EXHIBIT 10.1
CHANGE-OF-CONTROL AGREEMENT
THIS AGREEMENT, dated as of the 1st day of May, 2003 (the "Agreement"), by
and between UnionBanCal Corporation, a California corporation (the "Company"),
and __________________ (the "Executive").
WHEREAS, the Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its Shareholders
to assure that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined herein). The Board believes it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and to encourage the
Executive's full attention and dedication to the current Company and in the
event of any threatened or pending Change of Control, and to provide the
Executive with compensation and benefits arrangements upon a Change of Control
that ensure that the compensation and benefits expectations of the Executive
will be satisfied and that are competitive with those of other corporations.
Therefore, in order to accomplish these objectives, the Board has caused the
Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
SECTION 1. CERTAIN DEFINITIONS. (a) "Effective Date" means the first date
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during the Change of Control Period (as defined herein) on which a Change of
Control occurs. Notwithstanding anything in this Agreement to the contrary, if a
Change of Control occurs and if the Executive's employment with the Company is
terminated prior to the date on which the Change of Control occurs, and if it is
reasonably demonstrated by the Executive that such termination of employment (1)
was at the request of a third party that has taken steps reasonably calculated
to effect a Change of Control or (2) otherwise arose in connection with or
anticipation of a Change of Control, then "Effective Date" means the date
immediately prior to the date of such termination of employment.
(b) "Change of Control Period" means the period commencing on the date
hereof and ending thirty months after such date; PROVIDED, HOWEVER, that,
commencing on the date one year after the date hereof, and on each annual
anniversary of such date (such date and each annual anniversary thereof, the
"Renewal Date"), unless previously terminated, the Change of Control Period
shall be automatically extended so as to terminate thirty months from such
Renewal Date, unless, at least 60 days prior to the Renewal Date, the Company
shall give notice to the Executive that the Change of Control Period shall not
be so extended.
(c) "Affiliated Company" means any company controlled by the Company.
(d) "Change of Control" means: consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of the
assets or stock of the Company or the acquisition of the assets or stock of
another entity ("Business Combination"); excluding, however, such a Business
Combination pursuant to which (a) a Permitted Holder will beneficially own,
directly or indirectly, 30% or more of, respectively, the outstanding shares of
common stock, and the combined voting power of the then outstanding voting
securities entitled
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to vote generally in the election of directors (together, the "Company Stock"),
as the case may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company's assets
either directly or through one or more subsidiaries), and (b) no individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended has a greater beneficial interest,
directly or indirectly, in the Company Stock than a Permitted Holder.
For purposes of this definition, "Permitted Holder" shall mean (i) The Bank
of Tokyo-Mitsubishi, Ltd. or any successor thereto ("BTM"), (ii) an employee
benefit plan of BTM or (iii) a corporation controlled by BTM.
SECTION 2. EMPLOYMENT PERIOD. The Company hereby agrees to continue the
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Executive in its employ, subject to the terms and conditions of this Agreement,
for the period commencing on the Effective Date and ending thirty months after
the Effective Date (the "Employment Period"). The Employment Period shall
terminate upon the Executive's termination of employment for any reason.
SECTION 3. TERMS OF EMPLOYMENT. (a) POSITION AND DUTIES. (1) During the
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Employment Period, (A) the Executive's position (including status, offices,
titles and reporting requirements), authority, duties and responsibilities shall
be at least commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the 120-day period
immediately preceding the Effective Date and (B) the Executive's services shall
be performed at the office where the Executive was employed immediately
preceding the Effective Date or at any other location less than 35 miles from
such office.
(2) During the Employment Period, and excluding any periods of vacation and
sick leave to which the Executive is entitled, the Executive agrees to devote
reasonable attention and time during normal business hours to the business and
affairs of the Company and, to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period, it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that, to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company.
(b) COMPENSATION. (1) BASE SALARY. During the Employment Period, the
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Executive shall receive an annual base salary (the "Annual Base Salary") at an
annual rate at least equal to 12 times the highest monthly base salary paid or
payable, including any base salary that has been earned but deferred, to the
Executive by the Company and the Affiliated Companies in respect of the 12-month
period immediately preceding the month in which the
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Effective Date occurs. The Annual Base Salary shall be paid at such intervals as
the Company pays executive salaries generally. During the Employment Period, the
Annual Base Salary shall be reviewed at least annually, beginning no more than
12 months after the last salary increase awarded to the Executive prior to the
Effective Date. Any increase in the Annual Base Salary shall not serve to limit
or reduce any other obligation to the Executive under this Agreement. The Annual
Base Salary shall not be reduced after any such increase and the term "Annual
Base Salary" shall refer to the Annual Base Salary as so increased.
