Exhibit 10.5
AGREEMENT
THIS AGREEMENT dated as of August 27, 1995 is made by and
between Chemical Banking Corporation, a Delaware corporation, (the "Company"),
and _________________________ (the "Executive").
WHEREAS the Company considers it essential to the best
interests of its shareholders to foster the continuous employment of key
management personnel; and
WHEREAS the Company has entered into an Agreement and Plan of
Merger with The Chase Manhattan Corporation, dated as of August 27, 1995, under
which Chase will be merged into the Company (the "Merger"); and
WHEREAS the Board of Directors of the Company (the "Board")
recognizes that, as is the case with many publicly-held corporations, the Merger
and the uncertainty and questions which it may raise among management may result
in the departure or distraction of management personnel to the detriment of the
Company and its shareholders; and
WHEREAS the Board has determined that appropriate steps should
be taken to reinforce and encourage the continued attention and dedication of
key members of the management of the Company and its subsidiaries, including the
Executive, to their
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assigned duties without distraction in the face of potential uncertainty arising
from the Merger;
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. Defined Terms. The definitions of capitalized terms used in
this Agreement are provided in the last Section hereof.
2. Term of Agreement. This Agreement shall commence on
the date hereof and shall continue in effect through December 31, 1996;
provided, however, if Shareholder Approval shall have occurred during the term
of this Agreement, this Agreement shall continue in effect for a period of 24
months beyond the month in which such Shareholder Approval occurred.
3. Company's Covenants Summarized. In order to induce
the Executive to remain in the employ of the Company and its subsidiaries and in
consideration of the Executive's covenants set forth in Section 4 hereof, the
Company agrees, under the conditions described herein, to pay the Executive the
"Severance Payments" described in Section 6.01 hereof and the other payments and
benefits described herein in the event the Executive's employment with the
Company is terminated following Shareholder Approval and during the term of this
Agreement. No amount or benefit shall be payable under this Agreement unless
there shall have been (or, under the terms hereof, there shall be deemed to have
been) a termination of the Executive's employment with the Company, as described
in Section 6.01 hereof, following
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Shareholder Approval. This Agreement shall not be construed as creating an
express or implied contract of employment and, except as otherwise agreed in
writing between the Executive and the Company, the Executive shall not have any
right to be retained in the employ of the Company or any of its subsidiaries.
4. The Executive's Covenants. The Executive agrees
that, subject to the terms and conditions of this Agreement the Executive will
remain in the employ of the Company until the earliest of (i) a date which is
twelve (12) months from the date of such Board Approval, (ii) the date of
Shareholder Approval, (iii) the date of termination by the Executive of the
Executive's employment for Good Reason (determined by treating the Board
Approval as Shareholder Approval in applying the definition of Good Reason), by
reason of death, Disability or Retirement, or (iv) the termination by the
Company of the Executive's employment for any reason.
5. Compensation Other Than Severance Payments.
5.01 Following Shareholder Approval and during the term of this
Agreement, during any period that the Executive fails to perform the Executive's
full-time duties with the Company as a result of incapacity due to physical or
mental illness, the Executive's full salary shall be paid to the Executive by
the Company at a rate no less than the rate in effect at the commencement of any
such period, together with all compensation and benefits payable to the
Executive under the terms of any compensation or benefit plan, program or
arrangement maintained by the Company or its subsidiaries during such period,
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until the Executive's employment is terminated by the Company for Disability.
5.02 If the Executive's employment shall be terminated for any
reason following Shareholder Approval and during the term of this Agreement, the
Executive's full salary shall be paid to the Executive by the Company through
the Date of Termination at the rate in effect at the time the Notice of
Termination is given, together with all compensation and benefits payable to or
with respect to the Executive through the Date of Termination under the terms of
any compensation or benefit plan, program or arrangement maintained by the
Company or its subsidiaries during such period.
5.03 If the Executive's employment shall be terminated for any
reason following Shareholder Approval and during the term of this Agreement, the
Executive's normal post-termination compensation and benefits shall be paid to
the Executive as such payments become due. Such post-termination compensation
and benefits shall be determined under, and paid in accordance with, the
retirement, insurance and other compensation or benefit plans, programs and
arrangements maintained by the Company or its subsidiaries.
6. Severance Payments.
6.01 The Company shall pay the Executive the payments described
in this Section 6.01 (the "Severance Payments") upon the termination of the
Executive's employment with the Company following Shareholder Approval and
during the term of this Agreement, in addition to the payments and benefits
described in
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Section 5 hereof, unless such termination is (i) by the Company for Cause, (ii)
by reason of death, Disability or Retirement, or (iii) by the Executive without
Good Reason. The Executive's employment shall be deemed to have been terminated
following Shareholder Approval by the Company without Cause or by the Executive
with Good Reason if the Executive's employment is terminated prior to
Shareholder Approval without Cause at the request of Chase (or its affiliate) or
if the Executive terminates his employment with Good Reason prior to Shareholder
Approval (determined by treating Board Approval as Shareholder Approval in
applying the definition of Good Reason) if the circumstance or event which
constitutes Good Reason occurs at the request of Chase (or its affiliate). The
Executive's employment with the Company shall not be deemed terminated solely
because of a redesignation of the Executives's title or employer among the
Company and its primary subsidiaries.
(A) In lieu of any further salary payments to the Executive for
periods subsequent to the Date of Termination and in lieu of any
severance benefit otherwise payable to the Executive, the Company shall
pay to the Executive a lump sum severance payment, in cash, equal to
three times the sum of (i) the higher of the Executive's Annual Base
Salary in effect immediately prior to the occurrence of the event or
circumstance upon which the Notice of Termination is based or in effect
immediately prior to Shareholder Approval, and (ii) the average
percentage annual bonus paid or determined and payable to the Executive
over the preceding five years
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(expressed as a percentage of Annual Base Salary) and applied to the
Executive's Annual Base Salary as determined pursuant to clause (i)
above.
(B) For a 36 month period after the Date of Termination, the
Company shall arrange to provide the Executive with life, disability,
accident and health insurance benefits substantially similar to those
which the Executive is receiving immediately prior to the Notice of
Termination (without giving effect to any reduction in such benefits
subsequent to Shareholder Approval which reduction constitutes Good
Reason). Benefits otherwise receivable by the Executive pursuant to
this Section 6.01(B) shall be reduced to the extent comparable benefits
are actually received by or made available to the Executive without
cost during such period following the Executive's termination of
employment (and any such benefits actually received by the Executive
shall be reported to the Company by the Executive). If the benefits
provided to the Executive under this Section 6.01(B) shall result in a
decrease, pursuant to Section 6.02, in the Severance Payments and these
Section 6.01(B) benefits are thereafter reduced pursuant to the
immediately preceding sentence because of the receipt of comparable
benefits, the Company shall, at the time of such reduction, pay to the
Executive the lesser of (i) the amount of the decrease made in the
Severance Payments pursuant to Section 6.02(a), or (ii) the maximum
amount which can be paid to the Executive without being, or causing any
other
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payment to be, nondeductible by reason of section 280G of the Code.
