Exhibit 99.1
CHANGE IN EMPLOYMENT STATUS AGREEMENT ("Agreement")
I, Xxxxxxxxx X. Xxxxxxx, and Xxxxxx Xxxxxxx Xxxx Xxxxxx & Co., a
Delaware corporation (the "Company"), agree to resolve all issues regarding my
employment status as follows:
Section 1 -- Change in Employment Status
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(a) I resigned as the Executive Vice President, Chief Legal Officer
and Secretary of the Company and, except as provided in Section 1(b), all other
officer positions, offices and directorships with the Company and its affiliates
effective on June 10, 1999.
(b) The Company and I acknowledge and agree that I will remain an
active employee of the Company until January 31, 2000 (the "Retirement Date"),
however, I will report to the office on an "as needed" basis.
(c) The Company and I acknowledge and agree that following my
retirement, I will be available as an Advisory Director of Xxxxxx Xxxxxxx Xxxx
Xxxxxx ("MSDW") to provide such consulting services as the Company may
reasonably require from such retirement for such period of time and on such
terms as the Company and I may mutually agree. Such consulting services shall
relate to financial services modernization, antitrust issues relating to the
credit card industry, changes in national trading marketplaces, corporate
governance, employment practices issues and such other matters as we may
mutually agree.
(d) The Company and I acknowledge that we entered into a separate
release agreement contemporaneously herewith (the "Release Agreement").
Section 2 -- Payments and Benefits
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(a) In General: I may revoke the Release Agreement within seven days
after I sign it. If I do not revoke the Release Agreement, the Company will pay
me the amounts and provide me with the benefits set forth in this Section in
consideration for my acceptance of the terms of this Agreement and the Release
Agreement. I acknowledge that if I fail to comply with the terms and conditions
of this Agreement or the Release Agreement, the Company is not required to pay
me any amount or provide me with any benefit set forth in Section 2(d) that
becomes payable or effective on or after the date of such failure, subject to
the requirement to arbitrate such matters as provided in Section 4.
(b) Continuation of Base Salary and Employee Benefits: The Company
will pay me my base salary, at the rate currently in effect (which the parties
acknowledge is $300,000 per year), less any applicable withholding and
deductions, until the Retirement Date, notwithstanding my earlier death or
disability. If I voluntarily terminate my employment with the Company prior to
the Retirement Date, within 30 days after such voluntary termination, the
Company will pay me a lump sum cash payment equal to the amount of base salary
payable to
me pursuant to the preceding sentence that remains unpaid and that would
otherwise have been payable to me had I remained employed with the Company until
the Retirement Date. The Company also will continue to provide or make available
to me all employee benefits currently provided or made available (other than
incentive compensation or stock-based benefits), subject to my payment of any
applicable premium or contribution, until the earliest of the date I voluntarily
terminate my employment, the Retirement Date or the date of my death,
notwithstanding my earlier disability.
(c) Reimbursement of Legal Fees: Except for disputes arising after
this Agreement is executed that are covered by Section 4, the Company will
reimburse me for all legal fees and expenses incurred by me in connection with
my change of employment status with the Company promptly following my submission
of written documentation (in reasonable detail) of such fees and expenses.
(d) Annual Bonus and Severance Payment: The Company will pay me a
cash bonus for 1999 in an amount not less than seven-twelfths (7/12ths) of the
value of my above base compensation (defined as my total reward less my base
salary) for the Company's fiscal year 1998. Such bonus will be reduced by any
applicable withholding and deductions and paid at the same time that bonuses for
1999 are paid to other senior executives of the Company, notwithstanding my
earlier death, disability, termination of or retirement from employment. In
addition, the Company will pay me a severance payment in an amount equal to the
sum of (1) the amount I would have received under Section 4.2(a) of the Xxxxxx
Xxxxxxx Xxxx Xxxxxx & Co. Key Executive Employment Plan, as amended, and (2)
five-twelfths (5/12ths) of the value of my above base compensation for the
Company's fiscal year 1998. Such severance payment will be reduced by any
applicable withholding and deductions and paid within 30 days of my signing this
Agreement, notwithstanding my earlier death, disability, termination of or
retirement from employment.
(e) Stock Option and Restricted Stock Unit Awards: Any awards of
stock options and restricted stock units granted to me that by their terms were
not previously vested have been vested. All forfeiture provisions applicable to,
and transfer restrictions imposed by the Company on, any of my stock option
awards and any shares of the Company's common stock underlying any of my stock
option awards have been removed. All forfeiture provisions applicable to any
restricted stock units held by me have been removed. All restricted stock units
held by me shall become payable in accordance with their terms. To the extent
not inconsistent with the preceding, the termination of my employment is
considered to be and will be treated by the Company as (i) a "full career
retirement" for purposes of any awards granted to me in December 1997 and
December 1998 and (ii) a "retirement" for purposes of all other outstanding
options and restricted stock units granted to me.
