EXHIBIT 10(j)
EMPLOYMENT AGREEMENT
by and between
FLEET FINANCIAL GROUP, INC.
and
XXXX X. XXXXXX
TABLE OF CONTENTS
SECTION PAGE
------- ----
1. Employment.......................................................1
2. Term.............................................................1
3. Position and Duties..............................................1
4. Place of Performance.............................................2
5. Compensation and Related Matters.................................2
(a) Base Salary................................................2
(b) Bonuses....................................................2
(c) Equity-Based Compensation..................................2
(d) Expenses...................................................3
(e) Other Benefits.............................................3
(f) Vacation...................................................4
(g) Services Furnished.........................................4
6. Offices..........................................................4
7. Termination......................................................5
(a) Death......................................................5
(b) Disability.................................................5
(c) Cause......................................................5
(d) Good Reason................................................6
8. Termination Procedure............................................6
(a) Notice of Termination......................................6
(b) Date of Termination........................................6
(c) Compensation During Dispute................................6
9. Compensation upon Termination or During Disability ..............7
(a) Disability; Death..........................................7
(b) By Corporation without Cause or by the Executive...........7
(c) By Corporation for Cause...................................8
(d) Compensation Plans.........................................8
(e) Mitigation.................................................8
10. Confidential Information; Nonsolicitation Requirement............9
(a) Confidential Information...................................9
(b) Nonsolicitation Requirement................................9
SECTION PAGE
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11. Indemnification; Legal Fees......................................9
12. Successors; Binding Agreement....................................9
(a) Corporation's Successors...................................9
(b) The Executive's Successors................................10
13. Notice..........................................................10
14. Additional Payment..............................................10
15. Amendment or Modification; Waiver...............................12
16. Funding.........................................................12
17. Arbitration.....................................................12
18. Governing Law...................................................12
19. Miscellaneous...................................................12
20. Severability....................................................12
21. Counterparts....................................................13
22. Entire Agreement................................................13
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INDEX OF DEFINED TERMS
Term Where Defined
---- -------------
Actual Date.................................................Sec. 5(e) (ii)
Annual Bonus.....................................................Sec. 5(b)
Base Salary......................................................Sec. 5(a)
Board ........................................................Introduction
Cause ...........................................................Sec. 7(c)
Code .............................................................Sec. 11
Contract Payments...............................................Sec. 14(a)
Corporation...................................................Introduction
Date of Termination..............................................Sec. 8(b)
Disability.......................................................Sec. 7(b)
Disability Period................................................Sec. 9(a)
EGLIP ......................................................Sec. 5(e) (iv)
Earliest Date...............................................Sec. 5(e) (ii)
Effective Date......................................................Sec. 2
Effective Time................................................Introduction
Excise Tax......................................................Sec. 14(a)
Executive.....................................................Introduction
Good Reason......................................................Sec. 7(d)
Gross-Up Payment................................................Sec. 14(a)
Long-Term Bonus..................................................Sec. 5(b)
Merger........................................................Introduction
Notice of Termination............................................Sec. 8(a)
Shawmut.......................................................Introduction
Prior Agreement...............................................Introduction
SDLIP ......................................................Sec. 5(e) (ii)
SERP .....................................................Sec. 5(e) (iii)
Severance Agreement................................................Sec. 22
Term ..............................................................Sec. 2
Total Payments..................................................Sec. 14(b)
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EMPLOYMENT AGREEMENT
AGREEMENT, dated as of February 20, 1995, by and between Xxxx X. Xxxxxx
(the "Executive") and Fleet Financial Group, Inc., a Rhode Island corporation
(the "Corporation")
The Executive was formerly employed by Shawmut National Corporation, a
Delaware corporation ("Shawmut"), as Chairman and Chief Executive Officer
pursuant to an employment agreement (the "Prior Agreement") effective as of
February 24, 1994. Pursuant to the Agreement and Plan of Merger, dated as of
February 20, 1995 (the "Merger Agreement"), by and between the Company and
Shawmut, Shawmut will merge with and into the Company as of the "Effective Time"
(as defined in the Merger Agreement).
