Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of July 1, 1999 (the
"Effective Date"), by and between Upbancorp, Inc. (hereinafter called
"Employer"), and the undersigned executive, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (hereinafter
called "Executive").
WITNESSETH THAT:
WHEREAS, Employer desires to continue to employ Executive as its
Chairman, President and Chief Executive Officer and Executive desires to
continue in such employment;
NOW, THEREFORE, Employer and Executive, each intending to be legally
bound, hereby mutually covenant and agree as follows:
1. EMPLOYMENT AND TERM.
(a) EMPLOYMENT. Employer shall employ Executive as the
Chairman, President and Chief Executive Officer of Employer, and
Executive shall so serve, for the term set forth in Paragraph 1(b).
(b) TERM. The initial term of Executive's employment under
this Agreement shall commence on July 1, 1999 and end on June 30, 2004,
subject to the extension of such term as hereinafter provided and
subject to earlier termination as provided in Paragraph 6. The term of
this Agreement shall be extended automatically for one (1) additional
year after the initial term expires, and each anniversary date thereof
unless, no later than one hundred twenty (120) days prior to any such
renewal date, either the Board of Directors of Employer (the "Board"),
on behalf of Employer, or Executive gives written notice to the other,
in accordance with Paragraph 14, that the term of this Agreement shall
not be so extended. Notwithstanding anything in this Agreement to the
contrary, if at any time during Executive's period of employment under
this Agreement there is a Change in Control (as defined in
Paragraph 6), the term of this Agreement shall automatically be
extended to a date which is three years from the date of the Change in
Control or June 30, 2005, whichever is later (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)).
2. 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 Employer
in the conduct of its business. Executive's powers and authority shall
be as prescribed by the by-laws of 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 consistent with the position(s) of Chairman, President and
Chief Executive Officer. Executive recognizes, that during the period
of his employment hereunder, he owes an undivided duty of loyalty to
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 Employer. Executive will not perform any duties
for any other business without the prior written consent of 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 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 Employer's Chairman,
President and Chief Executive Officer, nothing herein contained shall
assure Executive, nor in any manner be construed to constitute an
agreement by Employer to continue the employment of Executive after the
expiration of this Agreement in such capacity or in any other capacity.
3. SALARY.
(a) BASE SALARY. For services performed by Executive for
Employer pursuant to this Agreement during the period of employment as
provided in Paragraph 1(b) hereof, Employer shall pay Executive a base
salary at the rate of Two Hundred Fifty Thousand Dollars ($250,000) per
year, payable in substantially equal installments in accordance with
Employer's regular payroll practices. Executive's base salary (with any
increases under paragraph (b), below) shall not be subject to reduction
without Executive' s written consent. Any compensation which may be
paid to Executive under any additional compensation or incentive plan
of 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 Executive shall be entitled under this
Agreement.
(b) INCREASE IN BASE SALARY. Executive's base salary shall be
subject to review from time to time and Employer may (but is not
required to) increase the base salary as the Board, in its discretion,
may determine.
4. BONUSES AND INCENTIVE COMPENSATION. For each fiscal year
during the term of employment, Executive shall be eligible to receive
compensation pursuant to the bonus and incentive compensation plans
established or to be established by Employer and administered by the
Board, in accordance with the terms of any such plan as adopted and
administered by the Board for senior executives of Employer, which plan
may be amended from time to time by the Board in its discretion.
Nothing contained herein shall be construed as requiring the Board to
adopt any bonus or incentive compensation plan.
5. OTHER BENEFITS. In addition to the compensation described
in Paragraphs 3 and 4, above, Executive shall also be entitled to the
following:
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(a) PARTICIPATION IN BENEFIT PLANS. Executive shall be
entitled to participate in all of the various retirement, welfare, life
insurance, accident and disability insurance, medical and dental plans,
fringe benefit, and expense reimbursement plans, programs and
arrangements of Employer to the extent Executive is eligible for
participation under the terms of such plans, programs and arrangements,
including, but not limited to non-qualified retirement programs,
deferred compensation plans, supplemental compensation plans, profit
sharing (401(k), ESOP, etc.), long term disability and any other
incentive or benefit plan.
