EMPLOYMENT AGREEMENT
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THIS AGREEMENT, made and entered into as of July 1, 1999 (the "Effective
Date"), by and between PrivateBancorp, Inc. (hereinafter called the "Employer"),
and Xxxxxx X. Xxxxxxxxxx (hereinafter called the "Executive").
WITNESSETH THAT:
WHEREAS, the Employer desires to employ or to continue to employ the
Executive as its Chief Financial Officer, and the Executive desires to continue
in such employment;
NOW, THEREFORE, the Employer and the Executive, each intending to be
legally bound, hereby mutually covenant and agree as follows:
I. Employment and Term.
A. Employment. The Employer shall employ the Executive as the Chief
Financial Officer of the Employer, and the Executive shall so serve, for the
term set forth in Paragraph 1(b).
B. Term. The initial term of the Executive's employment under this
Agreement shall commence on July 1, 1999 and end on June 30, 2000, subject to
any extension of such term as may be mutually agreed upon and subject to earlier
termination as provided in Paragraph 7. Commencing ninety (90) days prior to
each anniversary date hereof, either the Board of Directors of the Employer, or
a duly authorized committee thereof (the "Board"), on behalf of the Employer,
and the Executive agree to negotiate in good faith regarding the possible
renewal of this Agreement for a successive term. Anything in this Agreement to
the contrary, if at any time during the Executive's period of employment under
this Agreement there is a Change in Control (as defined in Paragraph 7), the
term of this Agreement shall automatically extend to a date which is two (2)
years from the date of the Change in Control (and shall be further extended
pursuant to the foregoing provisions of this Paragraph 1(b), unless written
notice to the contrary is given in accordance with this Paragraph 1(b)).
II. Duties and Responsibilities.
A. The duties and responsibilities of Executive are and shall continue to
be of an executive nature as shall be required by the Employer in the conduct of
its business. Executive's powers and authority shall be as prescribed by the by-
laws of the Employer and shall include all those presently delegated to him,
together with the performance of such other duties and responsibilities as from
time to time may be assigned to him by the Board of Directors of the Employer
consistent with the position(s) of Chief Financial Officer Executive recognizes,
that during the period of his employment hereunder, he owes an undivided duty of
loyalty to the Employer, and agrees to devote his entire business time and
attention to the performance of said duties and responsibilities and to use his
best efforts to promote and develop the business of the Employer. Executive will
not perform any duties for any other business without the prior written consent
of the Employer, and may engage in charitable, civic or community activities,
provided that such duties or activities do not materially interfere with the
proper performance of his duties under this Agreement. During the period of
employment, Executive agrees to serve as a director on the Board of Directors of
the Employer and/or any of its affiliates, as well as to serve as a member of
any committee of any said Board, to which he may be elected or appointed.
B. Notwithstanding that this Agreement provides for the employment of
Executive in his present capacity as the Employer's Chief Financial Officer,
nothing herein contained shall assure Executive, nor in any manner be construed
to constitute an agreement by the Employer to continue the employment of
Executive after the expiration of this Agreement in such capacity or in any
other capacity.
III. Salary.
A. Base Salary. For services performed by the Executive for the Employer
pursuant to this Agreement during the period of employment as provided in
Paragraph 1(b) hereof, the Employer shall pay the Executive a base salary at the
rate of One hundred forty-five thousand dollars ($145,000) per year, payable in
substantially equal installments in accordance with the Employer's regular
payroll practices. The Executive's base salary (with any increases under
paragraph (b), below) shall not be subject to reduction without the Executive's
written consent. Any compensation which may be paid to the Executive under any
additional compensation or incentive plan of the Employer or which may be
otherwise authorized from time to time by the Board (or an appropriate committee
thereof) shall be in addition to the base salary to which the Executive shall be
entitled under this Agreement. Executive's base salary shall be subject to
review from time to time, and the Employer may (but is not required to) increase
the base salary as the Board (or a duly authorized committee thereof), in its
discretion, may determine.
IV. Annual Bonuses. For each fiscal year during the term of employment, the
Executive shall be eligible to receive a bonus in the amount, if any, as may be
determined from time to time by the Board in its discretion.
V. Equity Incentive Compensation. During the term of employment hereunder the
Executive shall be eligible to participate in the PrivateBancorp, Inc. Stock
Incentive Plan, and in any other equity-based incentive compensation plan or
program adopted by PrivateBancorp, Inc. ("PrivateBancorp"), including (but not
by way of limitation) any plan providing for the granting of (a) options to
purchase stock, (b) restricted stock or (c) similar equity-based units or
interests to officers of the Employer.
VI. Other Benefits. In addition to the compensation described in Paragraphs 3,
4 and 5, above, the Executive shall also be entitled to the following:
A. Participation in Benefit Plans. The Executive shall be entitled to
participate in all of the various retirement, welfare, fringe benefit, and
expense reimbursement plans, programs and arrangements of the Employer to the
extent the Executive is eligible for participation under the terms of such
plans, programs and arrangements, including, but not limited to non-qualified
retirement programs and deferred compensation plans.
B. Vacation. The Executive shall be entitled to such number of days of
vacation with pay during each calendar year during the period of employment in
accordance with the Employer's applicable personnel policy as in effect from
time to time.
C. Executive Perquisites. The Employer shall furnish Executive with such
perquisites which may from time to time be provided by the Employer which are
suitable to the Executive's position and adequate for the performance of his
duties hereunder and reasonable in the circumstances.
