EXHIBIT 10.31
Amendment of Letter Agreement
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This Amendment of Letter Agreement is entered into between Xxxxxx
Financial, Inc., a Delaware corporation (the "Company"), and Xxxxxxxxx X.
Xxxxxxx (the "Executive");
Witnesseth That:
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Whereas, the Company and Executive entered into a Letter Agreement
detailing the terms and conditions of Executive's employment as Chief Executive
Officer and Chairman of the Board of the Company, effective as of December 31,
1997 (the "Letter Agreement"); and
Whereas, a portion of the Company's stock is being sold to the public as
part of an initial public offering, and the Company and Executive desire to
amend the Letter Agreement to provide additional protection to Executive in
connection with any future change in control of the Company;
Now, Therefore, it is hereby agreed by and between the parties, for good
and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, that the Letter Agreement be and it hereby is amended, effective
as of May 6, 1998, by adding the following new Paragraphs 16 and 17 to the
Letter Agreement, immediately after Paragraph 15 thereof:
"16. Payments and Benefits Upon Employment Termination After a Change in
Control. If, during the Term of this Agreement and within the period
ending on the earlier of two (2) years after a Change in Control (all
capitalized terms as defined below) or May 6, 2001, or during the
Period Pending a Change in Control, (i) your employment with the
Company and its Affiliates is terminated without cause (as defined in
Subparagraph 12(c)), or (ii) you voluntarily terminate your employment
with Good Reason, the Company will, within 30 days (except as
otherwise expressly provided) of your Employment Termination, make the
payments and provide the benefits described below.
(a) The Company will continue your annual Base Salary (as defined
below) for twenty-four (24) months following Employment
Termination at the same time and in the same manner as the
Company paid salary during employment (including the right to
defer such amounts under the Company's non-qualified deferred
compensation plan) or, at your election, make a lump sum cash
payment to you equal to the present value of two times your Base
Salary; and
(b) For the year in which Employment Termination occurs, the Company
will pay an Annual Incentive Plan bonus calculated as of the end
of the Annual Incentive Plan year, based on performance for the
entire year, at the applicable Target bonus level for that year.
The Company will pay such bonus in a lump sum within 45 days of
the end of the year of Employment Termination; and
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(c) 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, or (ii) the date
you become covered by a welfare benefit plan or program
maintained by an entity other than the Company or an Affiliate
which provides coverage or benefits at least equal, in all
respects, to such Welfare Benefit Plan, you shall continue to
participate in such Welfare Benefit Plan on the same basis and at
the same cost to you as was the case immediately prior to the
Change in Control (or, if more favorable to you, as was the case
prior to your Employment Termination), or, if any benefit or
coverage cannot be provided under a Welfare Benefit Plan because
of applicable law or contractual provisions, you shall be
provided with substantially similar benefits and coverage for
such period; and
(d) The Company will pay you a lump sum amount equal to the present
value of the additional benefit that you 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, as in
effect prior to your Employment Termination) had you continued to
receive benefits thereunder through the end of the 24th month
following Employment Termination. All benefits under the
Company's non-qualified retirement plans will be fully vested (to
the extent, if any, not vested upon the Change in Control). The
Company will pay such lump sum to you within 45 days of the end
of the year of Employment Termination; and
(e) The Company will add 24 months to your age and benefit service
for purposes of determining your eligibility for and benefits
under the Company's retiree medical benefit plan; and
(f) You will continue to be eligible for the executive perquisites
outlined in the Company's policies in effect at the time of the
Change in Control (or, if more favorable to you, as in effect
prior to your Employment Termination) through the end of the 24th
month following Employment Termination. The Company will bear
the cost of such benefits and perquisites, at the same level in
effect immediately prior to Employment Termination; and
(g) If Employment Termination occurs in 1998, you will be fully
vested in all performance shares granted to you under the
Company's 1996-1998 LTIP, and vested in two-thirds (2/3) of the
performance shares under the 1997-1999 LTIP. If Employment
Termination occurs in 1999, you will be fully vested in all
performance shares granted to you under the Company's 1997-1999
LTIP. The award paid to you under the 1996-1998 and 1997-1999
LTIPs will be determined under the terms of such
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LTIP for the applicable cycle, using actual performance for each
such cycle, and will be paid to you in a lump sum within 45 days
of the end of the year of your Employment Termination.
