CONFIDENTIAL SEPARATION AGREEMENT
This Confidential Separation Agreement ("Agreement") is made and entered
into as of the date indicated below between THE ST. ▇▇▇▇ COMPANIES, INC.,
including all of its subsidiaries, affiliates and related entities (collectively
"St. ▇▇▇▇"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("EXECUTIVE").
St. ▇▇▇▇ and Executive wish to provide for the separation of their
employment relationship and all agreements that may have existed between them,
and fully and finally to settle any and all disputes arising out of Executive's
employment by St. ▇▇▇▇ or the separation of that employment, without any
admission of any kind by either party.
Therefore, in consideration of the mutual promises and agreements set
forth in this Agreement, St. ▇▇▇▇ and Executive agree as follows:
I. EMPLOYMENT SEPARATION
A. SEPARATION DATE. Effective as of September 4, 1998 (the
"Separation Date"), Executive's employment relationship with St. ▇▇▇▇ will
cease. Executive hereby resigns, effective as of the Separation Date, from all
active employment with St. ▇▇▇▇ and, effective as of August 21, 1998, from all
directorships, offices and positions with St. ▇▇▇▇, including, without
limitation, as a director of The St. ▇▇▇▇ Companies, Inc. and The ▇▇▇▇ Nuveen
Company.
B. SEPARATION. Effective on the Separation Date, Executive shall
have no duties and no authority to make any representations or commitments on
behalf of St. ▇▇▇▇. Thereafter, Executive shall have no further rights deriving
from Executive's employment by St. ▇▇▇▇, and shall not be entitled to any
further compensation or non-vested benefits, except as provided in this
Agreement. Executive agrees to vacate St. ▇▇▇▇ premises on the Separation Date.
II. CONSIDERATION
Subject to Executive's compliance with, and in exchange for, the
promises contained in Section III, and subject further to the effectiveness of
the Waiver and Release of Claims and Covenant Not To ▇▇▇ set forth in
Section IV, and to the terms and conditions set forth in this Agreement,
St. ▇▇▇▇ agrees to provide Executive with the payments and benefits set forth in
this Section II ("Consideration"). The payments and other benefits to be
provided hereunder are in place of, and not in addition to, payments otherwise
provided under The St. ▇▇▇▇ Companies, Inc. Severance Plan or any other St. ▇▇▇▇
▇▇▇▇▇▇▇▇▇ plan or policy. No payments will be made hereunder until the
Effective Date, as defined in Section IV.
In no event shall Executive be obligated to seek other employment or
take other action by way of mitigation of the amounts payable to Executive under
any of the provisions of this Agreement.
(1)
A. SEPARATION PAYMENT.
1. SEPARATION PAYMENT; BASE SALARY CONTINUATION. St. ▇▇▇▇
will pay Executive a separation payment of $900,000, on or promptly after the
Separation Date. In addition, St. ▇▇▇▇ will pay Executive a separation payment
equal to One Million, Two Hundred Thousand Dollars ($1,200,000.00), payable in
equal installments over a twenty-four (24) month period on the first of each
month in advance, PROVIDED that the first installment hereunder will be paid as
of the first day of the month following the month in which Effective Date
occurs.
2. ADDITIONAL PAYMENT. Executive will be eligible to
receive an annual incentive bonus for the calendar year containing Executive's
Separation Date, (1998) and for the two calendar years following such year (1999
and 2000) payable on the date that incentive bonuses with respect to such
calendar years are paid to active employees under the terms of The St. ▇▇▇▇
Companies, Inc. Annual Incentive Plan. The bonus amount payable pursuant to
this Subsection in respect of 1998 will equal the incentive bonus to which
Executive would have been entitled to receive at Executive's opportunity level
immediately prior to the Separation Date in accordance with the terms of said
Annual Incentive Plan multiplied by the achievement percentage which applies to
the Chief Executive Officer of The St. ▇▇▇▇ Companies, Inc. for 1998, and the
bonus amount payable pursuant to this Subsection in respect of each of 1999 and
2000 shall be $300,000 per year.