D. Expense Reimbursement. The Employer shall reimburse Executive's
reasonable expenses incurred in performing services hereunder, which are
incurred and accounted for in accordance with Employer's policies and procedures
applicable thereto.
VII. Termination. Unless earlier terminated in accordance with the following
provisions of this Paragraph 7, the Employer shall continue to employ the
Executive and the Executive shall remain employed by the Employer during the
entire term of this Agreement as set forth in Paragraph 1(b). Paragraph 8 hereof
sets forth certain obligations of the Employer in the event that the Executive's
employment hereunder is terminated. Certain capitalized terms used in this
Paragraph 7 and in Paragraph 8 hereof are defined in Paragraph 7(d), below.
A. Death or Disability. Except to the extent otherwise provided in
Paragraph 8 with respect to death benefits and certain post-Date of Termination
payment obligations of the Employer, this Agreement shall terminate immediately
as of the Date of Termination in the event of the Executive's death or in the
event that the Executive becomes disabled. The Executive will be deemed to be
disabled upon the earlier of (i) the end of a six (6) consecutive month period,
or of an aggregate period of nine (9) months out of any consecutive twelve (12)
months, during which, by reason of physical or mental injury or disease, the
Executive has been unable to perform substantially all of his
usual and customary duties under this Agreement or (ii) the date that a
reputable physician selected by the Board, and as to whom the Executive has no
reasonable objection, determines in writing that the Executive will, by reason
of physical or mental injury or disease, be unable to perform substantially all
of the Executive's usual and customary duties under this Agreement for a period
of at least six (6) consecutive months. If any question arises as to whether the
Executive is disabled, upon reasonable request therefor by the Board, the
Executive shall submit to reasonable medical examination for the purpose of
determining the existence, nature and extent of any such disability. The Board
shall promptly give the Executive written notice of any such determination of
the Executive's disability and of any decision of the Board to terminate the
Executive's employment by reason thereof. In the event of disability, until the
Date of Termination, the base salary payable to the Executive under Paragraph 3
hereof shall be reduced dollar-for-dollar by the amount of disability benefits,
if any, paid to the Executive in accordance with any disability policy or
program of the Employer.
B. Discharge for Cause. In accordance with the procedures hereinafter set
forth, the Board may discharge the Executive from his employment hereunder for
Cause (as hereinafter defined). Except to the extent otherwise provided in
Paragraph 8 with respect to certain post-Date of Termination obligations of the
Employer, this Agreement shall terminate immediately as of the Date of
Termination in the event the Executive is discharged for Cause. Any discharge of
the Executive for Cause shall be communicated by a Notice of Termination to the
Executive given in accordance with Paragraph 15 of this Agreement.
C. Termination for Other Reasons. The Employer may discharge the Executive
without Cause by giving written notice to the Executive in accordance with
Paragraph 15. The Executive may resign from his employment with or without Good
Reason, without liability to the Employer, by giving written notice to the
Employer in accordance with Paragraph 15 at least thirty (30) days prior to the
Date of Termination; provided, however, that no resignation shall be treated as
a resignation for Good Reason unless the written notice thereof is given within
sixty (60) days after the occurrence which constitutes "Good Reason" or during
the ninety (90) day period described in the final sentence of Paragraph 7(d)(v).
Except to the extent otherwise provided in Paragraph 8 with respect to certain
post-Date of Termination obligations of the Employer, this Agreement shall
terminate immediately as of the Date of Termination in the event the Executive
is discharged without Cause or resigns.
D. Definitions. For purposes of this Agreement, the following capitalized
terms shall have the meanings set forth below:
1. "Accrued Obligations" shall mean, as of the Date of Termination,
the sum of (A) the Executive's base salary under Paragraph 3 through the Date of
Termination to the extent not theretofore paid, (B) the amount of any deferred
compensation and other cash compensation accrued by the Executive as of the Date
of Termination to the extent not theretofore paid, (C) any vacation pay, expense
reimbursements and other cash entitlements accrued by the Executive as of the
Date of Termination to the extent not theretofore paid, (D) any grants and
awards vested or accrued under any equity-based incentive compensation plan or
program and (E) all other benefits which have accrued as of the Date of
Termination. For the purpose of this Paragraph 7(d)(i), except as provided in
the applicable plan, program or policy, amounts shall be deemed to accrue
ratably over the period
during which they are earned, but no discretionary compensation shall be deemed
earned or accrued until it is specifically approved by the Board in accordance
with the applicable plan, program or policy.
2. "Cause" shall mean (A) the Executive's willful and continued (for a
period of not less than ten (10) business days after written notice thereof)
failure to perform substantially the duties of his employment (other than as a
result of physical or mental incapacity, or while on vacation); or (B) the
Executive's willful engaging in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the Employer; or (C) the Executive's
conviction of a felony involving moral turpitude, but specifically excluding any
conviction based entirely on vicarious liability (with "vicarious liability"
meaning liability based on acts of the Employer for which the Executive is
charged solely as a result of his offices with the Employer and in which he was
not directly involved and did not have prior knowledge of such actions or
intended actions); provided, however, that no act or failure to act, on the part
of the Executive, shall be considered "willful" unless it is done, or omitted to
be done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Employer; and
provided further that no act or omission by the Executive shall constitute Cause
hereunder unless the Employer has given detailed written notice thereof to the
Executive, and the Executive has failed to remedy such act or omission.