(C) "Employee Benefits" to which the Executive was entitled
pursuant to an individual agreement with the Company as in effect
immediately prior to the effective date hereof shall be provided to the
Executive in accordance with the terms thereof. Employee Benefits, for
this purpose, shall include benefits and other rights granted under
such individual agreement with respect to the Company's (i) Permanent
Life Insurance Options Plan, (ii) Supplemental Savings Incentive Plan,
(iii) Supplemental Retirement Benefits Plan, (iv) Executive Cash Plan
for Retirement, (v) post-retirement benefits under a welfare benefits
plan and (vi) any additional supplemental pension benefit provided for
under the terms of the individual agreement. Notwithstanding the
foregoing, there shall be no duplication of benefits or payments under
this Agreement and any such individual agreement.
6.02 (a) Notwithstanding any other provisions of this
Agreement, in the event that any payment or benefit received or to be received
by the Executive in connection with Shareholder Approval or the termination of
the Executive's employment (whether pursuant to the terms of this Agreement or
any other plan, arrangement or agreement with the Company or any of its
subsidiaries, any Person whose actions result in Shareholder Approval or any
Person affiliated with the Company or such Person) (all such payments and
benefits, including the Severance
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Payments, being hereinafter called "Total Payments") would subject the Executive
to an Excise Tax, and if such Total Payments less the Excise Tax is less than
the maximum amount of Total Payments which would otherwise be payable to the
Executive without the imposition of an Excise Tax, then, to the extent necessary
to eliminate the imposition of an Excise Tax (and after taking into account any
reduction in the Total Payments provided by reason of Section 280G of the Code
in such other plan, arrangement or agreement), (A) the cash Severance Payments
shall first be reduced (if necessary, to zero), and (B) all other non-cash
Severance Payments shall next be reduced (if necessary, to zero). For purposes
of this limitation (i) no portion of the Total Payments the receipt or enjoyment
of which the Executive shall have effectively waived in writing prior to the
Date of Termination shall be taken into account, (ii) no portion of the Total
Payments shall be taken into account which in the opinion of tax counsel
selected by the Company's independent auditors and reasonably acceptable to the
Executive does not constitute a "parachute payment" within the meaning of
section 280G(b)(2) of the Code, including by reason of section 280G(b)(4)(A) of
the Code, (iii) the Severance Payments shall be reduced only to the extent
necessary so that the Total Payments (other than those referred to in clauses
(i) or (ii)) in their entirety constitute reasonable compensation for services
actually rendered within the meaning of section 280G(b)(4)(B) of the Code or are
otherwise not subject to disallowance as deductions, in the opinion of the tax
counsel referred to in clause (ii); and (iv) the value of any
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non-cash benefit or any deferred payment or benefit included in the Total
Payments shall be determined by the Company's independent auditors in accordance
with the principles of sections 280G(d)(3) and (4) of the Code.
(b) In the event that the Executive becomes entitled to the
Severance Payments, if any of the Total Payments will be subject to the Excise
Tax, and if such Total Payments less the Excise Tax thereon is greater than the
maximum amount of Total Payments which would otherwise be payable to the
Executive without the imposition of a Excise Tax, the Company shall pay to the
Executive an additional amount (the "Gross-Up Payment") such that the net amount
retained by the Executive, after deduction of any Excise Tax on the Total
Payments and any federal, state and local income tax and Excise Tax upon the
payment provided for by this Section 6.02(b), shall be equal to the Total
Payments. For purposes of determining whether any of the Total Payments will be
subject to the Excise Tax and the amount of such Excise Tax, (i) the Total
Payments shall be treated as "parachute payments" within the meaning of section
280G(b)(2) of the Code, and all "excess parachute payments" within the meaning
of section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax,
unless in the opinion of tax counsel selected by the Company's independent
auditors and reasonably acceptable to the Executive such Total Payments (in
whole or in part) do not constitute parachute payments, including by reason of
Section 280G(b)(4)(A) of the Code, or such excess parachute payments (in whole
or in part) represent reasonable compensation for services
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actually rendered, within the meaning of section 280G(b)(4)(B) of the Code, in
excess of the Base Amount allocable to such reasonable compensation, or are
otherwise not subject to the Excise Tax, and (ii) the value of any non-cash
benefits or any deferred payment or benefit shall be determined by the Company's
independent auditors in accordance with the principles of sections 280G(d)(3)
and (4) of the Code. For purposes of determining the amount of the Gross-Up
Payment, the Executive shall be deemed to pay federal income taxes at the
highest marginal rate of federal income taxation in the calendar year in which
the Gross-Up Payment is to be made and applicable state and local income taxes
at the highest marginal rate of taxation, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and
local taxes. In the event that the Excise Tax is subsequently determined to be
less than the amount taken into account hereunder at the time of termination of
the Executive's employment, the Executive shall repay to the Company, at the
time that the amount of such reduction in Excise Tax is finally determined, the
portion of the Gross-Up Payment attributable to such reduction (plus that
portion of the Gross-Up Payment attributable to the Excise Tax and federal,
state and local income tax imposed on the Gross-Up Payment being repaid by the
Executive to the extent that such repayment results in a reduction in Excise Tax
and/or a federal, state or local income tax deduction) plus interest on the
amount of such repayment at the rate provided in section 1274(b)(2)(B) of the
Code. In the event that the Excise Tax is determined to
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exceed the amount taken into account hereunder at the time of the termination of
the Executive's employment (including by reason of any payment the existence or
amount of which cannot be determined at the time of the Gross-Up Payment), the
Company shall make an additional Gross-Up Payment in respect of such excess
(plus any interest, penalties or additions payable by the Executive with respect
to such excess) at the time that the amount of such excess is finally
determined. The Executive and the Company shall each reasonably cooperate with
the other in connection with any administrative or judicial proceedings
concerning the existence or amount of liability for Excise Tax with respect to
the Severance Payments.
