Exhibit Number (10)(iv)
To 6/30/96 Form 10-Q
EMPLOYMENT SECURITY AGREEMENT
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THIS EMPLOYMENT SECURITY AGREEMENT is entered into this 21st day of
May, 1996, between NORTHERN TRUST CORPORATION, a Delaware corporation (the
"Company"), and (NAME) (the "Executive").
WITNESSETH THAT:
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WHEREAS, Executive is employed by the Company or one of its wholly-owned
subsidiaries (referred to collectively as the "Company") and the Company desires
to provide certain security to Executive in connection with any potential change
in control of the Company; and
WHEREAS, the Company and the Executive entered into an Employment Security
Agreement dated as of (DATE) with respect to the Executive's employment
following a change in control of the Company (which agreement, as it has been
supplemented by subsequent letter agreements, is referred to in this Agreement
as the "Prior Agreement"); and
WHEREAS, the Executive and the Company wish to supersede the Prior
Agreement with this Agreement;
NOW, THEREFORE, it is hereby agreed by and between the parties, for good
and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, as follows:
1. Payments and Benefits Upon a Change in Control. If within two (2) years
after a Change in Control (as defined below) or during the Period Pending a
Change in Control (as defined below), (i) the Company shall terminate
Executive's employment with the Company without Good Cause (as defined
below), or (ii) Executive shall voluntarily terminate such employment with
Good Reason (as defined below), the Company shall, within 30 days of
Executive's Employment Termination (as defined below), make the payments
and provide the benefits described below.
(a) Cash Payment. The Company shall make a lump sum cash payment to
Executive equal to two times the Executive's annual salary at the
greater of (i) Executive's salary rate in effect on the date of the
Change in Control or (ii) Executive's salary rare in effect on
Executive's Employment Termination.
(b) Welfare Benefit Plans. With respect to each Welfare Benefit Plan (as
defined below), for the period beginning on Executive's Employment
Termination and ending on the earlier of (i) two years following
Executive's Employment Termination, or (ii) the date Executive becomes
covered by a welfare benefit plan or program maintained by an entity
other than the Company which provides coverage or benefits at least
equal, in all respects, to such Welfare Benefit Plan, Executive shall
continue to participate in such Welfare Benefit Plan on the same basis
and at the same cost to Executive as was the case immediately prior to
the Change in Control (or, if more favorable to Executive, as was the
case at any time hereafter), or, if any benefit or coverage cannot be
provided under a Welfare Benefit Plan because of applicable law or
contractual provisions, Executive shall be provided with substantially
similar benefits and coverage for such period. Immediately following
the expiration of the continuation period required by the preceding
sentence, Executive shall be entitled to continued group health
benefit plan coverage (so-called "COBRA coverage") in accordance with
Section 4980B of the Internal Revenue Code of 1986, as amended (the
"Code"), it being intended that COBRA coverage shall be consecutive to
the benefits and coverage provided for in the preceding sentence.
Executive's eligibility for, and premium contribution level under, The
Northern Trust Retiree Medical Care Plan and The Northern Trust
Medicare Supplemental Plan and any similar or successor plans or
programs maintained or contributed to by the Company, shall be
determined by adding two years to Executive's age and years of service
at Executive's Employment Termination.
(c) Salary to Date of Employment Termination. The Company shall pay to
Executive any unpaid salary or other compensation of any kind earned
with respect to any period prior to Executive's Employment Termination
and a lump sum cash payment for accumulated but unused vacation earned
through such Employment Termination.
2. Definitions. For purposes of this Agreement:
(a) "Good Cause" shall mean: (i) Executive's conviction of any criminal
violation involving dishonesty, fraud, or breach of trust; (ii)
Executive's willful engagement in any misconduct in the performance of
Executive's duty that materially injures the Company; (iii)
Executive's performance of any act which, if known to the customers,
clients, stockholders or regulators of the Company or any of its
subsidiaries, would materially and adversely impact on the business of
the Company or any of its subsidiaries; (iv) any act or omission by
Executive that causes a regulatory body with jurisdiction over the
Company or any of its subsidiaries, to demand, request, or recommend
that Executive be suspended or removed from any position in which
Executive serves with the Company or any of its subsidiaries; or (v)
Executive's willful and substantial nonperformance of assigned duties,
provided that such nonperformance has continued more than ten days
after the Company has given written notice of such nonperformance and
of its intention to terminate Executive's employment because of such
nonperformance.
(b) "Good Reason" shall exist if, without Executive's express written
consent:
(i) The Company shall materially reduce the nature, scope, level or
extent of Executive's responsibilities from the nature, scope,
level or extent of such responsibilities prior to the Change in
Control, or shall fail to provide Executive with adequate
office facilities and support services to perform such
responsibilities;
(ii) The Company shall reduce Executive's salary below that in
effect as of the date of this Agreement (or as of the Change in
Control, if greater);
(iii) The Company shall require Executive to relocate Executive's
principal business office or his principal place of residence
outside the (LOCATION) Standard Metropolitan Statistical Area
(the "Geographical Employment Area"), or assign to Executive
duties that would reasonably require such relocation;
(iv) The Company shall require Executive, or assign duties to
Executive which would reasonably require Executive, to spend
more than fifty normal working days away from the Geographical
Employment Area during any consecutive twelve-month period; or
(v) The Company shall fail to continue in effect any cash or stock-
based incentive or bonus plan, retirement plan, welfare benefit
plan, or other benefit plan, program or arrangement, unless the
aggregate value (as computed by an independent employee
benefits consultant selected by the Company) of all such
compensation, retirement and benefit plans, programs and
arrangements provided to Executive is not materially less than
their aggregate value as of the date of this Agreement (or as
of the Change in Control, if greater).
