EXHIBIT 10(o)
EXECUTIVE SEVERANCE AGREEMENT
THIS IS AN AGREEMENT between OLD KENT FINANCIAL CORPORATION (the
"Corporation") whose principal offices are located at Xxx Xxxxxxxxxx
Xxxxxx, Xxxxx Xxxxxx, Xxxxxxxx 00000, and XXXXXX X. XXXXXXXXXX (the
"Employee"), who resides at 0000 Xxxxxxxx, X.X., Xxx, Xxxxxxxx 00000, dated
December 16, 1991.
1. TERM OF AGREEMENT. This Agreement will begin on the date entered
above (the "Commencement Date") and will continue in effect through the
third anniversary of the Commencement Date. However, on the first
anniversary of the Commencement Date, and on each such anniversary date
thereafter, the term of this Agreement will be extended automatically for
one additional year (to a total of three years) unless, not later than six
months prior to such anniversary date, the Corporation gives written notice
to the Employee that it has elected not to extend this Agreement. In
addition, if a Change of Control occurs during the term of this Agreement,
this Agreement will continue in effect for at least 36 months beyond the
end of the month in which any Change of Control occurs.
2. DEFINITIONS. The following defined terms shall have the meanings
set forth below, for purposes of this Agreement.
(a) CHANGE OF CONTROL. "Change of Control" means an
occurrence of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Without limiting the inclusiveness of the
definition in the preceding sentence, a Change of Control of the
Corporation shall be deemed to have occurred if:
(i) Any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the
Corporation representing twenty-five percent (25%) or more
of the combined voting power of the Corporation's then-
outstanding securities; or
(ii) At any time a majority of the Board of Directors
of the Corporation is comprised of other than Continuing
Directors (for purposes of this paragraph, the term
Continuing Director means a director who was either (A)
first elected or appointed as a Director prior to the date
of this Agreement; or (B) subsequently elected or appointed
as a director if such director was nominated or appointed by
at least a majority of the then-Continuing Directors); or
(iii) Any of the following occur:
(A) any merger or consolidation of the
Corporation, other than a merger or consolidation in
which the voting securities of the Corporation
immediately prior to the merger or consolidation
continue to represent (either by remaining outstanding
or being converted into securities of the surviving
entity) fifty-one percent (51%) or more of the combined
voting power of the Corporation or surviving entity
immediately after the merger or consolidation with
another entity;
(B) any sale, exchange, lease, mortgage, pledge,
transfer, or other disposition (in a single transaction
or a series of related transactions) of all or
substantially all of the assets of the Corporation
which shall include, without limitation, the sale of
assets or earning power aggregating more than fifty
percent (50%) of the assets or earning power of the
Corporation on a consolidated basis;
(C) any liquidation or dissolution of the
Corporation;
(D) any reorganization, reverse stock split, or
recapitalization of the Corporation which would result
in a Change of Control; or
(E) any transaction or series of related
transactions having, directly or indirectly, the same
effect as any of the foregoing; or any agreement,
contract, or other arrangement providing for any of the
foregoing.
(b) DISABILITY. "Disability" means that, as a result of
Employee's incapacity due to physical or mental illness, the
Employee shall have been absent from the full-time performance of
his duties with the Corporation for 12 consecutive months and,
within 30 calendar days after written notice of suspension due to
Disability is given, the Employee shall not have returned to the
full-time performance of his duties.
(c) CAUSE. "Cause" means (i) Employee's willful and
continued failure to substantially perform Employee's duties with
the Corporation under this Agreement (other than any such failure
resulting from Disability or occurring after issuance by Employee
of a Notice of Termination for Good Reason), after a written
demand for substantial performance is delivered to the Employee
that specifically identifies the manner in which the Corporation
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believes that the Employee has willfully failed to substantially
perform his duties, and after the Employee has failed to resume
substantial performance of his duties on a continuous basis
within 14 calendar days of receiving such demand; (ii) the
Employee willfully engaging in conduct (other than conduct
covered under (i) above), which is demonstrably and materially
injurious to the Corporation, monetarily or otherwise; or (iii)
the Employee's having been convicted of a felony which impairs
his ability substantially to perform his duties with the
Corporation. For purposes of this subparagraph, no act, or
failure to act, on the Employee's part shall be deemed "willful"
unless done, or omitted to be done, by the Employee not in good
faith and without reasonable belief that the action or omission
was in the best interest of the Corporation.
