EXHIBIT 10.13
Retirement Agreement With One Executive Officer
XXXXXX/FROST BANKERS
A Family of Texas Banks
June 28, 1996
Xx. Xxxxxx X. XxXxxxx
Xxxxxx/Xxxxx Bankers, Inc.
000 Xxxx Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxx 00000
Dear Bob:
Cullen/Frost Bankers, Inc., a Texas corporation (the "Company"), hereby
acknowledges the significant contributions you have made, and continue to make,
to both the Company and the community during your years with the Company. In
addition, the Company is excited that you have been elected to serve as the
Chairman of The Greater San Antonio Chamber of Commerce for this year and the
constructive community relations benefits that will flow to the Company as a
result of you serving in such position. Due to the recent reorganization
within the bank and your election to retire and enter into the Retirement Plan
(as hereinafter defined) effective June 1, 1999, and the Company's desire that
you continue to serve as President of the Company until the earlier of the 1997
meeting of the Company's shareholders or June 30, 1997, and, in view of your
contributions to and knowledge of the Company and its operations, the Company's
desire to be able to call upon you for consulting services and special projects
assistance after your term as President has ended and until you enter into the
Retirement Plan, this letter agreement, which has been approved by the
Compensation and Benefits Committee of the Board of Directors of the Company,
sets forth the terms of your employment until your retirement on June 1, 1999:
1. Employment, Consulting Services and Duties. Subject to the
------------------------------------------
terms and conditions of this Agreement, the Company agrees to employ you as its
President, and you accept such employment with the Company, from the date
hereof until the earlier of the 1997 meeting of the Company's shareholders or
June 30, 1997 (the "Initial Term"). During this Initial Term it is understood
that you will be serving as Chairman or Immediate Past-Chairman of The Greater
San Antonio Chamber of Commerce and will perform such other duties for the
Company as may be assigned and agreed upon between you and the Senior Chairman
of the Board. For the period commencing with the expiration of the Initial
Term through May 31, 1999 ("Consulting Term"), the Company and you mutually
agree that you will be employed by the Company: (a) as a consultant on
community and customer relations matters and issues reporting directly to the
Senior Chairman of the Board; and (b) as a consultant to work on special
projects as may be assigned and agreed upon between you and the Senior Chairman
or Chairman of the Board. It is further understood that during calendar year
1997 you will serve, as the immediate past-Chairman of The Greater San Antonio
Chamber of Commerce, on the Chamber's Executive Committee thereby continuing to
provide constructive community relations benefits to the Company. The Initial
Term and the Consulting Term are collectively referred to herein as the "Term."
During the Consulting Term, and subject to the provisions of Section 5 hereof,
---------
you will be able to pursue other business ventures, activities and investments
that are not in conflict with your obligations and duties, as defined herein,
as an employee of the Company. During the Consulting Term and until such time
as you reach age 70, you will be considered annually by the Board as a
candidate for re-election to the Board of the Company and The Frost National
Bank; provided,
Cullen/Frost Bankers
however, that it is understood that whether or not you are nominated and/or re-
elected is solely and exclusively within the discretion of the Board. If you
are nominated and elected to serve as a member of either of such boards of
directors, you shall not be compensated in your capacity as a director so long
as you are receiving the monthly base salary set forth in Section 2.1 hereof.
-----------
2. Compensation and Benefits.
-------------------------
2.1 Monthly Base Salary. For all services rendered to the
-------------------
Company during the Term of this Agreement, the Company shall pay you a salary
of $25,000 per month, payable in accordance with the usual payroll practice of
the Company, less all required deductions.
2.2 Bonus. As additional compensation for services rendered
-----
under this Agreement, Employee shall receive a bonus of $90,000 to be paid not
later than March 31, 1997.
2.3 Benefits. You shall, in addition to the compensation
--------
provided for herein, be entitled to the following additional benefits during
the Term of this Agreement:
(a) Medical, Health, Life and Disability Benefits. You shall be
---------------------------------------------
entitled to receive all medical, health, life and disability benefits that may,
from time to time, be provided by the Company to senior management of the
Company as a group.
(b) Other Benefits. In addition to the normal benefits incident
--------------
to employment with the Company, you shall also be entitled to receive the
following additional benefits: (i) a car allowance of $6,000 per annum; (ii)
payment of dues for membership to the Argyle and San Antonio Country Club; and
(iii) payment for security at your residence.
2.4 Stock Options.
-------------
(a) Release of Unvested Options. As of the effective date of
---------------------------
this Agreement, you hold the following nonqualified stock options granted by
the Company subject to the terms of the applicable plan and option award
agreements (collectively, the "Unvested Options"): (i) 6,000 options granted on
October 20, 1994, which are scheduled to vest on October 20, 1999; and (ii)
6,800 options granted on September 28, 1995, 3,400 of which are scheduled to
vest on September 28, 1999 and 3,400 of which are scheduled to vest on
September 28, 2000. You have acknowledged that, in the absence of a change of
control of the Company, such Unvested Options shall, by their terms, expire
unvested as of your retirement on June 1, 1999.
