Exhibit 10(ii)
CHANGE OF CONTROL AGREEMENT
---------------------------
THIS AGREEMENT, entered into as of the 10th day of January, 2001, by
and between XXXXXXXX & XXXXXX CORPORATION (the "Company"), and Xxxx X. Xxxxx
(the "Executive") (hereinafter collectively referred to as "the parties").
W I T N E S S E T H :
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that the possibility of a Change of Control (as hereinafter defined in Section
2) exists and that the threat of or the occurrence of a Change of Control can
result in significant distractions of its key management personnel because of
the uncertainties inherent in such a situation; and
WHEREAS, the Board has determined that it is essential and in the best
interest of the Company and its shareholders to retain the services of the
Executive in the event of a threat or occurrence of a Change of Control and to
ensure his continued dedication and efforts in such event without undue concern
for his personal financial and employment security; and
WHEREAS, in order to induce the Executive to remain in the employ of
the Company, particularly in the event of a threat of or the occurrence of a
Change of Control, the Company desires to enter into this Agreement with the
Executive.
NOW, THEREFORE, in consideration of the respective agreements of the
parties contained herein, it is agreed as follows:
1. Employment Term. (a) The "Employment Term" shall commence on the
---------------
first date during the Protected Period (as defined in Section 1(c), below) on
which a Change of Control (as defined in Section 2, below) occurs (the
"Effective Date") and shall expire on the second anniversary of the Effective
Date; provided, however, that at the end of each day of the Employment Term the
-------- -------
Employment Term shall automatically be extended for one (1) day unless either
the Company or the Executive shall have given written notice to the other at
least thirty (30) days prior thereto that the Employment Term shall not be so
extended.
(b) Notwithstanding anything contained in this Agreement to the
contrary, if the Executive's employment is terminated prior to the Effective
Date and the Executive reasonably demonstrates that such termination (i) was at
the request of a third party who has indicated an intention or taken steps
reasonably calculated to effect a Change of Control, or (ii) otherwise occurred
in connection with or in anticipation of a Change of Control, then for all
purposes of this Agreement, the Effective Date shall mean the date immediately
prior to the date of such termination of the Executive's employment.
(c) For purposes of this Agreement, the "Protected Period" shall be the
two (2) year period commencing on the date hereof; provided, however, that at
-------- -------
the end of each day the Protected Period shall be automatically extended for one
(1) day unless at least thirty (30) days prior thereto the Company shall have
given written notice to the Executive that the Protected
Period shall not be so extended; and provided, further, that notwithstanding any
-------- -------
such notice by the Company not to extend, the Protected Period shall not end if
prior to the expiration thereof any third party has indicated an intention or
taken steps reasonably calculated to effect a Change of Control, in which event
the Protected Period shall end only after such third party publicly announces
that it has abandoned all efforts to effect a Change of Control.
2. Change of Control. For purposes of this Agreement, a "Change of
-----------------
Control" shall mean the first to occur of the following:
(a) The acquisition by any individual, entity or "group" (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of thirty-three percent (33%) or
more of either (i) the then outstanding shares of common stock of the Company
(the "Outstanding Company Common Stock") or (ii) the combined voting power of
the then outstanding voting securities of the Company entitled to vote generally
in the election of directors (the "Outstanding Company Voting Securities");
provided, however, that the following acquisitions of common stock shall not
-------- -------
constitute a Change of Control: (i) any acquisition directly from the Company
(excluding an acquisition by virtue of the exercise of a conversion privilege or
by one person or a group of persons acting in concert), (ii) any acquisition by
the Company, (iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by
the Company or (iv) any acquisition by any corporation pursuant to a
reorganization, merger, statutory share exchange or consolidation which would
not be a Change of Control under subsection (c) of this Section 2; or
(b) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
-------- -------
the date hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of either an actual or threatened "election contest" or other actual or
threatened "solicitation" (as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act) of proxies or consents by or on behalf
of a person other than the Incumbent Board; or
(c) Consummation of a reorganization, merger, statutory share exchange
or consolidation, unless, following such reorganization, merger, statutory share
exchange or consolidation, (i) more than two-thirds (2/3) of, respectively, the
then outstanding shares of common stock of the corporation resulting from such
reorganization, merger, statutory share exchange or consolidation and the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such reorganization, merger, statutory share exchange or
consolidation in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger, statutory share exchange or
2
consolidation, (ii) no person (excluding the Company, any employee benefit plan
(or related trust) of the Company or such corporation resulting from such
reorganization, merger, statutory share exchange or consolidation and any person
beneficially owning, immediately prior to such reorganization, merger, statutory
share exchange or consolidation, directly or indirectly, thirty-three percent
(33%) or more of the Outstanding Company Common Stock or Outstanding Voting
Securities, as the case may be) beneficially owns, directly or indirectly,
thirty-three percent (33%) or more of, respectively, the then outstanding shares
