1
MAGNA GROUP, INC.
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This agreement ("Agreement") has been entered into
effective the 1st day of January, 1995, and amended and re-
stated the 6th day of June, 1996 and as of the 27th day of May,
1997, by and between Magna Group, Inc., a Delaware corporation
("Company"), and G. Xxxxxx Xxxxx, an individual ("Executive").
RECITALS
The Board of Directors of the Company (the "Board"),
has determined that it is in the best interests of the Company
and its shareholders to reinforce and encourage the continued
attention and dedication of the Executive to the Company as a
member of the Company's management and to assure that the Com-
pany will have the continued dedication of the Executive, not-
withstanding the possibility, threat or occurrence of a Change
in Control (as defined below) of the Company. The Board xx-
xxxxx to provide for the continued employment of the Executive
on the terms hereof, and the Executive is willing to commit
himself to continue to serve the Company. Additionally, the
Board believes it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened
Change in Control, to encourage the Executive's full attention
and dedication to the Company currently and in the event of
any threatened or pending Change in Control, and to provide
the Executive with compensation and benefits arrangements upon
the breach of this Agreement by the Employer or upon a
termination of employment after a Change in Control which
ensure that the compensation and benefits expectations of the
Executive will be satisfied and which are competitive with
those of other corporations. Therefore, in order to
accomplish these objectives, the Board has caused the Company
to enter into this Agreement.
IS AGREED AS FOLLOWS:
SECTION 1: DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. For purposes of this Agreement,
the following words and phrases, whether or not capitalized,
shall have the meanings specified below, unless the context
plainly requires a different meaning.
1.1(a) "CASH COMPENSATION" means the Executive's
Annual Base Salary (as defined in Section
2
2.4(a)) plus the Incentive Bonus (as de-
fined in Section 2.4(b)) anticipated to be
awarded to the Executive in any given
year.
1.1(b) "BOARD" means the Board of Directors of
the Company.
1.1(c) "CHANGE IN CONTROL" means a change in con-
trol of the Company 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 Exchange Act;
provided that, for purposes of this
Agreement, a Change in Control shall be
deemed to have occurred if (i) any Person
(other than the Company) is or becomes the
"beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company
which represent 20% or more of the
combined voting power of the Company's
then outstanding securities; (ii) during
any period of two (2) consecutive years,
individuals who at the beginning of such
period constitute the Board cease for any
reason to constitute at least a majority
thereof, unless the election, or the
nomination for election, by the Company's
stockholders, of each new director is
approved by a vote of at least two-thirds
(2/3) of the directors then still in
office who were directors at the beginning
of the period, but excluding any
individual whose initial assumption of
office occurs as a result of either an
actual or threatened election contest (as
such term is used in Rule 14a-11 of
Regulation 14A promulgated under the
Exchange Act) or other actual or
threatened solicitation of proxies or
consents by or on behalf of a person other
than the Board; (iii) there is consummated
any consolidation or merger of the Company
in which the Company is not the continuing
or surviving corporation or pursuant to
which shares of the Company's Common Stock
are converted into cash, securities, or
other property, other than a merger of the
Company in which the holders of the
Company's Common Stock immediately prior
to the merger have the same proportionate
ownership of common stock of the
-2-
3
surviving corporation immediately after
the merger; (iv) there is consummated any
consolidation or merger of the Company in
which the Company is the continuing or
surviving corporation in which the holders
of the Company's Common Stock immediately
prior to the merger do not own fifty per-
cent (50%) or more of the stock of the
surviving corporation immediately after
the merger; (v) there is consummated any
sale, lease, exchange, or other transfer
(in one transaction or a series of related
transactions) of all, or substantially
all, of the assets of the Company, or (vi)
the stockholders of the Company approve
any plan or proposal for the liquidation
or dissolution of the Company.
1.1(d) "CHANGE IN CONTROL DATE" shall mean the
date of the Change in Control.
1.1(e) "CODE" shall mean the Internal Revenue
Code of 1986, as amended.
1.1(f) "COMPANY" means Magna Group, Inc., a Dela-
ware corporation.
1.1(g) "EMPLOYMENT PERIOD" means the period
beginning on the Effective Date and ending
on December 31, 1999.
1.1(h) "EFFECTIVE DATE" shall mean January 1,
1995.
1.1(i) "EXCHANGE ACT" means the Securities Ex-
change Act of 1934, as amended.
1.1(j) "PERSON" means any "person" within the
meaning of Sections 13(d) and 14(d) of the
Exchange Act.
1.1(k) "TERM" means the period that begins on the
Effective Date and ends on the earlier of:
(i) the close of business on December 31,
1999, or (ii) the Date of Termination as
defined in Section 3.6.
