Exhibit 10
Form of
Amended and Restated
Change in Control Agreement
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This Amended and Restated Change in Control Agreement (this "Agreement") is
entered into between Xxxxxx Financial, Inc., a Delaware corporation (the
"Company"), and _______________ (the "Executive"). Capitalized terms not
otherwise defined herein shall have the respective meanings given to them in
Section 4 of this Agreement.
Witnesseth That:
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Whereas, the Executive is employed by the Company, and the Company desires
to provide protection to the Executive in connection with any future change in
control of the Company which occurs while the Executive is employed by the
Company;
Now, Therefore, it is hereby agreed by and between the parties, for good
and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, as follows:
1. Effective Date and Term. This Agreement is dated as of _____________, 2001
(the "Effective Date") and succeeds, amends and restates in its entirety
any previous agreement between the Company and the Executive regarding a
change in control of the Company. This Agreement will remain in effect
through February 28, 2006 as long as the Executive remains employed by
the Company and, if the Executive's employment with the Company and all
Affiliates is terminated in such a way as to entitle him or her to benefits
under Section 2, for two years after the Executive's Employment
Termination.
2. Payments and Benefits Upon Employment Termination After a Change in
Control. If, within the period ending two (2) years after a Change in
Control or during the Period Pending a Change in Control, (i) the
Executive's employment with the Company and its Affiliates is terminated
without Cause or (ii) the Executive voluntarily terminates his or her
employment with Good Reason, the Company will, within 30 days (except as
otherwise expressly provided) after the Executive's Employment Termination,
make the payments and provide the benefits described below.
(a) Salary Continuation. The Company will continue the Executive's annual
Base Salary for twenty-four (24) months following Employment
Termination at the same time and in the same manner as the Company
paid salary during employment or, at the Executive's election, make a
lump sum cash payment to the Executive equal to the present value of
two times the Executive's Base Salary.
(b) Xxxxxx Performance Plan Bonus. The Company will pay the Executive an
amount equal to two times the largest Xxxxxx Performance Plan bonus he
or she received during the last three full years of employment with
the Company and its Affiliates or, if larger, two times the amount of
his or her target bonus under the Xxxxxx Performance Plan for the year
in which Employment Termination occurs,
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assuming performance for the entire year, at the applicable target
bonus level for that year. In addition, the Company will pay the
Executive a pro rata portion of the target bonus he or she would have
received under the Xxxxxx Performance Plan for the year in which the
Employment Termination occurred, had he or she remained employed until
the date Xxxxxx Performance Plan bonuses were paid for that year. The
pro rata portion due to the Executive will be determined by
multiplying the full-year target bonus by a fraction whose numerator
is the number of full months elapsed in the year in which Employment
Termination occurs, up to and including the Employment Termination,
and whose denominator is twelve. The Company will pay the bonus
amounts described in this paragraph in a lump sum within 45 days after
the end of the year in which Employment Termination occurs.
(c) Welfare Benefit Plans. With respect to each Welfare Benefit Plan, for
the period beginning on Employment Termination and ending on the
earlier of (i) two years following Employment Termination, and (ii)
the date the Executive becomes covered by a welfare benefit plan or
program maintained by an entity other than the Company or an Affiliate
which provides coverage or benefits comparable to those provided under
the Welfare Benefit Plan, the Executive will continue to participate
in the Welfare Benefit Plan on the same basis and at the same cost to
the Executive as was the case at Employment Termination Alternatively,
if any benefit or coverage cannot be provided under a Welfare Benefit
Plan because of applicable law or contractual provisions, the
Executive will be provided with substantially similar benefits and
coverage for the period required by the preceding sentence.
Immediately following the expiration of the coverage period required
by this paragraph, the Executive will be entitled to elect continued
group health plan coverage (so-called "COBRA coverage") in accordance
with Section 4980B of the Internal Revenue Code of 1986, as amended
(the "Code"), its being intended that COBRA coverage will be
consecutive to the benefits and coverage provided for in the preceding
two sentences.
