EXHIBIT 10.1
TRANSITIONAL COMPENSATION
AGREEMENT
AGREEMENT by and
between AMCORE Financial, Inc., a Nevada corporation (the
“Company”), and Judith C. Sutfin (the
“Executive”), dated as of the 6
th
day of May,
2008 .
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 below) of the Company. 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, to encourage the
Executive’s full attention and dedication to the Company
currently and in the event of any threatened or pending Change of
Control, and to provide the Executive with compensation and benefit
arrangements upon a Change of Control which ensure that the
compensation and benefits expectations of the Executive will be
satisfied and which are competitive with those of other similar
corporations. The Board believes that, in connection with such
compensation and benefit arrangements, it is appropriate to provide
for a “Gross-Up Payment” to the Executive to cover
certain special taxes which might result from her receipt of other
compensation and benefits.
Therefore, in order to accomplish
these objectives, the Board has caused the Company to enter into
this Agreement.
As a condition to the effectiveness
of this Agreement, the Executive has executed the Confidentiality
and Non-Competition Agreement attached hereto as Exhibit
A.
NOW, THEREFORE, IT IS HEREBY AGREED
AS FOLLOWS:
1. Certain
Definitions
(a) The “Effective Date”
shall mean the first date during the Change of Control Period (as
defined in paragraph (b), below) on which a Change of Control (as
defined in Section 2) occurs. Anything in this Agreement to
the contrary notwithstanding, if a Change of Control occurs and if
the Executive’s employment with the Company is terminated or
the Executive ceases to be an officer of the Company 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
or cessation of status as an officer (i) was at the request of
a third party who has taken
steps reasonably calculated to
effect the Change of Control, or (ii) otherwise arose in
connection with or anticipation of the Change of Control and was
not (A) for conduct by the Executive of the type described in
Section 4(b), below, (B) for significant deficiencies in
the Executive’s performance of her duties to the Company
(including, but not by way of limitation, significant failure to
cooperate in implementing a decision of the Board), or (C) for
some other specific substantial business reason unrelated to the
Change of Control, then for all purposes of this Agreement the
“Effective Date” shall mean the date immediately prior
to the date of such termination of employment or cessation of
status as an officer.
(b) The “Change of Control
Period” shall mean the period which commenced on
May 6, 2008 and ending on the third anniversary of such
date; provided, however, that on May 6, 2009 , and on
each annual anniversary of such date (such date and each annual
anniversary thereof being hereinafter referred to as a
“Renewal Date”), this Agreement and the Change of
Control Period shall be automatically extended so as to terminate
three (3) years from such Renewal Date, unless at least sixty
(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, in which case this Agreement shall terminate upon
the expiration of the Change of Control Period or, if an Effective
Period (as defined in Section 3) is then in effect, upon the
expiration of the Effective Period.
2. Change of Control . For
the purpose of this Agreement, a “Change of Control”
shall mean the occurrence, after the date hereof, of any of the
following events:
(a) The acquisition, other than from
the Company, by any 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 (the “Exchange Act”)) of Company
securities immediately after which such person is the beneficial
owner (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of fifteen percent (15%) or more of either the
then outstanding shares of common stock of the Company or the
combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of
directors, but excluding for this purpose any such acquisition by
the Company or any of its subsidiaries, or any employee benefit
plan (or related trust) of the Company or its subsidiaries, or any
corporation with respect to which, following such acquisition, more
than sixty percent (60%) of, respectively, the then
outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of
such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the common stock and voting
securities of the Company immediately prior to such acquisition in
substantially the same proportion as their ownership, immediately
prior to such acquisition, of the then
outstanding shares of common stock
of the Company or the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the
election of directors, as the case may be; or
(b) Individuals who, as of the date
hereof, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the
Board; provided that any individual becoming a director subsequent
to the date hereof, whose election, or nomination for election by
the Company’s shareholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office is in connection with
an actual or threatened election contest, including, but not
limited to, a consent solicitation, relating to the election of the
directors of the Company (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act); or
(c) There occurs (i) a
reorganization, merger or consolidation of the Company or any
direct or indirect subsidiary of the Company, in each case, with
respect to which all or substantially all of the individuals and
entities who were the respective beneficial owners of the common
stock and voting securities of the Company immediately prior to
such reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation, beneficially own, directly
or indirectly, more than sixty percent (60%) of, respectively,
the then outstanding shares of common stock and the combined voting
power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the
ultimate parent corporation of any corporation resulting from such
reorganization, merger or consolidation, or (ii) shareholder
approval of a complete liquidation or dissolution of the Company,
or (iii) the sale or other disposition of all or substantially
all of the assets of the Company.
3. Effective Period . This
Agreement shall be in effect for the period commencing on the
Effective Date and ending on the third anniversary of such date
(the “Effective Period”).