In exchange for good and valuable consideration provided under this
Agreement, you have agreed and do hereby forfeit and release the Unvested
Options immediately upon the execution of this Agreement.
-2-
Cullen/Frost Bankers
(b) Grant. In consideration for past and future services to the
-----
Company, you will receive a nonqualified stock option, subject to the terms of
the applicable plan and option award agreement as approved by the Company's
Compensation and Benefits Committee on June 26, 1996, of 15,000 options which
will be scheduled to vest on May 31, 1999, with a ten (10) year exercise
period from the date of grant.
2.5 Reimbursement of Expenses. During the Initial Term, the
-------------------------
Company shall reimburse you for all expenses reasonably incurred by you in
conjunction with the rendering of services at the Company's request, including
such entertainment, travel and other related incidental expenses reasonably
incurred by you in conjunction with your duties as Chairman or Immediate Past-
Chairman of the Greater San Antonio Chamber of Commerce or in support of
customer relations activities for the benefit of the Company, provided that
such expenses are incurred and submitted for reimbursement, with appropriate
receipts and itemization, in accordance with the prevailing practice and policy
of the Company. During the Consulting Term, the prior authorization or
approval by the Senior Chairman or Chairman of the Company shall also be
required for expense reimbursement.
2.6 Office. While employed as President during the Initial
------
Term, you will continue to occupy your current office and receive secretarial
and other office support appropriate to your position. Thereafter, until the
earlier of such time as you no longer request or regularly utilize such office
or you reach age 70, you will be provided with a private office and appropriate
office and secretarial support.
3. Termination.
-----------
3.1 Termination For Cause. Your employment under this Agreement
---------------------
may be terminated by the Company for "Cause" (hereinafter defined) upon written
notice thereof given by the Company to you. In the event of termination
pursuant to this Section 3.1, the Company shall pay you your monthly base
-----------
salary (subject to standard deductions) earned pro rata to the date of such
termination and the Company shall have no further obligations to you hereunder.
Termination by the Company of your employment for Cause shall mean termination
upon (a) the willful and continued failure by you to perform substantially your
duties with the Company (other than any such failure resulting from your
incapacity due to physical or mental illness) after a demand for substantial
performance is delivered to you by the Senior Chairman or the Chairman of the
Board which specifically identifies the manner in which such executive believes
that you have not substantially performed your duties, or (b) the willful
engaging by you in illegal conduct which is materially and demonstrably
injurious to the Company. For purposes of this Section 3.1, no
-----------
act, or failure to act, on your part shall be considered willful unless done,
or omitted to be done, by you in bad faith and without reasonable belief that
your action or omission was in, or not opposed to, the best interest of the
Company. Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or based on advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by
you in good faith and in the best interest of the Company. Notwithstanding the
foregoing, you shall not be deemed to have been terminated for Cause unless and
until there shall have been delivered to you a copy of a resolution duly
-3-
Cullen/Frost Bankers
adopted by the affirmative vote of not less than three quarters of the entire
membership of the Board at a meeting of the Board called and held for the
purpose (after reasonable notice to you and an opportunity for you, together
with your counsel, to be heard before the Board), finding that in the good
faith opinion of the Board you were guilty of the conduct set forth above in
(a) or (b) of this Section 3.1 and specifying the particulars thereof in
-----------
detail.
3.2 Termination Upon Death. This Agreement shall terminate upon
----------------------
your death.
3.3 Termination Upon Disability. In the event you become unable
---------------------------
to perform the essential functions of your duties hereunder, with or without
reasonable accommodation, on account of illness, disability or other reason
whatsoever for a period of more than 180 consecutive days, the Company may,
upon notice to you, terminate this Agreement. In the event of termination
pursuant to this Section 3.3, you shall be entitled to payment of a monthly
-----------
amount, that when added to the monthly amount to be received under all your
short-term and long-term disability benefits, is equal to your monthly base
salary. You shall receive such amount for the then remaining portion of the
Term of employment pursuant to this Agreement.
3.4 Survival of Provisions. The covenants and provisions of
----------------------
Section 5 and Section 8 hereof shall survive any termination of this Agreement
--------- ---------
regardless of how such termination may be brought about.
4. Retirement Plan. Notwithstanding the foregoing, upon the
---------------
occurrence of the earlier of (i) the termination of this Agreement on May 31,
1999 (i.e., the last day of the Term), or (ii) the termination of this
Agreement for any reason other than for death or Cause (as defined in Section
-------
3.1), you shall enter into retirement pursuant to the Retirement Plan for
---
Employees of Cullen/Frost Bankers, Inc. and its Affiliates (or any successor or
substitute defined benefit pension plan or plans of the Company) (the
"Retirement Plan").
