Exhibit (10)(vi)
FORM OF AMENDMENT TO EMPLOYMENT SECURITY AGREEMENT
--------------------------------------------------
(Tier 3 Agreement)
This Amendment, dated as of [insert date], expressly amends that
certain Employment Security Agreement, dated as of [insert date of original
agreement], by and between Northern Trust Corporation, a Delaware corporation
(the "Company") and [insert name of executive] (the "Executive").
WHEREAS, effective as of [insert date of original agreement], the
Company and the Executive entered into an Employment Security Agreement
concerning the provision of certain security to the Executive in connection with
any potential change in control of the Company; and
WHEREAS, the Company and the Executive desire to amend the Employment
Security Agreement with respect to certain definitions contained therein and
certain other matters;
NOW, THEREFORE, the Company and the Executive agree as follows:
Effective as of the date hereof, the Employment Security Agreement is
amended as follows:
1. Section 1 of the Employment Security Agreement is hereby amended by
adding the following new clause (d) thereto, as follows:
(d) Stock Incentive Plans. Whether or not there is a termination of
Executive's employment entitling him to the other benefits described in
this Section 1, all outstanding stock options granted to the Executive
under the Northern Trust Corporation Amended 1985 Incentive Stock Plan, the
Northern Trust Corporation 1992 Incentive Stock Plan, the Northern Trust
Corporation Amended 1992 Incentive Stock Plan and any other stock plan or
program (collectively referred to as the "ISPs"), will immediately become
fully vested and exercisable upon the Change in Control (or upon a
termination during a Period Pending a Change in Control under circumstances
which entitle the Executive to payments and benefits hereunder). All
restricted stock granted to the Executive under the ISPs will immediately
be fully vested and distributed to Executive upon the Change in Control.
With respect to performance shares granted to the Executive under the ISPs
pursuant to the Northern Trust Corporation Long Term Incentive Plan
("LTIP") or otherwise, upon the
Change in Control: (i) all performance shares credited to Executive's
performance share account will be immediately distributed to Executive
(together with any other amounts then credited to Executive's performance
share account); (ii) a pro rata portion of all performance shares awarded
to Executive but not then credited to Executive's performance share account
will be immediately distributed to Executive; and (iii) Executive will
remain eligible for crediting to Executive's performance share account as
of the end of the performance period, in accordance with the provisions of
the LTIP in effect as of the Change in Control, any remaining performance
shares awarded to Executive but not distributed in accordance with this
paragraph. In addition, each other equity based award granted to the
Executive (including stock units issued under an ISP) shall become fully
vested (and, to the extent applicable, exercisable or distributable) upon a
Change in Control. Notwithstanding anything to the contrary contained in an
ISP or an option agreement issued pursuant to an ISP, following any
termination of the Executive's employment entitling him to benefits under
this Section 1, (i) all outstanding non-qualified stock options granted to
the Executive under an ISP and (ii) all outstanding incentive stock options
granted to the Executive on or following September 25, 2001 shall remain
outstanding and exercisable until the earlier of (a) the exercise of such
option by the Executive, (b) the fifth anniversary of the Executive's
Employment Termination or (c) the expiration date of the option term. For
the avoidance of doubt, in the event of any conflict between the terms of
this Section 1(d) and those of any outstanding equity based award held by
the Executive, the terms of this Section 1(d) shall govern.
1. Section 1 of the Employment Security Agreement is hereby amended by
adding the following new clause (e) thereto, as follows:
(e) In the event that the Executive is a participant in the Northern Trust
Corporation Supplemental Pension Plan (or any successor plan thereto) (the
"Supplemental Pension Plan"), and the Executive qualifies for neither early
nor normal retirement benefits pursuant to the terms of The Northern Trust
Company Pension Plan (or any successor plan thereto) (the "Qualified
Pension Plan"), the Executive will be credited with up to an additional
twenty-four (24) months of age and/or service credit with respect to the
Supplemental Pension Plan, provided, however, that such additional age
and/or service credit will only be credited to the Executive with respect
to the Supplemental Pension Plan if and to the extent that such additional
credit would, as of the Executive's Employment Termination, enable the
Executive to qualify for early or normal retirement benefits pursuant to
the terms of the Qualified Pension Plan (if such additional credit were
taken into account
2
under such plan). Any additional credit shall be applied to calculate the
Executive's benefit only as specified under the terms of the Supplemental
Pension Plan. Notwithstanding the foregoing, if the Executive's entire
benefit under the Qualified Pension Plan is derived from the pension equity
formula under such plan, no additional credit shall be awarded.
1. Clause (i) of Section 2(a) of the Employment Security Agreement is
hereby restated as follows:
"(i) Executive's conviction of any criminal violation involving dishonesty,
fraud or breach of trust which involves the business of the Company or any
of its subsidiaries;"
1. Section 2(a) of the Employment Security Agreement is hereby
further amended by adding the following language following the last sentence
thereof:
"For purposes of clauses (ii) and (v) of this definition, no act, or
failure to act, on Executive's part shall be deemed "willful" unless done,
or omitted to be done, by Executive not in good faith and without
reasonable belief that Executive's act, or failure to act, was in the best
interest of the Company. In the event of a dispute concerning the
application of this provision, no claim by the Company that Good Cause
exists shall be given effect unless the Company establishes to the Board of
Directors of the Company by clear and convincing evidence that Good Cause
exists."