4. Termination of
Employment
(a) Death or Disability . The
Executive’s employment shall terminate automatically upon the
Executive’s death during the Effective Period. If the Company
determines in good faith that the Disability of the Executive has
occurred during the Effective Period (pursuant to the definition of
Disability as set forth below), it may give to the Executive
written notice in accordance with Section 11(b) of this
Agreement of its intention to terminate the Executive’s
employment. In such event, the Executive’s employment with
the Company shall terminate effective on the
thirtieth (30th) day after
receipt of such notice by the Executive (the “Disability
Effective Date”), provided that, within the thirty
(30) days after such receipt, the Executive shall not have
returned to full-time performance of the Executive’s duties.
For purposes of this Agreement, “Disability” shall mean
the absence of the Executive from the Executive’s duties with
the Company on a full-time basis for one hundred and eighty
(180) consecutive business days as a result of incapacity due
to mental or physical illness which 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 (such agreement as to acceptability not to be
withheld unreasonably).
(b) Cause .
(i) The Company may terminate the
Executive’s employment during the Effective Period for Cause
and may suspend the Executive from her duties with full pay and
benefits if the Executive is indicted for a felony involving moral
turpitude; provided, however, that the Executive will repay all
amounts paid by the Company from the date of such suspension if the
Executive is convicted of such felony. For purposes of this
Agreement, “Cause” shall mean (A) the willful and
continued failure by the Executive to substantially perform the
Executive’s duties with the Company (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 4(d) hereof) after
a written demand for substantial performance is delivered to the
Executive by the Board, which demand specifically identifies the
manner in which the Board believes that the Executive has not
substantially performed the Executive’s duties, or
(B) 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
(A) and (B) of this definition, (x) 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 without reasonable belief that the
Executive’s act, or failure to act, was in the best interest
of the Company and (y) in the event of a dispute concerning
the application of this provision, no claim by the Company that
Cause exists shall be given effect unless the Company establishes
to the Board by clear and convincing evidence that Cause exists,
and the Board adopts a finding to that effect.
(ii) A Notice of Termination for
Cause must include a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters (3/4) of the
entire membership of the Board at a meeting of the Board which was
called and held for the purpose of considering such termination
(after reasonable notice to the Executive and an opportunity for
the Executive, together with the Executive’s counsel, to be
heard before the Board) finding that, in the good faith opinion of
the Board, the Executive was guilty of conduct set forth in clause
(A) or (B) of the definition of Cause herein, and
specifying the particulars thereof in detail.
(c) Good Reason
The Executive’s employment may
be terminated during the Effective Period by the Executive for Good
Reason. For purposes of this Agreement, “Good Reason”
shall mean:
(i) The assignment to the Executive
of any duties inconsistent in any material respect with the
Executive’s position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as
in effect immediately prior to the Effective Date, or any other
action by the Company which results in a diminution in such
position, authority, duties or responsibilities, including, without
limitation, if the Executive was, immediately prior to the
Effective Date, an executive officer of a public company, the
Executive ceasing to be an executive officer of a public company,
but excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by
the Company within thirty (30) days after receipt of notice
thereof given by the Executive;
(ii) Any reduction by the Company in
Executive’s compensation or benefits as in effect immediately
prior to the Effective Date, other than an isolated, insubstantial
and inadvertent reduction not occurring in bad faith and which is
remedied by the Company promptly after receipt of notice thereof
given by the Executive;
(iii) The Company’s requiring
the Executive to be based at any office or location more than
twenty (20) miles from that in effect immediately prior to the
Effective Date;
(iv) Any purported termination by
the Company of the Executive’s employment otherwise than as
expressly permitted by this Agreement;
(v) Any failure by the Company to
comply with and satisfy Section 10(c) of this Agreement,
provided that such successor has received at least ten
(10) days prior written notice from the Company or the
Executive of the requirements of Section 10(c) of this
Agreement; or
For purposes of this
Section 4(c), any good faith determination of “Good
Reason” made by the Executive shall be conclusive.
(d) Notice of Termination .
Any termination by the Company for Cause, or by the Executive for
Good Reason, shall be communicated by a Notice of Termination to
the other party given in accordance with Section 11(b) of
this
Agreement. For purposes of this
Agreement, a “Notice of Termination” means a written
notice which (i) indicates the specific termination provision
in this Agreement relied upon, (ii) 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 (iii) if the
Date of Termination (as defined below) is other than the date of
receipt of such notice, specifies the termination date (which date
shall be not more than fifteen (15) 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 which
contributes to a showing of Good Reason or Cause shall not waive
any right of the Executive or the Company hereunder or preclude the
Executive or the Company from asserting such fact or circumstance
in enforcing the Executive’s or the Company’s rights
hereunder.
