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Exhibit 10(b)
April 12, 2004
Xxx Xxxxxx
c/x Xxxxxxxx & Xxxxxx Corporation
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Dear Xxx:
This Letter Agreement ("Letter Agreement") is intended to reflect our
agreement concerning your early retirement from Xxxxxxxx & Xxxxxx Corporation
("M&I") and all related matters.
1. Status of Employment Through June 30, 2004. From the date
of this letter through June 30, 2004 (the "Full-Time Employment
Period"), you will remain a full-time employee of M&I. You will
continue to report to Xxxxxx Xxxxxxx. During the Full-Time Employment
Period, your compensation and benefits will remain the same as they were
immediately prior to the date of this letter. On July 1, 2004, the
title to your current company vehicle will be transferred to you at no
cost. The value of the company vehicle will be reported for income tax
purposes as compensation to you, with value determination and taxable
income allocation pursuant to the Xxxxxxxx & Xxxxxx Corporation
Automobile Policy - 2004. M&I will pay you an incentive for the six-
month period beginning January 1 and ending June 30, 2004 in the amount
of $240,000 no later than July 31, 2004 if you comply with the
following: (a) you assist in a positive transition of your
responsibilities and (b) you execute, and do not revoke during the
applicable rescission period, the Complete and Permanent Release
provided to you once the Full-Time Employment Period ends.
2. Status of Employment from July 1, 2004 through
December 31, 2005. From July 1, 2004 through December 31, 2005
(the "Part-Time Employment Period"), you will be a part-time
employee of M&I, working less than 17.5 hours per week, and you
will continue to report to Xxxxxx Xxxxxxx; however, none of the
payments or benefits promised to you herein are or will be
contingent upon your performance of duties other than ones that
the parties (including you) shall mutually agree in writing after
the end of the Full-Time Employment Period (instead the payments
and benefits in this Letter Agreement will be guaranteed as set
forth in this document). During the Part-Time Employment Period,
you agree not to take any action, perform any duties, or incur any
expenses on M&I's behalf without Xxxxxx Xxxxxxx'x written
direction. Throughout the Part-Time Employment Period, you will
receive monthly payments of $72,000, totaling $1,296,000, in
accordance with M&I's regular payroll practices. Because of the
reduction in your hours of employment, you will be eligible to
participate in M&I's health and dental plans to the extent that
you elect continuation coverage in accordance with the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"). M&I will subsidize your health and dental coverage
(including payment of your COBRA premiums) to the same extent as
for full-time active employees through and until June 30, 2006.
This continued subsidy will last through and until June 30, 2006,
notwithstanding the fact that COBRA will run out December 31,
2005; such that you will continue to participate in M&I's health
and dental plans through June 30, 2006 as if you remained an
active, full-time employee, and M&I will continue to subsidize
your participation to the same extent as for full-time active
employees. Starting on July 1, 2006, you will be eligible to
participate in the M&I Retiree Medical Program, and any other
retirement plans or programs which similarly situated M&I retirees
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(excluding retirees of companies acquired by M&I who may have been
provided benefits according to the terms of an acquisition agreement)
enjoy, in accordance with their terms as in effect from time to time
pursuant to similar treatment of other similarly-situated retirees, if
you have remained a participant in the M&I health plans through June 30,
2006. Because of your part-time employment starting on July 1, 2004,
you will not be eligible to participate in any of M&I's other benefit
plans (other than ones specified in this Letter Agreement) including
M&I's long-term disability plans. This does not, however, limit in any
way, your right to purchase the conversion coverage provided by the
United Wisconsin Life Insurance Program. Any vested benefits you have
in M&I's qualified or nonqualified benefit plans as of December 31, 2005
will thereafter be governed by the terms of those plans, except as such
rights are set forth otherwise in this Agreement, in which case the
terms of this Agreement shall prevail. As of December 31, 2005, you
will be deemed to have utilized all vacation to which you may be
eligible and, therefore, will not be entitled to any payment for earned,
but unused, vacation. In addition, you agree not to apply for
unemployment compensation benefits from M&I respecting the end of your
employment with it.
