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EXHIBIT 10.1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of May 8, 2000, by and between U.S. Bancorp, a
Delaware corporation (as further defined in Section 8.13.12 hereof, "Employer"),
and John F. Grundhofer ("Executive"), amends and restates the Employment
Agreement dated as of August 1, 1997 by and between Employer and Executive (as
amended by the First Amendment to Employment Agreement dated as of June 11, 1998
by and between Employer and Executive, the "Original Agreement").
In consideration of the respective undertakings of Employer and
Executive set forth below, Employer and Executive agree as follows:
1. Employment. Employer hereby employs Executive, and Executive accepts
such employment and agrees to perform services for the Employer, for the period
and upon the other terms and conditions set forth in this Agreement.
2. Term of Employment. The term of Executive's employment pursuant to
this Agreement will commence on August 1, 1997 (the "Commencement Date") and,
unless terminated at an earlier date in accordance with Section 5 of this
Agreement, shall continue in effect until the fifth anniversary of the
Commencement Date; and, commencing on the first anniversary of the Commencement
Date and on each anniversary thereafter, the term of this Agreement shall
automatically be extended for one additional year unless, not later than 30 days
prior to any such date of automatic extension of this Agreement, Employer or
Executive shall have given the other party to this Agreement written notice that
the Agreement will not be so extended. The term of Executive's employment
commencing on the Commencement Date and ending pursuant to the terms hereof is
hereinafter referred to as the "Period of Employment."
3. Position and Duties.
3.01 Service with Employer. During the Period of Employment,
Executive agrees to perform such reasonable executive employment duties as
Employer shall assign to him from time to time and shall have the title of
President and Chief Executive Officer and upon the earlier of (x) the retirement
of Gerry B. Cameron and (y) January 1, 1999, the Executive shall have the
additional title of Chairman of the Board of Directors of the Employer;
provided, however, that (a) Employer may name another executive President during
the Period of Employment so long as Executive retains the other titles as herein
provided and (b) following a Partial Change in Control, Employer may name one or
more other executives Chairman of the Board of Directors, President and/or Chief
Executive Officer. Executive also agrees to serve, for any period for which he
is elected, as a director on the Board of Directors of Employer and to serve as
a member of any committee of the Board of Directors of Employer to which
Executive may be elected or appointed.
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3.02 Performance of Duties. Executive agrees to serve Employer
faithfully and to the best of his ability and to devote his full business time,
attention and efforts to the business and affairs of Employer during the Period
of Employment; provided, however, that Executive may engage in other activities,
such as activities involving charitable, educational, religious and similar
types of organizations, speaking engagements, membership on the boards of
directors of other organizations (as Employer may from time to time approve),
management of Executive's personal investments, and similar types of activities
to the extent that such other activities do not inhibit in any material way or
prohibit the performance of Executive's duties under this Agreement, or inhibit
in any material way or conflict with the business of Employer and its
subsidiaries.
4. Compensation.
4.01 Base Salary. As base compensation for all services to be
rendered by Executive under this Agreement, Employer will pay to Executive
during the Period of Employment a base annual salary ("Annual Salary") to be
paid in substantially equal installments in accordance with Employer's standard
payroll procedures and policies. The Annual Salary will be at least $840,000,
but the Annual Salary may be increased (but not reduced) from time to time in
the sole discretion of Employer; provided, however, that for any of the three
years beginning after a Change in Control (as hereinafter defined) during the
Period of Employment, Executive's Annual Salary shall be increased by a
percentage not less than the average percentage increase in the base annual
salary for each of the next five highest paid officers of Employer for such
year.
4.02 Annual Bonus. During the Period of Employment, Executive
will be entitled to participate in the Employer's Executive Incentive Plan (or,
if such Plan shall cease to exist, Employer's annual bonus award program, if
any, for Employer's executives at Executive's grade level) with a target bonus
opportunity at least as great as that provided to the Executive immediately
prior to the Commencement Date. The award of an annual bonus is highly
discretionary and is subject to the terms and provisions of the Executive
Incentive Plan (or, if such Plan shall cease to exist, Employer's annual bonus
award program, if any, for Employer's executives at Executive's grade level).
4.03 Options and Restricted Stock. During the Period of
Employment, Executive will be eligible to receive grants of Employer's stock
options and restricted stock, or other awards pursuant to equity-based plans of
Employer. Such grants are highly discretionary and would be subject to the terms
of the applicable agreements prescribed by Employer from time to time.
Notwithstanding the foregoing, the Executive shall be granted
on the date of the Original Agreement 50,000 shares of restricted common stock
of the Employer (the "Restricted Stock"). The Restricted Stock shall vest in
five equal installments on each of the first through fifth anniversaries of the
date of grant but shall vest immediately upon the Executive's death or
Disability (as defined in the Employer's Disability Program) or upon a
termination of the Executive's employment by the Employer without Cause or by
the
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Executive for Good Reason, or upon a Full Change in Control (as each of such
terms is defined in the next paragraph of this Section 4.03). The Executive
shall be granted as of the date of the Original Agreement an option (the
"Option") to acquire 150,000 shares of the Employer's common stock at their Fair
Market Value on the date of grant (as defined in the Employer's 1997 Stock
Incentive Plan). The Option shall have a term of 10 years and shall vest and
become exercisable in full on the fifth anniversary of the date of grant,
subject to acceleration in the event of achievement of performance targets set
forth in the grant of the Option, and shall be subject to all other terms and
conditions currently applicable to options granted under such Plan to other
executive officers of the Employer. The option shall vest and become immediately
exercisable upon the Executive's death or Disability (as defined in the
Employer's Disability Program) or upon a termination of the Executive's
employment by the Employer without Cause or by the Executive for Good Reason, or
upon a Full Change in Control (as each of such terms is defined in the next
paragraph of this Section 4.03).
For purposes of this Section 4.03, the terms "Cause," "Good
Reason" and "Full Change in Control" shall have the meanings contained in the
Original Agreement without regard to amendments thereto made hereby. For
purposes of the agreements between the Executive and the Employer relating to
the Restricted Stock and the Option, the terms "Cause" and "Good Reason" shall
have the meanings contained in the Original Agreement without regard to such
amendments.
This Agreement shall not have the effect of amending or
otherwise modifying in any way any agreements between the Employer and the
Executive relating to stock options or restricted stock awards in existence on
the date of this Agreement (except to the extent that the agreements relating to
the Restricted Stock and the Option are modified by the immediately preceding
paragraph).