The Board of Directors of the Corporation (the "Board") recognizes that
the Executive can contribute significantly to the growth and success of the
Corporation. The Board desires to provide for the employment of the Executive
and to encourage the attention and dedication to the Corporation of the
Executive as a member of the Corporation's management, in the best interests of
the Corporation and its shareholders. The Executive is willing to commit himself
to serve the Corporation, on the terms and conditions herein provided.
In order to effect the foregoing, the Corporation and the Executive wish
to enter into an employment agreement on the terms and conditions set forth
below. This Agreement shall become effective only at the Effective Time. If the
Effective Time does not occur, this Agreement shall be of no force and effect.
Accordingly, in consideration of the premises and the respective covenants and
agreements of the parties herein contained, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. Employment. The Corporation hereby agrees to employ the
Executive, and the Executive hereby accepts such employment, on the terms and
conditions hereinafter set forth.
2. Term. The period of employment of the Executive by the Corporation
hereunder (the "Term") shall commence on the date (the "Effective Date") on
which the Effective Time occurs and shall end on the Executive's 60th birthday,
unless sooner terminated as provided in Section 7.
3. Position and Duties. During the Term, the Executive shall serve as
Chairman of the Corporation. The Executive shall be responsible for the business
banking function, the consumer and investment management functions and the
operational, data processing, and other fee businesses of the Corporation and/or
shall have such other responsibilities and authority as may from time to time be
assigned to the Executive by the Chief Executive Officer of the Corporation or
the Board, provided that such other responsibilities and authority are
acceptable to the Executive. The Corporation agrees to sponsor the Executive's
election and reelection to the Board during the Term and thereafter until his
attainment of age 65. Upon the expiration of the Term and until the Executive's
attainment of age 65, the Executive shall also serve as Chairman of the
Executive Committee of the Board or in such other capacity as the Executive and
the Corporation shall mutually agree. The Executive agrees to devote
substantially all of his working time and efforts to the performance of his
duties for the Corporation; provided, however, that the Executive may (i) serve
on the boards of directors of other organizations to the extent such service is
permitted by applicable law and would not subject the Corporation to any
liability with respect to its business activities under such law, and (ii) may
devote a reasonable amount of time to charitable and community services.
4. Place of Performance. In connection with the Executive's employment by
the Corporation, the Executive shall be based at the headquarters of the
Corporation in Boston, Massachusetts, except for required travel on the
Corporation's business to an extent substantially consistent with the
Executive's business travel obligations with Shawmut prior to the Effective
Date.
5. Compensation and Related Matters.
(a) Base Salary. During the Term, the Corporation shall pay the Executive
a base salary ("Base Salary") at a rate no less than 90% of the base salary in
effect from time to time for the Chief Executive Officer of the Corporation.
Base Salary shall be paid in approximately equal installments in accordance with
the Corporation's customary payroll practices. Base Salary may be increased from
time to time in accordance with the normal business practices of the Corporation
and, if so increased, shall not thereafter during the Term be decreased. The
salary payments (including any increased salary payments) hereunder shall not in
any way limit or reduce any other obligation of the Corporation hereunder, and
no other compensation, benefit or payment hereunder shall in any way limit or
reduce the obligation of the Corporation to pay the Executive's salary
hereunder.
(b) Bonuses. During the Term, and with respect to calendar year 1995, the
Executive shall receive annual bonuses (each, an "Annual Bonus"), each of which
shall be at least equal to 90% of the annual bonus awarded to the Chief
Executive Officer of the Corporation and the Executive shall be eligible to
receive such other non-equity-based bonuses and awards (each, a "Long-Term
Bonus") as may be provided pursuant to the terms of the long-term incentive
plans of the Corporation applicable to similarly situated executive officers of
the Corporation, as such plans may from time to time be revised, each of which
shall be at least equal to 90% of the long-term bonus awarded to the Chief
Executive Officer of the Corporation. The Annual Bonus and the Long-Term Bonus
shall each be paid at a time and in a manner consistent with the time and manner
in which the Annual Bonus and the Long-Term Bonus are paid to the Chief
Executive Officer of the Corporation in accordance with the terms of such plans.
