EXHIBIT 10.32
Change in Control Agreement
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This Change in Control Agreement is entered into between Xxxxxx Financial,
Inc., a Delaware corporation (the "Company"), and_____________(the "Executive");
Witnesseth That:
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Whereas, a portion of the Company's stock is being sold to the public as
part of an initial public offering; and
Whereas, Executive is employed by the Company, and the Company desires to
provide protection to Executive in connection with any future change in control
of the Company;
Now, Therefore, it is hereby agreed by and between the parties, for good
and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, as follows:
1. Effective Date and Term. This Agreement is effective May 6, 1998 (the
"Effective Date"). This Agreement will terminate on May 6, 2001.
2. Payments and Benefits Upon Employment Termination After a Change in
Control. If, during the Term of this Agreement and within the period
ending on the earlier of two (2) years after a Change in Control (all
capitalized terms as defined below) or May 6, 2001, or during the Period
Pending a Change in Control, (i) the Executive's employment with the
Company and its Affiliates is terminated without Cause, or (ii) Executive
voluntarily terminates such employment with Good Reason, the Company will,
within 30 days (except as otherwise expressly provided) of Executive's
Employment Termination, make the payments and provide the benefits
described below.
(a) Salary Continuation. The Company will continue Executive's annual
Base Salary (as defined below) for twenty-four (24) months following
Employment Termination at the same time and in the same manner as the
Company paid salary during employment (including the right to defer
such amounts under the Company's non-qualified deferred compensation
plan) or, at Executive's election, make a lump sum cash payment to
Executive equal to the present value of two times Executive's Base
Salary; and
(b) Annual Incentive Bonus. For the year in which Employment Termination
occurs, the Company will pay an Annual Incentive Plan bonus calculated
as of the end of the Annual Incentive Plan year, based on performance
for the entire year, at the applicable Target bonus level for that
year. The Company will pay such bonus in a lump sum within 45 days of
the end of the year of Employment Termination; and
(c) Welfare Benefit Plans. With respect to each Welfare Benefit Plan, for
the period beginning on Employment Termination and ending on the
earlier of (i) two years
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following Employment Termination, or (ii) the date Executive becomes
covered by a welfare benefit plan or program maintained by an entity
other than the Company or an Affiliate which provides coverage or
benefits at least equal, in all respects, to such Welfare Benefit
Plan, Executive shall continue to participate in such Welfare Benefit
Plan on the same basis and at the same cost to Executive as was the
case immediately prior to the Change in Control (or, if more favorable
to Executive, as was the case at any time prior to the Employment
Termination), or, if any benefit or coverage cannot be provided under
a Welfare Benefit Plan because of applicable law or contractual
provisions, Executive shall be provided with substantially similar
benefits and coverage for such period. Immediately following the
expiration of the continuation period required by the preceding
sentence, Executive shall be entitled to continued group health
benefit plan coverage (so-called "COBRA coverage") in accordance with
Section 4980B of the Internal Revenue Code of 1986, as amended (the
"Code"), it being intended that COBRA coverage shall be consecutive to
the benefits and coverage provided for in the preceding sentence; and
(d) Retirement Plan Benefits. The Company will pay Executive a lump sum
amount equal to the present value of the additional benefit that
Executive would have accrued under the Company's qualified and non-
qualified retirement plans (as in effect prior to the Change in
Control or, if benefits are increased under the plans after the Change
in Control, prior to the Employment Termination) had he or she
continued to receive benefits thereunder through the end of the 24th
month following Employment Termination. All benefits under the
Company's non-qualified retirement plans will be fully vested (to the
extent, if any, not vested upon the Change in Control). The Company
will pay such lump sum to Executive within 45 days of the end of the
year of Employment Termination; and
(e) Retiree Medical Benefits. The Company will add 24 months to
Executive's age and benefit service for purposes of determining
Executive's eligibility for and benefits under the Company's retiree
medical benefit plan; and
(f) Perquisites. Executive will continue to be eligible for the executive
perquisites outlined in the Company's policies in effect at the time
of the Change in Control (or, if more favorable to the Executive, as
in effect prior to the Employment Termination) through the end of the
24th month following Employment Termination. The Company will bear
the cost of such benefits and perks, at the same level in effect
immediately prior to Employment Termination; and
(g) Long Term Incentive Plans. If Employment Termination occurs in 1998,
Executive will be fully vested in all performance shares granted to
Executive under the Company's 1996-1998 LTIP, and vested in two-thirds
(2/3) of the performance shares under the 1997-1999 LTIP. If
Employment Termination occurs in 1999, Executive will be fully vested
in all performance shares granted to Executive under the Company's
1997-1999 LTIP. The award paid to Executive under the 1996-1998
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and 1997-1999 LTIPs will be determined under the terms of such LTIP
for the applicable cycle, using actual performance for each such
cycle, and will be paid to Executive in a lump sum within 45 days of
the end of the year of Executive's Employment Termination.