(2) ANNUAL BONUS. In addition to the Annual Base Salary, the Executive
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shall be awarded, for each fiscal year ending during the Employment Period, an
annual bonus opportunity (the "Annual Bonus") in cash at least equal to the
Executive's target bonus under the Company's Senior Management Bonus Plan or its
successors for the year in which the Effective Date occurs (the "Recent Annual
Bonus"). Each such Annual Bonus shall be paid no later than the end of the third
month of the fiscal year next following the fiscal year for which the Annual
Bonus is awarded, unless the Executive shall elect to defer the receipt of such
Annual Bonus.
(3) INCENTIVE, SAVINGS AND RETIREMENT PLANS. During the Employment Period,
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the Executive shall be entitled to participate in all cash incentive, equity
incentive, savings and retirement plans, practices, policies, and programs
applicable generally to other peer executives of the Company and the Affiliated
Companies, but in no event shall such plans, practices, policies and programs
provide the Executive with incentive opportunities (measured with respect to
both regular and special incentive opportunities, to the extent, if any, that
such distinction is applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than the most
favorable of those provided by the Company and the Affiliated Companies for the
Executive under such plans, practices, policies and programs as in effect at any
time during the 120-day period immediately preceding the Effective Date or, if
more favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and the Affiliated
Companies. In addition, on the Effective Date, all stock options, restricted
stock and other equity and long-term incentives held by the Executive shall vest
and/or become immediately exercisable, as the case may be.
(4) WELFARE BENEFIT PLANS. During the Employment Period, the Executive
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and/or the Executive's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and the Affiliated
Companies (including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel accident
insurance plans and programs) to the extent applicable generally to other peer
executives of the Company and the Affiliated Companies, but in no event shall
such plans, practices, policies and programs provide the Executive with benefits
that are less favorable, in the aggregate, than the most favorable of such
plans, practices, policies and programs in effect for the Executive at any time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and the Affiliated
Companies.
(5) EXPENSES. During the Employment Period, the Executive shall be entitled
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to receive prompt reimbursement for all reasonable expenses incurred by the
Executive in
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accordance with the most favorable policies, practices and procedures of the
Company and the Affiliated Companies in effect for the Executive at any time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and the Affiliated Companies.
(6) FRINGE BENEFITS. During the Employment Period, the Executive shall be
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entitled to fringe benefits and perquisites, in accordance with the most
favorable plans, practices, programs and policies of the Company and the
Affiliated Companies in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and the Affiliated Companies.
(7) OFFICE AND SUPPORT STAFF. During the Employment Period, the Executive
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shall be entitled to an office or offices of a size and with furnishings and
other appointments, and to exclusive personal secretarial and other assistance,
at least equal to the most favorable of the foregoing provided to the Executive
by the Company and the Affiliated Companies at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, as provided generally at any time thereafter with respect to other
peer executives of the Company and the Affiliated Companies.
(8) VACATION. During the Employment Period, the Executive shall be entitled
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to paid vacation in accordance with the most favorable plans, policies, programs
and practices of the Company and the Affiliated Companies as in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the Company and the
Affiliated Companies.
SECTION 4. TERMINATION OF EMPLOYMENT. (a) DEATH OR DISABILITY. The
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Executive's employment shall terminate automatically if the Executive dies
during the Employment Period. If the Company determines in good faith that the
Disability (as defined herein) of the Executive has occurred during the
Employment Period (pursuant to the definition of "Disability"), it may give to
the Executive written notice in accordance with Section 11(b) of its intention
to terminate the Executive's employment. In such event, the Executive's
employment with the Company shall terminate effective on the 30th day after
receipt of such notice by the Executive (the "Disability Effective Date"),
PROVIDED that, within the 30 days after such receipt, the Executive shall not
have returned to full-time performance of the Executive's duties. "Disability"
means the absence of the Executive from the Executive's duties with the Company
on a full-time basis for 180 consecutive days as a result of incapacity due to
mental or physical illness that is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to the
Executive or the Executive's legal representative.
