensation in the form of restricted stock or units to the extent
permitted under the applicable Treasury regulations, or bonus, retention
or incentive compensation as may otherwise be permitted under the Treasury
regulations. Such permitted compensation includes bonus payments made
prior to June 15, 2009, compensation attributable to long-term incentive
awards or other contractual commitments in effect on February 9, 2009, or
compensation which qualifies as commission payments under
EESA.
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(B)
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Clawback and Repayment
of Bonus and Incentive Compensation. If, during the TARP
Period, you are a senior executive officer (a “SEO”) or you are one of top
twenty most highly compensated of the other employees (a “Top-20
Employee”), any bonus, retention or incentive compensation payments
you receive will be subject to recovery (clawback) by the Company if the
payment was based on materially inaccurate financial statements or any
other materially inaccurate performance metric or
criteria.
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(C)
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No Tax Gross-Up
Payment. If you are one of the Company’s SEOs or a
Top-20 Employee during the TARP Period, the Company may not pay you any
amount as a reimbursement of taxes owed by you with respect to your
compensation.
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(D)
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Prohibition on
Severance or CIC Payments. If at the time of your
departure (termination of employment) or a change in control (“CIC”) of the
Company during the TARP Period you are one of the Company’s SEOs or you
are one of the top five most highly compensated of the other employees
(each such individual referred to as a “Top-10
Employee”), the Company may not make any severance or CIC payment
to you at that time or later, including after the TARP Period. A severance
or CIC payment for this purpose has the same meaning as “golden parachute
payment” under EESA. Generally, a payment (such as cash
payment) or a benefit (such as accelerated vesting of an equity award)
will be a golden parachute payment under EESA if it is triggered by a
change in control of the Company or if the payment or benefit is triggered
by the circumstances relating to termination of employment (such as
severance pay paid upon involuntary termination without cause). A payment
or benefit will not be a prohibited severance or CIC payment if the
payment or benefit has already been earned (such as vested deferred
compensation or a vested stock option) by the date of the CIC or
termination of employment.
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(E)
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Avoidance of
Compensation Arrangements Encouraging Excessive Risks, Posing Risks to the
Company or Encouraging Manipulation of Reported
Earnings. EESA requires the Organization and
Compensation Committee of the Company’s Board of Directors (the “Compensation
Committee”) to periodically review the provisions of the Company’s
Compensation Arrangements for the purposes of determining if such
arrangements encourage the taking of unnecessary and excessive risks that
threaten the value of the Company, or pose unnecessary risks to the
Company or encourage manipulation of reported earnings. To the extent the
Compensation Committee determines any such circumstances exist, it is
obligated to take action to modify such Compensation Arrangements to limit
unnecessary risks or features that encourage earnings
manipulation.
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(F)
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Amendment of
Compensation Arrangements; Waiver and Repayment. Each of
the Company’s current and future compensation, bonus, incentive and other
benefit plans, programs, arrangements and agreements of any type under
which you are or may in the future be covered by or be a party to
(collectively, “Compensation
Arrangements”) is deemed amended by this letter agreement to the
extent necessary to give effect to the prohibitions, limitations and
requirements of EESA referred to in paragraphs (A) through (F) above, and
to otherwise comply with the applicable requirements of
EESA. For this purpose, Compensation Arrangements include,
without limitation, all employment agreements, change of control
agreements, annual bonus and other incentive plans, and stock option,
restricted stock and other cash-based or equity-based compensation plans
and agreements.
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To
the extent required by EESA, any payment or award to you which is provided
for in any such Compensation Arrangement is subject to waiver, forfeiture
or repayment to the extent such payment or award is subject to recovery or
clawback as described above or did or would violate any applicable
provision of EESA. In the event of any such circumstance, you shall be
deemed to have waived your right to such payment or award such that no
obligation on the part of the Company to pay or provide such waived amount
shall exist, and you agree to such waiver and forfeiture, and, if
applicable, to repay such amounts within 15 days of receipt of notice from
the Corporation that such repayment is
required.
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(G)
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Definitions,
Interpretation and Application. The following
definitions and interpretations shall apply to this
letter:
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“EESA” means the
Emergency Economic Stabilization Act of 2008, as amended by the American
Recovery and Reinvestment Act, and as implemented by rules, regulations,
guidance or other requirements issued thereunder governing the CPP that have
been issued by the Treasury, including, but not limited to the Interim Final
Rule issued by the U.S. Treasury Department on June 15, 2009, together with any
future amendments thereto, and any subsequent or similar legislation, rules,
regulations and/or interpretations that may from time to time be enacted or
promulgated.
“Senior executive
officer,” “SEO” and “most highly compensated
employee” have the meanings of such terms as defined under EESA and the
regulations thereunder. Generally, the determination of those
individuals who are the Company’s SEOs or a High-5, Top-20, or Top-10 Employee
for a calendar year during the TARP Period is fixed on January 1 of that year
based on proxy statement rules (which automatically treat the CEO and CFO as
SEOs) and compensation for the prior calendar year. Your execution of this
letter agreement shall not be determinative of your status as an SEO, a High-5,
Top-20 or Top-10 Employee. The Company will advise you as to whether you are an
SEO, High-5, Top 20 and/ or Top-10 Employee of the Company.
“Company” means MB
Financial, Inc. and includes MB Financial Bank, N.A. and any other entities
treated as a single employer with MB Financial, Inc. under EESA.
The
application of paragraphs (A) through (F) of this letter agreement are intended
to, and shall be interpreted, administered and construed to amend the
Compensation Arrangements only to the extent necessary to comply with the
limitations, prohibitions and requirements of EESA and, to the maximum extent
consistent with paragraphs (A) through (F) and EESA, to permit the operation of
the Compensation Arrangements in accordance with their terms before giving
effect to the provisions of this letter agreement.
If this
letter agreement sets forth our agreement on the subject matter hereof, kindly
sign and return to the Company the enclosed copy of this letter agreement which,
together with any agreement and waiver you entered into at the time the Company
entered into the Treasury Investment Agreement, will then constitute
our agreement on this subject.
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Sincerely,
MB
Financial, Inc.
By:
Name:[executive
name]
Title:
[executive title]
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Intending
to be legally bound, I agree to and accept the foregoing
terms:
Print
Name: ___________________________
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