of common stock of the corporation resulting from such reorganization, merger,
statutory share exchange or consolidation or the combined voting power of the
then outstanding voting securities of such corporation, entitled to vote
generally in the election of directors and (iii) at least a majority of the
members of the board of directors of the corporation resulting from such
reorganization, merger, statutory share exchange or consolidation were members
of the Incumbent Board at the time of the execution of the initial agreement
providing for such reorganization, merger or consolidation; or
(d) Consummation of (i) a complete liquidation or dissolution of the
Company or (ii) the sale or other disposition of all or substantially all of the
assets of the Company, other than to a corporation, with respect to which
following such sale or other disposition, (A) more than two-thirds (2/3) of,
respectively, the then outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such sale or other disposition in substantially the same
proportion as their ownership, immediately prior to such sale or other
disposition, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (B) no person (excluding the Company and
any employee benefit plan (or related trust) of the Company or such corporation
and any person beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, thirty-three percent (33%) or more of the
Outstanding Company Common Stock or Outstanding Company Voting Securities, as
the case may be) beneficially owns, directly or indirectly, thirty-three percent
(33%) or more of, respectively, the then outstanding shares of common stock of
such corporation or the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors and (C) at least a majority of the members of the board of directors
of such corporation were members of the Incumbent Board at the time of the
execution of the initial agreement or action of the Board providing for such
sale or other disposition of assets of the Company.
3. Employment. (a) Subject to the provisions of Section 3, hereof, the
----------
Company agrees to continue to employ the Executive and the Executive agrees to
remain in the employ of the Company during the Employment Term. During the
Employment Term, the Executive shall be employed in such executive capacity as
may be mutually agreed to by the parties. During the Employment Term,
Executive's position (including status, offices, titles and reporting
requirements), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those held or
assigned at any time during the twelve (12) month period immediately preceding
the Effective Date, and Executive's services shall be performed at the location
where Executive was employed immediately preceding the Effective
3
Date or at any office or location less than thirty-five (35) miles from such
location, unless mutually agreed to in writing by the parties.
(b) Excluding periods of vacation and sick leave to which the Executive
is entitled, during the Employment Term the Executive agrees to devote full time
attention to the business and affairs of the Company to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder, provided
that the Executive may take reasonable amounts of time to (i) serve on
corporate, civil or charitable boards or committees, and (ii) deliver lectures,
fulfill speaking engagements or teach at educational institutions, if such
activities do not significantly interfere with the performance of the
Executive's responsibilities hereunder. It is expressly understood and agreed
that to the extent any such activities have been conducted by the Executive
prior to the Effective Date, the continued conduct of such activities (or the
conduct of activities similar in nature and scope) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the performance of
Executive's responsibilities hereunder.
4. Compensation. (a) Base Salary. During the Employment Term, the
------------ -----------
Executive shall receive an annual base salary ("Annual Base Salary"), which
shall be paid at a monthly rate, at least equal to twelve (12) times the highest
monthly base salary paid or payable to the Executive by the Company and its
affiliated companies in respect of the twelve (12) month period immediately
preceding the month in which the Effective Date occurs, including any amounts
which were deferred under any plans of the Company and its affiliated companies.
During the Employment Term, the Annual Base Salary shall be reviewed at least
annually and shall be increased at any time and from time to time as shall be
substantially consistent with increases in base salary generally awarded in the
ordinary course of business to other peer executives of the Company and its
affiliated companies. Any increase in Annual Base Salary shall not serve to
limit or reduce any other obligation to the Executive under this Agreement.
Annual Base Salary shall not be reduced after any such increase and the term
Annual Base Salary as utilized in this Agreement shall refer to Annual Base
Salary as so increased. As used in this Agreement, the term "affiliated
companies" shall include any company controlled by, controlling or under common
control with the Company.
(b) Annual Bonus. In addition to Annual Base Salary, the Executive
------------
shall be awarded, for each fiscal year ending during the Employment Term, an
annual bonus (the "Annual Bonus") in cash at least equal to the average
annualized (for any fiscal year consisting of less than twelve (12) full months
or with respect to which the Executive has been employed by the Company for less
than twelve (12) full months) bonuses paid or payable, including any amounts
which were deferred under any plans of the Company and its affiliated companies,
to the Executive by the Company and its affiliated companies in respect of the
three (3) fiscal years immediately preceding the fiscal year in which the
Effective Date occurs (the "Recent Average Bonus"). Each such Annual Bonus shall
be paid no later than seventy-five (75) days after the end of the fiscal year
for which the Annual Bonus is awarded, unless the Executive shall elect to defer
the receipt of such Annual Bonus under any plan or arrangement of the Company
allowing therefor.