(d) GOOD REASON. For purposes of this Agreement, "Good
Reason" means the occurrence of any one or more of the following
without the Employee's express written consent:
(i) The assignment to Employee of duties inconsistent
with the duties, responsibilities, and status of Employee's
position as of the day prior to the Change of Control of the
Corporation;
(ii) A reduction by the Corporation in Employee's base
salary as of the day prior to the Change of Control, or
reduction of Employee's most recent target incentive award
opportunity prior to the Change of Control under the
Corporation's Annual Incentive Plan, or any successor plan;
(iii) The Corporation's requiring Employee to be based
at a location in excess of 50 miles from the location where
Employee is currently based;
(iv) The failure of the Corporation to obtain a
satisfactory agreement from any successor to the Corporation
to assume and agree to perform this Agreement, as
contemplated in Paragraph 7 hereof;
(v) Any termination by the Corporation of Employee's
employment that is not effected pursuant to a Notice of
Termination; and
(vi) Any termination of Employee's employment,
reduction in Employee's compensation or benefits, or adverse
change in Employee's location or duties, if such
termination, reduction or adverse change occurs within 12
months before a Change of Control, is in contemplation of
such Change in Control, and is taken to avoid the effect of
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this Agreement should such action occur after such Change in
Control.
The existence of Good Reason shall not be affected by
Employee's incapacity due to physical or mental illness.
Employee's continued employment shall not constitute a waiver of
Employee's rights with respect to any circumstance constituting
Good Reason hereunder.
(e) NOTICE OF TERMINATION. "Notice of Termination" means a
written notice indicating the specific termination provision in
this Agreement relied upon and setting forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of the employment under the provision so indicated.
(f) POTENTIAL CHANGE OF CONTROL. "Potential Change of
Control" means: (i) the Corporation's entering into or the Board
of Director's authorizing an agreement, the consummation of which
would result in the occurrence of a Change of Control; or (ii)
adoption by the Board of Directors of a resolution to the effect
that, for purposes of this Agreement, a Potential Change of
Control has occurred.
(g) TRUST. "Trust" means the trust to be created pursuant
to Paragraph 6 of this Agreement in the event of a Change of
Control or Potential Change of Control.
(h) TRUST AGREEMENT. "Trust Agreement" means the Trust
Agreement attached as Exhibit A to this Agreement.
(i) TRUSTEE. "Trustee" means the Trustee of the Trust.
3. ELIGIBILITY FOR SEVERANCE BENEFITS. Subject to Paragraph 5, the
Employee shall receive the Severance Benefits described in Paragraph 4 if
the Employee's employment is terminated during the term of this Agreement,
and:
(a) the termination occurs within 12 months after a Change
of Control, unless the termination is (i) because of Employee's
death or Disability, (ii) by the Corporation for Cause, or (iii)
by the Employee other than for Good Reason; or
(b) the Corporation terminates the employment within 12
months before a Change of Control, in contemplation of such
Change of Control, and to avoid the effect of this Agreement
should such action occur after such Change of Control.
4. SEVERANCE BENEFITS. Subject to Paragraph 5, the Employee shall
receive the following Severance Benefits (in addition to accrued
compensation and vested benefits) if eligible under Paragraph 3:
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(a) Employee's annual base salary at the rate in effect
immediately prior to the Change of Control or, if greater, at the
rate in effect at the time Notice of Termination is given (or on
the date the employment is terminated if no Notice of Termination
is required), multiplied by one;
(b) One hundred percent of Employee's annual target bonus
under the Corporation's Annual Incentive Plan in effect at the
time Notice of Termination is given (or on the date the
employment is terminated if no Notice of Termination is required)
or, if greater, the average bonus paid to Employee over the
preceding three-year period, multiplied by one; and
(c) For a one-year period after the date the employment is
terminated, the Corporation will arrange to provide to Employee
at the Corporation's expense, with:
(i) the same health care coverage Employee had prior
to the termination (or, if more favorable to Employee, that
furnished generally to salaried employees of the
Corporation) including, but not limited to, hospital,
surgical, medical, dental, and dependent coverages. Health
care benefits otherwise receivable by Employee pursuant to
this Paragraph 4(c) shall be reduced to the extent
comparable benefits are actually received by Employee from a
subsequent employer during the one-year period following the
date the employment is terminated and any such benefits
actually received by Employee shall be reported to the
Corporation;
(ii) life and accidental death and dismemberment
insurance coverage (including supplemental coverage purchase
opportunity and double indemnity for accidental death) equal
(including policy terms) to that in effect at the time
Notice of Termination is given or, if more favorable to
Employee, equal to that in effect at the date the Change of
Control occurs; and
(iii) disability insurance coverage (including policy
terms) equal to that in effect at the time Notice of
Termination is given or, if more favorable to Employee,
equal to that in effect immediately prior to the Change of
Control; provided, however, that no income replacement
benefits will be payable under such disability policy with
regard to the one-year period following a termination of
employment provided that the payments payable under
subparagraphs 4(a) and (b) above have been made.