-3-
4
1.2 GENDER AND NUMBER. When appropriate, pronouns
in this Agreement used in the masculine gender include the
feminine gender, words in the singular include the plural, and
words in the plural include the singular.
1.3 HEADINGS. All headings in this Agreement are
included solely for ease of reference and do not bear on the
interpretation of the text. Accordingly, as used in this
Agreement, the terms "Article" and "Section" mean the text
that accompanies the specified Article or Section of the
Agreement.
1.4 APPLICABLE LAW. This Agreement shall be gov-
erned by and construed in accordance with the laws of the
state of Missouri, without reference to its conflict of law
principles.
SECTION 2: TERMS AND CONDITIONS OF EMPLOYMENT.
2.1 PERIOD OF EMPLOYMENT. Throughout the Term of
this Agreement, the Executive shall remain in the employ of
the Company in accordance with the terms and provisions of
this Agreement.
2.2 POSITIONS AND DUTIES.
2.2(a) Throughout the Term of this Agreement,
the Executive's position (including status, offices,
titles and reporting requirements), authority,
duties and responsibilities shall be at least
commensurate in all material respects with those
assigned to, or held and exercised by, the Executive
on the Effective Date of this Agreement.
2.2(b) Throughout the Term of this Agreement
(but excluding any periods of vacation and sick
leave to which he is entitled), the Executive shall
devote reasonable attention and time during normal
business hours to the business and affairs of the
Company and shall use his reasonable best efforts to
perform faithfully and efficiently such
responsibilities as are assigned to him under or in
accordance with this Agreement; provided that, it
shall not be a violation of this paragraph for the
Executive to (i) serve on corporate, civic or
charitable boards or committees, (ii) deliver
lectures or fulfill speaking engagements, or (iii)
manage personal investments, so long as such
activities do not significantly interfere with the
performance of the Executive's responsibilities as
an employee of the Company in accordance with
-4-
5
this Agreement or violate the Company's conflict of
interest policy as in effect on the Effective Date.
2.3 SITUS OF EMPLOYMENT. Throughout the Term of
this Agreement, the Executive's services shall be performed at
the location where the Executive was employed on the Effective
Date, or any office which is the headquarters of the Company
and is located in the greater St. Louis area.
2.4 COMPENSATION. The Executive's annual Compensa-
tion and other benefits described in this Section 2.4, shall
be provided by the Company.
2.4(a) ANNUAL BASE SALARY. For the first cal-
endar year within the Term of this Agreement, the
Executive shall receive an annual base salary of
three hundred and seventy-five thousand dollars
($375,000.00), which shall be paid in equal or sub-
stantially equal monthly installments. During the
Term of this Agreement, the annual base salary pay-
able to the Executive shall be reviewed thereafter
at least annually but need not be adjusted upward as
a result of such review and shall not be reduced
after any increase thereof. "Annual Base Salary" as
used herein shall mean the annual base salary for a
then current year.
2.4(b) INCENTIVE BONUSES. In addition to An-
nual Base Salary, the Executive shall be entitled to
participate in any incentive bonuses ("Incentive Bo-
nuses") provided through any incentive compensation
plan, which is generally available to other peer ex-
ecutives of the Company. To the extent any incen-
tive bonus is paid in shares of restricted stock,
there shall be included in Cash Compensation the
value of such shares on their award date without any
discount; provided, however, such restricted shares
shall include only those awarded in lieu of
compensation payable, as determined by the
Compensation Committee of the Board. To the extent
any incentive bonus is calculated for a year in
which the bonus has not been paid, such amount shall
be the highest amount that would be paid assuming a)
the Company performance was at or above the level
permitting the maximum award, b) the individual
performance was at or above the level permitting the
maximum award and c) any discretionary award was
made at the maximum level, in each case as in effect
immediately prior to the date of the Change of
Control.
-5-
6
2.4(c) INCENTIVE, SAVINGS AND RETIREMENT
PLANS. Throughout the Term of this Agreement, the
Executive shall be entitled to participate in all
incentive, savings and retirement plans generally
available to other peer executives of the Company.
2.4(d) WELFARE BENEFIT PLANS. Throughout the
Term of this Agreement (and thereafter, subject to
Section 4.1(c) hereof), the Executive and/or the
Executive's family, as the case may be, shall be
eligible for participation in and shall receive all
benefits under welfare benefit plans, practices,
policies and programs provided by the Company
(including, without limitation, medical,
prescription, dental, disability, salary
continuance, employee life, group life, accidental
death and travel accident insurance plans and
programs) to the extent generally available to other
peer executives of the Company.
2.4(e) EXPENSES. Throughout the Term of this
Agreement, the Executive shall be entitled to
receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance
with the most favorable policies, practices and
procedures generally applicable to other peer
executives of the Company.