4.04 Participation in Other Benefit Plans. During the Period
of Employment, Executive will be entitled to participate in such retirement
plans, major medical, hospital, surgical and dental plans, executive disability
plans and other Employer benefits not described elsewhere in this Section 4 as
are being provided by Employer to executives at Executive's grade level from
time to time to the extent that Executive's age, positions and other factors
qualify him for such benefits. If, for any period during the Period of
Employment, Executive is not eligible by reason of length of service to
participate in such plans maintained by Employer, Employer shall provide
Executive with benefits equivalent to those provided under such plans and, with
respect to benefits provided by Employer equivalent to those provided under
Employer's major medical, hospital, surgical and dental plans, shall compensate
Executive on an after-tax basis for any additional income taxes payable by
Executive by reason of Employer providing such benefits directly rather than
through such plans. Upon a termination of employment for any reason and for the
remainder of the Executive's life and that of his current spouse, the Employer
shall continue to provide medical and dental benefits in the aggregate to the
Executive and his current spouse pursuant to the Employer's Retiree Health Care
Program at a subsidized cost on the same basis as the Employer subsidizes
premiums for retirees of the Employer who retired prior to January 1,
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1993 (collectively, "Medical Benefits"). The Executive and his current spouse's
entitlement to Medical Benefits shall survive the termination of this Agreement.
4.05 Long-Term Disability Benefits. During the Period of
Employment, Executive's annual benefit under Employer's long-term disability
plan shall not be less than 60% of the total of (i) Executive's base annual
salary at the date of disability plus (ii) the annual average of bonuses
received by Executive during the three prior Executive Incentive Plan years (or,
if such Plan shall cease to exist, such other annual bonus award program, if
any, pursuant to which Executive received annual bonus payments), and Employer
agrees to pay Executive (at the time benefits are payable under the long-term
disability plan) the excess, if any, of such annual benefit over the annual
benefit provided by Employer's long-term disability plan.
4.06 Survivor Benefit Programs; Life Insurance. During the
Period of Employment, Executive will be entitled to participate in survivor
benefit programs covering Employer's executives at Executive's grade level in
effect on the Commencement Date or as modified or supplemented by Employer from
time to time. If, for any period during the Period of Employment, Executive is
not eligible to participate in such survivor benefit programs, Employer shall
provide Executive with benefits equivalent to those provided under such
programs. In addition, during the Period of Employment Employer shall continue
to provide a life insurance policy with a face value of at least $1 million for
the benefit of a beneficiary designated by Executive (or, if no beneficiary is
designated, for the benefit of Executive's spouse). Such insurance policy shall
be in addition to the amount of group term insurance, if any, provided to
Executive under an insurance plan maintained by Employer for its employees
generally. Executive hereby represents to Employer that Executive is insurable
on normal terms and conditions.
4.07 Retirement Benefits. The Executive shall be entitled to a
retirement benefit pursuant to the Employer's Non-Qualified Supplemental
Executive Retirement Plan in effect as of the date hereof (the "NQSRP"), with
the following modifications: (i) the Executive's lifetime annual pension benefit
commencing at age 65 shall be 57.5% of his final three year's average
compensation, (ii) the Executive shall be fully vested in this benefit at age
60, with no actuarial or other reduction for retirement prior to age 65 but
after age 60 but with a reduction for commencement of benefits prior to age 65,
(iii) the Prior Plans' Offset (as defined in the NQSRP) shall be fixed at
$270,000 per year, and (iv) the Executive's minimum actual pension from all
Employer qualified plans and the NQSRP shall not be less than $1 million per
year, commencing at age 65 and, if the joint and survivor form of benefit is
elected, his spouse's minimum total survivor benefit from all sources upon
executive's death at or after age 65 shall not be less than $500,000 per year.
In the event of any conflict between the terms of this Section 4.07 and the
NQSRP, the provisions of this Section 4.07 shall prevail.
4.08 Vacation and Sick Leave. During the Period of Employment,
Executive will be entitled to reasonable paid vacation periods each year, will
be entitled to carry over to subsequent years unused vacation periods, and upon
termination of employment
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will be entitled to be paid for unused vacation periods, in each case in
accordance with Employer's policy for executives at Executive's grade level from
time to time. Executive will also be entitled to reasonable sick leave in
accordance with Employer's policy for executives at Executive's grade level from
time to time.
4.09 Perquisites. During the Period of Employment, Employer
will provide Executive with such perquisites as Employer from time to time
provides to executives at Executive's grade level including, without limitation,
(a) an automobile or automobile allowance consistent with Employer's policies
for an executive at Executive's grade level, (b) reimbursement of initiation,
fees, if any, and dues for one country club and one business club of Executive's
choice, and (c) the reimbursement of the cost of financial and tax counseling
(subject to an annual limit of two percent of current base annual salary).
Additionally, during the Period of Employment, Employer will reimburse Executive
for the difference between (i) interest payments made by Executive on
Executive's real estate mortgage loan for his personal residence (with the loan
amount not to exceed 80% of the purchase price for such residence) and (ii) the
interest payments that would apply to such loan if the interest rate on such
loan were one percentage point less than the interest rate generally prevailing
in the market at the time the loan was entered into.
4.10 Expenses. Employer will reimburse Executive for all
expenses and disbursements reasonably incurred by executive in the performance
of his duties during the Period of Employment, and such other facilities or
services as Employer and Executive may, from time to time, agree are
reimbursable, subject to the presentment of appropriate vouchers in accordance
with the Employer's normal policies for expense verification.
4.11 Indemnity and Hold Harmless. Except to the extent
inconsistent with Employer's charter or bylaws, Employer will indemnify
Executive and hold Executive harmless to the fullest extent permitted by law
with respect to acts of Executive as an officer and director of Employer during
the Period of Employment. Employer further agrees that if and to the extent
Employer in its sole discretion maintains directors' and officers' insurance
policies, Executive will be covered by such policies with respect to acts of
Executive as an officer and director of Employer during the Period of Employment
to the same extent as all other officers and directors of Employer under such
policies.
4.12 Payments on Account of Restricted Stock Relating to
Former Employment. Employer has established and is maintaining a bookkeeping
account for Executive (the "Bookkeeping Account"), which account was initially
credited with $305,074, representing the amount agreed to be paid to Executive
and not paid to date in respect of shares of Wells Fargo Company ("Wells Fargo")
Common Stock transferred by Wells Fargo to Executive, but not vested, as of
January 30, 1990. The amount credited to the Bookkeeping Account shall be deemed
to have been invested in such stock, bonds or other securities as Executive
shall, from time to time, designate in writing to Employer's Executive Vice
President, Human Resources, or such other individual as Employer shall
designate, which deemed investments must be reasonably acceptable to Employer
and must be of a type that Employer would be permitted to make under applicable
laws and regulations. The
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Bookkeeping Account shall be credited or debited, as the case may be, with gains
or losses deemed incurred as a result of such designated, deemed investments.