3. Salary and Incentive Continuation Payments. For the
period beginning January 1, 2006 and ending on June 30, 2006, you
shall receive monthly payments of $72,000, totaling $432,000, if
you execute, and do not revoke during the applicable rescission
period, the second Complete and Permanent Release provided to you
once the Part-Time Employment Period ends.
4. Treatment of Stock Options. Any M&I stock options
which by their terms will vest on or before December 31, 2005 will
do so in accordance with their terms and in accordance with your
status as an employee until December 31, 2005, and the fact that
your employment status changes from Full-Time to Part-Time on July
1, 2004 shall have no effect on your rights to have these options
vest. Any M&I stock options which do not vest on or before
December 31, 2005 will lapse as of January 1, 2006. The normal
terms of the relevant M&I Stock Option Plans provide that the
options remain exercisable for ninety days after your employment
terminates. However, notwithstanding the terms of those Stock
Option Plans, with regard to your vested options (as of December
31, 2005), you will be eligible for retiree treatment and
therefore your vested options will remain exercisable for the
shorter of (a) the remainder of their terms as if your employment
continued indefinitely or (b) one year after your death, but only
if, and to the extent, you choose to meet the following two
conditions. First, you execute, and do not revoke during the
applicable rescission period, the second Complete and Permanent
Release provided to you once the Part-Time Employment Period ends.
Second, you comply with the confidentiality and non-competition
provisions set forth in paragraphs 13 and 14 of this Letter
Agreement, not only for the term set forth in those paragraphs,
but for such longer period as you want your options to remain
exercisable. Should you violate any provision of paragraph 13 or
14 during the term set forth therein, or the extended term of your
choosing, you agree that your outstanding M&I stock options
(including those transferred to family members) shall, without any
action by M&I (other than providing notice), remain exercisable
only for the shorter of the remainder of their respective terms
or the ninety (90) day period running from the date of your
breach; provided that the ninety (90) day period shall not start
running until the date on which M&I provides you with written
notice of breach; and further provided that this language shall
have no impact on your LTIP entitlements delineated in Paragraph
6 of this Letter Agreement. The provisions of this Paragraph 4
shall not apply to the restricted units discussed below in
Paragraph 5.
5. Vesting of Restricted Stock. All restricted units that
have not vested by December 31, 2005 will automatically vest on
December 31, 2005 or January 1, 2006, at your choice (and if you
choose January 1, 2006, then the language and terms contained in
this Letter Agreement referencing expiration of your unvested
stock as of December 31, 2005 shall instead mean as of January 1,
2006, such that your unvested restricted units shall not be deemed
to have expired or been forfeited on or as of December 31, 2005)
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6. Participation in the Long-Term Incentive Plan. You
will continue to participate in the awards made to you under M&I's
1994 Long-Term Incentive Plan (the "LTIP") which relate to the
periods ended December 31, 2004 and 2005 in the amount of 8,000
units in each year. You will be treated as an age 65 retiree from
M&I as regards the 10,000 units which were awarded to you under
the LTIP in December 2003 for the performance period ended
December 31, 2006. Any incentive owing to you in connection with
such awards will be paid to you at such time and upon such terms
as payments are made to other participants. Your continued
participation with respect to your outstanding LTIP units shall
not be impacted in any manner if you choose to breach the terms
of Paragraphs 13 or 14 of this Letter Agreement after December 31,
2005.
7. Participation in the Deferred Compensation Plan. Your
right to make additional deferrals into M&I's Amended and Restated
Executive Deferred Compensation Plan (the "Deferred Compensation
Plan") will end on December 31, 2005; however, notwithstanding the
terms of the Deferred Compensation Plan, you will be given an
opportunity after you execute this Agreement to
redeclare/reallocate under the Deferred Compensation Plan for the
last six months of calendar year 2004. The balance in your
Account, as defined therein, will be distributed to you in
accordance with your form of Payment Election in accordance with
that Plan's terms. To the extent that the deductibility of any
payments made to you under this Letter Agreement would be limited
by Section 162(m) of the Internal Revenue Code, such payments will
automatically be deferred into your account in the Deferred
Compensation Plan, whenever such amounts are otherwise due and
owing to you.