3. "Change in Control" shall mean the occurrence of any one of the
following events:
a. Any "person" (as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended), other than (i) a trustee or
other fiduciary holding securities under an employee benefit plan of
PrivateBancorp or any of its subsidiaries, or (ii) a Corporation owned directly
or indirectly by the stockholders of PrivateBancorp in substantially the same
proportions as their ownership of stock of PrivateBancorp, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of PrivateBancorp representing 10% or more of the
total voting power of the then outstanding shares of capital stock of
PrivateBancorp entitled to vote generally in the election of directors (the
"Voting Stock"), provided, however, that the following shall not constitute a
change in control: (1) such person becomes a beneficial owner of 10% or more of
the Voting Stock as the result of an acquisition of such Voting Stock directly
from PrivateBancorp, or (2) such person becomes a beneficial owner of 10% or
more of the Voting Stock as a result of the decrease in the number of
outstanding shares of Voting Stock caused by the repurchase of shares by
PrivateBancorp; provided, further, that in the event a person described in
clause (1) or (2) shall thereafter increase (other than in circumstances
described in clause (1) or (2)) beneficial ownership of stock representing more
than 1% of the Voting Stock, such person shall be deemed to become a beneficial
owner of 10% or more of the Voting Stock for purposes of this paragraph (A),
provided such person continues to beneficially own 10% or more of the Voting
Stock after such subsequent increase in beneficial ownership, or
b. During any period of two consecutive years, individuals (the
"Incumbent Board"), who at the beginning of such period constitute the board of
directors of PrivateBancorp, and any new director, whose election by the board
of directors of PrivateBancorp or nomination for election by PrivateBancorp's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election
or nomination for election was previously so approved, cease for any reason to
constitute a majority thereof, or
c. Consummation of a reorganization, merger or consolidation or
the sale or other disposition of all or substantially all of the assets of
PrivateBancorp (a "Business Combination"), in each case, unless (1) all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Voting Stock immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50% of the total
voting power represented by the voting securities entitled to vote generally in
the election of directors of the Corporation resulting from the Business
Combination (including, without limitation, a Corporation which as a result of
the Business Combination owns PrivateBancorp's or all or substantially all of
PrivateBancorp's assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to the
Business Combination of the Voting Stock of PrivateBancorp, and (2) at least a
majority of the members of the board of directors of the Corporation resulting
from the Business Combination were members of the Incumbent Board at the time of
the execution of the initial agreement, or action of the Incumbent Board,
providing for such Business Combination; or
d. the stockholders of PrivateBancorp approve a plan of complete
liquidation or dissolution of PrivateBancorp.
The board of directors of PrivateBancorp has final authority to construe and
interpret the provisions of the foregoing paragraphs (A), (B), (C) and (D) and
to determine the exact date on which a change in control has been deemed to have
occurred thereunder.
4. "Date of Termination" shall mean (A) in the event of a discharge of
the Executive for or without Cause, the date the Executive receives a Notice of
Termination, or any later date specified in such Notice of Termination, as the
case may be, (B) in the event of a resignation by the Executive, the date
specified in the written notice to the Employer, which date shall be no less
than thirty (30) days from the date of such written notice, (C) in the event of
the Executive's death, the date of the Executive's death, and (D) in the event
of termination of the Executive's employment by reason of disability pursuant to
Paragraph 7(a), the date the Executive receives written notice of such
termination.
5. "Good Reason" shall mean the occurrence, other than in connection
with a discharge, of any of the following without the Executive's consent: (A)
Executive is not re-elected or is removed from the positions with the Employer
set forth in Paragraph 1(a), other than as a result of Executive's election or
appointment to positions of equal or superior scope and responsibility; or (B)
Executive shall fail to be vested by the Employer with the power and authority
of any of said positions, excluding for this purpose any isolated action not
taken in bad faith and which is remedied by the Employer promptly after receipt
of written notice thereof given by the Executive in accordance with Paragraph
15; or (C) any failure by the Employer to comply with any of the provisions of
this Agreement, other than any isolated, insubstantial and inadvertent failure
not occurring in bad faith and which is remedied by the Employer promptly after
receipt of written notice thereof given by the Executive in accordance with
Paragraph 15; or (D) the Employer giving notice to the Executive
pursuant to Paragraph 1(b) that the term of this Agreement shall not be extended
upon the expiration of the then-current term; or (E) the Employer requiring the
Executive to be based at an office or location which is more than 80 miles from
the Executive's office as of the Effective Date. In addition, any termination by
the Executive during the ninety (90) day period beginning on the first
anniversary of the date of a Change in Control shall be deemed to be for "Good
Reason."
6. "Notice of Termination" shall mean a written notice which (A)
indicates the specific termination provision in this Agreement relied upon, (B)
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 (C) if the Date of Termination is to be other than the date of
receipt of such notice, specifies the termination date.
VIII. Obligations of the Employer Upon Termination. The following provisions
describe the obligations of the Employer to the Executive under this Agreement
upon termination of employment. However, except as explicitly provided in this
Agreement, nothing in this Agreement shall limit or otherwise adversely affect
any rights which the Executive may have under applicable law, under any other
agreement with the Employer or any of its affiliates or subsidiaries, or under
any compensation or benefit plan, program, policy or practice of the Employer or
any of its affiliates or subsidiaries.