(c) Equity-Based Compensation. During each year of the Term, the Executive
shall be entitled to receive equity-based compensation awards, including without
limitation awards of stock options and restricted stock, each of which shall be
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at least equal to 90% of each such award made to the Chief Executive Officer of
the Corporation, and on the same terms and conditions as each award made to the
Chief Executive Officer of the Corporation; provided, however, that,
notwithstanding any other provision of this Agreement to the contrary, for
purposes of the vesting of such awards and the time at which such awards first
become exercisable, the Executive shall continue to be treated as an employee of
the Corporation until his 65th birthday.
(d) Expenses. The Corporation shall promptly reimburse the Executive for
all reasonable business expenses incurred during the Term by the Executive in
performing services hereunder, including all expenses of travel and living
expenses while away from home on business or at the request of and in the
service of the Corporation, provided that such expenses are incurred and
accounted for in accordance with the policies and procedures established by the
Corporation.
(e) Other Benefits.
(ii) The Executive shall be entitled to participate in all of the employee
benefit plans and arrangements made available by the Corporation to its
similarly situated executive officers, subject to and on a basis
consistent with the terms, conditions and overall administration of such
plans and arrangements; provided, however, that the Executive shall be
entitled to participate in such plans and arrangements only to the extent
that the benefits provided thereunder do not duplicate, in type, the
benefits provided under paragraphs (ii)-(vi) of this Section 5(e). Nothing
paid to the Executive under any plan or arrangement presently in effect or
made available in the future shall be deemed to be in lieu of the salary
payable to the Executive pursuant to subsection (a) of this Section 5. The
Board shall from time to time by resolution provide the Executive with
additional, individual benefits, which shall not thereafter during the
term be decreased or discontinued.
(ii) Notwithstanding any amendment or termination of Shawmut's
Split-Dollar Life Insurance Plan (the "SDLIP") following the Effective
Time, the Executive shall be entitled to receive all benefits to which he
would have been entitled (including both death benefits and supplemental
retirement benefits) had he continued to participate in such plan (as in
effect immediately prior to the Effective Time) after the Effective Time
for three (3) years.
(iii)Notwithstanding any amendment or termination of Shawmut's Executive
Supplemental Retirement Plan (the "SERP") following the Effective Time,
the Executive shall be entitled to continue to accrue, during the period
beginning at the Effective Time and ending upon his Date of Termination, a
benefit thereunder (or under a substitute or alternative plan) at a rate
at least equal to the greater of (A) the rate provided under the SERP as
in effect immediately prior to the Effective Time and (B) the rate
provided under any supplemental retirement plan maintained by the
Corporation or any of its subsidiaries.
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(iv) Notwithstanding any amendment or termination of Shawmut's Executive
Group Life Insurance Plan (the "EGLIP") following the Effective Time, the
Executive shall (A) continue to be provided with life insurance benefits
no less favorable than the benefits provided under the EGLIP immediately
prior to the Effective Time for three (3) years subsequent to the
Effective Time and (B) following his Date of Termination, be provided with
retiree life insurance benefits no less favorable than the retiree life
insurance benefits to which the participant would have been entitled under
the EGLIP (as in effect immediately prior to the Effective Time) had he
continued to be employed by Shawmut after the Effective Time for three (3)
years.