(c) Incentive, Savings and Retirement Plans. During the Employment
---------------------------------------
Term, the Executive shall be entitled to participate in all incentive, savings
and retirement plans, practices, policies and programs applicable generally to
other peer executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide
4
the Executive with incentive opportunities (measured with respect to both
regular and special incentive opportunities, to the extent, if any, that such
distinction is applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than the most
favorable of those provided by the Company and its affiliated companies for the
Executive under such plans, practices, policies and programs as in effect at any
time during the twelve (12) month period immediately preceding the Effective
Date, or, if more favorable to the Executive, those provided generally at any
time after the Effective Date to other peer executives of the Company and its
affiliated companies.
(d) Benefit Plans. During the Employment Term, 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 benefit plans, practices, policies and
programs provided by the Company and its affiliated companies (including,
without limitation, medical, prescription drug, dental, disability, salary
continuance, employee life, group life, accidental death and travel accident
insurance plans and programs) to the extent applicable generally to other peer
executives of the Company and its affiliated companies and their families; but
in no event shall such plans, practices, policies and programs provide the
Executive with benefits which are less favorable, in the aggregate, than the
most favorable of such plans, practices, policies and programs in effect for the
Executive and his family at any time during the twelve (12) month period
immediately preceding the Effective Date or, if more favorable to the Executive,
those provided generally at any time after the Effective Date to other peer
executives of the Company and its affiliated companies and their families.
(e) Expenses. During the Employment Term, 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 of the Company and its affiliated companies in effect for the
Executive at any time during the twelve (12) month period immediately preceding
the Effective Date 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.
(f) Fringe Benefits. During the Employment Term, the Executive shall be
---------------
entitled to fringe benefits (including but not limited to Company cars, club
dues and physical examinations) in accordance with the most favorable plans,
practices, programs and policies of the Company and its affiliated companies in
effect for the Executive at any time during the twelve (12) month period
immediately preceding the Effective Date 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.
(g) Office and Support Staff. During the Employment Term, 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,
in accordance with the most favorable of the foregoing provided to the Executive
by the Company and its affiliated companies at any time during the twelve (12)
month period immediately preceding the Effective Date or, if more favorable to
the Executive, as provided generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies.
5
(h) Vacation and Sick Leave. During the Employment Term, the Executive
-----------------------
shall be entitled to paid vacation and sick leave (without loss of pay) in
accordance with the most favorable plans, policies, programs and practices of
the Company and its affiliated companies as in effect for the Executive at any
time during the twelve (12) month period immediately preceding the Effective
Date 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.
(i) Restrictions. As of the Effective Date, all restrictions limiting
------------
the exercise, transferability or other incidents of ownership of any outstanding
award, including but not limited to restricted stock, options, stock
appreciation rights, or other property or rights of the Company granted to the
Executive shall lapse, and such awards shall become fully vested and be held by
the Executive free and clear of all such restrictions. This provision shall
apply to all such property or rights notwithstanding the provisions of any other
plan or agreement, unless the effect of the application of this provision to a
particular right or property would result in the loss of favorable securities
law treatment for participants under the plan pursuant to which the award was
granted.
5. Termination of Employment. During the Employment Term, the
-------------------------
Executive's employment hereunder may be terminated under the following
circumstances:
(a) Death or Disability. The Executive's employment shall terminate
-------------------
automatically upon the Executive's death during the Employment Term. If the
Company determines in good faith that the Disability of the Executive has
occurred during the Employment Term (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice in accordance with
Section 5 of this Agreement 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 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 the absence of the Executive from the Executive's duties
with the Company on a full-time basis for one hundred eighty (180) consecutive
business days as a result of incapacity due to mental or physical illness which
is determined to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Executive or the Executive's legal
representative, provided if the parties are unable to agree, the parties shall
request the Xxxx of the Medical College of Wisconsin to choose such physician.