B. STOCK OPTIONS.
1. 1998 GRANT. The option to purchase 98,982 shares of
common stock of The St. ▇▇▇▇ Companies, Inc. granted to Executive in 1998
pursuant to the 1994 Stock Incentive Plan shall expire as of the Separation
Date. St. ▇▇▇▇ will grant Executive a stock appreciation right in the form
attached hereto as Appendix A (the "1998 SAR") in respect of 98,982 shares of
common stock of The St. ▇▇▇▇ Companies, Inc.
2. OTHER OPTIONS. All options held by Executive which are
vested and exercisable as of the Separation Date will remain exercisable for a
period of one month following the Separation Date (the "Expiration Date") in
accordance with the terms of The St. ▇▇▇▇ Companies, Inc. 1988 or 1994 Stock
Incentive Plan, as the case may be. St. ▇▇▇▇ will ▇▇▇▇▇ Executive a stock
appreciation right (the "Vested SAR") in the form attached hereto as Appendix A
with respect to options which are vested and remain unexercised as of the
Expiration Date. All options, other than the 1998 Grant, which have not vested
as of the Separation Date, including without limitation the "mega-grant," which
will be canceled, will be treated in accordance with the terms of the applicable
grant and shall expire as of the Separation Date.
(2)
3. COMPENSATION COMMITTEE APPROVAL. St. ▇▇▇▇ represents to
Employee that the grant of the 1998 SAR and the Vested SAR to Executive have
been approved, or will have been approved prior to September 4, 1998, by the
Compensation Committee of The St. ▇▇▇▇ Companies, Inc. Board of Directors, which
is comprised solely of Non-Employee Directors (as defined in Rule 16b-3 under
the Securities Exchange Act of 1934).
C. RESTRICTED STOCK. St. ▇▇▇▇ will allow the sale restrictions
applicable to the 8,000 (post-stock split) shares of restricted stock granted to
Executive on May 2, 1994 which remain subject to restrictions as of the
Separation Date to lapse as of their regular vesting date of May 2, 1999.
D. LTIP PAYMENT. Executive will receive a long-term incentive award
under The St. ▇▇▇▇ Companies, Inc. Long-Term Incentive Plan for the 1996-1998
performance period, payable in a single lump sum at the same time that active
employees will receive payment of their long-term incentive awards for the
1996-1998 performance period. This payment will equal the amount that would
have been payable to Executive had Executive remained employed with St. ▇▇▇▇
through December 31, 1998.
E. EXECUTIVE RETIREMENT PLAN BENEFITS. Executive will be entitled
to receive a benefit under the Executive Retirement Plan component of The St.
▇▇▇▇ Companies, Inc. Benefit Equalization Plan equal to the actuarial present
value of Executive's Executive Retirement Plan benefits, if any, under the
Executive Retirement Plan provisions of The St. ▇▇▇▇ Companies, Inc. Benefit
Equalization Plan as of the date Executive becomes eligible to receive benefits
under the Plan (the "Benefit Commencement Date"). For purposes of the preceding
sentence, the actuarial present value of Executive's Executive Retirement Plan
benefits shall be computed in the same manner and using the same actuarial
assumptions used by The St. ▇▇▇▇ Companies, Inc. Employees' Retirement Plan to
determine the actuarial present value of a person's retirement benefits
thereunder as of the Benefit Commencement Date; PROVIDED, HOWEVER, that for this
purpose Executive will be credited with an additional two years of service.
The Executive Retirement Plan benefit (including any death
benefit) payable pursuant to this Subsection E. shall be in full satisfaction of
the Executive Retirement Plan benefits payable to Executive pursuant to the
Executive Retirement Plan provisions of The St. ▇▇▇▇ Companies, Inc. Benefit
Equalization Plan.
F. BENEFITS CONTINUATION. St. ▇▇▇▇ will continue to provide, for a
period of twenty-four (24) months following the Separation Date, or until the
date that Executive becomes eligible to participate in the welfare plans of a
new employer, if earlier, the Executive's family medical and dental coverage,
life, long-term disability and AD&D insurance currently provided under The St.