(e) Date of Termination .
“Date of Termination” means (i) if the
Executive’s 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 therein, as
the case may be, (ii) if the Executive’s employment is
terminated by the Company other than for Cause or Disability or by
the Executive other than for Good Reason, the Date of Termination
shall be the date on which the terminating party notifies the other
party of such termination, and (iii) if the Executive’s
employment is terminated by reason of death or Disability, the Date
of Termination shall be the date of death of the Executive or the
Disability Effective Date, as the case may be.
(f) Separation From Service .
“Separation From Service” means a termination of
employment that meets the “separation from service”
requirements under section 409A of the Internal Revenue Code of
1986, as amended (the “Code”) and section 1.409A-1(h)
of the regulations thereunder (as may be amended from time to time
and including any successor therto).
5. Obligations of the Company
upon Termination
(a) By Company Other Than for
Cause or Disability or By Executive for Good Reason . If,
during the Effective Period, the Company shall terminate the
Executive’s employment other than for Cause or Disability, or
the Executive shall terminate employment for Good
Reason:
(i) The Company shall pay to the
Executive in a lump sum the following amounts, payments to be made
at the times described below:
(A) The sum of
(1) the Executive’s then
current annual base salary through the Date of Termination to the
extent not theretofore paid, which amount shall be paid in cash
within 30 days after the Date of Termination;
(2) the product of
(x) Executive’s Recent Average Bonus (as defined below)
and (y) a fraction, the numerator of which is the number of
days in the then current fiscal year through the Date of
Termination, and the denominator of which is three hundred and
sixty-five (365). This amount shall be paid during the 30-day
period commencing six months subsequent to Executive’s
Separation From Service, and, in order to compensate for the delay,
the amounts to be paid shall be increased by six-months interest,
computed at the prime rate as reported in the Wall Street Journal
on the nearest date preceding the Separation From Service (the
“Prime Rate”);
(3) any compensation previously
deferred by the Executive (together with any accrued interest or
earnings thereon and as adjusted to reflect any other appreciation
or depreciation in value). This amount shall be paid in cash within
30 days after the Separation From Service; provided that, the
payment described in this section 5(a)(i)(A)(3) shall only be paid
as an immediate lump sum if (x) a lump sum payment had
previously been elected by the Executive in accordance with section
409A or (y) the Separation From Service is within two years
following the Change in Control and the Change in Control would
also qualify as a Change in Control under section 409A and the
regulations thereunder; and
(4) any accrued vacation pay; in
each case to the extent not theretofore paid, which amounts shall
be paid in cash within 30 days after the Date of Termination (the
sum of the amounts described in parts (1), (2), (3) and (4),
above, being hereinafter referred to as the “Accrued
Obligations”).
For purposes of this Agreement,
Executive’s Recent Average Bonus shall be the average
annualized (for any fiscal year consisting of less than twelve
(12) full months or with respect to which the Executive has
been employed by the Company for less than twelve (12) full
months) bonus paid or payable, before taking into account any
deferral, to the Executive by the Company and its affiliated
companies in respect of the three fiscal years immediately
preceding the fiscal year in which the termination of
Executive’s employment occurs (if Executive was not employed
by the Company in a given fiscal year, that year will be excluded
from the calculation of Recent Average Bonus); and
(B) The amount (such amount being
hereinafter referred to as the “Severance Amount”)
equal to the product of multiplying by three (3) the sum of
(1) the Executive’s then current annual base salary
(without, in the event of a termination of the Executive’s
employment pursuant to Section 4(c)(ii) hereof, giving effect
to any
reduction in the Executive’s
base salary) and (2) Executive’s Recent Average Bonus;
provided, however, that such amount shall be reduced by the present
value (determined as provided in Section 280G(d)(4) of the
Code) of any other amount of severance relating to salary or bonus
continuation to be received by the Executive, upon such termination
of employment, under any other severance plan, policy or
arrangement of the Company. One-third of the Severance Amount (the
“Non-Compete Payment”) shall be deemed to be allocable
to the performance of the covenants applicable to Executive
pursuant to the Confidentiality and Non-Competition Agreement
attached hereto as Exhibit A. This amount shall be paid during the
30-day period commencing six months subsequent to Executive’s
Separation From Service, and, in order to compensate for the delay,
the amounts to be paid shall be increased by six-months interest at
the Prime Rate; and
(ii) (A) At the Date of Termination,
stock options, restricted stock, and other awards relating to stock
under equity incentive plans or programs of the Company and its
affiliates which would have become vested (non-forfeitable) if
Executive’s employment had continued for thirty-six
(36) months thereafter, excluding awards that require
performance goals to be achieved in addition to passage of time and
continued employment, will be immediately vested and exercisable,
and any such stock options and other outstanding stock options
already vested at or before the Date of Termination shall remain
outstanding and exercisable for a period that is the greater of one
year after the Date of Termination (but in no event after the