(b) Cause. The Company may terminate the Executive's employment for
-----
"Cause." A termination for Cause is a termination evidenced by a resolution
adopted in good faith by a majority of the Board that the Executive (i)
willfully, deliberately and continually failed to substantially perform his
duties under Section 3, above (other than a failure resulting from the
Executive's incapacity due to physical or mental illness) which failure
constitutes gross misconduct, and results in and was intended to result in
demonstrable material injury to the Company, monetary or otherwise, or (ii)
committed acts of fraud and dishonesty constituting a felony, as determined by a
final judgment or order of a court of competent jurisdiction, and resulting or
intended to result in gain to or personal enrichment of the Executive at the
Company's expense, provided, however, that no termination of the Executive's
-------- -------
employment shall be for Cause as set forth in (i), above, until (a) Executive
shall have had at least sixty (60)
6
days to cure any conduct or act alleged to provide Cause for termination after a
written notice of demand has been delivered to the Executive specifying in
detail the manner in which the Executive's conduct violates this Agreement, and
(b) the Executive shall have been provided an opportunity to be heard by the
Board (with the assistance of the Executive's counsel if the Executive so
desires). No act, or failure to act, on the Executive's part, shall be
considered "willful" unless he has acted or failed to act in bad faith and
without a reasonable belief that his action or failure to act was in the best
interest of the Company. Notwithstanding anything contained in this Agreement to
the contrary, no failure to perform by the Executive after Notice of Termination
is given by the Executive shall constitute Cause for purposes of this Agreement.
(c) Good Reason.
-----------
(1) The Executive may terminate his employment for Good Reason.
For purposes of this Agreement, "Good Reason" shall mean the occurrence
after a Change of Control of any of the events or conditions described
in Subsections (i) through (vi) hereof:
(i) A change in the Executive's status, title,
position or responsibilities (including reporting
responsibilities) which, in the Executive's reasonable judgment,
does not represent a promotion from his status, title, position
or responsibilities as in effect immediately prior thereto; the
assignment to the Executive of any duties or responsibilities
which, in the Executive's reasonable judgment, are inconsistent
with his status, title, position or responsibilities in effect
immediately prior to such assignment; or any removal of the
Executive from or failure to reappoint or reelect him to any
position, except in connection with the termination of his
employment for Disability, Cause, as a result of his death or by
the Executive other than for Good Reason;
(ii) Any failure by the Company to comply with any of
the provisions of Section 4 of this Agreement.
(iii) The insolvency or the filing (by any party,
including the Company) of a petition for bankruptcy of the
Company;
(iv) Any material breach by the Company of any
provision of this Agreement;
(v) Any purported termination of the Executive's
employment for Cause by the Company which does not comply with
the terms of Section 5 of this Agreement; and
(vi) The failure of the Company to obtain an
agreement, satisfactory to the Executive, from any successor or
assign of the Company, to assume and agree to perform this
Agreement, as contemplated in Section 10 hereof.
(2) Any event or condition described in Section 5(c)(1) which
occurs prior to the Effective Date but which the Executive reasonably
demonstrates (i) was at the request of a third party who has indicated
an intention or taken steps reasonably calculated to effect
7
a Change of Control, or (ii) otherwise arose in connection with or in
anticipation of a Change of Control, shall constitute Good Reason for
purposes of this Agreement notwithstanding that it occurred prior to
the Effective Date.
(3) The Executive's right to terminate his employment
pursuant to this Section 5(c) shall not be affected by his incapacity
due to physical or mental illness. The Executive's continued employment
or failure to give Notice of Termination shall not constitute consent
to, or a waiver of rights with respect to, any circumstances
constituting Good Reason hereunder.
(4) For purposes of this Section 5(c), any good faith
determination of Good Reason made by the Executive shall be conclusive.
(d) Voluntary Termination. The Executive may voluntarily terminate
---------------------
his employment hereunder at any time.
(e) Notice of Termination. Any purported termination by the Company
---------------------
or by the Executive (other than by death of the Executive) shall be communicated
by Notice of Termination to the other. For purposes of this Agreement, a "Notice
of Termination" shall mean 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 circumstances claimed
to provide a basis for termination of the Executive's employment under the
provision so indicated, and (iii) the Termination Date. For purposes of this
Agreement, no such purported termination of employment shall be effective
without such Notice of Termination.
(f) Termination Date, etc. "Termination Date" shall mean in the case
---------------------
of the Executive's death, his date of death, or in all other cases, the date
specified in the Notice of Termination subject to the following:
(1) If the Executive's employment is terminated by the
Company, the date specified in the Notice of Termination shall be at
least thirty (30) days after the date the Notice of Termination is
given to the Executive, provided, however, that in the case of
-------- -------
Disability, the Executive shall not have returned to the full-time
performance of his duties during such period of at least thirty (30)
days;
(2) If the Executive's employment is terminated for Good
Reason, the date specified in the Notice of Termination shall not be
more than sixty (60) days after the date the Notice of Termination is
given to the Company; and
(3) In the event that within thirty (30) days following the
date of receipt of the Notice of Termination, one party notifies the
other that a dispute exists concerning the basis for termination, the
Executive's employment hereunder shall not be terminated except after
the dispute is finally resolved and a Termination Date is determined
either by a mutual written agreement of the parties, or by a binding
and final judgment order or decree of a court of competent jurisdiction
(the time for appeal therefrom having expired and no appeal having been
perfected).