▇▇▇▇ Companies, Inc. Employee Benefit Plan under substantially the same terms
and conditions (including contributions or premium payments required from
Executive for such benefits) as
(3)
applicable from time to time to senior executives of The St. ▇▇▇▇ Companies,
Inc., PROVIDED, that if Executive cannot continue to participate in any such
Employee Benefit Plan under its terms, St. ▇▇▇▇ will otherwise provide
comparable benefits on the same after-tax basis as if continued participation
had been permitted.
After the expiration of the continuation coverage period,
Executive may elect to convert his employee/dependent life insurance coverage to
an individual policy in accordance with the provisions of The St. ▇▇▇▇
Companies, Inc. Employee Benefit Plan.
G. MISCELLANEOUS PAYMENTS. St. ▇▇▇▇ will pay Executive One Hundred
Thirty-Six Thousand, Seven Hundred and Ninety-Eight Dollars ($136,798) as soon
as practicable following the Separation Date.
H. VACATION. Executive will receive payment for any unused, earned
regular, banked or purchased vacation days, as well as any unused floating
holidays, credited to Executive as of the Separation Date. Such payment will be
made with Executive's final regular payroll check.
I. OUTPLACEMENT SERVICES. Executive will receive outplacement
services from ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ at St. Paul's expense, for a period of up to
one-year following the Separation Date. Such outplacement services will include
the provision of an office and secretarial, telephone and telecopier services
for use by the Executive during such one-year period; PROVIDED THAT St. ▇▇▇▇ ▇▇▇
elect to provide Executive with office, secretarial, telephone and telecopier
services on the Company's premises or in other office space provided for
Executive.
J. ACKNOWLEDGMENT. Executive acknowledges that the Consideration
provided in this Agreement, which is in place of other payments and benefits, is
good and valuable consideration in exchange for this Agreement, and includes
payments and benefits to which Executive is not otherwise entitled.
K. WITHHOLDING. St. ▇▇▇▇ will withhold from the compensation and
benefits payable to Executive under Section II of this Agreement all appropriate
deductions for employee benefits, if applicable, and the amounts necessary for
St. ▇▇▇▇ to satisfy its withholding obligations under Federal, state and local
income and employment tax laws.
III. EXECUTIVE'S COVENANTS TO ST. ▇▇▇▇
The parties desire to provide for the protection of the business, good
will, confidential information, relationship and other proprietary rights of St.
▇▇▇▇. Accordingly, Executive agrees to the following:
(4)
A. PROPERTY OF ST. ▇▇▇▇. By the Separation Date, Executive will
return to St. ▇▇▇▇ all Company property, including, but not limited to all
identification cards; files; computer hardware, software, equipment and disks;
keys; Company owned or leased vehicles; credit cards; and records.
B. FUTURE CONDUCT. Executive agrees that he shall refer any
inquiries from the media, financial analysts or St. ▇▇▇▇ shareholder communities
concerning the reasons for his departure from St. ▇▇▇▇ to the Senior Vice
President-Human Resources or Senior Vice President-Chief Legal Counsel of
St. ▇▇▇▇ and shall not provide any such persons with any information concerning
the reasons for his departure beyond that described in St. Paul's announcement
of Executive's departure. Executive further agrees not to engage in any
discussion with any former or present director of St. ▇▇▇▇ concerning his
reasons for departure without first informing the Senior Vice President-Human
Resources of St. ▇▇▇▇ or its Senior Vice President-Chief Legal Counsel. For
purposes of this paragraph, St. ▇▇▇▇ and Executive further agree, however, that,
subject to the following sentence and the other provisions of this agreement,
Executive may explain, solely in connection with his search for future
employment, that the primary reason for his departure was the decision of the
Board of Directors of The St. ▇▇▇▇ Companies, Inc. that Executive would not be
considered as a candidate to become President or CEO of The St. ▇▇▇▇ Companies,
Inc. and that, although Executive was offered another executive position within
St. ▇▇▇▇, he would not continue as President of world wide insurance operations.