Certain debits have been made to the Bookkeeping Account as
provided in the Employment Agreement dated December 30, 1992 by and between
Employer and Executive (the "1992 Employment Agreement"). The balance of the
Bookkeeping Account shall become payable to, or with respect to, Executive upon
the earliest of the following events (i) January 30, 2003, (ii) Executive's
death or (iii) Executive's termination of employment for any reason within 24
months after a Change In Control. In the event the balance of the Bookkeeping
Account becomes payable upon Executive's termination of employment for any
reason other than death or within 24 months after a Change in Control, the
entire balance shall be paid within 30 days of such event. In the event the
balance of the Bookkeeping Account becomes payable upon Executive's death, the
entire balance shall be paid by December 31 of the calendar year in which
Executive dies. Upon the occurrence of any other event giving rise to Employer's
obligation to pay Executive the balance of the Bookkeeping Account, on January
30 of each year beginning in the year 2003 and for each of the next nine
consecutive years, after taking into account any amount credited or debited to
the Bookkeeping Account as a result of the deemed investment thereof or
otherwise pursuant to the terms of this Section 4.12, the following proportions
of the Bookkeeping Account shall be paid to Executive: 1/10, 1/9, 1/8, 1/7, 1/6,
1/5, 1/4, 1/3, 1/2 and the entire remaining balance thereof.
Employer, in its sole and absolute discretion, may alter the
timing or manner of payment of the balance of the Bookkeeping Account in the
event that Executive establishes to the satisfaction of Employer severe
financial hardship. Severe financial hardship will be deemed to have occurred in
the event of Executive's impending bankruptcy, a dependent's long and serious
illness or other events of similar magnitude. Executive may designate a
beneficiary or beneficiaries who, upon his death, are to receive distributions
that otherwise would have been paid to Executive. All designations shall be in
writing and shall be effective only if and when delivered to Employer during the
lifetime of Executive.
Employer shall have the right to deduct from all payments made
pursuant to this Section 4.12 any federal, state or local taxes required by law
to be withheld with respect to such payments. Executive and Employer understand
and agree that the timetable set forth above with respect to the payment of the
balance of the Bookkeeping Account is irrevocable and shall not be subject to
any amendment or modification. Further, Executive and Employer understand and
agree that Employer is under a contractual obligation to make payments to
Executive in accordance with this Section 4.12. Such payments shall not be
financed from any trust fund, insurance or otherwise and shall be paid solely
out of the general funds of Employer, and Executive shall have no interest
whatsoever in any investments made by Employer on account of Executive's request
with respect to deemed investments of the Bookkeeping Account. Executive will
not have any interest whatsoever in any specific asset of Employer as a result
of this Agreement, and Executive's rights to payments hereunder shall be no
greater than the right of any other general, unsecured creditor of Employer. In
no event shall Employer make any payment hereunder to any assignee or
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creditor of Executive or a beneficiary. Prior to the time of payment hereunder,
Executive or a beneficiary thereof shall have no rights by way of anticipation
or otherwise to assign or otherwise dispose of any interest under this Section
4.12, nor shall such rights be assigned or transferred by operation of law.
5. Termination.
5.01 Grounds for Termination. The Period of Employment will
terminate prior to the expiration of the term set forth in Section 2 of this
Agreement in the event that:
(a) Executive shall die.
(b) Executive shall qualify for and accrue payments under
Employer's Disability Program for a period covering
90 consecutive days.
(c) Employer shall terminate the Period of Employment for
Cause (as hereinafter defined).
(d) Executive shall terminate the Period of Employment
for (i) Good Reason (as hereinafter defined), (ii)
Good Reason following a Full Change in Control (as
hereinafter defined) or (iii) Good Reason following a
Partial Change in Control (as hereinafter defined).
(e) Employer shall terminate the Period of Employment
other than for Cause.
(f) Executive shall terminate the Period of Employment
for any reason not constituting Good Reason, Good
Reason following a Full Change in Control or Good
Reason following a Partial Change in Control.
Notwithstanding any termination of the Period of Employment,
Executive, in consideration of his employment hereunder to the date of such
termination, will remain bound by the provisions of this Agreement that
specifically relate to periods, activities or obligations upon or subsequent to
the termination of Executive's employment.
5.02 Effect of Termination.
(a) In the event of termination of the Period of
Employment pursuant to the provisions of Section
5.01(a) above, Executive's trust estate or estate, as
the case may be (as determined in accordance with
Section 8.02 of this Agreement), will be entitled to
be paid the base annual salary otherwise payable to
Executive pursuant to Section 4.01 of this Agreement
only through the date of such termination.
Additionally, Executive's survivors will be entitled
to any benefits provided under
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Employer's survivor benefit program. If the joint and
survivor form of benefit is elected, the Executive's
current spouse, should she survive the Executive,
shall be entitled to a survivor benefit based on a
50% joint and survivor annuity pursuant to the
Executive's retirement benefits described in Section
4.07, commencing on what would have been the
Executive's 65th birthday. In addition, the
Restricted Stock shall vest immediately and the
Option shall vest and become immediately exercisable.
The Executive's current spouse shall also be entitled
to the provision of Medical Benefits.
(b) In the event of termination of the Period of
Employment pursuant to the provisions of section
5.01(b) above, Executive will be entitled to be paid
the base annual salary otherwise payable to Executive
pursuant to Section 4.01 of this Agreement only
through the date of such termination. Executive will
be entitled to benefits under Employer's Disability
Program and to the benefits provided for in Section
4.05 in connection with Employer's Disability Plan.
If Executive shall cease to be eligible for long-term
disability payments pursuant to the Disability Plan
within three years following the date of such
termination, Employer will pay Executive a lump sum
payment in the amount of Executive's annual base
salary at the time of such termination. The Executive
shall receive the retirement benefits described in
Section 4.07 commencing on his 65th birthday. In
addition, the Restricted Stock shall vest
immediately, and the Option shall vest and become
immediately exercisable. The Executive and his
current spouse shall also be entitled to the
provision of Medical Benefits.
(c) In the event of termination of the Period of
Employment pursuant to the provisions of Section
5.01(c) or (f) above, Employer will have no further
obligations hereunder except that Employer will pay
Executive his base salary, at the rate then in
effect, and continue to provide Executive and his
current spouse Medical Benefits. Executive will not
be paid any annual bonus pursuant to Section 4.02 of
this Agreement for the calendar year in which the
termination occurs or any subsequent calendar year.