8
6. Obligations of the Company Upon Termination.
-------------------------------------------
(a) Good Reason; Other Than for Cause, Death or Disability. If, during
------------------------------------------------------
the Employment Term, the Company shall terminate the Executive's employment
other than for Cause or Disability or the Executive shall terminate employment
for Good Reason:
(i) The Company shall pay to the Executive in a lump sum in
cash within five (5) days after the Termination Date the aggregate of
the following amounts:
A. The sum of:
(1) The Executive's Annual Base Salary
through the Termination Date to the extent not
theretofore paid; and
(2) The product of (x) the higher of (I) the
Recent Average Bonus and (II) the Annual Bonus paid or
payable, including any amount deferred, (and
annualized for any fiscal year consisting of less than
twelve (12) full months or for which the Executive has
been employed for less than twelve (12) full months)
for the most recently completed fiscal year during the
Employment Term, if any (such higher amount being
referred to as the "Highest Annual Bonus.) and (y) a
fraction, the numerator of which is the number of days
completed in the current fiscal year through the
Termination Date, and the denominator of which is 365.
The sum of the amounts described in Clauses (1) and
(2) shall be hereinafter referred to as the "Accrued
Obligations";
B. The amount equal to the product of (1) two and (2)
the sum of (x) the Executive's Annual Base Salary (increased for
this purpose by any Section 401(k) deferrals, cafeteria plan
elections, or other deferrals that would have increased
Executive's Annual Base Salary if paid in cash to Executive when
earned) and (y) the Executive's Highest Annual Bonus;
C. A separate lump-sum supplemental retirement
benefit equal to the difference between (1) the actuarial
equivalent (utilizing for this purpose the most favorable to the
Executive actuarial assumptions and Company contribution history
with respect to the applicable retirement plan, incentive plans,
savings plans and other plans described in Section 4(c) (or any
successor plan thereto) (the "Retirement Plans") during the
twelve (12) month period immediately preceding the Effective
Date) of the benefit payable under the Retirement Plans and any
supplemental and/or excess retirement plan providing benefits
for the Executive (the "SERP") which the Executive would receive
if the Executive's employment continued for an additional two
(2) years after the Termination Date with annual compensation
equal to the sum of the Annual Base Salary and Highest Annual
Bonus, assuming for this purpose that all accrued benefits and
contributions are fully vested and that benefit accrual formulas
and Company contributions are no less advantageous to the
Executive than those in effect during the twelve (12) month
period immediately preceding the Effective Date, and (2)
9
the actuarial equivalent (utilizing for this purpose the
actuarial assumptions utilized with respect to the Retirement
Plans during the twelve (12) month period immediately preceding
the Effective Date) of the Executive's actual benefit (paid or
payable), if any, under the Retirement Plans and the SERP. For
example, if there were a termination today this supplemental
retirement benefit would be interpreted with respect to two
plans in existence today as follows: (i) with respect to the
Retirement Growth component of the retirement program of the
Company, the Executive would receive two times eight percent
(8%) (or sixteen percent (16%)) of the sum of the Executive's
Annual Base Salary (determined in accordance with subsection C
of Section 6(a)(i)) and the Executive's Highest Annual Bonus;
and (ii) with respect to the Incentive Savings component of the
retirement program of the Company, the Executive would receive
two times the annual Company match of fifty percent (50%) of the
Executive's maximum allowable contribution to the Plan assuming
Executive's compensation is as set forth above; and
D. The amount equal to the product of (i) two and
(ii) the sum of (x) the imputed income reflected on Executive's
W-2 attributable to the car provided to Executive by the Company
or its affiliates for the last calendar year ending before the
Effective Date and (y) the club dues for Executive paid by the
Company or its affiliates attributable to such year.
(ii) For twenty-four (24) months after the Termination Date,
the Company shall continue to provide medical and dental benefits to
the Executive and/or the Executive's family in accordance with the most
favorable plans, practices, programs or policies of the Company and its
affiliated companies applicable generally to other peer executives who
are active employees and their families as in effect from time to time
thereafter; provided, however, that if the Executive becomes reemployed
-------- -------
with another employer and is eligible to receive medical or other
benefits under another employer provided plan, the medical and other
benefits described herein shall be secondary to those provided under
such other plan during such applicable period of eligibility, provided
that the aggregate coverage of the combined benefit plans is no less
favorable to the Executive, in terms of amounts and deductibles and
costs to him, than the coverage required hereunder. For purposes of
determining eligibility of the Executive for retiree health insurance,
the Executive shall be considered to have remained employed until the
end of such twenty-four (24) month period and to have retired on the
last day of such period. If the Executive would qualify at the end of
such twenty-four (24) month period for retiree health insurance under
the Company's plan guidelines as in existence on the Effective Date,
the Company shall provide to the Executive and his or her spouse, for
life, retiree health insurance, subsidized to at least the same
percentage extent as under the Company's plan as in existence on the
Effective Date. Such retiree health insurance shall provide medical
benefits to the Executive and/or the Executive's spouse in accordance
with the most favorable plans, practices, programs or policies of the
Company and its affiliated companies applicable generally to other peer
executives who are active employees and their spouses as in effect from
time to time thereafter; provided, however, that if the Executive
-------- -------
and/or the Executive's spouse qualifies for coverage by Medicare or any
10
successor program, the Company may require that the Executive and/or
the Executive's spouse fully participate in Medicare and pay the
premiums therefor personally.