8. Retirement Contributions. M&I will make retirement
contributions totaling $183,000 related to the services you
perform in 2004 and 2005. The contributions for each year will
total $91,500, and will first be contributed to the qualified
retirement plans to the maximum extent provided by law, including
as an employer match under M&I's 401(k) plan, with the remainder
contributed to your account in the Deferred Compensation Plan.
9. Club Dues and Tax and Financial Planning Fees. M&I
will pay you a lump sum of $30,000, to cover your membership dues
and annual (but not extraordinary) capital assessments at your
clubs for the 2004 and 2005 calendar years and your income tax
preparation for your 2004 and 2005 federal and state income tax
returns and associated financial planning in accordance with M&I's
policies for executive officers, as well as other financial
planning costs. This payment will be made consistently with the
tax treatment and reimbursement methods as are used with the
Company's senior most executives, and to the extent that any of
the Company's senior most executives may be given tax favorable
treatment or tax gross-up, then you would be treated and given the
same. The value of these benefits, to the extent required by law,
will be reported for income tax purposes. M&I's obligations under
this Paragraph 9 regarding financial counseling, tax preparation,
and club fees, dues and costs will be capped at a total of
$30,000, but you will receive a total of $30,000 in benefit and/or
payment pursuant to this Paragraph 9, regardless of your actual
expenses and costs. In addition to this $30,000 payment, M&I will
reimburse you for your legal costs in having this Agreement
reviewed and negotiated on your behalf, up to a cap of $10,000.
10. Impact of Life Insurance and Disability Payments. If
you should suffer a disability between the date of this Letter
Agreement and June 30, 2004 such that you would qualify for short-
term or long-term disability payments under the M&I Short-Term
Disability Leave Policy or the Xxxxxxxx and Xxxxxx Corporation
Long-Term Disability Income Plan, the present value of any
projected payments will reduce any amounts owing to you under this
Letter Agreement. The present value will be computed assuming
disability payments will continue for the maximum amount of time
allowed under each plan. Should your right to disability payments
end prior to the receipt of the maximum payments, the present
value will be recomputed based on the actual number of disability
payments you received, and any excess reduction will be paid to
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you within thirty days of the date you no longer receive disability
payments. If you were to die during the period between the date of this
Letter Agreement and June 30, 2004, any life insurance proceeds from an
M&I plan that are paid to your beneficiaries will reduce the amounts
paid to your beneficiaries under this Letter Agreement on a dollar-for-
dollar basis. Notwithstanding the foregoing, however, M&I understands
that you have been and through June 30, 2004 will be continuing to pay
the cost of group life insurance premiums to obtain additional death
benefit beyond what the Company's premium payments cover, and therefore,
in the event of your death on or prior to June 30, 2004, then the amount
of life insurance paid out as a result of your paid premiums will not
be offset in anyway against the amounts paid to your beneficiaries under
this Letter Agreement.
11. Change of Control Agreement. Your Change of Control
Agreement with M&I dated August 12, 1999 shall terminate on the
date you execute this Letter Agreement.
12. Other Agreements. In exchange for the benefits
provided to you in this Letter Agreement, you agree as follows:
(a) You acknowledge that you and M&I have agreed on
the form of press release announcing your early retirement
and the related communication plan.
(b) You agree that your positions as President of
M&I Xxxxxxxx & Ilsley Bank and Executive Vice President of
M&I, as well as any other officer and director positions
you then hold with M&I or any other subsidiary or affiliate
of M&I, will end as of 5:00 p.m. (C.D.T.) on June 30, 2004,
and that no additional action is required by you in
connection with the end of your tenure in such positions.
