1
EXHIBIT 10.10
PHANTOM STOCK AGREEMENT
LAKE FOREST BANCORP INC
This Phantom Stock Agreement ("Agreement"), dated as of March 18, 1996, is
entered into by and between Lake Forest Bancorp Inc, a Delaware Corporation
(the "Company"), and Edward J. Wehmer of Lake Forest, Illinois
("Participant").
RECITALS
Whereas Participant is employed as President of the Company and has held
that position since the organization of the Company and;
Whereas Participant, in order to induce two individuals to join the
Company in key management positions and due to the lack of any other known
willing sellers at the time, sold those individuals a total of 864 common
shares of the Company out of his personal holdings (the "Sale"), and;
Whereas the Board of Directors of the Company wish to compensate
Participant for any current or future economic opportunity loss associated with
the Sale;
Now, therefore the Company and Participant agree as follows:
AGREEMENT
1) Award. The Company hereby grants and awards to Participant 1,300
phantom stock units (the "Units"). Each Unit shall have the right to receive as
deferred compensation the value of the Units as hereinafter defined, delivered
in the manner and subject to the terms and conditions hereinafter set forth.
Units and their Value will be credited to an unfunded account (the "Account")
for Participant on the books of the Company.
2) Valuation of the Units. Except as set forth elsewhere herein, the value
of each unit (the "Unit Value") shall be equal to the market value of a share
of the Company's common stock (the "Market Value") less a calculated amount
hereinafter referred to as the "Base Value". The Market Value shall be
determined as the price per common share paid in the most recent arms length
purchase or sale transaction involving the Company's common stock. If no such
transaction has occurred within three months of a valuation date, either party
at the Company's expense, can have the shares valued by a mutually agreed upon
investment banker whose valuation shall be binding. The initial Base Value
shall be $110.
3) Adjustments. The number of Units and the Base Value shall be subject
to adjustment from time to time as follows:
a) In the event that the Common Stock of the Company is changed into or
exchanged for a different number or kind of shares of stock or other
securities of the Company or;
b) In the event that the Company declares or enacts common stock
dividends, common stock splits, reverse common stock splits, or other
reclassifications or;
c) In the event that the Company, in a merger, consolidation or
reorganization with an "Affiliated Company" (as defined in Federal
Reserve Bank Regulations) where the Company is not the survivor,
receives stock or other securities of the surviving company then;
The Units and the Base Value shall be adjusted equitably as though the
Units were actually common shares owned by the Participant.
2
4) Merger, Tender or Consolidation. In the event that the holders of the
common stock of the Company are to receive consideration, whether in the form
of cash or shares of another entity, as the result of the liquidation or
dissolution of the Company, a merger, consolidation or reorganization with a
non-affiliated entity under circumstances where the Company will not be the
surviving party or in an event of a tender offer for the shares of the Company
by which the offeror is to obtain control of the Company, the Market Value
shall be equal to the value per share of the consideration tendered or
exchanged for the common shares of the Company.
5) Dividends. In the event that the Company or its affiliated successor
pays any cash dividends on common stock or pays interest or dividends on
securities which during the course of this agreement have been substituted for
the common stock of the Company, the Account shall be credited with an amount
equal to the dividends which are payable with respect to a number of shares of
Common Stock equal to the number of Units then credited to the Account. Such an
amount shall be referred to as a "Cash Credit". The balance of Cash Credits in
the Account shall bear interest payable quarterly at the average ninety day US
Treasury rate for the paying quarter. Any interest so credited to the Account
shall also be considered as Cash Credits.
In the event that the Company or its affiliated successor pays dividends
on the Common Stock or any replacement security in the form of Common Stock or
the substitute security, the Account shall be credited with additional Units or
fractions thereof equal to the number of shares of Common Stock or substitute
security distributed with respect to the number of Units then in the Account.
6) Vesting. All Units shall be 100% vested as of the date of the Award.
Any amounts credited to the Account shall be 100% vested as of the earlier of
the date of the credit or the date of the transaction giving rise to the
credit.
7) Payment of Account Value. Except as provided elsewhere herein, payment
of Account value (including the Value of the Units) shall be made as follows:
a) Participant may at any time request a payment of cash for all or any
portion of the Account Value then in the Account . Any such request
shall be in writing and be effective on the date that it is received by
the Company. Payment will be made within thirty days of said effective
date.
b) In the event the death of the Participant, his beneficiary shall
receive a lump sum payment in the amount of the Account Value as of the
date of death. If no beneficiary has been designated, payment shall be
made to the executor of Participant's estate. Said payment shall be
made within thirty days of the date of death.
c) Any Account Value remaining as of the Termination Date will be paid
to the Participant within thirty days of the Termination Date.
The Company shall have the right to deduct from any payment made under
this Plan the required amount of federal and state withholding tax required by
those taxing authorities.
8) Successors. This Agreement shall inure to the benefit of and be binding
upon the Company, its successors and assigns, and the Participant, his heirs,
legatees, administrators, executors and legal representatives.
9) Non-Alienation. Participant shall have no right to pledge, hypothecate,
anticipate or in any way create a lien upon any amounts payable under this
Agreement, and no benefits payable under this plan shall be assignable in
anticipation of payment either by voluntary or involuntary act, or by operation
of law.
3
10) Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes any prior oral or written agreements and
understandings between the parties or their representatives relating to the
Participant's deferred compensation through a Phantom Stock Agreement; provided
however that nothing in this Agreement shall create a contract of employment
between the Company and the Participant or confer upon the Participant any
right to continued employment by the Company, and shall not be deemed to modify
or supersede any other agreement between the parties respecting their
employment relationship or compensation therefor or affect Participant's right
to compensation and benefits in accordance with any such agreements or
otherwise in accordance with the Company's regular practices from time to time.
11) Modifications. This Agreement may be modified only by an agreement in
writing signed by both parties.
12) Nature of the Award. The award of Units to the Participant under this
Agreement is solely an arrangement to pay deferred compensation in an amount
equal to the value which the Participant would have received had the
Participant held 1,300 shares of the Company Common Stock as of the date of the
award. Nothing in this Agreement confers upon the Participant any rights as a
stockholder of the Company. Participant's right to receive payments under this
Agreement shall be no greater than the right of an unsecured general creditor
of the Company. All payments shall be made from the general funds of the
Company and no special or separate fund shall be established and no segregation
of assets shall be made to insure payment of such amounts. Participant shall
have no right, title or interest in or to any investments which the Company may
make to aid in meeting its obligations under this Agreement.
13) Term of the Agreement. This Agreement shall end upon the written
agreement of the parties, upon the events indicated in paragraph 7(b) of this
Agreement, or March 18, 2006 (the "Termination Date").
14) Notice. Any notice, request, filing, or other communication required
or permitted by this Agreement shall be sufficient if in writing and if sent by
first class mail to the Participant at the last address filed in writing with
the Company, or to the Company at 727 Bank Lane, Lake Forest, Illinois, 60045,
or such other address as the Company may specify from time to time in written
notice to the Participant.
15) Governing Law. This Agreement shall be construed in accordance with
and subject to, and governed by the laws of the State of Illinois irrespective
of the fact that one or more of the parties to this Agreement now is or may
become the resident of another state.
Lake Forest Bancorp, Inc. Participant
s/ David A. Dykstra s/ Edward J. Wehmer
- --------------------------- ---------------------------
by: David A. Dykstra Edward J. Wehmer
Executive Vice President