Executive agrees not to engage in any form of conduct, or make any statements or
representations, that disparage or otherwise harm the reputation, goodwill or
commercial interests of St. ▇▇▇▇ or its management.
In addition, Executive agrees to cooperate fully with St. ▇▇▇▇,
including its attorneys or accountants, in connection with any potential or
actual litigation, or other real or potential disputes, which directly or
indirectly involves St. ▇▇▇▇. Executive agrees to appear as a witness and be
available to attend depositions, consultations or meetings regarding litigation
or potential litigation as reasonably requested by St. ▇▇▇▇. St. ▇▇▇▇
acknowledges that these efforts, if necessary, will impose on Executive's time
and would likely interfere with other commitments Executive may have in the
future. Consequently, St. ▇▇▇▇ shall attempt to schedule such depositions,
consultations or meetings in coordination with Executive's schedule, but
Executive recognizes that scheduling of certain court proceedings, including
depositions, may be beyond St. Paul's control. Likewise, St. ▇▇▇▇ agrees to
provide Executive with reasonable compensation for Executive's time spent
traveling to and from and attending such depositions, consultations or meetings,
not to include ancillary time spent at hotels and related locations during
evenings between proceedings. St. ▇▇▇▇ also agrees to reimburse Executive for
the out-of-pocket expenditures actually and reasonably incurred by Executive in
connection with the performance of the services contemplated by this Subsection,
including hotel accommodations, air fare transportation and meals consistent
with St. Paul's generally-applicable expense reimbursement policies. It is
expressly understood by the parties that any compensation paid by St. ▇▇▇▇ to
Executive under this Subsection shall be in exchange for Executive's time and is
not intended or
(5)
understood to be dependent upon the character of content of any information
Executive discloses in good faith in any such proceedings, meetings or
consultation.
C. CONFIDENTIALITY OF THIS AGREEMENT. Executive and St. ▇▇▇▇ agree
that this Agreement and its terms will be regarded as privileged and
confidential communications between the parties, and that neither they nor their
counsel will reveal or disclose either the terms or the substance of this
Agreement to any other person, except as required by law (including the
securities laws), subpoena, court order or other legal process. This
restriction applies to any members of the public, and to any current, future or
former employees of St. ▇▇▇▇. If disclosure is compelled by law (including the
securities laws), subpoena, court order or other legal process, or as otherwise
required by law, the party so compelled agrees to notify the other party as soon
as notice of such requirement or process is received and before disclosure takes
place. Notwithstanding these provisions, Executive may disclose the terms of
this Agreement to members of Executive's immediate family, Executive's
accountant or financial advisor, and Executive's attorney upon their agreement
to maintain this Agreement in strict confidence, as set forth in this
Subsection. Further, nothing in this Subsection limits St. Paul's ability to
disclose the information internally to those persons with a legitimate business
reason to have access to the information.
D. CONFIDENTIAL INFORMATION. Executive acknowledges that he has had
access to confidential Company business information (including, but not limited
to, future business plans, pricing strategies, marketing plans, customer lists,
agent/broker lists, underwriting objectives, financial information and personnel
information) concerning the business, plans, finances and assets of St. ▇▇▇▇
("Confidential Information") and which is not generally known outside St. ▇▇▇▇.
For all time, Executive agrees that he shall not, without the proper written
authorization of St. ▇▇▇▇, directly or indirectly use, divulge, furnish or make
accessible to any person any Confidential Information, but instead shall keep
all Confidential Information strictly and absolutely confidential. Executive
will use reasonable and prudent care to safeguard and prevent the unauthorized
use or disclosure of Confidential Information.
Further, Executive expressly acknowledges that the terms of this
Subsection are material to this Agreement, and if Executive breaches the terms
of this Subsection, Executive shall be responsible for all damages and, at the
election of St. ▇▇▇▇, the return of all consideration paid hereunder, without
prejudice to any other rights and remedies that St. ▇▇▇▇ ▇▇▇ have.