(b) CAUSE. The Company may terminate the Executive's employment during the
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Employment Period for Cause. "Cause" means:
(1) the willful and continued failure of the Executive to perform
substantially the Executive's duties (as contemplated by Section
3(a)(1)(A)) with the Company or any
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Affiliated Company (other than any such failure resulting from incapacity
due to physical or mental illness or following the Executive's delivery of
a Notice of Termination for Good Reason), after a written demand for
substantial performance is delivered to the Executive by the Board or the
Chief Executive Officer of the Company that specifically identifies the
manner in which the Board or the Chief Executive Officer of the Company
believes that the Executive has not substantially performed the Executive's
duties, or
(2) the conviction of, or plea by the Executive of NOLO CONTENDERE to,
a felony.
For purposes of this Section 4(b), no act, or failure to act, on the part
of the Executive shall be considered "willful" unless it is done, or omitted to
be done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer of
the Company or an executive officer of the Company or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or omitted to
be done, by the Executive in good faith and in the best interests of the
Company. The cessation of employment of the Executive shall not be deemed to be
for Cause unless and until there shall have been delivered to the Executive a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Board (excluding the Executive,
if the Executive is a member of the Board) at a meeting of the Board called and
held for such purpose (after reasonable notice is provided to the Executive and
the Executive is given an opportunity, together with counsel for the Executive,
to be heard before the Board), finding that, in the good faith opinion of the
Board, the Executive is guilty of the conduct described in Section 4(b)(1) or
4(b)(2), and specifying the particulars thereof in detail.
(C) GOOD REASON. The Executive's employment may be terminated by the
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Executive for Good Reason or by the Executive voluntarily without Good Reason.
"Good Reason" means:
(1) the assignment to the Executive of any duties inconsistent in any
respect with the Executive's position (including status, offices, titles
and reporting requirements), authority, duties or responsibilities as
contemplated by Section 3(a), or any other diminution in such position,
authority, duties or responsibilities (whether or not occurring solely as a
result of the Company's ceasing to be a publicly traded entity), excluding
for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and that is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(2) any failure by the Company to comply with any of the provisions of
Section 3(b), other than an isolated, insubstantial and inadvertent failure
not occurring in bad faith and that is remedied by the Company promptly
after receipt of notice thereof given by the Executive;
(3) the Company's requiring the Executive (i) to be based at any
office or location other than as provided in Section 3(a)(1)(B), (ii) to be
based at a location other than the principal executive offices of the
Company if the Executive was employed at
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such location immediately preceding the Effective Date, or (iii) to travel
on Company business to a substantially greater extent than required
immediately prior to the Effective Date;
(4) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement; or
(5) any failure by the Company to comply with and satisfy Section
10(c).
For purposes of this Section 4(c), any good faith determination of Good Reason
made by the Executive shall be conclusive. Anything in this Agreement to the
contrary notwithstanding, a termination by the Executive for any reason pursuant
to a Notice of Termination given during the 30-day period immediately following
the first anniversary of the Effective Date shall be deemed to be a termination
for Good Reason for all purposes of this Agreement. The Executive's mental or
physical incapacity following the occurrence of an event described above in
clauses (1) through (5) shall not affect the Executive's ability to terminate
employment for Good Reason.
(D) NOTICE OF TERMINATION. Any termination by the Company for Cause, or by
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the Executive for Good Reason, shall be communicated by Notice of Termination to
the other party hereto given in accordance with Section 11(b). "Notice of
Termination" means a written notice that (1) indicates the specific termination
provision in this Agreement relied upon, (2) to the extent applicable, sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated, and (3) if the Date of Termination (as defined herein) is other than
the date of receipt of such notice, specifies the Date of Termination (which
Date of Termination shall be not more than 30 days after the giving of such
notice). The failure by the Executive or the Company to set forth in the Notice
of Termination any fact or circumstance that contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company, respectively,
from asserting such fact or circumstance in enforcing the Executive's or the
Company's respective rights hereunder.