(iii) The Executive shall have the right to purchase the car
provided to him by the Company or its affiliates during the twelve (12)
month period immediately preceding the Effective Date, if applicable,
(or a comparable car acceptable to the Executive if such car is no
longer owned by the Company or its affiliates), at the book value
thereof on the Termination Date, exercisable within thirty (30) days
after the Termination Date; and if the car is not purchased, Executive
shall return the car to the Company.
(iv) For the twenty-four (24) month period after the
Termination Date, the Company shall continue to provide group term life
insurance (or comparable term coverage) in the same face amount and on
substantially the same terms as in effect for the Executive just prior
to the Effective Time. At the end of the twenty-four (24) month period,
the Executive shall have any conversion rights as regards such coverage
as are provided by law.
(v) To the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive any other amounts
or benefits required to be paid or provided or which the Executive is
eligible to receive pursuant to this Agreement under any plan, program,
policy or practice or contract or agreement of the Company and its
affiliated companies (such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits").
Notwithstanding anything herein contained to the contrary, the payments and
benefits provided in this Section 6(a) (other than the Accrued Obligations)
shall not be paid or provided to the Executive unless and until he executes a
Complete and Permanent Release (the "Release") in the form attached hereto, and
the applicable period for rescission of the Release has expired. The parties
agree that the Release may be expanded to include any company acquiring the
Company and its affiliates as "Released Parties," as defined in the Release.
(b) Death. If the Executive's employment is terminated by reason of the
-----
Executive's death during the Employment Term, this Agreement shall terminate
without further obligations to the Executive's legal representatives under this
Agreement, except that the Company shall pay or provide the Accrued Obligations,
six (6) months of Annual Base Salary, and the Other Benefits. The Accrued
Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within thirty (30) days of the Termination
Date. The six (6) months of Annual Base Salary shall be paid during the six (6)
month period following the Termination Date on a monthly basis. With respect to
the provision of Other Benefits, the term Other Benefits as utilized in this
Section 6(b) shall include, and the Executive's family shall be entitled to
receive, benefits at least equal to the most favorable benefits provided by the
Company and any of its affiliated companies to surviving families of peer
executives of the Company and such affiliated companies under such plans,
programs, practices and policies relating to family death benefits, if any, as
in effect with respect to other peer executives and their families at any time
during the twelve (12) month period immediately preceding the Effective Date or,
if more favorable to the Executive and/or the Executive's family, as in effect
11
on the date of the Executive's death with respect to other peer executives of
the Company and its affiliated companies and their families.
(c) Disability. If the Executive's employment is terminated by reason
----------
of the Executive's Disability during the Employment Term, this Agreement shall
terminate without further obligations to the Executive, except that the Company
shall pay or provide the Accrued Obligations and the Other Benefits. The Accrued
Obligations shall be paid to the Executive in a lump sum in cash within thirty
(30) days of the Termination Date. With respect to the provision of Other
Benefits, the term Other Benefits as utilized in this Section 6(c) shall
include, and the Executive shall be entitled after the Disability Effective Date
to receive, disability and other benefits at least equal to the most favorable
of those generally provided by the Company and its affiliated companies to
disabled executives and/or their families in accordance with such plans,
programs, practices and policies relating to disability, if any, as in effect
generally with respect to other peer executives and their families at any time
during the twelve (12) month period immediately preceding the Effective Date or,
if more favorable to the Executive and/or the Executive's family, as in effect
at any time thereafter generally with respect to other peer executives of the
Company and its affiliated companies and their families.
(d) Cause; Other Than for Good Reason. If the Executive's employment
---------------------------------
shall be terminated for Cause during the Employment Term, or if the Executive
voluntarily terminates employment during the Employment Term for other than Good
Reason, this Agreement shall terminate without further obligations to the
Executive other than the obligation to pay to the Executive Annual Base Salary
through the Date of Termination and any other amounts earned or accrued through
the Termination Date, in each case to the extent theretofore unpaid; provided
that if Executive voluntarily terminates, Executive shall receive the benefits
normally provided upon normal or early retirement with respect to other peer
Executives and their families to the extent he qualifies therefore All salary or
compensation hereunder shall be paid to the Executive in a lump sum in cash
within thirty (30) days of the Date of Termination.