2.4(f) FRINGE BENEFITS. Throughout the Term
of this Agreement, the Executive shall be entitled
to such fringe benefits as generally are provided to
other peer executives of the Company.
2.4(g) OFFICE AND SUPPORT STAFF. Throughout
the Term of this Agreement, the Executive shall be
entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive
personal secretarial and other assistance, at least
equal to those generally provided to other peer ex-
ecutives of the Company.
2.4(h) VACATION. Throughout the Term of this
Agreement, the Executive shall be entitled to paid
vacation in accordance with the most favorable
plans, policies, programs and practices generally
provided with respect to other peer executives of
the Company.
-6-
7
SECTION 3: TERMINATION OF EMPLOYMENT.
3.1 DEATH. The Executive's employment shall termi-
nate automatically upon the Executive's death during the Em-
ployment Period.
3.2 DISABILITY. If the Company determines in good
faith that the Disability of the Executive has occurred during
the Employment Period (pursuant to the definition of
Disability set forth below), it may give to the Executive
written notice in accordance with Section 7.1 of its intention
to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate
effective on the thirtieth (30th) day after receipt of such
notice by the Executive (the "Disability Effective Date"),
provided that, within the thirty (30) days after such receipt
the Executive shall not have returned to full-time performance
of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean that the Executive has been unable to
perform the services required of the Executive hereunder on a
full-time basis for a period of one hundred eighty (180)
consecutive business days by reason of a physical and/or
mental condition. "Disability" shall be deemed to exist when
certified by a physician selected by the Company or its
insurers and acceptable to the Executive or the Executive's
legal representative (such agreement as to acceptability not
to be withheld unreasonably). The Executive will submit to
such examinations and tests as such physician deems necessary
to make any such Disability determination.
3.3 TERMINATION FOR CAUSE. The Company may termi-
nate the Executive's employment during the Employment Period
for "Cause," which shall mean termination based upon: (i) the
Executive's willful and continued failure to perform substan-
tially his duties with the Company (other than as a result of
incapacity due to physical or mental condition), after a
demand for substantial performance is delivered to him by the
Chairman of the Compensation Committee of the Board, which
specifically identifies the manner in which the Executive has
not substantially performed his duties, (ii) the Executive's
willful commission of misconduct which is materially injurious
to the Company, monetarily or otherwise, or (iii) the
Executive's material breach of any provision of this
Agreement. For purposes of this paragraph, no act, or failure
to act on the Executive's part shall be considered "willful"
unless done, or omitted to be done, without good faith and
without reasonable belief that the act or omission was in the
best interest of the Company. Notwithstanding the foregoing,
the Executive shall not be deemed to have been terminated for
Cause unless and until (i) he receives a Notice of Termination
(as defined in Section 3.5) from the Chairman of the
Compensation Committee of the Board,
-7-
8
(ii) he is given the opportunity, with counsel, to be heard
before the Board, and (iii) the Board finds, in its good faith
opinion, that the Executive was guilty of the conduct set forth
in the Notice of Termination.
3.4 GOOD REASON. The Executive may terminate his
employment with the Company for "Good Reason," which shall
mean termination based upon:
(i) the assignment to the Executive of
any duties inconsistent in any respect with the
Executive's position (including status, offices,
titles and reporting requirements), authority,
duties or responsibilities as contemplated by
Section 2.2 or any other action by the Company which
results in a material diminution in such position,
authority, duties or responsibilities, excluding for
this purpose any action not taken in bad faith and
which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(ii) (a) the failure by the Company to
continue in effect any benefit or compensation plan,
stock ownership plan, life insurance plan, health
and accident plan or disability plan to which the
Executive is entitled as specified in Section 2.4,
(b) the taking of any action by the Company which
would adversely affect the Executive's participation
in, or materially reduce the Executive's benefits
under, any plans described in Section 2.4, or
deprive the Executive of any material fringe benefit
enjoyed by the Executive as described in Section
2.4(f), or (c) the failure by the Company to provide
the Executive with the number of paid vacation days
to which the Executive is entitled as described in
Section 2.4(h).
(iii) the Company's requiring the Executive
to be based at any office or location other than
that described in Section 2.3;
(iv) a material breach by the Company of
any provision of this Agreement;
(v) any purported termination by the
Company of the Executive's employment otherwise than
as expressly permitted by this Agreement;
(vi) within a period ending at the close
of business on the date two (2) years after the
Change in Control Date, any failure by the Company
to comply
-8-
9
with and satisfy Section 6.2, on or after the Change
in Control Date; or
(vii) within a period ending at the close
of business on the date one (1) year after the
Change in Control Date, the Executive, in his sole
and absolute discretion, determines and notifies the
Company in writing, that he does not wish to
continue his employment with the Company.
For purposes of this Section any good faith determination of
"Good Reason" made by the Executive shall be conclusive.