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(d) In computing and determining Severance Benefits under
subparagraphs 4(a), (b), and (c) above, a decrease in Employee's
salary, target bonus, or insurance benefits shall be disregarded
if such decrease occurs within 12 months before a Change of
Control, is in contemplation of such Change of Control, and is
taken to avoid the effect of this Agreement should such action be
taken after such Change of Control; in such event, the salary,
target bonus, and/or insurance benefits used to determine
Severance Benefits shall be that in effect immediately before the
decrease that is disregarded pursuant to this subparagraph 4(d).
(e) Employee shall not be required to mitigate the amount
of any payment provided for in this paragraph 4 by seeking other
employment or otherwise, nor shall the amount of any payment
provided for in this paragraph be reduced by any compensation
earned by Employee as the result of employment by another
employer after the date the employment is terminated, or
otherwise, with the exception of a reduction in health insurance
coverage as provided in subparagraph 4(c)(i).
The payments provided in subparagraphs 4(a) and (b) above shall
be made not later than ten business days following the date the employment
terminates.
Any termination by the Corporation for Cause or due to Employee's
Disability, or by Employee for Good Reason shall be communicated by Notice
of Termination to the other party.
5. MAXIMUM PAYMENTS. Notwithstanding any provision in this
Agreement to the contrary, if part or all of any amount to be paid to
Employee by the Corporation under this Agreement or otherwise constitute a
"parachute payment" (or payments) under Section 280G or any other similar
provision of the Internal Revenue Code of 1986, as amended (the "Code"),
the following limitation shall apply:
If the aggregate present value of such parachute payments (the
"Parachute Amount") exceeds 2.99 times Employee's "base amount"
as defined in Section 280G of the Code, and if as a result the
amounts otherwise payable to or for the benefit of the Employee
subsequent to the termination of his employment, and taken into
account in calculating the Parachute Amount (the "termination
payments"), shall be reduced and/or delayed, as further described
below, to the extent necessary so that the Parachute Amount is
equal to 2.99 times the Employee's "base amount."
Any determination or calculation described in this Paragraph 5
shall be made by the Corporation's independent accountants. Such
determination, and any proposed reduction and/or delay in termination
payments shall be furnished in writing promptly by the accountants to the
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Employee. The Employee may then elect, in his sole discretion, which and
how much of any particular termination payment shall be reduced and/or
delayed and shall advise the Corporation in writing of his election, within
30 days of the accountant's determination, of the reduction or delay in
termination payments. If no such election is made by the Employee within
such 30-day period, the Corporation may elect which and how much of any
termination payment shall be reduced and/or delayed and shall notify the
Employee promptly of such election. As promptly as practicable following
such determination and the elections hereunder, the Corporation shall pay
to or distribute to or for the benefit of the Employee such amounts as are
then due to the Employee.
Any disagreement regarding a reduction or delay in termination
payments will be subject to arbitration under Paragraph 16 of this
Agreement. Neither the Employee's designation of specific payments to be
reduced or delayed, nor the Employee's acceptance of reduced or delayed
payments, shall waive the Employee's right to contest such reduction or
delay.