3. Change in Control. A "Change in Control" of the Company will be deemed to
occur as of the first day that The Fuji Bank, Limited and its subsidiaries
shall cease to own, directly or indirectly, at least fifty percent (50%) of
the combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of the Board (the
"Company Voting Securities") of the Company or any successor to the Company
resulting from a reorganization, merger or consolidation, or sale or other
disposition of all or substantially all of the assets of the Company.
4. Other Definitions. For purposes of this Agreement:
(a) "Affiliate" shall mean any entity that is a member of a controlled
group of corporations or a group of trades or businesses under common
control (each as defined in Code Section 1563), which includes the
Company.
(b) "Base Salary" shall mean Executive's salary at the greater of the rate
in effect on the date of (i) the Change in Control, or (ii) Employment
Termination.
(c) "Board" or "Board of Directors" shall mean the Company's Board of
Directors.
(d) "Employment Termination" shall mean the effective date of: (i)
Executive's voluntary termination of employment with the Company or
any Affiliate with Good Reason; or (ii) the termination of Executive's
employment by the Company or any Affiliate without Cause.
(e) "Cause" shall mean: (i) Executive's fraud or criminal misconduct; or
(ii) the material and willful breach by Executive of his or her
responsibilities or willful failure to comply with reasonable
directives or policies of the Board, but only if the Company has given
Executive written notice specifying the breach or failure to comply,
demanding that Executive remedy the breach or failure to comply and
giving Executive an opportunity to be heard in connection with the
breach or failure to comply, and Executive either failed to remedy the
alleged breach or failed to comply within 30 days after receipt of the
written notice or failed to take all reasonable steps to that end
during the 30 days after Executive received the notice.
(f) "Good Reason" shall exist if, without Executive's express written
consent, any of the following events occur:
(i) The Company or an Affiliate significantly diminishes Executive's
assigned duties and responsibilities from the level or extent at
which they existed
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before a Change in Control including, without limitation, if the
Company or Affiliate removes Executive's title(s) or materially
diminishes the powers associated with Executive's title(s). For
Good Reason to exist, Executive must deliver written notice to
the Company or Affiliate specifying the diminution in assigned
duties and responsibilities that he or she believes constitutes
Good Reason, and the Company or Affiliate must fail to reverse
the same or to take all reasonable steps to that end within 30
days after receiving the notice;
(ii) The Company or an Affiliate materially reduces Executive's Base
Salary below the greater of that in effect as of the date of
this Agreement and that in effect as of the Change in Control;
(iii) The Company or Affiliate requires Executive to relocate his or
her principal business office or his or her principal place of
residence outside the Standard Metropolitan Statistical Area
where Executive was located on the date of a Change in Control
(the "Geographical Employment Area"), or assigns to Executive
duties that would reasonably require such a relocation;
(iv) The Company or an Affiliate requires Executive to, or assigns
duties to Executive which would reasonably require Executive to,
spend more than one hundred (100) normal working days away from
the Geographical Employment Area during any consecutive twelve-
month period; or
(v) The Company or an Affiliate fails to continue in effect any cash
or stock-based incentive or bonus plan, retirement plan, welfare
benefit plan, or other benefit plan, program or arrangement that
applied to Executive on the date of the Change in Control,
unless the aggregate value (as computed by an independent
employee benefits consultant selected by the Company) of all
such compensation, retirement and benefit plans, programs and
arrangements provided to Executive is not materially less than
their aggregate value as of the date of this Agreement, or, if
greater, their aggregate value as of the date of the Change in
Control.
(g) "Period Pending a Change in Control" shall mean the period after the
approval by the Company's stockholders and prior to the effective time
of any transaction described in paragraph 3(c) or (d) above.