3.5 NOTICE OF TERMINATION. Any termination by the
Company for Cause or Disability, or by the Executive for Good
Reason, shall be communicated by Notice of Termination to the
other party, given in accordance with Section 7.1. For pur-
poses of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and cir-
cumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated, and
(iii) if the Date of Termination (as defined below) is other
than the date of receipt of such notice, specifies the
termination date (which date shall be not more than fifteen
(15) days after the giving of such notice). The failure by
the Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of
the Executive or the Company hereunder or preclude the
Executive or the Company from asserting such fact or
circumstance in enforcing the Executive's or the Company's
rights hereunder.
3.6 DATE OF TERMINATION. "Date of Termination"
means (i) if the Executive's employment is terminated by the
Company for Cause, the Date of Termination shall be the date
of receipt of the Notice of Termination or any later date
specified therein, as the case may be, (ii) if the Executive's
employment is terminated by him for Good Reason as provided in
Section 3.4 hereof, the Date of Termination shall be the date
on which the Executive receives benefits under Section 4.2
hereof, (iii) if the Executive's employment is terminated by
reason of death or Disability, the Date of Termination shall
be the date of death of the Executive or the Disability
Effective Date, as the case may be, or (iv) if the Executive's
employment is terminated by the Company other than for Cause,
death, or Disability, the Date of Termination shall be the
date of receipt of the Notice of Termination; provided that if
within thirty (30) days after any Notice of Termination is
given, the
-9-
10
party receiving such Notice of Termination notifies the other
party that a dispute exists concerning the termination, the Date
of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, or
by a final judgment, order or decree of a court of competent
jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected).
SECTION 4: CERTAIN BENEFITS UPON TERMINATION.
4.1 TERMINATION WITHOUT CAUSE OR FOR GOOD REASON
PRIOR TO A CHANGE IN CONTROL. If, prior to a Change in Con-
trol, during the Employment Period: (i) the Company shall
terminate the Executive's employment without Cause, or (ii)
the Executive shall terminate employment with the Company for
Good Reason, the Executive shall be entitled to the benefits
provided below:
4.1(a) "Accrued Obligations": On the fifth
(5th) business day following the Date of
Termination, the Company shall pay to the Executive
the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not
previously paid, (2) any compensation previously
deferred by the Executive (together with any accrued
interest or earnings thereon), (3) any accrued
vacation pay; in each case to the extent not
previously paid, and in the event of a termination
pursuant to Section 4.1, 4.2, 4.3 or 4.4 hereof (and
excluding any termination pursuant to Section 4.5)
part or all of the Incentive Bonus for the year in
which the Date of Termination occurs based on a
fraction of the number of whole or part months of
the year through the Date of Termination divided by
twelve.
4.1(b) "Annual Base Salary Continuation": For
the remainder of the Employment Period, the Company
shall pay to the Executive, the Executive's then-
current Annual Base Salary as would have been paid
to the Executive had the Executive remained in the
Company's employ throughout the Employment Period.
The Company at any time may elect to pay the balance
of such payments then remaining in a lump sum, in
which case the total of such payments shall be
discounted to present value as determined according
to Code Section 280G(d)(4).
4.1(c) "Welfare Benefit Continuation": For
the remainder of the Employment Period, or such
longer period as any plan, program, practice or
policy may
-10-
11
provide, the Company shall continue benefits to the
Executive and/or the Executive's family at least equal
to those which would have been provided to them in
accordance with the plans, programs, practices and
policies described in Section 2.4(d) if the Executive's
employment had not been terminated, in accordance with
the most favorable plans, practices, programs or
policies of the Company as those provided generally to
other peer executives and their families during the
ninety (90) day period immediately preceding the
Effective Date or, if more favorable to the Executive,
as those provided generally at any time after the
Effective Date to other peer executives of the
Company and their families; provided, however, that
if the Executive becomes reemployed with another
employer and is eligible to receive medical or other
welfare benefits under another employer-provided
plan, the medical and other welfare benefits de-
scribed herein shall be secondary to those provided
under such other plan during such applicable period
of eligibility. For purposes of determining eligi-
bility of the Executive for retiree benefits
pursuant to such plans, practices, programs and
policies, the Executive shall be considered to have
remained employed until the end of the Employment
Period and to have retired on the last day of such
period.
4.1(d) "Other Benefits": To the extent not
previously paid or provided, the Company shall
timely pay or provide to the Executive and/or the
Executive's family any other amounts or benefits
required to be paid or provided for which the
Executive and/or the Executive's family is eligible
to receive pursuant to this Agreement and under any
plan, program, policy or practice or contract or
agreement of the Company as those provided generally
to other peer executives and their families during
the ninety (90) day period immediately preceding the
Effective Date or, if more favorable to the
Executive, as those provided generally after the
Effective Date to other peer executives of the
Company and their families.