6. ESTABLISHMENT OF TRUST. In the event of a Change of Control or a
Potential Change of Control, the Corporation shall create a Trust for the
benefit of Employee and shall fund such Trust in an amount equal to the
aggregate severance payments which may become due to Employee under
subparagraphs 4(a) and (b) of this Agreement. The Trust Agreement shall
provide that upon a Change of Control (i) the Trust shall not be revoked or
the principal thereof invaded, without the written consent of Employee;
(ii) the Trustee shall pay all amounts properly payable to Employee under
subparagraphs 4(a) and (b) of this Agreement when and as the same become
due and payable pursuant to the Agreement; and (iii) all unexpended funds
in such Trust shall revert to the Corporation upon such payment. The
trustee shall be a national or state bank (including an affiliate of the
Corporation) having a combined capital and surplus of not less than
$50,000,000, selected by the Corporation. Nothing in this paragraph shall
relieve the Corporation of any of its obligations under this Agreement,
except that actual disbursements from the Trust to an Employee in
satisfaction of payments under this Agreement will be applied to reduce the
Corporation's obligations under this Agreement, to the extent of such
disbursement. Any funds including interest or investment earnings thereon,
remaining in the trust fund shall revert and be paid to the Corporation if
(i) a Change of Control has not occurred; and (ii) a court of competent
jurisdiction determines that the circumstances giving rise to that
particular funding of the Trust no longer exist. A copy of the Trust
Agreement is attached as Exhibit A to this Agreement and is incorporated by
reference herein.
Amounts placed in trust pursuant to this Paragraph 6 shall not be
subject to withdrawal by Employee and shall be paid to Employee only in
accordance with the terms of this Agreement. No amount placed in trust
pursuant to this Paragraph 6 shall be subject to assignment, transfer,
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sale, pledge, encumbrance, alienation or charge by Employee or any
beneficiary. Any attempt to assign, transfer, sell, pledge, encumber,
alienate or charge any amount placed in trust hereunder shall be without
effect. Neither Employee, nor any beneficiary, nor any other person shall
be deemed to have, pursuant to this Agreement, any property interest, legal
or equitable, in any specific asset of the Corporation. Employee shall be
a general unsecured creditor with respect to the promises of the
Corporation made herein.
Notwithstanding any other provision of this Paragraph 6 to the
contrary, the Trust Agreement shall provide that the Board of Directors and
the Chief Executive Officer of the Corporation shall have the duty to
inform the Trustee of the Corporation's insolvency, which shall be deemed
to occur if the Corporation is unable to pay its debts as they come due or
if the Corporation becomes subject to a proceeding as a debtor under the
Federal Bankruptcy Code (or any successor federal statute). If the Trustee
receives notice of insolvency from the Corporation or receives from any
other person claiming to be a creditor of the Corporation a written
allegation that the Corporation is insolvent, the Trustee shall proceed as
provided in the Trust Agreement to independently determine whether such
insolvency exists, and shall suspend all benefit payments to Employees if
called for by the Trust Agreement. The Trustee shall have no obligation to
investigate the financial condition of the Corporation prior to receiving a
notice or allegation of insolvency. If the Trustee determines that the
Corporation is insolvent, the Trustee shall make available the amounts
placed in trust pursuant to this Paragraph 6 to satisfy claims of the
Corporation's general creditors, as provided in the Trust Agreement.
Employees shall have no greater rights than other general creditors of the
Corporation with respect to any funds held in trust pursuant to this
Paragraph 6. Following a determination of insolvency, the Trustee shall
resume payments to Employee (and shall pay any suspended benefits) upon
termination of Insolvency Administration, as provided in the Trust
Agreement, if and when it determines that the Corporation is again solvent.
7. SUCCESSORS; BINDING AGREEMENTS. This Agreement shall inure to
the benefit of and be enforceable by Employee's personal and legal
representatives, executors, administrators, successors, heirs,
distributees, devisees, and legatees. Employee's rights and benefits under
this Agreement may not be assigned, except that if Employee dies while any
amount would still be payable to Employee hereunder if Employee had
continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement, to the
beneficiaries designated by the Employee to receive benefits under this
Agreement in a writing on file with the Corporation at the time of the
Employee's death or, if there is no such beneficiary, to Employee's estate.
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 (or of any division or
subsidiary thereof employing Employee) to expressly assume and agree to
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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 and agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle Employee to compensation from the Corporation
in the same amount and on the same terms to which Employee would be
entitled hereunder if Employee terminated the employment for Good Reason
following a Change of Control.