(e) Delinquent Payments. If any of the payments referred to in this
-------------------
Section 6 are not paid within the time specified after the Termination Date
(hereinafter a "Delinquent Payment"), in addition to such principal sum, the
Company will pay to the Executive interest on all such Delinquent Payments
computed at the prime rate as announced from time to time by M&I Xxxxxxxx &
Xxxxxx Bank, or its successor, compounded monthly. Notwithstanding the
foregoing, no interest shall be due and owing as regards payments which are
delayed because of Executive's failure to execute the Release or the recission
thereof.
(f) Vacation Pay. In consideration of all payments made by the Company
------------
to the Executive pursuant to this Agreement, the Executive hereby waives any
claim he may have for accrued and unpaid vacation pay as of the Termination
Date.
7. No Mitigation. 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 such
amounts shall not be reduced (except to the extent set forth in Section
6(a)(ii)) whether or not the Executive obtains other employment.
12
8. Limitation on Payments.
----------------------
(a) Notwithstanding anything contained herein to the contrary, prior to
the payment of any amounts pursuant to Section 6(a) hereof, an independent
national accounting firm designated by the Company (the "Accounting Firm") shall
compute whether there would be any "excess parachute payments" payable to the
Executive, within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), taking into account the total "parachute
payments," within the meaning of Section 280G of the Code, payable to the
Executive by the Company or any successor thereto under this Agreement and any
other plan, agreement or otherwise. If there would be any excess parachute
payments, the Accounting Firm will compute the net after-tax proceeds to the
Executive, taking into account the excise tax imposed by Section 4999 of the
Code, if (i) the payments hereunder were reduced, but not below zero, such that
the total parachute payments payable tot the Executive would not exceed three
(3) times the "base amount" as defined in Section 280G of the Code, less One
Dollar ($1.00), or (ii) the payments hereunder were not reduced. If reducing the
payments hereunder would result in a greater after-tax amount to the Executive,
such lesser amount shall be paid to the Executive. If not reducing the payments
hereunder would result in a greater after-tax amount to the Executive, such
payments shall not be reduced. The determination by the Accounting Firm shall be
binding upon the company and the Executive subject to the application of Section
8(b) hereof.
(b) As a result of the uncertainty in the application of Sections 280G
of the Code, it is possible that excess parachute payments will be paid when
such payment would result in a lesser after-tax amount to the Executive; this is
not the intent hereof. In such cases, the payment of any excess parachute
payments will be void ab initio as regards any such excess. Any excess will be
-- ------
treated as a loan by the Company to the Executive. The Executive will return the
excess to the Company, within fifteen (15) business days of any determination by
the Accounting Firm that excess parachute payments have been paid when not so
intended, with interest at an annual rate equal to the rate provided in Section
1274(d) of the Code (or 120% of such rate if the Accounting Firm determines that
such rate is necessary to avoid an excise tax under Section 4999 of the Code)
from the date the Executive received the excess until it is repaid to the
Company.
(c) All fees, costs and expenses (including, but not limited to, the
cost of retaining experts) of the Accounting Firm shall be borne by the Company
and the Company shall pay such fees, costs and expenses as they become due. In
performing the computations required hereunder, the Accounting Firm shall assume
that taxes will be paid for state and federal purposes at the highest possible
marginal tax rates which could be applicable to the Executive in the year of
receipt of the payments, unless the Executive agrees otherwise.
9. Unauthorized Disclosure. During the term of the Executive's
-----------------------
employment with the Company, and during the two-year period following the
Termination Date, the Executive shall not make any Unauthorized Disclosure. For
purposes of this Agreement, "Unauthorized Disclosure" shall mean disclosure by
the Executive without the consent of the Board to any person, other than an
employee of the Company or a person to whom disclosure is reasonably necessary
or appropriate in connection with the performance by the Executive of his duties
as an executive of the Company or as may be legally required, of any
confidential information obtained by the Executive while in the employ of the
Company (including, but not limited to, any confidential information with
respect to any of the Company's customers or methods of
13
operation) the disclosure of which he knows or has reason to believe will be
materially injurious to the Company; provided, however, that such term shall not
-------- -------
include the use or disclosure by the Executive, without consent, of any
information known generally to the public (other than as a result of disclosure
by him in violation of this Section 9) or any information not otherwise
considered confidential by a reasonable person engaged in the same business as
that conducted by the Company. Notwithstanding the foregoing, the Executive's
obligation hereunder not to make any Unauthorized Disclosure shall continue
after the end of the two-year period following his termination of employment
with the Company as regards any information which is a trade secret as defined
in Section 134.90 of the Wisconsin Statutes. In no event shall an asserted
violation of this Section 9 constitute a basis for deferring or withholding any
amounts otherwise payable to the Executive under this Agreement.