(d) In the event of termination of the Period of
Employment pursuant to the provisions of Sections
5.01(d) or 5.01(e) above, Employer will (i) pay
Executive his full base salary through the date of
termination at the rate in effect at the time Notice
of Termination is given; (ii) pay as damages to
Executive, not later than 30 days following the date
of termination, a lump sum payment equal to three
times the sum of (A) Executive's annual base salary
in effect at the time Notice of Termination is given
and (B) the annual target bonus potential
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available to Executive at the time Notice of
Termination is given (or, in the event of termination
within 24 months following a Change in Control or in
the event of an Anticipatory Termination (as
hereinafter defined), if either of the following
amounts is greater, the bonus earned in the last
fiscal year prior to the date of termination or the
average bonus earned in the last three fiscal years
prior to the date of termination, whichever is
larger), (iii) continue to provide the employee
benefits described in Sections 4.04, 4.05 (with
disability benefits to be calculated as of the date
of termination), and 4.06 to which Executive was
entitled on the date of such termination for a period
of three years from the date of such termination and
thereafter, to provide the Executive and his current
spouse with Medical Benefits, (iv) continue to
provide the perquisites described in Section 4.09 to
which Executive was entitled on the date of such
termination for a period of three years from the date
of such termination, (v) cause the acceleration of
the exercisability of any stock option or the vesting
of any restricted stock grants (other than those
pursuant to Employer's Restricted Stock and
Performance Plan) that would have become exercisable
or vested, as the case may be, during the remaining
Period of Employment had no such termination
occurred, and cause the Restricted Stock and the
Option to become immediately vested and exercisable,
as the case may be, provided, however, that such
acceleration or immediate vesting shall occur only to
the extent that it is consistent with the last two
paragraphs of Section 4.03 hereof, (vi) cause the
acceleration of vesting of restricted stock grants
under Employer's Restricted Stock and Performance
Plan if the vesting schedule has been determined at
the time of such termination and such vesting would
have occurred during the remaining Period of
Employment had no such termination occurred, (vii)
give Executive credit for three additional years of
age and service (or five additional years in the
event of termination within 24 months following a
Change in Control or in the event of an Anticipatory
Termination) for all purposes in determining
Executive's retirement benefits pursuant to Section
4.07 and the NQSRP, (viii) in the event of
termination within 24 months following a Change in
Control or in the event of an Anticipatory
Termination, pay Executive the full amount of any
long-term cash incentive award for any plan periods
then in progress to the extent not provided for in
any Employer long-term cash incentive plan or plans,
(ix) in the event of termination within 24 months
following a Change in Control or in the event of an
Anticipatory Termination, pay Executive the
year-to-date pro-rata amount of any annual cash
incentive award for any plan as in effect immediately
prior to the Change in Control to the extent not
provided for in such plan or plans and the amount of
any annual cash incentive award for any plan as in
effect for the immediately prior year if Executive
would have received
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such an award if there had been no such termination of
employment in the then current year, and (x) pay for
individual outplacement counseling services to Executive
up to a maximum of $60,000. Except as otherwise provided
in clause (ix) of this Section 5.02 (d) , Executive will
not be paid any annual bonus pursuant to Section 4.02 of
this Agreement for the calendar year in which the
termination occurs.
5.03 Notice of Termination. Any purported termination by
Employer or Executive of the Period of Employment shall be communicated by
written Notice of Termination to the other party hereto. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which indicates the
specific termination provision in Section 5.01 above relied upon.
5.04 Offsets. Executive shall have no duty to seek other
employment. However, in the event of termination of the Period of Employment
pursuant to the provisions of Sections 5.01(d) or 5.01(e), the following offsets
will apply to reduce the payments and benefits which Executive shall be entitled
to receive pursuant to Section 5.02(d): (i) (A) in the event of termination
within 24 months following a Change in Control or in the event of an
Anticipatory Termination, the amount payable to Executive pursuant to Section
5.02(d)(ii) will be offset by any salary, cash bonus and other earned income
(within the meaning of Section 911(d)(2)(A) of the Internal Revenue Code of
1986, as amended (the "Code")) received by Executive for services rendered by
Executive to persons or entities other than the Employer during or with respect
to the 36-month period after the date of termination, or (B) in the event of
termination at any time not within 24 months following a Change in Control and
that is not an Anticipatory Termination, one-third of the amount payable to
Executive pursuant to Section 5.02(d)(ii)(A) and the entire amount payable to
Executive pursuant to Section 5.02(d)(ii)(B) shall be offset by amounts received
by Executive which are described in subparagraph (A) above; (ii) the benefits
payable to Executive pursuant to Section 5.02(d)(iii) and (iv) shall be
discontinued if Executive obtains full-time employment providing welfare
benefits during the 36-month period following the date of termination; and (iii)
in the event of termination at any time within 24 months following a Change in
Control or in the event of an Anticipatory Termination, any additional benefits
under Employer's NQSRP pursuant to Section 5.02(d) will be reduced by the amount
of vested defined benefit pension benefits and vested defined benefit
non-qualified supplemental retirement benefits actually payable to Executive
without any risk of forfeiture from persons or entities other than Employer
which are attributable to service rendered by Executive to such other persons or
entities during the 36 months following the date of termination of Executive's
employment. Such reduction shall be calculated based on the vested benefits
payable at age 65 under the single life annuity form of payment under the
applicable plans which are accrued by Executive during such period. The
foregoing calculations for a particular plan shall be made by the actuary for
such plan in accordance with generally accepted actuarial principles. The amount
of such reduction at age 65 shall be actuarially reduced if Executive's benefits
under the Employer's NQSRP, as modified by Section 4.07, commence before
Executive attains age 65.
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Not less frequently than annually (by December 31 of each
year), Executive shall account to Employer with respect to all payments and
benefits received by Executive which are required hereunder to be offset against
payments or benefits received by Executive from Employer. If the Employer has
paid amounts in excess of those to which Executive is entitled (after giving
effect to the offsets provided above), Executive shall reimburse Employer for
such excess by December 31 of such year. The requirements imposed under this
paragraph shall terminate on December 31 of the calendar year which includes the
third anniversary of the date of termination.
5.05 Additional Payments. In the event any payment or
distribution of any type by Employer to Executive or for his benefit, whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise (the "Total Payments"), would be subject to the excise
tax imposed by Section 4999 of the Code, or any interest or penalties with
respect to such excise tax (such excise tax, together with any such interest and
penalties, are collectively referred to as the "Excise Tax"), then Executive
shall be entitled to receive an additional cash payment (a "Gross-Up Payment")
equal to an amount such that after payment by Executive of all taxes (including
any interest or penalties imposed with respect to such taxes), including any
Excise Tax, imposed upon the Gross-Up Payment, Executive would retain an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the Total Payments.
For purposes of determining the amount of the Gross-Up Payment, which
determination shall be made by the Employer's independent auditors, at the
Employer's sole expense, Executive's tax rate shall be deemed to be the highest
statutory marginal state and Federal tax rate (on a combined basis) (including
Executive's share of F.I.C.A. and Medicare taxes) then in effect. If no
determination by Employer's auditors is made prior to the time a tax return
reflecting the Total Payments is required to be filed by Executive, Executive
will be entitled to receive a Gross-Up Payment calculated on the basis of the
Total Payments reported by Executive in such tax return, within 30 days of the
filing of such tax return. In all events, if a tax authority determines that a
greater Excise Tax should be imposed upon the Total Payments than is determined
by the Employer's independent auditors or reflected in Executive's tax return
pursuant to this Section 5.05, Executive shall be entitled to receive the full
Gross-Up Payment calculated on the basis of the amount of Excise Tax determined
to be payable by such tax authority from Employer within 30 days of such
determination.