A. Death, Disability, Discharge for Cause, or Resignation Without Good
Reason. In the event this Agreement terminates pursuant to Paragraph 7(a) by
reason of the death or disability of the Executive, or pursuant to Paragraph
7(b) by reason of the discharge of the Executive by the Employer for Cause, or
pursuant to Paragraph 7(c) by reason of the resignation of the Executive other
than for Good Reason, the Employer shall pay to the Executive, or his heirs or
estate, in the event of the Executive's death, all Accrued Obligations in a lump
sum in cash within thirty (30) days after the Date of Termination; provided,
however, that any portion of the Accrued Obligations which consists of bonus,
deferred compensation, incentive compensation, insurance benefits or other
employee benefits shall be determined and paid in accordance with the terms of
the relevant plan or policy as applicable to the Executive. In addition, in the
event this Agreement terminates pursuant to Paragraph 7(a) by reason of death of
the Executive, the Employer shall pay to the Executive's heirs or estate death
benefits in a lump sum amount equal to six (6) months of his then current annual
base salary.
B. Discharge Without Cause or Resignation with Good Reason. In the event
that this Agreement terminates pursuant to Paragraph 7(c) by reason of the
discharge of the Executive by the Employer other than for Cause or disability or
by reason of the resignation of the Executive for Good Reason:
1. The Employer shall pay all Accrued Obligations to the Executive in
a lump sum in cash within thirty (30) days after the Date of Termination;
provided, however, that any portion of the Accrued Obligations which consists of
bonus, deferred compensation, incentive compensation, insurance benefits or
other employee benefits shall be determined and paid in accordance with the
terms of the relevant plan or policy as applicable to the Executive;
2. Within thirty (30) days after the Date of Termination, the Employer
shall pay to the Executive a bonus for the year during which termination occurs,
calculated as a prorata portion of
his prior year's bonus amount (if any) based on the number of days elapsed
during the year through the Date of Termination;
3. Continuation for a period of twelve (12) months (the "Severance
Period") of his then current annual base salary, payable in substantially equal
installments in accordance with the Employer's regular payroll practices;
4. Continuation for the Severance Period of the Executive's right to
maintain COBRA continuation coverage under the applicable plans at premium rates
on the same "cost-sharing" basis as the applicable premiums paid for such
coverage by active employees as of the Date of Termination; and
5. Outplacement counseling, the scope and provider of which shall be
selected by the Employer for a period beginning on the Date of Termination and
ending on the date the Executive is first employed elsewhere or otherwise is
provided compensated services of any type (including self-employment), provided
that in no event shall such outplacement services be provided for a period
greater than one (1) year.
In the event that upon the expiration of the Severance Period, Executive is not
employed or otherwise providing compensated services of any type (including
self-employment), and has not done so during the final ninety (90) days of the
Severance Period, the Employer may, in its sole discretion (which discretion
need not be applied in a consistent manner from one Executive to another), agree
to extend the Severance Period for up to an additional six (6) months (the
"Extended Severance Period"). The payments to Executive described in
subparagraph (iii) above and the reduce COBRA continuation premium described in
subparagraph (iv) above shall continue during the Extended Severance Period,
subject to earlier termination effective as of the first day of the month
following the date the on which the Executive becomes employed or provides
compensated services of any type (including self-employment).
The Executive shall provide such information as the Employer may reasonably
request to determine Executive's continued eligibility for the payments and
benefits provided by this Paragraph 8(b).
C. Effect of Change in Control. In the event that a Change in Control
occurs and this Agreement thereafter terminates pursuant to Paragraph 7(c) by
reason of the discharge of the Executive by the Employer other than for Cause or
disability or by reason of the resignation of the Executive for Good Reason:
1. The Employer shall pay all Accrued Obligations to the Executive in
a lump sum in cash within thirty (30) days after the Date of Termination;
provided, however, that any portion of the Accrued Obligations which consists of
bonus, deferred compensation, incentive compensation, insurance benefits or
other employee benefits shall be determined and paid in accordance with the
terms of the relevant plan or policy as applicable to the Executive;
2. Within thirty (30) days after the Date of Termination, the Employer
shall pay to the Executive a bonus for the year during which termination occurs,
calculated as a prorata portion of
his prior year's bonus amount (if any) based on the number of days elapsed
during the year through the Date of Termination;
3. The Employer shall pay the Executive a lump sum payment within
thirty (30) days after such termination of employment in the amount of two (2)
times the sum of the following:
a. the amount of Executive's annual base salary determined as of
the Date of Termination, or the date immediately preceding the date of the
Change in Control, whichever is greater; plus
b. the greater of (A) the Executive's bonus amount, if any, for
the calendar year immediately preceding that in which the Date of Termination
occurs, or (B) the average of the sum of the bonus amounts earned by Executive
with respect to the three (3) calendar years immediately preceding the calendar
year in which Executive's Date of Termination occurs, or if such sum would be
greater, with respect to the three (3) calendar years immediately preceding the
calendar year of the date of the Change in Control; plus
c. the sum of:
(1) the annual value of the contributions that would have
been expected to be made or credited by the Employer to, and benefits expected
to be accrued under, the qualified and non-qualified employee profit sharing,
401(k), pension and any other benefit plans maintained by the Employer to or for
the benefit of Executive; plus
(2) the annual value of the Other Benefits described in
Paragraph 6(a) and (c) above.
For purposes of paragraph (C)(I) above, the annual value of the contributions
and accruals to or under the employee benefit plans shall be determined on the
basis of the actual rate of contributions or accruals, as applicable, and the
provisions of the plans as in effect during the calendar year immediately
preceding the date of the Change in Control, or if the value so determined would
be greater, during the calendar year immediately preceding the Date of
Termination. The "annual value" of the executive perquisites described in
Paragraph 6(c) for purposes of paragraph (C)(II) above shall be 7.5% of the
annual base salary amount applicable under clause (iii)(A) above.