In the event that, under the terms of this Letter Agreement, you could
be entitled to both the payments and benefits described in this
Paragraph 16 and the payments and benefits provided in Paragraph 12,
you shall elect the Paragraph under which payments and benefits are
made to you; provided that, in no event shall payments and benefits be
paid to you under both Paragraph 12 and this Paragraph.
Notwithstanding any provision of this Subparagraph 16 to the contrary,
any payment or distribution by or on behalf of the Company or any
Affiliate to or for the benefit of you (whether paid or payable or
distributed or distributable pursuant to the terms of this Letter
Agreement or otherwise) as a result of a Change in Control shall not
exceed 2.99 times your average "Annualized Includible Compensation for
the Base Period," as defined in Code Section 280G(d)(1).
17. Other Definitions. For purposes of Paragraph 16 of this Letter
Agreement:
(a) "Affiliate" shall mean any entity that is a member of a
controlled group of corporations or a group of trades or
businesses under common control (each as defined in Code Section
1563), which includes the Company.
(b) "Base Salary" shall mean your salary at the greater of the rate
in effect on the date of (i) the Change in Control, or (ii)
Employment Termination.
(c) A "Change in Control" of the Company will be deemed to occur as
of the first day that The Fuji Bank, Limited and its subsidiaries
shall cease to own, directly or indirectly, at least fifty
percent (50%) of the combined voting power of the then
outstanding voting securities of the Company entitled to vote
generally in the election of the Board (the "Company Voting
Securities") of the Company and any successor to the Company
resulting from a reorganization, merger or consolidation, or sale
or other disposition of all or substantially all of the assets of
the Company.
(d) "Employment Termination" shall mean the effective date of: (i)
your voluntary termination of employment with the Company or any
Affiliate with Good Reason; or (ii) the termination of your
employment by the Company or any Affiliate without cause.
(e) "Good Reason" shall exist if, without your express written
consent, any of the following events occur:
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(i) The Company or an Affiliate significantly diminishes your
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 your title(s) or materially diminishes the powers
associated with your title(s). For Good Reason to exist,
you must deliver written notice to the Company or Affiliate
specifying the diminution in assigned duties and
responsibilities that you believe constitutes Good Reason,
and the Company or Affiliate must fail to reverse the same
or to take all reasonable steps to that end within 30 days
after receiving the notice;
(ii) The Company or an Affiliate materially reduces your 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 you to relocate your
principal business office or your principal place of
residence outside the Chicago, Illinois Standard
Metropolitan Statistical Area (the "Geographical Employment
Area"), or assigns to you duties that would reasonably
require such a relocation;
(iv) The Company or an Affiliate requires, or assigns duties to
you which would reasonably require, you 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 you 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 you is
not materially less than their aggregate value as of the
date of the amendment of this Letter Agreement, or, if
greater, their aggregate value as of the date of the Change
in Control.
(f) "Period Pending a Change in Control" shall mean the period after
the approval by the Company's stockholders and prior to the
effective time of any transaction described in subparagraph 16(c)
above.
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(g) "Welfare Benefit Plan" shall mean each welfare benefit plan
maintained or contributed to by the Company or any Affiliate,
including, but not limited to a plan that provides health
(including medical, dental or both), life, accident or disability
benefits or insurance, or similar coverage, in which you were
participating at the time of the Change in Control."
In Witness Whereof, the parties hereto have executed this Agreement on the
day and year first written above.
Xxxxxx Financial, Inc.
By:
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Its: Xxxxxxxxx X. Xxxxxxx
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