5.06 Nonexclusivity of Rights. Nothing in this Agreement shall
prevent or limit Executive from continuing or future participation in any
benefit, bonus, incentive, retirement or other plan or program provided by
Employer and for which Executive may qualify, nor, except as expressly provided
in this Agreement, shall anything herein limit or reduce such rights as
Executive may have under any other agreement with, or plan, program, policy or
practice of, Employer. Amounts which are vested benefits or which Executive is
otherwise entitled to receive under any agreement with, or plan, program, policy
or practice of, Employer (including, without limitation, the cashout of unused
vacation days upon termination of employment) shall be payable in accordance
with such agreement, plan, program, policy or practice, except as explicitly
modified by this Agreement. Notwithstanding the foregoing, if Executive becomes
entitled to benefits under Article 5 of
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this Agreement, Executive shall not be entitled to receive payments under any
other severance pay plan or program sponsored or maintained by Employer or any
of its Affiliates.
6. Non-Competition and Unfair Competition.
6.01 Agreement Not to Compete. Without the approval by
resolution of the Board of Directors of Employer, upon termination of
Executive's employment with Employer by Employer for Cause pursuant to Section
5.01(c) or by Executive without Good Reason, Good Reason following a Full Change
in Control or Good Reason following a Partial Change in Control pursuant to
Section 5.01(f), Executive will not, for a period of three years thereafter,
become an officer, employee, agent, partner, director or substantial stockholder
(holding more than 5% of the voting securities) of any bank, savings bank, trust
company, bank and trust company, savings and loan association or holding company
thereof, in each case if such entity conducts business in the State of
California, the State of Colorado, the State of Idaho, the State of Illinois,
the State of Iowa, the State of Kansas, the State of Minnesota, the State of
Montana, the State of Nebraska, the State of Nevada, the State of North Dakota,
the State of Oregon, the State of South Dakota, the State of Utah, the State of
Washington, the State of Wisconsin, the State of Wyoming or any other State in
which Employer has substantial operations.
6.02 Agreement Not to Solicit. Without the approval by
resolution of the Board of Directors of Employer, upon termination of
Executive's employment with Employer for any reason whatsoever, Executive will
not, for the remainder of the Period of Employment if no termination had
occurred (or, if longer, for the one-year period following such termination),
(i) solicit or aid in soliciting as a customer or client of banking or related
financial services (including, without limitation trust, credit card and
investment management services) any person, firm, corporation, association or
other entity (A) that was a customer or client of Employer or any Affiliate of
Employer, and for which Executive or anyone under Executive's supervision
performed any services or with which substantial business relations were
maintained by Employer or any Affiliate of Employer at any time during the five
years prior to the termination of the Period of Employment or (B) whose identity
or particular needs Executive otherwise discovered as a result of his employment
with Employer, or (ii) solicit or aid in soliciting any employees of Employer or
any Affiliate of Employer to leave their employment. Without the approval by
resolution of the Board of Directors of Employer, upon termination of
Executive's employment with Employer for any reason whatsoever, Executive agrees
never to copy, remove from Employer or its Affiliates, dispose or make any use
of any confidential customer list, confidential business information with
respect to customers, confidential materials relating to the practices or
procedures of Employer or its Affiliates, or any other proprietary information.
7. Taxes. All payments to be made to Executive under this
Agreement will be net of required withholding of federal, state and local income
and employment taxes. Whenever under this Agreement Executive is to be
compensated or reimbursed on an "after-tax basis," Executive will be assumed to
be subject to federal income taxes at the highest marginal rate applicable to
individuals and to state income taxes at the highest
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marginal effective rate for residents of Minneapolis, Minnesota.
8. Miscellaneous.
8.01 Governing Law. This Agreement is made under and shall be
governed by and construed in accordance with the laws of the State of Minnesota.
8.02 Successors. This Agreement shall be binding upon and
inure to the benefit of Employer and its successors. This Agreement will inure
to the benefit of, be enforceable by, and any amounts and benefits owed to
Executive at the time of Executive's death, unless otherwise provided herein,
will be paid to, the Trustee under the John F. and Beverly J. Grundhofer Living
Trust Agreement, or, if such Trust is not then in existence, the personal
representative or personal representatives of Executive's estate. Reference to
the "John F. and Beverly J. Grundhofer Living Trust Agreement" means that
certain Declaration of Trust, John F. and Beverly J. Grundhofer Living Trust,
dated February 22, 1988, by and between John F. and Beverly J. Grundhofer, as
donors and as original Trustees, as amended and existing at John F. Grundhofer's
death. Reference to the Trustee under the John F. and Beverly J. Grundhofer
Living Trust Agreement means the then acting Trustee or Trustees under the John
F. and Beverly J. Grundhofer Living Trust Agreement and any successor Trustees.
Employer will require the Resulting Corporation (as
hereinafter defined) or any other successor (whether direct or indirect, by
purchase, merger, consolidation, or otherwise) to all or substantially all of
the business and/or consolidated assets of Employer and its subsidiaries to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Employer would be required to perform if no such
succession had taken place. Failure of Employer to obtain such assumption and
agreement prior to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle Executive to compensation from Employer in the
same amount and on the same terms as Executive would be entitled to hereunder if
Executive terminated his employment for Good Reason following a Change in
Control, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the date of
termination and Notice of Termination shall be deemed to have been given on such
date. In any case where a successor assumes the Employer's obligations under
this Agreement by operation of law, the requirements imposed in this paragraph
will be satisfied if the successor acknowledges to Executive in writing that it
has assumed the Employer's obligations under this Agreement by operation of law
within 30 days of receipt of a written notice from Executive requesting such
acknowledgment.
8.03 Prior Agreements. This Agreement contains the entire
agreement of the parties relating to the employment of Executive by Employer and
the other matters discussed herein and supersedes all prior agreements and
understandings with respect to such subject matter, and the parties hereto have
made no agreements, representations or warranties relating to the subject matter
of this Agreement which are not set forth herein. The Original
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Agreement is hereby amended and restated. The Change in Control Severance Pay
Agreement entered into between Employer and Executive on March 16, 1992, which
was attached as Exhibit A to the 1992 Employment Agreement with Employer,
remains terminated and of no force or effect.
8.04 Amendments. No amendment or modification of this
Agreement will be deemed effective unless made in writing and signed by each
party hereto.