Executive shall also be entitled to out-placement counseling from a firm
selected by Employer for a period beginning on the date of termination of
employment and ending on the date Executive is first employed or otherwise
providing compensated services of any type (including, but not limited to, self-
employment), provided, that in no event shall Executive be entitled to out-
placement counseling after the date which is two (2) years from the date of
termination of employment.
Notwithstanding the foregoing, if a Change in Control occurs and this Agreement
terminated prior to the Change in Control pursuant to Paragraph 7(c) by reason
of the discharge of the Executive by the Employer other than for Cause or
disability or by reason of the resignation of the Executive for Good Reason,
then Executive shall be deemed for purposes of this Paragraph 8(c) to have so
terminated pursuant to Paragraph 7(c) immediately following the date the Change
in Control occurs if it is reasonably demonstrated by Executive that such
earlier termination was (i) at the request of a third party who had taken steps
reasonably calculated to effect the Change in Control, or (ii) otherwise arose,
or the circumstances that precipitated the termination otherwise arose, in
connection with or in anticipation of the Change in Control.
D. Effect on Other Amounts. The payments provided for in this Paragraph 8
shall be in addition to all other sums then payable and owing to Executive shall
be subject to applicable federal and state income and other withholding taxes
and shall be in full settlement and satisfaction of all of Executive's claims
and demands. Upon such termination of this Agreement, Employer shall have no
rights or obligations under this Agreement, other than its obligations under
this Paragraph 8, and Executive shall have no rights and obligations under this
Agreement, other than Executive's obligations under Paragraphs 12 and 13 hereof
(to the extent applicable).
E. Conditions. Any payments of benefits made or provided pursuant to this
Paragraph 8 are subject to the Executive's:
1. compliance with the provisions of Paragraphs 12 and 13 hereof (to
the extent applicable);
2. delivery to the Employer of an executed Release and Severance
Agreement, which shall be substantially in the form attached hereto as Exhibit
A, with such changes therein or additions thereto as needed under then
applicable law to give effect to its intent and purpose; and
3. delivery to the Employer of a resignation from all offices,
directorships and fiduciary positions with the Employer, its affiliates and
employee benefit plans.
Notwithstanding the due date of any post-employment payments, any amounts due
under this Paragraph 8 shall not be due until after the expiration of any
revocation period applicable to the Release and Severance Agreement.
IX. Certain Additional Payments by the Employer.
A. Anything in this Agreement to the contrary notwithstanding, in the event
it shall be determined that any payment or distribution by the Employer 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, but
determined without regard to any additional payments required under this
Paragraph 9) (a "Payment") would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended, (the "Code") or if any
interest or penalties are incurred by the Executive with respect to such excise
tax (such excise tax, together with any such interest and penalties, being
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 such that, after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed with
respect
thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains
an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payment.
B. Subject to the provisions of paragraph (c), below, all determinations
required to be made under this Paragraph 9, 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
the independent public accountants then regularly retained by the Employer (the
"Accounting Firm") in consultation with counsel acceptable to Executive, which
shall provide detailed supporting calculations both to the Employer 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 Employer. In the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting a Change in Control, the
Executive shall appoint another nationally recognized accounting firm to make
the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder) in consultation with counsel
acceptable to Executive. All fees and expenses of the Accounting Firm and such
counsel shall be borne solely by the Employer. Any Gross-Up Payment, as
determined pursuant to this Paragraph 9, shall be paid by the Employer to the
Executive within five (5) days of the receipt of the Accounting Firm's
determination. If the Accounting Firm 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 good faith determination by the Accounting Firm shall be binding
upon the Employer and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Employer should have been made ("Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Employer exhausts its remedies pursuant to paragraph (c), below, and
the Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Employer to or for the
benefit of the Executive.
C. The Executive shall notify the Employer in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Employer of a Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than fifteen (15) business days after the Executive is
informed in writing of such claim and shall apprise the Employer 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 Executive gives such notice to the
Employer (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Employer notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall:
1. Give the Employer any information reasonably requested by the
Employer relating to such claim,
2. Take such action in connection with contesting such claim as the
Employer shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Employer,
3. Cooperate with the Employer in good faith in order effectively to
contest such claim, and
4. Permit the Employer to participate in any proceedings relating to
such claim;
provided, however, that the Employer 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 limiting the foregoing provisions of
this paragraph (c), the Employer 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 Employer shall
determine; provided, however, that if the Employer directs the Executive to pay
such claim and xxx for a refund, the Employer 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 Employer'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.
D. If, after the receipt by the Executive of an amount advanced by the
Employer pursuant to paragraph (c), above, the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Employer's complying with the requirements of said paragraph (c)) promptly
pay to the Employer 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 Employer pursuant to said paragraph
(c), a determination is made that the Executive shall not be entitled to any
refund with respect to such claim and the Employer does not notify the Executive
in writing of its intent to contest such denial of refund prior to the
expiration of thirty (30) days after such determination, 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 the Gross-Up Payment
required to be paid.
X. Dispute Resolution. In the event any dispute arises and the parties after
good faith efforts are unable to agree as to the calculation of the amounts
payable under this Agreement, it shall be settled in accordance with the
majority opinion of a committee consisting of an accountant chosen by the
Employer, an accountant chosen by Executive and an independent accountant
acceptable to both Executive and the Employer, as the case may be. The
committee's determination shall be binding and conclusive on the parties hereto.