(b) VACATION. 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 Employer's applicable personnel policy
as in effect from time to time.
(c) EXECUTIVE PERQUISITES. Employer shall furnish Executive
with such perquisites which may from time to time be provided by
Employer which are suitable to Executive's position and adequate for
the performance of his duties hereunder and reasonable in the
circumstances.
(d) EXPENSE REIMBURSEMENT. 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.
(e) AUTOMOBILE. Executive shall be provided with a luxury
class automobile of his choice. This automobile will be provided by
Employer. Executive shall pay an agreed upon rate for personal usage of
the vehicle. All expense shall be borne by Employer. At any time after
three years after any vehicle acquired after the date of this Agreement
has been placed in service, Employer shall, at Executive's option,
provide Executive with a replacement luxury class vehicle of his choice
and allow Executive to acquire the original vehicle for its book value
as shown on the records of Employer. Upon Executive's retirement or
termination under the provisions of Paragraph 6 below, he shall be
permitted to acquire his then provided vehicle upon the same terms as
above.
(f) ADDITIONAL LIFE INSURANCE. Employer shall provide the
Employee additional life insurance in the amount of five hundred
thousand dollars ($500,000) under a split dollar arrangement whereby
Employer is assigned the cash value of the policy to the extent of the
premiums paid by Employer and the Employee owns all other rights in
the policy. Executive's obligation under the arrangement shall be to
pay the annual cost of the policy as if the policy were a term policy,
and Employer shall pay the balance of premiums. Executive shall be
entitled to receive each year a bonus in sufficient amount and at such
time that he will have the necessary funds to pay his required cost
amount. Employer shall continue this insurance coverage in the case of
the termination of this Agreement due to the Executive's disability (as
hereinafter defined) under the terms and conditions described herein.
Upon Executive's retirement or termination (other than due to his
disability) under the provisions of Paragraph 6, Employer shall assign
all of its interest in the policy to Executive upon payment to Employer
of the amount Employer has contributed to the payment of the premiums.
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(g) CLUBS. Executive shall be required to belong to two
Chicago area clubs, one of which shall be a golf club and the other a
dining or in town athletic club. The choice of clubs shall be
Executive's and they shall be primarily chosen for business purposes.
The cost of said clubs shall be borne by Employer and Executive shall
reimburse Employer for any strictly personal charges incurred. Upon
Executive's termination of employment hereunder, he shall be allowed
to continue membership in said clubs at his expense. Executive shall
not be required to reimburse Employer or Employer for any dues,
assessments or initial membership fees.
(h) FINANCIAL PLANNING. Employer shall reimburse Executive for
expenses incurred by Executive in securing personal financial planning
services. Such reimbursement shall not exceed $15,000 over the term of
this Agreement.
6. TERMINATION. Unless earlier terminated in accordance with
the following provisions of this Paragraph 6, Employer shall continue
to employ Executive and Executive shall remain employed by Employer
during the entire term of this Agreement as set forth in Paragraph
l(b). Paragraph 7 hereof sets forth certain obligations of Employer in
the event that Executive's employment hereunder is terminated. Certain
capitalized terms used in this Paragraph 6 and in Paragraph 7 hereof
are defined in Paragraph 6(d), below.