8.05 No Waiver. No term or condition of this Agreement will be
deemed to have been waived, nor will there be any estoppel to enforce any
provisions of this Agreement, except by a statement in writing signed by the
party against whom enforcement of the waiver or estoppel is sought. Any written
waiver will not be deemed a continuing waiver unless specifically stated, will
operate only as to the specific term or condition waived and will not constitute
a waiver of such term or condition for the future or as to any act other than
that specifically waived.
8.06 Assignment. This Agreement is not assignable, in whole or
in part, by any party without the written consent of the other party.
8.07 Injunctive Relief. Executive agrees that it would be
difficult to compensate Employer fully for damages for any violation of the
provisions of this Agreement, including without limitation the provisions of
Section 6. Accordingly, Executive specifically agrees that Employer will be
entitled to temporary and permanent injunctive relief to enforce the provisions
of this Agreement and that such relief may be granted without the necessity of
proving actual damages. This provision with respect to injunctive relief will
not, however, diminish the right of Employer to claim and recover damages in
addition to injunctive relief.
8.08 Disputes and Legal Fees.
(a) Before a Change in Control. Any controversy or claim
arising out of or relating to this Agreement, or the
breach thereof, which is not resolved by the parties will
not sooner than 30 days after the dispute shall arise, be
settled by arbitration before three arbitrators in
accordance with the rules of the American Arbitration
Association, and judgment upon an award rendered by the
arbitrators, or at least a majority of them, may be
entered in any court having jurisdiction thereof;
provided, however, that Employer will be entitled to seek
injunctive or other equitable relief in a court of law to
enforce the provisions of Section 6. Such arbitration
shall be conducted in Minneapolis, Minnesota. The
expenses incurred in connection with any arbitration,
including but not limited to each party's legal fees and
the arbitrators' fees and expenses, will be allocated
between the parties according to the relative fault of
each, as determined by the arbitrators.
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(b) After a Change in Control. Subparagraph (a) above shall
not apply after a Change in Control, and the provisions
of this subparagraph (b) shall apply instead. If
Executive so elects, any dispute or controversy arising
under or in connection with this Agreement shall be
settled exclusively, by arbitration in accordance with
the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award
in any court having jurisdiction. If Executive does not
elect arbitration, Executive may pursue any and all legal
remedies available to him. Employer shall pay to
Executive any legal fees and expenses reasonably incurred
by him after a Change in Control. If Executive elects
arbitration, Employer will pay all fees and expenses of
the arbitrator.
8.09 Severability. To the extent that any provision of this
Agreement shall be determined to be invalid or unenforceable, the invalid or
unenforceable portion of such provision will be deleted from this Agreement, and
the validity and enforceability of the remainder of such provision and of this
Agreement will be unaffected. In furtherance of and not in limitation of the
foregoing, it is expressly agreed that should the duration of or geographical
extent of, or business activities covered by, the noncompetition covenant
contained in Section 6 be determined to be in excess of that which is valid or
enforceable under applicable law, then such provision will be construed to cover
only that duration or extent, or those activities which may validly or
enforceably be covered. Executive acknowledges the uncertainty of the law in
this respect and expressly stipulates that this Agreement will be construed in a
manner which renders its provisions valid and enforceable to the maximum extent
(not exceeding its express terms) possible under applicable law.
8.10 Notices. All notices under this Agreement will be in
writing and will be deemed effective when delivered in person (in Employer's
case, to its Secretary) or twenty-four (24) hours after deposit thereof in the
U.S. mails, postage prepaid, for delivery as registered or certified mail,
addressed, in the case of Executive, to him at his last residential address
known by Employer and, in the case of Employer, to its corporate headquarters,
attention of its Secretary, or to such other address as Executive or Employer
may designate in writing at any time or from time to time to the other party. In
lieu of notice by deposit in the U.S. mails, a party may give notice by
telegram, telex or telecopy, in which case such notice will be deemed effective
upon receipt.
8.11 Counterparts. This Agreement may be executed by the
parties hereto in counterparts, each of which will be deemed to he an original,
but all such counterparts will together constitute one and the same instrument.
8.12 Headings. The headings of paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement.
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8.13 Definitions. For purposes of this Agreement, the
following additional definitions shall apply:
8.13.1 "Acquiring Person" shall mean any Person who or which, together
with all Affiliates and Associates of such person, is the Beneficial
Owner, directly or indirectly, of securities of Employer representing
20% or more of the combined voting power of Employer's then outstanding
securities, but shall not include any Company Entity.
8.13.2 "Affiliate" shall have the meaning ascribed to such term in Rule
12b-2 promulgated under the Exchange Act.
8.13.3 "Announcement Date" shall mean the date of the public
announcement of the transaction, event or course of action that results
in a Change in Control.
8.13.4 "Anticipatory Termination" shall mean a termination of
employment pursuant to Section 5.01(d) or 5.01(e) hereof as a result of
an act or event that occurs prior to a Change in Control and after the
Announcement Date and either (i) at the request of any other party to a
transaction, or any Person associated with the event or course of
events (other than Employer or a Company Entity), that results in a
Change in Control, or (ii) otherwise in contemplation of a Change in
Control; provided, that no termination shall be deemed an Anticipatory
Termination unless the Change in Control to which it relates actually
occurs.
8.13.5 "Associate" shall have the meaning ascribed to such term in Rule
12b-2 promulgated under the Exchange Act.
8.13.6 "Beneficial Owner" shall have the meaning ascribed to such term
in Rule 13d-3 promulgated under the Exchange Act.
8.13.7 "Board of Directors" shall mean the board of directors of
Employer.
8.13.8 "Cause" shall mean termination upon (i) the willful and
continued failure by Executive to substantially perform his duties with
Employer (other than any such failure resulting from his disability or
from termination by Executive for Good Reason, Good Reason following a
Full Change in Control or Good Reason following a Partial Change in
Control), after a written demand for substantial performance is
delivered to Executive that specifically identifies the manner in which
Employer believes that Executive has not substantially performed his
duties, and Executive has failed to resume substantial performance of
his duties on a continuous basis within 14 days of receiving such
demand, (ii) the willful engaging by Executive in conduct which is
demonstrably and materially injurious to Employer, monetarily or
otherwise, (iii) Executive's conviction of a felony which impairs his
ability substantially to perform his duties with Employer or (iv) the
issuance of an order under Section 8 (e) (4) or 8 (g) (1) of the
Federal Deposit Insurance Act by which Executive is removed
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and/or permanently prohibited from participating in the conduct of the
affairs of Employer and/or any Affiliate of Employer. For purposes of
this paragraph, no act, or failure to act, on Executive's part will be
deemed "willful" unless done, or omitted to be done, by Executive not
in good faith and without reasonable belief that his action or omission
was in the best interest of Employer. Failure to perform Executive's
duties with Employer during any period of disability shall not
constitute "Cause."
8.13.9 "Change in Control" shall mean a Full Change in Control or a
Partial Change in Control.