The Executive shall not be required to mitigate
the amount of any payment provided for in this Sec-
tion by seeking other employment or otherwise, nor
shall the amount of any payment provided for in this
Section be reduced by any compensation earned by the
Executive as the result of employment by another em-
ployer after the Date of Termination, or otherwise.
-11-
12
4.2 BENEFITS UPON TERMINATION AFTER A CHANGE IN
CONTROL. If a Change in Control occurs during the Employment
Period and within two (2) years after a Change in Control:
(i) the Company shall terminate the Executive's employment
without Cause, or (ii) the Executive shall terminate
employment with the Company for Good Reason, then the
Executive shall be entitled to the benefits provided below:
4.2(a) "Accrued Obligations": On the fifth
(5th) business day following the Date of
Termination, the Company shall pay to the Executive
the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not
previously paid, (2) any compensation previously
deferred by the Executive (together with any accrued
interest or earnings thereon) and (3) any accrued
vacation pay; in each case to the extent not
previously paid. No amount shall be paid as Annual
Base Salary for any period following the Date of
Termination.
4.2(b) "Severance Amount": On the fifth (5th)
business day following the Date of Termination, the
Company shall pay to the Executive as severance pay
in a lump sum, in cash, an amount equal to 2.99
times his Cash Compensation for the most recent
calendar year in which occurs the Date of
Termination.
4.2(c) "Welfare Benefit Continuation": For
three years after the Executive's Date of Termina-
tion, or such longer period as may be provided by
the terms of the appropriate plan, program, practice
or policy, the Company shall continue benefits to
the Executive and/or the Executive's family at least
equal to those which would have been provided to
them in accordance with the plans, programs,
practices and policies described in Section 2.4(d)
of this Agreement if the Executive's employment had
not been terminated or, if more favorable to the
Executive, as in effect generally at any time
thereafter with respect to other peer executives of
the Company and its affiliated companies and their
families, provided, however, that if the Executive
becomes reemployed with another employer and is
eligible to receive medical or other welfare
benefits under another employer provided plan, the
medical and other welfare benefits described herein
shall be secondary to those provided under such
other plan during such applicable period of
eligibility. For purposes of determining eligi-
bility (but not the time of commencement of
benefits) of the Executive for retiree benefits
pursuant to
-12-
13
such plans, practices, programs and policies, the
Executive shall be considered to have remained employed
until three years after the Date of Termination and to
have retired on the last day of such period.
4.2(d) "Other Benefits": To the extent not
previously paid or provided, and for a period ending
on the third anniversary of the Date of Termination,
the Company shall timely pay or provide to the
Executive and/or the Executive's family any other
amounts or benefits required to be paid or provided
for which the Executive and/or the Executive's
family is eligible to receive pursuant to this
Agreement and under any plan, program, policy or
practice or contract or agreement of the Company
applicable to the Executive and for his family as
well as those provided generally to other peer
executives and their families during the ninety (90)
day period immediately preceding the Effective Date
or, if more favorable to the Executive, as those
provided generally after the Effective Date to other
peer executives of the Company and their families.
4.2(e) "Certain Additional Payments by the
Company":
(i) Anything in this Agreement to the
contrary notwithstanding, in the event (A) it shall
be determined that any payment or distribution by
the Company to or for the benefit of the Executive
(whether paid or payable or distributed or
distributable pursuant to the terms of this
Agreement or otherwise) (a "Payment") would be
subject to the excise tax imposed by Code Section
4999, or (B) any interest or penalties are incurred
by the Executive with respect to such excise tax
(such excise tax, together with any interest and
penalties, are hereinafter collectively referred to
as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (a "Gross-
Up Payment") in an amount equal to the Excise Tax
imposed on the Payment and on the Gross-Up Payment
as well as any additional income tax, employment tax
and Excise Tax payable with respect to such ad-
ditional payment (including any interest or penal-
ties imposed with respect to such excise tax). The
Gross-Up Payment shall not include any amount for
the payment of any income or employment taxes
imposed on the Payment, but shall include any income
or employment taxes payable with respect to any
Gross-Up Payment
-13-
14
(and any interest and penalties imposed with respect
thereto).