(d) Retirement Plan Benefits. The Company will pay the Executive a lump
sum amount equal to the present value of the additional benefit the
Executive would have accrued under the Company's qualified and non-
qualified retirement plans (as in effect prior to the Change in
Control or, if benefits are increased under the plans after the Change
in Control, immediately prior to Employment Termination) had he or she
continued to receive benefits thereunder through the end of the 24th
month following Employment Termination. In addition, if the Executive
is not fully vested at Employment Termination in all benefits he or
she has by then accrued under the Company's qualified retirement
plans, the Company will pay him or her an amount equal to the unvested
portion of the Executive's benefits under those plans at Employment
Termination. All benefits under the Company's non-qualified retirement
plans will become fully vested (to the extent, if any, not vested upon
the Change in Control) at Employment Termination. The Company will pay
the lump sum required by this paragraph to the Executive within 45
days after the end of the year in which Employment Termination occurs.
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(e) Retiree Medical Benefits. The Company will add 24 months to the
Executive's age and benefit service for purposes of determining the
Executive's eligibility for and benefits under the Company's retiree
medical benefit plan.
(f) Perquisites. Through the end of the year in which his or her
Employment Termination occurs, the Executive will continue to be
eligible for reimbursement of expenses offered through the Company's
Executive Perquisite Program, up to the annual reimbursement allotment
in effect for him or her in the year in which Employment Termination
occurs. In addition, within 45 days after the end of the year in which
Employment Termination occurs, the Company will pay the Executive a
lump sum equal to the annual reimbursement allotment in effect for him
or her at the time of the Change in Control (or, if larger,
immediately before Employment Termination).
(g) Long-Term Incentive Plans. The Executive will be fully vested in all
performance shares granted to him or her under any LTIP whose final
year is the same as or before the year in which Employment Termination
occurs, 2/3 vested in all performance shares granted to him or her
under the LTIP whose second year is the year in which Employment
Termination occurs, and 1/3 vested in all performance shares granted
to him or her under the LTIP whose first year is the year in which
Employment Termination occurs. The amount of the award paid to the
Executive under each LTIP in which he or she participates will be
determined under the terms of that LTIP, using actual performance for
the LTIP's cycle (or so much of the LTIP's cycle as is completed by
the time of payment called for in the next sentence). The award under
each LTIP will be paid to the Executive within 45 days after the end
of the year in which Employment Termination occurs.
(h) Stock Options and Restricted Stock. The Executive will immediately
become fully vested in any restricted stock, stock options or other
rights then previously granted to him or her under the Company's 1998
Stock Incentive Plan or any successor plan.
(i) Outplacement Services. The Company will provide the Executive with
executive outplacement counseling services, on the same terms as it
typically provides those services to senior executives at the time of
the Employment Termination.
3. Change in Control. A "Change in Control" of the Company will be deemed to
occur as of the first day that The Fuji Bank, Limited and its subsidiaries
cease to own, directly or indirectly, at least forty-five percent (45%) of
the combined voting power of the then outstanding voting securities of the
Company, or of a successor to the Company, entitled to vote generally in
the election of the Board. An entity will be considered a successor to the
Company for purposes of the preceding sentence only if it results from a
reorganization, merger or consolidation, or sale or other disposition of
all or substantially all of the assets, of the Company. For purposes of
clarification, a Change of Control of
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the Company will not be deemed to have occurred if the reduction in
ownership is due to dilution resulting from the issuance by the Company of
common equity (or securities convertible into common equity) approved by
the Board of Directors of the Company.
4. Other Definitions. For purposes of this Agreement:
(a) "Affiliate" means any entity that is a member of a controlled group of
corporations or a group of trades or businesses under common control
(each as defined in Code Section 1563), which includes the Company.