(a) DEATH OR DISABILITY. Except to the extent otherwise
provided in Paragraph 7 with respect to certain post-Date of
Termination payment obligations of Employer and as provided in the last
sentence of Paragraph 6(d)(v), this Agreement shall terminate
immediately as of the Date of Termination in the event of Executive's
death or in the event that Executive becomes disabled. 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, 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 Executive has no reasonable
objection, determines in writing that Executive will, by reason of
physical or mental injury or disease, be unable to perform
substantially all of 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 Executive is disabled, upon reasonable
request therefor by the Board, 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
Executive written notice of any such determination of Executive's
disability and of any decision of the Board to terminate Executive' s
employment by reason thereof. In the event of disability, until the
Date of Termination, the base salary payable to Executive under
Paragraph 3 hereof shall be reduced dollar-for-dollar by the amount of
disability benefits, if any, paid to Executive in accordance with any
disability policy or program of Employer.
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(b) DISCHARGE FOR CAUSE. In accordance with the procedures
hereinafter set forth, the Board may discharge Executive from his
employment hereunder for Cause (as hereinafter defined). Except to the
extent otherwise provided in Paragraph 7 with respect to certain
post-Date of Termination obligations of Employer, this Agreement shall
terminate immediately as of the Date of Termination in the event
Executive is discharged for Cause. Any discharge of Executive for Cause
shall be communicated by a Notice of Termination (as hereinafter
defined) to Executive given in accordance with Paragraph 14 of this
Agreement.
(c) TERMINATION FOR OTHER REASONS. Employer may discharge
Executive without Cause by giving written notice to Executive in
accordance with Paragraph 14. Executive may resign from his employment
with or without Good Reason (as hereinafter defined), without liability
to Employer, by giving written notice to Employer in accordance with
Paragraph 14 at least sixty (60) 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 one hundred twenty (120) days after the occurrence which
constitutes "Good Reason" or during the period described in the final
sentence of Paragraph 6(d)(v). Except to the extent otherwise provided
in Paragraph 7 with respect to certain post-Date of Termination
obligations of Employer, this Agreement shall terminate immediately as
of the Date of Termination in the event 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:
(i) "ACCRUED OBLIGATIONS" shall mean, as of the Date of
Termination, the sum of (A) 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 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 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 6(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.
(ii) "CAUSE" shall mean (A) Executive's willful and continued
(for a period of not less than thirty (30) 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) Executive's willful engaging in illegal conduct or
gross misconduct which is materially and demonstrably injurious to
Employer; or (C) 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 Employer for which Executive
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is charged solely as a result of his offices with 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 Executive, shall be considered "willful" unless it is done, or omitted to be
done, by Executive in bad faith or without reasonable belief that Executive's
action or omission was in the best interests of Employer; and provided further
that no act or omission by Executive shall constitute Cause hereunder unless
Employer has given detailed written notice thereof to Executive, and Executive
has failed to remedy such act or omission. Following a Change in Control (as
hereinafter defined), the Board may discharge Executive for Cause only for acts
or omissions of the Executive that occur after the occurrence of a Change in
Control.
(iii) "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 Employer or any of its subsidiaries, or (ii) a
corporation owned directly or indirectly by the stockholders of
Employer in substantially the same proportions as their ownership of
stock of Employer, is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under said Act), directly or indirectly, of securities of
Employer representing 20% or more of the total voting power of the then
outstanding shares of capital stock of Employer 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 20% or more of the Voting
Stock as the result of an acquisition of such Voting Stock directly
from Employer, or (2) such person becomes a beneficial owner of 20% 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 Employer; 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 20% 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 Employer, and any new director, whose
election by the board of directors of Employer or nomination for
election by Employer'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
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(c) Consummation of a reorganization, merger or consolidation
or the sale or other disposition of' all or substantially all of the
assets of Employer (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 70% 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 Employer or all or substantially all of Employer'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 Employer, and
(2) at least two-thirds 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 Employer approve a plan of complete
liquidation or dissolution of Employer.
The board of directors of Employer 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.
(iv) "DATE OF TERMINATION" shall mean (A) in the event of a discharge
of Executive for or without Cause, the date 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 Executive, the date specified
in the written notice to Employer, which date shall be no less than sixty (60)
days from the date of such written notice, (C) in the event of Executive's
death, the date of Executive's death, and (D) in the event of termination of
Executive's employment by reason of disability pursuant to Paragraph 7(a), the
date Executive receives written notice of such termination.