(ii) Subject to the provisions of Section
4.2(f)(iii), all determinations required to be made
under this Section, including whether and when a
Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized
in arriving at such determination, shall be made by
an independent accountant which shall provide de-
tailed supporting calculations both to the Company
and the Executive within fifteen (15) business days
of the receipt of notice from the Executive that
there has been a Payment, or such earlier time as is
requested by the Company. All fees and expenses of
the independent accountant shall be borne solely by
the Company. Any Gross-Up Payment, as determined
pursuant to this Section 4.2(f), shall be paid by
the Company to the Executive within five (5) days of
the receipt of the independent accountant's
determination. If the independent accountant
determines that no Excise Tax is payable by the
Executive, it shall furnish the Executive with a
written opinion that failure to report the Excise
Tax on the Executive's applicable Federal income tax
return would not result in the imposition of a
negligence or similar penalty. Any determination by
the independent accountant shall be binding upon the
Company and the Executive. As a result of the
uncertainty in the application of Code Section 4999
at the time of the initial determination by the
independent accountant hereunder, it is possible
that Gross-Up Payments which will not have been made
by the Company should have been made ("Under-
payment"), consistent with the calculations required
to be made hereunder. In the event that the Company
exhausts its remedies pursuant to Section
4.2(f)(iii) and the Executive thereafter is required
to make a payment of any Excise Tax, the independent
accountant shall determine the amount of the
Underpayment that has occurred and any such
Underpayment, as well as any interest and penalties
imposed thereon, shall be promptly paid by the
Company to or for the benefit of the Executive.
(iii) The Executive shall notify the
Company in writing of any claim by the Internal
Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as
practicable but no later than ten (10) business days
after the Executive is
-14-
15
informed in writing of such claim and shall apprise the
Company of the nature of such claim and the date on
which such claim is requested to be paid. The
Executive shall not pay such claim prior to the
expiration of the thirty (30) day period following the
date on which the Executive gives such notice to the
Company (or such shorter period ending on the date that
any payment of taxes with respect to such claim is
due). If the Company notifies the Executive in writing
prior to the expiration of such period that it desires
to contest such claim, the Executive shall:
(a) give the Company any information
reasonably requested by the Company relating to
such claim,
(b) take such action in connection with con-
testing such claim as the Company shall reason-
ably request in writing from time to time, in-
cluding without limitation, accepting legal
representation with respect to such claim by an
attorney reasonably selected by the Company,
(c) cooperate with the Company in good faith
in order to effectively contest such claim, and
(d) permit the Company to participate in any
proceedings relating to such claim; provided, how-
ever, that the Company shall bear and pay directly
all costs and expenses (including additional
interest and penalties) incurred in connection with
such contest and shall indemnify and hold the
Executive harmless, on an after-tax basis, for any
Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result
of such representation and payment of costs and
expenses. Without limitation on the foregoing
provisions of this Section 4.2(f), the Company shall
control all proceedings taken in connection with
such contest and, at its sole option, may pursue or
forego any and all administrative appeals,
proceedings, hearings and conferences with the
taxing authority in respect of such claim and may,
at its sole option, either direct the Executive to
pay the tax claimed and xxx for a refund or contest
the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine;
provided, however, that if the Company
-15-
16
directs the Executive to pay such claim and xxx for a
refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and
shall indemnify and hold the Executive harmless, on
an after-tax basis, from any Excise Tax or income
tax (including interest or penalties with respect
thereto) imposed with respect to such advance or
with respect to any imputed income with respect to
such advance; and further provided that any
extension of the statute of limitations relating to
payment of taxes for the taxable year of the
Executive with respect to which such contested
amount is claimed to be due is limited solely to
such contested amount. Furthermore, the Company's
control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be
entitled to settle or contest, as the case may be,
any other issue raised by the Internal Revenue
Service or any other taxing authority.
(iv) If, after the receipt by the
Executive of an amount advanced by the Company
pursuant to Section 4.2(f)(iii), the Executive
becomes entitled to receive any refund with respect
to such claim, the Executive shall (subject to the
Company's compliance with the requirements of
Section 4.2(f)(iii)) promptly pay to the Company the
amount of such refund (together with any interest
paid or credited thereon after taxes applicable
thereto). If, after the receipt by the Executive of
an amount advanced by the Company pursuant to
Section 4.2(f)(iii), a determination is made that
the Executive shall not be entitled to any refund
with respect to such claim and the Company does not
notify the Executive in writing of its intent to
contest such denial or refund prior to the
expiration of thirty (30) days after such determi-
nation, then such advance shall be forgiven and
shall not be required to be repaid and the amount of
such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
4.3 DEATH. If the Executive's employment is termi-
nated by reason of the Executive's death during the Employment
Period (either prior or subsequent to a Change in Control),
this Agreement shall terminate without further obligations to
the Executive's legal representatives under this Agreement,
other than for (i) payment of Accrued Obligations (as defined
in Section 4.1(a)) (which shall be paid to the Executive's es-
xxxx or beneficiary, as applicable, in a lump sum in cash
within five (5) days of the Date of Termination) and (ii) the
-16-
17
timely payment or provision of Other Benefits (as defined in
Section 4.1(d)), including death benefits pursuant to the
terms of any plan, policy, or arrangement of the Company.