10. Successors and Assigns.
----------------------
(a) This Agreement shall be binding upon and shall inure to the benefit
of the Company, its successors and assigns and the Company shall require any
successor or assign (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform if no such succession or assignment had taken place. The
term "Company" as used herein shall include such successors and assigns. The
term "successors and assigns" as used herein shall mean a corporation or other
entity acquiring all or substantially all the assets and business of the Company
(including this Agreement) whether by operation of law or otherwise.
(b) Neither this Agreement nor any right or interest hereunder shall be
assignable or transferable by the Executive, his beneficiaries or legal
representatives, except by will or by the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representative.
11. Fees and Expenses. From and after the Effective Date, the Company
-----------------
shall pay all legal fees and related expenses (including the costs of experts,
evidence and counsel) reasonably incurred by the Executive as they become due as
a result of (i) the Executive's termination of employment (including all such
fees and expenses, if any, incurred in contesting or disputing any such
termination of employment), (ii) the Executive's hearing before the Board as
contemplated in Section 5(b) of this Agreement or (iii) the Executive's seeking
to obtain or enforce any right or benefit provided by this Agreement or by any
other plan or arrangement maintained by the Company under which the Executive is
or may be entitled to receive benefits.
12. Notice. For the purposes of this Agreement, notices and all other
------
communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by certified mail, return receipt requested,
postage prepaid, if to the Company, to Xxxxxxxx & Ilsley Corporation, 000 Xxxxx
Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000, or if to Executive, to the address set
forth below Executive's signature, or to such other address as the party may be
notified, provided that all notices to the Company shall be directed to the
attention of the Board with a copy to the Secretary of the Company. All notices
and communications shall be deemed to have been
14
received on the date of delivery thereof or on the third business day after the
mailing thereof, except that notice of change of address shall be effective only
upon receipt.
13. Non-Exclusivity of Rights. Nothing in this Agreement shall prevent
-------------------------
or limit the Executive's continuing or future participation in any benefit,
bonus, incentive or other plan or program provided by the Company or any of its
subsidiaries for which the Executive may qualify. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any plan
or program of the Company or any of its subsidiaries shall be payable in
accordance with such plan or program, except as explicitly modified by this
Agreement.
14. Settlement of Claims. The Company's obligation to make the payments
--------------------
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or others.
15. Miscellaneous. No provision of this Agreement may be modified,
-------------
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and the Company. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreement or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement.
16. Employment. The Executive and the Company acknowledge that the
----------
employment of the Executive by the Company is "at will" and prior to the
Effective Date, may be terminated by either the Executive or the Company at any
time. Moreover, if prior to the Effective Date, the Executive's employment with
the company terminates, the Executive shall have no further rights under this
Agreement.
17. Governing Law. This Agreement shall be governed by and construed
-------------
and enforced in accordance with the laws of the State of Wisconsin without
giving effect to the conflict of law principles thereof.
18. Severability. The provisions of this Agreement shall be deemed
------------
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
19. Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof. In consideration of the terms,
conditions and benefits to be provided under this Agreement, the Executive
hereby expressly waives all rights under those certain Employment Agreements
between the Executive and the Company dated December 16, 1993.
20. Headings. The headings herein contained are for reference only and
--------
shall not affect the meaning or interpretation of any provision of this
Agreement.
15
21. Modification. No provision of this Agreement may be modified or
------------
amended unless such modification or amendment is agreed to in writing signed by
both the Executive and the Company.
22. Withholding. The Company shall be entitled to withhold from amounts
-----------
paid to the Executive hereunder any federal, estate or local withholding or
other taxes or charges which it is, from time to time, required to withhold. The
Company shall be entitled to rely on an opinion of counsel if any question as to
the amount or requirement of any such withholding shall arise.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Executive has executed this
Agreement as of the day and year first above written.
XXXXXXXX & XXXXXX CORPORATION
By: /s/ Xxxxx X. Xxxxxxx,
--------------------------------
ATTEST: Xxxxx X. Xxxxxxx, Chairman
/s/ Xxxxxxx X. Xxxxxxxx
------------------------------
Xxxxxxx X. Xxxxxxxx, Secretary
EXECUTIVE:
/s/ Xxxx X. Xxxxx
------------------------------------
Xxxx X. Xxxxx
Address: [address]
---------------------------
---------------------------
16