6.03 The payments provided for in Section 6.01(A) and Section
6.02(b) hereof shall be made not later than the fifteenth day following the Date
of Termination, provided, however, that if the amounts of such payments, and the
limitation on such payments set forth in Section 6.02(a) hereof, cannot be
finally determined on or before such day, the Company shall pay to the Executive
on such day an estimate, as determined in good faith by the Company, of the
minimum amount of such payments to which the Executive is clearly entitled and
shall pay the remainder of such payments (together with interest at the rate
provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can
be determined but in no event later than the thirtieth (30th) day after the Date
of Termination. In the event that the amount of the estimated payments exceeds
the amount subsequently determined to have been due, such excess shall
constitute a loan by the
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Company to the Executive, payable on the fifth (5th) business day after demand
by the Company (together with interest at the rate provided in section
1274(b)(2)(B) of the Code). At the time that payments are made under this
Section, the Company shall provide the Executive with a written statement
setting forth the manner in which such payments were calculated and the basis
for such calculations including, without limitation, any opinions or other
advice the Company has received from outside counsel, auditors or consultants
(and any such opinions or advice which are in writing shall be attached to the
statement).
6.04 The Company also shall pay to the Executive reasonable
legal fees and reasonable expenses incurred in good faith by the Executive as a
result of a termination which entitles the Executive to the Severance Payments
(including, but not limited, to all such fees and expenses, if any, incurred in
disputing any such termination or in seeking in good faith to obtain or enforce
any benefit or right provided by this Agreement or in connection with any tax
audit or proceeding to the extent attributable to the application of section
4999 of the Code to any payment or benefit provided hereunder). Such payments
shall be made within five (5) business days after delivery of the Executive's
written requests for payment accompanied with such evidence of fees and expenses
incurred as the Company reasonably may require.
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7. Termination Procedures and Compensation During Dispute.
7.01 Notice of Termination. After Shareholder Approval
and during the term of this Agreement, any purported termination of the
Executive's employment with the Company (other than by reason of death) shall be
communicated by written Notice of Termination from one party hereto to the other
party hereto in accordance with Section 10 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment with the Company under the
provision so indicated.
7.02 Date of Termination. "Date of Termination", with
respect to any purported termination of the Executive's employment after
Shareholder Approval and during the term of this Agreement, shall mean (i) if
the Executive's employment is terminated for Disability, thirty (30) days after
Notice of Termination is given (provided that the Executive shall not have
returned to the full-time performance of the Executive's duties during such
thirty (30) day period), and (ii) if the Executive's employment is terminated
for any other reason, the date specified in the Notice of Termination (which, in
the case of a termination by the Company, shall not be less than thirty (30)
days (except in the case of a termination for Cause) and, in the case of a
termination by the Executive, shall not be less than fifteen (15)
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days nor more than sixty (60) days, respectively, from the date such Notice of
Termination is given).
7.03 Dispute Concerning Termination. If within fifteen
(15) days after any Notice of Termination is given, or, if later, prior to the
Date of Termination (as determined without regard to this Section 7.03), the
party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, the Date of Termination shall be the
date on which the dispute is finally resolved, either by mutual written
agreement of the parties or by a final judgment, order or decree of a court of
competent jurisdiction (which is not appealable or with respect to which the
time for appeal therefrom has expired and no appeal has been perfected);
provided further that the Date of Termination shall be extended by a notice of
dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
7.04 Compensation During Dispute. If a purported
termination occurs following Shareholder Approval and during the term of this
Agreement, and such termination is disputed in accordance with Section 7.03
hereof, the Company shall continue to pay the Executive the full compensation in
effect when the notice giving rise to the dispute was given (including, but not
limited to, salary) and continue the Executive as a participant in all
compensation, benefit and insurance plans in which the Executive was
participating when the notice giving rise to the dispute was given, until the
dispute is finally resolved in
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accordance with Section 7.03 hereof. Amounts paid under this Section 7.04 are in
addition to all other amounts due under this Agreement (other than those due
under Section 5.02 hereof) and shall not be offset against or reduce any other
amounts due under this Agreement.
8. No Mitigation. The Company agrees that, if the
Executive's employment is terminated during the term of this Agreement, the
Executive is not required to seek other employment or to attempt in any way to
reduce any amounts payable to the Executive by the Company pursuant to Section 6
or Section 7.04. Further, the amount of any payment or benefit provided for in
Section 6 (other than Section 6.01(B)) or Section 7.04 shall not be reduced by
any compensation earned by the Executive as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by the Executive to the Company or any of its subsidiaries, or otherwise.
9. Successors; Binding Agreement.
9.01 In addition to any obligations imposed by law upon any
successor to the Company, 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 expressly
assume 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. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and
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shall entitle the Executive to compensation from the Company in the same amount
and on the same terms as the Executive would be entitled to hereunder if the
Executive were to terminate the Executive's employment for Good Reason after
Shareholder Approval, except that, for purposes of implementing the foregoing,
the date on which any such succession becomes effective shall be deemed the Date
of Termination.
9.02 This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive shall die while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate upon the death of
the Executive) if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the executors, personal representatives or administrators of the
Executive's estate.
10. Notices. For the purpose of this Agreement, notices
and all other communications provided for in the Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed to
the respective addresses set forth below, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon actual receipt:
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To the Company:
Chemical Banking Corporation
270 Park Avenue
New York, New York 10017
Attention: General Counsel
To the Executive:
11. Miscellaneous. No provision of this Agreement may
be modified, waived or discharged unless such waiver, modification or discharge
is agreed to in writing and signed by the Executive and such officer as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not expressly set forth in this
Agreement. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of New York without regard
to conflicts of law principles. All references to sections of the Exchange Act
or the Code shall be deemed also to refer to any successor provisions to such
sections. Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law and any
additional withholding to
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which the Executive has agreed. The obligations of the Company and the Executive
under Sections 6 and 7 shall survive the expiration of the term of this
Agreement.
12. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
14. Settlement of Disputes; Arbitration. All claims by the
Executive for benefits under this Agreement shall be directed to and determined
by the Company and shall be in writing. The Company shall respond in writing to
any such claim within sixty (60) days following receipt of such claim. Failure
to respond to such claim within such period shall be deemed a denial of such
claim. Any denial by the Company of a claim for benefits under this Agreement
shall be delivered to the Executive in writing and shall set forth the specific
reasons for the denial and the specific provisions of this Agreement relied
upon. The Company shall afford a reasonable opportunity to the Executive for a
review of the decision denying a claim and shall further allow the Executive to
appeal in writing to the Company a decision of the Company within sixty (60)
days after notification by the Company that the Executive's claim has been
denied. The Company shall respond in writing to any such appeal within sixty
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(60) days following receipt of such appeal. Failure to respond to such appeal
within such period shall be deemed a denial of such appeal. Any further dispute
or controversy arising under or in connection with this Agreement shall be
settled exclusively by arbitration in New York, New York 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; provided,
however, that the Executive shall be entitled to seek specific performance of
the Executive's right to be paid by the Company until the Date of Termination
during the pendency of any dispute or controversy arising under or in connection
with this Agreement.