stated expiration date of such option) or such longer period as may
be provided under the applicable plan or program, and any such
awards subject to settlement at a date later than the vesting date
shall be immediately settled; and
(B) At the Date of Termination, any
then outstanding award opportunity under a long- or
intermediate-term incentive plan or program of the Company and its
affiliates which requires performance goals to be achieved (in
addition to passage of time and continued employment requirements)
in order for Executive to earn cash or equity compensation will be
terminated and settled by payment to Executive of an award, in cash
unless otherwise specified by the plan or program, based on the
assumed achievement of target performance for the entire specified
performance period, pro rated based on the portion of the total
performance period completed as of the Date of Termination (and
without regard to any requirement as to passage of time or
continued employment relating to the award). If the applicable plan
or program would not permit the payment to Executive of an award as
specified in this subparagraph (ii)(B). This amount shall be paid
during the 30-day period commencing six months subsequent to
Executive’s Separation From Service, and, in order to
compensate for the delay, the amounts to be paid shall be increased
by six-months interest, computed at the Prime Rate;
(iii) The Company shall pay to the
Executive a lump sum equal to X, which amount shall be paid during
the 30-day period commencing six
months subsequent to
Executive’s Separation From Service. For the purpose of the
preceding sentence, X equals the value of the benefits that would
have been provided to Executive and/or the Executive’s family
during the 36 month period immediately following the Date of
Termination, if the Executive’s employment had not been
terminated, in accordance with (A) the welfare benefit plans,
practices, programs or policies of the Company and its affiliated
companies as in effect and applicable generally to other peer
executives and their families or, if more favorable, applicable to
the Executive and her family, during the ninety (90)-day period
immediately preceding the Effective Date or (B) if more
favorable to the Executive, those in effect generally from time to
time thereafter with respect to other peer executives of the
Company and its affiliated companies and their families. For the
purpose of computing X with respect to benefits where the Company
pays insurance premiums, the cost of benefits shall equal the
insurance premiums that would have been paid over such three-year
period that provides benefits to the Executive, based on the
insurance premiums in effect on the Date of Termination. For
purposes of determining eligibility of the Executive for retiree
benefits pursuant to such plans, practices, programs and policies,
the Executive shall be considered to have remained employed during
the thirty-six (36) month period immediately following the
Date of Termination and to have retired on the last day of such
period (and, to the extent Executive is eligible to receive retiree
benefits that duplicate the benefits that would otherwise be taken
into account in computing X, X shall be reduced); and
(iv) The Company shall pay to the
Executive a lump sum equal to Y, which amount shall be paid during
the 30-day period commencing six months subsequent to
Executive’s Separation From Service. For the purpose of the
preceding sentence, Y equals the value of the benefits that would
have been provided to Executive during the thirty-six
(36) month period immediately following the Date of
Termination if the Company had continued to provide the Executive
and her family with the benefits and perquisites at least equal to
those which would have been provided to them if the
Executive’s employment had not been terminated, in accordance
with the terms generally applicable with respect to the provision
of such benefits and perquisites during the ninety (90) day
period immediately preceding the Effective Date, or, if more
favorable to the Executive, in effect generally from time to time
thereafter during such thirty-six (36) month period with
respect to other peer executives of the Company and its affiliated
companies and their families. These benefits shall include (but
shall not be limited to) the following: employer contributions to
the AMCORE Financial Security Plan, employer contributions to the
AMCORE Deferred Compensation Plan, or any other defined
contribution retirement plan, club membership fees, financial
planning allowance and car allowance. In computing Y, the Company
shall determine the amount of the benefit annually provided by the
Company by (A) assuming that the Executive’s base pay
would have remained in effect at the rate in effect on the Date of
Termination and the Executive would have received annual bonuses
equal to the Recent Average Bonus, and (B) assuming in the
case of club membership fees, financial planning, car allowance,
and
similar benefits, that the Executive
would receive such benefits during the three years following the
Date of Termination at the same rate that she received such
benefits during the 12 months ending on the last day of the
calendar quarter preceding the Date of Termination.
(b) Death . If the
Executive’s employment is terminated by reason of the
Executive’s death during the Effective Period, this Agreement
shall terminate without further obligations to the
Executive’s legal representatives under this Agreement, other
than for (i) payment of the Accrued Obligations (which
payments shall, notwithstanding the language of 5(a)(i)(A) above 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,
and shall not include the interest factor described in 5(a)(i)(A)
above) and (ii) the payment of the benefits described in
section 5(a)(III) and (iv) (which payments shall,
notwithstanding the language of 5(a)(iii) and (iv) above, 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).
(c) Disabi