Executive acknowledges and agrees that the Confidential
Information and special knowledge acquired during Executive's employment with
St. ▇▇▇▇ is valuable and unique, and that breach by Executive of the provisions
of this Agreement as described in this Subsection will cause St. ▇▇▇▇
irreparable injury and damage, which cannot be reasonably or adequately
compensated by money damages. Executive, therefore, expressly agrees that St.
▇▇▇▇ shall be entitled to injunctive or other equitable relief in order to
prevent a breach of this Agreement or any part thereof, in
(6)
addition to such other remedies legally available to St. ▇▇▇▇. Executive
expressly waives the claim that St. ▇▇▇▇ has an adequate remedy at law.
E. SOLICITATION OF EMPLOYEES. Executive shall not, at any time
prior to the Separation Date or during twenty-four (24) month period following
the Separation Date, solicit, participate in or promote the solicitation of any
person who was employed by St. ▇▇▇▇ on the Separation Date to leave the employ
of St. ▇▇▇▇ or, on behalf of himself or any other person, hire, employ or engage
any such person. Executive further agrees that, during such time, if an
employee of St. ▇▇▇▇ contacts Executive about prospective employment, Executive
will inform such employee that he or she cannot discuss the matter further
without informing St. ▇▇▇▇.
F. SOLICITATION OF CLIENTS, CUSTOMERS, ETC. Executive shall not, at
any time prior to the Separation Date or during the twenty-four (24) month
period following the Separation Date, solicit or take any action to cause the
solicitation of any person who, as of the Separation Date was a client,
customer, policyholder, vendor, consultant or agent of St. ▇▇▇▇ to discontinue
business, in whole or in part with St. ▇▇▇▇. This provision is not intended to
apply to situations in which an independent agent, who has a pre-existing
relationship with an insurer or other subsequent employer of Executive, decides
of his or her own volition to do business with such insurer or other employer
which has the effect of reducing the business of St. ▇▇▇▇ with such independent
agent; PROVIDED, that Executive has not personally instigated or caused such
independent agent to discontinue business with St. ▇▇▇▇. Executive further
agrees that, during such time, if a client, customer, policyholder, vendor,
consultant or agent of St. ▇▇▇▇ contacts Executive about discontinuing business
with St. ▇▇▇▇ and/or moving that business elsewhere, Executive will inform such
person that he cannot discuss the matter further without informing St. ▇▇▇▇.
IV. GENERAL WAIVER, RELEASE AND COVENANT NOT TO ▇▇▇ BY EXECUTIVE
A. GENERAL WAIVER AND RELEASE BY EXECUTIVE.
1. As a material inducement to St. ▇▇▇▇ to enter into this
Agreement, and in consideration of St. Paul's promise to make the payments and
provide the benefits set forth in this Agreement, Executive hereby knowingly and
voluntarily releases and forever discharges St. ▇▇▇▇, and all of its Affiliates,
parents, subsidiaries and related entities, and all of their past, present and
future respective agents, officers, directors, shareholders, employees,
attorneys and assigns from any federal, state or local charges, claims, demands,
actions, liabilities, suits, or causes of action, at law or equity or otherwise
and any and all rights to or claims for continued employment after the
Separation Date, attorneys fees or damages including contract, compensatory,
punitive or liquidated damages) or equitable relief, which he may ever have had,
has now or may ever have or which Executive's heirs, executors or assigns can or
shall have, against any or all of them,
(7)
whether known or unknown, on account of or arising out of Executive's employment
with St. ▇▇▇▇ or the termination thereof.
2. This release includes, but is not limited to, rights and
claims arising under the Age Discrimination in Employment Act of 1967, as
amended by the Older Workers Benefit Protection Act of 1990, Title VII of the
Civil Rights Act of 1964, as amended, the Americans with Disabilities Act, the
Fair Labor Standards Act, any state or local human rights statute or ordinance,
any claims or rights of action relating to breach of contract, public policy,
personal or emotional injury, defamation, additional compensation, or fringe
benefits. Executive specifically waives the benefit of any statute or rule of
law which, if applied to this Agreement, would otherwise exclude from its
binding effect any claims not now known by Executive to exist. This release
does not purport to waive claims arising under these laws after the date of this
Agreement.