15. Definitions. For purposes of this Agreement, the following
terms shall have the meanings indicated below:
(A) "Annual Base Salary" shall mean the Executive's regular
basic annual compensation prior to any reduction therein under a salary
reduction agreement pursuant to section 401(k) or section 125 of the
Code, and shall not include (without limitation) cost of living
allowances and post allowances for foreign service, fees, retainers,
reimbursements, bonuses, incentive awards, prizes or similar payments.
(B) "Base Amount" shall have the meaning defined in section
280G(b)(3) of the Code.
(C) "Board" shall mean the Board of Directors of the Company.
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(D) "Board Approval" shall mean the approval by the Board of
the Agreement and Plan of Merger, dated as of August 27, 1995, between
Chemical Banking Corporation and The Chase Manhattan Corporation.
(E) "Cause" for termination by the Company of the Executive's
employment, after Shareholder Approval, shall mean (i) the willful and
continued failure by the Executive to substantially perform the
Executive's duties with the Company, or a subsidiary of the Company, as
such duties may be defined from time to time, or abide by the written
policies of the Company or of the Executive's primary employer (other
than any such failure resulting from the Executive's incapacity due to
physical or mental illness or any such actual or anticipated failure
after the issuance of a Notice of Termination for Good Reason by the
Executive pursuant to Section 7.01) after a written demand for
substantial performance is delivered to the Executive by the Company,
which demand specifically identifies the manner in which the Company
believes that the Executive has not substantially performed the
Executive's duties or has not abided by written policies, or (ii) the
willful engaging by the Executive in conduct which is demonstrably and
materially injurious to the Company or its subsidiaries, monetarily or
otherwise. For purposes of clauses (i) and (ii) of this definition, no
act, or failure to act, on the Executive's part shall be deemed
"willful" unless done, or omitted to be done, by the Executive not in
good faith and
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without reasonable belief that the Executive's act, or failure to act,
was in the best interest of the Company and its subsidiaries.
(F) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(G) "Company" shall mean Chemical Banking Corporation and any
successor to its business and/or assets which assumes and agrees to
perform this Agreement by operation of law or otherwise (except in
determining, under Section 15(F) hereof, whether or not Shareholder
Approval of the Company has occurred in connection with such
succession).
(H) "Date of Termination" shall have the meaning stated in
Section 7.02 hereof.
(I) "Disability" shall be deemed the reason for the termination
by the Company of the Executive's employment, if, as a result of the
Executive's incapacity due to physical or mental illness, the Executive
shall have been absent from the full-time performance of the
Executive's duties with the Company for a period of six (6) consecutive
months, the Company shall have given the Executive a Notice of
Termination for Disability, and, within thirty (30) days after such
Notice of Termination is given, the Executive shall not have returned
to the full-time performance of the Executive's duties.
(J) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
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(K) "Excise Tax" shall mean any excise tax imposed under
section 4999 of the Code.
(L) "Executive" shall mean the individual named in the first
paragraph of this Agreement.
(M) "Good Reason" for termination by the Executive of the
Executive's employment shall mean the occurrence (without the
Executive's express written consent) of any one of the following acts,
or failure to act, unless, in the case of any act or failure to act
described in clause (I), (IV), (V), (VI) or (VII) below, such act or
failure to act is corrected prior to the Date of Termination specified
in the Notice of Termination given in respect thereof:
(I) a substantial diminution in the overall importance of the
Executive's role, as determined by balancing (i) any increase or
decrease in the scope of the Executive's management responsibilities
against (ii) any increase or decrease in the relative sizes of the
businesses, activities or functions (or portions thereof) for which the
Executive has responsibility; provided, however, that none of (a) a
change in the Executive's title or employer, (b) a change in the
hierarchy and (c) a change in the Executive's responsibilities from
line to staff or vice versa, shall, by itself, be considered Good
Reason;
(II) a reduction in the Executive's Annual Base Salary as in
effect on the date hereof or as the same may be increased from time to
time;
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(III) the relocation of the principal place of the Executive's
employment to a location that is more than 50 miles from such principal
place of employment immediately prior to Shareholder Approval (unless
such relocation is to the New York Metropolitan Area or from one
location outside of the United States);
(IV) the failure by the Company or a subsidiary to pay to the
Executive any portion of the Executive's current compensation, or to
pay to the Executive any portion of an installment of deferred
compensation under any deferred compensation program of the Company or
a subsidiary within seven (7) days of the date such compensation is
due;
(V) the failure by the Company or a subsidiary to pay the
Executive by February 15 following any calendar year an annual cash
bonus for such calendar year that, in the reasonable, good faith
judgment of the Compensation Committee of the Board of Directors of the
Company (or its designee), fairly reflects the performance of the
Executive, any unit or units (or portions thereof) for which the
Executive was responsible and the Company as a whole during such
calendar year; provided, however, that the Executive may not claim that
a bonus equal to or greater than the highest annual bonus paid to the
Executive for any of the three calendar years immediately preceding
Shareholder Approval does not fairly reflect such performance;
(VI) the failure by the Company or a subsidiary to include the
Executive in any other employee benefit or
24
compensation plan or arrangement on a basis reasonably comparable to
that of other executives of the Company having responsibilities of
equal importance to those of the Executive; provided, however, that
failure to include the Executive in a plan or arrangement designed for
a general category of positions that does not include the Executive's
position, as determined in good faith by the Compensation Committee of
the Board of Directors of the Company (or its designee), shall not be
considered Good Reason; or
(VII) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying
the requirements of Section 7.01; for purposes of this Agreement, no
such purported termination shall be effective.
The Executive's right to terminate employment for Good Reason shall not be
affected by the Executive's incapacity due to physical or mental illness. The
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.
(N) "Gross-Up Payment" shall have the meaning given in Section
6.02(b) hereof.
(O) "Notice of Termination" shall have the meaning stated in
Section 7.01 hereof.
(P) "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; however, a Person shall
25
not include (i) the Company or any of its subsidiaries, (ii) a trustee
or other fiduciary holding securities under an employee benefit plan of
the Company 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.
(Q) "Retirement" shall be deemed the reason for the termination
by the Company or the Executive of the Executive's employment if such
employment is terminated in accordance with the Company's retirement
policy, not including early retirement, generally applicable to its
salaried employees, as in effect immediately prior to Board Approval,
or in accordance with any retirement arrangement established by the
Board with the Executive's consent with respect to the Executive.
(R) "Severance Payments" shall mean those payments described in
Section 6.01 hereof.
26
(S) "Shareholder Approval" shall mean the approval by the
shareholders of the Company and Chase of the Agreement and Plan of
Merger, dated as of August 27, 1995, between Chemical Banking
Corporation and The Chase Manhattan Corporation.
(T) "Total Payments" shall mean those payments described in
Section 6.02 hereof.