(v) "GOOD REASON" shall mean the occurrence, other than in connection
with a discharge for Cause, of any of the following without Executive's consent:
(A) Executive is not reelected or is removed from the positions with 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 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 Employer promptly after receipt of written
notice thereof given by Executive in accordance with Paragraph 14; or (C) any
failure by Employer to comply with any of the provisions of this Agreement,
including a reduction in Executive's base salary or Employer's discontinuation
of the benefits described in Paragraph 5 unless said benefit program is
discontinued for all executive officers of Employer and Employer, other than any
isolated, insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by Employer promptly after receipt of written notice thereof
given by Executive in accordance with Paragraph 14; or (D) Employer giving
notice to
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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) Employer
requiring Executive to be based at an office or location which is more than ten
(10) miles from Executive's office as of the Effective Date; or (F) Executive is
not re-elected to serve as a director of Employer or Employer. In addition, any
termination of this Agreement by Executive for any reason, including his death
or disability, during the one (1) year period beginning on the date of the
occurrence of a Change in Control shall be deemed to be for "Good Reason."
(vi) "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 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 Date of Termination.
7. OBLIGATIONS OF EMPLOYER UPON TERMINATION. The following provisions
describe the obligations of Employer to 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 Executive may have under applicable law, under any other
agreement with Employer or any of its affiliates or subsidiaries, or under any
compensation or benefit plan, program, policy or practice of 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 6(a) by
reason of the death or disability of Executive, or pursuant to Paragraph 6(b) by
reason of the discharge of Executive by Employer for Cause, or pursuant to
Paragraph 6(c) by reason of the resignation of Executive other than for Good
Reason, Employer shall pay to Executive, or his heirs or estate, in the event of
Executive's death, all Accrued Obligations in a lump sum in cash within thirty
(30) days after the Date of Termination and, in the event this Agreement
terminates due to Executive's disability, Employer shall also comply with the
provisions of Paragraphs 5(e), 5(f) and 5(g), above; 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 Executive; provided further, that in
the event of Executive's death or disability during the one (1) year period
following the occurrence of a Change in Control, Executive shall be deemed to
have terminated this Agreement for Good Reason and Executive (or his heirs or
estate) shall receive the payments described in Paragraph 7(c), below.
(b) DISCHARGE WITHOUT CAUSE OR RESIGNATION WITH GOOD REASON. In the
event that prior to the occurrence of a Change in Control, this Agreement
terminates pursuant to Paragraph 6(c) by reason of: (1) the discharge of
Executive by Employer for any reason (other than for Cause); or (2) by reason of
the resignation of Executive for Good Reason:
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(i) Employer shall pay all Accrued Obligations to 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 Executive;
(ii) Within thirty (30) days after the Date of Termination, Employer
shall pay to Executive a bonus for the year during which termination occurs,
calculated as a prorata portion of his then current target annual bonus amount
based on the number of days elapsed during the year through the Date of
Termination;
(iii) Employer shall continue to pay to Executive for the remainder of
the Term of this Agreement (up to thirty-six (36) months) or for a period of
twelve (12) months, whichever is longer (the "Severance Period"), an annual
salary equal to the greater of Executive's base salary as of the Date of
Termination or Executive's base salary during the calendar year immediately
preceding the year in which the Date of Termination occurs, payable in
substantially equal installments in accordance with Employer's regular payroll
practices;
(iv) During the Severance Period, Employer shall provide complete
medical, dental, life insurance, and accident and disability insurance coverage
for Executive at no cost to Executive, said coverage to be the same or
equivalent to the coverage provided other Employer executive employees; and
(v) Employer shall pay for outplacement counseling, the scope and
provider of which shall be selected by Executive, for a period beginning on the
Date of Termination and ending on the date 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 two (2) years, and the cost of such services
exceed $15,000.