(b) "Base Salary" means the Executive's salary at the greater of the rate
in effect on the date of (i) the Change in Control or (ii) Employment
Termination.
(c) "Board" or "Board of Directors" means the Company's Board of
Directors.
(d) "Employment Termination" means the effective date of: (i) the
Executive's voluntary termination of employment with the Company and
all Affiliates with Good Reason; or (ii) the involuntary termination
of the Executive's employment with the Company and all Affiliates
without Cause.
(e) "Cause" means: (i) the Executive's fraud or criminal misconduct; or
(ii) the material and willful breach by the Executive of his or her
responsibilities or willful failure to comply with reasonable
directives or policies of the Board, but only if the Company has given
the Executive written notice specifying the breach or failure to
comply, demanding that the Executive remedy the breach or failure to
comply and giving the Executive an opportunity to be heard in
connection with the breach or failure to comply, and the Executive
either failed to remedy the alleged breach or failed to comply within
30 days after receipt of the written notice or failed to take all
reasonable steps to that end during the 30 days after the Executive
received the notice.
(f) "Good Reason" exists if, without the Executive's express written
consent, any of the following events occur:
(i) The Company or an Affiliate significantly diminishes the
Executive's assigned duties and responsibilities from the level
or extent at which they existed before a Change in Control
including, without limitation, if the Company or Affiliate
removes the Executive's title(s) or materially diminishes the
powers associated with the Executive's title(s). For Good Reason
to exist, the Executive must deliver written notice to the
Company or Affiliate specifying the diminution in assigned duties
and responsibilities that he or she believes constitutes Good
Reason, and the Company or Affiliate must fail to reverse the
same or to take all reasonable steps to that end within 30 days
after receiving the notice;
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(ii) The Company or an Affiliate materially reduces the Executive's
Base Salary below the greater of that in effect as of the date of
this Agreement and that in effect as of the Change in Control;
(iii)The Company or Affiliate requires the Executive to relocate his
or her principal business office or his or her principal place of
residence outside the Standard Metropolitan Statistical Area
where the Executive was located on the date of a Change in
Control (the "Geographical Employment Area"), or assigns to the
Executive duties that would reasonably require such a relocation;
(iv) The Company or an Affiliate requires the Executive to, or assigns
duties to the Executive which would reasonably require the
Executive to, spend more than one hundred (100) normal working
days away from the Geographical Employment Area during any
consecutive twelve-month period; or
(v) The Company or an Affiliate fails to continue in effect any cash
or stock-based incentive or bonus plan, retirement plan, welfare
benefit plan, or other benefit plan, program or arrangement that
applied to the Executive on the date of the Change in Control,
unless the aggregate value (as computed by an independent
employee benefits consultant selected by the Company) of all such
compensation, retirement and benefit plans, programs and
arrangements provided to the Executive is not materially less
than their aggregate value as of the date of this Agreement, or,
if greater, their aggregate value as of the date of the Change in
Control.
(g) "Period Pending a Change in Control" means the period after the
approval by the Company's stockholders and prior to the effective date
of any transaction described in the second sentence of Section 3
above.
(h) "Welfare Benefit Plan" means each welfare benefit plan maintained or
contributed to by the Company or any Affiliate, including, but not
limited to a plan that provides health (including medical, dental or
both), life, accident or disability benefits or insurance, or similar
coverage, in which the Executive was participating at the time of the
Change in Control.
5. Limitation on Company Payments. Notwithstanding any provision of this
Agreement to the contrary, the aggregate payments and distributions by or
on behalf of the Company or any Affiliate 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) as a result of a Change in
Control will not exceed 2.99 times the Executive's average "Annualized
Includible Compensation for the Base Period," as defined in Code Section
280G(d)(1).
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6. Executive's Death. If the Executive dies during the term of this Agreement
and after a Change in Control and Employment Termination, but before the
complete payment of any amount or benefit required under this Agreement,
the Company will pay that amount or benefit to the Executive's spouse, if
living, or to the Executive's estate.