CHEMICAL BANKING CORPORATION
By _________________________
Name:
Title:
____________________________
Executive
AGREEMENT
THIS AGREEMENT dated as of August 27, 1995 is made by and
between Chemical Banking Corporation, a Delaware corporation, (the "Company"),
and _________________________ (the "Executive").
WHEREAS the Company considers it essential to the best
interests of its shareholders to foster the continuous employment of key
management personnel; and
WHEREAS the Company has entered into an Agreement and Plan of
Merger with The Chase Manhattan Corporation, dated as of August 27, 1995, under
which Chase will be merged into the Company (the "Merger"); and
WHEREAS the Board of Directors of the Company (the "Board")
recognizes that, as is the case with many publicly-held corporations, the Merger
and the uncertainty and questions which it may raise among management may result
in the departure or distraction of management personnel to the detriment of the
Company and its shareholders; and
WHEREAS the Board has determined that appropriate steps should
be taken to reinforce and encourage the continued attention and dedication of
key members of the management of the Company and its subsidiaries, including the
Executive, to their assigned duties without distraction in the face of potential
uncertainty arising from the Merger;
2
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby agree as
follows:
1. Defined Terms. The definitions of capitalized terms used in
this Agreement are provided in the last Section hereof.
2. Term of Agreement. This Agreement shall commence on the date
hereof and shall continue in effect through December 31, 1996; provided,
however, if Shareholder Approval shall have occurred during the term of this
Agreement, this Agreement shall continue in effect for a period of 24 months
beyond the month in which such Shareholder Approval occurred.
3. Company's Covenants Summarized. In order to induce the
Executive to remain in the employ of the Company and its subsidiaries and in
consideration of the Executive's covenants set forth in Section 4 hereof, the
Company agrees, under the conditions described herein, to pay the Executive the
"Severance Payments" described in Section 6.01 hereof and the other payments and
benefits described herein in the event the Executive's employment with the
Company is terminated following Shareholder Approval and during the term of this
Agreement. No amount or benefit shall be payable under this Agreement unless
there shall have been (or, under the terms hereof, there shall be deemed to have
been) a termination of the Executive's employment with the Company, as described
in Section 6.01 hereof, following Shareholder Approval. This Agreement shall not
be construed as creating an express or implied contract of employment and,
except
3
as otherwise agreed in writing between the Executive and the Company, the
Executive shall not have any right to be retained in the employ of the Company
or any of its subsidiaries.
4. The Executive's Covenants. The Executive agrees that,
subject to the terms and conditions of this Agreement the Executive will remain
in the employ of the Company until the earliest of (i) a date which is twelve
(12) months from the date of such Board Approval, (ii) the date of Shareholder
Approval, (iii) the date of termination by the Executive of the Executive's
employment for Good Reason (determined by treating the Board Approval as
Shareholder Approval in applying the definition of Good Reason), by reason of
death, Disability or Retirement, or (iv) the termination by the Company of the
Executive's employment for any reason.
5. Compensation Other Than Severance Payments.
5.01 Following Shareholder Approval and during the term of this
Agreement, during any period that the Executive fails to perform the Executive's
full-time duties with the Company as a result of incapacity due to physical or
mental illness, the Executive's full salary shall be paid to the Executive by
the Company at a rate no less than the rate in effect at the commencement of any
such period, together with all compensation and benefits payable to the
Executive under the terms of any compensation or benefit plan, program or
arrangement maintained by the Company or its subsidiaries during such period,
until the Executive's employment is terminated by the Company for Disability.
4
5.02 If the Executive's employment shall be terminated for any
reason following Shareholder Approval and during the term of this Agreement, the
Executive's full salary shall be paid to the Executive by the Company through
the Date of Termination at the rate in effect at the time the Notice of
Termination is given, together with all compensation and benefits payable to or
with respect to the Executive through the Date of Termination under the terms of
any compensation or benefit plan, program or arrangement maintained by the
Company or its subsidiaries during such period.
5.03 If the Executive's employment shall be terminated for any
reason following Shareholder Approval and during the term of this Agreement, the
Executive's normal post-termination compensation and benefits shall be paid to
the Executive as such payments become due. Such post-termination compensation
and benefits shall be determined under, and paid in accordance with, the
retirement, insurance and other compensation or benefit plans, programs and
arrangements maintained by the Company or its subsidiaries.
6. Severance Payments.
6.01 The Company shall pay the Executive the payments described
in this Section 6.01 (the "Severance Payments") upon the termination of the
Executive's employment with the Company following Shareholder Approval and
during the term of this Agreement, in addition to the payments and benefits
described in Section 5 hereof, unless such termination is (i) by the Company for
Cause, (ii) by reason of death, Disability or Retirement, or
5
(iii) by the Executive without Good Reason. The Executive's employment shall be
deemed to have been terminated following Shareholder Approval by the Company
without Cause or by the Executive with Good Reason if the Executive's employment
is terminated prior to Shareholder Approval without Cause at the request of
Chase (or its affiliate) or if the Executive terminates his employment with Good
Reason prior to Shareholder Approval (determined by treating Board Approval as
Shareholder Approval in applying the definition of Good Reason) if the
circumstance or event which constitutes Good Reason occurs at the request of
Chase (or its affiliate). The Executive's employment with the Company shall not
be deemed terminated solely because of a redesignation of the Executives's title
or employer among the Company and its primary subsidiaries.
(A) In lieu of any further salary payments to the Executive for
periods subsequent to the Date of Termination and in lieu of any
severance benefit otherwise payable to the Executive, the Company shall
pay to the Executive a lump sum severance payment, in cash, equal to
two times the sum of (i) the higher of the Executive's Annual Base
Salary in effect immediately prior to the occurrence of the event or
circumstance upon which the Notice of Termination is based or in effect
immediately prior to Shareholder Approval, and (ii) the average
percentage annual bonus paid or determined and payable to the Executive
over the preceding five years (expressed as a percentage of Annual Base
Salary) and
6
applied to the Executive's Annual Base Salary as determined pursuant to
clause (i) above.
(B) For a 24 month period after the Date of Termination, the
Company shall arrange to provide the Executive with life, disability,
accident and health insurance benefits substantially similar to those
which the Executive is receiving immediately prior to the Notice of
Termination (without giving effect to any reduction in such benefits
subsequent to Shareholder Approval which reduction constitutes Good
Reason). Benefits otherwise receivable by the Executive pursuant to
this Section 6.01(B) shall be reduced to the extent comparable benefits
are actually received by or made available to the Executive without
cost during such period following the Executive's termination of
employment (and any such benefits actually received by the Executive
shall be reported to the Company by the Executive). If the benefits
provided to the Executive under this Section 6.01(B) shall result in a
decrease, pursuant to Section 6.02, in the Severance Payments and these
Section 6.01(B) benefits are thereafter reduced pursuant to the
immediately preceding sentence because of the receipt of comparable
benefits, the Company shall, at the time of such reduction, pay to the
Executive the lesser of (i) the amount of the decrease made in the
Severance Payments pursuant to Section 6.02(a), or (ii) the maximum
amount which can be paid to the Executive without being, or causing any
other
7
payment to be, nondeductible by reason of section 280G of the Code.