4.4 DISABILITY. If the Executive's employment is
terminated by reason of the Executive's Disability during the
Employment Period (either prior or subsequent to a Change in
Control), this Agreement shall terminate without further obli-
gations to the Executive, other than for (i) payment of
Accrued Obligations (as defined in Section 4.1(a)) (which
shall be paid to the Executive in a lump sum in cash within
five (5) days of the Date of Termination) and (ii) the timely
payment or provision of Other Benefits (as defined in Section
4.1(d)) including disability benefits pursuant to the terms of
any plan, policy or arrangement of the Company.
4.5 TERMINATION FOR CAUSE; OTHER THAN GOOD REASON.
If the Executive's employment shall be terminated for Cause
during the Employment Period (either prior or subsequent to a
Change in Control), this Agreement shall terminate without
further obligations to the Executive other than the obligation
to pay to the Executive Accrued Obligations (as defined in
Section 4.1(a)). If the Executive terminates employment with
the Company during the Employment Period, (excluding a
termination for Good Reason), this Agreement shall terminate
without further obligations to the Executive, other than for
Accrued Obligations (as defined in Section 4.1(a)) and the
timely payment or provision of Other Benefits (as defined in
Section 4.1(d)). In such case, all Accrued Obligations shall
be paid to the Executive in a lump sum in cash within thirty
(30) days of the Date of Termination. If the Executive's
employment shall terminate for the reasons stated in this
Section, the provisions of Section 5 shall continue to apply.
4.6 NON-EXCLUSIVITY OF RIGHTS. Except as provided
in Sections 4.1(c) nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in
any plan, program, policy or practice provided by the Company
and for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive
may have under any contract or agreement with the Company.
Amounts which are vested benefits of which the Executive is
otherwise entitled to receive under any plan, policy, practice
or program of, or any contract or agreement with, the Company
at or subsequent to the Date of Termination, shall be payable
in accordance with such plan, policy, practice or program or
contract or agreement except as explicitly modified by this
Agreement.
4.7 FULL SETTLEMENT. The Company's obligation to
make the payments provided for in this Agreement and otherwise
-17-
18
to perform its obligations hereunder shall not be affected by
any set-off, counterclaim, recoupment, defense or other claim,
right or action which the Company may have against the Execu-
tive or others. In no event shall the Executive be obligated
to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any
of the provisions of this Agreement and, except as provided in
Sections 4.1(c), such amounts shall not be reduced whether or
not the Executive obtains other employment. The Company
agrees to pay promptly as incurred, to the full extent
permitted by law, all legal fees and expenses which the
Executive may reasonably incur as a result of any contest
(regardless of the outcome thereof) by the Company, the
Executive or others of the validity or enforceability of, or
liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any
contest by the Executive regarding the amount of any payment
pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in
Code Section 7872(f)(2)(A).
4.8 RESOLUTION OF DISPUTES. If there shall be any
dispute between the Company and the Executive (i) in the event
of any termination of the Executive's employment by the Com-
pany, whether such termination was for Cause, or (ii) in the
event of any termination of employment by the Executive,
whether Good Reason existed, then, unless and until there is a
final, nonappealable judgment by a court of competent juris-
diction declaring that such termination was for Cause or that
the determination by the Executive of the existence of Good
Reason was not made in good faith, the Company shall pay all
amounts, and provide all benefits, to the Executive and/or the
Executive's family or other beneficiaries, as the case may be,
that the Company would be required to pay or provide pursuant
to Section 4.1 or 4.2 as though such termination were by the
Company without Cause or by the Executive with Good Reason;
provided, however, that the Company shall not be required to
pay any disputed amounts pursuant to this paragraph except
upon receipt of an undertaking by or on behalf of the
Executive to repay all such amounts to which the Executive is
ultimately adjudged by such court not to be entitled.
SECTION 5: NON-COMPETITION WITH AND SERVICES FOR THE COMPANY.
5.1 NON-COMPETE AGREEMENT.
5.1(a) It is agreed that either: (i) during
the Term of this Agreement and for a period ending
three (3) years thereafter; or (ii) if the Execu-
tive's employment is terminated during the Term of
this Agreement, then until the date three (3) years
-18-
19
after the date of termination, the Executive shall
not, without prior written approval of the Board,
become an officer, employee, agent, partner, or xx-
xxxxxx of any business enterprise in substantial di-
rect competition (as defined in Section 5.1(b)) with
the Company.
5.1(b) For purposes of Section 5.1, a business
enterprise with which the Executive becomes associ-
ated as an officer, employee, agent, partner, or xx-
xxxxxx shall be considered in substantial direct
competition, if such entity competes with the
Company in any business in which the Company is
engaged and is within the Company's market area (as
defined herein) as of the Date of Termination. The
Company's market area is defined for this purpose,
as the area which constitutes Central and Southern
Illinois, Northeastern and Central Iowa and the St.