8. WITHHOLDING OF TAXES. The Corporation may withhold from any
amounts payable under this Agreement all federal, state, city, or other
taxes as required by law.
9. NOTICE. For the purpose of this Agreement, notices 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 mailed by United States
registered mail, return receipt required, postage prepaid, addressed to the
respective addressees set forth on the first page of this Agreement, or at
such other addresses as the parties may designate in writing.
10. MISCELLANEOUS. No provision of this Agreement may be modified,
waived, or discharged unless such waiver, modification, or discharge is
agreed to in writing and signed by Employee and such officer as may be
specifically designated by the Board of Directors of the Corporation. The
validity, interpretation, construction, and performance of this Agreement
shall be governed by the laws of the State of Michigan.
11. EMPLOYMENT RIGHTS. This Agreement shall not confer upon Employee
any right to continue in the employ of the Corporation or its subsidiaries
and shall not in any way affect the right of the Corporation or its
subsidiaries to dismiss or otherwise terminate Employee's employment at any
time with or without cause.
12. NO VESTED INTEREST. Neither Employee nor Employee's beneficiary
shall have any right, title, or interest in any benefit under this
Agreement prior to the occurrence of the right to the payment thereof, or
in any property of the Corporation or its subsidiaries or affiliates.
13. PRIOR AGREEMENTS. This Agreement contains the understanding
between the parties hereto with respect to severance benefits in connection
with a Change of Control of the Corporation and supersedes any such prior
agreement between the Corporation (or any predecessor of the Corporation)
and Employee. If there is any discrepancy or conflict between this
Agreement and any plan, policy, or program of the Corporation regarding any
term or condition of severance benefits in connection with a Change of
Control of the Corporation, the language of this Agreement shall govern.
14. VALIDITY. The invalidity or unenforceability of any provision 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.
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15. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.
16. ARBITRATION. The sole and exclusive method for resolving any
dispute arising out of this Agreement shall be arbitration in accordance
with this paragraph. Except as provided otherwise in this paragraph,
arbitration pursuant to this paragraph shall be governed by the Commercial
Arbitration Rules of the American Arbitration Association. A party wishing
to obtain arbitration of an issue shall deliver written notice to the other
party, including a description of the issue to be arbitrated. Within 15
days after either party demands arbitration, the Corporation and the
Employee shall each appoint an arbitrator. Within 15 additional days,
these two arbitrators shall appoint the third arbitrator by mutual
agreement; if they fail to agree within said 15-day period, then the third
arbitrator shall be selected promptly pursuant to the rules of the American
Arbitration Association for Commercial Arbitration. The arbitration panel
shall hold a hearing in Kent County, Michigan, within 90 days after the
appointment of the third arbitrator. The fees and expenses of the
arbitrator, and any American Arbitration Association fees, shall be paid by
the Corporation. Both the Corporation and the Employee may be represented
by counsel and may present testimony and other evidence at the hearing.
Within 90 days after commencement of the hearing, the arbitration panel
will issue a written decision; the majority vote of two of the three
arbitrators shall control. The majority decision of the arbitrators shall
be final and binding on the parties, and shall be enforceable in accordance
with law. Judgment may be entered on the arbitrators' award in any court
having jurisdiction. The Employee shall be entitled to seek specific
performances of his rights under this Agreement during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
The Corporation will reimburse Employee for all reasonable attorney fees
incurred by Employee as the result of any arbitration with regard to any
issue under this Agreement (or any judicial proceeding to compel or to
enforce such arbitration): (i) which is initiated by Employee if the
Corporation is found in such proceeding to have violated this Agreement
substantially as alleged by Employee; or (ii) which is initiated by the
Corporation, unless Employee is found in such proceeding to have violated
this Agreement substantially as alleged by the Corporation.
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IN WITNESS WHEREOF, the parties have signed this Agreement as of
the day and year written above.
OLD KENT FINANCIAL
CORPORATION
By: /S/ XXXX X. XXXXXX
Xxxx X. Xxxxxx
Its: Chairman, President and Chief
Executive Officer
"Corporation"
/S/ XXXXXX X. XXXXXXXXXX
Xxxxxx X. Xxxxxxxxxx
"Employee"
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