(C) "Employee Benefits" to which the Executive was entitled
pursuant to an individual agreement with the Company as in effect
immediately prior to the effective date hereof shall be provided to the
Executive in accordance with the terms thereof. Employee Benefits, for
this purpose, shall include benefits and other rights granted under
such individual agreement with respect to the Company's (i) Permanent
Life Insurance Options Plan, (ii) Supplemental Savings Incentive Plan,
(iii) Supplemental Retirement Benefits Plan, (iv) Executive Cash Plan
for Retirement, (v) post-retirement benefits under a welfare benefits
plan and (vi) any additional supplemental pension benefit provided for
under the terms of the individual agreement. Notwithstanding the
foregoing, there shall be no duplication of benefits or payments under
this Agreement and any such individual agreement.
6.02 (a) Notwithstanding any other provisions of this
Agreement, in the event that any payment or benefit received or to be received
by the Executive in connection with Shareholder Approval or the termination of
the Executive's employment (whether pursuant to the terms of this Agreement or
any other plan, arrangement or agreement with the Company or any of its
subsidiaries, any Person whose actions result in Shareholder Approval or any
Person affiliated with the Company or such Person) (all such payments and
benefits, including the Severance
8
Payments, being hereinafter called "Total Payments") would subject the Executive
to an Excise Tax, and if such Total Payments less the Excise Tax is less than
the maximum amount of Total Payments which would otherwise be payable to the
Executive without the imposition of an Excise Tax, then, to the extent necessary
to eliminate the imposition of an Excise Tax (and after taking into account any
reduction in the Total Payments provided by reason of Section 280G of the Code
in such other plan, arrangement or agreement), (A) the cash Severance Payments
shall first be reduced (if necessary, to zero), and (B) all other non-cash
Severance Payments shall next be reduced (if necessary, to zero). For purposes
of this limitation (i) no portion of the Total Payments the receipt or enjoyment
of which the Executive shall have effectively waived in writing prior to the
Date of Termination shall be taken into account, (ii) no portion of the Total
Payments shall be taken into account which in the opinion of tax counsel
selected by the Company's independent auditors and reasonably acceptable to the
Executive does not constitute a "parachute payment" within the meaning of
section 280G(b)(2) of the Code, including by reason of section 280G(b)(4)(A) of
the Code, (iii) the Severance Payments shall be reduced only to the extent
necessary so that the Total Payments (other than those referred to in clauses
(i) or (ii)) in their entirety constitute reasonable compensation for services
actually rendered within the meaning of section 280G(b)(4)(B) of the Code or are
otherwise not subject to disallowance as deductions, in the opinion of the tax
counsel referred to in clause (ii); and (iv) the value of any
9
non-cash benefit or any deferred payment or benefit included in the Total
Payments shall be determined by the Company's independent auditors in accordance
with the principles of sections 280G(d)(3) and (4) of the Code.
(b) In the event that the Executive becomes entitled to the
Severance Payments, if any of the Total Payments will be subject to the Excise
Tax, and if such Total Payments less the Excise Tax thereon is greater than the
maximum amount of Total Payments which would otherwise be payable to the
Executive without the imposition of a Excise Tax, the Company shall pay to the
Executive an additional amount (the "Gross-Up Payment") such that the net amount
retained by the Executive, after deduction of any Excise Tax on the Total
Payments and any federal, state and local income tax and Excise Tax upon the
payment provided for by this Section 6.02(b), shall be equal to the Total
Payments. For purposes of determining whether any of the Total Payments will be
subject to the Excise Tax and the amount of such Excise Tax, (i) the Total
Payments shall be treated as "parachute payments" within the meaning of section
280G(b)(2) of the Code, and all "excess parachute payments" within the meaning
of section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax,
unless in the opinion of tax counsel selected by the Company's independent
auditors and reasonably acceptable to the Executive such Total Payments (in
whole or in part) do not constitute parachute payments, including by reason of
Section 280G(b)(4)(A) of the Code, or such excess parachute payments (in whole
or in part) represent reasonable compensation for services
10
actually rendered, within the meaning of section 280G(b)(4)(B) of the Code, in
excess of the Base Amount allocable to such reasonable compensation, or are
otherwise not subject to the Excise Tax, and (ii) the value of any non-cash
benefits or any deferred payment or benefit shall be determined by the Company's
independent auditors in accordance with the principles of sections 280G(d)(3)
and (4) of the Code. For purposes of determining the amount of the Gross-Up
Payment, the Executive shall be deemed to pay federal income taxes at the
highest marginal rate of federal income taxation in the calendar year in which
the Gross-Up Payment is to be made and applicable state and local income taxes
at the highest marginal rate of taxation, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and
local taxes. In the event that the Excise Tax is subsequently determined to be
less than the amount taken into account hereunder at the time of termination of
the Executive's employment, the Executive shall repay to the Company, at the
time that the amount of such reduction in Excise Tax is finally determined, the
portion of the Gross-Up Payment attributable to such reduction (plus that
portion of the Gross-Up Payment attributable to the Excise Tax and federal,
state and local income tax imposed on the Gross-Up Payment being repaid by the
Executive to the extent that such repayment results in a reduction in Excise Tax
and/or a federal, state or local income tax deduction) plus interest on the
amount of such repayment at the rate provided in section 1274(b)(2)(B) of the
Code. In the event that the Excise Tax is determined to
11
exceed the amount taken into account hereunder at the time of the termination of
the Executive's employment (including by reason of any payment the existence or
amount of which cannot be determined at the time of the Gross-Up Payment), the
Company shall make an additional Gross-Up Payment in respect of such excess
(plus any interest, penalties or additions payable by the Executive with respect
to such excess) at the time that the amount of such excess is finally
determined. The Executive and the Company shall each reasonably cooperate with
the other in connection with any administrative or judicial proceedings
concerning the existence or amount of liability for Excise Tax with respect to
the Severance Payments.