(v) Notwithstanding anything in this Section 5(d) of this Agreement to the
contrary, during the Term, (A) the Corporation shall make available to the
Executive long-term disability coverage providing a maximum monthly
benefit of $15,000 at a monthly cost to the Executive no greater than the
monthly cost paid by the Executive immediately prior to the Effective Date
with respect to such coverage provided by Shawmut; and (B) the Corporation
shall pay or reimburse the Executive for the premiums incurred by the
Executive for the personal long-term disability insurance policy
maintained by the Executive as of February 20, 1995. The reimbursement and
payment of amounts described in clause (v) (B) above, as well as payments
made under this sentence, shall be "grossed-up" to compensate the
Executive for the tax consequences associated with such reimbursement and
payment.
(vi) In addition to the foregoing, the Corporation shall provide to the
Executive retiree medical benefits no less favorable than those to which
he would have been entitled had he retired from Shawmut immediately prior
to the Effective Date.
(f) Vacation. The Executive shall be entitled to (i) the number of
vacation days in each calendar year, (ii) compensation in respect of earned but
unused vacation days, and (iii) all paid holidays, in each case as the same may
be provided by the Corporation to its similarly situated executive officers.
(g) Services Furnished. During the Term, the Corporation shall furnish the
Executive with office space, stenographic assistance and such other facilities
and services as shall be suitable to the Executive's position and adequate for
the performance of his duties as set forth in Section 3. Upon the expiration of
the Term and until the Executive's attainment of age 65, the Corporation shall
furnish him with office space at a location selected by him and stenographic
assistance and such other facilities and services as shall be suitable to his
position and adequate for his performance of his duties as a member of the
Board.
6. Offices. Subject to Sections 3 and 4, the Executive agrees to serve
without additional compensation, if elected or appointed thereto, as a director
of the Corporation or any of its subsidiaries and as a member of any committees
of the board of directors of any such corporations, and in one or more executive
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positions of any of the Corporation's subsidiaries, provided that the Executive
is indemnified for serving in any and all such capacities on a basis no less
favorable than is currently or may be provided to any other director of the
Corporation, any of its subsidiaries, or in connection with any such executive
position, as the case may be.
7. Termination. The Executive's employment hereunder may be terminated
without any breach of this Agreement only under the circumstances set forth in
subsections (a), (b), (c) and (d) of this Section 7. In the event of a
termination pursuant to subsection (a), (b) or (c) of this Section 7, the Term
shall end on the Executive's Date of Termination (as defined in Section 8(b)).
(a) Death. The Executive's employment hereunder shall terminate upon his
death.
(b) Disability. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from the
full-time performance of his duties hereunder for the entire period of six
consecutive months, and within thirty (30) days after written Notice of
Termination (as defined in Section 8) is given shall not have returned to the
performance of his duties hereunder on a full-time basis, the Corporation may
terminate the Executive's employment hereunder for "Disability."
(c) Cause. The Corporation may terminate the Executive's employment
hereunder for Cause. For purposes of this Agreement, the Corporation shall have
"Cause" to terminate the Executive's employment hereunder upon the occurrence of
any of the following events:
(i) the conviction of the Executive for the commission of a felony
involving dishonesty with respect to the Corporation; or
(ii) the willful misconduct by the Executive (including, but not limited
to, breach by the Executive of the provisions of Section 10) that is
demonstrably and materially injurious to the Corporation or its
subsidiaries, whether monetarily or otherwise.
Cause shall not exist unless and until the Corporation has delivered to the
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than two-thirds (2/3) of the entire membership of the Board at a meeting of
the Board called and held for such purpose (after reasonable notice to the
Executive and an opportunity for the Executive, together with his counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
the Executive was guilty of the conduct set forth in this Section 7(c) and
specifying the particulars thereof in detail. For purposes of this Section 7(c),
no act or failure to act on the Executive's part shall be considered "willful"
unless done or failed to be done by the Executive in bad faith and without
reasonable belief that the Executive's action or omission was in the best
interest of the Corporation.