Louis metropolitan area, and if the Company becomes
the successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) after
the Effective Date, to all or substantially all of
the business and/or assets of another business
enterprise, the geographical areas in which such
predecessor business enterprise conducts substantial
business activity.
5.2 CONFIDENTIAL INFORMATION. The Executive shall
hold in a fiduciary capacity for the benefit of the Company
all secret or confidential information, knowledge or data
relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been
obtained by the Executive during the Executive's employment by
the Company and which shall not be or become public knowledge
(other than by acts by the Executive or representatives of the
Executive in violation of this Agreement). After termination
of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company,
or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data
to anyone other than the Company and those designated by it.
In no event shall an asserted violation of the provisions of
this Section constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this
Agreement.
5.3 SERVICES FOLLOWING A CHANGE IN CONTROL. If a
Change in Control of the Company shall occur and the Executive
shall receive the payment provided in Section 4.2 hereof, then
following the Date of Termination, and for a period of six
months thereafter, the Executive shall make himself available
for no additional payment other than his reasonable expenses
-19-
20
incurred in the performance of his duties hereunder at such
reasonable times and places as shall be set forth in writing
by notice from the Chief Executive Officer of the Company to
him to perform such reasonable services as may be requested in
writing of him. No services hereunder shall be required on a
"full time" basis.
5.4 MODIFICATION. If any court of competent juris-
diction determines that, consistent with the established
precedent of the forum of jurisdiction, any restriction
contained in Section 5.1 of this Agreement is unenforceable or
unreasonable, a lesser restriction shall be enforced in its
place to the maximum extent deemed enforceable or reasonable,
and the remaining covenants and restrictions shall be
enforceable independently of each other.
SECTION 6: SUCCESSORS.
6.1 SUCCESSORS OF EXECUTIVE. This Agreement is
personal to the Executive, and without the prior written
consent of the Company, amounts receivable hereunder shall not
be assignable by the Executive otherwise than by will or the
laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Executive's legal
representatives.
6.2 SUCCESSORS OF COMPANY. The Company 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 Company
to assume expressly and agree to perform this Agreement in the
same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.
Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to terminate the
Agreement at his option on or after the Change in Control Date
for Good Reason. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to
its business and/or assets which assumes and agrees to perform
this Agreement by operation of law, or otherwise.
SECTION 7: MISCELLANEOUS.
7.1 NOTICE. For purposes of this Agreement,
notices and all other communications provided for in the
Agreement shall be in writing and shall be deemed to have been
duly given
-20-
21
when delivered or mailed by certified or registered mail, return
receipt requested, postage prepaid, addressed to the respective
addresses as set forth below; provided that all notices to the
Company shall be directed to the attention of the President of
the Company with a copy to the Secretary of the Company, or to
such other address as one party may have furnished to the other
in writing in accordance herewith, except that notice of change
of address shall be effective only upon receipt.
Notice to Executive:
-------------------
G. Xxxxxx Xxxxx
000 Xxxx Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Notice to Company:
-----------------
Magna Group, Inc.
One Magna Place
0000 Xxxxx Xxxxxxxxx Xxxx.
Xx. Xxxxx, Xxxxxxxx 00000-0000
7.2 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.
7.3 WITHHOLDING. The Company may withhold from any
amounts payable under this Agreement such Federal, state or
local taxes as shall be required to be withheld pursuant to
any applicable law or regulation.
7.4 WAIVER. The Executive's or the Company's fail-
ure to insist upon strict compliance with any provision hereof
or any other provision of this Agreement or the failure to as-
sert any right the Executive or the Company may have here-
under, including, without limitation, the right of the Execu-
tive to terminate employment for Good Reason pursuant to Sec-
tion 3.4 shall not be deemed to be a waiver of such provision
or right or any other provision or right of this Agreement.
7.5 REPLACEMENT OF PRIOR AGREEMENT. This Agreement
supersedes and replaces the Agreement between the undersigned
dated January 1, 1995, as amended and restated June 6, 1996.
-21-
22
IN WITNESS WHEREOF, the Executive and, the Company,
pursuant to the authorization from its Board, have caused this
Agreement to be executed in its name on its behalf, all as of
the day and year first above written.
/s/ G. Xxxxxx Xxxxx
----------------------------------------
G. Xxxxxx Xxxxx
MAGNA GROUP, INC.
By /s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Name: XXXXXXX X. XXXXXX
-----------------------------------
Title: SENIOR VICE PRESIDENT
----------------------------------
By /s/ Xxxx X. Xxxxx, Xx.
--------------------------------------
Xxxx X. Xxxxx, Xx.
Chairman of the Compensation
Committee of the Board of Directors
-22-