8.13.10 "Company Entity" shall mean Employer, any subsidiary of
Employer or any employee benefit plan of Employer or of any subsidiary
of Employer or any entity holding shares of the voting capital stock of
Employer organized, appointed or established for, or pursuant to the
terms of any such plan.
8.13.11 "Continuing Director" shall mean any person who is a member of
the Board of Directors, while such person is a member of the Board of
Directors, who is not an Acquiring Person or an Affiliate or Associate
of an Acquiring Person, or a representative of an Acquiring Person or
of any such Affiliate or Associate, and who (x) was a member of the
Board of Directors as of the date of this Agreement or (y) subsequently
becomes a member of the Board of Directors, if such person's initial
nomination for election or initial election to the Board of Directors
has been approved in advance by the Continuing Directors; provided that
any director designated by or on behalf of a Person who has entered
into an agreement with Employer (or who is contemplating entering into
such an agreement) to effect a consolidation or merger of Employer or a
Company Entity, or other reorganization, with or into one or more
entities which are not Company Entities, and any director that serves
in connection with the act of the Board of Directors of increasing the
number of directors and filling vacancies in connection with, or in
contemplation of, any such transaction, shall not be deemed to have
received such advance approval for initial nomination or election, and
any such director shall not be deemed to be a Continuing Director in
each case solely for the purpose of determining whether the addition of
members of the Board of Directors in connection with, or in
contemplation of, such transaction results in a Full Change in Control
under clause (B) of Section 8.13.14 of this Agreement.
8.13.12 "Employer" shall mean U.S. Bancorp, a Delaware corporation, or
any successor thereto pursuant to Section 8.02 hereof (including a
Resulting Corporation) or by operation of law.
8.13.13 "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
8.13.14 "Full Change In Control" shall mean any of the following after
the date hereof:
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(A) the public announcement (which, for purposes of
this definition, shall include, without limitation, a report
filed pursuant to Section 13(d) of the Exchange Act) by
Employer or any Person that a Person (other than a Company
Entity) has become the Beneficial Owner, directly or
indirectly, of securities of Employer (x) representing 20%
or more, but not more than 50%, of the combined voting power
of Employer's then outstanding securities unless the
transaction resulting in such ownership has been approved in
advance by the Continuing Directors or (y) representing more
than 50% of the combined voting power of Employer's then
outstanding securities (regardless of any approval by the
Continuing Directors); or
(B) the Continuing Directors cease to constitute a
majority of the Board of Directors of Employer or the
Resulting Corporation, except as a result of the death,
retirement or disability of one or more Continuing
Directors; or
(C) any sale, lease, exchange or other transfer (in
one transaction or a series of related transactions) of all
or substantially all of the consolidated assets of Employer
and its subsidiaries or the adoption of any plan of
liquidation or dissolution of Employer.
Notwithstanding the foregoing, any of the foregoing events
that would constitute a Full Change in Control may be deemed
to be a Partial Change in Control in the sole discretion of
the Board of Directors as evidenced by adoption of a
resolution by a majority of a quorum of the Board of
Directors at a duly held meeting or by unanimous written
action in lieu of a meeting, which determination may be made
at any time prior to the Change in Control or, in the case
of subparagraph (A) above, at any time within 20 days
following the Change in Control.
8.13.15 "Good Reason" shall mean termination of the Period of
Employment (other than an Anticipatory Termination) by Executive, at
any time that is not during the 24-month period following a Change in
Control, upon the occurrence, without Executive's consent, of any one
or more of the following: (i) the assignment to Executive of any duties
inconsistent in any respect with Executive's position (including
status, offices, titles and reporting requirements), authorities,
duties or other responsibilities as in effect immediately prior to such
assignment or any other action of Employer which results in a
diminishment in such position, authority, duties or responsibilities,
other than an insubstantial and inadvertent action which is remedied by
Employer promptly after receipt of notice thereof given by Executive,
and other than the Employer's providing the title of President of the
Employer to another executive, provided that Executive continues as
Chairman of the Board (if he is then Chairman of the Board) and Chief
Executive Officer of Employer; (ii) a reduction by Employer in
Executive's base salary as in effect on the Commencement Date or as the
same shall be increased from time to time; (iii) Employer's requiring
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Executive to be based at a location in excess of 30 miles from the
location of Executive's principal office as of the Commencement Date;
(iv) the failure by Employer to provide Executive with compensation and
benefits at least equal (in terms of benefit levels and/or reward
opportunities) to those provided for under each compensation or benefit
plan, program, policy and practice as in effect at the Commencement
Date (or as in effect following the Commencement Date, if greater); (v)
a material breach by Employer of its obligations under this Agreement
after notice in writing from Executive and a reasonable opportunity for
Employer to correct such conduct; (vi) the failure of Employer to
obtain a satisfactory agreement from the Resulting Corporation or any
other successor to Employer to assume and agree to perform this
Agreement; and (vii) any purported termination by Employer of
Executive's employment that is not effected pursuant to a Notice of
Termination (as previously defined). Executive's continued employment
shall not constitute consent to, or a waiver of rights with respect to,
any circumstance constituting Good Reason. Termination by Executive of
the Period of Employment for Good Reason shall constitute termination
for Good Reason for all purposes of this Agreement, notwithstanding
that Executive may also thereby be deemed to have "retired" under any
applicable retirement programs of Employer.
