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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 thereto).
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) Disability . If
the Executive’s employment is terminated by reason of the
Executive’s Disability during the Effective Period, this
Agreement shall terminate without further obligations to the
Executive, other t
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