3. Executive acknowledges that he has reviewed the
information about the severance offer described above as part of this Agreement.
Executive confirms that he has been given at least twenty-one (21) days within
which to consider this Agreement and the General Waiver and Release contained
herein. Executive further confirms that he has been advised in writing prior to
his execution of this Agreement to consult with legal counsel. Executive
acknowledges that if he executes this Agreement prior to the expiration of
twenty-one (21) days, or chooses to forgo the advice of legal counsel, or any
personal or financial advisor, he does so freely and knowingly, and waives any
and all future claims that such action or actions would affect the validity of
this Agreement. Executive acknowledges that any changes made to this Agreement
after its first presentation to Executive, whether material or immaterial, do
not restart the tolling of this twenty-one (21) day period.
4. Executive understands that he may revoke this Agreement
at any time on or before the fifteenth (15th) day following the date on which he
signs the Agreement. To be effective, the decision to revoke must be in writing
and delivered to St. ▇▇▇▇, personally or by certified mail, to the attention of:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Senior Vice President
The St. ▇▇▇▇ Companies, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
on or before the fifteenth (15th) day after Executive signs the Agreement. In
no case will this Agreement become effective or enforceable against the
Executive or St. ▇▇▇▇ until the expiration of the fifteen (15) day revocation
period (the "Effective Date"). If Executive exercises this limited right to
revoke, or if the release provisions of Section V are held invalid for any
reason
(8)
whatsoever, Executive agrees to return any consideration received under the
terms of this Agreement and that St. ▇▇▇▇ is released from any obligations under
this Agreement.
B. COVENANT NOT TO ▇▇▇. Executive covenants and agrees not to ▇▇▇
or bring any action, whether federal, state, or local, judicial or
administrative, now or at any future time, against St. ▇▇▇▇, its Affiliates, its
or their respective agents, directors, officers or employees, with respect to
any claim released hereby or arising out of Executive's employment with St. ▇▇▇▇
or its Affiliates. Nevertheless, this Agreement does not purport to limit any
right Executive may have to file a charge under the ADEA or other civil rights
statute or to participate in an investigation or proceeding conducted by the
Equal Employment Opportunity Commission or other investigatory agency. This
Agreement does, however, waive and release any right to recover damages under
the ADEA or other civil rights statute.
V. MISCELLANEOUS PROVISIONS
A. NON-ASSIGNMENT OF CLAIMS. Executive represents and warrants that
Executive has not sold, assigned, transferred, conveyed or otherwise disposed of
to any third-party, by operation of law or otherwise, any action, cause of
action, suit, debt, obligation, account, contract, agreement, covenant,
guarantee, controversy, judgment, damage, claim, counterclaim, liability or
demand of any nature whatsoever relating to any matter covered by this
Agreement.
B. SUCCESSORS. This Agreement shall be binding upon, enforceable by
and inure to the benefit of Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees and St. ▇▇▇▇ and any successor company, but neither this Agreement nor
any rights or payments arising hereunder may be assigned, pledged, transferred
or hypothecated by Executive.
C. CONTROLLING LAW AND VENUE. THE VALIDITY OF THIS AGREEMENT AND
ANY OF ITS PROVISIONS AND CONDITIONS, AS WELL AS THE RIGHTS AND DUTIES OF THE
PARTIES, SHALL BE INTERPRETED AND CONSTRUED PURSUANT TO AND IN ACCORDANCE WITH
THE INTERNAL LAWS, AND NOT THE LAW OF CONFLICTS, OF THE STATE OF MINNESOTA. THE
PARTIES SELECT AND IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF ANY
MINNESOTA OR UNITED STATES FEDERAL COURT SITTING IN THE STATE OF MINNESOTA FOR
ANY ACTION TO ENFORCE, CONSTRUE OR INTERPRET THIS AGREEMENT. THE PARTIES
FURTHER WAIVE ANY OBJECTION TO VENUE IN SUCH STATE ON THE BASIS OF FORUM NON
CONVENIENS OR OF CONVENIENCE OF THE PARTY.
D. AMENDMENT. Any amendment to this Agreement shall only be made in
writing and signed by the parties.