1. Section 2(b) of the Employment Security Agreement is hereby
amended by adding the following language following clause (v) thereof:
"Executive's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any act or failure to act constituting
Good Reason hereunder. For purposes of any determination regarding the
existence of Good Reason, any claim by Executive that Good Reason exists
shall be presumed to be correct unless the Company establishes to the Board
of Directors of the Company by clear and convincing evidence that Good
Reason does not exist."
1. Section 2(c) of the Employment Security Agreement is hereby
amended and restated in its entirety, as follows:
3
For all purposes under this Agreement (including, without limitation, for
purposes of the application of the accelerated vesting provision of Section
1(d) to equity awards granted prior to September 25, 2001), a "Change in
Control" shall be deemed to have occurred if the event set forth in any one
of the following paragraphs shall have occurred:
(i) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired
directly from the Company or its affiliates) representing 20% or more
of the combined voting power of the Company's then outstanding
securities, excluding any Person who becomes such a Beneficial Owner
in connection with a transaction described in clause (A) of paragraph
(iii) below; or
(ii) The election to the Board of Directors of the Company, without
the recommendation or approval of two thirds of the incumbent Board of
Directors of the Company, of the lesser of: (A) three directors; or
(B) directors constituting a majority of the number of directors of
the Company then in office, provided, however, that directors whose
initial assumption of office is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company
will not be considered as incumbent members of the Board of Directors
of the Company for purposes of this section; or
(iii) there is consummated a merger or consolidation of the
Corporation or any direct or indirect subsidiary of the Company with
any other company, other than (A) a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof), at
least 60% of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (B) a merger or
consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
(not including in the securities Beneficially Owned by such Person any
securities acquired directly from the Company or its Affiliates)
representing 20%
4
or more of the combined voting power of the Company's then outstanding
securities; or
(iv) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the
Company's assets to an entity, at least 60% of the combined voting
power of the voting securities of which are owned by stockholders of
the Corporation in substantially the same proportions as their
ownership of the Company immediately prior to such sale.
Notwithstanding the foregoing, a "Change in Control" shall not be deemed to
have occurred by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the record holders of
the common stock of the Company immediately prior to such transaction or
series of transactions continue to have substantially the same
proportionate ownership in an entity which owns all or substantially all of
the assets of the Company immediately following such transaction or series
of transactions.
For purposes of the Change in Control definition set forth in this
Section 2(c) and for purposes of Section 2(h) (where applicable) the following
definitions shall apply:
"Affiliate" shall have the meaning set forth in Rule 12b-2 under Section 12
of the Exchange Act; "Beneficial Owner" shall have the meaning set forth in
Rule 13d-3 under the Exchange Act, except that a Person shall not be deemed
to be the Beneficial Owner of any securities with respect to which such
Person has properly filed a Form 13-G; "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended from time to time; and "Person"
shall have the meaning given in Section 3(a)(9) of the Exchange Act, as
modified and used in Sections 13(d) and 14(d) thereof, except that such
term shall not include (i) the Company or any of its Affiliates, (ii) a
trustee or other fiduciary holding securities under an employee benefits
plan of the Corporation or any of its subsidiaries, (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities
or (iv) a corporation owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their ownership of
stock of the Company.
5
1. Section 2(h) of the Employment Security Agreement is hereby
amended and restated, in its entirety, to read as follows:
"Period Pending a Change in Control shall be deemed to have commenced if
the event set forth in any one of the following shall have occurred: (A)
the Company enters into an agreement, the consummation of which would
result in the occurrence of a Change in Control; (B) the Company or any
Person publicly announces an intention to take or to consider taking
actions which, if consummated, would constitute a Change in Control; (C)
any Person becomes the Beneficial Owner, directly or indirectly, of
securities of the Corporation representing 15% or more of either the then
outstanding shares of common stock of the Company or the combined voting
power of the Corporation's then outstanding securities (not including in
the securities beneficially owned by such Person any securities acquired
directly from the Company or its Affiliates); or (D) the Board adopts a
resolution to the effect that, for purposes of this Plan, a Period Pending
a Change in Control has commenced. The Period Pending a Change in Control
and shall lapse upon the occurrence of a Change in Control or, if earlier
(i) with respect to a Period Pending a Change in Control occurring pursuant
to clause (A) of the definition, immediately upon the abandonment or
termination of the applicable agreement, (ii) with respect to a Period
Pending a Change in Control occurring pursuant to clause (B) of the
definition, immediately upon a public announcement by the applicable party
that such party has abandoned its intention to take or consider taking
actions which if consummated would result in a Change in Control or (iii)
with respect to a Period Pending a Change in Control occurring pursuant to
clause (C) or (D) of the definition, upon the one year anniversary of the
commencement of the Period Pending a Change in Control (or such earlier
date as may be determined by the Board)."
6
IN WITNESS WHEREOF, Executive and, pursuant to due authorization from
its Board of Directors, the Company have caused this Amendment to be executed as
of the day and year first above written.
NORTHERN TRUST CORPORATION
By:__________________________
Name:
Title:
_____________________________
[Executive]
7