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(d) Good Reason. The Executive may terminate his employment during the
Term hereunder for "Good Reason." The Executive shall be deemed to have
terminated his employment for Good Reason if his employment terminates for any
reason other than death, Disability or by the Corporation for Cause.
8. Termination Procedure.
(a) Notice of Termination. Any termination of the Executive's employment
by the Corporation or by the Executive (other than termination pursuant to
Section 7(a) hereof) shall be communicated by written Notice of Termination to
the other party hereto in accordance with Section 13. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice that shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated.
(b) Date of Termination. "Date of Termination" shall mean (i) if the
Executive's employment is terminated pursuant to Section 7(a) above, (ii) if the
Executive's employment is terminated pursuant to Section 7(b) above, thirty (30)
days after Notice of Termination (provided that the Executive shall not have
returned to the performance of his duties on a full-time basis during such
thirty (30) day period), (iii) if the Executive's employment is terminated
pursuant to Section 7(c) above, the date specified in the Notice of Termination,
and (iv) if the Executive's employment is terminated pursuant to Section 7(d)
above, the date on which a Notice of Termination is given or any later date
(within 30 days) set forth in such Notice of Termination; provided, however,
that, if within thirty (30) days after any Notice of Termination is given the
party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, the Date of Termination shall be the
date on which the dispute is finally determined, either by mutual written
agreement of the parties, by a binding and final arbitration award or by a final
judgment, order or decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been perfected).
(c) Compensation During Dispute. If a purported termination occurs during
the Term, and such termination is disputed in accordance with subsection (b) of
this Section 8, the Corporation shall continue to pay the Executive the full
compensation in effect when the notice giving rise to the dispute was given
(including, but not limited to, salary) and continue the Executive as a
participant in all compensation, benefit and insurance plans in which Executive
was participating when the notice giving rise to the dispute was given, until
the Date of Termination, determined in accordance with subsection (b) of this
Section 8. Amounts paid under this Section 8(c) are in addition to all other
amounts due under this Agreement and shall not be offset against or reduce any
other amounts due under this Agreement.
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9. Compensation upon Termination or During Disability.
(a) Disability; Death. During any period that the Executive fails to
perform his duties hereunder as a result of incapacity due to physical or mental
illness ("Disability Period"), the Executive shall continue to receive his full
Base Salary at the rate in effect at the beginning of such period until his
employment is terminated pursuant to Section 7 (b), provided that payments so
made to the Executive during the disability period shall be reduced by the sum
of the amounts, if any, payable to the Executive with respect to such period
under the disability benefit plans of the Corporation then in effect or under
the Social Security disability insurance program, which amounts were not
previously applied to reduce any such payment. Subsequent to the termination of
the Executive's employment pursuant to Section 7(b), or in the event the
Executive's employment is terminated by reason of his death, the Corporation
shall pay to the Executive, his legal representative or his successors (as
described in Section 12(b)) his full salary through the Date of Termination at
the rate in effect at the time Notice of Termination is given. The Corporation
shall have no further obligations to the Executive under this Agreement, except
as set forth in this subsection (a) of Section 9, and the Executive's benefits
shall be determined under the Corporation's retirement, insurance and other
compensation programs then in effect in accordance with the terms of such
programs.