The Employer shall pay all fees and expenses of the dispute resolution.
XI. Enforcement. In the event the Employer shall fail to pay any amounts due to
Executive under this Agreement as they come due, the Employer agrees to pay
interest on such amounts at a rate equal to the prime rate (as from time to time
published in The Wall Street Journal (Midwest Edition) plus four percent (4%)
per annum. The Employer agrees that Executive and any successor shall be
entitled to recover all costs of enforcing any provision of this Agreement,
including reasonable attorneys' fees and costs of litigation.
XII. Confidential Information. Executive shall not at any time during or
following his employment hereunder, directly or indirectly, disclose or use on
his behalf or another's behalf, publish or communicate, except in the course of
his employment and in the pursuit of the business of the Employer or any of its
subsidiaries or affiliates, any proprietary information or data of the Employer
or any of its subsidiaries or affiliates, which is not generally known in the
banking business and which the Employer may reasonably regard as confidential
and proprietary. Executive recognizes and acknowledges that all knowledge and
information which he has or may acquire in the course of his employment, such
as, but not limited to the business, developments, procedures, techniques,
activities or services of the Employer or the business affairs and activities of
any customer, prospective customer, individual firm or entity doing business
with the Employer are its sole valuable property, and shall be held by Executive
in confidence and in trust for their sole benefit. All records of every nature
and description which come into Executive's possession, whether prepared by him,
or otherwise, shall remain the sole property of the Employer and upon
termination of his employment for any reason, said records shall be left with
the Employer as part of its property.
XIII. Non-Competition. Executive acknowledges that the Employer and its
affiliates and subsidiaries by nature of their respective businesses have a
legitimate and protectable interest in their clients, customers and employees
with whom they have established significant relationships as a result of a
substantial investment of time and money, and but for his employment hereunder,
he would not have had contact with such clients, customers and employees.
Executive agrees that during the period of his employment with the Employer and
for a period of one (1) year after termination of his employment for any reason
(other than termination of employment by resignation for Good Reason prior to a
Change in Control or for any reason upon or after a Change in Control) (the
"Non-Compete Period"), he will not (except in his capacity as an employee of the
Employer) directly or indirectly, for his own account, or as an agent, employee,
director, owner, partner, or consultant of any corporation, firm, partnership,
joint venture, syndicate, sole proprietorship or other entity which has a place
of business (whether as a principal, division, subsidiary, affiliate, related
entity, or otherwise) located within the Market Area (as hereinafter defined):
A. solicit or induce, or attempt to solicit or induce any client or
customer of the Employer or any of its subsidiaries or affiliates not to do
business with the Employer or any of its subsidiaries or affiliates; or
B. solicit or induce, or attempt to solicit or induce, any employee or
agent of the Employer or any of its subsidiaries or affiliates to terminate his
or her relationship with the Employer or any of its subsidiaries or affiliates.
For purposes of this Agreement, "Market Area" shall be an area encompassed
within a twenty-five (25) mile radius surrounding any place of business of the
Employer or of any of its subsidiaries or affiliates (existing or planned as of
the Date of Termination of employment).
The foregoing provisions shall not be deemed to prohibit (i) Executive's
ownership, not to exceed ten percent (10%) of the outstanding shares, of capital
stock of any corporation whose securities are publicly traded on a national or
regional securities exchange or in the over-the-counter market or (ii) Executive
serving as a director of other corporations and entities to the extent these
directorships do not inhibit the performance of his duties hereunder or conflict
with the business of the Employer.
XIV. Remedies. Executive acknowledges that the restraints and agreements
herein provided are fair and reasonable, that enforcement of the provisions of
Paragraphs 12 and 13 will not cause him/her undue hardship and that said
provisions are reasonably necessary and commensurate with the need to protect
the Employer and its legitimate and proprietary business interests and property
from irreparable harm. Executive acknowledges and agrees that (a) a breach of
any of the covenants and provisions contained in Paragraphs 12 or 13 above, will
result in irreparable harm to the business of the Employer, (b) a remedy at law
in the form of monetary damages for any breach by him of any of the covenants
and provisions contained in Paragraphs 12 and 13 is inadequate, (c) in addition
to any remedy at law or equity for such breach, the Employer shall be entitled
to institute and maintain appropriate proceedings in equity, including a suit
for injunction to enforce the specific performance by Executive of the
obligations hereunder and to enjoin Executive from engaging in any activity in
violation hereof and (d) the covenants on his part contained in Paragraphs 12
and 13, shall be construed as agreements independent of any other provisions in
this Agreement, and the existence of any claim, setoff or cause of action by
Executive against the Employer, whether predicated on this Agreement or
otherwise, shall not constitute a defense or bar to the specific enforcement by
the Employer of said covenants. In the event of a breach or a violation by
Executive of any of the covenants and provisions of this Agreement, the running
of the Non-Compete Period (but not of Executive's obligation thereunder), shall
be tolled during the period of the continuance of any actual breach or
violation.
XV. Notices. Any notice or other communication required or permitted to be
given hereunder shall be determined to have been duly given to any party (a)
upon delivery to the address of such party specified below if delivered
personally or by courier; (b) upon dispatch if transmitted by telecopy or
other means of facsimile, provided a copy thereof is also sent by regular mail
or courier; or (c) within forty-eight (48) hours after deposit thereof in the
U.S. mail, postage prepaid, for delivery as certified mail, return receipt
requested, addressed, in any case to the party at the following address(es) or
telecopy numbers:
A. If to Executive, at the address set forth on the signature page hereof.
B. If to the Employer:
PrivateBancorp, Inc.