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, Employer may, in its sole discretion, agree to extend the
Severance Period for up to an additional twelve (12) months (the "Extended
Severance Period"). The payments to Executive described in clause (III), above,
and the coverages described in clause (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 Executive becomes
employed or provides compensated services of any type (including
self-employment).
Executive shall provide such information as Employer may reasonably request to
determine Executive's continued eligibility for the payments and benefits
provided by this Paragraph 7(b).
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(c) EFFECT OF CHANGE IN CONTROL. In the event that a Change in Control
occurs and this Agreement thereafter terminates pursuant to Paragraph 6(c) by
reason of: (1) the discharge of Executive by Employer for any reason (other than
for Cause); or (2) the resignation of Executive for Good Reason:
(i) Employer shall pay all Accrued Obligations to 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 Executive;
(ii) Employer shall continue to pay to Executive during the
four year period after the Date of Termination (the "Change of Control
Payment Period") an annual salary equal to the greater of Executive's
base salary as of the Date of Termination or Executive's base salary
during the calendar year immediately preceding the year in which the
Change in Control occurred, payable in substantially equal installments
in accordance with Employer's regular payroll practices;
(iii) For each fiscal year during the Change in Control
Payment Period, Employer shall pay to Executive within thirty (30) days
of the end of each such fiscal year:
(A) the greater of (Y) Executive's target bonus under
Employer's annual bonus plan for the calendar year in which
the Date of Termination occurs, or (Z) the average of the sum
of the amounts earned by Executive under the annual bonus plan
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
(B) (except to the extent coverage is provided
pursuant to clause (iv), below) the sum of:
(I) the annual value of the contributions that
would have been expected to be made or credited by Employer
to, and benefits expected to be accrued under, the qualified
and non-qualified employee profit sharing, 40l(k), pension
and any other benefit plans maintained by Employer to or for
the benefit of Executive; plus
(II) the annual value of the Other Benefits
described in Paragraph 5(a), (c) above and (g).
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(iv) During the Change in Control Period, Employer
shall provide complete medical, dental, life insurance and
accident and disability insurance coverage for Executive at no
cost to Executive, said coverage to be the same or equivalent
to the coverage provided other Employer executive employees.
For purposes of paragraph (B)(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 Executive perquisites described in Paragraph
5(c) for purposes of paragraph (B)(II), above, shall be 7.5% of the annual base
salary amount applicable under clause (ii), above.
At Executive's option, and provided Executive gives written notice to Employer
within one hundred twenty (120) days of the Date of Termination, Employer shall
make to Executive within thirty (30) days of Employer's receipt of such notice,
a lump sum payment equal the amounts to be paid to Executive pursuant to clauses
(ii) and (iii), above (less any sums previously paid to Executive pursuant to
such clauses), and shall comply with clause (iv), above, for the remainder of
the Change in Control Payment Period.
Executive shall also be entitled to out-placement counseling from a firm
selected by Executive for a period beginning on the Date of Termination 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, and the cost of such services shall not exceed $15,000.
Notwithstanding the foregoing, if this Agreement is terminated pursuant to
Paragraph 6(c) by reason of: (a) the discharge of Executive by Employer for any
reason (other than for Cause); or (b) the resignation of Executive for Good
Reason, and if a Change in Control thereafter occurs, then Executive shall be
deemed for purposes of this Paragraph 7(c) to have been terminated pursuant to
Paragraph 7(c) immediately following the date the Change in Control occurs and
to be entitled to receive the payments described in Paragraph 7(c) 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. Payments received by Executive pursuant
to Paragraph 7(b) prior to the time it is determined that Executive is eligible
to receive payments pursuant to Paragraph 7(c) shall be deemed to be additional
payments and shall not be deducted from the amounts Executive is to receive
pursuant to Paragraph 7(c).