(E) DATE OF TERMINATION. "Date of Termination" means (1) if the Executive's
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employment is terminated by the Company for Cause, or by the Executive for Good
Reason, the date of receipt of the Notice of Termination or any later date
specified in the Notice of Termination, (which date shall not be more than 30
days after the giving of such notice), as the case may be, (2) if the
Executive's employment is terminated by the Company other than for Cause or
Disability, the date on which the Company notifies the Executive of such
termination, and (3) if the Executive resigns without Good Reason, the date on
which the Executive notifies the Company of such termination, and (4) if the
Executive's employment is terminated by reason of death or Disability, the date
of death of the Executive or the Disability Effective Date, as the case may be.
SECTION 5. OBLIGATIONS OF THE COMPANY UPON TERMINATION. (a) GOOD REASON;
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OTHER THAN FOR CAUSE, DEATH OR DISABILITY. If, during the Employment Period, the
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Company terminates the Executive's employment other than for Cause or Disability
or the Executive terminates employment for Good Reason:
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(1) the Company shall pay to the Executive, in a lump sum in cash
within 30 days after the Date of Termination, the aggregate of the
following amounts:
(A) the sum of (i) the Executive's Annual Base Salary through the
Date of Termination to the extent not theretofore paid, (ii) the
product of (x) the Recent Annual Bonus and (y) a fraction, the
numerator of which is the number of days in the current fiscal year
through the Date of Termination and the denominator of which is 365,
and (iii) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) and any
accrued vacation pay, in each case, to the extent not theretofore paid
(the sum of the amounts described in subclauses (i), (ii) and (iii),
the "Accrued Obligations");
(B) the amount equal to the product of (i) three (the
"Multiplier") and (ii) the sum of (x) the Executive's Annual Base
Salary and (y) the Recent Annual Bonus, provided that if the Executive
is 62 years old or older on the Date of Termination, the Multiplier
shall be multiplied by a fraction, the numerator of which shall be the
number of months (which shall not be deemed to be less than twelve)
until the Executive's 65th birthday, and the denominator of which
shall be 36; and
(C) an amount equal to the excess of (i) the actuarial equivalent
of the benefit under the Company's qualified defined benefit
retirement plan (the "Retirement Plan") (utilizing actuarial
assumptions no less favorable to the Executive than those in effect
under the Retirement Plan immediately prior to the Effective Date) and
any excess or supplemental retirement plan in which the Executive
participates (collectively, the "SERP") that the Executive would
receive if the Executive's employment continued for three years after
the Date of Termination, or if earlier, until the Executive's 65th
birthday (which shall be deemed to be no less than 12 months after the
Date of Termination), assuming for this purpose that all accrued
benefits are fully vested and assuming that the Executive's
compensation in each of the three years is that required by Sections
3(b)(1) and 3(b)(2), over (ii) the actuarial equivalent of the
Executive's actual benefit (paid or payable), if any, under the
Retirement Plan and the SERP as of the Date of Termination;
(2) for three years after the Executive's Date of Termination, or if
earlier, until the Executive's 65th birthday (which shall be deemed to be
no less than 12 months after the Date of Termination), or such longer
period as may be provided by the terms of the appropriate plan, program,
practice or policy, the Company shall continue benefits to the Executive
and/or the Executive's family at least equal to those that would have been
provided to them in accordance with the plans, programs, practices and
policies described in Sections 3(b)(4) and 3(b)(6) if the Executive's
employment had not been terminated or, if more favorable to the Executive,
as in effect generally at any time thereafter with respect to other peer
executives of the Company and the Affiliated Companies and their families;
PROVIDED, HOWEVER, that, if the Executive becomes reemployed with another
employer and is eligible to receive such benefits under another employer
provided plan, the medical and other welfare benefits described herein
shall be secondary to those
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provided under such other plan during such applicable period of
eligibility. For purposes of determining eligibility (but not the time of
commencement of benefits) of the Executive for retiree benefits pursuant to
such plans, practices, programs and policies, the Executive shall be
considered to have remained employed until three years after the Date of
Termination and to have retired on the last day of such period;
(3) the Company shall, at its sole expense as incurred, provide the
Executive with outplacement services the scope and provider of which shall
be selected by the Executive in the Executive's sole discretion, PROVIDED
that the cost of such outplacement shall not exceed 15% of the Executive's
Annual Base Salary; and
(4) to the extent not theretofore paid or provided, the Company shall
timely pay or provide to the Executive any Other Benefits (as defined in
Section 6).