6.03 The payments provided for in Section 6.01(A) and Section
6.02(b) hereof shall be made not later than the fifteenth day following the Date
of Termination, provided, however, that if the amounts of such payments, and the
limitation on such payments set forth in Section 6.02(a) hereof, cannot be
finally determined on or before such day, the Company shall pay to the Executive
on such day an estimate, as determined in good faith by the Company, of the
minimum amount of such payments to which the Executive is clearly entitled and
shall pay the remainder of such payments (together with interest at the rate
provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can
be determined but in no event later than the thirtieth (30th) day after the Date
of Termination. In the event that the amount of the estimated payments exceeds
the amount subsequently determined to have been due, such excess shall
constitute a loan by the
12
Company to the Executive, payable on the fifth (5th) business day after demand
by the Company (together with interest at the rate provided in section
1274(b)(2)(B) of the Code). At the time that payments are made under this
Section, the Company shall provide the Executive with a written statement
setting forth the manner in which such payments were calculated and the basis
for such calculations including, without limitation, any opinions or other
advice the Company has received from outside counsel, auditors or consultants
(and any such opinions or advice which are in writing shall be attached to the
statement).
6.04 The Company also shall pay to the Executive reasonable
legal fees and reasonable expenses incurred in good faith by the Executive as a
result of a termination which entitles the Executive to the Severance Payments
(including, but not limited, to all such fees and expenses, if any, incurred in
disputing any such termination or in seeking in good faith to obtain or enforce
any benefit or right provided by this Agreement or in connection with any tax
audit or proceeding to the extent attributable to the application of section
4999 of the Code to any payment or benefit provided hereunder). Such payments
shall be made within five (5) business days after delivery of the Executive's
written requests for payment accompanied with such evidence of fees and expenses
incurred as the Company reasonably may require.
13
7. Termination Procedures and Compensation During Dispute.
7.01 Notice of Termination. After Shareholder Approval and
during the term of this Agreement, any purported termination of the Executive's
employment with the Company (other than by reason of death) shall be
communicated by written Notice of Termination from one party hereto to the other
party hereto in accordance with Section 10 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment with the Company under the
provision so indicated.
7.02 Date of Termination. "Date of Termination", with respect
to any purported termination of the Executive's employment after Shareholder
Approval and during the term of this Agreement, shall mean (i) if the
Executive's employment is terminated for Disability, thirty (30) days after
Notice of Termination is given (provided that the Executive shall not have
returned to the full-time performance of the Executive's duties during such
thirty (30) day period), and (ii) if the Executive's employment is terminated
for any other reason, the date specified in the Notice of Termination (which, in
the case of a termination by the Company, shall not be less than thirty (30)
days (except in the case of a termination for Cause) and, in the case of a
termination by the Executive, shall not be less than fifteen (15)
14
days nor more than sixty (60) days, respectively, from the date such Notice of
Termination is given).
7.03 Dispute Concerning Termination. If within fifteen (15)
days after any Notice of Termination is given, or, if later, prior to the Date
of Termination (as determined without regard to this Section 7.03), the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall be the date on
which the dispute is finally resolved, either by mutual written agreement of the
parties or by a final judgment, order or decree of a court of competent
jurisdiction (which is not appealable or with respect to which the time for
appeal therefrom has expired and no appeal has been perfected); provided further
that the Date of Termination shall be extended by a notice of dispute only if
such notice is given in good faith and the party giving such notice pursues the
resolution of such dispute with reasonable diligence.
7.04 Compensation During Dispute. If a purported termination
occurs following Shareholder Approval and during the term of this Agreement, and
such termination is disputed in accordance with Section 7.03 hereof, the Company
shall continue to pay the Executive the full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to,
salary) and continue the Executive as a participant in all compensation, benefit
and insurance plans in which the Executive was participating when the notice
giving rise to the dispute was given, until the dispute is finally resolved in
15
accordance with Section 7.03 hereof. Amounts paid under this Section 7.04 are in
addition to all other amounts due under this Agreement (other than those due
under Section 5.02 hereof) and shall not be offset against or reduce any other
amounts due under this Agreement.
8. No Mitigation. The Company agrees that, if the Executive's
employment is terminated during the term of this Agreement, the Executive is not
required to seek other employment or to attempt in any way to reduce any amounts
payable to the Executive by the Company pursuant to Section 6 or Section 7.04.
Further, the amount of any payment or benefit provided for in Section 6 (other
than Section 6.01(B)) or Section 7.04 shall not be reduced by any compensation
earned by the Executive as the result of employment by another employer, by
retirement benefits, by offset against any amount claimed to be owed by the
Executive to the Company or any of its subsidiaries, or otherwise.
9. Successors; Binding Agreement.
9.01 In addition to any obligations imposed by law upon any
successor to the Company, 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 expressly
assume 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. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and
16
shall entitle the Executive to compensation from the Company in the same amount
and on the same terms as the Executive would be entitled to hereunder if the
Executive were to terminate the Executive's employment for Good Reason after
Shareholder Approval, except that, for purposes of implementing the foregoing,
the date on which any such succession becomes effective shall be deemed the Date
of Termination.
9.02 This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive shall die while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate upon the death of
the Executive) if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the executors, personal representatives or administrators of the
Executive's estate.
10. Notices. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below, or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon actual receipt:
17
To the Company:
Chemical Banking Corporation
270 Park Avenue
New York, New York 10017
Attention: General Counsel
To the Executive:
11. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and such officer as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not expressly set forth in this
Agreement. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of New York without regard
to conflicts of law principles. All references to sections of the Exchange Act
or the Code shall be deemed also to refer to any successor provisions to such
sections. Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law and any
additional withholding to
18
which the Executive has agreed. The obligations of the Company and the Executive
under Sections 6 and 7 shall survive the expiration of the term of this
Agreement.
12. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
14. Settlement of Disputes; Arbitration. All claims by the
Executive for benefits under this Agreement shall be directed to and determined
by the Company and shall be in writing. The Company shall respond in writing to
any such claim within sixty (60) days following receipt of such claim. Failure
to respond to such claim within such period shall be deemed a denial of such
claim. Any denial by the Company of a claim for benefits under this Agreement
shall be delivered to the Executive in writing and shall set forth the specific
reasons for the denial and the specific provisions of this Agreement relied
upon. The Company shall afford a reasonable opportunity to the Executive for a
review of the decision denying a claim and shall further allow the Executive to
appeal in writing to the Company a decision of the Company within sixty (60)
days after notification by the Company that the Executive's claim has been
denied. The Company shall respond in writing to any such appeal within sixty
19
(60) days following receipt of such appeal. Failure to respond to such appeal
within such period shall be deemed a denial of such appeal. Any further dispute
or controversy arising under or in connection with this Agreement shall be
settled exclusively by arbitration in New York, New York 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; provided,
however, that the Executive shall be entitled to seek specific performance of
the Executive's right to be paid by the Company until the Date of Termination
during the pendency of any dispute or controversy arising under or in connection
with this Agreement.
15. Definitions. For purposes of this Agreement, the following
terms shall have the meanings indicated below:
(A) "Annual Base Salary" shall mean the Executive's regular
basic annual compensation prior to any reduction therein under a salary
reduction agreement pursuant to section 401(k) or section 125 of the
Code, and shall not include (without limitation) cost of living
allowances and post allowances for foreign service, fees, retainers,
reimbursements, bonuses, incentive awards, prizes or similar payments.