5. Confidential Information. You agree that during and
------------------------
subsequent to your Term of employment with the Company, you will not at any
time communicate or disclose to any unauthorized person without the written
consent of the Senior Chairman or Chairman of the Company, any proprietary
process or information of the Company, or any subsidiary or related entity, or
other confidential information concerning their business, financial affairs,
products, suppliers or customers which, if disclosed, would have a material
adverse effect upon the business or operation of the Company and its
subsidiaries, taken as a whole; it being understood, however, that the
obligations of this Section 5 shall not apply to the extent that the aforesaid
---------
matters (a) are disclosed in circumstances where you are legally required to do
so or (b) become generally known to and available for use by the public
otherwise than by your wrongful act or omission. The intent of this Section 5
---------
is not to create a non-compete agreement but to protect the rights of the
Company as provided above.
-4-
Cullen/Frost Bankers
6. Successors; Binding Agreement.
-----------------------------
6.1 Upon your written request, the Company will seek to have any
Successor (as hereinafter defined), by agreement in form and substance
satisfactory to you, assent to the fulfillment by the Company of its
obligations under this Agreement. Failure of such person or entity to furnish
such assent by the later of (a) three business days prior to the time such
person or entity becomes a Successor or (b) two business days after such person
or entity receives a written request to so assent shall constitute a
termination by the Company without cause and shall entitle you to payment
within 30 days of such termination of a lump sum equal to (without discounting
to present value) your monthly base salary under Section 2.1 hereof for the
then remaining portion of the Term of employment pursuant to this Agreement and
immediately to the benefits provided in Section 4. In addition, the
---------
retirement benefits you shall receive under Section 4 hereof shall be those
---------
benefits you would have been entitled to had you remained in the employ of the
Company until the expiration of the Term of this Agreement. For purposes of
this Agreement, Successor shall mean any person or entity that succeeds to, or
has the practical ability to control (either immediately or with the passage of
time), the Company's business directly, by merger or consolidation, or
indirectly, by purchase of the Company's securities entitled to vote in the
election of directors, all or substantially all of its assets, or otherwise.
6.2 For purposes of this Agreement, the Company shall include any
corporation or other entity which is the surviving or continuing entity in
respect of any merger, consolidation or form of business combination in which
the Company ceases to exist.
6.3. This Agreement shall inure to the benefit of and be
enforceable by you and your personal or legal representatives and successors in
interest under this Agreement.
7. Taxes. The Company may withhold from any amounts payable
-----
under this Agreement all federal, state, city or other taxes as shall be
required pursuant to any law or governmental regulation or ruling.
8. Arbitration. Any claim, dispute or controversy of any nature
-----------
whatsoever, including but not limited to tort claims or contract disputes,
between the parties to this Agreement or their respective heirs, executors,
administrators, legal representatives, successors and assigns, as applicable,
arising out of or relating to your employment or the termination of your
employment with the Company and/or the terms and conditions of this Agreement,
including the implementation, applicability and interpretation thereof, shall
be resolved as follows: upon the written request of one party served upon the
other, any such claim, dispute or controversy shall be submitted to and settled
by arbitration in accordance with the provisions of the Federal Arbitration
Act, 9 U.S.C. Sections 1-15, as amended; provided, however, that with respect
to the provisions of Section 5 of this Agreement dealing with confidential
---------
information, the Company reserves the right to petition a court directly for
injunctive or other relief. If arbitration is requested, each of the parties
to this Agreement shall appoint one person as an arbitrator to hear and
determine any such disputes, and if they should be unable to agree, then the
two arbitrators shall choose a third arbitrator from a panel made up of
-5-
Cullen/Frost Bankers
experienced arbitrators selected pursuant to the procedures of the American
Arbitration Association (the "AAA") and, once chosen, the third arbitrator's
decision shall be final, binding and conclusive upon the parties to this
Agreement. Each party shall be responsible for the fees and expenses of its
arbitrator and the fees and expenses of the third arbitrator shall be shared
equally by the parties. The terms of the commercial arbitration rules of AAA
shall apply except to the extent they conflict with the provisions of this
paragraph. It is further agreed that any of the parties hereto may petition
the United States District Court for the Western District of Texas, San Antonio
Division, for a judgment to be entered upon any award entered through such
arbitration proceedings.