(c) "Change in Control" shall be deemed to occur on the earliest of:
(i) The receipt by the Company of a Schedule 13D or other statement
filed under Section 13(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), indicating that any
entity, person, or group has acquired beneficial ownership, as
that term is defined in Rule 13d-3 under the Exchange Act, of
more than 30% of the outstanding capital stock of the Company
entitled to vote for the election of directors ("voting
stock");
(ii) The commencement by an entity, person, or group (other than the
Company or a subsidiary of the Company) of a tender offer or an
exchange offer for more than 20% of the outstanding voting
stock of the Company;
(iii) The effective time of (A) a merger or consolidation of the
Company with one or more other corporations as a result of
which the holders of the outstanding voting stock of the
Company immediately prior to such merger or consolidation hold
less than 60% of the voting stock of the surviving or resulting
corporation, or (B) a transfer of substantially all of the
property of the Company other than to an entity of which the
Company owns at least 80% of the voting stock; or
(iv) The election to the Board of Directors of the Company, without
the recommendation or approval 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.
(d) "Employment Termination" shall mean the effective date of: (i)
Executive's voluntary termination of employment with the Company with
Good Reason; or (ii) the termination of Executive's employment by the
Company without Good Cause.
(e) "Welfare Benefit Plan" shall mean each welfare benefit plan maintained
or contributed to by the Company, including, but not limited to a plan
that provides health (including medical and dental), life, accident or
disability benefits or insurance, or similar coverage, in which
Executive was participating at the time of the Change in Control.
(f) "Period Pending a Change in Control" shall mean the period after the
approval by the Company's stockholders and prior to the effective time
of (A) a merger or consolidation of the Company with one or more other
corporations as a result of which the holders of the outstanding
voting stock of the Company immediately prior to such merger or
consolidation hold less than 60% of the voting stock of the surviving
or resulting corporation, or (B) a transfer of substantially all of
the property of the Company other than to an entity of which the
Company owns at least 80% of the voting stock.
3. Mitigation and Set-Off. Executive shall not be required to mitigate
Executive's damages by seeking other employment or otherwise. The
Company's obligations under this Agreement shall not be reduced in any way
by reason of any compensation or benefits received (or foregone) by
Executive from sources other than the Company after Executive's Employment
Termination, or any amounts that might have been received by Executive in
other employment had Executive sought such other employment. Executive's
entitlement to benefits and coverage under this Agreement shall continue
after, and shall not be affected by, Executive's obtaining other employment
after his Employment Termination, provided that any such benefit or
coverage shall not be furnished if Executive expressly waives the specific
benefit or coverage by giving written notice of waiver to the Company.
4. Litigation Expenses. The Company shall pay to Executive all out-of-pocket
expenses, including attorneys' fees, incurred by Executive in the event
Executive successfully enforces any provision of this Agreement in any
action, arbitration or lawsuit.
5. Assignment; Successors. This Agreement may not be assigned by the Company
without the written consent of Executive but the obligations of the Company
under this Agreement shall be the binding legal obligations of any
successor to the Company by merger, consolidation or otherwise, and in the
event of any business combination or transaction that results in the
transfer of substantially all of the assets or business of
the Company, the Company will cause the transferee to assume the
obligations of the Company under this Agreement. This Agreement may not be
assigned by Executive during Executive's life, and upon Executive's death
will inure to the benefit of Executive's heirs, legatees and legal
representatives of Executive's estate.
6. Interpretation. The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the State of Illinois,
without regard to the conflict of law principles thereof. The invalidity
or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement.
7. Withholding. The Company may withhold from any payment that it is required
to make under this Agreement amounts sufficient to satisfy applicable
withholding requirements under any federal, state or local law.
8. Amendment or Termination. This Agreement may be amended at any time by
written agreement between the Company and Executive. The Company may
terminate this Agreement by written notice given to Executive at least two
years prior to the effective date of such termination, provided that, if a
Change in Control occurs prior to the effective date such termination, the
termination of this Agreement shall not be effective and Executive shall be
entitled to the full benefits of this Agreement. Any such amendment or
termination shall be made pursuant to a resolution of the Board.
9. Financing. Cash and benefit payments under this Agreement shall constitute
general obligations of the Company. Executive shall have only an unsecured
right to payment thereof out of the general assets of the Company.
Notwithstanding the foregoing, the Company may, by agreement with one or
more trustees to be selected by the Company, create a trust on such terms
as the Company shall determine to make payments to Executive in accordance
with the terms of this Agreement.
10. Severability. In the event that any provision or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason, the
remaining provisions of this Agreement shall be unaffected thereby and
shall remain in full force and effect.
11. Other Agreements. This Agreement supersedes and cancels the Prior
Agreement, and all prior written or oral agreements and understandings
relating to the terms of this Agreement or the Prior Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first written above.
NORTHERN TRUST CORPORATION
By:_____________________________ _______________________________
Its:____________________________ Executive