(c) You hereby resign as a director of M&I Xxxxxxxx
& Ilsley Bank and Metavante Corporation effective as of
5:00 p.m. (C.D.T.) on April 12, 2004.
(d) You agree that any transactions by you in M&I
stock prior to the date on which M&I reports its calendar
year 2004 earnings are subject to the "Pre-Clearance"
provision of the M&I Securities Trading Policy, but that
after that date, you shall be subject only to applicable
law.
13. Confidentiality. In exchange for the benefits
provided to you above, you agree to be bound by the provisions of
Paragraphs 13 and 14 of this Letter Agreement. The term
"Company," as used in Paragraphs 13 and 14 hereof, means M&I and
any Affiliate. "Affiliate" means any corporation, partnership,
limited liability company or other business entity which, directly
or indirectly through one or more intermediaries, is controlled
by M&I. The term "control" means the power, directly or
indirectly, to vote 50% or more of the securities which have
ordinary voting power in the election of directors (or individuals
filling any analogous positions).
(a) Confidential Information. During the Full-Time
Employment Period, the Part-Time Employment Period, and
until June 30, 2006, you shall not make any Unauthorized
Disclosure. For purposes of this Agreement, "Unauthorized
Disclosure" shall mean your use or direct or indirect
disclosure, without the consent of the Board of Directors
of M&I, to any person, other than use or disclosure that
may be legally required (provided the provisions of
Paragraph 13(c) hereof are complied with), of any
confidential information obtained by you while in the
employ of M&I, including, but not limited to, confidential
information with respect to any of the Company's customers,
business plans, financial results and pricing, methods of
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operation, services and products (the "Confidential Information");
provided, however, that Confidential Information shall not include
any information which was or becomes generally available to the
public other than as a result of a wrongful disclosure by you, or
which M&I previously publicly discloses. Nothing herein shall
limit your confidentiality obligation as regards any information
which is a trade secret as currently defined in the Wisconsin
Uniform Trade Secrets Act, or any successor thereto, which you
acknowledge may extend beyond June 30, 2006.
(b) Return of Property. All memoranda, notes,
records, other documents, customer lists, software,
computer files, and equipment, and all copies thereof,
relating to the operations or business of the Company, some
of which may be prepared by you, and all objects associated
therewith in any way obtained by you in connection with the
performance of your duties for M&I, shall be the exclusive
property of M&I. You shall not copy or duplicate any of
the aforementioned, nor use any information concerning them
other than in accordance with the performance of your
duties for M&I. You will, no later than June 30, 2004, (i)
deliver the original and all copies of all of the
aforementioned that may be in your possession to M&I and
(ii) delete any such information on your home or laptop
computer.
(c) Legally-Required Disclosure. If you are
requested or become legally required or compelled (by oral
questions, interrogatories, requests for information or
documents, subpoena, civil or criminal investigative
demand, or similar process) or are required by a
governmental body to make any disclosure that is prohibited
or otherwise constrained by this Letter Agreement, you will
provide M&I with prompt written notice of such request so
that it may seek an appropriate protective order or other
appropriate remedy. Subject to the foregoing, you may
furnish that portion (and only that portion) of the
Confidential Information that you are legally compelled or
are otherwise required to disclose.
14. Non-Competition and Nonsolicitation. In exchange for
the benefits provided to you above, you agree to be bound by the
provisions of Paragraph 14 of this Letter Agreement, all of which
are severable.