(B) "Base Amount" shall have the meaning defined in section
280G(b)(3) of the Code.
(C) "Board" shall mean the Board of Directors of the Company.
20
(D) "Board Approval" shall mean the approval by the Board of
the Agreement and Plan of Merger, dated as of August 27, 1995, between
Chemical Banking Corporation and The Chase Manhattan Corporation.
(E) "Cause" for termination by the Company of the Executive's
employment, after Shareholder Approval, shall mean (i) the willful and
continued failure by the Executive to substantially perform the
Executive's duties with the Company, or a subsidiary of the Company, as
such duties may be defined from time to time, or abide by the written
policies of the Company or of the Executive's primary employer (other
than any such failure resulting from the Executive's incapacity due to
physical or mental illness or any such actual or anticipated failure
after the issuance of a Notice of Termination for Good Reason by the
Executive pursuant to Section 7.01) after a written demand for
substantial performance is delivered to the Executive by the Company,
which demand specifically identifies the manner in which the Company
believes that the Executive has not substantially performed the
Executive's duties or has not abided by written policies, or (ii) the
willful engaging by the Executive in conduct which is demonstrably and
materially injurious to the Company or its subsidiaries, monetarily or
otherwise. For purposes of clauses (i) and (ii) of this definition, no
act, or failure to act, on the Executive's part shall be deemed
"willful" unless done, or omitted to be done, by the Executive not in
good faith and
21
without reasonable belief that the Executive's act, or failure to act,
was in the best interest of the Company and its subsidiaries.
(F) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(G) "Company" shall mean Chemical Banking Corporation and any
successor to its business and/or assets which assumes and agrees to
perform this Agreement by operation of law or otherwise (except in
determining, under Section 15(F) hereof, whether or not Shareholder
Approval of the Company has occurred in connection with such
succession).
(H) "Date of Termination" shall have the meaning stated in
Section 7.02 hereof.
(I) "Disability" shall be deemed the reason for the termination
by the Company of the Executive's employment, if, as a result of the
Executive's incapacity due to physical or mental illness, the Executive
shall have been absent from the full-time performance of the
Executive's duties with the Company for a period of six (6) consecutive
months, the Company shall have given the Executive a Notice of
Termination for Disability, and, within thirty (30) days after such
Notice of Termination is given, the Executive shall not have returned
to the full-time performance of the Executive's duties.
(J) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
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(K) "Excise Tax" shall mean any excise tax imposed under
section 4999 of the Code.
(L) "Executive" shall mean the individual named in the first
paragraph of this Agreement.
(M) "Good Reason" for termination by the Executive of the
Executive's employment shall mean the occurrence (without the
Executive's express written consent) of any one of the following acts,
or failure to act, unless, in the case of any act or failure to act
described in clause (I), (IV), (V), (VI) or (VII) below, such act or
failure to act is corrected prior to the Date of Termination specified
in the Notice of Termination given in respect thereof:
(I) a substantial diminution in the overall importance of the
Executive's role, as determined by balancing (i) any increase or
decrease in the scope of the Executive's management responsibilities
against (ii) any increase or decrease in the relative sizes of the
businesses, activities or functions (or portions thereof) for which the
Executive has responsibility; provided, however, that none of (a) a
change in the Executive's title or employer, (b) a change in the
hierarchy and (c) a change in the Executive's responsibilities from
line to staff or vice versa, shall, by itself, be considered Good
Reason;
(II) a reduction in the Executive's Annual Base Salary as in
effect on the date hereof or as the same may be increased from time to
time;
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(III) the relocation of the principal place of the Executive's
employment to a location that is more than 50 miles from such principal
place of employment immediately prior to Shareholder Approval (unless
such relocation is to the New York Metropolitan Area or from one
location outside of the United States);
(IV) the failure by the Company or a subsidiary to pay to the
Executive any portion of the Executive's current compensation, or to
pay to the Executive any portion of an installment of deferred
compensation under any deferred compensation program of the Company or
a subsidiary within seven (7) days of the date such compensation is
due;
(V) the failure by the Company or a subsidiary to pay the
Executive by February 15 following any calendar year an annual cash
bonus for such calendar year that, in the reasonable, good faith
judgment of the Compensation Committee of the Board of Directors of the
Company (or its designee), fairly reflects the performance of the
Executive, any unit or units (or portions thereof) for which the
Executive was responsible and the Company as a whole during such
calendar year; provided, however, that the Executive may not claim that
a bonus equal to or greater than the highest annual bonus paid to the
Executive for any of the three calendar years immediately preceding
Shareholder Approval does not fairly reflect such performance;
(VI) the failure by the Company or a subsidiary to include the
Executive in any other employee benefit or
24
compensation plan or arrangement on a basis reasonably comparable to
that of other executives of the Company having responsibilities of
equal importance to those of the Executive; provided, however, that
failure to include the Executive in a plan or arrangement designed for
a general category of positions that does not include the Executive's
position, as determined in good faith by the Compensation Committee of
the Board of Directors of the Company (or its designee), shall not be
considered Good Reason; or
(VII) any purported termination of the Executive's employment
which is not effected pursuant to a Notice of Termination satisfying
the requirements of Section 7.01; for purposes of this Agreement, no
such purported termination shall be effective.
The Executive's right to terminate employment for Good Reason shall not be
affected by the Executive's incapacity due to physical or mental illness. The
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.
(N) "Gross-Up Payment" shall have the meaning given in Section
6.02(b) hereof. (O) "Notice of Termination" shall have the meaning
stated in Section 7.01 hereof.
(P) "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; however, a Person shall
25
not include (i) the Company or any of its subsidiaries, (ii) a trustee
or other fiduciary holding securities under an employee benefit plan of
the Company 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.
(Q) "Retirement" shall be deemed the reason for the termination
by the Company or the Executive of the Executive's employment if such
employment is terminated in accordance with the Company's retirement
policy, not including early retirement, generally applicable to its
salaried employees, as in effect immediately prior to Board Approval,
or in accordance with any retirement arrangement established by the
Board with the Executive's consent with respect to the Executive.
(R) "Severance Payments" shall mean those payments described in
Section 6.01 hereof.
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(S) "Shareholder Approval" shall mean the approval by the
shareholders of the Company and Chase of the Agreement and Plan of
Merger, dated as of August 27, 1995, between Chemical Banking
Corporation and The Chase Manhattan Corporation.
(T) "Total Payments" shall mean those payments described in
Section 6.02 hereof.
CHEMICAL BANKING CORPORATION
By _________________________
Name:
Title:
____________________________
Executive