(9)
E. WAIVER. No claim or right arising out of a breach or default
under this Agreement can be discharged by a waiver of that claim or right unless
the waiver is in writing signed by the party hereto to be bound by such waiver.
A waiver by any party of a breach or default by the other party of any provision
of this Agreement shall not be deemed a waiver of future compliance with such
provision, and such provision shall remain in full force and effect.
F. NOTICE. All notices, requests, demands and other communications
under the Agreement shall be in writing and delivered in person or sent by
certified mail, postage prepaid, and properly addressed as follows:
To Executive: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
To St. ▇▇▇▇: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior Vice President
The St. ▇▇▇▇ Companies, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Mail Code: 102U
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
The parties agree to notify each other promptly of any change in mailing
address.
G. HEADINGS. Headings used in this Agreement are for reference
purposes only and shall not be deemed to be a part of this Agreement.
H. ENTIRE AGREEMENT. St. ▇▇▇▇ and Executive each represent and
warrant that no promise or inducement has been offered or made except as set
forth and that the consideration stated is the sole consideration for this
Agreement. This Agreement and the Exhibit(s) hereto is a complete agreement and
states fully all agreements, understandings, promises and commitments as between
Executive and St. ▇▇▇▇ as to the separation of Executive from employment by St.
▇▇▇▇. This Agreement supersedes any prior agreements, whether oral or written,
between Executive and St. ▇▇▇▇. Except as expressly provided herein, Executive
is not entitled to any other or further compensation or remuneration.
I. STATUTORY INDEMNIFICATION. Pursuant to Minn. Stat. Section
181-970, Subd. 1, "An employer shall defend and indemnify its employee for civil
damages, penalties or fines claimed or levied against the employee provided that
the employee: (1) was acting in the performance of the duties of the employee's
position; (2) was not guilty of intentional misconduct, willful neglect of the
duties of the employee's position, or bad faith; and (3) has not been
indemnified by another Person for the same damages, penalties or fines."
St. ▇▇▇▇ warrants to Executive that it will
(10)
comply with the requirements of this statute and with any other indemnity
obligations owing to Executive arising out of Executive's service as a director
or officer of St. ▇▇▇▇.
J. UNEMPLOYMENT COMPENSATION. In the event that Executive files a
claim for unemployment compensation or re-employment insurance benefits, St.
▇▇▇▇ agrees that it will not contest Executive's claims on any grounds,
including, without limitation, that Executive has voluntarily resigned from
employment or committed acts of disqualifying misconduct. Nothing contained in
this paragraph prohibits St. ▇▇▇▇ from correcting misstatements made by
Executive.
K. REFERENCES. St. ▇▇▇▇ warrants that those employees who were made
aware of the circumstances of Executive's termination from St. Paul's employ
shall not make statements or representations that disparage or otherwise harm
the reputation of Executive. St. ▇▇▇▇ agrees that if requested by Executive St.
▇▇▇▇ will cause its officers and directors to provide favorable oral or written
employment references.
L. ASSISTANCE. St. ▇▇▇▇ agrees to assist Executive in satisfying
Executive's obligations to complete and file Forms 4 and/or 5 under the
Securities Exchange Act of 1934.
M. AMBIGUITY. Executive and St. ▇▇▇▇ and counsel for both Executive
and St. ▇▇▇▇ have reviewed this Agreement. Therefore the normal rule of
construction that any ambiguity or uncertainty in a writing shall be interpreted
against the Party drafting the writing shall not apply to any action on this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year set forth below:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ THE ST. ▇▇▇▇ COMPANIES, INC.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------- -------------------------
Its: SVP
Date: September 1, 1998 Date: September 1, 1998
(11)
Appendix A
[Letterhead of The St. ▇▇▇▇ Companies, Inc.]
September __, 1998
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: STOCK APPRECIATION RIGHTS
Dear ▇▇. ▇▇▇▇▇▇:
In connection with your Separation Agreement with The St. ▇▇▇▇
Companies, Inc. ("St. ▇▇▇▇") dated September 1, 1998, you have been awarded
Stock Appreciation Rights (the "SARs") on the terms and conditions set forth
below.