(B) DEATH. If the Executive's employment is terminated by reason of the
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Executive's death during the Employment Period, the Company shall provide the
Executive's estate or beneficiaries with the Accrued Obligations and the timely
payment or delivery of the Other Benefits, and shall have no other severance
obligations under this Agreement. The Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a lump sum in cash within
30 days of the Date of Termination. With respect to the provision of the Other
Benefits, the term "Other Benefits" as utilized in this Section 5(b) shall
include, without limitation, and the Executive's estate and/or beneficiaries
shall be entitled to receive, benefits at least equal to the most favorable
benefits provided by the Company and the Affiliated Companies to the estates and
beneficiaries of peer executives of the Company and the Affiliated Companies
under such plans, programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive's estate and/or the
Executive's beneficiaries, as in effect on the date of the Executive's death
with respect to other peer executives of the Company and the Affiliated
Companies and their beneficiaries.
(C) DISABILITY. If the Executive's employment is terminated by reason of
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the Executive's Disability during the Employment Period, the Company shall
provide the Executive with the Accrued Obligations and the timely payment or
delivery of the Other Benefits, and shall have no other severance obligations
under this Agreement. The Accrued Obligations shall be paid to the Executive in
a lump sum in cash within 30 days of the Date of Termination. With respect to
the provision of the Other Benefits, the term "Other Benefits" as utilized in
this Section 6(c) shall include, and the Executive shall be entitled after the
Disability Effective Date to receive, disability and other benefits at least
equal to the most favorable of those generally provided by the Company and the
Affiliated Companies to disabled executives and/or their families in accordance
with such plans, programs, practices and policies relating to disability, if
any, as in effect generally with respect to other peer executives and their
families at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive and/or the Executive's
family, as in effect at any time thereafter generally with respect to other peer
executives of the Company and the Affiliated Companies and their families.
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(D) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's employment is
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terminated for Cause during the Employment Period, the Company shall provide to
the Executive (1) the Executive's Annual Base Salary through the Date of
Termination, (2) the amount of any compensation previously deferred by the
Executive, and (3) the Other Benefits, in each case, to the extent theretofore
unpaid, and shall have no other severance obligations under this Agreement. If
the Executive voluntarily terminates employment during the Employment Period,
excluding a termination for Good Reason, the Company shall provide to the
Executive the Accrued Obligations and the timely payment or delivery of the
Other Benefits, and shall have no other severance obligations under this
Agreement. In such case, all the Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.
SECTION 6. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
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prevent or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or the Affiliated Companies
and for which the Executive may qualify, nor, subject to Section 11(f), shall
anything herein limit or otherwise affect such rights as the Executive may have
under any other contract or agreement with the Company or the Affiliated
Companies. Amounts that are vested benefits or that the Executive is otherwise
entitled to receive under any plan, policy, practice or program of or any other
contract or agreement with the Company or the Affiliated Companies at or
subsequent to the Date of Termination ("Other Benefits") shall be payable in
accordance with such plan, policy, practice or program or contract or agreement,
except as explicitly modified by this Agreement. Notwithstanding the foregoing,
if the Executive receives payments and benefits pursuant to Section 5(a) of this
Agreement, the Executive shall not be entitled to any severance pay or benefits
under any severance plan, program or policy of the Company and the Affiliated
Companies, unless otherwise specifically provided therein in a specific
reference to this Agreement.
SECTION 7. FULL SETTLEMENT. The Company's obligation to make the payments
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provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense, or other claim, right or action that the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement, and such amounts
shall not be reduced whether or not the Executive obtains other employment. The
Company agrees to pay as incurred (within 10 days following the Company's
receipt of an invoice from the Executive), to the full extent permitted by law,
all legal fees and expenses that the Executive may reasonably incur as a result
of any contest (regardless of the outcome thereof) by the Company, the Executive
or others of the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance thereof (including
as a result of any contest by the Executive about the amount of any payment
pursuant to this Agreement), plus, in each case, interest on any delayed payment
at the applicable federal rate provided for in Section 7872(f)(2)(A) of the
Internal Revenue Code of 1986, as amended (the "Code").