Xxx Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xx. Xxxxx X. Xxxxxxx
Telecopy No.: (000) 000-0000
with a copy to:
Vedder, Price, Xxxxxxx & Kammholz
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attn: Xx. Xxxxxx X. Xxxxxxx
Telecopy No.: (000) 000-0000
or to such other address(es) or telecopy number(s) as any party may designate by
Written Notice in the aforesaid manner.
XVI. Indemnification.
A. In the event that legal action is instituted against Executive during or
after the term hereof by a third party (or parties) based on the performance or
nonperformance by Executive of his duties hereunder, the Employer will assume
the defense of such action by its attorneys or attorneys selected by Executive
reasonably satisfactory to the Employer and advance the costs and expenses
thereof (including reasonable attorneys' fees) without prejudice to or waiver by
the Employer of its rights and remedies against Executive. In the event that
there is a final judgment entered against Executive in any such litigation, and
the Employer's Board of Directors determines that Executive should, in
accordance with its charter, By-Laws, or insurance reimburse such entities,
Executive shall be liable to the Employer for all such costs and expenses paid
or incurred by them in the defense of any such litigation (the "Reimbursement
Amount"). The Reimbursement Amount shall be paid by Executive within thirty (30)
days after rendition of the final judgment. The Employer shall be entitled to
set off the reimbursement amount against all sums which may be owed or payable
by the Employer to Executive hereunder or otherwise. The parties shall cooperate
in the defense of any asserted claim, demand or liability against Executive or
the Employer or its subsidiaries or affiliates. The term "final judgment" as
used herein shall be defined to mean the decision of a court of competent
jurisdiction,
and in the event of an appeal, then the decision of the appellate court, after
petition for rehearing has been denied, or the time for filing the same (or the
filing of further appeal) has expired.
B. The rights to indemnification under this Section 16 shall be in addition
to any rights which Executive may now or hereafter have under the charter or By-
laws of the Employer or any of its affiliates or subsidiaries, under any
insurance contract maintained by the Employer or any of its affiliates or
subsidiaries, or any agreement between Executive and the Employer or any of its
affiliates or subsidiaries.
XVII. Full Settlement; No Mitigation. The Employer's obligation to make the
payments and provide the benefits provided for in this Agreement and otherwise
to perform its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which the
Employer may have against the Executive 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 such amounts shall not be reduced whether or
not the Executive obtains other employment.
XVIII. Payment in the Event of Death. In the event payment is due and owing
by the Employer to Executive under this Agreement upon the death of Executive,
payment shall be make to such beneficiary as Executive may designate in writing,
or failing such designation, then the executor of his estate, in full settlement
and satisfaction of all claims and demands on behalf of Executive, shall be
entitled to receive all amounts owing to Executive at the time of death under
this Agreement. Such payments shall be in addition to any other death benefits
of the Employer and in full settlement and satisfaction of all severance benefit
payments provided for in this Agreement.
XIX. Entire Understanding. This Agreement constitutes the entire understanding
between the parties relating to Executive's employment hereunder and supersedes
and cancels all prior written and oral understandings and agreements with
respect to such matters, except to the extent to which Executive may have
entered into certain Split-Dollar Life Insurance Agreements, which agreement(s)
shall remain in full force and effect, and except for the terms and provisions
of any employee benefit or other compensation plans (or any agreements or awards
thereunder), referred to in this Agreement, or as otherwise expressly
contemplated by this Agreement.
XX. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the heirs and representatives of the Executive and the successors and
assigns of the Employer. The Employer shall require any successor (whether
direct or indirect, by purchase, merger, reorganization, consolidation,
acquisition of property or stock, liquidation, or otherwise) to all or a
substantial portion of its assets, by agreement in form and substance reasonably
satisfactory to the Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Employer would be
required to perform this Agreement if no such succession had taken place.
Regardless of whether such an agreement is executed, this Agreement shall be
binding upon any successor of the Employer in accordance with the operation of
law, and such successor shall be deemed the "Employer" for purposes of this
Agreement.
XXI. Tax Withholding. The Employer shall provide for the withholding of any
taxes required to be withheld by federal, state, or local law with respect to
any payment in cash, shares of stock and/or other property made by or on behalf
of the Employer to or for the benefit of the Executive under this Agreement or
otherwise. The Employer may, at its option: (a) withhold such taxes from any
cash payments owing from the Employer to the Executive, (b) require the
Executive to pay to the Employer in cash such amount as may be required to
satisfy such withholding obligations and/or (c) make other satisfactory
arrangements with the Executive to satisfy such withholding obligations.
XXII. No Assignment. Except as otherwise expressly provided herein, this
Agreement is not assignable by any party and no payment to be made hereunder
shall be subject to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or other charge.
XXIII. Execution in Counterparts. This Agreement may be executed by the parties
hereto in two (2) or more counterparts, each of which shall be deemed to be an
original, but all such counterparts shall constitute one and the same
instrument, and all signatures need not appear on any one counterpart.
XXIV. Jurisdiction and Governing Law. Except as provided in Paragraph 10,
jurisdiction over disputes with regard to this Agreement shall be exclusively in
the courts of the State of Illinois, and this Agreement shall be construed and
interpreted in accordance with and governed by the laws of the State of
Illinois, without regard to the choice of laws provisions of such laws.