I. 1998 SARS
You are hereby granted 98,982 SARs, each entitling you to receive
any increase in the fair market value of one share of common stock, without par
value (the "Common Stock") of the St. ▇▇▇▇ over $43.9375 per share (the "1998
SARs"). You may elect to receive payment as described below with respect to all
or any part of the 1998 SARs remaining outstanding beginning on February 3, 1999
through and until September 4, 2000. After September 4, 2000, all 1998 SARs
then outstanding will expire and you shall have no right to receive any
corresponding payment.
II. VESTED SARS
You hold options that are presently exercisable and that were
granted in February of each year from 1992 through 1997 (each an "Annual Option
Grant"). These options will, by their terms, terminate on the date (the "Option
Termination Date") one month after your termination of employment with St. ▇▇▇▇,
and you and St. ▇▇▇▇ wish to provide a contractual replacement for any options
that are so terminated prior to exercise ("Unexercised Vested Options") on terms
that will give you the potential to benefit in the appreciation through
September 4, 2000 of the fair market value of Common Stock over the original
exercise price of the option so terminated.
You are hereby granted SARs (the "Vested SARs") in respect of the
number of shares of Common Stock (if any) in each Annual Option Grant that after
the Option Termination Date are Unexercised Vested Options. Each such SAR shall
entitle you to receive any increase in the fair market value of one share of
Common Stock over the Exercise Price set forth below in
STOCK APPRECIATION RIGHTS
September 4, 1998
Page 2
respect of such Annual Option Grant. You may elect to receive payment as
described below with respect to all or any part of the Vested SARs remaining
outstanding beginning on January 1, 1999 through and until September 4, 2000.
After September 4, 2000, all Vested SARs then outstanding shall expire and you
shall have no rights to receive any corresponding payment. You agree that you
will not seek to exercise any outstanding option after the Option Termination
Date.
Annual Option Outstanding Unexercised
Grant Date Options (8/21/98) Vested Options Exercise Price
------------- ----------------- -------------- --------------
2/3/92 26,000 * $ 17.9375
2/2/93 30,000 * 19.7500
2/1/94 41,600 * 21.5938
2/7/95 60,000 * 23.9375
2/6/96 70,000 * 29.0000
2/3/97 89,628 * 31.5000
----------
* Equals number of options granted at annual option grant date and not
exercised on or prior to Option Termination Date.
III. PAYMENT
As soon as practicable after the exercise of any SARs granted
hereunder, St. ▇▇▇▇ shall pay to you in cash (after first withholding an amount
sufficient to satisfy St. Paul's obligation to withhold federal, state and local
taxes in connection with such exercise) any amounts owing hereunder.
The SARs granted herein may be exercised by giving written notice
to the Secretary of the Company, which notice shall specify the Annual Option
Grant(s) to which the SAR exercise relates, the number of shares with respect to
each such Annual Options Grant(s) as to which SARs are then being exercised and
the exercise price of such exercised SAR under the Annual Option Grant(s). The
Notice of Exercise shall be delivered personally to the Secretary of the Company
or mailed certified mail return receipt requested, to her attention at the
principal office of the Company, and exercise shall be deemed to have taken
place when the notice is received by the Secretary or, if mailed, by her office.
In the event of any transaction or event resulting in any
adjustment to or modification of the securities issuable upon exercise or the
exercise price or any other change or modification of any of the Annual Option
Grants, then the SARs represented by this letter shall be adjusted equitably by
St. Paul's Compensation Committee in a manner as similar as is practicable to
the manner in which Annual Option Grants are adjusted.
STOCK APPRECIATION RIGHTS
September 4, 1998
Page 3
Neither the SARs nor any right to payment or other right in
respect of this Agreement may be assigned, sold or otherwise transferred by you
except by will or the laws of descent and distribution and any purported
assignment, sale or other transfer shall render all SARs void.
Very truly yours,
THE ST. ▇▇▇▇ COMPANIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President and
Chief Legal Counsel