(b) By the Corporation without Cause or by the Executive. If during the
Term the Executive's employment is terminated by the Corporation other than for
Cause or Disability or by the Executive, then --
(i) the Corporation shall pay the Executive his full salary through the
Date of Termination at the rate in effect at the time Notice of
Termination is given, and an amount equal to all bonuses and awards that
would have been earned by the Executive upon completion of each award
cycle that began during the Term but had not been completed as of the Date
of Termination, assuming the full achievement of all goals and targets
relating thereto, in the case of each such bonus and award multiplied by a
fraction, the numerator of which shall be the number of days from the
beginning of the applicable bonus or award cycle to and including the Date
of Termination and the denominator of which shall be the number of days in
such cycle;
(ii) in lieu of any further salary payments to the Executive for periods
subsequent to the Date of Termination, the Corporation shall pay as
liquidated damages to the Executive an aggregate amount equal to the
product of (A) the number of years (including fractions thereof) remaining
in the Term as of the Date of Termination and (B) the sum of (1) the
Executive's annual salary rate in effect as of the Date of Termination,
(2) the highest Annual Bonus awarded to and earned by the Executive
pursuant to either Section 5(b) of this Agreement or Section 5(b) of the
Prior Agreement in respect of any fiscal year during the three fiscal
7
years completed prior to the Date of Termination, and (3) the highest
Long-Term Bonus awarded to and earned by the Executive pursuant to either
Section 5(b) of this Agreement or Section 5(b) of the Prior Agreement in
respect of any performance cycle ending during the three fiscal years
completed prior to the Date of Termination or, if no performance cycle has
ended during such three fiscal years, then the highest Long-Term Bonus
awarded to the Executive with respect to a performance cycle in effect but
not yet ended on the Date of Termination, such amount to be paid in a cash
lump sum within five (5) days following the Date of Termination, unless
the Executive elects, prior to the beginning of the calendar year in which
occurs the Date of Termination, to have such amount paid in substantially
equal monthly installments during the period commencing with the month
immediately following the month in which the Date of Termination occurs
and ending with the month corresponding to the end of the Term hereunder;
and
(iii) the Corporation shall (A) continue to provide to the Executive the
benefits described in Section 5(e) (v) hereof for the remainder of the
Term, and (B) provide the benefits to which the Executive would have been
entitled pursuant to Shawmut's Executive Supplemental Retirement Plan,
Shawmut's Executive Group Life Insurance Plan and Shawmut's Split Dollar
Life Insurance Plan (each, as in effect immediately prior to the Effective
Date), in each case had his employment continued at the rate of
compensation specified herein for the remainder of the Term,
notwithstanding the Executive's election, if any, to commence receiving
benefits under such plan, agreement or arrangement prior to the end of the
Term. Benefits otherwise receivable by the Executive pursuant to clause
(A) of this Section 9(b) (iv) shall be reduced to the extent comparable
benefits are actually received by the Executive from a subsequent employer
during the period during which the Corporation is required to provide such
benefits, and the Executive shall report any such benefits actually
received to the Corporation.
(c) By Corporation for Cause. If the Executive's employment shall be
terminated by the Corporation for Cause, then the Corporation shall pay the
Executive his Base Salary (at the rate in effect at the time Notice of
Termination is given) through the Date of Termination, and the Corporation shall
have no additional obligations to the Executive under this Agreement except as
set forth in subsection (d) of this Section 9.
(d) Compensation Plans. Following any termination of the Executive's
employment, the Corporation shall pay the Executive all unpaid amounts, if any,
to which the Executive is entitled as of the Date of Termination under any
compensation plan or program of the Corporation, including, but not limited to,
any deferred compensation plan or program, at the time such payments are due.
(e) Mitigation. Except as is specifically provided in subsection (b) (iv)
of this Section 9, the Executive shall not be required to mitigate the amount of
any payment provided herein by seeking other employment or otherwise, nor shall
the amount of any payment or benefit provided hereunder be reduced by any
compensation earned by the Executive as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by the Executive to the Corporation, or otherwise.
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10. Confidential Information; Nonsolicitation Requirement.
(a) Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Corporation all trade secrets, confidential
information, and knowledge or data relating to the Corporation and its
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Corporation and which shall not have been or now
or hereafter have become public knowledge (other than by acts by the Executive
or representatives of the Executive in violation of this Agreement). The
Executive shall not, without the prior written consent of the Corporation or as
may otherwise be required by law or legal process, communicate or divulge any
such trade secrets, information, knowledge or data to anyone other than the
Corporation and those designated by the Corporation. Any termination of the
Executive's employment or of this Agreement shall have no effect on the
continuing operation of this Section 10(a).