7. Mitigation and Set-Off. The Executive will not be required to mitigate
damages by seeking other employment or otherwise, except as provided in
Section 2(c). The Company's obligations under this Agreement will not be
reduced in any way by reason of any compensation or benefits received (or
foregone) by the Executive from sources other than the Company after the
Executive's Employment Termination, or any amounts that might have been
received by the Executive in other employment had the Executive sought such
other employment, except as provided in Section 2(c). The Executive's
entitlement to benefits and coverage under this Agreement will continue
after, and will not be affected by, the Executive's obtaining other
employment after the Employment Termination, except as provided in Section
2(c).
8. Arbitration and Expenses. The Company and the Executive agree that any
dispute or controversy arising under or in connection with this Agreement
will be submitted to and determined by arbitration in Chicago, Illinois, in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association, and the parties agree to be bound by the decision
in any such arbitration proceeding. The Company will pay to the Executive
all out-of-pocket expenses, including attorneys' fees, incurred by the
Executive in the event the Executive successfully enforces any provision of
this Agreement in any action, arbitration or lawsuit. If the Executive
loses such an action, arbitration or lawsuit, the Company will not pay the
Executive any out-of-pocket expenses so incurred.
9. Assignment; Successors. This Agreement may not be assigned by the Company
without the written consent of the Executive but the obligations of the
Company under this Agreement will be the binding legal obligations of any
successor to the Company by merger, consolidation or otherwise. In the
event of any business combination or transaction that results in the
transfer of substantially all of the assets or business of the Company, the
Company will cause the transferee to assume the obligations of the Company
under this Agreement. This Agreement may not be assigned by the Executive
during the Executive's life, and upon the Executive's death will inure to
the benefit of the Executive's heirs, legatees and legal representatives of
the Executive's estate.
10. Interpretation. The validity, interpretation, construction and performance
of this Agreement will be governed by the laws of the State of Delaware,
without regard to the conflict of law principles thereof. The invalidity or
unenforceability of any provision of this Agreement will not affect the
validity or enforceability of any other provision of this Agreement.
11. Withholding. The Company may withhold from any payment that it is required
to make under this Agreement amounts sufficient to satisfy applicable
withholding requirements under any federal, state or local law.
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12. Amendment or Termination. The Company and the Executive may amend this
Agreement at any time by written agreement.
13. Nonduplication of Benefits. If the Executive becomes entitled to benefits
under this Agreement, he or she will not be entitled to any payments under
the Xxxxxx Financial, Inc. Severance Pay Plan.
14. Indemnification. Following Employment Termination, the Company will: (i)
indemnify and hold harmless the Executive for all costs, liability and
expenses (including reasonable attorneys' fees) for all acts and omissions
of the Executive that relate to the Executive's employment with the
Company, to the maximum extent permitted by law; and (ii) continue the
Executive's coverage under the directors' and officers' liability coverage
maintained by the Company, as in effect from time to time, to the same
extent as other current or former senior executive officers and directors
of the Company until the end of the second policy year that begins after
the Employment Termination.
15. Financing. Cash payments under this Agreement (not including any payments
made from the Qualified Plan) are general obligations of the Company, and
the Executive will have only an unsecured right to payment thereof out of
the general assets of the Company. Notwithstanding the foregoing, the
Company may, in its sole discretion by agreement with one or more trustees
to be selected by the Company, create a trust on such terms as the Company
may determine, to make payments to the Executive in accordance with the
terms of this Agreement.
16. Severability. If any provision or portion of this Agreement is determined
to be invalid or unenforceable for any reason, the remaining provisions of
this Agreement will be unaffected thereby and will remain in full force and
effect.
In Witness Whereof, the parties hereto have executed this Agreement on the
day and year first written above.
Xxxxxx Financial, Inc.
By:_______________________
Its:______________________
__________________________
The Executive
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