9. Release. You release, dismiss, acquit and discharge the
-------
Company and its affiliates, and their divisions, officers, directors, agents,
employees, consultants, independent contractors, attorneys, advisers,
successors and assigns, jointly and severally, from any and all claims, known
or unknown, which you, your heirs, successors and assigns have or may have
against any of such parties, whether denominated claims, demands, causes of
action, obligations, damages or liabilities arising from any and all bases,
however denominated, including but not limited to claims of discrimination
under the Age Discrimination in Employment Act; Title VII of the Civil Rights
Act of 1964, as amended; the Civil Rights Act of 1991; 42 U.S.C. Section 1981,
Section 1985; Americans With Disabilities Act; Equal Pay Act;
anti-discrimination laws; libel; slander; defamation; Fair Labor Standards Act;
Employee Retirement Income Security Act of 1974; Texas Commission on Human
Rights Act; art. 5221k, Tex. Rev. Civ. Stat. Xxx. (Xxxxxx Xxxx. 1985) or any
other U.S. federal, state or local law including, statutory, common law or
regulations. This release relates to claims arising from and during your
relationship with the Company and its affiliates or as a result of the
termination of such relationship, specifically including but not limited to
your retirement to be effective June 1, 1999. This release is for any relief,
no matter how denominated, including but not limited to wages, back pay, front
pay, compensatory damages or punitive damages. You further agree that you will
not file or permit to be filed on your behalf any such claim. This release is
not intended to apply to the obligations of the Company set forth in this
Agreement or to future claims based upon events or occurrences subsequent to
the effective date of this Agreement. You expressly acknowledge that the
benefits being offered to you in this Agreement constitute consideration for
the foregoing release that is in addition to anything of value to which you are
already entitled from the Company and its affiliates.
10. Notice. Written notices required or furnished under this
------
Agreement shall be sent to the following addresses:
to the Company: Attn: Senior Chairman of the Board
Cullen/Frost Bankers, Inc.
000 X. Xxxxxxx Xxxxxx
P.O. Box 1600
San Antonio, Texas 78296
-6-
Cullen/Frost Bankers
to you: Xxxxxx X. XxXxxxx
000 Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxx 00000
Notices shall be effective on the first business day following receipt thereof.
Notices sent by mail shall be deemed received on the date of delivery shown on
the return receipt.
11. TERMINATION OF PRIOR LETTER AGREEMENTS. THIS AGREEMENT IS
--------------------------------------
INTENDED TO REPLACE IN THE ENTIRETY THE LETTER AGREEMENTS DATED NOVEMBER 15,
1994 AND MARCH 2, 1990 (THE "PRIOR AGREEMENTS") REGARDING A CHANGE IN CONTROL
OF THE COMPANY. BY MUTUAL AGREEMENT, THE PRIOR AGREEMENTS ARE HEREBY DECLARED
NULL AND VOID. THE RESPECTIVE OBLIGATIONS AND THE BENEFITS PROVIDED IN THE
PRIOR AGREEMENTS ARE TERMINATED AND OF NO FURTHER EFFECT.
12. Miscellaneous. This Agreement constitutes the entire
-------------
understanding between you and the Company and its affiliates with respect to
the subject matter hereof, and supersedes all prior understandings, written or
oral. The terms of this Agreement may be changed, modified or discharged only
by an instrument in writing signed by you and the Senior Chairman or the
Chairman of the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or of 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. Except to the extent that the terms and
provisions of this Agreement are governed by Federal law, this Agreement shall
be construed in accordance with the laws of the State of Texas. This Agreement
may be executed in any number of counterparts, each of which shall be deemed to
be original.
13. Representations and Warranties. You warrant that you are
------------------------------
over the age of twenty-one (21) and competent to execute this Agreement; that
in executing this Agreement, you are not relying on any statement,
representation, advice or counsel of the other party to this Agreement, but are
relying on your own judgment and/or that of your independent counsel; and that
the Agreement is the result of negotiation between the parties. You agree that
you have been encouraged to and have had an opportunity to consult with an
attorney of your own choosing regarding the Agreement, that it was executed
voluntarily without duress or coercion of any form. You further acknowledge
that you have been afforded a period of at least 21 days within which to
consider this Agreement and that you understand that for a period of seven (7)
days following the execution of this Agreement you may revoke the same, and
that the Agreement shall not become effective and enforceable until this
revocation period has expired.
-7-
Cullen/Frost Bankers
If this letter correctly sets forth our agreement on the subject
matter hereof, kindly sign and return to the Company the enclosed copy of this
letter which will then constitute our binding agreement on this subject.
Sincerely,
CULLEN/FROST BANKERS, LTD.
By:/s/X.X. Xxxxx
--------------------------------------
X.X. Xxxxx, Senior Chairman of the
Board of Directors
Agreed to this 28th day
----
of June 1996.
-----------
/s/ Xxxxxx X. XxXxxxx
-----------------------
Xxxxxx X. XxXxxxx
-8-