(a) Nonsolicitation of Customers. During the Full-
Time Employment Period, the Part-Time Employment Period,
and until June 30, 2006, you agree not to solicit, entice
or encourage any Customer of the Company so as to cause or
attempt to cause such Customer not to do business with the
Company, to diminish its business with the Company, or to
purchase a products or services sold by the Company from
any source other than the Company. For purposes of this
paragraph, "Customer" shall mean any person or business (i)
which had a borrowing or depository relationship with the
Company during any part of the one (1) year period prior to
June 30, 2004 or (ii) which purchased products or services
from the Company during the one (1) year period preceding
the June 30, 2004; and (iii) with whom you had Direct
Contact on behalf of the Company during such one (1) year
period. For purposes of this Paragraph 14(a) of this
Letter Agreement, the term "Direct Contact" means "focused
intentional contact by you to either maintain or enhance
M&I's business relationship with customer, whether contact
was in person, by phone, or in writing." Thus, the
prohibitions contained in this Paragraph 14(a) of this
Letter Agreement do not cover Customers with whom you did
not have Direct Contact during the one (1) year period
preceding June 30, 2004.
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(b) Non-Solicitation of Employees. During the
Full-Time Employment Period, the Part-Time Employment
Period, and until June 30, 2006, you will not induce or
attempt to induce any individual who was employed by M&I on
June 30, 2004 (a "Covered Employee") to terminate his or
her employment with, or reduce the hours he or she works
for, M&I.
(c) General Non-Competition Provisions. During the
Full-Time Employment Period, the Part-Time Employment
Period, and until June 30, 2006, you agree not to directly
or indirectly perform services substantially similar to the
type performed by you for M&I for any Competitor of the
Company where the services you provide benefit any of the
Competitor's business activities (as long as such business
activities are ones that M&I engages in) in (i) the State
of Wisconsin, , (iii) within Phoenix, Arizona or a 75-mile
radius of Phoenix, Arizona, (iv) within Tuscon, Arizona or
a 40-mile radius of Tucson, Arizona, or (v) within
Minneapolis, Minnesota or a 00-xxxx xxxxxx xx Xxxxxxxxxxx,
Xxxxxxxxx. A "Competitor" means an entity in the financial
services business which is engaged in deposit taking,
lending, or trust products or services, in the same manner
as M&I. Notwithstanding the foregoing, after December 31,
2005, you may violate the terms of this Paragraph 14(c) of
this Letter Agreement in the states of Arizona and
Minnesota, and if you do, then the Company shall,
commencing on the date of your violation, be relieved of
its obligations to continue paying you prospectively any
remaining unpaid Salary and Incentive Continuation Payments
referenced in Paragraph 3 of this Letter Agreement and your
outstanding M&I stock options (including those transferred
to family members) shall, without any action by M&I (other
than providing you with written notice of the acceleration
of your exercise period), remain exercisable only for the
shorter of the remainder of their respective terms or the
ninety (90) day period running from the date of your
violation; however, your violation of the terms of
Paragraph 14(c) with respect to the states of Arizona and
Minnesota after December 31, 2005 shall have no other
detrimental effect to you, and shall not otherwise reduce
your entitlements under this Letter Agreement.
(d) Acknowledgements/Consequences of Breach. You
acknowledge that irreparable and incalculable injury will
result to M&I, its business or properties, in the event of
a breach by you of any of the restrictions set forth in
Paragraphs 13 and 14 of this Letter Agreement. You
therefore agree that, in the event of any such actual,
impending or threatened breach, M&I will be entitled, in
addition to any other remedies, to temporary and permanent
injunctive relief (without the necessity of posting a bond
or other security) restraining the violation or further
violation of such restrictions by you. In addition, M&I
shall be entitled to recover from you the monetary value of
all consideration paid to you under this Letter Agreement,
as well as to suspend all future payments and benefits
which might otherwise be due you by them. The election of
any one or more remedies by M&I shall not constitute a
waiver of the right to pursue other available remedies.
You further acknowledge that: (a) you will be able to earn
a livelihood without violating the foregoing restrictions,
(b) the covenants and restrictions set forth in Paragraphs
13 and 14 are necessary to protect the legitimate business
interests of the Company and (c) your compliance with the
terms of Paragraphs 13 and 14 are material terms.