(f) Restoration Option Rights: The restoration option rights granted
to me in connection with awards of stock options will not terminate upon the
termination of my employment and instead will remain in effect until the earlier
of the expiration of the underlying stock options or my election to terminate my
status as an Advisory Director of MSDW.
(g) Continuation of Medical Plan Coverage: The Company will continue
to provide medical plan coverage to me at the level in effect upon the
termination of my
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employment with the Company (provided that I continue to timely make any
regularly required contributions under such plan) until the earliest of (i) my
attainment of age 65, (ii) my eligibility for coverage under another group
medical plan, or (iii) the termination of the Company's group medical plan and
failure of the Company to adopt a replacement plan; provided that if the other
group medical plan referred to in clause (ii) above contains any exclusion or
limitation with respect to any preexisting condition I or any of the members of
my family have, the Company will continue to provide medical plan coverage to me
as provided herein.
(h) D&O Coverage: The Company will continue to provide to me at the
level provided to other senior executive officers of the Company directors' and
officers' insurance coverage with respect to all ongoing outside activities
originally undertaken by me on behalf of the Company, including, without
limitation, my membership on the boards of directors and committees of
exchanges, self-regulatory organizations and trade associations.
(i) Retirement and Deferred Compensation Benefits: Any retirement
and/or deferred compensation benefits payable to me under the qualified and non-
qualified retirement and deferred compensation plans of the Company and its
predecessors will be calculated and become payable in accordance with the terms
and conditions of such plans, it being understood that the termination of my
employment with the Company is considered to be and will be treated by the
Company as a "full career retirement" or "retirement", as applicable, under any
retirement plan where relevant to determine my eligibility for benefits but not
the amount of or time of commencement of such benefits.
(j) Riverwoods Office: Continuing for so long as I am an Advisory
Director of MSDW, the Company will provide an appropriate office and secretarial
support to me at its offices in Riverwoods, Illinois.
Section 3 -- Miscellaneous
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(a) Entire Agreement: This Agreement and the Release Agreement
constitute the entire agreement between the parties regarding the matters which
are the subject hereof and supersede and are in full substitution for any and
all prior agreements and understandings among them relating to such matters, and
no party shall be liable or bound to the other party hereto in any manner with
respect to such subject matter by any warranties, representations, covenants or
agreements except as specifically set forth herein. This Agreement may not be
modified or cancelled in any manner except by a writing signed by both me and an
authorized officer of the Company. If any provision in this Agreement is found
to be unenforceable, all other provisions will remain fully enforceable.
(b) Successors: This Agreement inures to the benefit of and binds my
heirs, administrators, representatives, executors, successors, and assigns, and
will inure to the benefit of all Released Parties (as defined in the Release
Agreement) and their respective heirs, administrators, representatives,
executors, successors, and assigns. This Agreement also binds the Company and
its related entities, subsidiaries, affiliates and successors.
(c) Interpretation: This Agreement shall be construed as a whole
according to its fair meaning. It shall not be construed strictly for or against
me or any Released Party.
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Unless the context indicates otherwise, the term "or" shall be deemed to include
the term "and" and the singular or plural number shall be deemed to include the
other. Captions are intended solely for convenience of reference and shall not
be used in the interpretation of this Agreement. This Agreement shall be
governed by the statutes and common law of the State of New York, excluding its
statutes or common law regarding choice of laws.
(d) Taxes: I acknowledge that I am responsible for paying any taxes
with respect to payments and benefits that I receive pursuant to this Agreement.
Section 4 -- Arbitration of Disputes
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The Company and I agree to be bound by the arbitration provisions in
Section 7 of the Release Agreement for resolution of any dispute with respect to
this Agreement. This arbitration agreement applies to, among others, disputes
about the validity, interpretation, or effect of this Agreement or alleged
violations of it, or other statutory violation claims.
EXECUTED at Lake Forest, Illinois, this 1st day of September, 1999.
/s/ Xxxxxxxxx X. Xxxxxxx
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Xxxxxxxxx X. Xxxxxxx
EXECUTED at New York, New York, this 1st day of September, 1999.
XXXXXX XXXXXXX XXXX XXXXXX & CO.
BY: /s/ Xxxx X. Xxxxxxxx
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Name: Xxxx X. Xxxxxxxx
Title: Executive Vice President
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