8.13.16 "Good Reason following a Full Change in Control" shall mean
termination of the Period of Employment by Executive, during the
24-month period following a Full Change in Control (or prior to a Full
Change in Control in the event of an Anticipatory Termination), upon
the occurrence, without Executive's express written consent, of any one
or more of the following: (i) the assignment to Executive of any duties
inconsistent in any respect with Executive's position (including
status, offices, titles, and reporting requirements), authorities,
duties, or other responsibilities as in effect immediately prior to the
Announcement Date or any other action of Employer which results in a
diminishment in such position, authority, duties, or responsibilities,
other than an insubstantial and inadvertent action which is remedied by
Employer promptly after receipt of notice thereof given by Executive;
(ii) a reduction by Employer in Executive's base salary as in effect
immediately prior to the Announcement Date (or as in effect following
the Announcement Date, if greater); (iii) the failure by the Employer
to provide Executive total cash compensation (consisting of base salary
plus cash bonus) with respect to any fiscal year (including the fiscal
year in which the Full Change in Control occurs and the year prior to
the fiscal year in which the Full Change in Control occurs if the cash
bonus for such prior fiscal year has not been determined as of the date
of the Full Change in Control, and including a portion of a fiscal year
if a fiscal year is not complete at the end of the 24-month period
following a Full Change in Control) at least equal to the greatest of
(x) actual total cash compensation paid to Executive with respect to
the fiscal year prior to the fiscal year for which the calculation is
made or (y) the average annual total cash compensation paid to
Executive with respect to the two fiscal years prior to the fiscal year
for which the calculation is made (total cash compensation "with
respect to any fiscal year" shall be determined at the time the bonus
with respect to such fiscal year is determined, even if such bonus is
determined after the 24-month period following a
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Full Change in Control, and the bonus portion of cash compensation for
services rendered in a portion of a fiscal year determined at the end
of 24 months following a Full Change in Control shall be determined by
reference to the pro-rata portion of any annual bonus for such fiscal
year); (iv) a reduction by Employer in Executive's annual target bonus
or maximum bonus award opportunities as in effect immediately prior to
the Announcement Date (or as in effect following the Announcement Date,
if greater); (v) the Employer's requiring Executive to be based at a
location that is both outside the same metropolitan area of, and in
excess of 30 miles from, the location of Executive's principal office
immediately prior to the Announcement Date; (vi) the failure by the
Employer to provide employee benefit plans, programs, policies and
practices (including, without limitation, retirement plans and medical,
dental, life and disability insurance coverage) to Executive and
Executive's family and dependents (if applicable) that provide
substantially similar benefits, in terms of aggregate monetary value,
to Executive and Executive's family and dependents (if applicable) at
substantially similar costs to Executive as the benefits provided by
those plans, programs, policies and practices in effect immediately
prior to the Announcement Date (or as in effect following the
Announcement Date, if greater); (vii) a material breach by Employer of
its obligations under this Agreement after notice in writing from
Executive and a reasonable opportunity for Employer to correct such
conduct; (viii) the failure of Employer to obtain a satisfactory
agreement from the Resulting Corporation or any other successor to
Employer to assume and agree to perform this Agreement; and (ix) any
purported termination by the Employer of Executive's employment that is
not effected pursuant to a Notice of Termination. Termination by
Executive of the Period of Employment for Good Reason following a Full
Change in Control shall constitute termination for Good Reason
following a Full Change in Control for all purposes of this Agreement,
notwithstanding that Executive may also thereby be deemed to have
"retired" under any applicable retirement programs of Employer.
8.13.17 "Good Reason following a Partial Change in Control" shall mean
termination of the Period of Employment by Executive, during the
24-month period following a Partial Change in Control (or prior to a
Partial Change in Control in the event of an Anticipatory Termination),
upon the occurrence, without Executive's express written consent, of
any one or more of the following: (i) a reduction by the Employer in
Executive's base salary as in effect immediately prior to the
Announcement Date; (ii) a reduction by the Employer in Executive's
annual target bonus or maximum bonus award opportunities as in effect
immediately prior to the Announcement Date; (iii) the Employer's
requiring Executive to be based at a location that is both outside the
same metropolitan area of, and in excess of 30 miles from, the location
of Executive's principal office immediately prior to the Announcement
Date; (iv) a material breach by Employer of its obligations under this
Agreement after notice in writing from Executive and a reasonable
opportunity for Employer to correct such conduct; and (v) any purported
termination by the Employer of Executive's employment that is not
effected pursuant to a Notice of Termination. Any event which may
otherwise constitute Good Reason following a Partial Change in Control
shall cease to constitute Good Reason following a Partial Change in
Control if Executive does not have a Termination of Employment within
90 days following such event. Termination by Executive of the Period of
Employment for Good Reason following a Partial Change
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in Control shall constitute termination for Good Reason following a
Partial Change in Control for all purposes of this Agreement,
notwithstanding that Executive may also thereby be deemed to have
"retired" under any applicable retirement programs of Employer.
8.13.18 "Partial Change in Control" shall mean any of the following
after the date hereof:
(A) a consolidation or merger of Employer or a
Company Entity, or other reorganization, with or into one or
more entities which are not Company Entities, as a result of
which less than 60% of the outstanding voting securities of the
Resulting Corporation are, or are to be, owned by former
shareholders of Employer as determined immediately prior to
consummation of such transaction (excluding voting securities
of the Resulting Corporation owned, or to be owned, by such
shareholders by reason of their ownership prior to such
transaction of securities of any entity other than Employer)
and as a result of which the Continuing Directors constitute
more than 50% of the Board of Directors of the Resulting
Corporation;
(B) the public announcement (which, for purposes of
this definition, shall include, without limitation, a report
filed pursuant to Section 13(d) of the Exchange Act) by
Employer or any Person that a Person (other than a Company
Entity) has become the Beneficial Owner, directly or
indirectly, of securities of Employer representing 20% or more,
but not more than 50%, of the combined voting power of the
Employer's then outstanding securities if the transaction
resulting in such ownership has been approved in advance by the
Continuing Directors; or
(C) an event that would have constituted a Full
Change in Control but was deemed to be a Partial Change in
Control in accordance with the definition of Full Change in
Control.
8.13.19 "Person" shall have the meaning ascribed to such term as such
term is used in Sections 13(d) and 14(d) of the Exchange Act.
8.13.20 "Resulting Corporation" shall mean the surviving corporation in
any consolidation, merger or other reorganization to which Employer is
a party; provided, however, that if the surviving corporation in any
such transaction is a subsidiary of another corporation, then the
Resulting Corporation is the ultimate parent corporation of such
surviving corporation; and provided, further, that in the event of a
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consolidation, merger or other reorganization to which a Company Entity
(other than Employer) is a party, then Employer shall be deemed the
Resulting Corporation.
8.14 Code Section 162(m). Notwithstanding any other
provision of this Agreement to the contrary, to the extent that Employer's tax
deduction for remuneration in respect of the payment of any amount under
Sections 5.02, 5.05 or 8.02 of this Agreement would be disallowed under Code
Section 162(m) by reason of the fact that Executive's applicable employee
remuneration, as defined in Code Section 162(m)(4), either exceeds or, if such
amount were paid, would exceed the $1,000,000 limitation in Code Section
162(m)(1), Employer may, in its sole discretion, defer the payment of such
amount, but only to the extent that, and for so long as, Employer's tax
deduction in respect of the payment thereof would be so disallowed under Code
Section 162(m); provided that no payment may be deferred beyond three months
after the end of Employer's fiscal year in which Executive's termination of
employment occurs, and Employer may accelerate the payment of previously
deferred amounts if it determines that the amount of the tax deduction that
would be disallowed is not significant. Amounts which are deferred under this
Section 8.14 will be credited with interest at a rate determined by Employer
from time to time, but in no event less than the long-term applicable federal
rate under Code Section 1274(d) in effect from time to time.
IN WITNESS WHEREOF, Employer and Executive have executed this Agreement
as of the date set forth in the first paragraph hereof.
U.S. BANCORP
By /s/ Lee R. Mitau
-------------------------------------------
Its Executive Vice President - Corporate
Development, General Counsel and
Secretary
/s/ John F. Grundhofer
---------------------------------------------
John F. Grundhofer
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