XXV. Severability. If any provision of this Agreement shall be adjudged by any
court of competent jurisdiction to be invalid or unenforceable for any reason,
such judgment shall not affect, impair or invalidate the remainder of this
Agreement. Furthermore, if the scope of any restriction or requirement contained
in this Agreement is too broad to permit enforcement of such restriction or
requirement to its full extent, then such restriction or requirement shall be
enforced to the maximum extent permitted by law, and the Executive consents and
agrees that any court of competent jurisdiction may so modify such scope in any
proceeding brought to enforce such restriction or requirement.
XXVI. Waiver. The waiver of any party hereto of a breach of any provision of
this Agreement by any other party shall not operate or be construed as a waiver
of any subsequent breach.
XXVII. Amendment. No change, alteration or modification hereof may be made
except in a writing, signed by each of the parties hereto.
XXVIII. Construction. The language used in this Agreement will be deemed to be
the language chosen by Employer and Executive to express their mutual intent
and no rule of strict construction shall be applied against any person.
Wherever from the context it appears appropriate, each term stated in either the
singular of plural shall include the singular and the plural, and the pronouns
stated in either the masculine, the feminine or the neuter gender shall include
the masculine, feminine or neuter. The headings of the Paragraphs of this
Agreement are for reference purposes only and do not define or limit, and shall
not be used to interpret or construe the contents of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day and year first above written.
ATTEST: EMPLOYER
______________________________________ By:____________________________________
Title:_________________________________
EXECUTIVE
Address:______________________________ _______________________________________
______________________________________ Name: Xxxxxx X. Xxxxxxxxxx
---------------------------------
______________________________________ Title: Chief Financial Officer
--------------------------------
Exhibit A to Employment Agreement
---------------------------------
RELEASE AND SEVERANCE AGREEMENT
-------------------------------
THIS RELEASE AND SEVERANCE AGREEMENT is made and entered into this ____ day
of _________, _____ by and between PrivateBancorp, Inc. and its subsidiary
(collectively ("PBI") and ______________________________ (hereinafter
"EXECUTIVE").
EXECUTIVE'S employment with PBI terminated on __________, ______; and
EXECUTIVE has voluntarily agreed to the terms of this RELEASE AND SEVERANCE
AGREEMENT in exchange for severance benefits under the Employment Agreement
("Employment Agreement") to which EXECUTIVE otherwise would not be entitled.
NOW THEREFORE, in consideration for severance benefits provided under the
Employment Agreement, EXECUTIVE on behalf of himself and his spouse, heirs,
executors, administrators, children, and assigns does hereby fully release and
discharge PBI, its officers, directors, employees, agents, subsidiaries and
divisions, benefit plans and their administrators, fiduciaries and insurers,
successors, and assigns from any and all claims or demands for wages, back pay,
front pay, attorney's fees and other sums of money, insurance, benefits,
contracts, controversies, agreements, promises, damages, costs, actions or
causes of action and liabilities of any kind or character whatsoever, whether
known or unknown, from the beginning of time to the date of these presents,
relating to his employment or termination of employment from PBI, including but
not limited to any claims, actions or causes of action arising under the
statutory, common law or other rules, orders or regulations of the United States
or any State or political subdivision thereof including the Age Discrimination
in Employment Act and the Older Workers Benefit Protection Act.
EXECUTIVE acknowledges that EXECUTIVE'S obligations pursuant to Paragraphs
12 and 13, to the extent applicable, of the Employment Agreement relating to the
use or disclosure of confidential information shall continue to apply to
EXECUTIVE.
This Release and Settlement Agreement supersedes any and all other
agreements between EXECUTIVE and PBI except agreements relating to proprietary
or confidential information belonging to PBI, and any other agreements, promises
or representations relating to severance pay or other terms and conditions of
employment are null and void.
This release does not affect EXECUTIVE'S right to any benefits to which
EXECUTIVE may be entitled under any employee benefit plan, program or
arrangement sponsored or provided by PBI, including but not limited to the
Employment Agreement and the plans, programs and arrangements referred to
therein.
EXECUTIVE and PBI acknowledge that it is their mutual intent that the Age
Discrimination in Employment Act waiver contained herein fully comply with the
Older Workers Benefit Protection Act. Accordingly, EXECUTIVE acknowledges and
agrees that:
(a) The Severance benefits exceed the nature and scope of that to
which he would otherwise have been legally entitled to receive.
(b) Execution of this Agreement and the Age Discrimination in
Employment Act waiver herein is his knowing and voluntary act;
(c) He has been advised by PBI to consult with his personal attorney
regarding the terms of this Agreement, including the aforementioned waiver;
(d) He has had at least twenty-one (21) calendar days within which to
consider this Agreement;
(e) He has the right to revoke this Agreement in full within seven (7)
calendar days of execution and that none of the terms and provisions of
this Agreement shall become effective or be enforceable until such
revocation period has expired;
(f) He has read and fully understands the terms of this agreement; and
(g) Nothing contained in this Agreement purports to release any of
EXECUTIVE's rights or claims under the Age Discrimination in Employment Act
that may arise after the date of execution.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
indicated above.
PRIVATEBANCORP, INC., EXECUTIVE
for itself and its Subsidiary
By:_____________________________________ ______________________________________
Xxxxxx X. Xxxxxxxxxx
Its:____________________________________