15. Miscellaneous. Upon your execution of this Letter
Agreement, the following will apply:
(a) Severability. The sections, subsections,
paragraphs and subparagraphs of this Letter Agreement are
severable, and in the event any such section, subsection,
paragraph or subparagraph may be held to be invalid by such
court, this Letter Agreement shall be interpreted as if any
such invalid section, subsection, paragraph or subparagraph
were not contained in this Letter Agreement.
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(b) Entire Agreement; Amendment. This Letter
Agreement and the Complete and Permanent Releases (jointly,
the "Agreements") constitute the complete understanding
between you and M&I, concerning all matters affecting your
employment with M&I and the termination thereof. If you
execute this Letter Agreement, the Agreements supersede, as
of the date of your consent to each of them, all prior
agreements, understandings, personnel documents, handbooks,
policies and any prior customs or practices concerning such
matters, including the Change of Control Agreement between
you and M&I dated August 12, 1999. This Letter Agreement
may not be amended without the written consent of M&I and
you. However, any side letters, if any, shall become a
part of this Letter Agreement by a side letter making
express reference to this Letter Agreement.
(c) Governing Law. The Agreements and their
interpretation shall be governed and construed in
accordance with the laws of Wisconsin, without regard to
its principles of conflicts of laws, and shall be binding
upon the parties hereto and their respective successors and
assigns.
(d) Other Treatment. The amounts to be paid to you
are in lieu of any severance or other termination benefits
you would otherwise be entitled to under any other plan or
arrangement of M&I, and such amounts will not count as
compensation for purposes of any qualified or nonqualified
retirement or welfare benefit plans except as otherwise
expressly provided herein. All dollar amounts set forth
herein are stated prior to deduction for any applicable
income and employment tax withholding, or such other
deduction as may be required by law.
(e) Death or Disability. In the event of your
death, M&I shall continue to make the payments and provide
the benefits specified herein to your spouse or other
designated beneficiary (or in the event such beneficiary
predeceases you, to your estate), adjusted as provided in
paragraph 10 of this Letter Agreement if you were to die
prior to July 1, 2004. In the event of your disability,
M&I shall continue to make the payments and provide the
benefits specified herein, adjusted as provided in
paragraph 10 of this Letter Agreement if you were to become
disabled prior to July 1, 2004, directly to you, or, if
another person or entity has been appointed to handle your
financial affairs because you are unable to do so, to that
person or entity.
16. Consents, Approvals and Authorizations. M&I warrants
and represents to you that all consents, approvals and
authorizations required for M&I to execute, deliver and perform
this Letter Agreement have been obtained and are in full force and
effect as of the date hereof, and the Agreements are valid,
binding and enforceable obligations of M&I in accordance with
their terms.
17. No Mitigation Obligation. To the extent that you
choose to pursue other opportunities prior to July 1, 2006, such
pursuits shall have no effect on your entitlement to all payments,
benefits and promises owed to you by M&I under this Agreement
(assuming your compliance with this Agreement), as such payments,
benefits and promises are guaranteed. Moreover, you are under no
obligation to mitigate in relation to the changes in your
employment status with M&I. The fact that you are under no
obligation to mitigate shall have no effect on your obligations
to M&I regarding confidentiality, non-competition and
nonsolicitation contained in Paragraphs 13 and 14 of this
Agreement.
18. Counterparts. This Agreement may be executed in
counterparts, all of which taken together shall constitute one
Agreement.
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You may accept this Letter Agreement by signing it in the space provided
below and returning it to Xxxx Xxxxxx at Xxxxxxxx & Xxxxxx Corporation, 000
Xxxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx, 00000.
Very truly yours,
XXXXXXXX & ILSLEY CORPORATION
By: /s/ Xxxxx X. Xxxxx
_________________________________
Xxxxx X. Xxxxx
Vice President Human Resources
I agree with and accept the above-mentioned terms contained in this
Letter Agreement and agree to be bound by them.
Dated this 12th day of April, 2004.
/s/ Xxxxxx X. Xxxxxxx
___________________________________