SECTION 8. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
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(a) Anything in this Agreement to the contrary notwithstanding and except
as set forth below, in the event it shall be determined that any Payment would
be subject to the
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Excise Tax, then the Executive shall be entitled to receive an additional
payment (the "Gross-Up Payment") in an amount such that, after payment by the
Executive of all taxes (and any interest or penalties imposed with respect to
such taxes), including, without limitation, any income taxes (and any interest
and penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing
provisions of this Section 8(a), if it shall be determined that the Executive is
entitled to the Gross-Up Payment, but that the Parachute Value of all Payments
does not exceed 110% of the Safe Harbor Amount, then no Gross-Up Payment shall
be made to the Executive and the amounts payable under this Agreement shall be
reduced so that the Parachute Value of all Payments, in the aggregate, equals
the Safe Harbor Amount. The reduction of the amounts payable hereunder, if
applicable, shall be made by first reducing the payments under Section
5(a)(i)(B), unless an alternative method of reduction is elected by the
Executive, and in any event shall be made in such a manner as to maximize the
Value of all Payments actually made to the Executive. For purposes of reducing
the Payments to the Safe Harbor Amount, only amounts payable under this
Agreement (and no other Payments) shall be reduced. If the reduction of the
amount payable under this Agreement would not result in a reduction of the
Parachute Value of all Payments to the Safe Harbor Amount, no amounts payable
under the Agreement shall be reduced pursuant to this Section 8(a). The
Company's obligation to make Gross-Up Payments under this Section 8 shall not be
conditioned upon the Executive's termination of employment.
(b) Subject to the provisions of Section 8(c), all determinations required
to be made under this Section 8, including whether and when a Gross-Up Payment
is required, the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by a nationally
recognized certified public accounting firm as may be designated by the Company
(the "Accounting Firm"). The Accounting Firm shall provide detailed supporting
calculations both to the Company and the Executive within 15 business days of
the receipt of notice from the Executive that there has been a Payment or such
earlier time as is requested by the Company. All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 8, shall be paid by the Company to the
Executive within 5 days of the receipt of the Accounting Firm's determination.
Any determination by the Accounting Firm shall be binding upon the Company and
the Executive. As a result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments that will not have been made by
the Company should have been made (the "Underpayment"), consistent with the
calculations required to be made hereunder. In the event the Company exhausts
its remedies pursuant to Section 8(c) and the Executive thereafter is required
to make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable, but no later than 10 business days after the Executive is informed
in writing of such claim. The Executive shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
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following the date on which the Executive gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies the Executive in writing prior to
the expiration of such period that the Company desires to contest such claim,
the Executive shall:
(1) give the Company any information reasonably requested by the
Company relating to such claim,
(2) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such
claim by an attorney reasonably selected by the Company,
(3) cooperate with the Company in good faith in order effectively to
contest such claim, and
(4) permit the Company to participate in any proceedings relating to
such claim;
PROVIDED, HOWEVER, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest, and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties) imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this Section 8(c),
the Company shall control all proceedings taken in connection with such contest,
and, at its sole discretion, may pursue or forgo any and all administrative
appeals, proceedings, hearings and conferences with the applicable taxing
authority in respect of such claim and may, at its sole discretion, either pay
the tax claimed to the appropriate taxing authority on behalf of the Executive
and direct the Executive to sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; PROVIDED, HOWEVER, that, if the Company pays such claim and directs
the Executive to sue for a refund, the Company shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties) imposed with respect to such payment or with
respect to any imputed income in connection with such payment; and PROVIDED,
FURTHER, that any extension of the statute of limitations relating to payment of
taxes for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which the Gross-Up Payment would be payable hereunder, and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of a Gross-Up Payment or payment
by the Company of an amount on the Executive's behalf pursuant to Section 8(c),
the Executive becomes entitled to receive any refund with respect to the Excise
Tax to which such Gross-Up Payment relates or with respect to such claim, the
Executive shall (subject to the Company's
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complying with the requirements of Section 8(c), if applicable) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after payment by the
Company of an amount on the Executive's behalf pursuant to Section 8(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then the amount of such payment shall
offset, to the extent thereof, the amount of Gross-Up Payment required to be
paid.
(e) Notwithstanding any other provision of this Section 8, the Company may,
in its sole discretion, withhold and pay over to the Internal Revenue Service or
any other applicable taxing authority, for the benefit of the Executive, all or
any portion of any Gross-Up Payment, and the Executive hereby consents to such
withholding.