(d) EFFECT ON OTHER AMOUNTS. The payments provided for in this
Paragraph 7 shall be in addition to all other sums then payable and owing to
Executive shall be subject to
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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 7, and
Executive shall have no rights or obligations under this Agreement, other than
Executive's obligations under Paragraphs 11 and 12 hereof (to the extent
applicable) and his rights under Paragraph 7 (to the extent applicable).
(e) CONDITIONS. Any payments of benefits made or provided pursuant to
this Paragraph 7 are subject to Executive's:
(i) compliance with the provisions of Paragraphs 11 and 12
hereof (to the extent applicable); and
(ii) delivery to Employer of a resignation from all offices,
directorships and fiduciary positions with Employer, its affiliates
and employee benefit plans.
(f) RETIREMENT. In the event this Agreement has not been terminated
as provided in Paragraph 6, upon Executive's retirement as an employee of
Employer, Employer shall provide complete medical and dental insurance
coverage for Executive for so long as he shall live at no cost to Executive,
said coverage to be the same or equivalent to the coverage provided other
Employer executive employees. Coverage shall be reduced by any coverage
Executive then has under any public medical plan such as Medicare. Medical
and dental coverage as provided herein shall include Executive's spouse for
so long as she shall live, provided she does not have coverage available to
her from any other source including Medicare.
8. CERTAIN ADDITIONAL PAYMENTS BY EMPLOYER.
(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by Employer to or
for the benefit of 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 8) (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 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 Executive shall
be entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that, after payment by 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, 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 8, 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
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determination, shall be made by the independent public accountants then
regularly retained by Employer (the "Accounting Firm") in consultation with
counsel acceptable to Executive, which shall provide detailed supporting
calculations both to Employer and Executive within fifteen (15) business days of
the receipt of notice from Executive that there has been a Payment, or such
earlier time as is requested by 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, 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 Employer. Any Gross-Up
Payment, as determined pursuant to this Paragraph 8, shall be paid by Employer
to 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 Executive, it shall furnish Executive with a written opinion that failure to
report the Excise Tax on 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 Employer and
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 Employer should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that Employer exhausts
its remedies pursuant to paragraph (c), below, and 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 (including any
interest and penalties) and any such Underpayment shall be promptly paid by
Employer to or for the benefit of Executive.
(c) Executive shall notify Employer in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by
Employer of a Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than fifteen (15) business days after Executive is
informed in writing of such claim and shall apprise Employer of the nature of
such claim and the date on which such claim is requested to be paid. 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 Employer (or such
shorter period ending on the date that any payment of taxes with respect to such
claim is due). If Employer notifies Executive in writing prior to the expiration
of such period that it desires to contest such claim, Executive shall:
(i) Give Employer any information reasonably requested by Employer
relating to such claim,
(ii) Take such action in connection with contesting such claim as
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 Employer,
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(iii) Cooperate with Employer in good faith in order effectively to
contest such claim, and
(iv) Permit Employer to participate in any proceedings relating to such
claim;
provided, however, that 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 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), 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
Executive to pay the tax claimed and ▇▇▇ for a refund or contest the claim in
any permissible manner; and 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 Employer shall determine;
provided, however, that if Employer directs Executive to pay such claim and ▇▇▇
for a refund, Employer shall advance the amount of such payment to Executive on
an interest-free basis and shall indemnify and hold 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 Executive with respect to which such contested amount is
claimed to be due is limited solely to such contested amount. Furthermore,
Employer's control of the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and 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 Executive of an amount advanced by
Employer pursuant to paragraph (c), above, Executive becomes entitled to receive
any refund with respect to such claim, Executive shall (subject to Employer's
complying with the requirements of said paragraph (c)) promptly pay to Employer
the amount of such refund (together with any interest paid or credited thereon,
after taxes applicable thereto). If, after the receipt by Executive of an amount
advanced by Employer pursuant to said paragraph (c), a determination is made
that Executive shall not be entitled to any refund with respect to such claim
and Employer does not notify 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.