(h) "Welfare Benefit Plan" shall mean each welfare benefit plan maintained
or contributed to by the Company or any Affiliate, including, but not
limited to a plan that provides health (including medical, dental or
both), life, accident or disability benefits or insurance, or similar
coverage, in which Executive was participating at the time of the
Change in Control.
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6. Limitation on Company Payments. Notwithstanding any provision of this
Agreement to the contrary, any payment or distribution by or on behalf of
the Company or any Affiliate to or for the benefit of Executive (whether
paid or payable or distributed or distributable pursuant to the terms of
this Agreement or otherwise) as a result of a Change in Control shall not
exceed 2.99 times Executive's average "Annualized Includible Compensation
for the Base Period," as defined in Code Section 280G(d)(1).
7. Executive's Death. If Executive dies during the term of this Agreement and
after a Change in Control and Employment Termination, but before the
complete payment of any amount or benefit required under this Agreement,
the Company will pay such amount or benefit to Executive's spouse, if
living, or to Executive's estate.
8. Mitigation and Set-Off. Executive shall not be required to mitigate
damages by seeking other employment or otherwise, except as provided in
Section 2(c). The Company's obligations under this Agreement shall not be
reduced in any way by reason of any compensation or benefits received (or
foregone) by Executive from sources other than the Company after
Executive's Employment Termination, or any amounts that might have been
received by Executive in other employment had Executive sought such other
employment, except as provided in Section 2(c). Executive's entitlement to
benefits and coverage under this Agreement shall continue after, and shall
not be affected by, Executive's obtaining other employment after the
Employment Termination.
9. Arbitration and Expenses. The Company and Executive agree that any dispute
or controversy arising under or in connection with this Agreement shall be
submitted to and determined by arbitration in Chicago, Illinois, in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association, and the parties agree to be bound by the decision
in any such arbitration proceeding. The Company shall pay to Executive all
out-of-pocket expenses, including attorneys' fees, incurred by Executive in
the event Executive successfully enforces any provision of this Agreement
in any action, arbitration or lawsuit. If Executive loses such an action,
arbitration or lawsuit, the Company shall not pay Executive any out-of-
pocket expenses so incurred.
10. Assignment; Successors. This Agreement may not be assigned by the Company
without the written consent of Executive but the obligations of the Company
under this Agreement shall be the binding legal obligations of any
successor to the Company by merger, consolidation or otherwise, and in the
event of any business combination or transaction that results in the
transfer of substantially all of the assets or business of the Company, the
Company will cause the transferee to assume the obligations of the Company
under this Agreement. This Agreement may not be assigned by Executive
during Executive's life, and upon Executive's death will inure to the
benefit of Executive's heirs, legatees and legal representatives of
Executive's estate.
11. Interpretation. The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the State of Delaware,
without regard to the conflict of law
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principles thereof. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
12. Withholding. The Company may withhold from any payment that it is required
to make under this Agreement amounts sufficient to satisfy applicable
withholding requirements under any federal, state or local law.
13. Amendment or Termination. The Company and Executive may amend this
Agreement at any time by written agreement.
14. Indemnification. Following Employment Termination, the Company will: (i)
indemnify and hold harmless Executive for all costs, liability and expenses
(including reasonable attorneys' fees) for all acts and omissions of
Executive that relate to Executive's employment with the Company, to the
maximum extent permitted by law; and (ii) continue Executive's coverage
under the directors' and officers' liability coverage maintained by the
Company, as in effect from time to time, to the same extent as other
current or former senior executive officers and directors of the Company
until the end of the second policy year that begins after the Employment
Termination.
15. Financing. Cash payments under this Agreement (not including any payments
made from the Qualified Plan) are general obligations of the Company, and
Executive shall have only an unsecured right to payment thereof out of the
general assets of the Company. Notwithstanding the foregoing, the Company
may, in its sole discretion by agreement with one or more trustees to be
selected by the Company, create a trust on such terms as the Company shall
determine to make payments to Executive in accordance with the terms of
this Agreement.
16. Severability. In the event that any provision or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason, the
remaining provisions of this Agreement shall be unaffected thereby and
shall remain in full force and effect.
In Witness Whereof, the parties hereto have executed this Agreement on the
day and year first written above.
Xxxxxx Financial, Inc.
By:
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Its: Executive
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