(b) Nonsolicitation Requirement. During any period that the Executive is
performing services hereunder or the Executive is entitled to payment pursuant
to Section 9, and for a period of one (1) year following a termination of the
Executive's employment by the Corporation for Cause, the Executive shall not
induce any employee of the Corporation or its subsidiaries to terminate
employment with the Corporation or its subsidiaries in order to obtain
employment with any person, firm or corporation affiliated with the Executive.
11. Indemnification; Legal Fees. The Corporation shall indemnify the
Executive to the full extent permitted by law and the by-laws of the Corporation
for all expenses, costs, liabilities and legal fees that the Executive may incur
in the discharge of his duties hereunder, including any legal fees and expenses
incurred by the Executive in contesting or disputing any termination of the
Executive's employment or in seeking to obtain or enforce any right or benefit
provided by this Agreement (or in connection with any tax audit or proceeding to
the extent attributable to the application of section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code"), to any payment or benefit
provided hereunder) other than for any such expenses, costs, liabilities or
legal fees incurred as a result of the Executive's bad faith or gross
negligence. Such payments shall be made within five (5) days after the
Executive's request for payment accompanied with such evidence of fees and
expenses incurred as the Corporation reasonably may require. Any termination of
the Executive's employment or of this Agreement shall have no effect on the
continuing operation of this Section 11.
12. Successors; Binding Agreement.
(a) Corporation's Successors. The Corporation 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 Corporation to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Corporation would be required to perform it if no such
succession had taken place. Failure of the Corporation to obtain such assumption
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and agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle the Executive to compensation from
the Corporation in the same amount and on the same terms as he would be entitled
to hereunder if he terminated his employment for Good Reason, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. As used in this
Agreement, "Corporation" shall mean the Corporation as herein before defined and
any successor to its business and/or assets as aforesaid which executes and
delivers the agreement provided for in this Section 12 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law.
(b) The Executive's Successors. This Agreement and all rights of the
Executive hereunder shall inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts would still be payable to him hereunder if he had
continued to live, all such amounts unless otherwise provided herein shall be
paid in accordance with the terms of this Agreement to the Executive's devisee,
legatee, or other designee or, if there be no such designee, to the Executive's
estate.
13. Notice. For the purposes of this Agreement, notices, demands and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
Xxxx X. Xxxxxx
00 Xxxxxxxx Xxxx Xxxx
Xxxxxxxxxxx, Xxxxxxxxxxx 00000
If to the Corporation:
Fleet Financial Group, Inc.
00 Xxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attention: General Counsel
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
14. Additional Payment.
(a) If any of the payments provided for in this Agreement (the "Contract
Payments") or other portion of the Total Payments (as defined below) will be
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subject to the tax (the "Excise Tax") imposed by section 4999 of the Code, the
Corporation shall pay to the Executive, no later than the fifth day following
the Date of Termination, an additional amount (the "Gross-Up Payment") such that
the net amount retained by the Executive, after deduction of any Excise Tax on
the Contract Payments and such other Total Payments and any federal and state
and local income tax and Excise Tax upon the payment provided for by this
subsection, shall be equal to the Contract Payments and such other Total
Payments.