9. 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
14
by Employer, an accountant chosen by Executive and an independent accountant
acceptable to both Executive and Employer, as the case may be. The committee's
determination shall be binding and conclusive on the parties hereto. Employer
shall pay all fees and expenses of the dispute resolution.
10. ENFORCEMENT. In the event Employer shall fail to pay any amounts due
to Executive under this Agreement as they come due, 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. 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.
11. 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 Employer or any of its
subsidiaries or affiliates, any proprietary information or data of Employer or
any of its subsidiaries or affiliates, which is not generally known in the
banking business and which 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 Employer or the business affairs and activities of
any- customer, prospective customer, individual firm or entity doing business
with 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 Employer and upon termination of
his employment for any reason, said records shall be left with Employer as part
of its property.
12. NON-COMPETITION. Executive acknowledges that 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 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
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 Employer or any of its subsidiaries or affiliates
not to do business with Employer or any of its subsidiaries or
affiliates; or
15
(b) solicit or induce, or attempt to solicit or induce, any
employee or agent of Employer or any of its subsidiaries or affiliates
to terminate his or her relationship with Employer or any of its
subsidiaries or affiliates.
For purposes of this Agreement, "Market Area" shall be an area encompassed
within ten (10) miles from the principal offices of Employer or any of its
subsidiaries, except for the central loop area of Chicago.
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 Employer.
13. REMEDIES. Executive acknowledges that the restraints and agreements
herein provided are fair and reasonable, that enforcement of the provisions of
Paragraphs 11 and 12 will not cause him/her undue hardship and that said
provisions are reasonably necessary and commensurate with the need to protect
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 11 or 12 above, will result
in irreparable harm to the business of 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 11 and 12 is inadequate, (c) in addition to any remedy
at law or equity for such breach, 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 11 and 12, 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 Employer,
whether predicated on this Agreement or otherwise, shall not constitute a
defense or bar to the specific enforcement by 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.
14. 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.
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(b) If to Employer:
Upbancorp, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Board of Directors
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy No: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address(es) or telecopy number(s) as any party may designate by
Written Notice in the aforesaid manner.
15. FULL SETTLEMENT; NO MITIGATION. 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 Employer
may have against Executive or others. In no event shall Executive be obligated
to seek other employment or take any other action by way of mitigation of the
amounts payable to Executive under any of the provisions of this Agreement, and
such amounts shall not be reduced whether or not Executive obtains other
employment.
16. PAYMENT IN THE EVENT OF DEATH. In the event payment is due and owing
by Employer to Executive under this Agreement upon the death of Executive,
payment shall be made 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 Employer and in full settlement and satisfaction of all severance benefit
payments provided for in this Agreement.
17. 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 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.
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18. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the heirs and representatives of Executive and the successors and
assigns of Employer. 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
Executive, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that 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
Employer in accordance with the operation of law, and such successor shall be
deemed the "Employer" for purposes of this Agreement.
19. TAX WITHHOLDING. 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 Employer to or for the benefit of Executive under this Agreement or
otherwise. Employer may, at its option: (a) withhold such taxes from any cash
payments owing from Employer to Executive, (b) require Executive to pay to
Employer in cash such amount as may be required to satisfy such withholding
obligations and/or (c) make other satisfactory arrangements with Executive to
satisfy such withholding obligations.
20. 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. In certain situations, Employer may
direct its wholly-owned subsidiary, Uptown National Bank of Chicago
("Uptown"), to provide to Executive certain of the benefits described herein.
21. 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.
22. JURISDICTION AND GOVERNING LAW. 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.
23. 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
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.
24. 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.
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25. AMENDMENT. No change, alteration or modification hereof may be made
except in a writing, signed by each of the parties hereto.
26. 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.
UPBANCORP, INC.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
Its authorized officer
EXECUTIVE
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman, President and Chief
Executive Officer
Address: ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
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