(F) DEFINITIONS. The following terms shall have the following meanings for
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purposes of this Section 8.
(i) "Excise Tax" shall mean the excise tax imposed by Section 4999 of the
Code, together with any interest or penalties imposed with respect to such
excise tax.
(ii) "Parachute Value" of a Payment shall mean the present value as of the
date of the change of control for purposes of Section 280G of the Code of the
portion of such Payment that constitutes a "parachute payment" under Section
280G(b)(2), as determined by the Accounting Firm for purposes of determining
whether and to what extent the Excise Tax will apply to such Payment.
(iii) A "Payment" shall mean any payment or distribution in the nature of
compensation (within the meaning of Section 280G(b)(2) of the Code) to or for
the benefit of the Executive, whether paid or payable pursuant to this Agreement
or otherwise.
(iv) The "Safe Harbor Amount" means 2.99 times the Executive's "base
amount," within the meaning of Section 280G(b)(3) of the Code.
(v) "Value" of a Payment shall mean the economic present value of a Payment
as of the date of the change of control for purposes of Section 280G of the
Code, as determined by the Accounting Firm using the discount rate required by
Section 280G(d)(4) of the Code.
SECTION 9. (a) CONFIDENTIAL INFORMATION. The Executive shall hold in a
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fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or the Affiliated
Companies, and their respective businesses, which information, knowledge or data
shall have been obtained by the Executive during the Executive's employment by
the Company or the Affiliated Companies and which information, knowledge or data
shall not be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with the Company, the Executive shall
not, without the prior written consent of the Company or as may otherwise be
required by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than
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the Company and those persons designated by the Company. In no event shall an
asserted violation of the provisions of this Section 9 constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.
(b) NONDISPARAGEMENT/COOPERATION. Executive shall not intentionally make
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any public statements, encourage others to make statements or release
information intended to disparage or defame the Company or its Affiliates or any
of their respective directors or officers. Notwithstanding the foregoing,
nothing in this Paragraph 9(b) shall prohibit any person from making truthful
statements when required by order of a court or other body having jurisdiction.
(c) NON-SOLICITATION OF EMPLOYEES. The Executive agrees that for a period
-----------------------------
of twelve months following the Date of Termination, Executive shall not on
his/her own behalf or on behalf of any other person, firm, partnership,
association, corporation, or business organization, entity or enterprise call
on, solicit or attempt to induce any other officer or employee of the Company or
its affiliates to terminate his or her employment with the Company or its
affiliates and shall not assist any other person or entity in such a
solicitation unless such employee is terminated by the Company.
SECTION 10. SUCCESSORS. (a) This Agreement is personal to the Executive,
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and, without the prior written consent of the Company, shall not be assignable
by the Executive other than by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns. Except as provided in Section 10(c),
without the prior written consent of the Executive this Agreement shall not be
assignable by the Company.
(c) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. "Company" means
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid that assumes and agrees to perform this Agreement by
operation of law or otherwise.
SECTION 11. MISCELLANEOUS. (a) This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Delaware, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified other than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
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if to the Executive:
[Name of Executive]
[Address of Executive]
if to the Company:
400 California Street
San Francisco, California 94104
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.
(d) The Company may withhold from any amounts payable under this Agreement
such United States federal, state or local or foreign taxes as shall be required
to be withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good Reason
pursuant to Sections 4(c)(1) through 4(c)(5), shall not be deemed to be a waiver
of such provision or right or any other provision or right of this Agreement.
(f) The Executive and the Company acknowledge that, except as may otherwise
be provided under any other written agreement between the Executive and the
Company, the employment of the Executive by the Company is "at will" and,
subject to Section 1(a), prior to the Effective Date, the Executive's employment
may be terminated by either the Executive or the Company at any time prior to
the Effective Date, in which case the Executive shall have no further rights
under this Agreement. From and after the Effective Date, except as specifically
provided herein, this Agreement shall supersede any other agreement between the
parties with respect to the subject matter hereof, provided that any provision
with regard to supplemental retirement benefits in any prior employment
agreement shall remain in full force and effect.
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IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from the Board, the Company has caused these
presents to be executed in its name on its behalf, all as of the day and year
first above written.
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[Executive]
[Title of Executive]
UNIONBANCAL CORPORATION
By:
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Paul E. Fearer
Executive Vice President
Human Resources
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