(b) For purposes of determining whether any of Total Payments will be
subject to the Excise Tax and the amount of such Excise Tax, (i) any payments or
benefits received or to be received by the Executive in connection with an event
described in section 280(G) (b) (2) (A) (i) of the Code (hereinafter, a "change
in control"), or the Executive's termination of employment pursuant to the terms
of any plan, arrangement or agreement (other than this Agreement) with the
Corporation, its successors, any person whose actions result in a change in
control or any person affiliated with the Corporation or such person (together
with the Contract Payments, the "Total Payments"), shall be treated as
"parachute payments" within the meaning of section 280G(b) (2) of the Code
except to the extent that, in the opinion of tax counsel selected by the
Corporation's independent auditors and acceptable to the Executive, the Total
Payments do not constitute parachute payments, (b) all "excess parachute
payments" within the meaning of section 280G(b) (1) shall be treated as subject
to the Excise Tax except to the extent that, in the opinion of such tax counsel,
such excess parachute payments represent reasonable compensation for services
actually rendered within the meaning of section 280G(b) (4) (B) of the Code in
excess of the base amount within the meaning of section 280G(b) (3) of the Code,
or are otherwise not subject to the Excise Tax, and (c) the value of any
non-cash benefits or any deferred payment or benefit shall be determined by the
Corporation's independent auditors in accordance with the principles of sections
280G(d) (3) and (4) of the Code. For purposes of determining the amount of the
Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at
the highest marginal rate of federal income taxation in the calendar year in
which the Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of the Executive's
residence on the Date of Termination, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state and local
taxes.
(c) In the event that the Excise Tax is subsequently determined to be less
than the amount taken into account hereunder at the time of termination of the
Executive's employment, the Executive shall repay to the Corporation at the time
that the amount of such reduction in Excise Tax is finally determined, the
portion of the Gross-Up Payment attributable to such reduction (plus the portion
of the Gross-Up Payment attributable to the Excise Tax and federal and state and
local income tax imposed on the Gross-Up Payment being repaid by the Executive
if such repayment results in a reduction in Excise Tax and/or a federal and
state and local income tax deduction) plus interest on the amount of such
repayment at the rate provided in section 1274(b) (2) (B) of the Code. In the
event that the Excise Tax is determined to exceed the amount taken into account
hereunder at the time of the termination of the Executive's employment
(including by reason of any payment the existence or amount of which cannot be
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determined at the time of the Gross-Up Payment), the Corporation shall make an
additional gross-up payment in respect of such excess (plus any interest payable
with respect to such excess) at the time that the amount of such excess is
finally determined.
15. Amendment or Modification: Waiver. No provisions of this Agreement may
be modified, waived or discharged unless such waiver, modification or discharge
is agreed to in writing signed by the Executive and such officer of the
Corporation as may be specifically designated by the Board or its compensation
committee. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in Agreement.
16. Funding. This Agreement shall constitute a Plan for purposes of
Section 1.01 of the so-called rabbi trust entered into by Shawmut prior to the
Effective Date and assumed by the Corporation pursuant to the Merger Agreement;
provided, however, that nothing contained herein shall require the Corporation
to make additional contributions to such trust.
17. Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration, conducted
before a panel of three arbitrators in Boston, Massachusetts, in accordance with
the rules of the American Arbitration Association then in effect or of such
similar organization as the parties hereto may mutually agree. Judgment may be
entered on the arbitrator's award in any court having jurisdiction. The expense
of such arbitration shall be borne by the Corporation.
18. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Massachusetts without regard to its conflicts of law principles.
19. Miscellaneous. All references to sections of any statute shall be
deemed also to refer to any successor provisions to such sections. The
obligations of the Corporation under Section 9 shall survive the expiration of
the term of this Agreement. The compensation and benefits payable to the
Executive under this Agreement shall be in lieu of any other severance benefits
to which the Executive may otherwise be entitled upon his termination of
employment under any severance plan, program, policy or arrangement of the
Corporation (other than the Severance Agreement, as defined in Section 22).
20. Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect throughout the Term.
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21. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
22. Entire Agreement. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and, as of
the Effective Date, supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party hereto; and, as
of the Effective Date, the Prior Agreement and any prior agreement of the
parties hereto in respect of the subject matter contained herein are hereby
terminated and canceled; provided, however, that this Agreement shall not
supersede or in any way affect the validity of any other agreement setting forth
the rights of the Executive following a change in control of the Corporation
(the "Severance Agreement").
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
FLEET FINANCIAL GROUP, INC.
By:______________________________
Name:
Title:
_________________________________
Xxxx X. Xxxxxx
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